3.0 test audit day scheme

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COMMISSION ON AUDIT RESOLUTION NO. 95-505 July 4, 1995
SUBJECT : Re-Statement with Amendments of COA Memorandum No. 93-316D Prescribing
the Application of the Test Audit Scheme (TAS) and the Simplified Sampling
Scheme (SSS) in the Audit of Current and Prior Years Transactions and
Accounts of National and Local Government Agencies and Government Owned
and/or Controlled Corporations.
WHEREAS, the tremendous volume and complexity of transactions in the government
have made the practice of examining each and every transaction physically impossible, and in
fact has created a large volume of backlog in post-audit;
WHEREAS, it has been observed that due to the adherence to 100% audit of
transactions, backlogs in post-audit kept piling up to millions of unaudited vouchers/receipts and
other transaction documents;
WHEREAS, the existence of these backlogs cannot but raise doubt on the integrity of
the Annual Audit Reports submitted by the Auditors;
WHEREAS, external auditing as performed by other audit institutions, both in this
country and the world over, is always on test basis;
WHEREAS, detailed audit is time-consuming, costly and not necessarily more effective;
WHEREAS, the auditing staff cannot be expected to examine/review all the work of an
Accounting Department or Unit with more staff members;
WHEREAS, to facilitate audit work, this Commission has prescribed audit sampling
methodologies under COA Memorandum Nos. 84-316A, 85-316C and 93-316D;
WHEREAS, the use of sampling in audit is not without problems/difficulties particularly
during the initial stage of implementation when auditors are still in the process of internalizing
the concepts and methodologies involved;
WHEREAS, under COA Resolution No. 82-49, the Commission has adopted the policy
that in order to benefit from its use, audit sampling shall be constantly updated and modified
according to the needs of the auditor and his audit objectives in consonance with the over-all
policies and objectives of the Commission.
NOW, THEREFORE, the Commission has resolved, as it does hereby resolve, to
amend/modify and improve COA Memorandum No. 93-316D to address the
problems/difficulties encountered by the auditors in its implementation, as stated hereunder.
1.0
SIMPLIFIED SAMPLING SCHEME
1.1
DEFINITION OF TERMS
1.1.1
Batch/Population - documents consist of vouchers/receipts/JVs and
other transaction documents including their summaries and supporting
papers, usually submitted by management in batches periodically to the
Auditor for examination and audit. If one month's transactions are few,
several months may be combined and if they are voluminous one
month may be divided into several populations. In no case, however,
shall the population consists of more than four months transactions.
1.1.2
Error - is a deviation from or non-compliance with laws, rules and
regulations, or defects in the transaction that affects its validity including
inaccuracy in computations and representation of amounts.
1.1.3
High Value Items - transactions that are high in amount as determined
in accordance with the procedures prescribed and illustrated in
paragraph 1.2.1.2a hereof.
1.1.4
Key Items/Special Items - transactions and accounts that are prone to
error, subject of complaints, and other high risk transactions which in
the perception of the Auditor require detailed 100% audit such as
payment for infrastructure contracts, cancelled/ tampered ORs, bank
reconciliation statements and the like.
1.1.5
Route - direction specified for each month in the quarterly
Memorandum issued by the CASU/CRASU or its equivalent, which is
either downward or sideward.
1.1.6
Tolerable Error Rate - percentage of error in relation to the samples
selected which does not materially affect the integrity of the population
represented in the sample size.
1.1.7
Substantive Errors - when the amounts paid or collected or assessed
are illegal, invalid, inaccurate or unrecorded. These are also the
monetary inaccuracies in computation.
1.1.8
Compliance Errors - deviations from the established system of internal
control and prescribed rules and regulations including approval and
other documentary requirements.
1.2
PROCEDURES
1.2.1
BASIC SAMPLING DETERMINANTS
1.2.1.1
a.
Determination of Populations
Official Receipts - The population in the audit of Official
Receipts (ORs) may be classified in the following manner:
a.1
All ORs per accountable officer;
a.2
All ORs as submitted for a particular period by
management and as reported by the Chief Cashier
or Collecting Officer regardless of revenue
classification;
a.3
All ORs per revenue classification for a particular
period. The population may be per month, per two
(2) months or per three (3) months depending on the
volume. In no case shall it exceed four (4) months.
b.
Disbursement Vouchers - The population in the post-audit of
Disbursement Vouchers (DVs) shall include all the
disbursement vouchers submitted for a particular period as
reflected in the transmittal letter or Report of
Disbursements/Checks Issued after separating the payrolls,
liquidation of cash advances and Journal Vouchers (JVs).
The payrolls, liquidation of cash advances (other than
payrolls) will constitute separate populations while JVs will
be audited 100%. The audit of the liquidation of cash
advances (other than payrolls) shall be related to the cash
examination undertaken and vice-versa. The population
may be composed of one month, two months or three
months transactions depending on the volume. In no case,
however, shall the population exceed four months
transactions.
c.
Payrolls - The population for the post audit of payrolls shall
consist of the total number of payees or employees per
period. This may be per month, per two months or per three
months depending on the volume. In no case shall it exceed
four months.
