10+ Examples of Unnecessary Expenditures According to the Commission on Audit (COA)

In our article entitled “30+ Examples of Irregular Expenditures or Uses of Government Funds or Property, according to the Commission on Audit (COA)”, we discussed what irregular expenditures are and we provided various examples of these expenditures.

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Now, in this article, we will discuss to you what unnecessary expenditures are and we will likewise provide various examples to guide you in deciding whether an expenditure is necessary or not.

At this point, we emphasize that unnecessary expenditures may be suspended or disallowed in audit by COA.

[Read: When is Audit Observation, Notice of Suspension, and Notice of Disallowance issued by COA?]

What are Unnecessary Expenditures?

Section 2 (2), Article IX-D of the 1987 Constitution provides that the Commission on Audit (COA) shall have exclusive authority, subject to the limitation in this Article, to “xxx promulgate accounting and auditing rules and regulations, including those for the prevention of irregular, unnecessary, excessive, extravagant, or unconscionable (IUEEU) expenditures or uses of government funds and properties “.

This authority of COA was emphasized under Section 33 of Presidential Decree (P.D.) No. 1445, which states:

Section 33. Prevention of irregular, unnecessary, excessive, or extravagant expenditures of funds or uses of property; power to disallow such expenditures. – The Commissions shall promulgate such auditing and accounting rules and regulations as shall prevent irregular, unnecessary, excessive, or extravagant expenditures or uses of government funds or property.

Section 33, Presidential Decree No. 1445

COA defines unnecessary expenditures as:

• Expenditures which could not pass the test of prudence or the diligence of a good father of a family, thereby denoting non-responsiveness to the exigencies of the service.
• Expenditures that are not supportive of the implementation of the objectives and missions of the agency relative to the nature of its operation.
• Expenditures not dictated by the demands of good government, and those the utility of which cannot be ascertained at a specific time.
• An expenditure that is not essential or that which can be dispensed with without loss or damage to property; and
• The mission and thrust of the agency incurring the expenditures must be considered in determining whether or not an expenditure is necessary.

Quoting former COA Chairperson Grace Pulido-Tan, she said in a 2018 article in Manila Bulletin that: “unnecessary expenses are those that are not essential to the nature of the agency’s operations or exigencies of the service. Hiring of consultants whose functions are redundant with those of organic personnel, or overtime for non-urgent work fall in this category.”

Hereunder we provide you more examples of unnecessary expenditures, as provided by COA in Annex C of COA Circular No. 2012-003:

1. Creation or continued operation of subsidiaries, the function of which duplicates that of parent corporation.

2. Hiring of public relation (PR) companies.

3. PR expenses by government insurance corporation whose members and where government property are compulsorily insured.

4. Hiring of consultants whose function are redundant to the respective functions of concerned officials, for example hiring of procurement consultant, financial consultant or media consultant.

5. Hiring of consultants redering services not aligned/related to the mandate/thrusts of the hiring Agency and/or exceeding the agreed consultancy period including renewals.

6. Professional service cuntract for the design of a building with already existing design/plan, and subject services of the Architect was superfluos and unnecessary (COA Decision 94-117 dated March 10,1994).

7. Purchase of high-end or expensive models/brands of electronic gadgets such as mobile phones, desktops, laptops, etc, unless justified by circumstances.

8. Construction of building and/or procurement of equipment not actually needed or without any intended prupose, not put to use or use for purposes other than the intended purpose, not completed and could not be properly maintained or operations sustained.

9. Construction of housing units which were not distributed/awarded or disposed of within considerable period of time as evidenced by the deterioration of the units.

10. Replacement of serviceable structure/equipment.

11. Continuous repair of vehicles and equipment already considered beyond economic repair as evidenced by frequent breakdown and non-use after repair.

12. Grant of overtime pay for work that is not of urgent nature as to require completion within a specified time or that can be undertaken during regular offce hours

As emphasized earlier, unnecessary expenditures, along with irregular, illegal, excessive, extravagant, or unconscionable (IUEEU) expenditures may 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, COA Auditor shall issue a Notice of Disallowance if said transaction was found to be illegal, irregular, excessive, extravagant, unnecessary and unconscionable (IIEEUU).