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GAFAP Manual PDF
GAFAP Manual PDF
Table of Contents 1
Foreword 2
I. Acronym 8
II. Introduction
A. Rationale 8
B. Target Users 8
C. Structure of the Manual 8
VI. Annexes 58
These Guidelines for the Audit of Foreign-Assisted Projects (GAFAP) attempt to put
together all existing pertinent guidelines of the Commission on Audit (COA) into a single
user manual to equip COA auditors with an easy reference in the performance of the
audit of foreign-assisted projects (FAPs). Recently, there have been changes in COA
operations, and in the country’s initiatives to improve and maximize benefits from aid
effectiveness, that have significant implications for the audit of FAPs and have also
necessitated revision or updating of the existing guidelines. The changes include the
following:
For this purpose, a Sub-Technical Working Group (STWG) was reconstituted pursuant to
COA Office Order No. 2010-145 dated March 1, 2010 to finalize the GAFAP. The STWG
was composed of Supervising Auditor Fatima A. Rafer, as leader; and Supervising Auditor
Carmelita O. Antasuda, Auditors Ellen T. Sison, Ma. Theresa B. Ferreros and Anniely P.
Ibanez, as members, and Auditor Rhea D. Piano, as secretariat.
The STWG was under the Technical Working Group (TWG) as reconstituted pursuant to
COA Office Order No. 2010-088 dated February 4, 2010 composed of Director Bato S. Ali,
Jr, as chair, and Directors Luz L. Tolentino, Marietta M. Lorenzo and Roland A. Rey, as
members. The TWG enlisted the support of Director Melanie R. Anonuevo and
Supervising Auditors Villa DJ. Bernaldo and Myrna K. Sebial as Resource Persons to assist
both the STWG and the TWG. Technical assistance was also provided by Director Adelina
Concepcion L. Ancajas, Cluster 2-National Government Sector, who has audit jurisdiction
over Department of Finance (DOF), Bureau of the Treasury (BTr), Department of Budget
and Management (DBM) and National Economic and Development Authority (NEDA).
The project output was subject to the review and recommendation of the Steering
Committee composed of then Commissioner Juanito G. Espino, Jr., as chair, and
Assistant Commissioners Emma M. Espina, Carmela S. Perez and Isabel D. Agito, as
members, pursuant to COA Office Order No. 2010-088.
The preparation of these GAFAP benefited from the technical and financial support
provided by the Kreditanstalt fur Wiederaufbau (KfW), German bank, under the
A. Rationale
This Manual will serve as guide for the auditors to be able to address the
requirements of audit of FAPs, including those of the development partners (DPs).
It is applicable to the audit of projects funded by foreign loans and foreign loans
with grant released thru BTr.
B. Target Users
This Manual is primarily for the use of COA auditors assigned to audit FAPs.
IV Understanding FAPs defines FAPs and describes the types, sources and
terms of financing FAPs in the Philippines, as well
as the various modes of availment/disbursement.
It also describes the typical project cycle of FAPs
within which the audit function takes place,
particularly during the implementation phase and
after completion of FAPs
The mandate of COA is defined in Article IX-D of the 1987 Philippine Constitution,
particularly in the following sections:
The COA carried out its constitutional mandate through an organizational structure
that is headed by a Chairman and two Commissioners, all of whom are appointed
by the President, and supported by a group of Assistant Commissioners, a Public
Sector Accounting Standards Board, a Public Sector Auditing Standards Board, a
Commission Secretariat, and nine sectors, as shown in Figure 1.
In addition to its Constitutional duties, Section 8 of Republic Act (RA) No. 8182, also
known as the Official Development Act (ODA) of 1996, further reinforces the
mandate of COA to discharge oversight functions on ODA-funded projects, as
follows:
COA’s audit of FAPs is also guided by financial covenants of loan and grant
agreements (LAs/GAs) governing the implementation of specific FAPs. These
financial covenants indicate the types of audit required for each FAP.
A. Purpose
The purpose of this chapter is to give a brief description of FAPs to assist the
auditors in their understanding of its operation - knowledge of which is not only
necessary in planning the audit but in the entire audit exercise itself.
B. Overview
This chapter explains that, once agreements are entered into with DPs, the entire
funding requirements may consist of loan proceeds, GOP counterpart or equity,
and/or grant proceeds. The funds are sourced from different types of
creditors/donors who have their own peculiar rules and regulations.
This chapter also discusses the different modes of availment through which the
loan proceeds can be withdrawn. A short explanation is also given regarding the
financial cost which the GOP, GFIs, GOCCs or local government units (LGUs) bear as
a result of their loans. This cost includes interests, commitment charges, and
front-end fees, among others.
C. Types of Financing
(i) Foreign Loans – external indebtedness covered by LAs entered into by the
GOP, GFIs and GOCCs with DPs to finance specific programs and projects. The
GOP may avail of these loans for budgetary support, development projects of
national government agencies (NGAs), or for re-lending to GFIs/GOCCs/LGUs.
Foreign loans directly entered into by GFIs/GOCCs may or may not be
c. Commodity loans are provided by DPs in the form of goods for the direct
use of the project or to be subsequently monetized to finance such
project of the EA/IA.
d. Mixed Credit composed of one or more loans and one or more grants,
usually from bilateral and commercial DPs.
D. Funding Requirements
• Loan proceeds are funds coming from DPs which should be used exclusively for
purposes specified in the LA.
• Grants are assistance received either in cash or in-kind, which may be in the
form of goods and/or services for project development and implementation.
E. Sources of Financing
Funds for FAPs could be sourced from multilateral, bilateral and/or commercial
DPs. The distinct features of these DPs are described below:
F. Modes of Availment
The loan becomes effective when all requisite conditions or the period/date for
loan effectivity as stipulated in the LA have been fulfilled by a borrower. Common
conditions for loan effectivity are the establishment of Project Steering Committee
(PSC), Project Management Office (PMO), adoption of the Project Implementation
The modes of availment, whether cash or non-cash, through which the loan
proceeds can be withdrawn as stated in the LA are discussed below:
• Imprest Fund (for ADB)/Special Account Procedure (for IBRD, JICA) is when
the DP makes an advance disbursement from the loan account for deposit to a
designated bank account of the project to be used exclusively for DP’s share of
eligible expenditures; and/or
• Reimbursement Procedure (ADB, IBRD, JICA) is when the DP pays from the
loan proceeds to the borrower’s account for expenditures for goods and
services that have already been incurred and paid by the borrower from its
own resources.
