Fiscal Control Mechanisms

8/22/2019 Fiscal Control Mechanisms

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FISCAL ADMINISTRATION

Fiscal administration refers to systems, structures, processes, resources, and the

policy, environment, government, the inter-governmental and inter-local fiscal

relations, affecting among others, the following:

o the giving of allotments and grants by the national government (NG) to local

government units (LGUs);o sharing of taxing powers between the NG and the LGUs, and among LGUs units;

o policy on tax rates and structure;

o revenue and expenditure planning;

o revenue utilization and expenditure allocation;

o monitoring and approval of budgets, tax ordinances and other fiscal measures;

o policy on borrowing and borrowing instruments; and

o appointment and supervision of local fiscal officers.


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ORGANIZING FOR FISCAL ADMINISTRATION:Fiscal activity is present in all levels of the organization, whether line or staff;

top management level through middle management; the rank and file.

Top management is most interested in it; middle management is deeply

involved in it; the rank and file is affected by whatever results from it.


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The principal agencies tasked with fiscal functions:1. Congress, especially the Lower House - Congress is responsible for revenue and

expenditure policies.

2. Department of Finance - Revenue generation and collection

- Fund custody

- Disbursements

- Keeping of accounts

3. Department of Budget and Management- Review of estimates and fiscal

policy studies are done by the Department of Budget and Management in close

consultation with the National Economic Development Authority;

The Central Bank and other economic planning entities of the state to see to itthat fiscal plans and programs are geared towards national development.

4. Commission on Audit- The Commission on Audit conducts fund and

performance audit to see to it that expenditures are in accordance with the

Appropriation Law approved

ORGANIZING FOR FISCAL ADMINISTRATION:


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FISCAL CONTROL MECHANISMS

FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL :1. Prevent Misappropriation of Funds:

Requires review and approval by the administrative official of the line or operatingagency, of all requests for money releases and budgetary allotments, vouchers andsimilar papers before payments are made so that expenditures are in accordance

with policy and law and not illegal, irregular, unnecessary, unconscionable,

extravagant and excessive, (IIUUEE) (COA CIRC. 85-155)

2. Control to Implement Prospective Policyproactive administration inhibits governmental units from directly transacting andnegotiating money matters since such kind of transaction is officially channeledthrough the Department of Budget and Management in the form of budgetestimates as endorsed by the President.


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FISCAL CONTROL MECHANISMS

FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL:

3. Ensure the Wisdom and Propriety of Expenditure

Claims for payment from public funds, legality, prudence, reasonableness, the

morality of the claim or charge should be established.

A review of existing contracts and transactions should be made.

4. Prevent Deficits

Fiscal supervision and control may be useful but should not unduly interfere with

agency prerogative to carry out programs mandated by the constitution and the

laws.


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Allocation of INTERNAL REVENUE ALLOTMENT:(Sec. 285, RA 7160)

IRA

60% NATIONAL GOVT

40%

LOCAL GOVT

UNTIS

PROVINCES: 23%

CITIES: 23%

MUNICIPALITY:34%

BARANGAY:20%


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local revenue generation

STAKEHOLDERS:

Provided, however, that theshare of each province, city

or municipality shall be

cetermined on the basis of

the ff. Formula (Sec. 285, RA7160)

a. POPULATION 50%

b. LAND AREA 25%

c. EQUAL SHARING 25%

PROVINCES:

23%

CITIES: 23%

MUNICIPALITIES:

34%

BARANGAYS: 20%

81 PROVINCES

127 CITIES

1,501

MUNICIPALITIES

33,461

BARANGAYS


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Particulars Collecting Agency

FOREST CHARGES DEPARTMENT OF ENVIRONMENT AND NATURAL

RESOURCES

ROYALTIES AND MINERAL RESERVATION MINES AND GEO-SCIENCES BUREAU

ENERGY PRODUCTION RESOURCES DEPARTMENT OF ENERGY

MINING TAXES BUREAU OF INTERNAL REVENUE

40% OF THE GROSS COLLECTION BYTHE NATIONAL GOVERNMENT

FROM THE PRECEDING FISCAL YEAR

OUT OF THE PROCEEDS DERIVED

FROM THE UTILIZATION AND

DEVELOPMENT OF NATIONAL

WEALTH WITHIN THE LGUs

RESPECTIVE AREA.

