Part 1: COA flags P3.1-billion in stalled projects; asset records ‘unreliable’
THE 2024 Annual Audit Report (AAR) on the City Government of Cagayan de Oro has arrived, and its contents reveal major deficiencies in infrastructure implementation and financial controls.
Received by the Mayor’s Office on June 27, 2025, and subsequently referred to the City Council’s Committee on Appropriations, the comprehensive review by the Commission on Audit (COA-10) outlines systemic delays in the city’s infrastructure program and significant discrepancies in its asset records.
In a transmittal letter to City Mayor Rolando Uy dated May 28, 2025, COA-10 Regional Director Mathew Rey M. Magno detailed nine major audit observations. The audit was supervised by State Auditor V Marilou C. Mampao and led by State Auditor IV Atty. Farouk M. Dadayan.
The P3.1-billion backlog
State auditors flagged the city’s implementation of its infrastructure roadmap.
As of Dec. 31, 2024, the audit team reported that 241 infrastructure projects with a total cost of P3.167 billion were not completed within the specific contract time.
The report noted delays ranging from a few days to 1,991 calendar days — a lag of over five years.
“The lack of effective coordination with relevant government agencies and private entities, coupled with failure to thoroughly assess the technical viability of the projects and conduct comprehensive detailed engineering during the feasibility and preliminary engineering studies,” the report reads [Observation No. 16, Book I, p. 178].
Additionally, the audit found that 108 projects valued at P740.6 million had not started construction.
“The extensive delays across various categories of infrastructure projects — ranging from roads and flood control to school buildings and water systems — indicate substantial issues in project management, planning and execution,” the report states [Observation No. 16.4, Book I, pp. 178-179].
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Deterioration in loan-funded facilities
The audit also reported defects in major loan-funded facilities.
The Lumbia Hospital (SN 164-2021), reported as 89% complete, was flagged for early deterioration. Auditors observed incomplete fire exits, rust on steel frames, and water leaks.
The Tablon City Hospital (SN 165-2021) was reported at 47.21% completion, but auditors found no activity at the site.
“This project was delayed, with no construction materials or labor present on-site during inspection,” the audit team noted [Observation No. 12.32, Book I, p. 164].
Similarly, the P399.9-million City Library and School Building (SN 263-2021) remains unfinished. With 15% accomplishment, auditors noted that the contractor appears to have “abandoned or halted construction activities on-site.”
The audit also noted: “A review of all the loan-funded projects showed that they lacked the necessary building permits,” citing non-compliance with the National Building Code.
The P1.6-billion discrepancy
State auditors discovered a P1.643-billion variance between the Property, Plant and Equipment (PPE) balances recorded by the City General Services Office (CGSO) and the City Accounting Department (CAD).
“As a result, questions arise regarding the efficiency and effectiveness of asset management practices. This, in turn, casts doubt on the reliability and accuracy of the PPE accounts, consequently impacting their fair presentation in the financial statements,” the audit reads [Section No. 6, Book I, p. 110].
Physical counts revealed unaccounted assets totaling P8.336 million, including 13 motorcycles, six service vehicles, and eight computers. Conversely, auditors found 48 items in city offices that were not recorded in the books.
The audit also flagged inaccurate financial reporting regarding the Construction-in-Progress (CIP) balance. Completed projects remained classified as CIP, resulting in the misstatement of specific PPE accounts by P1.102 billion.
The report further noted that P141.1 million in unserviceable property — including 128 motor vehicles — remained unliquidated between 2022 and 2024.
Procurement and payables
The audit identified delays in the procurement cycle, which now averages 370 days, exceeding the standard 60-day limit. This has resulted in a P524.1-million backlog of unpaid obligations.
Crucially, auditors flagged the processing of payments without complete documentation. The report noted that the city recognizes payables based on Purchase Orders, often without the required Inspection and Acceptance Reports (IARs).
In the Special Education Fund (SEF), auditors found that 75% of items recognized as payables — totaling P21.78 million — were undelivered at year-end.
Finally, the city failed to maintain key procurement documents required under RA 9184, such as Project Procurement Management Plans (PPMP) and Annual Procurement Plans (APP), for several infrastructure contracts.
(This is the first in a series of reports on the Cagayan de Oro City audit findings, covering the Calendar Year ended December 31, 2024.)
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