THE General Headquarters-Armed Forces of the Philippines (GHQ-AFP) has “unauthorized accounts and unnecessary special and trust fund” totaling P1.078 billion and P567.65 million in various collections that remain in its custody, the Commission on Audit (COA) has discovered in its audit of the 2019 financial books of the AFP.
The Permanent Committee Joint Circular No. 4-20-2012 defines unauthorized accounts as cash balances maintained by agencies without specific authority or legal basis or sums with specific authority but maintained with non-Authorized Government Depository Banks (AGDBs).
The Permanent Committee is composed of the secretary of the Department of Finance as chairman, and the secretary of the Department of Budget and Management and chairman of the COA as members.
In the 2019 audit released last August 28, the COA found that as of December 31, 2019, the AFP was maintaining several local currency savings accounts at the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP) and the United Coconut Planters Bank (UCPB) that held P1,077,557,557.31 “without authority from the Permanent
Committee.”
The COA also found that the AFP has unremitted collections totaling P567,648,677.13.
These were from the AFP Educational Benefit System Office collections, remittances, cash donations and interest income (P366.716 million); and the AFP Modernization Act Trust Fund (AFPMATF) from residual cash, liquidated damages or forfeiture of performance security (P200.86 million).
Likewise, the COA said there were small sums in the accounts of the Philippine Military Academy (P170,588.90) and Western Mindanao Command (P125,787.28).
“These bank balances consist of interest income, liquidated damages, income share from opened LCs (letters of credit) and fund transfers to the opening of the LC,” the audit team noted.
The COA said the AFP has no authority to maintain said accounts or the purpose for which they were opened in the first place had already been served.
In response to the COA audit report, the AFP Procurement Service notified the agency that the secretary of the Department of National Defense has already requested approval from the Permanent Committee to maintain six of the eight accounts with the authorized banks because of pending transactions related to the AFP Modernization program.
It added that as of February 20, 2019, one of the two remaining accounts has been zeroed while the other one was closed as of March 13, 2020 with the balance being processed for turnover to the Bureau of Treasury (BTr).
Following its findings, the COA has required the GHQ-AFP to revert to the BTr the P1.078 billion and P567.65 million in “unauthorized accounts and unnecessary special and trust fund” that remain in its custody.
The COA reminded the AFP leadership that Executive Order No. 431 (2005) made it mandatory for government agencies to revert to the General Fund all dormant accounts and unnecessary special and trust funds.
It likewise cited COA Circular No. 2015-001 which defined the guidelines and procedures for the reversion to the General Fund of such accounts.
“We recommended and the management agreed to immediately remit to the BTr the amount due to the National Government and close the aforementioned bank accounts,” the COA said.
The AFP Procurement Service said that as far as the unremitted collections were concerned, P119.074 million was already turned over to the BTr in June 2019, January 2020 and May 2020, while P2.85 million is for wire transfer to the US Treasury. It said another P78.936 million is likewise under process for reversal to the BTr.
