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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 1445
PRESIDENTIAL DECREE NO. 1445 -
ORDAINING AND INSTITUTING A GOVERNMENT AUDITING CODE OF THE PHILIPPINES
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chanroblesvirtualawlibrary
WHEREAS,
the creation and establishment of the Commission on Audit under the new
Constitution and its recent reorganization and restructuring by virtue
of Presidential Decree No. 898 have rendered more pressing the
long-felt need to codify in revised and updated form, in keeping with
modern trends of government auditing and progressive legislation on the
subject, various scattered auditing laws, rules and regulations, and to
incorporate therein presidential decrees, orders, proclamations, and
instructions germane and relevant thereto for integrated effect;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution, do hereby
order and decree:cralaw:red
PRELIMINARY TITLE
General Provisions
Section 1. Title. — This law shall be known and cited
as the "Government Auditing Code of the Philippines."
Section 2. Declaration of Policy. — 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 safeguard 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 is faithfully adhered to rests directly with
the chief or head of the government agency concerned. chanroblesvirtualawlibrary
Section 3. Definition of terms. — Wherever used in
this Code, the following terms shall be taken and understood in the
sense indicated hereunder, unless the context otherwise requires:cralaw:red
(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" includes public moneys of
every sort and other resources pertaining to any agency of the
government.
(3) "Revenue Funds" comprises all funds derived from
the income of any agency of the government and available for
appropriation or expenditure in accordance with law.
(4) "Trust funds" refers to funds which 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. chanroblesvirtualawlibrary
(5) "Depository funds" comprises funds over which the
officer accountable therefore may retain control for the lawful
purposes for which they came into his possession. It embraces moneys in
any and all depositories.
(6) "Depository" means any financial institution
lawfully authorized to receive government moneys upon deposit. chanroblesvirtualawlibrary
(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.
Section 4. Fundamental principles. — Financial
transactions and operations of any government agency shall be governed
by the fundamental principles set forth hereunder, to wit:cralaw:red
(1) No money shall be paid out of any public treasury
of 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. chanroblesvirtualawlibrary
(4) Fiscal responsibility shall, to the greatest
extent, be shared by all those exercising authority 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.
TITLE I
The Commission on Audit
CHAPTER I
Organization
Section 5. Composition of the Commission on Audit
qualifications, term, and salary of members. —chanroblesvirtualawlibrary
(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
as annual salary of sixty thousand pesos and fifty thousand pesos,
respectively, which shall not be decreased during their continuance in
office.
Section 6. 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. chanroblesvirtualawlibrary
Section 7. Central and regional offices. — (1) The
Commission shall have the following central offices:cralaw:red
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.
Section 8. 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 central office manager.
Section 9. The Administrative Office. — The
Administrative Office shall perform the following functions:cralaw:red
(1) Develop and maintain a personnel program which
shall include recruitment, selection, appointment, performance
evaluation, employee relations, and welfare services; and
(2) Provide the Commission with services related to
personnel, records, supplies, equipment, medical, collections and
disbursements, security, general and other related services.
Section 10. The Planning, Financial, and Management
Office. — The Planning, Financial, and Management Office shall have the
following functions:cralaw:red
(1) Formulate long-range and annual plans and
programs for the Commission;chanroblesvirtualawlibrary
(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;chanroblesvirtualawlibrary
(3) Maintain and administer the accounting system
pertaining to the accounts of the Commission;chanroblesvirtualawlibrary
(4) Develop and administer a system for monitoring
the prices of materials supplies, and equipment purchased by the
government;chanroblesvirtualawlibrary
(5) Develop and maintain the management information
system of the Commission; and
(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.
Section 11. The Legal Office. — The Legal Office
shall be charged with the following responsibilities:cralaw:red
(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;chanroblesvirtualawlibrary
(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;chanroblesvirtualawlibrary
(3) Represent the Commission in preliminary
investigations of malversation cases discovered in 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;
and
(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 any
government agency in the settlement and adjustment of its accounts by
the commission.
Section 12. The Accountancy Office. — The Accountancy
Office shall have the following functions:cralaw:red
(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;chanroblesvirtualawlibrary
(2) Verify appropriations of national government
agencies and control fund releases thereto; and
(3) Prepare statements on revenues and expenditures
of local government units, and on their legal borrowing and net paying
capacities for reclassification and other purposes.
Section 13. The National Government Audit Office. —
The National Government Audit Office shall perform the following
functions;chanroblesvirtualawlibrary
(1) Formulate and develop plans, programs, operating
standards, and administrative techniques for the implementation of
auditing rules and regulations in departments, regions, bureau, and
offices of the National Government;chanroblesvirtualawlibrary
(2) Formulate accounting rules and regulations for
departments, regions, bureaus, and offices of the National Government;
and
(3) Advise and assist the Chairman on matters
pertaining to the audit of the departments, regions, bureaus, and
offices of the National Government.
Section 14. The Local Government Audit Office. — The
Local Government Audit Office shall have the following functions;chanroblesvirtualawlibrary
(1) Formulate and develop plans, programs, operating
standards, and administrative techniques for the implementation of
auditing rules and regulations for local government units;chanroblesvirtualawlibrary
(2) Formulate accounting rules and regulations for
local government units; and
(3) Advise and assist the Chairman on matters
pertaining to the audit of local government units.
Section 15. The Corporate Audit Office. — The
Corporate Audit Office shall perform the following functions:cralaw:red
(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 audit of financial operations
of public utilities and franchises;chanroblesvirtualawlibrary
(2) Formulate accounting rules and regulations for
government-owned or controlled corporations and self-governing boards,
commissions, or agencies of the government;chanroblesvirtualawlibrary
(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;
and chanroblesvirtualawlibrary
(4) Consolidate the corporate audit reports from all
the regions for inclusion in the annual report of the Commission. chanroblesvirtualawlibrary
Section 16. The Performance Audit Office. — The
Performance Audit Office shall have the following functions:cralaw:red
(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; and
(2) Undertake audits of the legality of government
expenditures, with particular emphasis on the statutory authority
governing the usage of appropriated funds.
Section 17. The Manpower Development Office. — The
Manpower Development Office shall perform the following functions:cralaw:red
(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;chanroblesvirtualawlibrary
(2) Prepare and implement annual training programs,
consistent with its long-range plans;chanroblesvirtualawlibrary
(3) Develop its capability to implement training
programs;chanroblesvirtualawlibrary
(4) Set up and maintain a library for the Commission;
and
(5) Publish the professional journal of the
Commission.
Section 18. The Technical Service Office. — The
Technical Service Office shall perform the following functions;chanroblesvirtualawlibrary
(1) Develop and propose auditing systems for
implementation in the government;chanroblesvirtualawlibrary
(2) Render consultancy services related to the
discharge of government auditing functions;chanroblesvirtualawlibrary
(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;chanroblesvirtualawlibrary
(4) Review and evaluate contracts, and inspect and
appraise infrastructure projects; and
(5) Initiate special studies on auditing matters.
Section 19. The Regional Offices. — Each regional
office shall perform the following functions:cralaw:red
(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;chanroblesvirtualawlibrary
(2) Review, analyze and consolidate local, national
and corporate audit reports pertaining to the region;chanroblesvirtualawlibrary
(3) Upon delegation by the Commission Proper,
exercise authority on internal Commission administration on personnel,
planning, financial (budgetary and accounting), and legal matter
pertaining to the region; and
(4) Perform such other related functions as may be
assigned by the Chairman. chanroblesvirtualawlibrary
Section 20. Auditing units; qualifications and
assignment of heads. — (1) There shall be in each agency of the
government an auditing unit which shall be provided by the audited
agency with a suitable and sufficient office space together with
supplies, equipment, furniture, and other necessary operating expenses
for its proper maintenance, including expenses for travel and
transportation. chanroblesvirtualawlibrary
(2) The auditing unit shall be headed by an auditor
assigned by the Commission who shall be a certified public accountant
or a member of the Bar or a holder of a college degree in commerce or
business administration; major in accounting.
(3) The corresponding assignment orders issued by the
Commission to such auditors and their support personnel holding core
auditing positions shall be supplementary to their appointments which
are without specifications of station.
