PD 1445 Acop

MALACAANG
M a n i l a
PRESIDENTIAL DECREE No. 1445
ORDAINING AND INSTITUTING A
GOVERNMENT AUDITING CODE OF THE
PHILIPPINES
WHEREAS, the creation and establishment of the
Commission on Audit under the new Constitution
and its recent reorganization and restructuring by
virtue of residential !ecree "o# $%$ have
rendered more &ressing the long'felt need to
codify in revised and u&dated form, in (ee&ing
with modern trends of government auditing and
&rogressive legislation on the sub)ect, various
scattered auditing laws, rules and regulations, and
to incor&orate therein &residential decrees,
orders, &roclamations, and instructions germane
and relevant thereto for integrated e*ect+
",W, -HERE.,RE, /, .ER!/"A"! E# MARC,S,
resident of the hili&&ines, by virtue of the
&owers vested in me by the Constitution, do
hereby order and decree0
PRELIMINARY TITLE
GENERAL PROVISIONS
Section 1. Title. -his law shall be (nown and
cited as the 12overnment Auditing Code of the
hili&&ines#1
Section . Declaration of Policy. /t is the declared
&olicy of the State that all resources of the
government shall be managed, e3&ended or
utilized in accordance with law and regulations,
and safeguard against loss or wastage through
illegal or im&ro&er dis&osition, with a view to
ensuring e4ciency, economy and e*ectiveness in
the o&erations of government# -he res&onsibility
to ta(e care that such &olicy is faithfully adhered
to rests directly with the chief or head of the
government agency concerned#
Section !. Defnition of terms. Wherever used in
this Code, the following terms shall be ta(en and
understood in the sense indicated hereunder,
unless the conte3t otherwise re5uires0
6# 1.und1 is a sum of money or other
resources set aside for the &ur&ose of
carrying out s&eci7c activities or attaining
certain ob)ectives in accordance with
s&ecial regulations, restrictions, or
limitations, and constitutes an
inde&endent 7scal and accounting entity#
8# 12overnment funds1 includes &ublic
moneys of every sort and other resources
&ertaining to any agency of the
government#
9# 1Revenue .unds1 com&rises all funds
derived from the income of any agency of
the government and available for
a&&ro&riation or e3&enditure in accordance
with law#
:# 1-rust funds1 refers to funds which have
come o4cially into the &ossession of any
agency of the government or of a &ublic
o4cer as trustee, agent, or administrator,
or which have been received for the
ful7llment of some obligation#
;# 1!e&ository funds1 com&rises funds over
which the o4cer accountable therefore
may retain control for the lawful &ur&oses
for which they came into his &ossession# /t
embraces moneys in any and all
de&ositories#
<# 1!e&ository1 means any 7nancial
institution lawfully authorized to receive
government moneys u&on de&osit#
=# 1Resources1 refers to the actual assets
of any agency of the government such as
cash, instruments re&resenting or
convertible to money, receivables, lands,
buildings, as well as contingent assets
such as estimated revenues a&&lying to
the current 7scal &eriod not accrued or
collected and bonds authorized and
unissued#
$# 12overnment agency1 or 1agency of the
government,1 or 1agency refers to any
de&artment, bureau or o4ce of the
national government, or any of its
branches and instrumentalities, or any
&olitical subdivision, as well as any
government'owned or controlled
cor&oration, including its subsidiaries, or
other self'governing board or commission
of the government#
Section 4. Fundamental principles. .inancial
transactions and o&erations of any government
agency shall be governed by the fundamental
&rinci&les set forth hereunder, to wit0
6# "o money shall be &aid out of any &ublic
treasury of de&ository e3ce&t in &ursuance
of an a&&ro&riation law or other s&eci7c
statutory authority#
8# 2overnment funds or &ro&erty shall be
s&ent or used solely for &ublic &ur&oses#
9# -rust funds shall be available and may
be s&ent only for the s&eci7c &ur&ose for
which the trust was created or the funds
received#
:# .iscal res&onsibility shall, to the greatest
e3tent, be shared by all those e3ercising
authority over the 7nancial a*airs,
transactions, and o&erations of the
government agency#
;# !isbursements or dis&osition of
government funds or &ro&erty shall
State Auditing Code of the hili&&ines
age 1 of "
invariably bear the a&&roval of the &ro&er
o4cials#
<# Claims against government funds shall
be su&&orted with com&lete
documentation#
=# All laws and regulations a&&licable to
7nancial transactions shall be faithfully
adhered to#
$# 2enerally acce&ted &rinci&les and
&ractices of accounting as well as of sound
management and 7scal administration
shall be observed, &rovided that they do
not contravene e3isting laws and
regulations#
TITLE I
THE COMMISSION ON AUDIT
CHAPTER 1
ORGANI#ATION
Section 5. Composition of the Commission on
Audit qualifcations, term, and salary of members.
6# -he Commission on Audit, hereinafter
referred to as the Commission, shall be
com&osed of a Chairman and two
Commissioners, who shall be natural'born
citizens of the hili&&ines and, at the time
of their a&&ointment, at least forty years of
age and certi7ed &ublic accountants or
members of the hili&&ine >ar for at least
ten years#
8# -he Chairman and the Commissioners
shall be a&&ointed by the rime Minister
for a term of seven years without
rea&&ointment# ,f the Commissioners 7rst
a&&ointed, one shall hold o4ce for seven
years, another for 7ve years, and the third
for three years# A&&ointment to any
vacancy shall only be for the une3&ired
&ortion of the term of the &redecessor#
9# -he Chairman and each Commissioner
shall receive as annual salary of si3ty
thousand &esos and 7fty thousand &esos,
res&ectively, which shall not be decreased
during their continuance in o4ce#
Section $. The Commission Proper.
6# .or &ur&oses of this Code and as a
com&onent of the organizational structure
of the Commission, the Chairman and the
two Commissioners shall together be
(nown as the Commission ro&er and as
such shall be distinguished from the other
com&onents of the Commission consisting
of the central and regional o4ces which
are hereinafter created#
8# -he Commission ro&er shall sit as a
body to determine &olicies, &romulgate
rules and regulations, and &rescribe
standards governing the &erformance by
the Commission of its &owers and
functions#
9# -he Chairman shall act as the &residing
o4cer of the Commission ro&er and the
chief e3ecutive o4cer of the Commission#
As such chief e3ecutive o4cer, he shall be
res&onsible for the general administration
of the Commission#
:# -he Chairman and each Commissioner
shall have such technical and clerical
&ersonnel in their res&ective o4ces as
may be re5uired by the e3igencies of the
service#
Section %. Central and regional ofces.
6# -he Commission shall have the following
central o4ces0
?a@ Administrative ,4ce
?b@ lanning, .inancial, and
Management ,4ce
?c@ Aegal ,4ce
?d@ Accountancy ,4ce
?e@ "ational 2overnment Audit
,4ce
?f@ Aocal 2overnment Audit ,4ce
?g@ Cor&orate Audit ,4ce
?h@ erformance Audit ,4ce
?i@ Man&ower !evelo&ment ,4ce
?)@ -echnical Service ,4ce
-hese o4ces shall &erform
&rimarily sta* functions, e3ercise
technical su&ervision over the
regional o4ces in matters
&ertaining to their res&ective
functional areas, and &erform such
other functions as may be assigned
by the Chairman#
8# -he Commission shall (ee& and
maintain such regional o4ces as may be
re5uired by the e3igencies of the service in
accordance with the /ntegrated
Reorganization lan for the national
government, or as may be &rovided by
law, which shall serve as the immediate
re&resentatives of the Commission in the
regions under the direct control and
su&ervision of the Chairman#
9# -he central and regional o4ces shall
each be headed by a Manager and a
Regional !irector, res&ectively# -he
Manager of the Aegal ,4ce shall also be
(nown and shall act as the 2eneral
Counsel of the Commission#
Section &. Commission ecretariat. -here shall
be a Commission Secretariat to be headed by the
Secretary to the Commission who shall have the
ran( and &rivileges of central o4ce manager#
age of "
Section '. The Administrati!e "fce. -he
Administrative ,4ce shall &erform the following
functions0
6# !evelo& and maintain a &ersonnel
&rogram which shall include recruitment,
selection, a&&ointment, &erformance
evaluation, em&loyee relations, and
welfare services+ and
8# rovide the Commission with services
related to &ersonnel, records, su&&lies,
e5ui&ment, medical, collections and
disbursements, security, general and other
related services#
Section 1". The Planning, Financial, and
#anagement "fce. -he lanning, .inancial, and
Management ,4ce shall have the following
functions0
6# .ormulate long'range and annual &lans
and &rograms for the Commission+
8# .ormulate basic &olicies and guidelines
for the &re&aration of the budget of the
Commission, coordinate with the >udget
Commission and the ,4ce of the resident
?rime Minister@ in the &re&aration of the
said budget+
9# Maintain and administer the accounting
system &ertaining to the accounts of the
Commission+
:# !evelo& and administer a system for
monitoring the &rices of materials su&&lies,
and e5ui&ment &urchased by the
government+
;# !evelo& and maintain the management
information system of the Commission+
and
<# !evelo& and administer a management
im&rovement &rogram, including a system
for measurement of &erformance of
auditing units on which an annual re&ort
shall be submitted to the Chairman not
later than the thirty'7rst day of Banuary
each year#
Section 11. The $egal "fce. -he Aegal ,4ce
shall be charged with the following
res&onsibilities0
6# erform advisory and consultative
functions and render legal services with
res&ect to the &erformance of the
functions of the Commission and the
inter&retation of &ertinent laws and
auditing rules and regulations+
8# Handle the investigation of
administrative cases 7led against the
&ersonnel of the Commission, evaluate and
act on all re&orts of involvement of the
said &ersonnel in anomalies or
irregularities in government transactions,
and &erform any other investigative wor(
re5uired by the Commission u&on
assignment by the Chairman+
9# Re&resent the Commission in
&reliminary investigations of malversation
cases discovered in audit, assist and
collaborate with the Solicitor 2eneral and
the -anod >ayan in handling cases
involving the Chairman or any of the
Commissioners, and other o4cials and
em&loyees of the Commission in their
o4cial ca&acity+ and
:# Coordinate, for the Commission and with
the a&&ro&riate legal bodies of
government, with res&ect to legal
&roceedings towards the collection and
enforcement of debts and claims, and the
restitution of funds and &ro&erty, found to
be due any government agency in the
settlement and ad)ustment of its accounts
by the commission#
Section 1. The Accountancy "fce. -he
Accountancy ,4ce shall have the following
functions0
6# re&are, for the Commission, the annual
7nancial re&ort of the 2overnment, its
subdivisions, agencies and
instrumentalities, including government'
owned or controlled cor&orations, and such
other 7nancial or statistical re&orts as may
be re5uired by the Commission+
8# Cerify a&&ro&riations of national
government agencies and control fund
releases thereto+ and
9# re&are statements on revenues and
e3&enditures of local government units,
and on their legal borrowing and net
&aying ca&acities for reclassi7cation and
other &ur&oses#
Section 1!. The %ational &o!ernment Audit
"fce. -he "ational 2overnment Audit ,4ce shall
&erform the following functions+
6# .ormulate and develo& &lans, &rograms,
o&erating standards, and administrative
techni5ues for the im&lementation of
auditing rules and regulations in
de&artments, regions, bureau, and o4ces
of the "ational 2overnment+
8# .ormulate accounting rules and
regulations for de&artments, regions,
bureaus, and o4ces of the "ational
2overnment+ and
9# Advise and assist the Chairman on
matters &ertaining to the audit of the
de&artments, regions, bureaus, and o4ces
of the "ational 2overnment#
age ! of "
Section 14. The $ocal &o!ernment Audit "fce.
