Governments around the world consider effective performance management and reporting systems as a vehicle for enhancing public accountability and driving the achievement of government outcome. In line with this principle, the Philippine Government, through the Department of Budget and Management (DBM) and the National Economic Development Authority (NEDA), embarked on projects to further strengthen accountability mechanisms and improve public expenditure management. One of the projects that was initiated by the DBM for this purpose was the Public Expenditure Management Improvement Project (PEMIP). The objectives of the PEMIP are as follows:
• To enhance aggregate fiscal discipline;
• To improve resource allocation; and
• To promote operating efficiency at the agency level
The major components of the PEMIP are as follows:
• Medium-Term Expenditure Framework (MTEF);
• Agency Performance Measurement System;
• Agency Managerial Flexibility; and
• Performance Incentives.
The Philippine Government started to introduce the MTEF and the Organizational Performance Indicator Framework (OPIF) through the FY 2000 National Budget Call. This was refined in the FYs 2001- 2002 budget calls, with the introduction of periodic assessment of on-going Programs, Activities and Projects (PAPs). These projects are subjected to the Sector Effectiveness and Efficiency Review (SEER). The MTEF, OPIF, and SEER constitute the three pillars of the Government’s public expenditure management reform program.
Under the MTEF, the budget will be restructured to cover a number of years to better support the Government’s development strategy and improve technical efficiency in the sectors by "providing a more predictable resource environment for program planning and implementation."
Hand in hand, the concept of performance indicators was introduced through OPIF. The indicators were intended to be linked to the organization’s performance in order to encourage government agencies to allocate and/or reallocate resources towards high priority PAPs. Under OPIF, the appropriate final output directly linked with the actual organization performance of the agencies will be identified and developed. A final output is a good or service produced or provided by an organization which is consumed or used by an external client.
Another project of the government which is related to performance reporting is the Formulation of Performance Indicators and Standards for Development Administration (FPISDA) Project. This project was undertaken by NEDA in relation to the paradigm shift in governance which is called "development administration" covering six areas of concern including, among others, re-engineering or streamlining the bureaucracy, privatization and decentralization. Under the project, NEDA commissioned the Development Academy of the Philippines (DAP) to formulate performance indicators and standards on the areas of concern of development administration. These indicators are intended to monitor and evaluate government’s performance under the new concept of "development administration". The ultimate objective of FPISDA is a shift to performance-based planning, programming and budgeting system.
In line with the government’s efforts to improve public expenditure management and strengthen accountability, a study on the existing performance reporting system of selected government agencies was undertaken. Performance reporting is considered as an integral part of the government’s accountability framework.
Reporting is the final phase of any activity and the resultant reports are considered to be the windows of accomplishments. For this reason, performance reports to be useful must be credible. Performance reports of government agencies are used by different sectors. Internal users or the management use the report to assess and monitor the progress of a particular activity in relation to its intended outcome. External users are using the reports for different purposes. The DBM and legislative bodies need performance reports for budget allocation purposes. The Office of the President uses the reports for monitoring the performance of the agency officials and as an input in the President’s State of the Nation Address(SONA).
The NEDA uses the agency’s reports as basis for assessing the extent of implementation of socio-economic and development programs of the government. Other external users of reports are the general public and the media.
This audit covered the evaluation of existing reporting systems of six (6) government agencies including the Department of Labor and Employment (D0LE).
The DOLE, with its vision to promote full and productive employment, is the primary government agency tasked with the formulation and administration of policies and programs relative to the protection, welfare and advancement of Filipino workers. Its missions include promoting gainful and dignified employment, ensuring workers’ protection and welfare, maintaining industrial peace and enhancing sectoral partnership to bring about social justice and sustained equitable economic growth.
The DOLE is composed of, among others, staff services which provide advisory, technical and administrative support to staff and line operations. These include Administrative Services (AS), Financial and Management Service (FMS), Human Resource Development Service (HRDS), International Labor Affairs Service (ILAS), Information and Publication Service (IPS), Legal Service (LS) and Planning Service (PS).
