Republic of the Philippines
HOUSE 0F RHPRESENTATIVES
Quezon City, Metro Manila
Nineteenth Congress
Second Regular Session
HouseBillNo.9606
RECEIVED
NOV   2  2  2023
Introduced by REP. JOEY SARTH SALCEDA
AN ACT
PROVIDING FOR THE REVISHD GOVERNMHNT AUDITING CODE 0F THH
PHILIPPINES
EXPLANATORY NOTE
The country's auditing policies is one of the world's most stringent. In the  1987 Constitution,
the  Commission  on  Audit  is  established  as  a  Constitutional  Commission,  with  full  fiscal
autonomy,  and  "the  power,  authority,  and  duty  to  examine,  audit,  and  settle  all  accounts
pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned
or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or
instrunentalities."
The Commission's powers are extensive, such that the mere threat of a notice of disallowance
from the Commission deters officials from releasing government funds, including tax refund
claims.
While this exercise of prudence is positive in preventing corruption, without a clearer operating
framework, excessive rigidity also leads to underspending, difficulty in doing business, and
foregoing socioeconomic development and opportunities.
This bill seeks to establish a more pragmatic and rules-based audit system that is designed to
strike a balance between efficiency of government service dehvery, and transparency and good
governance.
In view of the foregoing, the approval of this bill is urgently sought.


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
Nineteenth Congress
Second Regular Session
HouseBillNo.9606
Introduced by REP. JOEY SARTE SALCEDA
AN ACT
PROVIDING FOR THE REVISED GOVERNMENT AUDITING CODE 0F THE
PHILIPPINES
Be  it  enacted  by  the  Senate  and  House  Of Representatives  Of the  Philippines  in  Congress
assembled:
TITLE I
Chapter 1
GENERAL PROVISIONS
SECTION  1.  Sfoorf  rz.//e.  -This  Act  shall  be  known  and  cited  as  the   "Revi.fed
Government Auditing Code Act. "
SEC. 2. Dec/¢rcz/z.o7! o/Po/I.c);.  -  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 ensure that such policy is faithfully adhered to rests directly with the chief or
head of the government agency concerned.
SEC. 3. De¢#z./i.o# a/rcr7„s. -As used in this Act:
(a) .4ccow#f 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 of debit or credit in the books of accounts, registry or any other record;
(b) 4ccow#fwb/e oJffj ;cer refers to the offlcer of a government agency who by the nature
of the duties  and responsibilities or participation in the collection or receipt and
exependiture  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, hereinafter referred to as the Commission, which includes any public officer
or private person or entity who may have is direct or indirect participation in the
transaction;
(c) .4ggrc.ct;ed party refers to a person ur entity adversely affected by any decision,
order,  resolution  or  ruling  of  the  Commission  or  any  of  its  duly  authorized


representative; (d) Open opportunities for acquiring 21 st century skills, which are
linked to improving employment prospects and work success;
(d) 4##w¢/ 4wdc.f Jiepoit (AAR) refers to the final output of the regular yearly audit
conducted by the auditor on the accounts and operations of a government entity and
basically  consists  of  the  ilndependent  Auditor's  Report,  the audited  financial
statements and the audit observations and recommendations;
(e) A4l¢#¢ge"c#f fc#er (ML) refers to the fmal output of a regular or periodic audit
conducted by the auditor on the accounts and operations of a s government entity
which is in the fom of a letter to the auditee management containing just basically
the audit observations and recommendations;
(f) Spccl.¢/ 4wdi.f Reporf (SAR) refers to the fmal output of the special audit conducted
by the auditor assigned to audit specific accounts, transactions, projects, programs
or activities of a government entity and basically consists of audit observations and
recommendations;
(g) 4pprapri.¢fl.o# refers to an authorization by law, appropriation, ordinance, or other
enactments,  or the corporate operating budget directing the payment of personal
services,  maintenance  and  other  operating  expenses,  and capital  outlay  out  of
government funds under specifled conditions or purposes;
(h) 4ppc&/ 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;
(i) .4wdi.f refers  to  the  examination,  verification,  and  adjustment  of an account;  the
evaluation of internal control systems; the determination of the 2o       government
entity's  compliance  with  applicable  laws,  rules  and  regulations;  as  well  as  the
examination   and  evaluation of the  economy,   efficiency   and  effectiveness  of
management  systems,  operations  and  decisions.  It may  also  cover other  special
audits as may be prescribed by the Commission;
0.) Awdi.for refers  to  any officer or employee  of the  Commission duly appointed or
designated as such;
(k) 4wd!.f growp refers to a cluster of audit teams that are grouped together, headed by
a   supervising   auditor   (SA), which   is   responsible   for   planning,   managing,
supervising and quality control of the audit work as well as ensuring the prompt
submission of audit reports;
(I)  f4wdi.f  fea!ffl  refers  to  the  basic  organizational  unit  responsible  for  the  audit  of
government  entities  consisting  of an  audit  team  leader  (ATL)  and  audit  team
members (ATMs);
(in) 4wdl.f wor4 p¢pcrs refer to the documentation or evidence of the work done and
the results thereof, consisting of relevant or pertinent data, analyses, computations,
calculations,  notes,  schedules,  excexpts,  confirmation  and  other  documents  or
materials gathered, prepared and compiled in the course of an audit;
(n) C¢sfo refers to money or its equivalent currencies, negotiable checks, or balances in
bank accounts or in the possession or custody of a collecting or disbursing officer;
(o) Cfo¢rgc  refers  to  an  inclusion  or addition  to  an accountability pertaining  to  the
assessment, appraisal or collection of revenues, receipts and other income arising
from under-appraisal,  under-assessment,  under-collection  or  failure to  collect or
remit collection which are found in the course of audit of revenues or receipts;
a) Order a/Ejcecwfz.o# /COEJ 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 Charge and issued
after the issuance of the Notice of Finality of Decision (NFD);


q)   Co"ml.ssi.o# refers to the Commission on Audit as a constitutional body created
under Article IX-D of the 1987 Philippine Constitution;
(r)  Dccc.s..o#  or  Peso/#ft.o#  refers  to  an  adjudication  or  settlement  of  a  claim  or
controversy by the authorized official of the Commission which shall embody the
facts of the case, the issues to be resolved, and the laws, regulations, or precedents
on which the ruling is based;
(s)  Deposi.ft7ry refers to any financial institution lawfully authorized to receive deposit
of goverrment moneys;
(t)  DI.s¢//ow¢#ce is the disapproval in audit of a transaction, either in whole or in part
involving government disbursement or property;
(u) GotJcr#"e#f ¢ge#ey 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, as well as government
financial institutions and other government corporations, with or without original
charter, including its subsidiaries, other self-governing boards or commissions of
the  government,  constitutional  bodies  with  fiscal  autonomy  and  autonomous
educational institutions;
(v) GovcrHme#f /w7®ds  refer  to  public  moneys  of  every  sort  and  other  resources
pertaining funds transferred to private sectors as a subsidy, equity, or counterpart
fund for implementation of speciflc subjects;
(w) £!.¢b!./I.ty refers to a personal obligation arising from an audit disallowance, charge,
or decision which may be satisfied through payment or restitution as determined by
competent  authority  or  by  other  modes  of extinguishment  of an  obligation  as
provided by law;
(x) Mo#ey c/¢i.in refers to a demand for payment of a sum of money, reimbursement or
compensation arising from law, contract, quasi-contract or quasi-delict due from a
government agency or owing to a claimant;
(y)  IVofl.ce a/FI.#¢/ Dcci.si.o# (NFD) refers to a written  notification addressed to the
agency head that a decision of the Commission has become fmal and executory;
(z)  Per§o"s  /I.¢b/e  refer  to  the  persons  determined  to  be  answerable  for  an  audit
disallowance, charge or decision by the Commission;
(aa)Pcrso#s   rcspo#sl.b/a   refer   to    the   persons   determined to be answerable for
the compliance with the audit requirements as called for in the notice of suspension
O{S);
(bb)PwbJ!.cpwrposc refers to any purpose or use directly available to the general public
as a matter of right which includes traditionally viewed as essentially government
functions such as the building of roads and the delivery of basic services, and other
purposed designed to promote social justice and public interest;
(cc)jReve#we refers to income or receipts derived by a government agency from taxes,
excise,   custom  duties,   fees,  royalties,  rents,   sales  of  goods,   or  services  and
collections from other sources;
(dd)Sc#/emc#f 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);
(ee)Sc#Je"e#f a/¢ccow#f refers to the process of determining the status or balance of
the account of an accountable officer after audit and examination; and
® rrwsf /w#ds refer to funds which, by operation of law or by contract, have come
officially into the possession of any government agency or public officer as trustee,


