COMMISSION ON AUDIT CIRCULAR NO.

77-48
TO

January 31, 1977

: All Heads of Department and Managing Heads of Government-Owned and/or

Controlled Corporations; Self- Governing Boards, Agencies and Commissions;
Chiefs of Bureaus, Agencies and Offices; Governors, City/Municipal Mayors; and
Others Concerned.

SUBJECT : Basic Guidelines on Internal Control

With the withdrawal of pre-audit with certain limitations, there is a need to conduct a
thorough review and evaluation of the internal control systems of each agency to the end that
weakness, if any, can be corrected.
In this connection, attention is invited to the provision of Section 27, Presidential Decree
No. 898, quoted hereunder:
"It shall be the direct responsibility of the chief or head of each government
subdivision, agency or instrumentality, including government-owned or controlled
corporation and other self-governing board, commission or agency to install,
implement, and monitor a sound system of internal control. For this purpose, the
chief or head of agency may seek the assistance of the Commission in the
design and installation of the internal control system."
In pursuance of the above-quoted provision, the attached basic guidelines provide for
some pointers on the installation of an adequate system of internal control. As an element of
the system, this Commission recommends the creation of an Internal Control Unit which shall
monitor and oversee the internal control system and shall review and appraise:
1.
2.
3.
4.
5.

the extent and nature of compliance with agency management's policies, rules and
procedures;
the proper functioning of management controls over operations and resources;
the reliability and usefulness of financial and statistical data;
the effective protection and utilization of manpower and assets; and
the effectiveness of operating activities and personnel performance.

Please be guided accordingly.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman