THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
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 and/or controlled corporations by mandating these agencies to 
establish their respective Internal Audit Service (IAS), further amending for the 
purpose Republic Act (RA) No. 3456, as amended by RA No. 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 RA No. 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 
care of. The 
bill also 
makes mandatory 
for 
heads 
of 
agencies 
to 
establish their respective IAS, violation of which would render these officials 
liable under RA No. 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. 
JI Rd 
0 JERCITO ESTRADA 


THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
SENATE 
S.B. No. 
Introduced by Sen. Jinggoy Ejercito Estrada 
AN ACT 
FURTHER AMENDING SECTIONS THREE AND FOUR OF REPUBLIC ACT 
NUMBERED THREE THOUSAND FOUR HUNDRED FIFTY-SIX, AS AMENDED 
BY REPUBLIC ACT NUMBERED ONE THOUSAND ONE HUNDRED SEVENTY- 
SEVEN, OTHERWISE KNOWN AS THE "INTERNAL AUDITING ACT OF 1962 " 
Be it enacted by the Senate and the House of Representatives of the 
Philippines Congress assembled: 
SECTION I. 
Sections three and four of the Republic act Numbered Three 
Thousand Four Hundred Fifty-Six, as amended by Republic Act Numbered Four 
Thousand One Hundred Seventy-Seven, otherwise 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 for the agency. The chief of 
the Internal Audit Service shall have the raqk 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 
and/or 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.]” 
SECTION 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 
the Implementing Rules and Regulations, the heads of agencies are mandated to 
install the Internal Audit Services in their respective agencies. 
SECTION 3. Any violation of this Act shall render the officials of the 
agencies concerned liable under Republic Act Numbered Six Thousand Seven 
Hundred 
Thirteen, otherwise known as the “Code of Conduct and Ethical 
Standards for Public Officials and Employees” and other existing administrative 
and/or criminal laws. 
SECTION 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.