EXCLUSIVE: Months ahead of last week’s row over "cash gifts" for local politicians and legislators, the Commission on Audit had admonished the Office of the President, under Gloria Macapagal Arroyo, to hold its officers accountable for sundry questionable expenses in 2006.
The COA said the Palace had diverted donations for calamity areas to spruce up the Malacanang Golf Course, incurred huge amounts of unliquidated cash advances, issued loans without records, and could not explain big discrepancies between the booked and physical inventories of supplies, property and equipment.
Sergio Apostol, chief presidential legal counsel, told GMANews.TV Wednesday night that incurring unliquidated cash advances “is normal" among government agencies.
"That can be settled easily. Perhaps, the receipts and vouchers have not yet been forwarded to COA when it made the audit. But I think the papers are already with the COA," Apostol said.
Apostol declined to comment on other portions of the COA findings. He said he has not received a copy of the report.
The COA, in its official audit of the accounts and operations of the Office of the President from January to December 2006, rendered “a qualified opinion on the fairness of the financial statements" and listed 10 adverse “observations and recommendations."
In particular, the COA audit revealed that Mrs Arroyo’s office:
• Failed to settle cash advances worth P615 million made to officers and employees, local government units and government corporations;
• Granted P269 million in loans out of the President’s Social Fund “without supporting documents and disbursement vouchers;"
• Diverted P8.8 million in donations for calamity areas, including P900,000 to spruce up the Malacanang Golf Course, P3 million for hotel and conference expenses, and P4 million as “donation" to an unnamed foundation;
• “Improperly recorded" P112 million in fund transfers to local government units, government corporations and nongovernmental organizations;
• “Erroneously recorded in the books of the Office of the President" the P48.9 million balance of a trust account under the name “President’s Social Fund-Livelihood Assistance Program" deposited with the Land Bank of the Philippines;
• Failed to reconcile booked and physical inventory office supplies, property, plant and equipment, worth P70 million in all;
• Understated the accumulated depreciation and depreciation expense accounts of property, plant and equipment worth P950 million;
The COA said the audit sought to “ascertain the propriety of the financial transactions and determine the fairness of the presentation of the statements" of the Office of the President that consists of “the OP Proper and the agencies under it."
The 60-page COA report was submitted to Executive Secretary Eduardo Ermita on June 25, 2007. The report was signed by COA Director IV Bato S. Ali Jr., Cluster I – Executive and Oversight director, while the transmittal letter to Ermita was signed by COA Commissioner and officer-in-charge Reynaldo A. Villar.
Lawyer Susan D. Vargas, Malacanang’s deputy executive secretary for administration and finance, and Teresita P. Valdellon, department chief accountant, signed the “Statement of Management’s Responsibility for Financial Statements."
‘Best estimates’
Vargas and Valdellon certified that “the financial statements have been prepared in conformity with generally accepted state accounting principles and reflect amounts that are based on best estimates and informed judgment of management with an appropriate consideration to materiality."
Too, they wrote that, “management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition, and liabilities are recognized."
The OP Proper, COA explained, consists of “the Private Offices, the Presidential Assistant System, the Executive Offices, the General Government Administration Staff, the Internal Administration Staff, the Internal Audit Service Unit, the Locally Funded/Foreign-Assisted Projects, and other Executive Offices."
In addition, “the OP directly supervises 61 other executive offices, agencies, commissions and committees that warrant the special attention of the President."
COA cited that “Article VII of the 1987 Constitution vests the executive power upon the President," who also “exercises control of all the executive departments, bureaus and offices" and “ensures that laws be faithfully executed."
Unliquidated millions
For 2006 and even two years prior, COA noted that the OP had failed to liquidate cash advances made to cash-disbursing officers worth P77 million; cash advances to officers and employees worth P29.5 million, and “other receivables" worth a whopping P508 million.
In its qualified comment, the audit cited that under Section 89 of Presidential Decree 1445, “A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served."
On the other hand, COA Circular 97-002 prescribes deadlines for liquidation of cash advances, and failure to do so “shall constitute a valid cause" for withholding the salary of the accountable officers. COA has proposed that the OP “compel" these officers to settle their accounts within the prescribed period, and refrain from granting additional cash advance to those with unsettled accounts.
