FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
- 
/[I/--% S''i 
I 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
INTRODUCED BY SEN. JINGGOY EJERCITO ESTRADA 
EXPLANATORY NOTE 
The accompanying bill seeks to strengthen the internal control systems in 
branches, subdivisions and instrumentalities of the government, including 
government-owned andlor controlled corporations by mandating these agencies 
to establish their respective Internal Audit Service (IAS), further amending for the 
purpose Republic Act No. 3456, as amended by R.A. 4177, otherwise known as 
the Internal Auditing Act of 1962. 
The need for internal audit services as tool for achieving efficient and 
effective fiscal administration and performance of agency affairs and functions 
has been recognized as early as 1962 when R.A. 3456 was enacted. In spite of 
this landmark legislation and the various legislative and administrative orders that 
were issued thereafter, not all agencies of the government have established their 
IAS. Those that were able to comply, at least partly, had their staff detailed or 
borrowed from other units of the agency. 
Under the bill, the IAS shall be under the direct supervision and control of 
the head of agency in order to provide clear lines of authority. The bill calls on 
the Commission on Audit (COA) together with the Civil Service Commission 
(CSC) and the Department of Budget and Management (DBM) to come up with 
the implementing rules and regulations within ninety (90) days after the effectivity 
of the Act. 
This is to ensure that plantilla positions and the corresponding 
budgetary allocation for personnel who will be assigned to the IAS will be taken 
cared of. The bill also makes mandatory for heads of agencies to establish their 
respective IAS, violation of which would render these officials liable under R.A. 
6713, otherwise known as the Code of Conduct and Ethical Standards for Public 
Officials and Employees. 
In view of the foregoing, approval of this bill is earnestly sought. 
I 
Senator 


FOURTEENTH CONGRESS OF THE REPUBLIC 
) 
7 Jlil -2 i' 
' 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
Senate Bill No.- 490 
INTRODUCED BY SEN. JlNGGOY EJERCITO ESTRADA 
AN ACT 
FURTHER AMENDING SECTIONS THREE AND FOUR OF REPUBLIC ACT 
NO. 3456, AS AMENDED BY REPUBLIC ACT NO. 1177, OTHERWISE 
KNOWN AS THE "INTERNAL AUDITING ACT OF 1962." 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Sections three and four of Republic Act No. 3456, as 
amended by R.A. No. l'i77, othetwise known as the "Internal Auditing Act of 
1962" are hereby further amended to read as follows: 
"SEC 3. The Internal Audit Service shall be under the direct 
administrative supervision and control of the heads of the agency. It shall 
correspondingly perform staff functions. 
It shall be responsible for 
instituting and conducting a program of internal audit of the agency. The 
chief of the Internal Audit Service shall have the rank and salary 
equivalent to the third ranking official of the agency. He shall report 
directly to the head [or assistant head] of the agency. 
"SEC 4. The [Auditor General] COMMISSION ON AUDIT shall be 
responsible for the promulgation and enforcement of general policies, 
rules and regulations on internal auditing, non-compliance or disregard of 
which shall be considered as a breach of official duty and may be used as 
a basis for an administrative action against the defaulting official. [He] THE 
COMMISSION shall coordinate government internal auditing activities and 
[schedule] the [gradual] installation of internal audit services in all 
branches, subdivisions and instrumentalities of the government, including 
government owned andlor controlled corporations, and shall develop for 
execution, working plans and training program to maintain continuously 
the effectiveness of these internal audit services. [The Internal Auditing 
Coordinating Department of the General Auditing Office shall assist the 
Auditor General in the discharge of these responsibilities.]" 
SEC 2. 
The Commission on Audit, together with the Civil Service 
Commission and Department of Budget and Management, in consultation with 
the Association of Government Internal Auditors, shall within ninety (90) days 


after the effectivity of this Act, promulgate the rules and regulations for the 
effective implementation of this Act. 
The Commission on Audit shall submit to both Houses of Congress copies 
of the Implementing Rules and Regulations, the heads of the agencies are 
mandated to install the Internal Audit Services in their respective agencies. 
SEC 3. Any violation of this Act shall render the officials of the agencies 
concerned liable under Republic Act No. 6713, otherwise known as the “Code of 
Conduct and Ethical Standards for Public Officials and Employees” and other 
existing administrative and/or criminal laws. 
SEC 4. Effectivity. - This Act shall take effect fifteen (15) days following 
the completion of its publication in the Official Gazette or in at least two (2) 
newspapers of general circulation 
Approved,