1.2.1.2
Adjusted Population
The adjusted population is defined as the population
less High Value Items (HVIs) and Key Items (KIs). In cases
where the populations is homogeneous in terms of amounts,
as in the case of payrolls, only KIs are separated from the
population to arrive at the adjusted population. HVIs and
KIs are to be audited 100%.
a.
Determination of High Value Items - High Value Items are
determined by the use of the percentage table to define the
high value as shown below:
Percentage to Define High Value
Number of Transactions
in the Population
0 - 1,999
2,000 - 4,999
5,000 +
Percentage
5%
2%
1%
Illustration:
For the month of May 1994, the accounting unit
submitted 2,030 vouchers (payrolls, liquidation of cash
advances [other than payrolls], and journal vouchers are
considered separate population and are already segregated)
to COA with a total amount of P11,000,000.00. From the
table of percentage, 2,030 falls within the range of 2,000 4,999 for which 2% is to be used to determine high value.
High Value (HV) = 2% x P11,000,000 = P220,000.00. This
means that any single transaction amounting to
P220,000.00 and above will be considered high value item.
1.2.1.3
Sample Size
The sample size to be used must have the right
balance between two conflicting needs - minimal sampling
uncertainty and audit economy. Sampling uncertainty can
be reduced by increasing the sample size but this would be
at the expense of audit economy.
The desired sample size from a given population shall
be determined through the use of the following table:
Determination of Sample Sizes
Number of Transactions
in the Population
0
200
2,000
5,000
199
- 1,999
- 4,999
+
Sample Size
75
100
150
200
Sample sizes are determined based on the adjusted
population or on the unadjusted population in case there will
be no HVIs and KIs.
Illustration:
Assuming that from the submitted 2,030 vouchers with
a total amount of P11,000,000.00, 10 vouchers are high
value items, each with amounts of P220,000.00 or more
totaling P7,000,000.00 and 40 vouchers picked as key items
amounting to P500,000.00. The adjusted population will
then be:
Total volume
Less: HV items
Key items
Adjusted Population
2,030
(10)
(40)
-------1,980
The sample size for 1,980 vouchers based on the table
is 100.
Sample Interval
The sample interval is determined by dividing the
adjusted population by the desired sample size.
Example: Based on the given example
Sample Interval (SI) = 1,980 adj. population
---------------------------100 sample size
= 19.80 or 20
This means that if the sample interval is 20, the auditor
will select one sample for every 20 vouchers.
1.2.2
SELECTION OF SAMPLES
In the selection of samples, several factors are to be considered.
For one, every item in the population must have an equal or known
chance of selection. Another, the process of selecting the sample must
be unbiased. The samples will be selected on a systematic sampling
technique. This means that after getting the sample interval (SI), the
Auditor will look from the Memorandum on Random Number Start
(RNS) (Annex A) for the starting number. In the selection of the
prescribed starting number, the month of audit is the reference month.
When the prescribed number is higher than the SI, the Auditor should
refer to the prescribed route stated in the Memorandum to get the
number which is equal to or less than the SI. As in our example, 20 is
the SI and referring to the month of June in the Memorandum (Annex
A), 45 is the starting number for two (2) digits in Table 1 (Annex B).
Since 45 is higher than the SI, the auditor will go downward and look for
a number equal to or less than 20, which in this case, the number is 15.
This means that the first sample is the 15th voucher. For the
succeeding sample items, add the SI to the number of the first sample
item and every interval thereof until the desired sample size is obtained.
1st sample item
2nd sample item 15 + 20
3rd sample item 35 + 20
4th sample item 55 + 20
=
=
=
=
15th voucher
35th voucher
55th voucher
75th voucher
This process will continue until the desired sample size is
attained.
Random Number Start
A memorandum on monthly Random Number Start (RNS) will be
issued by the CASU/CRASU or its equivalent on a quarterly basis
covering three months period.
1.2.3
EVALUATION OF SAMPLES
The selected samples are post-audited and evaluated by
comparing the actual compliance and substantive errors found during
the audit of the samples with the tolerable error rates. The tolerable
error rate for compliance evaluation is 20% of the sample size while the
tolerable error rate for substantive evaluation is 8% of the total amount
of the sample size (Annex C). If the audit of the samples does not pass
compliance and/or substantive evaluation, the auditor shall audit the
whole population.
In both cases, the auditor shall submit the
corresponding evaluation report.
Evaluation Working Paper
The auditor shall prepare an Evaluation Working Paper (EWP)
(Annex C). While the format is flexible, it must include the reference for
the transactions audited and the total number of compliance and
substantive errors found in the sample. A copy of the EWP shall be
attached to and submitted quarterly together with the accomplishment
report.
When error rates do not exceed the tolerable error rates.
Where the audit of the samples reveal compliance and/or
substantive error rates equal to or below 20% or 8%, respectively, but
which nevertheless resulted to suspensions, disallowances, or charges,
the transactions in the population related or similar to the transactions
suspended, disallowed or charged in audit shall be audited 100%. The
rest of the other transactions in the population shall be considered to
have been passed in audit. The amounts suspended, disallowed or
charged shall be reflected in the CSB.
