By: ATTY. ELIZABETH S. ZOSA Assistant Commissioner Commission on Audit.
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Transcript of By: ATTY. ELIZABETH S. ZOSA Assistant Commissioner Commission on Audit.
GACPA PRESENTATION
37TH ANNUAL NATIONAL CONVENTION
(APRIL 17, 2015)by:
ATTY. ELIZABETH S. ZOSAAssistant Commissioner
Commission on Audit
IMPROVING COMPLIANCE WITH AUDITING RULES AND
REGULATIONS
(MINIMIZING AUDIT DISALLOWANCES)
DISCUSSION OUTLINE
Legal Authority and Basic Concepts Communicating Audit Results IIUUEE Expenditures Determination of Persons Liable
Acts Constituting Liability Appeals from Disallowances Nature of Liability for
Disallowances Enforcement of Liability
LEGAL AUTHORITYAND BASIC CONCEPTS
COA’s AUDIT AUTHORITY: •1987 Constitution
Art. IX D (1)-
to examine, audit,
and settle all accounts
To verify, validate, check,
compare,analyze,
etc.
EXAMINE
To determine legality/ propriety
of use/receipt of funds/property
To determine
the balance of the account
audited
SETTLE
COA’s AUDIT AUTHORITY
•PD 1445
Sec. 81- to certify balances in the
accounts of officers
Sec 82- to notify in writing the officer whose accounts
have been audited and
settled
AUDIT ACTION
• Allow- no difference found;
in order
AUDIT ACTION
•Defer- audit decision cannot yet be made; issue AOM
AUDIT ACTION
•Suspend- temporarily dis-
approve and require
justification (NS)
AUDIT ACTION • Disallow- disapprove and
require refund (ND)
AUDIT ACTION •Charge- add to the accountability and
require payment (NC)
COMMUNICATING AUDIT RESULTS
Notice to Persons
Responsible
1. Audit Observation Memorandum
(AOM)
2. Notice of Suspension (NS)
Notice to Persons Liable
3. Notice of Charge (NC)
4. Notice of Disallowance (ND)
AUDIT OBSERVATION MEMORANDUM (AOM)
•for documentation or information deficiencies
•Management to comply within 15 days
AUDIT OBSERVATION MEMORANDUM (AOM)
•Not a requirement before a disallowance
•Clear violation of law/ regulation•Previous similar transaction was disallowed
AUDIT OBSERVATION MEMORANDUM (AOM)
•Auditor to evaluate management’s comments and reply to the agency by, either:
•allowing the transaction, or•issuing an ND/NC
NOTICE OF SUSPENSION (NS)•For transaction of doubtful legality/propriety; required to be justified or documented so as not to be disallowed• Management to comply
with requirements within 90 days
NOTICE OF SUSPENSION (NS)
•Compliance documents to beevaluated by Auditor whoshall, either:•Allow the transaction, or•Issue an ND/NC
NOTICE OF CHARGE (NC)
-for audit of revenue
•Non-collection•Under-collection•Under-assessment•Under-appraisal
NOTICE OF DISALLOWANCE (ND)
-for disbursement that is:•Illegal- I•Irregular- I•Unnecessary- U•Unconscionable- U•Excessive- E•Extravagant- E
UPDATED GUIDELINESFOR THE PREVENTION of IUEEU Expenditures
COA CIRCULAR No.2012-003 (Oct 29, 2012)
(amending CC 85-55A, 9/8/85)
ILLEGAL Expenditure-contrary to law-in violation of lawEx. -payment for contracts
which are not bidded, in violation of RA 9184-payment of allowances prohibited under the SSL
ILLEGAL Expenditure
-supplementary retirement benefits (CA 186/RA 4968)- hazard pay (RA 7305)- use of funds for private
purpose (PD 1445, etc)
ILLEGAL Expenditure- for contracts without appropriation
(PD 1445)-for private lawyers by
LGUs except as providedunder RA 7160
IRREGULAR Expenditure
-incurred without adhering to established rules, regulations, principles or practices which have gained recognition in law
IRREGULAR Expenditure
-CNA signing bonus, orincentives charged to funds other than
savings- attorneys’ fees without
OSG/OGCC approval or COA concurrence
IRREGULAR Expenditure
-purchases(not bidded) at prices in excess of 10% of COA evaluated price
- repairs at prices in excess of 30% of CMV of same equipment
IRREGULAR Expenditure
-EME of GOCC officers >COB provision and without ORs
-purchase > requirements
-payment for defective/ deficient projects
UNNECESSARY Expenditure
•Not essential•Could be dispensed with•Not supportive of mission
and objectives of agency•Non-responsive to
exigency of the service
UNNECESSARY Expenditure• Media advertisements not
in furtherance of agencymission, etc.