• Direct Payment Procedure (ADB, IBRD, JICA) is when the borrower requests
the DP to pay from loan funds the amount due directly to the designated
beneficiary (consultant/supplier); and/or
• Commitment Procedure (ADB, IBRD, JICA) is when the DP, at the request of
the borrower, provides an assurance in the form of a commitment letter from
the Bank to a commercial bank/third party for payment made or to be made to
a supplier in accordance with the terms and conditions specified in the letter of
credit (LC)/agreement between the DP and the borrower.
Grants that pass through BTr are deposited to the designated account of the
Treasurer of the Philippines, and eventually transferred to an Imprest or Special
account specifically opened by the EA/IA for the purpose. Other grants that do not
pass through BTr are directly deposited to the designated account of the EA/IA or
administered by a Fund Manager as designated by the donor.
G. Funds Flow
The funds flow for the receipt of loan proceeds varies depending on the mode of
availment and on whether the EA/IA is an NGA, a GFI/GOCC or an LGU. For LGUs,
loans are availed through relending from the Municipal Development Fund Office
(MDFO) or a GFI. Initially, the loan proceeds are availed of by the MDFO or GFI, as
the EA, following the procedures diagrammed in A.1 and A.2, respectively. The
MDFO or a GFI relends the funds received to the LGU.
A. Cash Availment
EA/IA DP
Receives loan
proceeds and records
receipt
LGU MDFO/GFIs
Receives loan
proceeds and
records receipt
Note: If through MDFO, MDFO instructs AGDB to credit LGUs’ Project Account
B. Non-Cash Availment
Receives Notice of
Notifies GOCCs
Disbursements/ WA/ of disbursement
Payment Advice and
made
records availment
Loan Cancellation
While the loan is still effective, any unwithdrawn amount of the loan may be
cancelled by the DPs, upon notice to the borrower and the guarantor under
any of the following conditions:
• The borrower’s right to make withdrawals from the loan account has
been suspended or the reasons for suspension have remained
unremedied;
• DP determines, at any time and after consultation with the borrower,
that the loan is no longer required for purposes of the project;
• DP determines, with respect to any contract to be financed out of the
proceeds of the loan, that corrupt or fraudulent practices were engaged
in by representatives of the borrower, the guarantor, or any beneficiary
of the loan during the procurement of goods or services, consultants’
selection or the execution of the contract, without the borrower or
guarantor having taken appropriate action to remedy the situation;
• DP determines that the procurement of any goods and services to be
financed out of the proceeds of the loan is inconsistent with the
procedure set out in the LA; or
• An amount of the loan remains unwithdrawn from the loan account at
loan closing date.
After the loan closing date specified in the LA, the borrower’s right to make
withdrawals from the loan ceases unless there is an extension approved by
the DPs. The loan closing date may be extended upon request by the EA/IA
through the ICC for approval, and the DOF for negotiation with the DPs.
Expenditures incurred after the loan closing date will not be financed under
the loan. The DPs, however, usually allow several months after the loan
closing date for the borrower’s withdrawal applications to reach them to fully
liquidate expenditures prior to loan closing date and to refund any IMA/SA
balances.
H. Debt Service
Debt service refers to the repayment of the principal, payments of interest, fees
and charges such as front-end fee, commitment fee, and service charges, other
fees/charges as well as penalties on a loan. It is usually a scheduled payment
made semi-annually based on an amortization schedule as agreed between the
DPs and borrower country or agency. Under some loan agreements, interests,
commitment fees, services charges, and other fees/charges are no longer paid by
the borrower to the DPs but by the DP to itself, thus, are capitalized expenses
which form part of the availments/drawdowns from the loan.
Loans of the NG
In the NG, the BTr effects debt servicing through the BSP and it involves the
following procedures:
Loans of GOCCs/GFIs
The GOCCs/GFIs may obtain loans through the NG or directly from the DPs. The
loan repayment involves the following processes:
Loans of LGUs
Foreign funding availed by LGUs through the NG or conduit GFIs are called relent
loans. The MDFO manages relent loans from NG while the Land Bank of the
Philippines (LBP) and the Development Bank of the Philippines (DBP) manage other
relent loans to the LGUs.
In the grant of loans, MDFO requires LGUs to execute the Sub-Project Loan
Agreement (SPLA) which defines the terms, conditions and requirements for
the loan, the repayment mode and schedule of amortization.
The repayment of GFI-managed relent loans is made directly to the specific GFI
through a designated bank account in accordance with the amortization schedule
specified in the LA, and the statement of account or bill is sent to the LGUs
concerned.
I. Terms of Financing
When the NG, GFIs and GOCCs borrow from DPs for their development projects,
such borrowed funds are coupled with financing costs such as interests,
commitment charges and front-end fees, among others. A sample comparative
table of the loan charges, repayment and grace period for ADB, IBRD JICA and KfW
is shown in Annex A.
The PDC refers to the stages/phases in the life of the project. Documents
produced for each phase can be valuable sources of information in the audit of
FAPs. Generally, each project undergoes a cycle consisting of seven phases. This
section will discuss the phases as drawn from the NEDA Reference Manual on
Project Development Evaluation (2005).
Project Cycle
This phase is about the conceptualization and identification of projects that are
supportive of the national development goals and objectives specified in the
Phase 3: Feasibility
The project’s overall potential or viability is examined using data and information
gathered at the preparation stage. The feasibility stage is critical as it is the
culmination of all preparatory work and provides a comprehensive review of all
aspects of the project before a final decision about its viability is taken.
The project must be examined to see if it can meet the financial, economic and
social criteria set by the government [e.g., the Investment Coordination Committee
(ICC)] for investment expenditures. This is the final part of project appraisal and is
meant to improve the accuracy of the measures of key variables if the project
shows a potential for success. At the end of this stage, the most important decision
to approve or disapprove a project has to be made.
