THE Commission on Audit has junked the appeal of the Social Security System (SSS)—Luzon North Cluster on the disallowance issued against the payment of P20 million in cash incentives to rank-and-file employees of government-owned or controlled corporation (GOCC) in 2005 to 2008.
With the ruling, those who received the questioned sum are now required to refund the money to the SSS.
“For CY 2005 to 2008, SSS paid its rank-and-file employees CNA (collective negotiation agreement) incentives and additional incentives. It also paid counterpart incentives to the confidential, coterminous and contractual employees, lawyers, and executives, including the members of the Social Security Commission (SSC),” the COA said.
To give a semblance of regularity to the extra compensation, the SSC passed seven separate resolutions even if several were signed after the incentives have been paid.
Citing conflict with Budget Circular No. 2006-1 issued by the Department of Budget and Management (DBM) and Public Sector Labor Management Council Resolution No. 2, the audit team issued notices of disallowance on the ground that the cash stipend was both “irregular and excessive.”
The SSS management claimed the SSC had statutory power to grant the assailed incentives so that the allocation of up to 80 percent of savings on the pension agency’s Maintenance and other Operating Expenses (MOOE) did not violate the rules.
Auditors countered that the P20,000 CNA incentive in 2005 was not disallowed but only the P30,000 and the additional P10,000 per employee that was paid to them in March 2006.
“The grant of CNA incentives for the years 2005 and 2007 was not in accordance with Section 3 of PSLMC Resolution No. 2. For the year 2005, the actual revenue of P59,799,616,316.00 did not meet the target revenue of P60,420,000,000.00 per COB (corporate operating budget),” the COA said.
For the 2007, the SSS argued that its operating income hit P79.7 billion against that year’s target of P78.3 billion.
However, the audit team said the figure cited included the P7.105 billion realized from the sale of San Miguel Corporation shares of stock although this was not supposed to be computed in the COB.
“The payment of additional CNA incentives for the years 2006, 2007 and 2008 were not sourced from savings on MOOE generated out of cost-cutting measures implementation, but rather from excessive accruals of cash incentive,” the commission added.
For their participation in passing the various resolutions cited as basis for the irregular incentives, the COA said the members of the Social Security Commission may be held liable once the review of their involvement is completed.
The supervising auditor and the audit team leader were instructed to determine if the issuance of a supplemental notice of disallowance is warranted.
