COA flags AMLC's 'overspending' on meals, accommodations

The Commission on Audit (COA) has questioned the Anti-Money Laundering Council (AMLC) for spending over P7.2 million for the conduct of its training, workshops and planning activities in hotels or resorts.

The COA, in its annual audit report for 2022, said such spending exceeds daily travel expense rates provided under Executive Order 77 by P4.57 million, which resulted in additional expenses by the AMLC.

COA said the actual daily expenses per participant for meals ranged from P1,600.00 to P3,250.00, while those for hotel accommodation ranged from P1,211.54 to P3,075.00.

The allowed expenses for these under order, however, only ranged from P450 to P660 for meals and P750 to P1,100 for lodging, depending on the location of the seminar.

“During the course of the audit, documents to support Negotiated Procurement-Lease of Real Property or Venue such as non-availability of publicly owned venue in the place where training/seminar were conducted, the justification or document that the lease of privately-owned property/venue is more economical and efficient for the government were not provided as required in the Paragraph 9(b), Annex H of the 2016 RIRR of the RA No. 9184 (Procurement law),” state auditors said.

“In view of the inadequate documentation of the leases of hotels/resorts for the conduct of trainings/seminars/planning activities to warrant the adoption of Negotiated Procurement-Lease of Real Property or Venue, the said leases were reviewed/evaluated based on the relevant provisions of EO No. 77 to determine what is most economical to the agency. Consequently, the excess was P940.00 to P2,590.00 for meals and P111.54 to P2,018.33 for hotel accommodation, or a total of P4.759 million in excess payment for the conduct of the 12 activities,” the COA added.

The COA said the meals and accommodation in excess of the allowable rates under EO No. 77 for the  conduct of 12 training/workshop/planning activities did not exhibit the economical use of government resources.

“We recommended that Management direct the Deputy Directors to ensure that expenses on training, seminars and planning activities are in accordance with the rates prescribed under EO No. 77 as applicable for prudence and economy in operations,” COA said.

“We also recommend that Management prioritize the lease of publicly-owned real property or venue,” it added.

In response to the COA report, AMLC said the subject expenses for lease of venue, with meals and accommodations, are not  subject to the provisions of EO No. 77 because such expenses were not charged to Traveling Expenses-Local in AMLC’s books given that such expenses were not intended for travel.

AMLC cited Section 53 and Annex H of the 2016 implementing rules and regulations of the Procurement law which states that “government entities may procure, through negotiated procurement, lease of venue for official use.”

“These  venues refer to hotels and other similar establishments catering to training, seminars,  conferences, and similar gatherings. Such lease may include meals and accommodation  depending on the requirements of the Procuring Entity (PE). Moreover, rental rates are  considered reasonable when they represent or approximate the value of what the lessee  Procuring Entity gets in terms of accommodation, facility, amenities, and convenience from  the leased real property or venue, and the Lessor gets an equitable return of capital or  investment,” the AMLC said.

“Clearly, EO No. 77 and the 2016 RIRR of RA No. 9184 have different ways and standards for obtaining the allowable expenses therein. Applying EO No. 77 would ignore the intent and will of the legislature on considering the prevailing lease rates for venues within the vicinity of the selected location in order to determine the reasonable rental rates,” the agency added.

The AMLC then argued that given the high inflation and increased costs of operations, the rate of P1,500.00-P2,000.00 under EO No. 77 would make it extremely hard, if not impossible, for the AMLC to look for a venue that would suit its needs.

Further, AMLC said the law does not prohibit government agencies to procure and resort to leasing privately-owned venues, which may also include meals and accommodations.

It invoked the Government Procurement Policy Board (GPPB) Resolution No.  08-2009 or the Guidelines on Lease of Privately-Owned Real Property and Venue which has been  revised by Annex H of the 2016 RIRR of the Procurement law mentioned above.

“Thus, it is no longer needed to  conduct a cost-benefit analysis in order to resort to leasing privately-owned real property or  venue, instead of leasing publicly-owned real property or venue from other government  agencies. The end-user Procuring Entity merely needs to justify that resort to leasing privately-owned real property or venue is more efficient and economical to the government,” the AMLC added.

COA, however, was firm.

“It is clear that for the procuring entity to resort to lease privately-owned  property, a justification shall be first made that such would be efficient and economical to the government. During the course of the audit, there were no document/s provided to support the lack of publicly-owned real property or venue where the venue is located, the necessity to lease privately-owned venues which will be more efficient and economical to the government, among others, in order to justify the expenses during trainings and seminars  which exceed the rates as prescribed in EO No. 77,” COA said.

“As EO No. 77 prescribes the rules  and regulations on the rates of expenses to be incurred by government officials and  employees relative to meals and hotel accommodations during travels to attend seminars  and trainings, the rates thereon were used to measure the efficiency and economy as required in the above provision,” it added.—Llanesca Panti/LDF, GMA Integrated News