Excessive discretionary fund spending by LGU in Eastern Samar raises COA’s eyebrows

MANILA, Philippines – The Commission on Audit (COA) flagged the municipal government of Guiuan in Eastern Samar province for overspending in 2023, in violation of its agency circular and the Local Government Code.

Records show the local government unit (LGU) appropriated P6.56 million for extraordinary and miscellaneous expenses (EME), even though the cap was set at a measly P26,456.14.

Using COA Circular No. 85-551 as reference, the municipal government was only authorized to set aside discretionary funds equivalent to 2% of the 2021 real property tax collection, which was valued at P1.323 million. Only the mayor has the authority to tap into that fund.

“The municipality did not only exceed the 2% limitation that could be appropriated for discretionary fund,” the COA pointed out, “but also provided budget for other offices other than the Office of the Mayor.”

To make matters worse, the LGU’s total expenditures for EME were P7.447 million. The biggest shares went to the following:

• Mayor’s office: P2.61 million
• Municipal investment and tourism office: P1.33 million
• Vice mayor’s office: P500,000
• Municipal council: P500,000
• Municipal treasurer’s office: 450,000
• Municipal administrator’s office: P200,000
• Municipal engineer’s office: P200,000

In response, the municipal accountant’s office of Guiuan said the local government committed an “honest mistake,” wrongly assuming that EME and other maintenance and other operating expenses (OMOOE) were the same.

It added that the expenditures were for meetings, conferences for trainings, seminars, and catering services.

Guiuan’s budget officer assured COA that corrections for 2024 were put in place, and promised to only allocate the discretionary funds to the mayor’s office.

Clarification

In a statement on Friday, April 12, Guiuan Mayor Annaliza Gonzales–Kwan underscored that the amounts appropriated and spent under the 2023 budget were not intended as discretionary fund.

The expenses were also supported by receipts and went through the stringent procurement process.

LGU officials likewise acknowledged the erroneous classification.

“LGU Guiuan is a consistent awardee of the Seal of Good Financial Housekeeping, including CY 2023. It assures its constituents, the Guiuanons, of its continued commitment in promoting transparency and accountability in the administration of public funds, ensuring the efficient allocation of resources while adhering to all relevant laws and regulations,” Gonzales-Kwan said in a statement. – Rappler.com