Wednesday, June 24, 2009

Pre-audit compared with post-audit

Hereunder is the definition of pre-audit as against post-audit of government transactions:

Pre-audit is an examination of vouchers, contracts, etc., in order to substantiate a transaction or a series of transactions before they are paid for and recorded.

Post-audit is an audit of accounting records, conducted at some interval of time after a transaction or a series of transactions has already occurred.

Source:

An expounded definition of pre-audit vs post-audit, particularly by COA, is given by MARCELO L. TECSON as shown below:

COA audit of government expenditures—whether on post audit or pre-audit basis—involves determination of compliance to governmental laws and regulations, like required APPROPRIATION or budget, LEGALITY of transaction, proper APPROVAL, and SUPPORTING documents (code-named “ALAS”).

PARTIAL COA PRE-AUDIT

Partial COA pre-audit involves doing the same kind of work under the present 100% COA post audit, including looking at exactly the same disbursement vouchers and supporting documents being used in post audit, except that pre-audit is done earlier--or BEFORE payment and consummation of government transactions--on selected key government transactions, therefore:

(1) It does not entail increase in volume of COA audit work; it just advances the audit work to dates before payment of transactions and, in the process, compels COA to do its work promptly and without delay--because the audited government agencies/corporations are waiting for COA's pre-audit verdict on the disbursement vouchers before effecting payments.

In effect, the PRICE of preventing multi-billion-peso corruption under COA pre-audit is timely and expeditious work on the part of COA auditors. They have to act within prescribed time limits on disbursement vouchers submitted for pre-audit by audited agencies/entities. This greater demand from COA is tolerable because, to begin with, its crucial fraud-prevention pre-audit work will cover only a few high-amount and high-risk transactions.

(2) It can detect and prevent corruption because it is done BEFORE payments are made, or when acts of corruption are not yet consummated and it is not yet too late to stop them, thus it is useful in the PREVENTION of corruption.

(3) Consequently, it has the great ADVANTAGE of avoiding or minimizing the disgraceful and debilitating LOSSES of BILLIONS upon BILLIONS of PESOS in government funds from rampant corruption.

100% COA POST AUDIT

COA post audit involves doing the same kind of work under pre-audit and looking at exactly the same disbursement vouchers and supporting documents already available even prior to payment, except that it is intentionally done later, or AFTER execution and payment of government transactions, consequently:

(1) It does not contribute to reduction in volume of COA audit work, just postponement of it to later dates after government transactions or disbursements are already consummated.

(2) It cannot detect and prevent corruption because it is done AFTER payment of transactions, or when acts of corruption are already consummated and it is too late to stop them, hence it is USELESS in the PREVENTION of corruption and cannot do away with the need for selective COA pre-audit as potent fraud-prevention measure.

(3) Consequently, under 100% COA post audit, there is a great DISADVANTAGE or cost penalty to the government—LOSSES of BILLIONS upon BILLIONS of PESOS in public funds from unhampered and hence unabated CORRUPTION.

Economic sting

Commission on Audit under COA Circular No. 2009-002 dated May 18, 2009 defines pre-audit and post-audit as follows:

Pre-audit is the examination of documents supporting a transaction or series of transactions before these are paid for and recorded. Pre-audit operates to determine that the proposed expenditure is for a purpose in compliance with the appropriation law, other specific statutory authority and regulations. It assures that sufficient funds are available to enable payment of the claim. It also initially determines that the proposed expenditure is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. Moreover, pre-audit determines that the transaction is approved by proper authority and duly supported by authentic underlying evidences.

Post-audit covers the same areas and supplemented by tracing the transaction under audit to the books of accounts. It also includes a final determination that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary. In general and wherever practical, the scope of post-audit work covers all areas identified in the risk assessment and embraces financial, compliance and value for money audits. Transactions subjected to pre-audit shall be post-audited without reperforming the audit procedures previously undertaken in pre-audit, unless there is compelling reason to reperform the same.

coa circular no. 2009-002

There is really a need nowadays to reinstitute selective pre-audit on government transactions to prevent occurence of irregularities/anomalies in the government.

2 comments:

  1. now that coa has lifted the pre-audit in govt. transactions, isn't it obvious that it succumbed to the wishes of the politicians? Isn't it obvious that COA is nowhere in the vision of Pnoy's matuwid na daan? why feign corruptions on auditors when corrupt auditors are always corrupt even if there's no pre-audit. COA leaders failed miserably in their studies when they used as alibi that there were low percentages of quantities denied by auditors during their pre-audit. They failed to see that even if there's only one single transaction if it amounts to millions and the auditor had successfully prevented the irregularity of such payment in pre-audit, that would be significant enough to not lift the pre-audit! COA leaders failed to account for the big savings that were generated out of the pre-audit and it just lifted pre-audit outright on the bases of wrong data, wrong assumptions and wrong presumptions against their own COA auditors! COA leaders should be investigated in congressional hearings for failing to heed the citizenry on their cry for transparency, 'right' directions and 'right' visions! COA leaders should be reminded that not all correct perceptions would lead to right decisions! and incorrect perceptions would lead to wrong decisions! COA leaders please do something right!

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