Preliminary findings uncover multiple discrepancies

The NMI Retirement Fund internal auditing team has uncovered multiple discrepancies in the agency’s operations, based on its preliminary findings reported to the board of trustees last Friday.

Lilian Pangelinan, head of the internal audit team, said most deficiencies were uncovered in areas of pension payouts (underpayment and overpayments), problems on disability cases, and discrepancies in overtime and compensatory payments, among others.

In reviewing the disability benefits, it found out that 13 of the 14 files it assessed are not in compliance with the necessary requirements and proper documentations such as insufficient physicians’ report being submitted and accepting the alternative reports in determining the disability of surviving children.

Pangelinan added that no follow-ups were conducted to determine continuing eligibility to beneficiaries as well as insufficient proof if there is permanent disability.

Because the internal audit will cover all the Fund’s operational files, it is expected that discrepancies and deficiencies like these will be uncovered until the completion of the entire audit activity.

Pangelinan also said that among the specific preliminary findings on the audit, there were a significant number of people who received overpayments for their overtime and therefore should be recouped by the Fund.

In this area, Pangelinan went through 130 files where overpayment and underpayments were discovered. According to Fund administrator Richard Villagomez, these cases went back 10 years ago which the Fund wants to address. Preliminary findings also revealed that some $300,000 was discovered overpaid to two retirees based on the initial findings.

“The 130 files we reviewed are anywhere from 15 to 16 years old and these included retirees who initially retired in mid-1990s through 2000,” said Pangelinan, adding that more files will be reviewed in this area.

According to Villagomez, the review of overtime and compensatory payments was the result of the Attorney General’s opinion regarding its proper application. This is also one of the audit findings of OPA which the Fund is trying to address. This opinion was issued in 2000. Pangelinan said the Fund, with its legal counsels, will strategize on how these overpayments and underpayments will be recouped.

According to Fund officials, the agency cannot immediately suspend or cut the pension of members who were found overpaid or underpaid because there is due process under the policy, which provides 30 days to appeal the Fund’s decision.

The internal auditor also discovered that one member was wrongfully paid a refund of $20,000 in the past without the necessary documentations-the notice of personnel action-that will prove the employee’s separation from the government.

This case has now been referred to the Fund’s counsel for review. The said employee had rescinded her resignation and received the refunds while continuing employment in the government.

Villagomez explained that the said case is an isolated situation and will soon be rectified. It was found that the Fund used the clearance sheet in basing its decision to issue the refund check to the employee.

Pangelinan also disclosed that a significant amount in travel advances will not be collected by the agency because of the statute of limitations. She is hopeful that this particular audit problem will be closed when OPA issues its audit tracking recommendations by the end of this month.

The Fund, meantime, commended the auditing team for resolving the issues involving the former executive director of the Commonwealth Ports Authority, Carlos Shoda, who had paid back the overpayments he received from the Fund. The civil action against the former official was also dismissed as of Friday.

Based on the preliminary findings, Pangelinan revealed that the Fund can potentially collect $204,307 in underpayment of benefits and about $70,000 in overpayments. Additionally, the agency can also collect some $145,000 from the COLA of children with disability benefits.

Fund officials revealed that these discrepancies were not uncovered in the annual audit conducted by independent auditors because their audit are considered random in nature and only covers checks on the agency’s financial statements.

According to Fund chair Sixto Igisomar, the internal audit was pushed since the leadership of former chair Juan Pan Guerrero.

“Considering the amount of money that the Fund is dealing with, it was recommended to the board that we have to conduct an internal audit,” said the chairman.

The chairman added that because the system in the Fund is not 100 percent accurate, the discovery of discrepancies and deficiencies are only natural. He cited some manual procedures that are still in existence in the current system. He assured though that the internal auditing team will continue the work until everything is checked, reviewed, and collected.