Republic of the Hailippines COMMISSION ON AUDIT ‘Commonwealth Avenue, Quezon City, Philippines MEMORANDUM No. : 2014-008 Date: AUG 18 201° TO + Assistant Commissioners, Directors, Supervising Auditors, Regional Supervising Auditors, Audit Team Leaders/Members and All Others Concerned SUBJECT —: Guidelines on the Implementation of the Unified/Integrated Audit Strategy In view of the adoption by the Commission of the Unified/Integrated Audit Strat- egy, the following guidelines shall be observed: Nature of Uni ied /Integrated Audit Strategy A unified/integrated audit strategy is an approach in the audit of funds, programs/projects/activities of the government or follow-the-money-trail audit where audits of the Head Office down to the field offices/operating units of an agency within a cluster (vertical) or of different agencies under different clus- ters/sectors are integrated and’ reported in a single audit report by the clus- ter/sector which has audit jurisdiction over the lead implementing agency (hori- tantal). it basically adopts the Integrated Results and Risk-Based Audit (IRRBA) methodology prescribed under COA Resolution No. 2011-009 dated October 20, 2011. Definition of Terms For purposes of this Memorandum, the terms below shall be understood to mean as follows: 1. Vertical audit - refers to audit of funds, programs/ projects/activities {PPAs) implemented by the head office of National Government Agen- cies/Government-Owned and Contro!led Corporations (NGAs/GOCCs) and their field offices/branches/operssing units. 2. Horizontal audit - refers to audit of funds pertaining to a specific PPA co-implemented by various agencies or sectors of the government. This may be within the cluster, or sector, or across sectors of the Commission.3. Integrated Results and Risk-Based Audit - is an audit methodology which aims to integrate the different COA audit services such as: Financial and Compliance Audit, Agency-based Performance Au Government-wide and Sectoral Performance Audit, and Fraud Audit, into a common holistic audit approach. This integrated approach focuses on identified and prioritized critical areas/accounts and desired results in the light of limited audit resources. This methodolo- gy takes into consideration the ageney’s mandate/s as well as the target and actual outputs and outcomes of PPAS. Lead Implementing Agency - pertains to the agency mandated or responsible for the overall implementation ofa particular PPA. Stand Alone Agency - pertains to a national or corporate agency Jo- cated in the region and without brarches/field offices outside the re~ gion. 6. Over-all supervision - pertains to the exercise of advisory and over- sight functions in the discharge ofthe mandates of the Local Govern- ment Sector (LGS}, National Government Sector (NGS) and Corporate Government Sector (CGS). In the case of inter-sectoral implementation of PPAs, over-all supervi- sion is exercised by the Assistant Commissioner of the LGS/NGS/CGS who has audit jurisdiction over the lead implementing agency. 7. Technical supervision - pertains to all aspects of audit such as identl- fication and prioritization of risks, preparation of audit plans and pro- grams, execution of audit, preparation and transmittal of audit re- ports, monitoring of implementation of audit recommendations and quality assurance, among others. 8, Administrative supervision - adopts COA Memorandum No. 2011- 017 dated September 1, 2011 on the Revised Rules and Guidelines on Travels, Attendance and Leaves except those specifically mentioned herein. Il. General Guidelines L The conduct of unified/integrated audit shall be in accordance with the applicable existing policies of the Commission, A vertical audit shall be undertaken for each agency with field/branch operations from the head office down to its field operating units. For this purpose, the Regional Supervising Auditors (RSAs) designated by the COA Chairperson shall supervise the audit teams of NGAs/GOCCs in the regions and prepare the pertinent consolidated report. The RSAs shall be ; ¢4 under the supervision of the Cluster/s that has/have jurisdiction over the supervised teams. Ahorizontal audit shall be conducted for PPAs implemented by more than one agency under the audit jurisdiction of one or more clusters, or one oF more sectors. The Cluster/Regional Piryctor with audit jurisdiction over the lead implementing agency shall, coordination with the other Cluster/Regional Directors concerned, (2) take the lead in planning the audit, and (b) be responsible for yhe review, consolidation and preparation of the consolidated audit report to be transmitted to the head ‘of the lead implementing agency of the PPA in the form of a Unified /integrated Audit Report. In the conduct of horizontal audit, in case there are audit issues cutting across sectors/clusters, the lead Sector Head shall initiate the issuance of the necessary audit instructions. ‘The conduct of fraud and spdcial audits are not covered by this guidelines. IV. Specific Guidelines 2 L At the start of every audit year, the