State Auditing

STATE AUDITING IN THE PHILIPPINES chronicleed by MYRLA P. SEDENIO RUTH C. TACUJAN A. OBJECTIVES I. To reason the State scrutinise strategy 2. To grade Issues and Limitations of giving medication take stocking 3. To Discuss the Measurement of judicature consummation B. INTRODUCTION The Filipino theme emphasizes the magnificence of accountability in the political sympathies. name XI simply and bluntly begins universe office is a earthly concern trust, onwards it adds that officials and employees should serve the people with responsibility, integrity, loyalty and efficiency. In the administration reckon cycle, accountability is position down by the need for presidential term agencies and departments relinquish to submit quarterly and periodic income statements statements of unvoicedlyotment, obligations and balances along with separate(a) fiscal reports and documents for canvas a varianceal work out whereby the authenticity, the true and reliability o f pecuniary accounts or proceeding ar paired and approved. on that point atomic number 18 several(prenominal) kinds of study One is fiscal Auditing wherein financial proceedings and accounts atomic number 18 checked to witness the submitting presidential term political science business office has comp harpd with the rules and regulations, specific onlyy the pre-agreed and presidential term business relationship scheme. A nonher part is murder Auditing whereby unity is intenting at the strategys of the manner to assess it has delivered on its institutional terminuseavor and mandate by linking the budgets with results or results-establish budgets. An inside analyse, as the name suggests, an innate check on chest systems and processes.External Auditing involves an outside take stock body being brought in to look at the influence. Pre- size uping refers to canvassing by agencies before eulogy of exploits while post-auditing is auditing by an nonsymbi otic body after. The Philippine politics has agencies mandated to check off accountability and transp atomic number 18ncy on its oecumenical operations. These agencies be The plaza of the Ombudsman, Sandiganbayan, Presidential Anti-Graft guidance, the civic Service emphasising and primarily, for the conclude of this paper, the bang on Audit. C. STATE AUDIT SYSTEMAuditing is the interrogative of information by a three party other than the preparer or user with the intention of establishing its realibility, and the reporting of the results of this examination with the mind-set of increasing the usefulness of the information to the user. commitment on Audit The counsel on Audit (COA) is the constitutional commission mandated to be the supreme audit institution of the presidency. It has jurisdiction over national political relation agencies, topical anaesthetic government units, government-owned and sustainled corporations and non-government organizations receivi ng benefits and subsidies from the government.The Constitution identified the adjacent(a) functions for the equip 1. Examine, audit and settle all accounts pertaining to the r sluiceue and receipts of, and exp leftoveritures or uses of gold and property owned or held in trust by, or pertaining to, the government 2. announce account statement and auditing rules and regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable exp fireitures, or uses of government pecuniary pick and properties 3.Submit annual reports to the President and the Congress on the financial condition and operation of the government 4. Recommend measures to improve the efficiency and posture of government operations 5. Keep the oecumenic accounts of government and preserve the vouchers and supporting written document pertaining thereto 6. Decide any side brought before it within 60 age 7. Perform much(prenominal) other duties a nd functions as may be provided by justness. COA, as the other constitutional commissions are mandated, is headed by a prexy and two Commissioners establish by the President and the Commission on Appointments of Congress.It too enjoys fiscal autonomy which mode its appropriations must be released regularly and automatically. The Commission also deploys resident auditors in all national government agencies, topical anesthetic government units and government-owned and dominanceled corporations pursuant to its mandate to follow separately chest of drawerss financial operations in a risk-based audit approach. The Commission on Audit (COA) has developed and introduced a risk-based audit approach (RBAA) that emphasizes the need for the auditors to focus on high-risk areas that are electric potential breeding grounds for graft and corruption.Auditing plays an substantial role in domain finance, the Auditing label of the Philippines was promulgated in 1979 (P. D. 1445). As it military gist mainly from the basic law, the Code amplifies, elaborates, specifies, and gives under the declaration of policy in the Auditing Code, it is state that all resources of the government shall be managed, pass and utilized in conformity with law and regulations and safeguard against loss or wastage by meaning of illegal or improper disposition, with a view to ensuring efficiency, economic system and specialty in the operations of government.COA reports In order to execute its audit functions, COA produces different kinds of reports. A try by the Philippine National calculate Monitoring confinement identified and explained each(prenominal) of these 1. Regular annual Audit Report of each NGA, LGU and GOCC 2. Consolidated Annual monetary Report for NGAs, LGUs and GOCCs 3. modified Audit Reports 4. Circulars and other Issuances The Annual Audit Reports contain the results of the audit conducted on the financial statements submitted by agencies, local governm ent units and government-owned and accountantled corporations to COA auditors.The results are shown in the form of audit thoughts indicating how the agencies faired with their financial statements at the end of each fiscal year. The types of audit opinions are Unqualified (U), restricted (Q), indecent (A) and disclaimer (D). An Unqualified Opinion refers to the clean opinion or the agency reflected the results of the financial statements passably, which promoter its operations and the financial condition in a period of time based on existing government account standards, and in conformity with government laws, rules and regulations.A Qualified Opinion kernel that an agency reflected fairly except for some(a) specific transactions and/or accounts that watch been found to be problematic, either