20%PROVINCE

45%COMPONENT

CITY ORMUNICIPALITY

35%BARANGAY

SHARED


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3. SHARE IN THE GROSS INCOME TAXES PAID BY ALL BUSINESSES AND

ENTERPRISES WITHIN THE ECOZONES

LGUs WITHIN SUBIC, CLARK, JOHN HAY, PORO POINT SPECIAL ECO AND FREE PORT

ZONES ARE ENTITLED TO A 2% OF THE 5% FINAL TAX (RA 7227)

1% OF THE 5% FINAL TAX ONGROSS INCOME EARNED OF THE

TOTAL TAX COLLECTED, TO THE

LGUs AFFECTED BY THE

DECLARATION OF THE ECOZONES

1% OF THE 5% FINAL TAX ON GROSSINCOME EARNED OF THE TOTAL TAX

COLLECTED, TO THE SPECIAL DEVELOPMENT

FUND (SDF) OF EACH LGU OUTSIDE BUT

CONTIGUOS TO THE BASE/ECOZONE AREAS

DISTRIBUTED BASED ON

THE FOLLOWING FACTORS:POPULATION: 50%

EQUAL SHARING: 25%

LAND AREA: 25%


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4. SHARE IN VALUE-ADDED TAX

LGUs ARE ENTITLED TO A SHARE IN VAT ONLY WHEN THERE IS AN INCREMENTAL

COLLECTION WHICH REFERS TO THE EXCESS IN THE ANNUAL INCREASE IN ACTUALCOLLECTIONS.

EXAMPLE

YEAR VAT Collections Increase

2006 64.550M 20.972M

2005 43.383M 19.700M

2004 23.886M

2006 increase in collection 20,972M

Less; 2005 Increase in collection 19.700M

-----------------------

Excess of Increase in Collection 1.272M

50% Share in Incremental Collection 0.636M

Distributed as follows:

20% Share of LGUs (city/municipality) 0.127M

80% share of National Governments 0.509M


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5. TOBACCO EXCISE TAX: RA NO. 7171, JANUARY 9, 1992 ENTITLED AN ACT TO

PROMOTE THE DEVELOPMENT OF FARMERS IN THE VIRGINIA TOBACCO

PRODUCING PROVINCES, TOBACCO-PRODUCING LGUs ARE ENTITLED TO 15% OF

EXCISE TAXES ON LOCALLY-MANUFACTURED VIRGINIA-TYPE CIGARETTES.

PROVINCE

30%

MUNICIPALITIES AND

CITIES WITHIN THE

DISTRICT AS

IDENTIFIED BY THEIR

RESPECTIVELEGISLATORS

30%

MUNICIPALITIES :

DIVIDED

ACCORDING TO

VOLUME

50%

40%DIVIDED EQUALLY

50%

OF THE 15%...


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ONE FUND concept

The "one-fund" concept is the policy enunciated through PD 1177 which requiresthat all income and revenues of the government must accrue to the General Fundand thus can be freely allocated to fund programs and projects of government asprioritized.

The "one-fund" concept is a fiscal management policy requiring that as much as

possible, all revenues and other receipts of the government must enter theGeneral Fund and their utilization and disbursement subject to the budgetingprocess. The one-fund concept is significant in that it serves as an avenue throughwhich fiscal authorities may properly allocate scarce government resources inaccordance with the priorities in the over-all program of economic development.

It likewise provides a mechanism to control drawdowns on pooled resources.

Regularly, the level of funds disbursed are monitored against the level of revenuesgenerated. This way, we are able to stick to the targeted level of disbursement fora given period and avoid incurring a deficit. It also alerts us of possible revenueshortfalls.


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BALANCED BUDGET CONCEPT:

In the context of government budgeting, a budget is said to bebalanced when revenues match expenditures or disbursements.When expenditures exceed revenues, the government incurs adeficit which may result in the following situations:

The government borrows money either from foreign sourcesor from the domestic capital market which increases the debt stockof the NG and its debt servicing requirements;

The government borrows money from the Bangko Sentral ngPilipinas; or,

The government withdraws funds from its cash balances in

the Treasur


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THE GOVERNMENTS FISCAL POLICY:

Historically, national government expenditures have always exceeded total revenues resultingin annual budget deficits. Thus, the national overnment had to resort to borrowing to cover

said deficits which resulted in the ballooning of foreign and domestic debts. However, in

1994, the government broke the deficit trend by posting a budget surplus of P16 billion

through an aggressive privatization and revenue generation program and a prudent

expenditure program. Since then, the government has been exerting efforts to maintain the

surplus budget policy.

