By Reinir Padua
MANILA, Philippines – Instead of just exposing irregularities in expenditures already made by government agencies, the Commission on Audit (COA) will soon include in its functions the pre-audit of big-ticket projects to spot possible corruption before it is committed.
“We have just approved a resolution on (reinstating) the pre-audit (function of the COA),” chairperson Reynaldo Villar revealed at a recent symposium on government accountability marking the 110th anniversary of the commission.
Villar did not discuss the specifics of the resolution but said it would be published soon in the commission’s official gazette.
However, a source from the COA told The STAR that the commission intends to start implementing the pre-audit within the year.
The source said the commission was still setting up the guidelines but the pre-audit would initially be on big-ticket government projects.
The commission found an ally in Senate President Juan Ponce Enrile, who said “we should restore what COA used to do.”
“Before, the COA was consulted in every government project,” said Enrile, who was the keynote speaker during the symposium.
“At least it can be seen right in the beginning if the project will be overpriced or substandard. It’s difficult going after (the crooks) if the money is already spent,” Enrile added.
It was during the Marcos regime in 1985 when the gradual removal of the pre-audit functions of the commission started.
Enrile pointed out that among the reasons raised for the lifting of the pre-audit was the delay in important government projects then pre-screened by the COA.
“But I think the losses incurred in the delay of the projects because of the pre-audit are little compared to the money lost due to corruption,” the Senate president said.
In a related development, Enrile said he was in full support of the pending bill at the Senate “seeking to strengthen and upgrade the capabilities of the COA as a key anti-corruption institution.”
“For as long as I am the Senate President, I assure you that this will pass,” Enrile said.
source
Selective pre-audit of government transactions will start on August 1, 2009 per coa circular no. 2009-004.
Showing posts with label coa pre-audit. Show all posts
Showing posts with label coa pre-audit. Show all posts
Thursday, July 16, 2009
Wednesday, July 8, 2009
Will pre-audit deter crooks in the government?
Written by About Town / Ernesto Hilario
Tuesday, 07 July 2009 01:54
Starting August, the Commission on Audit (COA) will restore preaudits—the scrutiny of transactions before funds are released and recorded in the government’s books—that were discarded way back in 1995. This is a step in the right direction as it will act as a deterrent against financial anomalies.
The COA move is timely in view of reports that unliquidated cash advances of national government agencies have already reached P7.68 billion as of December 31, 2007, while those of local government units stood at P2.45 billion at year-end 2007, for a total of more than P10 billion. That amount could very well have funded the full automation of next year’s presidential polls, with several billions more available for constructing more schoolrooms or health centers, especially in the far-flung areas.
So what happens to the P10 billion that remains unliquidated by government officials and employees? The right thing to do is to make them cough up the money, sooner or later, whether through monthly salary deductions or perhaps subtracting the entire amount from their retirement benefits. But what if the miscreants have hightailed it to parts unknown, perhaps enjoying their loot in tropical Bahamas?
The preaudits are being restored to curb what the COA describes as “rising incidents of irregular, illegal, wasteful and anomalous” releases of public money and disposal of government property.
But we’re informed that preaudits will apply only to certain transactions of select national government agencies, local government units and government-owned and government-controlled corporations. Intelligence funds of various government agencies running into quite possibly tens of billions more will remain outside the scope of COA scrutiny, and are likely to end up God knows where.
In any case, we hope that with the restoration of preaudits, government auditors will succeed in putting the fear of the law in the unscrupulous and the greedy who believe that public funds are theirs for the taking.
So to answer the question: Will preaudits check corruption in government? Our guess is that it will not, since the crooks will always find creative but devious ways to get around the rules.
Source
Comment:
Everyone is entitled to his own opinion. But something must be done to address the “rising incidents of irregular, illegal, wasteful and anomalous releases of public money and disposal of government property.” And the reinstitution of selective pre-audit on government transactions is the answer to that. To me, I think no one should be afraid of pre-audit because it is for the protection of officials/employees in the government agency.
Tuesday, 07 July 2009 01:54
Starting August, the Commission on Audit (COA) will restore preaudits—the scrutiny of transactions before funds are released and recorded in the government’s books—that were discarded way back in 1995. This is a step in the right direction as it will act as a deterrent against financial anomalies.
