THIRTEENTH CONGRESS OF THE REPUBLI 
1 
OF THE PHILIPPINES 
) 
First Regular Session 
) 
SENATE 
s. i o .  
‘04 J 
2 52 
Introduced by Senator S. R. OsmeAa 111 
EXPLANATORY NOTE 
Being cited with increasing frequency as a country where the government is 
plagued by high levels of corruption, the Philippines is losing its competitive position 
as a recipient of investment flows from private investors as well as of development aid 
from other governments. 
It is undeniable that corruption in the government saps resources available for 
development, distorts access to services for poor communities, and undermines public 
confidence in the government’s will and capacity to serve the poor. A strategy for 
combating corruption is therefore an essential complement to the government’s 
measures to alleviate poverty and promote economic development. 
This bill seeks to strengthen and upgrade the capabilities of the Commission on 
Audit (COA) as one of the key anti-corruption institutions in the government by 
a) defining more clearly the mandate of the COA so that with a sharper focus on its 
functions and responsibilities, 
it can promote accountability, transparency, 
economy, 
productivity and effectiveness in the conduct of the government’s 
operations; 
b) consolidating audit procedures into one code for more effective implementation; 
c) authorizing the COA to effect a restructuring or reorganization for flexibility and 
adaptability to changing strategies; and 
d) defining and imposing sanctions and penalties on acts which can be constituted 
as acts of obstructing audit by the COA. 
The COA is a critical part of the system that would uphold accountability in 
government, hence a stronger COA is an indispensable part of the government’s anti- 
corruption strategy. 
In view of the foregoing, early passage of this bill is earnestly requested. 
S 
Senator 


n 
‘, ’ 
I 
THIRTEENTH CONGRESS OF THE REPUBLIC 
First Regular Session 
) 
OF THE PHILIPPINES 
1 
, + I  
SENAT 
S. No. 
2 
Introduced by Senator S. R. Osmeiia Ill 
AN ACT 
TO ADOPT A REVISED GOVERNMENT AUDITING CODE OF THE PHILIPPINES 
REVISING PRESIDENTIAL DECREE NO, 1445, AS AMENDED BY EXECUTIVE 
ORDER NO. 292, OTHERWISE KNOWN AS THE GOVERNMENT AUDITING CODE 
OF THE PHILIPPINES, AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Republic of the 
Philippines in Congress assembled: 
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SECTION I. 
Short Title. - This Act shall be known as the “Government 
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Auditing Code of 2004.” 
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SEC. 2. 
Declaration of Policy. - It is hereby declared to be the 
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policy of the State that all resources of the Government shall be managed, 
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expended or utilized in accordance with law and regulations, and safeguarded 
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against loss or wastage through illegal or improper disposition with a view to 
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ensuring efficiency, economy and effectiveness in the operations of government. 
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The responsibility to take care that this policy is faithfully adhered to rests 
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directly with the chief or head of the government agency concerned. 
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SEC. 3. 
Definifion of Terms. - Whenever used in this Code, the 
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following terms shall be understood in the sense indicated hereunder, unless the 
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context otherwise requires: 
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I) 
“Account” - is an individual record wherein the effects of transactions and 
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events pertaining to fund, property, obligation, equity, revenue or 
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expense classifications are entered. 
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2) “Audit” is the examination, verification, evaluation and adjustment of an 
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account by persons legally authorized for the purpose. Audit also covers 


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the examination and evaluation of the economy, efficiency and 
effectiveness of management systems, operations and decisions. 
3) “Auditor” 
refers to any officer of the Commission duly appointed or 
designated as such. 
4) “Audit Working Papers” consists of all data, analysis, notes, schedules, 
excerpts, confirmations and other documents or materials prepared and 
compiled during the audit. 
5) “Commission’, refers to the Commission on Audit as an organization or 
the Commission Proper as a collegial body, as the case may be. 
6) ‘Commission on Audit” - refers to the organization as a whole. 
7) “Commission Proper” refers to the collegial body composed of the 
Chairman and two (2) Commissioners. 
8) “Depository” means any financial institution lawfully authorized to receive 
government moneys upon deposit; 
9) “Examine” means to probe, inspect, scrutinize, analyze or test accounts 
and in 
or records of financial transactions by appropriate methods 
accord an ce with accepted st and a rd s; 
10)”Fund” is a sum of money or other resources set aside for the purpose of 
or limitations and constitutes an independent fiscal and 
carrying, 
accounting entity . 
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1)“Government Agency” or “Agency of the Government” or “Agency” refers 
to any department, bureau or office of the national government, or any of 
its branches and instrumentalities, or any political subdivision, as well as 
any 
government-owned 
or 
controlled 
corporation, 
including 
its 
subsidiaries, 
or other self-governing board or commission of the 
govern men t. 
12)“Head of Agency” refers to the highest official of an agency such as but 
not exclusive of the department secretary, bureau commissioner/director, 
regional director, district officer, chief executive officer of government- 
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owned or controlled corporations, branch manager, provincial governor, 
city/municipal mayor and other heads of offices. 
13)"Residual Equity" refers to the excess of assets over liabilities of a 
pa rticu la r accounting entity ; 
14)"Resources" refers to the actual assets of any agency of the Government 
such as cash, instruments representing or convertible to money, 
receivables, lands, buildings, as well as contingent assets such as 
estimated revenues applying to the current fiscal period not accrued or 
collected, and bonds authorized and unissued. 
15)"Revenue" refers to income or receipts derived by an agency from taxes, 
excises, customs, duties, fees, rents, sales of goods or services, and 
collections from other sources. 
16)"Settle" means to determine the status of balance of amounts between 
parties so as to cause payment, satisfaction or liquidation of said 
amounts. 
SEC. 4. 
Basic Princip/es of Fiscal Operations - 
Financial 
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transactions and 
operations of any agency sha'll be governed by the 
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fundamental principles set forth hereunder, to wit: 
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1) No money shall be paid out of any public treasury or depository 
except in pursuance of an appropriation law or other specific statutory 
authority; 
2) Government funds or property shall be spend or used solely for public 
purposes; 
3) Trust funds shall be available and may be spent only for the specific 
purposes for which the trust was created or the funds received; 
4) Expenditures or disposition of government funds or property shall 
bear the approval of the proper officials; 
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5) All financial transactions, including claims against government funds, 
and shall 
shall be duly supported with complete documentation, 
comply with applicable laws and regulations; 
6) General accepted principles and practices of accounting as well as of 
sound management and fiscal administration shall be observed, 
provided that they do not contravene existing laws and regulations; 
7) Fiscal responsibility shall, to the greatest ehtent, be shared by all 
those exercising authority over the financial affairs, transactions, and 
operations of the government agency. 
SEC. 5. 
Statement of Objectives. - 
In keeping with the 
constitutional mandate, the Commission on Audit shall adhere to the following 
objectives: 
I) 
To determine whether or not the fiscal responsibility that rests directly with 
the head of the government agency has been properly and effectively 
discharged; 
2) To continuously update the audit approaches, techniques, methods and 
procedures used by the Commission, 
including the adoption of audit 
sampling and the team audit approach; 
3) To develop and implement 
a comprehensive audit program that shall 
encompass an examination of operating systems, financial transactions, 
accounts and reports, including the audit of receipts and revenues, and the 
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evaluations of compliance with applicable laws and regulations including a 
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review of the economy, 
efficiency 
and effectiveness of government 
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operations; 
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4) Institute control measures through the promulgation of auditing and 
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accounting rules and regulations governing the revenues, 
receipts, 
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disbursements, and uses of funds and property, consistent with the total 
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economic development efforts of the Government; 
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representatives; 
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5) Institute measures designed to preserve and ensure the independence of its 
6) Endeavor to bring its operations closer to the people by the delegation of 
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authority through decentralization, 
Constitution and the laws; 
consistent with the provisions of the 
7) To promulgate auditing and accounting rules and regulations so as to 
facilitate the keeping, and enhance the information value of the accounts of 
the Government. 
