COMMISSION ON AUDIT
DEPARTMENT OF BUDGET AND MANAGEMENT
JOINT CIRCULAR NO. 87-1
March 17, 1987
TO
: Governing Boards/Managing Heads/Finance Officers of Government
Corporations including Subsidiaries; COA Directors/Heads of Corporate Auditing
Units; and Others Concerned.
SUBJECT : Guidelines in the implementation of Section 2 of Executive Order No. 19 dated
June 19, 1986 which fixes the cost of audit services rendered to government
corporations by the Commission on Audit.
1.0
PURPOSE
1.1
To provide a uniform interpretation of term corporate operating budget.
1.2
To provide procedures in the computation of cost of audit services and
other related guidelines in the implementation of Executive Order No. 19, s. 1986.
2.0
DEFINITION OF TERMS
2.1
Corporate Operating Budget (COB) shall consist of the estimates of
revenues, the estimates of expenditures which shall cover current operating and capital
expenditures, and the estimates of the borrowings for a given year of government
corporations, except that in the case of government financial institutions, rediscounting,
lending and borrowing transactions of these institutions shall not be considered as part
of their operating budgets for purposes of this Circular.
2.2
Government corporation is a stock or non-stock corporation, whether
performing governmental or proprietary functions which is directly chartered by special
law or if organized under the general corporation law, is owned or controlled by the
government directly or indirectly through a parent corporation or subsidiary corporation,
to the extent of at least a majority of the outstanding capital stock or of its outstanding
voting capital stock. It shall likewise include government corporate subsidiaries created
through the Corporation Code.
3.0
GENERAL GUIDELINES
3.1
The COBs of government corporations shall be submitted to the
Department of Budget and Management (DBM) one month before the onset of a new
calendar year. Said budget shall be recommended by the respective Governing Boards
for consideration and final approval by the President.
3.2
Government corporations shall not incur obligations or make payments
for current operating or capital expenditures after the beginning of each calendar year
unless the COB for said year is submitted to DBM, copy furnished the COA.
3.3
The cost of audit services for the year of government corporations shall
be equivalent to one fourth (1/4) of one percent (1%) of its COB. This shall initially be
computed based on the COB as submitted to DBM and correspondingly adjusted during
the year in case of shortfall in operating funds or reduction/increase in operations. In no
case shall the final cost of audit services for the year exceed the 1/4 of 1% of the COB
as approved by the President thru DBM. In case of failure of the government
corporation to enact its COB for the current year, the COB for the immediately
preceding year shall be used as basis for the determination of the cost of audit services.
3.4
Operating expenses authorized by law including allowances and fringe
benefits granted by government corporations to corporate auditing units personnel shall
be charged against the annual appropriation of the COA.
3.5
Cost of audit services collected from government corporations shall be
remitted by COA to the Bureau of the Treasury (BTR) which shall form part of the
General Fund income.
4.0
RESPONSIBILITIES
4.1
Government corporation shall:
4.1.1 Submit to DBM corporate operating budgets as approved by their
respective Governing Boards;
4.1.2
Furnish the COA a certified copy of said COB;
4.1.3 Remit to COA the cost of audit services in six (6) equal
installments every sixty (60) days, the first installment to fall on January 15 of
every calendar year;
4.1.4 Adjust cost of audit services to be remitted to COA based on the
COB as approved by the DBM; and
4.1.5
Furnish the DBM a copy of proof/certificate of payments made to
COA.
4.2
Commission on Audit shall:
4.2.1 Prepare the initial billings based on the copy/ies of the COBs
submitted by the corporations/subsidiaries concerned;
4.2.2 Follow up/demand in writing the remittance
installments five (5) days after the same has become due;
of
delayed
4.2.3 Initiate disciplinary or administrative action with the office of the
President or other proper authority, for neglect of duty against the head of the
corporation/subsidiary who failed to remit the amount due for the cost of audit
services, (20) days after serving the demand for remittance of the delinquent
installment;
4.2.4 Prepare the final billing based on the approved copy of the COBs
as furnished by the DBM; and
4.2.5 Request DBM to withhold form the national government equity
contribution or subsidy due the government corporation concerned, if any, such
amount equivalent to the unremitted corporate audit cost.
4.3
Department of Budget and Management shall:
4.3.1 Ensure that the corporate operating budgets include the cost of
audit services corresponding to 1/4 of 1% of said budget;
4.3.2 Furnish COA with copy/ies of the approved corporate operating
budgets for the year;
4.3.3 Release the appropriations for COA as authorized in the General
Appropriations Act, for the audit of corporate agencies and their subsidiaries, in
accordance with Section 4 of Executive Order No. 19, s.1986; and
4.3.4 Upon request of COA, withhold from the national government
equity contribution or subsidy due the government corporation concerned, if any,
such amount equivalent to the unremitted corporate audit cost and release from
the same upon lifting of withholding request from COA.
This Circular shall take effect January 1, 1987.
(SGD.) GUILLERMO N. CARAGUE
Secretary
Department of Budget and Management
(SGD.) EUFEMIO C. DOMINGO
Chairman
Commission on Audit