1 
Republic of the Philippines 
HOUSE OF REPRESENATIVES 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
House Bill No. ___________ 
Introduced by Rep. Isidro T. Ungab 
EXPLANATORY NOTE 
Now, is the appropriate time to revise the country’s 47-year-old Government Auditing 
Code, as embodied under Presidential Decree No. 1445, which was enacted on June 
11, 1978.  The existing auditing rules and procedures are to some extent, requires a 
major updating and upgrading to adapt to the world of new technologies in financial 
accounting and auditing reforms. 
There is a need to address the outdated Auditing Code of the Philippines to align with 
international accounting and auditing standards by utilizing emerging technologies and 
innovative solutions in audit approaches and processes. 
The Commission on Audit, being a trustworthy, respected and independent audit 
institution plays a major role in the implementation of the Government Auditing Code. 
That is why, the government must prioritize the urgent concerns of the Commission to 
revise the Code including a thorough reorganization and the institutionalization of 
reforms in order to deliver better services to the national government, local 
government units, government owned-or controlled corporations, other government 
instrumentalities, and the Filipino people as a whole.   
We entrust to the Commission on Audit, as mandated under Article IX-D of the 
Constitution, the full power, authority and duty to examine, audit, and settle all 
accounts pertaining to the revenue and receipts of, and expenditures or uses of funds 
and property. This proposed measure aims to strengthen and safeguard national 
finances, recover potential revenue losses, and modernize the Commission on Audit 
to meet global standards. 
This refiled measure was authored and filed by the Honorable Joey Sarte Salceda 
during the 19th Congress. 
In view of the foregoing, approval of this bill is earnestly sought. 
ISIDRO T. UNGAB 
August 12, 2025
8:47 am
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Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
House Bill No. ________ 
Introduced by REP. ISIDRO T. UNGAB 
AN ACT 
PROVIDING FOR THE REVISED GOVERNMENT AUDITING CODE OF THE 
PHILIPPINES 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
TITLE I 
Chapter 1 
GENERAL PROVISIONS 
SECTION 1. Short Title. – This Act shall be known and cited as the “Revised 
Government Auditing Code Act.” 
SEC. 2. Declaration of Policy. – It is the policy of the State that all 
resources  of the government  shall   be managed,  expended  or utilized  in 
accordance with law, rules and regulations, and safeguarded against loss or wastage 
through illegal or improper disposition in order to ensure efficiency, economy and 
effectiveness in the operations of government. The responsibility to ensure that such 
policy is faithfull adhered to rests directly with the chief or head of the government 
agency concerned.  
SEC. 3. Definition of Terms. — As used in this Act: 
(a) Account refers to a list or statement of monetary transactions pertaining to
fund, property, obligation, equity, revenue, collection or expense, whether
or not entered as item of debit or credit in the books of accounts, registry or
any other record;
(b) Accountable Officer refers to the officer of a government agency who by
the nature of the duties and responsibilities or participation in the collection
or receipt and expenditure or use of government funds, custody and
disposal of government property, is required by law or regulation to render
account to the Commission on Audit, hereinafter referred to as the
Commission, which includes any public officer or private person or entity
who may have direct or indirect participation in the transaction;
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(c) Aggrieved Party refers to a person or entity adversely affected by any 
decision, order, resolution or ruling of the Commission or any of its duly 
authorized representative;  
(d) Annual Audit Report (AAR) refers to the final output of the regular yearly 
audit conducted by the auditor on the accounts and operations of a 
government entity and basically consists of the Independent Auditor's 
Report, the audited financial statements and the audit observations and 
recommendations;  
(e) Management Letter (ML) refers to the final output of a regular or periodic 
audit conducted by the auditor on the accounts and operations of a 
government entity which is in the form of a letter to the auditee management 
containing just basically the audit observations and recommendations; 
(f) Special Audit Report (SAR) refers to the final output of the special audit 
conducted by the auditor assigned to audit specific accounts, transactions, 
projects, programs or activities of a government entity and basically consists 
of audit observations and recommendations; 
(g) Appropriation refers to an authorization by law, appropriation, ordinance, 
or other enactments, or the corporate operating budget directing the 
payment of personal services, maintenance and other operating expenses, 
and capital outlay out of government funds under specified conditions or 
purposes;   
(h) Appeal refers to the process of elevating to a higher authority any decision, 
order, resolution or ruling of the Commission or any of its duly authorized 
representatives; 
(i) Audit refers to the examination, verification, and adjustment of an account; 
the evaluation of internal control systems; the determination of the 
government entity's compliance with applicable laws, rules and regulations; 
as well as the examination  and evaluation of the economy,  efficiency  and 
effectiveness of management systems, operations and decisions. It may 
also cover other special audits as may be prescribed by the Commission; 
(j) Auditor refers to any officer or employee of the Commission duly appointed 
or designated as such; 
(k) Audit Group refers to a cluster of audit teams that are grouped together, 
headed by a supervising auditor (SA), which is responsible for planning, 
managing, supervising and quality control of the audit work as well as 
ensuring the prompt submission of audit reports; 
(I)  Audit Team refers to the basic organizational unit responsible for the audit 
of government entities consisting of an audit team leader (ATL) and audit 
team members (ATMs); 
(m) Audit Work Papers refer to the documentation or evidence of the work 
done and the results thereof, consisting of relevant or pertinent data, 
analyses, 
computations, 
calculations, 
notes, 
schedules, 
excerpts, 
confirmation and other documents or materials gathered, prepared and 
compiled in the course of an audit; 
(n) Cash refers to money or its equivalent currencies, negotiable checks, or 
balances in bank accounts or in the possession or custody of a collecting or 
disbursing officer; 
(o) Charge refers to an inclusion or addition to an accountability pertaining to 
the assessment, appraisal or collection of revenues, receipts and other 
income arising from under-appraisal, under-assessment, under-collection or 


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failure to collect or remit collection which are found in the course of audit of 
revenues or receipts; 
(p) COA Order of Execution (COE) refers to a written instruction to the head 
of agency to withhold payment of salary and other money due to persons 
liable, for settlement of their liability as indicated in the Notice of 
Disallowance or Charge and issued after the issuance of the Notice of 
Finality of Decision (NFD); 
q)   Commission refers to the Commission on Audit as a constitutional body 
created under Article IX-D of the 1987 Philippine Constitution; 
(r) Decision or Resolution refers to an adjudication or settlement of a claim or 
controversy by the authorized official of the Commission which shall embody 
the facts of the case, the issues to be resolved, and the laws, regulations, 
or precedents on which the ruling is based; 
(s)  Depository refers to any financial institution lawfully authorized to receive 
deposit of government moneys; 
(t)  Disallowance is the disapproval in audit of a transaction, either in whole or 
in part involving government disbursement or property; 
(u) Government Agency refers to any department, bureau, or office of the 
national government, or any of its branches and instrumentalities, local 
government units and its political subdivision, including entities created by 
it, as well as government financial institutions and other government 
corporations, with or without original charter, including its subsidiaries, other 
self-governing boards or commissions of the government, constitutional 
bodies with fiscal autonomy and autonomous educational institutions; 
(v) Government Funds refer to public moneys of every sort and other 
resources pertaining funds transferred to private sectors as a subsidy, 
equity, or counterpart fund for implementation of specific subjects; 
(w) Liability refers to a personal obligation arising from an audit disallowance, 
charge, or decision which may be satisfied through payment or restitution 
as determined by competent authority or by other modes of extinguishment 
of an obligation as provided by law; 
(x) Money Claim refers to a demand for payment of a sum of money, 
reimbursement or compensation arising from law, contract, quasi-contract 
or quasi-delict due from a government agency or owing to a claimant; 
(y)  Notice of Final Decision (NFD) refers to a written notification addressed 
to the agency head that a decision of the Commission has become final and 
executory; 
(z)  Persons Liable refer to the persons determined to be answerable for an 
audit disallowance, charge or decision by the Commission; 
(aa)Persons   Responsible   refer   to   the   persons   determined to be 
answerable for the compliance with the audit requirements as called for in 
the notice of suspension (NS); 
(bb)Public Purpose refers to any purpose or use directly available to the 
general public as a matter of right which includes traditionally viewed as 
essentially government functions such as the building of roads and the 
delivery of basic services, and other purposed designed to promote social 
justice and public interest; 
(cc)Revenue refers to income or receipts derived by a government agency from 
taxes, excise, custom duties, fees, royalties, rents, sales of goods, or 
services and collections from other sources; 


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(dd)Settlement refers to the payment, restitution or other act of extinguishing 
an obligation as provided by law in satisfaction of the liability under a Notice 
of Disallowance or Notice of Charge (ND/NC) or in compliance 
with the requirements of a Notice of Suspension (NS); 
(ee)Settlement of Account refers to the process of determining the status or 
balance of the account of an accountable officer after audit and examination; 
and 
(ff) Trust Funds refer to funds which, by operation of law or by contract, have 
come officially into the possession of any government agency or public 
officer as trustee, agent or administrator, and received in fulfillment of 
certain obligation or a specific purpose. 
 
 
  
SEC. 4. Fundamental Principles – Financial transactions and operations of 
any government agency shall be governed by the following fundamental principles: 
 
(a) No money shall be paid out of any treasury or depository except in 
pursuance of an appropriation law, appropriation ordinance, or other 
specific statutory authority, or a board-approved corporate operating 
budget; 
(b) Government funds or property shall be spent or used solely for public 
purposes; 
(c) Trust funds shall be spent only for the specific purpose for which the trust 
was created or the funds were received; 
(d) Fiscal responsibility shall, to the greatest extent, be shared by all those 
exercising authority over the financial affairs, transactions, and operations 
of the government agency; 
(e) Disbursement or disposition of government funds or property shall be 
approved by the proper official of the government agency; 
(f) Claims against government funds shall be supported with the complete 
required documentation; 
(g) All laws, rules and regulations applicable to financial transactions shall be 
faithfully adhered to; and 
(h) Generally accepted principles and standards of accounting as well as of 
sound management and fiscal administration shall be observed, provided 
that they do not contravene existing laws and regulations. 
 
TITLE II 
THE COMMISSION ON AUDIT 
 
Chapter 1 
ORGANIZATION 
 
SEC. 5. Commission on Audit - Composition, Qualifications, Term and 
Salary 
of 
Members. 
— 
(a) 
The  Commission  on  Audit,  is composed of a 
Chairperson and two Commissioners, who are natural-born citizens of the Philippines, 
either certified public accountants with not less than ten years of auditing experience, 
or members of the Philippine Bar engaged in the practice of law for at least ten years, 
and must not have been candidates for any elective positions in the elections 
immediately preceding their appointments. At no time shall all member belong to the 
same profession. 


