13.3 However, an examination of the Disbursement Vouchers (DVs) showed that they
were not supported by a Memorandum of Agreement (MOA) between the
Municipality and the Barangays. Additionally, these DVs lacked an Approved
Project Expenditure or Estimated Expenses document outlining the project’s
objectives and expected outcomes. In an interview, the Municipal Accountant
stated that the fund transfers were indeed covered by a MOA. However, he
acknowledged that the MOA did not include a provision for the liquidation of
funds, making it difficult to enforce liquidation requirements on the Barangays.
13.4 We requested that the Municipal Accountant submit the MOA to us, but as of the
date of the audit observation, the same has not been submitted.
13.5 The lack of a Memorandum of Agreement (MOA) and an Approved Project
Expenditure or Estimated Expenses document can significantly impact the fund
transfer process, resulting in several effects such as:
1. Lack of Accountability – Without a formal MOA, the responsibilities and
obligations of both the Municipality and the Barangays remain undefined. This
can lead to confusion and a lack of accountability in fund management.
2. Absence of Proper Oversight – The lack of an Approved Project Expenditure
or Estimated Expenses document means there is no clear financial plan. This
could result in inefficient fund utilization or even misuse of funds.
3. Difficulty in Monitoring and Evaluation – Without documented project
objectives and expected outcomes, it becomes challenging to assess whether
the funds were used appropriately and whether the intended goals were
achieved.
4. Complications in Fund Liquidation – A MOA typically includes provisions
for liquidation. Without it, enforcing the return of unused or misused funds can
become difficult.
13.6 We recommended and Management agreed to:
a. Submit the following documents for the ₱420,000.00 fund transfers:
Duly executed Memorandum of Agreement (MOA) between the
Municipality and each recipient Barangay
Approved Project Expenditures or Estimated Expenses detailing the
project objectives, expected outcomes, and budget allocations
b. Strictly adhere to the documentary requirements prescribed under COA
Circular No. 2012-001, as amended by COA Circular No. 2016-002, for all
future fund transfers to Implementing Agencies, including Barangays. All
MOAs must explicitly provide for liquidation requirements, including
timelines, required supporting documents, and sanctions for non-
compliance.
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