GOVERNMENT AUDITING

It is the declared policy of the State that all resources of the government shall be
managed, expended, or utilized in accordance with law and regulations, and safeguarded
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy, and effectiveness in the operations of government. The responsibility to
take care that such policy has faithfully adhered to rests directly with the chief or head of the
government agency concerned.

Definitions of terms
(1) “Fund” is a sum of money or other resources set aside for the purpose of carrying
out specific activities or attaining certain objectives in accordance with special regulations,
restrictions, or limitations, and constitutes an independent fiscal and accounting entity.
(2) “Government funds” include public money of every sort and other resources
pertaining to any agency of the government.
(3) “Revenue funds” comprise all funds derived from the income of any agency of the
government and available for appropriation or expenditure in accordance with the law.
(4) “Trust funds” refers to funds that have come officially into the possession of any
agency of the government or of a public officer as trustee, agent, or administrator, or which
have been received for the fulfillment of some obligation.
(5) “Depository funds” comprise funds over which the officer accountable therefore
may retain control for the lawful purposes for which they came into his possession. It embraces
money in any and all depositories.
(6) “Depository” means any financial institution lawfully authorized to receive
government money upon deposit.
(7) “Resources” refers to the actual assets of any agency of the government such as
cash, instruments representing or convertible to money, receivables, lands, buildings, as well as
contingent assets such as estimated revenues applying to the current fiscal period not accrued
or collected and bonds authorized and unissued.
(8) “Government agency” or “agency of the government,” or “agency” refers to any
department, bureau, or office of the national government, or any of its branches and
instrumentalities, or any political subdivision, as well as any government owned or controlled
corporation, including its subsidiaries, or other self-governing board or commission of the
government.
 Fundamental principles
(1) No money shall be paid out of any public treasury or depository except in pursuance
of an appropriation law or other specific statutory authority.
(2) Government funds or property shall be spent or used solely for public purposes.
(3) Trust Funds shall be available and may be spent only for the specific purpose for
which the trust was created or the funds received.
(4) Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authorities over the financial affairs, transactions, and operations of the government agency.
(5) Disbursements or disposition of government funds or property shall invariably bear
the approval of the proper officials.
(6) Claims against government funds shall be supported with complete documentation.
(7) All laws and regulations applicable to financial transactions shall be faithfully
adhered to.
(8) Generally accepted principles and practices of accounting as well as of sound
management and fiscal administration shall be observed, provided that they do not contravene
existing laws and regulations.

THE COMMISSION ON AUDIT

ORGANIZATION
Composition of the Commission on Audit; qualifications, term, and salary of members.
(1) The Commission on Audit, hereinafter referred to as the Commission, shall be
composed of a Chairman and two Commissioners, who shall be natural-born citizens of the
Philippines and, at the time of their appointment, at least forty years of age and certified public
accountants or members of the Philippine Bar for at least ten years.
(2) The Chairman and the Commissioners shall be appointed by the Prime Minister for a
term of seven years without reappointment. Of the Commissioners first appointed, one shall
hold office for seven years, another for five years, and the third for three years. Appointment to
any vacancy shall only be for the unexpired portion of the term of the predecessor.
(3) The Chairman and each Commissioner shall receive an annual salary of sixty
thousand pesos and fifty thousand pesos, respectively, which shall not be decreased during
their continuance in office.
 The Commission Proper
(1) For purposes of this Code and as a component of the organizational structure of the
Commission, the Chairman, and the two Commissioners shall together be known as the
Commission Proper and as such shall be distinguished from the other components of the
Commission consisting of the central and regional offices which are hereinafter created.
(2) The Commission Proper shall sit as a body to determine policies, promulgate rules
and regulations, and prescribe standards governing the performance by the Commission of its
powers and functions.
(3) The Chairman shall act as the presiding officer of the Commission Proper and the
chief executive officer of the Commission. As such chief executive officer, he shall be
responsible for the general administration of the Commission.
(4) The Chairman and each Commissioner shall have such technical and clerical
personnel in their respective offices as may be required by the exigencies of the service.

Central and regional offices

(1) The Commission shall have the following central offices:
a. Administrative Office
b. Planning, Financial, and Management Office
c. Legal Office
d. Accountancy Office
e. National Government Audit Office
f. Local Government Audit Office
g. Corporate Audit Office
h. Performance Audit Office
i. Manpower Development Office
j. Technical Service Office
These offices shall perform primarily staff functions, exercise technical
supervision over the regional offices in matters pertaining to their respective functional
areas, and perform such other functions as may be assigned by the Chairman.
 (2) The Commission shall keep and maintain such regional offices as may be required by
the exigencies of the service in accordance with the Integrated Reorganization Plan for the
national government, or as may be provided by law, which shall serve as the immediate
representatives of the Commission in the regions under the direct control and supervision of
the Chairman.
(3) The central and regional offices shall each be headed by a Manager and a Regional
Director, respectively. The Manager of the Legal Office shall also be known and shall act as the
General Counsel of the Commission.

Commission Secretariat
There shall be a Commission Secretariat to be headed by the Secretary to the
Commission who shall have the rank and privileges of a central office manager.

The Administrative Office

Functions:
(1) Develop and maintain a personnel program that shall include recruitment, selection,
appointment, performance evaluation, employee relations, and welfare services.