(4) The Commission shall have the authority to make
changes in such assignments and to effect a periodic reshuffle of heads
of auditing units as well as their support personnel whenever the
exigencies of the service so require. However, such changes and
reshuffle shall not affect the tenure of office of the incumbents of
the positions involved and shall not constitute a demotion or reduction
in rank or salary, nor result in a change in status.
Section 21. Auditing units for newly-created
agencies. — The creation of every new agency shall be construed to
include the establishment of an auditing unit therein, and the
appropriation or allotment therefor is deemed to include the amounts
necessary to provide such agency with adequate auditing services as
determined by the Commission.
Section 22. Number and compensation of auditing
personnel. — (1) The assignment of Commission representatives and
support personnel to agencies of the government shall be determined
solely by the Commission.
(2) The salaries and other forms of compensation of
the personnel of the Commission shall follow a common position
classification and compensation plan regardless of agency of
assignment, and shall be subject to P.D. No. 985.
(3) All officials and employees of the Commission,
including its representatives and support personnel shall be paid their
salaries, emoluments, and allowances directly by the Commission out of
its appropriations and contributions, as provided in this Code.
Section 23. Professionalization of audit service. —
The Commission shall develop and adopt for its officials and employees
a comprehensive and continuing manpower and development program. chanroblesvirtualawlibrary
Section 24. Appropriations and funding. — (1) The
amount of appropriations for the annual operating expenses of the
Commission, including the salaries, allowances and other emoluments of
all its officials and employees and its central and regional offices as
well as in the auditing units in the various national and local
government agencies, including government-owned or controlled
corporation, shall be included in the annual general appropriations
law. The usage of these funds shall be governed by the general
appropriations and other budget laws;chanroblesvirtualawlibrary
(2) All government-owned or controlled corporations,
including their subsidiaries, and self-governing boards, commissions,
or agencies of the government shall appropriate in their respective
budgets and remit to the National Treasury an amount at least
equivalent to the appropriation for the salaries and allowances of the
representative and staff of the Commission during the preceding fiscal
year;chanroblesvirtualawlibrary
(3) A maximum of one-half of one per-centum (1/2 of
1%) of the collections from national internal revenue taxes not
otherwise accruing to Special Funds or Special Accounts in the General
Fund of the National Government, upon authority from the Minister
(Secretary) of Finance, shall be deducted from such collections and
shall be remitted to the National Treasury to cover the cost of
auditing services rendered to local government units;chanroblesvirtualawlibrary
(4) The amount estimated to be earned as a result for
the assessments on government-owned or controlled corporations, local
government units, and other agencies as provided for in this Section
shall be taken into consideration in the preparation of the annual
budget of the Commission, in accordance with pertinent budget laws. The
General Appropriations law shall provide each year for the cost of
Commission operations as may be supported by available funds, in order
to meet the audit requirements of national and local government units
and of government-owned or controlled corporations and other agencies
covered by this Code.
CHAPTER II
Jurisdiction, Powers and Functions of the Commission
Section 25. Statement of objectives. — In keeping
with its Constitutional mandate, the Commission adheres to the
following primary objectives:cralaw:red
(1) To determine whether or not the fiscal
responsibility that rests directly with the head of the government
agency has been properly and effectively discharged;chanroblesvirtualawlibrary
(2) To develop and implement a comprehensive audit
program that shall encompass an examination of financial transactions,
accounts, and reports, including evaluation of compliance with
applicable laws and regulations; chanroblesvirtualawlibrary
(3) To institute control measures through the
promulgation of rules and regulations governing the receipts,
disbursements, and uses of funds and property, consistent with the
total economic development effort of the government;chanroblesvirtualawlibrary
(4) To promulgate auditing and accounting rules and
regulations so as to facilitate the keeping, and enhance the
information value, of the accounts of the government; chanroblesvirtualawlibrary
(5) To adopt measures calculated to hasten the full
professionalization of its services;chanroblesvirtualawlibrary
(6) To institute measures designed to preserve and
ensure the independence of its representatives; and
(7) To endeavor to bring its operations closer to the
people by the delegation of authority through decentralization,
consistent with the provisions of the new Constitution and the laws.
Section 26. General jurisdiction. — The authority and
powers of the Commission shall extend to and comprehend all matters
relating to auditing procedures, systems and controls, the keeping of
the general accounts of the Government, the preservation of vouchers
pertaining thereto for a period of ten years, the examination and
inspection of the books, records, and papers relating to those
accounts; and the audit and settlement of the accounts of all persons
respecting funds or property received or held by them in an accountable
capacity, as well as the examination, audit, and settlement of all
debts and claims of any sort due from or owing to the Government or any
of its subdivisions, agencies and instrumentalities. The said
jurisdiction extends to all government-owned or controlled
corporations, including their subsidiaries, and other self-governing
boards, commissions, or agencies of the Government, and as herein
prescribed, including non-governmental entities subsidized by the
government, those funded by donations through the government, those
required to pay levies or government share, and those for which the
government has put up a counterpart fund or those partly funded by the
government.
Section 27. Appointing power. — The Commission Proper
shall appoint, subject to Civil Service Law the officials and employees
of the Commission whenever they are stationed or assigned.
Section 28. Examining authority. — The Commission
shall have authority to examine books, papers, and documents filed by
individuals and corporations with, and which are in the custody of,
government offices in connection with government revenue collection
operations, for the sole purpose of ascertaining that all funds
determined by the appropriate agencies as collectible and due the
government have actually been collected, except as otherwise provided
in the Internal Revenue Code of 1977.
Section 29. Visitorial Authority. — (1) The
Commission shall have visitorial authority over non-government entities
subsidized by the government, those required to pay levies or
government share, those which have received counterpart funds from the
government or are partly funded by donations through the government,
the said authority however pertaining only to the audit of those funds
or subsidiaries coming from or through the government.
(2) Upon direction of the President (Prime Minister),
the Commission shall likewise exercise visitorial authority over
non-governmental entities whose loans are guaranteed by the Government,
provided that such authority shall pertain only to the audit of the
government's contingent liability. chanroblesvirtualawlibrary
Section 30. Fees for audit and other services. — (1)
The Commission shall fix and collect reasonable fees for the different
services rendered to non-government entities that shall be audited in
connection with their dealings with the government arising from
subsidies, counterpart funding by government, or where audited records
become the basis for a government levy or share. Fees of this nature
shall accrue to the General Fund and shall be remitted to the Treasurer
of the Philippines within 10 days following completion of the
audit. chanroblesvirtualawlibrary
(2) Whenever the Commission contracts with any
government entity, to render audit and related services beyond the
normal scope of such services, the Commission is empowered to fix and
collect reasonable fees. Such fees shall either be appropriated in the
agency's current budget, charged against its savings, or appropriated
in its succeeding year's budget. Remittance shall accrue to the General
Fund and shall be made to the Treasurer of the Philippines within the
time provided for in the contract of service, or in the billing
rendered by the Commission.
Section 31. Deputization of private licensed
professionals to assist government auditors. — (1) The Commission may,
when the exigencies of the service so require, deputize and retain in
the name of the Commission such certified public accountants and other
licensed professionals not in the public service as it may deem
necessary to assist government auditors in undertaking specialized
audit engagements.
(2) The deputized professionals shall be entitled to
such compensation and allowances as may be stipulated, subject to
pertinent rules and regulations on compensation and fees.
Section 32. Government contracts for auditing,
accounting, and related services. — (1) No government agency shall
enter into any contract with any private person or firm for services to
undertake studies and services relating to government auditing,
including services to conduct, for a fee, seminars or workshops for
government personnel on these topics, unless the proposed contract is
first submitted to the Commission to enable it to determine if it has
the resources to undertake such studies or services. The Commission may
engage the services of experts from the public or private sector in the
conduct of these studies.
(2) Should the Commission decide not to undertake the
study or service, it shall nonetheless have the power to review the
contract in order to determine the reasonableness of its costs.
