Fiscal control mechanisms-mfdeRamos

FISCAL ADMINISTRATION

FISCAL ADMINISTRATION• Fiscal administration refers to systems, structures, processes, resources, and the

policy, environment, government, the inter-governmental and inter-local fiscal relations, affecting among others, the following:

o the giving of allotments and grants by the national government (NG) to local government units (LGUs); o sharing of taxing powers between the NG and the LGUs, and among LGUs units; o policy on tax rates and structure; o revenue and expenditure planning; o revenue utilization and expenditure allocation; o monitoring and approval of budgets, tax ordinances and other fiscal measures; o policy on borrowing and borrowing instruments; and o appointment and supervision of local fiscal officers.

ORGANIZING FOR FISCAL ADMINISTRATION: Fiscal activity is present in all levels of the organization, whether line or staff;

top management level through middle management; the rank and file.

Top management is most interested in it; middle management is deeply involved in it; the rank and file is affected by whatever results from it.

The principal agencies tasked with fiscal functions: 1. Congress, especially the Lower House - Congress is responsible for revenue and

expenditure policies. 2. Department of Finance - Revenue generation and collection

- Fund custody - Disbursements - Keeping of accounts

3. Department of Budget and Management - Review of estimates and fiscal policy studies are done by the Department of Budget and Management in close consultation with the National Economic Development Authority;The Central Bank and other economic planning entities of the state to see to it that fiscal plans and programs are geared towards national development.

4. Commission on Audit - The Commission on Audit conducts fund and performance audit to see to it that expenditures are in accordance with the Appropriation Law approved

ORGANIZING FOR FISCAL ADMINISTRATION:

FISCAL CONTROL MECHANISMSFOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL :1. Prevent Misappropriation of Funds:

Requires review and approval by the administrative official of the line or operating agency, of all requests for money releases and budgetary allotments, vouchers and similar papers before payments are made so that expenditures are in accordance

with policy and law and not illegal, irregular, unnecessary, unconscionable, extravagant and excessive, (IIUUEE) (COA CIRC. 85-155)

2. Control to Implement Prospective Policyproactive administration inhibits governmental units from directly transacting and negotiating money matters since such kind of transaction is officially channeled through the Department of Budget and Management in the form of budget estimates as endorsed by the President.

FISCAL CONTROL MECHANISMS

FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL:3. Ensure the Wisdom and Propriety of Expenditure

Claims for payment from public funds, legality, prudence, reasonableness, the morality of the claim or charge should be established.A review of existing contracts and transactions should be made.

4. Prevent DeficitsFiscal supervision and control may be useful but should not unduly interfere with agency prerogative to carry out programs mandated by the constitution and the laws.

SOURCES OF FUNDSOF LOCAL GOVERNMENT UNITS

1. INTERNAL REVENUE ALLOTMENT:- refers to the share of LGUs from the National Internal Revenue Taxes (NIRT)

NATIONAL INTERNAL REVENUE TAXES include the following: Income tax Estate Tax and Donor’s Tax Value-Added Tax Other Percentage Taxes Taxes Imposed by Special Laws, such as Travel tax

Allocation of INTERNAL REVENUE ALLOTMENT: (Sec. 285, RA 7160)

IRA60%

NATIONAL GOVT

40%LOCAL GOVT UNTISPROVINCES: 23%

CITIES: 23%

MUNICIPALITY:34%

BARANGAY:20%

local revenue generation

STAKEHOLDERS:Provided, however, that the share of each province, city or municipality shall be cetermined on the basis of the ff. Formula (Sec. 285, RA 7160)

a. POPULATION 50%

b. LAND AREA 25%

c. EQUAL SHARING 25%

PROVINCES: 23%

CITIES: 23%

MUNICIPALITIES: 34%

BARANGAYS: 20%

81 PROVINCES

127 CITIES

1,501 MUNICIPALITIES

33,461 BARANGAYS


2. SHARE IN THE UTILIZATION AND DEVELOPMENT OF NATIONAL WEALTH: (Sec. 289 and 290, RA 7160)

FOUR TYPES OF NATIONAL WEALTH

Particulars Collecting Agency

FOREST CHARGES DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

ROYALTIES AND MINERAL RESERVATION MINES AND GEO-SCIENCES BUREAU

ENERGY PRODUCTION RESOURCES DEPARTMENT OF ENERGY

MINING TAXES BUREAU OF INTERNAL REVENUE

40% OF THE GROSS COLLECTION BY THE NATIONAL GOVERNMENT FROM THE PRECEDING FISCAL YEAR OUT OF THE PROCEEDS DERIVED FROM THE UTILIZATION AND DEVELOPMENT OF NATIONAL WEALTH WITHIN THE LGUs RESPECTIVE AREA.

