Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
HOUSE BILL NO. 4267 
Introduced by Representatives Ferdinand Martin G. Romualdez, Yedda 
Marie K. Romualdez, Andrew Julian K. Romualdez, and Jude A. Acidre 
AN ACT 
PROVIDING FOR THE REVISED GOVERNMENT AUDITING CODE 
OF THE PHILIPPINES 
EXPLANATORY NOTE 
This bill seeks to strengthen and upgrade the function of the Commission 
on Audit by providing a revised Philippine Government Auditing Code, repealing 
for the purpose, Presidential Decree (PD) No. 1445, as amended.  
On June 11,1978, PD No.1445, entitled “Ordaining and Instituting a 
Government Auditing Code of the Philippines” was issued. On June 25, 1987, 
PD No. 1445 was amended with the issuance of Executive Order (EO) No. 292, 
otherwise known as the” Administrative Code Of 1987. "  
Forty-five (45) years have passed and up to the present, PD No. 1445, as 
amended, remains the reference and centerpiece of government auditing.  
Fast-forwarding to this time's rapid development of frontier and cutting-
edge electronic technologies, and as we rise up from the vestiges of the pandemic 
alongside the challenges caused by the global economic crises, it is crucial and 
imperative for Commission on Audit to upgrade its organizational structure and 
functions to ensure the accountability and transparency of the public sector.  
September 1, 2025
3:49 pm


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While it is true that the mandate of the Commission on Audit is not tackling 
corruption per se, there is a growing awareness that its role in overseeing the 
country's financial management of public funds gives this constitutional body an 
important role to play in deterring and detecting corruption in the public sector.  
Consonant to the State policy enunciated under Article 11, Section 27 of 
the 1987 Constitution which provides that “The State shall maintain honesty and 
integrity in the public service and take positive and effective measures against 
graft and corruption,” this bill seeks to reinforce and toughen the capabilities of 
the Commission on Audit as part of the convergent efforts of the country's key 
anti-corruption institutions including the Office of the Ombudsman, Department 
of Budget and Management, Presidential Anti-Graft Commission, Civil Service 
Commission, and Career Executive Service Board.  
Auditing is an indispensable element in the government's thrust in 
upholding the public sector's accountability. Thus, as a way of fostering 
efficiency, economy, and effectiveness of the national government, the role of the 
Commission on Audit in examining the government revenues and expenditures 
should be revised and strengthened.  
This measure was approved by the House on Third Reading during the 19th 
Congress. 
In view of the foregoing, approval of this bill is earnestly sought. 
FERDINAND MARTIN G. ROMUALDEZ 
YEDDA MARIE K. ROMUALDEZ 
ANDREW JULIAN K. ROMUALDEZ 
JUDE A.  ACIDRE 


Republic of the Philippines 
House of Representatives 
Quezon City, Metro Manila 
Twentieth Congress 
First Regular Session 
HOUSE BILL NO. 4267 
Introduced by Representatives Ferdinand Martin G. Romualdez, Yedda 
Marie K. Romualdez, Andrew Julian K. Romualdez, and Jude A. Acidre 
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 I 
GENERAL PROVISIONS 
SECTION 1. Short Title. – This Act shall be known and cited as the “Revised 
Government Auditing 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 


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improper disposition in order to ensure efficiency, economy, and effectiveness in 
the operations of government. The responsibility to take care that such policy is 
faithfully 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/s 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 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 (COA). This shall include any public officer or private 
person or entity who may have direct or indirect participation in the transaction; 
 
(c) Advice to Debit Account (ADA) refers to an authorization issued by 
the government entity that serves as an instruction to government servicing banks 
to debit a specified amount from 
its 
available account balance 
for
 
payment of creditors/payees; 
 
(d) 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 representatives; 
 


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(e) Appropriation refers to an authorization by law, appropriation 
ordinance, or other enactments, or the corporate operating budget directing the 
payment of Personnel Services (PS), Maintenance and Other Operating Expenses 
(MOOE), and capital outlay out of government funds under specified conditions 
and/or purposes; 
 
(f) 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; 
 
(g) Audit refers to the examination, verification, evaluation and analysis 
of the accounts or financial records including evaluation of the effectiveness of 
internal control systems; the determination of the government entity’s 
compliance with applicable laws, rules, and regulations; as well as the evaluation 
of the economy, efficiency and effectiveness of management systems, operations, 
and programs, activities, or projects (PAPs). It may also cover other special audits 
as may be prescribed by the Commission; 
 
(h) Auditor refers to any officer or employee of the COA duly appointed 
or designated to conduct an audit; 
 
(i) 
Audit Group refers to a cluster of Audit Teams that are grouped 
together headed by a Supervising Auditor (SA). The audit group shall plan, 
manage, conduct the Audit work, and ensure prompt submission of the audit 
report; 
 
(j) 
Audit Decision refers to the action of the auditor as a result of the audit 
to allow, disallow, or charge a particular transaction; 


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(k) Audit Report refers to the final output of an audit on the accounts, 
financial records, systems, and operations of a government entity; 
 
(l) 
Audit Team refers to the basic organizational unit responsible for the 
audit of government and non-government entities; 
 
(m) Audit Work Papers refer to the documentation or evidence either in 
physical or electronic form of the work done and the results thereof, consisting 
of relevant or pertinent data, analyses, computations, calculations, notes, 
schedules, excerpts, confirmations 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 and/or 
disbursing officer; 
 
(o) Cash Advances refer to regular or special advances granted to public 
officers and employees for a public purpose; 
 
(p) Charge refers to accountability pertaining to the assessment, appraisal, 
or collection of revenues, receipts, and other income such as those arising from 
under-appraisal, under-assessment or under-collection or failure to collect or 
remit collection which is found in the course of audit of revenues or receipts; 
 
(q) 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 


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or Notice of Charge. It is issued after the issuance of the Notice of Finality of 
Decision (NFD); 
 
(r) Cost of Audit Services refers to the cost of discharging the audit 
function taking into consideration the nature and complexity of operations, size 
of the government entity, and the volume of transactions being audited; 
 
(s) Decision or resolution refers to an adjudication of any case or matter 
brought before any authorized official or body in the Commission which shall 
embody the facts of the case, the issue/s to be resolved, the ruling, and the law, 
regulations, or precedent on which the ruling is based; 
 
(t) 
Depository refers to any financial institution lawfully authorized to 
receive the deposit of government moneys; 
 
(u) Direct Electronic Payment (DEP) refers to an electronic payment 
scheme where the payments are made by the government entity itself, using the 
intermediary's technology or infrastructure. This includes the use of ADA; 
 
(v) Disallowance refers to the disapproval in the audit of a transaction, 
either in whole or in part, involving government disbursement or property;  
 
 
(w) Electronic Collection (e-Collection) refers to a method or manner 
wherein revenue, fees, assessments, or obligations due to the government entity 
is being collected using a mechanical device, electronic device, or computer-
based system. The term refers to an alternative way of collection wherein no 
actual money, check, or any physical note is handed through the hands of the 


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government entity's collecting officer. This includes the use of an intermediary 
in performing the collection function; 
 
(x) Electronic Payment (e-Payment) refers to the disbursement of money 
or equivalent electronic representations of legal tender, for purposes of paying 
government expenditures, solely through electronic means as opposed to the use 
of cash, check, or physical notes to accomplish the same. This includes the 
manner by which an obligation is extinguished by means of sending instruction 
for the debit of the government entity's account and the corresponding credit to 
the payee's account. This includes the transfer of funds to the intermediary for the 
purpose of distribution; 
 
(y) Financial Reporting Framework refers to a set of accounting 
principles, standards, interpretations, and pronouncements that must be followed 
in the preparation of the financial statements. It defines how and when to 
recognize, measure, present and disclose transactions in the financial statements. 
This refers to the applicable accounting standards adopted by the Commission on 
Audit (COA) as prescribed by the international standards-setting body; 
 
(z) 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, 
and government corporations, including their subsidiaries; 
 
(aa) Government funds and properties refer to public moneys of every sort 
and other resources pertaining or accruing to any agency of the government; 
including funds transferred to private entities as a subsidy, equity, donation, 
grant, or counterpart fund for implementation of PAPs; 


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(bb) Liability refers to either an obligation arising from audit decisions or 
from contracts or quasi-contracts; 
 
(cc) Money Claim refers to a demand for payment of a sum of money, 
reimbursement, or compensation arising from law, contract, or quasi-contract due 
from a government agency or owing to a claimant; 
 
(dd) Notice of Finality of Decision (NFD) refers to a written notification 
addressed to the head of the agency that a decision of the Commission has 
become final and executory; 
 