SEC. 6. 
The Commission Proper: Composition, Quaiificafions, 
Appoinfmenf, and Tenure of Commissioners. - (1) The Commission on 
Audit shall be composed of a Chairman and two Commissioners who shall be 
natural-born citizens of the Philippines and at the time of their appointment, at 
least thirty-five years of age, certified public accountants with not less than ten 
years of auditing experience or members of the Philippine Bar who have been 
engaged in the practice of law for at least ten years, and must not have been 
candidates for any elective position in the elections immediately preceding their 
appointment. At no time shall all the members of the Commission belong to the 
same profession. 
(2) The Chairman and the Commissioners shall be appointed by the 
President with the consent of the Commission on Appointments for a 
term of seven years without reappointment. Appointment to any 
vacancy shall be only for the unexpired portion of the term of the 
predecessor. 
In no case shall any member be appointed or 
designated in a temporary or acting capacity. 
(3) No member of the Commission Proper shall, during his tenure, hold 
any other office or employment. Neither shall he engage in the 
practice of any profession or in the active management or control of 
any business which in any way may be affected by the functions of 
his office, nor shall he be financially distressed, directly or indirectly, 
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in any contract with, or in any franchise or privilege granted by the 
government, any of its subdivisions, agencies, or instrumentalities, 
including government-owned or controlled corporations and their 
corporate subsidiaries. 
(4) Rule-Making Function. - The determination of the scope of the audit 
and examination by the Commission, 
the establishment 
of the 
techniques and methods required therefor, and the promulgation of 
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 property. 
(5) Reportorial Function. - 
The submission to the President and 
Congress of annual reports covering the financial conditions and 
operations of the Government, 
its subdivisions, agencies and 
instrumentalities, 
including 
government-owned 
or 
controlled 
corporations, 
and non-governmental entities subject to its audit, 
together with recommendations of measures necessary to improve 
their effectiveness and efficiency. 
(6) Personnel Function. - The appointment, assignment/reassignment of 
the officials and employees of the Commission, which shall be in 
accordance with the policy set by the Commission Proper. It shall 
have original jurisdiction in the matter of resolving administrative 
cases filed against COA personnel. 
(7) Accounting Function. The keeping of the general account of the 
Government and subject to Section 18 (2) hereof, preserve the 
vouchers and other supporting papers pertaining thereto. 
(8) Other Functions., The exercise of such other functions as may be 
required by law, including the institutions of measures designed to 
preserve and ensure the fiscal autonomy of the Commission 
as 
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guarantee by the Constitution, as well as the independence of its 
representative. 
SEC, 7. 
Meetings of the Commission Proper; Quorum - (1) The 
Commission Proper shall, through resolution, fix the time and place of its 
regular meetings, which shall not be less than once a week. It may, however, 
meet in special session at the instance of the majority of its members, upon prior 
notice to all members of the Commission Proper, and at such time and place as 
may be agreed upon. 
(2) 
Two members of the Commission Proper shall constitute a quorum 
for the purpose of doing business. In the absence of the Chairman during the 
regular or scheduled special meeting, the Commissioner designated by the 
Chairman shall temporarily act as presiding officer. 
However, if no 
Commissioner has been designated, the senior Commissioner shall temporarily 
act as presiding officer for the particular session. 
SEC. 8. 
Duties and Responsibilities of the Chairman. - 
The 
Chairman acts in the dual capacity as presiding officer of the Commission 
Proper, and chief executive officer for the Commission. 
(1) As the presiding officer, 
the Chairman shall preside during the 
meetings of the Commission Proper, 
and shall see that the 
Commission decides by a majority vote any case or matter brought 
before it within sixty days from the date of its submission for decision 
or resolution. A case or matter is deemed submitted for decision or 
resolution upon the filing of the last pleading, brief, or memorandum 
required by the rules of the Commission or by the Commission itself. 
(2) As chief executive officer, the Chairman shall: 
a) Executive and administer the policies, 
decisions, orders and 
resolutions approved by the Commission; 
b) Direct and supervise the operations and internal administration of 
the Commission; 
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c) Sign appointments of subordinate officials and employees made 
by the Commission Proper 
and enforce decisions 
on 
administrative discipline involving them; 
d) Make temporary assignments, rotate and transfer personnel in 
accordance with the policies of the Commission Proper and the 
provisions of the Civil Service Law; 
e) Submit an annual budget to the Commission for its approval; 
9 Delegate his authority to other officials of the Commission, in 
accordance with the rules and regulations of the Commission. 
g) Control and supervise the audit of highly technical or confidential 
transactions or accounts of any government agency; and 
h) Perform such other duties as may be authorized or required by the 
Commission Proper. 
SEC. 9. 
Duties and Responsibilities of the Commissioners. - 
The Commissioners, together with the Chairman, compose the Commission 
Proper. 
The duties and responsibilities of the Commissioners shall be as 
defined by the Commission Proper, which shall include the following: 
I) 
Attend the meetings, participate in the discussions, and vote during the 
deliberations of the Commission Proper on policy matters; 
2) Participate in the promulgation of decisions of cases brought before the 
Commission; 
3) Initiate the adoption of or propose changes in the policies, standards, rules 
and regulations of the Commission; 
4) Summon any official of the Commission on Audit for the purpose of gathering 
data and information 
pertinent to the formulation, implementation, or 
enforcement of orders, decisions, policies, standards, or regulations of the 
Commission Proper; 
5) In case of the effective absence of the Chairman, the senior Commissioner 
shall perform the functions of the Chairman; and 
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6) Accept assignments to assist the Chairman in the general administration of 
the Commission, upon proper delegation of the Chairman. 
SEC. I O .  
Organizational 
Structure 
nd 
Functions 
of 
fhe 
Cornmission. - Within the limits of the appropriation authorized in the general 
appropriation act, 
the Commission Proper is authorized to determine the 
organizational structure of the Commission, fix and determine the salaries, 
allowances and other benefits of its officials and employees subject to the 
limitations of existing salary standardization laws. 
SEC. 11. 
Central Offices. - (1) The Commission shall have offices 
as may be established and organized by the Commission Proper. 
(3) Until otherwise provided by the Commission Proper in accordance 
with 
the 
immediately 
preceding 
paragraph, 
the 
existing 
organizational set-up and functions of the Commission, together with 
the duties presently assigned to each office, shall continue to be 
observed. The existing central offices are as follows: 
A. Administrative office 
6. Planning, Financial and Management Office 
C. Legal Office 
D. Accountancy Office 
E. National Government Audit Offices I and I1 
F. Local Government Audit Office 
G. Corporate Audit Offices I and I I  
H. Special Audit Office 
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State Accounting and Audit Development Office 
J. Technical Services Office 
K. Information Technology Center 
L. Public Debt Office 
SEC. 12. 
