Retention money refunded without substitute guaranty bond
National Housing Authority · 2023
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What Happened?
Category: Financial ManagementIssue: Non-complianceNHA gave back money that was being held as a guarantee to developers, but they did not require the developers to provide a new guarantee. Also, the developers did not provide warranties for the houses they built. This means if something goes wrong, NHA has no protection.
Why It Matters
Recommended Actions
- Submit the Individual and Certificate of Inspection and Acceptance Report and require the developers to remedy any defects noted before the release of the remaining balance of the retention money.
Original Audit Finding Excerpt
"Partial refund of retention money (RM) amounting to P174.588 million of nine projects were released to the developers without posting substitute guaranty bond, contrary to Sections 9.2 (ii) of the TOR for AFP/PNP Housing Program. Likewise, the surety/guarantee bond or warranty for all completed housing units covered by a Deed of Conveyance for a period of one year prior to release of payment were not also provided by the Developers contrary to Section 11.2 of the TOR. Thus, the assurance that the Developer will perform its obligations under those warranties, is not guaranteed."