(ee) Persons Liable refer to the persons determined to be answerable for an 
Audit disallowance, charge, or decision by the Commission; 
 
(ff) 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); 
 
(gg) Programs, Activities, Projects (PAPs) refer to any work progress or 
group of work progress undertaken to realize the outputs and outcomes of an 
agency. This is represented by an item of appropriation in the national budget; 
 
(hh) Public Officer refers to any person holding any public office in the 
government by virtue of an appointment, election, or contract vested with 
sovereign functions of the government; 
 


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(ii) Public Purpose refers to any purpose or use directly available to the 
general public as a matter of right. This pertains to those traditionally viewed as 
essentially government functions such as the building of roads and the delivery 
of basic services. It may also include those purposes designed to promote social 
justice and public interest allowed by the law or jurisprudence; 
 
(jj) Public Utility refers to a public service that operates, manages, or 
controls for public use any public facility, network and system as enumerated in 
Republic Act No. 11659 entitled, “An Act Amending Commonwealth Act No. 
146, otherwise known as the Public Service Act, as amended”; 
 
(kk) Regular Cash Advances refer to those granted to cashiers, disbursing 
officers, paymasters, and/or property/supply officers for any of the following 
purposes: 
 
1. 
Salaries and wages; 
 
2. 
Commutable allowances; 
 
3. 
Honoraria and other similar payments to officials and employees; and 
 
4. 
Petty operating expenses, consisting of small payments for 
maintenance and operating expenses cannot be paid conveniently paid by check 
or are required to be paid immediately; 
 
(ll) Revenue refers to income or receipts derived by a government agency 
from taxes, excise, custom duties, fees, royalties, rents, sale of goods or services, 
sale of assets and collections from other sources; 


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(mm) Settlement of Liability 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); 
 
(nn) Settlement of Accounts refers to the process of determining the status 
or balance of the account of an accountable officer after audit and examination; 
 
(oo) Settled Account refers to a transaction which after audit does not result 
to any adverse audit decision; 
 
(pp) Special Cash Advances refer to those granted on the explicit authority 
of the Head of the Agency only to duly designated disbursing officers or 
employees for other legally authorized purposes, as follows: 
 
1. Current operating expenditures of the agency field office or of the 
activity of the agency undertaken in the field when it is impractical to pay to the 
same by check, such as – (a) Salaries, Wages and Allowances; (b) Maintenance 
and other operating expenses; and 
 
2. 
Travel Expenditures, including transportation fare, travel allowance, 
hotel room/lodging expenses and other expenses incurred by the officials and 
employees in connection with official travel; 
 
(qq) Statement of Internal Control (SIC) refers to the representation of the 
head of the agency’s informed judgment as to the overall adequacy and 


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effectiveness of internal control within the agency related to compliance, 
reporting, and operations; 
 
(rr) Suspension refers to a temporary disallowance of a transaction or 
accounts which appear illegal or improper or irregular unless satisfactorily 
explained or justified by the persons responsible or until the requirements on 
matters raised in the course of audit are submitted or complied with; 
 
(ss) Trust Funds refer to funds which, by operation of law or by contract 
which are officially in the possession of any government agency or of a public 
officer as trustee, agent, or administrator, which are for the fulfillment of certain 
obligations or a specific purpose; and 
 
(tt) Transfer-Distribute-Liquidate (TDL) refers to an e-Payment scheme 
where the government entity's funds are first transferred to the intermediary's 
possession and control, which the latter thereafter uses to distribute payments to 
the intended payees of the principal government entity. 
 
SEC. 4. Fundamental Principles. – Financial transactions and operations of any 
government agency shall be governed by the fundamental principles set forth 
hereunder: 
 
(a) No money shall be paid out of any public treasury or depository except 
in pursuance of an appropriation law, appropriation ordinance, or other 
specific statutory authority, or a Department of Budget and Management 
(DBM)-approved corporate operating budget; 
 


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(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 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) Disbursements 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 properly authorized and 
supported with the complete required documentation; 
 
(g) All laws, rules, and regulations applicable to financial transactions shall be 
faithfully adhered to; and 
 
(h) Applicable financial reporting framework adopted by the Commission, as 
prescribed by 
international standards-setting body, as well as sound 
management and fiscal administration, shall be observed: Provided, That 
they do not contravene existing laws, rules, and regulations. 
 
TITLE II 
CHAPTER I 
ORGANIZATION 
 


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SEC. 5. Composition of the Commission on Audit, Qualifications, Term and 
Salary of Members. – The Commission shall be headed by a Chairperson and 
two (2) Commissioners, who shall be natural-born citizens of the Philippines and, 
at the time of their appointment, at least thirty-five (35) years of age, either 
certified public accountants with at least ten (10) years of auditing experience, or 
members of the Philippine Bar who have been engaged in the practice of law for 
at least ten (10) years, and must not have been candidates for any elective 
positions in the elections immediately preceding their appointment. At no time 
shall all Members of the Commission belong to the same profession. 
 
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 (7) 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. 
 
In case of vacancy pending the appointment of a Chairperson, the senior 
member, as to appointment, shall perform the functions of the Chairperson until 
a new one is appointed and assumes office. 
 
No member of the Commission shall, during their tenure, hold any other 
office or employment in the government. They shall neither be 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 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 


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subdivisions, agencies or instrumentalities, including government-owned or 
controlled corporations and their subsidiaries. 
 
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 (CP). – The Commission Proper shall be 
composed of the Chairperson and two (2) Commissioners. They shall sit as a 
collegial body in the discharge of the powers and functions of the Commission. 
 
SEC. 7. Functions of the CP. – The following shall be the functions of the CP: 
(a) Promulgate auditing rules and regulations for the determination of the 
scope and type of audit and examination by the Commission, establish the 
techniques and methods required therefor, including those for the 
prevention and disallowance of illegal, irregular, unnecessary, excessive, 
extravagant, or unconscionable expenditures or uses of government funds 
or property; 
 
(b) Promulgate accounting and auditing policies, rules, and regulations, and 
authorize the adoption of the international accounting and auditing 
standards prescribed by the international standards-setting body; 
 
(c) Promulgate its own rules concerning pleadings and practices before it or 
any of the offices of the Commission. Such rules however shall not 
diminish, increase, or modify substantive rights; 
 
(d) Decide by a majority vote of all its Members any case or matter brought 
before it; 


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(e) Appoint the officials and employees of the Commission in accordance with 
the Civil Service laws, rules, and regulations. For the Regional Offices, 
appointments to rank-and-file positions may be delegated by the CP to the 
Directors concerned. The CP shall provide the appropriate guidelines for 
this purpose; 
 
(f) Exercise original and concurrent jurisdiction over administrative cases 
filed against COA personnel. 
 
(g) Recommend to Congress its retirement benefits system pursuant to its 
fiscal autonomy; 
 
(h) Restructure, when necessary, the organizational structure of the 
Commission, create new positions, transfer items, or make adjustments in 
the Personnel Services Itemization in accordance with the organization, 
staffing and position classification standards of the DBM; 
 
(i) Authorize the conduct of special audits including re-opening of settled 
accounts in case of fraud, collusion, or error of calculation or when new 
and material evidence is discovered, and other investigations as may be 
prescribed by the rules of the Commission; and 
 
(j) Perform such other functions as may be provided by law. 
 
SEC. 8. Duties and Responsibilities of the Chairperson. – The Chairperson shall 
act as the presiding officer of the CP and chief executive officer of the 
Commission. As chief executive officer, the Chairperson shall: 


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(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 CP; 
 
(c) Sign appointments for recruitment and promotions, and office orders for 
audit engagements, assignment/reassignment of officials and employees, 
or any other personnel movement of any office or station; 
 
(d) 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 
CP; 
 
(e) Submit a proposed annual or supplemental budget of the Commission to 
the DBM for approval of the Congress; 
 
(f) Summon any person or public official for the purpose of gathering data or 
inquiring into matters pertinent to the formulation, implementation or 
enforcement of any order, decision, policy, standard, or regulation of the 
CP; 
 
(g) Designate appropriate official as head of the Public Sector Accounting 
Standards Board and the Public Sector Auditing Standards Board; and 
 
(h) Perform such other functions as may be required by law or policy of the 
Commission. 


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SEC. 9. Duties and Responsibilities of the Commissioners. – The following are 
the duties and responsibilities of the Commissioners: 
(a) Participate in the proceedings of the CP in the discharge of its powers and 
functions; and 
 
(b) Perform such other functions as may be provided by law, rules, regulations, 
or policies of the Commission. 
 