Section 33. Prevention of irregular, unnecessary,
excessive, or extravagant expenditures of funds or uses of property;
power to disallow such expenditures. — The Commission shall promulgate
such auditing and accounting rules and regulations as shall prevent
irregular, unnecessary, excessive, or extravagant expenditures or uses
of government funds or property.
Section 34. Settlement of accounts between agencies.
— The Commission shall have the power, under such regulations as it may
prescribe, to authorize and enforce the settlement of accounts
subsisting between agencies of the government.
Section 35. Collection of indebtedness due the
government. — The Commission shall, through proper channels, assist in
the collection and enforcement of all debts and claims, and the
restitution of all funds or the replacement or payment at a reasonable
price of property, found to be due the Government, or any of its
subdivisions, agencies or instrumentalities, or any government-owned or
controlled corporation or self-governing board, commission or agency of
the government, in the settlement and adjustment of its accounts. If
any legal proceeding is necessary to that end, the Commission shall
refer the case to the Solicitor General, the Government Corporate
Counsel, or the legal staff of the creditor government office or agency
concerned to institute such legal proceeding. The Commission shall
extend full support in the litigation. All such moneys due and payable
shall bear interest at the legal rate from the date of written demand
by the Commission.
Section 36. Power to compromise claims. — (1) When
the interest of the government so requires, the Commission may
compromise or release in whole or in part, any claim or settled
liability to any government agency not exceeding ten thousand pesos and
with the written approval of the Prime Minister, it may likewise
compromise or release any similar claim or liability not exceeding one
hundred thousand pesos, the application for relief therefrom shall be
submitted, through the Commission and the Prime Minister, with their
recommendations, to the National Assembly.
(2) The respective governing bodies of
government-owned or controlled corporations, and self-governing boards,
commissions or agencies of the government shall have the exclusive
power to compromise or release any similar claim or liability when
expressly authorized by their charters and if in their judgment, the
interest of their respective corporations or agencies so requires. When
the charters do not so provide, the power to compromise shall be
exercised by the Commission in accordance with the preceding
paragraph. chanroblesvirtualawlibrary
(3) The Commission may, in the interest of the
government, authorize the charging or crediting to an appropriate
account in the National Treasury, small discrepancies (average or
shortage) in the remittances to and disbursements of the National
Treasury, subject to the rules and regulations as it may
prescribe. chanroblesvirtualawlibrary
Section 37. Retention of money for satisfaction of
indebtedness to government. — When any person is indebted to any
government agency, the Commission may direct the proper officer to
withhold the payment of any money due such person or his estate to be
applied in satisfaction of the indebtedness.
Section 38. Authority to examine accounts of public
utilities. — (1) The Commission shall examine and audit the books,
records, and accounts of public utilities in connection with the fixing
of rates of every nature, or in relation to the proceedings of the
proper regulatory agencies, for purposes of determining franchise taxes.
(2) During the examination and audit, the public
utility concerned shall produce all the reports, records, books of
accounts and such other papers as may be required. The Commission shall
have the power to examine under oath any official or employee of the
said public utility.
(3) Any public utility refusing to allow an
examination and audit of its books of accounts and pertinent records,
or offering unnecessary obstruction to the examination and audit, or
found guilty of concealing any material information concerning its
financial status shall be subject to the penalties provided by law.
Section 39. Submission of papers relative to
government obligations. — (1) The Commission shall have the power, for
purposes of inspection, to require the submission of the original of
any order, deed, contract, or other document under which any collection
of, or payment from, government funds may be made, together with any
certificate, receipt, or other evidence in connection therewith. If an
authenticated copy is needed for record purposes, the copy shall upon
demand be furnished.
(2) In the case of deeds to property purchased by any
government agency, the Commission shall require a certificate of title
entered in favor of the government or other evidence satisfactory to it
that the title is in the government.
(3) It shall be the duty of the officials or
employees concerned including those in non-government entities under
audit, or affected in the audit of government and non-government
entities, to comply promptly with these requirements. Failure or
refusal to do so without justifiable cause shall constitute a ground
for administrative disciplinary action as well as for disallowing
permanently a claim under examination, assessing additional levy or
government share, or withholding or withdrawing government funding or
donations through the government.
Section 40. Investigatory and inquisitorial powers;
power to punish for contempt. — (1) The Chairman or any Commissioner of
the Commission, the central office managers, the regional directors,
the auditors of any government agency, and any other official or
employee of the Commission specially deputed in writing for the purpose
by the Chairman shall, in compliance with the requirement of due
process, have the power to summon the parties to a case brought before
the Commission for resolution, issue subpoena and subpoena duces tecum,
administer oaths, and otherwise take testimony in any investigation or
inquiry on any matter within the jurisdiction of the Commission.
(2) The Commission shall have the power to punish
contempt provided for in the Rules of Court, under the same procedure
and with the same penalties provided therein. Any violation of any
final and executory decision, order or ruling of the Commission shall
constitute contempt of the Commission. chanroblesvirtualawlibrary
Section 41. Annual report of the Commission. — (1)
The Commission shall submit to the President, the Prime Minister, and
the National Assembly not later than the last day of September of each
year an annual report on the financial condition and results of
operation of all agencies of the government which shall include
recommendations of measures necessary to improve the efficiency and
effectiveness of these agencies. chanroblesvirtualawlibrary
(2) To carry out the purposes of this section, the
chief accountant or the official in charge of keeping the accounts of a
government agency shall submit to the Commission year-end trial
balances and such other supporting or subsidiary statements as may be
required by the Commission not later than the fourteenth day of
February. Trial balances returned by the Commission for revision due to
non-compliance with accounting rules and regulations, shall be
resubmitted within three days after the date of receipt by the official
concerned.
(3) Failure on the part of any official or employee
to comply with the provisions of the immediately preceding paragraph
shall cause the automatic suspension of the payment of his salary and
other emoluments until he shall have complied therewith. The violation
of these provisions for at least three times shall subject the offender
to administrative disciplinary action.
Section 42. Statement of monthly receipts and
disbursements. — The Commission shall forward to the Minister
(Secretary) of Finance, as soon as practicable and within sixty days
after the expiration of each month, a statement of all receipts of the
national government of whatever class, and payments of moneys made on
warrants or otherwise during the preceding month.
Section 43. Powers, functions, and duties of auditors
as representatives of the Commission. — (1) The auditors shall exercise
such powers and functions as may be authorized by the Commission in the
examination, audit and settlement of the accounts, funds, financial
transactions, and resources of the agencies under their respective
audit jurisdiction.
(2) A report of audit for each calendar year shall be
submitted on the last working day of February following the close of
the year, by the head of each auditing unit through the Commission to
the head or the governing body of the agency concerned, and copies
thereof shall be furnished the government officials concerned or
authorized to receive them. Subject to such rules and regulations as
the Commission may prescribe from time to time, the report shall set
forth the scope of audit and shall include a statement of financial
condition; a statement of surplus or deficit analysis; a statement of
operations; a statement of changes in financial position; and such
comments and information as may be necessary together with such
recommendations with respect thereto as may be advisable, including a
report of any impairment of capital noted in the audit. It shall also
show specifically any program, expenditure, or other financial
transaction or undertaking observed in the course of audit which in the
opinion of the auditor has been carried out or made without authority
of law. The auditor shall render such other reports as the Commission
may require. chanroblesvirtualawlibrary
(3) In the performance of their respective audit
functions as herein specified, the auditors shall employ such auditing
procedures and techniques as are determined by the Commission under
regulations that it may promulgate.
(4) The auditors in all auditing units shall have the
custody, and be responsible for the safekeeping and preservation of
paid expense vouchers, journal vouchers, stubs of treasury warrants or
checks, reports of collections and disbursements and similar documents
together with their respective supporting papers, under regulations of
the Commission.
Section 44. Check and audit of property or supplies.
— The auditor shall from time to time conduct a careful and thorough
check and audit of all property or supplies of the agency to which he
is assigned. Such check and audit shall not be confined to a mere
inspection and examination of the pertinent vouchers, inventories, and
other papers but shall include an ocular verification of the existence
and condition of the property or supplies. The recommendation of the
auditor shall be embodied in the proper report.