agent or administrator, and received in fulfillment of certain obligation or a specific
Purpose.
SEC.   4.  Fw#c7czme7!/cz/  Prz.#c!P/es  -  Financial  transactions  and  operations  of  any
government agency shall be governed by the following fundamental principles:
(a) No money shall be paid out of any treasury or depository except in pursuance of an
appropriation law, appropriation ordinance, or other specific statutory authority, or
a board-approved corporate operating budget;
(b) Government funds or property shall be spent or used solely for public purposes;
(c)  Trust funds  shall be spent only for the  specific purpose  for which the trust was
created or the funds were received;
(d) Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency;
(e)  Disbursement or disposition of government funds or property shall be approved by
the proper official of the government agency;
(I)  Claims  against government funds  shall be supported with the complete required
documentation;
(g) All laws, rules and regulations applicable to financial transactions shall be faithfully
adhered to; and
(h) Generally  accepted  principles  and  standards  of accounting  as  well  as  of sound
management and fiscal administration shall be observed, provided that they do not
contravene existing laws and regulations.
TITLE 11
THE COMMISSION ON AUDIT
Chapter 1
ORGANIZATION
S>EC.  5.  Commission  on  Audit  -  Composition,  Qualifications,  Term  and  Salary    Of
A4:embers.  -(a)  The    Comlnission    on    Audit,     iscomposedofa  Chaixperson  and  two
Commissioners,  who  are  natural-born  citizens  of  the  Philippines,  either  certified  public
accountants with not less than ten years of auditing experience, or members of the Philippine
Bar engaged in the practice of law for at least ten years, and must not have been candidates for
any elective positions in the elections immediately preceding their appointments. At no time
shall all member
(b) The Chairperson and the Commissioners shall be appointed by the President of the
Philippines,  subject to the confirination of the Commission on Appointments,  for a term of
seven  years  without  reappointment. Appointment  to  any  vacancy  shall  be  only  for  the
unexpired portion of the term of the predecessor. In no case shall any member be appointed or
designated in a temporary or acting capacity;
(c)      No members of the commission shall, during their tenure, hold any other office
or employment in the goveriiment. Neither shall they engage 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 s Corrmission, nor shall they be fmancially 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   instrunentalities,   including
government-owned or controlled corporations and their subsidiaries; and
(d)     The salary of the chairperson and the commissioners shall be fixed by law and
shall not be decreased during their tenure.
SEC. 6. Comrmz.sfz.oJc PJ~aper. -The Commission Proper is composed of the Chairperson
and two  Commissioners.  They shall  sit as  a collegial body to  formulate policies,  rules  and
regulations, prescribe standards governing the discharge of its powers and functions.
SEC. 7. Specifecfunctions Of the Commission Proper. -The spec±fiic functions of the
Commission Proper are the following:
(a)  Promulgate the rules concerning pleadings and practices before the Commission or
any of its  offices.     Such rules however shall not diminish,  increase,  or modify
substantive rights ;
(b) Decide, by a majority vote of all members of the Commission Proper, any case or
matter brought before  it within  sixty  (60)  days  from the  date of submission for
decision or resolution;
(c)  Appoint,  in  accordance   with  the  civil  service  laws  and  the  s  applicable  career
executive development programs, the officials and employees of the Commission.
Appointment of lower non-core positions may be  delegated by the  Commission
Proper  to  the  appropriate  officials  of  the  Commission.  It  shall  have  original
jurisdiction   over   administrative   cases    filed   against   the   personnel   of   the
Corrmission;
The  Commission  Proper  shall  determine  the  salaries  and  other  forms  of
compensation and other benefits, including medical, dental, optical and other health
benefits  of the personnel  of the Commission,  pursuant to  its  fiscal autonomy as
provided in the Constitution.
The  Commission Proper may re-organize  the  organizational  structure  of the
Commission as the need arises and to effectively attain the Commission's mandate
in keeping with the demands of the service.
The  Commission Proper  shall  develop  and  implement  a  comprehensive  and
continuing education, manpower training and development program for officials
and employees of the Commission.
(d) Promulgate  auditing  rules  and  regulations  for  the  determination  of  the  scope
and type of audit and examination by the Commission, the establishment of 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;
The     Commission     Proper     shall     also     promulgate     accountingrules,
regulations     and     standards     in     conformity with     International public sector
Accounting Standards and International Financial Reporting Standards.
(e)  Issue policies, rules and procedures in the custody and preservation of the general
accounts of the national government;
(f)  Issue regulations pertaining to the responsibility and accountability of the audited
agency in the custody and preservation of disbursement vouchers, journal vouchers
and their supporting papers, official receipts and report of collection,  accounting
records and reports, whether audited or not, for a period of ten (10) years or for a
longer prescriptive period, as may be provided by law or regulations; and


(g) Perfom such other functions as may be necessary for the effective implementation
of this Act.
SEC. 8. Duties and Responsibilities Of the Chairperson. -Tt\e Chairpersor\ shaill act as
the presiding officer of the Commission Proper 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 Commission Proper;
(c)  Sign     appointments,      promotions,      office  orders      for     audit  engagements,
assignment,  reassignment  of  offlcials  and  employees,  or  any  other  persormel
movement   in   any   office   or   station   of  the   Commission    without   additional
remuneration, except those authorized by law;
(d) Exercise  control  and  supervision  over  the  audit  of intelligence  or  confidential
transactions or accounts of government agencies;
(e)  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 Commission Proper;
(f)  Submit  an annual  budget  to   the commission  Proper  for its approval;
(g) Submit  to  the  Offlce  of the  President  of the  Philippines,  Congress  and  other
oversight    agencies,    the    annual    financial    reports    covering    the    financial
condition  and results of operations of the Government, its subdivisions, agencies,
and  instrumentalities,  including  government-owned  or  controlled  corporations
subject  to  its  audit,  together with recommendations  or measures  to  improve the
economy, efficiency and effectiveness of their operations, and such other reports as
may be required by law;
(h) Authorize the re-opening of settled accounts in case of fraud, collusion, or error of
calculation or when new  and material  evidence  is  discovered.  The  auditor may
certify thereon a new balance within three (3) years after the original settlement of
any account by the auditor or discovery thereof but not to exceed ten years from the
date of transaction;
(i)   Summon any person or public official for the purpose of gathering data or inquiring
into matters pertinent to the fomulation,  implementation or enforcement of any
order, decision, policy, standard, or regulation of the Commission Proper; and
¢)  Perform  such  other  functions  as  may  be  required  by  law  or  policy  of  the
Commission.
EEC. 9. Duties and Responsibilities Of the Commissioners. -The Cornrnissio"ers, as
members  of   the Commission  Proper,  shall   have  the following duties and responsibilities:
(a)  Formulate and propose policies, accounting and auditing rules; review, evaluate and
update          exi sting          regulations          o f          the          C ommi s s ion;           and
prescribe standards governing the perfomance by the Commission of  its   powers
and functions;
(b) Review and deliberate cases submitted for decision or resolution;
(c)  Approve the appointment   and promotion  of the officials  and employees of the
Commission, subject to civil service rules;


(d) Assist in the general administration of the Commission upon proper delegation by
the Chaixperson;
(e)  Act     as     officer-in-charge     of    the commission    upon proper designation by
the Chairperson, in case of the latter's absence; and
(I)  Perform  such  other  functions  as  may be  provided by  law,  rules,  regulations  or
policies of the Commission.
SEC.10. Organizational Structure, Compensation Of Personnel and Functions. -I:bie
Commission  Proper  shall detemine  the organizational structure of the Commission; and fix
the salaries, allowances, and other benefits of  its officials   and employees,  which  shall  be
exempt  from  the Salary Standardization Law, and in accordance with the fiscal autonomy  of
the Commission.
SEC.11.  S/o#c7czrds Bo¢rds'.  -The public  sector accounting  standards board and the
public sector auditing standards board shall be created directly under the Commission Proper,
the members of which shall function in an ex-a;#?cz.a capacity.
SEC.  12. .4ssz.s/cz#f Commz.ssz.o73ers'.  -The organizational structure of the Commission
shall be composed of sectors consisting of offices or clusters, as   may be determined by the
Commission Proper. Each sector shall be headed by an Assistant Commissioner who shall have
the following functions :
(a)  Formulate,  develop, update,  and supervise the implementation of the operational
plan  and  perfomance  commitment  of  the  sector  which  are  aligned  with  the
Commission's strategic plan and annual holistic operational plan;
(b) Supervise the general administration of offlces or cluster of offices under histher
jurisdiction;
(c)   Formulate,    evaluate    and   recommend   policies,    rules    and   regulations    for
consideration by the Commission Proper; and
(d) Perform such other functions as may be necessary in the effective implementation
of this Act.
SEC.  13.  Ge7!ercz/ Coct7!se/. -One of the Assistant Commissioner shall head the legal
services sector of the Commission and concurrently designated as the General Counsel of the
Commission who, as such, shall:
(a)  Perfom advisory and consultative services on legal matters;
(b) Render   legal  service   with  respect  to  the  performance    of the  functions  of the
Commission   and  the  interpretation  of  pertinent  laws  and  auditing  rules  and
regulations, with the exception of purely accounting matters which shall be acted
upon by the Commission's government accountancy sector;
(c)  Handle  the  investigation  of administrative  complaints  or  cases  filed  against  a
persomel of the Commission; evaluate and act on all reports of involvement of the
persomel   of  the   Commission   in   anomalies   or  irregularities   in  government
transactions;   and   perform   any   other   investigative   work   required   s   by   the
Commission upon assignment by the Chairperson;
(d)  Represent   the   Commission   in   preliminary   investigations ofmalversation and
other criminal or administrative cases discovered in audit;  assist and collaborate
with the  Solicitor General  and the  Ombudsman  in handling  cases  involving  the


Chairperson or any of the Commissioners, or other officials and employees of the
Commission in their official capacity;
(e)  Coordinate,   for   the   Commission   and   with   the   appropriate   legal   bodies   of
government,   with   respect   to   legal   proceedings   towards   the   collection   and
enforcement of debts and claims, and the restitution of funds and property, found to
be due any government agency which are pending settlement or adjustment by the
Commission; and
(I)  Supervise    the enforcement   and    settlement    of    disallowances,  charges  and
decisions of the Commission covered by a notice of finality of decision and order
of  execution.   For  this  purpose,  the  General  Counsel  shall  have  control  and
supervision over the Office of the Commission Chief Enforcement Officer.
SEC.   14.   Com777z.ss!.o#   Cfez.e/ E#/orceme#Z   Oj7jj}cer.   -  a)  There   shall  be   a  Chief
Enforcement  Officer  who  shall  have  the  rank  and  privileges  of a  central  office  cluster
director.    The powers and authority Chief Enforcement Officer shall be similar to that of a
sheriff of a regular court, with additional tasks as may be defined by the Commission Proper.
The Chief Enforcement Offlcer and the deputies shall be under the control and supervision of
the General Counsel; and
(b) There shall be a regional enforcement offlcer in every regional office in accordance
with the guidelines issued by the Commission Proper.
SEC.15. Ce#fra/ alice. -The Colnmission shall have offices as may be established
and organized by the Commission Proper. The existing organizational set-up and functions of
the Commission, together with the duties presently assigned to each office, shall continue to
be observed unless otherwise provided in this Act.     The existing sectors in the Central Office
are as follows:
Administration S ector (AS) ;
Planning, Finance and Management Sector (PFMS);
Professional and Institutional Development Sector (PIDS)
Government Accountancy Sector (GAS);
Special Services Sector (SSS);
Legal Services Sector (LSS);
Commission Proper Adjudication Sector (CPAS);
Systems and Technical Services Sector (STSS);
National Government Audit Sector (NGAS);
Coxporate Government Audit Sector (CGAS); and
Local Government Audit Sector (L-GAS)
h sector shall discharge their existing duties and such other duties and functions as
may be prescribed by the Commission Proper.
SEC.16.  Co773mz.ssz.o# Secrefczrz.¢/.  -The Commission Secretariat shall be headed by a
director who shall have the same rank and privileges of a central office cluster director. The
Commission Secretariat shall perform the following functions:
(a)  Prepare the agenda for the sessions of the Commission Proper;
(b) Prepare, keep and preserve the minutes of all sessions, hearings and conferences of
the Commission Proper;
(c)  Maintain and preserve the records of the Commission Proper; and


