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ADMINISTRATIVE ORDER NO. 278
ADMINISTRATIVE ORDER NO. 278 -
DIRECTING THE STRENGTHENING OF THE INTERNAL CONTROL SYSTEMS OF
GOVERNMENT OFFICES, AGENCIES, GOVERNMENT OWNED AND/OR CONTROLLED
CORPORATIONS, INCLUDING GOVERNMENT FINANCIAL INSTITUTIONS AND LOCAL
GOVERNMENT UNITS, IN THEIR OPERATIONS
I, CORAZON C. AQUINO, President of the
Philippines, by virtue of the powers vested in me by law, do hereby
order:
Section 1. In addition to the provisions of Sec. 1
of Administrative Order No. 119, Series of 1989, all heads of
government offices, agencies, government-owned and/or controlled
corporations, including government financial institutions and. local
government units, shall organize Internal Audit Services (IAS) in their
respective offices, as follows:
1.1
The Internal Audit Service (IAS) shall be an integral part of the
office/organization and shall assist the institution management in the
effective discharge of its responsibilities insofar as the same would
not encroach on or be adversarial with those of the auditors of the
Commission on Audit. It shall function in accordance with the policies
established by the provisions of Republic Act No. 3456, as amended by
Republic Act No. 4177, and shall perform staff functions with primary
responsibilities encompassing the examination and evaluation of the
adequacy and effectiveness of Internal control and the quality of
performance. The internal audit activities shall include the following:
1.1.1
Ascertaining the reliability and integrity of financial and operational
information and the means used to identify, measure, classify and
report such information;
1.1.2
Ascertaining the extent of compliance and reviewing the systems
established to ensure compliance with government policies, plans and
procedures, laws and regulations which have impact on operations;
1.1.3
Ascertaining the extent to which the assets and other resources of the
institutions are accounted for and safeguarded from losses of all kinds;
1.1.4
Reviewing and evaluating the soundness, adequacy and application of
accounting, financial and other operating controls and promoting the
most effective control at reasonable cost;
1.1.5
Reviewing operations or programs to ascertain whether or not results
are consistent with established objectives and goals and whether or not
such programs are being carried out as planned;
1.1.6
Evaluating the quality of performance of groups/individuals in carrying
out their assigned responsibilities; and
1.1.7
Recommending corrective actions on operational deficiencies observed.
2.0 In
addition to its above duties, the IAS may be called upon to perform
special assignments by the Head of the Agency. However, it shall not be
responsible for or required to participate in procedures which are
essentially a part of regular operating activities or in operations
which are the primary responsibility of another unit in the
organization. The IAS shall be detached from all functions of routine
operating character, such as the following:
2.1 Pre-audit
of vouchers and counter-signature of checks;
2.2 Inspection
of deliveries, although the internal auditor may, as part of his
examination, observe inspection;
2.3
Preparation of treasury and bank reconciliation statements;
2.4
Development and installation of systems and procedures; however, in
exceptional cases, the internal auditor may assist by way of giving
suggestions;
2.5 Taking
physical inventories; however, the internal auditor may review the
plans in advance and observe and test-check the accuracy of counting,
costing and summarizing;
2.6
Maintaining property records; and
2.7 All other
activities related to operations.
3.0 The IAS
shall be provided with sufficient support from the top management to
gain the cooperation/confidence of the auditee.
3.1 In the
performance of their function, the internal auditors should be able to
exercise independence to render impartial and unbiased judgments
essential to the proper conduct of the audit.
3.2 The
auditor should be able to gather sufficient evidential matters in
support of his findings and recommendations.
3.3 The
Head/Chief of the IAS shall report directly to the Head of the Agency.
4.0 Internal
audit shall be performed with proficiency and due professional care.
4.1 The IAS
shall provide assurance that the technical proficiency and educational
background of internal auditors are appropriate for the audit to be
performed.
4.2 Internal
auditors shall possess/obtain the knowledge, skills and discipline
needed to carry out the audit responsibilities of the IAS.
4.3 The IAS
shall provide assurance that internal audits are properly supervised
and performed with due professional care.
4.4 The IAS
shall conduct the audit in conformity with the standards of the
internal audit profession.
4.5 The Code
of Ethics promulgated by the Association of Government Internal
Auditors (AGIA) shall be strictly observed to maintain high standards
of honesty, objectivity, diligence and loyalty.
Sec. 2. In order to best serve the interests of
their Offices, in particular, and of the government service, in
general, all Heads and Staff of the Internal Audit Service shall
cooperate and actively participate in the activities of the AGIA.
Sec. 3. The AGIA shall ensure that internal audit
practices, methods and procedures are improved and updated through
continuing education and that all audit works for each government
agency are conducted in conformity with the standards of the internal
audit profession.
Sec. 4. Agencies without an internal audit
service/unit shall constitute one to be staffed by assigning or
deploying personnel from other units of the Agency.
Sec. 5. This Administrative Order shall take
effect immediately.
Done in the City of Manila,
this 28th day of April, in the year of Our Lord, nineteen hundred and
ninety-two.
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Since 19.07.98.