When error rates exceed the tolerable error rates.
When the audit of the samples results to a situation where either
the compliance or substantive error rate exceeds 20% or 8%,
respectively, the whole population shall be audited 100% and the
resulting suspensions, disallowances or charges shall be reflected in
the CSB/s.
1.2.4
ISSUANCE OF CERTIFICATE OF SETTLEMENT AND BALANCES
(CSB)
When sampling is applied, the CSB shall preferably be issued on
a per population basis. The certification on the face of the CSB may be
modified to include a statement to the effect that the
transactions/accounts covered by the CSB have been audited in
accordance with the Simplified Sampling Scheme procedures
prescribed under COA Resolution No. _______ dated ________.
Transactions to be stamped "Post-Audited"
Only the audited High Value Items, Key Items and the samples
selected shall be stamped post-audited although the entire population
represented by the samples shall be deemed to have been audited and
covered by the corresponding CSB or CSBs issued therefore.
1.2.5
REPORTING
The auditor shall submit to the CASU/CRASU or its equivalent the
quarterly accomplishment report (Annex D) which shall reflect the
transaction stream, the month of audit, period covered, the volume, the
sample size, the high value and key items, the total transactions
passed in audit and the number of transactions suspended, disallowed
or charged. Likewise, the audit objectives with the corresponding audit
procedures as stated in the State Audit Manual shall also be included
but only in the initial implementation of sampling.
1.2.6
AUDIT SCOPE
The audit of the samples, the High Value Items and the Key Items
shall cover the entire accounting cycle, i.e., from source documents at
the inception of a transaction up to the point when that transaction is
ultimately immersed in the agency's financial statements or vice versa.
The audit of the entire accounting cycle will generally comprise the
following stages:
1.2.6.1
The audit of source documents for receipts, disbursements
and other sources of original entries.
1.2.6.2
The audit of entries in the Books of Original Entries and
month-end accounts summarization.
1.2.6.3
The audit of postings from the Books of Original Entries and
other sources, to the Subsidiary and General Ledgers.
1.2.6.4
The verification of the trial balance, financial statements and
other financial reports.
The transactions selected as samples including the High Value
Items and Key Items shall be audited and considered as the basis for
the audit of the accounts affected by the transactions. In case there
are accounts whose transactions do not form part of the samples
selected or where there are only very few transactions forming part of
the samples, the auditor may select additional samples pertaining to the
said accounts.
In the case of payrolls, the audit may be done through sampling
as herein prescribed or by using the systems-based audit approach as
prescribed in Section 30.3 of the State Audit Manual.
2.0
TEST AUDIT MONTH SCHEME
2.1
DEFINITION OF TERMS
2.1.2
2.2
Test Audit Months - The months selected for audit which shall comprise
at least six (6) months of the year under audit as determined in
accordance with the procedures prescribed in paragraph 2.2 hereof.
SELECTION OF TEST AUDIT MONTHS
2.2.1
The selection of the test audit months which shall comprise at least six
(6) months of the succeeding year shall be made by the COA Director
concerned. For this purpose, the Unit Auditor shall submit to the said
COA Director, on or before the end of December of each year, the
following information:
2.2.1.1
Nature, frequency and amount per month of suspensions,
disallowances or charges for the current year and the
immediately preceding two (2) years (for the initial year of
implementation only).
2.2.1.2
Monthly volume of transactions in terms of quantity and total
amount per month for the current year and the immediately
preceding two (2) years (for the initial year of implementation
only), categorized into collections, disbursements and other
non-cash transactions. Sub-categories under each of the
main categories may be presented as necessary depending
on the nature of the operations of the audited agency.
On the basis of the foregoing information, the COA Director concerned
shall select the test audit months. The selection of the test audit months shall
consider the relative impact of the suspensions, disallowances or charges in the
preceding three (3) years as against the volume of transactions. However, when
suspensions, disallowances or charges in the preceding years have been
minimal or negligible, the peak months of the year, i.e., the months when
transactions are voluminous in terms of amount and quantity, shall be selected
as test audit months.
2.3
2.2.2
Except for the months of January and December which shall be
considered as mandatory test audit months, the information on whether
a particular month is a test or non-test audit month shall be released in
writing by the COA Director to the Auditor concerned one at a time only,
ten (10) days after the end of the particular month.
2.2.3
The approved test audit months shall be kept confidential and any
unauthorized release of information relative thereto shall be a ground
for disciplinary action.
2.2.4
The months not selected as test audit months during any year may be
included as test audit month in the succeeding year provided due
consideration is given to the nature, frequency and amount of
suspensions, disallowances and charges in the preceding years.
2.2.5
When in the judgement of the Auditor, the six (6) test audit months can
still be reduced as when the internal control system of the auditee
agency has been established to be adequate or when errors,
suspensions, disallowances or charges have been very minimal or
negligible or when sheer volume of transactions compels further
reduction of tests, the Auditor may upon proper written justification
recommend to the COA Director concerned, the reduction of the six (6)
audit months which in all cases shall not be less than four (4) months.