7 NEDA Board Confirms the ICC –CC approval NEDA Board Resolution
8 DOF Determines financial term of the proposed Request for Monetary
loan and compliance with foreign borrowings Board (MB) approval in
law (RA 4860 Foreign Borrowing Act as principle
amended or RA 8182, ODA Act, as amended)
9 DBM Evaluates and verifies availability of resources Forward Obligational
for the GOP counterpart requirement/s, if Authority (FOA)
needed
10 Bangko Sentral Facilitates MB approval-in-principle MB approval –in
ng Pilipinas principle
(BSP) –
International
Department (ID)
11 Office of the Issues Presidential Special Authority Special authority to
President (OP) negotiate and sign in
behalf of the President
12 DOF Prepares formal request for financial Request for FA
assistance (FA) and submits to DPs
13 DP Evaluates request for FA and notifies DOF of Draft LA and Invitation
their willingness to assist. to negotiate
Preliminary design criteria must be established when the project is identified and
appraised, but expenditures on detailed technical specifications are usually not
warranted at that time. Once the project has been approved for implementation,
the design task should be completed in more detail. Details of the basic programs
should be provided, tasks allocated, resources determined, and functions to be
carried out along with their priorities set down in operational form. Technical
requirements such as manpower needs by skill class should also be completed at
this stage. After the blueprints and specifications for construction of facilities and
equipment are completed, operating plans and schedules along with contingency
plans must be prepared and consolidated.
In summary, the detailed design phase in project appraisal is that stage when the
accuracy of the data from all previous modules is ascertained so that an
operational plan of action can be developed. Not only is the project’s physical
design complete at this stage but even the programs for administration, operations
and marketing are now final.
More extensive than the audit is the ex-post evaluation, where the project’s
performance is assessed and given a verdict on its overall contribution to the
country’s development. Such an evaluation also identifies the critical variables in
the project design and implementation that may have determined its success and
failure. From such an evaluation should emerge well-considered
recommendations about improving each aspect of the project design and actual
implementation. Based on this evaluation, ongoing projects may be modified and
subsequent projects in the sector can be improved. New policies, better
management practices and improved procedures can also be adopted to improve
future project performance.
Aside from the approved feasibility studies, Project Appraisal Document (PAD) for
IBRD projects, Reports and Recommendation of the President (RRP) or the Staff
DPs Guidelines/Manuals/Handbooks
1. ADB Loan Disbursement Handbook, January 2007
ADB’s Guidelines on the Use of Consultants by Asian Development Bank and
its Borrowers, April 2010
ADB’s Procurement Guidelines, April 2010
Handbook on Policies, Practices, and Procedures Relating to Procurement
under Asian Development Bank Loans
3. JICA Guidelines for Procurement under Japanese ODA Loans dated March 2009
Reimbursement Procedure for Japanese ODA Loans dated October 2008
Commitment Procedure, October 2008
Special Account Procedure, October 2008
Reimbursement Procedure, October 2008
The auditors should also consider the relevant amendments to the above DPs rules
and regulations as applicable to the grant or loan agreement.
A. Purpose
B. Overview
This chapter provides the framework in conducting FCA and PA of FAPs. The
objective of FCA is to express an opinion on the fairness of presentation of the
general purpose financial statements (GPFS) or special purpose financial
statements (SPFS) generated by the EA/IA for its FAPs, and on the EA’s/IA’s
compliance with laws, rules and regulations with regard to FAPs. The objective of
PA is to evaluate the efficiency, economy, effectiveness and sustainability of FAPs.
This chapter also identifies the audit areas for PA such as project readiness,
procurement of goods/services/consultancies, monitoring and evaluation, asset
management and project sustainability. It also includes the different ways by
which the DPs, oversight agencies and the respective Project Management Offices
(PMOs) of the EAs/IAs conduct project monitoring and evaluation during
implementation and after completion.
C. Audit Framework
In this pursuit, COA uses the IRRBA methodology in performing its audit functions.
Its purpose is to provide a common framework to ensure consistent delivery of
quality audit services.
It also aims to give management and other users a higher level of assurance that
the EA/IA’s processes are designed appropriately and operating effectively to
produce FS that meet all standards and requirements. It helps the EAs/IAs
improve their risk management and risk control processes.
Planning Delivery
Agency Audit Execution Conclusion and
Planning and Reporting
Risk Assessment
Monitoring
D. Scope of Audit
The audit of FAPs will cover: (i) program loans of investment type, (ii) all project
loans, and (iii) grants that pass through BTr and those that require audit as
specified in the GAs.
E. Types of Audit
This audit is conducted to enable the auditor to express an opinion on the fair
presentation of the GPFS or SPFS generated for FAPs, as well as on the EA/IA’s
compliance with applicable laws, rules and regulations, and LAs/GAs.
In the NG, the BTr’s GPFS integrate the transactions on the receipt of the
loan proceeds and debt servicing. On the other hand, the implementing
NGA maintains a separate fund (with complete set of books of accounts)
for FAPs which account the utilization of the loan proceeds for project
implementation. At year-end, this fund is consolidated in the GPFS of the
NGA.
In the GFIs, GOCCs and LGUs, the receipt of loan proceeds, utilization of
funds and debt servicing are included in their GPFS.
The illustrative accounting entries for availment and debt servicing are
shown in Annex C.
Audit of the GPFS involves the review of all accounts affected in the
agency processes prioritized for audit. The audit of accounts related to
project implementation follows the procedures for financial and
compliance audit. However, considering the peculiarity of the debt
service process which varies depending on the borrowers, i.e. NGAs,
GFIs/GOCCs and LGUs, this Section of the Manual focuses on the audit of
debt service accounts such as Loans Payable-Foreign, Interest Expense,
Commitment Fees and Other Financing Charges.
Disbursements from the SA/IMA are made either for payments or for
reimbursement of local project expenditures by the EA/IA. The DP
then replenishes the special bank account on the basis of
appropriate withdrawal applications submitted for these
disbursements.
The identified possible risks and the corresponding sample APs are
presented in Annex G. However, the auditors are not precluded to
include other risks identified and prepare the corresponding APs to
address such risks.