(d) Perforin such   related functions as may be assigned   by the   Chairperson   or   the
Corrmission Proper.
SIEC.17 . Duties and responsibilities Of the Central Office Directors. -The dNI+ies and
responsibilities of the central office directors, as head of their respective offices or clusters, are
as follows:
(a)  Formulate,  develop,  and supervise  the implementation of the armual Operational
Plan and Office Performance Commitment of the office or cluster, both aligned with
the sector's operational  plan and performance commitment, and in accordance with
the Commission's Strategic Plan;
(b) Manage     the     general     administration    of    the     office,     including     matters
pertaining   to   workload,    work    accomplishment,   and    management   of   the
resources of the office or cluster;
(c)  Direct  and  manage  the  implementation  and  execution  of  laws,  and  policies,
standards, rules and regulations promulgated by the Commission and memoranda
issued by the Office of the Chairperson;
(d) Submit amual performance report and other reports as directed by the Commission
Proper or by the Chairperson; and
(e)Perforin      other      functions      that     may     be      assigned     by     higher     and
competent    authorities     in     the     Commission    relevant     to     the     effective
implementation of this Act.
SEC.  18. jzcgz.o#¢/ Oj7}ces.. Sfrwc/#re ¢#d F##cfz.o#s. -(a) There shall be COA regional
officesasmaybeestablishedororganizedbytheCommissionProper.Untilotherwiseprovided
by the Commission Proper, the existing regional offices are as follows:
(1) CORDILLERA ADMINISTRATIVE REGION (CAR);
(2) REGION I;
(3)  REGION 11;
(4) REGION Ill;
(5) REGION IV-A (CALABARZON);
(6) REGION IV-B (MIMAROPA);
(7) REGION V;
(8) REGION VI;
(9) REGIONAL SATELLITE AUDIT OFFICE NEGROS ISLAND;
(10)      REGIONVII;
(11)      REGIONVIII;
(12)      REGIONIX;
(13)      REGIONX;
(14)      REGIONXI;
(15)      REGIONXII;
(16)      REGIONXIII; and
(17)      BANGSAMORO  AUTONOMOUS   REGION  IN  MUSLIM  MINDANAO
(BARMM).
(b) Each regional office shall be headed by a director who shall perform the following
functions:


(1) Formulate,  develop,  and supervise the implementation of the Operational
Plan  and  Office  Performance  Commitment  of the  regional  office,  both
aligned with the sector's operational plan and performance commitment, as
well as the Commission's strategic plan;
(2) Exercise supervision and control over the implementation of auditing rules
and regulations in any agency of the government with s principal offices or
place of operations within the region;
(3)   Review,  analyze    and     consolidate    local,  national and  corporate  audit
reports and audited fmancial statements of agencies in the region as may be
required;
(4)   Exercise     authority     over     intemal     administration     of     personnel,
planning,    financial    (budgetary   and   accounting),    and   legal   matters
pertaining to ,the region upon delegation by the Commission Proper; and
(5) Perform such other related functions as may be assigned by the Chairperson.
SEC.  19. j4#c7z.f Growps ¢7!c7 4c{c7z./ reczms.  In accordance with the policies approved by
the  Commission Proper,  audit groups  and  audit teams  are  created  as  the  exigencies  of the
service may require.
(a)  Audit groups may be constituted for the audit of a group of agencies to be determined
by the Commission Proper. Each audit group shall be headed by a supervising auditor,
who shall report directly to the cluster or regional director;
(b) Audit teams may be constituted to audit various agencies as may be detemined by the
CP.   Each  audit  team  shall  be  headed  by  a  team  leader  who  shall  report  to  the
supervising auditor of the concerned audit group;
(c)  The  audit  team  supervisor  (ATS)  or  the  audit  tear  leader  (ATL)  who  signs  the
independent auditor's report shall be a certified public accountant;
(d)  The CP shall review the composition of the audit groups and audit teams and may make
changes or modifications in the exigency of the service and as the need arises;
(e)  Until  such  time  that  the  Commission  shall  have  adequate  provincial  satellite  audit
offices (PSAO) in each province to house the audit teams for the national government
or local government agencies, the audited agency shall continue to provide suitable and
sufficient office and storage space together with supplies,  equipment,  furniture,  and
other  necessary   operating   expenses   for   its   maintenance   as   determined   by   the
supervising auditor and approved by the concerned director; and
(I)  Upon  the  physical  transfer  of the  audit  teams  from  the  premises  of the  national
government or local government auditee to the PSAO, the auditee shall continue to
support the annual logistical and operating expenses of their audit teams. They shall
transfer such amounts budgeted for auditing services to the regional or central office
having supervision over the audit team assigned to the auditee.
SEC.   20.   Powers,   Fw#c/!.o7!s,   cz#c7  Dw/I.es   o/ ,4wdz./orb.   -   (a)   The   auditor   shall
exercise    such   powers    and   functions as  maybe  authorizedby  the  Commission  in  the
examination,           audit          and           settlement          o f          the          ac c ounts ,           funds ,
property,   fmancial   transactions,   resources   and  physical operations of the agencies under
histher respective audit jurisdiction;
(b)  The  auditor  shall  employ  such  auditing  procedures  and  techniques  as  it  may
prescribe under the regulations of the Commission;


(c)       The ATL shall submit an audit report to the head of the audit group on the date
and in the manner that the Commission may prescribe and render such other reports as the
Commission may require;
(d)        The  ATL  shall,  after  the  audit,  retain  custody  and  responsibility  for  the
safekeeping  and preservation of paid  expense vouchers, joumal  vouchers,  stubs  of checks,
reports of collections and disbursements and similar documents together with their respective
supporting  papers,  which  are  the  subject  of an  audit  observation  memoranda,  notice  of
suspension,  notice  of  disallowance,  notice  of  charge,  complaint,  or  a  pending  audit  or
investigation or court case until these audit or legal evidence shall have been tuned over to a
Central Audit Evidence Management Services (CAEMS) in the Central Office or the Regional
Audit  Evidence   Management   Unit  (RAEMU)   which   are  created   by  the commission;
and
(e)        The  audit  team  shall  retain  a  digital  copy  of the  post-audited  vouchers  and
supporting papers, official receipts, and other documents/reports upon turn over/return of the
originals  to  the auditee  for safekeeping  and preservation in accordance with the guidelines
promulgated by the Commission Proper.
SEC.  21. .4#77ctcz/ ,4wdz./ cz#d W7lork Progrcz". -The ATL shall develop or formulate an
armual  audit  plan  and  the  necessary  audit  programs  for  auditee  in  accordance  with  the
regulations of the Commission.   The annual audit plan of the audit team shall be aligned with
the cluster or regional office's operational plan and performance commitment.
EEC. 22. Assignment and Compensation Of Auditing Personnel. -a) The assig:rrmeat of
repres entative s          and          support          p ersonnel          o f         the          C ommi s s ion         to
agencies  of  the  government shall  be determined by the Chairperson in accordance with the
policy promulgated by the Commission Proper; and
(b) The salaries and other forms of compensation of the personnel of the Commission
shall  be  determined  by  the  Commission  Proper  which  shall  be  exempt  from  the  Salary
Standardization  Law  pursuant  to  the  Commission's  fiscal  autonomy  as  provided  in  the
Constitution.
SBC. 23. Legal  Assistance  to  COA  Officials  and Employees.  -(a,) The  oREro±a,ls and
employees of the Commission are authorized to engage the services of private lawyers for a
fee in accordance with the guidelines issued by the Commission Proper; and
(b)      For this purpose, the commission shall include in its budget the alnount to be set
aside as a legal assistance fund.
SEC. 24. Pro/ess!.o#cz/I.zczfz.o# a/4wc7z./ Servz.ccs. -The Commission shall develop, adopt
and  implement  for its  officials  and  employees  a  comprehensive  and  continuing  manpower
training and development program, which may follow a ladderized system. For this purpose, it
shall continue  its capacity building program in coordination with intemational professional
bodies   such   as   the   International   Organization   of   Supreme   Audit   Institutions,   Asian
Organization of Supreme Audit Institutions, Association of Southeast Asian Nations Supreme
Audit Institutions and other supreme audit institutions.