COA Regional Offices: Structure and Functions. - There 
shall be COA regional offices as may be established, or organized by the 
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Commission Proper. Until otherwise provided by the Commission Proper, the 
existing organizational structure of the following regional offices, together with 
the present duties assigned to it, shall continue to be observed: a) Cordillera 
Administrative Region; b) Region I ;  e) Region I I ;  d) Region Ill; e) Region IV; 
f) Region V; g) Region VI; h) Region VII; (i) Region 
VIII; j) Region IX; k) 
Region X; I) Region XI; m) Region XII; and n) Autonomous Region for Muslim 
Mindanao. 
SEC. 13. 
Audit teams; qualifications and assignment of heads. . 
(I) 
In accordance with the policies formulated by the Commission Proper, the 
Chairman shall authorize the creation of audit teams as the exigencies of the 
service may require. The audited agency shall provide the auditors with the 
necessary equipment, 
furniture and other operating expenses, 
including 
expenses for travel and transportation. 
(2) All officials and employees of the Commission, 
including its 
representatives and support personnel shall be paid their salaries, emoluments 
and allowances directly by the Commission out of its appropriations and 
contributions, as provided in this Code 
(4) In order to preserve the independence and integrity 
of the 
Commission, its officials and employees are prohibited from receiving 
salaries, honoraria and bonuses, allowances or other emoluments 
from any government entity, local government unit, and government- 
owned and/or control led corporations and govern me nt 
fin a ncia I 
institutions, 
except those compensation paid directly by the 
Commission out of its appropriations and contributions. 
SEC. 14. 
Appropriation and Function. 
- 
(1) 
The annual 
appropriations for the Commission shall be included 
in the annual 
appropriations law. The budget proposal for the Commission to be submitted to 
Congress 
or other government agency shall first be approved by the 
Commission Proper. 
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(2) 
The Commission shall assess government-owned or controlled 
corporations, including their subsidiaries, and self-governing 
boards, commissions, or agencies of the government for the cost 
of audit services rendered in accordance with law, which shall be 
equivalent at least to the amount assessed in the preceding fiscal 
year. The proceeds from such assessment shall be deposited 
with the National Treasury and shall accrue to the General Fund. 
A maximum of one-half of one per cent (112 of 1%) 
of the 
collection from ’ national internal revenue taxes 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 the National Treasury to cover the cost of 
auditing services rendered to local government units. 
Chapter 3. 
(3) 
Jurisdiction, Powers and Functions of the Commission 
SEC. 15. 
Fiscal Autonomy. - The Commission shall enjoy fiscal 
autonomy. Their approved annual appropriations shall be automatically and 
regularly released. 
SEC. 16. 
General Jurisdiction. - (1) The Commission shall be the 
sole audit institutions of the Government. As such, it shall have the power, 
authority and duty to examine, audit and settle all accounts pertaining to the 
revenue and receipts of, and expenditures or uses of funds and property owned 
or held in tryst by, or pertaining to the Government or any of its subdivisions, 
agencies or instrumentalities, including government-owned or -controlled 
corporations with original charter, and on a post audit bases: 
a) Constitutional bodies, 
commissions and offices that have been 
granted fiscal autonomy under the 1987 Constitution; 
b) Autonomous state colleges and universities; 


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c) Other government-owned or controlled corporations and their 
subsidiaries; and 
d) Such non-governmental entities receiving subsidy or equity; directly or 
indirectly, form or through the Government, which are required by law 
or the granting institution to submit to such an audit as a condition of 
subsidy or equity. 
(2) 
Subject to such regulations as the Commission may issue, the 
general accounts of the Government shall be kept for a period of not more than 
ten ( I O )  years, including the preservation of the vouchers and other supporting 
papers pertaining thereto. Vouchers, receipts and other transaction documents 
and their supporting documentation shall be kept in the custody of the 
management of the audited agencies, subject any time to the access of and 
examination by the authorized representative(s) of the Commission except the 
following vouchers and records which must be kept under the custody of the 
Commission or its audit teams: those evidencing transactions which are 
disallowed/suspended in audit or under audit or examination, or which are the 
subject of court cases or investigations. Under no circumstances shall vouchers 
and its supporting documents be disposed of without the approval of the 
Commission or its authorized representative. 
(3) 
The Commission shall have exclusive authority, subject to the 
limitations provided in 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. 
(4) 
The Commission shall have access to all records and documents 
filed by any person natural or juridical, which are in the custody of any agency of 
the government, and which are necessary in the examination, audit and 
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settlement of all accounts pertaining to the revenues or receipts of and 
expenditures or uses of funds and property of the government and any of its 
agencies. Violation hereof will be subject to the penal and administrative 
disciplinary actions under Sections 87 and 88 of this Code. 
(5) 
No entity 
of the Government or its subsidiary, including any 
investment of public funds, shall be exempt in any guise whatever from the 
jurisdiction of the Commission. 
SEC. 17. 
Fees for Audif and Ofher Services. - (1 ) The Commission 
shall fix and collect reasonable fees for the different services rendered to non- 
government organizations and entities including water districts and electric 
cooperatives that shall be audited in connections with their dealings with the 
government arising from subsidies, counterpart funding by government, or 
where audited records become the basis for a government levy or share. 
SEC. 18. 
Whenever the Commission contracts with any government 
entity, to render audit and related services beyond the normal scope of such 
services, the Commission is empowered to fix and collect reasonable fees. 
Such fees shall either be appropriated in the agency’s current budget, charged 
against its savings, or appropriated in its succeeding year’s budget. Remittance 
shall accrue to the General Fund and shall be made to the Treasurer of the 
Philippines within the time provided for in the contract service, or in the billing 
rendered by the Commission. 
SEC. 19. 
Deputation of Private Licensed Professionals to Assist 
Government Auditors. - (I) The Commission may, when the exigencies of the 
service so require, deputize and retain in the name of the Commission such 
certified public accountants, lawyers and other licensed professionals not in the 
public service as it may deem necessary to assist government auditors in 
undertaking specialized audit engagements. 


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(2) The deputized professional shall be entitled to such compensation 
and allowances as may be stipulated, subject to pertinent rules and regulations 
on compensation and fees. 
SEC. 20. 
Power to Promulgate 
for the Prevention and 
Disallowance of Irregular, Unnecessary, Excessive, Extravagant or 
Unconscionable Expenditures of Funds or Uses of Property, - 
The 
Commission shall promulgate such auditing and accounting rules and 
regulations as shall prevent and disallow irregular, unnecessary, excessive, 
extravagant or unconscionable expenditures or uses of government funds or 
property . 
SEC. 21. 
Settlement of Accounts Between Agencies. - 
The 
Commission shall have the power under such regulations as it may prescribe to 
authorize and enforce the settlement of accounts subsisting between agencies 
of the government. 
SEC. 22. 
Collection of indebtedness due the government. - The 
Commission shall through proper channels assist in the collection and 
enforcement of all debts and claims, and the restitution of all funds or the 
replacement or payment at a reasonable price of property, found to be due the 
Government, or any of its subdivisions, agencies and instrumentalities, or any 
government-owned or 
controlled 
corporation 
or 
self-governing board, 
commission or agency of the government, in the settlement and adjustment of 
its accounts. If any legal proceeding is necessary to that end, the Commission 
shall refer the case to the Solicitor General, 
the Government Corporate 
Counsel, 
or the legal staff of the creditor government office or agency 
concerned to institute such legal proceeding. The Commission shall extend full 
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support in the litigation. All such moneys due and payable shall bear interest at 
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the legal rate from the date of written demand by the Commission. 
