Senator Kiko Pangilinan vows action into a Diliman Diary email to Senators about its article on COA 2009 COA reports on SUCs' financial irregularities

Senator Kiko Pangilinan is the third Senator to respond to a Diliman Diary email sent to Senators last November 22, 2010 asking them to do what they could do to check into a November 1, 2010 article written by the Diliman Diary entitled, "State Universities and Colleges are haunted by COA's 2009 Audits into their Financial Expenditures" (please see: http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html). Senator Pangilinan's reply email is embedded below. The email is addressed to Diliman Diary's Editor, Chanda Shahani

While the Diliman Diary supports the retention and even increase of the budgets of State Universities and Colleges (SUCs), it has also taken the editorial stand of opposing the siphoning away of existing SUC funds through financial irregularities which have been duly documented by COA. In this regard, two other Senators, Senator Loren B. Legarda and Senator Pia S. Cayetano have also responded in the affirmative to our emails and have already instructed their staffs to do their own due diligence on the issue (please see: http://diliman-diary.blogspot.com/2010/11/senators-promise-to-look-into-financial.html).

We are also continuing to email members of Congress (i.e., the Lower House) about the matter. We have actually begun this campaign starting November 18, 2010 and will conclude it when we are convinced that sufficient progress has been made in ending the abuses of the past (please see: http://dilimandiary.blogspot.com/2010/11/commentary-this-little-piggy-goes-all_18.html).

The overall intention of these activities are to ensure that even increases in budgets of SUCs sourced from state and taxpayer's monies end up with their intended recipients in SUCs rather than end up in private pockets. It is with the check-and-balance function of the legislature in mind that we are undertaking this campaign for better governance within SUCs and their existing managements.

RE: State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures

Tuesday, December 7, 2010 3:10 PM

From:

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"Kiko Pangilinan"

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To:

dilimandiary@yahoo.com

Dear Chanda,

We received your letter and I would like to thank you for your diligence in presenting the facts and data you sent, and the show of concern over the state of our SUCs. We will look into the anomalies and financial irregularities, and will form an action plan to address these issues.

Best regards,

K
--

K I K O  P A N G I L I N A N
Senate of the Philippines
Rm. 526 GSIS Financial Center, Roxas Blvd., Pasay City
Tel. 5526601
Website: www.kiko.ph

COA's 2009 Consolidated Audited Annual Report scores six (6) U.P. campuses for "lapses in internal control."

By Chanda Shahani

More student protests are expected in the following days due to the proposed budget cuts in 2011 by the administration of President Benigno S. Aquino III to State Universities and Colleges (SUCs), including the University of the Philippines System. But U.P. officials have not helped U.P.'s cause much with legislators – due to their massive failure to control the misuse of state funds – the 2009 Consolidated Audited Annual Report (CAAR) of the Commission on Audit (COA) shows.

Department of Budget and Management Secretary Florencio Abad says that a zero-based budget approach was used for the entire proposed 2011 national budget. Zero-based budgeting essentially throws away previous assumptions of previous years and forces the beneficiaries of the budget to justify on a line item basis every proposed expenditure. However, there is barely any time left for U.P. to make its case for 2011, as Senate President Juan Ponce Enrile has already promised to pass the budget out of the Senate by December 1.

From the one-dimensional point of view of DBM, moreover, cutting the budgets of SUCs automatically creates greater efficiencies in utilization and causes graft and corruption to be minimized because funding will no longer flow abundantly, as water does from a faucet. Student protester from U.P. disagree, however, saying that the existing budget of U.P. in 2010 was barely enough to keep its operations intact. They say that it is the duty of the State to subsidize education for state scholars and say that the unique mission of U.P. is that it is a public university that teaches its students that they have the obligation to serve the Filipino people and they are not there just obtain an excellent education.

On the revenue side, student protesters say that the alternative path of raising funds – which is the commercialization of education in U.P. – is wrong, because it essentially allows the State to pass on its obligations to U.P. on to market forces which will seek out the highest revenue yielding courses and aggressively seek efficiencies of all sorts and thereby force U.P. to ultimately abandon its commitment to serve the people.

But the stark reality is that on the cost side, U.P. has not kept its side of the street clean, as state and taxpayer funds from at least six (6) U.P. campuses continue to be diverted into unauthorized uses with the outgoing U.P. Administration unable or unwilling to exercise appropriate measures despite years of warnings from COA auditors.

