MANILA – The Commission on Audit (COA) has ordered the Land Transportation Office (LTO) to address audit findings regarding its project with Dermalog or it would face a disallowance of payments amounting to P1.27 billion.

Dermalog – a German information technology contractor – is behind the agency’s online portal Land Transportation Management System (LTMS). 

In a letter sent by COA dated Nov. 29, 2024, it said the notice of suspension pertains to LTO’s Road IT Infrastructure Project – Component A or the LTMS.

“The Audit Team has yet to receive the complete compliance and/or justifications from the Management on these noted observations/issues on the aforesaid [Audit Observation Memorandum],” the letter to LTO read.

“On May 21, 2024 and November 26, 2024, the Audit Team issued two follow-up letters to the LTO but still no response has been given by Management as of this date, hence, the issuance of this Notice of Suspension,” it added.

COA said it suspended the audit on some items in the LTMS project between 2019 and 2022 after the LTO allegedly did not submit its response to the AOM.

The findings were also based on the assessment of 13 Technical Evaluation and Inspection Reports (TEIRs) dated from March 13 to September 13, 2023.

State auditors found that there were incomplete submission of documents, non-compliance with contract requirements, and issues on data and linkages.

“Items suspended in audit, which are not settled within 90 days from receipt hereof shall become a disallowance pursuant to Section 82 of P.D. 1445 and COA Circular No. 2009-006 dated September 15, 2009, prescribing the Rules and Regulations on Settlement of Accounts,” the letter read.

The LTMS is considered a cornerstone of LTO’s five-year IT modernization program to make the agency more efficient and give its clients the convenience of online service.

The system's portal is a one-stop online shop that seeks to integrate all LTO services in a single contact-less database system and digital platform.

In March last year, LTO said it was studying the possibility of rescinding its contract with Dermalog.

ABS-CBN News reached out to LTO chief Assistant Secretary Vigor Mendoza II regarding the COA order, but he has yet to respond as of posting.