-he Aocal 2overnment Audit ,4ce shall have the
following functions+
auditing rules and regulations for local
government units+
regulations for local government units+ and
matters &ertaining to the audit of local
government units#
Section 15. The Corporate Audit "fce. -he
Cor&orate Audit ,4ce shall &erform the following
functions0
auditing rules and regulations in
cor&orations and self'governing boards,
commissions, or agencies of the
government, as well as for the conduct of
audit of 7nancial o&erations of &ublic
utilities and franchises+
regulations for government'owned or
controlled cor&orations and self'governing
boards, commissions, or agencies of the
government+
matters &ertaining to the audit of
cor&orations and self'governing boards,
commissions, or agencies of the
government+ and
:# Consolidate the cor&orate audit re&orts
from all the regions for inclusion in the
annual re&ort of the Commission#
Section 1$. The Performance Audit "fce. -he
erformance Audit ,4ce shall have the following
functions0
6# Conduct, consistently with the e3ercise
by the Commission of its visitorial &owers
as hereinafter conferred, variable sco&e
audit of non'governmental 7rms subsidized
by the government or government
authority, or those re5uired to &ay levies
or government share those funded by
donations through the government, and
those for which the government has &ut u&
a counter&art fund0 rovided, -hat such
audits shall be limited to the funds or
subsidies coming from the government+
and
8# Dnderta(e audits of the legality of
government e3&enditures, with &articular
em&hasis on the statutory authority
governing the usage of a&&ro&riated funds#
Section 1%. The #anpo'er De!elopment "fce.
-he Man&ower !evelo&ment ,4ce shall &erform
the following functions0
6# .ormulate long'range &lans for a
com&rehensive training &rogram for all
&ersonnel of the Commission and
&ersonnel of the agencies of government,
with res&ect to Commission rules and
regulations and audit matters+
8# re&are and im&lement annual training
&rograms, consistent with its long'range
&lans+
9# !evelo& its ca&ability to im&lement
training &rograms+
:# Set u& and maintain a library for the
Commission+ and
;# ublish the &rofessional )ournal of the
Commission#
Section 1&. The Technical er!ice "fce. -he
-echnical Service ,4ce shall &erform the
following functions+
6# !evelo& and &ro&ose auditing systems
for im&lementation in the government+
8# Render consultancy services related to
the discharge of government auditing
functions+
9# 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 ,4ce+
:# Review and evaluate contracts, and
ins&ect and a&&raise infrastructure
&ro)ects+ and
;# /nitiate s&ecial studies on auditing
matters#
Section 1'. The (egional "fces. Each regional
o4ce shall &erform the following functions0
6# E3ercise su&ervision and control over
the im&lementation of auditing rules and
regulations in any agency of the
government with &rinci&al o4ces or &lace
of o&erations within the region, including
the "ational Assembly+
8# Review, analyze and consolidate local,
national and cor&orate audit re&orts
&ertaining to the region+
age 4 of "
9# D&on delegation by the Commission
ro&er, e3ercise authority on internal
Commission administration on &ersonnel,
&lanning, 7nancial ?budgetary and
accounting@, and legal matter &ertaining to
the region+ and
:#erform such other related functions as
may be assigned by the Chairman#
Section ". Auditing units) qualifcations and
assignment of heads.
6# -here shall be in each agency of the
government an auditing unit which shall be
&rovided by the audited agency with a
suitable and su4cient o4ce s&ace
together with su&&lies, e5ui&ment,
furniture, and other necessary o&erating
e3&enses for its &ro&er maintenance,
including e3&enses for travel and
trans&ortation#
8# -he auditing unit shall be headed by an
auditor assigned by the Commission who
shall be a certi7ed &ublic accountant or a
member of the >ar or a holder of a college
degree in commerce or business
administration+ ma)or in accounting#
9# -he corres&onding assignment orders
issued by the Commission to such auditors
and their su&&ort &ersonnel holding core
auditing &ositions shall be su&&lementary
to their a&&ointments which are without
s&eci7cations of station#
:# -he Commission shall have the authority
to ma(e changes in such assignments and
to e*ect a &eriodic reshuEe of heads of
auditing units as well as their su&&ort
&ersonnel whenever the e3igencies of the
service so re5uire# However, such changes
and reshuEe shall not a*ect the tenure of
o4ce of the incumbents of the &ositions
involved and shall not constitute a
demotion or reduction in ran( or salary,
nor result in a change in status#
Section 1. Auditing units for ne'ly*created
agencies. -he creation of every new agency shall
be construed to include the establishment of an
auditing unit therein, and the a&&ro&riation or
allotment therefor is deemed to include the
amounts necessary to &rovide such agency with
ade5uate auditing services as determined by the
Commission#
Section . %umber and compensation of
auditing personnel.
6# -he assignment of Commission
re&resentatives and su&&ort &ersonnel to
agencies of the government shall be
determined solely by the Commission#
8# -he salaries and other forms of
com&ensation of the &ersonnel of the
Commission shall follow a common
&osition classi7cation and com&ensation
&lan regardless of agency of assignment,
and shall be sub)ect to #!# "o# %$;#
9# All o4cials and em&loyees of the
Commission, including its re&resentatives
and su&&ort &ersonnel shall be &aid their
salaries, emoluments, and allowances
directly by the Commission out of its
a&&ro&riations and contributions, as
&rovided in this Code#
Section !. Professionali+ation of audit ser!ice.
-he Commission shall develo& and ado&t for its
o4cials and em&loyees a com&rehensive and
continuing man&ower and develo&ment &rogram#
Section 4. Appropriations and funding.
6# -he amount of a&&ro&riations for the
annual o&erating e3&enses of the
Commission, including the salaries,
allowances and other emoluments of all its
o4cials and em&loyees and its central and
regional o4ces as well as in the auditing
units in the various national and local
government agencies, including
cor&oration, shall be included in the annual
general a&&ro&riations law# -he usage of
these funds shall be government by the
general a&&ro&riations and other budget
laws+
8# All government'owned or controlled
cor&orations, including their subsidiaries,
and self'governing boards, commissions, or
agencies of the government shall
a&&ro&riate in their res&ective budgets and
remit to the "ational -reasury an amount
at least e5uivalent to the a&&ro&riation for
the salaries and allowances of the
re&resentative and sta* of the Commission
during the &receding 7scal year+
9# A ma3imum of one'half of one &er'
centum ?6F8 of 6G@ of the collections from
national internal revenue ta3es not
otherwise accruing to S&ecial .unds or
S&ecial Accounts in the 2eneral .und of
the "ational 2overnment, u&on authority
from the Minister ?Secretary@ of .inance,
shall be deducted from such collections
and shall be remitted to the "ational
-reasury to cover the cost of auditing
services rendered to local government
units+
:# -he amount estimated to be earned as a
result for the assessments on government'
owned or controlled cor&orations, local
government units, and other agencies as
&rovided for in this Section shall be ta(en
into consideration in the &re&aration of the
annual budget of the Commission, in
accordance with &ertinent budget laws#
-he 2eneral A&&ro&riations law shall
&rovide each year for the cost of
age 5 of "
Commission o&erations as may be
su&&orted by available funds, in order to
meet the audit re5uirements of national
and local government units and of
cor&orations and other agencies covered
by this Code#
CHAPTER
(URISDICTION) PO*ERS AND FUNCTIONS OF
THE COMMISSION
Section 5. tatement of ob,ecti!es. /n (ee&ing
with its Constitutional mandate, the Commission
adheres to the following &rimary ob)ectives0
6# -o determine whether or not the 7scal
res&onsibility that rests directly with the
head of the government agency has been
&ro&erly and e*ectively discharged+
8# -o develo& and im&lement a
com&rehensive audit &rogram that shall
encom&ass an e3amination of 7nancial
transactions, accounts, and re&orts,
including evaluation of com&liance with
a&&licable laws and regulations+
9# -o institute control measures through
the &romulgation of rules and regulations
governing the recei&ts, disbursements,
and uses of funds and &ro&erty, consistent
with the total economic develo&ment e*ort
of the government+
:# -o &romulgate auditing and accounting
rules and regulations so as to facilitate the
(ee&ing, and enhance the information
value, of the accounts of the government+
;# -o ado&t measures calculated to hasten
the full &rofessionalization of its services+
<# -o institute measures designed to
&reserve and ensure the inde&endence of
its re&resentatives+ and
=# -o endeavor to bring its o&erations
closer to the &eo&le by the delegation of
authority through decentralization,
consistent with the &rovisions of the new
Constitution and the laws#
Section $. &eneral ,urisdiction. -he authority
and &owers of the Commission shall e3tend to and
com&rehend all matters relating to auditing
&rocedures, systems and controls, the (ee&ing of
the general accounts of the 2overnment, the
&reservation of vouchers &ertaining thereto for a
&eriod of ten years, the e3amination and
ins&ection of the boo(s, records, and &a&ers
relating to those accounts+ and the audit and
settlement of the accounts of all &ersons
res&ecting funds or &ro&erty received or held by
them in an accountable ca&acity, as well as the
e3amination, audit, and settlement of all debts
and claims of any sort due from or owing to the
2overnment or any of its subdivisions, agencies
and instrumentalities# -he said )urisdiction
e3tends to all government'owned or controlled
cor&orations, including their subsidiaries, and
other self'governing boards, commissions, or
agencies of the 2overnment, and as herein
&rescribed, including non'governmental entities
subsidized by the government, those funded by
donations through the government, those
re5uired to &ay levies or government share, and
those for which the government has &ut u& a
counter&art fund or those &artly funded by the
government#
Section %. Appointing po'er. -he Commission
ro&er shall a&&oint, sub)ect to Civil Service Aaw
the o4cials and em&loyees of the Commission
whenever they are stationed or assigned#
Section &. -.amining authority. -he
Commission shall have authority to e3amine
boo(s, &a&ers, and documents 7led by individuals
and cor&orations with, and which are in the
custody of, government o4ces in connection with
government revenue collection o&erations, for the
sole &ur&ose of ascertaining that all funds
determined by the a&&ro&riate agencies as
collectible and due the government have actually
been collected, e3ce&t as otherwise &rovided in
the /nternal Revenue Code of 6%==#
Section '. /isitorial Authority.