SEC. 10. Duties and Responsibilities of the Assistant Commissioners. – The 
following are the duties and responsibilities of the Assistant Commissioners: 
(a) Formulate, develop, update, and supervise the implementation of the 
operational plan and performance commitment of the Sector headed which 
are aligned with the Commission’s strategic plan; 
 
(b) Supervise the general administration of offices under the jurisdiction of the 
Assistant Commissioner; 
 
(c) Serve as a member of an Assistant Commissioners Group which shall work 
as a collegial body to study, review, and recommend policies, rules, and 
regulations for consideration by the CP or the COA Chairperson; and 
 
(d) Perform such other functions as may be assigned. 
 
SEC. 11. The General Counsel. – The Assistant Commissioner of the Legal 
Services Sector shall be the General Counsel of the Commission. 


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SEC. 12. The Central and Regional Offices. – The operations of the Commission 
under Section 16 of this Act shall be further carried out by the various offices 
under each Sector in the Central and Regional Offices. Each regional office shall 
be headed by a regional director with a rank of Director IV. All offices under the 
audit sectors shall supervise their respective audit groups and audit teams. 
The COA Regional Offices shall serve as representatives of the 
Commission in the regions under the direct control and supervision of the 
Assistant Commissioner of Local Government Audit Sector (LGAS). 
SEC. 13. Duties and Responsibilities of the Commission Secretary. – The 
Commission Secretary shall have the rank of a Director IV who shall provide 
secretariat and administrative support to the CP. 
SEC. 14. Duties and Responsibilities of the Chief Executive Staff. – The Chief 
Executive Staff in the Office of the Chairperson shall have the rank of an 
Assistant Commissioner who shall be responsible for the general administration 
and supervision of the offices under it. 
SEC. 15. Duties and Responsibilities of the Directors. – The Directors of the 
Commission shall have the following duties and responsibilities: 
(a) Formulate, develop, and supervise the implementation of the annual 
operational plan, in accordance with the Commission’s strategic plan; 
 
(b) Manage the administrative operations of the office;  
 
(c) Implement and execute laws, policies, standards, and rules and regulations 
promulgated by the Commission or the Chairperson; 
 


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(d) Submit annual performance report and other reports as directed by the CP 
or the Chairperson; 
 
(e) Adjudicate on cases within their jurisdiction; 
 
(f) Publish audit reports in the website of the Commission; and 
 
(g) Perform other functions that may be assigned by higher and competent 
authority; The Commission may add or limit the duties and responsibilities 
of the officers and employees. 
 
SEC. 16. Operations of the Commission. – The operations of the Commission 
shall be undertaken through the following sectors which shall each be headed by 
an Assistant Commissioner who shall exercise supervision over various offices 
under it: 
(a) Local Government Audit Sector (LGAS) shall be responsible for the audit 
of LGUs; 
 
(b) National Government Audit Sector (NGAS) shall be responsible for the 
Audit of NGAs; 
 
(c) Corporate Government Audit Sector (CGAS) shall be responsible for the 
Audit of GCs; 
 
(d) Special Audit Services Sector (SASS) shall be responsible for the conduct 
of performance audit; fraud audit; and special audit of account of public 
utilities, private entities to which government funds have been transferred 
in the form of subsidy, equity, donation, grants, or counterpart funds, 


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franchise grantees, payment of levies or government shares, PPP projects, 
and the like; 
 
(e) Systems and Technical Audit Services Sector (STASS) shall be 
responsible for technical audit and conduct of other technical-related 
services; audit of information technology and systems and conduct of other 
services related to information and communications technology resources 
and services of government agencies; and assessment of conformance of 
internal Audit service or unit of government agencies with the prescribed 
internal auditing standards and providing assistance pertaining to the 
internal control systems of government agencies; 
 
(f) Government Accountancy Sector (GAS) shall be responsible for the 
keeping of the general accounts of the government, preparation and 
submission of Annual Financial Reports and other financial reports, and 
providing technical assistance pertaining to accounting and financial 
management; recommendation on the adoption and implementation of 
accounting standards, policies, rules, and regulations; 
 
(g) Legal Services Sector (LSS) shall be responsible for rendering legal 
opinions and legal services; review of legal retainers and other contracts, 
and COA issuances; preparation of comments on proposed congressional 
bills and issuances of government agencies; conduct of formal hearing and 
drafting of decisions on administrative cases; enforcement of COA 
decisions; assistance in the prosecution and litigation of cases involving 
COA and its personnel acting as witnesses, including preparation of 
pertinent comments and pleadings; coordination with the Office of the 
Solicitor General (OSG), Office of the Ombudsman (OMB) and other 


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agencies pertaining to cases involving COA; legal assistance to COA 
personnel subjected to harassment suits; 
 
(h) Commission Proper Adjudication Sector (CPAS) shall be responsible for 
drafting of decisions or resolutions for consideration of the CP; 
 
(i) Planning, Finance and Management Sector (PFMS) shall be responsible 
for the formulation of long-range and annual plans and programs of the 
Commission; providing budget services to the Commission; and 
formulation, recommendation, and implementation of policies on the 
processing of claims, assessment of cost of audit services, and personnel 
payroll management; 
 
(j) Administration Sector (AS) shall be responsible for the development and 
maintenance of the information system of the Commission, and human 
resources  management  program;  and  providing  general  administrative 
services and support to the Commission; and 
 
(k) Professional and Institutional Development Sector shall be responsible for 
the formulation, recommendation, and implementation of policies and 
programs on learning and development of personnel of the Commission; 
and providing capacity building of other government agencies’ personnel 
pertaining to accounting and auditing matters. 
 
The CP may effect changes in the organization and functions of the 
Commission as it may deem necessary in the exercise of its fiscal autonomy in 
order to carry out its constitutional mandate. 


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SEC. 17. Legal Assistance to Current and Former Officials and Employees. – 
Current and former COA officials and employees are authorized to engage the 
services of private lawyers for a fee on cases filed against them in relation to the 
performance of their official functions in accordance with the guidelines issued 
by the CP. 
For this purpose, the Commission shall provide a legal assistance fund to 
be included in its annual appropriation. 
SEC. 18. Professionalization of Audit Services. – The Commission shall 
develop, adopt, and implement a competency-based capacity building and 
continuing education. It shall participate and support the activities of international 
professional organizations such as the International Organization of Supreme 
Audit Institutions (INTOSAI), Asian Organization of Supreme Audit Institutions 
(ASOSAI), ASEAN Supreme Audit Institutions (ASEANSAI), and other 
supreme audit institutions. 
For this purpose, the capacity building shall include courses on accounting 
standards, rules, and regulations relevant to auditing services. 
SEC. 18. Professionalization of Audit Services. – The Commission shall 
develop, adopt, and implement a competency-based capacity building and 
continuing education. It shall participate and support the activities of international 
professional organizations such as the International Organization of Supreme 
Audit Institutions (INTOSAI), Asian Organization of Supreme Audit Institutions 
(ASOSAI), ASEAN Supreme Audit Institutions (ASEANSAI), and other 
supreme audit institutions. 
For this purpose, the capacity building shall include courses on accounting 
standards, rules, and regulations relevant to auditing services. 


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SEC. 19. Professionalization of Accounting and Other Services. – For 
accounting services,  the Commission shall 
conduct 
capacity 
building 
in 
coordination with international professional bodies on accounting services such 
as the International Public Sector Accounting Standards Board (IPSASB), 
Financial and Sustainability Reporting Standards Council (FSRSC), and other 
international professional bodies relevant to accounting services. 
The Commission shall likewise provide similar capacity building for other 
services. 
SEC. 20. Fiscal Autonomy. – (a) The Commission shall enjoy fiscal autonomy 
and its approved annual appropriation shall be automatically and regularly 
released. The Chairperson of the COA is authorized to augment any item in the 
general appropriations for the Commission from savings in any item in the same 
appropriation; and (b) any savings from the approved budget under the GAA shall 
be retained by the Commission until fully spent. 
SEC. 21. Statement of Objectives. – In keeping with 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, 


23 
 
disbursements, and uses of funds and properties, including audit 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; 
 
(d) Promulgate accounting and auditing rules and regulations to facilitate the 
keeping of the accounts of the Government and enhance their information 
value; 
 
(e) Institute measures designed to preserve and ensure the independence of the 
Commission, ensure transparency and accountability in government 
operations, and promote service excellence and quality in all aspects of its 
work; and 
 
(f) Bring its operations closer to the people by the delegation of authority 
through decentralization and participatory governance, consistent with the 
provision of the Constitution. 
 
