Sunday, August 1, 2010

COA updates the Diliman Diary's readers about its 2009 audits of interlocking directorates between the U.P. System and U.P. Foundations

By Chanda Shahani

The Commission on Audit's (COA) Supervising Auditor of the University of the Philippines (U.P.) System, Ms. Sofia C. Gemora, has written the readers of the Diliman Diary, through this writer, of the progress being made on our letter request dated February 1, 2010 asking that the U.P. System's financial transactions between the University of the Philippines Foundation, Inc. (UPFI) and the U.P. Business Research Foundation be subjected to audit for the Consolidated Audited Annual Report (CAAR) of COA for 2009.

Our various letter requests to COA, were substantially more detailed than the June 20, 2010 article in the Diliman Diary (“Interlocking Directorates between the University of the Philippines and U.P.-based foundations present a compelling case of for intensifying and further scrutinizing financial audits of these foundations, says COA. The Diliman Diary digs further into the details and shows why.”
but both the letter requests and the article essentially made the same point that the lack of an actual audit by COA of the financial transactions between the U.P. System and UPFI and UPBRF by and of itself constitutes an anomaly of the process by any reasonable standard of accepted financial accounting and control measures.

Here is the text of the letter reproduced below for easy reference, with the scanned copies also embedded above and below:

June 30, 2010

Mr. Chanda R. Shahani
22 Solar Street
Bel-Air 3
Makati City

Dear Mr. Shahani:

This pertains to your letter request dated February 1, 2010 quoted below:

1.“My December 10, 2010 (sic) request of the status report to COA from U.P. of the action taken by U.P. on the recommendation which COA requested U.P. to submit no laterthan 60 days from receipt of COA's transmittal letter and report last September 23, 2009”, and

2.“My request to include both the U.P. Foundation and the U.P. Business Research Foundation in COA's 2009 CAARs, and the future CAARs because the same set of high-ranking university officials in each instance are also key officers of both foundations and thus to eliminate conflict of interest, the funds being handled by these foundations should be audited by COA.”

Concerning your first request, attention is invited to Rules 2 and 3 of COA Memorandum No. 87-22E dated August 24, 1987 read:

“2. The auditor concerned shall ascertain that the giving of information and access to records and documents, including the furnishing of copies thereof, would not affect any on-going audit or investigation, and is not in violation of Article 229 and 230 of the Revised Penal Code on revelation of secrets, the laws on trade and commercial secretas, secrecy of bank deposits, anti-graft and corrupt practices, the confidentiality of records in administrative cases and other similar laws:

3.If the information, or record or document is covered by or under audit or investigation, no information may be given, or copy thereof reproduced until a copy of the corresponding audit report (annual audit report, cash examination report, certificate of settlement and balances and the like) has been officially transmitted to and received by the head of the audited agency concerned.”

Moreover, limitations on giving of information andf access to official records, including the furnishing of copies thereof provided by COA 87-22E is further buttress by the provisions of COA Resolution No. 97-006 dated January 28, 1997, read:

“NOW THEREFORE, upon motion of Commissioner Sofronio B. Ursal duly seconded by Commissioner Rogelio B. Espiritu, BE IT RESOLVED, AS IT DOES HEREBY RESOLVE that:

1.No COA audit report of whatever nature shall be released to any person until a copy of said audit report has been officially transmitted to and received by the head of the government agency being audited. The purpose hereof is to give the officials adversely affected in the report with sufficient opportunity to explain their side, and also to ensure that no fact or data material to the audit finding is ommitted in the report;

2.After receipt of the audit report by the head of the audited agency, copies of the reportmay be made available to any party, for any lawful purpose, upon payment of the cost of duplication thereof if desired and such other incidental expenses relative thereto, upon previous written permission from the COA Director concerned. However, where the production of copies of the audit report is directed by the Courts, the Office of the Special Prosecutor, and the Office fo the Ombudsman, or any of the latter's Deputies, through a subpoena duces tecum or any other compulsory process, the auditor concerned shall forwith comply herewith without the necessity of prior clearance or authority from his superiors;”

Further, penultimate portion of COA Resolution No. 2008-010 dated October 10, 2008 provides that:

NOW THEREFORE, it is resolved that all request for certified copy of information, documents, data and other official records originating from any Office, Cluster, Division, Section or Unit of the central Office, or request from the media shall be referred/forwarded to the Office of the Chairman for approval or prior clearance, until a new policy is duly issued on the above-captioned subject.

As to your 2nd request, rest assured that this Office is mindful of your issue and we appreciate the data given.

We are still in the process of finalizing our audit report on the U.P. Operations for CY 2009 hence, referral for clearance to the office of the Chairman, this Commission, for issuance of a copy to any interested taxpayer can only be undertaken after the same has been officially transmitted to the UP management (underscoring supplied by the Diliman Diary).

Finally, please be informed that in several occasions after receipt of your letter, the action taken of this office was made known to your office through your secretary (Ms. Cynthia) who was in constant communication with our office.

Best regards.

Very truly yours,

Sofia C. Gemora
Supervising Auditor

In its June 20, 2010 article, the Diliman Diary noted that the Office of the Vice President for Public Affairs and the Office of the Vice President for Legal Affairs of the U.P. System essentially declined to comment on the previous article before it was uploaded, despite being given ample time to do so. In fact, the only exceptions to the general rule of U.P.'s lack of transparency have been the release of documents relative to U.P. Diliman's National College of Public Administration and Governance (NCPAG) and the School of Labor and Industrial Relations; projects with private foundations which enjoyed multilateral agency funding but which required the release of the financial documents to COA (Please see Diliman Diary, December 12, 2009 at this link: Otherwise, COA has been left in the dark about the activities of other foundations operating with impunity within the U.P. System.

The Diliman Diary will respond in due time to this letter on behalf its readers and fellow taxpayers as well as undertake actions consistent with values of citizen journalists.

We shall keep our readers updated on this worthwhile and timely topic.

(Chanda Shahani is the Editor of the Diliman Diary. He has a master's degree in entrepreneurship (M.E.) from the Asian Institute of Management).

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