The COA Director shall select the test audit months in accordance with
the procedures prescribed above.
AUDIT SCOPE
2.3.1
The audit of the test months shall likewise cover the entire accounting
cycle as provided in paragraph 1.2.6 hereof.
2.3.2
2.4
The following shall likewise be audited in addition to the audit of the test
audit months:
2.3.2.1
All infrastructure and other significant non-recurring
transactions occurring in the non-test audit months.
2.3.2.2
All transactions in the non-test audit months similar to or
related to those transactions suspended, disallowed or
charged in the course of the audit of the six test audit
months. However, when in the judgement of the Auditor, the
suspensions, disallowances or charges in the test audit
months are not material as to warrant the audit of the related
or similar transactions in the non-test audit months, he may
dispense with the audit of the latter mentioned transactions
upon written authority of the COA Director concerned.
2.3.2.3
All transactions subject of complaints or adverse information
whether or not such transactions are included in the test
audit months.
2.3.3
In case fraud is established during the audit, a special audit report shall
be prepared and submitted immediately in accordance with the
guidelines embodied in COA Memorandum No. 93-813 dated July 9,
1993.
2.3.4
The Unit Auditor shall keep a permanent file of the Audit Program used
in the examination of the transactions and accounts in the test audit
months indicating therein among other, the names of the audit staff
assigned to perform the audit. The said Audit Program shall be updated upon completion of the audit for a particular month, to reflect
therein the actual audit procedures undertaken and the names of the
audit staff who actually performed the audit activities embodied in the
audit program.
ISSUANCE OF THE CERTIFICATE OF SETTLEMENT AND BALANCES (CSB)
2.4.1
The CSBs shall be issued monthly and only for the test audit months
except in the instances contemplated in paragraphs 2.3.2.1, 2.3.2.2 and
2.3.2.3 above where the particular transactions audited in the non-test
audit months shall likewise be covered by the corresponding CSB.
2.4.2
Only the transactions audited shall be stamped "Post-audited". On the
other hand, the unaudited transactions of the non-test audit months
shall be reported in the monthly Summary Report On Post-Audit And
Issuance of CSBs as indicated in Annex F hereof.
2.4.3
When the Test Audit Month Scheme is applied, the certification on the
face of the CSB may be modified to include a statement to the effect
that the transactions/accounts covered by the CSB have been audited
in accordance with the Test Audit Month Scheme procedures
prescribed under COA Resolution No. ______ dated ______.
3.0
TEST AUDIT DAY SCHEME
3.1
DEFINITION OF TERMS
3.1.1
3.2
Test Audit Days - The days selected for audit which shall comprise at
least six (6) days of the month under audit as determined in accordance
with the procedures prescribed in paragraph 3.2 hereof.
SELECTION OF TEST DAYS
3.2.1
The sampling methodology herein authorized considers the 253
working days of the year as the population from which six (6) working
days per month shall be selected as audit samples.
3.2.2
The first and last working days of the year and the last working day of
each month shall be considered as mandatory test days to assure
among others that the account balances carried forward including
reversing entries, if any, at the beginning of the year and the adjusting
entries at the end of the year are duly audited, as well as to establish
the reliability of the monthly trial balance/ financial reports.
3.2.3
Transactions in the non-test days similar to or related to the
transactions suspended, charged or disallowed in the course of the
audit of test days shall be audited.
3.2.4
The total number of samples (test days) in a year is seventy two (72)
days consist of thirteen (13) mandatory test days (first and last working
day of January and last working day of each of the test of the months)
and fifty nine (59) sample test days.
3.2.5
The sample test days shall be selected by the auditor based on the
Memorandum of Random Number Start (RNS) which in this case shall
be issued by the CASU or CRASU monthly (Annex E) and Table I of
the Random Number Tables (Annex B). The sample selection process
is illustrated as follows:
a.
From the Memorandum of Random Number Start for the month
of March 1995 (Test Audit Day Scheme), the location of the
RNS using Table I is column 5, row 9 and the RNS is 40.
b.
Since the average number of working days in a month is 22
days, the numbers in Table I that should correspond to the
sample test days should be any number or numbers no less or
greater than 1 to 22.
c.
In the example above, the RNS is 40 which is greater than 22.
Further, the route or direction given in the Memorandum of
Random Number Start is going down.
Following this direction, the numbers following the RNS 40 are
20, 21, 04, 17, 26, 19, 44, etc. Thus, the numbers that should
be selected are those that are no less nor greater than 1 to 22
which are 20, 21, 04, 17, and 19. This means that the test audit
days for the month of March 1995 are the 20th, 21st, 4th, 17th,
19th and last working day of the month.
d.
3.3
Where the RNS is equal to or between the number 1 to 22, the
RNS becomes the first sample test day.
