30+ Examples of “IRREGULAR” Financial Transactions or Uses of Government Funds and Properties, According To COA
The Commission on Audit (COA) is the sole government agency that is mandated to promulgate accounting and auditing rules and regulations for the Philippine government, including those for the prevention of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures (IUEEU) or uses of funds and property pursuant to Section. 2[1], Art. XII-D of the Philippine Constitution.
In this article, GABOTAF will discuss what irregular expenditures are and we will identify situational and actual examples of these expenditures and uses of funds and properties, as provided by COA in its existing Circulars.
What does COA mean by “irregular expenditures”?
COA defines irregular expenditures in different ways, as follows:
- The term “irregular expenditure” signifies an expenditure incurred without adhering to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in laws.
- Irregular expenditures are incurred if funds are disbursed without conforming with prescribed usages and rules of discipline.
- There is no observance of an established pattern, course, mode of action, behavior, or conduct in the incurrence of an irregular expenditure.
- A transaction conducted in a manner that deviates or departs from, or which does not comply with standards set is deemed irregular.
- A transaction which fails to follow or violates appropriate rules of procedure is, Iikewise, irregular.” (COA Circular No. 2012-003 dated October 29, 2012)
Irregular vs. Illegal: What’s the difference?
Irregular expenditures are different from illegal expenditures since the latter would pertain to expenses incurred in violation of the law whereas, the former is incurred in violation of applicable rules and regulations other than the law. (COA Circular No. 85-55-A dated September 8, 1985)
Various Examples of “Irregular” Expenditures or Uses of Government Funds and Property
Here we list down situational and actual examples (i.e., those with decision references) of irregular expenditures as identified by COA in “Annex A” of COA Circular No. 2012-003 dated October 29, 2012.
1. Payment of salaries and wages wherein the signatures in the logbook vary with the signatures of the workers in the payroll (COA Decision No. 2008-183 dated September 11, 2008). Similarly, payment of salaries or wages of laborers under a labor payroll to persons other than payees unless properly authorized by the latter is also irregular.
2. Honoraria granted to members of social commitees such as an Executive Committee, Program on Awards and Incentives for Service Excellence and Regional Selection and promotions Board, which are performing functions inherent in the regular functions of the agency. (COA Decesion No. 2008-126 dated December 24/ 2008).
3. Honoraria paid to members of the Bids and Award Committee (BAC) and Technical Working Group (TWG) in excess of the rates provided for under DBM Budget Circular No. 2004-5A dated October 7, 2005 and for procurement activities pertaining to contracts not yet awarded to the winning bidder (Joseph Peter Sison, et al. vs. Rogelio Tablang, et al., G.R. No. 177011 dated june 5, 2009).
4. Grant of christmas bonuses, cash gift and other fringe benefits to consultants and to members of the Board who are not salaried officials of the government as they are not considered employees of the hiring agency (COA Decision No. 2006-030 dated April 11, 2006, BCDA vs. COA, G.R. No. 178160 dated February 26, 2009).
5. Grant of amelioration allowance or any similar benefits to private employees of service contractors contrary to Administrative Order (A.O.) No. 365 dated October 10, 1997 (HDMF vs. COA, G.R. No. 157001 dated October 19, 2004).
6. Loyalty service award granted to employees that have not yet rendered the minimum service of ten years in the government required under CSC Memorandum Circular No. 42, s. 1992 (BCDA vs. COA No. 142760 dated August 6, 2002). Similarly, the annual payment of Anniversary Bonus to government employees which is not consistent with A.O. No. 263 dated March 28, 1996, authorizing the grant thereof of their agencies’ milestone years-that is, on the 15th year thereafter, is also irregular.
7. Payment of COLA and other allowances deemed integrated in the salary per DBM-NCC No. 59 and DBM-CCC No. 10 (Victoria C. Gutierrez, et al. vs. DBM, G.R. No. 153266 dated March 18, 2010).
8. Grant of food allowance, rice subsidy and health care allowance as there is no law authorizing the grant of such allowances (BFAR Employees Union, R.O. VII vs. COA, G.R. No. 169637 dated June 8, 2007). Similar case that may also fall under this example is the payment of Health care insurance, except for local government units (LGUs) (the Province of Negros Occidental vs. the Commissioners, COA, et al., G.R. No. 182574 dated September 28, 2010).
9. RATA and cash gift to Office of the Government Corporate Counsel (OGCC) lawyers rendering legal assistance to government-owned and controlled corporation (GOCCs) without the presence of the three concuring conditions required under Section 6 of Executive Order (E.O.) No. 878 dated March 4, 1983 (COA Decision No. 2006-030 dated April 11, 2006). Paying Attorny’s fees to regular employees is likewise irregular.
10. Payment of Collective Negotiation Agreement (CNA) signing bonus to members of governing board (non-organic employees) and those occupying managerial position higher than division chief (COA Decision 2008-029 dated February 29, 2008).
11. Payment of CNA cash incentive/benefit to rank-and-file employees where the conditions required in determining “savings’ under Public Sector Labor-Mnagement Council (PSLMC) resolution No. 02, s. 2003 dated May 19, 2003 and DBM Budget Circular No. 2006-01 dated February 1, 2006 are not met.