The COA move is timely in view of reports that unliquidated cash advances of national government agencies have already reached P7.68 billion as of December 31, 2007, while those of local government units stood at P2.45 billion at year-end 2007, for a total of more than P10 billion. That amount could very well have funded the full automation of next year’s presidential polls, with several billions more available for constructing more schoolrooms or health centers, especially in the far-flung areas.
So what happens to the P10 billion that remains unliquidated by government officials and employees? The right thing to do is to make them cough up the money, sooner or later, whether through monthly salary deductions or perhaps subtracting the entire amount from their retirement benefits. But what if the miscreants have hightailed it to parts unknown, perhaps enjoying their loot in tropical Bahamas?
The preaudits are being restored to curb what the COA describes as “rising incidents of irregular, illegal, wasteful and anomalous” releases of public money and disposal of government property.
But we’re informed that preaudits will apply only to certain transactions of select national government agencies, local government units and government-owned and government-controlled corporations. Intelligence funds of various government agencies running into quite possibly tens of billions more will remain outside the scope of COA scrutiny, and are likely to end up God knows where.
In any case, we hope that with the restoration of preaudits, government auditors will succeed in putting the fear of the law in the unscrupulous and the greedy who believe that public funds are theirs for the taking.
So to answer the question: Will preaudits check corruption in government? Our guess is that it will not, since the crooks will always find creative but devious ways to get around the rules.
Source
Comment:
Everyone is entitled to his own opinion. But something must be done to address the “rising incidents of irregular, illegal, wasteful and anomalous releases of public money and disposal of government property.” And the reinstitution of selective pre-audit on government transactions is the answer to that. To me, I think no one should be afraid of pre-audit because it is for the protection of officials/employees in the government agency.
Tuesday, July 7, 2009
Pre-audit Returns; 10 Billion Advances Unliquidated
UNLIQUIDATED cash advances of national government agencies and local government units (LGUs) have ballooned to P10 billion, prompting the Commission on Audit (COA) to restore the preaudit of select government transactions starting next month.
The COA said it was restoring the practice of preaudit in a bid to check what it described as the “rising incidents of irregular, illegal, wasteful and anomalous” releases of public money and disposal of government property.
The preaudit, which scrutinizes transactions before funds are released and recorded in the government’s books, was discontinued in 1995. It was entrusted to internal auditors who are employees of the agency they examine. COA auditors were restricted to postaudit work.
The COA said in a circular, “An assessment of the risk-prone areas in government operations and the marked inadequacy in internal controls, as exemplified by the frequency of anomalies uncovered or reported, point to the need to consider preaudit as a deterrent against the resurgence of the observed maladies.”
The preaudit will resume on August 1 and will apply to certain transactions of select national government
agencies, LGUs and government-owned and -controlled corporations. National high schools, barangays and state corporations audited under the team approach are initially exempt from preaudit.
COA records showed that P7.68 billion in cash advances to officials and employees of national government agencies remained unliquidated as of December 31, 2007. The cash advances were drawn from the payroll and special purpose funds, and include fund transfers to field offices. Unliquidated cash advances of LGUs stood at P2.45 billion at the end of 2007.
Under Presidential Decree 1445, the Government Auditing Code, a cash advance should be reported on and liquidated as soon as the purpose for which it was given has been served.
But the unliquidated cash advances have ballooned partly because a COA directive prohibiting further advances to those who have not settled their accounts is repeatedly violated, according to COA auditors.
“It all boils down to a lack of political will,” a COA official said.
An audit report showed the Office of the President accounting for P632.9 million of the unliquidated cash advances in 2007. Malacañang released P223 million in cash advances for foreign travels that year. Although these had been mostly liquidated, the COA questioned the release of the advances to the cashier who was never a member of or party to the foreign travels, which is a violation of another COA circular.
Subject to preaudit are:
• Cash advances except those for payroll, intelligence funds, petty-cash funds and those given for local-travel expenses of officers and employees.
• The first and last salary payments and terminal leave benefits of government workers.
• Advanced payment and the first and last progress billings of contracts for infrastructure projects that fall within the threshold set by the COA, for example, P25 million and above for those of departments, bureaus, head offices, general headquarters and project management offices.