CHAPTER 11
APPROPRIATIONS, FUNDING AND FISCAL AUTONOMY
SEC.  25.     4apraprz.¢fz.o#s  cz#d Fw77dz.#g.  -    (a)  The  annual  operating  budget  of the
Commission  as  provided  in  the  General  Appropriations  Act  shall  be  sourced  from  the
following:
( 1 ) One-half of one percent ( 1/2 of 1 %) of the annual collections from national
intemal revenue taxes;
(2) A fixed amount equivalent .to the actual cost of the audit services in the
government corporations, plus  a reasonable rate to cover overhead expenses;
and
(3) Other sources such as but not limited to collections of audit fees from water
districts and special audits, consultancy fees and retained income;
(b)     The budget proposal may be subject to review by the Department of Budget and
Management but in no case shall it be lower than the approved budget of the Commission for
the previous year; and
(c)       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 Personal Services to
the National Treasury and shall transfer to the Commission, the amount for the MOOE and
Capital Outlay to be utilized by the assigned audit tear of the Commission during the calendar
year.  Should the assigned audit team remain in residency in the .premises of the GOCC, the
Capital Outlay and MOOE budget by the audit team shall continue to be directly provided by
the agency.
SEC.  26.    Fz.sccz/ 4w/o#o7#);.  -(a) The Commission shall enjoy fiscal autonomy.    Its
approved     annual     appropriation     shall    be  automatically     and  regularly  released.  The
Commission Proper may be authorized to augment any item in the general appropriations for
the Commission from savings in any item in the same appropriation;
(b)      Any savings from the approved budget under the GAA shall be retained by the
Commission until fully spent; and
(c)       Violation  of this  section  shall  subject  the  concerned  responsible  officials  to
appropriate administrative sanctions.
CHAPTHR Ill
JURISDICTION, POWERS AND FUNCTIONS OF THE COMNISSI0N
SEC.   27.   S/cz/e773c7!f  a/ Ozy.ec/I.ves'.   -     Pursuant  to   its  constitutional  mandate,   the
Commission adheres to the following objectives:
a)       Determine whether the fiscal responsibility which rests directly with the head of
the goveriiment agency has been properly, efficiently and effectively discharged;
(b)      Develop  and implement a comprehensive audit plan that shall  encompass  the
examination  of  financial  and  non-financial  transactions,  accounts  and  reports,  including
evaluation of the internal control system of the agency;
(c)       Institute control measures through the promulgation of auditing and accounting
rules and regulations governing the revenue, receipts, disbursements, and uses of funds and
property, including evaluation of proj ects 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,  consistent  with  the  total  economic  development
efforts of the Government;
(d)      Promulgate  accounting  and  auditing  rules    and  regulations   to  facilitate  the
safekeeping of the accounts of the government and enhance their infomation value using state
of the art technology;
(e)       Institute    measures    designed   to    preserve   and    ensure   theindependence
of the Commission's officials and employees; and
(I) Bring its operations closer to the people by the delegation of authority, consistent with the
provision of the Constitution and the national policy on decentralization.
SEC. 28.   Jwrz.sc7z.c/I.o77 a/ffee Com"z.ssz.o#.  -(a) The Commission shall have the power,
authority, and duty to examine, audit, and settle all accounts pertaining to the assessments and
collections of revenues and receipts,  and to the expenditures or uses of funds and property,
owned or held in trust by, or pertaining to the national government, or any of its subdivisions,
agencies,   including     state      universities    and     colleges,     instrunentalities,     government
corporations and their subsidiaries, including water districts;
(b)     The commission shall   also have   auditjurisdiction  over the following:
( 1 )          Public utilities;
(2)        Non-government    entities    such    as    electric    cooperatives,  NGOs,
POs;  private  foundations,   educational   institutions   and  other  entities  receiving  subsidy  or
equity, donation or grant, or fund transfer directly or indirectly from or through the government,
those which have government shares,  or counterpart funds from the government, and those
which are required by law or the granting institution to submit to such audit as a condition of
subsidy or equity, donation or grant, or fund transfer. This authority, however,  shall pertain
only to the audit of these funds or subsidies coming from or through the government; and
(3)        Leagues of provinces, cities municipalities and barangays;
(4)        Private   entities   collecting   revenues   in   behalf  of  thegovemment.
(c)      The  Coinmission  shall  have  exclusive  authority,  subject to  the  limitations  of
Article IX of the 1987 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 illegal,  irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government
funds and property;
(d)      No  entity  of the  government,  or  its  instrumentalities,  subsidiaries,  shall  be
exempted  in any guise whatsoever  from the jurisdiction  of the Commission;
(e)       The authority and power of the commission shall extend to and comprehend all
matters relating to :
(1) Auditing procedures, systems and controls;
(2) Keeping of the general accounts of the government;
(3)  Examination and inspection of the books,  records,  and papers relating to
those accounts and operations under audit;
(4)  Audit  and  settlement  of the  accounts  of all  persons  respecting  funds  or
properly received or held by them in an accountable capacity;
(5) Settlement of accounts subsisting between agencies of the government and
(6)  Examination,  audit,  and  settlement  of all  debts  and  claims  of any  sort,
including set-off, due from or owing to the government or any of its subdivisions, agencies and
instrumentalities.
(I) The Commission shall have visitorial authority over the following:
(1) Non-government entities subsidized   by  the  government, those required to
pay   levies   or  government   share;   royalties   or   fees   from   exploitation,   exploration   and


development  of natural  resources.  This  authority pertains  only  to  the  determination  of the
amount to be assessed, collected and remitted to the government;
(2) Non-government entities whose loans are guaranteed by the government,
provided that such authority shall pertain only to  the audit of the govemment's  contingent
liability;
(3) Non-government entities operating and charging fees or tariffs to the public
for the use of public facilities or utilities in so far as the reasonableness of the rates charged to
the users of the facilities or utilities; and
(4) Non-government entities which have contracts with the government under a
Public -Private Partnership (PPP) Agreement or any of its variants, insofar as the detemiination
of the: existence of value-for money in procurement through PPP; 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; and absence of disadvantage to the
government in the agreement relating to the operation, maintenance and handover of the public
infrastructure or proj ect.
SEC.  29.  Fees  or j4wc7z./  CZJ?c7  a/feer Servz.ces.  -(a)  The  Commission  shall  assess  and
collect reasonable fees for the different services rendered to non-government entities that shall
be audited in connection with their dealings with the government, arising from but not limited
to subsidies, counterpart funding, government equity, donation, grant, fund transfer, directly or
indirectly from or through the goverrment, or where audited records become the basis for a
government levy or share. Fees of this nature shall accrue directly to the Commission within
ten (10) working days following the completion of the audit and
(b)      Whenever   the   Co]rmlission   enters   into   a   contract   with   anygovemment
entity,  to  render  audit  and  deliver  services  beyond the  nomal  scope  of such  services,  the
Commission  is  empowered  to  assess  and  collect reasonable  fees.  Such  fees  shall  likewise
accrue directly to the funds of the Commission within the time provided for in the contract or
in the billing statement rendered by the Commission.
SEC. 30. Deputization Of Licensed Professionals  or Experts.  -(al) The Co:rrrm:ission
Proper 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  not  in  the  public  service,  to  assist  its  auditors  in undertaking  specialized  audit
engagements;
(b)     The   deputized   professionals   or   experts   are  entitled   to  suchcompensation
and allowances as may be stipulated in an agreement or contract, subject to pertinent rules and
regulations on compensation and fees;
(c)        The  Corrmission  Proper  shall  issue  guidelines   .   in  contracting  deputized
professionals or experts referred to in this section.
EEC. 31. Civil Society Organizations (CSO) in the Conduct Of Audit. -Ttre Chairperson
may deputize duly accredited civil society organizations (CSOs) in the conduct of audit to help
auditors in the ocular inspection, validation, evaluation and monitoring ofproj ects imbued with
public                                                                       interest                                                                       or
located   in   remote   and   critical   areas   in   order   to   enhance   credibility, accountability
and transparency in audit processes.
SiEC.  32.     Disallowance   Of  Unconscionable  Expenditures   Of  Funds   or  Uses   Of
Praperty.  - 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 criminal sanctions against the persons liable.
SBC.  33.  Auditing  Transactions  with  Private  Persons.  -INo    gowerrrme"  algemcy  or
government employees association shall enter into any contract or transaction with any private
person or firm for services to undertake studies and services relating to government auditing
and accounting, including services to conduct, for a fee, seminars or workshops for government
personnel on these topics, unless the proposed contract is first submitted to the Commission to
enable  it  to  determine  if it  has  the  resources  and  capability  to  undertake  such  studies  or
services.    The  Commission may  engage  the  services  of experts  from the public  or private
sectors in the conduct of such studies.
Should the Commission decide not to undertake the study or service, the Commission
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.  34. £egr/ Serv!.ces a/Prz.v¢/e Low Fz.ms.  -No contract involving public funds
shall be entered into for the services of a private law flrm or lawyer to represent government
agencies in court or to render legal  services  for them.  In the event that such legal  services
cannot  be   avoided   or   is  justified   under   extraordinary     or     exceptional circumstances,
the    written    conformity    and  acquiescence  or  clearance  of the  Solicitor  General  or  the
Government  Corporate  Counsel,  as  the  case  may  be,  and  the  written  concurrence  of the
Commission shall first be secured before the hiring or employment of a private lawyer or law
frm; and
In the absence of the said requirements,  any payment thereof shall be disallowed in
audit and the same shall be the personal liability of the officials concerned.
SBC.   35.   Prohibition   in   Soliciting,   Grants,   or   Financial   Assistance.   -  Private
foundations and entities organized and managed by government officials and employees are
prohibited  from  using  the  name  and  resources  of the  government  agency  in  soliciting  or
receiving donations;  grants,  or financial assistance  from private,  domestic and international
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  recorded   in the  books  of the  concerned government agency. Refusal to submit
itself to such audit shall constitute an offense punishable under Section 102 of this Act.
SEC.    36.     Submission   Of    Documents    Relative     to    Government obligations. -
The  Commission  shall have the power,  for audit  and examination purposes,  to  require  the
submission of the original of any:  (a) order, deed, contract, or other document which is the
basis for any collection of, or payment from government funds, together with any certificate of
ownership in case of investments;
(b) official receipts and assessment notices issued by the Bureau of Intemal Revenue,
Bureau  of  Customs,   Land  Transportation  Office  and  similar  agencies   and  the  related
compromise agreements, if any;
(c)  copies  of board  resolutions  or council resolutions  in  case  of GOCCs  or LGUs,
respectively; or


