Certificate of Availability of Funds not secured from the Accountant – ₱17,975,445.24
13. Procurement contracts entered into by the Municipal Government, and
disbursements related thereto, amounting to at least ₱17,975,445.24, 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.
13.1 Section 86 of Presidential Decree No. 1445, otherwise known as the State Audit
Code of the Philippines, states that, except for contracts for personal services,
supplies for current use or stock not exceeding a three-month estimate, or banking
transactions of government-owned or controlled banks, no contract involving
public funds may be entered into or authorized without a certification from the
agency’s accounting officer. This certification must attest that funds have been
duly appropriated and are available to cover the contract for the current fiscal year,
subject to verification by the auditor. The certification, signed by both the
accounting officer and the verifying auditor, shall be attached to and form part of
the contract, and the certified amount shall be reserved exclusively for that
contract until the obligation is fully settled.
13.2 The post-audit of disbursements pertaining to the procurement of construction
materials and office supplies, as well as construction contracts entered into by the
Municipal Government totaling ₱17,975,445.24 (Appendix 3), showed that these
were not supported by the required CAF from the Municipal Accountant. The
Municipal Accountant explained that the Municipality was simply adhering to the
reporting formats and forms prescribed in the New Government Accounting
System (NGAS) Manual for Local Government Units (LGUs).
13.3 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
the Interior and Local Government, Bureau of Local Government Finances, etc.
Additionally, the Commission may issue supplemental guidelines to enforce
accounting and auditing rules and regulations pursuant to Article IX-D, Sec. 2(2)
of the 1987 Philippine Constitution.
13.4 Transactions without the required CAF are deemed void under Sec. 87 of the same
Presidential Decree, quoted hereunder:
13.4.1 “Section 87. Void contract and liability of officer. Any contract entered
into contrary to the requirements of the two immediately preceding
sections shall be void, and the officer or officers entering into the contract
shall be liable to the government or other contracting party for any
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