Fraud Auditing and the Commission on Audit: Safeguarding the People’s Money, Defending the Nation’s Integrity

*Timpuyog Pilipinas Think-Tank Group

 

Introduction

Every peso the government spends comes from the hard work of ordinary Filipinos. It comes from the teacher whose salary is automatically deducted for taxes, from the jeepney driver who pays value-added tax each time he buys diesel, from the small sari-sari store owner who passes on excise taxes to customers. In return, people expect that their money will be used to build classrooms, provide health services, improve flood control, and bring food and assistance in times of disaster.

But too often, that expectation is betrayed. Instead of medicines reaching hospitals, they are overpriced. Instead of classrooms rising from the ground, they remain on paper as “ghost projects.” Instead of relief goods reaching survivors of calamities, they rot in warehouses. Corruption, in these cases, is not just about stolen money—it is about stolen futures and stolen dignity (De Guzman, 2023).

This is where fraud auditing and the Commission on Audit (COA) come in. Fraud auditing is the process of digging deeper, not just to check if receipts exist, but to verify if funds were misused, stolen, or diverted. And COA, the constitutional guardian of public funds, is the independent institution mandated to protect the people’s money and ensure that government funds are used properly (1987 Constitution, art. IX-D, sec. 2).

For Timpuyog Pilipinas, which stands for federalism, unity, patriotism, moral renewal, and sustainable development, the issue of fraud auditing is central. Without accountability, no system of government will succeed. Without integrity, no development will be sustainable.

 

Fraud Auditing Explained in Simple Terms

A regular audit checks if financial records are correct. For example, if a mayor reports that ₱1 million was spent on road repair, a regular audit checks the vouchers, contracts, and receipts. If the paperwork is complete, the audit might be satisfied.

A fraud audit, however, goes further. It asks: was the road really repaired? Was it overpriced? Was gravel replaced with cheap sand? Were there “ghost workers” paid for labor they never did? Fraud audits look for intentional deception—whether by falsifying documents, inflating prices, or creating fictitious projects (Singleton & Singleton, 2010).

Fraud audits often involve tracing fund flows, physical verification of projects, data analysis, and community confirmation. The goal is not just to detect fraud but to establish accountability and prevent recurrence.

 

The Commission on Audit: The People’s Watchdog

The Commission on Audit (COA) is enshrined in the 1987 Constitution as one of the three independent constitutional commissions. Article IX-D of the Constitution gives COA the exclusive authority to examine, audit, and settle all accounts involving government funds and property (1987 Constitution, art. IX-D, sec. 2).

COA is independent. Its commissioners have fixed terms to insulate them from political pressure. This independence is crucial because COA often audits the very institutions that wield immense power (Brillantes & Fernandez, 2011).

In practice, COA conducts regular audits, special fraud audits, performance audits, and produces reports that often serve as evidence for the Ombudsman or Congress. Without COA, corruption would flourish in the shadows.

 

Case Study 1: The Pork Barrel Scam (2013)

The Priority Development Assistance Fund (PDAF) scam revealed how lawmakers funneled billions into fake NGOs linked to Janet Lim-Napoles. In its Special Audit Report (2007–2009), COA found that ₱6.156 billion went to 82 NGOs that did not implement real projects (COA, 2013).

Funds intended for farmers went to ghost beneficiaries. Livelihood kits were never distributed. Infrastructure projects existed only on paper.

The scam showed how systemic corruption denied communities real services. COA’s findings became the foundation for Ombudsman cases against senators and congressmen (Philippine Daily Inquirer, 2013).

 

Case Study 2: Yolanda Relief and Rehabilitation Funds (2013)

Super Typhoon Yolanda (Haiyan) devastated the Visayas in November 2013. Billions in aid poured in, yet COA’s 2014 audit report revealed billions of pesos in funds unliquidated or mismanaged (COA, 2014).

Temporary shelters were overpriced, relief goods spoiled, and funds for housing were delayed. Survivors described the misuse as a second tragedy—betrayal after disaster (Rappler, 2015).

The case illustrated how corruption in calamity funds compounds human suffering. Fraud auditing here was not merely financial—it was moral.

 

Case Study 3: COVID-19 Pandemic Spending (2020–2021)

During the pandemic, billions were allocated for emergency procurement. COA flagged ₱67.3 billion in deficiencies in the Department of Health’s COVID response (COA, 2021).