3.2.6
All accounts and transactions in the sample test days shall be audited
on hundred percent (100%) and evaluated by comparing the actual
compliance and substantive errors found in the course of the audit with
the tolerable error rates. The tolerable error rate for substantive
evaluation is 8% of the total amount of the transactions of all the test
days in a month while the tolerable error rate for compliance evaluation
is 20% of the total number of transactions in all the test days of the
month. If the audit of the test days does not pass compliance and/or
substantive evaluation, the auditor may select another six (6) days of
the month as additional samples. If the percentage of the sum of the
errors found in the first and second samples in relation to the double
size sample still exceeds the tolerable error rate for either substantive
and/or compliance error, the auditor shall audit the transactions of the
entire month.
3.2.7
The auditor shall prepare an Evaluation Working Paper (EWP) in
accordance with the requirements and procedures prescribed under
paragraph 1.2.3 hereof.
AUDIT SCOPE AND PROCEDURES
3.3.1
The audit of the test days, including the transactions enumerated in
paragraphs 3.2.4 and 3.3.2 hereof shall likewise cover the entire
accounting cycle as provided in paragraph 1.2.6 of this Resolution.
3.3.2
The following shall likewise be audited in addition to the audit of the test
days:
3.3.2.1
All infrastructure and other significant
transactions occurring in the non-test days.
non-recurring
3.3.2.2
All transactions in the non-test days similar to or related to
those transactions suspended, disallowed or charged in the
course of the audit of the test days.
3.3.2.3
3.4
4.0
All transactions subject of complaints or adverse information
whether or not such transactions are included in the test
audit days.
3.3.3
In case fraud is established during the audit, a special audit report shall
be prepared and submitted immediately in accordance with the
guidelines embodied in COA Memorandum No. 93-813 dated July 9,
1993.
3.3.4
Unit Auditor shall keep a permanent file of the Audit Program used in
the examination of the transactions and accounts in the test days
indicating therein among others, the names of the audit staff assigned
to perform the audit. The Audit Program shall be updated upon
completion of the audit for a particular month to reflect the actual audit
procedures undertaken, the actual time spent for each activity and the
names of the audit staff who actually performed the audit activities
embodied in the audit program.
ISSUANCE OF THE CERTIFICATE OF SETTLEMENT AND BALANCES (CSB)
3.4.1
The CSB shall be issued monthly with the certification on the face
thereof modified to include a statement to the effect that the
transactions/accounts covered by the CSB(s) have been audited in
accordance with the Test Audit Day Scheme prescribed under COA
Resolution No. _________ dated ________.
3.4.2
Only the transactions audited including those mentioned under
paragraph 3.3.2 hereof shall be stamped "Post-audited".
SAMPLING SUPPORT ORGANIZATION
Creation and Functions of the CASU/CRASU
There shall be a COA Audit Sampling Unit (CASU) and COA Regional Audit
Sampling Unit (CRASU) or its equivalent in each central operating office and regional
office, respectively, that will assist the respective COA Directors in the following
activities:
4.1
Monitoring and supervision over the implementation of audit sampling by the
auditing units;
4.2
Conduct of in-house training on sampling;
4.3
Selection of the test audit months for those applying the Test Audit Month
Scheme;
4.4
Issuance of the Random Number Start (RNS):
4.5
5.0
4.4.1
RNS covering three months period (Annex A) - one month before the
beginning of the quarter for those applying either the Pareto Sampling
Scheme, the CSCM or the SSS; and
4.4.2
RNS covering one month period (Annex E) - ten (10) days before the
beginning of the month for those applying the Test Audit Day Scheme.
Such other functions/duties as may be assigned from time to time by the
Chairman or the Director concerned.
AUDITORIAL JUDGEMENT/USE OF OTHER AUDIT TOOLS AND TECHNIQUES
As an audit tool, sampling shall not be substituted for good auditorial judgement.
As such, the auditor is not precluded from using other means or tools in accomplishing
his audit objectives.
The application of sampling enables the auditor to form a conclusion on the state
of compliance with applicable laws, rules and regulations not only on the sample
transactions but also on the population of transactions subjected to sampling selection,
and therefor provides the auditor with an achievable target and manageable audit scope
in the post-audit of transactions.
However, samplings inherent limitation is that it is merely an audit technique and
may not provide all the answers to the problems that may be encountered in the conduct
of the audit. Thus, to ensure that the standard of "sufficient, relevant and competent
evidence" needed by the auditor to arrive at a conclusion on the regularity, efficiency,
economy or effectiveness of operations or to express an audit opinion on the financial
statements, is adequately met, it will be necessary for the auditor, to employ, in addition
to the procedures applied to the sample transactions, other audit tools and techniques
such as but not limited to the following:
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6.0
Inspection / physical count
Confirmation
Observation
Analysis
Interview / inquiry / questionnaire
Recomputations
Review of reconciliation procedures
Modeling
Flowcharting / validation
POST-AUDIT OF BACKLOGS
The up-dating of post-audit backlogs shall be carried out in accordance with the
procedures prescribed. However, in view of the Annual Audit Reports that have been
rendered in the previous years, the audit of the corresponding accounts need not be
disturbed except when the same is relevant to and affects the balances of
accountabilities reflected in the books of accounts. As a general rule therefore, the
audit of backlogs shall be limited to the determination of regularity or validity of
transactions except when balances of accountabilities are affected as a result of the
issuance of CSBs or other pertinent special audit reports.
