1. Gacpa presentation 37th Annual national Convention (April 17, 2015)
by:
ATTY. ELIZABETH S. ZOSA
Assistant Commissioner
Commission on Audit

2. IMPROVING COMPLIANCE WITH AUDITING RULES AND REGUlaTIONS (minimizing AUDIT Disallowances)

3. DISCUSSION OUTLINE Appeals from Disallowances
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

4. LEGAL AUTHORITY AND BASIC CONCEPTS

5. COA’s AUDIT AUTHORITY:
1987 Constitution
Art. IX D (1)-
to examine, audit,
and settle all accounts

6. To verify, validate, check,
EXAMINE
To verify, validate, check,
compare,
analyze, etc.

7. To determine legality/ propriety of use/receipt
of funds/
property

8. SETTLE
To determine the
balance of the account
audited

9. 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

10. AUDIT ACTION
Allow- no difference found;
in order

11. AUDIT ACTION
Defer- audit decision cannot
yet be made; issue AOM

12. AUDIT ACTION
Suspend- temporarily dis-
approve and require
justification (NS)

13. AUDIT ACTION
Disallow- disapprove and
require refund (ND)

14. AUDIT ACTION
Charge- add to the
accountability and
require payment (NC)

15. COMMUNICATING AUDIT RESULTS

16. Notice to Persons Responsible
1. Audit Observation Memorandum (AOM)
2. Notice of Suspension (NS)

17. Notice to Persons Liable
3. Notice of Charge (NC)
4. Notice of Disallowance (ND)

18. AUDIT OBSERVATION MEMORANDUM (AOM)
for documentation or information deficiencies
Management to comply within 15 days

19. AUDIT OBSERVATION MEMORANDUM (AOM)
Not a requirement before a disallowance
Clear violation of law/ regulation
Previous similar transaction was disallowed

20. 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

21. 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

22. NOTICE OF SUSPENSION (NS)
Compliance documents to be
evaluated by Auditor who
shall, either:
Allow the transaction, or
Issue an ND/NC

23. -for audit of revenue NOTICE OF CHARGE (NC) Non-collection
Under-collection
Under-assessment
Under-appraisal

24. -for disbursement that is:
NOTICE OF
DISALLOWANCE (ND)
-for disbursement that is:
Illegal- I
Irregular- I
Unnecessary- U
Unconscionable- U
Excessive- E
Extravagant- E

25. UPDATED GUIDELINES FOR THE PREVENTION of IUEEU Expenditures
COA CIRCULAR No.
(Oct 29, 2012)
(amending CC 85-55A, 9/8/85)

26. ILLEGAL Expenditure -contrary to law -in violation of law
Ex. -payment for contracts
which are not bidded, in
violation of RA 9184
-payment of allowances
prohibited under the SSL

27. ILLEGAL Expenditure -supplementary retirement
benefits (CA 186/RA 4968)
- hazard pay (RA 7305)
- use of funds for private
purpose (PD 1445, etc)

28. ILLEGAL Expenditure - for contracts without appropriation (PD 1445)
-for private lawyers by
LGUs except as provided
under RA 7160

29. IRREGULAR Expenditure
-incurred without adhering to established rules, regulations, principles or practices which have gained recognition in law

30. IRREGULAR Expenditure
-CNA signing bonus, or incentives charged to
funds other than savings
- attorneys’ fees without OSG/OGCC approval or COA concurrence

31. 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

32. IRREGULAR Expenditure
-EME of GOCC officers > COB provision and without ORs
-purchase > requirements
-payment for defective/ deficient projects

33. UNNECESSARY Expenditure
Not essential
Could be dispensed with
Not supportive of mission
and objectives of agency
Non-responsive to
exigency of the service

34. UNNECESSARY Expenditure
Media advertisements not
in furtherance of agency
mission, etc.
Luxurious furnishings
Wines, liquors, cigars
Meetings in expensive
hotels, centers

35. UNNECESSARY Expenditure
Replacement of serviceable
equipment
Hiring of consultants for
regular and available
work in the agency
Purchase of high end model
electronic gadgets

36. UNCONSCIONABLE
Expenditure
Unreasonable
No man in his right
sense would make
Violates ethical and
moral standards

37. UNCONSCIONABLE
Expenditure
Payment for expired
medicines
Delivery of agricultural fertilizer usable only for flower plants
Pesticides with potency
below requirements

38. EXCESSIVE Expenditure
Immoderate quantity
Exorbitant price
Exceeds what is normal or proper
In excess of reasonable limits

39. EXCESSIVE Expenditure
Grant of cash advance in excess of requirements
Purchase of seeds exceeding farmers’ needs
Release of funds to NGOs above project requirements

40. EXTRAVAGANT Expenditure
Without restraint, judiciousness, economy
Exceeds the bounds of propriety
Prodigal, lavish, luxurious

41. EXTRAVAGANT Expenditure
Expensive decorative lamp posts
Out-of-town conferences, meetings
Rental of expensive halls

42. DETERMINATION OF PERSONS LIABLE

43. CRITERIA To Determine Persons Liable Nature of the transaction
Duties and responsibilities
of officer/employee
Extent of participation in the
transaction

44. Nature of the Transaction
Honoraria RATA, Traveling expenses Procurement Cash Advances Terminal leave benefits

45. Nature of the Transaction
Fund transfer to NGO
Hiring of private lawyer
EME
Retirement Benefit
Salary, Step Increment, Overtime Pay

