Lifting Pre-Audit of Government Transactions

COA Circular No. 2011-002 is titled “LIFTING OF PRE-AUDIT OF GOVERNMENT TRANSACTIONS.”
The Circular is adopted on July 22, 2011.
The Circular states it is effective immediately.
The Circular is issued by the Commission on Audit and is signed by Ma. Gracia M. Pulido Tan (Chairperson) and commissioners Juanito G. Espino, Jr. and Heidi L. Mendoza (with signatures shown in the issuance).

COA Circular No. 2011-002 withdraws selective pre-audit under COA Circular No. 2009-002 dated May 18, 2009.
The Circular lifts all pre-audit activities being performed by the Commission on financial transactions of the:
- national government agencies,
- government-owned and/or controlled corporations, and
- local government units.
The withdrawal applies to pre-audit activities performed by the Commission on covered financial transactions.
The Circular preserves the exception for transactions required by existing laws.

After the Circular’s withdrawal of selective pre-audit, pre-audit activities become the responsibility of the agencies concerned as part of their accounting and fiscal control process.
All agencies must establish and maintain an adequate internal control system.
The internal control system must achieve economy, efficiency and effectiveness in the management and utilization of agency resources.
The internal control system must prevent illegal, irregular, unnecessary, excessive, extravagant, and unconscionable expenditures and uses of funds.
The internal control system must ensure the legality and propriety of collection of what is due the government.

The Commission may re-institute pre-audit or adopt other control measures whenever circumstances warrant.
The Circular identifies one warranting situation: when the internal control system of a government agency is inadequate.
Re-instituted pre-audit or other control measures must be necessary and appropriate to protect government funds and property.
The objective of re-instituted pre-audit or other measures is to ensure:
- government resources are safeguarded against loss or wastage, and
- government operations are efficient, economical, and effective.

All transactions submitted for or otherwise pending pre-audit by the Commission as of July 22, 2011 are directed to no longer be pre-audited.
Such transactions must be returned to the agency concerned for its appropriate action.
The Circular ties the cut-off to July 22, 2011 for all pending or submitted transactions under the Commission’s pre-audit process.

The Circular operates as a shift in audit control emphasis: it re-affirmes that fiscal responsibility resides with agency management through agency internal control and faithful adherence to the policy in Presidential Decree No. 1445.
The withdrawal of selective pre-audit is intended to accelerate the delivery of public services and to facilitate government transactions.
The Circular continues to recognize the Commission’s constitutional authority to adopt pre-audit or other control measures when conditions require stronger protection of government resources.