Foreign chambers warn vs government audit of private firms

The government through the Commission on Audit (COA) should not examine the books of private companies like the oil firms because it will set a bad precedent and might even discourage potential foreign investors, the Joint Foreign Chambers (JFC) said.

In a letter to Executive Secretary Eduardo Ermita, JFC said the proposed COA audit on oil firms is not part of the mandate of the said government agency.

“The oil companies and we, the Joint Foreign Chambers, are extremely wary, however, over the proposed COA audit. We do not believe this is part of COA’s mandate under Section 2, Article IX-D of the Philippine Constitution,” the letter stated.

According to the foreign businessmen, any attempt by government, through the COA, to audit private business would set a negative precedent.

“This initiative by the government to expand the scope of the COA into private business could seriously affect foreign investor sentiments towards setting up shop in the Philippines, harming the efforts the government is already making to attract investment to the country,” the letter further said.

The JFC cleared that auditing oil firms is acceptable as long as it is done by private institutions. In May, private firms conducted an impartial and objective review of the oil companies pricing structure among others.

Oil companies are also subjected to very stringent reportorial requirements that include the submission of industry and company specific information to the Securities and Exchange Commission (SEC), the Bureau of Customs and the Department of Energy (DOE) on a monthly and quarterly basis.

“We reiterate our position that private international oil companies do not object to being audited, but we are concerned with the government expanding the scope of the COA to include privately-held business concerns. Such actions would clearly harm the perceptions of the Philippines as an investment destination,” the letter said.

Earlier, local industries warned the government that auditing oil firms could send the wrong signal to potential investors that the state is intervening in deregulated industries.

Jesus L. Arranza, president of the Federation of Philippine Industries (FPI) urged the COA to reconsider its plan to check the books of the oil companies.

 “The oil industry is already deregulated so having the oil players audited by the COA could be construed as a state intervention,” he said.

Instead, Arranza said if the government must look into the financial books of the oil firms it can hire an independent auditing firm.

 “The same result can be achieved by asking independent auditors to conduct the audit, with the Departments of Energy, Justice and other concerned government agencies sitting as observers,” Arranza said.

He explained that looking into the books of oil firms may be justified because this would safeguard the welfare of Filipino consumers against possible abuses. However, Arranza said COA is not the appropriate party to conduct the audit.