COA rules leave aliases unchecked in confidential funds — auditor

Government rules governing the liquidation of confidential and intelligence funds neither explicitly allow nor prohibit the use of aliases in supporting documents, a former Commission on Audit (COA) official told the Senate impeachment court on Wednesday, exposing what lawmakers said were gaps in the state's oversight framework.

oderick Wamil, a former auditor with COA's Intelligence and Confidential Fund Audit Office (ICFAO), said the COA-Department of Budget and Management (DBM) Joint Circular No. 2015-01, which sets the rules for the use and liquidation of confidential and intelligence funds, contains no provision addressing the use of aliases in acknowledgment receipts and other liquidation records.

Asked by Senator-Judge Bam Aquino whether the circular permits the use of aliases, Wamil replied: "Based on the provision of the joint circular, it is neither allowed nor prohibited."

He added that previous guidelines governing confidential funds were similarly silent on the matter. "Silent po 'yung circular," Wamil said.

Wamil explained that ICFAO audits are conducted as compliance audits, meaning auditors determine whether submitted liquidation documents comply with the requirements of the joint circular and other applicable regulations.

"Ang focus ng audit namin ay compliance audit. Kung ano 'yung provision ng circular, 'yun ang basis ng audit namin," he said.

The former auditor said COA's examination is based on liquidation reports and supporting documents submitted by agencies and does not include independently verifying whether individuals identified in receipts actually exist.

"Hindi kasama sa audit ang validation kung totoong tao o hindi," Wamil testified.

The Joint Circular, issued in 2015 by COA, DBM, the National Security Council, Department of National Defense and other agencies, sets the rules for the release, utilization and liquidation of confidential and intelligence funds.

Under the guidelines, agencies are required to submit liquidation reports, certifications and acknowledgment receipts to support their expenditures, but the circular does not explicitly require auditors to verify the identities of individuals named in the documents.

Wider audit powers

The testimony prompted Senator-Judge Panfilo Lacson to call for a review and possible expansion of the government's audit rules on confidential and intelligence funds, arguing that the current framework limits auditors to checking paperwork rather than verifying whether expenditures were tied to legitimate intelligence activities.

Wamil testified that ICFAO audits are therefore conducted as compliance audits, with auditors relying on documents submitted by the audited agency.

"Ang focus ng audit namin ay compliance audit. Kung ano 'yung provision ng circular, 'yun ang basis ng audit namin," he said.

The former auditor also told the court that verifying whether individuals named in receipts are real persons is outside the scope of the audit.

"Hindi kasama sa audit ang validation kung totoong tao o hindi," Wamil said.

Lacson, a former Philippine National Police chief who headed intelligence and anti-crime operations during his law enforcement career, questioned whether such a document-based review was sufficient to establish that confidential funds were properly spent.

"Bakit paper audit lang kayo? Wala kayong physical? Parang bitin ang paggawa ng audit. Paano n'yo malalaman kung legitimate ang pumirma sa acknowledgment receipts kung hindi n'yo inaalam kung meron bang totoong tao na nasa likod ng mga alias na 'yan?" he asked.

"Baka pwedeng irekomenda mo na i-amend ninyo ang inyong Joint Memorandum Circular. Parang bitin. In fairness to the concerned offices or persons na ina-audit, dapat kumpleto ang due process," he added.

The senator also questioned whether auditors assigned to confidential and intelligence fund reviews should be granted security clearances, noting that intelligence operations often involve classified records identifying informants, assets and operatives who use aliases.

According to Lacson, such records remain restricted until an operation is terminated or declassified, preventing auditors from examining information that could establish whether a project actually existed and whether expenditures were connected to legitimate intelligence work.

"Paano ka makakapag-audit properly kung hindi mo alam ang nature ng intelligence project or operation?" he asked.

Lacson further suggested that after-surveillance or after-intelligence reports prepared by operatives could be recognized as evidence that a surveillance or intelligence-gathering activity had been successfully conducted.

Wamil replied that the Joint Circular does not prescribe a specific document to prove the success of an intelligence operation. Instead, auditors determine compliance by examining whether there is a "causal link" between information supplied by an informer and the outcome of an operation.