The Department of the Interior and Local Government (DILG) is maintaining four bank accounts with an aggregate amount of P12.98 million without legal basis, the Commission on Audit (CoA) has found.

A review of the DILG's bank records showed that the agency has four unauthorized accounts totaling P12,983,556.13 with the Land Bank of the Philippines under the Trust Fund.

State auditors lamented that these accounts exist notwithstanding that their creation and retention as of year-end 2023 "have no legal basis."

Section 2 of Executive Order No. 338 clearly states that all government agencies, unless otherwise provided by law, shall immediately transfer all public funds deposited with depository banks and other institutions to the Bureau of Treasury (BTr), regardless of income source.

Audit findings showed the DILG Central Office's special account — which has the lion's share of the funds at P10.03 million — is being used by the agency as a depository account for funds from other national government agencies for the implementation of various projects.

DILG-Regional Office 9 (Pagadian City) has a trust regular fund with a balance of P1.73 million and is being used as a depository account for performance bonds and 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 balances of P1.12 million and P11,009.42. The accounts are also depository accounts for funds received by DILG-NCR from the Parañaque local government for the implementation of the Regional Peace and Order Council and from the Local Government Academy (LGA), respectively.

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

The CoA, however, argued, "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, however, informed auditors that they had already deposited the funds to the BTr, while the DILG-NCR LGA Trust Fund was already closed as of 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 warned it would continue to monitor the DILG’s compliance with the ongoing effort to close the current account.