6# -he Commission shall have visitorial
authority over non'government entities
subsidized by the government, those
re5uired to &ay levies or government
share, those which have received
counter&art funds from the government or
are &artly funded by donations through the
government, the said authority however
&ertaining only to the audit of those funds
or subsidiaries coming from or through the
government#
8# D&on direction of the resident ?rime
Minister@, the Commission shall li(ewise
e3ercise visitorial authority over non'
governmental entities whose loans are
guaranteed by the 2overnment, &rovided
that such authority shall &ertain only to the
audit of the governmentHs contingent
liability#
Section !". Fees for audit and other ser!ices.
6# -he Commission shall 73 and collect
reasonable fees for the di*erent services
rendered to non'government entities that
shall be audited in connection with their
dealings with the government arising from
subsidies, counter&art funding by
government, or where audited records
become the basis for a government levy or
share# .ees of this nature shall accrue to
the 2eneral .und and shall be remitted to
the -reasurer of the hili&&ines within 6I
days following com&letion of the audit#
age $ of "
8# Whenever the Commission contracts
with any government entity, to render
audit and related services beyond the
normal sco&e of such services, the
Commission is em&owered to 73 and
collect reasonable fees# Such fees shall
either be a&&ro&riated in the agencyHs
current budget, charged against its
savings, or a&&ro&riated in its succeeding
yearHs budget# Remittance shall accrue to
the 2eneral .und and shall be made to the
-reasurer of the hili&&ines within the time
&rovided for in the contract of service, or in
the billing rendered by the Commission#
Section !1. Deputi+ation of pri!ate licensed
professionals to assist go!ernment auditors.
6# -he Commission may, when the
e3igencies of the service so re5uire,
de&utize and retain in the name of the
Commission such certi7ed &ublic
accountants and other licensed
&rofessionals not in the &ublic service as it
may deem necessary to assist government
auditors in underta(ing s&ecialized audit
engagements#
8# -he de&utized &rofessionals shall be
entitled to such com&ensation and
allowances as may be sti&ulated, sub)ect
to &ertinent rules and regulations on
com&ensation and fees#
Section !. &o!ernment contracts for auditing,
accounting, and related ser!ices.
6# "o government agency shall enter into
any contract with any &rivate &erson or
7rm for services to underta(e studies and
services relating to government auditing,
including services to conduct, for a fee,
seminars or wor(sho&s for government
&ersonnel on these to&ics, unless the
&ro&osed contract is 7rst submitted to the
Commission to enable it to determine if it
has the resources to underta(e such
studies or services# -he Commission may
engage the services of e3&erts from the
&ublic or &rivate sector in the conduct of
these studies#
8# Should the Commission decide not to
underta(e the study or service, it shall
nonetheless have the &ower to review the
contract in order to determine the
reasonableness of its costs#
Section !!. Pre!ention of irregular, unnecessary,
e.cessi!e, or e.tra!agant e.penditures of funds
or uses of property) po'er to disallo' such
e.penditures. -he Commission shall &romulgate
such auditing and accounting rules and
regulations as shall &revent irregular,
unnecessary, e3cessive, or e3travagant
e3&enditures or uses of government funds or
&ro&erty#
Section !4. ettlement of accounts bet'een
agencies. -he Commission shall have the &ower,
under such regulations as it may &rescribe, to
authorize and enforce the settlement of accounts
subsisting between agencies of the government#
Section !5. Collection of indebtedness due the
go!ernment. -he Commission shall, through
&ro&er channels, assist in the collection and
enforcement of all debts and claims, and the
restitution of all funds or the re&lacement or
&ayment at a reasonable &rice of &ro&erty, found
to be due the 2overnment, or any of its
subdivisions, agencies or instrumentalities, or any
government' owned or controlled cor&oration or
self'governing board, commission or agency of the
government, in the settlement and ad)ustment of
its accounts# /f any legal &roceeding is necessary
to that end, the Commission shall refer the case
to the Solicitor 2eneral, the 2overnment
Cor&orate Counsel, or the legal sta* of the
creditor government o4ce or agency concerned
to institute such legal &roceeding# -he
Commission shall e3tend full su&&ort in the
litigation# All such moneys due and &ayable shall
bear interest at the legal rate from the date of
written demand by the Commission#
Section !$. Po'er to compromise claims.
6# When the interest of the government so
re5uires, the Commission may com&romise
or release in whole or in &art, any claim or
settled liability to any government agency
not e3ceeding ten thousand &esos and
with the written a&&roval of the rime
Minister, it may li(ewise com&romise or
release any similar claim or liability not
e3ceeding one hundred thousand &esos,
the a&&lication for relief therefrom shall be
submitted, through the Commission and
the rime Minister, with their
recommendations, to the "ational
Assembly#
8# -he res&ective governing bodies of
cor&orations, and self'governing boards,
commissions or agencies of the
government shall have the e3clusive
&ower to com&romise or release any
similar claim or liability when e3&ressly
authorized by their charters and if in their
)udgment, the interest of their res&ective
cor&orations or agencies so re5uires# When
the charters do not so &rovide, the &ower
to com&romise shall be e3ercised by the
Commission in accordance with the
&receding &aragra&h#
9# -he Commission may, in the interest of
the government, authorize the charging or
crediting to an a&&ro&riate account in the
"ational -reasury, small discre&ancies
?average or shortage@ in the remittances to
and disbursements of the "ational
-reasury, sub)ect to the rules and
regulations as it may &rescribe#
age % of "
Section !%. (etention of money for satisfaction
of indebtedness to go!ernment. When any &erson
is indebted to any government agency, the
Commission may direct the &ro&er o4cer to
withhold the &ayment of any money due such
&erson or his estate to be a&&lied in satisfaction
of the indebtedness#
Section !&. Authority to e.amine accounts of
public utilities.
6# -he Commission shall e3amine and
audit the boo(s, records, and accounts of
&ublic utilities in connection with the 73ing
of rates of every nature, or in relation to
the &roceedings of the &ro&er regulatory
agencies, for &ur&oses of determining
franchise ta3es#
8# !uring the e3amination and audit, the
&ublic utility concerned shall &roduce all
the re&orts, records, boo(s of accounts and
such other &a&ers as may be re5uired# -he
Commission shall have the &ower to
e3amine under oath any o4cial or
em&loyee of the said &ublic utility#
9# Any &ublic utility refusing to allow an
e3amination and audit of its boo(s of
accounts and &ertinent records, or o*ering
unnecessary obstruction to the
e3amination and audit, or found guilty of
concealing any material information
concerning its 7nancial status shall be
sub)ect to the &enalties &rovided by law#
Section !'. ubmission of papers relati!e to
go!ernment obligations.
6# -he Commission shall have the &ower,
for &ur&oses of ins&ection, to re5uire the
submission of the original of any order,
deed, contract, or other document under
which any collection of, or &ayment from,
government funds may be made, together
with any certi7cate, recei&t, or other
evidence in connection therewith# /f an
authenticated co&y is needed for record
&ur&oses, the co&y shall u&on demand be
furnished#
8# /n the case of deeds to &ro&erty
&urchased by any government agency, the
Commission shall re5uire a certi7cate of
title entered in favor of the government or
other evidence satisfactory to it that the
title is in the government#
9# /t shall be the duty of the o4cials or
em&loyees concerned including those in
non'government entities under audit, or
a*ected in the audit of government and
non'government entities, to com&ly
&rom&tly with these re5uirements# .ailure
or refusal to do so without )usti7able cause
shall constitute a ground for administrative
disci&linary action as well as for
disallowing &ermanently a claim under
e3amination, assessing additional levy or
government share, or withholding or
withdrawing government funding or
donations through the government#
Section 4". 0n!estigatory and inquisitorial
po'ers) po'er to punish for contempt.
6# -he Chairman or any Commissioner of
the Commission, the central o4ce
managers, the regional directors, the
auditors of any government agency, and
any other o4cial or em&loyee of the
Commission s&ecially de&uted in writing
for the &ur&ose by the Chairman shall, in
com&liance with the re5uirement of due
&rocess, have the &ower to summon the
&arties to a case brought before the
Commission for resolution, issue sub&oena
and sub&oena duces tecum, administer
oaths, and otherwise ta(e testimony in any
investigation or in5uiry on any matter
within the )urisdiction of the Commission#
8# -he Commission shall have the &ower to
&unish contem&ts &rovided for in the Rules
of Court, under the same &rocedure and
with the same &enalties &rovided therein#
Any violation of any 7nal and e3ecutory
decision, order or ruling of the Commission
shall constitute contem&t of the
Commission#
Section 41. Annual report of the Commission.
