US embassy cable - 04BOGOTA12960

UNCLAS SECTION 01 OF 02 BOGOTA 012960 
 
SIPDIS 
 
PLEASE PASS TO TREASURY OASIA/MDM: J. FRANCO AND 
EB/IFD/OMA: L. GALLAGHER 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, EFIN, CO, MOPS 
SUBJECT: TRANSPARENCY OF COLOMBIAN BUDGET/MILITARY SPENDING 
 
REF: SECSTATE 239929 
 
1.   (U)  Per Secstate 239929, post has spoken to appropriate 
Colombian government authorities and has responses to 
questions posed by Washington. 
 
2.    (U)  Military Expenditures are audited by the National 
Comptroller, which works on an annual cycle to audit each 
aspect of military expenditures.  There are five types of 
auditing modalities.  A regular audit is performed for new 
entities (first-time audits) or entities that have not 
received recent audits.  Abbreviated audits are performed on 
a yearly basis for most entities.  Special audits are 
performed on specific processes such as audits on classified 
military spending.  Account audits are performed for very 
small entities.  Finally, follow-up audits are performed on 
entities that face a critical situation or those that have 
already been audited and have committed to special 
improvement plans.  Assigned auditors submit their auditing 
reports to multidisciplinary teams of economists, lawyers, 
and generals to evaluate a strategy and the information they 
have received.  They determine the deficiencies, determine 
linkages to problems, analyze causes of deficiencies, 
determine the impact of deficiencies, determine if the 
problems are sporadic or reoccurring, and evaluate the 
evidence.  The auditing teams are obliged to inform the 
entities that receive the audits about their findings.  The 
audited entities are also mandated to apply corrective 
measures immediately after receiving auditing reports (they 
have 3 days to respond to the National Comptroller after 
receiving the report). 
 
3.   (U) At the regional level, 31 departmental offices 
perform audits on military units throughout the country. 
Those regional offices consist of groups of auditors 
supervised by regional managers who report to the National 
Comptroller's Office at the central level.  At the central 
level, the National Comptroller assigns 5 auditors for the 
Army, 5 for the Navy, 5 for the Air Force, 4 for the National 
Police, 4 for the DAS (Administrative Security Department), 
and 3 for the other entities related to security such as 
DISAN (Defense Sanitary Directorate) and the Superintendence 
of Private Vigilance.  Auditing of classified security 
spending is done separately on a total of 11 entities 
(including Army, Navy, Air Force, Police, DAS, INPEC, DNE, 
Prosecutor General,s Office, and a few others).  A total of 
7 auditors are assigned to classified defense spending.  As 
mentioned above, these auditors report to working teams at 
the Comptroller,s office who evaluate and measure the impact 
of the findings and report to the audited entities, judicial 
and legislative authorities for corrective actions and 
political control. 
 
4.   (U)  The audits are reported to the audited entities, 
Congress and the President.  While the Contraloria is the 
only entity that approves the audits, the President usually 
meets with the Comptroller to discuss the results.  If the 
auditing reports conclude that there are grounds for 
initiating disciplinary or penal investigations, then the 
audits are also reported to the Prosecutor General or the 
Attorney General Offices accordingly. 
 
5.    (U)  Apart from the military authorities, some civilian 
entities make up part of the defense and security sector 
including the Military Hospital, Military Club, Military 
University, Civilian Defense, Indumil (Military Industry), 
Satena (Airline), Superintendence of Private Vigilance, DAS 
(Administrative Department of Security), INPEC (Penitentiary 
Institute), National Police, DNE (National Drugs Directorate) 
and others.  The National Comptroller audits all of these 
civilian entities. 
 
6.    (U)   There is an existing framework for conducting 
annual audits of military expenditures.  The Comptroller 
performs these audits annually, starting in August and ending 
in June.  97 percent of the military budget is audited every 
year.  The auditing process by the National Comptroller is a 
standard procedure that has been certified by ISO 9000.  The 
auditing is based on past auditing reports and on information 
received from the entities receiving the audits.  Audits 
consist of three phases: planning, execution, and reporting. 
The planning is documented in a General Auditing Plan, which 
determines specific dates and entities to be audited.  During 
execution, auditors collect evidence and evaluate the 
evidence.  The reporting consists of producing a report with 
the findings of the audits performed. There is an instituted 
policy that requires these audits. 
 
7.    (U) One of the main objectives of the auditing process 
is to measure efficacy.  However, in the defense sector, many 
of the objectives are hardly measurable.  For example, a 
certain amount of military operations were performed to 
maintain peace or fight against terrorism, but there is no 
certain way of measuring what the situation would have been 
in the absence of such operations.  Some deficiencies are 
also present in the process of collecting information.  The 
entities that receive the audits sometimes use different 
accounting methods and in some cases information is not 
submitted on time.  There is classified material that can not 
be fully audited because of the sensitive nature of the data. 
 Additionally, there is no legislation that regulates the use 
of classified spending or that provides management criteria 
for classified budgets.  These deficiencies do not appear to 
be intentional, and likely are the result of restrictions 
related to security concerns or lack of mechanisms to verify 
the information received. 
 
8.     (U)  Colombia's defense budget includes the police, 
Ministry of Defense (Armed Forces) and DAS (Dept. of 
Administrative Security).  The only significant off-budget 
military receipts are those for Plan Colombia, which are 
audited because the U.S-Colombia cooperation agreement 
specifically requires that audits be performed on such funds. 
 Other off-budget military receipts include the Military 
Forces, own resources and other international cooperation 
funds, neither of which represent significant amounts. 
WOOD