COA flags SSS for P13M tissue purchase made on verbal deal

The Commission on Audit (COA) flagged the Social Security System (SSS) in its 2024 audit report for the procurement of 143,424 rolls of tissue paper amounting to P13.195 million, based solely on a verbal agreement without any supporting documentation or formal memorandum of understanding.

The Commission cited that such laxities pose risks of loss or deterioration, inconsistent with Section 4 of Presidential Decree No. 1445, and Section 28 of the General Appropriations Act, which states that the inventory of supplies, materials, and equipment spare parts to be procured shall not exceed the agency’s two-month requirement.

According to the COA report, SSS began procuring the tissue rolls on 8 May 2024 in compliance with its Annual Procurement Plan (APP).

The quantity procured exceeded the two-month supply requirement, resulting in storage and inventory management challenges. In addition, due to SSS’s limited warehouse capacity, 116,046 tissue rolls had to be retained at the supplier’s premises.

“This situation indicates procurement activities that were undertaken without sufficient planning and without consideration of existing warehouse capacity, thereby posing risks of loss, damage, or deterioration of the stored items,” COA said in its report.

The report further stated that upon verification, it was found that the supplier arrangement with SSS was based solely on a verbal agreement, without any supporting documentation or formal memorandum of agreement.

The Commission noted that the lack of documentation violates Section 4 of Presidential Decree No. 1445, which states that financial transactions and operations of any government agency shall be governed through authorization and in accordance with law.

COA recommended that SSS strictly comply with the two-month requirement under Section 28 of the Fiscal Year 2024 GAA beginning in the 2025 procurement cycle and “exercise prudence” in the use of government resources by ensuring proper procurement planning and conducting a full inventory.

In addition, COA recommended that the concerned agency institutionalize procurement planning guidelines by the fourth quarter of 2025 to ensure that future procurements align with the actual storage capacity and operational needs of the agency.