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(b) The Chairperson and the Commissioners shall be appointed by the 
President of the Philippines, subject to the confirmation of the Commission on 
Appointments, for a term of seven years without reappointment. Appointment to any 
vacancy shall be only for the unexpired portion of the term of the predecessor. In no 
case shall any member be appointed or designated in a temporary or acting capacity; 
(c)      No member of the Commission shall, during their tenure, hold any other 
office or employment in the government. Neither shall they engage in the practice of 
any profession or in the active management or control of any business which in any 
way may affect their functions as members of the s Commission, nor shall they be 
financially interested, directly or indirectly, in any contract with, or in any franchise or 
privilege granted by the national government, any of its political subdivisions, agencies 
or instrumentalities, including government-owned or controlled corporations and their 
subsidiaries; and 
    (d)     The salary of the Chairperson and the Commissioners shall be fixed by 
law and shall not be decreased during their tenure. 
 
SEC. 6. The Commission Proper. – The Commission Proper is composed of 
the Chairperson and two Commissioners. They shall sit as a collegial body to 
formulate policies, rules and regulations, prescribe standards governing the discharge 
of its powers and functions. 
 
SEC. 7. Specific functions of the Commission Proper. – The specific 
functions of the Commission Proper are the following:  
 
(a) Promulgate the rules concerning pleadings and practices before the 
Commission or any of its offices.    Such rules however shall not diminish, 
increase, or modify substantive rights; 
(b) Decide, by a majority vote of all members of the Commission Proper, any 
case or matter brought before it within sixty (60) days from the date of 
submission for decision or resolution; 
(c) Appoint, in accordance with the civil service laws and the s applicable career 
executive development programs, the officials and employees of the 
Commission. Appointment of lower non-core positions may be delegated by 
the Commission Proper to the appropriate officials of the Commission. It 
shall have original jurisdiction over administrative cases filed against the 
personnel of the Commission; 
 
The Commission Proper shall determine the salaries and other forms of 
compensation and other benefits, including medical, dental, optical and 
other health benefits of the personnel of the Commission, pursuant to its 
fiscal autonomy as provided in the Constitution. 
 
The Commission Proper may re-organize the organizational structure of 
the Commission, as the need arises, and to effectively attain the 
Commission's mandate in keeping with the demands of the service. 
 
The Commission Proper shall develop and implement a comprehensive 
and continuing education, manpower training and development program for 
officials and employees of the Commission. 
(d) Promulgate auditing rules and regulations for the determination of the scope 
and type of audit and examination by the Commission, the establishment of 
the techniques and methods required therefor, including those for the 
prevention and disallowance of illegal, irregular, unnecessary, excessive, 


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extravagant, or unconscionable expenditures or uses of government funds 
or property; 
 
The   Commission   Proper   shall   also   promulgate   accounting rules, 
regulations and standards in conformity with International Public Sector 
Accounting Standards and International Financial Reporting Standards. 
(e) Issue policies, rules and procedures in the custody and preservation of the 
general accounts of the national government; 
(f) Issue regulations pertaining to the responsibility and accountability of the 
audited agency in the custody and preservation of disbursement vouchers, 
journal vouchers and their supporting papers, official receipts and report of 
collection, accounting records and reports, whether audited or not, for a 
period of ten (10) years or for a longer prescriptive period, as may be 
provided by law or regulations; and 
(g) Perform such other functions as may be necessary for the effective 
implementation of this Act. 
 
SEC. 8. Duties and Responsibilities of the Chairperson. – The Chairperson 
shall act as the presiding officer of the Commission Proper and chief executive officer 
of the Commission. As chief executive officer, the Chairperson shall: 
 
(a) Control and supervise the general administration   of the Commission; 
(b) Direct and manage the implementation and execution of policies, standards, 
rules and regulations promulgated by the Commission Proper; 
(c) Sign    
appointments,    
promotions,    
office 
orders    
for    
audit 
engagements, assignment, reassignment of officials and employees, or any 
other 
personnel 
movement 
in 
any 
office 
or 
station 
of 
the 
Commission  without additional remuneration, except those authorized by 
law; 
(d) Exercise control and supervision over the audit of intelligence or confidential 
transactions or accounts of government agencies; 
(e) Delegate to the commissioners assistant commissioners, directors and 
other officials of the Commission such authority on internal administration 
concerning personnel, planning, financial, legal, and other matters 
pertaining to their respective functional areas as may be determined by the 
Commission Proper; 
(f) Submit  an annual  budget  to   the Commission  Proper  for its approval; 
(g) Submit to the Office of the President of the Philippines, Congress and other 
oversight agencies, the annual financial reports covering the financial 
condition  and results of operations of the Government, its subdivisions, 
agencies, and instrumentalities, including government-owned or controlled 
corporations subject to its audit, together with recommendations or 
measures to improve the economy, efficiency and effectiveness of their 
operations, and such other reports as may be required by law; 
(h) Authorize the re-opening of settled accounts in case of fraud, collusion, or 
error of calculation or when new and material evidence is discovered. The 
auditor may certify thereon a new balance within three (3) years after the 
original settlement of any account by the auditor or discovery thereof but not 
to exceed ten years from the date of transaction; 
(i) Summon any person or public official for the purpose of gathering data or 
inquiring into matters pertinent to the formulation, implementation or 


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enforcement of any order, decision, policy, standard, or regulation of the 
Commission Proper; and 
(j) Perform such other functions as may be required by law or policy of the 
Commission. 
 
SEC. 9. Duties and Responsibilities of the Commissioners. – The 
Commissioners, as members  of   the Commission  Proper,  shall   have  the following 
duties and responsibilities: 
 
(a) Formulate and propose policies, accounting and auditing rules; review, 
evaluate and update existing regulations of the Commission; and 
prescribe standards governing the performance by the Commission of 
its 
powers and functions; 
(b) Review and deliberate cases submitted for decision or resolution; 
(c) Approve the appointment   and promotion  of the officials  and employees 
of the Commission, subject to civil service rules; 
(d) Assist in the general administration of the Commission upon proper 
delegation by the Chairperson; 
(e) Act    as    officer-in-charge    of    the Commission    upon proper 
designation by the Chairperson, in case of the latter's absence; and 
(f) Perform such other functions as may be provided by law, rules, regulations 
or policies of the Commission. 
 
SEC. 10. Organizational Structure, Compensation of Personnel and 
Functions. – The Commission  Proper  shall determine  the organizational structure 
of the Commission; and fix the salaries, allowances, and other benefits of  its 
officials   and employees,  which  shall  be exempt  from  the Salary Standardization 
Law, and in accordance with the fiscal autonomy  of the Commission. 
 
SEC. 11. Standards Boards. – The public sector accounting standards board 
and the public sector auditing standards board shall be created directly under the 
Commission Proper, the members of which shall function in an ex-officio capacity. 
 
SEC. 12. Assistant Commissioners. – The organizational structure of the 
Commission shall be composed of sectors consisting of offices or clusters, as  may be 
determined by the Commission Proper. Each sector shall be headed by an Assistant 
Commissioner who shall have the following functions: 
 
(a) Formulate, develop, update, and supervise the implementation of the 
operational plan and performance commitment of the sector which are 
aligned with the Commission's strategic plan and annual holistic operational 
plan;  
(b) Supervise the general administration of offices or cluster of offices under 
his/her jurisdiction; 
(c)  Formulate, evaluate and recommend policies, rules and regulations for 
consideration by the Commission Proper; and 
(d) Perform such other functions as may be necessary in the effective 
implementation of this Act. 
 


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SEC. 13. General Counsel. – One of the Assistant Commissioner shall head 
the legal services sector of the Commission and concurrently designated as the 
General Counsel of the Commission who, as such, shall: 
 
(a) Perform advisory and consultative services on legal matters; 
(b) Render  legal service  with respect to the performance   of the functions of 
the Commission  and the interpretation of pertinent laws and auditing rules 
and regulations, with the exception of purely accounting matters which shall 
be acted upon by the Commission's government accountancy sector; 
(c) Handle the investigation of administrative complaints or cases filed against 
a personnel of the Commission; evaluate and act on all reports of 
involvement of the personnel of the Commission in anomalies or 
irregularities in government transactions; and perform any other 
investigative work required s by the Commission upon assignment by the 
Chairperson; 
(d)  Represent   the   Commission   in   preliminary   investigations of 
malversation and other criminal or administrative cases discovered in audit; 
assist and collaborate with the Solicitor General and the Ombudsman in 
handling cases involving the Chairperson or any of the Commissioners, or 
other officials and employees of the Commission in their official capacity; 
(e) Coordinate, for the Commission and with the appropriate legal bodies of 
government, with respect to legal proceedings towards the collection and 
enforcement of debts and claims, and the restitution of funds and property, 
found to be due any government agency which are pending settlement or 
adjustment by the Commission; and 
(f) Supervise   the enforcement  and   settlement   of   disallowances, charges 
and decisions of the Commission covered by a notice of finality of decision 
and order of execution. For this purpose, the General Counsel shall have 
control and supervision over the Office of the Commission Chief 
Enforcement Officer. 
 
SEC. 14. Commission Chief Enforcement Officer. – a) There shall be a Chief 
Enforcement Officer who shall have the rank and privileges of a central office cluster 
director.   The powers and authority Chief Enforcement Officer shall be similar to that 
of a sheriff of a regular court, with additional tasks as may be defined by the 
Commission Proper. The Chief Enforcement Officer and the deputies shall be under 
the control and supervision of the General Counsel; and 
(b) There shall be a regional enforcement officer in every regional office in 
accordance with the guidelines issued by the Commission Proper. 
 
SEC. 15. Central Office. – The Commission shall have offices as may be 
established and organized by the Commission Proper. The existing organizational set-
up and functions of the Commission, together with the duties presently assigned to 
each office, shall continue to be observed unless otherwise provided in this Act.    The 
existing sectors in the Central Office are as follows: 
 
(a) Administration Sector (AS); 
(b) Planning, Finance and Management Sector (PFMS); 
(c) Professional and Institutional Development Sector (PIDS) 
(d) Government Accountancy Sector (GAS); 


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(e) Special Services Sector (SSS); 
(f) Legal Services Sector (LSS); 
(g) Commission Proper Adjudication Sector (CPAS); 
(h) Systems and Technical Services Sector (STSS); 
(i) National Government Audit Sector (NGAS); 
(j) Corporate Government Audit Sector (CGAS); and 
(k) Local Government Audit Sector (L-GAS) 
Each sector shall discharge their existing duties and such other duties and 
functions as may be prescribed by the Commission Proper. 
 
