MANILA, Philippines (Updated July 20, 10:26 a.m.) — The Commission on Audit issued the Office of the Vice President, then led by former Vice President Leni Robredo, a notice of disallowance over its hiring of a legal consultant without the permission of the state auditing body and the Office of the Solicitor General.
"In view of the lack of the written conformity and acquiescence of the Solicitor General and the written concurrence of COA, and despite having legal officers, payments made to the legal consultant are considered irregular and unnecessary expenditures," the COA said in its 2021 audit report on the OVP.
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In its defense, the OVP said it requested the Office of the President to create third-level positions for a core group of policy advisers, including the legal consultant who was recommended by Robredo to be appointed as undersecretary.
"However, OP did not act upon the request which compelled the office to resort to a consultancy arrangement," the OVP said in comments to COA’s findings.
What's a notice of disallowance anyway?
But state auditors were not satisfied with this explanation and maintained that the expenses paid to the legal consultant should be disallowed as it issued a notice of disallowance on April 5, 2022.
In its 2009 Revised Rules of Procedure, the COA defines disallowance as "the disapproval in audit of a transaction, either in whole or in part."
Essentially, when a government transaction is disallowed, as it is either irregular, unnecessary, excessive, extravagant or illegal, the public funds used for it must be returned to the government by the people who approved of it.
In the OVP’s case, the COA said "concerned agency officials who signed/approved the contract of service, approved the payments, and certified as to the necessity and lawfulness of the expenses as well as the completeness of supporting documents, should be held personally liable for the disallowance."
What happens next?
The COA's notice of disallowance has been lifted after it granted the OVP's appeal on June 29 "considering the absence of bad faith, malice or gross negligence in the transaction," Robredo's spokesperson Barry Gutierrez said in a statement.
Gutierrez added that it is now under automatic review by the COA.
According to COA rules, appeals are taken up by directors who have jurisdiction over the agency being audited. Decisions of directors on the appeals may be elevated to the COA’s Adjudication and Settlement Board or to the commission proper.
In this case, the commission proper, composed of COA chairperson Jose Calida and COA commissioners Roland Pondoc and Mario Lipana, will take up any appeals arising from a decision adverse to Robredo’s OVP by a director who would review the disallowance.
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Even then, the decision of the commission proper does not become final and executory until after 30 days, unless a motion for reconsideration is filed before the Supreme Court.
Gutierrez said that in the OVP's appeal, it maintained that the consultant worked primarily as a key adviser on policy matters and not as a lawyer and should not be covered by COA rules on hiring lawyers.
How does this affect the audit rating of Robredo’s OVP?
Even if COA flagged the OVP over the hiring of a legal consultant, it still got an unmodified or an unqualified opinion from the state auditing body, which indicates that the financial statements of Robredo’s former office are all in order.
This means that the COA found that the OVP during Robredo’s final year in office fairly presented its financial statements according to public sector accounting standards.
The COA cautioned, however, that an audit opinion should not be treated as a rating that ranges from highest to lowest.
"It is important to note that the financial statements represent only a facet of an agency and that an audit opinion does not provide any conclusions on the agency’s level of compliance with laws, rules and regulations, nor the application of the principles of economy, efficiency, and effectiveness in the agency’s operations," the COA said in June.