11.6 We recommended and the Inventory Committee agreed to prepare the
RPCRNS and reconcile it with the records available in the Office of the
Accountant. We also recommend that the GSO or property custodian submit
the Report on LRN as required under COA Circular No. 2015-008.
No Certificate of Availability of Funds secured from Accountant - ₱3,456,340.65
12. Procurement contracts entered into by the Municipal Government, and
disbursements related thereto, amounting to at least ₱3,456,340.65, were incurred
without the required Certificate of Availability of Funds (CAF) from the Chief
Accountant, contrary to Section 86 of Presidential Decree (PD) No. 1445, thereby
rendering the validity and legality of the transactions questionable.
12.1 Section 86 of Presidential Decree No. 1445, otherwise known as the State Audit
Code of the Philippines, provides as follows:
12.1.1 “Section 86. Certificate showing appropriation to meet contract. Except in
the case of a contract for personal service, for supplies for current
consumption or to be carried in stock not exceeding the estimated
consumption for three months, or banking transactions of government-
owned or controlled banks no contract involving the expenditure of public
funds by any government agency shall be entered into or authorized unless
the proper accounting official of the agency concerned shall have certified
to the officer entering into the obligation that funds have been duly
appropriated for the purpose and that the amount necessary to cover the
proposed contract for the current fiscal year is available for expenditure
on account thereof, subject to verification by the auditor concerned. The
certificate signed by the proper accounting official and the auditor who
verified it, shall be attached to and become an integral part of the proposed
contract, and the sum so certified shall not thereafter be available for
expenditure for any other purpose until the obligation of the government
agency concerned under the contract is fully extinguished.”
12.2 The post-audit of disbursements related to the procurement of construction
materials and office supplies, as well as the construction contracts entered into by
the Municipal Government totaling ₱3,456,340.65 (Appendix 1), showed that
these were not supported by the required CAF from the Municipal Accountant.
The Municipal Accountant explained that the Municipality was simply following
the reporting formats and forms prescribed in the New Government Accounting
System (NGAS) Manual for Local Government Units (LGUs).
12.3 May we remind Management that the NGAS Manual only prescribes the
accounting system for LGUs, specifically, the uniform guidelines and procedures
in accounting for government funds and property, new coding structure and new
chart of accounts, and new accounting books, reports/ forms, financial statements,
and accounting entries. Other reportorial requirements may be prescribed by
oversight agencies, i.e., Government Procurement Policy Board, Department of
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