(d) other records and papers or other evidence in connection with a financial transaction
involving public funds.
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.
Failure  or  refusal  to  do  so  without justifiable  cause  shall  constitute  a  ground  for
administrative disciplinary action as well as 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   penal   or
administrative sanctions as provided by law.
SEC. 37. J#vesfz.gcz/ory cz#c7 Co#fe"p/ Powers.  -The Chairperson or any Commissioner
of the Commission, the Assistant Commissioners, central office directors, regional directors,
the auditors assigned to any government agency, and any other official or employee of the
Commission  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   anyinvestigationor
inquiry on any matter within the jurisdiction of the Commission.
The Corrmission 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 Commission, under the same
procedure  and  with  the  same  penalties  provided  therein.  Any  violation  of any  fmal  and
executory decision, order or ruling of the Commission shall constitute as indirect contempt.
SEC. 38. Power fo .4//c4c7z.ca/e A4o#e); C/czj.ms. -   The Commission shall have the power
to adjudicate money claims filed against the government arising from law, contract,  quasi-
contract or quasi-delict.
SEC. 39. Power /a Comprom!.se C/oz.ms.  -(a) 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 goverrment agency not exceeding Ten million (Plo,000,000.00) pesos arising out of any
matter or case before it or within its jurisdiction.   In case the claim or liability exceeds Ten
million  (Plo,000,000.00)        pesos,         the       Commission       shall       submit       with       its
recommendations, the application for relief to Congress; and
(b)  The  respective  governing  bodies  of government  financial  institutions  and  other
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 the 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.    40.       Collection    Of    Indebtedness     due    the     Government.     -    (al)    The
Commission   shall, through   proper   channels,   assist  in the  collection   and enforcement of
all  debts  and  claims,  and  the  restitution  of all  funds  or  the  replacement  or payment  at  a
reasonable price,  of property found to be due the government agency in the settlement and
adjustment of its accounts.


If any  legal  proceeding  in court  is necessary,    involving  final and executory audit
disallowances or charges, the Prosecution and Litigation Offlce of the Commission shall handle
the same.  All other cases shall be handled by the Office of the Solicitor General or the Office
of the Government Corporate Counsel, as the case may be. The Commission shall extend full
support in the litigation. All money claims due and payable shall bear the legal interest rate
from the date of receipt of the Order of Execution or upon demand by the Commission; and
(b) The Commission may further refer the case to the Office of the Ombudsman for the
filing        of       the        proper        administrative        and        criminal        actions        against
agency   personnel   concerned   and private persons  in case  of  any irregularity or illegality
in the incurrence of such debts and claims.
SEC. 41.   Retention Of Money f or Satisf ;action Of Indebtedness. -(al) TNh:en 8Iny person
or  entity  is   indebted  to   any  government  agency,   including   fmal   and  executory  audit
disallowances  or charges,  the Commission may direct the head of agency or public  officer
concerned to withhold the payment of any money due from such entity or person or the estate,
in satisfaction of the indebtedness, disallowances and charges; and
(b) Failure on the pat of the head of agency or public officer to withhold the said money
to satisfy such indebtedness or audit disallowances and charges shall make the head of agency
or. public officer personally liable therefor without prejudice to administrative action that may
be filed for neglect of duty.
SEC. 42.    4#73w¢/ jtepor/. -(a) The Commission shall submit to the President and the
Congress of the Philippines, not later than September 30 of each year, an annual report on the
financial condition and results of operation of all goverrment agencies, which shall include
recommendations of measures necessary to improve economy, efficiency and effectiveness of
these agencies;
(b)      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 the
year-end financial statements and such other supporting or subsidiary statements as may be
requiredbytheCommissionnotlaterthanMarch31ofeachyear.Financialstatementsretumed
by the Commission for revision due to non-compliance with accounting standards, rules and
regulations shall be resubmitted within three (3) days after the date of receipt by the official
concerned; and
(c) Failure on the part of any official or employee to comply with the provisions of the
immediately preceding paragraph shall cause automatic suspension of the payment of the salary
and  other  emoluments  until  the  official  or  employee  shall  have  complied  therewith. The
violation of these provisions for at least three times shall subject the offender to administrative
disciplinary action.
SEC. 43.   Authority to Examine Accounts of public utilities. -    The corn"isston shall
examine  and  audit  the  books,  records  and  accounts  of all  public  utilities  such  as  water
conc e s sionaire s ,              franchi se              ho lders              and              electric              di stribution,
and   transmission   utilities   including   generation   utilities,   in connection with the fixing of
rates of every nature,  or in relation to the proceedings of the proper regulatory agencies for
purposes of determining franchise taxes and other fees.  The examination and audit shall be
conducted any time after a provisional or final rate increase is approved or implemented by the
Energy Regulatory Commission.  Any authorized government agency may, without any need
of prior request of the said government agency, examine and audit subject to the guidelines of
the Commission.


(a)       During the examination and audit, any official or employee of the public utility
concerned shall produce all the reports, records, books of accounts and such other papers as
may be required. The Commission shall have the power to take testimony under oath from any
official or employee of the said s public utility on matters pertaining to the audit; and
(b)      Any official or employee of the public utility who refuses the examination and
audit of the books of accounts and pertinent records, or causes unnecessary obstruction to the
examination and audit, or found guilty of concealing any material information concerning its
financial status shall be subject to the penalties provided under Section 102 hereof
SEC.  44.     Powers,  Fw#cfj.o#s  cz#c7 DwZz.es  a/4wd!.C  Growps.   -The  audit  groups  in
government agencies shall perform the following functions and duties:
(a)       Examine, audit and settle accounts, funds, financial transactions, and resources
of the agencies under the respective audit jurisdiction and exercise such powers and functions
as may be authorized by the Commission;
(b)      Submit an audit report  for each  calendar   year  on the dates prescribed by the
Commission but not later than June 30 following the close of the year;
(c)       In the performance of the respective audit functions as herein specified, employ
auditing  procedures   and  techniques   in  consonance  with  the   applicable  Philippine   and
International Standards adopted by the Commission;
(d)      Conduct audit of the transactions and accounts submitted for audit within such
period    prescribed    by    the    Commission    in    the    guidelines    and    issue    the    results,
findings   and   observations   thereon   through   Audit   Observation Memoranda, Notice of
Suspension,  Disallowances  and  Charges  in  accordance  with  the  rules  and  regulations  on
settlement of accounts;
(e)        Keep    and    preserve    disbursement    vouchers,   journal    vouchers,  original
copies of paid checks, bank statements, reports of collections and disbursements and similar
documents together with the  supporting papers  evidencing transactions that are disallowed,
charged or suspended in audit, including those that are the subject of audit observations or court
cases  or  investigations  by  the  Office  of the  Ombudsman  or  other  investigative  bodies  in
accordance with the rules and regulations of the Commission;
The    safekeeping    and   preservation   of   other   audited    documents    not    falling
under   the   preceding   paragraph   shall   be   returned   to   the   custody   and responsibility
of the  management  subject  any  time  to  the  access  of,  and  examination by  the  authorized
representative of the Commission. Under no circumstances shall said documents be removed
or disposed of without the approval of the Commission or the authorized representative; and
(I)        Perform such other functions as may be assigned by the superiors.
SiEC;.  45.  Examination  Of  Cash  and  Accounts  Of  Accountable  Officer.   -  (81)  The
cashbooks, accounts, papers and cash in the accountability of an accountable officer shall at all
times  be  open  to  the  audit  and  examination  of the  Commission  and  its  duly  authorized
representatives; and
(b)       In  case  an  examination  of the  cash  and  accounts  of an  accountable  officer
discloses a shortage,  the auditor shall 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 government agency
shall  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 be submitted immediately by the auditor to
the director for purposes of filing the appropriate administrative and criminal case against the


said defalcating accountable officer with the Office of the Ombudsman, as the evidence may
warrant.
SIEC.    46.       Withholding    Of   Salaries    and    other    Emoluments    Of Accountable
O;orce7is'.  -    Whenever an  accountable  officer has  been  found  short  of the  accountabilities
during  cash  .  examination  or  audit  of the  cash  and  accounts,  the  auditor  shall  order  the
withholding of the salaries and other emoluments due the accountable officer found to have
incured  cash  shortage  until  the  final  determination  of the  latter's  accountability  by  the
Commission or final judgment by a competent court. In the event that the accountable officer
is found not liable for the cash shortage, the withheld salary and other emoluments shall be
released to the accountable officer, otherwise, it shall be applied in payment of the officer's
indebtedness.
SEC.  4] .  Constructive  Distraint  Of Property  Of Accountable  Officer.  -  (t>) Upon
discovery in audit of a shortage in the accounts of any accountable officer, and upon fmding a
prima facie case of malversation of public funds or property against an accountable officer, 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
there from, or hide or conceal the property;
(b)     The constructive distraint shall be effected   by   requiring the accountable officer
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  the
accountable officer to preserve the same intact and unaltered, and not to dispose of it in any
mamer whatsoever without the express authority of the Commission;
(c)     In  case  the  said  accountable  officer or any 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; and
(d) The auditor shall submit to the chairperson, through the director, a report on any
distraint effected pursuant to this section not later than five (5) calendar days from the date of
the distraint of the property. A copy of the report shall be furnished the General Counsel of the
Commission.
CHAPTER IV
DECISION 0F THE COMMISSION
SEC. 48.   4apeo//rom Decz.sz.o# o/4wd!./ore. -(a) Any person aggrieved by the decision
of an auditor of any goverrment agency in the settlement of an account or claim may, within
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 intemal rules concerning pleadings and
practices of the Commission;
(b)      The Commission shall impose reasonable appeal filing fees and legal research
fee.  These  fees  shall  be  assessed  by  the  office  where  the  appeal  is  filed  and  paid  to  the
Commission's Treasury Office. The corresponding receipts shall be attached to the appeal or


