The Baguio City Council has requested the Committee on Appropriations and Finance Cluster B to review the financial audit of the Commission on Audit (COA) on the management of funds of the City Government of Baguio. The audit report revealed discrepancies in the city government’s management of funds, particularly concerning the placement of idle funds in time deposits/high yield savings accounts (HYSA) and the misuse of Special Education
Fund (SEF) funds, leading to financial imbalances and deviations from regulatory guidelines.

The city government had placed P4.4 billion from the city’s general fund into time deposit/ HYSA accounts as of December 31, 2023, violating COA Circular 92-382. This action exceeded the specified limit of P695,005,426.93, which is only authorized to be invested under time deposit for the first semester of 2024. Idle funds are cash that local governments can invest in government securities or fixed-term deposits after considering expenses like
salaries, debt servicing, and capital outlays within the cash operating cycle of the government unit.

The excessive investment in time deposits resulted in delayed settlement of liabilities to suppliers or contractors,
unpaid obligations, accumulation of liabilities and unremitted amounts to other government agencies, and utilization of funds intended for current liabilities and operating expenses for future investments, impacting
development projects and socio-economic outcomes. The audit report recommended unloading the excessive
investment in time deposits to address financial imbalances and emphasized the need for strict compliance with COA circulars and the adoption of a comprehensive investment policy by the city council to ensure prudent financial
management and internal controls.

Jordan Habbiling/SP

Amianan Balita Ngayon