(2) Provide the Commission with services related to personnel, records, supplies,
equipment, medical, collections and disbursements, security, general, and other
related services.

The Planning, Financial, and Management Office

Functions:
(1) Formulate long-range and annual plans and programs for the Commission.
(2) Formulate basic policies and guidelines for the preparation of the budget of the
Commission, coordinate with the Budget Commission and the Office of the President (Prime
Minister) in the preparation of the said budget.
(3) Maintain and administer the accounting system pertaining to the accounts of the
Commission.
(4) Develop and administer a system for monitoring the prices of materials, supplies,
and equipment purchased by the government.
 (5) Develop and maintain the management information system of the Commission.
(6) Develop and administer a management improvement program, including a system
for measurement of performance of auditing units on which an annual report shall be
submitted to the Chairman not later than the thirty-first day of January each year.

The Legal Office

Responsibilities:
(1) Perform advisory and consultative functions and render legal services with respect to
the performance of the functions of the Commission and the interpretation of pertinent laws
and auditing rules and regulations.
(2) Handle the investigation of administrative cases filed against the personnel of the
Commission, evaluate and act on all reports of involvement of the said personnel in anomalies
or irregularities in government transactions, and perform any other investigative work required
by the Commission upon assignment by the Chairman.
(3) Represent the Commission in preliminary investigations of malversation cases
discovered in an audit, assist and collaborate with the Solicitor General and the Tanod Bayan in
handling cases involving the Chairman or any of the Commissioners, and other officials and
employees of the Commission in their official capacity.
(4) 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 to any government
agency in the settlement and adjustment of its accounts by the Commission.

The Accountancy Office

Functions:
(1) Prepare, for the Commission, the annual financial report of the Government, its
subdivisions, agencies, and instrumentalities, including government-owned or controlled
corporations, and such other financial or statistical reports as may be required by the
Commission.
(2) Verify appropriations of national government agencies and control fund releases
thereto.
(3) Prepare statements on revenues and expenditures of local government units, and on
their legal borrowing and net paying capacities for re-classification and other purposes.
 The National Government Audit Office
Functions:
(1) Formulate and develop plans, programs, operating standards, and administrative
techniques for the implementation of auditing rules and regulations in departments, regions,
bureaus, and offices of the National Government.
(2) Formulate accounting rules and regulations for departments, regions, bureaus, and
offices of the National Government.
(3) Advise and assist the Chairman on matters pertaining to the audit of the
departments, regions, bureaus, and offices of the National Government.

The Local Government Audit Office

Functions:
(1) Formulate and develop plans, programs, operating standards, and administrative
techniques for the implementation of auditing rules and regulations in local government units;
(2) Formulate accounting rules and regulations for local government units;
(3) Advise and assist the Chairman on matters pertaining to the audit of local
government units.

The Corporate Audit Office

Functions:
(1) Formulate and develop plans, programs, operating standards, and administrative
techniques for the implementation of auditing rules and regulations in government-owned or
controlled corporations and self-governing boards, commissions, or agencies of the
government, as well as for the conduct of an audit of financial operations of public utilities and
franchises.
(2) Formulate accounting rules and regulations for government-owned or controlled
corporations and self-governing boards, commissions, or agencies of the government.
(3) Advise and assist the Chairman on matters pertaining to the audit of government-
owned or controlled corporations and self-governing boards, commissions, or agencies of the
government.
(4) Consolidate the corporate audit reports from all the regions for inclusion in the
annual report of the Commission.
 The Performance Audit Office
Functions:
(1) Conduct, consistently with the exercise by the Commission of its visitorial powers as
hereinafter conferred, variable scope audit of non-governmental firms subsidized by the
government or government authority, or those required to pay levies or government share,
those funded by donations through the government, and those for which the government has
put up a counterpart fund: Provided, That such audits shall be limited to the funds or subsidies
coming from the government;
(2) Undertake audits of the legality of government expenditures, with particular
emphasis on the statutory authority governing the usage of appropriated funds.

The Manpower Development Office

Functions:
(1) Formulate long-range plans for a comprehensive training program for all personnel
of the Commission and personnel of the agencies of government, with respect to Commission
rules and regulations and audit matters;
(2) Prepare and implement annual training programs, consistent with its long-range
plans.
(3) Develop its capability to implement training programs.
(4) Set up and maintain a library for the Commission.
(5) Publish the professional journal of the Commission.

The Technical Service Office

Functions:
(1) Develop and propose auditing systems for implementation in the government.
(2) Render consultancy services related to the discharge of government auditing
functions.
(3) Assist in the formulation of accounting rules and regulations and in seeing to it that
these are observed by agencies of government, in coordination with the Accountancy Office.
(4) Review and evaluate contracts, and inspect and appraise infrastructure projects.
(5) Initiate special studies on auditing matters.
 The Regional Offices
Functions:
(1) Exercise supervision and control over the implementation of auditing rules and
regulations in any agency of the government with principal offices or place of operations within
the region, including the National Assembly.
(2) Review, analyze and consolidate local, national, and corporate audit reports
pertaining to the region.
(3) Upon delegation by the Commission Proper, exercise authority on internal
Commission administration on personnel, planning, financial (budgetary and accounting), and
legal matters pertaining to the region.
(4) Perform such other related functions as may be assigned by the Chairman.