SEC. 16. Commission Secretariat. – The Commission Secretariat shall be 
headed by a director who shall have the same rank and privileges of a central office 
cluster director. The Commission Secretariat shall perform the following functions: 
 
(a) Prepare the agenda for the sessions of the Commission Proper; 
(b) Prepare, keep and preserve the minutes of all sessions, hearings and 
conferences of the Commission Proper; 
(c) Maintain and preserve the records of the Commission Proper; and 
(d) Perform such related functions as may be assigned by the Chairperson or 
the Commission Proper. 
 
SEC. 17. Duties and responsibilities of the Central Office Directors. –The 
duties and responsibilities of the central office directors, as head of their respective 
offices or clusters, are as follows: 
 
(a) Formulate,  develop,  and supervise  the implementation of the annual 
Operational Plan and Office Performance Commitment of the office or 
cluster, both aligned with the sector's operational  plan and performance 
commitment, and in accordance with the Commission's Strategic Plan; 
(b) Manage the general administration of the office, including matters 
pertaining  to  workload,   work   accomplishment,  and   management  of   
the resources of the office or cluster; 
(c) Direct and manage the implementation and execution of laws, and policies, 
standards, rules and regulations promulgated by the Commission and 
memoranda issued by the Office of the Chairperson; 
(d) Submit annual performance report and other reports as directed by the 
Commission Proper or by the Chairperson; and 
(e) Perform other functions that may be assigned by higher and 
competent   authorities    in    the    Commission   relevant    to    the    effe
ctive implementation of this Act. 
 
SEC. 18. Regional Offices: Structure and Functions. – (a) There shall be 
COA regional offices as may be established or organized by the Commission Proper. 
Until otherwise provided by the Commission Proper, the existing regional offices are 
as follows: 
 
(1) CORDILLERA ADMINISTRATIVE REGION (CAR); 
(2) REGION I; 
(3) REGION II; 
(4) REGION III; 


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(5) REGION IV-A (CALABARZON); 
(6) REGION IV-B (MIMAROPA); 
(7) REGION V; 
(8) REGION VI; 
(9) REGIONAL SATELLITE AUDIT OFFICE NEGROS ISLAND; 
(10) 
REGION VII; 
(11) 
REGION VIII; 
(12) 
REGION IX; 
(13) 
REGIONX; 
(14) 
REGION XI; 
(15) 
REGION XII; 
(16) 
REGION XIII; and 
(17) 
BANGSAMORO AUTONOMOUS REGION IN MUSLIM MINDANAO 
(BARMM). 
 
(b) Each regional office shall be headed by a director who shall perform the 
following functions: 
 
(1) Formulate, develop, and supervise the implementation of the 
Operational Plan and Office Performance Commitment of the 
regional office, both aligned with the sector's operational plan and 
performance commitment, as well as the Commission's strategic 
plan; 
(2) Exercise supervision and control over the implementation of auditing 
rules and regulations in any agency of the government with s 
principal offices or place of operations within the region; 
(3)  Review, analyze   and    consolidate   local, national and corporate 
audit reports and audited financial statements of agencies in the 
region as may be required; 
(4)  Exercise authority over internal administration of personnel, 
planning,   financial   (budgetary   and   accounting),   and   legal   m
atters pertaining to ,the region upon delegation by the Commission 
Proper; and  
(5) Perform such other related functions as may be assigned by the 
Chairperson. 
 
SEC. 19. Audit Groups and Audit Teams. In accordance with the policies 
approved by the Commission Proper, audit groups and audit teams are created as the 
exigencies of the service may require. 
 
(a) Audit groups may be constituted for the audit of a group of agencies to be 
determined by the Commission Proper. Each audit group shall be headed by a 
supervising auditor, who shall report directly to the cluster or regional director; 
(b) Audit teams may be constituted to audit various agencies as may be 
determined by the CP.  Each audit team shall be headed by a team leader who 
shall report to the supervising auditor of the concerned audit group; 
(c) The audit team supervisor (ATS) or the audit team leader (ATL) who signs the 
independent auditor's report shall be a certified public accountant; 


12 
 
(d)  The CP shall review the composition of the audit groups and audit teams and 
may make changes or modifications in the exigency of the service and as the 
need arises; 
(e) Until such time that the Commission shall have adequate provincial satellite 
audit offices (PSAO) in each province to house the audit teams for the national 
government or local government agencies, the audited agency shall continue 
to provide suitable and sufficient office and storage space together with 
supplies, equipment, furniture, and other necessary operating expenses for its 
maintenance as determined by the supervising auditor and approved by the 
concerned director; and 
(f) Upon the physical transfer of the audit teams from the premises of the national 
government or local government auditee to the PSAO, the auditee shall 
continue to support the annual logistical and operating expenses of their audit 
teams. They shall transfer such amounts budgeted for auditing services to the 
regional or central office having supervision over the audit team assigned to the 
auditee. 
 
SEC. 20. Powers, Functions, and Duties of Auditors. – (a) The auditor shall 
exercise  such  powers  and  functions as may be authorized by the Commission in 
the 
examination, 
audit 
and 
settlement 
of 
the 
accounts, 
funds, 
property,   financial   transactions,   resources   and  physical operations of the 
agencies under his/her respective audit jurisdiction; 
(b) The auditor shall employ such auditing procedures and techniques as it may 
prescribe under the regulations of the Commission; 
(c)      The ATL shall submit an audit report to the head of the audit group on 
the date and in the manner that the Commission may prescribe and render such other 
reports as the Commission may require; 
(d)      The ATL shall, after the audit, retain custody and responsibility for the 
safekeeping and preservation of paid expense vouchers, journal vouchers, stubs of 
checks, reports of collections and disbursements and similar documents together with 
their respective supporting papers, which are the subject of an audit observation 
memoranda, notice of suspension, notice of disallowance, notice of charge, complaint, 
or a pending audit or investigation or court case until these audit or legal evidence 
shall have been turned over to a Central Audit Evidence Management Services 
(CAEMS) 
in 
the 
Central 
Office 
or 
the 
Regional 
Audit  Evidence   Management   Unit  (RAEMU)   which   are  created   by  the 
Commission; and 
(e)      The audit team shall retain a digital copy of the post-audited vouchers 
and supporting papers, official receipts, and other documents/reports upon turn 
over/return of the originals to the auditee for safekeeping and preservation in 
accordance with the guidelines promulgated by the Commission Proper. 
 
SEC. 21. Annual Audit and Work Program. – The ATL shall develop or 
formulate an annual audit plan and the necessary audit programs for auditee in 
accordance with the regulations of the Commission.   The annual audit plan of the 
audit team shall be aligned with the cluster or regional office's operational plan and 
performance commitment. 
 
SEC. 22. Assignment and Compensation of Auditing Personnel. – a) The 
assignment of representatives and support personnel of the Commission to 


13 
 
agencies of the government shall  be determined by the Chairperson in accordance 
with the policy promulgated by the Commission Proper; and 
(b) The salaries and other forms of compensation of the personnel of the 
Commission shall be determined by the Commission Proper, which, shall be exempt 
from the Salary Standardization Law pursuant to the Commission's fiscal autonomy 
as provided in the Constitution. 
 
SEC. 23. Legal Assistance to COA Officials and Employees. - (a) The 
officials and employees of the Commission are authorized to engage the services of 
private lawyers for a fee in accordance with the guidelines issued by the Commission 
Proper; and 
(b)     For this purpose, the Commission shall include in its budget the amount 
to be set aside as a legal assistance fund. 
 
SEC. 24. Professionalization of Audit Services. - The Commission shall 
develop, adopt and implement for its officials and employees a comprehensive and 
continuing manpower training and development program, which may follow a 
ladderized system. For this purpose, it shall continue its capacity building program in 
coordination with international professional bodies such as the International 
Organization of Supreme Audit Institutions, Asian Organization of Supreme Audit 
Institutions, Association of Southeast Asian Nations Supreme Audit Institutions and 
other supreme audit institutions. 
 
 
 
CHAPTER II 
APPROPRIATIONS, FUNDING AND FISCAL AUTONOMY 
 
SEC. 25.    Appropriations and Funding. -   (a) The annual operating budget 
of the Commission as provided in the General Appropriations Act shall be sourced 
from the following: 
(1) One-half of one percent (1/2 of 1%) of the annual collections from 
national internal revenue taxes; 
(2) A fixed amount equivalent ·to the actual cost of the audit services in 
the government corporations, plus a reasonable rate to cover overhead 
expenses; and 
(3) Other sources such as but not limited to collections of audit fees from 
water districts and special audits, consultancy fees and retained income; 
(b)     The budget proposal may be subject to review by the Department of 
Budget and Management but in no case shall it be lower than the approved budget of 
the Commission for the previous year; and 
(c)      All government corporations, including their subsidiaries, and self-
governing boards shall appropriate in their respective budgets and remit not later than 
the end of the second quarter of each year an amount equivalent to the appropriation 
for Personal Services to the National Treasury and shall transfer to the Commission, 
the amount for the MOOE and Capital Outlay to be utilized by the assigned audit team 
of the Commission during the calendar year. Should the assigned audit team remain 
in residency in the ·premises of the GOCC, the Capital Outlay and MOOE budget by 
the audit team shall continue to be directly provided by the agency. 
 


14 
 
SEC. 26.   Fiscal Autonomy. - (a) The Commission shall enjoy fiscal 
autonomy.   Its approved   annual   appropriation   shall be automatically   and 
regularly released. The Commission Proper may be authorized to augment any item 
in the general appropriations for the Commission from savings in any item in the same 
appropriation; 
(b)     Any savings from the approved budget under the GAA shall be retained 
by the Commission until fully spent; and 
(c)      Violation of this Section shall subject the concerned responsible officials 
to appropriate administrative sanctions. 
 
CHAPTER III 
JURISDICTION, POWERS AND FUNCTIONS OF THE COMMISSION 
 
SEC. 27. Statement of Objectives. -   Pursuant to its constitutional mandate, 
the Commission adheres to the following objectives: 
a)      Determine whether the fiscal responsibility, which rests directly with the 
head of the government agency, has been properly, efficiently and effectively 
discharged; 
(b)     Develop and implement a comprehensive audit plan that shall encompass 
the examination of financial and non-financial transactions, accounts and reports, 
including evaluation of the internal control system of the agency; 
(c)      Institute control measures through the promulgation of auditing and 
accounting rules and regulations governing the revenue, receipts, disbursements, and 
uses of funds and property, including evaluation of projects under public-private-
partnership agreements or the like, fund transfers to non-government organizations 
(NGOs), peoples organizations (POs) or other private entities for specific purpose, 
consistent with the total economic development efforts of the Government; 
(d)     Promulgate accounting and auditing rules   and regulations  to facilitate 
the safekeeping of the accounts of the government and enhance their information 
value using state of the art technology; 
(e)      Institute    measures    designed   to    preserve   and    ensure   the 
independence of the Commission's officials and employees; and 
(f) Bring its operations closer to the people by the delegation of authority, consistent 
with the provision of the Constitution and the national policy on decentralization. 
 