• Payments for road right of way.
• Procurement of land and building and goods and services.
• Payments made through automatic debit service.
• Release to nongovernment organizations and people organizations.
• Transfer of funds between and among government agencies.
• Releases from trust funds of local government units.
• Disposal of government property.
In early October, then-Philippine National Police comptroller Eliseo de la Paz and his wife were held at the Moscow airport for carrying €105,000 or nearly P7 million, which he told a Senate inquiry was a “cash advance” for the police delegation that had attended the 77th Interpol General Assembly.
Allegations of collusion and corruption have also dogged infrastructure projects, including those funded by the World Bank through the National Roads Improvement and Management Program.
The scandals have earned the Philippines the reputation of being one of Asia’s most corrupt countries.
Although senior COA auditors acknowledged the comeback of preaudit as a possible deterrent to financial malfeasance, they said the emphasis on financial audits since 2002, instead of compliance and performance audits, has undermined the commission’s effectiveness as guardian of the public purse.
Auditors, they said, were also discouraged from suspending and disallowing transactions even when they documented irregularities. Instead, they were limited to preparing “audit-observation memos” that were recommendatory.
The recently launched Philippine Human Development Report (PHDR) found financial audits ineffective in detecting fraud.
“While financial audits examine the accuracy and reliability of government financial reporting, they can also conceal more than reveal,” the report said. “The more detailed the rules, the easier it is for management to cheat and structure transactions to get around the rules.”
Compliance auditing reviews an agency’s adherence to legislative and regulatory guidelines, including the budget law. Performance auditing examines programs, functions, operations or the management systems and procedures to see if public funds are used with “economy, efficiency and effectiveness.”
Earlier, the COA ordered government agencies to furnish auditors a copy of their contracts and purchase orders within five working days upon their approval, noting how government officials have repeatedly violated this rule, and citing “irregularities discovered in government contracts.”
The Constitution empowers the 12,000-strong COA, a constitutional body, to define the scope and techniques for its audits and prohibits legislation that would limit its audit coverage.
I believe that pre-audit in selective government transactions should really be reinstituted to prevent the occurrence of irregular, illegal, wasteful and anomalous government transactions.
Source
The COA said it was restoring the practice of preaudit in a bid to check what it described as the “rising incidents of irregular, illegal, wasteful and anomalous” releases of public money and disposal of government property.
The preaudit, which scrutinizes transactions before funds are released and recorded in the government’s books, was discontinued in 1995. It was entrusted to internal auditors who are employees of the agency they examine. COA auditors were restricted to postaudit work.
The COA said in a circular, “An assessment of the risk-prone areas in government operations and the marked inadequacy in internal controls, as exemplified by the frequency of anomalies uncovered or reported, point to the need to consider preaudit as a deterrent against the resurgence of the observed maladies.”
The preaudit will resume on August 1 and will apply to certain transactions of select national government
agencies, LGUs and government-owned and -controlled corporations. National high schools, barangays and state corporations audited under the team approach are initially exempt from preaudit.
COA records showed that P7.68 billion in cash advances to officials and employees of national government agencies remained unliquidated as of December 31, 2007. The cash advances were drawn from the payroll and special purpose funds, and include fund transfers to field offices. Unliquidated cash advances of LGUs stood at P2.45 billion at the end of 2007.
Under Presidential Decree 1445, the Government Auditing Code, a cash advance should be reported on and liquidated as soon as the purpose for which it was given has been served.
But the unliquidated cash advances have ballooned partly because a COA directive prohibiting further advances to those who have not settled their accounts is repeatedly violated, according to COA auditors.
“It all boils down to a lack of political will,” a COA official said.
An audit report showed the Office of the President accounting for P632.9 million of the unliquidated cash advances in 2007. Malacañang released P223 million in cash advances for foreign travels that year. Although these had been mostly liquidated, the COA questioned the release of the advances to the cashier who was never a member of or party to the foreign travels, which is a violation of another COA circular.
Subject to preaudit are:
• Cash advances except those for payroll, intelligence funds, petty-cash funds and those given for local-travel expenses of officers and employees.
• The first and last salary payments and terminal leave benefits of government workers.
