CHAPTER 4

Jurisdiction, Powers and Functions of the Commission

SECTION 10. Statement of Objectives.—In keeping with the constitutional mandate, the Commission adheres to the following objectives:

(1) Determine whether or not the fiscal responsibility that rests directly with the head of the government agency has been properly and effectively discharged;

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

(3) Institute control measures through the promulgation of auditing and accounting rules and regulations governing the receipts, disbursements, and uses of funds and property, consistent with the total economic development efforts of the Government;

(4) Promulgate auditing and accounting rules and regulations so as to facilitate the keeping, and enhance the information value of the accounts of the Government;

(5) Institute measures designed to preserve and ensure the independence of its representatives; and

(6) Endeavor to bring its operations closer to the people by the delegation of authority through decentralization, consistent with the provisions of the Constitution and the laws.

SECTION 11. General Jurisdiction.—(1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of government funds and properties.

SECTION 12. Appointing Power.—The Commission Proper shall appoint in accordance with the Civil Service Law, the officials and employees of the Commission wherever they are stationed or assigned.

SECTION 13. Examining Authority.—The Commission shall have authority to examine books, papers, documents filed by individuals and corporations with, and which are in the custody of, government offices in connection with government revenue collection operations, for the sole purpose of ascertaining that all funds determined by the appropriate agencies and collectible and due the Government have actually been collected, except as otherwise provided in the Internal Revenue Code of 1977.

SECTION 14. Visitorial Authority.—(1) The Commission shall have visitorial authority over non-government entities subsidized by the Government, those required to pay levies or have government shares, those which have received counterpart funds from the Government or are partly funded by donations through the Government. This authority, however, shall pertain only to the audit of these funds or subsidies coming from or through the Government; and

(2) Upon direction of the President, the Commission shall likewise exercise visitorial authority over non-governmental entities whose loans are guaranteed by the Government, provided that such authority shall pertain only to the audit of the government’s contingent liability.

SECTION 15. Fee for Audit and Other Services.—(1) The Commission shall fix and collect reasonable fees for the different services rendered to non-government entities that shall be audited in connection with their dealings with the Government arising from subsidiaries, counterpart funding by Government, or where audited records become the basis for a government levy or share. Fees of this nature shall accrue to the General Fund and shall be remitted to the Treasurer of the Philippines within ten (10) days following the completion of the audit; and

(2) Whenever the Commission contracts with any government entity to render audit and related services beyond the normal scope of such services, the Commission is empowered to fix and collect reasonable fees. Such fees shall either be appropriated in the agency’s current budget, charged against its savings, or appropriated in its succeeding year’s budget. Remittance shall accrue to the General Fund and shall be made to the Treasurer of the Philippines within the time provided for in the contract of service, or in the billing rendered by the Commission.

SECTION 16. Deputization of Private Licensed Professionals to Assist Government Auditors.—(1) The Commission may, when the exigencies of the service so require, deputize and retain in the name of the Commission such certified public accountants and other licensed professionals not in the public service as it may deem necessary to assist government auditors in undertaking specialized audit engagements; and

(2) The deputized professionals shall be entitled to such compensation and allowances as may be stipulated, subject to pertinent rules and regulations on compensation and fees.

SECTION 17. Government Contracts for Auditing, Accounting and Related Services.—(1) No government agency shall enter into any contract with any private person or firm for services to undertake studies and services relating to government auditing, including services to conduct, for a fee, seminars or workshops for government personnel on these topics, unless the proposed contract is first submitted to the Commission to enable it to determine if it has the resources to undertake such studies or services. The Commission may engage the services of experts from the public or private sectors in the conduct of these studies; and

(2) Should the Commission decide not to undertake the study or service, it shall nonetheless have the power to review the contract in order to determine the reasonableness of its costs.

SECTION 18. Settlement of Accounts Between Agencies.—The Commission shall have the power, under such regulations as it may prescribe, to authorize and enforce the settlement of accounts subsisting between agencies of the Government.

SECTION 19. Collection of Indebtedness Due to the Government.—The Commission shall, through proper channels, assist in the collection and enforcement of all debts and claims, and the restitution of all funds or the replacement or payment as a reasonable price of property, found to be due the Government, or any of its subdivisions, agencies or instrumentalities, or any government-owned or controlled corporation or self-governing board, commission or agency of the Government, in the settlement and adjustment of its accounts. If any legal proceeding is necessary to that end, the Commission shall refer the case to the Solicitor General, the Government Corporate Counsel, or the Legal Staff of the Creditor Government Office or agency concerned to institute such legal proceeding. The Commission shall extend full support in the litigation. All such moneys due and payable shall bear interest at the legal rate from the date of written demand by the Commission.