SEC. 28.   Jurisdiction of the Commission. - (a) The Commission shall have 
the power, authority, and duty to examine, audit, and settle all accounts pertaining to 
the assessments and collections of revenues and receipts, and to the expenditures or 
uses of funds and property, owned or held in trust by, or pertaining to the national 
government, 
or 
any 
of 
its 
subdivisions, 
agencies, 
including   state    universities  and   colleges,   instrumentalities,   government 
corporations and their subsidiaries, including water districts; 
(b)     The Commission shall   also have   audit jurisdiction  over the following: 
 
 
(1)        Public utilities; 
 
 
(2) 
Non-government   entities   such   as   electric   cooperatives, 
NGOs, POs; private foundations,  educational  institutions  and other entities receiving 
subsidy or equity, donation or grant, or fund transfer directly or indirectly from or 
through the government, those which have government shares, or counterpart funds 
from the government, and those which are required by law or the granting institution 
to submit to such audit as a condition of subsidy or equity, donation or grant, or fund 


15 
 
transfer. This authority, however, shall pertain only to the audit of these funds or 
subsidies coming from or through the government; and 
 
 
(3) 
Leagues of provinces, cities municipalities and barangays; 
 
 
(4) 
Private   entities   collecting   revenues   m   behalf   of   the 
government. 
(c)     The Commission shall have exclusive authority, subject to the limitations 
of Article IX of the 1987 Constitution, to define the scope of its audit and examination, 
establish the techniques and methods required therefor, and promulgate accounting 
and auditing rules and regulations, including those for the prevention and disallowance 
of illegal, irregular, unnecessary, excessive, extravagant, or unconscionable 
expenditures, or uses of government funds and property; 
(d)     No entity of the government, or its instrumentalities, subsidiaries, shall be 
exempted  in any guise whatsoever  from the jurisdiction  of the Commission; 
(e)      The authority and power of the Commission shall extend to and 
comprehend all matters relating to: 
 
 
(1) Auditing procedures, systems and controls; 
 
 
(2) Keeping of the general accounts of the government; 
 
 
(3) Examination and inspection of the books, records, and papers 
relating to those accounts and operations under audit; 
 
 
(4) Audit and settlement of the accounts of all persons respecting funds 
or properly received or held by them in an accountable capacity; 
 
 
(5) Settlement of accounts subsisting between agencies of the 
government and 
 
 
(6) Examination, audit, and settlement of all debts and claims of any sort, 
including set-off, due from or owing to the government or any of its subdivisions, 
agencies and instrumentalities. 
(f) The Commission shall have visitorial authority over the following: 
 
 
(1) Non-government entities subsidized   by the government, those 
required to pay levies or government share; royalties or fees from exploitation, 
exploration and development of natural resources. This authority pertains only to the 
determination of the amount to be assessed, collected and remitted to the government; 
 
 
(2) Non-government entities whose loans are guaranteed by the 
government provided that such authority shall pertain only to the audit of the 
government's contingent liability; 
 
 
(3) Non-government entities operating and charging fees or tariffs to the 
public for the use of public facilities or utilities in so far as the reasonableness of the 
rates charged to the users of the facilities or utilities; and 
 
 
(4) Non-government entities which have contracts with the government 
under a Public - Private Partnership (PPP) Agreement or any of its variants, insofar as 
the determination of the: existence of value-for money in procurement through PPP; 
compliance with the terms and conditions of the contract or agreement; 
reasonableness of the sharing of the risks and rewards between the private sector and 
the government; and absence of disadvantage to the government in the agreement 
relating to the operation, maintenance and handover of the public infrastructure or 
project. 
 
SEC. 29. Fees or Audit and Other Services. -(a) The Commission shall 
assess and collect reasonable fees for the different services rendered to non-
government entities that shall be audited in connection with their dealings with the 
government, arising from but not limited to subsidies, counterpart funding, government 


16 
 
equity, donation, grant, fund transfer, directly or indirectly from or through the 
government, or where audited records become the basis for a government levy or 
share. Fees of this nature shall accrue directly to the Commission within ten (10) 
working days following the completion of the audit; and 
(b)      Whenever   the   Commission   enters   into   a   contract   with   any 
government entity, to render audit and deliver services beyond the normal scope of 
such services, the Commission is empowered to assess and collect reasonable fees. 
Such fees shall likewise accrue directly to the funds of the Commission within the time 
provided for in the contract or in the billing statement rendered by the Commission. 
 
SEC. 30. Deputization of Licensed Professionals or Experts. - (a) The 
Commission Proper may, when the exigencies of the service so require, deputize and 
retain in the name of the Commission such certified public accountants and other 
government licensed professionals or experts not in the public service, to assist its 
auditors in undertaking specialized audit engagements; 
(b)     The   deputized   professionals   or   experts   are entitled   to  such 
compensation and allowances as may be stipulated in an agreement or contract, 
subject to pertinent rules and regulations on compensation and fees; 
(c)      The Commission Proper shall issue guidelines in contracting deputized 
professionals or experts referred to in this section. 
  
SEC. 31. Civil Society Organizations (CSO) in the Conduct of Audit. - The 
Chairperson may deputize duly accredited civil society organizations (CSOs) in the 
conduct of audit to help auditors in the ocular inspection, validation, evaluation and 
monitoring 
of 
projects 
imbued 
with 
public 
interest 
or 
located 
in   remote   and   critical   areas   in   order   to   enhance   credibility, accountability 
and transparency in audit processes. 
  
SEC. 32.   Disallowance of Unconscionable Expenditures of Funds or 
Uses of Property. - The Commission shall promulgate accounting and auditing rules 
and regulations for the prevention and disallowance of illegal, irregular, unnecessary, 
excessive, extravagant or unconscionable expenditures, or uses of government funds 
or property. Any violation of such rules and regulations shall be a ground for 
disallowance without prejudice to administrative, civil and criminal sanctions against 
the persons liable. 
  
SEC. 33. Auditing Transactions with Private Persons. -No   government 
agency or government employees association shall enter into any contract or 
transaction with any private person or firm for services to undertake studies and 
services relating to government auditing and accounting, including services to 
conduct, for a fee, seminars or workshops for government personnel on these topics, 
unless the proposed contract is first submitted to the Commission to enable it to 
determine if it has the resources and capability to undertake such studies or services. 
The Commission may engage the services of experts from the public or private sectors 
in the conduct of such studies.  
Should the Commission decide not to undertake the study or service, the 
Commission shall nonetheless have the power to review the proposed contract in 
order to determine ·the necessity, capability or expertise of the private party and the 
reasonableness of its fees.  


17 
 
Any contract entered into without the approval of the Commission shall be 
considered null and void and the related expenditures incurred thereon shall be 
disallowed in audit and become the personal liability of the officials concerned. 
  
SEC. 34. Legal Services of Private Law Firms. - No contract involving public 
funds shall be entered into for the services of a private law firm or lawyer to represent 
government agencies in court or to render legal services for them. In the event that 
such 
legal 
services 
cannot 
be 
avoided 
or 
is 
justified 
under 
extraordinary   or   exceptional circumstances, the   written   conformity   and 
acquiescence or clearance of the Solicitor General or the Government Corporate 
Counsel, as the case may be, and the written concurrence of the Commission shall 
first be secured before the hiring or employment of a private lawyer or law firm; and  
 
In the absence of the said requirements, any payment thereof shall be 
disallowed in audit and the same shall be the personal liability of the officials 
concerned. 
  
SEC. 35. Prohibition in Soliciting, Grants, or Financial Assistance. - Private 
foundations and entities organized and managed by government officials and 
employees are prohibited from using the name and resources of the government 
agency in soliciting or receiving donations; grants, or financial assistance from private, 
domestic and international donors. 
  
Any violation of the preceding paragraph shall subject the said foundation or 
entity to special audit by the Commission as if the funds so received are public 
funds which should   be  recorded   in the  books  of  the  concerned government 
agency. Refusal to submit itself to such audit shall constitute an offense punishable 
under Section 102 of this Act. 
 
SEC.    36.    Submission   of    Documents   Relative    to   Government 
Obligations. - The Commission shall have the power, for audit and examination 
purposes, to require the submission of the original of any: (a) order, deed, contract, or 
other document, which is the basis for any collection of, or payment from government 
funds, together with any certificate of ownership in case of investments;  
(b) official receipts and assessment notices issued by the Bureau of Internal 
Revenue, Bureau of Customs, Land Transportation Office and similar agencies and 
the related compromise agreements, if any;  
(c) copies of board resolutions or council resolutions in case of GOCCs or 
LGUs, respectively; or 
(d) other records and papers or other evidence in connection with a financial 
transaction involving public funds.  
In the case of deeds to property purchased by any government agency, the 
Commission shall require a certificate of title entered in favor of the government or 
other evidence satisfactory to it that the title is in the name of the government. 
It shall be the duty of the officials or employees concerned, including those in 
non-government entities under audit, or affected in the audit of government and non-
government entities, to comply promptly with these requirements. 
Failure or refusal to do so without justifiable cause shall constitute a ground for 
administrative disciplinary action as well as for disallowance of the claim under 
examination, assessment of additional levy or government share, or withholding or 
withdrawal of government funding or donations through the government, as well as for 
penal or administrative sanctions as provided by law. 


18 
 
 
SEC. 37. Investigatory and Contempt Powers. -The Chairperson or any 
Commissioner of the Commission, the Assistant Commissioners, central office 
directors, regional directors, the auditors assigned to any government agency, and 
any other official or employee of the Commission specially deputed in writing for the 
purpose by the Chairperson shall, in compliance with the requirement of due process, 
have the power to summon the parties to a case brought before the Commission for 
resolution, 
issue 
subpoena 
and 
subpoena 
duces   tecum,   administer   oaths,   and   otherwise   take   testimony   in   any 
investigation or inquiry on any matter within the jurisdiction of the Commission. 
The Commission shall have the power to punish for contempt as provided for 
in the Revised Rules of Court and the Revised Rules of Procedure of the Commission, 
under the same procedure and with the same penalties provided therein. Any violation 
of any final and executory decision, order or ruling of the Commission shall constitute 
as indirect contempt. 
  
SEC. 38. Power to Adjudicate Money Claims. -   The Commission shall have 
the power to adjudicate money claims filed against the government arising from law, 
contract, quasi-contract or quasi-delict. 
  