• Luxurious furnishings• Wines, liquors, cigars• Meetings in expensive
hotels, centers
UNNECESSARY Expenditure• Replacement of serviceable
equipment• Hiring of consultants for
regular and available work in the agency
• Purchase of high end model electronic gadgets
UNCONSCIONABLE Expenditure
•Unreasonable•No man in his right
sense would make•Violates ethical and
moral standards
UNCONSCIONABLE Expenditure
•Payment for expiredmedicines
•Delivery of agricultural fertilizer usable only for flower plants •Pesticides with potency
below requirements
EXCESSIVE Expenditure
•Immoderate quantity•Exorbitant price•Exceeds what is normal or
proper•In excess of reasonable limits
EXCESSIVE Expenditure
•Grant of cash advance in excess of requirements•Purchase of seeds exceeding farmers’ needs•Release of funds to NGOs above project requirements
EXTRAVAGANT Expenditure
•Without restraint, judiciousness, economy•Exceeds the bounds of propriety•Prodigal, lavish, luxurious
EXTRAVAGANT Expenditure
•Expensive decorative lamp posts
•Out-of-town conferences, meetings•Rental of expensive halls
DETERMINATION OF PERSONS LIABLE
CRITERIA To Determine Persons Liable
•Nature of the transaction•Duties and responsibilities
of officer/employee•Extent of participation in the
transaction
Nature of the Transaction
Honoraria RATA, Traveling expensesProcurementCash AdvancesTerminal leave benefits
Nature of the Transaction
Fund transfer to NGOHiring of private lawyerEMERetirement BenefitSalary, Step Increment, Overtime Pay
Nature of the Transaction
Allowances and Other Benefits
CNAHazard duty payYEB and cash giftPIB
Duties and Responsibilities
Appointment
Cashier
General Services OfficerChief EngineerAccountantBudget OfficerBoard of Directors
Duties and Responsibilities
Designation
Inspection and Acceptance Committee
Bids and Award CommitteeSpecial Disbursing OfficerProperty Inventory Committee
Acts Constituting Liability
•1. Custodian of government funds- for failure to
safeguardfunds against loss, or to ensure that they are utilizedor transferred in accordancewith law and regulations
Acts Constituting Liability
•2. Authorizing or certifying official- for false, non-legitimate authority/ certification; or certificationissued in violation of law, rule or regulation
Acts Constituting Liability•Certifications:
•“Expenses necessary, lawful , incurred under my direct supervision.”
•“Supporting documents complete,
proper and legal.”•“Pre-audited; allowed for P__.”
Acts Constituting Liability
•Certifications:•“Deliveries are in accordance with
quantity and specifications.”
• “Project is 100% accomplished in accordance with plans/POW.”
Acts Constituting Liability•Certifications:
• “Cost reasonable, estimate within allowable limits”
• “After due evaluation, XYZ Co. wasfound to be the Lowest
ComplyingBidder”
Acts Constituting Liability
•3. Approving officer -for negligence
•Arias vs Sandiganbayan•Cruz vs Sandiganbayan•Leycano vs COA
Approving Officer
Arias vs Sandiganbayan, GR 81563 (12/19/89)
“All heads of offices have to rely to a reasonable extent on their subordinates and on their good faith xxx. There has to be some added reason why he should examine each voucher in such detail.”
Approving Officer
Cruz vs Sandiganbayan, GR 134493 (8/16/05)
“There exists an exceptional circumstance that should have prodded petitioner xxx to be curious and go beyond what his subordinates prepared or recommended.”
Approving Officer
Leycano vs COA GR 154665 (2/10/06)
“Arias doctrine does not apply when the approving officer is not acting as head of office.”
Acts Constituting Liability
•4.Payee-for receipt of payment(liability is only up to the amount received)
• Good faith vs• “Solutio Indebiti”
Good faith-
Good faith connotes an honest intention to abstain from taking unconscientious advantage of another; it is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged by actual or fancied token or signs. (PNB vs Heirs of Estanislao Militar, et al. GR No. 164801, June 30, 2006)
“Solutio Indebiti”• if something is received when
there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises (Art 2154, NCC);
• the person who has no right to receive such payment becomes obligated to return the same;
Extent of Participation
Liability up to the amount certified/ authorized/ approved-Partial payment-Progress billings
Extent of Participation
• Acts done by subordinate under direction of superior-
Sec 106,PD 1445
Section 106Section 106. Liability for acts done by direction of superior officer. No accountable officer shall be relieved from liability by reason of his having acted under the direction of a superior officer in paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the superior officer in writing of the illegality of the payment, application, or disposition. The officer directing any illegal payment or disposition of the funds or property shall be primarily liable for the loss, while the accountable officer who fails to serve the required notice shall be secondarily liable.
