The Commission on Audit has called the attention of the Philippine Charity Sweepstakes Office (PCSO) over questionable transactions worth more than P10.17 billion intended for charity programs and medical assistance.
Of the P10.17 billion worth of questioned transactions, P5.89 billion were supposedly used for the wrong purpose, while P4.28 billion accounted for accumulated losses from the PCSO's online gaming operation.
COA auditors said the PCSO management deducted P5.89 billion from the Charity Fund even if the purpose of the spending was not provided under Section 6.B of the Charity Sweepstakes, Horse Races, and Lotteries Act.
The law states the fund will be utilized for payments or grants for health programs, medical assistance, and charities of national character such as the Philippine National Red Cross.
"Expenses not related to charity programs/projects totaling P5.89 billion were charged to the Charity Fund, which may deplete the same and eventually affect the delivery and implementation of the mandated purposes," the 2017 audit on the PCSO read.
The COA said the PCSO instead used the money to help strengthen higher education and pay documentary stamp taxes, services of employees assigned at charity clinics, and medical benefits of all employees. It said these transactions should have been charged to the Operating Fund.
COA figures showed the PCSO paid P5.3 billion worth of documentary stamp taxes to the Bureau of Internal Revenue (BIR) and P318 million to the Commission on Higher Education (CHED), plus charged P204 million to its Expanded Medical Assistance Program (EMAP) and P67.98 million to the PCSO Charity Clinic.
The COA said the remittances to BIR and CHED alone reduced the Charity Fund of PCSO by 38 percent.
"We recommended that management discontinue the charging to the Charity Fund expenses for the Charity Clinic and EMAP while the various mandated contributions and the BIR documentary stamp taxes, should be charged first to the Retail Receipts, net of the printing costs," COA said.
The PCSO said Charity Clinic expenses were charged to the Operating Fund starting January 2018, while EMAP remains to be charged under the Charity Fund being a health-related expense.
CHED contributions and documentary stamp taxes remain charged under the Charity Fund in compliance with the PCSO Board meeting held in April 1995. The COA, however, said these are not health-related and therefore should not be charged in the fund pursuant to the law.
Keno Gaming Operations
The COA further said the same Charity Fund had a deficit of more than P1.43 billion from revenues on the online Keno Gaming Operations, which has an accumulated loss of P4.28 billion in its Prize Fund since it started operations in 2006.
The COA questioned why the online game continues to operate even if it already incurred a multi-billion-peso deficit.
The commission said it has been informed by the PCSO that Keno operations contributed to the funding of various charitable programs.
A computation of the contributed amount of Keno operations, however, showed it only generated P2.85 billion for 11 years, or an excess deficit of P1.43 billion.
"It can be concluded that the current operation of the online Keno game is not financially viable. Moreover, the continuous incurrence of deficit by the Keno operations had negatively affected the consolidated Prize Fund of PCSO," COA said.
The COA urged PCSO to revisit the Keno game or consider the possibility of discontinuing its operations to ensure the stability of the consolidated Prize Fund.
The PCSO said its Gaming Sector has been continuously developing solutions to sustain Keno operations, but said the COA recommendation of ceasing the online game will be discussed on its next Board meeting. — MDM, GMA News