MANILA — The Department of Interior and Local Government (DILG) has closed four trust fund accounts at Landbank of the Philippines with an aggregate amount worth over P12.98 million.

The Commission on Audit (COA) earlier flagged the DILG for maintaining the "unauthorized" bank accounts that were created and retained until end of 2023 and "have no legal basis."

In a statement last week, the DILG explained the accounts were used as depository accounts for funds from other national government agencies and "ensure the prompt release of funds to support the implementation of various programs and projects."

The DILG said it had closed the P1.73 million Regional Office IX trust regular account and the DILG-NCR Local Government Academy Special Project Account with P111,009.42.

The agency is also in the process of closing the DILG-NCR Special Project Account with P1.116 million and DILG Central Office Trust Account with P10.025 million.

"For the latter, the Department has returned the unutilized P2.363-million balance to the source agency; and has utilized the P5.834-million from the Department of Trade and Industry and the Bureau of Fire Protection - Interagency Task Force," it said.

"As of today,  the BFP-IATF Fund balance of only P199,627.90  shall be utilized for unpaid claims, after which, any remaining balances shall be remitted to the Bureau of Treasury (BTr) at year-end," the DILG added.

DILG said it is coordinating with the Bureau of Treasury to open a Modified Disbursement System Trust Account under Landbank of the Philippines.

"This account will be used for fund transfers granted or entrusted to the Department and may take effect in January 2025," it explained.

COA says its reports, findings can be used as evidence

COA'S FINDINGS

In its annual audit report for 2023, the COA flagged the four bank accounts without authority from the permanent committee.

It cited Section 2 of Executive Order No. 338 dated June 4,1996 that "requires all government offices and agencies, unless otherwise provided by law, to immediately transfer all public funds and monies deposited with depository banks and other institutions to the Bureau of Treasury regardless of income source."

"Verification of bank accounts recorded under the account CIB-LCCA showed that four bank accounts maintained by DILG-CO, NCR and IX with the LBP were retained/maintained without legal basis."

Bank accounts maintained with the LBP: 

    - DILG-CO Special Account: P10,025,854.57 

    - DILG-NCR Special Project LGA: P111,009.42

    - DILG-NCR Special Project: P1,116,294.53

    - RO-IX Trust Regular: P1,730,397.61

The audit team said the chief accountant said the reason for maintaining the bank accounts was to ensure "prompt release of funds in connection with implementation of various DILG projects."

"Nevertheless, the retention of funds in an unauthorized account is not only contrary to applicable regulations but also exposes it to risk of misuse and circumvents the reversion of unexpended funds at the end of its validity period," COA said.

The audit team said it will monitor DILG's compliance and the ongoing effort to close the current account.