Extent of Participation
• Conspiracy –
“the act of one is the act of all”
(liability is solidary)
“A conspiracy need not be proved by direct evidence of the acts charged but may and generallymust be proven by a number of indefinite acts, conditions and circumstances.”
APPEALS FROM DISALLOWANCES
APPEAL FROM ND/NC
• To COA Director
• Regular audit- Director with audit supervision over agency audited
APPEAL FROM ND/NC
• To COA Commission Proper
• FAO audit• SAO audit• ICFAU audit
APPEAL FROM ND/NC
Period to appeal-
within 6 months (180 days) from receipt of ND/NC
APPEAL FROM Director’s Decision
To CP thru ComSec
Period to appeal- within the remaining of the 6 months (180 days) period from receipt of ND/NC
Sample Computation of Appeal Period
Date of receipt of ND- 1/12/15Appeal to CD- 3/15/15Date of receipt of CD decision-
4/1/15Deadline to file petition
review - 7/28/15
-62 days
118 days
FILING FEE
1/10 of 1%, not >P20,000 plus research fee (1% appeal fee not> P200
• appeal from ND/NC/Auditor’s decision• request for relief from
accountability or appeal from denialthereof, write-off, condonation
• Petition for review of Director’s decision
FILING FEE
1/10 of 1%, not >P50,000 plus research fee- 1% appeal fee,
not>P200
•Money claim•Request for approval of
private sale
FILING FEE
•Per appeal/petition basis
•Charged to the person liable•Appeal•Petition for review •Money claim•Request for relief from
accountability
FILING FEE
•Charged to the agency
•Write-off• condonation (between
government agencies)•Approval of private sale
NATURE OF LIABILITY FOR DISALLOWANCE
NATURE of Liability To Government
Solidary or joint and several
“One for All”
NATURE of Liability To Government
Art. 1216, NCC- creditor may proceed against one, or some or all debtors simultaneously until debt is fully collected
NATURE of Liability To Government
Why solidary?•Art 1207, NCC
the law provides for solidarity
[T]here is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity
NATURE of Liability To Government
Laws providing for solidary obligation for disallowances:•Sec 43, Ch 5, Book 6, RAC•Section 49, PD 1177•Sec 347, RA 7160
Section 43. Liability for Illegal Expenditures. - Every expenditure or obligation authorized or incurred in violation of the provisions of this Code or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.
Section 49. Liability for Illegal Expenditure. Every expenditure or obligation authorized or incurred in violation of the provisions of this Decree or of the general and special provisions contained in the annual General or other Appropriations Act shall be void. Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.
SEC. 347. Rendition of Accounts. - Local treasurers, accountants and other local accountable officers shall render their accounts within such time, in such form, style, and content and under such regulations as the Commission on Audit may prescribe. Provincial, city, and municipal auditors shall certify the balances arising in the accounts settled by them to the Chairman of the Commission on Audit and to the local treasurer, accountant, and other accountable officers. Copies of the certification shall be prepared and furnished other local officers who may be held jointly and severally liable for any loss or illegal, improper or unauthorized use or misappropriation of local funds or property.
NATURE of Liability Among Persons Liable
Among themselves, personsliable are Joint Debtors•Art 1217, NCC
-debtor may claim from co-debtorsthe share which corresponds to each
ENFORCEMENT OF LIABILITY
• COA ORDER OF EXECUTION
(COE)
ENFORCEMENT of LiabilityOfficer/employee in the service
-deduct from salary and other benefits
Contractor/Private person- withhold money due him from agency or file collection suit
Enforcement of Liability
Officer/employee out of service-file collection suit
Deceased officer- claim againstthe estate
Payment by installment- Only for disallowed benefits or
allowances- Approved by the OGC- COA- Payment period not > 2 years
graduated according to amount- Full payment demandable upon
separation from the service
Other Remedies to Enforce ND/NC Criminal action- violation of
related criminal laws
Administrative Charges- violation of civil service lawand regulations
Deceased officer- claim againstthe estate