• Advanced payment and the first and last progress billings of contracts for infrastructure projects that fall within the threshold set by the COA, for example, P25 million and above for those of departments, bureaus, head offices, general headquarters and project management offices.
• Payments for road right of way.
• Procurement of land and building and goods and services.
• Payments made through automatic debit service.
• Release to nongovernment organizations and people organizations.
• Transfer of funds between and among government agencies.
• Releases from trust funds of local government units.
• Disposal of government property.
In early October, then-Philippine National Police comptroller Eliseo de la Paz and his wife were held at the Moscow airport for carrying €105,000 or nearly P7 million, which he told a Senate inquiry was a “cash advance” for the police delegation that had attended the 77th Interpol General Assembly.
Allegations of collusion and corruption have also dogged infrastructure projects, including those funded by the World Bank through the National Roads Improvement and Management Program.
The scandals have earned the Philippines the reputation of being one of Asia’s most corrupt countries.
Although senior COA auditors acknowledged the comeback of preaudit as a possible deterrent to financial malfeasance, they said the emphasis on financial audits since 2002, instead of compliance and performance audits, has undermined the commission’s effectiveness as guardian of the public purse.
Auditors, they said, were also discouraged from suspending and disallowing transactions even when they documented irregularities. Instead, they were limited to preparing “audit-observation memos” that were recommendatory.
The recently launched Philippine Human Development Report (PHDR) found financial audits ineffective in detecting fraud.
“While financial audits examine the accuracy and reliability of government financial reporting, they can also conceal more than reveal,” the report said. “The more detailed the rules, the easier it is for management to cheat and structure transactions to get around the rules.”
Compliance auditing reviews an agency’s adherence to legislative and regulatory guidelines, including the budget law. Performance auditing examines programs, functions, operations or the management systems and procedures to see if public funds are used with “economy, efficiency and effectiveness.”
Earlier, the COA ordered government agencies to furnish auditors a copy of their contracts and purchase orders within five working days upon their approval, noting how government officials have repeatedly violated this rule, and citing “irregularities discovered in government contracts.”
The Constitution empowers the 12,000-strong COA, a constitutional body, to define the scope and techniques for its audits and prohibits legislation that would limit its audit coverage.
I believe that pre-audit in selective government transactions should really be reinstituted to prevent the occurrence of irregular, illegal, wasteful and anomalous government transactions.
Source
Brief Outline on the Selective Pre-audit on Government Transactionstions (Part II)
Transfer of funds between and among government agencies
- all transfers of funds either thru funding check or bank transfer between and among bank accounts of agencies or between different bank accounts of the same government agency.
Exceptions:
- Routinary fund transfers between government banks
- Transfers of funds to address an emergency or existing calamity
- Releases of NCAs and NTAs
Disbursements from trust funds of LGUs
- Only disbursements of trust funds released by the national government or by GOCCs are subject to pre-audit
Disposal of real property, unserviceable property and those no longer needed
- Include only those undertaken through negotiated sale for NGAs/GOCCs and private sales for LGUs
- Real property - at least P1 million for NGAs and GOCCs regardless of amount for LGUs
Unserviceable property/those no longer needed
- at least P500,000 for NGAs/GOCCs
- acquisition/transfer cost of at least P50,000 for provinces/cities and P25,000 for municipalities/barangays
Acquired assets of GFIs – at least P50M
Exception: Disposal to previous owners in the exercise of the right of redemption
RESPONSIBILITY TO CONDUCT PRE-AUDIT
The head of the auditing unit or audit team shall be responsible to conduct pre-audit.
The head may either be a Supervising Auditor or an Audit Team Leader depending on the agency involved
DUTIES AND RESPONSIBILITIES OF AGENCY OFFICIALS
no transactions are paid without evidence of the pre-audit action
all disbursement vouchers, advices/instructions, MOAs, MOUs, contracts, purchase/letter orders, loan agreements, bond flotation/certificates of indebtedness, appraisal reports and their supporting documents are submitted
disbursement vouchers for infrastructure projects are accompanied by duly accomplished relevant checklist for technical review
copies of delivery documents are furnished to the auditor within 24 hours after acceptance of deliveries
the agency’s Annual Procurement Plan and its amendments are submitted within the first quarter
a separate logbook of transactions subject to and submitted for pre-audit is maintained.
