CEBU CITY, PHILIPPINES — The Commission on Audit (COA), in its 2024 audit of the Cebu City Government, has flagged billions of pesos in irregular expenditures, ballooning garbage costs, idle medical equipment, unliquidated barangay and NGO funds, questionable procurement practices, and lapses in disaster fund use.
In its latest Independent Auditor’s Report, COA issued a qualified opinion on the city’s financial statements, citing material discrepancies that undermine transparency and accountability.
Auditors told then Mayor Raymond Alvin Garcia: “Expenditures totaling ₱11,180,308,503.34 as presented in the ‘Actual Amounts’ column of the Statement of Comparison of Budget and Actual Amounts for calendar year 2024 were based from the obligated amounts in the Statement of Appropriations, Allotments, Obligations, and Balances instead of the amounts actually disbursed during the given period, thereby affecting the reliability, transparency and accountability of financial reporting.”
A qualified opinion means the financial statements are generally reliable but contain significant exceptions. The best possible COA opinion is an unqualified opinion, often called a “clean opinion,” which signals full compliance with standards and complete accuracy of records.
Cebu City’s qualified opinion underscores that, while not wholly unreliable, its finances cannot be considered fully accurate.
The audit detailed how inventories worth ₱4.25 billion could not be verified due to incomplete physical counts, while property, plant, and equipment accounts showed ₱1.46 billion in unreconciled differences between the City Accounting Office and the General Services Office.
A further ₱1.34 billion in Plant, Property and Equipment(PPE) balances were written off without following guidelines, understating accountability for assets.
Income was understated by ₱340.3 million because realized revenues from advance real property tax collections were not recognized.
Barangays were deprived of their lawful share, with ₱204.6 million in unpaid distributions from fiscal years 2020 to 2024.
Donated assets worth ₱25.9 million, including patrol motorcycles and working dogs for the city’s K9 facility, were not recorded.
Three pending court cases with probable unfavorable outcomes totaling ₱13 million were not disclosed, leaving liability balances unreliable.
Cash accounts were also unreliable. Subsidiary ledgers showed negative balances of ₱8.3 million, the Cash in Bank account carried a ₱4.8 million unreconciled difference, and eight collecting officers who had left service as early as 2019 still carried ₱11.49 million in outstanding accountabilities.
Garbage and waste management emerged as one of the most pressing issues. The absence of operational Materials Recovery Facilities and weak enforcement of segregation at source led to ₱407.77 million in tipping fees in 2024.
Contracts worth ₱111.90 million for landfill disposal lacked the required documentation, such as odor control and traffic management plans.
Hospitals were also found non compliant with health care waste guidelines, with improper handling and storage of medical wastes at the Cebu City Medical Center and Guba Community Hospital posing risks to public health.
COA further flagged irregularities in the use of the Local Disaster Risk Reduction and Management Fund.
Supplies worth ₱54.75 million procured under emergency measures to mitigate El Niño impacts were paid in full but delivered incompletely and distributed late, denying immediate intervention to farmer beneficiaries.
Procurement practices were marred by irregularities. Transactions totaling ₱204.32 million could not be reviewed due to missing contracts.
Payments totaling ₱252.31 million were made for the “Digital Traffic System Phase I and II,” despite the absence of the necessary wiring layout plans. Additionally, a contract worth ₱248.32 million for Phase II was signed by the former City Administrator without the required authority from the Sangguniang Panlungsod.
Although the COA report did not specify the official’s name, previous reports indicate that Phase II was signed in 2021 under the late Mayor Edgardo Labella, with Atty. Floro Casas serving as the administrator.
Ten infrastructure contracts worth ₱181.13 million lacked detailed unit price analyses, and the ₱52.15 million renovation of the Cebu City Sports Center track oval was found to have procedural deficiencies in the post qualification process.
COA also questioned the granting of ₱220.46 million in cash awards and incentives to city officials and employees under the PRAISE program, which did not conform to Civil Service Commission guidelines.
Meanwhile, billions in unliquidated or idle funds remain unresolved: ₱125.25 million in NGO and PO transfers dating back to 2006, ₱419.21 million in barangay assistance, ₱677.19 million in national agency grants, ₱27.43 million in provincial assistance, and ₱144.99 million in unused PAGCOR shares intended for community development projects. Medical equipment worth ₱70.96 million acquired for the Cebu City Medical Center remained unutilized, with warranties already lapsed.
On compliance, COA noted that the city insured its properties with GSIS, paying ₱39.28 million in premiums, and appropriated ₱1.29 billion for senior citizens, differently abled persons, and the Local Council for the Protection of Children, with disbursements reaching ₱1.25 billion.
The report closed with a summary of suspensions, disallowances, and charges totaling over ₱1.25 billion as of December 31, 2024. Suspensions amounted to ₱423.82 million, still for settlement by responsible officials, while disallowances reached ₱833.06 million, more than 70 percent of which are pending appeal at various levels of adjudication. COA reminded that, under its rules, suspensions must be settled within 90 days or converted into disallowances and charges.
By issuing a qualified opinion, COA has signaled that Cebu City’s finances are not wholly unreliable, but they are not fully accurate either.
The city is expected to address the flagged issues to move toward the best possible outcome—an unqualified opinion, which reflects full compliance and reliability.
The audit underscores not only technical lapses but also the broader impact on communities, barangays, hospitals, and public services. From garbage collection costs to idle medical equipment, from unliquidated barangay funds to questionable incentives, the findings highlight the urgent need for corrective measures.
As COA reminded in its report: “The reliability, transparency and accountability of financial reporting have been affected by discrepancies in expenditures, inventories, property accounts, and revenues.”
| Written by Caecent No-ot Magsumbol/RAE