Loans sans records
Last year also, COA said that “loans granted under the President’s Social Fund in CY (calendar year) 2003 and January 2004 totaling P269,527,000 were not booked up, thus understating the appropriate Loan Receivable accounts while overstating the Cash in Bank account."
The report explained that “one of the main funding sources of OP is its share in the net earnings of the Philippine Amusement and Gaming Corporation (Pagcor), also called the President’s Social Fund."
Initially, the PSF provided funds to implement the “Isang Bayan, Isang Produkto, Isang Milyon," that Mrs Arroyo eventually institutionalized through Executive Order No. 176 issued in 2002.
Under the program, “to simulate economic activity and growth of small and medium enterprises" Malacanang allotted P1 million loans for a borrower in each town and city, payable to the Land Bank.
The COA determined that loans granted totaling P216 million in 2003 and January 2004 “were not recorded in the books." Just as bad, “reports required from grantees/borrowers pursuant to the MOA (memorandum of agreement) such as accomplishment, financial and terminal reports were not submitted."
Donations diverted
The diversion of donations received for calamity victims by Malacanang was also discerned by COA.
In 2006, COA said the Office of the President received “from various sources" donations totaling P65,413,463.79 or P65 million, for the following purposes:
• Donation for the Southern Leyte landslide, P7.1 million
• Donation for Socio-Economic Projects of the President, P35.6 million
• Donation for Typhoon Milenyo victims, P2.7 million
• Donation for the relief and rehabilitation of affected areas in Albay province, P20 million.
COA’s adverse finding follows: “We noted, however, that out of the actual expenses incurred totaling P64,079,173.40 from the donations, expenses totaling P8,807.621.75 could not be identified with any of the purposes of the donations."
According to COA, Malacanang had reported using the donations thus:
• Burial expenses, P795,000
• Hotel Expenses, P815,380.15
• Maintenance of the Malacanang Golf Course, P900,000
• Summit Conferences/General Assembly, P2,295,241.60
• Donation to Foundation, P4,000,000
These expenses “out of the purposes of the donations are contrary to Section 13 of the General Provisions of the General Appropriations Act of 2005," which stipulates that “donations, whether in cash or kind, shall be deemed automatically appropriated for the purpose specified by the donor."
“We recommend that management strictly use donations for the intended purposes specified by the donors," COA stated.
However, it took note of the explanation given by Malacanang officials that, “some donations have (a) general purpose, so they have wider discretion of what purpose these donations shall be released."
Still, COA stressed that, “the provisions of the law on donations… shall be faithfully observed."
Inventory discrepancies
Yet another qualified comment COA made pertained to discrepancies between physical and book inventories of supplies and equipment in the Office of the President.
The audit report said that under “Construction in progress – Agency Assets," Malacanang booked a balance of P198 million, but “per physical count, it has no balance since such construction of assets was already completed."
Too, the Inventory Committee of the Office of the President “failed to conduct physical count of other inventories worth P13,495,998.07," and failed to file the required semestral reports on the same.
The balance sheet of the inventories reported to COA by Malacanang included:
• Merchandise inventory worth P726,339.39
• Drugs and Medicines Inventory, P264,155.15
• Medical, Dental & Laboratory Supplies Inventory, P152,286.56
• Gasoline, Oil and Lubricants Inventory, P3,511,843.18
• Other Supplies Inventory, P8,788,899.79
• Livestock Inventory, P52,474.00
However, COA determined that:
• “There was no physical count of the Merchandise Inventory and Livestock Inventory since the balances of these were carried in the book s of accounts and non-moving since 2000."
• “Drugs and Medicines Inventory have been immediately issued upon receipt."
• “Gasoline, Oil, and Lubricants Inventory had never been inventoried semi-annually or annually."
• “In the absence of the physical count, the reliability of the balance of inventories are doubtful," COA said.
Dormant accounts
Finally, COA said Malacanang continues to keep in its books, as of December 31, 2006, various dormant accounts totaling P293 million dating from as far back as 1992.
The biggest item under this account pertain to “Other Investments and Marketable Securities" valued at P275.6 million.