SURPLUS BUDGETING

The surplus budget policy is important to encourage economic growth. The less the

government borrow from the public, the lesser the pressure on interest and inflation rates

and the more funds are made available in the financial market. Such funds may be used by

businessmen to build factories, hire workers, buy equipment and open more employment

opportunities. By keeping more funds in the hands of the Private sector rather thancompeting for credit, the government helps make financing available for families who want to

own homes, buy cars, or support their children's education. The government also needs to

generate a budget surplus to repay the huge debt it has accumulated over the years. The

reduction of the national budget debt will correspondingly lessen government's

requirements for interest and principal payments. This becomes important particularly

during periods of rising interest rates and unstable exchange rates.


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TOTAL RESOURCE BUDGET CONCEPT is adopted by the present budgeting system which

requires the preparation of the national government within the framework of the total

impact of all government entities on the national economy. Under this concept, the National

Government (NG) budget is considered as only one component of the entire public sector

resources.

Government-Owned and Controlled Corporations (GOCCs) and Local Government Units

(LGUs) are also considered as substantial contributors to total public resources. GOCCs and

LGUs are therefore required to prepare their budget consistent in form and timing with that

of the NG to facilitate comprehensive evaluation of the overall budget.

In total resource budgeting, the energies and capabilities of all public entities are harnessed

in drawing up the optimal package of goods and services that can be sustained by available

resources.
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PLAN-BUDGET PROCESS

DEVELOPMENT

PLANNING

(6-15YEARS)

INVESTMENT

PROGRAMMING

(3-5 YEARS)

ANNUAL

INVESTMENT

PLAN

BUDGETPREPARATION

BUDGETAUTHORIZATI

ON

BUDGETREVIEW

BUDGETEXECUTION

BUDGET

ACCOUNTABILITY

CURRENT

YEAR

(JAN-JUNE)

CURRENT

YEAR

(JUL-DEC)

BUDGET YEAR

(JAN-DEC)


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DEVELOPMENT

PLANNING

(6-15YEARS)

INVESTMENT

PROGRAMMING

(3-5 YEARS)

ANNUAL

INVESTMENT

PLAN

BUDGET PROCESS

ANNUAL INVESTMENT PLAN PREPARATION

KEYPLAYERS: LOCAL DEVELOPMENT COUNCIL,

MPDO, MBO, LCE, SB, NGO,CS

ALIGN DEVELOPMENT PLAN WITH CURRENT DEVELOPMENT

ISSUESCULL OUT THE CURRENT SLICE OF THE LDIP AS INPUT AND

ANNUAL COMPONENT OF THE CAPITAL EXPENDITURE INTO THE

AIP SUMMARY FORM

DETERMINE RESOURCE REQUIREMENTS OF PPAs FOR BASIC

SERVICES DELIVERY

PREPARE DRAFT AIP SUMMARY FORM AND PRESENT TO THELCE FOR COMMENT/REVIEW


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BUDGET PROCESS

LEGAL BASIS: THE LOCAL CHIEF EXECUTIVE BUDGET FOR THE

ENSUING FISCAL YEAR (SEC 318, RA 7160)

KEYPLAYERS: LOCAL CHIEF EXECUTIVE, LOCAL FIANCE COMMITTEE (MUNICIPAL

BUDGET OFFICER, MUNICIPAL TREASURER, MUNICIPAL PLANNING AND

DEVELOPMENT OFFICER

FLOWCHART OF BUDGET PREPARATION

STARTISSUE THE BUDGET

CALL

JUNE 5, LCE

CONDUCT BUDGET

FORUM

JULY 15, DEPT HEADS

PREPARE AND

SUBMIT BUDGET

PROPOSALS

JULY 5, LCE/LFC/

DEPT HEADS

REVIEW &

CONSOLIDATE

BUDGET PROPOSALS

LOCAL BUDGET OFFICER

CONDUCT BUDGET

HEARING

SEPT 30, LCE/LFC

PREPARE THE

LOCAL EXECUTIVE

PROGRAM (LEP)

