REPUBLIC OF THE PHILIPPINES COMMISSION ON AUDIT Regional Office No. IX ‘Zamboanga City Office of the Re MEMORANDUM To : All Supervising Auditors, Audit Team Leaders, Members and Staff Local Government Sector This Regional Office SUBJECT : Specific Audit Instructions for the Audit of Local Government Units {UGUs) for CY 2018 Accounts and Operations DATE july 30, 2018 In line with the adoption by the Commission of the Revised Guidelines on the Implementation of Unified Audit Approach under COA Memorandum No. 2016-023 dated November 14, 2016, and pursuant to the General Audit Instructions (GAls) issued by the Local Government Sector for CY 2018 audit under LGS Memorandum dated July 9, 2018, hereunder are the Specific Augit Instructions for the audit of Local Government Units (LGUs) for the year 2018: 41. Additional/supplemental audit thrusts It Is understood that supplemental audit thrust areas, over and above the General ‘Audit Instructions issued by the LGS Assistant Commissioner, may be looked into as ‘additional audit foci, as may be deemed necessary and appropriate, arising from the application of risk assessment as an audit approach. 2. Application of PPSAS Part of the audit/assessment is the consideration of the proper implementation of the Philippine Public Sector Accounting Standards (PPSAS) in the review of Financial Statements, Said financial statements should be reviewed to ascertain completeness, ‘consistency and correctness. 3. Other FS Review considerations Likewise, review of relationships of accounts in the FS shall be made. As much as possible, performance of proof of correctness/tie-in analysis should be done, such as, but not limited to, the following:8 = SCBAA vis-a-vis budget utilization = Presentation of current and non-current accounts - Reciprocal accounts reconciling/tallying with each other - Liabilities without cash/receivable back-up - Restatement of PY errors Disclosures ‘The Auditor shall also see to it that all applicable disclosures as required under PPSAS are made, and additional information not quite evident on the face of the FS but are relevant to the understanding of the FS are incorporated in the Notes to the FS. Materiatity Application of materiality percentage, to be discussed and agreed upon during the 2018 ‘Annual Planning Conference, shall be applied on a uniform basis. The application of the ‘concept of materiality in planning and performing the audit of FS is prescribed in duly- adopted ISSAI/PPSSA standards. Subsequent events Subsequent events and transactions happening between the FS date and the date of final submission of the audit report shall be duly considered to determine if there is a need for additional disclosures and adjustments in the audited financial statements, Follow up of Prior Years’ Audit Recommendations The follow up of the implementation of Prior Years’ Recommendations shall be in accordance with COA Memorandum No. 2014-002 dated March 18, 2014. The audit team, thru the Supervising Auditor, shall ensure that the accomplished Agency Action, Plan and Status of Implementation (AAPSI) is duly monitored and submitted to the Auditor within 60 days from receipt of the Audit Report, and that the duly-accomplished ‘AAPSI is validated by the audit team within a reasonable period, using the Action Plan ‘Monitoring Too! (APMT). Audit findings which have material impact, particularly on the FS, and which have remained uncorrected should be reiterated by issuing an Audit Observation Memorandum (AOM), updating the amount involved and/or the circumstances and reasons for management's inaction, A review of recurring audit observations shall be made, for possible revision to more appropriate and doable audit recommendations. Updated AAPSI and APMT The AAPSI and APMT shall be updated as of the end of the year, indicating the status of implementation of audit recommendations of PY audit recommendations as of year-end, to serve as support to Part Ill Status of Implementation of Prior Years’ Recommendations of the 2018 Annual Audit Report (AAR),2. Audit Working Papers It is understood that all phases of audit, including the resulting audit observations, shall be supported with quality audit work papers, to provide adequate basis for the conclusions made in audit. Said working papers should show the levels of preparation and review, and should be properly dated, indexed and cross-referred. 10, Conduct of Exit Conference Al audit teams shall conduct exit conferences with the respective auditees prior to the finalization/submission of the Audit Report, to ensure inclusion of final audit issues and management's justifications/comments in the report, where warranted, Pertinent provisions of COA Memorandum No. 2014-011 dated October 21, 2014 and other pertinent issuances on the conduct of exit conferences shall be observed. As much as Possible, the Supervising Auditor shall attend the exit conference. In the case of exit ‘conferences for provinces, cities and problematic audited agencies, the Regional Director and/or Assistant Regional Director shall be invited, preferably accompanied by the Service Chief of the Regional Legal Services Office. 411. Review responsibilities ‘The Supervising Auditor shall conduct a thorough review of the AARs prior to submission to the Regional Office for further review, in the case of provinces and cities, or prior to transmittal to the audited agencies and oversight bodies, in the case of municipalities and barangays. As much as practicable, a Review Checklist and other supplemental instructions shall be used and accomplished, R, : DEADLINES — Category of submission to Transmittal LGU/Particulars SA RD/ARD- Management/ITO* Provinces and Cities | Mareh 31, 2019 | April30, 2019 | May 31, 2019 Municipalities March 31, 2019 NA | May 31, 2019 Barangays | June 15, 2019 NA June 30, 2019 Electronic copies for | Within S days | Within 7 days | "July 31, 2019 COA web publication | from transmittal_| from transmittal (exclusive of Barangay | to management | to management LAARs) = For strict compliance. rACION Q) MENDO! Regional Director