Title
Guidelines on Audit of Gov't Infrastructure Contracts
Law
Coa No. 2015-014
Decision Date
Apr 6, 2015
The Philippine Jurisprudence case highlights the authority of the Commission on Audit (COA) to define the scope of its audit and examination, establish techniques for conducting audits, and promulgate rules to prevent irregular expenditures, as demonstrated by the issuance of COA Resolution No. 014-15 which repeals previous resolutions and prescribes new guidelines for the review and evaluation of government infrastructure contracts.
revised guidelines
auditorial review
evaluation
A

Previous Guidelines on Infrastructure Project Audits

  • COA Resolution No. 91-52 (1991) previously established that for infrastructure audits, the Approved Agency Estimate (AAE) served as a reference for the COA cost estimate.
  • Contract prices were deemed reasonable only if they did not exceed the COA estimate plus a 10% variance; exceeding this threshold indicated excessive contract pricing.

Government Procurement Reform Act and Its Implications

  • Republic Act No. 9184 and its Implementing Rules and Regulations (IRR) set procurement standards for government contracts.
  • Annex aAa of the IRR requires construction quantities to be computed within a ±10% accuracy margin relative to final as-built quantities.
  • The Approved Budget for the Contract (ABC) already incorporates a 10% allowance for quantity variance.

Need for Updated Guidelines and Rationale

  • Allowing an additional 10% variance over the COA cost estimate, which is based on the ABC, risks unnecessary or excessive government spending due to the substantial contract costs involved.
  • There is a recognized necessity to update auditing guidelines to ensure validity and regularity, particularly about contract costs in government infrastructure projects.

Repeal and Adoption of New Guidelines

  • COA Resolution No. 91-52 (1991) is repealed.
  • New guidelines are prescribed to enhance audit rigor and compliance monitoring.

Compliance and Monitoring Requirements

  • Auditors must ensure strict compliance of auditee agencies with RA No. 9184, its IRR, and related issuances.
  • Auditors or their representatives are required to observe all stages of the procurement process, per Section 13.1 of the IRR of RA No. 9184.
  • Auditors must prepare reports assessing Bid and Awards Committee compliance with procurement laws and submit these to the Government Procurement Policy Board, the Office of the Ombudsman, and the Director overseeing the auditee agency.

Legal and Auditorial Review Procedures

  • Auditors shall certify the contract’s legality and audibility before technical review is conducted.
  • Technical reviews shall align with Annex aAa of the IRR, detailing engineering requirements and other COA issuances.

Reference Values and Cost Estimation

  • The Approved Budget for the Contract (ABC) is the baseline for the COA cost estimate.
  • COA cost estimates will be computed without any variance allowance.
  • Auditors will rely on technical evaluation reports from technical personnel during audits.

Communication and Disallowance of Discrepancies

  • Any discovered defects or errors in the ABC that impact the contract price adversely must be communicated in writing to the auditee.
  • Discrepancies unfavorable to the government found during technical review after legal and auditorial approval should be disallowed in audit.

Effectivity and Supersession

  • The Resolution immediately takes effect upon adoption.
  • It supersedes COA Resolution No. 91-52 (1991) and any inconsistent issuances are repealed or modified accordingly.

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