SEC. 22. General Jurisdiction. – Pursuant to Section 2(1), Article IX-D of the 
1987 Constitution, the Commission shall have the power, authority, and duty to 
examine, Audit and settle all accounts pertaining to the revenues and receipts of, 
and expenditures or uses of funds and property, owned or held in trust by, or 
pertaining to the Government, or  any  of  its  subdivisions,  agencies,  or  
instrumentalities,  including  government corporations, and on a post-audit basis: 
 
(a) constitutional bodies, commissions and offices that have been granted 
fiscal autonomy under the Constitution; 
 


24 
 
(b) autonomous state colleges and universities; 
 
(c) other government corporations and their subsidiaries; and 
 
(d) such non-governmental entities receiving subsidy or equity directly or 
indirectly, from or through the government, which are required by law or 
the granting institution to submit to such audit as a condition of subsidy or 
equity. However, where the internal control system of the audited agencies 
is inadequate, the Commission may adopt such measures, including 
temporary or special pre-audit, as are necessary and appropriate to correct 
the deficiencies. It shall keep the general accounts of the government, and 
for such period as may be provided by law, preserve the vouchers and other 
supporting papers pertaining thereto. 
 
The Commission, under Section 2(2), Article IX-D of the 1987 Philippine 
Constitution, shall have exclusive authority subject to the limitations in Article 
IX of the 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 
irregular, 
unnecessary, 
excessive, 
extravagant, 
or 
unconscionable 
expenditures, or uses of government funds and properties. 
  
SEC. 23. Examining Authority. – The Commission shall have authority to 
examine in the course of audit, books, papers, documents pertaining to the income 
of individuals and corporations in connection with government revenue collection 
operations, for the purpose of ascertaining that all revenues determined to be 
collectible and due the Government have actually been collected. 


25 
 
 
SEC. 24. Limited Jurisdiction over Private Entities. – The Commission shall 
have authority to examine and audit the books and records of private entities in 
connection with their contracts, agreements, or dealings with the government for 
which they: (i) received subsidies, counterpart funding, government equity, 
donation or grant, fund transfer; (ii) were allowed to use government properties 
or facilities; and/or (iii) were required to pay revenue share such as, but not 
limited, to levy, franchise fees, income share, or other forms. 
 
SEC. 25. Authority to Examine Accounts of Public Utilities. – The Commission 
may conduct a special audit of the books, records, and accounts of all public 
utilities for the purpose of determining reasonableness of rates charged to the 
public, or in relation to the proceedings of the proper regulatory agencies for 
purposes of determining franchise taxes and other fees. The Commission shall 
issue the audit guidelines to implement this provision. 
 
SEC. 26. Authority to Examine Accounts of Public-Private Partnership (PPP). 
– Non-government entities which have contracts with the government under a 
Public-Private Partnership (PPP) Agreement or any of its variants, as regards to 
the determination of the following: 
 
(a) Existence of value-for-money in procurement through PPP; 
 
(b) Compliance with the terms and conditions of the contract or agreement; 
 
(c) Reasonableness of the sharing of the risks and rewards between the private 
sector and the government; or 
 


26 
 
(d) Absence of disadvantage to the government in the agreement relating to 
the operation, maintenance and handover of the public infrastructure or 
project. 
 
SEC. 27. Deputization of Government Licensed Professionals or Experts to 
Assist Government Auditors. – The CP 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 as it 
may deem necessary, to assist its auditors in undertaking specialized audit 
engagements. 
 
The deputized professionals or experts shall be entitled to such compensation and 
allowances as may be stipulated in the contract, subject to pertinent rules and 
regulations on compensation and fees. 
 
The CP shall issue guidelines in contracting deputized professionals or 
experts referred to in this section. 
 
SEC. 28. Participation of Civil Society Organizations in the Conduct of Audit. 
– The COA Chairperson may deputize duly accredited Civil Society 
Organizations (CSOs) in the conduct of audit to help auditors in the ocular 
inspection, validation, evaluation, collection of data or information and 
monitoring of projects or located in remote and critical areas to enhance 
credibility, accountability, and transparency in audit processes. 
 
SEC. 29. Prohibition of Person or Entity from Rendering Auditing and Related 
Services to Government Entities. – No person or entity shall enter into a contract 
to render accounting or auditing related services for a fee to any government 


27 
 
agency or conduct of seminars or workshops on accounting and auditing for 
government personnel on these topics without clearance from COA to enable it 
to determine if it has the resources and capability to undertake the same. 
 
Should the Commission decide not to undertake the study or service, it 
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. 
 
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. 30. Government Contracts for the Hiring of a Private Lawyer or Law 
Firm to Handle Legal Cases or Render Legal Services to Government Agencies. 
– No contract involving public funds shall be entered into for the services of a 
private lawyer or law firm to represent government agencies in court or to render 
legal services for them. If hiring of such legal services cannot be avoided, or is 
justified under extraordinary or exceptional circumstances, the written 
conformity and acquiescence or clearance of the OSG or the Office of the 
Government Corporate Counsel (OGCC), as the case may be, and the written 
concurrence of the COA shall first be secured before the engagement of a private 
lawyer or law firm, unless exempted under the rules of the Commission. 
 
In the absence of above-stated requirements, any payment thereof shall be 
disallowed in audit and the same shall be the personal liability of the officials 
concerned. 
 


28 
 
SEC. 31. Prohibition of Private Foundations and Entities to Use the Name and 
Resources of the Government to Solicit and/or Receive Donations, Grants, 
Financial Assistance from Private Domestic and International Donors. – 
Private foundations and entities organized and managed by government officials 
and employees are prohibited from using the name, resources, insignia, or logo 
of a government agency for whatever enterprise to solicit and/or receive 
donations, grants, financial assistance from the public or other 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 recognized in the books of the concerned government 
agency. Refusal to submit itself to such audit shall constitute an offense 
punishable under Section 101 of this Act. 
 
SEC. 32. Prevention of Illegal, Irregular, Unnecessary, Excessive, Extravagant 
or Unconscionable Expenditures or Uses of Government Funds of Property; 
Power to Disallow such Expenditures. – 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/or criminal sanctions against the persons liable therefor. 
 
SEC. 33. Settlement of Accounts Between Agencies. – The Commission shall 
have the exclusive power, under such regulations as it may prescribe, to authorize 
and enforce the settlement of accounts subsisting between agencies of the 
government. 
 


29 
 
SEC. 34. Collection of Indebtedness Due to the Government. – The 
Commission, through proper channels, may assist in the collection and 
enforcement of all debts and claims and the restitution of all funds or the 
replacement or payment to the government of any government property lost or 
destroyed. 
 
SEC. 35. Power to Adjudicate Money Claims Against the Government. – The 
Commission shall have the power to adjudicate money claims filed against the 
government or any of its subdivisions, agencies, and instrumentalities in relation 
to liquidated claims and quantum meruit cases. Unliquidated money claims 
against the government shall be filed before the proper courts, tribunals, and other 
adjudicative bodies. 
 
Liquidated claims refer to those determined or readily determinable from 
vouchers, invoices, and such other papers within reach of accounting officers. 
When the Commission is in the exercise of its power to execute judgments on 
money claims, the Commission shall, at all times, respect the principle of 
immutability of judgments. 
 
SEC. 36. Power to Compromise Claims. – 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 pesos 
(P10,000,000.00) arising out of any matter or case before it or within its 
jurisdiction. In case the claim or liability exceeds Ten million pesos 
(P10,000,000.00), the Commission shall submit with its recommendations, the 
application for relief to Congress. 
 


30 
 
The respective governing bodies of 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 their 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. 37. Satisfaction of Indebtedness Arising from Final and Executory Audit 
Decisions. – When any person or entity is indebted to any government agency by 
reason of a final and executory audit decision, the Commission shall direct the 
head of agency to withhold the salary or any money due to such entity or person 
liable or from the estate, in satisfaction of the indebtedness under the said 
decision. 
 
In case the money due is not sufficient or there is no such money due to the 
entity or person liable to satisfy the indebtedness from the final and executory 
audit decision, the Commission shall have the power to levy property or garnish 
bank accounts to the extent of the unpaid balance. 
 
Failure on the part of the head of agency concerned to comply with the 
preceding paragraphs shall make the head of agency personally liable without 
prejudice to administrative action that may be filed for neglect of duty. 
 
SEC. 38. Authority to Require Submission of Documents Relative to 
Government Transactions. – The Commission shall have the power to require 
the submission of the original, in whatever form, of any order, deed, contract, or 
other document under which any collection of, or payment from, government 


31 
 
funds may be made, together with any certificate, receipt, or other evidence in 
connection therewith. If an authenticated copy is needed for record purposes, the 
copy shall upon demand be furnished. 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. 
 
