The Department of the Interior and Local Government (DILG) is maintaining four unauthorized bank accounts, holding a total of P12.98 million, without legal basis, the Commission on Audit (CoA) has revealed.

An audit of the DILG’s bank records showed the agency has four accounts with the Land Bank of the Philippines under its Trust Fund, totaling P12,983,556.13. CoA auditors noted that these accounts had no legal basis, and their continued existence as of the end of 2023 violated regulations.

Executive Order No. 338 mandates that all government funds unless otherwise specified by law, must be transferred to the Bureau of the Treasury (BTr) immediately after they are deposited in depository banks and other institutions.

The audit found that the DILG Central Office’s special account, which holds the largest share of funds — P10.03 million — is used by the agency to manage deposits from other government agencies for various project implementations.

DILG-Regional Office 9 (Pagadian City) has a trust regular fund with a balance of P1.73 million. This account is used as a depository for performance bonds, the sale of bidding documents, the Resilience and Preparedness Toward Inclusive Development Support Fund, and proceeds from the sale of an unserviceable vehicle.

DILG-National Capital Region, meanwhile, has two bank accounts with P1.12 million and P11,009.42.

The accounts also function as depository accounts for funds received by DILG-NCR from the Parañaque City local government to support the implementation of the Regional Peace and Order Council, as well as from the Local Government Academy (LGA) for related programs.

The DILG chief accountant told the audit team that they have maintained the bank accounts to ensure the prompt release of funds in connection with the implementation of various projects of the agency.

The CoA, however, argued that “the retention of funds in an unauthorized account is not only contrary to applicable regulations but also exposes it to the risk of misuse and circumvents the reversion of unexpended funds at the end of its validity period.”

DILG-Pagadian City informed the auditors they had already deposited the funds with the BTr. The DILG-NCR LGA Trust Fund was closed in January of this year.

“Out of P10,025,854.57, the [DILG] has already returned to the source agency the unutilized balance of P2,363,677.28, or 23.60 percent. The balance of P7,041,104.83 is with ongoing activities, while P343,860.72 are performance bonds collected from winning bidders/or suppliers for refund upon completion of the project,” the DILG explained.

Nonetheless, the CoA cautioned that attention must be given to ensuring compliance with the ongoing efforts to close the current accounts.