EVIDENCE OF AUDIT ACTION
Pre-audit action is evidenced by a pre-audit stamp impressed upon the face of the disbursement voucher and its supporting documents with the following statement:
Pre-audited pursuant to COA Circular
No. 2009-002 dated May 18, 2009
In case of deficiencies or defects, the disbursement voucher and its supporting documents should be returned to the head of the agency within 24 hours from such determination informing him of the action taken and indicating the reasons therein
Credit Notice for cash advances
APPEAL
Adverse action of the auditor may be appealed to the Cluster/Regional Director
Decision of the Cluster/Regional Director shall not be subject to appeal to higher authorities
Agency may pursue the proposed transaction notwithstanding the adverse action of the auditor or director.
Appeal is permitted as an extraordinary remedy to afford the aggrieved party another opportunity to ventilate its cause.
Appeal is limited to the Cluster/Regional Director because the proposed transaction is not yet consummated and the CP does not act on hypothetical issues.
OVERSIGHT COMMITTEE
The Assistant Commissioners’ Group
Authority and responsibility
- recommend to CP the inclusion/exclusion of transactions subject to pre- audit
- develop mechanism for evaluating progress of agencies in enhancing/improving their internal control
- develop mechanism/process by which agencies may be exempted from pre-audit using the risk-calibrated agency audit framework
PENAL PROVISIONS
Non-liquidation of cash advances subjects the accountable officer to liability under Sec. 128 in relation to Sec. 89 of PD 1445 and/or other applicable laws and administrative regulations.
Non-submission of transaction for pre-audit before consummation is a ground for initiating administrative disciplinary action in accordance with Section 127 of PD 1445 and Section 55, Title I-B, Book V of EO No. 292, without prejudice to disallowance, if warranted.
This briefing on the Selective Pre-audit on Government Transactions was given by COA Assistant Commissionner Lourdes M. Castillo, Administration Sector, on July 1, 2009 and which I attended together with other COA Region VI audit team leaders.
- all transfers of funds either thru funding check or bank transfer between and among bank accounts of agencies or between different bank accounts of the same government agency.
Exceptions:
- Routinary fund transfers between government banks
- Transfers of funds to address an emergency or existing calamity
- Releases of NCAs and NTAs
Disbursements from trust funds of LGUs
- Only disbursements of trust funds released by the national government or by GOCCs are subject to pre-audit
Disposal of real property, unserviceable property and those no longer needed
- Include only those undertaken through negotiated sale for NGAs/GOCCs and private sales for LGUs
- Real property - at least P1 million for NGAs and GOCCs regardless of amount for LGUs
Unserviceable property/those no longer needed
- at least P500,000 for NGAs/GOCCs
- acquisition/transfer cost of at least P50,000 for provinces/cities and P25,000 for municipalities/barangays
Acquired assets of GFIs – at least P50M
Exception: Disposal to previous owners in the exercise of the right of redemption
RESPONSIBILITY TO CONDUCT PRE-AUDIT
The head of the auditing unit or audit team shall be responsible to conduct pre-audit.
The head may either be a Supervising Auditor or an Audit Team Leader depending on the agency involved
DUTIES AND RESPONSIBILITIES OF AGENCY OFFICIALS
no transactions are paid without evidence of the pre-audit action
all disbursement vouchers, advices/instructions, MOAs, MOUs, contracts, purchase/letter orders, loan agreements, bond flotation/certificates of indebtedness, appraisal reports and their supporting documents are submitted
disbursement vouchers for infrastructure projects are accompanied by duly accomplished relevant checklist for technical review
copies of delivery documents are furnished to the auditor within 24 hours after acceptance of deliveries
the agency’s Annual Procurement Plan and its amendments are submitted within the first quarter
a separate logbook of transactions subject to and submitted for pre-audit is maintained.
EVIDENCE OF AUDIT ACTION
Pre-audit action is evidenced by a pre-audit stamp impressed upon the face of the disbursement voucher and its supporting documents with the following statement:
Pre-audited pursuant to COA Circular
No. 2009-002 dated May 18, 2009
In case of deficiencies or defects, the disbursement voucher and its supporting documents should be returned to the head of the agency within 24 hours from such determination informing him of the action taken and indicating the reasons therein
Credit Notice for cash advances
APPEAL
Adverse action of the auditor may be appealed to the Cluster/Regional Director
Decision of the Cluster/Regional Director shall not be subject to appeal to higher authorities
Agency may pursue the proposed transaction notwithstanding the adverse action of the auditor or director.
