Unit 2 Accounting and Auditing

Arrangements
 Lesson 1
Internal Auditing
RA 3456
“AN ACT PROVIDING FOR THE CREATION, ORGANIZATION
AND OPERATION OF INTERNAL AUDIT SERVICES IN
ALL DEPARTMENTS, BUREAUS AND OFFICES
OF THE NATIONAL GOVERNMENT”

Section 1-6

Approved: June 16, 1962  

RA 4177
“An Act to Amend Sections Two, Three and Four of Republic Act
Numbered Three Thousand Four Hundred Fifty-Six, Known as
"Internal Auditing Act of 1962”

Section 1-2

Approved: March 26, 1965

AO 278
“DIRECTING THE STRENGTHENING OF THE INTERNAL
CONTROL SYSTEMS OF GOVERNMENT OFFICES,
AGENCIES, GOVERNMENT-OWNED AND/OR
CONTROLLED CORPORATIONS, INCLUDING
GOVERNMENT FINANCIAL INSTITUTIONS AND LOCAL
GOVERNMENT UNITS, IN THEIR OPERATIONS”

Section 1-5

Approved: April 22, 1992

 Lesson 2

Objectives of auditing
The objective of
an audit is to
express an opinion
on financial
statements, to give
the opinion about
the financial
statements, the
auditor examines
the financial
statements to satisfy
himself about the
truth and fairness of
the financial
position and
operating results of
the enterprise.
Reforms
The objectives of the Government’s public financial management
reforms are to:
i. Allocate and manage expenditures via a Medium Term
Expenditure Framework (MTEF);
ii. Strengthen feedback mechanism for budget formulation
through enhanced budget and performance monitoring;
iii. Improve the performance management environment by
simplifying budgeting rules;
iv. Introduce incentives for better performance management; and
v. Increase management flexibility to ensure performance
results.
Phil Expenditures Management System
In general, Public Expenditure Management (PEM) tends to
promote the achievement of three outcomes, namely, aggregate fiscal
discipline, allocative efficiency, and operational efficiency.

 Key Aspects of Public Expenditure Management

Budgets
Budget preparations
Resource allocations
Expenditures
Expenditure Tracking; quantitative and qualitative; utilization,
quality, composition, transparency and accountability
 Service Delivery
Extent and quality of service delivery
User satisfaction and perceptions (qualitative and quantitative)
Impact
Monitoring
Outcomes – Public Expenditure Management
• Accountable, transparent and efficient resource allocation,
expenditures and service delivery
• Civic engagement in budgeting, expenditure tracking and
monitoring service delivery.
• Institutional arrangements (mutually accountable) between
government and civil society which create space and allows for
these processes to be integrated into budgetary processes.
• Citizen report cards as a part of PRSP (and influence MTEF)
• Development of participatory budgeting processes and skills in
civil society institutions.
Objectives of Anti Corruption Policy
Republic Act No. 3019 (The Anti-Graft and Corrupt Practices Act).

Efforts to reduce corruptions

The implementation of Republic Act No. 3019
i. Deregulating and privatizing public functions;
ii. Increasing transparency and public oversight of government and
public sector functioning;
iii. Vigorously pursuing efforts to root out corruption from those
agencies, and public processes such as procurement where they
mainly exist through improved audit and other special measures;
 iv. Enabling better judicial functioning and equitable access to
the legal system; and
v. Reforming agencies that have particularly high interaction
with the public such as the police.

Lesson 3: Issues and Recommendations

Inconsistency of Auditor Independence on Coexistence of Responsibilities

The Commission on Audit is responsible for promulgating
accounting and auditing rules. These responsibilities are defined in
Article IX of the Constitution 1987.
Absence of Computerized Accounting
“Computerized vs. Non-computerized Accounting System”
No consistent sets of Accounting standards for budgeting and reporting
There is no ensured transactions or events are recorded in the
same way, from one accounting year to the next. There is no
consistent set of accounting standards for budgeting and reporting.
Major reporting different result.
Attractive Salaries
Comparatively attractive starting salaries attract high quality
personnel into government accounting. A flat earnings
structure means that higher-level salaries are far from
competitive. This creates retention problems and provides a
supportive environment for graft and corruption.
Auditing Time
Auditors spend the majority of their time on compliance auditing
(checking transactions). Minimal time is spent on financial
attest auditing as more effort is applied to value-for-money
audits.
https://www.chanrobles.com/republicactno3456.html
https://lawphil.net/statutes/repacts/ra1965/ra_4177_1965.html
https://www.officialgazette.gov.ph/1992/04/28/administrative-order-no-278-s-1992/
https://www.iedunote.com/audit-objectives
https://www.adb.org/publications/what-public-expenditure-management-pem
https://slideplayer.com/slide/2487138/
https://www.gppb.gov.ph/laws/laws/RA_3019.pdf
https://faq.ph/stop-corruption-in-the-philippines/
https://www.semanticscholar.org/paper/Computerized-vs.-Non-computerized-Accounting-
System-Arcega-Datinguinoo/1860c210a51f0cfad83dfe25c87c4ae6c699209c
http://hdl.handle.net/11540/299