The Commission on Audit (COA) has issued a qualified opinion on the 2024 financial statements of the Cebu City Government, citing significant irregularities in financial reporting and asset management. The audit revealed that the city listed P11.18 billion in obligated funds as actual expenditures in its budget performance report, despite the amount not yet being disbursed.
Major Financial and Asset Management Deficiencies
Auditors stated that this practice distorted the city's spending picture and adversely affected the reliability, transparency, and accountability of its financial statements. Under standard government accounting rules, expenditures must be reported on a cash basis to reflect actual money released. Using obligated amounts does not accurately show how much was truly spent within the year.
The audit also uncovered major issues in the city's asset management. A substantial P4.25 billion in city inventory could not be fully validated due to a lack of complete physical counts. Furthermore, the city's Property, Plant, and Equipment (PPE) records remain unreliable. A staggering P1.46 billion unreconciled discrepancy was found between the records of the City Accounting Office and the Department of General Services, casting doubt on the accuracy of assets on the books.
Auditors also flagged that P1.34 billion in PPE entries were written off without proper adherence to COA's one-time cleansing guidelines, resulting in the under-reporting of asset balances. Additionally, donated PPE worth P25.99 million, including four patrol motorcycles and 11 working dogs for the city's K9 facility, were not recorded as income or added to assets, further diminishing financial accuracy.
Operational Lapses: Development Funds and Waste Management
One of the most alarming operational findings involved the city's extremely low utilization of its Local Development Fund (LDF). From the available P3.9 billion for development projects in infrastructure, social services, and disaster resilience, the city spent only P290.8 million, or a mere 7.4%. COA warned that delays or non-implementation of LDF projects hinder Cebu City's socio-economic development and delay crucial public services.
The city's spending on garbage disposal continues to rise. In 2024 alone, it spent P407.7 million on hauling and tipping fees. This was attributed to barangays lacking Materials Recovery Facilities (MRFs) and the failure to implement waste segregation at source. COA noted that the composting facility in Kalunasan is insufficient to manage the daily volume of biodegradable waste.
Ongoing Issues and Unresolved Recommendations
The audit found persistent deficiencies in the City Treasurer's Office. Despite long-standing rules requiring daily deposits of collections, auditors discovered numerous collections from 2020 to 2024 were not deposited on time. COA emphasized this recurring violation risks public funds to possible loss or misuse.
The audit also revealed a P4.82 million unreconciled difference between bank records and city books, as well as negative cash balances in the accountability ledgers of four officers. As of year-end, Cebu City had P423.8 million in suspensions and P833 million in audit disallowances still unresolved, involving transactions questioned by auditors in prior years.
Out of 174 prior audit recommendations, only 41 have been fully implemented, while 102 remain unaddressed, showing significant gaps in compliance and corrective action.
Despite the audit issues, Cebu City recorded a P242.9 million surplus in 2024, a turnaround from the P579.7 million deficit in 2023. Revenues reached P9.22 billion, increasing by over P1.4 billion from the previous year. As of December 31, 2024, the city listed P31.4 billion in assets, P13.1 billion in liabilities, and P18.28 billion in equity.