COA's 2009 CAAR repeatedly scores the outgoing U.P. administration for “lapses in internal control on the granting/liquidation of cash advances were observed in all of the UP campuses of which a total of P21.77 million unliquidated cash advances have been long outstanding for two years or more contrary to COA Circular No.97-002 dated February 10, 1997.”

Read the rest here: COA's 2009 Consolidated Audited Annual Report scores six (6) U.P. campuses for "lapses in internal control."

COA's 2009 Consolidated Audited Annual Report unearths more Money Management problems at the University of the Philippines

The Commission on Audit's (COA) 2009 Consolidated Audited Annual Reports is bringing to light more disclosures about how taxpayer's money remains unaccounted for at the University of the Philippines (U.P.), at a time when U.P. faces unprecedented budget cuts upon the recommendation of the Department of Budget and Management (DBM). 

DBM Secretary Florencio Abad has said that part of the basis for its determination of the 2011 national budget is partly based on COA reports about an agency or institution. By that standard, U.P.looks like it has problems in fiscal management - and if this is left unaddressed - weakens its institutional credibility as it demands for a higher budget from Congress in 2011. Legislators will want to know that U.P. has sufficient controls to ensure that the money is not "lost" and unaccounted for.

For example, COA said the UP Diliman manner of recording income realized but not yet collected from its auxiliary and income generating activities did not conform with the usual accrual method of accounting, which is a norm. Instead, what U.P. does is to recognize income by recording it as Other Deferred Credits account instead of an appropriate Income account thus, overstating and understating respectively these aforementioned accounts by at least P17.59 million as of December 31, 2009.

Auditors say this can lead to possible corruption known as “kiting”, because by understating actual income for a given year, then the understated income can be spent without the auditors looking for this money in bank balances or through receipts and vouchers, etcetera.

COA is recommending that the U.P. Diliman Administration require the Accounting Office to prepare a Journal Entry Voucher to adjust the identified erroneous credit made to Other Deferred Credits account, and to henceforth comply strictly with the prescribed government accounting system.

The 2009 Consolidated Audited Annual Report (CAAR) of COA also pointed out that the balances of Cash in Bank Local Currency-Current Accounts and Savings Accounts (LCCA & LCSA) of P152.48 million of U.P. Manila and Visayas and Foreign Currency Account of $187,674.61 of U.P. Manila were misstated due to unreconciled differences between the books and bank balances amounting to P131.90 million and $104,809.07 respectively, due to the failure of the Accounting Division to prepare and update the bank reconciliation statements (BRS).

In other words, COA is probably being overly polite by referring to the window dressing by the U.P. Administration of its books of accounts as it claims that UP Manila-PGH it was in actual possession of taxpayer funds worth P 142,689,776.86 when it reality the U.P.'s own bank balances for UP Manila-PGH only showed the existence of funds worth P 74,480,379.96 or a staggering variance of P131,790,603.10. Where did this money go? Did university officials dip their hands in the cookie jar one too many times? Perhaps or even perhaps not. However, such endless speculation may be quieted once and for all, if only U.P. officials would simply follow Section 74 of P.D. No. 1445, otherwise known as the State Audit Code of the Philippines, COA said.

P.D. No. 1445 provides that: “At the close of each month, depositories shall report to the agency head, in such form as he may direct, the condition of the agency account standing on their books. The head of the agency shall see to it that reconciliation is made between the balance shown in the report and the balance found in the books of the agency.”

“The reconciliation of cash in bank account balances with bank records provides a periodic determination of the validity of cash balances appearing in the books of the agency concerned. Bank reconciliation statements prepared on a regular and timely basis is an essential control over these cash accounts. The agency accountant shall draw journal vouchers to record all valid reconciling items that require adjustment and correction in the General Ledger

COA's 2009 CAAR also found that U.P. Visayas said that it had at least P 9,787,307.82 in its books, when it reality it had P 9,897,874.82, or a positive variance of P 110,567.00 which, while it might seem like a happy problem, was still problematic from a COA perspective, because it showed that accountants were not practicing sufficient levels of rigor that was in accordance with Generally Accepted Accounting Procedures (GAAP).

In terms of foreign currency holdings, UP Manila-PGH said that it had at least $187,674.61 in its books, but actual bank statements only proved that it was in possession of $292,483.68 or a positive variance of $104,809.07 which again makes it difficult for COA auditors to determine the path of the money trail in terms of where this money comes from and where it is going.

