SAI PHILIPPINES
Anti-corruption coordination between
SAI and international organizations
 In 2012, the Philippine Government entered into an agreement
with the International Bank for Reconstruction and Development
of the World Bank for a grant aimed at further improving the
effectiveness and efficiency of COA audit capabilities in financial,
compliance, procurement, value-for-money and fraud audits
through the development and adoption of a results-based
integrated audit methodology using the Integrated Results and
Risk-based Audit (IRRBA), The IRRBA and the Forensic Audit
Manuals were developed as the primary guides of the audit sectors
for the conducts of an integrated audit of agencies. The manuals
contain the concepts, related International Standards of Auditing
(ISAs) and International Standards of Audit for Supreme Audit
Institutions (ISSAIs), relevant procedures, and documentation
structure for the delivery of an integrated audit to auditees using
the IRRBA.
Anti-corruption coordination between
SAI and international organizations
 Integrity for Investments Initiative (i3) - one of the USAID
projects under the Partnership for Growth (PFG), a White House
signature initiative that elevates bilateral engagement between the
Government of the Philippines and the US Government to address
the most serious constraints to economic growth and development
in the Philippines. I3 will contribute to inclusive growth by
reducing the costs of corruption to investments and trade, thereby
promoting open and fair competition. The 5-year project
commenced on 20 February 2013, with $14.7 million total
estimated cost.
 The project will work with anticorruption offices, primarily the
Office of the Ombudsman (OMB), Commission on Audit (COA),
Civil Service Commission (CSC), Securities and Exchange
Commission (SEC), and the Governance Commission for
Government-Owned and Controlled Corporations (GOCCs).
Anti-corruption coordination between
SAI and international organizations
 The Philippines–Australia Public Financial Management
Program (PFMP) is a long term partnership between the
Governments of Australia and the Philippines to improve the
efficiency, accountability and transparency of public fund use
in the Philippines.
 The PFMP is assisting the Philippines Government to
implement its Philippine PFM Reform Roadmap: Towards
Improved Accountability and Transparency, 2011–2015. This
comprehensive PFM reform agenda aims to clarify, simplify,
improve and harmonize the financial management processes
and information systems of the civil service in the
Philippines.
Improving anti-corruption measures
in national level
 The Commission on Audit (COA), together with the Australian
Government, launched the Disaster Risk Reduction and Management
(DRRM) Accounting and Reporting Guidelines aim to further improve
transparency and accountability in the use of disaster funds.
“Benchmarked against the International Standards for Supreme Audit
Institutions, these will ensure that all disaster-related funds and
donations are properly accounted for and efficiently utilized. With the
recent typhoons and other calamities, the Philippine government was
faced with the challenge of protecting disaster aid funds without
impeding response time and recovery assistance. In the case of Typhoon
Yolanda (Haiyan), the public clamored for transparency on the use of
government funds and other contributions from local and international
donors.
 The use of the Disaster Accounting Guidelines will make the Filipino
people confident on how disaster funds are allocated, utilized, and
accounted for.
Improving anti-corruption measures
in national level
 The USAID-funded Philippines Integrity Project focuses on
current successful anti-corruption initiatives while also
establishing new initiatives to improve integrity within
government agencies. It builds on work done from 2006 to 2009
by Management System International on the Millennium
Challenge Account-Philippines Threshold Program Technical
Assistance Project.
 More specifically, the Project has four components. MSI will assist
the Office of the Ombudsman (OMB) in reengineering its
business process in order to build better case records and
information management capabilities and to improve capacity to
use the Information Technology physical infrastructure now in
place.
Improving anti-corruption measures
in national level
 MSI will also put in place a system to manage judicial court case
evidence to support more successful prosecutions at all levels.
 MSI will work with the OMB and the Department of Justice
(DOJ) to build an effective system for successful prosecution of
lower court corruption cases. MSI will support completion and
maintenance of an accurate database of cases to use as a tool for
sound caseload management. It will also execute a Memorandum
of Understanding between OMB and DOJ to support their
collaboration on successful, timely prosecution, and training to
make prosecutors more effective. Through a small grants program,
civil society will conduct a court watch program.
Improving anti-corruption measures
in national level
 Initiatives in the fight against corruption will usually be most
effective if they are carried out by concerned agencies
cooperatively. MSI will provide specific targeted support for
the strengthening of the cooperation between the OMB, the
Commission on Audit (COA) and the Civil Service
Commission (CSC). Support will focus on the more effective
use of the Statement of Assets Liabilities and Net Worth and
audits in prosecution of public officials for graft and
corruption through joint training of auditors, investigators
and prosecutors.