“Management reasoned that their pertinent records are no longer available due to the fire that gutted the agency’s Administration Building sometime in August 1995," COA said, “hence the difficulty or the impossibility to retrieve the required papers." – Malou Mangahas, GMANews.TV/GMA News Research
Source: http://www.gmanews.tv/story/64838/COA-Palace-misused-charity-funds-has-unbooked-loans-huge-advances#
The COA said the Palace had diverted donations for calamity areas to spruce up the Malacanang Golf Course, incurred huge amounts of unliquidated cash advances, issued loans without records, and could not explain big discrepancies between the booked and physical inventories of supplies, property and equipment.
Sergio Apostol, chief presidential legal counsel, told GMANews.TV Wednesday night that incurring unliquidated cash advances “is normal" among government agencies.
"That can be settled easily. Perhaps, the receipts and vouchers have not yet been forwarded to COA when it made the audit. But I think the papers are already with the COA," Apostol said.
Apostol declined to comment on other portions of the COA findings. He said he has not received a copy of the report.
The COA, in its official audit of the accounts and operations of the Office of the President from January to December 2006, rendered “a qualified opinion on the fairness of the financial statements" and listed 10 adverse “observations and recommendations."
In particular, the COA audit revealed that Mrs Arroyo’s office:
• Failed to settle cash advances worth P615 million made to officers and employees, local government units and government corporations;
• Granted P269 million in loans out of the President’s Social Fund “without supporting documents and disbursement vouchers;"
• Diverted P8.8 million in donations for calamity areas, including P900,000 to spruce up the Malacanang Golf Course, P3 million for hotel and conference expenses, and P4 million as “donation" to an unnamed foundation;
• “Improperly recorded" P112 million in fund transfers to local government units, government corporations and nongovernmental organizations;
• “Erroneously recorded in the books of the Office of the President" the P48.9 million balance of a trust account under the name “President’s Social Fund-Livelihood Assistance Program" deposited with the Land Bank of the Philippines;
• Failed to reconcile booked and physical inventory office supplies, property, plant and equipment, worth P70 million in all;
• Understated the accumulated depreciation and depreciation expense accounts of property, plant and equipment worth P950 million;
The COA said the audit sought to “ascertain the propriety of the financial transactions and determine the fairness of the presentation of the statements" of the Office of the President that consists of “the OP Proper and the agencies under it."
The 60-page COA report was submitted to Executive Secretary Eduardo Ermita on June 25, 2007. The report was signed by COA Director IV Bato S. Ali Jr., Cluster I – Executive and Oversight director, while the transmittal letter to Ermita was signed by COA Commissioner and officer-in-charge Reynaldo A. Villar.
Lawyer Susan D. Vargas, Malacanang’s deputy executive secretary for administration and finance, and Teresita P. Valdellon, department chief accountant, signed the “Statement of Management’s Responsibility for Financial Statements."
‘Best estimates’
Vargas and Valdellon certified that “the financial statements have been prepared in conformity with generally accepted state accounting principles and reflect amounts that are based on best estimates and informed judgment of management with an appropriate consideration to materiality."
Too, they wrote that, “management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition, and liabilities are recognized."
The OP Proper, COA explained, consists of “the Private Offices, the Presidential Assistant System, the Executive Offices, the General Government Administration Staff, the Internal Administration Staff, the Internal Audit Service Unit, the Locally Funded/Foreign-Assisted Projects, and other Executive Offices."
In addition, “the OP directly supervises 61 other executive offices, agencies, commissions and committees that warrant the special attention of the President."
COA cited that “Article VII of the 1987 Constitution vests the executive power upon the President," who also “exercises control of all the executive departments, bureaus and offices" and “ensures that laws be faithfully executed."
Unliquidated millions
For 2006 and even two years prior, COA noted that the OP had failed to liquidate cash advances made to cash-disbursing officers worth P77 million; cash advances to officers and employees worth P29.5 million, and “other receivables" worth a whopping P508 million.
In its qualified comment, the audit cited that under Section 89 of Presidential Decree 1445, “A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served."
On the other hand, COA Circular 97-002 prescribes deadlines for liquidation of cash advances, and failure to do so “shall constitute a valid cause" for withholding the salary of the accountable officers. COA has proposed that the OP “compel" these officers to settle their accounts within the prescribed period, and refrain from granting additional cash advance to those with unsettled accounts.
Loans sans records
Last year also, COA said that “loans granted under the President’s Social Fund in CY (calendar year) 2003 and January 2004 totaling P269,527,000 were not booked up, thus understating the appropriate Loan Receivable accounts while overstating the Cash in Bank account."
