COA flags Cebu City for irregularities in financial assistance,

purchases

During one of its assessments, the Commission on Audit found several irregularities in
the transactions made by the Cebu City government as part of its financial assistance to
survivors of Typhoon Odette. There were unnecessary purchases made by the government where
the money could have been used for more development programs and projects for the city. This
includes several material misrepresentations and misstatements that are significant in
decision-making for stakeholders. The state auditor has assessed that there were deficiencies
like a manipulation of signatures to some constituents who claimed to received financial
assistance but did not receive the cash assistance, duplication of payments to certain members
of the city, and a non0submission of complete supporting documents. This article can be related
to three auditing concepts: Audit Sampling, Test of Controls, and Materiality level.

The state auditor used a random sampling method in conducting audit procedures. The
random sampling method is a technique used without a certain pattern or bias. This is used by
obtaining a representative sample of the population which allows the auditors to make
conclusions about the entire population based on the sample used. By selecting the sample at
random, the auditors can conduct the procedures without bias, and a true representative of the
population is made. The state auditor conducted a random written interview of 241 residents
from ten different barangays to test whether there was strict adherence to the guidelines
regarding the financial assistance of those individuals affected by Typhoon Odette. Based on the
interviews made, the majority of the respondents have answered that “they were not able to
receive financial assistance from the Cebu City government”. The Commission on Audit also
suggested that it found various loopholes in its data profiling given by the Cebu City government
which then made it difficult to identify the specific person listed as beneficiary.

The auditor flagged several expenses made by the City government which is considered
material in assessing the risk of misstatement on its financial statements. Materiality is
considered to be a key concept in planning and the overall process of auditing. It refers to the
importance or significance of an item/s on the financial statements. This assessment would
involve considering factors such as the amount of money involved, the nature of the
transactions, and the potential impact on the city's financial statements. Based on the article, the
auditor listed the material irregularities listed in the City government’s financial statements. The
Commission on Audit therefore recommended that the City government must use the financial
assistance given to maximize productivity to important objectives which would help the city
thrive.

Due to the numerous deficiencies made by the government, the state auditor would
conduct a test of controls that support the assessment made on the lack of transparency and
integrity made by some officers of the government. As a result of the sampling, the auditor
recommended that the government should assign two or more officers to conduct the process of
giving out financial assistance as the government’s internal control system lacks the proper
distribution of roles within the community. This could lead to the inadequacy of the supporting
documents provided by the government or a possible fraud implication due to the lack of
professional due care.

References:

JJL. (2023, July 17). COA flags Cebu City for irregularities in financial assistance, purchases.
SunStar Publishing Inc.
https://www.sunstar.com.ph/cebu/local-news/coa-flags-cebu-city-for-irregularities-in-financia
l-assistance-purchases