DOF hit for low fund utilization, P5-M unauthorized honoraria

MANILA, Philippines — The Commission on Audit has told the Department of Finance to be “more realistic” with its budget proposal as the agency has been posting a low fund utilization rate in the last three years.

In an annual audit report posted on its website on July 6, the audit body said the DOF failed to use its funds amounting P262.176 million, P435.830 million, and P442.204 million for 2015, 2016, and 2017, respectively, or a total of P1.14 billion.

The COA noted that of the P1.061 billion allotment that the DOF received in 2015, only 75.3 percent or P799.564 million was obligated; while of the P1.164 billion allotment for 2016, only 62.5 percent or P729.085 was obligated. For 2017, the COA said the DOF had P2.135 billion allotment but only 79.2 percent or P1.692 billion was obligated.

“Despite the low utilization rate of the allotments in Calendar Year 2015, the agency’s budget increased by 8.9 per cent in CY 2016 and 68.3 per cent in CY 2017,” the COA noted.

The COA attributed the low fund utilization to the “shift of plan by the new DOF management; slow procurement process; and insufficient performance indicators” for its programs, projects and activities or PPAs.

The COA casted doubts on the DOF's quarterly accomplishment reports, in which it declared that it exceeded its targets for 2015, 2016 and 2017 for various PPAs notwithstanding the low fund utilization rates.

“Review of the physical accomplishment report indicates that the identified performance indicators are inadequate. To point out, there are no indicators pertaining to one of its most important mandates, that of management of all public sector debt, domestic or foreign,” the COA said.

Furthermore, the COA said there was also a total of P56.092 million in unused “special purpose funds” and collections from sale of bid documents which remains in the DOF's three bank accounts, instead of reverting it back to the Bureau of Treasury in accordance with the 2017 General Appropriations Act and Executive Order (EO) 292, otherwise known as the Administrative Code of 1987.

“The significant unexpended fund balances may also suggest that the budgets provided to DOF were more than its absorptive capacity...We recommended that [DOF] Management require the Budget Division and all the offices concerned to prepare a more realistic budget proposal based on well-studied/planned PPAs,” the COA said.

Unauthorized honoraria

Meanwhile, in the same audit report, the COA flagged the P5.119 million honoraria that the DOF granted in 2016 and 2017 to its officials and employees who were part of the Technical Working Committees that have undertaken Quality Management System (QMS) and Information Security Management System (ISMS) activities which eventually led to the DOF's certification by the International Organization for Standardization (ISO).

The COA pointed out that under EO No. 605 issued in 2007, all government agencies are directed to adopt a quality management system for ISO certification.

Thus, the COA said, “the activities of the DOF related to QMS and ISMS are considered regular in nature, and should not entitle the employees concerned to payment of honoraria.”

Furthermore, the audit body said there was also no appropriations provided under the 2016 and 2017 GAAs for such honoraria, hence, the payment was “without legal basis”.

“We recommended that Management stop the payment of honoraria to its employees for undertakings that are considered regular activities of the agency; and ensure that all payments made are covered with the appropriations law or specific statutory authority,” the COA said. — Elizabeth Marcelo