improper, questionable or needfully further explanations. Adverse opinion means that the financial statements did non fairly personate its results of operations and financial condi tion of the agency, and are non in compliance with cocksure laws and applicable guidelines. Lastly, the Disclaimer opinion means that there is no sufficient foothold to form any opinion for an agency does not keep or submit its records of financial accounts and transactions.An audit report has the following parts Audit Certificate, which shows the audit opinion, the financial Statements, Major Findings and Observations which explains if there are defects in the compliance of accounting and auditing rules and policies, and Recommendations to the entities. In turn, COA checks if these measures were conformed by the entity on the next years annual audit report. The Consolidated Annual Financial Reports on the other consider show the financial performance of the public sector in general.Each level has a volume of the consolidated financial report, one each for NGAs, LGUs and GOCCs. These are based on the audit reports of each entity. These reports contain the financial condition an d highlights of agencies, local government units and government corporations. These reports also reflect the financial resources of the government, even the off-budget accounts or funds that are not subject to annual appropriations. Interestingly, these reports are the only source where one can be informed about funds that are not sourced out from appropriations.Special Audit Reports are purposely for investigation, in response to a request by interested parties or by a directive from Congress. The Commission has already undergone picky audit reports on the countrys outstanding debt and special purpose funds such as the Agriculture and Fisheries Modernization Act and procurance of the Department of Public Works and Highways. GAFMIS The establishment Accountancy and Financial focussing schooling System (GAFMIS) is a financial database which keeps the general accounts of the government.It is spearheaded by the COA so as to implement its mandated function. Thru this, the appropri ations are verified and allotment releases to agencies are ensured not to exceed the appropriations. From the Department of cipher focal point (DBM), copies of Agency Budget Matrices (ABM) and Special Allotment release Orders (SARO) are submitted to GAFMIS and these string up the Registry of Appropriations and Allotments. The GAFMIS is also intrinsic because it assists government agencies with the Electronic New government natural action accounting System (e-NGAS).It is a computerized chopine of the New Government Accounting System wherein budget transactions, allotments and obligations are recorded and monitored electronically. It also helps in streamlining the New Government Accounting System which provides the spick-and-span accounting policies in the government. Some of the basic features of the new system are the aggregation accounting and One-fund concept. Accrual accounting recognizes the income when earned and expenses when incurred as agree to recognizing income when cash is earned and expenses when paid. familiar control and the intimate control system Internal control is defined as a process effected by an organizations structure, work and endorsement flows, people and management information systems which are designed to help it accomplish its goals. It is a means by which an organizations resources are directed, monitored, and measured. It plays an meaning(a) role in preventing and detecting bilgewater and protecting the organizations resources. Internal audit is an implicit in(p) part of internal control. It maintains efficiency and effectiveness in operations.It looks at the reliability of financial transactions in reports by qualification sure that they are in accordance with rules and regulations. Several nutriment in the Philippines go through signified the internal control in the government such as piece 123 of the amended Presidential Decree 1445, the administrative Code 1987 and Government Accounting and Auditing manual guided by worldwide standards thru the world-wide brass section for Standardization (ISO) and International Organization for Supreme Audit Institutions (INTOSAI). The INTOSAI also speculate standards for the internal control systems in the public sector.It has emphasized that internal control systems shall be in line with the characteristics, taxs and condition of the public organizations. In line with these provisions, the Government has formulated the National Government Internal Control System (NGICS) through the efforts of the DBM and resource and reference panels from various government agencies. It serves as a guide to government agencies in putting up internal control systems. It aims to strengthen accountability, safeguard assets, promote efficiency, economy and effectiveness in the operations and flummox with the policies of the organization. D.Issues and Problems of Government Auditing In her public budgeting and accounting class, the late professor Emilia Boncodin dysphoric some issues on COAs mandate and the accounting and auditing system of the government as follows 1. The audit system looks only on the agencies compliance with the accounting standards and laws in the financial reports alternatively of finding if the agencies stir properly allocated their allow for budgets. 2. Reporting of the GOCCs entire budget What is reported in the government budget documents regarding the GOCCs are the budgetary support to government corporations or subsidies only.Yet, COA audits the corporate operating expenses on the entire budget of government corporations. 3. easy in penalizing because COA is limited to recommendatory functions only Adverse/disclaimer audit opinions and recommendations by COA to government agencies do not have the equivalent penalties or sanctions if they are not acted upon and followed. An congresswoman is DPWHs audit report where it has been addicted an adverse opinion for the gone 18 years. 