Assistant Commissioners of the LGS, NGS and CGS shall prepare and submit not later than 30th of April to the Office of the Chairperson the Sector Risk Identification Template (SRIT) aligned to the Commission's Government Risk Identification Template (GRIT). The Cluster/Regional Directors. in turn, shall prepare and submit not later than 15th of May to the Office of the Assistant Commissioner concerned their respective Cluster/Regional Risk Identifiction Template (CRIT/RIT) taking, into consideration the SRIT, This risk identification at the sector and cluster level shal! be an input in the determination of the agency priority/critical areas and the corre- sponding audit strategies needed to be applied for the allocation of the required resources such as people, skills, competence, processes and pro- cedures.” ‘The Assistant Commissioners of the LGS, NGS and CGS shall develop their respective sector's operational plan, aligned to the Commission's strategic plan and policy directions for approval of the COA Chairperson. Based on the sector's operational plan, the Cluster/Regional Directors shall develop their corresponding operational plan. To ensure uniform implementation of the audit plans, the Cluster/Regional Directors shall issue the necessary general audit instructions to all audit groups/teams under their supervision. The specific audit instructions pertinent to each auditee shall be Issued by the Head Office Supervising Auditor concerned.For the State Universities and Colleges (SUCs)and Water Districts, the Assistant Commissioners of the NGS and CGS, respectively, shall issue the necessary instructions for the guidance of the Regional Directors ’ For agencies located in the region with branches in other regions, the Regional Director having jurisdiction over the Head Office shall issue the necessary instructions to all audit groups/teams. 4 Upon approval of the Assistant Commisioner concerned, the Cluster/Regional Directors shall conduct at least_ two conferences/ workshops every year to be attended by: the Head Office/Regional /Audit Group Supervising Auditors, Audit Team j.eaders and selected Audit Team Members for the purpose of (a) audit group level risk assessment and audit planning and (b) review and consolidation of the annual audit outputs, ' : During the audit group level operational planning exercise, the Cluster Director thru the TSO Director or the Regional Director shall require the participation of their technical audit representatives for purposes of allocating, prioritizing and scheduling available technical resources. 5. For PPAs subject to horizontal audit, the SA/ATL of the co-implementing agencies shall incorporate the results oF-audit of their respective agency in the Annual Audit Report and shall submit the results of audit not later than July 31 to the SA/ATL of the lead implementing agency. The latter shall then review and prepare the consolidated audit report in the form of a Unified /Integrated Audit Report for review and transmittal by the CD not later than August 31. 6. For purposes of preparation of the Report on Salaries and Allowances (ROSA), Annual Financial Report (AFR) and Report on the Audit of Official Development Assistance (ODA) Funds, required data such as financial reports and the like, of water districts/stand-alone agencies of CGS/NGS under the direct supervision of the Regional Director shall be consolidated by the Regional Director nd submitted to the concerned Assistant Commissioners for overall cor-soiidation. Duties and Responsibilities 1. Responsibility for the supervision and control of the audit shall be exercised in accordance with the Matrix of Supervision for Unified /Integrated Audit below f Peon Seer) | typeof | COAOfficiats | Officials aay | upgPhion | Responsible | Personnel putea Neen | Panne |__| Supervised_|_____ + [K Overall Jedistant | Regional LGUs = Provinces, Cities, | | Sapervision | Commissioner- | Direcors | Municipalities arangays | uss Leagues of LSUs/LGU Oficals | tec }i 7 Goa | Typeof | COAOfficials Officials [__Saervision | Responsible | Fesonne pr Nos Chas | Comassioner- | Directors Nes. | 1 [Regional | Directors | i { | Cas Giuster | | Commissioner- | Directors | as | : | | | | | \ * ego | gional | Directors ¢ | Vissistant | Giasory Commissioner- | Regional NGS/CGS/LES | Directors of ead Vhaving > 1 | Implementing | jurstievon Agency | over agencie and OB Both Techni ‘Administrative faster Directors: NGS | ang cas Assistant Cluster Directors as immediate supervisor over technical matters ‘Supervising | Auaicors implementing Intercluster intersectoral PPAc Supervising | Auditors | Budit Team | Leaders Members | Rgancies complementing Audited Agencies | Wess with Head Ofc Metre tana including thelr region/Tield oftices/branches/operating smite ‘State Universities & Colleges — (GUCS}, stand alone NGAs and other NGAS with Head Offices orfside NCR. GCS wh ead icesin | | Metto Manila including their | | branches/field | offices operating units and subsidiaries =| ~ | Water Districts, stand alone | corporations, and