petition for review, which shall fom part of the record of the appeal. Appeal or petition for
review not supported with receipt of the flling fee shall be a ground for the dismissal of the
case, except those appeals that may be allowed by the Commission. In no case shall expenses
related to the appeal from the decisions of the auditor or director be charged against public
funds.
SEC. 49.    Period for Rendering Decisions  Of the  Commission.  -    The CornrnissLon
Proper  shall  decide  any  case brought before  it within  sixty  (60)  days  from the  date  of its
submission for resolution. If the account or claim involved in the case needs referral to other
persons or offices, or to a party interested, the period shall be counted from the time the last
comment or pleading necessary to a proper decision is received by it.
SBC. 50.    Appealf irom Decisions of the commission. -The party a,ggrievedby a;ny 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 Office of the Solicitor
General shall at all times represent the Commission in all its decisions appealed to the Supreme
Court.
EEC.   51.   Finality   Of   Decisions    Of   the    Commission.    -   (al)   The   decisi:on   of
the   Commission, director   or   auditor   upon   any   matter within the  auditjurisdiction, if
not appealed as herein provided, shall be fmal and executory; and
(b)     The General counsel or any authorized officer of the commission shall issue an
order of execution requiring the sheriffs or enforcement officers of the Commission to execute
its fmal decisions, resolutions, orders or claims and awards.
SiEC.  52.     Enforcement  Of Decisions  Of the  Auditor  or  Commission  Proper.  - The
agency head shall ensure the immediate settlement of the fmal and executory decision of the
auditor, director or the CP. Uureasonable failure or refusal of the head of agency or concerned
officer to implement the fmal and executory decision of the auditor, director, or the CP, shall
render the former administratively liable for neglect of duty.
EEC. 53.     Reopening and re-audit Of audited transactions.  -(al) A:H tra,rLsalctio"s and
accounts are open for audit within ten (10) years after the date of transaction; and
(b)      When any  transaction appears  to  be  tainted with  fraud,  collusion,  or error of
assessment,  or when new and material  evidence is discovered,  the CP may mo/w propz.o or
upon: the instance of a party in interest, order the reopening or re-audit thereof within three (3)
years   after  the  original   audit  but  not  to   exceed  ten  (10)  years   from  the  date  of  the
transaction.   The concerned auditor shall prepare an audit report thereon and submit the same
to the chaixperson or the authorized representative.
TITLE Ill
GOVERNMHNT AUDITING
Chapter I
BAslc poLICIEs Ar`u) sTANDARDs
SEC.   54.   De¢#z./I.o#   o/  Gover7?rme77f   ,4wdz.fz.#g.    -        Government   auditing   Is   the
analytical  and systematic examination and verification of financial transactions,  operations,


accounts, and reports of any government agency for the purpose of determining the accuracy,
integrity, authenticity, and compliance with the requirements of law, rules and regulations,
Intemational Public Sector Accounting Standards (IPSAS) or Philippine Financial Reporting
Standards (PFRS), and the standards in auditing or the International Standards for Supreme
Audit Institutions (IS SAis).
SEC.  55.    Ge#cr¢/ Sf¢#d¢rds.  - (a) The audit shall be performed by a person with
adequate technical training and proficiency in auditing;
(b)      In all  matters  relating  to  the  audit work,  the  auditor  shall  maintain complete
independence,  impartiality and objectivity and  shall  avoid any possible  compromise of the
independence or any act that creates a presumption of lack of independence, or the possibility
of undue influence in the perfomance of duties; and
(c)      The   auditor   shall   exercise   due   professional   care   guided   by applicable
laws, regulations and the intemationally adopted standards of audit or the ISSAis, which guide
the planning, performance and execution of the audit work, reporting of the results of the audit,
monitoring and quality assurance in the conduct of all phases of the audit.
Chapter 11
RECEIPT AND DISPOSITION OF FUNDS AND PROPERTY
SIEC.  56.  Accounting  Of Money  and  Property  Received  by  Public  Offiicials.  -    Ail
moneys  and property  officially  received by  a public  officer  in  any  capacity  or upon  any
occasion must be accounted for as government funds and government property, except as may
otherwise be specifically provided by law or competent authority. The recognition in the books
of accounts of the concerned agency shall be in accordance with the International Public Sector
Accounting Standards or Philippine Financial Reporting Standards.
S>BC.    57.       Designation   Of  Collecting   or   Disbursing   Officers   for  Government
.4ge#cz.es.  - The head of any government agency may designate such number of collecting or
disbursing officers or agents as may be deemed necessary.
SEC. 58.    ri."e ¢#dMode o/Re#derz.7€g,4ccow#f. -In the absence of specific provision
of law, all accountable officers shall, through the agency accountants, render their accounts,
submit their vouchers, and make deposits of money collected or held by them at such time and
in such marmer as shall be prescribed  in the rules and regulations  of the Commission. The
auditor concerned shall then conduct the necessary examination and audit thereof.
S;BC. 59. Accrual Of Income or Revenues to Unappropriated Surplus  Of the Geperal
Fw%d. -(a) All income or revenues accruing to the agencies by virtue of the provisions of law,
orders and regulations shall be deposited in the National Treasury or in any duly authorized
government depository and shall accrue to the unappropriated surplus of the General Fund of
the government, unless otherwise speciflcally provided by law; and
(b)       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 deterlnined by a Pemanent Committee composed of the Secretary
of Finance  as  Chairperson,  Chairperson of the  Commission on Audit and the  Secretary  of
Budget and Management, as members.


SEC.  60.    fpecz.a/,  Fj.c7wcz.czry  ¢#d  rrc4s/ F#72ds.  -  (a)  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;
(b)      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; and
(c)      In case any government agency fails or refuses lo 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:
(1)          when  the terns have expired  or when it is no longer necessary for
attainment  of the purpose for which -the funds were established;
(2)          when the funds  have remained domant for unreasonable length of
time;
(3)          when the General Fund is needed in times of emergency; or
(4)           when  used  in  violation  of the  rules  and  regulations  issued  by  the
Permanent Committee.
fsEC. 61. Receipts and Revenues Of Local Government Units (LGUs) . -AIL recctxpts an!d
income accruing to the LGUs shall be deposited in the account maintained in the authorized
government  depository  bank  or private  bank  with  the  prior  approval  of the  Secretary  of
Finance.
EEC. 62.    Receipts and Revenues Of Government Corporations.  -     A:Il  rece+pts and
income accruing to goveriiment corporations shall be deposited in the account maintained in
the authorized government depository bank.
SEC. 63 . JsSw¢#ce o/O;orcz.cz/ jzece!.pis. -(a) No payment of any nature shall be received
by a collecting officer. without immediately issuing an official receipt in acknowledgement
thereof. The receipt maybe in the form of postage, internal revenue or documentary stamps or
such other foms as the law or the Commission may allow. Temporary or provisional receipts
shall not be issued to acknowledge the receipt of public funds;
(b)   Where digital or electronic devices are used to acknowledge cash receipt,  the same
shall be subject to inspection and verification  by the Commission;
(c) The same is acceptable provided the document maintains its integrity and reliability
and may be authenticated so as to be usable for subsequent reference, in that:
(1)         the electronic document remains complete and unaltered, apart from the
addition of any endorsement and any authorized change, or an change which arises in
the norinal course of communication, storage and display; and
(2)       the  electronic  document  is  reliable  for the  purpose  for  which  it  was
generated and for all relevant circumstances.
S>EC. 64.    Check Payments i;or Taxes or Other Indebtedness to the Government. -(ti)
An officer charged with the  collection of revenue  or the  receipt  of moneys  payable  to  the
government shall accept a payment in the fom of checks issued in favor of the government
agency, upon proper indorsement and identification of the payee or indorsee.  Checks drawn
in favor of the government for payment of any indebtedness shall likewise be accepted by the


officer concerned,  provided it  shall be made payable to  the  agency or the  official  title or
designation of the offlcial concerned as the payee;
(b)      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 or closed accounts, the drawer shall be criminally liable therefor; and
(c)      Money in the hands or custody of the collecting officer shall not be utilized for
the purpose of encashing private checks.
S>EC.  65.  Deposit  Of Money  in  the  Treasury  or  Authorized  Government  Depository
Bcz#fa  -  (a)  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 the officers to the account of the National Treasury or in the account of agencies
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; and
(b)     The  collections  shall  not be used  for purposes  of disbursements  except when
authorized by law or regulations.
S;E£. 66.    Acknowledgement of Receipt of Money by Government Depositories. -A;Il
authorized government depository banks shall acknowledge receipt of all the money received,
for the  account  of the national  treasurer or the  agency  concerned.    The  acknowledgement
receipt shall bear the date of actual deposit and shall indicate from whom, and on what account
the  money  was  received.  The  money  received  shall  be  governed  by  the  Treasury Single
Account System established pursuant to Executive Order No. 55, Series of 2011.
S;Ef3.  6].      Shipment  Of Government  Money  or  Property  by  Carrier;  Notatjon  Of
Evz.de#ce o/Loss.  -    When government money or property is transported from one place to
another by carrier, it shall be the duty of the  consignee or the representative to make notations
on the bill of lading or receipt on any evidence of loss, shortage, or damage.
S;Ef3. 68. Credit for Loss Occurring in Transit or Due to Fire,. Thoft, Robbery o_I For?e_
A4¢/.ewre.  -  In case  of loss  of government  funds,  property,  documents  evidencing  financial
transactions, or records of accountabilities occur while in transit, or loss is caused by fire, theft,
robbery or force majeure,  the officer or employee accountable or in custody thereof,  shall
immediately notify the auditor concerned and, within thirty days from the occurrence of loss,
shall present the 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
withthisrequirementshallnotberelievedfromliabilitynorshallbeallowedcreditforanyloss
thereof.
S;E£. 69.  Transfer  Of Funds from  One  Agency  to  Another  or  Fro_in  One  Oifp_cer  to
£4#ofAer.  -   Transfer of government funds from one agency to another or from one officer to
another shall, except as allowed by law or regulation, be made only upon prior direction or
authorizationoftheagencyheadfollowingtheaccountabilityandaccountingguidelinesissued
by the Commission.
S;F£. 70.    Transfer  Of property  between  government  agencies. : _Ary. gore;rmnerA
property that is no  longer serviceable or needed by the agency to which it belongs may be


