THE Commission on Audit (COA) found weaknesses in Cebu City’s handling of public collections, including delayed deposits, 168 blank official receipts signed in advance and 16 collectors or tellers assigned to handle government funds without the required fidelity bonds.
The findings were contained in three separate audit observations in the Cebu City Government’s 2025 Annual Audit Report.
The audit observations do not establish that any collector stole or misappropriated public funds. Instead, they identify weaknesses in the internal controls designed to safeguard collections, accountable forms and government personnel entrusted with public money.
The report also identified the collectors and tellers involved in the transactions reviewed by auditors. It did not state that all Cebu City collectors committed the cited lapses.
Delayed deposits
In Audit Observation 24, COA found that some collections were not deposited intact each day or by the next banking day, contrary to government regulations.
Depositing collections intact means depositing the entire amount collected without deduction or use for any purpose before it is turned over to the City Treasury or credited to the authorized government depository bank.
The requirement limits the time public funds remain in the custody of individual collectors. It also enables supervisors and auditors to compare official receipts, collection reports and bank deposits without long delays between the transaction and the deposit.
When deposits are delayed, cash remains outside the City’s treasury and banking controls for a longer period. That increases the risk of loss, unauthorized use or difficulty in determining responsibility if a shortage is later discovered.
Delayed deposits may also create discrepancies between the date shown on an official receipt, the date recorded in collection reports and the date the funds appear in the City’s bank account.
COA did not state that any money was missing. It said the failure to deposit collections within the prescribed period weakened the audit trail and made the timely detection of shortages more difficult.
Pre-signed official receipts
COA also found that 168 blank official receipts had been signed before transaction details were entered.
An official receipt is an accountable form documenting the government’s receipt of money. Its serial number, date, payor, nature of payment and amount form part of the records used to trace a collection from the taxpayer or payor to the City’s accounts.
A collector’s signature certifies that a receipt was issued for an actual transaction. Signing a receipt while it is still blank removes an important safeguard because another person could later fill in the transaction details after the document has already been authenticated.
The practice could allow the amount, date, payor or purpose of payment to be entered without the signing collector verifying the completed receipt. It could also complicate efforts to determine responsibility if the receipt is lost, altered or issued without a corresponding entry in the collection records.
The audit finding does not state that the 168 receipts were used for fraudulent transactions. Rather, it says the receipts were exposed to possible unauthorized use because they had been signed before completion.
Official receipts are accountable forms because they serve as proof that the government received money. Controls over their issuance, custody and use are intended to guard against unrecorded collections and falsified transactions.
Collectors without bonds
In Audit Observation 28, COA identified 16 collectors or tellers who were handling government funds without the required fidelity bonds.
The observation, titled “Accountable officers with no fidelity bonds,” appears on printed pages 173 and 174, or PDF pages 186 and 187.
A fidelity bond provides financial protection to the government if an accountable officer incurs a shortage or causes the loss of public money or property covered by the bond.
Government personnel responsible for receiving, keeping or controlling public funds are generally required to obtain fidelity bonds before assuming or continuing accountable duties.
Without valid bonds, the City has less financial protection if funds entrusted to collectors or tellers are lost, stolen or cannot be accounted for.
COA did not conclude that any of the 16 personnel incurred shortages. The finding states that they were performing accountable functions without a safeguard required for government officers entrusted with public funds.
The audit also noted that the City must ensure each bond corresponds to the officer’s level of accountability. Expired or inadequate bond coverage may leave part of the government’s financial exposure unprotected.
Internal control weaknesses
Taken together, the findings point to weaknesses at several stages of the collection process.
Official receipts document payments received. Collection reports account for the receipts issued and the money collected. Deposits confirm that funds were transferred to the City Treasury or an authorized depository bank. Fidelity bonds provide financial protection if accountable officers fail to account for public money.
Pre-signed receipts weaken controls at the beginning of the collection process. Delayed deposits weaken safeguards over the transfer of funds. The absence of fidelity bonds leaves the City without complete financial protection against potential losses involving accountable personnel.
COA said the City should enforce daily reconciliation and deposit requirements, prohibit the signing of blank official receipts, maintain strict control over receipt booklets and ensure personnel are properly bonded before being assigned to handle public funds.
Supervisors should also reconcile official receipts, daily collection reports and validated bank deposit records. Any discrepancies should be investigated while the transactions and supporting documents can still be readily verified.
The audit observations should not be construed as proof of theft or criminal wrongdoing. They identify weaknesses in internal controls that, if left unaddressed, could increase the risk of shortages, unrecorded collections and disputes over accountability for public funds. (KAL)
