DENR audit findings highlight unliquidated funds, revenue gaps in the Philippines

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DENR audit findings highlight issues

Highlights

CoA found 79% of the P2.43 billion DENR project funds unliquidated at year-end 2025 due to incomplete or missing reports.
P521.26 million in revenues remained uncollected across 14 DENR regional and provincial offices, attributed to weak enforcement and vague collection processes.
CoA questioned the P5.61 million National Greening Program buyout by a private company, citing inconsistencies with environmental laws and program goals.

2025 audit findings and compliance issues

As reported by BusinessWorld Online, the Commission on Audit said 79% of the P2.43 billion that the DENR transferred to implementing agencies remained unliquidated at year-end because liquidation reports were missing or had not been submitted despite follow-ups. The audit report says this covers the DENR Central Office, one regional office and six provincial environment and natural resources offices.

CoA recommends that the department send regular demand letters to implementing agencies, strengthen monitoring and require the return of unused project funds. Auditors also cite P521.26 million in uncollected revenues at Regional Office IV-A and 13 provincial environment offices, which they link to unclear collection procedures, weak enforcement and inadequate monitoring.

The unpaid amounts include foreshore land rentals, occupational fees, resource user fees, performance bonds, forest charges and surcharges. CoA also questions the buyout of National Greening Program reforestation projects involving P5.61 million in government investments after these were acquired by a private company through Community Environment and Natural Resources Office Bangui and Urdaneta for use in an energy project.

The DENR Central Office authorizes the arrangement through a directive, but CoA says it appears inconsistent with environmental laws and undermines the program's goal of rehabilitating degraded areas. Auditors also find that the department has yet to establish a national river basin master plan to guide flood control and water resource management.

Operational and fiscal implications for environmental programs

Beyond the fund and revenue issues, the audit cites missed project targets, discrepancies between accomplishment and financial reports, and delays in consultant-led projects. These findings point to broader execution risks for environmental protection, watershed planning and land management programs.

Outstanding audit suspensions reach P50.72 million, while disallowances stand at P260.16 million and charges hit P32.5 million as of Dec. 31, 2025. Despite these findings, the DENR receives an unmodified audit opinion on its 2025 financial statements.

Our earlier article on planned Philippine sovereign bond reforms and the country’s push for global index inclusion explained that easier-to-trade government securities can broaden the investor base and improve liquidity, but won’t automatically translate into stronger real-economy investment. It also stressed that outcomes ultimately hinge on fiscal credibility, governance, and the quality and transparency of public spending—factors that shape investor trust and the cost of capital.

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