The Commission on Audit (CoA) has flagged P1.4 billion in unreconciled accounting discrepancies and P684.4 million in unutilized disaster risk reduction and management funds at the Local Water Utilities Administration (LWUA), citing inadequate financial reconciliation and delays in project implementation.

LWUA is the government-owned and -controlled corporation created in 1973 under Presidential Decree No. 198 to provide loans and technical assistance to local water districts serving communities outside Metro Manila, while the CoA is the constitutional audit body that examines how government agencies use public funds.

In its annual report, state auditors found that LWUA's P5.229-billion inter-agency payables account contained a P1.330-billion unreconciled discrepancy within its Due to National Government Agencies-Liability for Special Fund account. The agency's subsidiary ledgers did not match official reports on the status of subsidy funds.

"Due to lack of sufficient details and reconciliation of variances between the SLs and the Report on the Status of Subsidy Fund, we were unable to determine the appropriate adjustments in respect of the balance of the Inter-Agency Payables account as at December 31, 2025 and 2024," the CoA said in its annual report.

Auditors also questioned the reliability of LWUA's P12.378-billion receivables account, which includes P9.777 billion in loans receivable from local water districts and P122.786 million in open account bills. Confirmations with the water districts revealed a P178.817-million discrepancy between the agency's book balances and external confirmations, while internal checks found a P99.262-million gap between its general ledger and subsidiary ledgers. Because lending to water districts is a core LWUA function, such unreconciled variances mean the accuracy of the reported loan balances could not be verified from the agency's own records.

"Due to lack of sufficient details on the analysis and reconciliation of variances between the loan balances per books and confirmation results and general ledger and subsidiary ledgers, we were unable to determine the appropriate adjustments in respect of the balance of the Receivables account as at December 31, 2025 2024," state auditors said.

The audit body likewise flagged delays in LWUA's disaster response projects, which left P684.4 million in funds unspent as of the end of 2025. LWUA received P1.891 billion from the national government between 2014 and 2025 for disaster risk reduction and management projects. Some of the unspent allocations trace back to Typhoon Yolanda (international name Haiyan), which devastated parts of the central Philippines in November 2013 and set off a multiyear rehabilitation effort that funded water restoration projects from 2014 onward.

The CoA attributed the delays to slow disbursements and inadequate project monitoring and supervision by LWUA's engineering department. These resulted in delays of 463 to 4,372 days in restoring potable water supplies to disaster-affected communities.

Auditors recommended that LWUA management initiate the return of long-idle project balances to the Bureau of the Treasury, including P59.323 million allocated for National Housing Authority-Yolanda water projects and P265,559 under the Yolanda Rehabilitation and Recovery Program, which recorded no disbursements.

Under the CoA's standard audit process, LWUA management has the opportunity to respond to the observations, and progress on the recommendations can be tracked in the agency's subsequent annual audit reports.

LWUA ended 2025 with P17.373 billion in assets and P8.775 billion in liabilities, leaving equity at P8.598 billion.

— Pexcel John Bacon

Source: BusinessWorld