COA calls out Coast Guard for billions worth of messy finances
MANILA, Philippines – The Philippine Coast Guard (PCG) proudly announced that it acquired its largest and most modern ship this week, but the agency has yet to fix its messy finances as state auditors again flagged it for inaccuracies amounting to billions of pesos in its 2018 financial records.
Topping the the Commission on Audit (COA) 2018 report on the PCG are "aggregate misstatements" worth P4.1 billion, or 31.6% of its total assets for 2018.
"Due to the significant impact of the misstatements including the deficiencies noted that affected the reliability of the reported balances of the agency’s various accounts, the financial statements did not fairly present the financial position, financial performance, and cash flows of the Agency," said COA in the audit report.
In COA's breakdown, PCG failed to faithfully record billions worth of supply and equipment deliveries, affecting the accuracy of its records and even the existence and completeness of the deliveries.
In general, COA noted "deficiencies in accounting and property controls."
For example, COA noted that P748.25 million worth of supplies and equipment was not "recorded by the Accounting Service Office (ASO) since they were not provided copies of delivery receipts and inspection and Acceptance Reports by the Supply Administration Office (SAO)."
State auditors found a discrepancy of P392.532 million in PCG's inventories due to "improper recording of various receipts and issuances."
They also found that in PCG's P5.6 billion-purchase of 10 watercrafts, it failed to record the 10th watercraft worth P454 million "thus, understating the Watercrafts account and Subsidy from Other National Government Agencies, both by the same amount."
Auditors also found unrecorded equipment such as P26.67 million worth of motor vehicles, an P18-million aluminum workboat, and 575 lighthouses.
COA said that when auditors tracked down the workboat, they found it to be "dilapidated, damaged, and unrecognizable."
"And we were informed that this was never utilized," the auditors said.
COA also noted that although the PCG obligated 99.39% of its P17-billion budget for 2018, it only disbursed P13 billion or 76.75%. (READ: Auditors flag P3.6B in Philippine Coast Guard transactions)
Obligated means the amount that the PCG committed for the projects, while disbursement refers to the amount the agency actually spent.
COA said the lower level of disbursement was due to "delayed project accomplishments or delivery of procured items and slow processing of payments" which affected "the timely and efficient delivery of benefits that could be derived therefrom."
Problems with cash advances
In 2017, PCG was among only 5 agencies that were flagged for fake transactions. Such transactions involve liquidation of cash advances which were disowned by suppliers or contractors. (READ: Corruption Red Flags: Fake transactions, doubtful accounts government spending)
The 2017 fake receipts involved P818 million worth of cash advances for Rear Admiral Leopoldo Larroya.
COA said that Laroya had explained that he was "of the impression that all the liquidations documents that reached his office have no irregularity as his complex role as District Commander limits him from scrutinizing all the official receipts."
COA, in its status of past years' recommendations, did not explicitly say how the issue of fake receipts were solved but simply said it found the "explanation/justification validated and meritorous."
COA said the PCG has assigned additional personnel in reviewing supporting documents to avoid similar problems.
Unlike in past years, PCG did not have problems of fake receipts in 2018, but COA still flagged it for excessive and unliquidated cash advances that were deemed excessive and unliquidated.
Petty cash funds (PCF) ranging from P45,000 to P500,000 and which were given to officers assigned in the headquarters and the National Capital Region (NCR) were "found to be excessive based on the average monthly incurrence of operational and administrative petty expenses."
"The excessive grant of PCF per custodian/Accountable Officer (AO) could result in high risk of probability of misuse/misappropriation of the unused cash in the hands of the AOs," said COA.
Cash advances worth P6.2 million were also not liquidated.
PCG had committed that "it is now strictly monitoring the liquidation of the cash advances and performs verification of money accountability before the issuance/approval of clearances."
On top of that, P12.45 million worth of various expenditures were not properly documented.
"Review of the Disbursement Vouchers and Report of Disbursements on liquidations of cash advances pertaining to various transactions during the year disclosed irregular expenses and other disbursements which were not supported with complete documentation as a result of the Agency’s non-compliance with relevant laws, rules and regulations," said COA.
Auditors have demanded an immediate refund.
PCG's messy finances have resulted in various suspensions and disallowances that by December 31, 2018, have reached more than P59 million. PCG is appealing most of the disallowances.
COA warned PCG: "We recommended that Management enforce the settlement of the amounts disallowed from persons responsible/liable and submit the required documents for the suspended transactions to prevent the same from maturing into disallowance."
Past anomalies have subjected top level officials of PCG to graft charges; some of them were even suspended by the Office of the Ombudsman last year. (READ: Duterte again promotes PH Coast Guard officers facing graft raps) – Rappler.com