Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. 3
City of San Fernando, Pampanga

MEMORANDUM

TO : All Supervising Auditors (SAs)

All Audit Team Leaders (ATLs)
All Audit Team Members
Local Government Units of this Region

FROM : OMAR S. ROQUE

Regional Director
SUBJECT : Specific Audit Instructions (SAI) for the conduct of audit of Sanggunian
Kabataan (SK) Funds in CY 2024
DATE : April 08, 2024

In accordance with the General Audit Instructions (GAI) and Supplemental GAI dated October
09, 2023 and March 19, 2024, respectively, regarding the audit of the Sangguniang Kabataan (SK)
Funds, all concerned are enjoined to observe the herein instructions to ensure uniformity and
consistency in audit methodology and audit actions.

1. Audit of SK Funds

As mentioned in the GAI dated October 09, 2023, only those SKs with separate bank
accounts will be subjected to a separate audit. The audit shall cover the period from the date the
SK bank accounts were opened until December 31, 2023.

Moreover, the audit of SKs shall be synchronized with the cyclical audit of Barangays.
Therefore, only those SKs whose Barangays are scheduled to be audited this year shall undergo
scrutiny.

The SK Audit Report shall consist of the following:

1. Transmittal Letter
2. Annual Statement of Receipts and Payments (ASRP)
3. Report of Inventory of Donated Property and Equipment (RIDPE)
4. Report of Inventory of Purchased Property and Equipment (RIPPE)
5. Statement of Comparison of Budget and Actual Amounts (SCBAA)
6. Notes to Financial Statements (NFS)
7. Summary of Audit Observations and Recommendations (SAOR), which shall be
presented in a matrix form, composing of the following elements:

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 a. Reference (i.e. AOM No.);
b. Audit Observations;
c. Audit Recommendations;
d. Management Comments; and
e. Auditor’s Rejoinder
8. Status of Implementation of Prior Year’s Audit Recommendations (SIPYAR), if
available.

The SK Audit Report is to be transmitted by the Audit Team Leader, through the
Supervising Auditor concerned, to the SK Chairperson on or before October 31, 2024.

2. Application of Materiality

Pursuant to COA Resolution No. 2019-0161 dated June 25, 2019, and in order to foster
compliance with pertinent ISSAIs, the Audit Groups/Audit Teams (AGs/ATs) shall compute
materiality thresholds to be used for planning and execution phases.

Using the Annual Statement of Receipts and Payments (ASRP), the AGs/ATs shall
compute the overall planning materiality and testing thresholds to identify high-value items for
the adoption of sampling scheme.

3. Sampling Methodology

The application of the sampling methodology to be used by the AGs/ATs shall follow the
guidelines prescribed in COA Resolution No. 2021-013 dated June 24, 2021. The recommended
methods for sample selection are the Test Audit Day Scheme (TADS) in the audit of Official
Receipts (ORs) and the Random Sampling in the audit of disbursements, where applicable. The
appropriate sampling working papers shall be prepared by the ATs.

4. Audit Thrust/Foci

The conduct of audit for SK Funds as of December 31, 2023 shall cover the audit thrust
areas identified in the GAI, as presented hereunder with specific audit procedures:

Audit Thrust Areas Audit Instructions Audit Procedures

Balances of SK Determine if all SK funds
Fund, as of have been transferred by the
December 31, 2023 Barangay in accordance with
Section 20(a) of R.A. No.
10742, which states that
10% of the general fund of
the barangay shall be set
aside for the SK.
Determine the accuracy of
SK Funds
1. Obtain the approved annual budget of the
Barangay including appropriation ordinance or
resolution, then identify the specific portion or
line item in the budget that represents the
allocation for the SK funds.
2. Calculate 10% of the total Barangay budget to
determine the expected amount allotted for the

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Guidelines in Determining and Using Materiality Thresholds in Financial Audit
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Audit Thrust Areas Audit Instructions
the Specific Purpose Fund
balance by reviewing and
analyzing the transactions
recorded in the Registry of
Specific Purpose Fund,
Commitments, Payments
and Balances (RSPFCPB).
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Audit Procedures
SK funds.
3. Compare the calculated 10% allocation with
the actual amount allotted for the SK funds in
the Barangay’s approved annual budget, then
note variances, if any.
4. Obtain Register of Cash Receipts, Deposits and
Other Related Financial Transactions (RCRD).
5. Secure copies of official receipts, deposit slips
and bank statements then compare it with the
recorded amounts in the RCRD to ensure its
reliability.
6. Check the 'Subsidy from Barangay' column of
RCRD to verify if the Barangay has deposited
the 10% SK Funds accruing for the year.
7. Also obtain the Register of Cash in Bank and
Other Related Financial Transactions (RCB).
8. Check the reliability of RCB by comparing its
deposits and withdrawal columns with bank
statements.
9. Verify if the 10% SK Funds directly deposited
by Barangay are also recorded in RCB.
RSPFCPB
10. Obtain the Registry of Specific Purpose Fund,
Commitments, Payments, and Balances
(RSPFCPB) for MOOE and Capital Outlay,
and reconcile it with RCRD, especially
regarding the ‘With Specific Purpose’ column,
to verify if all collections with specific
purposes are recorded in RSPFCPB.
11. Secure copies of SK Resolutions, then verify if
all funds received with specific purposes are
supported by SK Resolutions.
12. Verify if Commitments and Payments recorded
in RSPFCPB are supported by Disbursement
Vouchers (DVs), purchase orders (POs),
Audit Thrust Areas Audit Instructions Audit Procedures
contracts, delivery receipts (DRs) and/or other
required supporting documents.