6# -he Commission shall submit to the
resident, the rime Minister, and the
"ational Assembly not later than the last
day of Se&tember of each year an annual
re&ort on the 7nancial condition and
results of o&eration of all agencies of the
government which shall include
recommendations of measures necessary
to im&rove the e4ciency and e*ectiveness
of these agencies#
8# -o carry out the &ur&oses of this section,
the chief accountant or the o4cial in
charge or (ee&ing the accounts of a
government agency shall submit to the
Commission year'end trial balances and
such other su&&orting or subsidiary
statements as may be re5uired by the
Commission not later than the fourteenth
day of .ebruary# -rial balances returned by
the Commission for revision due to non'
com&liance with accounting rules and
regulations, shall be resubmitted within
three days after the date of recei&t by the
o4cial concerned#
9# .ailure on the &art of any o4cial or
em&loyee to com&ly with the &rovisions of
the immediately &receding &aragra&h shall
cause the automatic sus&ension of the
&ayment of his salary and other
emoluments until he shall have com&lied
therewith# -he violation of these &rovisions
for at least three times shall sub)ect the
age & of "
o*ender to administrative disci&linary
action#
Section 4. tatement of monthly receipts and
disbursements. -he Commission shall forward to
the Minister ?Secretary@ of .inance, as soon as
&racticable and within si3ty days after the
e3&iration of each month, a statement of all
recei&ts of the national government of whatever
class, and &ayments of moneys made on warrants
or otherwise during the &receding month#
Section 4!. Po'ers, functions, and duties of
auditors as representati!es of the Commission.
6# -he auditors shall e3ercise such &owers
and functions as may be authorized by the
Commission in the e3amination, audit and
settlement of the accounts, funds, 7nancial
transactions, and resources of the
agencies under their res&ective audit
)urisdiction#
8# A re&ort of audit for each calendar year
shall be submitted on the last wor(ing day
of .ebruary 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 co&ies thereof shall be furnished the
government o4cials concerned or
authorized to receive them# Sub)ect to
such rules and regulations as the
Commission may &rescribe from time to
time, the re&ort shall set forth the sco&e of
audit and shall include a statement of
7nancial condition+ a statement of sur&lus
or de7cit analysis+ a statement of
o&erations+ a statement of changes in
7nancial &osition+ and such comments and
information as may be necessary together
with such recommendations with res&ect
thereto as may be advisable, including a
re&ort of any im&airment of ca&ital noted
in the audit# /t shall also show s&eci7cally
any &rogram, e3&enditure, or other
7nancial transaction or underta(ing
observed in the course of audit which in
the o&inion of the auditor has been carried
out or made without authority of law# -he
auditor shall render such other re&orts as
the Commission may re5uire#
9# /n the &erformance of their res&ective
audit functions as herein s&eci7ed, the
auditors shall em&loy such auditing
&rocedures and techni5ues as are
determined by the Commission under
regulations that it may &romulgate#
:# -he auditors in all auditing units shall
have the custody, and be res&onsible for
the safe(ee&ing and &reservation of &aid
e3&ense vouchers, )ournal vouchers, stubs
of treasury warrants or chec(s, re&orts of
collections and disbursements and similar
documents together with their res&ective
su&&orting &a&ers, under regulations of
the Commission#
Section 44. Chec1 and audit of property or
supplies. -he auditor shall from time to time
conduct a careful and thorough chec( and audit of
all &ro&erty or su&&lies of the agency to which he
is assigned# Such chec( and audit shall not be
con7ned to a mere ins&ection and e3amination of
the &ertinent vouchers, inventories, and other
&a&ers but shall include an ocular veri7cation of
the e3istence and condition of the &ro&erty or
su&&lies# -he recommendation of the auditor shall
be embodied in the &ro&er re&ort#
Section 45. Annual audit and 'or1 program.
Each auditor who is the head of an auditing unit
shall develo& and devise an annual wor( &rogram
and the necessary audit &rogram for his unit in
accordance with regulations of the Commission#
Section 4$. ei+ure of ofce by auditor.
6# -he boo(s accounts, &a&ers and cash of
any local treasurer or other accountable
o4cer shall at all times be o&en to the
ins&ection of the Commission or its duly
authorized re&resentative#
8# /n case an e3amination of the accounts
of a local treasurer discloses a shortage in
cash which should be on hand, it shall be
the duty of the e3amining o4cer to seize
the o4ce and its contents, notify the
Commission and the local chief e3ecutive
and thereu&on immediately ta(e full
&ossession of the o4ce and its contents,
close and render his accounts to the date
of ta(ing &ossession, and tem&orarily
continue the &ublic business of such o4ce#
9# -he auditor who ta(es &ossession of the
o4ce of the local treasurer under this
section shall i&so facto su&ersede the local
treasurer until the o4cer involved is
restored, or other &rovision has been
lawfully made for 7lling the o4ce#
Section 4%. Constructi!e distraint of property of
accountable "fce.
6# D&on the discovery in audit of a
shortage in the accounts of any
accountable o4cer and u&on a 7nding of a
&rima facie case of malversation of &ublic
funds or &ro&erty against him, in order to
safeguard the interest of the 2overnment,
the Commission may &lace under
constructive distraint &ersonal &ro&erty of
the accountable o4cer concerned where
there is reasonable ground to believe that
the said o4cer is retiring from the
government service or intends to leave the
hili&&ines or remove his &ro&erty
therefrom or hide or conceal his &ro&erty#
-he constructive distraint shall be e*ected
by re5uiring the accountable o4cer
concerned or any other &erson having
&ossession or control of the &ro&erty to
accom&lish a recei&t in the form &rescribed
age ' of "
by the Commission, covering the &ro&erty
distrained and obligate himself to &reserve
the same intact and unaltered and not to
dis&ose of it in any manner whatever
without the e3&ress authority of the
Commission#
8# /n case the said accountable o4cer or
other &erson having the &ossession and
control of the &ro&erty sought to be &laced
under constructive distraint refuses or fails
to accom&lish the recei&t herein referred
to, the re&resentative of the Commission,
e*ecting the constructive distraint shall
&roceed to &re&are a list of such &ro&erty
and in the &resence of two witnesses leave
a co&y thereof in the &remises where the
&ro&erty distrained is located after which
the said &ro&erty shall be deemed to have
been &laced under the constructive
distraint#
CHAPTER !
DECISIONS OF THE COMMISSION
Section 4&. Appeal from decision of auditors.
Any &erson aggrieved by the decision of an
auditor of any government agency in the
settlement of an account or claim may within si3
months from recei&t of a co&y of the decision
a&&eal in writing to the Commission#
Section 4'. Period for rendering decisions of the
Commission. -he Commission shall decide any
case brought before it within si3ty days from the
date of its submission for resolution# /f the
account or claim involved in the case needs
reference to other &ersons or o4ces, or to a &arty
interested, the &eriod shall be counted from the
time the last comment necessary to a &ro&er
decision is received by it#
Section 5". Appeal from decisions of the
Commission. -he &arty aggrieved by any decision,
order or ruling of the Commission may within
thirty days from his recei&t of a co&y thereof
a&&eal on certiorari to the Su&reme Court in the
manner &rovided by law and the Rules of Court#
When the decision, order, or ruling adversely
a*ects the interest of any government agency,
the a&&eal may be ta(en by the &ro&er head of
that agency#
Section 51. Finality of decisions of the
Commission or any auditor. A decision of the
Commission or of any auditor u&on any matter
within its or his )urisdiction, if not a&&ealed as
herein &rovided, shall be 7nal and e3ecutory#
Section 5. "pening and re!ision of settled
accounts.
6# At any time before the e3&iration of
three years after the settlement of any
account by an auditor, the Commission
may motu &ro&io review and revise the
account or settlement and certify a new
balance# .or that &ur&ose, it may re5uire
any account, vouchers, or other &a&ers
connected with the matter to be forwarded
to it#
8# When any settled account a&&ears 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, o&en the account, and after a
reasonable time for re&ly or a&&earance of
the &arty concerned, may certify thereon a
new balance# An auditor may e3ercise the
same &ower with res&ect to settled
accounts &ertaining to the agencies under
his audit )urisdiction#
9# Accounts once 7nally settled shall in no
case be o&ened or reviewed e3ce&t as
herein &rovided#
TITLE II
GOVERNMENT AUDITING
CHAPTER 1
+ASIC POLICIES AND STANDARDS
Section 5!. Defnition of go!ernment auditing.
government Auditing is the analytical and
systematic e3amination and veri7cation of
7nancial transactions, o&erations, accounts, and
re&orts of any government agency for the &ur&ose
of determining their accuracy, integrity, and
authenticity, and satisfying the re5uirements of
law, rules and regulations#
-he conduct of government audit shall conform
with the auditing standards set forth in the
following three sections#
Section 54. &eneral standards.
6# -he audit shall be &erformed by a
&erson &ossessed with ade5uate technical
training and &ro7ciency as auditor#
8# /n all matters relating to the audit wor(,
the auditor shall maintain com&lete
inde&endence, im&artiality and ob)ectivity
shall avoid any &ossible com&romise of his
inde&endence or any act which may create
a &resum&tion of lac( of inde&endence or
the &ossibility of undue inJuence in the
&erformance of his duties#
9# -he auditor shall e3ercise due
&rofessional care and be guided by
a&&licable laws, regulations and the
generally acce&ted &rinci&les of
accounting in the &erformance of the audit
wor( as well as in the &re&aration of audit
and 7nancial re&orts#
Section 55. -.amination and e!aluation
standards.