7.0
TRANSMITTAL OF ACCOUNTS/RECORDS BY THE AUDITEE-AGENCY
In cases where the agency's reporting/accounting system does not indicate the
details of the transactions nor provide for reports such as Report of Collections or
Report Disbursements / Checks Issued or other similar reports indicating the details of
the transactions, the submission of the accounts/records to the auditor must be
accompanied by a Transmittal Form listing down all the transactions by official receipt
numbers or check.
The Transmittal Form shall contain columns for Item Number, Official
Receipt/Check Number, Voucher Number and Amount. Furthermore, the Item Number
column shall show the total of the transactions in a batch.
8.0
CONTINUATION OF THE SAMPLING SCHEMES PRESENTLY EMPLOYED
The existing sampling schemes, i.e., the COA Sampling Card Methodology
(CSCM) and the Pareto's Principle of Distribution shall still be continued. The auditor
shall have the option to choose which scheme is best suited to their particular auditeeagency.
The selection of the appropriate sampling scheme(s) best suited to the
transactions/accounts of the auditee-agency shall be reported in writing by the unit
auditor to the COA Director concerned for monitoring purposes. Thereafter, no changes
in sampling methodology shall be effected by the auditor without the prior approval of
the Director concerned.
9.0
LEGAL AUTHORITY VIS-A-VIS LIABILITY
The provisions of the Constitution grant the Commission exclusive authority to
define the scope of its audit and to establish the methods and techniques required
therefor. This Constitutional prerogative is amplified in Section 43(3) of PD No. 1445,
otherwise known as the Government Auditing Code of the Philippines and in Section
28(3), Subtitle B, Book V, of the Administrative Code of 1987 (EO No. 292), which
contain the basic proviso that justifies the promulgation by the Commission of auditing
procedures and techniques to wit:
"In the performance of their respective audit function as herein
specified, the auditors shall employ such auditing procedures and
techniques as are determined by the Commission under regulations that
it may promulgate."
When the auditor employs the sampling techniques authorized by the
Commission and as long as he apply the technique in good faith and with due care, he
does not incur any civil, criminal or administrative liability arising in any way from his use
of such audit technique.
The sampling procedures herein prescribed should be applied only in instances
where the volume of transactions is physically impossible to audit 100%. When the
volume of transactions does not warrant the application of sampling technique, the
auditor may perform a 100% audit.
BE IT FURTHER RESOLVED, to authorize the Chairman of this Commission to make
changes or modifications, on a case to case basis, in the application of certain provisions of this
Resolution as may be warranted to suit the actual conditions obtaining in the audited agency.
BE IT FINALLY RESOLVED, that the Directors/Officers-In-Charge of COA Central
Operating Offices and Regional Offices shall be responsible for the proper implementation of
this Resolution.
This Commission shall take effect immediately and shall supersede COA Memorandum
No. 93-316D dated November 11, 1993.
Quezon City, July 4, 1995.
(SGD.) CELSO D. GAÑGAN, Chairman
(SGD.) ROGELIO B. ESPIRITU, Commissioner
(SGD.) SOFRONIO B. URSAL, Commissioner
ANNEX A
REPUBLIC OF THE PHILIPPINES
Commission on Audit
Quezon City
March 8, 1993
MEMORANDUM To :
ALL AUDITING UNIT HEADS CONCERNED
Subject:
Random Number Start for the Second Quarter, 1993
Pursuant to COA Memorandum No. 85-316-C dated September 19, 1985 which
prescribes the adoption of the COA-Sampling-Card Methodology (CSCM) in addition to the
existing Pareto Sampling Scheme for the post-audit of government transactions, we are
furnishing you the following information regarding the starting numbers for the second quarter
of 1993.
A.
B.
Pareto Sampling Scheme
Reporting
Month
Table
Number
April '93
May '93
June '93
6-8
6-7
6-2
Location
Column
Row
3
5
3
Starting
Number
Route
431
341
63
97311
82320
20738
-down-down-down-
COA-Sampling-Card Methodology
April '93 Table I, 4 digits
Table II, 3 digits
Table III, 2 digits
Table IV, 4 digits
Table V, 2 digits
5
5
6
1
2
21
36
10
48
9
8930
023
06
0008
18
-down-down-down-down-down-
May '93 Table I, 4 digits
Table II, 3 digits
Table III, 2 digits
Table IV, 4 digits
Table V, 2 digits
6
2
4
5
1
57
104
25
64
11
8231
554
19
0415
11
-down-down-down-down-down-
June '93 Table I, 4 digits
Table II,3 digits
Table III, 2 digits
Table IV, 4 digits
Table V, 2 digits
6
1
3
3
5
73
24
15
100
15
7276
926
16
1570
19
-down-down-down-down-down-
Additional guidelines on the use of the random number table are:
C.
