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COA: Makati gov’t still pays its employees in hard cash


The Makati city hall. Photo from www.makati.gov.ph

For a city that prides itself on being the country’s financial center, Makati has a government that remains in the pre-ATM age when paying the salaries of its employees.

According to a Commission on Audit (COA) report, Makati City still pays its roughly 9,000 employees by stuffing cash in envelopes every pay day.

In its 2012 annual audit report released last month, the COA noted that P35.8 million in cash (for the salaries of regular and casual employees and payroll bonuses and incentives for public school teachers) was handled by four disbursing officers at the Makati City Hall.

The COA discovered the crude handling of the payroll during a series of cash examinations in December last year.

“The huge amount of cash on hand was expected since the payroll system of the city government requires payment in cash despite the automation age. This system had more disadvantages than advantages that need to be addressed to strengthen control not only in cash management but also in the other aspects of disbursement,” the COA said.


The COA cited several drawbacks to Makati’s archaic payroll system, such as high risk of loss or misapplication; disbursing officers exceed their maximum cash accountability; and loss of man-hours for employees who leave their work stations to go to City Hall to get their salaries and then go back to their posts; long lines to the teller’s booth; and the distribution of money to 4,024 regular employees and 4,794 casual employees every pay day.

The COA recommended that Makati City tighten internal control of its payroll funds “to protect government funds and minimize operating costs” such as by using the automated teller machine (ATM) payroll system.

The COA said most government offices had given up the outmoded payroll system and adopted the ATM system, resulting in cost savings in man-hours and supplies, making it more convenient for both the management and the employees, and eliminating risks of loss or misapplication of funds by cutting the cash advances held by disbursing officers.

In its reply, the city government said it “had taken note of the observation” and gave assurance that the ATM system “would be considered.”

Talking to banks

In a telephone interview with the Inquirer, Makati Public Information Officer Joey Salgado admitted that the shift to the ATM system was taking a long time.

He said the change to the ATM system had been in the works since the 1990s, but kept being deferred due to repeated changes at the top in the personnel department.

“But we have already talked to several banks. We are looking for the best offer,” Salgado said.

“[We hope the ATM system] can be applied by early next year,” Salgado said, referring to this year.

Salgado described the COA observations as “minor.”

“What is important is [City Hall employees] receive their salaries on time [and the amount is correct]. And they do,” Salgado said.

The COA also found that the Makati government did not provide insurance coverage for P1.877 billion worth of property as required by law.

The properties are the Makati Parking building (P886.355 million), Makati Department of Education building (P118.611 million), and dozens of barangay (village) halls and covered courts (P158.355 million).

“These (barangay halls and courts) were constructed several years back but no formal turnover had been made, hence their ownership is still with the city. Although they are being used and maintained by the barangays, prudence dictates that their insurance coverage should be shouldered by the city to provide financial protection in case of loss,” the COA said.

Only six of the 33 barangays in Makati have insurance.

Salgado confirmed the COA finding and said the Makati Physical Resources Office had already requested the city council to pass a resolution that would authorize Mayor Jejomar Erwin Binay Jr. to sign a deed of donation for the transfer of the properties to the barangays which, according to him, should have jurisdiction over them.

“The deeds of donation are being prepared, then the barangays concerned will be in charge [of insuring] the properties,” Makati accountant Raydes Pestano said in a text message on Tuesday.

Cash advances

The COA also said Makati City Hall failed to record P156.250 million in cash advances as of December last year, nearly half of which, or P70 million, were accounted for by unbooked intelligence funds made several years ago.

The COA requires all cash advances to be liquidated at the end of every year.

It also prohibits additional disbursements to employees who have not settled or properly accounted for their previous cash advances.

All settled

Salgado said the bulk of the cash advances, covering intelligence funds, had already been submitted to the COA.

He said the current Binay administration had no unliquidated cash advances. The unliquidated cash advances reported by the COA were made by previous administrations.

Before Jejomar Erwin Binay Jr. became mayor in 2010, the city was headed by his father, Jejomar Sr., who is now Vice President of the Philippines. And before that, the mayor was Binay Jr.’s mother, Elenita Binay.

Salgado said nowhere in the COA report was there mention of “any findings of irregularity or loss of money.”

All questions had been answered when the COA wrapped up its examination in April, he said.


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Tags: Commission On Audit (COA) , Employees , local government , Makati , pay envelopes , pre-ATM age , Salaries

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