Can COA audit private entities?

The exclusive power of the Commission on Audit (COA) to audit government agencies is granted by the Philippine Constitution.

But, have you ever thought if COA has the same authority to audit private institutions? If it has, on what extent?

The Power of the COA

The exclusive power of COA to audit is stated in Section 2, Article IX-D of the 1987 Philippine Constitution which states that:

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.

In the above provision of the Constitution, the COA has audit jurisdiction over the following entities:

a. Constitutional bodies, commissions and offices that have been granted fiscal autonomy under the 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.

It is expressed in the Constitution that COA has audit jurisdiction over non-government entities receiving subsidy or equity so long as it is required either by law or the institution granting the subsidy or equity.

This authority of COA is also consistent with Section 29(1) of Presidential Decree (P.D.) No. 1445 otherwise known as the Auditing Code of the Philippines which grants COA visitorial authority over the following non-governmental entities:

1. Non-governmental entities “subsidized by the government”;

2. Non-governmental entities “required to pay levy or government share”;

3. Non-governmental entities that have “received counterpart funds from the government”; and

4. Non-governmental entities “partly funded by donations through the Government”.

The same authority to audit non-governmental entities is also stated in Section 11, Chapter 4, Subtitle B, Title I, Book V of the Administrative Code of 1987.

Thus, generally, COA’s audit power covers the Philippine government (public entities) but it also extends to non-governmental entities so long as said entities received financial assistance or aid from the Philippine government.

References:

Funa v. Manila Economic and Cultural Office, et al.

Bayani F. Fernando, Petitioner, v. The Commission on Audit

State Auditing Code of the Philippines (PD 1445)