SEC. 39. Investigatory and Inquisitorial Powers; Power to Punish for 
Contempt. – The Chairperson, and other officials and employees 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 COA, 
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. 40. Annual Financial Report of the Commission. – The Commission shall 
submit to the President and the Congress of the Philippines not later than the last 
day of October of each year an annual report on the financial condition and results 


32 
 
of operation of all government agencies, which shall include recommendation of 
measures necessary to improve economy, efficiency, and effectiveness of these 
agencies. 
 
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, year-end financial statements and such other supporting or 
subsidiary statements as may be required by the Commission not later than the 
31st day of March 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 five (5) working days after the date of 
receipt by the official concerned. 
 
SEC. 41. Annual Report on Appropriations, Allotments, Obligation and 
Disbursements, including Off-Budgetary Funds and Trust Receipts. – Within 
one hundred twenty (120) days after the end of every fiscal year, the Commission 
shall submit to the President and the Congress of the Philippines an annual report 
on appropriations, allotments, obligations and disbursements of national 
government agencies and government corporations maintaining Special 
Accounts in the General Fund and receiving budgetary support from the 
government. 
 
For the purpose stated in this section, agencies are required to submit 
financial accountability reports to this Commission in compliance with the 
pertinent sections of the General Provisions of the General Appropriations Act 
(GAA) and Republic Act No. 7226. 
 


33 
 
SEC. 42. Powers, Functions, and Duties of Auditors. – The following are the 
powers, functions, and duties of auditors as representatives of the Commission: 
 
(a) Exercise such powers and functions as may be authorized by the 
Commission in the examination of cash and accounts of accountable 
officers; conduct financial, compliance, performance, and other special 
audits; settle accounts of the agencies under the respective audit 
jurisdiction; 
 
(b) Submit an audit report on the date and in the manner prescribed by the 
Commission and render such other reports as the Commission may require; 
 
(c) For transactions subject of Audit Observation Memorandum (AOM), NS, 
ND, NC, complaint or a pending audit or investigation or court case, retain 
custody and be responsible for the safekeeping and preservation of paid 
expense vouchers, journal entry vouchers, stubs of checks, reports of 
collections and disbursements, and similar documents together with their 
respective supporting papers, until the final disposition thereof. The 
Commission shall prescribe the manner for preservation of these audit or 
legal evidence; 
 
(d) Retain a digital copy of the audited vouchers and supporting papers, 
official receipts, and other documents or reports upon turnover or return of 
the originals to the auditee for safekeeping and preservation in accordance 
with the guidelines promulgated by the CP; 
 
(e) Act as witness in proceedings before the courts, the OMB, and other quasi-
judicial bodies; and 


34 
 
 
(f) Perform such other functions as may be assigned to them by the 
Commission. 
 
SEC. 43. Examination of Cash and Accounts of Accountable Officer. – The 
cashbooks, accounts, papers, and cash in the accountability of an accountable 
officer shall be opened at all times to audit and examination of the Commission 
and its duly authorized representatives. 
 
In case an examination of the cash and accounts of an accountable officer 
discloses a shortage, it shall be the duty of the auditor to 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 agency may 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 immediately be submitted by the 
auditor to the Director concerned for purposes of referral to the OMB for 
investigation and filing of the appropriate administrative and/or criminal case 
against the said defalcating accountable officer, as the evidence may warrant. 
 
For this purpose, the auditor shall, at all times, be regarded as a witness 
only in cases filed before the OMB and the regular courts. In no case shall the 
auditor be named as the complainant therein. 
 
SEC. 44. Withholding of Salaries and Other Emoluments of Accountable 
Officers. – Whenever an accountable officer has been found short of any 
accountability during cash examination or audit and after failure to explain 
satisfactorily or to produce the missing funds within the period prescribed by the 


35 
 
rules of the Commission, the auditor shall order the head of the agency to direct 
the withholding of the salaries and other emoluments due the accountable officer 
found to have incurred cash shortage up to the extent of the liability until the final 
determination of the latter’s accountability by the Commission or by 
final judgment of a competent court. 
 
SEC. 45. Constructive Distraint of Property of Accountable Officer. – Upon 
discovery in audit of a shortage in the accounts of any accountable officer and 
upon a finding of a prima facie case of malversation of public funds or property 
against such accountable officer, in order to safeguard the interest of the 
government, 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 such 
property. The constructive distraint shall be effected by requiring the accountable 
officer concerned 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 to preserve the same intact and unaltered and 
not to dispose of it in any manner whatsoever without the express authority of the 
Commission. 
 
In case the said accountable officer or other 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 


36 
 
property shall be deemed to have been placed under constructive distraint, in 
accordance with the rules and regulations of the Commission. 
 
The auditor shall submit a report to the Chairperson on any distraint 
effected pursuant to this Section not later than five (5) calendar days from the 
date of the distraint of the property. 
 
SEC. 46. Appeals from Decisions of Auditors. – Any person aggrieved by the 
decision of an auditor, may within one hundred eighty (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, including the imposition of reasonable filing 
and legal research fees. 
 
SEC. 47. Period Rendering Decisions of the Commission. – The CP shall decide 
any case brought before it within sixty (60) days from the date of its submission 
for decision or resolution. A case is deemed submitted for decision or resolution 
upon receipt of the last comment on the draft decision from any member of the 
CP necessary for a proper decision. 
 
CHAPTER II 
DECISION OF THE COMMISSION 
 
SEC. 48. 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 


37 
 
ruling adversely affects the interest of any government agency, the appeal may 
be taken by the proper head of that agency. 
 
The OSG shall at all times represent the Commission in all its decisions 
appealed to the Supreme Court. 
 
SEC. 49. Finality of Decisions of the Commission and Responsibility of Head 
of the Agency. – A decision of the Commission, upon any matter within its 
jurisdiction, if not appealed as herein provided, shall be final and executory. The 
General Counsel or any authorized official of the Commission shall issue an order 
of execution for final and executory decisions, resolutions, or orders of the 
Commission. 
 
For final and executory decisions on money claims, the claimant shall 
initiate the process of payment with the agency concerned pursuant to existing 
rules and regulations. 
 
SEC. 50. Enforcement of Decisions of the Auditor or Commission Proper. – 
The head of agency shall ensure the immediate settlement of final and executory 
decisions of the Commission. Unreasonable failure or refusal of the head of 
agency or concerned official to implement the final and executory decision of the 
Commission shall render the former administratively liable for neglect of duty. 
 
SEC. 51. Re-audit of Audited Transactions. – All transactions and accounts are 
open for audit within ten (10) years after the date of transaction. 
 
TITLE III 
CHAPTER I 


38 
 
BASIC POLICIES AND STANDARDS 
 
SEC. 52. Definition of Government Auditing. – Government auditing is a 
systematic, independent, and objective process that involves obtaining and 
evaluating evidence in accordance with the prevailing International Standards for 
the Supreme Auditing Institutions (ISSAIs) for the purpose of assessing whether 
the financial information, transactions, programs, operations, accounts, and 
reports of any government agency are in accordance with the applicable 
international accounting framework. Government audits cover three audit 
streams: financial audits, compliance audits, and performance audits which are 
guided respectively by separate ISSAIs. 
 
SEC. 53. Principles of Government Auditing. – The auditor shall be guided by 
the general principles and the prescribed international standards related to the 
audit process: 
 
(a) Comply with the relevant ethical principles of integrity, independence and 
objectivity, competence, professional behavior, and confidentiality and 
transparency; 
 
(b) Maintain appropriate professional behavior by applying professional 
skepticism, professional judgment, and due care throughout the audit; 
  
(c) Perform the audit in accordance with professional standards on quality 
control; 
 


39 
 
(d) Possess collectively the knowledge, skills, expertise, and ability and 
experience to exercise professional judgment necessary to successfully 
complete the audit; 
 
(e) Manage the risks of providing a report that is inappropriate in the 
circumstances of the audit; 
 
(f) Consider materiality throughout the audit process, in relation to 
stakeholder concerns, public interest, regulatory requirements and 
consequences for society; 
 
(g) Prepare audit documentation that is sufficiently detailed to provide a clear 
understanding of the work performed, evidence obtained, and conclusions 
reached; and 
 
(h) Establish effective communication throughout the audit process. 
 