With this article, the Diliman Diary continues to update, incrementally, a broader article which interprets and reports on COA's 2009 report on the whole U.P. System. Interested readers and policy makers may access the U.P. System article here: http://diliman-diary.blogspot.com/2010/11/breaking-news-coa-releases-2009-audit_05.html. The Diliman Diary has also embedded the U.P. System article within an even broader article that interprets and reports on COA's 2009 CAARs on Metro Manila based State Universities and Colleges. This article may be accessed at this link: http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html

Senator's promise to look into financial irregularities at State Universities and Colleges described in Diliman Diary's November 1 article on COA's 2009 audit reports

(Editor's note: The Dliman Diary has begun to make good on its promise to its readers to begin emailing members of Congress about financial irregularities at State Universities and Colleges (SUCs) (see: http://diliman-diary.blogspot.com/2010/11/commentary-this-little-piggy-goes-all_18.html) based on our reporting on the 2009 Consolidated Audited Annual Reports (CAARs) of the Commission on Audit. We are embedding below an email we sent to Senator Loren B. Legarda with similar emails sent to other Senators, including Senator Legarda's response. As we get more responses over time, we will update this particular dispatch. The Diliman Diary has the theory that with this kind of feedback to legislators, SUCs will henceforth be under greater pressure to render a comprehensive accounting of how the budgets allocated to them by the People are being spent and for what purpose.)

Re: COA's 2009 report on State Universities and Colleges

Monday, November 22, 2010 4:56 PM

From:

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"Loren Legarda"  

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To:

"diliman diary"

Cc:

"sweet malones"

Dear Mr Shahani:

Thank you for the information you provided. I shall instruct my legislative staff to look into these.

Best regards,

Loren

---

From: diliman diary
To: loren_b_legarda@yahoo.com.ph
Cc: dilimandiary@yahoo.com
Sent: Monday, November 22, 2010 10:55:55 AM
Subject: COA's 2009 report on State Universities and Colleges

Senator Loren B. Legarda Philippine Senate Pasay City Dear Senator Legarda: Greetings! The Diliman Diary is a bilingual online weblog that features stories in Diliman area in Filipino and English. It features everything from personal stories, technology, business, the arts, music, literature, theatre, film, politics, sports which impact the Diliman area and its netizens who may be located anywhere and in any time zone. In this regard, I have written an article dated November 1, 2010, entitled “State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles Co-located on one (1) continuously updated link.” This article is essentially an interpretation and condensed summary COA's 2009 Consolidated Audited Annual Reports (CAAR) on Metro Manila based State Universities and Colleges (SUCs). The link to the article is here: http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html In this regard, I would like to respectfully request you and/or your staff to take just a little bit of your precious time to read our article, because it shows a very broad pattern of unmitigated financial irregularities by and among SUCs. While I personally support maintaining and even increasing the budgets of SUCs, I am nevertheless very much against the siphoning off of taxpayer's money from existing budgets of the SUCs due to financial irregularities. As a concerned taxpayer, I am hoping that you will be able to employ your power to call the administrators to account for unaddressed concerns of COA that span several years. I am respectfully requesting you and your staff to take note of the valid points made by COA during budget hearings (for the 2011 budget) and even other hearings. This is all summarized in the article I wrote (http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html). Additionally, the article itself is based on COA's 2009 CAARs of SUCs which may be directly accessed at this link: http://www.coa.gov.ph/Audit/AAR.htm Salamat po! Very truly yours, Chanda Shahani Editor Diliman Diary UPDATE: The following is an email from Senator Pia Cayetano's office regarding the same email sent to senators and congressmen: RE: AcknowledgementWednesday, December 1, 2010 1:03 PM From: "pia@senatorpiacayetano.com" pia@senatorpiacayetano.com To: dilimandiary@yahoo.com30 November 2010 MS. CHANDA SHAHANI Editor Diliman Diary dilimandiary@yahoo.com Dear Ms. Shahani: This is to acknowledge receipt of your electronic mail dated 21 November 2010 expressing your concern on the unmitigated financial irregularities by and among state universities and colleges, and the unaddressed concerns of the Commission on Audit on the same matter. May God bless our country and our people! Very truly yours, SENATOR PIA S. CAYETANO By: (SGD.) ATTY. DENYA GRACIA J. UY-ANASTACIO Deputy Chief of Staff

Commentary: This Little Piggy Goes all the way to both Houses of Congress

(Source: http://en.wikipedia.org/wiki/This_Little_Piggy)

By Chanda Shahani

Does anyone remember the centuries-old nursery rhyme, called “This Little Piggy”? The nursery rhyme goes this way:

“This little piggy went to market.