SEC. 39. Power to Compromise Claims. - (a) When the interest of the 
government so requires, the CP may compromise or release in whole or in part, any 
settled claim or liability to any government agency not exceeding Ten million 
(Pl0,000,000.00) pesos arising out of any matter or case before it or within its 
jurisdiction.  
In 
case 
the 
claim 
or 
liability 
exceeds 
Ten 
million 
(Pl0,000,000.00)      pesos,     the     Commission     shall     submit     with     its 
recommendations, the application for relief to Congress; and 
  
(b) The respective governing bodies of government financial institutions and 
other government corporations and self-governing boards, commissions or  agencies 
of the government shall have the authority to condone, compromise or release any 
similar claim or liability when expressly authorized by their charters, subject to timely 
review and post-audit by the Commission. When the charters do not so provide, the 
power to condone or compromise shall be exercised exclusively by the Commission 
in accordance with the preceding paragraph. 
 
SEC. 40.   Collection of Indebtedness due the Government. - (a) The 
Commission   shall,  through   proper   channels,   assist  in the  collection   and 
enforcement of all debts and claims, and the restitution of all funds or the replacement 
or payment at a reasonable price, of property found to be due the government agency 
in the settlement and adjustment of its accounts.  
If any legal  proceeding  in court  is necessary,   involving  final and executory 
audit disallowances or charges, the Prosecution and Litigation Office of the 
Commission shall handle the same.  All other cases shall be handled by the Office of 
the Solicitor General or the Office of the Government Corporate Counsel, as the case 
may be. The Commission shall extend full support in the litigation. All money claims 
due and payable shall bear the legal interest rate from the date of receipt of the Order 
of Execution or upon demand by the Commission; and 
(b) The Commission may further refer the case to the Office of the Ombudsman 
for the filing of the proper administrative and criminal actions against 


19 
 
agency   personnel   concerned   and private persons  in case  of  any irregularity or 
illegality in the incurrence of such debts and claims. 
 
SEC. 41.   Retention of Money for Satisfaction of Indebtedness. - (a) When 
any person or entity is indebted to any government agency, including final and 
executory audit disallowances or charges, the Commission may direct the head of 
agency or public officer concerned to withhold the payment of any money due from 
such entity or person or the estate, in satisfaction of the indebtedness, disallowances 
and charges; and 
(b) Failure on the part of the head of agency or public officer to withhold the 
said money to satisfy such indebtedness or audit disallowances and charges shall 
make the head of agency or· public officer personally liable therefor without prejudice 
to administrative action that may be filed for neglect of duty. 
  
SEC. 42.    Annual Report. -  (a) The Commission shall submit to the President 
and the Congress of the Philippines, not later than September 30 of each year, an 
annual report on the financial condition and results of operation of all government 
agencies, which shall include recommendations of measures necessary to improve 
economy, efficiency and effectiveness of these agencies; 
(b)     To carry out the purposes of this section, the chief accountant or the 
official in charge of keeping the accounts of the government agency shall submit to 
the Commission the year-end financial statements and such other supporting or 
subsidiary statements as may be required by the Commission not later than March 31 
of each year. Financial statements returned by the Commission for revision due to 
non-compliance with accounting standards, rules and regulations shall be resubmitted 
within three (3) days after the date of receipt by the official concerned; and 
(c) Failure on the part of any official or employee to comply with the provisions 
of the immediately preceding paragraph shall cause automatic suspension of the 
payment of the salary and other emoluments until the official or employee shall have 
complied therewith. The violation of these provisions for at least three times shall 
subject the offender to administrative disciplinary action. 
  
SEC. 43.   Authority to Examine Accounts of Public Utilities. -    The 
Commission shall examine and audit the books, records and accounts of all public 
utilities such as water concessionaires, franchise holders and electric distribution,  
and   transmission   utilities   including   generation   utilities,   in connection with the 
fixing of rates of every nature, or in relation to the proceedings of the proper regulatory 
agencies for purposes of determining franchise taxes and other fees. The examination 
and audit shall be conducted any time after a provisional or final rate increase is 
approved or implemented by the Energy Regulatory Commission.  Any authorized 
government agency may, without any need of prior request of the said government 
agency, examine and audit subject to the guidelines of the Commission. 
 
(a)      During the examination and audit, any official or employee of the public 
utility concerned shall produce all the reports, records, books of accounts and such 
other papers as may be required. The Commission shall have the power to take 
testimony under oath from any official or employee of the said s public utility on matters 
pertaining to the audit; and 
(b)     Any official or employee of the public utility who refuses the examination 
and audit of the books of accounts and pertinent records, or causes unnecessary 


20 
 
obstruction to the examination and audit, or found guilty of concealing any material 
information concerning its financial status shall be subject to the penalties provided 
under Section 102 hereof 
  
SEC. 44.   Powers, Functions and Duties of Audit Groups. - The audit 
groups in government agencies shall perform the following functions and duties: 
  
(a)      Examine, audit and settle accounts, funds, financial transactions, and 
resources of the agencies under the respective audit jurisdiction and exercise such 
powers and functions as may be authorized by the Commission; 
 (b)     Submit an audit report  for each  calendar   year  on the dates prescribed 
by the Commission but not later than June 30 following the close of the year; 
(c)      In the performance of the respective audit functions as herein specified, 
employ auditing procedures and techniques in consonance with the applicable 
Philippine and International Standards adopted by the Commission; 
(d)     Conduct audit of the transactions and accounts submitted for audit within 
such period prescribed by the Commission in the guidelines and issue the results, 
findings   and   observations   thereon   through   Audit   Observation Memoranda, 
Notice of Suspension, Disallowances and Charges in accordance with the rules and 
regulations on settlement of accounts; 
(e)      Keep   and   preserve   disbursement   vouchers,  journal   vouchers, 
original copies of paid checks, bank statements, reports of collections and 
disbursements and similar documents together with the supporting papers evidencing 
transactions that are disallowed, charged or suspended in audit, including those that 
are the subject of audit observations or court cases or investigations by the Office of 
the Ombudsman or other investigative bodies in  accordance with the rules and 
regulations of the Commission;  
The safekeeping and preservation of other audited documents not falling 
under   the   preceding   paragraph   shall   be   returned   to   the   custody   and 
responsibility of the management  subject any time to the access of, and examination 
by the authorized representative of the Commission. Under no circumstances shall 
said documents be removed or disposed of without the approval of the Commission 
or the authorized representative; and 
 (f)       Perform such other functions as may be assigned by the superiors. 
  
SEC. 45. Examination of Cash and Accounts of Accountable Officer. - (a) 
The cashbooks, accounts, papers and cash in the accountability of an accountable 
officer shall at all times be open to the audit and examination of the Commission and 
its duly authorized representatives; and 
(b)      In case an examination of the cash and accounts of an accountable 
officer discloses a shortage, the auditor shall immediately demand in writing the 
restitution of the shortage and notify in writing the head of the government agency 
concerned of said shortage in accordance with the regulations of the Commission. The 
head of the government agency shall immediately relieve the accountable officer and 
assign another officer to assume the former's duties and responsibilities. A complete 
report on the cash examination of the accounts of the accountable officer with cash 
shortage shall be submitted immediately by the auditor to the director for purposes of 
filing the appropriate administrative and criminal case against the said defalcating 
accountable officer with the Office of the Ombudsman, as the evidence may warrant. 
  


21 
 
SEC.   46.      Withholding   of   Salaries   and   other   Emoluments   of 
Accountable Officers. -   Whenever an accountable officer has been found short of 
the accountabilities during cash · examination  or audit of the cash and accounts, the 
auditor shall order the withholding of the salaries and other emoluments due the 
accountable officer found to have incurred cash shortage until the final determination 
of the latter's accountability by the Commission or final judgment by a competent court. 
In the event that the accountable officer is found not liable for the cash shortage, the 
withheld salary and other emoluments shall be released to the accountable officer, 
otherwise, it shall be applied in payment of the officer's indebtedness. 
  
SEC. 47. Constructive Distraint of Property of Accountable Officer. - (a) 
Upon discovery in audit of a shortage in the accounts of any accountable officer, and 
upon finding a prima facie case of malversation of public funds or property against an 
accountable officer, the Commission may place under constructive distraint the 
personal property of the accountable officer concerned where there is reasonable 
ground to believe that the said officer is retiring from the government service, or 
intends to leave the Philippines or remove the property therefrom, or hide or conceal 
the property; 
(b)     The constructive distraint shall be effected   by   requiring  the 
accountable officer or any other person having possession or control of the property 
to accomplish a receipt in the form prescribed by the Commission, covering the 
property distrained and obligating the accountable officer to preserve the same intact 
and unaltered, and not to dispose of it in any manner whatsoever without the express 
authority of the Commission; 
(c)    In case the said accountable officer or any person having the possession 
and control of the property sought to be placed under constructive distraint refuses or 
fails to accomplish the receipt herein referred to, the representative of the 
Commission, effecting the constructive distraint, shall proceed to prepare a list of such 
property and in the presence of two witnesses leave a copy thereof in the premises 
where the property distrained is located. Thereafter, the said property shall be deemed 
to have been placed under constructive distraint, in accordance with the rules and 
regulations of the Commission; and 
(d) The auditor shall submit to the chairperson, through the director, a report on 
any distraint effected pursuant to this section not later than five (5) calendar days from 
the date of the distraint of the property. A copy of the report shall be furnished the 
General Counsel of the Commission. 
 
CHAPTER IV 
DECISIONS OF THE COMMISSION 
 
 
SEC. 48.   Appeal from Decision of Auditors. - (a) Any person aggrieved by 
the decision of an auditor of any government agency in the settlement of an account 
or claim may, within 180 calendar days from receipt of a copy of the decision, appeal 
in writing to the Commission. The procedures of appeal shall be governed by the 
internal rules concerning pleadings and practices of the Commission; 
(b)     The Commission shall impose reasonable appeal filing fees and legal 
research fee. These fees shall be assessed by the office where the appeal is filed and 
paid to the Commission's Treasury Office. The corresponding receipts shall be 
attached to the appeal or petition for review, which shall form part of the record of the 


22 
 
appeal. Appeal or petition for review not supported with receipt of the filing fee shall 
be a ground for the dismissal of the case, except those appeals that may be allowed 
by the Commission. In no case shall expenses related to the appeal from the decisions 
of the auditor or director be charged against public funds. 
 
SEC. 49.   Period for Rendering Decisions of the Commission. -    The 
Commission Proper shall decide any case brought before it within sixty (60) days from 
the date of its submission for resolution. If the account or claim involved in the case 
needs referral to other persons or offices, or to a party interested, the period shall be 
counted from the time the last comment or pleading necessary to a proper decision is 
received by it.  
 