Appeal is permitted as an extraordinary remedy to afford the aggrieved party another opportunity to ventilate its cause.
Appeal is limited to the Cluster/Regional Director because the proposed transaction is not yet consummated and the CP does not act on hypothetical issues.
OVERSIGHT COMMITTEE
The Assistant Commissioners’ Group
Authority and responsibility
- recommend to CP the inclusion/exclusion of transactions subject to pre- audit
- develop mechanism for evaluating progress of agencies in enhancing/improving their internal control
- develop mechanism/process by which agencies may be exempted from pre-audit using the risk-calibrated agency audit framework
PENAL PROVISIONS
Non-liquidation of cash advances subjects the accountable officer to liability under Sec. 128 in relation to Sec. 89 of PD 1445 and/or other applicable laws and administrative regulations.
Non-submission of transaction for pre-audit before consummation is a ground for initiating administrative disciplinary action in accordance with Section 127 of PD 1445 and Section 55, Title I-B, Book V of EO No. 292, without prejudice to disallowance, if warranted.
This briefing on the Selective Pre-audit on Government Transactions was given by COA Assistant Commissionner Lourdes M. Castillo, Administration Sector, on July 1, 2009 and which I attended together with other COA Region VI audit team leaders.
Brief Outline on the Selective Pre-audit on Government Transactions (Part I)
There are two reasons why Selective Pre-audit on Government Transactions was reinstituted by the Commission on Audit:
1. Rising incidents of illegal, irregular, wasteful and anomalous disbursements of huge amounts of public funds
2.Marked inadequacies in internal controls as exemplified by anomalies uncovered or reported after assessment of risk-prone areas in government operations
Not all government agencies are subject to pre-audit.
Not all transactions of the government are subject to pre-audit - only 10 transactions are initially identified.
DEFINITION AND GENERAL SCOPE OF PRE-AUDIT
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 in compliance with appropriation law and other specific statutory authority and regulations
- assure that sufficient funds are available
- initially determine that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary
- determine that the transaction is approved by proper authority and supported by authentic underlying evidences
As used in the circular “initially determine” emphasize that determination of the auditor is not yet final and could be modified in post-audit
- In cases of technical matters, the auditor may possess some degree of competency in determining the reasonableness of price but still needs the assistance of a technical expert.
PRE-AUDIT VS. POST-AUDIT
Pre-audit is a review before a transaction is paid for or recorded. Post-audit refers to review after the transaction is recorded or consummated.
Pre-audit is an upfront auditing procedure undertaken on the documents supporting a transaction prior to its payment or recording.
COVERAGE of the Selective Pre-audit on Government Transactions
Agencies - national government agencies, local government units and GOCCs with original charter
Exception: national high schools, GOCCs audited on an engagement basis and barangays
Transactions
- cash advances
- payments of salaries and terminal leave benefits
- payments for infrastructure projects
- payments for road right-of-way
- procurement of capital assets, goods and services
- payments thru ADA
- releases of funds to NGOs/POs
- transfer of funds between government agencies
- disbursements from trust funds of LGUs
- disposal of real property and unserviceable property
SPECIFIC SCOPE OF PRE-AUDIT
Cash advances - all cash advances including those for foreign travel funded out of local funds
Exceptions: cash advances for payroll fund, intelligence funds, petty cash funds, revolving funds and local travel expenses
Payment of salaries and terminal leave benefits
- payment of first salary after appointment by transfer or reinstatement and last payment of salary prior to transfer
- all payments of terminal leave benefits
Infrastructure projects
- Only the advance payments to contractors and the first and last progress billings are subject to pre-audit
- First progress billing covers first collection on work accomplishment
- Pre-audit of last progress billing must consider all previous payments
Variation orders
all first payments under variation orders related to contracts within the monetary threshold are subject to pre-audit
First payment and last progress billing under variation orders which bring a contract within the monetary threshold are subject to pre-audit
Price escalation
All claims for price escalations are subject to pre-audit
Infrastructure projects
National Government Agencies
- Dept./Bureau/Agency Main/Central/Head Offices,
- General Headquarters, PMOs – P 25M above
- Regional Offices or their equivalents – P 10M above
