City eyes new funds amid COA findings

CEBU, Philippines — Despite being flagged by the Commission on Audit (COA) over underutilized local development funds and delayed implementation of government-funded projects, Cebu City Mayor Nestor Archival is seeking fresh financial support from the national government for the city's priority development initiatives.

Archival recently met with Budget Secretary Kim de Leon to discuss funding for the rehabilitation of the Boy Scouts Camp in Barangay Kalunasan and Cebu City's share of the Local Government Support Fund (LGSF).

The mayor described the meeting as "productive," saying the requested assistance would help accelerate priority infrastructure projects, improve public facilities, and strengthen essential services.

"Every meeting is another opportunity to bring resources, partnerships, and better services home to Cebu City," Archival said, emphasizing his administration's efforts to secure national support for local development.

However, COA's 2025 Annual Audit Report showed that the city has yet to fully implement projects previously financed through the same funding program.

The city received P13.21 million in July 2023 under the LGSF to finance three projects in two barangays. As of December 31, 2025, two projects in Barangay Sambag II—a P3.61-million potable water supply system and a P3-million renewable energy-based electrification project—remained unimplemented.

COA also noted that an unexpended balance of P8,296.42 from the construction of a four-story, 12-classroom building at Ermita Elementary School had not been reverted to the National Treasury.

The audit agency said these deficiencies violated Department of Budget and Management (DBM) Local Budget Circular No. 151, which requires LGSF-funded projects to be implementable within prescribed timelines and mandates the immediate reversion of unused funds if they remain unutilized beyond December 31, 2024.

According to COA, the failure to implement the Sambag II projects deprived residents of their intended socio-economic benefits, while the city's failure to return excess funds prevented the national government from maximizing available resources.

The audit also cited Section 3.3 of DBM-DILG Joint Circular No. 2024-121, which reiterates that LGSF allocations are trust funds under Republic Act No. 7160 and must be used strictly for their intended purposes.

COA noted that the issue had already been raised in its 2024 Annual Audit Report, when city officials committed to coordinate with the Department of Engineering and Public Works (DEPW) and the City Planning and Development Office (CPDO) to resolve implementation delays.

Despite those assurances, the projects remained stalled, prompting COA to repeat its audit observation.

The audit body recommended that the City Engineer and CPDO submit a comprehensive explanation for the non-implementation of the projects and consult with the Regional Task Force-ELCAC on whether they should proceed or be reprogrammed.

It also directed the Acting City Accountant to facilitate the immediate reversion of the remaining P8,296.42 to the National Treasury.

In its April 8, 2026 reply, the City Planning and Development Office said the Project Monitoring Committee, in coordination with the Department of the Interior and Local Government, was conducting "continuous and rigorous monitoring," with updates being posted on the Subaybayan Portal.

The Acting City Accountant, in a separate letter dated April 22, 2026, said communications had been sent to the DEPW requesting justification and action on the delayed projects, including the proper disposition of the funds.

UNLIQUIDATED

Beyond the delayed LGSF projects, COA also flagged P404.06 million in financial assistance granted to 64 barangays that remained unliquidated as of December 31, 2025, with some outstanding balances dating back to 2009.

Unlike the LGSF allocations, these funds came from various financial assistance programs, but COA said the accountability issues were equally significant.

Of the total amount, P237.5 million had no liquidation reports submitted, P152.2 million worth of reports were suspended due to deficiencies, P30.9 million remained under pre-audit, while P16.6 million could not be reconciled because fund returns could not be matched with the corresponding grants.

COA reported that 47 barangays had yet to submit liquidation reports. Seven of them each had outstanding balances exceeding P10 million: Babag (P14.8 million), Poblacion Pardo (P14.7 million), Tisa (P13 million), Inayawan (P12.6 million), Punta Princesa (P11.7 million), Apas (P10.6 million), and Buot-Taup (P10.1 million).

Another 51 barangays submitted liquidation reports that were suspended by the Pre-Audit Division due to deficiencies, including 11 barangays with balances of at least P5 million.

Meanwhile, 11 barangays still had reports under examination totaling P30.9 million, while 13 barangays had unreconciled balances amounting to P16.6 million due to fund returns that could not be traced to the original grants.

Although COA acknowledged some improvement from the previous year, it noted that the overall outstanding balance declined by only 3.62 percent, indicating that accountability issues persist.

The audit warned that the prolonged failure to liquidate the financial assistance distorts the city's financial statements by overstating receivables and understating expenses, making the records unreliable.

COA recommended stricter enforcement of liquidation requirements, expedited legal action against non-compliant barangays, faster processing of suspended and pending liquidation reports, and reconciliation of unidentified fund returns.

City officials, for their part, said demand letters continue to be issued, with the latest released in February 2026, although compliance has remained slow. The Acting City Accountant acknowledged that some barangay officials could no longer locate supporting documents due to changes in administration and the age of the transactions. –FPL (CEBU NEWS)