AUG. 15, LCE/LFC

PREPARE BUDGET

MESSAGE & BESF

SUBMIT EXECUTIVE

BUDGET TO SB

OCT 10, LCE/LFC

OCT 16, LCE

END


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BUDGET PROCESS

BUDGETREVIEW

BUDGETAUTHORIZATION

LEGAL BASIS: ON OR BEFORE THE END OF THE CURRENT FISCAL YEAR, THE

SANGGUNIAN CONCERNED SHALL ENACT, THROUGH AN ORDINANCE, THE ANNUAL

BUDGET OF THE LOCAL GOVERNMENT UNIT FOR THE ENSUING FISCAL YEAR ON

THE BASIS OF THE ESTIMATES OF INCOME AND EXPENDITURES SUBMITTED BY THE

LCE (SEC 319, RA 7160)

KEYPLAYERS: LCE, SB, SB COM ON APPROPRIATIONS/FINANCE, SB SEC, LFC, HEADS

OF DEPT

ENACT APPROPRIATION ORDINANCE,

a. EVALUATE THE BUDGET

b. DELIBERATE ON THE BUDGETc. AUTHORIZE THE ANNUAL BUDGET

APPROVE THE APPROPRIATION ORDINANCE

SUBMIT THE APPROPRIATION ORDINANCE FOR REVIEW TO

THE SP


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BUDGET

EXECUTION

BUDGET PROCESS

LEGAL BASIS:THE FINANCIAL AFFAIRS, TRANSACTIONS AND OPERATIONS OF THE

LGU SHALL BE GOVERNED BY THE FF. FUNDAMENTAL PRINCIPLES:

NO MONEY SHALL BE PAID OUT OF THE LCOAL TREASURY EXCEPT IN PURSUANCEOF AN APPROPRIATION ORDINANCE OR LAW;

LOCAL GOVERNMENT FUNDS OR MONIES SHALL BE SPENT SOLELY FOR PUBLIC

PURPOSES;

LOCAL REVENUE IS GENERATED ONLY FROM SOURCES EXPRESSLY AUTHORIZED BY LAW OR ORDINANCE AND

COLLECTION THEREOF SHALL AT ALL TIMES BE ACKNOWLEDGED PROPERLY;

ALL MONIES OFFICIALLY RECEIVED BY A LOCAL GOVERNMENT OFFICER IN ANY CAPACITY OR ON ANY

OCCASIION SHALL BE ACCOUNTED FOR AS LOCAL FUNDS, UNLESS OTHERWISE PROVIDED BY LAW;

TRUST FUND IN THE LOCAL TREASURY SHALL NOT BE PAID OUT EXCEPT IN FULFILLMENT OF THE PRUPOSE

FOR WHICH THE TRUST WAS CREATED OR THE FUNDS RECEIVED;

EVERY OFFICER OF THE LOCAL GOVERNMENT UNIT WHOSE DUTIES PERMIT OR REQUIRED THE POSSESSION

OR CUSTODY OF LOCAL FUNDS SHALL BE PROPERLY BONDED AND SUCH OFFICER SHALL BE ACCOUNTABLE

AND RESPONSIBLE FOR SAID FUNDS AND FOR THE SAFEKEEPING THEREOF IN CONFORMITY WITH THE

PROVISIONS OF LAW;

LOCAL GOVERNMENTS SHALL FORMULATE SOUND FINANCIAL PLANS AND THE LOCAL BUDGETS SHALL BE

BASED ON FUNCTIONS, ACTIVITIES,A ND PROJECTS IN TERMS OF EXPECTED RESULTS 9SEC. 305, RA 7160)

THE ORDINANCE ENACTING THE ANNUAL BUDGET SHALL TAKE EFFECT AT THE BEGINNING OF THE ENSUING

CALENDAR YEAR. AN ORDINANCE ENACTING A SUPPLEMENTAL BUDGET, HOWEVER, SHALL TAKE EFFECT

UPON ITS APPROVAL OR ON THE DATE FIXED THEREIN. THE RESPONSIBILITY FOR THE EXECUTION OF THE

ANNUAL AND SUPPLEMENTAL BUDGET SHALL BE VESTED PRIMARILY IN THE LOCAL CHIEF EXECUTIVE (SEC.

