SC upholds COA circular lifting pre-audit of gov't transactions

The Supreme Court has upheld a Commission on Audit circular doing away with a pre-audit of transactions by the national government and government-owned and controlled corporations (GOCC). In an 11-page decision penned by Justice Ma. Lourdes Sereno, the high court en banc unanimously dismissed a petition by taxpayer Gualberto Dela Llana to set aside COA Circular No. 89-299. De Llana insisted that the COA's duty to conduct a pre-audit could not be lifted by a mere circular since such a pre-audit is mandated under Section 2, Article IX-D of the 1987 Constitution. The high court however did not agree with the petitioner. "There is nothing in the said provision that requires the COA to conduct a pre-audit of all government transactions and for all government agencies," read the decision. "The only clear reference to a pre-audit requirement is found in Section 2, paragraph 1, which provides that a post-audit is mandated for certain government or private entities with state subsidy or equity and only when the internal control system of an audited entity is inadequate. In such a situation, the COA may adopt measures, including a temporary or special pre-audit, to correct the deficiencies,” the high court added. The court ruled that the pre-audit of government and GOCC transactions is not a "mandatory duty" of the COA, which it said has "exclusive authority to define the scope of its audit and examination." The court noted that Llana's petition lacked a statement of material dates and that he failed to attach a certified true copy of the assailed COA circular. "[However] the court still tackled the merits of the case in view of the serious matter involved," the court said. The COA issued Circular No. 82-195 on October 26, 1982 lifting the system of pre-audit of government financial transactions. The circular emphasized the state policy to use government resources in accordance with law and regulation. The circular said the responsibility to ensure faithful adherence to the state policy rested directly with the chief or head of the government agency concerned. Four years later, in 1986, the COA through Circular No. 86-257 reinstated the pre-audit of selected government transactions. In 1989, the COA once more lifted the pre-audit system through Circular No. 89-299, which is the circular that Llana assailed in his petition with the Supreme Court. The COA insisted that Circular 89-299 would "reaffirm the concept that fiscal responsibility resides in management as embodied in the Government Auditing Code of the Philippines and contribute to accelerating the delivery of public services and improving government operations by curbing undue bureaucratic red tape and ensuring facilitation of government transactions, while continuing to preserve and protect the integrity of these transactions." The COA would later issue Circulars 94-006 that clarified the total lifting of pre-audit activities on all financial transactions of the national government and GOCCs. In 1995, Circular 95-006 expanded the coverage of the lifting of pre-audit procedures to include local government units. — LBG, GMA News