The audit of SOE is part of the overall audit of the EA/IA’s FS.
However, a greater effort of compliance checking is usually necessary
to check EA/IA’s assertions that expenditures are incurred and paid
for under the terms and conditions of the LA; payments have not
been split to enable it to pass through the threshold prescribed
under the SOE; expenditures are properly authorized and fully
supported by documentation; and records on expenditures are
maintained and are available for examination by the DP’s
disbursement/review missions and independent auditor.
The identified possible risks and the corresponding sample APs are
presented in Annex I. However, the auditors are not precluded to
include other risks identified and prepare the corresponding APs to
address such risks.
The identified audit areas subject to performance audit are the following, but
not limited to: Project Readiness, Procurement of Goods/Civil Works/Services,
Asset Management, Monitoring and Evaluation, and Project Sustainability.
a. Project Readiness
Project readiness refers to the timely compliance of the EAs/IAs with the
start-up requirements during appraisal and prior to project
implementation which may include the following:
Establishment of a PMO
PMO is the department or group within the organization that defines and
maintains the standards and processes related to project management. It
is responsible for overall project management, coordination, monitoring
and evaluation of the project and is the source of documentation,
guidance and standards on the practice of project management and
execution. It tries to equip project managers with the best
methodologies and tools available, and also works to ensure that projects
adhere to adopted standards and processes. A PMO may manage one or
more projects, assign project managers and directly oversee their work.
All PMOs share the common goal of improving project performance. A
successful PMO enables more projects to deliver high quality results on
time and within the budget.
In terms of manpower support to all the FAPs, the EAs/IAs determine the
number of project personnel needed by engaging organic and contractual
staff and consultants, or employing them in combination.
IBRD/WB
o Establish and maintain a PMO responsible for implementing the
project at acceptable standards, ensuring that project output/assets
are maintained in good condition, asset management is improved
and corporate structure and processes in place are streamlined to
improve service delivery, accountability and integrity.
The identified possible risks and the corresponding sample APs are
presented in Annex J. However, the auditors are not precluded to include
b. Procurement
The categories of goods, services and civil works and the applicable
procurement methods are stipulated in the LA between the DP and the
EA/IA. In the absence of specific requirements in the LA, the provisions
of Republic Act No. 9184 (RA 9184), the Government Procurement
Reform Act shall apply.
Consulting Services
c. Asset Management
The auditor should look into the achievement of the above objectives.
The identified possible risks and the corresponding sample APs are
presented in Annex L. However, the auditors are not precluded to
include other risks identified and prepare the corresponding APs to
address such risks.
Types of Description
Monitoring
an intended beneficiary
Process Tracking of pre-implementation processes, procurement
processes, right of way (ROW) acquisition and
resettlement activities, negotiation with LGUs
Sector Tracking of sector performance either based on the
consolidated project performance on sub-sector or
sector-wide basis or through the Sector Efficiency and
Effectiveness Review (SEER)
Source: Manual for Project Monitoring, NEDA (2004)
OECD-DAC Description
Criteria
Relevance Extent to which the aid activity is suited to the priorities
and policies of the target group, recipient and donor
Efficiency Extent to which aid activity attains its objectives
Effectiveness Measures outputs—qualitative and quantitative—in
relation to the inputs
Impact Positive and negative changes produced by a
development intervention, directly or indirectly, intended
or unintended
Sustainability Measures benefits of an activity that is likely to continue
after project completion
Source: OECD-DAC
a. NEDA
Instituted in 2010 under the auspices of the PIO system, the GPA
documents strategies adopted by IAs in managing ODA programs and
projects towards achieving sector outcomes and addressing recurrent
implementation issues. The GPA aims to encourage IAs to take stock
of their performance in implementing critical ODA projects, recognize
IAs which developed good practices, and multiply the benefits of such
practices by allowing other IAs to learn and possibly adopt them.
Project Re-evaluation
M&E Reports
Ex-post Evaluation
b. PMOs
PMOs of the EAs/IAs usually have M&E Units that undertake the M&E
activities and report the results based on the PIPs or Implementation
Manuals or its equivalent. Implementing arrangements for FAPs vary.
Below are some of the categories or modalities, among others.
By the DPs
The table below describes the M&E processes, reports and practices of
some of the country’s major DPs:
DP M&E Processes/Reports/Practices
ADB Evaluation is an important part of its project cycle. Its
evaluation has two levels: a) self-evaluation by the
operations department of the EA/IA responsible for
preparing and implementing projects, programs and TA
operations, and b) independent evaluation by the
Operations Evaluation Department (OED), now
Independent Evaluation Department (IED) of ADB. Self-
evaluation uses a number of instruments, such as:
project/program performance reports; review reports
prepared during the course of project implementation,
usually at mid-term; project/program completion
reports (PCRs), TA completion reports; and country
portfolio performance review (CPPR). For the
independent evaluation, project performance evaluation
reports and program performance evaluation reports
are prepared by the IED. With the exception of project
preparation TA resulting in a loan, ADB’s policy is to
conduct PCRs and TA completion reports on all
completed projects, programs and TA.
KfW The KfW, a development bank that works for the federal
government, has responsibility towards its partner
countries, the German Government and German
taxpayers. This is why KfW depends on reliable
information on whether the Financial Cooperation
projects it funds on behalf of the federal government
are successful or not. Every single project that is
completed is subjected to an intensive, independent ex-
post evaluation, also called a final evaluation. Three to
five years after the start of operation, all projects are
subjected to an ex-post evaluation. Final evaluation
serves a dual purpose: a) the impacts of each individual
project are recorded, analyzed and compared with the
costs incurred. KfW reports these results to the German
federal government and the general public. This
provides accountability for its work as a development
bank; and b) additionally, KfW wants to learn from past
projects and apply these lessons to future projects. A
uniform, basic methodological approach is applied in
every final evaluation: the actual project impacts are
systematically compared with the target impacts
expected at the time of the project appraisal. In order to
evaluate a project's developmental efficacy, the project
is analyzed against three main criteria: its effectiveness,
relevance/significance, and efficiency.