PROVINCE •20%

COMPONENT CITY OR

MUNICIPALITY•45%

BARANGAY •35%

SHARED

3. SHARE IN THE GROSS INCOME TAXES PAID BY ALL BUSINESSES AND ENTERPRISES WITHIN THE ECOZONES LGUs WITHIN SUBIC, CLARK, JOHN HAY, PORO POINT SPECIAL ECO AND FREE PORT ZONES ARE ENTITLED TO A 2% OF THE 5% FINAL TAX (RA 7227)

1% OF THE 5% FINAL TAX ON GROSS INCOME EARNED OF THE TOTAL TAX COLLECTED, TO THE LGUs AFFECTED BY THE DECLARATION OF THE ECOZONES

1% OF THE 5% FINAL TAX ON GROSS INCOME EARNED OF THE TOTAL TAX COLLECTED, TO THE SPECIAL DEVELOPMENT FUND (SDF) OF EACH LGU OUTSIDE BUT CONTIGUOS TO THE BASE/ECOZONE AREAS

DISTRIBUTED BASED ON THE FOLLOWING FACTORS:

POPULATION: 50%

EQUAL SHARING: 25%

LAND AREA: 25%


4. SHARE IN VALUE-ADDED TAXLGUs ARE ENTITLED TO A SHARE IN VAT ONLY WHEN THERE IS AN INCREMENTAL COLLECTION WHICH REFERS TO THE EXCESS IN THE ANNUAL INCREASE IN ACTUAL COLLECTIONS.

EXAMPLEYEAR VAT Collections Increase

2006 64.550M 20.972M

2005 43.383M 19.700M

2004 23.886M


2006 increase in collection 20,972MLess; 2005 Increase in collection 19.700M

-----------------------Excess of Increase in Collection 1.272M50% Share in Incremental Collection 0.636MDistributed as follows:20% Share of LGUs (city/municipality) 0.127M80% share of National Governments 0.509M

5. TOBACCO EXCISE TAX: RA NO. 7171, JANUARY 9, 1992 ENTITLED “AN ACT TO PROMOTE THE DEVELOPMENT OF FARMERS IN THE VIRGINIA TOBACCO PRODUCING PROVINCES’’, TOBACCO-PRODUCING LGUs ARE ENTITLED TO 15% OF EXCISE TAXES ON LOCALLY-MANUFACTURED VIRGINIA-TYPE CIGARETTES.


PROVINCE30%

MUNICIPALITIES AND CITIES WITHIN THE DISTRICT AS IDENTIFIED BY THEIR

RESPECTIVE LEGISLATORS

30%

MUNICIPALITIES : DIVIDED AC-CORDING TO

VOLUME50%

40%DIVIDED EQUALLY

50%

OF THE 15%...

BUDGET CONCEPT AND THE BUDGET PROCESS

“ONE – FUND’ concept

The "one-fund" concept is the policy enunciated through PD 1177 which requires that all income and revenues of the government must accrue to the General Fund and thus can be freely allocated to fund programs and projects of government as prioritized. The "one-fund" concept is a fiscal management policy requiring that as much as possible, all revenues and other receipts of the government must enter the General Fund and their utilization and disbursement subject to the budgeting process. The one-fund concept is significant in that it serves as an avenue through which fiscal authorities may properly allocate scarce government resources in accordance with the priorities in the over-all program of economic development. It likewise provides a mechanism to control drawdowns on pooled resources. Regularly, the level of funds disbursed are monitored against the level of revenues generated. This way, we are able to stick to the targeted level of disbursement for a given period and avoid incurring a deficit. It also alerts us of possible revenue shortfalls.