Section 45. Annual audit and work program. — Each
auditor who is the head of an auditing unit shall develop and devise an
annual work program and the necessary audit program for his unit in
accordance with regulations of the Commission.
Section 46. Seizure of office by auditor. — (1) The
books accounts, papers and cash of any local treasurer or other
accountable officer shall at all times be open to the inspection of the
Commission or its duly authorized representative.
(2) In case an examination of the accounts of a local
treasurer discloses a shortage in cash which should be on hand, it
shall be the duty of the examining officer to seize the office and its
contents, notify the Commission and the local chief executive and
thereupon immediately take full possession of the office and its
contents, close and render his accounts to the date of taking
possession, and temporarily continue the public business of such office.
(3) The auditor who takes possession of the office of
the local treasurer under this section shall ipso facto supersede the
local treasurer until the officer involved is restored, or other
provision has been lawfully made for filling the office.
Section 47. Constructive distraint of property of
accountable Office. — (1) Upon the discovery in audit of a shortage in
the accounts of any accountable officer and upon a finding of a prima
facie case of malversation of public funds or property against him, in
order to safeguard the interest of the Government, the Commission may
place under constructive distraint personal property of the accountable
officer concerned where there is reasonable ground to believe that the
said officer is retiring from the government service or intends to
leave the Philippines or remove his property therefrom or hide or
conceal his property. chanroblesvirtualawlibrary
The constructive distraint shall be effected by requiring the
accountable officer concerned or any other person having possession or
control of the property to accomplish a receipt in the form prescribed
by the Commission, covering the property distrained and obligate
himself to preserve the same intact and unaltered and not to dispose of
it in any manner whatever without the express authority of the
Commission.
(2) In case the said accountable officer or other
person having the possession and control of the property sought to be
placed under constructive distraint refuses or fails to accomplish the
receipt herein referred to, the representative of the Commission,
effecting the constructive distraint shall proceed to prepare a list of
such property and in the presence of two witnesses leave a copy thereof
in the premises where the property distrained is located after which
the said property shall be deemed to have been placed under the
constructive distraint.
CHAPTER III
Decisions of the Commission
Section 48. Appeal from decision of auditors. — Any
person aggrieved by the decision of an auditor of any government agency
in the settlement of an account or claim may within six months from
receipt of a copy of the decision appeal in writing to the Commission.
Section 49. Period for rendering decisions of the
Commission. — The Commission shall decide any case brought before it
within sixty days from the date of its submission for resolution. If
the account or claim involved in the case needs reference to other
persons or offices, or to a party interested, the period shall be
counted from the time the last comment necessary to a proper decision
is received by it.
Section 50. Appeal from decisions of the Commission.
— The party aggrieved by any decision, order or ruling of the
Commission may within thirty days from his receipt of a copy thereof
appeal on certiorari to the Supreme Court in the manner provided by law
and the Rules of Court. When the decision, order, or ruling adversely
affects the interest of any government agency, the appeal may be taken
by the proper head of that agency. chanroblesvirtualawlibrary
Section 51. Finality of decisions of the Commission
or any auditor. — A decision of the Commission or of any auditor upon
any matter within its or his jurisdiction, if not appealed as herein
provided, shall be final and executory.
Section 52. Opening and revision of settled accounts.
— (1) At any time before the expiration of three years after the
settlement of any account by an auditor, the Commission may motu propio
review and revise the account or settlement and certify a new balance.
For that purpose, it may require any account, vouchers, or other papers
connected with the matter to be forwarded to it.
(2) When any settled account appears to be tainted
with fraud, collusion, or error calculation, or when new and material
evidence is discovered, the Commission may, within three years after
the original settlement, open the account, and after a reasonable time
for reply or appearance of the party concerned, may certify thereon a
new balance. An auditor may exercise the same power with respect to
settled accounts pertaining to the agencies under his audit
jurisdiction.
(3) Accounts once finally settled shall in no case be
opened or reviewed except as herein provided.
TITLE II
Government Auditing
CHAPTER I
Basic Policies and Standards
Section 53. Definition of government auditing. —
Government Auditing is the analytical and systematic examination and
verification of financial transactions, operations, accounts, and
reports of any government agency for the purpose of determining their
accuracy, integrity, and authenticity, and satisfying the requirements
of law, rules and regulations.
The conduct of government audit shall conform with the auditing
standards set forth in the following three sections.
Section 54. General standards. — (1) The audit shall
be performed by a person possessed with adequate technical training and
proficiency as auditor.
(2) In all matters relating to the audit work, the
auditor shall maintain complete independence, impartiality and
objectivity shall avoid any possible compromise of his independence or
any act which may create a presumption of lack of independence or the
possibility of undue influence in the performance of his duties.
(3) The auditor shall exercise due professional care
and be guided by applicable laws, regulations and the generally
accepted principles of accounting in the performance of the audit work
as well as in the preparation of audit and financial reports.
Section 55. Examination and evaluation standards. —
(1) The audit work shall be adequately planned and assistants shall be
properly supervised. chanroblesvirtualawlibrary
(2) A review shall be made of compliance with legal
and regulatory requirements.
(3) An evaluation shall be made of the system of
internal control and related administrative practices to determine the
extent they can be relied upon to ensure compliance with laws and
regulations and to provide for efficient, economical and effective
operations.
(4) The auditor shall obtain through inspections,
observation, inquiries, confirmation and other techniques, sufficient
competent evidential matter to afford himself a reasonable basis for
his opinions, judgments, conclusions, and recommendations.
Section 56. Reporting standards. — (1) Audit reports
shall be dated, signed manually and shall be issued and distributed in
the manner provided by regulations of the Commission.
(2) Audit reports shall contain basically the
transmittal statement, scope and objectives of the audit and time
period examined highlights, financial information, findings,
recommendations and conclusions as well as other data that may provide
the management of the audited agency with the necessary input for the
decision-making process. Tables, charts, graphs and other data to
detail the conditions and facts shall be used in proper cases.
(3) Audit reports shall meet the following reporting
criteria:cralaw:red
(a) Factual matter must be accurately, completely and
fairly presented.
(b) Findings must be presented objectively and in
language as clear and simple as the subject matter permits.
(c) Findings must be adequately supported by evidence
in the audit working papers.
(d) Reports must be concise yet complete enough to be
readily understood by the users.
(e) Information on underlying causes of problems must
be included so as to assist in implementing or devising corrective
actions.
(4) Audit reports shall:cralaw:red
(a) Put primary emphasis on improvement; critical
comments shall be presented in balanced perspective, recognizing
unusual difficulties or circumstances faced by officials
concerned. chanroblesvirtualawlibrary
(b) Identify and explain issued and questions needing
further study and consideration by the auditor, the agency or others.
(c) Include recognition or noteworthy accomplishments
particularly when management improvements in one area or activity may
be applied elsewhere.
(d) Include recognition of the views of responsible
officials of the agency audited on the auditors findings, conclusions
and recommendations. Except where the possibility of fraud or other
compelling reason may require different treatment, the auditor's
tentative findings and conclusions should be reviewed with officials.
When possible, without undue delay, their view should be obtained in
writing and objectively considered and presented in the final report.
(e) State whether any significant pertinent
information has been omitted because it is deemed confidential. The
nature of such information should be described and the law or other
basis under which it is withheld should be stated.
(5) Audit reports accompanying financial reports
shall:cralaw:red
(a) State whether the audit was made in accordance
with generally accepted auditing standards, and shall disclose the
omission of any auditing procedure generally recognized as normal or
deemed necessary by him under the circumstances of a particular case,
as well as the reasons for the omission. Nothing in this section,
however, shall be construed to imply authority for the omission of any
procedure which auditors would ordinarily employ in the course of audit.
(b) Express the auditor's opinion with respect to —chanroblesvirtualawlibrary
i) whether the financial report have been presented
fairly in accordance with applicable laws and regulations and the
generally accepted accounting principles applied on a consistent basis.
ii) material changes in accounting principles and
practices and their effect on the financial reports.
(c) Identity any matter to which he takes exception
and shall specifically and clearly state his exceptions together with a
statement on the effect thereof, to the extent practicable, on the
related financial report. chanroblesvirtualawlibrary
(d) Contain appropriate supplementary explanatory
information about the contents of the financial report as may be
necessary for full and informative disclosure about the financial
operations of the agency audited.