The Design and Monitoring Framework (DMF) for ADB funded projects or
Logical Framework for IBRD/WB funded projects is a results-based tool
for analyzing, conceptualizing, designing, implementing, monitoring and
evaluating FAPs. It structures the project planning process and helps
communicate essential information about the project to stakeholders in
an efficient, easy-to-read format. It derives its name from the logical
linkages set out by the planner(s) to connect a project’s means with its
ends. The logframe is only one monitoring and evaluation tool and its use
does not pre-empt the use of other evaluation tools.
Impact
Outcome
Outputs
A look into the logframe for some projects revealed that different formats
were used and elements included vary. NEDA’s Project Logframe includes
the same elements as ADB’s DMF as shown in Figure 3, except for the
activities with milestones and inputs.
(ii) Include only outputs that can be delivered by the project and
are feasible with the resources available;
(i) List only the activities that represent the main steps in the
transformation process, turning inputs into outputs. They should
not be a restatement of an output as an action;
NEDA
Requirement Frequency/Schedule
Progress reports (containing physical, financial, Quarterly for loans;
results or outcomes) Semestral for grants
Annual ODA Portfolio Review Forms Annually
Annual Work, Physical and Financial Plan Annually
Project Completion Report Within 3 months upon
project completion
In addition to the above reports, FAPs are required to submit once during
the project’s implementation (after the loan/grant documents have been
signed) Project Profile Form as required under DBM, COA and DOF Joint
Circular No. 2-97 dated March 1997.
DPs
The identified risks and the corresponding sample APs are presented in
Annex M. However, the auditors are not precluded to include other risks
identified and prepare the corresponding APs to address such risks.
e. Project Sustainability
The details of the expected output and outcome are incorporated in the
Logical Framework of the project which is usually attached to the project
implementation agreement or in the terms of reference.
The auditor shall determine whether the project’s desired impact has
been attained and whether funds/manpower were requested by the
EA/IA and provided by the concerned NGA/GOCC/LGU to sustain the
project benefits after project completion.
The identified possible risks and the corresponding sample APs are
presented in Annex N. However, the auditors are not precluded to
include other risks identified and prepare the corresponding APs to
address such risks.
The requirements of DPs for the audit of accounts and financial statements related
to the expenditures financed out of the loan proceeds and the submission of the
report of such audit are provided in the LA. The scope of the audit and its detail as
well as the reporting deadline as stated in the LAs vary among DPs.
For ADB, LAs generally contain specific provisions on the submission of certified
copies of the audited accounts and financial statements and the report of the
auditors which includes the auditor’s opinion on the use of the loan proceeds and
The IBRD usually requires the audit of a project’s financial statements covering a
period of one fiscal year.
In its LAs, JICA requires a certified copy of the auditor’s report in such scope and
detail as it may request. The audit report is to contain a separate opinion on
whether the SOEs submitted during a given fiscal year, together with the
procedures and internal controls can be relied upon to support the related
disbursements.
Implementation arrangements differ according to, among others, the nature and
scope of projects. There are projects which are implemented by only one agency
or various agencies, at different levels of the organization while others involve
LGUs. Considering that the IAs/EAs have their respective auditors, the following
shall be observed in the preparation and submission of the required reports:
2. The ATL, MDFO shall consolidate the IARs submitted by the SAs/ATLs, LGUs and
prepare an AR with a Consolidated Independent Auditor’s Report (CIAR).
3. The SA, DOF shall then transmit the required AR together with the CIAR to the
MDFO.
4. In case the project has a lead IA/EA, the SA, DOF shall submit the AR together
with the CIAR to that IA/EA.
1. The SA/ATL of the agency/corporation shall prepare and submit the AR on the
audit of the FS, SA/IMA, SSAF and/or SOE, as the case maybe, together with the
IAR, not later than the period stated in the LA for the submission of the AR.
2. The SA/ATL shall transmit the required AR and the corresponding IAR to
Management.
1. The SA/ATL of ROs of the agency/corporation shall prepare and submit to the
SA/ATL of the head office of that agency/corporation the management letter
(ML) with audited FS, SSAF and/or SOE, as the case maybe, together with the
corresponding IAR, four and seven months after the end of each fiscal year for
ARs due to DPs not later than six and nine months after the end of such period,
respectively.
2. The SA/ATL of the head office of the agency/corporation shall consolidate the
MLs and IARs submitted by the SAs/ATLs of the ROs, and prepare a
consolidated AR with IAR.
3. The SA/ATL shall transmit the required AR together with the IAR to the
Management.
1. The SA/ATL of the IA/EA other than the lead IA/EA shall prepare and submit to
the SA/ATL of the latter the AR with the audited FS, SA/IMA, SSAF and/or SOE,
as the case may be, together with the IAR, four and seven months after the end
of each fiscal year for AR due to DPs not later than six and nine months after
the end of such period, respectively.
2. The SA/ATL, lead IA/EA shall consolidate the ARs and IARs submitted by the
SAs/ATLs of the IA/EA and prepare a consolidated AR and IAR.
3. The SA/ATL, lead IA/EA shall transmit the required consolidated AR and IAR to
Management of the lead IA/EA.
1. The SA/ATL of the conduit agency/corporation shall prepare and submit the
required AR with IAR on the audit of the FS, SA/IMA, SSAF and/or SOE, as the
case maybe, not later than the period stated in the LA for the submission of the
AR.
2. The SA/ATL shall transmit the required ARs and the corresponding IARs to
Management.
The audit reporting requirements of the DPs will prevail, in the absence of which,
COA’s rules and regulations will apply.
The form and content of the IAR on different forms of audit opinions on the GPFS
and SPFS are shown in Annexes O and P, respectively.