SECTION 20. Power to Compromise Claims.—(1) When the interest of the Government so requires, the Commission may compromise or release in whole or in part, any settled claim or liability to any government agency not exceeding ten thousand pesos arising out of any matter or case before it or within its jurisdiction, and with the written approval of the President, it may likewise compromise or release any similar claim or liability not exceeding one hundred thousand pesos. In case the claim or liability exceeds one hundred thousand pesos, the application for relief therefrom shall be submitted, through the Commission and the President, with their recommendations, to the Congress; and

(2) The Commission may, in the interest of the Government, authorize the charging or crediting to an appropriate account in the National Treasury, small discrepancies (overage or shortage) in the remittances to, and disbursements of, the National Treasury, subject to the rules and regulations as it may prescribe.

SECTION 21. Retention of Money for Satisfaction of Indebtedness to Government.—When any person is indebted to any government agency, the Commission may direct the proper officer to withhold the payment of any money due such person or his estate to be applied in satisfaction of the indebtedness.

SECTION 22. Authority to Examine Accounts of Public Utilities.—(1) The Commission shall examine and audit the books, records and accounts of public utilities in connection with the fixing of rates of every nature, or in relation to the proceedings of the proper regulatory agencies, for purposes of determining franchise taxes;

(2) Any public utility refusing to allow an examination and audit of its books of accounts and pertinent records, or offering unnecessary obstruction to the examination and audit, or found guilty of concealing any material information concerning its financial status shall be subject to the penalties provided by law; and

(3) During the examination and audit, the public utility concerned shall produce all the reports, records, books of accounts and such other papers as may be required. The Commission shall have the power to examine under oath any official or employee of the said public utility.

SECTION 23. Submission of Papers Relative to Obligations.—(1) The Commission shall have the power, for purposes of inspection, to require the submission of the original of any order, deed, contract, or other document under which any collection, or payment from, government funds may be made, together with any certificate, receipt, or other evidence in connection therewith. If authenticated copy is needed for record purposes, the copy shall upon demand be furnished;

(2) In the case of deeds to property purchased by any government agency, the Commission shall require a certificate of title entered in favor of the Government or other evidence satisfactory to it that the title is in the Government; and

(3) It shall be the duty of the officials or employees concerned, including those in non-government entities under audit, or affected in the audit of government and non-government entities, to comply with these requirements. Failure or refusal to do so without justifiable cause shall be a ground for administrative disciplinary action as well as for disallowing permanently a claim under examination, assessing additional levy or government share, or withholding or withdrawing government funding or donations through the Government.

SECTION 24. Investigatory and Inquisitorial Powers.—The Chairman or any Commissioner, the Central Office Managers, the Regional Directors, the Auditors of any government agency, and any other official or employee of the Commission specially deputed in writing for the purpose by the Chairman shall, in compliance with the requirement of due process, have the power to summon the parties to a case brought before the Commission for resolution, issue subpoena and subpoena duces tecum, administer oaths, and otherwise take testimony in any investigation or inquiry on any matter within the jurisdiction of the Commission.

SECTION 25. Power to Punish Contempt.—The Commission shall have the power to punish contempt provided for in the Rules of Court under the same procedure and with the same penalties provided therein. Any violation of any final and executory decision, order or ruling of the Commission shall constitute contempt of the Commission.

SECTION 26. Annual Report of the Commission.—(1) The Commission shall submit to the President and the Congress not later than the last day of September of each year an annual report on the financial condition and results of operation of all agencies of the Government which shall include recommendations of measures necessary to improve the efficiency and effectiveness of these agencies;

(2) To carry out the purposes of this section, the Chief Accountant or the official in charge of keeping the accounts of government agency shall submit to the Commission year-end trial balances and such other supporting or subsidiary statements as may be required by the Commission not later than the fourteenth (14) day of February. Trial balances returned by the Commission for revision due to non-compliance with accounting rules and regulations shall be resubmitted within three days after the date of receipt by the official concerned; and

(3) Failure on the part of any official or employee to comply with the provisions of the immediately preceding paragraph shall cause the automatic suspension of the payment of his salary and other emoluments until he shall have complied therewith. The violation of these provisions for at least three (3) times shall subject the offender to administrative disciplinary action.

