Linggo, Enero 27, 2013

PUBLIC AND PRIVATE AUDITS COMPARED

It is ostensible that Sen. Allan Peter Cayetano does not have full trust on the independence of the Commission on Elections, so he wants a third-party private auditing firm, probably Sycip & Velayo, to conduct an audit of the Senate finances.  But of course, even with the outright agreement of Sen. President Enrile, the entire Senate must have to concur.  Whether it's going to be a public or a private auditor to  examine the Senate funds does not really much matter, for as long as both auditors are, first and foremost, aware of the fundamental differences and similarities in the financial management control systems existing in the government offices, relative to those existing in a private organization.

First off,  there exists a whale of a big difference in the budget control systems existing in a private establishment and those in government offices.  And each auditor, public or private, are bound to confine strictly within his own standards.

For example, in private enterprises, the budget is totally  closed at the end of each budget year.  That is, budget savings, called surplus,  are closed to deficit, so that for the ensuing year, the previous budget is no longer relevant..  An entirely new budget is prepared to govern the next year's transactions. But that is  only after carefully scrutinizing both the "savings," or "surplus"  and the over-expenditures or deficit, primarily to determine whether, as well as why,  certain budgeted items had ended up with a surplus or savings and some over-spent.  That should then provide appropriate guidelines in budgeting for the ensuing year.   In either case, each budget holder is required to explain, and is urged to avoid any recurrence of either unexplained surplus or deficit.    For all intents and purposes, the previous year's unspent budget will  not be used to augment next year's budget, since everything reverts back to zero as an entirely new budget is developed..  

In the government, the Constitution itself, under Section 25(5) of Article VI expressly authorizes the Senate President, and several other major department heads, "to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations."  It is a matter of plain common sense that 'budget savings" are reckoned with only at the end of the year, as indeed it was towards December 2012 that Enrile availed of his discretionary authority to realign his own department's savings to augment the so-called MOOE (maintenance and other operating expenses) of the respective offices of the senators.  Thus, in auditing Enrile's performance in this regard, a private auditing firm must consider not the budget control systems existing in private corporations but this specific provision of the charter, no more no less.  For example, did Enrile committed the "anomaly" of giving  'cash gifts and bonuses" to the senators for their respective "personal" benefits, or merely "to augment" their respective MOOEs.  Enrile recently clarified the "cash gifts and bonuses" as more or less a misnomer, saying he just quoted Senator Drilon who had jokingly asked him whether there was some cash gifts or bonuses awaiting the  Senators for 2012, as had been traditional in the Senate;  as well obviously as in other major departments, pursuant to the above constitutional provision.  Enrile explained that he purposely issued a check to each senator, for the check to serve as each senator's official receipt or acknowledgement of the people's money that they may only spend for public purposes, and which, in turn, each one of them is bound to liquidate under existing systems and procedures.

Such existing liquidation systems and procedures are, meanwhile, what is provided under Section 25(6) of the same Article, which says: "Discretionary funds appropriated for particular offices shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law."  The "particular offices" mentioned here is very obviously the respective offices of the senators.  Thus, it is clearly the manner by which the individual senators had disbursed the discretionary funds appropriated to their respective offices that will essentially form the primary bone of contention of any audit to be conducted, be it by COA or by an independent private auditing firm.

As things stand, the COA was recently quoted in the news as saying there was nothing particularly wrong or objectionable with what Enrile did, firstly because it was within his discretionary authority under the Constitution.  For reasons I earlier highlighted, no one would  expect a private auditing firm to be judging Enrile's performance in light of what is expected from him if he were the manager of a private corporation. He should rather be judged according to his explicit authority under the law.  On the other hand, it will essentially be the individual senators who are going to be individually audited, if Sen. Cayetano truly meant well in what he suggested. .  For example, things like Sen. Miriam Defensor Santiago had been paying her maid's salaries and her personal grocery bills out of her Senate budget, as Sen. Ping Lacson, chair of the Senate Finance Committee, had recently revealed, would surely be looked into by the auditors, public or private.  It's no wonder, therefore, that  Sen. Enrile had outright concurred with Sen. Cayetano, providing the entire Senate would agree.

Well, given the foregoing considerations, it somehow defies plain common sense that Sen Cayetano -- whose main political foe appears to be only Sen Enrile -- had suggested such  private audit as would more  largely cover his very own and the other senators' respective financial transactions than  Enrile's.  In the interim, whether the other senators would support Cayetano's resolution  remains to be seen.

Personally, I would meanwhile wish that a comprehensive audit be indeed conducted, be it by COA or be an independent auditor.   Then and only then, perhaps might  the Senate as an institution be given the opportunity to either rise up from the ugly gutter it has sunk itself into, or to remain wallowing therein until a new Congress is born.


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