SEC. 50.    Appeal from Decisions of the Commission. -   The party aggrieved by 
any decision, order or ruling of the Commission may, within thirty (30) days from the 
receipt of a copy thereof, appeal on certiorari to the Supreme Court in the manner 
provided by law and the Rules of Court. When the decision, order, or ruling adversely 
affects the interest of any government agency, the appeal may be taken by the proper 
head of that agency. The Office of the Solicitor General shall at all times represent the 
Commission in all its decisions appealed to the Supreme Court. 
 
SEC. 51. Finality of Decisions of the Commission. - (a) The decision of 
the   Commission, director   or   auditor   upon   any   matter within the  audit 
jurisdiction, if not appealed as herein provided, shall be final and executory; and 
(b)     The General Counsel or any authorized officer of the Commission shall 
issue an order of execution requiring the sheriffs or enforcement officers of the 
Commission to execute its final decisions, resolutions, orders or claims and awards. 
 
SEC. 52.    Enforcement of Decisions of the Auditor or Commission 
Proper. - The agency head shall ensure the immediate settlement of the final and 
executory decision of the auditor, director or the CP. Unreasonable failure or refusal 
of the head of agency or concerned officer to implement the final and executory 
decision of the auditor, director, or the CP, shall render the former administratively 
liable for neglect of duty. 
  
SEC. 53.    Reopening and re-audit of audited transactions. - (a) All 
transactions and accounts are open for audit within ten (10) years after the date of 
transaction; and 
(b)     When any transaction appears to be tainted with fraud, collusion, or error 
of assessment, or when new and material evidence is discovered, the CP may motu 
propio or upon: the instance of a party in interest, order the reopening or re-audit 
thereof within three (3) years after the original audit but not to exceed ten (10) years 
from the date of the transaction.   The concerned auditor shall prepare an audit report 
thereon and submit the same to the chairperson or the authorized representative. 
 
TITLE III 
GOVERNMENT AUDITING 
 
Chapter I 
BASIC POLICIES AND STANDARDS 
 


23 
 
SEC. 54. Definition of Government Auditing. -     Government auditing Is the 
analytical  and systematic examination and verification of financial transactions, 
operations, accounts, and reports of any government agency for the purpose of 
determining the accuracy, integrity, authenticity, and compliance with the 
requirements of law, rules and regulations, International Public Sector Accounting 
Standards (IPSAS) or Philippine Financial Reporting Standards (PFRS), and the 
standards in auditing or the International Standards for Supreme Audit Institutions 
(ISSAis). 
  
SEC. 55.   General Standards. - (a) The audit shall be performed by a person 
with adequate technical training and proficiency in auditing;  
(b)     In all matters relating to the audit work, the auditor shall maintain 
complete independence, impartiality and objectivity and shall avoid any possible 
compromise of the independence or any act that creates a presumption of lack of 
independence, or the possibility of undue influence in the performance of duties; and
 
 
(c)     The   auditor   shall   exercise   due   professional   care   guided   by 
applicable laws, regulations and the internationally adopted standards of audit or the 
ISSAis, which guide the planning, performance and execution of the audit work, 
reporting of the results of the audit, monitoring and quality assurance in the conduct 
of all phases of the audit. 
 
Chapter II 
RECEIPT AND DISPOSITION OF FUNDS AND PROPERTY 
 
SEC. 56. Accounting of Money and Property Received by Public Officials. 
-   All moneys and property officially received by a public officer in any capacity or upon 
any occasion must be accounted for as government funds and government property, 
except as may otherwise be specifically provided by law or competent authority. The 
recognition in the books of accounts of the concerned agency shall be in accordance 
with the International Public Sector Accounting Standards or Philippine Financial 
Reporting Standards. 
  
SEC.   
57.     
Designation of 
Collecting or Disbursing Officers for 
Government Agencies. - The head of any government agency may designate such 
number of collecting or disbursing officers or agents as may be deemed necessary. 
  
SEC. 58.   Time and Mode of Rendering Account. - In the absence of specific 
provision of law, all accountable officers shall, through the agency accountants, render 
their accounts, submit their vouchers, and make deposits of money collected or held 
by them at such time and in such manner as shall be prescribed  in the rules and 
regulations  of the Commission. The auditor concerned shall then conduct the 
necessary examination and audit thereof. 
 
SEC. 59. Accrual of Income or Revenues to Unappropriated Surplus of the 
General Fund. - (a) All income or revenues accruing to the agencies by virtue of the 
provisions of law, orders and regulations shall be deposited in the National Treasury 
or in any duly authorized government depository and shall accrue to the 
unappropriated surplus of the General Fund of the government, unless otherwise 
specifically provided by law; and 


24 
 
(b)     Income or revenues from business-type activities and revolving funds of 
government agencies may be separately recorded and disbursed in accordance with 
such rules and regulations  as may be determined by a Permanent Committee 
composed of the Secretary of Finance as Chairperson, Chairperson of the 
Commission on Audit and the Secretary of Budget and Management, as members. 
  
SEC. 60.   Special, Fiduciary and Trust Funds. - (a) Receipts shall be 
recorded as income of Special, Fiduciary or Trust Funds or funds other than General 
Fund only when authorized by law in accordance with the rules and regulations issued 
by the Permanent Committee; 
(b)     Revenues collected from particular taxes, levy and royalties for special 
purpose shall be treated as a special fund or Special Account in the General Fund and 
paid out for such purpose only. If the purpose for which a special fund was created 
has been fulfilled or abandoned, the balance, if any, shall be transferred-to the General 
Fund of the government; and 
(c)     In case any government agency fails or refuses to implement such 
reversion and closure, the Permanent Committee may recommend for approval of the 
President the reversion and closure of the Special Account in the General Fund, 
Fiduciary or Trust Funds on any of the following grounds: 
  
 
(1)         when the terms have expired  or when it is no longer necessary 
for attainment  of the purpose for which -the funds were established; 
 (2)         when the funds have remained dormant for unreasonable 
length of time; 
(3)         when the General Fund is needed in times of emergency; or
 
 
(4)         when used in violation of the rules and regulations issued by the 
Permanent Committee. 
  
SEC. 61. Receipts and Revenues of Local Government Units (LGUs). - All 
receipts and income accruing to the LGUs shall be deposited in the account 
maintained in the authorized government depository bank or private bank with the prior 
approval of the Secretary of Finance. 
  
SEC. 62.   Receipts and Revenues of Government Corporations. -    All 
receipts and income accruing to government corporations shall be deposited in the 
account maintained in the authorized government depository bank. 
  
SEC. 63. Issuance of Official Receipts. - (a) No payment of any nature shall 
be received by a collecting officer. without immediately issuing an official receipt in 
acknowledgement thereof. The receipt maybe in the form of postage, internal revenue 
or documentary stamps or such other forms as the law or the Commission may allow. 
Temporary or provisional receipts shall not be issued to acknowledge the receipt of 
public funds; 
(b)   Where digital or electronic devices are used to acknowledge cash 
receipt, the same shall be subject to inspection and verification  by the Commission; 
(c) The same is acceptable provided the document maintains its integrity and 
reliability and may be authenticated so as to be usable for subsequent reference, in 
that: 


25 
 
(1)        the electronic document remains complete and unaltered, apart 
from the addition of any endorsement and any authorized change, or an change 
which arises in the normal course of communication, storage and display; and 
(2)      the electronic document is reliable for the purpose for which it was 
generated and for all relevant circumstances. 
  
SEC. 64.    Check Payments for Taxes or Other Indebtedness to the 
Government. - (a) An officer charged with the collection of revenue or the receipt of 
moneys payable to the government shall accept a payment in the form of checks 
issued in favor of the government agency, upon proper indorsement and identification 
of the payee or indorsee.  Checks drawn in favor of the government for payment of 
any indebtedness shall likewise be accepted by the officer concerned, provided it shall 
be made payable to the agency or the official title or designation of the official 
concerned as the payee; 
(b)     When a check drawn in favor of the government is not accepted by the 
drawee bank for any reason, the drawer shall continue to be liable for the sum due 
and all penalties resulting from delayed payment. Where the reasons for non-
acceptance by the drawee bank are insufficiency of funds or closed accounts, the 
drawer shall be criminally liable therefor; and 
(c)     Money in the hands or custody of the collecting officer shall not be utilized 
for the purpose of encashing private checks. 
  
SEC. 65. Deposit of Money in the Treasury or Authorized Government 
Depository Bank. - (a) Public officers authorized to receive and collect moneys 
arising from taxes, revenues, or receipts of any kind shall remit or deposit intact the 
full amounts so received and collected by the officers to the account of the National 
Treasury or in the account of agencies maintained in the authorized government 
depository bank not later than the following banking day, except when it is impractical 
to do so due to distance and the amount to be deposited is minimal; and 
(b)    The collections shall not be used for purposes of disbursements except 
when authorized by law or regulations. 
 
SEC. 66.    Acknowledgement of Receipt of Money by Government 
Depositories. -   All authorized government depository banks shall acknowledge 
receipt of all the money received, for the account of the national treasurer or the 
agency concerned.   The acknowledgement receipt shall bear the date of actual 
deposit and shall indicate from whom, and on what account the money was received. 
The money received shall be governed by the Treasury Single Account System 
established pursuant to Executive Order No. 55, Series of 2011. 
  
SEC. 67.    Shipment of Government Money or Property by Carrier; 
Notation of Evidence of Loss. -   When government money or property is transported 
from one place to another by carrier, it shall be the duty of the consignee or the 
representative to make notations on the bill of lading or receipt on any evidence of 
loss, shortage, or damage. 
  
SEC. 68. Credit for Loss Occurring in Transit or Due to Fire,. Theft, 
Robbery or Force Majeure. - In case of loss of government funds, property, 
documents evidencing financial transactions, or records of accountabilities occur while 
in transit, or loss is caused by fire, theft, robbery or force majeure, the officer or 


26 
 
employee accountable or in custody thereof, shall immediately notify the auditor 
concerned and, within thirty days from the occurrence of loss, shall present the 
application for relief, together with the required supporting evidence. When warranted, 
credit for the loss shall be allowed.   An officer or employee who fails to comply with 
this requirement shall not be relieved from liability nor shall be allowed credit for any 
loss thereof. 
  
SEC. 69. Transfer of Funds from One Agency to Another or From One 
Officer to Another. -   Transfer of government funds from one agency to another or 
from one officer to another shall, except as allowed by law or regulation, be made only 
upon prior direction or authorization of the agency head following the accountability 
and accounting guidelines issued by the Commission. 
  
SEC. 70.   Transfer of Property between Government Agencies. - Any 
government property that is no longer serviceable or needed by the agency to which 
it belongs may be transferred without cost, or at an appraised value, to other 
government agencies upon authority of the respective agency heads. 
  