SEC. 23. 
Power to Compromise Claims. - (1) When the interest of 
the Government so requires, and under such regulations the Commission may 
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promulgate, the head of the agency may compromise or release in whole or in 
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part, any settled 
claim or liability 
in favor of his agency an amount not 
exceeding One Hundred Thousand Pesos (P100,OOO). If the amount of claim or 
liability exceeds One Hundred Thousand Pesos (P100,OOO) but not more than 
One million Pesos (;1;11,000,000) the head of the agency shall submit the 
application for compromise together with his recommendations to the President 
for his approval. in case the claim or liability exceeds One Million Pesos, the 
head of the agency shall submit the application for compromise together with 
his recommendations to the President for his approval. In case the claim or 
liability exceeds One Million Pesos (PI ,000,000) the application for compromise 
therefrom shall be submitted by the head of the agency through the President 
with his recommendation to the Congress of the Philippines. The compromise 
approved by the head of the agency and President shall invariably be subject to 
post-audit of the Commission; and 
(2) The Commission may, in the interest of the Government, authorize 
the charging or crediting to an appropriate account in the National Treasury, 
small discrepancies (overage and shortage) in the remittances to, and 
disbursements of, the National Treasury, subject to the rules and regulations as 
it may prescribe. 
SEC. 24. 
Retention of Money to Saiisfy Seiiled Liability. - When 
any persons has a settled liability or indebtedness to any government agency as 
determined by the Commission Proper, 
it may motu proprio 
direct the 
concerned officer to withhold the payment of any money due such person or his 
estate. 
SEC. 25. 
Submission of Papers Necessary for the Conduct of 
Audit. - (1) The Commission shall have the power, for audit and examination 
purposes, to require the submission of the original of any order, deed, contract, 
or other document which is the basis for any collection of, or payment from 
government funds, together with any certificate, receipt, assessment notice, 
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compromise agreement, 
or other evidence in connection with a financial 
transaction involving public funds. If an authenticated copy is needed for record 
purposes, the copy shall upon demand be furnished. 
(2) The Commission may, in the interest of the Government, authorize 
the charging or crediting to an appropriate account in the National Treasury, 
small discrepancies (overage and shortage) in the remittances to, 
and 
disbursements of the National Treasury, subject to the rules and regulations as 
it may prescribe. 
SEC. 26. 
Retention of Money to Satisfy Setfled Liabilify. - When 
any person has a settled liability or indebtedness to any government agency as 
determined by the Commission Proper, 
it may motu proprio 
direct the 
concerned officer to withhold the payment of any money due such person or his 
estate. 
SEC. 27. 
Submission of Papers Necessary for the Conduct of 
Audit. - (I) 
The Commission shall have the power for audit and examination 
purposes, to require the submission of the original of any order, deed, contract, 
or other document which is the basis for any collection of, or payment from, 
government funds, together with any certificate, receipt, assessment notice, 
compromise agreement, 
or other evidence in connection with a financial 
transaction involving public funds. If an authenticated copy is needed for record 
purposes, the copy shall upon demand be furnished. 
(2) It shall be the duty of the officials or employees of the government 
agencies concerned, including those in non-government organizations and 
entities such as water 
or 
affected in the audit of government and non-government entities, to comply 
districts and electric cooperatives under audit, 
promptly with the submission of the papers necessary for the conduct of audit 
pursuant to the preceding paragraph. 
Failure or refusal to do so without 
justifiable cause shall constitute obstructing audit which is a ground for penal 
and/or administrative disciplinary actions under Sections 87 and 88 of this Code, 
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as well as for disallowing permanently a claim, assessing additional levy or 
government share, or withholding or withdrawing Government 
funding or 
donations through the Government. 
SEC. 28. 
lnvesfigatory and inquisitorial Powers. - The Chairman 
or any Commissioner of the Commission, the Assistant Commissioner, the 
directors, the audit teamhnit leaders, and any other official or employee of the 
Commission especially deputed in writing for the purpose by the Chairman 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 testimony in any investigation or inquiry on any matter within 
the jurisdiction of the Commission. 
SEC. 29. 
Power to Punish Confempt. - 
The Commission shall 
have the power to punish any person for contempt, directly and indirectly, and 
impose appropriate penalties therefor in accordance with the provisions of the 
Rules of Court. Any violation of any final and executory decision, order or ruling 
of the Commission shall constitute contempt thereof. 
SEC. 30. 
Annual Report of the Commission. - (1) 
The 
Commission shall submit to the President, and the Congress no later than the 
last day of August of each year an annual report on the financial condition and 
results of operation of all agencies of the Government which shall include 
recommendations of measures necessary to improve the efficiency and 
effectiveness of these agencies. 
(2) To carry out the purposes of this section, the chief accountant or the 
official in charge of keeping the accounts of a government agency shall submit 
to the Commission year-end trial balances, financial statements, and such 
other supporting or subsidiary statements as may be required by the 
Commission not later than the fourteenth day of February. Trial balances 
returned by the Commission for revision due to non-compliance with accounting 
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rules and regulations, shall be resubmitted within three days after the date of 
receipt by the official concerned. 
(3) Failure on the part of any official or employee to comply with the 
provisions of the immediately preceding paragraph shall cause the automatic 
suspension of the payment of his salary and other emoluments until he shall 
have complied therewith. The head of agency concerned shall supervise 
compliance with 
the preceding paragraph, 
including the withholding of 
salaries of the officials or employees involved as herein required. The violation 
of these provisions for at least three times shall subject the offender to penal 
and/or administrative disciplinary actions under Sections 87 and 88 of this Code. 
SEC. 31. 
Powers, Funcfions, 
and 
Dufies 
of Auditors 
as 
Represenfafives of fhe Commission. - 
(1) The auditors shall exercise such 
powers and functions conferred in this Code as representatives of the 
Commission and as may be authorized by it through regulations, in connection 
with the examination, audit and settlement of the accounts, funds, financial 
transactions, 
and resources of the agencies 
under their respective audit 
jurisdictions. 
SEC. 32. 
In the performance of their respective audit functions, the 
auditors shall employ such auditing procedures and techniques, including audit 
sampling, as may be prescribed by the Commission under regulations. 
SEC. 33. 
A report of audit for each calendar year shall be submitted 
by the head of each audit'team on the date and in the manner that the 
Commission may prescribe by resolution. The Auditor shall also render such 
other reports as the Commission may require. 
SEC. 34. 
Preparation of Audit Plans 
and Programs, 
and 
Submission of Audit Reports. - Each auditor who is the head of an audit 
team or unit 
shall prepare an annual plan and program for his team 
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SEC. 35. 
Constructive Distraint of 
perty of Accountable 
Officer. - (1) 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 him, in order to safeguard the interest of the 
government, the Commission may place under constructive distraint 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 his property therefrom, or hide or conceal his 
property. 
(2) 
The constructive distraint 
shall be effected by requiring 
the 
accountable office 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 obligate himself to preserve 
the same intact and unaltered and not to dispose of it in any manner whatever 
without the express authority of the Commission. 
(3) 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, after which the said property shall be deemed to have been placed 
under the constructive distraint. 
SEC. 36. 