transferred without cost, or at an appraised value, to other government agencies upon authority
of the respective agency heads.
S>EC.  7\.     Invoice  and  Receipt  upon  Transfier  Of Property.  -    Wh!en  gore;rrJrmenl
property is transferred from one accountable officer to another, or from an outgoing officer to
the successor, it shall be done upon properly itemized invoice and receipt which shall invariably
support the clearance to be issued to the relieved  or outgoing  officer, subject to regulations   by
the   Commission.      The   head   of  agency   shall   ensure   the   proper   turn-over   of  their
accountabilities.
S>EC.  72.      Destruction  or  Sale  Of  Unserviceable  Property.  -    Whom  gore:rnrr+eat
property      has      become      unserviceable      for      any      cause,      an      inventory      shall
be  made,   and   upon   application   by   the  officer   accountable   therefor   for destruction,
the property shall be inspected and appraised by the appraisal committee created by the head
of the  agency,  subject  for review by the  auditor concerned  and,  if found to  be  valueless,
unserviceable or unsalable, the property may be destroyed or disposed of in the presence of the
auditor.
If found to be valuable, the property may be sold thin public bidding to the highest
bidder under the  supervision  of the  Disposal  Committee  of the  government  agency,  after
advertising  the  same  for  two  (2)  consecutive  days  in  any  national  newspaper  of general
circulation. Where the value of the property does not warrant the expense of publication, as
determined by said Committee, the notice of sale shall be posted for the same period in at least
three (3) public places in the locality where the property is to be sold.  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.
SEC.  73.     Dz.sposz./I.o7¢ a/ Gover#me#/ PrapeJ~ty.  -    Any government property that is
no longer needed by the agency to which it belongs as certified by the head of the said agency
may,  after appraisal thereof by management,  and review by the Commission, be  sold thin
public bidding to the highest bidder.  Such sale shall be under the supervision of the proper
committee on award or similar body of the government agency, after publication for not less
than two  (2)  consecutive  days  in any national newspaper of general  circulation. Where the
value of the property does not warrant the expense of publication, as determined by the said
proper committee, notices of said sale shall be posted for a like period in the website of the
agency and in at least three (3) public places in the locality where the property is located, or
where the sale will be conducted. 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
Corrmission.
Sale or any mode of disposition of real properties shall be subject to the prior approval
by the Commission.
S>EC. 74.    Disposition  Of Foreclosed Assets  or  Collaterals  Acquired  in  the  Regular
Cowrse   o/  Bwsz.#ess   Z7);   Gover#meJt/   Corporczfz.o#s.   -      Their   Charters   notwithstanding,
foreclosed  assets  or  collaterals  acquired  in  the  regular  course  of business  by  government
corporations shall be sold through public bidding to the highest bidder after appraisal thereof
by  an independent appraiser and review by the  Commission.   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, it shall be subject for reappraisal and shall be 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.
SEE. 75.      Disposition  Of Funds  or  Property  Held  by  Deceased,  Incapacitated  or
f4Z)sco#dz.#g 4ccow#/¢b/e Oj7j7?cer.  -   (a) When an officer accountable for government funds or
property absconds, dies,  or becomes incapacitated in the performance of duties, the agency
head shall designate a custodian lo take charge of the funds or property until a successor shall
have been appointed and qualified. The agency head may appoint a committee to   count the
cash  and  take  an  inventory  of the  property  for which the  officer was  accountable  and to
determine the responsibility for any shortage therein.  One copy of the inventory and of the
report of the committee duly certified shall be filed with the auditor concerned but the findings
of the coirmiittee shall not be conclusive until audit thereon is completed.     The agency head,
whenever necessary, shall be responsible for securing a ''Ao/c7 c7epczr/#re ondcr" from the proper
government agency to prevent the absconding officer from leaving the country; and
(b) If    the    absconding,    deceased    or    incapacitated    officer    isaccountablefor
funds or property of a province or city, the acting custodian and committee shall be designated
by the local chief executive, furnishing notice to the Secretary of Finance, who shall thereafter
appoint a regular accountable officer through the Bureau of Local Government Finance.
SEC.  76.    Fz.#cz/ jzeporf o/£4ccow#/¢b/e  QLicers.  - (a) An accountable officer, upon
ceasing to act as such, shall submit to the auditor of the agency a report of the accountability
within one ( 1 ) month after ceasing to act as accountable officer. Upon receipt of the report, the
auditor shall conduct a cash examination on the accountability; and
(b)      Any   remaining   balance   of the   cash   accountability   shall   bedepositedin
the proper treasury immediately.
S>EC. 77 . Auditor's Notice Of Disallowances, Charges and Suspensions to Accountable
O#cer. -  (a) At the end of every period prescribed by the Commission, the auditor shall send
a written notice of disallowance,  charge,  or suspension,  if any,  to  each accountable officer,
through the agency head, whose accounts have been audited and settled in whole or in part. An
audit suspension which is not satisfactorily explained within ninety (90) days after receipt of
the notice by the accountable officer shall become a disallowance.
(b)     Any person aggrieved by the decision of the auditor pertaining to disallowances,
charges, or suspensions, may appeal the case in accordance with the rules of procedure of the
Commission.
Chapter Ill
APPLICATION 0F APPROPRIATE FUNDS
SEC. 78. 4pprapr!.¢fz.o# Be/ore E#/erz.#g I.#fo Co#/rczc/.  -     The contract involving the
expenditure of public funds shall not be entered into unless there is an appropriation therefor,


the unexpended balance of which, free of other obligations, is sufficient to cover the proposed
expenditure.
S;F£.  79.      Certif icate showing Appropriation to Meet contract. -Except irLthe c;ace
of a contract  for personal  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 accounting official of the agency 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 accounting official shall be attached
to                and               b e come                an                integral               part               o f               the
contract,   and  the  sum  so  certified   shall  not  thereafter   be  available   forexpenditure for
any other purpose until the obligation of the government agency under the contract is fully
extinguished.
SEC. 80.  7roz.cJ Co#frczc/ cz#d fz.¢bz./I.fy o/O#cer.  -Any contract entered into contrary to
the requirements of the two immediately preceding sections shall be void and not binding to
the government. The officers of any government agency responsible for the contract shall be
personally liable to the government or other contracting party as if the transaction had been
entered into between private parties.
SEC. 81.    Restrictions on Payment Under Government Procurement Contracts. -"o
payment, partial or final, shall be made on any government  procurement contract except upon
a certification by the head of the agency or the duly authorized representative to the effect that
the                                             s ervic es                                             have                                            b een
rendered,    supplies,    materials    or   equipment   have    been   delivered    and infrastructure
projects have been implemented or completed in accordance with the terms and conditions of
the contract and have been duly inspected and accepted.
S;E£.    82,.       Prohibition  against    advance    payment    on    government  contracts.
-   Except when authorized by law, the government shall not be obliged to make an advance
payment for contracts for:
(a)      services not yet rendered;
(b)      supplies and materials not yet delivered, inspected and accepted; and
(c)       infrastructure projects not yet implemented or completed, inspected and accepted
other than for 15% mobilization as provided for in RA 9184.
SEC. 83. £z.mz./cz/i.o7zs o# cczsfo czdvcz#ce.  -(a) Cash advance shall not be given unless for
a legally authorized specific pulpose. A cash advance shall be reported on, and liquidated, as
soon as the purpose for which the cash advance was given has been served. Additional cash
advance shall not be allowed to  any offlcial or employee unless the previous  cash advance
given has been settled or a proper accounting has been made;
(b)      The failure of the 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;
(c)      The transfer of cash advance by a disbursing offlcer to another does not constitute
an  expenditure  for which the  disbursing  offlcer may  claim  credit  in the  accounts,  but the
responsibility continues to attach until the anount has been fully accounted for; and
d)         Cash     advance      shall     not     be     granted     for     the     procurement   or
implementation  of infrastructure  projects.  Any  violation  of the  foregoing  provisions  shall


