THE Commission on Audit (CoA) flagged a P323.67-million unreconciled difference between the Philippine Coast Guard’s (PCG) inventory balances in its financial statements and its physical count reports, along with P37.89 million in unrecovered contractor advances and irregularities in fuel and travel expenses.
In its 2025 audit report, CoA questioned the PCG’s P2.53-billion inventory balance after finding negative inventory amounts and weak internal controls over the issuance of supplies.
“The accuracy and existence of the reported year-end balance of the Inventories account amounting to P2,526,227,267.93 cannot be ascertained due to the… unreconciled difference between the balances per Financial Statements and the Reports on the Physical Count of Inventories and Semi-expendable Properties totaling P323,671,873.34,” state auditors said, noting that these affected the reliability and fair presentation of the agency’s financial statements.
Auditors also identified P316.37 million in financial misstatements, including P97.36 million in fuel, oil and lubricants expenses recorded in the wrong accounting period and P91.21 million in understated operating expenses due to late claims submissions.
Property, plant and equipment accounts worth P16.13 billion were misstated by P80.13 million because of unrecorded asset transfers, uncalculated depreciation, and unprovided impairment losses.
The PCG’s total property and equipment balance of P35.06 billion was also affected by a P119.92-million difference found during physical counts. Auditors likewise noted undocumented donated assets.
CoA also found P37.89 million in contractor advances that remained unrecovered despite the termination of projects or their completion and full payment.
“Advances to Contractors totaling P37,892,902.17 from projects/procurements that were either issued with notices of termination, in the process of termination or completely delivered and paid in full remained not recouped,” state auditors said, warning of the “possible loss or wastage of government funds.”
The audit also found irregularities in foreign travel expenses, including duplicate daily subsistence allowances for meals provided by host entities and airfare payments without proof of payment or proper authorization.
In procurement, CoA cited noncompliance with bidding requirements, including P11.33 million in building repair contracts in North Western Luzon and P7.40 million in venue and catering expenses in Bicol that lacked sufficient supporting documents.
Auditors also raised concerns over the absence of a standardized system for issuing and monitoring fuel slips, which they said weakened controls and increased the risk of fuel misuse.
“The absence of a standardized and integrated control system for the issuance and use of gas slips resulted in inconsistent practices across PCG units,” CoA said.
As of Dec. 31, 2025, the PCG had P273.41 million in unsettled audit disallowances and P2.16 million in audit charges.
PCG management agreed to implement CoA’s recommendations, including reconciling financial records, establishing a centralized fuel tracking system, preventing duplicate travel allowances, and pursuing the recovery of contractor advances.
CoA rendered a qualified opinion on the PCG’s 2025 financial statements due to P316.37 million in misstatements. — Pexcel John Bacon