4.4. Our review of the financial statements and the aging of unliquidated cash advances
as of December 31, 2024, disclosed a substantial amount of unliquidated cash
advances totaling ₱4,209,529.72, as shown in the table below: (See Appendix 2 for
details)
Special
General
Account Name Education Trust Fund Total
Fund
Fund
Advances for Operating
₱ 3,896.15 ₱ 1,555.44 ₱ 5,727.49 ₱ 11,179.08
Expenses
Advances for Payroll 1,387,627.94 0.00 0.00 1,387,627.94
Advances to Officers
2,484,319.30 197,853.40 128,550.00 2,810,722.70
and Employees
Total ₱3,875,843.39 ₱199,408.84 ₱ 134,277.49 ₱4,209,529.72
4.5. Our verification of the aging schedule of the Advances to Officers and Employees
account disclosed that ₱3,596,303.87 out of ₱4,209,529.72 or 85% of the total cash
advances remained unliquidated for over five to 10 years.
4.6. Our inquiry with the Municipal Accountant revealed that demand letters have been
issued to local government officials and employees with outstanding unliquidated
cash advances. Consequently, salary deductions have been implemented as a means
of settlement.
4.7. Despite these efforts to enforce liquidation and recover the advances, the
unliquidated balance remains significantly high, totaling ₱4,209,529.72 as of year-
end. This indicates the need for more stringent monitoring and enforcement
measures to ensure full compliance with existing regulations.
4.8. As a result of the non-settlement of cash advances, the receivable and expense
accounts have been overstated and understated, respectively, because these may
have already been expended, considering the lapse of time and the remote
possibility of settlement.
4.9. This observation was communicated to Management through Audit Observation
Memorandum No. 2025-05(202)-Mabinay dated May 28, 2025.
4.10. We reiterated our recommendation and Management agreed that the
Municipal Accountant pursue the immediate liquidation of all outstanding
cash advances by issuing final demand letters to the accountable officers
concerned. In cases where liquidation is still not effected within the prescribed
period despite due notice, the appropriate sanctions should be enforced,
including the withholding of salaries in accordance with existing rules and
regulations.
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