BALANCED BUDGET CONCEPT:

In the context of government budgeting, a budget is said to be balanced when revenues match expenditures or disbursements. When expenditures exceed revenues, the government incurs a deficit which may result in the following situations:

• The government borrows money either from foreign sources or from the domestic capital market which increases the debt stock of the NG and its debt servicing requirements;

• The government borrows money from the Bangko Sentral ng Pilipinas; or,

• The government withdraws funds from its cash balances in the Treasur


THE GOVERNMENT’S FISCAL POLICY:Historically, national government expenditures have always exceeded total revenues resulting in annual budget deficits. Thus, the national overnment had to resort to borrowing to cover said deficits which resulted in the ballooning of foreign and domestic debts. However, in 1994, the government broke the deficit trend by posting a budget surplus of P16 billion through an aggressive privatization and revenue generation program and a prudent expenditure program. Since then, the government has been exerting efforts to maintain the surplus budget policy.

SURPLUS BUDGETINGThe surplus budget policy is important to encourage economic growth. The less the government borrow from the public, the lesser the pressure on interest and inflation rates and the more funds are made available in the financial market. Such funds may be used by businessmen to build factories, hire workers, buy equipment and open more employment opportunities. By keeping more funds in the hands of the Private sector rather than competing for credit, the government helps make financing available for families who want to own homes, buy cars, or support their children's education. The government also needs to generate a budget surplus to repay the huge debt it has accumulated over the years. The reduction of the national budget debt will correspondingly lessen government's requirements for interest and principal payments. This becomes important particularly during periods of rising interest rates and unstable exchange rates.


TOTAL RESOURCE BUDGET CONCEPT is adopted by the present budgeting system which requires the preparation of the national government within the framework of the total impact of all government entities on the national economy. Under this concept, the National Government (NG) budget is considered as only one component of the entire public sector resources. Government-Owned and Controlled Corporations (GOCCs) and Local Government Units (LGUs) are also considered as substantial contributors to total public resources. GOCCs and LGUs are therefore required to prepare their budget consistent in form and timing with that of the NG to facilitate comprehensive evaluation of the overall budget. In total resource budgeting, the energies and capabilities of all public entities are harnessed in drawing up the optimal package of goods and services that can be sustained by available resources.


PLAN-BUDGET PROCESS

DEVELOPMENT PLANNING(6-15YEARS)

INVESTMENT PROGRAMMING

(3-5 YEARS)

ANNUALINVESTMENT

PLAN

BUDGET PREPARATION

BUDGET AUTHORIZATION

BUDGET REVIEW

BUDGET EXECUTION

BUDGET ACCOUNTABILITY

CURRENT YEAR

(JAN-JUNE)

CURRENT YEAR

(JUL-DEC)

BUDGET YEAR(JAN-DEC)

DEVELOPMENT PLANNING(6-15YEARS)

INVESTMENT PROGRAMMING

(3-5 YEARS)

ANNUALINVESTMENT

PLAN

BUDGET PROCESS

ANNUAL INVESTMENT PLAN PREPARATION

KEYPLAYERS: LOCAL DEVELOPMENT COUNCIL, MPDO, MBO, LCE, SB, NGO,CS

ALIGN DEVELOPMENT PLAN WITH CURRENT DEVELOPMENT ISSUESCULL OUT THE CURRENT SLICE OF THE LDIP AS INPUT AND ANNUAL COMPONENT OF THE CAPITAL EXPENDITURE INTO THE AIP SUMMARY FORMDETERMINE RESOURCE REQUIREMENTS OF PPAs FOR BASIC SERVICES DELIVERYPREPARE DRAFT AIP SUMMARY FORM AND PRESENT TO THE LCE FOR COMMENT/REVIEW

BUDGET PROCESS

BUDGET PREPARATION

LEGAL BASIS: THE LOCAL CHIEF EXECUTIVE BUDGET FOR THE ENSUING FISCAL YEAR (SEC 318, RA 7160)KEYPLAYERS: LOCAL CHIEF EXECUTIVE, LOCAL FIANCE COMMITTEE (MUNICIPAL BUDGET OFFICER, MUNICIPAL TREASURER, MUNICIPAL PLANNING AND DEVELOPMENT OFFICER

FLOWCHART OF BUDGET PREPARATION

START ISSUE THE BUDGET CALL

JUNE 5, LCE

CONDUCT BUDGET FORUM

JULY 15, DEPT HEADS

PREPARE AND SUBMIT BUDGET

PROPOSALSJULY 5, LCE/LFC/

DEPT HEADS

REVIEW & CONSOLIDATE

BUDGET PROPOSALS

LOCAL BUDGET OFFICER

CONDUCT BUDGET HEARING

SEPT 30, LCE/LFC

PREPARE THE LOCAL EXECUTIVE PROGRAM (LEP)