CHAPTER II 
RECEIPTS AND DISPOSITION OF FUNDS AND PROPERTIES 
 
SEC. 54. Accounting for Moneys and Property Received by Public Officials. – 
All moneys and properties officially received by a public officer in any capacity 
or upon any occasion, or those received in connection with the office, must be 
accounted for as government funds and property, except as may otherwise be 
specifically provided by law or competent authority. Their recognition in the 
books of accounts of the agency concerned shall be in accordance with pertinent 
laws, policies, rules and regulations, and applicable financial reporting 
framework. 


40 
 
 
SEC. 55. Designation of Collecting or Disbursing Officers for Government 
Agencies. – The head of agency may designate such number of collecting and 
disbursing officers or agents as may be deemed necessary. They shall render 
reports of their collections and disbursements pursuant to the regulations of the 
Commission, to be submitted promptly to the auditor concerned  who shall 
conduct the necessary examination and audit. 
 
SEC. 56. Time and Mode of Rendering Account. – In the absence of specific 
provision of law, all accountable officers, through the agency accountants, shall 
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. 57. Accrual of Income or Revenues to Unappropriated Surplus of the 
General Fund. – 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. 
 
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 the Permanent 
Committee created by law, composed of the Secretary of Department of Finance 
as Chairperson, Secretary of Department of Budget and Management, and 
Chairperson of Commission on Audit, as members. 


41 
 
 
SEC. 58. Special, Fiduciary and Trust Funds. – 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. 
 
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. 
 
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: 
 
(a) The terms have expired or no longer necessary for attainment of the 
purpose for which said funds were established; 
 
(b) Dormant for unreasonable length of time; 
 
(c) Needed by the General Fund in times of emergency; or 
 
(d) Used in violation of the rules and regulations issued by the Permanent 
Committee. 
 


42 
 
SEC. 59. Receipts and Revenues of Local Government Units (LGUs). – All 
receipts and income accruing to the LGUs shall be deposited in their account 
maintained in the  authorized government depository bank or private bank with 
the prior approval of the Department of Finance. 
 
SEC. 60. Receipts and Revenues of Government Corporations (GCs). – All 
receipts and income accruing to GCs shall be deposited in their account 
maintained in the authorized government depository bank. 
 
SEC. 61. Collections by the Government. – No payment of any nature shall be 
received by a collecting officer without immediately issuing an official receipt in 
acknowledgment thereof. The receipt may be in the form of postage, internal 
revenue or documentary stamps or such other digital forms as the law or the 
Commission may allow. At no instance shall temporary or provisional receipts 
be issued to acknowledge the receipt of public funds. 
 
Where digital or electronic devices are used to acknowledge cash receipt, 
an electronic official receipt (eOR) shall be issued and the electronic copies of 
the pieces of evidence of the e-collection through Self-Collect and Credit (SCC) 
or Collect-Aggregate-Remit (CAR) or other modes of electronic collection 
allowed by the rules of the COA, shall be kept in electronic archives. The same 
shall be subject to inspection and verification by the Commission, in accordance 
with its prescribed guidelines on the use of eORs to acknowledge collection of 
income and other receipts of government. 
 
The same is acceptable provided the document maintains its integrity and 
reliability and can be authenticated so as to be usable for subsequent reference: 
Provided, That the electronic document has remained complete and unaltered, 


43 
 
apart from the addition of any endorsement and any authorized change, or any 
change which arises in the normal course of communication, storage and display; 
and that the electronic document is reliable for the purpose for which it was 
generated and for all relevant circumstances. 
 
Collections in the form of checks in favor of the government shall be 
governed by the rules of the Commission. 
 
At no instance should money in the hands of the collecting officer be 
utilized for whatever purpose but should be deposited intact with an authorized 
government depository bank. 
 
SEC. 62. Payment in Settlement. – Electronic payment through TDL, credit card, 
DEP such as ADA and other modes may be used to settle all obligations of the 
government in accordance  with  the  guidelines  of  the  Commission  and  other  
Public  Financial Management agencies of the government. 
 
Electronic payment to a person not duly authorized to receive such payment 
shall subject the concerned accountable officer to administrative/civil 
sanctions or criminal prosecution, as may be warranted. 
  
In instances when checks are drawn against the checking account of the 
government agencies maintained with any government depository in payment of 
an obligation: 
 
(a) The check shall be made payable directly to the creditor to whom the 
money is due, or to the disbursing officer or employee for an official 
disbursement; 


44 
 
 
(b) Checks drawn in payment of any indebtedness shall likewise be accepted 
by the officer concerned, provided it shall be made payable to the entity or 
the authorized official of the payee; and 
 
(c) 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 
and/or closed accounts, the drawer shall be criminally liable therefor. 
 
SEC. 63. - Deposit of Money in the Treasury or Authorized Government 
Depository Bank. – 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 them to the account of the National 
Treasury or in the agencies account 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. 
Fifty percent (50%) share on proceeds from the community tax certificates 
collected by duly deputized barangay treasurers shall be automatically retained 
and deposited intact in authorized depository banks of the barangay where the tax 
is collected pursuant to the Republic Act No. 7160, as amended, otherwise known 
as the “Local Government Code of 1991.” 
 
No collections shall be used for purposes of disbursements except when 
authorized by law or regulations. 
 


45 
 
SEC. 64. Acknowledgment of Receipt of Money by Government Depositories. 
– All authorized government depository banks shall acknowledge receipt of all 
money received by them, for the account of the National Treasurer or the agency 
concerned. The acknowledgment shall bear the date of actual deposit and indicate 
from whom and on what account it was received. Such moneys received shall be 
governed by the Treasury Single Account System. established pursuant to law. 
The authorized agency official shall regularly furnish the monthly bank 
statements to the auditor. 
 
SEC. 65. Shipment of Government Money or Property by a Carrier; Notation 
of Evidence of Loss. – When government money or property is transported from 
one place to another by a carrier, it shall be the duty of the consignee or duly 
authorized representative to make notation or notations on the bill of lading or 
receipt on any evidence of loss, shortage, or damage. 
 
SEC. 66. Credit for Loss Occurring in Transit or Due to Fire, Theft, Robbery 
or Force Majeure. – When a loss of government funds, property, documents 
evidencing financial transactions, or records of accountabilities occurs while they 
are in transit or loss is caused by fire, theft, robbery or force majeure, the officer 
or employee accountable therefor or having custody thereof shall immediately 
notify the auditor concerned and, within thirty (30) days from the occurrence of 
loss, shall file an 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 of 
liability or allowed credit for any loss thereof. The procedures on application for 
relief shall be governed by the rules and regulations of the Commission. 
 


46 
 
SEC. 67. Disposal of Government Property. – When property of the government 
becomes unserviceable or is no longer needed, it may be disposed of in the 
following manner, following the guidelines issued by the Commission: 
 
(a) Transfer of property between government agencies; 
 
(b) Destruction or sale of unserviceable property; 
 
(c) Sale through public auction of unserviceable property; 
 
(d) Sale through public auction of government property that is no longer 
needed; and 
 
(e) Other modes as may thereafter be approved and prescribed in the 
guidelines issued by the Commission. 
 
SEC. 68. Disposal of Real Property. – Whenever the subject of the disposal by 
sale is real property, the same shall require prior approval of the Commission. 
 
SEC. 69. Disposal of Goods and Properties Seized or Confiscated by Law 
Enforcement Agencies. – The destruction or disposal of goods and properties 
seized or confiscated by law enforcement agencies and presented as evidence in 
cases before the courts shall be carried out by such agencies in accordance with 
their respective rules and regulations. 
 
SEC. 70. Funds or Property Held by Deceased, Incapacitated or Absconding 
Accountable Officer. – When an officer accountable for government funds or 
property dies, becomes incapacitated, or absconds in the performance of duties, 


47 
 
the head of the agency shall designate a custodian to take charge of the funds or 
property until a successor shall have been appointed and qualified. The head of 
the agency 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 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 head of the agency, 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. 
 
If the deceased, incapacitated, or absconding officer is accountable for 
funds or property of a local government unit, the acting custodian and committee 
shall be designated by the local chief executive, furnishing notice to the Secretary 
of the Department of Finance or the authorized appointing official as prescribed 
under the Local Government Code. 
 
SEC. 71. Disposal of Foreclosed Assets or Collaterals Acquired in the Regular 
Course of Business by Government Corporations. – Notwithstanding their 
respective charters, foreclosed assets or collaterals acquired in the regular course 
of business by government corporations shall be sold thru public bidding to the 
highest bidder after appraisal thereof by an independent appraiser. 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 


48 
 
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, this will 
be subject to reappraisal and 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. 72. Final Report of Accountable Officers. – An accountable officer, upon 
ceasing to act in official capacity, shall submit to the auditor of the agency 
concerned a report of accountability within one (1) month after such cessation. 
Upon receipt of the report, the auditor shall conduct a cash examination on the 
accountability of such accountable officer. Any remaining balance on cash 
accountability shall be deposited immediately in the proper treasury. 
 