age 1" of "
6# -he audit wor( shall be ade5uately
&lanned and assistants shall be &ro&erly
su&ervised#
8# A review shall be made of com&liance
with legal and regulatory re5uirements#
9# An evaluation shall be made of the
system of internal control and related
administrative &ractices to determine the
e3tent they can be relied u&on to ensure
com&liance with laws and regulations and
to &rovide for e4cient, economical and
e*ective o&erations#
:# -he auditor shall obtain through
ins&ections, observation, in5uiries,
con7rmation and other techni5ues,
su4cient com&etent evidential matter to
a*ord himself a reasonable basis for his
o&inions, )udgments, conclusions, and
recommendations#
Section 5$. (eporting standards. 6# Audit re&orts
shall be dated, signed manually and shall be
issued and distributed in the manner &rovided by
regulations of the Commission#
8# Audit re&orts shall contain basically the
transmittal statement, sco&e and
ob)ectives of the audit and time &eriod
e3amined highlights, 7nancial information,
7ndings, recommendations and
conclusions as well as other data that may
&rovide the management of the audited
agency with the necessary in&ut for the
decision'ma(ing &rocess# -ables, charts,
gra&hs and other data to detail the
conditions and facts shall be used in
&ro&er cases#
9# Audit re&orts shall meet the following
re&orting criteria0
?a@ .actual matter must be
accurately, com&letely and fairly
&resented#
?b@ .indings must be &resented
ob)ectively and in language as clear
and sim&le as the sub)ect matter
&ermits#
?c@ .indings must be ade5uately
su&&orted by evidence in the audit
wor(ing &a&ers#
?d@ Re&orts must be concise yet
com&lete enough to be readily
understood by the users#
?e@ /nformation on underlying
causes of &roblems must be
included so as to assist in
im&lementing or devising corrective
actions#
:# Audit re&orts shall0
?a@ ut &rimary em&hasis on
im&rovement+ critical comments
shall be &resented in balanced
&ers&ective, recognizing unusual
di4culties or circumstances faced
by o4cials concerned#
?b@ /dentify and e3&lain issued and
5uestions needing further study
and consideration by the auditor,
the agency or others#
?c@ /nclude recognition or
noteworthy accom&lishments
&articularly when management
im&rovements in one area or
activity may be a&&lied elsewhere#
?d@ /nclude recognition of the views
of res&onsible o4cials of the
agency audited on the auditorKs
7ndings, conclusions and
recommendations# E3ce&t where
the &ossibility of fraud or other
com&elling reason may re5uire
di*erent treatment, the auditorHs
tentative 7ndings and conclusions
should be reviewed with o4cials#
When &ossible, without undue
delay, their view should be
obtained in writing and ob)ectively
considered and &resented in the
7nal re&ort#
?e@ State whether any signi7cant
&ertinent information has been
omitted because it is deemed
con7dential# -he nature of such
information should be described
and the law or other basis under
which it is withheld should be
stated#
;# Audit re&orts accom&anying 7nancial
re&orts shall0
?a@ State whether the audit was
made in accordance with generally
acce&ted auditing standards, and
shall disclose the omission of any
auditing &rocedure generally
recognized as normal or deemed
necessary by him under the
circumstances of a &articular case,
as well as the reasons for the
omission# "othing in this section,
however, shall be construed to
im&ly authority for the omission of
any &rocedure which auditors would
ordinarily em&loy in the course of
audit#
?b@ E3&ress the auditorHs o&inion
with res&ect to
i# whether the 7nancial
re&ort have been &resented
fairly in accordance with
age 11 of "
a&&licable laws and
regulations and the
generally acce&ted
accounting &rinci&les
a&&lied on a consistent
basis#
ii# material changes in
accounting &rinci&les and
&ractices and their e*ect on
the 7nancial re&orts#
?c@ /dentity any matter to which he
ta(es e3ce&tion and shall
s&eci7cally and clearly state his
e3ce&tions together with a
statement on the e*ect thereof, to
the e3tent &racticable, on the
related 7nancial re&ort#
?d@ Contain a&&ro&riate
su&&lementary e3&lanatory
information about the contents of
the 7nancial re&ort as may be
necessary for full and informative
disclosure about the 7nancial
o&erations of the agency audited#
?e@ E3&lain violations of legal or
other regulatory re5uirements,
including instances of non'
com&liance#
CHAPTER
AUDIT O+(ECTIVES
Section 5%. Determination of audit procedures.
/n the determination of auditing &rocedures and
techni5ues to be followed and the e3tent of
e3amination of vouchers and other documents by
government auditors, the Commission shall give
due regard to generally acce&ted &rinci&les of
auditing and accounting organizations and
systems, including consideration of the
e*ectiveness of internal control and related
administrative &ractices of the audited agencies#
Section 5&. Audit of assets. -he e3amination and
audit of assets shall be &erformed with a view to
ascertaining their e3istence ownershi&, valuation
and encumbrances as well as the &ro&riety of
items com&osing the res&ective asset accounts,
determining their agreement with records, &roving
the accuracy of such records+ ascertaining if the
assets were utilized economically, e4ciently and
e*ectively+ and evaluating the ade5uacy of
controls over the accounts#
Section 5'. Audit of $iabilities. /n his audit of
liabilities the auditor shall see( to establish that
all obligations of the agency have been accurately
recorded+ only bona7de obligations of the agency
have been included+ the obligations incurred are
&ro&erly authorized+ all &rovisions of trust
indentures or mortgages are com&lied with+ and
mortgages and other encumbrances are fully
disclosed#
Section $". Audit of re!enue accounts. -he
e3amination and audit of revenue accounts shall
be &erformed with a view to ascertaining that
earned revenues have been duly recorded+ and all
recorded revenues have been earned and
a&&ro&riate classi7cations of revenues have been
consistently followed#
Section $1. Audit of e.pense accounts. -he
e3amination of e3&ense accounts shall be
underta(en to ascertain that all e3&enses incurred
have been duly authorized+ ade5uately funded
and documented+ &ro&erly recorded+ all recorded
e3&enses have been actually incurred+ and the
classi7cations of e3&enses are a&&ro&riate and
have been consistently followed#
Section $. Audit of surplus or net'orth. -he
audit of sur&lus or networth shall see( to
determine the nature of the sur&lus, whether
current or invested sur&lus+ the amount of current
sur&lus available to cover a&&ro&riations for the
o&erational e3&enses of the government, the
&ro&riety of the ledger accounts and balance
sheet &resentation account+ and the &ro&er
authority and recording of changes in the ca&ital
structure made during the &eriod under audit#
CHAPTER !
RECEIPT AND DISPOSITION OF FUNDS AND
PROPERTY
Section $!. Accounting for moneys and property
recei!ed by public ofcials. E3ce&t as may
otherwise be s&eci7cally &rovided by law or
com&etent authority all moneys and &ro&erty
o4cially received by a &ublic o4cer in any
ca&acity or u&on any occasion must be accounted
for as government funds and government
&ro&erty# 2overnment &ro&erty shall be ta(en u&
in the boo(s of the agency concerned at
ac5uisition cost or an a&&raised value#
Section $4. Designation of collecting ofcers for
go!ernment agencies. -he head of an agency
may designate such number of collecting o4cers
or agents may be deemed necessary# -hey shall
render re&orts of their collections, under the
regulations of the Commission, to be submitted
&rom&tly to the auditor concerned who shall
conduct the necessary e3amination land audit
within thirty days from recei&t thereof#
Section $5. Accrual of income to unappropriated
surplus of the &eneral Fund. ?6@ Dnless otherwise
s&eci7cally &rovided by law, income accruing to
the agencies by virtue of the &rovisions of law,
orders and regulations shall be de&osited in the
"ational -reasury or in any duly authorized
government de&ository, and shall accrue to the
una&&ro&riated sur&lus of the 2eneral .und of the
2overnment#
?8@ Amounts received in trust and from
business'ty&e activities of government
may be se&arately recorded and disbursed
in accordance with such rules and
regulations as may be determined by a
ermanent Committee com&osed of the
age 1 of "
Secretary ?Minister@ of .inance as
Chairman, and the Commissioner of the
>udget and the Chairman, Commission of
Audit, as members#
Section $$. pecial, Fiduciary and Trust Funds.
Recei&ts shall be recorded as income of S&ecial
.iduciary of -rust .unds or .unds other than the
2eneral .und only when authorized by law as
im&lemented by rules and regulations issued by
the ermanent Committee created in the
&receding section#
Section $%. 2arrants and chec1s recei!ables in
payment for ta.es or other indebtedness to the
go!ernment.
6# An o4ce charged with the collection of
revenue or the receiving of moneys
&ayable to the government shall acce&t
&ayment for ta3es, dues or other
indebtedness to the government in the
form of chec(s and warrants issued in
&ayment of government obligations, u&on
&ro&er indorsement and identi7cation of
the &ayee or indorsee# Chec(s drawn in
favor of the government in &ayment of any
such indebtedness shall li(ewise be
acce&ted by the o4cer concerned#
8# When a chec( drawn in favor of the
government is not acce&ted by the drawee
ban( for any reason, the drawer shall
continue to be liable for the sum due and
all &enalties resulting from delayed
&ayment# Where the reason for non'
acce&tance by the drawee ban( is
insu4ciency of funds, the drawer shall be
criminally liable therefore#
9# At no instance should money in the
hands of the collecting o4cer be utilized
for the &ur&ose of encashing &rivate
chec(s#
Section $&. 0ssuance of "fcial receipt..
6# "o &ayment of any nature shall be
received by a collecting o4cer without
immediately issuing an o4cial recei&t in
ac(nowledgment thereof -he recei&t may
be in the form of &ostage, internal revenue
or documentary stam&s and the li(e, or
o4cially numbered recei&ts, sub)ect to
&ro&er custody, accountability, and audit#
8# Where mechanical devices are used to
ac(nowledge cash recei&ts, the
Commission may a&&rove, u&on re5uest,
e3em&tion from the use of accountable
forms#
Section $'. Deposit of moneys in the treasury.
6# ublic o4cers authorized to receive and
collect moneys arising from ta3es,
revenues, or recei&ts of any (ind shall
remit or de&osit intact the full amounts so
received and collected by them to the
treasury of the agency concerned and
credited to the &articular accounts to
which the said moneys belong# -he
amount of the collections ultimately
&ayable to other agencies of the
government shall thereafter be remitted to
the res&ective treasuries of these
agencies, under regulations which the
Commission and the !e&artment ?Ministry@
of .inance shall &rescribe#
8# When e3igencies of the service so
re5uire, under such rules and regulations
as the Commission and the !e&artment
?Ministry@ of .inance may &rescribe,
&ostmasters may be authorized to use
their collections to &ay money orders,
telegra&hic transfer and withdrawals from
the &ro&er de&ository ban( whenever their
cash advance funds for the &ur&ose have
been e3hausted# -he amount of collections
so used shall be restored u&on recei&t by
the &ostmaster of the re&lenishment of his
cash advance#
9# ending remittance to the &ro&er
treasury, collecting o4cers may
tem&orarily de&osit collections received by
them with any treasury, sub)ect to
regulations of the Commission#
:# -he res&ective treasuries of those
agencies shall in turn de&osit with the
&ro&er government de&ository the full
amount of the collections not later than
the following ban(ing day#
Section %". Ac1no'ledgment of receipt for
funds. Dnder such rules and regulations as the
Commission and the !e&artment ?Ministry@ of
.inance may &rescribe, the -reasurer of the
hili&&ines and all authorized de&ository ban(s
shall ac(nowledge recei&t of all funds received by
them, the ac(nowledgment bearing the date of
actual remittance or de&osit and indicating from
whom and on what account it was received#
Section %1. Creditors3 unclaimed balances.