320, RA 7160)

KEYPLAYERS: LCE, VICE-GOVERNOR/MAYOR, LBO, LT, LA, LPDO, DEPT HEAD


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LEGAL BASIS:

PERSONS ACOUNTABLE FOR LOCAL GOVERNMENT FUNDS. ANY OFFICER

OF THE LOCAL GOVERNMENT UNIT WHOSE DUTY PERMITS OR REQUIRES

THE POSSESSION OR CUSTODY OF LOCAL GOVERNMENT FUNDS SHALL BE

ACCOUNTABLE AND RESPONSIBLE FOR THE SAFEKEEPING THEREOF IN

CONFORMITY WITH THE PROVISIONS OF THIS TITLE. OTHER LOCAL

OFFICERS, WHO, THOUGH NOT ACCOUNTABLE BY THE NATURE OF THEIR

DUTIES, MAY LIKEWISE BE HELD ACCOUNTABLE AND RESPONSIBLE FOR

THE LOCAL GOVERNMENT FUNDS THROUGH THEIR PARTICIPATION IN THEUSE OF APPLICATION THEREOF (SEC 340, RA 7160)

FISCAL RESPONSIBILITYSHALL BE SHARED BY ALL THOSE EXERCISING

AUTHORITY OVER THE FINANCIAL AFFAIRS, TRANSACTIONS, AND

OPERATIONS OF THE LGU.

BUDGET

ACCOUNTABILITY

BUDGET PROCESS

BUDGET ACCOUNTABILITY

LOCAL CHIEF EXECUTIVE: THE LCE SHALL BE PRIMARILY RESPONSIBLE FOR THE

EXECUTION OF THE ANNUAL AND SUPPLEMENTAL BUDGETS AND THE

ACCOUNTABILITY THEREOF


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BUDGET

ACCOUNTABILITY

BUDGET PROCESS

BUDGET ACCOUNTABILITY

LOCAL CHIEF EXECUTIVE: THE LCE SHALL BE PRIMARILY RESPONSIBLE FOR THEEXECUTION OF THE ANNUAL AND SUPPLEMENTAL BUDGETS AND THE ACCOUNTABILITYTHEREFOR (SEC 320, RA 7160)

SPECIFICALLY , THE LCE SHALL:

- ENSURE THAT ALL TAXES AND OTHER REVENUES OF THE LGU ARE COLLECTED, AND THAT

LOCAL GOVERNMENT FUNDS ARE APPLIED TO THE PAYMENT OF EXPENSES AND SETTLEMENT

OF OBLIGATIONS, IN ACCORDANCE WITH THE LAW OR ORDINANCE (SEC 444, 455,465, RA

7160)

-CAUSE THE PERIODIC EXAMINATION OF BOOKS, RECORDS AND OTHER DOCUMENTS MAINTAINED BY

ACCOUNTABLE OFFICIALS, AGENTS, OR EMPLOYEES OF THE LGU TO ENSURE THAT INCOME COLELCTION AND

DISBURSEMENTS ARE PROPERLY RECORDED (SEC 444, 455,465, RA 7160)

- ENSURE THAT ALL EXECUTIVE OFFICIALS AND EMPLOYEES OF THE MUNICIPALITY FAITHFULLY DISCHARGE

THEIR DUTIES AND FUNCTIONS AS PROVIDED BY LAW AND THIS CODE, AND CAUSE TO BE INSTITUTED

ADMINISTRATIVE OR JUDICIAL PROCEEDINGS AGAINST ANY OFFICIAL OR EMPLOYEE OF THE MUNICIPALITY

WHO MAY HAVE COMMITTED AS OFFENSE IN THE PERFORMANCE OF HIS OFFICIAL DUTIES;


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BUDGET PROCESS

THE TREASURER :1. COLLECT TAXES FEES, AND CHARGES SEC 170, RA 7160)

2. ADVISE THE GOVERNOR OR MAYOR, AS THE CASE MAY BE, THE SANGGUNIAN, AND OTHER LOCAL

GOVERNMENT AND NATIONAL OFFICIALS CONCERNED REGARDING DISPOSITION OF LOCAL GOVERNMENT

FUNDS, AND ON SUCH OTHER MATTERS RELATIVE TO PUBLIC FINANCE;