SEC. 73. Notice of Disallowances, Charges and Suspensions Issued by the 
Auditor to Accountable Officer. – Whenever there is a finding of pecuniary loss 
or damage on the part of the government, the auditor concerned shall issue a 
written notice of disallowance or charge through the head of the agency to each 
accountable officer, whose accounts have been audited in whole or in part. 
Within ninety (90) days, an audit suspension which is not settled either by 
satisfactory explanation, justification, or submission of evidence to prove the 
contrary to the initial findings of an auditor on the irregularity or illegality of the 
transaction after receipt of the notice shall become a disallowance. 
 
Any person aggrieved by the decision of the auditor pertaining to 
disallowances, charges, or suspensions, may appeal the case in accordance with 
the rules and regulations on settlement of accounts of the Commission. 
 
TITLE III 


49 
 
CHAPTER I 
GOVERNMENT ACCOUNTING 
 
SEC. 74. Appropriation Before Entering into a Contract. – No contract 
involving the expenditure of public funds shall be entered into unless there is an 
appropriation or approved budget therefor, the unexpended balance of which, free 
of other obligations, shall be sufficient to cover the proposed expenditure. 
 
SEC. 75. Certificate Showing Appropriation to Meet Contract. – Except in the 
case of a contract for personnel 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 budget 
officer of the agency concerned 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 budget 
officer 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 concerned under the 
contract is fully extinguished. The funding guidelines of the DBM shall be 
followed for multi-year contracts. 
 
SEC. 76. 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 officer of any government agency 
responsible for the said contract shall be personally liable to the government or 
other contracting party as if the transaction had been entered into between private 
parties. 


50 
 
 
SEC. 77. Prohibition Against Advance Payment on Government Contracts. – 
Except when authorized by law, the government shall not be obliged to make an 
advance payment on contracts for: 
 
(a) services not yet rendered; 
 
(b) supplies and materials not yet delivered, inspected, and accepted, except in 
lease of venues and catering services as provided for in the procurement 
law and its implementing rules and regulations; and 
 
(c) infrastructure projects not yet implemented or completed, inspected, and 
accepted, other than for mobilization as provided for in the procurement 
law and its implementing rules and regulations. 
 
SEC. 78. Limitations on Cash Advance. – The following shall be the limitations 
on cash advance: 
 
(a) No cash advance shall be given unless for a legally authorized specific 
purpose; 
 
(b) A cash advance shall be reported on and liquidated as soon as the purpose 
for which it was given has been served; 
 
(c) No additional cash advance shall be granted or allowed unless the previous 
cash advance has been first settled/liquidated or a proper accounting 
thereof is made; 
 


51 
 
(d) Except for cash advance for official travel, no officer or employee shall be 
granted cash advance unless such officer or employee is properly bonded 
in accordance with existing laws or regulations. The amount of cash 
advance which may be granted shall not exceed the maximum cash 
accountability covered by bond of an officer or employee; 
 
(e) Only permanent appointed officials shall be designated as disbursing 
officers; 
 
(f) Only duly appointed or designated disbursing officers may perform 
disbursing functions. Officers and employees who are given cash 
advances for official travel need not be designated as disbursing officers; 
 
(g) Transfer of cash advance from one accountable officer to another shall not 
be allowed; 
 
(h) The cash advance shall be used solely for specific legal purpose for which 
it was granted. Under no circumstance shall it be used for encashment of 
checks or for liquidation of a previous cash advance; 
 
(i) The failure of the concerned 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; 
 
(j) The transfer of cash advance by a disbursing officer to another does not 
constitute an expenditure for which the disbursing officer may claim credit 


52 
 
in accounts, but the responsibility of such disbursing officer continues to 
attach until the amount has been fully accounted for; or 
 
(k) No cash advance shall 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/civil sanction and criminal prosecution of both the 
authorizing and the accountable officials, as may be warranted. 
 
SEC. 79. Transfer of Funds from One Officer to Another. – Transfer of 
government funds from one officer to another shall, except as allowed by law or 
regulation, be made only upon prior direction or authorization of the head of the 
agency following the accountability and accounting guidelines issued by the 
Commission. 
 
SEC. 80. Limitations on Fund Transfers from One Government Agency to 
Another. – The following shall be the limitations on transfer of funds from one 
government agency to another: 
 
(a) No fund transfers shall be given except for legally authorized specific 
purpose as embodied in a Memorandum of Agreement (MOA) executed 
between the source and implementing agencies; 
 
(b) The fund transfers shall be reported on and/or 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; 


53 
 
 
(c) No additional or new fund transfers shall be made unless the previous 
transfers have been fully liquidated as certified by the head of agency 
concerned; 
 
(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/persons to comply with the above-
mentioned responsibilities shall constitute a ground for administrative or criminal 
action, as evidence may warrant. 
 
SEC. 81. Limitations on Fund Transfers from Any Government Agency to a 
Private Organization or Entity. – The following shall be the limitations on 
transfer of funds from any government agency to any private organization or 
entity: 
 
(a) No fund transfer from a government agency shall be given to a private 
organization or entity unless authorized by law for a specific purpose which 
should be embodied in a MOA 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 fund transfers; 
 
(c) 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 


54 
 
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 fund transfers shall be made unless the previous fund 
transfers have been fully liquidated as certified by the head of the agency; or 
 
(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 any public officer, employee, or any person to comply with 
the above-mentioned responsibility shall constitute a ground for administrative 
or civil sanction or criminal prosecution. 
 
SEC. 82. 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. 83. Loss Through Electronic Collection or Payment. – Government 
agencies utilizing e-Collection and/or payment systems shall formulate internal 
policy guidelines to implement reasonable and appropriate organizational, 
technical, and personnel controls to prevent loss of funds caused by internet 
connectivity issues, errors in payment instructions, online banking fraud, security 


55 
 
breach, or other similar events. Any loss due to the foregoing shall be the liability 
of the erring party. 
  
SEC. 84. Replacement of Lost, Stolen or Destroyed Checks. – When payment is 
made through check and the same was lost, stolen, or destroyed, the issuing 
officer may issue a replacement check as payment for the same obligation. 
Replacement shall be made upon the execution of an affidavit of loss and 
submission of stop payment order to the drawee bank. 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 
for seeing to it that no double payment is made as a result thereof. 
 
SEC. 85. Reversion of Unpaid Trade Payables Aged More Than Two (2) Years. 
– The head of national government agencies, LGUs and government corporations 
classified as non-commercial public sector entities shall cause the reversion of 
trade payables aged more than two (2) years to the Unappropriated Surplus or 
Accumulated Surplus/(Deficit). 
 
The head of government corporations classified as commercial public 
sector entity shall revert unpaid trade payables aged more than two (2) years to 
retained earnings. In both instances the reversion shall only be made when there 
is no actual claim or is not supported by a valid contract. 
 
CHAPTER II 
ACCOUNTABILITY AND RESPONSIBILITY FOR GOVERNMENT 
FUNDS AND PROPERTY 
 
SEC. 86. Accountable Officers; Bond Requirement. – Every officer of any 
government agency whose duties permit or require the possession or custody of 


56 
 
government funds or property shall be accountable therefor and for the 
safekeeping thereof in conformity with law. Other government officers who, 
though not accountable by the nature of their duties, may likewise be similarly 
held accountable for government funds or property through their participation in 
the use or application thereof. 
 
Every accountable officer shall be properly bonded in accordance with law 
and the pertinent rules or regulations. 
 
SEC. 87. Primary Responsibility and Fiscal Accountability of the Head of the 
Agency. – The head of any agency who is primarily responsible for all 
government funds and property pertaining to the agency, shall ensure that – 
 
(a) the required financial and other reports and statements are submitted by the 
concerned agency officials in such form and within the period prescribed by 
the Commission; 
 
(b) the settlement of disallowances and charges is made within the prescribed 
period; 
 
(c) the requirements of transactions suspended in audit are complied with; and 
 
(d) appropriate actions are taken on the deficiencies noted in the course of 
audit. 
 
Persons entrusted with the possession or custody of the funds or property under 
the head of the agency shall be accountable therefor and immediately responsible 


57 
 
to the head of the agency, without prejudice to the liability of either party to the 
government. 
 
SEC. 88. 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. 89. Degree of Supervision over Accountable Officers. – The head of any 
government agency shall exercise due diligence in supervising accountable 
officers under the control of such head of the agency to prevent the incurrence of 
loss of government funds or property, otherwise the head of the agency shall be 
jointly and solidarily liable with the person primarily accountable therefor. 
 
