Is government finance still in the Stone Age? - Leonor Magtolis Briones
LEONOR MAGTOLIS BRIONES/abs-cbnNEWS.com | 10/27/2008 1:29 AM
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THE BUSINESS OF GOVERNANCE
The Philippines prides itself in being up to date in most aspects of governance. Both government and private sectors boast that current financial management systems, processes, rules and regulations are harmonized with international practice. Billions are spent for the latest toys in computerized gadgets, information systems and capacity building for financial management analysts, planners and budget officers, accountants and auditors.
The donor community has spent hundreds of millions of dollars and euros in assisting national and local governments in improving financial management practices. They have invested heavily in organizational development and capacity building. Hundreds of public officials go abroad each year to study various aspects of financial management.
The Commission on Audit claims that it has updated accounting and auditing rules and regulations to standards compatible with global benchmarks. The Department of Budget and Managements boasts that budget implementation is closely monitored and actual performance of agencies measured.
So how come we had the PNP fiasco in Russia involving the Comptroller ? And he was heading a PNP delegation to, of all meetings, an Interpol conference!
The more facts are uncovered by enterprising media and the senators, the more we realize that government financial practices are stuck in the Stone Age when money and had to be transported physically.
Financial management in PNP and DILG
The Senate hearings have exposed the vulnerability of the financial management system in the PNP and its mother department, the DILG. It is obvious that the amount of cash carried by the PNP delegation far exceeds maximum allowable levels. Who approved the allowances which break existing rules? Fingers point to the PNP Head and the DILG Secretary.
Back to the Stone Age: Cash and Carry
In spite of claims to modernization and globalization, it appears that the government is still in the Stone Age. We laugh at peasants who hide money under their beds or in holes in their posts. We are amused with stories about money being carried about in chests during wars in ancient times. And here we have the highest financial management official in the PNP lugging over a hundred thousand euros in the year 2008!
International banking was already practiced in the ancient Roman Empire. It flourished further during the Crusades when the Knights Templar set up banks all over the known civilized world. Pilgrims would deposit cash in their home countries and travel only with statements of deposits and minimal cash. They would withdraw money as needed in Jerusalem or in the nearest branch wherever they happened to be. That was during the time of Richard the Lion Hearted!
The DILG Secretary lamely explained that so much cash had to be carried because the delegation was going to a strange country and had to be ready for contingencies such as health emergencies. Hasn’t he heard of health insurance and credit cards?
Challenges to agency heads, the DBM and COA
The Audit Code clearly states that fiscal responsibility rests with the head of office. The internal control systems of PNB and DILG are dangerously weak and subject to manipulation. It is the responsibility of heads of agencies to overhaul their internal control systems and to correct the appalling ignorance of their financial management officials.
Obviously sound financial management is not practiced in many agencies PNP may only be the tip of the iceberg. It is the responsibility of DBM which monitors budget releases and the Commission on Audit which reviews internal control systems to conduct a government wide review of financial practices in overseas travel. . They might be in for a shock!
Round Table Discussion on Legislative Budget Reforms
On Tuesday, October 28 Cong. Teofisto “TG” Guingona will convene a round table discussion on legislative budget reforms. Twenty experts and practitioners will exchange views on problems and issues which TG will present for their reactions and inputs. The objective is to identify urgent problems in budgeting which need legislative reform.
The array of participants include present and former DBM officials, COA executives, experts from the academe, and practitioners from agencies with the largest budgets. The Round Table will be held at the U.P. National College of Public Administration and Governance.
TG is one of the most studious congressmen in the House of Representatives. In the course of reviewing the national budget, participating in the debates and conducting hearings, he has uncovered myriad problems in budget practices which can be traced to the budget law.
He is one of the leading champions of the Alternative Budget Initiative convened by Social Watch Philippines.
TG has realized that it is not enough to expose questionable practices year after year. Executive Order 292 which includes a chapter on the national budget must be amended.