1. Feasibility Study
2. Investment Coordination Committee PE Forms/ ICC Project Evaluation Forms 1-6
3. Regional Development Council (RDC) endorsements for regional, municipal and local
projects
4. Endorsement from other concerned agencies (e.g. ITECC for IT programs, respective
mother agency/department level endorsement for proposals of Bureaus or attached
agencies
5. Department of Finance (DOF) – Corporate Affairs Group (CAG) review for GOCC projects
6. NCC review for relending programs
7. Right of Way (ROW) acquisition and resettlement action plan
8. Location Map
9. Department of Budget and Management (DBM) certification of budget cover availability
for the project
10. Environmental Impact Statement/Environmental Compliance Certificate/Certificate on
Non-Coverage
1. Historical Background
2. Sectoral Program Context – Recommendation
3. Regional and Spatial Context – Recommendation
4. Project Objectives
5. Project Description
6. Cost and Financing
7. Institutional Arrangement
8. Implementation Schedule
9. Technical/Market/Environmental Analysis
10. Financial Analysis
11. Economic Evaluation
12. Social Analysis
13. Issues
14. Recommendations
The count of the timeframe of review shall start upon submission of complete documents.
AUDIT PROGRAM
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
Audit Objectives 1 To determine whether debt service payments on relent loans to GFIs/GOCCs
are billed and paid in accordance with the SLA
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
AUDIT PROGRAM
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
SPECIAL ACCOUNT
Statement of Sources and Application of Funds
As of December 31, 201_
USD Php
Beginning Balance, 01 January 201_ 0.00 0.00
Add: Receipts of Funds
Date JEV No. Particulars
1 0.00 0.00
2 0.00 0.00
3 0.00 0.00
Total Funds Available 0.00 0.00
Less: Disbursements
Date Check Particulars
1 0.00 0.00
2 0.00 0.00
3 0.00 0.00
Total Disbursements 0.00 0.00
Balance
Add/(Deduct): Adjustments
1 0.00
2 0.00 0.00 0.00
Ending Balance, 31 December 201_ 0.00 0.00
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
Amount
Amount Deposited by World Bank USD 0.00
Less:
Amount Recovered by World Bank
Amount Withdrawn and Claimed but not yet credited as of
December 31, 201_
Amount Withdrawn but not yet Claimed
Outstanding Checks
Interest Earnings to be remitted to the Bureau of the Treasury
Bank Service Charges/Cable Cost to be offsettted against interest
earnings
Interest earnings remitted to BTr in 201_
Difference in USD equivalent in CY 201_ Outstanding Checks
Bank Service Charges/Cable Cost offsetted against interest earnings
remitted to BTr in 201_ 0.00
Ending Balance, December 31, 201_ USD 0.00
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
USD Php
1 Total amount Advanced by World Bank
2 Total Amount Recovered by World Bank
3 Gain (Loss) on Foreign Exchange Rate
Amount paid by Bank
Amount Applied
4 Increase/(Decrease) on Foreign Exchange Rate
5 Equals Present Outstanding Amount advanced to
Special Account 0.00 0.00
6 Ending Balance Special Account as of December 31, 0.00 0.00
201_
7 Plus amount applied not yet credited as of December
31, 201_
8 Amount Withdrawn but not yet claimed
9 Interest Earnings to be remitted to BTr
10 Interest earnings remitted in 201_
11 Bank Service Charge/Cable Cost to be offsetted
against interest earnings remitted to BTr
12 Outstanding Checks
13 Difference in USD equivalent on the CY 201_
Outstanding Checks 0.00 0.00
Equals Total Advance to Special Account accounted
for as of December 31, 201_ 0.00 0.00
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
Note:
Format may vary among GFIs.
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
Audit Objectives 1 To determine whether funds are being used for the purpose intended.
2 To determine whether funds received from DPs are properly accounted for
and recorded in the books of accounts.
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
Risk Statement Expenditures may not be fully documented, properly authorized, and eligible
under the LA.
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
Risk Statement 1 The GOP Counterpart Fund for financing of project start-up activities may not
have been requested by the EA/IA and not released by the DBM within a
reasonable period of time to ensure that those activities are completed prior to
the scheduled loan effectivity.
Audit Objective 1 To determine whether the EA/IA has requested the DBM for funds necessary
for project start-up activities and whether the same were accordingly released
by the DBM in time to complete the activities prior to the scheduled loan
effectivity
AUDIT PROGRAM
Risk Statements 1 The PMO structure and composition created by the EA/IA may not be in
accordance with the requirements of the LA.
2 The personnel constituting the PMO may not be selected in accordance with
the approved/required qualification standards and criteria.
3 The PMO resources may not be adequate and available when needed to
implement the FAPs.
Audit Objectives 1 To determine whether the EA/IA has established a PMO structure and
composition in accordance with the requirements of the LA
3 To determine whether the PMO resources are adequate and available when
needed to implement the FAPs
Audit Risk 1. A Project Implementation Plan (PIP)/Operations Manual (OM) may not be
prepared and completed prior to the loan effectivity/project
implementation.
Audit Objective 1. To determine whether a PIP/OM has been prepared and completed prior
to loan effectivity/project implementation
Audit Risk 1. ROW/Site/Location for the project may not have been acquired prior to
loan effectivity/project implementation.
Audit Objective 1. To determine if ROW/Site/Location of the project has been acquired prior
to loan effectivity/project implementation
Audit Risk 1 The initial activities for the procurement of consultants up to the
preparation of the Terms of Reference/s (TOR/s) may not have been
undertaken and completed prior to loan effectivity/project
implementation.
Audit Objective 1 To determine whether the initial activities for the procurement of
consultants as well as the preparation of the Terms of Reference/s
(TOR/s) have been undertaken and completed prior to loan
effectivity/project implementation
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
Audit Objectives 1 To determine whether property acquired from loans are properly accounted
for and issued to persons with proper documentation
2 To determine whether controls are in place to provide regular maintenance of
asserts and safeguards against loss or misuse
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
3 Adequate indicators and baseline data may not be used to monitor and
evaluate the progress and results of the project.
4 The PMO M&E Units may not have sufficient and competent personnel to
undertake M&E activities.
6 M&E data/results may not be used for project implementation and policy
formulation/enforcement.
Audit Objectives 1 To determine whether a PF has been prepared, updated and submitted to
NEDA for each project as required under the pertinent NEDA Guidelines.
2 To determine whether the elements of the PF are properly/correctly stated/
presented and there are clear linkages of the elements with one another.
