BY GEROME DALIPE IV
ILOILO City – The Commission on Audit (COA) called out the Iloilo Provincial Government for underutilizing its 20 percent development fund of P939.41 million in 2023.
In its annual audit report, the COA noted that a significant portion of the fund was left unspent due to the partial or non-implementation of various programs, projects, and activities (PPAs).
This underutilization violated Item No. 4.0 of Joint Memorandum Circular No. 1 issued on November 4, 2020, by the Department of Budget and Management (DBM), the Department of Finance (DOF), and the Department of the Interior and Local Government (DILG), according to state auditors.
This inefficiency, added COA, hindered the achievement of socio-economic goals and deprived constituents of the benefits that could have been derived from completed developmental initiatives.
Item 3.2.1 of the DBM-DOF-DILG joint memo mandates local government units (LGUs) to use the 20 percent development fund to finance priority development projects.
These projects must be well-planned and procurement- and implementation-ready, as emphasized in the same circular.
The local chief executive and other concerned officials are held responsible and accountable for ensuring that these development projects are executed effectively.
They must ensure that the projects optimally contribute to achieving the LGU’s socio-economic targets and desired outcomes.
Non-compliance, such as delays or inefficiencies, could undermine the intended developmental benefits for the community.
In 2023, the Iloilo Provincial Government had a total appropriation of P1.668 billion for its development fund, comprising of P728.606 million for the current year’s appropriation and P939.410 million representing continuing appropriations.
Under the current year’s appropriation, the provincial government obligated P604.695 million, equivalent to 83.0 percent of the 20 percent development fund for the current year.
Most programs, projects, and activities (PPAs) had high utilization rates, except for power supply system projects under Hospital Management.
The provincial government utilized P476.527 million or 50.7 percent for 77 PPAs.
In total, the provincial government obligated P1.081 billion or 64.8 percent of its P1.668 billion total appropriation, covering 131 PPAs out of the planned 208 PPAs.
This marked a significant improvement compared to 30.7 percent utilization in CY 2022.
In addition, some P586.794 million or 35.2 percent of the total appropriation remained unobligated.
About P110.543 million of this amount was for 77 unimplemented and unobligated PPAs.
The remaining unobligated funds are tied to ongoing PPAs, which could result in savings once these projects are completed.
Road networks
On the other hand, the road networks and other small-scale infrastructure projects received the highest budget allocation for the year.
Out of the 19 planned road projects, two projects were not implemented and are pending re-bidding.
The 17 roads under implementation remained incomplete as of the fourth quarter.
Physical accomplishment for these projects ranged from 6.6 percent to 80.2 percent, showing varying levels of progress.
Small-scale infrastructure projects
These projects included 11 sub-programs implemented through fund transfers to various LGUs for specific development initiatives.
A total of P199.743 million was obligated for 242 fund transfers. At least 188 fund transfers were disbursed, amounting to P22.475 million during the first semester and P149.419 million during the second semester. About P27.850 million of obligated funds remained undisbursed at year-end.
Despite the high allocation, delays in completion reflect challenges in project implementation and monitoring.
The incomplete roads and low physical accomplishment levels underscore the need for stronger project management and oversight.
While the majority of fund transfers were disbursed, the undisbursed balance of P27.850 million indicates room for improving the efficiency of fund utilization.
The memorandum of agreement (MOA) for fund transfers requires implementing agencies to either implement the proposed PPAs or liquidate funds within six months of receipt.
For PPAs funded in the first semester of 2023, the funds were supposed to be either used or returned by Dec. 31, 2023.
However, only P6.790 million of the allocated funds had been liquidated as of year-end, leaving the implementation of the remaining PPAs for unliquidated fund transfers uncertain.
The P16.900 million allocated for power supply systems under Hospital Management was only approved in September 2023.
As a result, the project remained unimplemented by the end of the year. This budget was sourced from the unutilized maintenance and other operating expenses (MOOE) of the 2022 20 percent development fund.
The partial and non-utilization of the funds, coupled with the incomplete implementation of PPAs, hindered the full realization of socio-economic targets and outcomes.
Consequently, the intended benefits from completed projects were not fully enjoyed by the constituents.
Replying to the audit memo dated March 21, 2024, the provincial government directed the provincial administrator to order the assessment of the appropriation balances from previous years.
The provincial officers were also directed to identify the unused balances and subject them to the reversion process if not utilized within three years.
The auditors said that such is part of the effort to optimize the use of the 20 percent development fund and ensure that funds are properly allocated and utilized.
The Provincial Engineer’s Office (PEO) identified P60.021 million in unused funds that are available for reversion.
However, the ongoing road network and water system projects are expected to be completed by the end of the second quarter of 2024.
The PEO also clarified that two road network projects under the calendar year 2023 appropriation were delayed due to the lengthy procurement process.
Regarding road networks, many projects were already completed, with the remaining ones under the 2022 appropriation nearing completion.
The PEO attributed discrepancies between the allocated amounts and obligated funds to bidding processes, where actual bid prices were lower than the approved budget for the contract, often around 80 percent of the allocated funds.
In the audit report, the state auditors recommended that the provincial government should direct the implementing offices to maximize the utilization of the continuing appropriations from the 20 percent development fund.
COA also urged the provincial government to expedite the implementation of the PPAs to ensure that the benefits and services from development projects are fully realized by constituents./PN