(e) Explain violations of legal or other regulatory
requirements, including instances of non-compliance. chanroblesvirtualawlibrary
CHAPTER II
Audit Objectives
Section 57. Determination of audit procedures. — In
the determination of auditing procedures and techniques to be followed
and the extent of examination of vouchers and other documents by
government auditors, the Commission shall give due regard to generally
accepted principles of auditing and accounting organizations and
systems, including consideration of the effectiveness of internal
control and related administrative practices of the audited agencies.
Section 58. Audit of assets. — The examination and
audit of assets shall be performed with a view to ascertaining their
existence ownership, valuation and encumbrances as well as the
propriety of items composing the respective asset accounts, determining
their agreement with records, proving the accuracy of such records;
ascertaining if the assets were utilized economically, efficiently and
effectively; and evaluating the adequacy of controls over the accounts.
Section 59. Audit of Liabilities. — In his audit of
liabilities the auditor shall seek to establish that all obligations of
the agency have been accurately recorded; only bona fide obligations of
the agency have been included; the obligations incurred are properly
authorized; all provisions of trust indentures or mortgages are
complied with; and mortgages and other encumbrances are fully disclosed.
Section 60. Audit of revenue accounts. — The
examination and audit of revenue accounts shall be performed with a
view to ascertaining that earned revenues have been duly recorded; and
all recorded revenues have been earned and appropriate classifications
of revenues have been consistently followed.
Section 61. Audit of expense accounts. — The
examination of expense accounts shall be undertaken to ascertain that
all expenses incurred have been duly authorized; adequately funded and
documented; properly recorded; all recorded expenses have been actually
incurred; and the classifications of expenses are appropriate and have
been consistently followed.
Section 62. Audit of surplus or networth. — The audit
of surplus or networth shall seek to determine the nature of the
surplus, whether current or invested surplus; the amount of current
surplus available to cover appropriations for the operational expenses
of the government, the propriety of the ledger accounts and balance
sheet presentation account; and the proper authority and recording of
changes in the capital structure made during the period under audit.
CHAPTER III
Receipt and Disposition of Funds and Property
Section 63. Accounting for moneys and property
received by public officials. — Except as may otherwise be specifically
provided by law or competent authority all moneys and property
officially received by a public officer in any capacity or upon any
occasion must be accounted for as government funds and government
property. Government property shall be taken up in the books of the
agency concerned at acquisition cost or an appraised value.
Section 64. Designation of collecting officers for
government agencies. — The head of an agency may designate such number
of collecting officers or agents may be deemed necessary. They shall
render reports of their collections, under the regulations of the
Commission, to be submitted promptly to the auditor concerned who shall
conduct the necessary examination land audit within thirty days from
receipt thereof.
Section 65. Accrual of income to unappropriated
surplus of the General Fund. — (1) Unless otherwise specifically
provided by law, income accruing to the agencies by virtue of the
provisions of law, orders and regulations shall be deposited in the
National Treasury or in any duly authorized government depository, and
shall accrue to the unappropriated surplus of the General Fund of the
Government.
(2) Amounts received in trust and from business-type
activities of government may be separately recorded and disbursed in
accordance with such rules and regulations as may be determined by a
Permanent Committee composed of the Secretary (Minister) of Finance as
Chairman, and the Commissioner of the Budget and the Chairman,
Commission of Audit, as members.
Section 66. Special, Fiduciary and Trust Funds. —
Receipts shall be recorded as income of Special Fiduciary of Trust
Funds or Funds other than the General Fund only when authorized by law
as implemented by rules and regulations issued by the Permanent
Committee created in the preceding section.
Section 67. Warrants and checks receivables in
payment for taxes or other indebtedness to the government. — (1) An
office charged with the collection of revenue or the receiving of
moneys payable to the government shall accept payment for taxes, dues
or other indebtedness to the government in the form of checks and
warrants issued in payment of government obligations, upon proper
indorsement and identification of the payee or indorsee. Checks drawn
in favor of the government in payment of any such indebtedness shall
likewise be accepted by the officer concerned.
(2) When a check drawn in favor of the government is
not accepted by the drawee bank for any reason, the drawer shall
continue to be liable for the sum due and all penalties resulting from
delayed payment. Where the reason for non-acceptance by the drawee bank
is insufficiency of funds, the drawer shall be criminally liable
therefore.
(3) At no instance should money in the hands of the
collecting officer be utilized for the purpose of encashing private
checks.
Section 68. Issuance of Official receipt. — (1) No
payment of any nature shall be received by a collecting officer without
immediately issuing an official receipt in acknowledgement thereof. The
receipt may be in the form of postage, internal revenue or documentary
stamps and the like, or officially numbered receipts, subject to proper
custody, accountability, and audit.
(2) Where mechanical devices are used to acknowledge
cash receipts, the Commission may approve, upon request, exemption from
the use of accountable forms.
Section 69. Deposit of moneys in the treasury. — (1)
Public officers authorized to receive and collect moneys arising from
taxes, revenues, or receipts of any kind shall remit or deposit intact
the full amounts so received and collected by them to the treasury of
the agency concerned and credited to the particular accounts to which
the said moneys belong. The amount of the collections ultimately
payable to other agencies of the government shall thereafter be
remitted to the respective treasuries of these agencies, under
regulations which the Commission and the Department (Ministry) of
Finance shall prescribe.
(2) When exigencies of the service so require, under
such rules and regulations as the Commission and the Department
(Ministry) of Finance may prescribe, postmasters may be authorized to
use their collections to pay money orders, telegraphic transfer and
withdrawals from the proper depository bank whenever their cash advance
funds for the purpose have been exhausted. The amount of collections so
used shall be restored upon receipt by the postmaster of the
replenishment of his cash advance. chanroblesvirtualawlibrary
(3) Pending remittance to the proper treasury,
collecting officers may temporarily deposit collections received by
them with any treasury, subject to regulations of the Commission.
(4) The respective treasuries of those agencies shall
in turn deposit with the proper government depository the full amount
of the collections not later than the following banking day.
Section 70. Acknowledgement of receipt for funds. —
Under such rules and regulations as the Commission and the Department
(Ministry) of Finance may prescribe, the Treasurer of the Philippines
and all authorized depository banks shall acknowledge receipt of all
funds received by them, the acknowledgement bearing the date of actual
remittance or deposit and indicating from whom and on what account it
was received.
Section 71. Creditors' unclaimed balances. — (1)
There shall be maintained in the books of the Commission an account
designated "Creditors' Unclaimed Balances" to the credit of which shall
be deposited all moneys for which there is no present rightful
claimant. Money accruing to this account shall be held exclusively for
the payment of pertinent obligations against it, when certified by the
Commission, not in excess of the respective amounts which accrued to
that account by reason of these obligations.
(2) After remaining unclaimed for a period of ten
years, money in this account shall revert as treasury funds, to the
agency that made the deposit, or, in the absence thereof to the
national government.
Section 72. Shipment of government funds or property
by carrier; notation of evidence of loss. — When government funds or
property are transported from one place to another by carrier, it shall
be upon proper bill of lading or receipt from the carrier, it shall be
the duty of the consignee or his representative to make full notation
of any evidence of loss, shortage, or damage, upon the bill of lading
or receipt before accomplishing it.
Section 73. Credit for loss occurring in transit or
due to casualty or force majeure. — (1) When a loss of government funds
or property occurs while they are in transit or the loss is caused by
fire, theft, or other casualty or force majeure, the officer
accountable therefore or having custody thereof shall immediately
notify the Commission or the auditor concerned and, within thirty days
or such longer period as the Commission or auditor may in the
particular case allow, shall present his applicable for relief, with
the available supporting evidence. Whenever warranted by the evidence
credit for the loss shall be allowed. An officer who fails to comply
with this requirement shall not be relieved of liability or allowed
credit for any loss in the settlement of his accounts.
(2) The Commission shall promulgate rules and
regulations to implement the provisions of this section.
