COA bares misuse of P1.2 B in Arroyo’s social fund

MANILA, Philippines—More than P1.2 billion from the President’s Social Fund was transferred to various non-government organizations and government agencies in 2010 and irregularly recorded as donations, thus making it difficult to establish accountability for the money, according to the Commission on Audit.

The COA, in its 2010 report on the Office of the President released over the weekend, also noted that of the P1.268 billion, sums totaling P391 million were transferred to several NGOs without disbursement vouchers and supporting documents.

The P391 million was released to the groups in the first half of 2010, when the Arroyo administration was still in power. The recipients included the GMAC Foundation, which received the money for various socio-civic projects for Pampanga and Bicol, and the Bicol Network for Community Organizing and Linkages, which got financial assistance for various economic projects.

The other recipients of money from the P391 million were the Libmanan-Pulantuna Planters Federation, Gawing Tama Movement, Inc., Philippine Bamboo Foundation, Lopez (Quezon) Greater Manila Residents Association, and the Evena Multi-Purpose Cooperative.

The COA had also questioned in 2009 the practice of recording funds transferred from the PSF to government agencies and NGOs as donations.

The audit agency said this was contrary to two COA circulars that prescribed rules and regulations intended to ensure that money transferred to implementing agencies is properly used and accounted for, and to promote transparency and accountability in the use of funds transferred to NGOs.

In its latest report, COA said that P1.268 billion from the PSF was transferred to NGOs and government offices in 2010, and these were recorded as donations. A total of P1.336 billion was sourced from the PSF in that year, but P68.294 million was for financial assistance to soldiers wounded or killed in action.

“Accountability over the funds transferred/released to various government agencies/offices and to non-government/peoples’ organizations (NGO/PO) totaling P1.268 billion could not be established because these were recorded as ‘Donations,’ contrary to the provisions of [COA circulars],” the COA said.

Because of this, the Office of the President was freed from the task of requiring the agencies to submit reports on how they used the money, it said.

“Moreover, the recording of fund transfers to the Donation expense account is irregular and contrary to the above-mentioned COA circulars because it released the management, particularly the Source Agency, from the responsibility of requiring the Implementing Agency for the submission of the Reports of Checks Issued and Reports of Disbursements as required,” it said.

The COA also noted that in lieu of the reports of disbursements and checks issued, the Office of Special Projects submits financial and audit reports signed by its audit team.

But it still said that the non-submission of the reports of disbursements and checks issued “hinders the oversight function, duties and responsibilities of the auditor of the [source agency] and [implementing agency].”

The recording of the fund transfers as donations also exempted the implementing agencies, such as the government offices and local government units, from their duties and responsibilities of ensuring that the accounting and reporting of the fund use was properly done, and that the implementation of the project was  within the approved program, it added.

The audit agency recommended that the Office of the President require the chief accountant to comply with COA circulars and correct the records. It should ensure that transactions concerning fund transfers to other agencies should not be treated as donations so that the accountability of the implementing agency could be established.

In response, the Office of the President told the COA that it was reviewing the appropriate account to be used for the funds transferred to various national and local government agencies as well as NGOs. The Office of the President also sent confirmation letters to the recipients of the funds to support the adjustments to be made.