6# -here shall be maintained in the boo(s
of the Commission an account designated
1CreditorsH Dnclaimed >alances1 to the
credit of which shall be de&osited all
moneys for which there is no &resent
rightful claimant# Money accruing to this
account shall be held e3clusively for the
&ayment of &ertinent obligations against it,
when certi7ed by the Commission, not in
e3cess of the res&ective amounts which
accrued to that account by reason of these
obligations#
8# After remaining unclaimed for a &eriod
of ten years, money in this account shall
revert as treasury funds, to the agency
that made the de&osit, or, in the absence
thereof to the national government#
age 1! of "
Section %. hipment of go!ernment funds or
property by carrier) notation of e!idence of loss.
When government funds or &ro&erty are
trans&orted from one &lace to another by carrier,
it shall be u&on &ro&er bill of lading or recei&t
from the carrier, it shall be the duty of the
consignee or his re&resentative to ma(e full
notation of any evidence of loss, shortage, or
damage, u&on the bill of lading or recei&t before
accom&lishing it#
Section %!. Credit for loss occurring in transit or
due to casualty or forces ma,eure.
6# When a loss of government funds or
&ro&erty occurs while they are in transit or
the loss is caused by 7re, theft, or other
casualty or force ma)eure, the o4cer
accountable therefore or having custody
thereof shall immediately notify the
Commission or the auditor concerned and,
within thirty days or such longer &eriod as
the Commission or auditor may in the
&articular case allow, shall &resent his
a&&licable for relief, with the available
su&&orting evidence# Whenever warranted
by the evidence credit for the loss shall be
allowed# An o4cer who fails to com&ly with
this re5uirement shall not be relieved of
liability or allowed credit for any loss in the
settlement of his accounts#
8# -he Commission shall &romulgate rules
and regulations to im&lement the
&rovisions of this section#
Section %4. #onthly reports of depositories to
agency head. At the close of each month,
de&ositories shall re&ort to the agency head, in
such from as he may direct, the condition of the
agency account standing on their boo(s# -he head
of the agency shall see to it that a reconciliation is
made between the balance shown in the re&orts
and the balance found in the boo(s of the agency#
Section %5. Transfer of funds from one ofcer to
another. -ransfer of government funds from one
o4cer to another shall, e3ce&t as allowed by law
or regulation, be made only u&on &rior direction or
authorization, of the Commission or its
re&resentative#
Section %$. Transfer of property bet'een
go!ernment agencies. Any government &ro&erty
that is no longer serviceable or needed by the
agency to which it belongs may be transferred
without cost, or at an a&&raised value, to other
agencies of the government u&on authority of the
res&ective heads of agencies in the national
government, or of the governing bodies of
government'owned or controlled cor&orations,
other self'governing boards or commissions or the
government, or of the local legislative bodies for
local government units concerned#
Section %%. 0n!oice and receipt upon transfer of
funds or property. When government funds or
&ro&erty are transferred from one accountable
o4cer to another, or from an outgoing o4cer to
his successor, it shall be done u&on &ro&erly
itemized invoice and recei&t which shall invariably
su&&ort the clearance to be issued to the relieved
or out'going o4cer, sub)ect to regulations of the
Commission#
Section %&. Disposition of funds or property held
by deceased, incapacitated, absconding, or
superseded accountable ofcer.
6# When an o4cer, accountable for
government funds or &ro&erty absconds
with them dies, or becomes inca&acitated
in the &erformance of his duties, the
&ro&er agency head shall designate a
custodian to ta(e charge of the funds or
&ro&erty until a successor shall have been
a&&ointed and 5uali7ed# -he agency head
may a&&oint a committee to count the
cash and ta(e an inventory of the &ro&erty
for which the o4cer was accountable and
to determine the res&onsibility for any
shortage therein# ,ne co&y of the
inventory and of the re&ort of the
Committee duly certi7ed shall be 7led with
the Commission but the 7ndings of the
committee shall not be conclusive until
a&&roved by the Commission or its duly
authorized re&resentative#
8# /f the absconding, deceased,
inca&acitated, or su&erseded o4cer is
accountable for funds or &ro&erty of a
&rovince or city, the custodian and
committee shall be designated by the
Minister ?Secretary@ of .inance, and if
accountable for munici&al or barrio
?barangay@ funds or &ro&erty, by the
&rovincial treasurer# /n all other res&ects,
the above'&rescribed &roceedings shall be
observed#
9# /f the absconding, deceased,
inca&acitated, or su&erseded o4cer is
res&onsible to another who is accountable,
the latter may himself designate the
committee or ta(e other lawful measures
for the &rotection of his interest#
Section %'. Destruction or sale of unser!iceable
property. When government &ro&erty has become
unserviceable for any cause, or is no longer
needed, it shall, u&on a&&lication of the o4cer
accountable therefor, be ins&ected by the head of
the agency or his duly authorized re&resentative
in the &resence of the auditor concerned and, if
found to be valueless or unsalable, it may be
destroyed in their &resence# /f found to be
valuable, it may be sold at &ublic auction to the
highest bidder under the su&ervision of the &ro&er
committee an award or similar body in the
&resence of the auditor concerned or other duly
authorized re&resentative of the Commission,
after advertising by &rinted notice in the ,4cial
2azette, or for not less than three consecutive
days in any news&a&er of general circulation, or
where the value of the &ro&erty does not warrant
the e3&ense of &ublication, by notices &osted for
a li(e &eriod in at least three &ublic &laces in the
age 14 of "
locality where the &ro&erty is to be sold# /n the
event that the &ublic auction fails, the &ro&erty
may be sold at a &rivate sale at such &rice as may
be 73ed by the same committee or body
concerned and a&&roved by the Commission#
Section &". Final report of accountable ofcers.
6# An accountable o4cer, u&on ceasing to
act in his o4cial ca&acity as such, shall
submit to the auditor of the agency
concerned a re&ort of his accountability#
8# Any remaining balance of such
accountability shall be de&osited in the
&ro&er treasury without unnecessary delay#
Section &1. Auditor3s certifcate of balance.
Auditors of all government agencies, shall certify
the balances arising in the accounts settled by
them to the Commission and to the &ro&er
treasurer, collecting o4cer, or disbursing o4cer,
in such form as the Commission may &rescribe,
within si3ty days from the date of recei&t of those
accounts from the treasurer, collecting o4cer, or
disbursing o4cer concerned#
Section &. Auditor3s notice to accountable
ofcer of balance sho'n upon settlement. -he
auditor concerned shall, at convenient intervals,
send a written notice under a certi7cate of
settlement to each o4cer whose accounts have
been audited and settled in whole or in &art by
him, stating the balances found due thereon and
certi7ed, and the charges or di*erences arising
from the settlement by reason of disallowances,
charges, or sus&ensions# -he certi7cate shall be
&ro&erly itemized and shall state the reasons for
disallowance, charge, or sus&ension of credit# A
charge of sus&ension which is not satisfactorily
e3&lained within ninety days after recei&t of the
certi7cate or notice by the accountable o4cer
concerned shall become a disallowance, unless
the Commission or auditor concerned shall, in
writing and for good cause shown, e3tend the
time for answer beyond ninety days#
Section &!. Transcript of auditor3s record as
e!idence of liability. /n any criminal or civil
&roceeding against an o4cer for the
embezzlement or misa&&ro&riation of government
funds or &ro&erty, or to recover an amount due
the government from an accountable o4cer it
shall be su4cient, for the &ur&ose of showing a
balance against him, to &roduce the wor(ing
&a&ers of the auditor concerned# A showing in this
manner of any balance against the o4cer shall be
&rima facie evidence of the misa&&ro&riation of
the funds or &ro&erty unaccounted for or of civil
liability of the o4cer as the case may be# -he
e3istence or contents of bonds, contracts, or other
&a&ers relating to or connected with the
settlement of any account may be &roved by the
&roduction of certi7ed co&ies thereof but the court
may re5uire the &roduction of the original when
this a&&ears to be necessary for the attainment of
)ustice#
CHAPTER 4
APPLICATION OF APPROPRIATED FUNDS
Section &4. Disbursement of go!ernment funds.
6# Revenue funds shall not be &aid out of
any &ublic treasury or de&ository e3ce&t in
&ursuance of an a&&ro&riation law or other
s&eci7c statutory authority#
8# -rust funds shall not be &aid out of any
&ublic treasury or de&ository e3ce&t in
ful7llment of the &ur&ose for which the
trust was created or funds received, and
u&on authorization of the legislative body,
or head of any other agency of the
government having control thereof, and
sub)ect to &ertinent budget law, rules and
regulations#
9# "ational revenue and trust funds shall
not be withdrawn from the "ational
-reasury e3ce&t u&on warrant or other
instruments of withdrawal a&&roved by the
Minister ?Secretary@ of .inance as
recommended by the -reasurer of the
hili&&ines#
:# -em&orary investment of investible cash
in the "ational -reasury in any securities
issued by the "ational 2overnment and its
&olitical subdivisions and instrumentalities
including government'owned or controlled
cor&orations as authorized by the
Secretary ?Minister@ of .inance, shall not be
construed as disbursements of funds#
Section &5. Appropriation before entering into
contract.
6# "o contract involving the e3&enditure of
&ublic funds shall be entered into unless
there is an a&&ro&riation therefor, the
une3&ended balance of which, free of
other obligations, is su4cient to cover the
&ro&osed e3&enditure#
8# "otwithstanding this &rovision, contracts
for the &rocurement of su&&lies and
materials to be carried in stoc( may be
entered into under regulations of the
Commission &rovided that when issued,
the su&&lies and materials shall be
charged to the &ro&er a&&ro&riation
account#
Section &$. Certifcate sho'ing appropriation to
meet contract. E3ce&t in the case of a contract for
&ersonal service, for su&&lies for current
consum&tion or to be carried in stoc( not
e3ceeding the estimated consum&tion for three
months, or ban(ing transactions of government'
owned or controlled ban(s no contract involving
the e3&enditure of &ublic funds by any
government agency shall be entered into or
authorized unless the &ro&er accounting o4cial of
the agency concerned shall have certi7ed to the
o4cer entering into the obligation that funds have
age 15 of "
been duly a&&ro&riated for the &ur&ose and that
the amount necessary to cover the &ro&osed
contract for the current 7scal year is available for
e3&enditure on account thereof, sub)ect to
veri7cation by the auditor concerned# -he
certi7cate signed by the &ro&er accounting o4cial
and the auditor who veri7ed it, shall be attached
to and become an integral &art of the &ro&osed
contract, and the sum so certi7ed shall not
thereafter be available for e3&enditure for any
other &ur&ose until the obligation of the
government agency concerned under the contract
is fully e3tinguished#
Section &%. /oid contract and liability of ofcer.