In pursuance of its mandate, the DOLE received appropriations amounting to P1.467 billion in 2000, P1.467 billion in 2001, and P1.25 billion in 2002. Of the total appropriations for 2002, 35% was earmarked for General Administration and Support, and Support to Operations and Projects, while 65% was earmarked for Operations apportioned.
The audit was conducted to assess the efficiency and effectiveness of the performance reporting system of overseas labor operations giving consideration to the sufficiency of performance indicators and the reliability, relevance, and completeness of performance information.
AUDIT SCOPE AND METHODOLOGY
The audit covered the evaluation of performance reports rendered by six (6) selected medium-sized government agencies for CYs 2001 and 2002 which include the DOLE.
The audit focused on the performance reporting system of the Philippine Overseas Labor Offices (POLOs) strategically located overseas and posted by the Labor Attaches (Labatts). The POLOs are under the supervision of the ILAS. The POLOs act as an operating arm of DOLE for providing protection, facilities, programs and appropriate services to Overseas Filipino Workers (OFWs), which include, but not limited to, the following:
a. assistance in all problems arising out of employment;
b. ensuring against discrimination and exploitation;
c. authentication and verification of employment contracts when appropriate;
d. conduct of appropriate studies on labor and employment;
The activities of the POLOs are part of its Promotion of Employment and Worker’s Welfare Program with an appropriation of P344 Million equivalent to 27% (P0.344B /P1.25B) of the total DOLE appropriation.
To achieve the audit objective, the team considered the following key criteria for assessing the effectiveness of the performance reporting system:
• Complete and informative reporting;
• Accurate and reliable reports;
• Timely submission of reports;
• Sufficient and appropriate performance indicators.
During the audit, the team performed the following procedures:
a. Reviewed existing policies and guidelines on DOLE’s performance reporting particularly, on the functions of the Labatt Corps;
b. Interviewed concerned key officials and personnel;
c. Evaluated physical, narrative and significant accomplishment reports submitted by the Labatts;
d. Assessed the sufficiency of performance indicators;
e. Gathered information from DOLE attached agencies in relation to the collection function of Labatts; and
f. Confirmed the relevance of DOLE reports to other government agencies.
The audit was conducted from November 18, 2002 to March 31, 2003 in compliance with COA Office Orders Nos. 2002-518 and 2002-518A dated November 15 and 25, 2002, respectively, and pursuant to COA Memorandum dated February 13, 2003.
The existing performance reporting system of the POLOs needs improvement to ensure the generation of reliable, complete and informative reports. This situation is partly due to insufficient performance indicators to measure the achievement of the POLO’s objective. In view of this deficiency, the reports could not be used as bases for assessing the effective implementation of the POLO’s programs and the achievement of its intended results.
The team noted that the reports merely enumerate the activities and outputs accomplished during the period without relating such outputs to the program’s intended results or outcome which is protecting the welfare and improving the working conditions of OFWs. This hinders the conduct of an effective evaluation of the POLO’s performance which is geared towards ensuring the attainment of the objective and identifying existing weaknesses affecting the implementation of the programs.
The audit also disclosed that about 43% of the narrative and statistical reports in CY 2002 were submitted beyond the deadline which the other 27% were not submitted at all. This affected the accuracy and completeness of the reports.
Likewise, reports submitted by POLOs could not be relied upon due to the absence of validation of reports and varied accomplishments appearing in different reports for the same period.
Considering the importance of reports as a vital source of information for assessing the impact of government projects and for improving public confidence, the team recommended measures to address these concerns for consideration by the DOLE.
MANAGEMENT’S REACTION TO AUDIT OBSERVATIONS
The results of the audit were discussed with the concerned officials and employees of the DOLE in an exit conference conducted on September 12, 2003. The DOLE accepted the team’s observations and had taken initial steps to address these concerns.