Section 74. Monthly reports of depositories to agency
head. — At the close of each month, depositories shall report to the
agency head, in such from as he may direct, the condition of the agency
account standing on their books. The head of the agency shall see to it
that a reconciliation is made between the balance shown in the reports
and the balance found in the books of the agency.
Section 75. Transfer of funds from one officer to
another. — Transfer of government funds from one officer to another
shall, except as allowed by law or regulation, be made only upon prior
direction or authorization, of the Commission or its
representative. chanroblesvirtualawlibrary
Section 76. Transfer of property between government
agencies. — Any government property that is no longer serviceable or
needed by the agency to which it belongs may be transferred without
cost, or at an appraised value, to other agencies of the government
upon authority of the respective heads of agencies in the national
government, or of the governing bodies of government-owned or
controlled corporations, other self-governing boards or commissions or
the government, or of the local legislative bodies for local government
units concerned.
Section 77. Invoice and receipt upon transfer of
funds or property. — When government funds or property are transferred
from one accountable officer to another, or from an outgoing officer to
his successor, it shall be done upon properly itemized invoice and
receipt which shall invariably support the clearance to be issued to
the relieved or out-going officer, subject to regulations of the
Commission.
Section 78. Disposition of funds or property held by
deceased, incapacitated, absconding, or superseded accountable officer.
— (1) When an officer, accountable for government funds or property
absconds with them dies, or becomes incapacitated in the performance of
his duties, the proper agency head shall designate a custodian to take
charge of the funds or property until a successor shall have been
appointed and qualified. The agency head may appoint a committee to
count the cash and take an inventory of the property for which the
officer was accountable and to determine the responsibility for any
shortage therein. One copy of the inventory and of the report of the
Committee duly certified shall be filed with the Commission but the
findings of the committee shall not be conclusive until approved by the
Commission or its duly authorized representative.
(2) If the absconding, deceased, incapacitated, or
superseded officer is accountable for funds or property of a province
or city, the custodian and committee shall be designated by the
Minister (Secretary) of Finance, and if accountable for municipal or
barrio (barangay) funds or property, by the provincial treasurer. In
all other respects, the above-prescribed proceedings shall be
observed. chanroblesvirtualawlibrary
(3) If the absconding, deceased, incapacitated, or
superceded officer is responsible to another who is accountable, the
latter may himself designate the committee or take other lawful
measures for the protection of his interest. chanroblesvirtualawlibrary
Section 79. Destruction or sale of unserviceable
property. — When government property has become unserviceable for any
cause, or is no longer needed, it shall, upon application of the
officer accountable therefor, be inspected by the head of the agency or
his duly authorized representative in the presence of the auditor
concerned and, if found to be valueless or unsalable, it may be
destroyed in their presence. If found to be valuable, it may be sold at
public auction to the highest bidder under the supervision of the
proper committee an award or similar body in the presence of the
auditor concerned or other duly authorized representative of the
Commission, after advertising by printed notice in the Official
Gazette, or for not less than three consecutive days in any newspaper
of general circulation, or where the value of the property does not
warrant the expense of publication, by notices posted for a like period
in at least three public places in the locality where the property is
to be sold. In the event that the public auction fails, the property
may be sold at a private sale at such price as may be fixed by the same
committee or body concerned and approved by the Commission.
Section 80. Final report of accountable officers. —
(1) An accountable officer, upon ceasing to act in his official
capacity as such, shall submit to the auditor of the agency concerned a
report of his accountability.
(2) Any remaining balance of such accountability
shall be deposited in the proper treasury without unnecessary
delay. chanroblesvirtualawlibrary
Section 81. Auditor's certificate of balance. —
Auditors of all government agencies, shall certify the balances arising
in the accounts settled by them to the Commission and to the proper
treasurer, collecting officer, or disbursing officer, in such form as
the Commission may prescribe, within sixty days from the date of
receipt of those accounts from the treasurer, collecting officer, or
disbursing officer concerned. chanroblesvirtualawlibrary
Section 82. Auditor's notice to accountable officer
of balance shown upon settlement. — The auditor concerned shall, at
convenient intervals, send a written notice under a certificate of
settlement to each officer whose accounts have been audited and settled
in whole or in part by him, stating the balances found due thereon and
certified, and the charges or differences arising from the settlement
by reason of disallowances, charges, or suspensions. The certificate
shall be properly itemized and shall state the reasons for
disallowance, charge, or suspension of credit. A charge of suspension
which is not satisfactorily explained within ninety days after receipt
of the certificate or notice by the accountable officer concerned shall
become a disallowance, unless the Commission or auditor concerned
shall, in writing and for good cause shown, extend the time for answer
beyond ninety days.
Section 83. Transcript of auditor's record as
evidence of liability. — In any criminal or civil proceeding against an
officer for the embezzlement or misappropriation of government funds or
property, or to recover an amount due the government from an
accountable officer it shall be sufficient, for the purpose of showing
a balance against him, to produce the working papers of the auditor
concerned. A showing in this manner of any balance against the officer
shall be prima facie evidence of the misappropriation of the funds or
property unaccounted for or of civil liability of the officer as the
case may be. The existence or contents of bonds, contracts, or other
papers relating to or connected with the settlement of any account may
be proved by the production of certified copies thereof but the court
may require the production of the original when this appears to be
necessary for the attainment of justice.
CHAPTER IV
Application of Appropriated Funds
Section 84. Disbursement of government funds. — (1)
Revenue funds shall not be paid out of any public treasury or
depository except in pursuance of an appropriation law or other
specific statutory authority. chanroblesvirtualawlibrary
(2) Trust funds shall not be paid out of any public
treasury or depository except in fulfillment of the purpose for which
the trust was created or funds received, and upon authorization of the
legislative body, or head of any other agency of the government having
control thereof, and subject to pertinent budget law, rules and
regulations.
(3) National revenue and trust funds shall not be
withdrawn from the National Treasury except upon warrant or other
instruments of withdrawal approved by the Minister (Secretary) of
Finance as recommended by the Treasurer of the Philippines.
(4) Temporary investment of investible cash in the
National Treasury in any securities issued by the National Government
and its political subdivisions and instrumentalities including
government-owned or controlled corporations as authorized by the
Secretary (Minister) of Finance, shall not be construed as
disbursements of funds.
Section 85. Appropriation before entering into
contract. — (1) No contract involving the expenditure of public funds
shall be entered into unless there is an appropriation therefor, the
unexpended balance of which, free of other obligations, is sufficient
to cover the proposed expenditure.
(2) Notwithstanding this provision, contracts for the
procurement of supplies and materials to be carried in stock may be
entered into under regulations of the Commission provided that when
issued, the supplies and materials shall be charged to the proper
appropriation account.
Section 86. Certificate showing appropriation to meet
contract. — Except in the case of a contract for personal service, for
supplies for current consumption or to be carried in stock not
exceeding the estimated consumption for three months, or banking
transactions of government-owned or controlled banks no contract
involving the expenditure of public funds by any government agency
shall be entered into or authorized unless the proper accounting
official of the agency concerned shall have certified to the officer
entering into the obligation that funds have been duly appropriated for
the purpose and that the amount necessary to cover the proposed
contract for the current fiscal year is available for expenditure on
account thereof, subject to verification by the auditor concerned. The
certificate signed by the proper accounting official and the auditor
who verified it, shall be attached to and become an integral part of
the proposed contract, and the sum so certified shall not thereafter be
available for expenditure for any other purpose until the obligation of
the government agency concerned under the contract is fully
extinguished.
Section 87. Void contract and liability of officer. —
Any contract entered into contrary to the requirements of the two
immediately preceding sections shall be void, and the officer or
officers entering into the contract shall be liable to the government
or other contracting party for any consequent damage to the same extent
as if the transaction had been wholly between private parties.