Improving anti-corruption measures
in national level
 Improvement of legal regulation in financial area –
 RA 9160, the Anti-Money Laundering Act of 2001 amended on 5 March 2003
(RA 9194). RA 9160 criminalized money laundering in the Philippines and, at
the same time, introduced civil forfeiture as an appropriate remedy for the
seizure and forfeiture in favour of the State, without the necessity of conviction
or prosecution in a criminal case, of monetary instrument, property or
proceeds involved in or related to an unlawful activity or money laundering
offense as defined in the law. RA 9160 likewise created the Philippines Financial
Intelligence Unit (FIU), the Anti-Money Laundering Council (AMLC)
 The COA is a principal of the Reform Program, along with the DBM, DOF and
BTR. The PFM Reform Program of the government under the leadership of
President Benigno Aquino III seeks to improve “efficiency, transparency and
accountability in public fund use. Executive Order No. 55 signed on
September 16, 2011 empowers the PFM Committee to implement the PFM
Reform Roadmap,, an all-inclusive plan that will clarify, simplify, improve and
harmonize the government’s financial management processes and information
systems.
Development of anti-corruption
standards for public servants
 Integrity Development Review (IDR). The IDR, which
involves a systematic and comprehensive review of systems
and procedures to determine corruption vulnerabilities and
integrity safeguards, has been implemented since 2004.
Agencies are required to craft action plans to address their
agency vulnerabilities.
Development of anti-corruption
standards for public servants
 Moral Renewal Action Program (MRAP). Administrative
Order 255 was issued on January 30, 2009 directing the
government agencies to set up Moral Renewal Program to
achieve zero tolerance for corruption. It serves as the legal
infrastructure to ensure the adoption and implementation of
the Integrity Development Action Plan (IDAP) which is the
Anticorruption Framework for the Executive Branch. It also
brings into the fore the importance of expansion and
strengthening of the membership of the Integrity Committee
and adoption/updating of agency-specific Code of Conduct,
among others.
Development of anti-corruption
standards for public servants
 Inter-Agency Anti-graft Coordinating Council (IAAGCC). It
is composed of representatives from 8 agencies including
COA to create/approved/monitor the following
committees/projects through its Principals (heads of
agencies):
 COA-OMB Joint Investigation Team - a joint investigation
team formed in 2012 to ensure the efficient and successful
filing, investigation and prosecution of cases involving graft,
corruption and violations of the ethical code of conduct for
public officials and employees. The joint team gave priority to
the investigation and prosecution of selected high profile
cases.
Inter-agency Anti-Corruption
Coordinating Council
 Inter Agency Policy Study Team (IAPST) – aims to come up with
policy recommendations to be signed by IAAGCC Principals, in
order to prevent/avoid repetition of what happened with the
Priority Development Assistance Fund/Various Infrastructures
including Local Projects (PDAF/VILP) funds; to guide the
legislators and those people in the approval/ budgeting/
disbursements of funds of similar nature
 IT-based Reporting of Anomalies and Irregularities Project – aims
to interconnect IAAGCC’s Member agencies as regards to IT
reporting anomalies
 Rationalization/Harmonization Workshop sponsored by the
British Embassy – to harmonize the processes of IAAGCC’s
member-agencies in order to enhance anti-corruption
enforcement in the Philippines
Anti-Corruption Code for Business
Communities
 The Baseline Study conducted by the Office of the Ombudsman, with the
assistance of the Development Academy of the Philippines (DAP), assessed
the extent that governments, business associations, and private enterprises
of APEC member economies have put in place policies, programs, and
practices aligned with the provisions of the APEC Anti-Corruption Code
of Conduct for Business (APEC Code). The study was carried out through an
online survey, content-analysis of publicly available documents from
websites of randomly-selected companies, and review of secondary
information.
Anti-Corruption Code for Business
Communities
 The results of the study show that several provisions of the APEC Code
are in place in the 17 member economies reviewed. The code
provisions that were found to be in place in more than half of the
economies covered are Prohibition of Bribery, Program to Counter
Bribery, Raising Concerns and Seeking Guidance, Gifts, Hospitality
and Expenses, and Leadership. However, the level of implementation
of each code provision varies per economy. Moreover, majority of
the anti-corruption laws and policies only pertain to private individuals
or enterprises bribing public officials. Most anti-corruption
initiatives remain unfocused on private sector corruption that also
takes place between and among businesses and private individuals.
Nevertheless, the study also found that private enterprises
implement policies, programs, and practices aligned with the APEC
Code. Most of these policies and programs are in compliance with the
rules and regulations of business associations or chambers of commerce
that they belong to.