SEC. 71.    Invoice and Receipt upon Transfer of Property. -   When 
government property is transferred from one accountable officer to another, or from 
an outgoing officer to the successor, it shall be done upon properly itemized invoice 
and receipt which shall invariably support the clearance to be issued to the relieved  or 
outgoing  officer, subject to regulations   by the Commission.    The head of agency 
shall ensure the proper tum-over of their accountabilities. 
  
SEC. 72.    Destruction or Sale of Unserviceable Property. -   When 
government property has become unserviceable for any cause, an inventory shall 
be  made,   and   upon   application   by   the  officer   accountable   therefor   for 
destruction, the property shall be inspected and appraised by the appraisal committee 
created by the head of the agency, subject for review by the auditor concerned and, if 
found to be valueless, unserviceable or unsalable, the property may be destroyed or 
disposed of in the presence of the auditor. 
If found to be valuable, the property may be sold thru public bidding to the 
highest bidder under the supervision of the Disposal Committee of the government 
agency, after advertising the same for two (2) consecutive days in any national 
newspaper of general circulation. Where the value of the property does not warrant 
the expense of publication, as determined by said Committee, the notice of sale shall 
be posted for the same period in at least three (3) public places in the locality where 
the property is to be sold. In the event that the public bidding fails, the property may 
be sold at a negotiated sale at such price as may be fixed by the same committee, 
subject to the immediate audit of the auditor concerned in accordance with the 
regulations of the Commission. 
  
SEC. 73.    Disposition of Government Property. -   Any government 
property that is no longer needed by the agency to which it belongs as certified by the 
head of the said agency may, after appraisal thereof by management, and review by 
the Commission, be sold thru public bidding to the highest bidder. Such sale shall be 
under the supervision of the proper committee on award or similar body of the 
government agency, after publication for not less than two (2) consecutive days in any 
national newspaper of general circulation. Where the value of the property does not 


27 
 
warrant the expense of publication, as determined by the said proper committee, 
notices of said sale shall be posted for a like period in the website of the agency and 
in at least three (3) public places in the locality where the property is located, or where 
the sale will be conducted. In the event that the public bidding fails, the property may 
be sold at a negotiated sale at such price as may be fixed by the same committee, 
subject to the immediate audit of the auditor concerned in accordance with the 
regulations of the Commission.  
Sale or any mode of disposition of real properties shall be subject to the prior 
approval by the Commission. 
  
SEC. 74.   Disposition of Foreclosed Assets or Collaterals Acquired in the 
Regular Course of Business by Government Corporations. -    Their Charters 
notwithstanding, foreclosed assets or collaterals acquired in the regular course of 
business by government corporations shall be sold through public bidding to the 
highest bidder after appraisal thereof by an independent appraiser and review by the 
Commission.  Such sale shall be under the supervision of the proper committee on 
award or similar body of the government corporation, after publication for not less than 
two (2) consecutive days in any national newspaper of general circulation. 
In the event that the public bidding fails, the property may be sold at a 
negotiated sale at such price as may be fixed by the same committee, subject to the 
immediate audit of the auditor concerned in accordance with the regulations of the 
Commission. If the property remains unsold for at least one year, it shall be subject for 
reappraisal and shall be offered again for sale through public bidding. 
Government property may be disposed of as payment of dividend, after 
appraisal thereof by an independent appraiser and review by the Commission. 
  
SEC. 75.     Disposition of Funds or Property  Held by Deceased, 
Incapacitated or Absconding Accountable Officer. -   (a) When an officer 
accountable for government funds or property absconds, dies, or becomes 
incapacitated in the performance of duties, the agency head shall designate a 
custodian lo take charge of the funds or property until a successor shall have been 
appointed and qualified. The agency head may appoint a committee to  count the cash 
and take an inventory of the property for which the officer was accountable and to 
determine the responsibility for any shortage therein. One copy of the inventory and 
of the report of the committee duly certified shall be filed with the auditor concerned 
but the findings of the committee shall not be conclusive until audit thereon is 
completed.    The agency head, whenever necessary, shall be responsible for 
securing a "hold departure order" from the proper government agency to prevent the 
absconding officer from leaving the country; and 
(b) If    the    absconding,    deceased    or    incapacitated    officer    is 
accountable for funds or property of a province or city, the acting custodian and 
committee shall be designated by the local chief executive, furnishing notice to the 
Secretary of Finance, who shall thereafter appoint a regular accountable officer 
through the Bureau of Local Government Finance. 
 
SEC. 76.   Final Report of Accountable Officers. - (a) An accountable officer, 
upon ceasing to act as such, shall submit to the auditor of the agency a report of the 
accountability within one (1) month after ceasing to act as accountable officer. Upon 
receipt of the report, the auditor shall conduct a cash examination on the 
accountability; and 


28 
 
 (b)      Any   remaining   balance   of  the   cash   accountability   shall   be 
deposited in the proper treasury immediately. 
  
SEC. 77. Auditor's Notice of Disallowances, Charges and Suspensions to 
Accountable Officer. -  (a) At the end of every period prescribed by the Commission, 
the auditor shall send a written notice of disallowance, charge, or suspension, if any, 
to each accountable officer, through the agency head, whose accounts have been 
audited and settled in whole or in part. An audit suspension which is not satisfactorily 
explained within ninety (90) days after receipt of the notice by the accountable officer 
shall become a disallowance. 
(b)     Any person aggrieved by the decision of the auditor pertaining to 
disallowances, charges, or suspensions, may appeal the case in accordance with the 
rules of procedure of the Commission. 
 
 
Chapter III 
 
APPLICATION OF APPROPRIATE FUNDS 
 
SEC. 78. Appropriation Before Entering into Contract. -    The contract  
involving the expenditure of public funds shall not be entered into unless there is an 
appropriation or approved budget therefor, the unexpended balance of which, free of 
other obligations, is sufficient to cover the proposed expenditure. 
  
SEC.  79.     Certificate Showing Appropriation to Meet Contract. - Except 
in the case of a contract for personal services or for supplies for immediate 
consumption, no contract involving the expenditure of public funds by any government 
agency shall be entered into or authorized unless the proper accounting official of the 
agency shall have certified to the officer entering into the obligation that funds have 
been duly appropriated for the purpose and that the amount necessary to cover the 
proposed contract for the fiscal year is available for expenditure on account 
thereof.    The certificate signed by the proper accounting official shall be attached to 
and 
become 
an 
integral 
part 
of 
the 
contract,   and  the  sum  so  certified   shall  not  thereafter   be  available   for 
expenditure for any other purpose until the obligation of the government agency under 
the contract is fully extinguished. 
 
SEC. 80. Void Contract and Liability of Officer. -Any contract entered into 
contrary to the requirements of the two immediately preceding sections shall be void 
and not binding to the government. The officers of any  government agency 
responsible for the contract shall be personally liable to the government or other 
contracting party as if the transaction had been entered into between private parties. 
  
SEC. 81.    Restrictions on Payment Under Government Procurement 
Contracts. - No payment, partial or final, shall be made on any government  
procurement contract except upon a certification by the head of the agency or the duly 
authorized 
representative 
to 
the 
effect 
that 
the 
services 
have 
been  
rendered,   supplies,   materials   or   equipment   have    been   delivered   and 
infrastructure projects have been implemented or completed in accordance with the 
terms and conditions of the contract and have been duly inspected and accepted. 


29 
 
  
SEC.   82.     Prohibition  against   advance   payment   on   government 
contracts. -   Except when authorized by law, the government shall not be obliged to 
make an advance payment for contracts for: 
(a)     services not yet rendered; 
(b)     supplies and materials not yet delivered, inspected and accepted; and 
(c)     infrastructure projects not yet implemented or completed, inspected and 
accepted other than for 15% mobilization as provided for in RA 9184. 
  
SEC. 83. Limitations on cash advance. - (a) Cash advance shall not be given 
unless for a legally authorized specific purpose. A cash advance shall be reported on, 
and liquidated, as soon as the purpose for which the cash advance was given has 
been served. Additional cash advance shall not be allowed to any official or employee 
unless the previous cash advance given has been settled or a proper accounting has 
been made; 
 (b)     The failure of the official or employee to liquidate the cash advance after 
due demand by an authorized officer, is a prima facie presumption of 
malversation despite the absence  of a finding of actual damage  to the government; 
(c)      The transfer of cash advance by a disbursing officer to another does not 
constitute an expenditure for which the disbursing officer may claim credit in the 
accounts, but the responsibility continues to attach until the amount has been fully 
accounted for; and 
 d)      Cash   advance   shall not be granted   for   the   procurement or 
implementation of infrastructure projects. Any violation of the foregoing provisions 
shall constitute a valid cause for the withholding of the salary of the accountable officer 
without prejudice to the imposition of administrative or civil sanction and criminal 
prosecution of both the authorizing and the accountable officials, as may be warranted. 
 
SEC.   84.      Limitations on   Cash   or   Fund   Transfers   from   One 
Government Agency to Another. - (a) Cash or fund transfers shall not be given 
unless for legally authorized specific purpose as embodied in a memorandum of 
agreement executed between the source and implementing agencies; 
(b) The cash or fund transfers shall be reported and liquidated by the 
implementing agencies as soon as the purpose for which they have been granted have 
been served, but not later than the end of the year; 
(c) Additional or new cash or fund transfers shall not be made unless the 
previous transfers had been fully liquidated as certified by the head of agency; and 
(d)  The heads of the source and implementing   agencies shall be responsible 
for compliance with the foregoing requirements. Failure on the part of the foregoing 
officials or persons to comply with the above-mentioned responsibility shall constitute 
a ground for administrative or criminal action, as evidence may warrant. 
 
SEC.   85.      Limitations   on   Cash   or   Fund   Transfers   from   Any 
Government Agency to a Private Organization or Entity. - (a) Cash or fund 
transfers from a government agency shall not be given to a private organization or 
entity unless authorized by law for a specific purpose which should be embodied in a 
Memorandum  of Agreement  executed between the source government agency and 
the implementing private organization or entity; 
(b)     Only duly registered, accredited and reputable private organizations or 
entities shall be granted cash or fund transfers; 


30 
 
(c)     The cash or fund transfers shall be reported on and liquidated by the 
implementing private organizations or entities to the source government agency as 
soon as the project has been completed or not later than sixty (60) days after project 
completion.    If the project implementation will go beyond December 31st of the year, 
a partial liquidation report as of December 31st of that year shall be submitted to the 
source government agency not later than January 15 of the ensuing year; 
 (d)      No additional or new cash or fund transfers shall be made unless the 
previous cash or fund transfers have been fully liquidated as certified by the head of 
the agency; and 
 (e) The heads of the source government agency and implementing private 
organizations or entities shall be responsible for compliance with the foregoing 
requirements. Failure on the part of the officials or persons to comply with the above-
mentioned responsibility shall constitute a ground for administrative or civil sanction or 
criminal prosecution, as warranted. 
 