This little piggy stayed at home.

This little piggy had roast beef,

This little piggy had none.

And this little piggy went "Wee! Wee! Wee!" all the way home.”

(Source: http://en.wikipedia.org/wiki/This_Little_Piggy)

Well, this little piggy (i.e., the Diliman Diary) has decided to make good on its responsibilities as a community weblog and has already sent in complaints to the concerned government authorities about the irregular activities or decisions of state organs and institutions. In particular, this little piggy has already gone all the way to Congress to complain about financial irregularities in State Universities and Colleges (SUCs). This little piggy is timing this to coincide with protests that seek to restore budget cuts to SUCs. While the Diliman Diary supports increasing subsidies to education as an investment in the nation's future, we nevertheless oppose the haemorrhaging of public funds into the pockets of career bureaucrats in the academe who have already forgotten their primary mandate – which is to serve the people and the taxpayers.

We justify blogging interspersed with occasional intervention because this is the common challenge routinely faced by innumerable community newspapers, websites, and weblogs all over the world; and every Editor has to make an individual decision as to how to treat local anomalies in their backyards vis-a-vis their policies of service to their communities. By way of analogy, if you, dear reader were the Editor of the hypothetical Chernobyl Diary (see: http://en.wikipedia.org/wiki/Chernobyl) in Russia, would you not consider opposing the possible actions of local authorities to reopen that nuclear power plant in your community after the nuclear holocaust that took place decades before? Would you limit yourself to documenting a developing tragedy or would you not do your best to write national authorities to brief them about specialized knowledge or insights that you may have so that they can act in their best lights?  

The Diliman Diary has taken the consistent editorial stand of opposing financial irregularities in Metro Manila-based SUCs. We have issued an interpretative report of the Commission on Audit's (COA) 2009 Consolidated Audited Annual Reports (CAARs) of these SUCs and are now systematically emailing this to legislators in both houses of Congress for their information and possible action (see Diliman Diary, November 1, 2010: http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html).

We think that there is every possibility that hard-nosed and principled legislators (and there happen to be a few of them) will be willing to take up the cudgels for the people when they come across reports like these. The Diliman Diary is not a newspaper, wire service, television station, radio station or tax-payer funded website. We are just a simple weblog of the kind that anybody in an internet cafe can set up, and we encourage others to try it. Truth to tell, and to paraphrase Department of Budget and Management Secretary Florencio Abad (on the early days of the Liberal Party), you could put the entire leadership of the Diliman Diary in the back of a Volkswagen Beetle with room to spare. Our strength (and also any other blogger's) is not in numbers but the ideas of the many we have the privilege of posting here, with the internet as a kind of level playing field.  Although we are welcoming volunteers and writers to help us out, and our readers to continue sending us feedback, tips, anecdotes and stories, we also encourage the citizenry to file complaints to the national authorities, but backed up by some original insights or analysis to add value to the complaint for in the right legislators' hands, this can be fertile material for investigation or more.

At the end of the day, it is only with an active and engaged citizenry that we can minimize the incidence of official bureaucratic corruption in our country; as our fragile democracy is too precious to solely allow the state apparatus to handle this vital matter. We must all be involved in the process, or risk becoming nothing more than armchair critics of the status quo.

Announcement:

The Diliman Diary is finalizing and will soon be uploading a link to the entire directory of the Philippine Senate before the end of November, in order to facilitate citizen feedback to the national authorities, and so that anomalies can be reported to our elected officials. We will also be uploading the link to the directory of Congress shortly thereafter and for the same purpose.

(Chanda Shahani is the Editor of the Diliman Diary)

Update on COA's 2009 Consolidated Audited Annual Report on Rizal Technological University

Though it was founded in 1975 as Rizal Technological Colleges (RTC), the College was converted into the Rizal Technological University (RTU) on October 11, 1997, by virtue of Republic Act No. 8365. RTU is tasked to provide highly professional, scientific, technological and special instructions in the fields of engineering and technology, education, business and entrepreneurial technology and arts and sciences and to the promotion of research, extension and advance studies in its area of specialization.

