’Old expenses ballooned Cebu City’s P1B cash overdraft’

CLOSE to P1 billion in overdraft which the Cebu City government incurred last year included expenditures from previous years, the City Accountant’s Office said yesterday.

City Accountant Diwa Cuevas said these items continue to appear on the city’s list of obligations due to their office’s difficulty in reconciling City Hall records from the old government accounting system to the new system that began in 2006.

“We have talked to the Commission on Audit (COA) and their instructions are to reconcile them. We promised to exert effort to reconcile everything,” she said during a press briefing held at the mayor’s office conference room yesterday.

Cuevas said they are setting up a system to record the city’s receivables especially those on real property taxes.

“The COA is more on the city’s liquidity. If the city is liquid it can pay its obligations. But they focus only on cash in vault and cash in bank, but we also have receivables (to add to our assets). These receivables are a quick asset,” she said.

Mayor Michael Rama, Cuevas and some City Hall department heads met with state auditors for an exit conference last June 4 to clarify an April 30 Audit Observation Memorandum (AOM).

The AOM mentioned that the Cebu City government incurred close to P1 billion in overdraft last year.

Cuevas said the city’s problem is not the availability of cash but in recording its revenues, collectibles and expenditures.

“It’s more of a problem in transfer of funds. The balances (overdraft) is because of the beginning balance (at the start of the year) that can hardly be reconciled using the old accounting system to the new system,” she said.

To date, her office is still assessing how much from the nearly P1 billion overdraft mentioned in the AOM are actual obligations and from what year these were incurred.

Cuevas said they are also working with CTO to identify the city’s collectibles and find means to already collect these dues.

“We have low collection efficiency. We want to know why these are not collected. We can send them demand letters,” she said.

Cuevas said the formula to determine the liquidity of a government entity is the determination of its quick assets minus its inventory over its current liabilities.

Quick assets refer not only to the city’s available cash and but also its collectibles.

“If we deduct all payables in which we are obligated and we focus only on cash in bank, this will result to shortage (in funds),” she said.

Cuevas said the city’s collectibles from real property taxes also form part of the city’s quick assets.

These assets may be converted into cash if the city collects real property taxes and sell real properties already forfeited in favor of the city because of unpaid taxes, she said.

“We already requested CTO to furnish us a copy and hopefully we can correct our records,” she said. Chief of Reporters Doris C. Bongcac