Rules of Pleadings and Pracfice. - The Commission en 
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banc shall promulgate its rules concerning pleadings and practice before it or 
before any of its offices. Such rules however shall not diminish, increase, or 
modify substantive rights as provided in this Code and other laws. 
SEC. 37. 
Appeal from the Decision of the Auditor. - Any person 
aggrieved by the decision of an auditor in the settlement of an account or claim 
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may, within ninety (90) days from receipt of a copy thereof, appealed in 
writing to the Commission. 
SEC. 38. 
Appeal from the Decision of the Auditor. - Any person 
aggrieved by the decision of an auditor in the settlement of an account or claim 
may, within ninety (90) days from receipt of a copy thereof, appealed in 
writing to the Commission. 
SEC. 39. 
Period for Rendering Decisions of the Commission. - 
(I) 
The Commission sha1.l decide by a majority vote of all its members any 
case or matter brought before it within sixty (60) days from the date of its 
submission for resolution. A case or matter is deemed submitted for decision or 
resolution upon the filing of the last pleading, brief, or memorandum required 
by the rules of the Commission or by the Commission itself. 
(2) If the account or claim involved in the case needs reference to other 
persons or officers, or to a party interest, the period shall be counted from the 
time the last comment necessary to a proper decision is received by it. 
SEC. 40. 
Appeal from Decisions of the Commission. - Any 
decision, order ruling or the Commission may be brought to the Supreme Court 
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on certiorari by the aggrieved party within thirty (30) days from his'receipt of a 
copy thereof in the manner provided by law and the Rules of Court. When the 
decision, 
order or ruling adversely affects the interest of any government 
agency, the appeal may be taken by the proper head of that agency. 
SEC. 41. 
Finality of Decision of the Commission or Any Auditor; 
Power to Enforce. - (1) A decision of the Commission or of any Auditor upon 
any matter within its or his jurisdiction, shall become final and executory upon 
expiration of the period to appeal if no appeal is taken. 
(2) The Commission Proper, upon its own initiative or on motion of any 
interested party may issue a writ of execution requiring a sheriff or a proper 
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SEC. 42. 
Opening and Revisions of Settled Accounts. - 
(1) At 
any time before the expiration of three (3) years after the settlement of any 
account by an auditor, the Commission may motu propio review and revise the 
account or settlement and certify a new balance. For this purpose, it may 
require any account, voucher, document or other paper connected with the 
transaction or matter to be submitted or forwarded to it. 
(2) When any settled account appears to be tainted with fraud, collusion, 
or error of calculation, or when new and material evidence is discovered, the 
Commission may, within three (3) years after the original settlement, open the 
account, and after a reasonable time for reply or appearance of the party 
concerned, certify thereon a new balance. An auditor may exercise the same 
power with respect to settled accounts pertaining to the agencies subject of his 
audit. 
SEC. 43. 
Definition of Government Auditing. - (1) Government 
auditing is the analytical and systematic examination and verification of financial 
transactions, operations, account and reports of any government agency for the 
purpose of determining their accuracy, 
integrity, 
and authenticity, 
and 
satisfying the requirements of law, rules and regulations. 
(2) The conduct of government audit shall conform with the standards 
set forth by the Commission and in the following three sections. 
SEC. 44. 
General Standards. - (1) The audit shall be performed by 
a person 
possessed with adequate technical training 
and proficiency as 
auditor in accordance with the qualifications standards prescribed by the 
Commission; 
(2) 
In all matters relating to the audit work, the auditor shall maintain 
complete independence, impartiality 
and objectivity 
and shall avoid any 
possible compromise of his independence or any pact which may create a 
presumption of lack of independence or the possibility of undue influence in the 
performance of his duties; and 
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(3) 
The auditor shall exercise due professional care and be guided by 
applicable laws, 
regulations 
and the generally 
accepted principles 
of 
accounting in the performance of the audit work as well as in the preparation 
and audit of financial reports, 
SEC. 45. 
Examination and Evaluation Standards. - (I) The audit 
work shall be adequately planned and assistance shall be properly supervised. 
(2) A review shall be made of compliance with legal and regulatory 
requirements. 
(3) 
An evaluation shall be made of the system of internal control and 
related administrative practices to determine the extent to which they can be 
relied upon to ensure compliance with laws and regulations and to provide for 
efficient, economical and effective operations. 
(4) 
The auditor shall obtain through sampling, 
inspections, 
observations, 
inquiries, 
confirmation and other techniques, 
sufficient 
competent evidential matter to afford himself a reasonable basis for his 
opinions, judgments, conclusions and recommendations. 
SEC. 46. 
Reporting Standards. - 
(1) Audit reports shall be dated, 
signed manually and shall be issued and distributed in the matter provided by 
regulations of the Commission. 
(2) Audit 
reports shall contain basically the financial information, 
findings, recommendations, and conclusions as well as other data they may 
provide the management of the audited agency with the necessary input for the 
decision-making process, including a statement of total audit disallowance, 
suspensions, and charges, if any. 
(3) Audit reports shall meet the following criteria: 
a) Factual matter must be accurately, completely and fairly presented 
b) Findings must be presented objectively and in language as clear and 
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c) Findings must be adequately supported by evidence in the audit 
working papers; 
d) Reports must be concise yet complete enough to be readily 
understood by the users; 
e) Information on underlying causes of problems must be included so as 
to assist in implementing or devising corrective actions. 
(4) Audit reports accompanying financial reports shall 
a) 
State whether the audit was made in accordance with laws and the 
regulations prescribed by the Commission, and shall disclose the 
omission of any auditing procedure generally recognized as normal 
or deemed necessary by him under the circumstances of a particular 
case, as well as the reasons for the omission. 
Express in the auditor’s opinion and statement of audit disallowance 
the following: 
(i) 
whether the financial reports have presented fairly in 
accordance with applicable laws and regulations and the 
generally accepted accounting principles 
applied on a 
cons is tent bas is; 
material changes in accounting principles and practices and 
their effect on the financial reports. 
b) 
(ii) 
(iii) 
Total amount of audit disallowances, charges 
and 
suspensions. 
(c ) Explain in the audit findings violations of legal or other regulatory 
requirements with penal sanctions, 
including instances of non- 
compliance. 
SEC. 47. 
Revenue Audifs. - 
(1) 
In the discharge of its audit 
functions the Commission shall equally emphasize revenue audits, and for this 
purpose the heads of the audited agencies are hereby mandated to submit or 
allow access to all documents, assessment notices, compromise agreements, 
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records, 
representatives. 
and papers in its custody, to the Commission or its authorized 
Failure to comply with the requirements of the preceding paragraph will 
subject the head of the agency concerned to penal and administrative liabilities 
under Sections 87 and 88 of this Code. 
(2) 
The primary audit objective in the audit of revenue is to determine 
that the taxes, revenues and receipts due the government or any of its agencies 
are promptly and correctly assessed and collected in full. 
In undertaking revenue audit, 
the authorized representatives of the 
Commission shall observe strict confidentiality of the tax returns, compromise 
agreements, and other documents or records pertaining to taxes under audit, 
and in no case shall auditors 
communicate directly or indirectly with the 
taxpayers concerned. 
Violation of the confidentiality requirement 
shall 
constitute a criminal offense punishable under special laws. 
Chapter 6. Receipt and Disposition of Funds and Property 
SEC.48. 