The Commission on Audit's (COA) 2009 Consolidated Audited Annual Report (CAAR) of RTU found that RTU's income increased from P 359 million in 2008 to P 397 million in 2009 or an increase in P 38 million. Of this, P 25 million  was from the National Government and P 12.7 million was from other income, 

But COA's 2009 CAAR also found the following problems with RTU's usage of the taxpayer's money:

See the rest here:

http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html

Update on COA's 2009 Consolidated Audited Annual Report on the Philippine State College of Aeronautics

The Commission on Audit's (COA) 2009 Consolidated Audited Annual Report (CAAR) said that the Philippine State College of Aeronautics (PhilSCA) had 423 personnel from Villamor Air Base and other campuses consisting of permanent – 148; part-timers – 197; temporary – 9 and support staff – 69. Out of the 423 workforce, 287 belong to the academe and 136 are administrative support staff.

The Philippine State College of Aeronautics (PhilSCA) was established in 1967 as a community college, the Basa Air Base Community College, in Floridablanca, Pampanga. The College was operated under AFP Regulations s. 168-342 issued by the Armed Forces of the Philippines and approved by the Department of National Defense on April 1, 1968 to cater to the educational needs of the military personnel, civilian employees and their dependents. In 1977, then President Ferdinand Marcos signed P.D. 1078 converting Basa Air Base Community College into a full-pledged College and was renamed Philippine Air Force College of Aeronautics (PAFCA). On June 3, 1992, R.A. 7605 was approved by then President Corazon C. Aquino, converting PAFCA into a state college, the Philippine State College of Aeronautics (PhilSCA). There are four campuses located in Mactan, Cebu, Floridablanca, Pampanga, Lipa City and the main campus in Villamor Air Base (VAB), Pasay City.

The College aims to provide professional and advance technical and technological instructions and trainings in the fields of aeronautical sciences and in the general area of science and technology for the Philippine Air Force and the airline industries. It also aims to promote research, advance studies and progressive leadership in its field of specialization.

But the 2009 CAAR also found the following irregularities in its 2009 CAAR:

See the rest here:
http://diliman-diary.blogspot.com/2010/11/state-universities-and-colleges-are.html

Update: All U.P. Workers Union complaint vs. U.P. PGH FMAB Project leads to scathing COA criticism vs. U.P. Administration in its 2009 Consolidated Audited Annual Report

On the basis of a complaint filed by the All U.P. Workers Union (AUPWU), the Commission on Audit (COA) has now cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through U.P. Manila- Philippine General Hospital (UPM-PGH), and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the Faculty Medical Arts Building (FMAB) in its recently released 2009 Consolidated Audited Annual Report (CAAR).

The FMAB is a priority project of the Administration of outgoing U.P. President Emerlinda R. Roman. However, the 2009 CAAR refers extensively to “unresolved legal issues and inadequacy of auditorial documentary requirements on the 25- year lease contract of the Faculty Medical Arts Building (FMAB).”

COA said the unresolved legal issues and inadequacy of the auditorial documentary requirements cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through the UPM-PGH, and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the FMAB.

Read the rest here: BREAKING NEWS: COA Releases 2009 Audit Report on the University of the Philippines System

BREAKING NEWS: COA Releases 2009 Audit Report on the University of the Philippines System

By Chanda Shahani

The Commission on Audit (COA) has released yesterday its 2009 Consolidated Audited Annual Report (CAAR) of the U.P. System on its website (http://www.coa.gov.ph/Audit/AAR.htm). The 2009 CAAR shows signifcant problems with the way the U.P. Administration has failed to address many COA criticisms over the U.P. Administration's handling of taxpayer-owned cash, financial instruments and other assets in 2009.

But the problem goes back further in time. For an analysis of the U.P. System's previous performance from 2006 to 2008, please click on a Diliman Diary authored article here: http://tinyurl.com/24kkbtv. The U.P. System's troubling financial history should also be looked at within a broader context of systemic financial abuse by officials of several State Universities and Colleges (SUCs) as can be seen by our reportage on COA's 2009 CAARs on other Metro Manila-based SUCs. To read that report, please click here: http://tinyurl.com/399fekf

Here are the highlights of the COA 2009 CAAR of the U.P. System:

1. On the issue of conflicts of interest among ranking university officials and university-affiliated foundations:

COA's 2009 CAAR of the U.P. System said that: “The manner by which the UP System, through its formulated guidelines, addressed the existence of conflict of interest of its officials who are at the same time officers of the UP-affiliated foundations, as well as the absence of an independent oversight office to monitor the transactions entered into by these foundations, appears inadequate to substantially resolve the issue on transparency required in public governance."

