Law Summary
Organization of the Commission on Audit (COA)
- Composed of a Chairman and two Commissioners, appointed by the Prime Minister for seven-year terms without reappointment.
- Must be natural-born citizens, at least 40 years old, and certified public accountants or lawyers with at least ten years of experience.
- Receives fixed salaries not reducible during tenure.
- The Commission Proper is the policy-making body, responsible for the general administration.
- Central offices include Administrative, Planning and Financial, Legal, Accountancy, National and Local Government Audit, Corporate Audit, Performance Audit, Manpower Development, and Technical Service Offices.
- Regional offices serve as immediate COA representatives in the regions.
- Auditing units must be established in every government agency, headed by qualified auditors assigned by the Commission.
Functions of Central Offices
- Administrative Office: Manages personnel programs and support services.
- Planning, Financial, and Management Office: Plans and coordinates budget, accounting systems, and performance measurement.
- Legal Office: Provides legal advice, handles administrative cases within COA, represents the Commission in investigations and litigations.
- Accountancy Office: Prepares financial reports, verifies appropriations, and assesses local government units' capacities.
- National Government Audit Office: Oversees national government audits, formulates accounting and auditing policies.
- Local Government Audit Office: Develops policies and advises on local government audits.
- Corporate Audit Office: Oversees auditing of government-owned corporations and public utilities.
- Performance Audit Office: Conducts audits on non-government entities subsidized by the government and legality of expenditures.
- Manpower Development Office: Manages training programs, library, and publishes the Commission's professional journal.
- Technical Service Office: Develops auditing systems, offers consultancy, reviews contracts, and undertakes special studies.
Commission Secretariat and Regional Offices
- Commission Secretariat is headed by the Secretary to the Commission.
- Regional offices supervise audit implementation locally, consolidate reports, and manage regional administration.
Auditing Units
- Each government agency must have an auditing unit with proper facilities and personnel.
- Heads of auditing units must be certified accountants, lawyers, or commerce graduates specializing in accounting.
- The Commission controls assignment and reassignment of auditing personnel without affecting tenure or compensation.
Funding and Appropriations
- Commission's operating expenses and salaries are included in the general appropriations law.
- Government-owned corporations and self-governing boards must appropriate and remit amounts for COA's services.
- A portion of national internal revenue taxes is dedicated to auditing services for local government units.
- Fees for audits conducted on non-government entities subsidized by the government may be fixed and collected by the Commission.
Jurisdiction, Powers, and Functions
- COA’s jurisdiction covers auditing systems, accounts, vouchers, and the settlement of accounts of all government agencies and certain non-governmental entities subsidized or funded by the government.
- Has authority to appoint COA officials and employees.
- May examine relevant books and documents filed with government offices regarding revenue collection.
- Holds visitorial authority over relevant nongovernmental entities subsidized or funded by the government.
- Can charge reasonable fees for audit and related services.
- May deputize private licensed professionals to assist government auditors.
- Has authority to review government contracts relating to audit services.
- Promulgates rules to prevent irregular, unnecessary or extravagant expenditures.
- Authorizes settlement of accounts between government agencies and assists in debt collection.
- Can compromise claims against government agencies within specified monetary limits.
- Can direct withholding payments to satisfy debts owed to the government.
- Can audit public utilities for rate fixing and related proceedings.
- Requires submission of original documents supporting government obligations from officials and audited entities.
- Has investigatory and inquisitorial powers including issuing subpoenas, administering oaths, and punishing contempt.
Decisions and Appeals
- Decisions of auditors may be appealed to the Commission within six months.
- The Commission must decide cases within 60 days of submission.
- Decisions of the Commission may be appealed to the Supreme Court on certiorari within thirty days.
- Decisions not appealed become final and executory.
- The Commission can open settled accounts within three years for review or correction in cases of fraud, error, or new evidence.
Government Auditing Standards
- Auditors must have adequate technical training, maintain independence, impartiality, and exercise due professional care.
- Audits must be properly planned, supervised, and evaluate compliance with laws and effectiveness of internal controls.
- Audit reports must be accurate, objective, concise, complete, and include findings, recommendations, and opinions on financial statements.
Audit Objectives and Procedures
- Audits cover assets, liabilities, revenues, expenses, and net worth, assessing existence, ownership, valuation, compliance, authorization, and proper classification.
Receipt and Disposition of Funds and Property
- All moneys and property received by public officials are government funds/property and must be properly accounted and recorded.
- Heads of agencies may designate collecting officers who must submit collection reports regularly.
- Income generally accrues to the unappropriated surplus of the General Fund unless otherwise authorized.
- Payment for government taxes or debts may be made by checks or warrants payable to the government.
- Official receipts must be issued immediately upon payment.
- Collected funds must be deposited intact to the proper treasury or government depository promptly.
- Special rules govern unclaimed balances, losses of funds in transit, transfer of funds or properties, and disposition of unserviceable property.
- Procedures are in place for the handling of funds/property when accountable officers die, abscond, or become incapacitated.
Application of Appropriated Funds
- Expenditures from revenue funds require appropriation laws or statutory authority.
- Trust funds may only be spent for their intended purposes with proper authorization.
- Contracts require prior appropriation certification; unauthorized contracts are void with liability on officers.
- No advance payments on government contracts are allowed except with highest authority approval.
- Cash advances must be for authorized purposes and are subject to prompt liquidation.
- Payment of rewards and creditor payments require specific approvals.
- Warrants/checks payable to creditors or disbursing officers; payment requires countersignature by COA official.
- Regulations govern lost or stale warrants and reversion of unliquidated balances.
Accountability and Responsibility
- Officers in possession of government funds/property are accountable and must be bonded.
- Agency heads bear primary responsibility for funds and property under their control, with secondary responsibility of custodians.
- Unlawful expenditures lead to personal liability.
- Heads must supervise accountables to prevent losses; failure incurs joint and solidary liability.
- Accountable officers liable for losses due to improper use, negligence, or unlawful deposits.
- Liability persists even if actions were directed by superiors unless prior written notice of illegality was given.
- Rendering accounts and submission of vouchers governed by Commission regulations.
- Accountable officers prohibited from pecuniary interest in agency contracts or transactions.
Government Accounting
- Government accounting involves analyzing, recording, classifying, summarizing, and communicating financial transactions.
- Objectives include producing historical data, guiding future operations, controlling public funds use, and reporting financial positions.
- Agencies must keep detailed and honest records conforming to generally accepted principles, using a prescribed chart of accounts.
- Accounts classified to enable budgetary control and uniform financial reporting.
- General ledger maintained on a double-entry basis with subsidiary records.
- Financial reports must comply with laws and regulations, with penalties for failure to submit timely reports.
Internal Control
- Internal control defined as organizational and procedural measures to safeguard assets, ensure accuracy of records, and enforce compliance.
- Agency heads are directly responsible for installing and monitoring internal controls.
Final Provisions
- Existing Chairman shall exercise COA powers until full constitution.
- Agencies must respect and preserve the independence of COA.
- Failure to comply with code requirements constitutes neglect of duty, subject to administrative sanctions.
- Penal provisions for violations include fines and imprisonment.
- Separability clause ensures remainder of law stands if part is invalidated.
- Repeals conflicting laws and mandates effectivity three months after publication.