Accounting 
for Moneys and Property 
Received by 
Public Officials. - Except as may otherwise be specifically provided by law or 
competent authority, all moneys and property officially received by a public 
officer 
in any capacity or upon any occasion must be accounted for as 
government funds and government property. Government property shall be 
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Accrual of lncome to Unappropriated Residual Equity of 
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the General Funds. - (I) 
Unless otherwise specifically provided by law, all 
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income accruing to the agencies by virtue of the provisions of law, orders and 
taken'up in the books of the agency concerned at acquisition cost or at 
appraised value in accordance with the regulations of the Commission. 
SEC. 49. 
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regulations shall be deposited in the National Treasury or in any duly authorized 
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government depository, and shall accrue to the unappropriated residual equity 
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of the General Fund. - (I) 
Unless otherwise specifically provided by law, all 
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income accruing to the agencies by virtue of the provisions of law, order and 
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regulations shall be deposited in the National Treasury or in any duly authorized 
government depository, and shall accrue to the unappropriated residual equity 
of the General Fund of the Government. 
(2) Amounts received in trusts and from business-type activities of 
government may be separately recorded and disbursed in accordance with such 
rules and regulations as may be determined by a Permanent Committee 
composed of the Secretary of Finance as Chairman, and as members the 
Secretary the Department of Budget Management, and the Director-General of 
the National Economic Development Authority. 
SEC. 50. 
Special and Trust Funds. - Receipts shall be recorded 
as income of Special Funds, Trust Funds or Funds other than the General Fund 
only when authorized by law as implemented by rules and regulations issued by 
the Permanent Committee created in the preceding section. 
SEC. 51. 
lssuance of Official Receipfs. - 
No payment of any 
nature shall be received by a collecting officer without immediately issuing an 
official receipt in acknowledgement thereof. The receipt may be in the form of 
postage, internal revenue or documentary stamps and the like, or officially 
numbered receipts, subject to proper custody, accountability and audit. Where 
mechanical devices are used to acknowledge cash receipts, the approval of the 
proper department head or the governing board of government-owned or 
controlled corporations concerned must first be secured. 
SEC. 52. 
Deposif of Money in the Treasury. - Public officers and 
other persons duly authorized to receive and collect money arising from taxes, 
revenues, or receipts of any kind shall remit or deposit the same in accordance 
with the regulations which the Commission and the Department of Finance shall 
prescribe. 
SEC. 53. 
Creditors Unclaimed Balances. - (I) There shall 
maintained in the books of the National Treasury an account designated 
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moneys for which there is no present rightful claimant. 
(2) 
After remaining unclaimed for a period of ten years money in this 
account shall remain with the National Treasury to form part of the 
unappropriated residual equity of the General Fund. 
SEC. 54. 
Credit for Loss Occurring in Transit or Due to Casualty 
or Force Majeure. - (I) When a loss of government funds or property occurs 
while they are in transit or the loss is caused by fire, theft, or other casualty or 
force majeure, the officer accountable therefor or having custody thereof shall 
immediately notify the head of the agency. Within thirty days from such notice, 
the accountable officer concerned shall submit his application for relief, with the 
available supporting evidence, to the head of agency who may grant the relief 
in accordance with the succeeding paragraph 
and the regulations of the 
Commission. An officer who fails to comply with this requirement shall not be 
relieved of liability or allowed credit for any loss in the settlement of his 
accounts. 
(2) 
All relief from accountability approved by the head of agency shall 
invariably be subject to post-audit by the Commission or its representative. 
(3) 
The Commission shall promulgate rules and regulations to 
implement the provisions of this section. 
SEC. 55. 
Transfer of Funds from one Officer to Another. 
- 
Transfer of government funds 
otherwise allowed by law or regulation, 
direction or authorization 
regulations issued by the Commission. 
from one officer to another shall, 
unless 
be made only upon prior written 
of the head of the agency in accordance with 
SEC. 56. 
lnvoice and Receipt Upon Transfer of Funds or 
Property. - 
When government funds or property are transferred from one 
accountable officer to another, or from an outgoing officer to his successor, it 
shall be done upon properly itemized invoice and receipt which shall invariably 
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support the clearance to be issued to the relieved or outgoing officer, subject to 
regulations of the Commission, 
SEC.57. 
Invoice and Receipt upon Transfer of Funds or 
Property. - 
When government funds or property are transferred from one 
accountable officer to another, or from an outgoing officer to his successor, it 
shall be done upon properly itemized invoice and receipt which shall invariably 
support the clearance to be issued to the relieved or outgoing officer, subject to 
regulations of the Commission. 
SEC. 58. 
Transfer of Property Between Government Agencies. - 
Any government property that is no longer serviceable or needed but the 
agency to which it belongs may be transferred without cost, or at any appraised 
value, to other agencies of the government upon authority of the respective 
head of agencies in the national government, or of the governing bodies of 
government-owned or controlled corporations, other self-governing boards or 
commissions of the government, or of the local legislative bodies for local 
government units concerned. 
SEC. 59. 
Disposition of Funds or Property Held by Deceased, 
Incapacitated, Absconding, or Superseded Accountable 
Officer. - (1 ) 
When an officer accountable for government funds or property absconds, dies 
or becomes incapacitated in the performance of his duties, the proper agency 
head shall designate a custodian to take charge of the funds or property until a 
successor shall have been appointed and qualified. The agency head may 
appoint a committee to count the cash and take an inventory of the property for 
which the officer was accountable and to determine the responsibility for any 
shortage therein. One copy of'the inventory and of the report of the committee 
duly certified shall be filed with the Commission but the findings of the 
committee shall not be conclusive until after the audit of the Commission or its 
d u I y authorized rep resen tat ive. 
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(2) 
If the absconding, deceased, incapacitated or superseded officer 
is responsible to another who is accountable, the latter may himself designate 
the committee or take other lawful measure for the protection of his interest. 
SEC. 60. 
Destruction or Sale of Unserviceable Property. - When 
government property has become unserviceable for any cause, or is no longer 
needed, 
it shall, upon application of the officer accountable therefor, 
be 
inspected by the head of the agency or his duly authorized representative and, 
if found to be valueless or unsalable, it may be destroyed upon prior notice to 
the Commission. If found to be valuable, it may be sold at public auction to the 
highest bidder under the supervision of the proper committee on award or 
similar body after advertising for not less than three consecutive days in any 
newspaper of general circulation, or where the value of the property does not 
warrant the expense of publication, by notices posted for a like period in at least 
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that the public auction fails, the property may be sold at a private sale at such 
price as may be fixed by the same committee or body concerned. 
SEC. 61. 
Prohibited Sale or Disposition of Property. - 
No 
government property shall be sold or disposed of in favor of a public officer of 
any government agency, whether he is incumbent, 
retired or resigned. 
However, retiring or resigning officials may for sentimental reasons purchase 
property at replacement cost provided these are of small value as determined by 
the Commission and used by him in office for at least five years. 
SEC. 62. 
Final Report of Accountable Officers. 
- 
(1) 
An 
accountable officer, upon ceasing to act in his official capacity as such, shall 
submit to the auditor of the agency concerned a report of his accountability 
(2) 
Any remaining balance of such accountability shall be deposited 
in accordance with the regulations of the Commission. 
SEC. 63. 
Auditor’s Certificate of Disallowance. - (1) Auditors of 
government agencies shall certify the total audit disallowances, charges, and 


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suspensions in the accounts settled by them to the proper accountable officer 
through the head of the agency, in accordance with the regulations of the 
Commission. The certificate shall be properly itemized and shall state the 
reasons for disallowance, charge or suspension. 