46. Nature of the Transaction
Allowances and Other Benefits
CNA
Hazard duty pay
YEB and cash gift
PIB

47. Duties and Responsibilities
Appointment
Cashier
General Services Officer
Chief Engineer
Accountant
Budget Officer
Board of Directors

48. Duties and Responsibilities
Designation
Inspection and Acceptance Committee
Bids and Award Committee
Special Disbursing Officer
Property Inventory Committee

49. Acts Constituting Liability
1. Custodian of government
funds- for failure to safeguard
funds against loss, or to
ensure that they are utilized
or transferred in accordance
with law and regulations

50. Acts Constituting Liability
2. Authorizing or certifying
official- for false, non-
legitimate authority/
certification; or certification
issued in violation of law,
rule or regulation

51. Acts Constituting Liability
Certifications:
“Expenses necessary, lawful ,
incurred under my direct
supervision.”
“Supporting documents complete,
proper and legal.”
“Pre-audited; allowed for P__.”

52. Acts Constituting Liability
Certifications:
“Deliveries are in accordance with
quantity and specifications.”
“Project is 100% accomplished in
accordance with plans/POW.”

53. Acts Constituting Liability
Certifications:
“Cost reasonable, estimate
within allowable limits”
“After due evaluation, XYZ Co. was
found to be the Lowest Complying
Bidder”

54. Acts Constituting Liability
3. Approving officer
-for negligence
Arias vs Sandiganbayan
Cruz vs Sandiganbayan
Leycano vs COA

55. Arias vs Sandiganbayan, GR 81563 (12/19/89)
Approving Officer
Arias vs Sandiganbayan,
GR (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.”

56. Cruz vs Sandiganbayan, Approving Officer 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.”

57. Leycano vs COA Approving Officer GR 154665 (2/10/06)
“Arias doctrine does not apply when the approving officer is not acting as head of office.”

58. Acts Constituting Liability
4.Payee-for receipt of payment
(liability is only up to the
amount received)
Good faith vs
“Solutio Indebiti”

59. 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 , June 30, 2006)

60. “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;

61. Extent of Participation
Liability up to the amount certified/ authorized/ approved
-Partial payment
-Progress billings

62. Acts done by subordinate under direction of superior- Sec 106,PD 1445
Extent of Participation
Acts done by
subordinate
under direction
of superior-
Sec 106,PD 1445

63. Section 106
Section 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.

64. Extent of Participation
Conspiracy –
“the act of one
is the act of all”
(liability is solidary)

65. “A conspiracy need not be proved
by direct evidence of the acts
charged but may and generally
must be proven by a number of
indefinite acts, conditions and
circumstances.”

66. APPEALS FROM DISALLOWANCES

67. APPEAL FROM ND/NC
To COA Director
Regular audit- Director with audit supervision over agency audited

68. APPEAL FROM ND/NC
To COA Commission Proper
FAO audit
SAO audit
ICFAU audit

69. days) from receipt of ND/NC APPEAL FROM ND/NC Period to appeal-
within 6 months (180
days) from receipt of
ND/NC

70. of the 6 months (180 days) period 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

71. Sample Computation of Appeal Period Date of receipt of ND- 1/12/15
Appeal to CD /15/15
Date of receipt of CD decision-
4/1/15
Deadline to file petition
review /28/15
-62 days
118 days

72. plus research fee (1% appeal fee not> P200
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 denial
thereof, write-off, condonation
Petition for review of Director’s
decision

73. Request for approval of private sale
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

74. Per appeal/petition basis Charged to the person liable
FILING FEE
Per appeal/petition basis
Charged to the person liable
Appeal
Petition for review
Money claim
Request for relief from accountability

75. FILING FEE
Charged to the agency
Write-off
condonation (between
government agencies)
Approval of private sale

76. NATURE OF LIABILITY FOR DISALLOWANCE

77. Solidary or “One for All” NATURE of Liability To Government
joint and several
“One for All”

78. proceed against one, or some or all debtors simultaneously
NATURE of Liability
To Government
Art. 1216, NCC- creditor may
proceed against one, or some
or all debtors simultaneously
until debt is fully collected

79. NATURE of Liability
To Government
Why solidary?
Art 1207, NCC
the law provides for
solidarity

80. [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

81. 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

82. Section 43. Liability for Illegal Expenditures
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.

83. Section 49. Liability for Illegal Expenditure
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.

84. SEC. 347. Rendition of Accounts
SEC 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.

85. NATURE of Liability Among Persons Liable Among themselves, persons
liable are Joint Debtors
Art 1217, NCC
-debtor may claim from co-debtors
the share which corresponds to each

86. ENFORCEMENT OF
LIABILITY

87. COA ORDER OF
EXECUTION
(COE)

88. ENFORCEMENT of Liability
Officer/employee in the service
-deduct from salary and
other benefits
Contractor/Private person-
withhold money due him from
agency or file collection suit

89. Enforcement of Liability
Officer/employee out of service
-file collection suit
Deceased officer- claim against
the estate

90. 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

91. Other Remedies to Enforce ND/NC
Criminal action- violation of
related criminal laws
Administrative Charges-
violation of civil service law
and regulations
Deceased officer- claim against
the estate

92. THANK YOU!