(3) TAKE CUSTODY OF AND EXERCISE PROPER MANAGEMENT OF THE FUNDS OF THE LOCAL GOVERNMENT

UNIT CONCERNED;

(4) TAKE CHARGE OF THE DISBURSEMENT OF ALL LOCAL GOVERNMENT FUNDS AND SUCH OTHER FUNDS THECUSTODY OF WHICH MAY BE ENTRUSTED TO HIM BY LAW OR OTHER COMPETENT AUTHORITY;

(5) INSPECT PRIVATE COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS WITHIN THE JURISDICTION OF THE

LOCAL GOVERNMENT UNIT CONCERNED IN RELATION TO THE IMPLEMENTATION OF TAX ORDINANCES,

PURSUANT TO THE PROVISIONS UNDER BOOK II OF THIS CODE;

(6) MAINTAIN AND UPDATE THE TAX INFORMATION SYSTEM OF THE LOCAL GOVERNMENT UNIT;

(7) IN THE CASE OF THE PROVINCIAL TREASURER, EXERCISE TECHNICAL SUPERVISION OVER ALL TREASURY

OFFICES OF COMPONENT CITIES AND MUNICIPALITIES; AND

(8) EXERCISE SUCH OTHER POWERS AND PERFORM SUCH OTHER DUTIES AND FUNCTIONS AS MAY BE

PRESCRIBED BY LAW OR ORDINANCE.


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BUDGET PROCESS

THE ACCOUNTANT:

(1) Install and maintain an internal audit system in the local government unit concerned;(2) Prepare and submit financial statements to the governor or mayor, as the case may be, and to the sanggunian

concerned;

(3) Appraise the sanggunian and other local government officials on the financial condition and operations of the

local government unit concerned;

(4) Certify to the availability of budgetary allotment to which expenditures and obligations may be properly charged;

(5) Review supporting documents before preparation of vouchers to determine completeness of requirements;

(6) Prepare statements of cash advances, liquidation, salaries, allowances, reimbursements and remittances

pertaining to the local government unit;

(7) Prepare statements of journal vouchers and liquidation of the same and other adjustments related thereto;

(8) Post individual disbursements to the subsidiary ledger and index cards;

(9) Maintain individual ledgers for officials and employees of the local government unit pertaining to payrolls and

deductions;

(10) Record and post in index cards details of purchased furniture, fixtures, and equipment, including disposal

thereof, if any;

(11) Account for all issued requests for obligations and maintain and keep all records and reports related thereto;(12) Prepare journals and the analysis of obligations and maintain and keep all records and reports related thereto;

and

(13) Exercise such other powers and perform such other duties and functions as may be provided by law or

ordinance.


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BUDGET PROCESS

THE BUDGET OFFICER

(1) Prepare forms, orders, and circulars embodying instructions on budgetary and appropriation

matters for the signature of the governor or mayor, as the case may be;

(2) Review and consolidate the budget proposals of different departments and offices of the local

government unit;

(3) Assist the governor or mayor, as the case may be, in the preparation of the budget and during

budget hearings;(4) Study and evaluate budgetary implications of proposed legislation and submit comments and

recommendations thereon;

(5) Submit periodic budgetary reports to the Department of Budget and Management;

(6) Coordinate with the treasurer, accountant, and the planning and development coordinator for

the purpose of budgeting;

(7) Assist the sanggunian concerned in reviewing the approved budgets of component localgovernment units;

(8) Coordinate with the planning and development coordinator in the formulation of the local

government unit development plan; and


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Section 2. (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, includinggovernment-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.


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(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 andauditing 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 3. No law shall be passed exempting any entity of the Government or its

subsidiaries in any guise whatever, or any investment of public funds, from the

jurisdiction of the Commission on Audit.

Section 4. The Commission shall submit to the President and the Congress,

within the time fixed by law, an annual report covering the financial condition

and operation of the Government, its subdivisions, agencies, and

instrumentalities, including government-owned or controlled corporations, and

non-governmental entities subject to its audit, and recommend measures

necessary to improve their effectiveness and efficiency. It shall submit such

other reports as may be required by law. (1987 Constitution)


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BABAY!!!