AUG. 15, LCE/LFC

PREPARE BUDGET MESSAGE & BESF

SUBMIT EXECUTIVE BUDGET TO SB

OCT 10, LCE/LFC

OCT 16, LCE

END

BUDGET PROCESS

BUDGET REVIEW

BUDGET AUTHORIZATION

LEGAL BASIS: ON OR BEFORE THE END OF THE CURRENT FISCAL YEAR, THE SANGGUNIAN CONCERNED SHALL ENACT, THROUGH AN ORDINANCE, THE ANNUAL BUDGET OF THE LOCAL GOVERNMENT UNIT FOR THE ENSUING FISCAL YEAR ON THE BASIS OF THE ESTIMATES OF INCOME AND EXPENDITURES SUBMITTED BY THE LCE (SEC 319, RA 7160)

KEYPLAYERS: LCE, SB, SB COM ON APPROPRIATIONS/FINANCE, SB SEC, LFC, HEADS OF DEPT

ENACT APPROPRIATION ORDINANCE, a. EVALUATE THE BUDGET b. DELIBERATE ON THE BUDGETc. AUTHORIZE THE ANNUAL BUDGET

APPROVE THE APPROPRIATION ORDINANCESUBMIT THE APPROPRIATION ORDINANCE FOR REVIEW TO THE SP

BUDGET EXECUTION

BUDGET PROCESSLEGAL BASIS:THE FINANCIAL AFFAIRS, TRANSACTIONS AND OPERATIONS OF THE LGU SHALL BE GOVERNED BY THE FF. FUNDAMENTAL PRINCIPLES:

• NO MONEY SHALL BE PAID OUT OF THE LCOAL TREASURY EXCEPT IN PURSUANCE OF AN APPROPRIATION ORDINANCE OR LAW;

• LOCAL GOVERNMENT FUNDS OR MONIES SHALL BE SPENT SOLELY FOR PUBLIC PURPOSES;

• LOCAL REVENUE IS GENERATED ONLY FROM SOURCES EXPRESSLY AUTHORIZED BY LAW OR ORDINANCE AND COLLECTION THEREOF SHALL AT ALL TIMES BE ACKNOWLEDGED PROPERLY;

• ALL MONIES OFFICIALLY RECEIVED BY A LOCAL GOVERNMENT OFFICER IN ANY CAPACITY OR ON ANY OCCASIION SHALL BE ACCOUNTED FOR AS LOCAL FUNDS, UNLESS OTHERWISE PROVIDED BY LAW;

• TRUST FUND IN THE LOCAL TREASURY SHALL NOT BE PAID OUT EXCEPT IN FULFILLMENT OF THE PRUPOSE FOR WHICH THE TRUST WAS CREATED OR THE FUNDS RECEIVED;

• EVERY OFFICER OF THE LOCAL GOVERNMENT UNIT WHOSE DUTIES PERMIT OR REQUIRED THE POSSESSION OR CUSTODY OF LOCAL FUNDS SHALL BE PROPERLY BONDED AND SUCH OFFICER SHALL BE ACCOUNTABLE AND RESPONSIBLE FOR SAID FUNDS AND FOR THE SAFEKEEPING THEREOF IN CONFORMITY WITH THE PROVISIONS OF LAW;

• LOCAL GOVERNMENTS SHALL FORMULATE SOUND FINANCIAL PLANS AND THE LOCAL BUDGETS SHALL BE BASED ON FUNCTIONS, ACTIVITIES,A ND PROJECTS IN TERMS OF EXPECTED RESULTS 9SEC. 305, RA 7160)

• THE ORDINANCE ENACTING THE ANNUAL BUDGET SHALL TAKE EFFECT AT THE BEGINNING OF THE ENSUING CALENDAR YEAR. AN ORDINANCE ENACTING A SUPPLEMENTAL BUDGET, HOWEVER, SHALL TAKE EFFECT UPON ITS APPROVAL OR ON THE DATE FIXED THEREIN. THE RESPONSIBILITY FOR THE EXECUTION OF THE ANNUAL AND SUPPLEMENTAL BUDGET SHALL BE VESTED PRIMARILY IN THE LOCAL CHIEF EXECUTIVE (SEC. 320, RA 7160)

