State auditor: Confidential funds transfer breaks accountability chain

MANILA – Transferring confidential funds from a special disbursing officer (SDO) to another person breaks the chain of accountability and exposes public money to possible misuse, a Commission on Audit (COA) auditor told the Senate impeachment court Wednesday.

COA Intelligence and Confidential Funds Audit Office state auditor Xylene Mae del Campo made the clarification during questioning by Senate President Win Gatchalian on the handling of confidential funds of the Office of the Vice President (OVP) and the Department of Education (DepEd).

“Nung itinansfer po niya ito sa ibang tao, naputol na po yung chain of accountability (When it was transferred to another person, the chain of accountability was broken),” Del Campo said.

She explained that the SDO is directly responsible for disbursing a cash advance and should have personal knowledge that the money was actually spent for confidential activities.

Once the funds are handed to another person, Del Campo said, the SDO loses such personal knowledge, weakening the certification that the expenses were necessary, legal and used for confidential operations.

“Pwede po itong magamit sa hindi dapat paggamitan na hindi for confidential expenses. May risk po na ganun (It could be used for purposes other than confidential expenses. There is that risk),” she said.

Gatchalian cited the OVP’s PHP375-million confidential fund for 2023, which Del Campo said was disallowed after the money handled by special disbursing officer Gina Acosta was transferred to Col. Raymund Dante Lachica.

He then raised what he described as similar circumstances involving the OVP’s fourth-quarter confidential fund in 2022 and the DepEd confidential funds, where cash advances were also allegedly passed on to individuals other than the designated SDOs.

Asked whether applying the same audit rationale could result in the disallowance of those transactions, Del Campo agreed.

She also affirmed Gatchalian’s assertion that the entire PHP612.5 million in OVP and DepEd confidential funds could face disallowance if COA establishes the same circumstances in the transactions under review.

Del Campo said COA is still studying whether previously settled DepEd accounts should be reopened, a process that would require the authority of the COA chairperson and a review of voluminous records.

She stressed that improperly disbursed confidential funds may ultimately have to be returned to the government.

“Dahil nga po naging mali yung paggasta nito, kailangan pong ibalik ito sa pondo ng bayan (Because the funds were improperly spent, they have to be returned to the public coffers),” Del Campo said.

Fraud audit eyed on OVP, DepEd confidential funds

Meanwhile, COA is studying whether to conduct a fraud audit of confidential fund transactions of the OVP and DepEd.

Del Campo said the possibility remains under consideration after Senator-judge Bam Aquino asked why unusual aliases appearing in acknowledgment receipts had not triggered a fraud investigation.

“Wala pa po. Pinag-aaralan pa po with the chairperson (None yet. It is still being studied with the chairperson),” Del Campo said when asked whether COA had initiated an investigation for possible fraud.

Asked if a fraud audit could still be undertaken, Del Campo replied: “Opo. Gaya nga po ng sinasabi ko, pinag-aaralan pa lang po at kung kinakailangan po, pwede pong mag-fraud audit (Yes. As I said, it is still being studied and, if necessary, a fraud audit may be conducted).”

She explained that COA’s original examination of the confidential fund transactions was a compliance audit, which focused on whether expenditures conformed with the applicable joint circular rather than verifying the identities of persons listed in the acknowledgment receipts.

Aquino raised the issue after pointing to unusual names appearing in confidential fund records, including “Piattos,” “Bacon,” “Heart” and “Keso,” and asked whether these should have been considered possible red flags.

Del Campo said auditors initially presumed regularity because the Special Disbursing Officer had certified under oath that the funds were used for confidential operations and for necessary and legal purposes.

She stressed, however, that each acknowledgment receipt should correspond to an actual person and the activity stated in the supporting document must have actually been carried out.

While the joint circular is silent on the use of aliases, Del Campo said the more important requirement is that confidential funds must have gone to real recipients and been spent for legitimate confidential expenses. (PNA)

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