Posted by: Elmer Brabante | February 7, 2011

Government Auditing Code (PD 1445)

Presidential Decree No. 1445




Section 1: Title

The 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 utilised in accordance with law and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned.

Section 3: Definition of Terms

Whether used in this Code, the following terms shall be taken and understood in the sense indicated hereunder, unless the context otherwise requires:

(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 fulfilment of some obligation.

(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.

(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 of 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:

(1) No money shall be paid out of any public treasury or depository except in pursuance of an appropriation law or other specific statutory authority.

(2) Government funds or property shall be spent or used solely for public purposes.

(3) Trust funds shall be available and may be spent only for the specific purpose for which the trust was created or the funds received.

(4) Fiscal responsibility shall, to the greatest extent, be shared by all those exercising 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.





Section 5: Composition of the Commission on Audit; Qualifications, Term and Salary of Members

(1) The Commission on Audit, hereinafter referred to as the Commission, shall be composed of a Chairman and two Commissioners, who shall be natural-born citizens of the Philippines and, at the time of their appointment, at least forty years of age and certified public accountants or members of the Philippine Bar for at least ten years.

(2) The Chairman and the Commissioners shall be appointed by the Prime Minister for a term of seven years without reappointment. Of the Commissioners first appointed, one shall hold office for seven years, another for five years, and the third year for three years. Appointment to any vacancy shall only be for the unexpired portion of the term of the predecessor.

(3) The Chairman and each Commissioner shall receive an annual salary of sixty thousand pesos and fifty thousand pesos, respectively, which shall not be decreased during their continuance in office.

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 here in after 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 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.

Section 7: Central and Regional Offices

(1) The Commission shall have the following central offices:

a. Administrative Office

b. Planning, Financial, and Management office

c. Legal Office

d. Accountancy Office

e. National Government Audit Office

f. Local Government Audit Office

g. Corporate Audit Office

h. Performance Audit Office

i. Manpower Development Office

j. Technical Service Office

These offices shall perform primarily staff functions, exercise technical supervision over the regional offices in matters pertaining to their respective functional areas, and perform such other functions as may be assigned by the Chairman.

(2) The Commission shall keep and maintain such regional offices as may be required by the exigencies of the service in accordance with the Integrated Reorganisation 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 a central office manager.

Section 9: The Administrative Office

The Administrative Office shall perform the following functions:

(1) Develop and maintain a personnel programme 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:

(1) Formulate long-range and annual plans and programmes for the Commission;

(2) Formulate basic policies and guidelines for the preparation of the budget of the Commission, coordinate with the Budget Commission and the Office of the president (Prime Minister) in the preparation of the said budget;

(3) Maintain and administer the accounting system pertaining to the accounts of the Commission;

(4) Develop and administer a system for monitoring the prices of materials, supplies, and equipment purchased by the government;

(5) Develop and maintain the management information system of the Commission; and

(6) Develop and administer a management improvement programme, 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:

(1) Perform advisory and consultative functions and render legal services with respect to the performance of the functions of the Commission and the interpretation of pertinent laws and auditing rules and regulations.

(2) Handle the investigation of administrative cases filed against the personnel of the Commission, evaluate and act on all reports of involvement of the said personnel in anomalies or irregularities in government transactions, and perform any other investigative work required by the Commission upon assignment by the Chairman;

(3) Represent the Commission in preliminary investigations of malversation cases discovered in 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:

(1) Prepare, for the Commission, the annual financial report of the Government, its sub-divisions, agencies, and instrumentalities, including government-owned or controlled corporations, and such other financial or statistical reports as may be required by the Commission;

(2) Verify appropriations of national government agencies and control fund releases thereto; 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:

(1) Formulate and develop Plans, programmes, operating standards, and administrative techniques for the implementation of auditing rules and regulations in departments, regions, bureaus, and offices of the National Government;

(2) Formulate accounting rules and regulations for departments, regions, bureaus, and offices of the National Government; 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:

