COA calls out Navy over P1.4-B idle deposits

The Commission on Audit (COA) has called out the Philippine Navy (PN) over P1.445 billion in idle deposits in government banks intended for the implementation of various programs, projects and activities.

In its 2021 annual audit report on the PN, the COA noted that of the total P2.666-billion balance in the Deposit on Letter of Credit (DLC) of the PN with two Authorized Government Depository Banks (AGDBs), 54.21 percent or P1.445 billion were outstanding for over one to five years due to non-implementation of several programs, projects and activities.

“The intended projects, programs and activities remained undelivered or unimplemented; thus hampering the operations of the PN units and depriving PN of the immediate use and possible benefits that may be derived therefrom,” the COA said in its report.

The audit body pointed out that the PN “could have earned interest income on the deposit had it availed of an interest income sharing agreement with the concerned AGDBs.”

The two AGDBs identified in the audit report as repository of the PN’s funds were the United Coconut Planters Bank (UCPB) and the Land Bank of the Philippine (LBP).

Meanwhile, the PN units identified to have the outstanding idle deposits were the Naval Logistics Center, Philippine Marine Corps and Naval Sea Systems Command.

“Considering the length of time that funds are in the possession of the banks, the PN might have earned an interest income had the PN arranged an interest income sharing scheme on the DLC with UCPB and LBP, without prejudice to the timely implementation of the projects subject of DLC,” the COA said.

The COA recommended to the PN to require the concerned units to ensure completion or delivery of the projects/programs/activities covered by the DLC, “otherwise, terminate the contracts and coordinate with the AGDBs for the remittance of unserved balance of deposits to the Bureau of Treasury and blacklist defaulting suppliers in future transactions of the agency.”

The COA said the commander of the concerned units of the PN must also “make representation with the AGDBs for an interest sharing scheme on transfers/deposits for projects with delivery period of more than three months.”

In a comment, the PN said the concerned units have already committed to take appropriate actions to address the audit observations, among them making representation with the “higher headquarters officials to arrange or coordinate with the AGDBs for possible interest income sharing scheme.”