The Department of Finance (DOF) has required treasurers of local government units to include in their quarterly and annual financial reports to the DOF all environment and natural resources revenues and expenditures, particularly the payments made by the mining and other extractive industries to their respective LGUs.

Since 2011, local treasurers have been required to report to the DOF on a quarterly and annual basis the fiscal and financial operations of their respective LGUs through the electronic Statement of Receipts and Expenditure (eSRE) system.

Under Department Order No. 049-2016 issued just recently, Finance Secretary Carlos Dominguez III has mandated local treasurers to include in their regular eSRE reports from hereon all payments made by extractive industries along with the detailed account of the shares from national wealth and their LGUs’ expenditures using the receipts/collections from these businesses and from the development and utilization of national wealth.

Other monetary and non-monetary benefits received by LGUs from extractives industries must also be included in their quarterly eSRE reports to the DOF.

“It’s high time for local treasurers to properly account for what the extractive and related sectors contribute to local economies, and how the local communities benefit from them and from the utilization of their natural resources,” Dominguez said.

Under Dominguez’ new directive, local treasurers will submit their reports through a web-based Environment and Natural Resources Data Management Tool (ENRDMT), which is a data management system associated with the eSRE system that is being maintained by the Bureau of Local Government Finance (BLGF).

BLGF is a DOF-attached agency while the eSRE is the official fiscal and financial management reporting system for the LGUs to the DOF and BLGF.

Local treasurers are required to prepare and submit their reports to the DOF and BLGF on a quarterly basis, and their consolidated annual reports at the end of each year.

The development of the ENRDMT was supported by the Philippine Extractive Industries Transparency Initiative (PH-EITI), and the Philippines Poverty-Environment Initiative (PPEI) under the auspices of the United Nations Development Programme and the United Nations Environment Programme, according to BLGF officer-in-charge Niño Alvina.

Alvina said that the BLGF, in coordination with the DOF and the Department of the Interior and Local Government (DILG), is leading the training of trainers and rollout of the new policy on the web-based reporting platform from October this year to February 2017.

Department Order No. 8-2011 mandated the official reporting and monitoring of all LGU fiscal and financial operations via the eSRE.

Being the agency responsible for maintaining the eSRE system and overseeing the fiscal and financial affairs of LGUs, the BLGF “commits to the goals of the PH-EITI and PPEI for greater transparency in local fiscal and financial management,” said DO 049-2016.

Section 1 of this new DOF order states that, “The data requirements for the PH-EITI and the PPEI annual reports shall form part of the quarterly SRE reports submitted by local treasurers to report the payments made by extractive industries and detailed account of the shares from national wealth.”

Dominguez has directed local treasurers to include in their eSRE reports the following direct and non-direct payments made by the extractive industries to their LGUs:

Ø Local taxes, fees, and other charges;

Ø Receipts of shares from national wealth in their localities;

Ø Expenditures of LGUs coming from receipts/collections from the extractive
industries and shares from national wealth; and

Ø Such other monetary and non-monetary benefits received by LGUs from
extractive industries and shares from national wealth.

Section 2 of Dominguez’s order assigned the BLGF, in turn, to perform the following:

Ø Provide the PH-EITI/PPEI/concerned agencies and other stakeholders with the data on local taxes, fees and user charges directly collected from the extractive industries, detailed account of shares of the national wealth received by LGUs, expenditure items from such proceeds, and such other relevant data;

Ø Check the integrity of data on total shares from national wealth reported by LGUs through the ENRDMT vis-a-vis the data reported through the eSRE;

Ø Develop and conduct relevant capacity building interventions to ensure compliance of local treasury offices with the new DOF directive; and

Ø Provide access to the DOF’s Domestic Finance Group (DFG) to supply PH-EITI data and updates.