corporations | | interciuster/Intersectoral | pas \ | | | mead omas/edomces; | | Bs Opera Un Stand Alone Agencies in Metro | | anitafo | ic | Type of coaorticiis | officals | sarcivaion | Reépenibe | Persmnet | AuawesAgencs | Supervised _| ee et Directors Auditors: : | LUs-Provinces,Citles, | | Vassstae | | Municipalities, Barangays: and { Regional | Weatorcausneu oma: | | Directors as : \ i “ammediate 1} guce,stand atone NGAS and | | supervisor other NGAS with Head Offices: | over technical | outside NCR 1 | matter i \ | ‘water Districts, stand alone | Sapanscng | arte ~ | enprations and corporations | auattors artes | with Head Offices outside NCR aaa | Members \erpotn Technica | RSs Audit Team a | and = beaders/ * | ‘rdmmnistrative | | Members cxcepttravel | \ | \icieciniea [Chater \ | supervision as | Ditectors” | | ‘well as [nesyecs | | administrative \ | Rpontsion | Assistang, | | Stateain ern | Cluster | NGAsand GOs in the regions | Vi.()below | Direciorsas fencept stand alone agencies | | | immedi | | supervisor i \ | over tectmest | | [rmaters | \ | He caniniswative | sis ' Supervision | [es i only | pegionay | ABET | | Regional | veaders/ | | Members 2. 3. ee | ‘The Head Office SA and RSA shail jointly undertake audit planning and rae ne the Audit Group Plan to the concerned Cluster Director for approval. ‘The RSA shall be responsible for the follow ing: a. Preparation of the RSA Audit Plan based on the approved Audit Group Plans; b. Signingof the AGM, NC, ND,and NS, jointly with the AT after review sey necessary coordination with the concerned Head Office SA for _ uniformity of audit actions re 63. The Regional Audit Teams of NGS c. Review and transmittal of Management Letter; and 4. Consolidation and preparation of matrix of findings/recommendo- tions/comments/rejoinder for submfssion to the Head Office SA, COPY furnished the concerned Cluster Dires ‘7, within the deadline set by the Cluster concerned. Administrative Matters i At well asi Daily Time Records, Monthly Reports of Undertimes and Absences and Ijeave of Absence shall rest with the official who has administrative supervision over the Audit Groups/Teams including the RSA. ci For supervision of NGS and CGS person guidelines shall be observed } 1. Approval of domestic travels. as ‘All domestic travels for purposes of aud?t audit plan which shall Include the audi places to be visited, dates of travel , ul 2. ‘The semestral performance rating of the SAJRSA/ATL/ATM shall be the responsibilty of officials having technical Supervision over them. all be supported with an RSA tivities to be performed, the ‘and the corresponding estimated costs. For RSAs, the Regional Directors shall provide written feedback to the Clus- tor Director concerned in gauging the ratee’s readiness for higher responsi bilities. ‘The ranking for promotion shall be subj éct to the guidelines issued by the Commission. dnd CGS shall submit quarterly ‘Kecomplishment reports to the RSA epncerned for consolidation per mentee, copy furnished the Regional Dire-tor for mont Ont purposes. The anetolidated report shall be submitzed to the Head Office SA for consoMwide consolidation and submigsion to the Cluster Director concerned. Quarterly accomplishment reports |! 4. water districts/stand alone fgencies of CGS and NGS/NGAs and othe GOCCS with head office outside seen Jor the direct supervision of the Regional Tise0t shall be MCR gated by sector by the Regional Dijector which shal form part of the seeamplishment of the region. The said NGS and CoH ‘regional consolidated accomplishment reports shall be furnished the NGS and CGS Assistant Commissioners, for monitoring purposes\4, The Cluster Director concerned shall act on the following: All applications for'Té&ve of absence with requests for authority for personal foreign travels upon recommendation of the immediate st- pervisor and for ternrinal leave; ‘Attendance to conventions and seminars outside the region OF O° ceeding five days upon ‘recommendation of the immediate supervir sor} c, Nominations to scholarships; Recommendation for audit of foreign-based government agency and ther foreign audit engagements ; and e. Recommendation for promotion. + 5, Recommendation for the designation of OIC-RSA/ATL in the emt of ava- cancy/absence of an RSA/ATL shall be made by the Regional Director con- eee in consultation with the Cluster Director concerned COA Central Office clearance required for purposes of retirement, personal foreign travel, application for terminal leave, and leave of absence for more eee) dave, among others, shall be initialed by the Supervising palitor/RSA and signed by the concerned Cluster Director, 7, All recommendations for recruitment and assignment !p ‘the NGS/CGS audit rams in the regions which are submitted to the COA Central Office shall be coursed through the concerned Cluster Director. Vil, Repealing Clause COA issuances that are inconsistent herewith are hereby repealed or modified accordingly. VII. Effectivity ‘These guidelines take shall take effect immediately 1. MENDOZA Commissioner . NOt