"We therefore reiterate our previous recommendation that Management formalize an arrangement through a Memorandum of Agreement with these Foundations by defining the functions and responsibilities of both parties, including how to account and share for the income/revenues earned from its operation. Moreover, a policy or guidelines must be established to set the limits and boundaries with respect to the role or participation of the UP employees and officers to any of these Foundations. Financial transactions entered into by these Foundations for and in behalf of the University must be accounted and reported to the UP System management and be subjected to the COA review, verification and audit.”

“As there was no information given with regard to the officers of the UP Foundation, Inc., available data gathered disclosed that in its amended by-laws, the President of the UP System is the Chairman and President of the U.P. Foundations, Inc. In addition, the Chancellors of its four autonomous units and three members of the Board of Regents sit on the Board of Trustees. Likewise, per inquiry, its current executive director is a professor of the University” (emphasis supplied by Diliman Diary).

"It appears that the creation of these Foundations is tainted with legal infirmity as an apparent conflict of interest existed considering that some of its officers are at the same time officials of the University, thus, transactions and dealings entered into by these public officers channeled through the Foundations are within the ambit of the public’s right to be informed as mandated by the Constitution consistent with the policy on transparency in government affairs."

See the rest here: http://tinyurl.com/3ywj72l

2. On the basis of a complaint filed by the All U.P. Workers Union (AUPWU), the Commission on Audit (COA) has now cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through U.P. Manila- Philippine General Hospital (UPM-PGH), and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the Faculty Medical Arts Building (FMAB) in its recently released 2009 Consolidated Audited Annual Report (CAAR).

The FMAB is a priority project of the Administration of outgoing U.P. President Emerlinda R. Roman. However, the 2009 CAAR refers extensively to “unresolved legal issues and inadequacy of auditorial documentary requirements on the 25- year lease contract of the Faculty Medical Arts Building (FMAB).”

COA said the unresolved legal issues and inadequacy of the auditorial documentary requirements cast doubts on the legality and validity of the 25-year lease contract entered into by and between the UP, through the UPM-PGH, and the Mercado General Hospital, Inc. (MGHI), for the conversion and development of the PGH Dispensary historical three-storey concrete building into the FMAB.

See the rest here: http://tinyurl.com/32c9khm

3. The University Hotel (formerly PCED Hostel) as a special project under the UP System Administration, continues to operate as a separate and distinct entity since 1983 and the results of its financial position and operations, which reflected a gross income of P30.46 million in 2009, remained undisclosed or unreported in the System’s books of accounts thus, affecting the fair presentation of the University System’s consolidated financial statements.

See the rest here: http://tinyurl.com/3yoa366

4. The UP Diliman manner of recording income realized but not yet collected from its auxiliary and income generating activities did not conform with the usual accrual method of accounting, which is a norm. Instead, what U.P. does is to recognize income by recording it as Other Deferred Credits account instead of an appropriate Income account thus, overstating and understating respectively these aforementioned accounts by at least P17.59 million as of December 31, 2009.

This can lead to possible corruption known as “kiting”, because by understating actual income for a given year, then the understated income can be spent without the auditors looking for this money in bank balances or through receipts and vouchers, etcetera.

COA is recommending that the U.P. Diliman Administration require the Accounting Office to prepare a Journal Entry Voucher to adjust the identified erroneous credit made to Other Deferred Credits account, and to henceforth comply strictly with the prescribed government accounting system.

5. The 2009 Consolidated Audited Annual Report (CAAR) of COA also pointed out that the balances of Cash in Bank Local Currency-Current Accounts and Savings Accounts (LCCA & LCSA) of P152.48 million of U.P. Manila and Visayas and Foreign Currency Account of $187,674.61 of U.P. Manila were misstated due to unreconciled differences between the books and bank balances amounting to P131.90 million and $104,809.07 respectively, due to the failure of the Accounting Division to prepare and update the bank reconciliation statements (BRS).