- Provincial/District/Satellite Offices or their equivalents – P 2M above
- Tertiary and/or specialized hospitals – P 5M above
Local Government Units
- Cities within MM, other highly urbanized cities, first class provinces – P 5M above
- Provinces/cities below first class – P 3M above
- Municipalities – P 1M above
GOCCs
- Head Offices, PMOs – P 25M above
- Regional/Provincial Branches/Field Offices – P 10M above
- Tertiary and/or specialized hospitals – P5M above
Payments for road right-of-way
All claims for road right-of-way to be pre-audited based on its compliance with the requirements of RA No. 8974 and its implementing rules and regulations
Procurement of capital assets, goods and services
- capital assets (land and building)
- supplies, materials, general support services (rentals, janitorial, security, solid waste management) labor
- procurement of construction materials for projects implemented by administration
- only first payment for general support services is subject to pre-audit
Procurements subject to pre-audit:
- at least P 2M for NGAs, GOCCs, cities within MM, other highly urbanized cities and first class provinces
- at least P 1M for provinces/cities below first class
- at least P500,000 for municipalities
Exception:
- Procurement between government agencies
- Procurement of life saving medicines, food and other items necessary to address natural calamities or emergencies
Payments thru ADA
All ADA payments are subject to pre-audit
In instances where ADA is the mode of payment in transactions similarly covered by pre-audit such as payments for infrastructure projects or procurements, all payments shall be subject to pre-audit.
Releases to NGOs/POs
- All releases are subject to pre-audit taking into consideration the requirements and guidelines provided in COA Circular No. 2007-001 (October 25, 2007)
1. Rising incidents of illegal, irregular, wasteful and anomalous disbursements of huge amounts of public funds
2.Marked inadequacies in internal controls as exemplified by anomalies uncovered or reported after assessment of risk-prone areas in government operations
Not all government agencies are subject to pre-audit.
Not all transactions of the government are subject to pre-audit - only 10 transactions are initially identified.
DEFINITION AND GENERAL SCOPE OF PRE-AUDIT
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 in compliance with appropriation law and other specific statutory authority and regulations
- assure that sufficient funds are available
- initially determine that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary
- determine that the transaction is approved by proper authority and supported by authentic underlying evidences
As used in the circular “initially determine” emphasize that determination of the auditor is not yet final and could be modified in post-audit
- In cases of technical matters, the auditor may possess some degree of competency in determining the reasonableness of price but still needs the assistance of a technical expert.
PRE-AUDIT VS. POST-AUDIT
Pre-audit is a review before a transaction is paid for or recorded. Post-audit refers to review after the transaction is recorded or consummated.
Pre-audit is an upfront auditing procedure undertaken on the documents supporting a transaction prior to its payment or recording.
COVERAGE of the Selective Pre-audit on Government Transactions
Agencies - national government agencies, local government units and GOCCs with original charter
Exception: national high schools, GOCCs audited on an engagement basis and barangays
Transactions
- cash advances
- payments of salaries and terminal leave benefits
- payments for infrastructure projects
- payments for road right-of-way
- procurement of capital assets, goods and services
- payments thru ADA
- releases of funds to NGOs/POs
- transfer of funds between government agencies
- disbursements from trust funds of LGUs
- disposal of real property and unserviceable property
SPECIFIC SCOPE OF PRE-AUDIT
Cash advances - all cash advances including those for foreign travel funded out of local funds
Exceptions: cash advances for payroll fund, intelligence funds, petty cash funds, revolving funds and local travel expenses
Payment of salaries and terminal leave benefits
- payment of first salary after appointment by transfer or reinstatement and last payment of salary prior to transfer
- all payments of terminal leave benefits
Infrastructure projects
- Only the advance payments to contractors and the first and last progress billings are subject to pre-audit
- First progress billing covers first collection on work accomplishment
- Pre-audit of last progress billing must consider all previous payments
Variation orders
all first payments under variation orders related to contracts within the monetary threshold are subject to pre-audit
First payment and last progress billing under variation orders which bring a contract within the monetary threshold are subject to pre-audit
Price escalation
All claims for price escalations are subject to pre-audit