Impact
• there is a direct means-end
relationship between the outcome
and the impact
Outcome
• expressed in change language
instead of action language to
reflect accomplishments
• phrased as an improvement over a
baseline situation, which is
Output
• must be necessary to achieve the
outcome
• can be delivered by the project
and is feasible with the resources
available
• does not use the infinitive tense
(e.g., To assess, To prepare) at the
beginning of output statement as
this implies activity
Performance targets/indicators
• SMART:
• specific – relate to the results
the project seeks to achieve
• measurable – stated in
quantifiable terms
• achievable – realistic in what is
to be achieved
• relevant – useful for
management information
purposes
• time-bound – stated with
target dates
• CREAM:
• clear – precise and
unambiguous
• relevant – appropriate and
timely
• economic – available at
reasonable cost
• adequate – sufficient to assess
performance
• monitorable – can be
independently verified
Risks
Assumptions
• positive statements of conditions,
events, or actions that are
necessary to achieve the results at
each level of the M&E Framework
Data sources
• show where information on the
status of each indicator can be
obtained
• who provides the information
• how the data is collected
Reporting mechanisms
• state where the information is
documented
2.5 Analyze/evaluate the effects of
elements which are not stated/
presented as required to the M&E of
the project.
2.6 Analyze if each of the element has a
cause and effect relationship.
2.7 Verify the causes/reasons for the
absence of the necessary elements and
linkages of the elements to one
another as required, if any.
3 3.1 Check if there are performance
indicators and baseline data and target
values for the project’s implementation
period.
3.2 Using the PF, evaluate if the
performance indicators, baseline data
and target values for the project’s
implementation period are adequate to
assess the progress of the project
toward the achievement of its expected
impact.
3.2 Evaluate if the baseline data and target
values could be used to determine if
there are significant changes and
improvements to the target
beneficiaries.
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
______________________ ______________________
Printed Name & Position Printed Name & Position
Date: Date:
A. Unqualified Opinion
[Appropriate Addressee]
We have audited the accompanying financial statements of (Name of Agency), which comprise
the statement of financial position as at December 31, 20XX, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
In our opinion, the financial statements present fairly, in all material respects, the financial
position of (Name of Agency) as at December 31, 20XX, and its financial performance and its
cash flows for the year then ended in accordance with International Financial Reporting
Standards. 1, 2
[Form and content of this section of the auditor’s report will vary depending on the nature of the
auditor’s other reporting responsibilities]
[Auditor’s signature]
[Auditor’s address]
B. Qualified Opinion
[Appropriate Addressee]
We have audited the accompanying consolidated financial statements of (Name of Agency) and
its (subsidiaries/regional offices/attached agencies), which comprise the consolidated statement
of financial position as at December 31, 20XX, and the consolidated statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards, 5 and for
such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
1
If the auditee is not adopting IFRS, replace IFRS with “State accounting principles”
2
Deleted “(or give a true and fair view of)” and “(of)” in the Illustration of ISA 700
3
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
4
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
5
If the auditee is not adopting IFRS, replace “International Financial Reporting Standards” with “State accounting principles.”
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
a. xxx
b. xxx
Opinion
In our opinion, except for the effects of the matter described in the Bases for Qualified Opinion
paragraph, the financial statements present fairly, in all material respects, the financial position
of (Name of Agency) as at December 31, 20XX, and its financial performance and its cash flows
for the year then ended in accordance with International Financial Reporting Standards. 6, 7
[Form and content of this section of the auditor’s report will vary depending on the nature of the
auditor’s other reporting responsibilities]
[Auditor’s signature]
[Auditor’s address]
6
Deleted “(or give a true and fair view of)” and “(of)” in the Illustration of ISA 705
7
If auditee is not adopting IFRS, replace “International Financial Reporting Standards” with “State accounting principles.”
8
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
[Appropriate Addressee]
We have audited the accompanying consolidated financial statements of (Name of Agency) and
its (subsidiaries/regional offices/attached agencies), which comprise the consolidated statement
of financial position as at December 31, 20XX, and the consolidated statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards, 10 and for
such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
9
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
10
If the auditee is not adopting IFRS, replace “International Financial Reporting Standards” with “State accounting principles.”
Opinion
In our opinion, because of the significance of the matters discussed in the Basis of Adverse
Opinion paragraph, the financial statements do not present fairly the financial position of the
(name of project) as the financial statements do not present fairly the financial position of
(Name of Project) as at December 31, 20XX, and its financial performance and its cash flows for
the year then ended in accordance with International Financial Reporting Standards. 11, 12
[Form and content of this section of the auditor’s report will vary depending on the nature of the
auditor’s other reporting responsibilities]
[Auditor’s signature]
[Auditor’s address]
D. Disclaimer of Opinion
[Appropriate Addressee]
We have audited the accompanying consolidated financial statements of (Name of Agency) and
its (subsidiaries/regional offices/attached agencies), which comprise the consolidated statement
of financial position as at December 31, 20XX, and the consolidated statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards, 15 and for
such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
11
Deleted “(or give a true and fair view of)” and “(of)” in the Illustration of ISA 705
12
If auditee is not adopting IFRS, replace “International Financial Reporting Standards” with “State accounting principles.”
13
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
14
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
15
If the auditee is not adopting IFRS, replace “International Financial Reporting Standards” with “State accounting principles.”
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
a. xxx
b. xxx
Opinion
Because of the significance of the matters discussed in the Bases for Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a
basis for an audit opinion. Accordingly, we do not express an opinion on the financial
statements.
[Form and content of this section of the auditor’s report will vary depending on the nature of the
auditor’s other reporting responsibilities]
[Auditor’s signature]
[Auditor’s address]
16
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
A. Unqualified Opinion
[Appropriate Addressee]
Pursuant to (specific provision on the audit in the LA) between the (DPs and Borrower), we have
audited the Accompanying statement of financial condition (of the Project) as of (Period) and
the related statements of financial performance and cash flows for the year ended (December
31, 20XX)/period from (01 January 2012 to 30 June 2013), and the summary of significant
accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with generally accepted accounting principles in the Philippines. This
responsibilities includes: designing, implementing, and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with generally accepted state auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosure in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risk of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessment, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained are sufficient and appropriate to provide
basis for our audit opinion.
