Who audits the Commission on Audit (COA)?

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Many people know that the Commission on Audit (COA) has the supreme authority under the Constitution to audit (or look into how public funds were spent by) the Philippine government which in essence makes it a “watchdog” of the government.

What is a watchdog?

A watchdog is an individual or group that monitors the activities of another entity (such as an individual, corporation, non-profit group, or governmental organization) on behalf of the public to ensure that entity does not behave illegally or unethically. [Wikipedia]

The term watchdog does not come to some people positively but the term as used in this article means “defender of public funds” and/or “enabler of good governance and a champion of just and prudent use of public funds”.

During the time of former COA Chairperson Maria Gracia M. Pulido Tan, COA used the term “watchdog” in the biography of Chairperson Tan to the United Nation Board of Auditors. It said:

Chair Tan’s main agenda is to establish COA as a truly effective, efficient and resolute “watchdog” of public funds and property (xxx) [Ref]

The Commission on Audit has always been in the spotlight of the press when it comes to informing the public of how government agencies spent their respective agency funds as a result of COA’s post-audit functions.

In fact, we oftentimes see in the news erring government offices and officials pointing COA’s regular and special Audit Reports as basis.

Investigations upon investigations have been conducted against abusive government officials and the COA has always been at the forefront of these investigations.

Through the years, COA has been regarded by the general public and the government as effective in exposing anomalies in the use of government funds and properties.

But…

Have you ever thought, who watches the watchdog? Who looks into how COA uses it’s own government funds? In fact, COA belongs to the fiscal autonomy group which means it has freedom from outside control especially as far as its own funds are concerned. Does this mean COA is exempted from audit?

Perhaps, just like many people, you also ask this question: WHO AUDITS COA?

To answer this question we searched for indicators. We looked into the website of the Commission (being the most readily available source) of any signs that a “watchdog” is watching the “watchdog”.

Indicator 1: COA Organizational Chart

First, we looked into the Organizational Chart of the Commission, as shown below. If the photo is not clear on your end, just zoom out the photo or just click it to go to the original source.

As shown in the organizational chart, the mandate of the Commission to audit government offices is managed through its different offices which are grouped into different and distinct sectors. These sectors are further divided into different clusters.

The answer to our question of who audits COA may be found under the National Government Audit Sector (NGAS). The NGAS is divided into eight (8) different clusters, as enumerated below. These clusters are composed of various Audit Teams which is composed usually of a Team Leader and team members.

• Cluster 1 – Executive Offices

• Cluster 2 – Oversight and Public Debt Management Agencies

• Cluster 3 – Legislative, Judiciary and Constitutional Offices

• Cluster 4 – Defense and Security

• Cluster 5 – Education and Employment

• Cluster 6 – Health and Science

• Cluster 7 – Public Works, Transport, and Energy

• Cluster 8 – Agriculture and Environment

The NGAS is divided into eight (8) different clusters one of which is Cluster 3 which audits, among others, the Constitutional Offices to which COA belongs.

Under the Philippine Constitution, particularly Article 9, the following are identified as Constitutional Commissions:

• Civil Service Commission (CSC);

• Commission on Election (COMELEC); and

• Commission on Audit (COA).

Based on the COA’s organizational chart alone, we may already conclude that the Commission on Audit, particularly Cluster 3 of COA’s National Government Audit Sector, audits the Commission on Audit.

But, as this indicator may not be conclusive, as the Constitutional Offices under NGAS-Cluster 3 may only pertain to CSC, COMELEC, and other constitutional offices, we looked further into other available sources that indicate a “watchdog” is watching the “watchdog” or an office is auditing COA.

Indicator 2: COA Annual Audit Report

The COA Annual Audit Report is perhaps a more reliable basis that indicates that COA is not exempted from being audited; that COA is also audited by an office.

In its official website, under Annual Audit Reports (AARs), COA provides the results of the audit it conducted on the accounts of government agencies concerned.

Said AARs are classified into: 1) National Government Agencies (NGAs); 2) Local Government Units (LGUs); 3) Government-Owned and/or Controlled Corporations (GOCCs); 4) Public Debt Reporting; and 5) Judiciary Development Fund.

In these AARs, particularly under the National Government Agencies, we can find the Annual Audit Reports for the Commission on Audit. Here we can find the answer to our question of who audits COA?

COA audits COA.
That’s the answer to our question.

In fact, in 2021 COA received an unqualified opinion from the Audit Team (who are also from COA) who audited COA’s financial transactions, reports and statements.

The said audit conducted covered the following:

• verify the level of assurance that may be placed on COA Management’s assertions on its financial statements;

• recommend agency’s improvement opportunities;

• determine the propriety of transactions as well as the extent of compliance with pertinent laws, rules and regulations; and

• determine the extent of implementation of prior year’s audit recommendations.

Summary of Significant Observations on the Financial Transactions of COA for CY 2021

Below are some of the audit observations raised by the Audit Team concerned on the financial statements of COA for CY 2021:

• Receivables representing the cost of audit services of undetermined amount were not accrued and recorded;

• Non-provision of impairment loss for unserviceable items and non-adjustment of missing properties;

• Not capitalizing capital expenditures on repairs and maintenance;

When to Capitalize Repairs and Maintenance according to COA?

• Unreconciled general and subsidiary ledger for Cash in Bank account; and

• The balances of property, plant and equipment accounts cannot be ascertained due to unreconciled property and accounting records.

Please note that the above findings involve the different offices of COA. Please read the whole Annual Audit Report here for the details.

On the other hand, COA has no audit charges in CY 2021; but it has audit disallowance amounting to P1.272 million and an audit suspension of P92,970.00.

With this indicator, we may conclude that an office, which is COA itself, is auditing COA.

There are other indicators…

But this time, it is not the COA as an office but its auditors.

Indicator 3: Other Indicators (the other “watchdogs”)

The Commission, just like other government agencies, particularly its people — the state auditors, are not excused from being charged with administrative and criminal charges. In other words, there are other watchdogs that watch the watchdogs.

For instance, in 2013, a COA auditor was sued before the Office of the Ombusdman for malversation. Graft investigator Soller-Relin elevated the case before the Ombudsman after she found sufficient evidence against the auditor concerned. The said auditor allegedly falsified documents for her undue advantage.

What is Technical Malversation?

Further…

In 2015, twelve (12) COA auditors were sued criminal charges by the National Bureau of Investigation (NBI) due to their alleged involvement in the release of the infamous Priority Development Assistance Fund (PDAF). This case was however junked by the Ombudsman due to lack of evidence.

In 2017, a COA auditor was sued before the Ombudsman for an P8 million medicine scam. The Ombudsman said in its press release for the said case:

As to COA Auditor Balila, “all throughout the procurement process, [his] hand as the Auditor could be seen, as majority of the documents pertaining to the subject procurement had been marked pre-audited by him on 22 June 2010. He stands charged for not having noticed or minded at all, the numerous discrepancies and irregularities attending the subject procurement despite having pre-audited the documents, and allowing the payment to be disbursed.”
Office of the Ombudsman

True to its mandate…

True to its mandate, COA maintains the highest level of integrity for subjecting itself to scrutiny whether to its own office, funds, or its auditors.

While it is granted fiscal autonomy under the Constitution, which means it has undeniably more control over how it uses its funds as compared to the executive offices under the President, the Commission maintains prudence and strict compliance with the accounting and auditing rules and regulations it issued.

When it comes to transparency, the Commission does not hide from the public what is going on its own financial backyard as evidenced by the Annual Audit Report it issued pertaining to the Commission itself.

Now, with all the indicators presented in this article, we settle once and for all this very simple question of who audits COA.