Any contract entered into contrary to the
re5uirements of the two immediately &receding
sections shall be void, and the o4cer or o4cers
entering into the contract shall be liable to the
government or other contracting &arty for any
conse5uent damage to the same e3tent as if the
transaction had been wholly between &rivate
&arties#
Section &&. Prohibition against ad!ance
payment on go!ernment contracts.
6# E3ce&t with the &rior a&&roval of the
resident ?rime Minister@ the government
shall not be obliged to ma(e an advance
&ayment for services not yet rendered or
for su&&lies and materials not yet
delivered under any contract therefor# "o
&ayment, &artial or 7nal, shall be made on
any such contract e3ce&t u&on a
certi7cation by the head of the agency
concerned to the e*ect that the services or
su&&lies and materials have been rendered
or delivered in accordance with the terms
of the contract and have been duly
ins&ected and acce&ted#
8# "otwithstanding the foregoing
&aragra&h, any government agency, with
the a&&roval of the &ro&er de&artment
head, may furnish su&&lies and materials
to any &arty who has a contract with that
agency if the su&&lies and materials are
needed in the &erformance of the services
being contracted for and the value thereof
does not e3ceed in any one month ten
&ercent of the value of the services
already rendered due and unsettled as
com&uted by the agency concerned#
Section &'. $imitations on cash ad!ance. "o
cash advance shall be given unless for a legally
authorized s&eci7c &ur&ose# A cash advance shall
be re&orted on and li5uidated as soon as the
&ur&ose for which it was given has been served#
"o additional cash advance shall be allowed to
any o4cial or em&loyee unless the &revious cash
advance given to him is 7rst settled or a &ro&er
accounting thereof is made#
Section '". Payment of re'ards. When a reward
becomes &ayable by authority of law for
information given relative to any o*ense or for
any act done in connection with the a&&rehension
of the o*ender, the reward shall, in the absence
of s&ecial &rovisions, be &aid in such manner as
shall be &rescribed by e3ecutive order# -he 7nal
determination by the &ro&er administrative
authority &ursuant to law or any such order, as to
whether or not the &ersons concerned are entitled
to any reward and the amount thereof, shall be
conclusive u&on the e3ecutive agencies
concerned as regards the liability of the
government#
Section '1. Payments to creditors. ayments to
creditors shall be made only u&on the s&eci7c
a&&roval of the head of the agency concerned or
his duly authorized re&resentative, or if there be
no such o4cer, u&on the a&&roval of the
de&artment head endorsed u&on the warrant or
chec( or voucher e*ecting the &ayment#
Section '. Persons authori+ed to dra' 'arrants
or chec1s for payment out of go!ernment funds.
6# Warrants u&on the "ational -reasury or
chec(s draw against duly authorized ban(
accounts shall be drawn by the agency
head having control of the a&&ro&riation or
fund against which the warrants or chec(s
are chargeable, or by such subordinate
o4cer as shall be designated for that duty
by the said agency head, who shall all be
duly de&utized for the &ur&ose by the
-reasurer of the hili&&ines# Co&ies of the
designation shall be furnished the
-reasurer of the hili&&ines and the
re&resentative of the Commission# "otice
shall li(ewise be given to the -reasurer of
the hili&&ines and the Commission when
the designation is revo(ed# "o member of
the accounting unit or the internal control
unit of the agency may be designated to
&erform the duty#
8# Warrants chargeable to national
a&&ro&riations or funds not under the
control of an agency shall be drawn by
such o4cer as shall be s&eci7ed by law, or,
in the absence of that o4cer, by an o4cer
designated by the resident ?rime
Minister@#
Section '!. To 'hom 'arrants or chec1s
payable. Warrants chargeable to revenue or trust
funds of the national government or chec(s drawn
against the -reasury Chec(ing Account for
Agencies maintained with any government
de&ository shall be made &ayable either directly
to the creditor to whom the money is due or to a
disbursing o4cer for o4cial disbursement#
Section '4. Countersigning of 'arrants or
chec1s by auditors. "o warrant or chec( shall be
&aid by the -reasurer of the hili&&ines, local
treasurer, or any government de&ository unless it
is countersigned by a duly authorized o4cial of
the Commission# When in the o&inion of the
Commission, the interest of the service so
re5uires the warrant or chec( may be &aid
without the countersignature under such rules
age 1$ of "
and regulations as it may &rescribe from time to
time#
Section '5. Treasurer3s responsibility for
indorsements. -he -reasurer of the hili&&ines
shall, within three years from the date of &ayment
by him, be res&onsible for the indorsements on all
warrants and chec(s and shall retain them in his
custody, after which they shall be dis&osed of
under &ertinent regulations0 rovided, that they
are not needed for &ending civil, criminal or
administrative &roceedings#
Section '$. Payment of lost or fraudulently
encashed treasury 'arrants or chec1s. When any
chec( or warrant is lost, stolen or destroyed, the
issuing o4cer may issue a du&licate chec( or
warrant which shall be &aid under regulations of
the Commission in regard to issuance and
&ayment and u&on the e3ecution of a bond to
indemnify the issuing agency in such amount and
with such security as the Commission may
re5uire#
-reasury Warrant or chec( encashed under forged
or fraudulent indorsement shall be re&laced by
the -reasurer of the hili&&ines even before the
recovery of the e5uivalent amount under rules
and regulations that the Commission and the
!e&artment ?Ministry@ of .inance shall &rescribe#
-he Clearing or ayment of -reasury warrant and
chec( &aid by ban( or other holder in due course
and subse5uently lost may be allowed under
regulations of the Commission and the
!e&artment ?Ministry@ of .inance#
Section '%. Disposition of stale 'arrants or
chec1s.
6# A -reasury warrant or chec( which
remains outstanding after two years from
date of its issue shall not be &aid by the
-reasurer of the hili&&ines or by any duly
authorized de&ository# -he issuing agency
shall ta(e u& in its boo(s of accounts the
amount of this warrant or chec( as sur&lus
ad)ustment of the fund against which it
was &reviously charged# D&on &resentation
of a stale warrant or chec(, the issuing
agency shall cancel it and issue to the
&ayee a substitute warrant or chec( in lieu
thereof#
8# Such sum as may be necessary to meet
the obligation arising out of the issuance of
substitute warrants or chec(s chargeable
against the general fund shall be charged
to the current yearHs 2eneral
A&&ro&riations law, sub)ect to &ertinent
budget rules and regulations# Substitute
warrants or chec(s &ayable from funds
other than the general fund shall be &aid
from the a&&ro&riate funds#
Section '&. (e!ersion of unliquidated balances
of accounts payable. -he Commission u&on notice
to the head of agency concerned may revert to
the una&&ro&riated sur&lus of the general fund of
the national government, any unli5uidated
balance of accounts &ayable in the boo(s of the
national government, which has been outstanding
for two years or more and against which no actual
claim, administrative or )udicial, has been 7led or
which is not covered by &erfected contracts on
record# -his section shall not a&&ly to unli5uidated
balances of accounts &ayable in trust funds as
long as the &ur&oses for which the funds were
created have not been accom&lished#
Section ''. Transfer of une.pended balances to
the general fund. -he Commission may transfer at
any time, from moneys a&&ro&riated for a s&eci7c
&ur&ose, to the una&&ro&riated general fund any
sur&lus balance standing to the credit of any
a&&ro&riation or fund when the o4cer having
administrative control thereof certi7es to the
Commission that there is a sur&lus in e3cess of
the re5uirements, or that the wor( or &ur&ose for
which the a&&ro&riation was made has been
com&leted, inde7nitely &ost&oned or abandoned,
and that there is no outstanding obligation to be
&aid therefrom#
Section 1"". (eports of disbursing ofcers in a
go!ernment agency. !isbursing o4cers in any
government agency shall render monthly re&orts
of their transactions &ursuant to regulations of the
Commission to be submitted not later than the
7fth day of the ensuing month to the auditor
concerned who shall conduct the necessary
e3amination and audit within thirty days from
recei&t thereof#
CHAPTER 5
ACCOUNTA+ILITY AND RESPONSI+ILITY FOR
GOVERNMENT FUNDS AND PROPERTY.
Section 1"1. Accountable ofcers) bond
requirement.
6# Every o4cer of any government agency
whose duties &ermit or re5uire the
&ossession or custody of government
funds or &ro&erty shall be accountable
therefor and for the safe(ee&ing thereof in
conformity with law#
8# Every accountable o4cer shall be
&ro&erly bonded in accordance with law#
Section 1". Primary and secondary
responsibility.
6# -he head of any agency of the
government is immediately and &rimarily
res&onsible for all government funds and
&ro&erty &ertaining to his agency#
8# ersons entrusted with the &ossession
or custody of the funds or &ro&erty under
the agency head shall be immediately
res&onsible to him, without &re)udice to
the liability of either &arty to the
government#
age 1% of "
Section 1"!. &eneral liability for unla'ful
e.penditures. E3&enditures of government funds
or uses of government &ro&erty in violation of law
or regulations shall be a &ersonal liability of the
o4cial or em&loyee found to be directly
res&onsible therefor#
Section 1"4. (ecords and reports required by
primarily responsible ofcers. -he head of any
agency or instrumentality of the national
government or any government'owned or
controlled cor&oration and any other self'
governing board or commission of the
government shall e3ercise the diligence of a good
father of a family in su&ervising accountable
o4cers under his control to &revent the
incurrence of loss of government funds or
&ro&erty, otherwise he shall be )ointly and
solidarily liable with the &erson &rimarily
accountable therefore# -he treasurer of the local
government unit shall li(ewise e3ercise the same
degree of su&ervision over accountable o4cers
under his su&ervision otherwise, he shall be )ointly
and solidarily liable with them for the loss of
government funds or &ro&erty under their control#
Section 1"5. #easure of liability of accountable
ofcers.