constitute a valid cause for the withholding of the salary of the accountable officer without
prejudice to the imposition of administrative or civil sanction and criminal prosecution of both
the authorizing and the accountable officials, as may be warranted.
SIEC.   84.       Limitations   on    Cash    or    Fund    Transfiers   from    One Government
j4ge#c); /a 4#o/feer. - (a) Cash or fund transfers shall not be given unless for legally authorized
specific puxpose as embodied in a memorandum of agreement executed between the source
and implementing agencies;
(b) The cash or fund transfers shall be reported and 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;
(c)  Additional  or new cash or fund transfers  shall  not be made unless  the previous
transfers had been fully liquidated as certified by the head of agency; and
(d)  The heads  of  the  source  and  implementing   agencies  shall  be responsible for
compliance with the foregoing requirements. Failure on the part of the foregoing officials or
persons  to  comply  with  the  above-mentioned  responsibility  shall  constitute  a  ground  for
administrative or criminal action, as evidence may warrant.
SIEC.   85.       Limitations    on    Cash    or    Fund   Transf;ers   from   Any Government
4ge#ey /a cz Prz.vczfe Orgr#z.zczfl.o7! or E#fz.fy.  - (a)  Cash or fund transfers from a government
agency shall not be given to a private organization or entity unless authorized by law for a
specific  purpose  which  should  be  embodied  in  a  Memorandum  of Agreement   executed
between the source government agency and the implementing private organization or entity;
(b)      Only duly registered, accredited and reputable private organizations or entities
shall be granted cash or fund transfers;
(c)     The cash or 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 31St of the year, a partial liquidation report as of
December 31St of that year shall be submitted to the source government agency not later than
January 15 of the ensuing year;
(d)       No additional or new cash or fund transfers shall be made unless the previous
cash or fund transfers have been fully liquidated as certified by the head of the agency; and
(e)   The   heads   of  the   source   government   agency   and   implementing   private
organizations or entities shall be responsible for compliance with the foregoing requirements.
Failure  on  the  part  of  the   officials   or  persons   to   comply  with  the   above-mentioned
responsibility  shall  constitute  a  ground  for  administrative  or  civil  sanction  or  criminal
prosecution, as warranted.
SEC. 86.   P¢)/me"f o/jzow¢rds. -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.
S;EC. &] . Replacement Of Lost, Stolen or Destroyed Checks. -Wbien e[ny check is test,
stolen or destroyed, the issuing officer may issue a replacement check as payment for the same
obligation upon the execution of an affidavit of loss, submission of stop payment order to the
drawee bank and a surety bond issued by the Government Service Insurance System (GSIS) to
indemnify the issuing agency of the amount of the check.  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 that no double payment is made as a result thereof.
SEC.    88.       ro    7772om    Cfeechs    czre    Pcz}/ob/e.     -    Checks    drawn    against    the
government   agencies' Checking Account maintained with any government depository shall
be made payable directly to the creditor to whom the money is due, or to a disbursing officer
or employee for an official disbursement.
Release of checks to a person not duly authorized to receive such check shall subject
the  accountable  officer  to  administrative  or  civil  sanctions  or  criminal  prosecution,  as
warranted.
SEC. 89.    Reversion Of Unliquidated Balances  Of Accounts  Payable.  -The rNe2rd of
agency  shall  cause  the reversion to  the  unappropriated  surplus  of the  general  fund  of the
national government or of LGUs, and for GOCCs, to their retained earnings, any unliquidated
balance of accounts payable in their books of accounts, which has been outstanding for two
years or more and which no actual valid claim, administrative or judicial, has been filed.
Chapter IV
ACCOUNTABILITY AND RESPONSIBILITY FOR GOVERNMENT FUNDS AND
PROPERTY
SEC.  90.     Accountable  Officers;   Bond  Requirement.   -  (al)  ENery  offieer  of  airy
government      agency      whose      duties      permit      or      require      the      possession      or
custody   of   government   funds   or   property   shall   be accountable   for   the safekeeping
thereof in conformity with law.    Other government officers not accountable by the nature of
their    duties,     may    be     similarly     held     accountable     for    government       funds     or
property   through   their   participation   in  the  use  or application thereof; and
(b)      Every accountable officer shall be properly bonded in accordance with law and
the pertinent rules or regulations.
EEC. 9+.     Primary  Responsibility and Accountability Of the Ageney Head.  -(al) T:he
head  of any  agency  of the  government  is  immediately  and  primarily  responsible  for  all
government funds and property pertaining to the agency; and
(b) Persons entrusted with the possession or custody of the funds or property under the
agency head shall be immediately responsible, without prejudice to the liability of either party
to the goverrment.
SEC. 92. General Liability for Unlawful Expenditures. -Expendin]res of gore:rnrmeat
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.
EEC.  93.  Degree  Of  Supervision  Over  Accountable  Officers.  -The  heed  of  any
government agency shall exercise the diligence of a good father of a family in supervising
accountable officers under his control to prevent the incurrence of loss of government funds or
property, otherwise liability shall be joint and solidary with the person primarily accountable
therefor. The treasurer of the local government unit shall likewise exercise the same degree of


supervision over accountable offlcers under his oversight, otherwise liability shall be joint and
solidary with the head of government agency for the loss of government funds or property.
SEC. 94.    Measure of Liability of Accountable of f iicers. -(a)ENery off roer acconatabhe
for government property shall be liable for its money value in case of improper, unauthorized
use or misapplication thereof, by the officer or any person for whose acts the officer may be
responsible.      The  accountable  officer  shall  also  be  liable   for  all  losses,   damages,   or
deterioration occasioned by negligence  in the keeping  or use  of the property regardless  of
whether or not there is actual custody; and
(b)      Every officer accountable 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;. 95.    Liability for Acts Done by Direction Of superior Offiicer. -The accouatziidle
officer shall not 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 the officer is
accountable, unless prior to that act, the accountable officer notified the superior officer in
writing  of the  illegality  of the payment,  application,  or disposition.      The  superior 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 solidarity liable.
SEC.  96.  Profoj.bz./I.o#  4gcH.J7sf  Pecw#z.czry  J7!/eres'/.   -  The  head  of  agency,  board  of
directors, accountable officer or public official shall not have pecuniary interest, directly or
indirectly, in any contract or transaction of the agency in which he/she is an officer, or in any
other office where he/she has influence.
This prohibition shall apply to the accountable officer's immediate family and relatives
up to the thnd civil degree by consanguinity or affinity.
TITLE IV
GOVIRNRENT ACCOUNTING
Chapter I
SEC.     97.         Gover7cme7!Z    4ccow#/I.#g.    -     Government    accountingencompasses
the  processes  of  analyzing,  recording,  classifying,  summarizing,  and  communicating  all
transactions  involving  the  receipt  and  disposition  of government  funds  and  property  and
interpreting the results thereof.
SEC.  98.    ,4ccow#fz.#g Rw/es  ¢#c7 Regc//czfz.o7cs.  -  The  Commission  shall  promulgate
accounting       rules       and       regulations       in       accordance       with       the       Generally
Accepted   Accounting   Principles, International   Public    Sector   Accounting standards and
Intemational Financial Reporting Standards, as applicable. Such rules and regulations shall be
updated  from  time  to  time  as  the  Commission  may  deem  proper,  to  meet  the  changing
government accounting requirements.


Chapter 11
ACCOUNTING REPORTS
SEC. 99. F!.#cz73cz.cz/ jteports cz7!d S/czfeme#/s'.  -(a) The financial reports prepared by the
agencies shall comply with the specific requirements of applicable   laws   and regulations   as
to  nature,     accounting    basis,    content,  frequency,  and  distribution  as  well  as  with  all
applicable restrictions pertaining to infomation that is classified for national security purposes;
and
(b)         The     financial     statements     shall     be     based     on     official     accounting
records   and   registries   kept   in   accordance   with   law, regulations   of the commission,
and   the   International   Public   Sector  Accounting   Standards   and   Intemational   Financial
Reporting Standards, as applicable.
SEC.100.   Swb7„z.ssz.o# a/reports.  -(a) Whenever deemed necessary in the exigencies
of the service, the Commission may, under regulations issued by it, require the agency heads,
chief accountants,  budget officers,  cashiers, disbursing officers, administrative or personnel
officers,       and      other      responsible      officials       of      the      various      agencies         to
submit   fmancial   statements, physical inventory reports,  current plantilla of personnel,  and
such other reports as may be necessary for the exercise of its functions;
(b)       In case offailure 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 the salaries until the officials 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; and
(c)       Failure on the part of the head of the goverrment 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.
Chapter Ill
INTERNAL CONTROL SYSTEMS
SEC.  \01.    Internal  Control  System  and Its  Installation.  -(aL) InterrLal coatrof is the
plan  of  organization  and  all  the  coordinate  methods  and  measures  adopted  within  an
organization  or  agency  to  safeguard  its  assets,  check  the  accuracy  and  reliability  of  its
accounting data, and encourage adherence to prescribed managerial policies;
(b)       It shall be the direct responsibility of the agency head to  establish an internal
control unit that shall install, implement, and monitor a sound internal control system in that
goverrment agency; and
(c)       Failure  on the part of the head of the  government agency to  implement the
preceding paragraph, withoutjustifiable cause, shall constitute as a ground for this Commission
to file the appropriate administrative charge against the erring official.


TITLE IV
FINAL PROVISIONS
SEC.102.   Pe7tcz/ Provz.sz.o#. -  The penalty of fine not exceeding One hundred thousand
(P100,000.00)  pesos  or  imprisonment  not  exceeding  one  (1)  year,  or  both  such  fine  and
imprisonment at the discretion of the court, shall be imposed upon any public officer or private
person committing any of the following acts or omissions declared as obstruction of audit:
(a)        Refusing   or   neglecting   to   render   or   settle   an   account   as   required   by
law     or     regulation      after     demand     by     the      Commission     or     its      authorized
representatives;
(b)       Denying access to or failing to produce documents, records, or papers under the
custody of such public officer or private person within fifteen (15) days after demand by the
Commission or its authorized representatives in connection with the conduct of audit; and
(c)       Destroying  or concealing  documents,  records,  or papers  which  are  officially
entrusted  to  such  public  officer  or  private  person,  pertaining  to  the  collection,  receipt,
expenditure,ordisbursementofpublicfundsandutilizationordisposalofgovemmentproperty
in connection with the conduct of audit.
SEC.  103.   Dwty /o Jzespecf frfee Com7#z.ssz.o#'s J#depc#de72ce.  -It    shall be the duty of
every person to respect, protect and preserve the independence of the Commission.
SEC.  104.     .4dmz.7%.s/rcz/I.ve Dz.sczZ7/z.#czry ,4c/j.o#.  -    (a)  Any unjustified failure by the
public officer to comply with the requirements imposed in this Code, shall constitute neglect
of duty or grave misconduct, and shall be a ground for the Commission to  file appropriate
administrative disciplinary action against the public officer who, upon being found guilty after
hearing, shall be meted the penalty commensurate with the degree of the guilt in accordance
with the civil service laws, without prejudice to criminal prosecution whenever the evidence
warrants and
(b)      The auditor shall report to the director any violation of the preceding paragraph
for referral of the case to the Office of the Ombudsman,  or other government disciplining
authorities.
SEC.  105.  Sepczrczbz./g.fy  C/¢c/se.  -    If any provision or part of this  Code  is  declared
invalid or unconstitutional, the remaining parts or provisions not affected shall remain in full
force and effect.
SEC.  106. Jzepecz/I.ng c/czc4se.  -    Presidential Decree No.  1445, otherwise known as the
''Gover#me72/ ,4wdz.fz.#g Code o//fee Pfoz./zzipz.7!es,  " is hereby expressly repealed. All other laws,
executive orders, proclamations, decrees, instructions, rules and regulations, or parts thereof
which are inconsistent or in conflict with any provision of this Code are hereby repealed or
modified accordingly.
SEC.  107. EJffecfz.vz.ty. -This Code shall take effect fifteen ( 15) days after its publication
in the Qffcz.cz/ Gczze//e or in two (2) newspapers of general circulation.
Approved,