OFFICIALS of the Philippine Claims and Compensation Committee Secretariat (PCCCS) will have something to explain regarding the report released by the Commission on Audit (COA) late last year. Said report stipulated that a total of US$1,200,779.19 was earned, as income, from the interest of the compensation money remitted by the United Nations Compensation Commission (UNCC) within a four-year period. Out of this interest earning only US$239,565.24 was reported spent for operational expenses.
According to Mr. Alecks Pabico of the Philippine Center for Investigative Journalism (PCIJ), the COA report was submitted to Vice President and Department of Foreign Affairs (DFA) Secretary Teofisto Guingona in October 2001. It is not clear, as of this writing, if COA findings were verified and acted upon as per recommendation of the government audit team.
The special audit report, of which copy was obtained by PCIJ and generously shared by Mr. Pabico to this writer, covered transactions and operations of the PCCCS from March 1997 to March 31, 2000. March 2000 was the time that the scam involving then Undersecretary Benjamin Domingo was exposed for the first time by leading journalists based in Manila.
For clarity and information of all claimants and followers of this series on Gulf War compensation payments to Filipino victims, a summary of the COA report is hereunder presented:
On accounting and reporting of funds
COA could not verify the financial transactions as well as balances of accountability of the funds received from UNCC because of lack of record. The PCCCS did not prepare and maintain financial records! Proofs of financial transactions presented by the PCCCS officials to the audit team comprised merely of bank statements and improvised claim vouchers with supporting documents for identification of claimants. There were no books of accounts to record the receipt and disbursement of funds!
Based on bank statements and the list of payees from May 1997 to March 31, 2000, total remittances from the UNCC amounted to US$126,673,018.88. Disbursements from the fund totaled only to US$39,316,146.95.
The most interesting part of the summary report provided by Mr. Pabico follows:
“Total interest income earned was US$1,200,779.19, and only US$239,565.24 was used to pay for operating expenses of the PCCCS.”
“However, veracity of the balances could not be made in the absence of financial records and supporting documents. A discrepancy in the balance of interest earned as reflected in the bank records was discovered, amounting to US$63,929.74 as of March 16, 2000. The PCCCS says the difference represents amounts inadvertently not considered by the audit team. But the auditors counter that it was a result of the unavailability of the PCCCS’ disbursement records during the audit.”
Accordingly, PCCCS officials submitted a well-prepared schedule of payments but the amounts of disbursements could not be verified by the audit team as “there were no underlying documents to prove their validity.”
On internal control
There was obvious disarray within the PCCCS as far as internal control is concerned. COA noted that the system of recording of funds received from the UNCC and the subsequent disbursements to claimants and the service charges against interest earned “needs improvement.” Furthermore, it concluded that “the organizational structure of the PCCC Secretariat does not provide for an adequate check and balance in the functions of custody and record-keeping or accounting.”
Disbursements pertaining to PCCCS’ operations were “not covered by duly approved vouchers and other supporting documents, such as approved requisition and issue voucher (RIV), purchase order (PO), inspection and acceptance reports, thus making it difficult to determine the legality, propriety and validity of payments.” Requests for operating expenses and authorization, the COA discovered, were all done verbally.
The report noted that “all other disbursements for the operating expenses were paid in cash by the designated special disbursing officer regardless of amount upon presentation of official receipts, invoices, payroll and acknowledgement receipts.”
Payments of claimants’ money, as earlier mentioned, were supported by claim vouchers and the required supporting documents for identification purposes.
The audit team also discovered that compensation payments, in the form of a cheque, was signed only by Domingo. No countersignature was found anywhere in the copies of cheques given out to payees. Domingo also approved underlying documents such as notice of approval of claim, checklist and transmittal letter to the bank.
It is very interesting to note that at the time of the report “cash advances amounting to P96,044.60 granted to various officials (including former Undersecretary Benjamin Domingo) have not yet been liquidated.”
Disbursements made by PCCCS from December 24, 1999 to March 14, 2000, as reviewed by COA, showed “that purchases of various equipment amounting to P821,305.00 did not go through the regular and proper procurement process such as bidding of canvass from at least three bona fide dealers.”
It was also discovered the absence of documents such as requisition and issue vouchers and purchase orders to show that the equipment were acquired at the most advantageous prices.
The COA report discovered “double-payment in the granting of benefits to the PCCC Secretariat personnel. Employees from the Department of Foreign Affairs (DFA), Overseas Workers Welfare Administration (OWWA), Department of Justice (DOJ), Central Bank of the Philippines (CBP) and PIA assigned to the PCCCS office received 13th month pay, clothing allowance, cash gift, performance incentive pay even when they already received the same from their mother agencies.
COA, at the end of the report, has recommended a follow-up audit of the missing financial statements.
Author: Freda Editha O. Contreras
Published on: June 30, 2002