State Auditing : Types and Audit Process

By: Jelena Marie Alcantara

Types of Auditing
1.) Timing
2.) Organizational Status
3.) Scope

 Timing
Two (2) Types of Timing

a.) Pre - Audit – the auditor reviews a transaction even before such services are
rendered

b.) Post – Audit – the auditor reviews and approves the transaction after the
service have been rendered and payment has been made.

The Review may consists of:

 Determining whether all relevant laws, rules and regulations have been
observed in the transaction;
 Physical Inspection of supplies or equipment;
 Checking whether all necessary documents are submitted properly and
accomplished;
 Determining whether the required authority or approval has been secured and;
 Checking the mathematical accuracy

2.) Organizational Status

a.) Internal Audit – mainly a management tool for control and evaluation of agency
operations. Sometimes referred to as “Management Audit”.

b.) External Audit – Performed by auditors external to or independent of the audited

organization. In the State Audit it is performed by the COA auditors ; in commercial audit it is conducted
by the independent certified accountants on private business organizations.

3.) As to Audit Scope

 Fiscal Audit is the “traditional financial audit” in government. It is a combination of financial

audit and compliance audit.
 Financial Audit – performed primarily through an examination of financial
statements in order to express an opinion on the fairness with which the
financial condition and results of operations of an audited entity are
represented.
 Compliance Audit- is an evaluation of the extent to which the agency has
complied with pertinent laws, policies and rules and regulations in the conduct
of its operation.
  Performance Audit- It is a constructive examination and evaluation of the
financial and operational performance of an organization, program, function or
activity with the objective of identifying opportunities for greater economy,
efficiency, and effectiveness in agency operations.

Economy and Efficiency Audits Determine:

1.) Whether the agency is managing and utilizing its resources economically and
efficiently;
2.) The causes of inefficiencies or uneconomical practices;
3.) Whether the agency has complied with laws and regulations concerning matters of
efficiency and economy.

Effectiveness or “Program Results” Audit Determines:

1.) Whether the desired results or benefits established by the legislature or other
authorizing body are being achieved; and
2.) Whether the agency considered alternatives that might yield desired results at a lower
cost.

Special / Other Audit

Subsidy Audit ( In the Constitution, PD 1445) “Levy Audit”

Ordaining and Instituting Government Auditing Code of the Philippines

WHEREAS, the creation and establishment of the Commission on Audit under the new
constitution and its recent reorganization and restructuring by virtue of Presidential Decree No. 898
have rendered more pressing the long-felt need to codify in revised and updated form , in keeping with
modern trends of government auditing and progressive legislation on the subject, various scattered
auditing laws, rules and regulations, and to incorporate therein presidential decrees, orders,
proclamations and instructions germane and relevant thereto for integrated effect.