Section 88. Prohibition against advance payment on
government contracts. — (1) Except with the prior approval of the
President (Prime Minister) the government shall not be obliged to make
an advance payment for services not yet rendered or for supplies and
materials not yet delivered under any contract therefor. No payment,
partial or final, shall be made on any such contract except upon a
certification by the head of the agency concerned to the effect that
the services or supplies and materials have been rendered or delivered
in accordance with the terms of the contract and have been duly
inspected and accepted. chanroblesvirtualawlibrary
(2) Notwithstanding the foregoing paragraph, any
government agency, with the approval of the proper department head, may
furnish supplies and materials to any party who has a contract with
that agency if the supplies and materials are needed in the performance
of the services being contracted for and the value thereof does not
exceed in any one month ten percent of the value of the services
already rendered due and unsettled as computed by the agency concerned.
Section 89. Limitations on cash advance. — No cash
advance shall be given unless for a legally authorized specific
purpose. A cash advance shall be reported on and liquidated as soon as
the purpose for which it was given has been served. No additional cash
advance shall be allowed to any official or employee unless the
previous cash advance given to him is first settled or a proper
accounting thereof is made.
Section 90. Payment of rewards. — When a reward
becomes payable by authority of law for information given relative to
any offense or for any act done in connection with the apprehension of
the offender, the reward shall, in the absence of special provisions,
be paid in such manner as shall be prescribed by executive order. The
final determination by the proper administrative authority pursuant to
law or any such order, as to whether or not the persons concerned are
entitled to any reward and the amount thereof, shall be conclusive upon
the executive agencies concerned as regards the liability of the
government.
Section 91. Payments to creditors. — Payments to
creditors shall be made only upon the specific approval of the head of
the agency concerned or his duly authorized representative, or if there
be no such officer, upon the approval of the department head endorsed
upon the warrant or check or voucher effecting the payment. chanroblesvirtualawlibrary
Section 92. Persons authorized to draw warrants or
checks for payment out of government funds. — (1) Warrants upon the
National Treasury or checks draw against duly authorized bank accounts
shall be drawn by the agency head having control of the appropriation
or fund against which the warrants or checks are chargeable, or by such
subordinate officer as shall be designated for that duty by the said
agency head, who shall all be duly deputized for the purpose by the
Treasurer of the Philippines. Copies of the designation shall be
furnished the Treasurer of the Philippines and the representative of
the Commission. Notice shall likewise be given to the Treasurer of the
Philippines and the Commission when the designation is revoked. No
member of the accounting unit or the internal control unit of the
agency may be designated to perform the duty.
(2) Warrants chargeable to national appropriations or
funds not under the control of an agency shall be drawn by such officer
as shall be specified by law, or, in the absence of that officer, by an
officer designated by the President (Prime Minister).
Section 93. To whom warrants or checks payable. —
Warrants chargeable to revenue or trust funds of the national
government or checks drawn against the Treasury Checking Account for
Agencies maintained with any government depository shall be made
payable either directly to the creditor to whom the money is due or to
a disbursing officer for official disbursement.
Section 94. Countersigning of warrants or checks by
auditors. — No warrant or check shall be paid by the Treasurer of the
Philippines, local treasurer, or any government depository unless it is
countersigned by a duly authorized official of the Commission. When in
the opinion of the Commission, the interest of the service so requires
the warrant or check may be paid without the countersignature under
such rules and regulations as it may prescribe from time to time.
Section 95. Treasurer's responsibility for
indorsements. — The Treasurer of the Philippines shall, within three
years from the date of payment by him, be responsible for the
indorsements on all warrants and checks and shall retain them in his
custody, after which they shall be disposed of under pertinent
regulations: Provided, that they are not needed for pending civil,
criminal or administrative proceedings. chanroblesvirtualawlibrary
Section 96. Payment of lost or fraudulently encashed
treasury warrants or checks. — When any check or warrant is lost,
stolen or destroyed, the issuing officer may issue a duplicate check or
warrant which shall be paid under regulations of the Commission in
regard to issuance and payment and upon the execution of a bond to
indemnify the issuing agency in such amount and with such security as
the Commission may require.
Treasury Warrant or check encashed under forged or fraudulent
indorsement shall be replaced by the Treasurer of the Philippines even
before the recovery of the equivalent amount under rules and
regulations that the Commission and the Department (Ministry) of
Finance shall prescribe.
The Clearing or Payment of Treasury warrant and check paid by bank or
other holder in due course and subsequently lost may be allowed under
regulations of the Commission and the Department (Ministry) of Finance.
Section 97. Disposition of stale warrants or checks.
— (1) A Treasury warrant or check which remains outstanding after two
years from date of its issue shall not be paid by the Treasurer of the
Philippines or by any duly authorized depository. The issuing agency
shall take up in its books of accounts the amount of this warrant or
check as surplus adjustment of the fund against which it was previously
charged. Upon presentation of a stale warrant or check, the issuing
agency shall cancel it and issue to the payee a substitute warrant or
check in lieu thereof.
(2) Such sum as may be necessary to meet the
obligation arising out of the issuance of substitute warrants or checks
chargeable against the general fund shall be charged to the current
year's General Appropriations law, subject to pertinent budget rules
and regulations. Substitute warrants or checks payable from funds other
than the general fund shall be paid from the appropriate funds.
Section 98. Reversion of unliquidated balances of
accounts payable. — The Commission upon notice to the head of agency
concerned may revert to the unappropriated surplus of the general fund
of the national government, any unliquidated balance of accounts
payable in the books of the national government, which has been
outstanding for two years or more and against which no actual claim,
administrative or judicial, has been filed or which is not covered by
perfected contracts on record. This section shall not apply to
unliquidated balances of accounts payable in trust funds as long as the
purposes for which the funds were created have not been accomplished.
Section 99. Transfer of unexpended balances to the
general fund. — The Commission may transfer at any time, from moneys
appropriated for a specific purpose, to the unappropriated general fund
any surplus balance standing to the credit of any appropriation or fund
when the officer having administrative control thereof certifies to the
Commission that there is a surplus in excess of the requirements, or
that the work or purpose for which the appropriation was made has been
completed, indefinitely postponed or abandoned, and that there is no
outstanding obligation to be paid therefrom.
Section 100. Reports of disbursing officers in a
government agency. — Disbursing officers in any government agency shall
render monthly reports of their transactions pursuant to regulations of
the Commission to be submitted not later than the fifth day of the
ensuing month to the auditor concerned who shall conduct the necessary
examination and audit within thirty days from receipt thereof.
CHAPTER V
Accountability and Responsibility for Government Funds and Property
Section 101. Accountable officers; bond requirement.
— (1) Every officer of any government agency whose duties permit or
require the possession or custody of government funds or property shall
be accountable therefor and for the safekeeping thereof in conformity
with law.
(2) Every accountable officer shall be properly
bonded in accordance with law.
Section 102. Primary and secondary responsibility. —
(1) The head of any agency of the government is immediately and
primarily responsible for all government funds and property pertaining
to his agency.
(2) Persons entrusted with the possession or custody
of the funds or property under the agency head shall be immediately
responsible to him, without prejudice to the liability of either party
to the government.
Section 103. General liability for unlawful
expenditures. — Expenditures of government funds or uses of government
property in violation of law or regulations shall be a personal
liability of the official or employee found to be directly responsible
therefor. chanroblesvirtualawlibrary
Section 104. Records and reports required by
primarily responsible officers. — The head of any agency or
instrumentality of the national government or any government-owned or
controlled corporation and any other self-governing board or commission
of the government shall exercise the diligence of a good father of a
family in supervising accountable officers under his control to prevent
the incurrence of loss of government funds or property, otherwise he
shall be jointly and solidarily liable with the person primarily
accountable therefore. The treasurer of the local government unit shall
likewise exercise the same degree of supervision over accountable
officers under his supervision otherwise, he shall be jointly and
solidarily liable with them for the loss of government funds or
property under their control.
Section 105. Measure of liability of accountable
officers. — (1) Every officer accountable for government property shall
be liable for its money value in case of improper or unauthorized used
or misapplication thereof, by himself or any person for whose acts he
may be responsible. He shall likewise be liable for all losses,
damages, or deterioration occasioned by negligence in the keeping or
use of the property whether or not it be at the time in his actual
custody.
(2) Every officer accountable for government funds
shall be liable for all losses resulting from the unlawful deposit,
use, or application thereof and for all losses attributable to
negligence in the keeping of the funds.