SEC. 86.   Payment of Rewards. - When a reward becomes payable by 
authority of law for information given relative to any offense or any illegal activity, or 
for any act done in connection with the apprehension of the offender, the reward shall 
be paid as prescribed by law or regulations. Such payment of reward shall be subject 
to audit in accordance with the regulations of the Commission. 
  
SEC. 87. Replacement of Lost, Stolen or Destroyed Checks. - When any 
check is lost, stolen or destroyed, the issuing officer may issue a replacement check 
as payment for the same obligation upon the execution of an affidavit of loss, 
submission of stop payment order to the drawee bank and a surety bond issued by 
the Government Service Insurance System (GSIS) to indemnify the issuing agency of 
the amount of the check. If destroyed, presentation of the destroyed check to the 
issuing officer is also required. The chief accountant or internal auditor of the agency 
shall be responsible that no double payment is made as a result thereof. 
  
SEC. 88.   To Whom Checks are Payable. - Checks drawn against the 
government   agencies' Checking Account maintained with any government 
depository shall be made payable directly to the creditor to whom the money is due, 
or to a disbursing officer or employee for an official disbursement.  
Release of checks to a person not duly authorized to receive such check shall 
subject the accountable officer to administrative or civil sanctions or criminal 
prosecution, as warranted. 
  
SEC. 89.   Reversion of Unliquidated Balances of Accounts Payable. - The 
head of agency shall cause the reversion to the unappropriated surplus of the general 
fund of the national government or of LGUs, and for GOCCs, to their retained earnings, 
any unliquidated balance of accounts payable in their books of accounts, which has 
been outstanding for two years or more and which no actual valid claim, administrative 
or judicial, has been filed. 
 
 
Chapter IV 
 
ACCOUNTABILITY AND RESPONSIBILITY FOR GOVERNMENT FUNDS AND 
PROPERTY 


31 
 
 
 
SEC. 90.   Accountable Officers; Bond Requirement. - (a) Every officer of 
any government agency whose duties permit or require the possession or 
custody   of   government   funds   or   property   shall   be accountable   for   the 
safekeeping thereof in conformity with law.    Other government officers not 
accountable by the nature of their duties, may be similarly held accountable for 
government   funds or property   through   their   participation   in the use or 
application thereof; and 
(b)     Every accountable officer shall be properly bonded in accordance with 
law and the pertinent rules or regulations. 
 
SEC. 91.    Primary Responsibility and Accountability of the Agency Head. 
- (a) The head of any agency of the government is immediately and primarily 
responsible for all government funds and property pertaining to the agency; and 
(b) Persons entrusted with the possession or custody of the funds or property 
under the agency head shall be immediately responsible, without prejudice to the 
liability of either party to the government. 
 
SEC. 92. General Liability for Unlawful Expenditures. - Expenditures of 
government funds or uses of government property in violation of law or regulations 
shall be the personal liability of the official or employee found to be directly responsible 
therefor. 
  
SEC. 93. Degree of Supervision Over Accountable Officers. - The head of any 
government agency shall exercise the diligence of a good father of a family in 
supervising accountable officers under his control to prevent the incurrence of loss of 
government funds or property; otherwise, liability shall be joint and solidary with the 
person primarily accountable therefor. The treasurer of the local government unit shall 
likewise exercise the same degree of supervision over accountable officers under his 
oversight; otherwise, liability shall be joint and solidary with the head of government 
agency for the loss of government funds or property. 
 
SEC. 94.    Measure of Liability of Accountable Officers. - (a) Every officer 
accountable for government property shall be liable for its money value in case of 
improper, unauthorized use or misapplication thereof, by the officer or any person for 
whose acts the officer may be responsible.    The accountable officer shall also be 
liable for all losses, damages, or deterioration occasioned by negligence in the keeping 
or use of the property regardless of whether or not there is actual custody; and 
(b)     Every officer accountable for government funds shall be liable for all losses 
resulting from the unlawful deposit, use, or application thereof and for all losses 
attributable to negligence in the keeping of the funds. 
  
SEC. 95.    Liability for Acts Done by Direction of Superior Officer. - The 
accountable officer shall not be relieved from liability by reason of acting under the 
direction of a superior officer in paying out, applying, or disposing of the funds or 
property for which the officer is accountable, unless prior to that act, the accountable 
officer notified the superior officer in writing of the illegality of the payment, application, 
or disposition.     The superior officer directing any illegal payment or disposition of the 


32 
 
funds or property and the accountable officer who fails to serve the required notice 
shall be jointly and solidarity liable. 
  
SEC. 96. Prohibition Against Pecuniary Interest. - The head of agency, 
board of directors, accountable officer or public official shall not have pecuniary 
interest, directly or indirectly, in any contract or transaction of the agency in which 
he/she is an officer, or in any other office where he/she has influence.  
This prohibition shall apply to the accountable officer's immediate family and 
relatives up to the third civil degree by consanguinity or affinity. 
 
 
TITLE IV 
GOVERNMENT ACCOUNTING 
 
Chapter I 
 
SEC.    97.       Government    Accounting.   -    Government    accounting 
encompasses the processes of analyzing, recording, classifying, summarizing, and 
communicating all transactions involving the receipt and disposition of government 
funds and property, and interpreting the results thereof. 
  
SEC. 98.   Accounting Rules and Regulations. - The Commission shall 
promulgate accounting rules and regulations in accordance with the Generally 
Accepted   Accounting   Principles, International   Public   Sector   Accounting 
Standards and International Financial Reporting Standards, as applicable. Such rules 
and regulations shall be updated from time to time as the Commission may deem 
proper, to meet the changing government accounting requirements. 
 
 
Chapter II 
 
ACCOUNTING REPORTS 
 
SEC. 99. Financial Reports and Statements. - (a) The financial reports prepared 
by the agencies shall comply with the specific requirements of applicable   laws   and 
regulations   as to  nature,   accounting   basis,   content, frequency, and distribution 
as well as with all applicable restrictions pertaining to information that is classified for 
national security purposes; and 
(b)     The financial statements shall be based on official accounting 
records   and   registries   kept   in   accordance   with   law, regulations   of the 
Commission, and the International Public Sector Accounting Standards and 
International Financial Reporting Standards, as applicable. 
 
SEC. 100.   Submission of reports. - (a) Whenever deemed necessary in the 
exigencies of the service, the Commission may, under regulations issued by it, require 
the agency heads, chief accountants,  budget officers,  cashiers, disbursing officers, 
administrative or personnel officers, and other responsible officials  of the various 
agencies   to submit  financial  statements, physical inventory reports, current plantilla 
of personnel, and such other reports as may be necessary for the exercise of its 
functions; 


33 
 
(b)      In case of failure on the part of the officials concerned to submit the 
documents and reports mentioned herein within the prescribed period, the head of the 
agency shall cause the suspension of the payment of the salaries until the officials 
shall have complied with the requirements of the Commission without prejudice to any 
disciplinary action that may be instituted against such official or employee in 
accordance with the applicable rules on administrative cases issued by the Civil 
Service Commission; and 
(c)      Failure on the part of the head of the government agency to implement, 
without justifiable cause, the sanctions provided in the immediately preceding 
paragraph shall constitute as a ground for this Commission to file the appropriate 
administrative charge against the erring official. 
 
 
Chapter III 
 
INTERNAL CONTROL SYSTEMS 
 
SEC. 101.   Internal Control System and Its Installation. - (a) Internal control 
is the plan of organization and all the coordinate methods and measures adopted 
within an organization or agency to safeguard its assets, check the accuracy and 
reliability of its accounting data, and encourage adherence to prescribed managerial 
policies; 
(b)      It shall be the direct responsibility of the agency head to establish an 
internal control unit that shall install, implement and monitor a sound internal control 
system in that government agency; and 
(c)      Failure on the part of the head of the government agency to implement 
the preceding paragraph, without justifiable cause, shall constitute as a ground for this 
Commission to file the appropriate administrative charge against the erring official. 
 
 
 
TITLE V 
 
FINAL PROVISIONS 
 
SEC. 102.   Penal Provision. -  The penalty of fine not exceeding One hundred 
thousand (Pl00,000.00) pesos or imprisonment not exceeding one (1) year, or both 
such fine and imprisonment at the discretion of the court, shall be imposed upon any 
public officer or private person committing any of the following acts or omissions 
declared as obstruction of audit: 
(a)      Refusing or neglecting to render or settle an account as required by 
law   or   regulation   after   demand   by   the   Commission   or   its   authorized 
representatives; 
(b)      Denying access to or failing to produce documents, records, or papers 
under the custody of such public officer or private person within fifteen (15) days after 
demand by the Commission or its authorized representatives in connection with the 
conduct of audit; and 
(c)      Destroying or concealing documents, records, or papers which are 
officially entrusted to such public officer or private person, pertaining to the collection, 


34 
 
receipt, expenditure, or disbursement of public funds and utilization or disposal of 
government property in connection with the conduct of audit. 
 
SEC. 103.  Duty to Respect the Commission's Independence. -It   shall be 
the duty of every person to respect, protect and preserve the independence of the 
Commission. 
 
SEC. 104.    Administrative Disciplinary Action. -   (a) Any unjustified failure 
by the public officer to comply with the requirements imposed in this Code, shall 
constitute neglect of duty or grave misconduct, and shall be a ground for the 
Commission to file appropriate administrative disciplinary action against the public 
officer who, upon being found guilty after hearing, shall be meted the penalty 
commensurate with the degree of the guilt in accordance with the civil service laws, 
without prejudice to criminal prosecution whenever the evidence warrants and 
 (b)     The auditor shall report to the director any violation of the  preceding 
paragraph for referral of the case to the Office of the Ombudsman, or other 
government disciplining authorities. 
  
SEC. 105. Separability Clause. -   If any provision or part of this Code is 
declared invalid or unconstitutional, the remaining parts or provisions not affected shall 
remain in full force and effect. 
  
SEC. 106. Repealing clause. -   Presidential Decree No. 1445, otherwise 
known as the "Government Auditing Code of the Philippines, " is hereby expressly 
repealed. All other laws, executive orders, proclamations, decrees, instructions, rules 
and regulations, or parts thereof which are inconsistent or in conflict with any provision 
of this Code are hereby repealed or modified accordingly. 
 
SEC. 107. Effectivity. - This Code shall take effect fifteen (15) days after its 
publication in the Official Gazette or in two (2) newspapers of general circulation. 
 
Approved,