Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. 1749

Introduced by REP. YSABEL MARIA J. ZAMORA

EXPLANATORY NOTE

This bill seeks to strengthen the Commission on Audit (COA) by enacting a revised
Government Auditing Code, thereby repealing Presidential Decree (P.D.) No. 1445, which
was issued forty-seven (47) years ago.

P.D. No. 1445 entitled “Ordaining and Instituting a Government Auditing Code of
the Philippines” was issued on 11 June 1978. It was amended on 25 July 1987 by Executive
Order No. 292, otherwise known as the “Administrative Code of 1987.”

This proposed measure will modernize the government's auditing framework and
align it with international public sector accounting and auditing standards. Among its key
reforms is the institutionalization of the use and admission of electronic collection,
electronic receipts, electronic payments and other digitized transaction audits.

To enhance the capacity and independence of COA, the bill clearly defines the
powers and functions of the COA Chairperson, Commissioners, Assistant Commissioners,
Directors and auditors. The bill also grants the COA Chairperson the power to deputize
duly accredited civil society organizations (CSOs) to help in the audit of projects located in
remote and critical areas.

‘And in recognition of the important role of COA in deterring and detecting
corruption in the public sector, this bill provides for increased penalties for impeding,
frustrating or delaying the efficient conduct of audit.

The House of Representatives in the 19th Congress passed on Third Reading a
similar measure.

In view of the foregoing, the immediate approval of this bill is earnestly sought.

Lone District, City of San Juan


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. ATA 3

Introduced by REP. YSABEL MARIA J. ZAMORA

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:
TITLET
CHAPTER I
GENERAL PROVISIONS

SECTION 1. 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 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;

(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;

(k) Audit Report refers to the final output of an audit on the accounts, financial records,
systems, and operations of a government entity;

(1) 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;

(0) 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 or Notice of Charge. It is issued after the
issuance of the Notice of Finality of Decision (NFD);

(8) 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;

(8) 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;

(ua) 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 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;

(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 toa 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;

(ce) 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;

(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 which cannot be paid conveniently 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;

(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;

(00) 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 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, 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)

b)

)

d)

°)

8

h)

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;

Government funds or property shall be spent or used solely for public purposes;

Trust funds shall be spent only for the specific purpose for which the trust was
created, or the funds received;

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;

Disbursements or disposition of government funds or property shall be approved by
the proper official of the government agency;

Claims against government funds shall be properly authorized and supported with
the complete required documentation;

All laws, rules, and regulations applicable to financial transactions shall be faithfully
adhered to; and

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

Chapter I

ORGANIZATION

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 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;

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;

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;

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-

b)

0)


and-file positions may be delegated by the CP to the Directors concerned. The CP
shall provide the appropriate guidelines for this purpose;

) 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:

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;

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;

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.

°)

e)

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;

) 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

4) 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.

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’ strategic plan;

b) Manage the administrative operations of the office;

©) Implement and execute laws, policies, standards, and rules and regulations
promulgated by the Commission or the Chairperson;

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;

°)

Corporate Government Audit Sector (CGAS) shall be responsible for the audit of
Government Corporations (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, 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;

£) 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;

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
agencies pertaining to cases involving COA; legal assistance to COA personnel
subjected to harassment suits;

8)

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.

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 (ASEANSAD,
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. 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;

©) Institute control measures through the promulgation of auditing and accounting
rules and regulations governing the revenue, receipts, 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;
b) autonomous state colleges and universities;
©) 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.

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;

©) Reasonableness of the sharing of the risks and rewards between the private sector
and the government; or

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 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.

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.

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.

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 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 of operation of all
government agencies, which shall include recommendation of measures necessary to
improve the 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, Obligations 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.

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;

©) 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;

°)

‘Act as witness in proceedings before the courts, the OMB, and other quasi-judicial
bodies; and

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 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 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 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 I
CHAPTER I
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 (ISSAls) 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;
Maintain appropriate professional behavior by applying professional skepticism,
professional judgment, and due care throughout the audit;

©) Perform the audit in accordance with professional standards on quality control;

d) Possess collectively the knowledge, skills, expertise, and ability and experience to
exercise professional judgment necessary to successfully complete the audit;

‘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;
Prepare audit documentation that is sufficiently detailed to provide a clear
understanding of the work performed, evidence obtained, and conclusions reached;
and

Establish effective communication throughout the audit process.

b)

e)

8

hy)

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.

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.
~ Alll 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.

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;

©) Needed by the General Fund in times of emergency; or

d) Used in violation of the rules and regulations issued by the Permanent Committee.


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 (COR) 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, 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;

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

©) 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.

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.

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;

©) 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, 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 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, ot
suspensions, may appeal the case in accordance with the rules and regulations on settlement
of accounts of the Commission.
TITLE 1
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.

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
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.

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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;

©) 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;

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

ting 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;

Transfer of cash advance from one accountable officer to another shall not be

allowed;

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8)


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 in accounts, but the

responsibility of such disbursing officer continues to attach until the amount has
been fully accounted for; or

No cash advance shall be granted for the procurement or implementation of

infrastructure projects.

k

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;

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;

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;

The heads of the source and implementing agencies shall be responsible for
compliance with the foregoing requirements.

b)

cS

d)

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 shalll 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;

Only duly registered, accredited, and reputable private organizations or entities shall
be granted fund transfers;

Fund transfers shall be reported on and liquidated by the implementing private
organizations or entities to the source government agency as soon as the project has
been completed or not later than sixty (60) days after project completion. If the
project implementation will go beyond December 31* of the year, a partial
liquidation report as of December 31* of that year shall be submitted to the source
government agency not later than January 15 of the ensuing year;

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

The heads of the source government agency and implementing private organizations
or entities shall be responsible for compliance with the foregoing requirements.

b)

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d)

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Failure on the part of 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 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 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 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.

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 3"‘civil degree by consanguinity or affinity.

TITLEIV
CHAPTER I
BASIC PRINCIPLES

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 (PERS), 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 IT
ACCOUNTING REPORTS

SEC. 96. Financial Reports and Statements. - The financial reports prepared by the agencies
shall comply with the applicable financial reporting framework of 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 of the Commission, and the
applicable financial reporting framework of 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
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 in accordance with the civil service law, without prejudice to
criminal prosecution whenever the evidence warrants.

The auditor shalll 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.

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.

°)

Destroying or concealing documents, records, or papers which are officially
entrusted to such person, pertaining to the collection, receipt, expenditure, or
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 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 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,