(2) 
A suspension which is not satisfactorily explained within sixty (60) 
days 
after receipt of the certificate or notice by the accountable officer 
concerned shall become a permanent disallowance or charge, as the case 
may be, unless the Commission or auditor concerned shall, in writing and for 
good cause shown, extend the time to answer beyond sixty (60) days. 
SEC. 64. 
Transcript of Auditor's Record as Evidence of Liability. 
- In any criminal, civil, or administrative proceeding against an officer for the 
embezzlement or misappropriation of government funds or property, or to 
recover an amount due the government from an accountable officer, it shall be 
sufficient for the purpose of'showing a balance against him, to produce the 
working papers of the auditor concerned. A showing in this manner of any 
balance against the officer shall be prima facie evidence of the misappropriation 
of the funds or property unaccounted for or of civil liability of the officer as the 
case may be. The existence or contents of bonds, contracts, or other papers 
relating to or connected with the settlement or any account may be proved by 
the production or certified copies 
thereof but the court may require the 
production of the original when this appears to be necessary for the attainment 
of j ustice. 
Chapter 7. Application of Appropriated Funds 
SEC. 65. 
Appropriation for Government Contracts; Void Contract 
and Liability of Officer. - (1) No contract involving the expenditure of public 
funds 
shall be entered into unless there is an appropriation therefor, the 
unexpended balance of which, free of other obligations, is sufficient to cover 
the proposed expenditure. 
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(2) Any contract entered into in violation of the immediately preceding 
paragraph shall be void. The officer or officers entering into and approving 
such contract shall be personally liable to the government or other contracting 
party for any consequent damage to the same extent as if the transaction has 
been wholly between private parties and may likewise be liable criminally and/or 
administratively. 
SEC. 66. 
Ceatificate Showing Appropriation, Allotment or Fund 
for Government Contracts. - 
(I) Except in the case of a contract for 
personnel service, 
banking 
transactions of government-owned andlor 
controlled banks, or as may be prescribed by the Commission, every contract 
involving the expenditure of public funds shall be supported by a certificate 
issued by the proper accounting officer of the agency concerned as to the 
availability of an appropriation, allotment of fund necessary to cover the contract 
for the current fiscal year, The amount 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. 
(2) Any unjustified ‘failure by the official concerned to comply with the 
requirement prescribed under the immediately preceding paragraph shall be a 
ground for appropriate penal or administrative action according to existing laws 
as the evidence may warrant. 
SEC. 67. 
Restrictions 
on 
Payment 
Under 
Government 
Procurement Contracts. - No payments, partial or final shall be made on any 
government procurement contract except upon a certification by the head of the 
agency concerned to the effect that the services or supplies, materials and 
equipment have been rendered or delivered in accordance with terms of the 
contract and have been 
duly inspected and accepted. 
Unless otherwise 
provided by law, no advance payment shall be made on such contracts for 
services not yet rendered or supplies, materials and equipment not yet 
delivered. 
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SEC. 68. 
Commission Participation in Public Biddings. - (I) 
The 
provisions of existing laws notwithstanding, the presence of the auditor or 
Commission representative is not mandatory in the opening of bids or during 
any stage in the process of public biddings. The head of the agency, however 
shall designate his personal representative to witness such opening of bids, 
who shall report to him all deviations from the bidding rules and prescribed 
procedures. 
(2) The agency head, nevertheless, shall be responsible for the proper 
conduct of public biddings and shall ensure that documents 
and records 
pertaining thereto are furnished the Commission or its representative within five 
(5) days 
to enable him to review the bid procedures, 
pre-qualification 
requirements, terms and conditions, 
and other details of the bidding 
procedures. 
SEC. 69. 
Limitations on Cash Advance. - No cash advance shall 
be given unless for a legally authorized specific purpose. A cash advance shall 
be reported on and liquidated as soon as the purpose for which it was given has 
been served. No additional cash advance shall be allowed to any official or 
employee unless the previous cash advance given to him is first settled or a 
proper accounting thereof is made. The Commission shall issue the necessary 
regulations governing the granting and liquidation of cash advance. 
The violation of this provision shall subject the offender to penal and/or 
administrative disciplinary actions under Sections 87 and 88 of this code. 
SEC. 70. 
Disposition ofsfale Checks. - ( A )  A check which remains 
outstanding after six months from date of its issue shall not be paid by any duly 
authorized depository. The issuing agency shall take up in its books of accounts 
the amount of this check as residual equity adjustment of the fund against 
which it was previously charged. Upon presentation of a stale check, the 
issuing agency shall cancel it and issue to the payee a substitute check in lieu 
thereof. 
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SEC. 71. 
Reversion of Unliquidated Balances of Accounts 
Payable. - The head of agency shall revert to the unappropriated residual 
equity of the general fund of the agency concerned, any unliquidated balance 
of accounts payable in the books which has been outstanding for two years or 
more and against which no actual claim, administrative or judicial, has been 
filed or which is not covered by perfected contracts of record. This section shall 
not apply to unliquidated balance of accounts payable in trust funds as long as 
the purposes for which the funds were created have not been accomplished. 
SEC. 72. 
Transfer of Unexpected Balance to the General Fund. - 
The Commission may transfer at any time, from moneys appropriated for a 
specific purpose, to the unappropriated residual equity of the general fund any 
unexpended balance outstanding to the credit of any appropriation or fund when 
the officer having administrative control thereof certifies to the Commission that 
there is a surplus in excess of the requirements, or that the work or purpose for 
which the appropriation was made has been completed, indefinitely postponed 
or abandoned, and that there is no outstanding obligation to be paid therefrom. 
Chapter 8. Fiscal Responsibility and Accountability 
SEC. 73. 
Accountable Officers; Bond Requirement. - (1) Every 
officer of any government agency whose duties permit or require the possession 
or custody of 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 and responsible for government funds through their 
participation in the use or application thereof. 
The violation of this provision shall subject the offender to penal and/or 
administrative disciplinary actions under Sections 87 and 88 of this Code. 
SEC. 74. 
Disposition of Stale Checks. - (1) A check which remains 
outstanding after six months from the date of its issue shall not be paid by any 
duly authorized depository. The issuing agency shall take up in its books of 
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accounts the amount of this check as residual equity adjustment of the fund 
against which it was previously charged. Upon presentation of a stale check, 
the issuing agency shall cancel it and issue to the payee a substitute check in 
lieu thereof. 
SEC. 75. 
Reversion of Unliquidafed Balances of Accounts 
Payable. - The head of agency shall revert to the unappropriated residual 
equity of the general fund of the agency concerned, any unliquidated balance of 
accounts payable in the books which has been outstanding for two years or 
more and against which no actual claim, administrative or judicial, has been 
filed or which is not covered by perfected contracts or record. This section shall 
not apply to unliquidated balance of accounts payable in trust funds as long as 
the purposes for which the funds were created have not been accomplished. 
SEC. 76. 
Transfer of Unexpecfed Balance fo the General Fund. - 
The Commission may transfer at any time, from moneys appropriated for a 
specific purpose, to the unappropriated residual equity of the general fund any 
unexpended balance outstanding to the credit of any appropriation or fund 
when the officer having administrative control thereof certifies 
to the 
Commission that there is a surplus in excess of the requirements, or that the 
work or purpose for which the appropriation was made has been completed, 
indefinitely postponed or abandoned, 
and that there is not outstanding 
obligation to be paid therefrom. 