17
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
There is reasonable assurance that the financial statements are free of material misstatements
and were prepared in accordance with laws, rules and regulations and in conformity with
generally accepted accounting principles.
Unqualified Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial condition of the (name of the project) as of (December 31, 20XX), and the results
of its financial performance and its cash flow for the year ended December 31, 20XX)/period
from (01 January 20XX to 30 June 20XX), in accordance with applicable laws, rules and
regulations and in conformity with the generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Supervising Auditor/Audit Team Leader
Date
B. Qualified Opinion
[Appropriate Addressee]
Pursuant to (specific provision on the audit in the LA) between the (DPs and Borrower), we have
audited the Accompanying statement of financial condition (of the Project) as of (Period) and
the related statements of financial performance and cash flows for the year ended (December
31, 20XX)/period from (01 January 2012 to 30 June 2013), and the summary of significant
accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with generally accepted accounting principles in the Philippines. This
responsibilities includes: designing, implementing, and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
18
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with generally accepted state auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosure in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risk of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessment, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained are sufficient and appropriate to provide
basis for our audit opinion.
a. xxx
b. xxx
Opinion
In our opinion, except for the effects of the matters described in the Bases for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the
financial condition of the (name of the project) as of (December 31, 20XX) and the results of its
financial performance and its cash flow for the year ended December 31, 20XX)/period from (01
January 20XX to 30 June 20XX), in accordance with applicable laws, rules and regulations and in
conformity with the generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Supervising Auditor/Audit Team Leader
Date
[Appropriate Addressee]
Pursuant to (specific provision on the audit in the LA) between the (DPs and Borrower), we have
audited the Accompanying statement of financial condition (of the Project) as of (Period) and
the related statements of financial performance and cash flows for the year ended (December
31, 20XX)/period from (01 January 2012 to 30 June 2013), and the summary of significant
accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with generally accepted accounting principles in the Philippines. This
responsibilities includes: designing, implementing, and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with generally accepted state auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosure in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risk of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessment, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained are sufficient and appropriate to provide
basis for our audit opinion.
19
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
a. xxx
b. xxx
Adverse Opinion
In our opinion, because of the significance of the matters discussed in the Basis of Adverse
Opinion paragraph, the financial statements do not present fairly the financial position of the
(name of project) as at December 31, 20XX and the results of its financial performance and its
cash flow for the year ended December 31, 20XX)/period from (01 January 20XX to 30 June
20XX), in accordance with applicable laws, rules and regulations and in conformity with the
generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Supervising Auditor/Audit Team Leader
Date
D. Disclaimer Opinion
[Appropriate Addressee]
Pursuant to (specific provision on the audit in the LA) between the (DPs and Borrower), we have
audited the Accompanying statement of financial condition (of the Project) as of (Period) and
the related statements of financial performance and cash flows for the year ended (December
31, 20XX)/period from (01 January 2012 to 30 June 2013), and the summary of significant
accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with generally accepted accounting principles in the Philippines. This
responsibilities includes: designing, implementing, and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
20
The sub-title “Report on the Financial Statements” is unnecessary in circumstances when the second sub-title “Report on Other
Legal and Regulatory Requirements” is not applicable (see A34 to A36 of ISA 700).
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with generally accepted state auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosure in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risk of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessment, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained are sufficient and appropriate to provide
basis for our audit opinion.
a. xxx
b. xxx
Opinion
Because of the significance of the matters described in the Bases of Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide
bases for an audit opinion. Accordingly, we do not express an opinion on the financial
statements.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Supervising Auditor/Audit Team Leader
Date
Illustration 1:
Our responsibility is to express an opinion on these financial reports based on our audit.
We conducted our audit in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial reports are free from
material misstatement.
An audit includes examining, on test basis, evidence supporting the amounts and
disclosures on the above mentioned financial report/s. An audit also includes evaluating
assessing the accounting principles used and estimates made by management, as well as
evaluating the overall presentation of the financial reports. This audit also involved
evaluating (agency) compliance with the applicable Agreement Terms and Conditions for
the Project and which are set out in (list/specify/describe Financial Agreement, or other
documents).
We believe that our audit provide a reasonable basis for our opinion.
Opinion
In our opinion, the financial report/s of the (Project) for the period from (date) to (date)
present in all material respects accurately the expenditures actually incurred and the
cash received for the Project in conformity with the applicable Agreement Terms and
Conditions.
Our report is intended solely for the information and use of the (Agency creditor) and
(Agency Debtor).
[Auditor’s signature]
[Date of the auditor’s report]
[Auditor’s address]
(i) Flat Commitment Charge – is applied on the full undisbursed balance of a public
sector program loan.
Currency Conversion – change in the loan currency of all or part of the undisbursed
and/or disbursed loan amounts at any time during the life of the loan.
EURIBOR – the Europe Interbank Offered Rate is the new European interbank base rate
that replaced the national interbank rates (IBOR) in the countries participating in the
European Monetary Union from January 1, 1999. It is the average rate at which the euro
interbank term deposits within the euro zone are offered by one prime bank to another.
Executing Agency – entity or entities responsible for carrying out the program/projects
which maybe an NGAs, GOCCs and LGUs.
Front-end Fee - is a one-time fee charged to the borrower at the time of signature of
the loan contract.
LIBOR – the London Interbank Offered Rate measures the approximate cost to banks of
funds which they obtained in the London Interbank market. Each bank has its own IBOR
which reflects the bank’s borrowing costs. LIBOR rates are always related to deposits for
a defined period of time.
Loan Closing Date – is the date the DP may terminate the right of the borrower to make
withdrawals from the loan account.
Market-based Loan (MBL) – is single currency loan in US dollar or Japanese yen or Swiss
francs and carries either floating or fixed interest rate at borrower’s choice.
Pool-based Single Currency Loan in US dollar (PSCL in USD) – is single currency loan and
carries variable interest rate that is based on the average ADB’s outstanding US dollar
borrowings to fund PSCLs plus a lending spread.
Withdrawal Application – is a written request from the borrower to the DP to pay funds
against the borrower’s loan account.