The Pharmally scandal shocked the nation. A small firm with only ₱625,000 in capital bagged multi-billion peso contracts for PPEs, some overpriced, while health workers struggled without proper allowances (ABS-CBN News, 2021).

Fraud audits revealed how even in crisis, corruption thrived. The victims were not abstract—they were doctors, nurses, and patients gasping for survival.

 

Case Study 4: The Present Flood Control Controversy (2025)

In 2025, COA flagged anomalies in flood control projects amounting to nearly ₱1 trillion. Reports revealed duplication of projects, suspicious cost inflation, unfinished works, and budget insertions (Philippine Star, 2025).

Flood control has long been vulnerable to corruption. Projects are buried underground or hidden in riversides, making them easy to fake or inflate.

The consequences are visible each rainy season. Despite massive budgets, communities remain submerged. Families wade through floods, workers lose livelihoods, and diseases spread. Every ghost project means a barangay under water.

Fraud auditing in flood control is a matter of survival. When corruption drowns resources, it also drowns the people.

 

Fraud Auditing as a Tool for Reform

The four cases—the Pork Barrel scam, Yolanda misuse, COVID anomalies, and the Flood Control controversy—prove that fraud auditing is essential to democracy.

Fraud audits expose betrayal, highlight systemic weaknesses, and recommend reforms. But they face political pressure, delayed justice, and lack of follow-through. Strengthening COA’s independence and capacity is vital.

 

The Advocacy of Timpuyog Pilipinas

For Timpuyog Pilipinas, fraud auditing resonates with its core values. It protects nationalism by defending resources from theft and foreign influence. It promotes sustainable development by ensuring funds build real projects. It embodies moral integrity by confronting corruption head-on.

As federalism devolves funds to regions, fraud auditing mechanisms must be even stronger. Defending COA is therefore a patriotic duty.

Conclusion

Fraud auditing is not just about numbers—it is about people. The teacher without classrooms, the Yolanda survivor without housing, the nurse without PPEs, and the family trapped in floods are all victims of corruption.

COA, as the constitutional watchdog, has exposed scams from PDAF to flood control. But its reports must not be ignored. Citizens must demand action. Leaders must be held accountable.

Every fraud audit reminds us: public money is the people’s money. Every peso stolen is a life betrayed. Supporting COA and fraud audits is a fight for justice, dignity, and the future of our nation.

 

References

1987 Constitution of the Republic of the Philippines, Art. IX-D, Sec. 2.

ABS-CBN News. (2021, September. Pharmally exec admits supplies bought from Chinese firm, sold to gov’t with 20-40% markup. https://news.abs-cbn.com

Brillantes, A. B., & Fernandez, M. T. (2011). Restoring integrity in the Philippine public service: A review of integrity initiatives in the Philippines. Asian Education and Development Studies, 1(1), 3–18.

Commission on Audit. (2013). Special Audit Report on the Priority Development Assistance Fund (2007–2009). Quezon City: COA.

Commission on Audit. (2014). Annual Audit Report on Typhoon Yolanda Rehabilitation Funds. Quezon City: COA.

Commission on Audit. (2021). Consolidated Annual Audit Report on the Department of Health. Quezon City: COA.

De Guzman, C. (2023, July 1). Corruption and governance in the Philippines: A continuing challenge. Philippine Journal of Public Policy, 36(2), 45–68.

Philippine Daily Inquirer. (2013, August 27). COA report bares pork scam irregularities. https://newsinfo.inquirer.net

Philippine Star. (2025, September 1). COA flags P1-trillion flood control anomalies. https://www.philstar.com

Rappler. (2015, November . Where did the Yolanda funds go? https://www.rappler.com

Singleton, T. W., & Singleton, A. J. (2010). Fraud auditing and forensic accounting (4th ed.). Wiley.

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*The Timpuyog Pilipinas Think-Tank Group, headed by its Secretary-General Dr. Rodolfo John Ortiz Teope, is a fellowship of respected and experienced individuals drawn from various sectors of Philippine society. Its members include scholars and educators from the academe, seasoned lawyers, retired generals, successful business leaders, diplomats, and religious personalities—each known for their integrity and excellence in their respective fields.

The group also includes former legislators and local government officials whose firsthand experience in public service brings valuable insight into the intricacies of governance and policymaking. Together, this diverse body forms a formidable alliance committed to the pursuit of national transformation through socio-economic and political reforms grounded in patriotism, public service, and principled leadership.