1.
When one-digit number is required - drop the left-hand digit of the two-digit
random number selected.
2.
When more than four-digit numbers are required - add to the selected 4 - digit
number the required additional number of the digits from the next adjacent
column to the right. In case the selected number falls under the last column, use
the first column of the same row.
Simplified Sampling Scheme
Column
Row
Starting
Number
Route
April '93
Table I
Table II
Table III
1
4
3
5
20
35
16
32
805
-down-down-down-
May '93
Table I
Table II
Table III
4
2
4
20
19
1
04
36
108
-down-down-down-
June '93
Table I
Table II
Table III
1
6
4
1
30
77
45
37
193
-down-down-down-
Please give this information to the auditors under your jurisdiction who may wish to
apply either scheme.
COA Director Concerned
ANNEX B
COA RANDOM NUMBER TABLE I
TWO DIGITS FOR NUMBERS 01 TO 50
01
02
03
04
05
06
(01)
(02)
(03)
(04)
(05)
45
15
14
24
16
41
03
25
03
19
29
47
37
28
20
12
24
50
13
35
15
20
31
10
13
03
10
38
17
27
(06)
(07)
(08)
(09)
(10)
06
14
46
01
05
46
37
18
18
21
46
47
15
22
49
39
46
07
14
16
17
20
44
40
20
14
04
19
40
08
(11)
(12)
(13)
(14)
(15)
11
17
19
19
01
48
06
12
29
19
18
19
09
33
12
27
43
20
03
15
21
04
17
26
19
36
33
32
01
01
(16)
(17)
(18)
(19)
(20)
26
13
43
35
09
02
22
41
26
37
28
21
35
33
35
19
23
32
34
04
44
28
02
26
42
24
28
21
44
43
(21)
(22)
(23)
(24)
(25)
48
19
50
26
26
14
05
41
41
11
06
26
17
04
13
37
15
17
21
48
21
28
26
06
24
13
31
32
17
38
(26)
(27)
(28)
(29)
(30)
12
27
42
25
11
35
01
23
13
43
42
24
23
48
19
43
09
17
26
12
11
14
14
16
36
17
20
05
25
41
Table I will be used if the sample interval is from 01 to 50.
COA RANDOM NUMBER TABLE II
TWO DIGITS FOR NUMBERS 01 TO 99
01
02
03
04
05
06
01
02
03
04
05
94
15
07
05
14
92
57
14
58
58
45
03
59
82
87
62
92
47
66
25
41
89
24
49
37
80
89
20
90
50
06
07
08
09
10
51
03
24
84
18
69
28
62
08
18
69
52
20
86
50
81
13
55
97
41
43
10
97
39
97
19
17
82
82
06
11
12
13
14
15
17
70
58
24
19
71
50
75
73
76
86
14
20
20
16
14
37
94
87
39
85
68
04
46
49
93
47
95
18
56
16
17
18
19
20
40
21
16
74
21
06
49
69
36
78
40
81
70
50
36
29
62
11
41
32
72
06
65
40
57
70
67
48
87
45
21
22
23
24
25
19
58
23
92
47
64
59
52
67
87
30
71
19
01
01
43
20
29
56
19
31
96
59
91
12
34
82
85
12
61
26
27
28
29
30
55
72
13
51
22
50
81
22
76
92
06
94
72
22
16
99
42
12
59
64
80
49
32
27
12
80
41
86
74
37
Table II will be used if the sample interval is from 51 to 99.
COA RANDOM NUMBER TABLE III
THREE DIGITS FOR NUMBERS 001 TO 999
001
002
003
004
005
006
001
002
003
004
005
949
155
071
055
145
245
703
459
882
887
624
928
472
664
253
180
989
420
990
750
552
689
621
895
313
572
810
038
474
824
006
007
008
009
010
516
032
246
840
481
969
852
220
886
850
814
131
559
973
419
319
017
782
982
706
336
524
421
822
464
994
888
334
876
639
011
012
013
014
015
117
705
587
247
197
186
014
520
320
616
148
376
940
874
394
593
847
495
618
956
093
467
321
150
901
020
991
356
744
182
016
017
018
019
020
400
214
116
743
217
640
981
970
650
836
297
620
116
414
325
270
667
548
087
745
802
082
586
164
222
774
573
183
772
817
021
022
023
024
025
196
585
235
926
478
430
971
219
701
701
433
209
295
596
191
134
682
985
112
261
893
017
330
278
591
310
324
395
322
702
026
027
028
029
030
555
728
132
517
229
016
194
272
622
216
998
424
128
592
641
080
942
286
776
237
115
104
288
364
251
262
105
697
136
800
031
032
033
034
035
693
853
435
633
225
582
854
106
783
718
653
938
910
199
805
393
003
595
135
269
426
784
228
961
962
844
004
648
189
589
Table number III will be used if the sample interval is from 100 to 999.
