Confidential and intelligence funds from a taxpayer’s perspective

It seems like everybody who’s anybody has been so awfully preoccupied with the issue of confidential and intelligence funds, and rightfully so, as we the people need to know and be confident about how taxpayers’ money is spent. In the midst of this crisis and the fast approaching holiday season, some people who still seem quite confused, not to mention detached from politics, have now become eager to understand exactly why such funds are needed and why they are so important, especially for national security purposes.

Simply put, confidential funds are more often than not used for special reasons that cannot be publicly disclosed that would otherwise compromise its purpose – an example of which would be on matters that surround national security concerns that provide funding for intelligence agencies and counter terrorism as well as emergency relief efforts and undercover operations that could eventually require arrests of high-profile targets.

A friend of mine, Mon Abrea, known as the “Tax Whiz,” explained how such funds work in the most efficient and simplest way possible for people who seem to be fully invested on the issue. In his column, Mon explained that signified by a resolution in 2015, the Commission on Audit and the Department of Budget and Management, all allocations of confidential and intelligence funds must be supported by a physical and financial plan, detailing the proposed amounts for each program, activity or project. Once such funds are allocated, these go through a very meticulous reporting process to the COA as well as key legislative leaders.

According to Mon, while any agency can make a request for confidential funds, they are customarily allocated to agencies such as the Department of National Defense, the Armed Forces of the Philippines and the Philippine National Police who have within their mandate the capability to calibrate such disbursements. Mon also explained that agencies such as the Department of Education and the Office of the Vice President seldom require such funds, as their government mandates do not have enough justification for their spending.

Under the general guidelines of the COA, national government agencies are provided a budget for confidential and intelligence funds under the General Appropriations Act (GAA) or the annual expenditure program of the government. Local government units may also be given confidential funds if there is a specific provision in their annual budget for programs on peace and order. In the 2015 COA guidelines, a list of specific programs or activities that require CIFs is provided, wherein such activities are limited to those concerning peace and order as well as national security and, unless authorized by law, the COA guidelines specifically state that funds may not be used to pay for salaries and allowances of employees and officials unless authorized by law.

Furthermore, the document also states that it prohibits the allocation of CIFs for the construction or acquisition of buildings and housing structures, and for representation, consultation fees or entertainment expenses. As stated, all CIF expenses must be supported by a physical and financial plan where the proposed amount for each program, project and activity is determined.

On the other hand, CIF for national government agencies must be provided among the items to be released upon approval of the GAA, wherein its utilization is subject to the approval of the agency head or department secretary. As for intelligence funds, release of such needs prior approval of the President.

Is there a difference between confidential and intelligence funds? There certainly is. Confidential funds are the lump-sum amounts allotted in the GAA for national government agencies, in appropriation ordinances for that of the local government units and in corporate-cooperating budgets (COBs) for government-owned and -controlled corporations (GOCCs) to cover confidential expenses.

Alternatively, intelligence funds are lump-sum allocations specifically assigned or focused on intelligence expenses utilized by authorized intelligence practitioners, such as law enforcement agencies. Even more significantly, intelligence funds have a direct impact on national security.

How then are confidential funds audited from a taxpayer’s perspective? As explained by the “Tax Whiz” Mon Abrea, the auditing of confidential fund allocations is governed by provisions in the GAA and the Administrative Code, which mandate the Commission on Audit (COA) to establish specific accounting and auditing rules for government funds. This is why agencies must submit accomplishment reports explaining in detail their utilization, supported by documentary evidence and certifications from authorized officials. It is the Commission on Audit’s Intelligence and Confidential Fund Audit Unit that reviews these reports and holds accountable any parties found guilty of discrepancies or misuse.