COA questions Comelec’s P2.5-B supply contracts

The Commission on Audit (COA) has directed the Commission on Elections (Comelec) to justify why it entered into supply contracts totaling P2.58 billion despite the absence of a Certificate of Availability of Funds (CAF), in violation of government procurement rules.

“The absence of the required CAF in the contracts entered into by Comelec rendered the contracts null and void, as provided for in the above cited regulations, thus resulting in illegal disbursements,” the COA said in its management letter to Comelec Chairman Sheriff Abas on May 21, 2018.

COA explained that it issued a management letter instead of an annual audit report as the poll body has yet to submit its financial statements for 2017.

The COA said a review by its audit team revealed that 60 contracts for the procurement of goods and services amounting to P2,580,157,478.24 were effected, despite the absence of the CAF.

The COA said the lack of CAF renders the contracts “null and void,” as proof of the availability of funds is a primary requirement for any government procurement as stated in Volume 2 of Government Procurement Manual (GPM), Government Accounting Manual (GAM) and Presidential Decree No. 1445 or the Government Auditing Code of the Philippines.

“CAF is an important confirmation of the agency’s readiness on its procurement... Section 85(1) of PD 1445 provides that no contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free from other obligations, is sufficient to cover the proposed expenditure,” the COA explained.

The COA, however, did not specify in its letter the year or years when the contracts were entered into as well as the names of the suppliers to which the contracts were awarded.

The COA has directed the Comelec’s Bids and Awards Committee (BAC) “to explain/justify the failure to secure the required CAF from the chief accountant.”

The COA added the BAC, as well as the Comelec’s Finance Services Department, must also justify “why the disbursements pertaining to the above-mentioned contracts should not be disallowed in audit.”

The COA usually issues a Notice of Disallowance if a government agency fails to justify a transaction or a disbursement found to be irregular by the audit team. An Notice of Disallowance serves as an order to return the disbursed amount.

In a letter dated April 11, 2018, the director of the Comelec Finance Services Department said it concurs with the audit recommendations and promised to “strictly comply” with the rules cited by the COA.