The Commission on Audit (COA) has released a report on the Local Government Unit (LGU) of Kawit, Cavite, revealing a significant cash deficit for the fiscal year ending December 31, 2021.

According to the report, the available cash of the Municipality, amounting to ₱26,126,921.14 for the General Fund and ₱16,217,157.96 for the Trust Fund, was insufficient to cover current liabilities and the continuing appropriations under the 20 per cent Development Fund.

The total deficit amounted to ₱79,482,770.19.

The report highlighted that the cash deficit was contrary to Section 337 of RA No 7160, otherwise known as the Local Government Code. This section states that total disbursements from any local fund shall not exceed fifty percent (50%) of the uncollected estimated revenue accruing to such local fund in addition to actual collections. Furthermore, it prohibits any cash overdraft in any local fund at the end of the fiscal year.

The COA Report also pointed out that any overdraft incurred at the end of the year in any local fund shall be covered by the first collections of the immediately succeeding fiscal year accruing to such local fund, as per the provisions of the Local Government Code.

The COA report also referred to Section 316 of RA No 7160, which mandates the creation of a finance committee in every province, city, and municipality. This committee is composed of the chief planning and development officer, budget officer, and treasurer, and is tasked with determining the income reasonably projected to be collectible for the ensuing fiscal year, recommending appropriate tax and other revenue measures and borrowings to support the budget, and recommending to the chief executive the level of annual expenditures and ceilings for spending on economic, social, and general services based on approved development plans.

The financial position of the municipality as of December 31, 2021, showed a cash deficit/overdraft in the amount of ₱76,001,909.45 and ₱3,480,860.74, for the General Fund and Trust Fund, respectively, COA said.

The cash and cash equivalent were insufficient to cover current liabilities and the continuing appropriations under the 20 per cent Development Fund for CY 2021, COA noted.

The main reason why the municipality incurred a cash deficit was its inability to achieve its target revenue from local sources in CY 2021. The Statement of Comparison of Budget and Actual Amounts (SCBAA) showed that the Municipality was not able to realize the projected revenue from tax and non-tax revenues for CY 2021, according to COA.