Thanks to audit reports, the public found out that the Department of Education (DepEd), under Vice President Sara Duterte, not only missed its targets but also incurred disallowances, putting the former presidential daughter in the middle of a political firestorm, and highlighting the bureaucratic lapses of an education in crisis.

DepEd built only 192 or just 3% of its 6,379 target classrooms in 2023. Part of Duterte’s confidential funds, or P73 million out of P125 million, was disallowed. In total, P2 billion of DepEd’s spending was tagged as disallowances, which means that auditors want DepEd to return P2 billion, subject to appeal all the way to the Supreme Court.

These crucial details about how the education department spends its budget became known because the House of Representatives subpoenaed Commission on Audit (COA) documents.

In a previously normal world, DepEd’s Annual Audit Report (AAR) would have already been published as early as June, which would have allowed civil society, including journalists, to scrutinize the document.

But in this world, as of writing, DepEd’s AAR has yet to be uploaded on the COA website. Worse, DepEd’s AAR is not the only one which will have a delayed publication.

It took some political maneuverings in the current anti-Duterte House to bring the reports to light. ACT Teachers Representative France Castro raised the alarm about the delayed COA reports: “Why is that, madam chair? Because as far as I know, come the SONA (State of the Nation Address), the COA has already uploaded several audit reports of agencies in preparation for the budget briefing.”

COA Assistant Commissioner Alexander Juliano said the audit reports will be uploaded starting December 1, which is a six-month delay from the usual period.

New rules, or just new discretion?

The reason? New rules, according to COA. COA Chairperson Gamaliel Cordoba said they are following the law, or the 2023 General Appropriations Act (GAA), which says that “within sixty (60) days from receipt of the COA Annual Audit Report, agencies concerned shall submit to the COA, either in printed form or by way of electronic document, a status report on the actions taken on said audit findings and recommendations.”

The effect, by Cordoba’s logic, is that agencies get a 60-day chance to respond to the AAR first, before they are made public.

There are two issues with this logic.

First, that same provision is also found in the 2022 GAA, yet it did not stop COA from following the usual timeline in 2023 when they started uploading the 2022 reports in the first half of the year.

Second, agencies already have a chance to respond even before the AAR is finalized.

COA’s auditing process is a year-long process. Within the fiscal year, auditors issue what is called an AOM or an audit observation memorandum (AOM), a confidential way to flag transactions. Agencies can respond to these AOMs and explain themselves. If auditors are satisfied with the response, the issue raised in the AOM is no longer found in the AAR.

Otherwise, COA holds a final exit conference in the beginning of the next fiscal year, which is again another chance for agencies to explain. All these responses are consolidated before auditors finalize the AAR, so they can publish them starting June of the next fiscal year.

“Based on my experience, it’s an iterative process. Many dialogues happen between the auditors and the agencies to understand transactions…. If that’s the practice before, why do we have to give extra 60 days?” former finance undersecretary Cielo Magno told Rappler in an interview.

Why is COA suddenly adding another layer which the effect of a six-month delay in publication?

People’s right to know

Budget analyst Zy-za Suzara said the delay in the publications “doesn’t signal credibility and trustworthiness” and doesn’t only affect the public, but other stakeholders as well.

“It doesn’t send a good signal for the business community, and even to the investors. Because local suppliers are not the only ones that have contract with the governments. Stakeholders who fund highly technical projects have contracts as well,” Suzara added.

“The agencies are not the only audience of COA reports, the public is there, the citizenry is there, budget watchers are there, the legislators are there. So if this references are not available to look at how these agencies are complying with audit standards in terms of utilizing government money, that’s a big red flag for me,” Magno said.

The additional 60-day period for agencies to reply to COA’s audit is added leeway, which should not be celebrated, according to experts. The usual time frame given to the agencies should be enough to prepare necessary documents and attachments, as this was the usual practice even before the GAA provision, the experts added.

“I cannot understand why there would be delays if there are no significant changes in the process. If there are changes in the process, those changes should consider the importance of audit reports in the budgeting process,” Magno said.

Instead of giving leeway, Suzara said COA must raise the bar and compel all agencies to comply with the commission’s mandate. She added that COA is known for being “intimidating” because of its strict policies on audit, but this is just right because it is part of COA’s role as supreme auditing body to be strict and particular about details.

“So why now it seems that COA gives leeway and the one that actually sets the bar low for public accountability?” Suzara said. “Because the highest audit body is the one that’s supposed to be most transparent also in the absence of budget utilization information while the budget is being executed.”

Suzara said the government should consider removing the GAA provision in the next budget law. She explained that at the time several issues surround public funds, COA as an independent commission must be able to release timely information about audits. In addition, Suzara believes more leeway only paves the way for inefficiency.

“It breeds inefficiency, it breeds corruption also, and not accountability, if given more leeway, right? The way it looks to me, it weakens accountability on the side of the government.”

In the government multiverse, COA is a weaker body. It does not have prosecutorial powers, does not have the power of the purse, and does not have contempt powers. Its audit reports, even audit decisions such as Notice of Disallowance, can be ignored for years.

But it is powerful in its own way. There’s been countless of times that COA reports had exposed corruption, and triggered all of the political moves to exact accountability.

Audit reports were helpful in assessing how public funds were used in relation to the pork barrel scam. It was also COA, which flagged the expensive face masks and face shields, in April 2020. Amid the COVID-19 pandemic, COA reports fueled outrage against the administration of former president Rodrigo Duterte after the commission flagged P67.3 billion worth of pandemic funds that were deficiently used by the Department of Health.

Impact on budget proceedings?

Castro, during the COA’s budget deliberations, also called attention to the supposed impact of the delayed audit reports on the budget proceedings.

The country’s legislative branches usually start the budget deliberations between July to August, or after the president’s SONA. Both chambers of Congress — the House of Representatives and the Senate — discuss the government budget and come up with a budget bill that will be later signed by the president.

This is a yearly cycle and COA reports play a significant role in this process.

Magno said COA reports are indicators of how agencies are performing in terms of utilizing their allotted funds. These audit reports should be scrutinized by both the public and other stakeholders as lawmakers deliberate on the proposed budget of several agencies, the former finance official added.

The Philippines has no mechanism to show in real time how the government spends the people’s money. Suzara said this is where AARs come in. The audit reports fill a “very huge gap” during budget hearings because they contains a detailed version of how a specific budget has been used.

“The major effect would be the legislators and even different sectors monitoring the budget in general won’t have much basis in assessing the actual spending, and if ever there are audit red fags in the COA audit report,” Suzara added.

In COA’s defense, only the publication will be delayed, and not the transmittal of the audit reports to agencies. Transmittal is the transfer of the audit reports to concerned agencies and their oversight bodies.

“The transmittal of the annual audit report has not been changed. It’s still June 30,” Juliano said.

Oversight agencies include the Office of the President, the Senate, and the House, which means these bodies can still have access to audit reports even before the COA publishes them.

But while these bodies can have access, it remains a fact that the public still needs to wait a few months before they can access audit reports. Or similar to the audit report on DepEd, the public and the media got an inkling about the findings only after the DepEd’s budget deliberation in the House this week. – Rappler.com

*Quotes were translated to English for brevity