6# Every o4cer accountable for
government &ro&erty shall be liable for its
money value in case of im&ro&er or
unauthorized used or misa&&lication
thereof, by himself or any &erson for
whose acts he may be res&onsible# He
shall li(ewise be liable for all losses,
damages, or deterioration occasioned by
negligence in the (ee&ing or use of the
&ro&erty whether or not it be at the time in
his actual custody#
8# Every o4cer accountable for
government funds shall be liable for all
losses resulting from the unlawful de&osit,
use, or a&&lication thereof and for all
losses attributable to negligence in the
(ee&ing of the funds#
Section 1"$. $iability for acts done by direction
of superior ofcer. "o accountable o4cer shall be
relieved from liability by reason of his having
acted under the direction of a su&erior o4cer in
&aying out, a&&lying, or dis&osing of the funds or
&ro&erty with which he is chargeable, unless &rior
to that act, he noti7ed the su&erior o4cer in
writing of the illegality of the &ayment,
a&&lication, or dis&osition# -he o4cer directing
any illegal &ayment or dis&osition of the funds or
&ro&erty shall be &rimarily liable for the loss,
while the accountable o4cer who fails to serve
the re5uired notice shall be secondarily liable#
Section 1"%. Time and mode of rendering
account. /n the absence of s&eci7c &rovision of
law, all accountable o4cers shall render their
accounts, submit their vouchers, and ma(e
de&osits of money collected or held by them at
such times and in such manner as shall be
&rescribed in the regulations of the Commission#
Section 1"&. Prohibition against pecuniary
interest. "o accountable or res&onsible o4cer
shall be &ecuniary interested, directly or
indirectly, in any contract or transaction of the
agency in which he is such an o4cer#
TITLE III
GOVERNMENT ACCOUNTING
CHAPTER 1
+ASIC PRINCIPLES AND O+(ECTIVES
Section 1"'. Defnition. 2overnment accounting
encom&asses the &rocesses of analyzing,
recording, classifying, summarizing and
communicating all transactions involving the
recei&t and dis&osition of government funds and
&ro&erty, and inter&reting the results thereof#
Section 11". "b,ecti!es of go!ernment
accounting. 2overnment accounting shall aim to
6# &roduce information concerning &ast
o&erations and &resent conditions+
8# &rovide a basis for guidance for future
o&erations+
9# &rovide for control of the acts of &ublic
bodies and o4cers in the recei&t,
dis&osition and utilization of funds and
&ro&erty+ and
:# re&ort on the 7nancial &osition and the
results of o&erations of government
agencies for the information of all &ersons
concerned#
CHAPTER
ACCOUNTS AND ACCOUNTING
Section 111. 4eeping of accounts.
6# -he accounts of an agency shall be (e&t
in such detail as is necessary to meet the
needs of the agency and at the same time
be ade5uate to furnish the information
needed by 7scal or control agencies of the
government#
8# -he highest standards of honesty,
ob)ectivity and consistency shall be
observed in the (ee&ing of accounts to
safeguard against inaccurate or misleading
information#
Section 11. (ecording of fnancial transaction.
Each government agency shall record its 7nancial
transactions and o&erations conformity with
generally acce&ted accounting &rinci&les and in
accordance with &ertinent laws and regulations#
Section 11!. Chart of accounts. -he chart of
accounts for government agencies shall be
&rescribed by the Commission and shall be so
designed as to &ermit agency heads to review
their activities according to selected areas of
age 1& of "
res&onsibility+ allow for a clearer de7nition of
obligation accounting leading to more &recise
budgetary control+ &rovide for a wider range of
analytical information designed for use in
management audit or legislative review+ furnish
information regarding the &roduction of income
and the investment in ca&ital items which is of
value in 7scal and economic &lanning+ enable
tighter accounting control to be e3ercised over
agenciesH 7nancial relationshi& with the -reasury+
&ermit a more sim&li7ed &re&aration of trial
balances and a sim&ler and more orderly
&re&aration of trial balances and a sim&ler and
more orderly &rocess of national consolidation and
facilitate the a&&lication of mechanized
accounting &rocedures for more e*ective
&rotection against error and irregularity and
yielding economies in o&eration#
Section 114. The general ledger.
6# -he government accounting system
shall be on a double entry basis with a
general ledger in which all 7nancial
transactions are recorded#
8# Subsidiary records shall be (e&t where
necessary#
Section 115. Terminology and classifcation. A
common terminology and classi7cation shall be
used consistently throughout the budget, the
accounts and the 7nancial re&orts#
Section 11$. Accounts classifcation. -o &ermit
e*ective budgetary control and to establish
uniformity in 7nancial re&orts, accounts shall be
classi7ed in balanced fund grou&s# -he grou& for
each fund shall include all accounts necessary to
set forth its o&erations and condition# All 7nancial
statements shall follow this classi7cation#
Section 11%. 5udgetary control accounts. -he
general accounting system shall include
budgetary control accounts for revenues,
e3&enditures and debt, as &rovided by #!# "o#
66==#
Section 11&. Accounting for unreali+ed
re!enues. Estimated revenues which remain
unrealized at the close of the 7scal year shall not
be boo(ed or credited to the una&&ro&riated
sur&lus or any other account#
Section 11'. Accounting for obligations and
e.penditures. All lawful e3&enditures and
obligations incurred during the year shall be ta(en
u& in the accounts of that year#
CHAPTER !
ACCOUNTING REPORTS
Section 1". (eporting requirements. -he
Commission shall issue the &ertinent accounting
rules and regulations whenever the re&orting
re5uirements to be &rescribed by the >udgetary
Commission &ursuant to the budget law a*ect
accounting functions of the various agencies of
the government#
Section 11. Financial reports and statements.
6# -he 7nancial re&orts &re&ared by the
agencies shall com&ly with the s&eci7c
re5uirements of a&&licable laws and
regulations as to nature, accounting basic,
content, fre5uency, and distribution as well
as with all a&&licable restrictions
&ertaining to information that is classi7ed
for national security &ur&oses#
8# -he 7nancial statements shall be based
on o4cial accounting records (e&t in
accordance with law and the generally
acce&ted accounting &rinci&les and
standards#
Section 1. ubmission of reports. Whenever
deemed necessary in the e3igencies of the
service, the Commission may under regulations
issued by it re5uire the agency heads, chief
accountants, budget o4cers, cashiers, disbursing
o4cers, administrative or &ersonnel o4cers, and
other res&onsible o4cials of the various agencies
to submit trial balances, &hysical inventory
re&orts, current &lantilla of &ersonnel, and such
other re&orts as may be necessary for the
e3ercise of its functions#
?8@ .ailure on the &art of the o4cials
concerned to submit the documents and
re&orts mentioned herein shall
automatically cause the sus&ension of
&ayment of their salaries until they shall
have com&lied with the re5uirements of
the Commission#
?9@ "o a&&ro&riation authorized in the
2eneral A&&ro&riations Act shall be
available to &ay the salary or any o4cial or
em&loyee who violates the &rovisions of
this section, without &re)udice to any
disci&linary action that may be instituted
against such o4cial or em&loyee#
CHAPTER 4
INTERNAL CONTROL SYSTEMS
Section 1!. Defnition of internal control.
/nternal control is the &lan of organization and all
the coordinate methods and measures ado&ted
within an organization or agency to safeguard its
assets, chec( the accuracy any reliability of its
accounting data, and encourage adherence to
&rescribed managerial &olicies#
Section 14. 0nstallation. /t shall be the direct
res&onsibility of the agency head to install,
im&lement, and monitor a sound system of
internal control#
TITLE IV
FINAL PROVISIONS
Section 15. Transitory pro!isions.
age 1' of "
6# Dntil such time as the Commission shall
have been fully constituted, the incumbent
Chairman or his successor shall continue to
e3ercise all the &ower and functions
&ro&erly a&&ertaining to the Commission#
8# ending im&lementation of the
&rovisions of Section 8:, &aragra&h 8 of
this Code, the agencies concerned shall
continue to &rovide the necessary amounts
for the salaries, allowances and other
bene7ts for the re&resentative and sta* of
the Commission#
Section 1$. Duty to respect the Commission3s
independence. /t shall be the duty of every &erson
to res&ect, &rotect and &reserve the
inde&endence of the Commission#
Section 1%. Administrati!e disciplinary action.
Sub)ect to rules and regulations as may be
a&&roved by the resident ?rime Minister@, any
un)usti7ed failure by the &ublic o4cer concerned
to com&ly with any re5uirement im&osed in this
Code shall constitute neglect of duty and shall be
a ground for administrative disci&linary action
against the said &ublic o4cer who, u&on being
found guilty thereof after hearing, shall be meted
out such &enalty as is commensurate with the
degree of his guilt in accordance with the Civil
Service Aaw# Re&eated un)usti7ed failure to
com&ly with the re5uirements im&osed in this
Code shall be conclusive &roof that the &ublic
o4cer concerned is notoriously undesirable#
Section 1&. Penal pro!ision. Any violation of the
&rovisions of Sections <=, <$, $%, 6I<, and 6I$ of
this Code or any regulation issued by the
Commission im&lementing these sections, shall be
&unished by a 7ne not e3ceeding one thousand
&esos or by im&risonment not e3ceeding si3 ?<@
months, or both such 7ne and im&risonment in
the discretion of the court#
Section 1'. eparately clause. Should any
&rovision of this Code or any &art thereof be
declared invalid, the other &rovisions, so far as
they are se&arable from the invalid one, shall
remain in force and e*ect#
Section 1!". (epealing clause. Cha&ter 8<
?Accounting Aaw@ of Act 8=66 is hereby re&ealed#
All other laws, e3ecutive orders, &roclamations,
decrees, instructions, rules and regulations, or
&arts thereof which are inconsistent or in conJict
with any &rovision of this Code shall be deemed
re&ealed or modi7ed accordingly#
Section 1!1. -6ecti!ity clause. -his Code shall
ta(e e*ect three months after the com&letion of
its &ublication in the ,4cial 2azette#
!one in the City of Manila, this 66th day of Bune,
in the year of ,ur Aord, nineteen hundred and
seventy'eight#
age " of "

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