Anti-Corruption Code for Business
Communities
 These results were presented in the Forum on the
Implementation of the APEC Anti-Corruption Code of
Conduct for Business held on 20-21 September 2012 in
Manila, Philippines. The Forum showcased presentations from
expert anti-corruption speakers, a workshop session, and an
exhibit of anti-corruption initiatives from various development
agencies. It was attended by 46 delegates from both the
government and business sectors of 14 APEC member economies
Integrity Pledge of Business
Communities
 The Pledge is an expression of the companies’ moral
obligation to uphold ethical business practices and to support
the collective effort to build a culture of integrity in the
country.
 The signatories (1,700) adopt a Unified Code of Conduct for
Business followed by the Integrity Self Assessment process
which will then be validated by a third party.
 They commit not only to zero tolerance for corruption but
also to pay right taxes, follow labor laws, respect the
environment, and favor long term sustainable development
over short term goals.
“SAI should strengthen investigative
powers in SAI mandate.”
 Yes, contemporary audit standards impose an obligation on
the auditor, to take positive actions that will help assure the
detection of probable fraud if it exists
Relevant International Standards
 Standards promulgated by the Institute of Internal Auditors
(“IIA”) Standard 1210.A2 states, “The internal auditor should have
sufficient knowledge to identify the indicators of fraud but is
not expected to have the expertise of a person whose
primary responsibility is detecting and investigating fraud.”
 IIA Practice Advisory 1210.A2-1: Identification of Fraud, and
 IIA Practice Advisory 1210.A2-2: Responsibility for Fraud
Detection, interpret that Standard and provide guidance for
its implementation.
Relevant International Standards
 Standards promulgated by the American Institute of Certified
Public Accountants - The AICPA Statement on Auditing Standards
99 (SAS 99) supersedes the Auditing Standards Board's earlier
fraud standard, Statement on Auditing Standards 82. The key
provisions of SAS 99 include:
 Increased Emphasis on Professional Skepticism. Putting aside any
prior beliefs as to management’s honesty, members of the audit team
must exchange ideas or brainstorm how frauds could occur in the
area under audit. These discussions are intended to identify fraud risks
and should be conducted while keeping in mind the characteristics
that are present when frauds occur: incentives, opportunities, and
ability to rationalize. Throughout the audit, the engagement team
should think about and explore the question, “If someone wanted to
perpetrate a fraud in this area, how would it be done?” From these
discussions, the engagement team should be in a better position to
design audit tests that are responsive to the risks of fraud.
AICPA Standards 99
 Discussions with Management The engagement team is expected to inquire of management
and others in the organization as to the risk of fraud and
specifically whether they are aware of any frauds or potential for
fraud. The IA should make a point of talking to employees in
and outside management, present employees as well as
employees that are no longer working for the organization.
Giving employees and others the opportunity to “blow the
whistle” may encourage someone to step forward and advise the
auditors as to whether fraud may have occurred. It might also
help deter others from committing fraud if they are concerned
that a co-worker will turn them in.
AICPA Standards 99
 Unpredictable Audit Tests –
 During an audit, the engagement team should test areas,
locations and accounts that otherwise might not be tested. The
team should design tests that would be unpredictable and
unexpected by the auditee. The audit team should not discuss
these audit procedures with anyone outside the audit team.
 Responding to Management Override of Controls –
 Because management is often in a position to override controls
in order to commit fraud, a test of management override of
internal controls must be a part of every audit.
ISA 240
 Standards promulgated by the International Federation of
Accountants International Standards on Auditing, ISA 240, provides explicit
guidance regarding the auditor’s responsibility to consider the
probability of fraud and error when planning and performing an
audit.
Reasons why auditors
do not detect more fraud
• Lack of audit skill
• No experience, training or skill in fraud awareness,
•
•
•
•
detection and investigation
Failure to include fraud detection when planning
audits
Lack of an awareness of the probabilities of fraud
occurring in the area being audited
Unaware of the implications of red flags or other fraud
indicators
Failure to follow up on fraud symptoms and indicators
Part 3
 Planning Stage
 Highest Risk Area – all Sectors
 Public procurement and contracting
 Infrastructure projects
 Funds transferred to NGOs/projects
implemented by NGOs using government
funds
How to detect corruption in public
procurement and contracting
 Red Flags
 Procurement of services, goods, or work projects not
needed, or in excess of what may be required.
 Needs assessments for services, goods, or work
projects that are not adequate or are not accurately
developed.
 Requirements that justify continuing to contract with
or buy from only certain contractors or vendors.
 Defining requirements so that only certain contractors
or vendors can supply them.