001
002
003
004
005
006
036
037
038
039
040
831
171
651
172
578
995
788
993
826
857
260
532
482
086
247
819
652
026
423
388
023
932
418
671
521
875
771
042
113
889
041
042
043
044
045
749
151
049
723
224
505
916
328
584
083
470
899
580
387
037
227
576
820
680
165
118
720
712
724
911
813
741
428
130
935
046
047
048
049
050
453
642
008
063
987
967
877
721
039
044
347
248
662
335
997
315
348
762
571
427
913
417
331
146
618
890
797
698
725
863
051
052
053
054
055
968
386
880
791
629
583
040
757
259
661
206
764
803
600
785
758
318
736
821
009
266
759
431
219
412
957
223
203
894
100
056
057
058
059
060
547
374
855
883
779
958
059
449
848
657
631
686
786
838
302
249
483
959
285
314
469
730
218
377
466
781
823
405
471
872
061
062
063
064
065
092
561
543
590
264
076
209
659
613
226
765
681
233
152
339
903
265
780
685
329
161
103
528
415
768
920
365
289
129
126
066
067
068
069
070
935
028
149
705
065
173
627
646
326
729
731
792
706
884
437
084
943
707
891
147
047
521
054
025
441
338
549
462
933
368
071
072
073
074
075
755
436
769
272
367
332
125
404
108
239
515
923
438
873
488
333
951
604
312
221
337
159
931
740
004
311
496
727
902
292
076
077
078
079
080
921
859
510
398
598
045
704
925
362
397
075
127
747
295
439
167
193
546
737
211
950
980
615
605
046
463
168
442
860
029
081
082
083
084
085
121
047
734
048
361
271
597
865
181
522
446
733
024
342
663
596
862
162
501
804
732
019
301
643
948
861
143
491
695
089
086
087
088
089
090
682
983
303
683
030
827
122
492
828
172
963
273
644
964
304
101
452
796
102
494
241
601
930
243
649
401
742
062
402
798
091
092
093
094
095
382
808
290
870
503
545
960
473
056
692
709
109
655
235
846
845
286
829
383
031
984
461
986
565
205
174
632
184
748
384
096
097
098
099
100
091
753
455
238
188
274
938
665
406
369
479
114
878
670
570
656
296
057
898
700
830
530
236
095
066
988
710
403
275
252
101
102
103
104
105
190
207
253
349
531
370
389
457
554
739
574
602
696
760
099
832
907
976
097
350
096
176
208
280
557
279
345
390
508
909
106
107
108
109
110
979
575
672
375
539
240
939
120
833
192
509
351
507
353
550
699
558
716
673
256
100
912
254
255
300
392
352
537
608
609
111
408
510
611
674
834
035
112
113
114
115
072
512
518
420
359
619
077
766
380
676
751
369
416
837
218
996
410
360
377
263
511
514
659
918
ANNEX C
SAMPLING EVALUATION WORKING PAPER
_____________________________________
Agency Name
1
2
3
4
5
6
7
8
9
Total
SUBSTANTIVE EVALUATION
A
B
C
D
RefeBook
Audit
Absolute
rence
Value
Value
Error
6th
1,000
900
100
27th
2,000
1,900
700
29th
5,000
3,300
3,000
58th
3,000
0
2,000
68th
25,000
23,000
500
79th
3,500
3,000
4th
6,000
/
12th
4,600
/
P 2,000,000.00
% for Subs. Error =
COMPLIANCE EVALUATION
I
II
X
III
X
1
x
x
1
1
1
X
P6,400.00
6,400
------------- = .0032%
2,000,000
Total
4
% for Compliance error =
4
----- = 4%
100
Maximum number of errors that may be detected
per COA Simplified Sampling Scheme.
8%
======
20%
=======
Did samples selected pass sampling test?
Yes
======
Yes/No
yes
=======
Yes/No
* Place a check mark (/) if the same as book value.
** Compliance errors : I - No OR
II - No Inspection Report
III - No canvass papers
The samples above were taken from an adjusted population of 1,980 wherein the
auditor selected 100 samples. After auditing and evaluating the samples, it was found out that
errors were below the tolerable error rate for both substantive and compliance test. All the
transactions in the population passed in audit. Likewise, errors detected will be noted in the
CSB.
ANNEX E
April 7, 1995
MEMORANDUM to:
All Heads of Auditing Units Concerned
SUBJECT:
Random Number Start for the Month of March 1995 applicable to
the Test Day Audit Scheme
Pursuant to COA Memorandum No. 95-_____ dated _______ 1995 prescribing the
adoption among others of the Test Day Audit Scheme in addition to the other audit sampling
schemes already prescribed by this Commission, you are furnished herewith the following
information regarding the random number start for the month of March 1995 for use in the
application of the Test Day Audit Scheme:
Auditing
Unit/Agency
Table I
Location
Column
Row
Starting
Number
Route
"AA" Auditing Unit
01-50
5
9
40
down
"BB" Auditing Unit
01-50
1
7
14
down
"CC" Auditing Unit
01-50
3
10
49
down
"x x x x x x x x"
01-50
xx
xx
xx
down
"x x x x x x x x"
01-50
xx
xx
xx
down
____________________
Director
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