QuestionsQuestions (COA CIRCULAR NO. 2007-001)
It cites Article II, Section 23 of the 1987 Philippine Constitution (encouraging non-governmental/community-based/sectoral organizations), and Section 34 of Republic Act No. 7160 (Local Government Code) which institutionalizes the partnership between LGUs and NGOs/POs.
“Funds” are government funds entrusted to an NGO/PO to cover implementation of a project included in the GO’s Work and Financial Plan (WFP) and Budget.
The NGO/PO must submit: (1) proof of legal personality (SEC and/or CDA/DOLE, as applicable); (2) authenticated articles of incorporation/cooperation and proof of filing/approval; (3) audited financial reports for the past three years (or equivalent proof if operating less than 3 years); (4) disclosure of other related businesses/ownership; (5) WFP and sources/details of proponents’ equity participation; (6) complete approved project proposal; (7) list/photos of similar previously completed projects; (8) sworn affidavit of the Secretary that none of its incorporators/organizers/directors/officials is an agent or related by consanguinity/affinity up to the 4th civil degree to specified GO officials.
It states that GO funds granted to NGOs/POs “shall retain their character as public funds.”
To ensure transparency; the GO must make public the identified priority projects under its WFP through newspapers, agency websites, bulletin boards, and similar means at least three months before the target commencement.
For each project proposal, the GO must accredit the NGO/PO project partners through a Bids and Awards Committee (BAC) or an appropriate committee that sets selection criteria and performs screening of qualification documents, ocular inspection, and evaluation of technical and financial capability.
The MOA must include terms such as: project details (name, beneficiaries, benefits, cost estimates, site); systems/procedures for implementation and procurement; time schedules for releases and reporting/monitoring; the period to liquidate funds; provisions on ownership/turnover of infrastructure/fixed assets; simple bidding/canvass for procurement of assets; donation deed if assets are for specified beneficiaries; monitoring/inspection by the GO; visitorial audit by COA authorized personnel; legal action against defaulting NGO/PO; lien on assets upon dissolution; maintenance of separate savings account per fund; and return of unused amounts (with interest if any).
The NGO/PO must have an equity equivalent to 20% of the total project cost, which may be in labor, land for the project site, facilities, equipment, and similar contributions for use in the project.
No additional releases may be granted unless an interim Fund Utilization Report of the previous release is first complied with—certified by the NGO/PO’s Accountant and approved by its President/Chairman—showing expense summary and accomplishment status (evidenced by pictures). The internal auditor/equivalent of the GO must verify the document.
(1) No funds may be released before signing of the MOA; checks must be crossed for deposit to the NGO/PO’s savings or current account. (2) Funds may not be used for: money market placement/time deposits/other investments; cash advance of any NGO/PO official unless related to the project; payment of salaries/honoraria/allowances of personnel not connected with the project; purchase of supplies/materials/equipment/motor vehicles of the GO; and acquisition of NGO/PO assets unless necessary and specifically stipulated in the MOA.
The NGO/PO must post a performance security upon MOA signing in the form of a GSIS surety bond callable on demand or an accredited insurance company surety equivalent to 30% of total funds. If not completed within 90 days after the prescribed completion date due to the NGO/PO’s fault, the bond is forfeited in favor of the GO. Supplemental MOAs may govern extensions but must not contradict the original MOA.
The MOA must stipulate the sharing of income and expenses between the NGO/PO and the GO, including reporting procedures.
The NGO/PO must keep and maintain financial and accounting records of GO funds in accordance with Philippine Accounting Standards, submit required financial reports to the GO as agreed in the MOA, and make available records/documents (including disbursement vouchers) to COA auditors.
Within 60 days, the NGO/PO must submit the final Fund Utilization Report certified by its Accountant and approved by its President/Chairman, plus the inspection report and project completion certificate from the GO authorized representative, and a list of beneficiaries with their acceptance/acknowledgment. Internal auditor verification supports GO recording of fund utilization and liquidation of granted funds.
COA audits the grant and utilization of funds. The Supervising Auditor/Audit Team Leader (SA/ATL) or authorized audit team performs audit and checks GO compliance with accreditation/awarding/monitoring procedures, GO and NGO/PO compliance with the Circular and MOA, economy/efficiency/effectiveness (VFM), and validation that intended beneficiaries actually received the benefits. Results can lead to memoranda and notices of suspension/disallowance/charge.
Projects must be beyond the GO’s capability and clearly defined in the MOA. They include (non-limited) livelihood development, manpower development, sports development, cooperative development, delivery of basic services, environmental protection, agricultural/fisheries diversity, rural industrialization, development of local enterprises, social services typically not undertaken by the private sector, and certain infrastructure projects (e.g., poorest-of-poor housing; school buildings for inadequate classrooms).
The GO may institute legal action against the defaulting NGO/PO and/or disqualify it from applying for another project in any other GO. Additionally, visitorial COA audits may result in notices of suspension/disallowance/charge, and sanctions/remedies under existing laws may be imposed by the GO, COA, or aggrieved/interested parties.
Yes. It supersedes COA Circular No. 96-003 dated February 27, 1996, and repeals or modifies other issuances inconsistent with it.