SECTION 27. Statement of Monthly Receipts and Disbursements.—The Commission shall forward to the Secretary of Finance, as soon as and within sixty (60) days after the expiration of each month, a statement of all receipts of the national government of whatever class, and payments of moneys made on warrants or otherwise during the preceding month.

SECTION 28. Powers, Functions, Duties of Auditors as Representatives of the Commission.—(1) The Auditors shall exercise such powers and functions as may be authorized by the Commission in the examination, audit and settlement of the accounts, funds, financial transactions and resources of the agencies under their respective audit jurisdiction;

(2) A report of audit for each calendar year shall be submitted on the last working day of February following the close of the year by the head of each auditing unit through the Commission to the head or the governing body of the agency concerned, and copies thereof shall be furnished the government officials concerned or authorized to receive them. Subject to such rules and regulations as the Commission may prescribe, the report shall set forth the scope of audit and shall include statements of financial conditions, surplus or deficit analysis, operations, changes in financial position, and such comments and information as may be necessary together with such recommendations with respect thereto as may be advisable, including a report of any impairment of capital noted in the audit. It shall also show specifically any program, expenditure, or other financial transaction or undertaking observed in the course of audit which in the opinion of the auditor has been carried out or made without authority of law. The auditor shall render such other reports as the Commission may require;

(3) In the performance of their respective audit functions as herein specified, the auditors shall employ such auditing procedures and techniques as are determined by the Commission under regulations that it may promulgate; and

(4) The auditors in all auditing units shall have the custody and be responsible for the safekeeping and preservation of paid expense vouchers, journal vouchers, stubs of treasury warrants or checks, reports of collections and disbursements and similar documents, together with their respective supporting papers, under regulations of the Commission.

SECTION 29. Check and Audit of Property or Supplies.—The auditor shall from time to time conduct a careful and thorough check and audit of all property or supplies of the agency to which he is assigned. Such check and audit shall not be confined to a mere inspection and examination of the pertinent vouchers, inventories, and other papers but shall include an ocular verification of the existence and condition of the property or supplies. The recommendation of the auditor shall be embodied in the proper report.

SECTION 30. Annual Audit and Work Program.—Each Auditor who is head of an auditing unit shall develop and devise an annual work program and the necessary audit program for his unit in accordance with regulations of the Commission.

SECTION 31. Seizure of Office by Auditor.—(1) The books, accounts, papers and cash of any local treasurer or other accountable officer shall at all times be open to the inspection of the Commission or its authorized representative;

(2) In case an examination of the accounts of a local treasurer discloses a shortage in cash which should be on hand, it shall be the duty of the examining officer to seize the office and its contents, notify the Commission and the local chief executive, thereupon immediately take full possession of the office and its contents, close and render his accounts to the date of taking possession, and temporarily continue the public business of such office; and

(3) The auditor who takes possession of the office of the local treasurer under this section shall ipso facto supersede the local treasurer until the officer involved is restored, or another person has been appointed or designated to the position or other provision has been lawfully made for filling the office.

SECTION 32. Constructive Distraint of Property of Accountable Officer.—(1) Upon discovery in audit of a shortage in the accounts of any accountable officer and upon a finding of a prima facie case of malversation of public funds or property against him, in order to safeguard the interest of the Government, the Commission may place under constructive distraint personal property of the accountable officer concerned where there is reasonable ground to believe that the said officer is retiring from the government service or intends to leave the Philippines or remove his property therefrom or hide or conceal his property;

(2) The constructive distraint shall be effected by requiring the accountable officer concerned or any other person having possession or control of the property to accomplish a receipt, in the form prescribed by the Commission, covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of it in any manner whatever without the express authority of the Commission; and

(3) In case the said accountable officer or other person having the possession and control of the property sought to be placed under constructive distraint refuses or fails to accomplish the receipt herein referred to, the representative of the Commission effecting the constructive distraint shall proceed to prepare a list of such property and, in the presence of two (2) witnesses, leave a copy thereof in the premises where the property distrained is located, after which the said property shall be deemed to have been placed under constructive distraint.

Executive Order No. 292

ADMINISTRATIVE CODE OF 1987