Section 106. Liability for acts done by direction of
superior officer. — No accountable officer shall be relieved from
liability by reason of his having acted under the direction of a
superior officer in paying out, applying, or disposing of the funds or
property with which he is chargeable, unless prior to that act, he
notified the superior officer in writing of the illegality of the
payment, application, or disposition. The officer directing any illegal
payment or disposition of the funds or property shall be primarily
liable for the loss, while the accountable officer who fails to serve
the required notice shall be secondarily liable. chanroblesvirtualawlibrary
Section 107. Time and mode of rendering account. — In
the absence of specific provision of law, all accountable officers
shall render their accounts, submit their vouchers, and make deposits
of money collected or held by them at such times and in such manner as
shall be prescribed in the regulations of the Commission.
Section 108. Prohibition against pecuniary interest.
— No accountable or responsible officer shall be pecuniary interested,
directly or indirectly, in any contract or transaction of the agency in
which he is such an officer.
TITLE III
Government Accounting
CHAPTER I
Basic Principles and Objectives
Section 109. Definition. — Government accounting
encompasses the processes of analyzing, recording, classifying,
summarizing and communicating all transactions involving the receipt
and disposition of government funds and property, and interpreting the
results thereof. chanroblesvirtualawlibrary
Section 110. Objectives of government accounting. —
Government accounting shallm to (1) produce information concerning past
operations and present conditions; (2) provide a basis for guidance for
future operations; (3) provide for control of the acts of public bodies
and officers in the receipt, disposition and utilization of funds and
property; and (4) report on the financial position and the results of
operations of government agencies for the information of all persons
concerned.
CHAPTER II
Accounts and Accounting
Section 111. Keeping of accounts. — (1) The accounts
of an agency shall be kept in such detail as is necessary to meet the
needs of the agency and at the same time be adequate to furnish the
information needed by fiscal or control agencies of the government.
(2) The highest standards of honesty, objectivity and
consistency shall be observed in the keeping of accounts to safeguard
against inaccurate or misleading information.
Section 112. Recording of financial transaction. —
Each government agency shall record its financial transactions and
operations conformity with generally accepted accounting principles and
in accordance with pertinent laws and regulations.
Section 113. Chart of accounts. — The chart of
accounts for government agencies shall be prescribed by the Commission
and shall be so designed as to permit agency heads to review their
activities according to selected areas of responsibility; allow for a
clearer definition of obligation accounting leading to more precise
budgetary control; provide for a wider range of analytical information
designed for use in management audit or legislative review; furnish
information regarding the production of income and the investment in
capital items which is of value in fiscal and economic planning; enable
tighter accounting control to be exercised over agencies' financial
relationship with the Treasury; permit a more simplified preparation of
trial balances and a simpler and more orderly preparation of trial
balances and a simpler and more orderly process of national
consolidation and facilitate the application of mechanized accounting
procedures for more effective protection against error and irregularity
and yielding economies in operation. chanroblesvirtualawlibrary
Section 114. The general ledger. — (1) The government
accounting system shall be on a double entry basis with a general
ledger in which all financial transactions are recorded.
(2) Subsidiary records shall be kept where necessary.
Section 115. Terminology and classification. — A
common terminology and classification shall be used consistently
throughout the budget, the accounts and the financial reports.
Section 116. Accounts classification. — To permit
effective budgetary control and to establish uniformity in financial
reports, accounts shall be classified in balanced fund groups. The
group for each fund shall include all accounts necessary to set forth
its operations and condition. All financial statements shall follow
this classification.
Section 117. Budgetary control accounts. — The
general accounting system shall include budgetary control accounts for
revenues, expenditures and debt, as provided by P.D. No. 1177.
Section 118. Accounting for unrealized revenues. —
Estimated revenues which remain unrealized at the close of the fiscal
year shall not be booked or credited to the unappropriated surplus or
any other account. chanroblesvirtualawlibrary
Section 119. Accounting for obligations and
expenditures. — All lawful expenditures and obligations incurred during
the year shall be taken up in the accounts of that year.
CHAPTER III
Accounting Reports
Section 120. Reporting requirements. — The Commission
shall issue the pertinent accounting rules and regulations whenever the
reporting requirements to be prescribed by the Budgetary Commission
pursuant to the budget law affect accounting functions of the various
agencies of the government.
Section 121. Financial reports and statements. — (1)
The financial reports prepared by the agencies shall comply with the
specific requirements of applicable laws and regulations as to nature,
accounting basis, content, frequency, and distribution as well as with
all applicable restrictions pertaining to information that is
classified for national security purposes. chanroblesvirtualawlibrary
(2) The financial statements shall be based on
official accounting records kept in accordance with law and the
generally accepted accounting principles and standards.
Section 122. Submission of reports. — Whenever deemed
necessary in the exigencies of the service, the Commission may under
regulations issued by it require the agency heads, chief accountants,
budget officers, cashiers, disbursing officers, administrative or
personnel officers, and other responsible officials of the various
agencies to submit trial balances, physical inventory reports, current
plantilla of personnel, and such other reports as may be necessary for
the exercise of its functions. chanroblesvirtualawlibrary
(2) Failure on the part of the officials concerned to
submit the documents and reports mentioned herein shall automatically
cause the suspension of payment of their salaries until they shall have
complied with the requirements of the Commission.
(3) No appropriation authorized in the General
Appropriations Act shall be available to pay the salary or any official
or employee who violates the provisions of this section, without
prejudice to any disciplinary action that may be instituted against
such official or employee.
CHAPTER IV
Internal Control Systems
Section 123. Definition of internal control. —
Internal control is the plan of organization and all the coordinate
methods and measures adopted within an organization or agency to
safeguard its assets, check the accuracy any reliability of its
accounting data, and encourage adherence to prescribed managerial
policies.
Section 124. Installation. — It shall be the direct
responsibility of the agency head to install, implement, and monitor a
sound system of internal control.
TITLE IV
Final Provisions
Section 125. Transitory provisions. — (1) Until such
time as the Commission shall have been fully constituted, the incumbent
Chairman or his successor shall continue to exercise all the power and
functions properly appertaining to the Commission. chanroblesvirtualawlibrary
(2) Pending implementation of the provisions of
Section 24, paragraph 2 of this Code, the agencies concerned shall
continue to provide the necessary amounts for the salaries, allowances
and other benefits for the representative and staff of the
Commission. chanroblesvirtualawlibrary
Section 126. Duty to respect the Commission's
independence. — It shall be the duty of every person to respect,
protect and preserve the independence of the Commission.
Section 127. Administrative disciplinary action. —
Subject to rules and regulations as may be approved by the President
(Prime Minister), any unjustified failure by the public officer
concerned to comply with any requirement imposed in this Code shall
constitute neglect of duty and shall be a ground for administrative
disciplinary action against the said public officer who, upon being
found guilty thereof after hearing, shall be meted out such penalty as
is commensurate with the degree of his guilt in accordance with the
Civil Service Law. Repeated unjustified failure to comply with the
requirements imposed in this Code shall be conclusive proof that the
public officer concerned is notoriously undesirable. chanroblesvirtualawlibrary
Section 128. Penal provision. — Any violation of the
provisions of Sections 67, 68, 89, 106, and 108 of this Code or any
regulation issued by the Commission implementing these sections, shall
be punished by a fine not exceeding one thousand pesos or by
imprisonment not exceeding six (6) months, or both such fine and
imprisonment in the discretion of the court.
Section 129. Separability clause. — Should any
provision of this Code or any part thereof be declared invalid, the
other provisions, so far as they are separable from the invalid one,
shall remain in force and effect.
Section 130. Repealing clause. — Chapter 26
(Accounting Law) of Act 2711 is hereby repealed. All other laws,
executive orders, proclamations, decrees, instructions, rules and
regulations, or parts thereof which are inconsistent or in conflict
with any provision of this Code shall be deemed repealed or modified
accordingly. chanroblesvirtualawlibrary
Section 131. Effectivity clause. — This Code shall
take effect three months after the completion of its publication in the
Official Gazette.
Done in the City of Manila,
this 11th day of June, in the year of Our Lord, nineteen hundred and
seventy-eight.
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