FOR repeatedly ignoring recommendations from government auditors to move its money from a private bank to an authorized government depository bank (AGDB), the Angat Water District is now facing the potential loss of P2.45 million after its bank of choice was ordered closed by the Bangko Sentral ng Pilipinas (BSP).
In its 2022 report released last February 23, the Commission on Audit said the chances of Angat WD recovering its deposits totaling P2,545,999 from Farmers Bank is now remote after the bank ceased operations on May 12, 2022.
Auditors said the Monetary Board prohibited the bank from continuing to do business due to insolvency. It was placed under receivership and eventual liquidation of its remaining assets.
According to the audit team, Angat WD had bank accounts with state-owned banks, including Land bank of the Philippines branches in Sta. Maria and Baliwag in Bulacan and Philippine Veterans Bank, also in Baliwag.
However, it still maintained bank deposits with Farmers Bank and Country Bank.
Until the shutdown of Farmers Bank in 2022, the management of Angat WD had been repeatedly cautioned to move its deposits to AGDBs for greater protection.
“The audit observations regarding maintenance of bank accounts with the private banks had been continuously cited in the Financial Audit Reports since CY 2014, however, Management still opted not to implement the audit recommendations,” the COA said.
The water district reasoned that it felt its money is more secure with private banks since they have branches within 200 meters (Farmers Bank) and six meters (Country Bank) from its offices.
It added that keeping money in the private banks was convenient in terms of disbursements. It said any fund in excess of three month’s requirement are transferred to AGDBs.
The last exit conference between Angat WD and the team of auditors was held on April 27, 2022 where water district officials were again reminded that keeping money in private banks without clearance from the Department of Finance was a violation of DOF Department Circular No. 01-2017.
“Management was reminded that maintenance of depository accounts with private banks without approval from the DOF was in violation of Section 5.5.1 of the aforementioned DOF Department Circular and their funds were exposed to possible loss in case of bankruptcy,” the audit team said.
Just 15 days after the exit conference, the BSP ordered Farmers Bank to cease operations.
The Angat WD filed a claim with the Philippine Deposit Insurance Corporation (PDIC) to recover its deposits totaling P2,954,999 but only P500,000 was covered by insurance.
“The remaining unclaimed deposits totaling ₱2,454,999 may be considered losses and the possibility to recover the funds is slim or remote due to the sudden closure of the Farmers’ Bank while the insurance coverage with the PDIC is limited to ₱500,000,” the COA said.
Responding to the audit findings, the Angat WD general manager said a request has been filed with the DOF to approve the maintenance of funds with Country Bank but if the request is denied, it will close the existing account and transfer all funds to an AGDB.