12. Premiums paid for the Personnel Accident Insurance of officers and employees of GOCCs without prior authority from the DBM and/or the Office of the President (COA Decision No. 2006-030 dated April 11, 2006). Similar case that may also fall under this example is the procurement and payment of correspanding premiums for Directors and Offices Liability Insurance (DOLI).
13. Hiring of private lawyers by the GOCCs to handle their cases and legal matters without prior written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written concurerence of the COA (Phividec Industrial Authority and Atty. Cesilo Adaza vs. Capitol Steel Corp. and Cheng Han Sui, G.R. No. 1 55692 dated October 23, 2003).
14. Hiring of casual and probationary employees under job order with entitlement and benefits enjoyed by regular government employees, in violation of CSC Resolution No. 020790 dated June 5, 2002 and CSC Memorandum Circular No. 15,s 1999.
15. Hiring of consultants and contractuals to perform functions that will exercise control and supervision over regular employees (CSC Memorandum Circular No. 26, s. 1997).
16. Continuous extension of the services of a foreign consultant to undertake relatively simple supervisory work required for the final stages of the project that can be done by the implementing agency itself or a local consultant (NHA vs. COA, G.R. No. 101370, September 2, 1993).
17. Hiring of employees who had previously opted to retire/be separated from the service as a result of nationalization efforts of their agency within five (5) years after retirement/separation (DBM Circular Letter No. 2011-14, dated December 22, 2011 and Civil Service regulations).
18. Payment for damages, litigation costs and attorney’s fees awarded by the court to a contractor caused by serious lapses and omissions of a public officer such as the issuance of change orders without authority from the Sangguniang Panglungsod and his failure to protect public funds from being garnished (COA Decision No. 2008-043 dated may 6, 20080.
19. Reimbursement of expenses incurred by persons who are not authorized to attend conferences, meetings and other official functions.
20. Unless there is a law which provides otherwise, reimbursement of legal expenses incurred by public officials and employees against whom criminal/civil/administrative suits have been filed, in relation to the performance of their public functions.
21. Payments of rental contracts for service vehicles covering a continuous period of more than 15 days without the authority or approval of the Secretary of the DBM, appropriation and certification of availability of funds (COA Decisions No. 2009-007 dated February 9, 2009).
22. Release of funds to non-government organization/people’s organizations (NGO’s/POs) for money market placement, time deposits or other forms of invesments (COA Circular No. 2007-001 dated October 25,2007).
23. Release of assistance such as fertilizers, seeds and other farm inputs and equipment other than to the intended farmer beneficiaries.
24. Media advertisements, except those required in the issuance of agency guidelines, rules and regulations, the conduct of public biddings, and the dissemination of important public announcements (A.O No. 103 dated August 31, 2004).
25. Expenses for advertisements of anniversaries, etc. in newspaper, TV or radio merely for publicity or propaganda purposes except when the nature of the agency’s mission would require such expenses as in the case of promotion of trade and bussiness.
26. Donations, contributions, grants and gifts, except if said activities are undertaken pursuant to the mandate of the donor-agency (A.O. No. 103 dated August 31, 2004). Similar example of this is the release of funds as financial assistance to civic organizations such as Rotary, Jaycees and Lions, non-stock non-profit coorporations/foundations and private corporations.
27. Payment of foreign travel expenses to private individuals purportedly as representatives of an international organization for the purpose of attending a convention, using the travel rates prescribed under E.O. 298 dated March 23, 2004 (update: EO 77, s. 2019), which governs government personnel only.
28. Including names or initials and/or images or pictures of government officials in the billboard and signages on government programs, projects and properties banned under Department of the Interior and Local Government (DILG) Memorandum Circular No. 2010-101 dated September 23, 2010.
29. Acceptance of a project as 100 percent complete pursuant to Certificate of Inspection Report when the project was not yet completed (Manuel Leycano, Jr. vs. COA, G.R No. 154665, February 10, 2006).
30. Acceptance of a project constructed not in accordance with plans and specifications and with noted deficiencies.
31. Acceptance of seeds and other articles/goods without passing the required quality test by the responsible government entity such as by the Bureau of Plant Industry, in case of seeds.
32. Use of government motor vehicles for private social function such as receptions, balls, theaters and for other personal purposes; use by spouse, children, friends and the like, of the official entitled thereto, even if they are in the company of said officials; or on Sunday, legal holiday or out of their regular office hours or outside the route of the official or employee, unless properly authorized. (A.O. No. 239 dated September 15, 2008).
Irregular expenditures may either be suspended or disallowed in audit.
A suspension is a temporary disallowance of a transaction which is of doubtful legality/validity/propriety or may result to pecuniary loss to the government and appears illegal, improper or irregular unless satisfactorily explained/justified by the responsible officers or until additional documentation or the requirements on matters raised in the course of audit are submitted or complied with. Otherwise, said financial transaction shall be disallowed in audit.
COA Auditors shall issue a Notice of Disallowance for transactions which are found to be illegal, irregular, excessive, extravagant, unnecessary and unconscionable (IIEEUU).
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