COA thumbs down use of Cebu City Special Education Fund as aid Teachers who got P10,000 ‘bonus’ may be made to return money

Public school teachers in Cebu City would be made to refund the P10,000 cash assistance they received in December 2012 should the City Hall fail to justify why they used the Special Education Fund (SEF) to finance the dole out.

Regional state auditor Sabiniano Cabatuan said the teachers as fund recipients are equally liable as the city officials who authorized the use of the SEF if the Commission on Audit decides to issue a notice of disallowance.

“If the use of the SEF is declared illegal, they (the teachers) have to return it,” he told the Cebu City Council.

Mayor Michael Rama said he is ready to go all the way to the Supreme Court to defend the regularity of the disbursement of P56.3 million from the SEF which was used to double the cash assistance to teachers from only P5,000 to P10,000.

“Has COA made a conclusion that I committed graft and corruption? If they (COA) wanted to help [the city], they should [instead] be giving us solutions,” he told reporters.

State auditors led by Cabatuan appeared before the city council in an executive session yesterday morning to answer questions on the 2012 Annual Audit Report (AAR) of the Cebu City government.

Also in attendance during the executive session was city auditor Cymbeline Celia Chiong Uy.

Councilor Margot Osmeña, the City Council’s budget committee chairperson, asked about the “adverse” rating which COA gave the city based on the 39 audit observations mentioned in the AAR.

The city government, she said, was given an “adverse” rating in 2011 and 2012.

“Ma-grandslam na ta ani if we still get the adverse rating next year,” Osmeña said.

Cabatuan told the councilors that COA does financial statement audit and regularity compliance audit on the city’s transactions for a certain period.

In the absence of legal remedies, recommendations on the adoption of proper audit recommendations are made for adverse findings made from their financial audit.

On the contrary, auditors have the option to issue a notice of suspension or disallowance on City Hall transactions found to be irregular and recommend the filing of appropriate charges on accountable people before the Office of the Ombudsman.

“The issuance of adverse opinion [against a local government unit] is rare. We would appreciate if changes are made so we can issue a clean audit opinion in 2013,” Cabatuan told the councilors.

Overdraft

In the 2012 AAR, COA had called the city’s attention on possible cash overdraft amounting to close to a billion pesos.

Auditors also asked city officials to justify the use of P56.3 million from its SEF for teachers assistance released on December 2012 and another P3.5 million from its 2012 calamity fund for the payment of wages of job order personnel.

Copies of the 2012 AAR where forwarded to Mayor Rama and Vice Mayor Edgar Labella on June 28. They were given a month to submit their reply.

“At this point, there has been no reply (from the Office of the Mayor) and so we have not yet re-evaluated the issue,” Cabatuan told the councilors.

While they are trying to maintain a certain degree of “leniency” in their dealings with the city government, Cabatuan said, he will direct city auditor Uy to follow up on the city’s reply.

“If management can’t satisfactorily answer, then we will decide to issue a notice of disallowance and they will go to adjudication,” said Cabatuan.

However, Cabatuan pointed out that the SEF and calamity fund uses are two different issues.

Cabatuan said that service had been rendered by the JOs to justify the use of the P3.5 million calamity funds.

“Because service was already rendered, we go back to those who authorized the use of the funds. If the JOs do not return the money, then we will run after those who authorized the illegal payment,” he said.

Cabatuan said that on the SEF use, the recipients of the money could be held equally liable as those who authorized its use.

Rama said he already directed city administrator Jose Marie Poblete to coordinate with different city hall offices in drafting the audit reply.

“Should I be the one answering?” asked Rama who added that he will now be reminding Poblete of the needed audit replies.

Of the P56.3 million SEF, P48.2 million was used as performance incentives for public school teachers released on Dec. 28. Other charges made to the SEF include: P2.9 million in SEF for psychological tests for teachers, P3.9 million for food and accommodation during activities of the Department of Education, P1 million for door prizes during the Teachers’ Day celebration and P300,000 for the Teachers Scholarship Tuition.

State Auditor Eva Cabrera mentioned in a January 7, 2013 Audit Observation Memorandum (AOM) of the “deficiencies” and “errors” in the charges which auditors found after a review of the city’s check disbursements made from January 1 to December 31, 2012.

Section 272 of the Local Government Code provides that the SEF should only be used for the operation and maintenance of public schools; construction and repair of school buildings, facilities and equipment; educational research; purchase of books and periodicals; and sports development, as determined and approved by the LSB.

Cabrera also pointed in her AOM that the teachers incentive was already “on top of other legally authorized benefits”.

“The giving of such incentives may affect other vital projects,” it added.

Cabrera also noticed there was no document to support the release of P48 million from the SEF except for the memorandum issued by Rama authorizing the disbursement. Notes appearing on the cash disbursement voucher also showed that OIC city treasurer Emma Villarete and city accountant Diwa Cuevas had approved the voucher with “objections”.

Bureau of Local Government Finance (BLGF) director Salvador del Castillo concurred with the AOM.

“It appears that the grant of the additional benefits to all public school teachers is not among the purposes for which the SEF proceeds could be applied to,” del Castillo said in a January 9 letter to Villarete.