Inappropriate charges to advertising expenses totaling ₱300,000.00.
16.10 Section 2.2.18 of Local Budget Memorandum No. 85 dated June 15, 2022
provides that the FY 2023 annual budgets of provinces be prepared consistent
with the Revised Chart of Accounts for LGUs, as prescribed under COA
Circular No. 2015-009 dated December 1, 2015. Annex “B” of the said Circular
defines Advertising Expenses as an account to be used to record the cost
incurred for advertisement, such as expenses to (a) promote and market products
and services; and (b) publish invitations to bid and other authorized government
advertisements.
16.11 However, contrary to the above cited regulations, it was observed that the
production services and the fireworks display and pyrotechnicians for the State
of the Province Address (SOPA) and the Grand Launching of Tourism
Roadshow amounting to ₱300,000.00, accrued in CY 2023, were improperly
charged to the Advertising Expense account (5-02-99-010).
16.12 The production expenses pertain to the fees of the dancers, choristers, the host
and the event conceptualization, styling and management. It is important to
emphasize that the SOPA, where the governor reports on accomplishments and
plans and promotes culture and arts, should not be classified as advertising
expenses. Instead, it serves as a formal communication regarding the province’s
governance, progress, and future plans.
16.13 Furthermore, Section 9.1.3.5 of COA Circular No. 2012-001 dated June 14,
2012 requires that when a government agency engages in paid advertising, the
claims must be supported by documentary evidence, such as a copy of
newspaper clippings, showing publication and/or CD in the case of TV/Radio
commercial. However, such documentations were not submitted to support
these transactions, as these expenses do not pertain to advertising.
16.14 Anent thereto, Management is reminded that one of the austerity measures
adopted under Administrative Order No. 103 dated August 31, 2004, is the
suspension, among others, of paid media advertisements, except those required
in the issuance of agency guidelines, rules and regulations, and the conduct of
public bidding and the dissemination of important public announcements.
16.15 Inasmuch as budgetary control in the expenditure of funds rests in the obligation
of transaction through appropriate recording in the registries maintained by the
Provincial Budget Officer, the use of appropriate budgetary accounts is
necessary in conformity with the NGAS Manual. Failure to ensure proper
account classification defeats the purpose of budgetary control.
16.16 We recommended and Management agreed to desist from charging to the
Provincial Fund expenses related to receptions, pageants, fireworks
displays, and similar activities, as well as other related events.
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