4. Pre-Audit vs. Post audit E ach type of audit has its own problems.Postaudit is inexpedient because it involves final evaluation of financial transaction that is after the funds have already been disbursed. Pre-audit however, ironically defeats the overall essential purpose of auditing because financial transactions are assessed beforehand. In the past, COA had been operating on post audit basis since 1995-2009 when COA circular 2009-002 reinstituted the selective pre-auditing ascribable to rising incidents and anomalous disbursements. However, Circular 2009-003 in June 16 2009 suspended some of the provisions in the earlier circular to ensure uniformity and consistency in its implementation.On COA reports The Philippine National Budget Monitoring tramp has identified the following limitations that affect the importance of COA reports in ensuring accountability 1. Timeliness COAs deadline on the submission of reports is not parallel of latitude to the schedule of budget supply. Audit and financial report s must be submitted by end of September while budget preparation time ends in July when the Congress session opens. The timings would thus work best if transposed since the reports should serve as aids in reviewing the agencies budgets in time for budget legislation.Given the reality, the value of COAs reports being used as tools to determine the status of government entities in ground of financial performance and compliance with rules are nullified. 2. Completeness Audit reports of agencies are not completed on time overdue to inability of personnel and time constraints. In effect, this puts problems in reviewing the budget and in fashioning the annual financial reports. 3. Availability Although COAs website is useful in terms of the reports posted, many another(prenominal) reports from agencies including those from LGUs and GOCCs are currently missing. 4. Contestability of findingsThere are issues on COAs findings on its reports. First is that the some of the past findings have not been inflexible yet or the so-called contagious balance sheets. An example is the disallowances that must be deducted by agencies to employees. However, these have not been unflinching even if some personnel have already left the service or died. Secondly, there is the inconsistency of audit rules by resident auditors. In some agencies, the rules of past auditors and new auditors differ like deductions that were not present in the past have already been installed at the time the new auditor comes to office.The third issue is the unwarranted application of rules and regulations in auditing. Some expenses are disallowed even if it yields good results. The last issue is the inability of auditors to understand the situation of agencies operations. The operations have complexities that emergencies become inevitable and it is hard for them to look at the reasons for the issues in operations. 5. feasibleness of recommendations The COAs recommendations on reports are not alway s being followed by agencies and these are already beyond the control of the institution. 6. passage of arms of interestCOA auditors are still considered as innocent mortals that may experience biases, influences and errors in judgment. There are often claims that some auditors are complicit in bribery and graft. On internal control and the internal control system The NGICS has identified the following limitations of internal control Human error, i. e. , errors in judgment such as internal auditors biases/conflict of interest, negligence, misunderstanding, fatigue, distraction, collusion, abuse, etc. 1. Shifts in government policies or programs 2. Resource constraints 3. Organizational changes and 4. Management attitudeE. Measurement of Government Performance chthonian COA Resolution none 2002-005 dated whitethorn 17, 2002, the Special Audit Office was renamed Management Services to expand its services to acknowledge a. Conduct of Value-For-Money audits and related operations r eview activities. b. Provide management consultancy services to other government agencies in such areas as * Organization * Strategy Formulation * Financial Feasibility * Strategic Planning * another(prenominal) related areas c. Coordinate with all offices of the Commission for the purpose of establishing feedback mechanisms on implemented innovations. d.Formulate recommendations to the Chairman on the adoption of the most enchant systems for the enhancement of operations. e. Perform such other functions as may be assigned. Recently, the Office is assigned to conduct Rate and charge audits. The functions Conduct of Value-For-Money (VFM) Audit This audit is interested with the review of management efficiency with the end in view of eliminating waste and promoting economic use of public funds and resources and the ascertainment of the agencys effectiveness by ascertain whether desired results have been achieved and programs have accomplish their purposes and objectives.Approache s in the conduct of VFM audits Agency-based approach An audit of a particular program, project or activity of a selected agency. Government-wide and Sectoral Performance Audits Government-wide and Sectoral Performance Audits are new approaches adopted by the Commission under COA Resolution No. 98-005 dated March 3, 1998. While these types of audits were introduced in 1998, it was only in 2002 that these approaches were operationalized under the COA-UNDP AusAID Project entitled Enhancing the Public Accountability computer programme of the Philippine Commission on Audit.Government-wide audit is the simultaneous examination of a management function or activity in a number of government agencies which is expected to provide * basic data for comparing practices and operations between and among government agencies in the same sector or with the whole government * collated data of practices in various government agencies that could show the order of magnitude or insignificance of deficien cies in the system * audit criteria which are supported by best practices * awareness on the part of auditors and the auditees of how their agency compares with other government agencies in terms of objectives, functions, operations, internal and administrative controls, and output and * opportunities to the audited agency for benchmarking with other government agencies.On the other hand, the Sectoral Audit refers to an audit of programs or activities that are delivered by more than one government agency and is expected to provide * an overall submit of how various segments of a program are implemented and possibly lead to the appointment of areas where improvements can be introduced * audit criteria or benchmark for future audits of government programs by various government agencies * basis for auditors to get to that program difficulties may not lie with a single agency however possibly with the way the agencies involved in the program work together * an battleground for airi ng program difficulties by audited agencies and * probability for making changes in the program, if necessary.