Financial transaction

EXPLAINER: 7 questions you must have asked about Cebu City Government’s COA “clean” note and the findings of its 2020 expenditure audit. The answers we have so far.


[a] The mayor of Cebu City, in a July 11 message, said he was “happy to report” that the COA (Audit Commission) had given the municipal government an “unmodified” or “no notice” notice. reserve “for its 2020 financial transactions. This was the” highest mark “the LGU has ever received in its history, the former Labella administrations of Tomas Osmeña and Michael Rama.

[b] Mayor Labella said the memo showed the city “strictly follows governance processes, especially with regard to tax expenditures.” The COA’s February 28 letter stated that the financial statements “present fairly, in all material respects, the financial position of the city (…) its financial performance, cash flow, comparison budget and actual amounts. “for the year 2020.

[c] The city authorities’ turn as a certificate of good health for LGU transactions last year, the year of the pandemic, was quickly grabbed by critics of the Labella administration, accusing it of misinforming the government. public on its expenses.

WHAT WAS CLEAR when the town hall announced the news:

[a] The COA’s letter giving LGU an “unmodified” or “clean” notice was genuine and uncontested; the event that triggered the “joyous” occasion was real.

[b] The information / propaganda apparatus of the mayor and the town hall gave a favorable twist or interpretation to the town hall, namely that the town was recognized for having scrupulously followed government regulations (” hugot nga gituman “) and his expenses were” quite fair “. Critics seized on this claim to accuse the Labella administration of lying when the full report came out and COA reported transactions.

SOURCE. For questions readers must have wanted to ask, the independent source is Heidi Macaraan Lloce-Mendoza, whose Max Limpag of Innopub was able to tap into her perspective on the local issue. Mendoza posted his thoughts in a Facebook post.

Heidi Mendoza de Tayabas, Quezon was commissioner and head of the COA from 2011 to 2015. Former Assistant Secretary-General of the United Nations Office of Internal Oversight, her credentials include the label of “staunch defender of good governance and development” . She has also served as an external auditor for the Food and Agriculture Organization, the World Health Organization and the International Labor Organization.

WHAT WE KNOW. [1] What exactly did Cebu City get when the COA gave it an “unmodified opinion” on the city’s financial transactions in 2020? What is a COA notice and what is not?

Mendoza said and the audit opinion is not a rating. Before the opinion is given, she said, the COA undertakes a financial and compliance audit, which examines whether the declared cash is correct, the UGL owns it or not, and the claims are valid and remain. and whether the law and rules on cash spending are followed.

Her response to Max Limpag does not say so, but that must be what the COA’s letter to Mayor Labella means when she says that the LGU financial documents “fairly represent, in all material aspects” the government’s 2020 financial position. municipal. The opinion focused on the results of its financial and compliance audit.

[2] Did the COA’s “unmodified” or “clean” opinion of Cebu City mean that there had been no irregularities in its 2020 spending?

No, says Mendoza, “getting a ‘clean’ opinion is not proof that there are no improprieties.”

The audit report is not just the COA’s opinion or remark contained in one or two pages of a letter to the mayor. The remainder of the full Cebu City audit report is over 250 pages long, which the COA posted on its website.

Reading the audit report cannot be limited to the opinion or remarks of the auditor.

In addition to “financial and compliance auditing,” Mendoza says, there are other audits that the COA performs, each with a purpose or objective, such as “the fraud audit,” to find out if cheating and other irregularities have been committed, or audit ”, to see if the regulations on the procurement of goods or services have been observed.

[3] Given that Cebu City has already received an “unmodified” or “unqualified” notice from the COA, can it be said that the errors or violations by the LGU, as listed in the findings, have already been corrected and so the “clean” opinion?

Mendoza says that it cannot be claimed that the corrections have already been made by the LGU as evidenced by the “clean” opinion. The COA opinion, to put it plainly, does not recognize that corrections to any irregularities have been made by the LGU and the COA accepts them.

[4] How does the COA certify the corrections made by the LGU, following the sequence of the audit procedure?

Cebu City’s 2020 Main Spending Report gives this sequence, according to Limpag: (1) audit finding and details; (2) the management’s comment, that is to say the explanation of the town hall; (3) reply from the auditor; and (4) recommendation of the ACO.

In the town hall press release of July 15, amid controversy over the true nature of an “unmodified opinion”, city administrator Floro Casas Jr. said the COA’s comments had been “corrected already. and answered satisfactorily “. This means that the town hall explained and even acted on the results.

If this is true, if the town hall’s explanations and remedies have been accepted, the audit observations are removed, Mendoza says from the report. If Cebu City received the “clean” notice but there are still findings accompanying the audit report, they remain in the report, including the responsibility of the officials concerned.

To resolve the matter, watch the report again and see COA’s response to the explanation and the requested corrections. The “clean” opinion is not enough.

[5] Did the mayor and other officials fabricate or lie about the “unmodified” or “clean” opinion?

COA indeed sent a letter dated February 28 to Cebu City, as it did to other LGUs such as Makati City, Ilocos Norte and Liloan, Cebu. The “attribution” of an unqualified opinion was neither a concoction nor a fabrication.

The point of contention apparently rests on how Cebu City officials interpreted the opinion. They believed the “clean” opinion meant that COA had found all of its 2020 transactions “over the edge”. Mayor Labella’s response to the news must have been prompted by information and advice from key staff. And the municipal administrator Casas and the PIO, no later than last Thursday, July 15, pushed this line again with the argument that the “clean” opinion means that the explanation and the corrections of the town hall have already been accepted by the COA. (This is not the case, as Mendoza explains.)

It would be reckless, even stupid, if they knowingly misinterpreted, as the facts of the audit could be verified and denied.

[6] Was it wrong for LGUs, like Cebu City and Liloan Town, to claim victory for “clean opinion”? Are the observations of the COA indicating certain projects and certain transactions an automatic proof of irregularity?

No, it was not undeserved; honor must have been hard earned. Meeting COA requirements and other government rules is no easy task, given the track record of former mayors, in Cebu in particular, who have fared badly or even failed (with ratings ranging from qualified to unfavorable).

And a project or transaction reported by COA does not automatically make it irregular or abnormal. The LGU is not yet charged with wrongdoing. He can still explain and make corrections. The COA’s findings are not yet proof of a crime, but they may lead to its exposure.

[7] Did the media err in breaking the story without verifying for its readers what the “unmodified” or “clean” opinion of the COA meant?

Two reports (one after the other, July 8 and 10) in the two Cebu newspapers do not constitute complete local media coverage, unless SunStar and Freeman are counted as Cebu media and the two reports were the only basis.

A day or two of release does not constitute complete coverage of an ongoing story, which moves and evolves after Day 1. With digital media of news, due cycles keep spinning, giving bodies to information a chance to correct the erroneous or deficient report, of the catch-up, as some editors say.

The ideal was to immediately explain what “opinion” or “remark” means, where COA is based, but the agency is not exactly known to be open or talkative. The full report was posted on its website a week or more after the story was published. Newspapers and other media had to release the town hall’s source statement, knowing that a follow-up story could correct a source error.

SunStar’s warning, via an Explainer, came out two days after the newspaper printed a town hall press release on the COA’s opinion. This explanatory story comes out five days after the first Explanator on the matter and eight days after the mayor marveled at the feat.

News organizations were careful not to immediately use leaked documents that had no legitimate source to hang on to. They waited for the full report to be posted on the ACO website and for more information to become available.

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