KEYPLAYERS: LCE, VICE-GOVERNOR/MAYOR, LBO, LT, LA, LPDO, DEPT HEAD

LEGAL BASIS: PERSONS ACOUNTABLE FOR LOCAL GOVERNMENT FUNDS. ANY OFFICER OF THE LOCAL GOVERNMENT UNIT WHOSE DUTY PERMITS OR REQUIRES THE POSSESSION OR CUSTODY OF LOCAL GOVERNMENT FUNDS SHALL BE ACCOUNTABLE AND RESPONSIBLE FOR THE SAFEKEEPING THEREOF IN CONFORMITY WITH THE PROVISIONS OF THIS TITLE. OTHER LOCAL OFFICERS, WHO, THOUGH NOT ACCOUNTABLE BY THE NATURE OF THEIR DUTIES, MAY LIKEWISE BE HELD ACCOUNTABLE AND RESPONSIBLE FOR THE LOCAL GOVERNMENT FUNDS THROUGH THEIR PARTICIPATION IN THE USE OF APPLICATION THEREOF (SEC 340, RA 7160)

FISCAL RESPONSIBILITY SHALL BE SHARED BY ALL THOSE EXERCISING AUTHORITY OVER THE FINANCIAL AFFAIRS, TRANSACTIONS, AND OPERATIONS OF THE LGU.


BUDGET PROCESS

BUDGET ACCOUNTABILITYLOCAL CHIEF EXECUTIVE: THE LCE SHALL BE PRIMARILY RESPONSIBLE FOR THE EXECUTION OF THE ANNUAL AND SUPPLEMENTAL BUDGETS AND THE ACCOUNTABILITY THEREOF


BUDGET PROCESS

BUDGET ACCOUNTABILITY•LOCAL CHIEF EXECUTIVE: THE LCE SHALL BE PRIMARILY RESPONSIBLE FOR THE EXECUTION OF THE ANNUAL AND SUPPLEMENTAL BUDGETS AND THE ACCOUNTABILITY THEREFOR (SEC 320, RA 7160)

SPECIFICALLY , THE LCE SHALL:- ENSURE THAT ALL TAXES AND OTHER REVENUES OF THE LGU ARE COLLECTED, AND THAT LOCAL GOVERNMENT FUNDS ARE APPLIED TO THE PAYMENT OF EXPENSES AND SETTLEMENT OF OBLIGATIONS, IN ACCORDANCE WITH THE LAW OR ORDINANCE (SEC 444, 455,465, RA 7160)

-CAUSE THE PERIODIC EXAMINATION OF BOOKS, RECORDS AND OTHER DOCUMENTS MAINTAINED BY ACCOUNTABLE OFFICIALS, AGENTS, OR EMPLOYEES OF THE LGU TO ENSURE THAT INCOME COLELCTION AND DISBURSEMENTS ARE PROPERLY RECORDED (SEC 444, 455,465, RA 7160)- ENSURE THAT ALL EXECUTIVE OFFICIALS AND EMPLOYEES OF THE MUNICIPALITY FAITHFULLY DISCHARGE THEIR DUTIES AND FUNCTIONS AS PROVIDED BY LAW AND THIS CODE, AND CAUSE TO BE INSTITUTED ADMINISTRATIVE OR JUDICIAL PROCEEDINGS AGAINST ANY OFFICIAL OR EMPLOYEE OF THE MUNICIPALITY WHO MAY HAVE COMMITTED AS OFFENSE IN THE PERFORMANCE OF HIS OFFICIAL DUTIES;

BUDGET PROCESS

THE TREASURER : 1. COLLECT TAXES FEES, AND CHARGES SEC 170, RA 7160)2. ADVISE THE GOVERNOR OR MAYOR, AS THE CASE MAY BE, THE SANGGUNIAN, AND OTHER LOCAL GOVERNMENT AND NATIONAL OFFICIALS CONCERNED REGARDING DISPOSITION OF LOCAL GOVERNMENT FUNDS, AND ON SUCH OTHER MATTERS RELATIVE TO PUBLIC FINANCE;

(3) TAKE CUSTODY OF AND EXERCISE PROPER MANAGEMENT OF THE FUNDS OF THE LOCAL GOVERNMENT UNIT CONCERNED;