13. Summarize all deficiencies/observations noted

and prepare/issue AOM, if necessary.

Approved Annual Determine consistency of the CBYDP

Budget programs, activities and
projects (PAPs) between the 1. Obtain the CBYDP then check whether the
Comprehensive Barangay PAPs in CBYDP are aligned with Sections 20a
Youth Development Plan and 20c of the IRR of RA 10742 which provide
(CBYDP) and Annual that the SK funds shall be utilized for youth
Barangay Youth Investment development and empowerment purposes.
Program (ABYIP)
2. Also obtain the ABYIP then assess if PAPs of
Determine the correctness of ABYIP are aligned with CBYDP.
amounts presented in the
Statement of Comparison of 3. Secure a copy of Approved Annual Budget,
Budget and Actual Amounts together with any Supplemental Budget, if
(SCBAA) by reviewing the available, and then check whether it has
ABYIP and analyzing the corresponding SK Resolutions.
Registry of Budget,
Commitments, Payments 4. Verify whether the Approved Annual Budget is
and Balances anchored with ABYIP.

SCBAA

5. Obtain the Registry of Budget, Commitments,

Payments, and Balances (RBCPB) for MOOE
and Capital Outlay (CO), then check if the
budgets presented in RBCPB match the
Approved Annual Budget.

6. Verify if all Commitments and Payments

recorded in RBCPB-MOOE & CO are
supported by Disbursement Vouchers, Purchase
Orders, Contracts and/or other required
supporting documents.

7. Obtain quarterly Summary of Budget,

Commitments, Payments and Balances
(SBCPB) then tally it with RBCPB-MOOE &
CO.

