COA calls out PS-DBM over 'unauthorized' P3-B high-yield investment

The Commission on Audit (COA) has flagged the Procurement Service of the Department of Budget and Management (PS-DBM) over its P3 billion worth of high-yield investment in government banks, saying it is unauthorized and executed outside of its mandate.

In a management letter to PS-DBM, state auditors said PS-DBM failed to revert the investment to the general fund of the Bureau of Treasury (BTr) in violation of Executive Order No. 431 dated May 30, 2004.

Dennis Santiago, PS-DBM executive director, told GMA News Online the audit observation is currently being reviewed.  He also said the amount is "intact."

The COA said the non-return of the P3-billion investment to the BTr is contrary to Department of Finance-DBM-COA Joint Circular No. 04-2012 dated September 11, 2012, which states that all dormant account, as well as unnecessary special and trust funds, shall be reverted to the general fund.

The same 2012 Joint Circular also states that dormant accounts refer to collections authorized by law to be deposited with an authorized government depository bank (AGDB) and have remained inactive for more than five years.

"Review of the Cash in Bank [such as] Time Deposits, Local Currency disclosed that the PS-DBM invested its funds in high-yield savings account with the LBP and the Development Bank of the Philippines (DBP), to earn interest at higher rates as compared to that of a current or savings account," the COA said.

"It is not in PS-DBM's mandate to make investments and it has no authority to invest in a high-yield savings account. The practice of investing cash in a High Yield Savings account, therefore, deviates from its mandate of procurement of CSEs which requires the utilization of funds," it added.

"The non-reversion of the investment in the High Yield Savings account maintained for over five years to the Bureau of Treasury's General Fund had not provided the national government additional funds for its operations."

The COA also said that while PS-DBM's high-yield savings account was terminated and the proceeds were returned to its LBP Current Account in 2020, the DBP high-yield savings account remained with a balance of P3.001 billion.

"Out of the balance, P1.363 million which represents interest income earned was automatically swept into the account of the BTr as evidenced by the credit advice issued by the DBP on March 18, 2022," it said.

"The fund source of the P3.000 billion deposited with the DBP could not be specifically identified. Since the funds with the PS-DBM's are fund transfers from client-agencies whose budgets are provided on an annual basis, any fund balance is to be reverted to the General Fund. Also, the high-yield savings account has been established for more than five years and has remained inactive, with the incurrence of interest income as the only transaction," it added.

Given the findings, the COA has recommended that PS-DBM ask its head of Treasury Division to immediately remit the balance of the savings to the BTr.

Amount intact

Santiago said the audit observations are being reviewed by the PS-DBM.

"We are already reviewing the audit observation on the high yield savings account and shall revert to COA to address the AOM," he said.

"The amount of P3 billion is intact, and I am for the return of the money to the national treasury soon as we have properly clarified the nature of the funds with COA," he added.

Santiago also appealed to "trust the new PS-DBM administration."

"Allow us to introduce and institute reforms in PS-DBM. Hayaan po ninyo kaming ayusin at linisin ang sistema at proseso dito. We want to bring back to PS-DBM its old glory. Higit sa lahat, nais naming manumbalik ang tiwala at kumpiyansa ninyo sa PS-DBM," he said.—KBK/LDF, GMA News