(4) TAKE CHARGE OF THE DISBURSEMENT OF ALL LOCAL GOVERNMENT FUNDS AND SUCH OTHER FUNDS THE CUSTODY OF WHICH MAY BE ENTRUSTED TO HIM BY LAW OR OTHER COMPETENT AUTHORITY;

(5) INSPECT PRIVATE COMMERCIAL AND INDUSTRIAL ESTABLISHMENTS WITHIN THE JURISDICTION OF THE LOCAL GOVERNMENT UNIT CONCERNED IN RELATION TO THE IMPLEMENTATION OF TAX ORDINANCES, PURSUANT TO THE PROVISIONS UNDER BOOK II OF THIS CODE;

(6) MAINTAIN AND UPDATE THE TAX INFORMATION SYSTEM OF THE LOCAL GOVERNMENT UNIT;

(7) IN THE CASE OF THE PROVINCIAL TREASURER, EXERCISE TECHNICAL SUPERVISION OVER ALL TREASURY OFFICES OF COMPONENT CITIES AND MUNICIPALITIES; AND

(8) EXERCISE SUCH OTHER POWERS AND PERFORM SUCH OTHER DUTIES AND FUNCTIONS AS MAY BE PRESCRIBED BY LAW OR ORDINANCE.

BUDGET PROCESS

THE ACCOUNTANT:(1) Install and maintain an internal audit system in the local government unit concerned; (2) Prepare and submit financial statements to the governor or mayor, as the case may be, and to the sanggunian concerned; (3) Appraise the sanggunian and other local government officials on the financial condition and operations of the local government unit concerned; (4) Certify to the availability of budgetary allotment to which expenditures and obligations may be properly charged;(5) Review supporting documents before preparation of vouchers to determine completeness of requirements; (6) Prepare statements of cash advances, liquidation, salaries, allowances, reimbursements and remittances pertaining to the local government unit; (7) Prepare statements of journal vouchers and liquidation of the same and other adjustments related thereto; (8) Post individual disbursements to the subsidiary ledger and index cards; (9) Maintain individual ledgers for officials and employees of the local government unit pertaining to payrolls and deductions; (10) Record and post in index cards details of purchased furniture, fixtures, and equipment, including disposal thereof, if any; (11) Account for all issued requests for obligations and maintain and keep all records and reports related thereto; (12) Prepare journals and the analysis of obligations and maintain and keep all records and reports related thereto; and (13) Exercise such other powers and perform such other duties and functions as may be provided by law or ordinance.

BUDGET PROCESS

THE BUDGET OFFICER

(1) Prepare forms, orders, and circulars embodying instructions on budgetary and appropriation matters for the signature of the governor or mayor, as the case may be; (2) Review and consolidate the budget proposals of different departments and offices of the local government unit; (3) Assist the governor or mayor, as the case may be, in the preparation of the budget and during budget hearings; (4) Study and evaluate budgetary implications of proposed legislation and submit comments and recommendations thereon;(5) Submit periodic budgetary reports to the Department of Budget and Management; (6) Coordinate with the treasurer, accountant, and the planning and development coordinator for the purpose of budgeting; (7) Assist the sanggunian concerned in reviewing the approved budgets of component local government units; (8) Coordinate with the planning and development coordinator in the formulation of the local government unit development plan; and

AUDITING CONCEPT

• Section 2. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post- audit basis:– (a) constitutional bodies, commissions and offices that have been granted fiscal

autonomy under this Constitution; – (b) autonomous state colleges and universities; – (c) other government-owned or controlled corporations and their subsidiaries; and – (d) such non-governmental entities receiving subsidy or equity, directly or

indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.

(2) The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties.

Section 3. No law shall be passed exempting any entity of the Government or its subsidiaries in any guise whatever, or any investment of public funds, from the jurisdiction of the Commission on Audit.

Section 4. The Commission shall submit to the President and the Congress, within the time fixed by law, an annual report covering the financial condition and operation of the Government, its subdivisions, agencies, and instrumentalities, including government-owned or controlled corporations, and non-governmental entities subject to its audit, and recommend measures necessary to improve their effectiveness and efficiency. It shall submit such other reports as may be required by law. (1987 Constitution)

AUDITING CONCEPT

BABAY!!!

Fiscal control mechanisms-mfdeRamos

Business

fiscal activity

fiscal functions

fiscal plans

fiscal measures o policy

fiscal policy studies

structure o revenue

lgus units o policy

expenditure control