How to detect corruption in public
procurement and contracting
 Red Flags
 Unsuccessful bidders who become subcontractors, or
goods and services suppliers.
 Contracting or purchasing from a single source without
developing alternate sources of goods and services.
 Work statements or material specifications that appear to
fit a favored or single contractor or vendor.
 Releasing procurement information to preferred or
selected contractors or vendors.
 Consulting with preferred contractors and vendors about
requirements and specifications.
How to detect corruption in public
procurement and contracting
 Red Flags
 Designing pre-qualification standards,
specifications or conditions to limit competition
to preferred vendors or contractors.
 Splitting contract requirements to so that
contractors and vendors can share or rotate bids
and awards.
 Splitting procurement requirements to avoid
procurement policies.
How to detect corruption in public
procurement and contracting
 Red Flags
 Lost or misplaced vendor or contractor bid
proposals and price quotations.
 Questionable disqualification of a contractor or
vendor.
 Biased proposal evaluation criteria.
 Award of contract or purchase order to other
than lowest responsible bidder.
 Material changes to the contract or purchase
order after the award.
How to detect corruption in public
procurement and contracting
 Red Flags
 Awards to contractors or vendors with a history of poor or
questionable performance.
 Incorrect certification by the contractor or vendor as to the
stage of contract completion or delivery of goods and services.
 The delivery of services or materials that do not conform to
contract or purchase order requirements.
 Acceptance without verification of contractor or vendor
certification of service and material quality
Public Information System
Public Information System
 Welcome to the COA Public Information System
 To efficiently respond to requests, we utilize this Helpdesk using a support
ticket system. Every support request is assigned a unique ticket number as
reference for tracking your concern. Every request requires a valid email
address.
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Open A New Ticket
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previously submitted ticket, please login.
 Open a New Ticket
 Check Ticket Status
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We provide archives and history of all your current and past support requests
complete with responses.
 Check Ticket Status
Citizens’ Desk
 For reports on allegations of fraud, waste, abuse or
mismanagement of funds, please visit our Citizens' Desk:
The citizen feedback portal of the COA
Report a case or volunteer to be a
citizen auditor
People’s vigilance
 In participatory audit,
citizens (civil society,
academic groups, community
members, private sector) and
the COA work together to
audit the processes of
delivering public services and
government programs. As a
result, transparency and
accountability in the way
government performs its
functions is enhanced
Forensic/Investigative Audit Office
 Fraud Audit Office
 conducts audits of government agencies with probable fraudulent
transactions to safeguard government assets against abuse and fraud
and to respond to the increasing public demand for fidelity in the use
of government funds and properly.
 It is a multi-disciplinary office with staff composed of lawyers,
Certified Fraud Examiners, engineers andCertified Public
Accountants
 It has a Forensic Auditing Manual developed under the Integrity
Project contracted by the Management Systems International and
funded by the USAid
 The SAI has also issued a Guidelines in the Conduct and Reporting of
Fraud
Forensic Auditing Manual
 The Audit Manual on Forensic Auditing discusses forensic auditing
as a tool to prevent, detect, investigate and support the
prosecution of fraud. It explains the auditor’s responsibility to take
a proactive approach in detecting, documenting, and referring
instances of probable fraud, the concept and principles underlying
forensic audit; the standards in the effective conduct of forensic
audit; the techniques, analytical tools and approaches used in
forensic auditing; the gathering, preservation and use of forensic
evidence for purposes of establishing administrative, civil and
criminal liability; the specific stages and the logical procedures
involved in forensic audit; and fraud detection and investigative
processes specific in the conduct of forensic audit and
investigation.
Capacity Building
 A General and Sector Specific Fraud Awareness Training was
conducted on 30 July 2014. The training focused on
understanding fraud, detecting and addressing fraud,
assessing and preventing fraud and investigating fraud. Also
included in the training is the infrastructure fraud awareness.
 Certified Fraud Examination Training – to provide COA
personnel continuous development of their skills and
competence
 Cross training with Anti-corruption agencies
 Asian Development Bank’s training on anti-corruption
Utilization of Fraud Audit Reports
 Fraud audit reports with findings of fraudulent
acts discovered in audit/investigation are
transmitted by Head of SAI to the Office of the
Ombudsman with recommendation to file
appropriate cases against persons
liable/responsible.
Contents of Fraud Audit Reports
 The fraud audit report shall state the findings vis-à-vis
the allegations in the complaint; the laws, rules and
regulations violated; the persons liable; and the evidence
in support of the findings.
 The amount of loss or damage to the government shall
be specified.
 The list of evidence shall be attached to the report
together with the pieces of evidence.