PCSO risks possible depletion of funds due to online lottery: COA

Adrian Ayalin, ABS-CBN News

Posted at Jul 13 2018 04:33 PM

MANILA - The Commission on Audit (COA) has warned the Philippine Charity Sweepstakes Office (PCSO) of fund depletion because of the online Keno gaming operations which incurred deficits in its prize fund from 2006 to 2017, accumulating P4.283 billion as of December 31, 2017.

In its 2017 audit report on the PCSO, government auditors said the pay-outs that exceeded the allocated amount for prizes could result to possible depletion of the reserve fund for lotto games. 

PCSO has a lease contract for Keno operations with Total Gaming Technologies, Inc. for 10 years, which will expire in 2020. 

The PCSO explained to government auditors that solutions to deficits are being developed such as increasing the minimum price bet from P10 to P20 or P24 (considering Documentary Tax Stamp), as well as adjustments in the jackpot amount and operating hours for the game. 

The COA however strongly urged PCSO to implement new strategies or revisit the existing policies and guidelines for the Keno operations.

“Otherwise, consider the possibility of discontinuing the Keno operations if it will continuously incur deficits in the prize fund which is detrimental to the stability of the consolidated prize fund,” the COA said. 

DEPLETION OF CHARITABLE FUND

Government auditors also warned of another possible depletion of PCSO funds, this time in its Charitable Fund.

The COA flagged P5.890 billion expenditures which are not related to charity projects and projects and yet charged to the CF of the agency.

The disbursements were supposedly in violation of the Republic Act 1169 or the Philippine Charity Sweepstakes Office charter which mandates that 30% of PCSO funds shall be set aside for health programs, medical assistance, and other charities of national character.

The disbursements which were flagged were remittances or charges for the Commission on Higher Education amounting to P318.589 million for higher education strengthening, for the Bureau of Internal Revenue amounting to P5.298 billion for payment of documentary stamp taxes, for PCSO Charity Clinic for the payment of employees amounting to P67.98 million, and expanded medical assistance program for employees worth P204.593 million.

The PCSO, however, told the COA that the charity clinic expenses for employees were already charged to the operating fund of the agency starting January 2018 while the expanded medical assistance, being a health-related expense, was charged to the charity fund.

The agency further explained that the CHED contributions have to be complied with in view of the provisions of the law while the documentary stamp taxes are being charged to the charity fund based on the minutes of the meeting of the PCSO board members dated April 27, 1995.

“As a rejoinder, the audit team maintains its position that the documentary stamp taxes and contributions to CHED are not health-related expenses and should not be charged entirely to the charity fund pursuant to RA 1169,” the COA said. 

Lower sales collections were also noticed by government auditors such as collections reported by 71 Authorized Agent Corporations (AACs) for Small Town Lottery whose collections were lower by P10.012 billion as opposed to their quoat or presumptive monthly retail receipts. 

The COA added that the total under remittances of the PCSO for 2017 is P4.049 billion, including the remittances of 7 other AACs which who met their quota but did not remit the required amount.

“We recommend the immediate collection from the concerned AACs of the short remittances totaling P4.049 billion,” the COA said.

The COA also recommended the immediate payment of cash bonds by 30 AACs for STL of P15 million each or one month of their monthly quota, whichever is lower.