The treasurer of the LGU shall likewise exercise the same degree of supervision 
over accountable officers under the oversight of the treasurer, otherwise the 
treasurer shall be jointly and solidarily liable with them for the loss of government 
funds or property under their stewardship. 
 
SEC. 90. Measure of Liability of Accountable Officers. – Every officer 
accountable for government property shall be liable for its money value in case 
of improper or unauthorized use or misapplication thereof by such accountable 
officer or by any person for whose acts such accountable officer may be 
responsible for. Accountable officer shall likewise be liable for all losses, 
damages, or deterioration occasioned by negligence in the keeping or use of the 
property regardless of whether or not it is in actual custody of such accountable 
officer. 
 


58 
 
Every accountable officer 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. 91. Liability for Acts Done by Direction of Superior Officer. – No 
accountable officer shall 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 such accountable officer is accountable, unless prior to that 
act, the accountable officer notified the superior officer in writing that the 
expenditure is illegal, irregular, excessive, extravagant, unnecessary, and 
unconscionable. The officer directing any illegal payment or disposition of the 
funds or property and the accountable officer who fails to serve the required 
notice shall be jointly and solidarily liable. 
 
SEC. 92. Prohibition Against Pecuniary Interest. –  No head of agency, 
members of the board or commission, accountable officer or public official shall 
have pecuniary interest, directly or indirectly, in any contract or transaction of the 
agency in which such public officer is an officer, or in any other office where the 
public officer has influence. 
 
This prohibition shall likewise apply to the accountable officer’s 
immediate family and relatives up to the 3rd civil degree by consanguinity or 
affinity. 
 
TITLE IV 
CHAPTER I 
BASIC PRINCIPLES 
 


59 
 
SEC. 93. Definition of 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 in accordance with the applicable international 
accounting framework - International Public Sector Accounting Standards 
(IPSAS) or Philippine Financial Reporting Standards (PFRS), as the case may be, 
and interpreting the results thereof. 
 
SEC. 94. Recognition of Financial Transactions. – Each government agency 
shall recognize its financial transactions and operations conformably with 
pertinent laws, policies, rules and regulations, and applicable financial reporting 
framework. 
 
SEC. 95. Accounting Policies, Rules and Regulations. – The Commission shall 
promulgate accounting policies, rules, and regulations in accordance with the 
applicable international accounting framework. Such policies, rules and 
regulations shall be updated from time to time as the Commission may deem 
proper. 
 
CHAPTER II 
ACCOUNTING REPORTS 
 
SEC. 96. Financial Reports and Statements. – The financial reports prepared by 
the agencies shall comply with the applicable financial reporting framework to 
the government agency. 
 
The financial statements shall be based on official accounting records and 
registries kept in accordance with pertinent laws, policies, rules and regulations 


60 
 
of the Commission, and the applicable financial reporting framework to the 
government agency. 
 
SEC. 97. Submission of Reports. – The Commission shall, under regulations 
issued by it, require the head of the agencies, chief accountants, budget officers, 
cashiers, disbursing/collecting officers, administrative or personnel officers, and 
other responsible officials of the various agencies to submit financial statements, 
financial accountability reports, physical inventory reports, current staffing 
pattern, and such other reports as may be necessary for the exercise of its 
functions. 
 
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 their salaries until they 
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. 
 
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 concerned. 
 
CHAPTER III 
INTERNAL CONTROLS 
 


61 
 
SEC. 98. Internal Control System and its Installation. – Internal control is an 
integral process that is effected by an agency’s management and personnel and is 
designed to address risks and provide reasonable assurance that in pursuit of the 
agency’s mission, the general objectives are being achieved. 
 
It shall be the direct responsibility of the head of the agency to establish an 
internal control unit that shall install, implement, review, and monitor a sound 
internal control system in accordance with Internal Control Standards for the 
Philippine Public Sector. The head of agency shall sign the Statement of Internal 
Control (SIC). 
 
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 concerned. 
 
TITLE IV 
FINAL PROVISIONS 
SEC. 99. Duty to Respect the Independence of the Commission. – It shall be the 
duty of every person to respect, protect and preserve the independence of the 
Commission. 
 
SEC. 100. Administrative Disciplinary Action. – Any unjustified failure by the 
public officer concerned to comply with any requirement imposed in this Act 
shall constitute neglect of duty or grave misconduct, as the case may be, and shall 
be a ground for this Commission to file appropriate administrative disciplinary 
action against the said public officer who, upon being found guilty thereof after 
hearing, shall be meted out such penalty commensurate with the degree of guilt 


62 
 
in accordance with the civil service law, without prejudice to criminal prosecution 
whenever the evidence warrants. 
 
The auditor shall report to the concerned Director any violation of the preceding 
paragraph for referral of the case to the OMB, or other government disciplining 
authorities. 
 
SEC. 101. Penal Provisions. – Any person who shall commit any of the 
following acts shall, upon conviction, suffer imprisonment of not less than six (6) 
months and one (1) day but not more than six (6) years or a fine of not less than 
One hundred thousand pesos (P100,000.00) but not more than One million two 
hundred thousand pesos (P1,200,000.00) or an imprisonment of six (6) years and 
one (1) day to twelve (12) years, or both at the discretion of the court. If the 
offender is a corporation, partnership or association or other juridical entity, the 
penalty may in the discretion of the court be imposed upon such juridical entity 
and upon the officer or officers of the corporation, partnership, association, or 
entity responsible for the violation. 
(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 databases or information technology systems, or failing to 
produce documents, records, or papers under custody within fifteen (15) days 
after demand by the Commission or its authorized representatives in 
connection with the conduct of audit. 
 
(c) Destroying or concealing documents, records, or papers which are officially 
entrusted to such person, pertaining to the collection, receipt, expenditure, or 


63 
 
disbursement of public funds and utilization or disposal of government 
property in connection with the conduct of audit. 
 
(d) Failing or refusing to submit documents required in audit without justifiable 
cause shall constitute a ground 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 administrative or penal sanctions. 
 
(e) Committing other similar acts that impede, frustrate, or delay the efficient 
conduct of audit. 
  
If a violation of this Act constitutes an offense or crime punished under Act 
No. 3815, otherwise known as the Revised Penal Code, as amended, or other 
special laws which imposes a higher penalty, the latter shall prevail. 
 
SEC. 102. Implementing Rules and Regulations. – The CP shall promulgate the 
necessary rules and regulations for the effective implementation of this Act. 
 
SEC. 103. Appropriations. – The amount necessary for the implementation of 
this Act shall be included in the annual General Appropriations Act. The 
Commission on Audit is authorized to: 
 
(a) Collect one-half (1/2) of the one percent (1%) from the annual national tax 
collections not otherwise accruing to special funds or special accounts in the 
general fund of the national government, upon authority from the Secretary 
of Finance, shall be deducted from such collections and shall be remitted to 


64 
 
the National Treasury to cover the cost of auditing services rendered to local 
government units; 
 
(b) A fixed amount equivalent to the annual cost of the audit services in the 
government corporations; and 
 
(c) Other sources such as, but not limited to, collections of audit fees from water 
districts and special audits, consultancy fees and retained income. 
 
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 personnel services of the audit team to the National Treasury. 
 
The amount for the MOOE and capital outlay to support the annual or the 
actual Audit operations of the COA audit teams assigned to NGAs, LGUs and 
government corporations which form part of the approved budget of the audited 
agency for auditing services under the General Appropriations Act, 
appropriations ordinance or annual operating budget, respectively, shall be 
remitted directly to the Commission on Audit Central Office. 
 
All internally generated income from other sources shall accrue to its 
general fund to be exclusively utilized for the operation and performance of its 
mandate. 
 
SEC. 104. Repealing Clause. – Presidential Decree No. 1445, otherwise known 
as the Government Auditing Code of the Philippines, and Subtitle B, Title I, Book 
V, of Executive Order No. 292, or the Administrative Code of 1987, are hereby 


65 
 
repealed. All other laws, executive orders, proclamations, decrees, instructions, 
rules and regulations, or parts thereof which are inconsistent or in conflict with 
any provision herewith shall be deemed repealed or modified accordingly. 
  
SEC. 105. Separability Clause. – Should any provision of this Act or any part 
thereof be declared invalid, the other provisions, insofar as they are separable 
from the invalid provision, shall remain in force and effect. 
 
SEC. 106. Effectivity. – This Act shall take effect fifteen (15) days following 
completion of its publication in the Official Gazette or in any newspaper of 
general circulation.  
 
Approved,