(1) Formulate and develop plans, programmes, operating standards, and administrative techniques for the implementation of auditing rules and regulations in local government units;

(2) Formulate accounting rules and regulations for local government units; 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:

(1) Formulate and develop plans, programmes, 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;

(2) Formulate accounting rules and regulations for government-owned or controlled corporations and self-governing boards, commissions, or agencies of the government;

(3) Advise and assist the Chairman on matters pertaining to the audit of government-owned or controlled corporations and self-governing boards, commissions, or agencies of the government; and

(4) Consolidate the corporate audit reports from all the regions for inclusion in the annual report on the Commission.

Section 16: The Performance Audit Office

The Performance Audit Office shall have the following functions:

(1) Conduct, consistently with the exercise by the Commission of its visitorial powers as here in after conferred, variable scope audit of non-governmental firms subsidised 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 of 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

(1) Formulate long-range plans for a comprehensive training programme for all personnel of the Commission and personnel of the agencies of government, with respect to Commission rules and regulations and audit matters;

(2) Prepare and implement annual training programmes, consistent with its long-range plans;

(3) Develop its capability to implement training programmes;

(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:

(1) Develop and propose auditing systems for implementation in the government;

(2) Render consultancy services related to the discharge of government auditing functions;

(3) Assist in the formulation of accounting rules and regulations and in seeing to it that these are observed by agencies of government in coordination with the Accountancy Office;

(4) Review and evaluate contracts, and inspect and appraise infrastructure project; and

(5) Initiate special studies on auditing matters.

Section 19: The Regional Offices

Each regional office shall perform the following functions:

(1) Exercise supervision and control over the implementation of auditing rules and regulations in any agency of the government with principal offices or place of operations within the region, including the National Assembly;

(2) Review, analyze and consolidate local, national and corporate audit reports pertaining to the region;

(3) Upon delegation by the Commission Proper, exercise authority on internal Commission administration on personnel, planning, financial (budgetary and accounting), and legal matters pertaining to the region; and

(4) Perform such other related functions as may be assigned by the Chairman.

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.

(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 specification 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 consumed 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 government agencies 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 Services

The Commission shall develop and adopt for its officials and employees a comprehensive and continuing manpower development programme.

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 in 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 corporations, shall be included in the annual general appropriations law. The usage of these funds shall be governed by the general appropriations and other budget law;

(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,

(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.

(4) The amount estimated to be earned as a result of 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.


Section 25: Statement of Objectives

In keeping with its Constitutional mandate, the Commission adheres to the following primary objectives:

(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;

(2) To develop and implement a comprehensive audit programme that shall encompass an examination of financial transactions, accounts, and reports, including evaluation of compliance with applicable laws and regulations;

(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;

(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;

(5) To adopt measures calculated to hasten the full professionalization of its services;

(6) To institute measures designed to preserve and ensure the independence of its representatives;

(7) To endeavour to bring its operations closer to the people by the delegation of authority through decentralisation, 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 there to 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 sub-divisions, 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 subsidised 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 wherever 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 subsidised 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 subsidies 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.

Section 30: Fees or 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.

(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, deputise 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 specialised audit engagements.

(2) The deputised 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 be 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 Expenditure.

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 sub-divisions, 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 settled claim or liability to any government agency not exceeding ten thousand pesos. In case the claim or liability exceeds one hundred thousand pesos arising out of any matter or case before it or within its jurisdiction, and with the written approval on 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 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.

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 favour 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 or 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’s provided for in the Ruled 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.

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.

(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 Commissions, 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 or 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 programme, 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.

(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 auditor 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 of 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 programme and the necessary audit programme 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 Officer-

(1) Upon 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 of intends to leave the Philippines or remove his property therefrom or hide or conceal his property.

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 place 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 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.



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.

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 proprio review and revise the account or settlement and certify a new balance. For the 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 of 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.



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