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/contnuation-of-balances-of-cash-in-bank.html

6. The six UP units/campuses failed to allocate at least 5% of their CY 2009 approved budget for the Gender and Development Program, as required by law, resulting in inadequate promotion of gender-responsive governance to address gender issues and concerns of their constituents/sectors as required under Section 29 of the General Provisions of RA 9524 and Joint Circular No. 2004- 1.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/6.html

7. COA's 2009 CAAR repeatedly scores the outgoing U.P. administration for “lapses in internal control on the granting/liquidation of cash advances were observed in all of the UP campuses of which a total of P21.77 million unliquidated cash advances have been long outstanding for two years or more contrary to COA Circular No.97-002 dated February 10, 1997.”

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/7.html

8. The Cash in bank balances of the UP Diliman and Manila were understated by P15.66 million due to the non-restoration of the cash equivalent of unreleased checks amounting to P14.43 million required under GAFMIS Circular Letter No.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/8.html

9. The UP Visayas-Iloilo, Tacloban, Baguio and Open University incurred expenses totaling P10.96 million, which either lacks the appropriate legal basis or in excess of allotments, contrary to Section 28, Volume I, NGAS Manual, thus overstating the expense account of the same amount.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/9.html

10. Other Payables account of UP-Manila, Los Baños and Cebu campuses totalling P2.81 billion was overstated by P686.50 million due to error in recording income collections, misclassification of accounts, inadequate documentation and absence of a Subsidiary Ledger, rendering the account balance unreliable.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/10.html

11. Procedural lapses in the recording and control of inventories such as non-observance of Perpetual Inventory method and non reconciliation of the accounting and property records in the UP Los Baños, Open University and Mindanao cast doubts on the validity of the P46.70 million inventories and related expense accounts.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/11.html

12. The implementation of the UP Diliman ERDT program disclosed 127 unfilled scholarship slots, 20 incidents of voluntary and involuntary termination of scholarship grants and idle funds of P151.65 million which, if not closely monitored, may result to the non-attainment of the program’s objective to address the problem on lack of highly trained research scientists and engineers.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/12.html

13. The 102 UPV in-house Research Projects worth P16.56 million were not completed before the expiration of the contracts due to the absence of, or laxity of the management to impose sanctions against the erring proponents thus, defeating the purposes of the researches and compromising the UP’s objective of strengthening its position as the leading research and development university in the country. Moreover, publications of the outputs in the abstract publication and in the UPV Journals were not fully attained as only ten out of the 80 Research Projects that started in January 2002 costing P11.26 million were completed in CY 2009 thus, depriving the beneficiaries of the benefits that could be provided by these research projects.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/13.html

14. The PPE accounts of the nine UP offices/campuses totalling P6.96 billion is of doubtful validity with a negative variance of least P506.09 million existing between the books and the Physical Inventory Reports, which was attributed to unrecorded reconciling items, incomplete or lack of inventory reports, and the absence of regular reconciliation of property and accounting reports/records.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/13.html

15. Recognition of payables was not based on actual claims for goods delivered or service rendered, as P68.43 million listed as payables in three UP offices/campuses were not found to be valid claims supported by sufficient evidence, contrary to Section 46 Par. 2 of PD 1177, and likewise overstating the expense and liability accounts at year-end by the same amount.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/15.html

16. The Electricity Expenses account of P6.32 of the UP System appeared is understated by P3.10 million as only P1.52 million was certified to accounts payable from the unpaid charges of P4.62 million due to inadequate monitoring and control of MERALCO bills of which processing and payment were allocated by office.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/16.html

17. The Items in Transit account balance of P550.50 million of the UP Diliman and Los Baños cannot be relied upon as it includes long outstanding and undocumented charges amounting to P242.48 million.

See the rest here: http://diliman-diary-sidebars.blogspot.com/2010/11/17.html

(Editor's note: The remainder of this dispatch is still under construction and will be updated shortly. We apologize to our readers for the inconvenience. For readers who wish to read the report directly, we encourage them to refer directly to the 2009 COA report at: http://www.coa.gov.ph/Audit/AAR.htm.)

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.” http://diliman-diary.blogspot.com/2010/06/interlocking-directorates-between_20.html)
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: http://diliman-diary.blogspot.com/2009/12/2008-coa-report-opens-maze-of-questions.html). 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).