Chapter 8. Fiscal Responsibility and Accountability 
SEC. 77. 
Accountable Officers; Bond Requirement - (1) Every 
officer of any government agency whose duties permit or require the possession 
of custody of 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 and responsible for government funds through their 
participation in the use or application thereof. 
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SEC. 78. 
Time and Mode of Rendering Account; Consequence 
for Failure. - In the absence of a specific provision of law, all accountable 
officers shall render their accounts, submit their vouchers, and make deposits 
of money collected or held by them at such times and in such manner as shall 
be prescribed in the regulations of the Commission. 
(2) Refusing or neglecting to render or settle an account as required by 
law or regulation after demand by the Commission or its authorized 
representatives is a ground for penal and/or administrative disciplinary actions 
as provided for in Sections 87 and 88 of this Code. 
SEC. 79. 
General Liabilify for Unlawful Expenditures. - Any loss 
resulting from expenditures of government funds or uses of government 
property in violation of law or regulations shall be a personal liability of the 
official or employee found to be directly responsible therefor. 
SEC. 80, 
Degree of Supervision Over Accounfable Officers. - 
The head of any government agency shall exercise the diligence of a good 
father of the family in supervising accountable officers under his control to 
prevent the incurrence of loss of government funds or property, otherwise he 
shall be solidarily liable with the person primarily accountable therefor. 
SEC. 81. 
Measure of Liability of Accountable Officers. - (I 
) Every 
officer accountable for government property shall be liable for all losses or 
damage thereof occasioned by its improper or unauthorized use by himself or 
any person for whose acts he may be held responsible , or by negligence in the 
keeping or use thereof, whether or not it be at the time in his actual custody. 
His liability shall be measured by the extent of the loss of damage of the 
property, to be determined un the basis of its appraised value under regulations 
of the Commission. 
(2) Every officer accountable for government funds shall be liable for all 
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losses resulting from the unlawful deposit, use or application thereof and for all 
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losses attributable to negligence of persons for whose acts he may be 
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responsible. 
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SEC. 82. 
Liability for Acfs Done by Direcfion of Superior Officer. 
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- No Accountable officer shall be relieved from liability by reason of his having 
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acted under the direction of a superior officer in paying out, 
applying or 
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disposing of funds or property with which he is chargeable, unless prior to that 
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act, he notified the superior officer in writing of the illegality of the payment, 
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application or disposition. The officer directing any illegal payment or disposition 
of the funds or property 
while the 
shall be primarily liable for the loss, 
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accountable officer who fails to serve the required notices shall be secondarily 
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liable. 
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SEC. 83. 
Prohibition Against Pecuniary Interest. - No accountable 
or responsible officer shall be pecuniarily interested, directly or indirectly, in 
any contract or transaction of the agency in which he is such an officer. 
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Chapter 9. Government Accounting 
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SEC. 84. 
Definition. - Government accounting encompasses the 
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processes of analyzing, recording, classifying, summarizing and communicating 
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all transactions involving the receipt and disposition of government funds and 
property, and interpreting the results thereof. 
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SEC. 85. 
Objecfive of Governmenf Accounfing. - Government 
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accounting shall aim to (1) produce information concerning past operations 
and present conditions; (2) provide a basis for guidance for future operations; 
(3) provide for control of the acts of public bodies and officers in the receipt, 
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disposition and utilization of funds and property; and (4) report on the financial 
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position and the results of operations of government agencies for the 
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SEC. 86. 
Keeping of Accounfs. - (I) 
The accounts of an agency 
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shall be kept in such detail as is necessary to meet the needs of the agency 
information of all persons concerned. 
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and at the same time be adequate to furnish the information needed by fiscal or 
control agencies of the government. 
(2) The highest standards of honesty, objectivity and consistency shall 
be observed in the keeping of accounts to safeguard against inaccurate or 
misleading information. 
SEC. 87. 
Recording of Financial Transactions. - Each government 
agency shall record its financial transactions and operations conformably with 
pertinent laws and regulations and in the absence thereof, 
it shall be in 
conformity with generally accepted accounting principles. 
SEC. 88. 
Chart of Accounts, 
- The Chart of accounts for 
government agencies shall be prescribed by the Commission and shall be 
observed by the government agencies. 
SEC. 89. 
The General Ledger. - (1) The government accounting 
system shall be on a double entry basis with a general ledger in which all 
financial transactions are recorded. 
(2) Subsidiary records shall be kept where necessary. 
SEC. 90. 
Terminology and Classificafion. - A common terminology 
and classification shall be used consistently throughout the budget, 
the 
accounts and the financial reports. 
SEC. 91. 
Accounts Classification. - To permit effective budgetary 
control and to establish uniformity in financial reports, 
accounts shall be 
classified in balanced fund groups. The group for each fund shall include all 
accounts necessary to set forth its operations and condition. 
All financial 
statements shall follow this classification. 
SEC. 92. 
Accounting for Revenues. - (1) 
Estimated revenues 
which remain unrealized at the close of the fiscal year shall not be booked or 
credited to the unappropriated residual equity or any other account. 
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(2) Uncollected earned revenues which are the subject of a compromise 
agreement 
shall be booked in accordance with the regulations of the 
Commission. 
SEC. 93. 
Accounting for Obligations and Expenditures.. - All 
expenditures and obligations incurred during the year shall be taken up in the 
accounts of that year. 
SEC. 94. 
Definition of lnternal Control. - Internal control is the 
plan of organization or agency to safeguard its assets, check the accuracy and 
reliability of its accounting data, 
and encourage adherence to prescribed 
managerial policies. 
SEC. 95. 
Installation. - 
It shall be the direct responsibility of the 
agency head to install, implement, and monitor a sound system of internal 
control. 
Chapter 10. Final Provisions 
SEC. 96. 
Penal Provisions. - The penalty of fine not exceeding ten 
thousand pesos (P10,OOO) or imprisonment in the discretion of the court, shall 
be imposed upon any of the following acts or omissions which are hereby 
declared as obstruction of audit: 
(1) Refusing or neglecting to render or settle account as required by law 
or regulation after demand by the Commission or its authorized 
representatives. 
(2) Denying access to or failing to produce documents, records, or 
to the Commission or its authorized 
papers under his custody 
representatives in connection with the conduct of audit 
SEC. 97. 
Administrative Disciplinary Action. - 
(1) 
Acts or 
omissions of public officers constituting obstructing audit as defined and 
punished in the preceding section, shall also constitute neglect of duty and shall 
be a ground for administrative disciplinary action against said public officer. 
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SEC. 98. Separabilify Clause. 
If any section or provision of this Act 
shall be declared unconstitutional or invalid, the other sections or provisions not 
affected thereby shall remain in full force and effect 
SEC. 99. SEC. 3. Repealing Clause. - The provisions of R.D. No 1445 
and Subtitle B- Commission on Audit, Title 1, Book V of E.O. No. 292, are 
hereby repealed. 
All other laws, executive orders, proclamations, decrees, 
orders, rules and regulations and other issuances or parts thereof which are 
inconsistent or in conflict with any of the provisions of this Act are deemed 
modified, revoked or repealed accordingly. 
SEC. 100. SEC. 4. Effecfivify. This Act shall take effect fifteen (15) days 
after its publication in two (2) leading newspapers of national circulation. 
Approved,