Continuation of: "Lapses in internal control on the granting/liquidation of cash advances were observed in all of the UP campuses of which a total of P21.77 million unliquidated cash advances"

COA's 2009 CAAR repeatedly scores the outgoing U.P. administration for “lapses in internal control on the granting/liquidation of cash advances were observed in all of the UP campuses of which a total of P21.77 million unliquidated cash advances have been long outstanding for two years or more contrary to COA Circular No.97-002 dated February 10, 1997.”

COA Circular No. 97-002 guidelines states, among others, that: “No cash advance shall be given unless for a legally specific purpose.” amd that “No additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made.” and also that “A cash advance shall be reported on as soon as the purpose for which it was given has been served.”

The COA report also invoked Section 16 Title III of Executive Order 248 and Par. 5.1.3 of COA Cir. 97-002 which says that “Within sixty (60) days after his return to the Philippines, in the case of official travel abroad, or within (30) days of his return to his permanent station in the case of official local travel, every official or employee shall render an account of the cash advance received by him in accordance with existing applicable rules and regulations.”

COA also said that COA Circular No. 97-002 dated February 10, 1997 provides that failure though on the part of the accountable officers and employees to submit liquidation reports on a specified period shall constitute a ground for the withholding of the payment of any money due to them.

Moreover, for the proper matching of costs against revenues, it is necessary that cash advances granted during the year must be liquidated and recorded on that same year, so that the appropriate expense charges will be properly recognized during the period of occurrence, COA said.

Citing COA Circular No. 2009-002 which provides for the selective restitution of pre-audit on government transactions, the 2009 COA CAAR said that, “Except for cash advances for payroll, intelligence funds, petty cash funds, and those granted for local travel expenses of officers and employees, all other cash advances including those for foreign travels funded out of the local funds regardless of amount shall pass through pre-audit.”

COA said that the foregoing rules and regulations were formulated to “provide clear and extensive guidelines for an efficient and effective control in the granting, utilization and liquidation of cash advances, and the appropriate recording/recognition of the same in the books. However, these were not strictly observed and implemented as can be gleaned from reports and records submitted.” COA said the following data in Table I shows the total unliquidated cash advances to the officers and employees of the following UP units/campuses as shown in the consolidated financial statements:

(Table I. To enlarge the graphic, just click on it)

COA is recommending that the U.P. Administration adopt the following measures specific to the following areas of jurisdiction:

UP System

• Strictly observe the governing rules in the granting, utilization, and liquidation of cash advances, such as but not limited to the following:

• Require a yearly liquidation on cash advances for Doctorate studies which have more than a year duration to prevent accumulation of cash advances and that appropriate expenditures be properly recognized during the period of incurrence;

• Observe strictly the rule that “no additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made."

• Impose the appropriate penalties/remedies provided for its violation such as withholding of salaries of erring accountable officers;

• Revisit the previous request for write off which was returned by the Auditor for submission of lacking documents; and

• No clearance from money and property accountability must be granted to any officers and employees unless all accountabilities are cleared. Any concerned officer found to be negligent for the improper granting of clearance to ineligible employees/personnel must be held personally or administratively liable.

UP Diliman

• Monitor regularly cash advances granted in order that these are reported on as soon as the purpose for which these were given have been served; and

• Impose the appropriate penalties/remedies provided for its violation such as withholding of salaries of erring accountable officers.

UP PGH/Manila

• Issue notice or demand letters to all accountable officers and employees to settle their accountabilities within the prescribed period. In case of failure to comply, strictly impose sanctions such as withholding of salaries or any money due to them pursuant to Section 9.3.2 of COA Circular No. 97-002 dated February 10, 1997 or course legal action through the Office of the Ombudsman for demand letters not acted upon;

• Request the COA for the cancellation of those long outstanding/overdue accounts and other unsettled cash advances which could no longer be collected in accordance with existing rules and regulations. Revisit the previous request for write off which was returned by the Auditor due to lack of documents;

• No clearance from money and property accountability must be granted to any officers and employees unless all accountabilities are cleared. Any concerned officer found to be negligent for the improper granting of clearance to ineligible employees/personnel must be held personally or administratively liable;

• Require the Accounting personnel to verify and update all accounts which were not recorded in the books and make regular reconciliation of their records with that of the Accountable Officers to effect appropriate adjustments in the books. Likewise, immediately forward to the Auditing Unit all liquidations, reports, adjustments, etc. related to the cash advances’ accounts for proper auditing and issuance of the corresponding credit notices; and

• Require the Cashier to explain in writing why she failed to submit the disbursement vouchers for cash advances covering foreign travels and expenses for projects/activities that are required to pass through pre-audit pursuant to COA Circular No. 2009-002. Management to refer the matter to the Legal Office, for the possible filing of administrative disciplinary action to persons responsible in accordance with Section 127 of Presidential Decree No. 1445 and Section 55, Title I-B, Book V of the Revised Administrative Code of 1987, without prejudice to the disallowance of the transactions in post-audit, if warranted.

UP Visayas – Iloilo

• Subsequent cash advances should be granted only after the issuance of a Credit Notice for the previous cash advance by the Office of the Auditor.

Rejoinder of U.P. and COA's counter responses

To read the table of U.P.'s rejoinders to COA's criticisms and COA's final word on the matter, please click on this link: http://www.scribd.com/doc/43888586/UP-s-Rejoinders

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