COA calls out Talisay over unmet revenue target

CEBU, Philippines —  The Commission on Audit has called out the Talisay City government over its failure to conduct a periodic review of financial performance resulting in the shortfall of at least P69.7 million in the projected local revenue collections for the year 2022.

A periodic review of financial performance is required in Section 316 of Republic Act 7160 or the Local Government Code and the Department of Budget and Management (DBM) local budget circular No. 112.

“Hence, the inability to fully maximize its revenue collection which would redound to the benefit of its constituents,” state auditors said.

According to the audit team that looked into the financial transactions of Talisay City, the city government projected a total revenue of P422 million, inclusive of the share from national taxes, in 2022. However, the actual revenue collected was only P352,240,281.78 or a deficit of ?69,759,718.22.

“Our analysis showed that the large difference could have been avoided or the city could have performed better had there been a periodic review of its performance as required in Section 316 of R.A. No. 7160 and DBM LBC No. 112 dated June 10, 2016, or the Budget Operations Manual for 2016, which necessitated a Quarterly Report of Income, a budget document (LBAC Form No. 1) to be prepared by the City Treasurer, certified correct by the City Accountant for submission to the LFC, thru the City Budget Officer on or before the 10th day of the month following the ending quarter,” a portion  of the COA report read.

A quarterly report of income provides information to the members of the LFC on the variances and at the same time alerts them on the needed remedial action for revenue accounts that missed the projections.

The audit team said that the city treasurer was not able to render the required quarterly report of income, hence, no basis to check the performance level of the targets set at the beginning of the year.

On the other hand, it said that they could have used the Report of Revenues and Receipts (RRR) rendered by the CAO which contained the same information as that of the Quarterly Report of Income, to serve as a tool in the periodic review of financial performance, and to determine what aspects where the city should intensify its collection effort.

The audit team recommended for the city government to have a systematic and realistic forecasting of revenue taking into account the prior years’ experience and statistics as benchmarks in setting targets; involved the CTO and other departments in generating revenues to meet the targets; require the CTO to accomplish the Quarterly Report of Income to keep track of the status of revenue generation; and require the concerned officials to conduct a periodic review of the quarterly report of income to ascertain whether collection targets are attained and to provide assurance of improved finances for the operations of the city.

In their reply, the city government explained that despite their best efforts, they were unable to meet the revenue projections on local sources as taxpayers are still recovering from the aftermath of the COVID-19 pandemic and typhoon Odette.

“The CTO as member of the LFC shall review the financial strategies, then consider a systematic and realistic forecasting of revenue taking into account the prior years’ statistics as point of reference in setting of targets,” the city government added.

BLEEDING ENTERPRISES

Meanwhile, three Local Economic Enterprises (LEEs) of the city such as the slaughterhouse, public market, and Talisay City College (TCC) were operating at a loss in 2022 totaling ?48,108,457.42 due to unreasonably high maintenance/operating expenses, thus defeating the purpose for which these businesses were established.

LEEs are ventures wholly or partially owned by LGUs that generate revenue/income through the sale of services and goods to meet a perceived constituency demand.

“These enterprises have been operating at a loss which means that they entirely depend on subsidies from the LGU to augment their operating expenses, thus, showing a negative viability and sustainability,” COA-7 said.

The audit team also noted that the larger chunk of expenses incurred were for the personal services and benefits, honorarium and other maintenance and operating expenses which could have been avoided had proper planning and management have been implemented to ensure that these LEEs effectively contribute to the attainment of their respective development goals and objectives.

COA recommended for the city government to re-evaluate the operations of the slaughterhouse, public market, and TCC to ensure effectiveness and efficiency in its operations and to avoid continued net loss.

The city government explained that the slaughterhouse operating at a net loss is attributable to the disruption of its operations due to the damage brought by Typhoon Odette.

The city also said that the TCC is also yet to receive its subsidy and is expecting for the release and transmittal of the Free Higher Education Billing for the first and second semesters of A.Y. 2022-2023.

As to the market operations, the CTO together with the market administrator will conduct a thorough checking of the records of all market vendors and stall holders as well as physical inventory.