KAWIT, Cavite — State auditors have flagged the Municipality of Kawit, under the administration of Mayor Angelo Aguinaldo, for incurring a P61.4 million cash deficit at the end of 2018, reflecting massive corruption and violating government regulations on local fund management and potentially affecting its ability to meet financial obligations.

In a report released by the Commission on Audit (COA), the municipality’s total cash position of P75.4 million was insufficient to cover its current liabilities of P106.6 million and the unexpended balance of P30.2 million from its 20% Development Fund.

The deficit violates Section 337 of Republic Act No. 7160 and Section 4(3) of Presidential Decree No. 1445, which prohibit cash overdrafts in local funds at the fiscal year’s end, auditors said.

According to the report, the municipality’s financial strain due to graft and corruption has compromised its ability to pay inter-agency payables and provide adequate cash backing for trust liabilities.

Among the unpaid obligations were remittances to government agencies including the Bureau of Internal Revenue (P3.3 million), GSIS (P1.2 million), and PhilHealth (P86,497).

The audit team noted that the municipality had been using withheld funds due to other government agencies and trust funds for other purposes, a practice that contradicts sound financial management principles.

State auditors attributed the cash deficit partly to the municipality’s failure to meet their target collections in recent years, though specific collection figures were not detailed in the report.

Under RA 7160, any overdraft incurred at year-end must be covered by collections from the immediate succeeding fiscal year.

The law also stipulates that disbursements from local funds should not exceed 50% of the uncollected estimated revenue for that fiscal year.