i Report Online | Arroyo Fails COA Audit: Fairness of Presidency's Books 'Doubtful'

31 MAY 2008

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ALSO IN THIS MONTH'S FEATURES

HIMIG PINOY

MAD OVER MONEY

2007 FEATURES

PUBLIC EYE

CROSSBORDER

2006 FEATURES

by MALOU MANGAHAS

UNLIQUIDATED CASH advances, “loans” without records, donations diverted to uses not prescribed by donors, understated expenses, and overstated accounts, in the hundreds of millions of pesos, all sourced from taxpayers' money.

SEAL of the President of the Philippines

These irregular transactions in clear breach of government accounting and auditing rules mark financial transactions in the Office of the President (OP) under Gloria Macapagal Arroyo in 2007, according to Commission on Audit (COA) report, a copy of which was obtained by the Philippine Center for Investigative Journalism (PCIJ).

The report on the presidency for 2007 contained 11 qualified comments and observations on these erroneous entries — mostly the same errors COA had noted in its 2006 audit of the same office. COA also pointed out that of the 11 audit recommendations it made in the 2006 audit, only four were fully implemented, three partially implemented, and four not implemented at all by Malacañang.

Thus, for the second year in a row, COA rendered “a qualified opinion on the fairness of the presentation of the financial statements of the OP.”

The OP Proper consists of “the Private offices, the Presidential Assistant System, the Executive Offices, the General Government Administration Staff, the Internal Audit Service Unit, the Locally Funded/Foreign Assisted Projects, and the Other Executive Offices.” The OP also “directly supervises 58 other executive offices, agencies, commissions, and committees that warrant the special attention of the President.”

The OP kitty is obviously substantial. In 2007, the OP received total cash inflows of P3.38 billion, or 13 percent more than the P2.99 billion it got in 2006. Of the 2007 figure, P2.31 billion came from notices of cash allocation from the Department of Budget and Management. The OP collected another P1.06 billion as its share in the net earnings of the Philippine Amusement and Gaming Corporation (Pagcor) and the Philippine Charity Sweepstakes Office (PCSO).

The OP likewise raised service income of P9.3 million, interest income of P4.05 million, and miscellaneous income of P3.3 million.

COA said that the OP’s total cash outflows reported in 2007 amounted to P2.67 billion, or 13 percent more than the P2.36 billion in 2006.

NON-EMPLOYEES GOT MONEY

Where those monies went can be gleaned from the COA audit — somewhat. In its latest audit of the presidency signed by COA Director IV Bato S. Ali Jr., the agency said that as of December 31, 2007, Arroyo's Malacañang had:

Failed to liquidate a total of P632.9 million of cash advances and receivables from officers, employees and other persons, on account of foreign and domestic travels that the president made, typically with a large retinue of political deputies and allies. Of the total, P594 million represented “cash advances granted to persons who are not employees of the OP.”

Diverted “donations” totaling P37.3 million to expenses “outside of intended purposes,” contrary to provisions of the General Appropriations Act of 2007.

Erroneously remitted and deposited collections on income from OP Bus Service Fares (P1.86 million collected from Malacañang employees) and entrance fees for the Presidential Museum (P1.74 million) in a Special Account in the Bureau of the Treasury (Btr), and not in the unappropriated surplus of the General Fund.

Granted “loans” from the President’s Social Fund (PSF) using money from Pagcor in CY 2003 and January 2004 totaling P269.5 million without complete records.

Erroneously classified collections and disbursements on electricity and water expenses of other agencies and government-owned and -controlled corporations in the books of accounts, resulting in the understatement of Other Payables account by P4.1 million, and overstatement of the Due to Other NGAs and Due to GOCCs accounts by P4.1 million and P21,422.23, respectively. (NGAs are national government agencies and GOCCs are government-owned and -controlled corporations.)

Failed to reconcile physical count of office supplies, as well as of property and plant equipment, with balances per books, resulting in “the overstatement/understatement of various supplies” and “casting doubt on their reliability.”

Failed to provide property, plant and equipment worth a total of P914.8 million with depreciation, “thus understating both the accumulated depreciation and depreciation expense accounts.”

Enrolled balances of P186.7 million as “Due to Other NGAs” and P42.07 million as “Due to Other GOCCs” accounts that remain “doubtful” because of “unreconciled beginning balance” of P181.9 million, and P42.05 million, respectively.

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