Infrastructure projects
National Government Agencies
- Dept./Bureau/Agency Main/Central/Head Offices,
- General Headquarters, PMOs – P 25M above
- Regional Offices or their equivalents – P 10M above
- Provincial/District/Satellite Offices or their equivalents – P 2M above
- Tertiary and/or specialized hospitals – P 5M above
Local Government Units
- Cities within MM, other highly urbanized cities, first class provinces – P 5M above
- Provinces/cities below first class – P 3M above
- Municipalities – P 1M above
GOCCs
- Head Offices, PMOs – P 25M above
- Regional/Provincial Branches/Field Offices – P 10M above
- Tertiary and/or specialized hospitals – P5M above
Payments for road right-of-way
All claims for road right-of-way to be pre-audited based on its compliance with the requirements of RA No. 8974 and its implementing rules and regulations
Procurement of capital assets, goods and services
- capital assets (land and building)
- supplies, materials, general support services (rentals, janitorial, security, solid waste management) labor
- procurement of construction materials for projects implemented by administration
- only first payment for general support services is subject to pre-audit
Procurements subject to pre-audit:
- at least P 2M for NGAs, GOCCs, cities within MM, other highly urbanized cities and first class provinces
- at least P 1M for provinces/cities below first class
- at least P500,000 for municipalities
Exception:
- Procurement between government agencies
- Procurement of life saving medicines, food and other items necessary to address natural calamities or emergencies
Payments thru ADA
All ADA payments are subject to pre-audit
In instances where ADA is the mode of payment in transactions similarly covered by pre-audit such as payments for infrastructure projects or procurements, all payments shall be subject to pre-audit.
Releases to NGOs/POs
- All releases are subject to pre-audit taking into consideration the requirements and guidelines provided in COA Circular No. 2007-001 (October 25, 2007)
Monday, June 22, 2009
COA Reinstitutes Selective Pre-audit
The reinstitution of selective pre-auditing effective July 1 is seen to curb anomalies in government transactions, according to the director of the Commission on Audit-Regional Office 13. Lawyer Roy Ursula said that the COA will implement a selective pre-audit on government transactions nationwide based on COA Circular 2009-002 dated May 18 of this year as there have been “documented cases that have proven to be weak in internal control.”The pre-audit is an examination of documents supporting a transaction or series of transactions before these are paid for and put on records, such as cash advances, payments of salaries and terminal leave benefits, payments for infrastructure projects, payments for road right-of-way, payments for procurement of capital assets, goods, and services; payments made through automatic debit advice, releases of funds to non-government organizations/people’s organizations; transfers of funds between government agencies, disbursements from trust funds of local government units and disposal of real property and unserviceable property.It was further learned from Ursula that selective pre-auditing was already practiced then but was lifted in 1995 because at that time, studies showed there was good governance then. But currently, there have been several cases where COA found anomalies in, he said. — Barbara Anne B. Ocaba, STC Masscom intern/MEEV (THE FREEMAN)
I believe that selective reinstitution of pre-audit is necessary to prevent further occurence of anomalies in the government. Checking of documents and inspection of projects before payment is done should really pass by COA's examination to ensure that what is being paid for is reasonable, regular and in accordance with rules and regulations.
Selective Pre-audit
I believe that selective reinstitution of pre-audit is necessary to prevent further occurence of anomalies in the government. Checking of documents and inspection of projects before payment is done should really pass by COA's examination to ensure that what is being paid for is reasonable, regular and in accordance with rules and regulations.
Selective Pre-audit
Selective Pre-audit on Government Transactions
Starting July 1, 2009, the Commission on Audit through COA Circular no. 2009-002 dated May 18, 2009, is reinstituting selective pre-audit on government transactions. This is because of recent developments which gave rise to incidents of irregular, illegal, wasteful and anomalous disbursements of huge amounts of public funds and disposal of public property. Indeed corruption is everywhere nowadays, you can see or hear it in the news everyday pointing to the need to consider restoring pre-audit as a deterrent against resurgence of the observed maladies. For a full text of COA Circular no. 2009-002, please click below:
COA Circular No. 2009-002
COA Circular No. 2009-002
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