The report explained that “one of the main funding sources of OP is its share in the net earnings of the Philippine Amusement and Gaming Corporation (Pagcor), also called the President’s Social Fund."
Initially, the PSF provided funds to implement the “Isang Bayan, Isang Produkto, Isang Milyon," that Mrs Arroyo eventually institutionalized through Executive Order No. 176 issued in 2002.
Under the program, “to simulate economic activity and growth of small and medium enterprises" Malacanang allotted P1 million loans for a borrower in each town and city, payable to the Land Bank.
The COA determined that loans granted totaling P216 million in 2003 and January 2004 “were not recorded in the books." Just as bad, “reports required from grantees/borrowers pursuant to the MOA (memorandum of agreement) such as accomplishment, financial and terminal reports were not submitted."
Donations diverted
The diversion of donations received for calamity victims by Malacanang was also discerned by COA.
In 2006, COA said the Office of the President received “from various sources" donations totaling P65,413,463.79 or P65 million, for the following purposes:
• Donation for the Southern Leyte landslide, P7.1 million
• Donation for Socio-Economic Projects of the President, P35.6 million
• Donation for Typhoon Milenyo victims, P2.7 million
• Donation for the relief and rehabilitation of affected areas in Albay province, P20 million.
COA’s adverse finding follows: “We noted, however, that out of the actual expenses incurred totaling P64,079,173.40 from the donations, expenses totaling P8,807.621.75 could not be identified with any of the purposes of the donations."
According to COA, Malacanang had reported using the donations thus:
• Burial expenses, P795,000
• Hotel Expenses, P815,380.15
• Maintenance of the Malacanang Golf Course, P900,000
• Summit Conferences/General Assembly, P2,295,241.60
• Donation to Foundation, P4,000,000
These expenses “out of the purposes of the donations are contrary to Section 13 of the General Provisions of the General Appropriations Act of 2005," which stipulates that “donations, whether in cash or kind, shall be deemed automatically appropriated for the purpose specified by the donor."
“We recommend that management strictly use donations for the intended purposes specified by the donors," COA stated.
However, it took note of the explanation given by Malacanang officials that, “some donations have (a) general purpose, so they have wider discretion of what purpose these donations shall be released."
Still, COA stressed that, “the provisions of the law on donations… shall be faithfully observed."
Inventory discrepancies
Yet another qualified comment COA made pertained to discrepancies between physical and book inventories of supplies and equipment in the Office of the President.
The audit report said that under “Construction in progress – Agency Assets," Malacanang booked a balance of P198 million, but “per physical count, it has no balance since such construction of assets was already completed."
Too, the Inventory Committee of the Office of the President “failed to conduct physical count of other inventories worth P13,495,998.07," and failed to file the required semestral reports on the same.
The balance sheet of the inventories reported to COA by Malacanang included:
• Merchandise inventory worth P726,339.39
• Drugs and Medicines Inventory, P264,155.15
• Medical, Dental & Laboratory Supplies Inventory, P152,286.56
• Gasoline, Oil and Lubricants Inventory, P3,511,843.18
• Other Supplies Inventory, P8,788,899.79
• Livestock Inventory, P52,474.00
However, COA determined that:
• “There was no physical count of the Merchandise Inventory and Livestock Inventory since the balances of these were carried in the book s of accounts and non-moving since 2000."
• “Drugs and Medicines Inventory have been immediately issued upon receipt."
• “Gasoline, Oil, and Lubricants Inventory had never been inventoried semi-annually or annually."
• “In the absence of the physical count, the reliability of the balance of inventories are doubtful," COA said.
Dormant accounts
Finally, COA said Malacanang continues to keep in its books, as of December 31, 2006, various dormant accounts totaling P293 million dating from as far back as 1992.
The biggest item under this account pertain to “Other Investments and Marketable Securities" valued at P275.6 million.
“Management reasoned that their pertinent records are no longer available due to the fire that gutted the agency’s Administration Building sometime in August 1995," COA said, “hence the difficulty or the impossibility to retrieve the required papers." – Malou Mangahas, GMANews.TV/GMA News Research
Source: http://www.gmanews.tv/story/64838/COA-Palace-misused-charity-funds-has-unbooked-loans-huge-advances#
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