8. Likewise, compute the aggregate balances of 1st

to 4th quarter SBCPB then tally it with the

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Audit Thrust Areas Audit Instructions
Cash Review the correctness of
the amounts presented in the
Annual Statement of
Receipts and Payments
(ASRP) by cross-referencing
with the Register of Cash in
Bank and Other Related
Financial Transactions
(RCB), and Register of Cash
Receipts, Deposits and Other
Related Financial
Transactions (RCRD)
Verify Bank Reconciliation
Statements
Review the compliance with
COA Circular No. 97-002
dated February 10, 1997 on
the Granting and Liquidation
of Cash Advances
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Audit Procedures
balances presented in Statement of Comparison
of Budget and Actual Amounts (SCBAA).
9. Summarize all deficiencies/observations noted
and prepare/issue AOM, if necessary.
ASRP
1. Obtain RCRD and RCB.
2. Secure copies of official receipts, deposit slips
and bank statements then compare it with the
recorded amounts in the RCRD to ensure its
reliability. (Note: same procedure with SK Fund
Balances audit thrust area)
3. Compare the disbursement vouchers and bank
statements with the recorded amounts in the
RCB, then note discrepancies, if any.
4. After verifying the correctness of recorded
amounts, compare the quarterly totals of
‘Breakdown of Receipts/Direct Deposits’
column of RCRD with the ‘Receipt’ portion of
Quarterly Statement of Receipts and Payments
(QSRP) and quarterly totals of ‘Breakdown of
Withdrawals/Payments’ column of RCB with
the ‘Payment’ portion of QSRP then note any
discrepancies.
5. Compute the aggregate balances of 1st to 4th
quarters of QSRP then compare them with the
balances of ASRP to identify any discrepancies.
Bank Reconciliation Statements (BRS)
6. Verify the BRS and note the following:
a. Unadjusted reconciling items
b. Unusual items/balances that should be
reclassified/adjusted
c. Undocumented reconciling items.
Cash Advances
7. From ‘Advances’ column of RCB, vouch cash
Audit Thrust Areas Audit Instructions
Property and Verify the details of the
Equipment property and equipment
presented in the Report on
Inventory of Donated
Property and Equipment
(RIDPE) and Report on
Inventory of Purchased
Property and Equipment
(RIPPE)
Confirm with new SK
Officials if these properties
and equipment were
properly turned over
Determine the existence of
these properties and
equipment by conducting a
physical inventory
Require the new SK
Officials to submit new
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Audit Procedures
advances granted to SK Treasurer and Officials,
and its corresponding liquidations to the
supporting documents to verify:
a. whether the posted amounts are correct and
supported with complete and proper
documentation; and
b. the mathematical accuracy of the
transactions.
8. Verify if the cash advances were liquidated
within the period prescribed under COA
Circular No. 97-002 dated February 10, 1997.
9. If the balances of the unliquidated
accountabilities are substantial inquire the
causes of accumulation of outstanding cash
advances and/or non-liquidation thereof.
Determine the measures taken by management
to address the reasons for non-liquidations then
enforce liquidations thereof.
10. Summarize all deficiencies/observations noted
and prepare/issue AOM, if necessary.
1. Obtain RIPPE as of December 31, 2023 then
compare the quantity of PPE with the property
and equipment card (PEC) maintained by the
SK Treasurer.
2. For purchased property, plant and equipment
(PPE), verify their corresponding disbursement
vouchers (DVs) along with supporting
documents particularly inspection and
acceptance report (IAR), delivery receipts and
sales invoice.
3. Likewise, obtain RIDPE then check if the
donated PPEs have corresponding SK
Resolutions.
4. Verify if the SK Treasurer maintains Registry
of Donated Property and Equipment (RDPE)
with quantities tallied with RIDPE, and copies
of Acknowledgement Receipt for Donated
Property and Equipment/Supplies and
Audit Thrust Areas Audit Instructions
Property Acknowledgement
Receipts (PARs)
Payables/Liability Require the SK Treasurer to
submit a list of unpaid
commitments for goods,
services and infrastructure
projects and photocopies of
procurement documents and
delivery receipts
Review the Register of Cash
in Bank and Other Related
Financial Transactions
(RCB) to determine the
correctness of unremitted
taxes presented in the Notes
to Financial Statements.
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Audit Procedures
Materials (ARDPE/SM).
5. Also, verify if the SK Treasurer maintains
copies of Property Acknowledgement Receipt
(PAR) for PPEs in RIPPE and RIPDE. Check
if the new PARs were issued to newly elected
SK Officials.
6. Obtain a copy of CY 2023 Final Inventory and
Turnover of SK Properties, Financial Records,
Documents (PFRDs) and Money
Accountabilities as required under DILG
Memorandum Circular No. 2023-047 dated
March 21, 2023 to check if the PPEs presented
in RIPPE and RIPDE were properly turned
over to the newly elected SK Officials.
7. Conduct validation to establish the existence
and ownership of the PPEs giving priority to
high value items.
8. Summarize all deficiencies/observations noted
and prepare/issue AOM, if necessary.
Unpaid Commitments
1. Obtain Registry of Budget, Commitments,
Payments and Balances (RBCPB) and Registry
of Specific Purpose Funds, Commitments,
Payments and Balances (RSPFCPB) –
Maintenance and Other Operating Expenses
(MOOE) and Capital Outlay (CO).
2. Verify if Commitments and Payments recorded
in RSPFCPB are supported by Disbursement
Vouchers (DVs), purchase orders (POs),
contracts, delivery receipts (DRs) and/or other
required supporting documents. (note: this audit
procedure was also mentioned in SK Fund
Balances audit thrust area)
3. Compare the list of unpaid commitments
obtained from SK Treasurer with the amounts
of unpaid commitments shown in RBCPB and
RSPFCPB then note any discrepancies.
Audit Thrust Areas Audit Instructions
4.
Audit Procedures
Based on RBCPB and RSPFCPB, ascertain
whether the amounts of unpaid commitments at
the year's end match those reported in the Notes
to Financial Statements.

Unremitted Taxes

5. With RCB, compute the accuracy of amount of

taxes withheld from the suppliers/payees for
the purchase of goods and services.

6. Verify the payment and remittance of

withholding taxes reported in RCB by cross-
referencing the corresponding DVs and
supporting documents.

7. Determine the amount of unremitted taxes at

year-end as reported in RCB, then compare it
with the amount presented in the Notes to FS.

8. Summarize all deficiencies/observations noted

and prepare/issue AOM, if necessary.

Financial Ensure the completeness of

transactions the submission of financial
transaction documents by
cross-referencing with the
Register of Cash in Bank
and Other Related Financial
Transactions (RCB) and the
Register of Cash Receipts,
Deposits and Other Related
Financial Transactions
(RCRD).
Ensure that the financial
transactions are properly
authorized and covered with
appropriation.
Ensure that the financial
transactions are supported
with complete
documentation.
1. Obtain Report of Accountability for
Accountable Forms (RAAF) then compare the
issued official receipts (ORs) with RCRD and
the issued checks with RCB.
2. Determine whether all issued official receipts
(ORs) with corresponding validated deposit
slips (VDS), and all issued checks with
corresponding disbursement vouchers (DVs)
and supporting documents, were submitted by
the SK Treasurer for audit.
3. To ensure the accuracy of ‘Receipt’ column of
RAAF, send a confirmation letter to the
Municipal Treasurer regarding the official
receipt booklets purchased by the SK Treasurer,
and to the Authorized Government Depository
Bank of SK regarding the check booklets also
purchased by the SK Treasurer. Upon receiving
the confirmation replies, compare them with
the official receipts and checks shown in the
‘Receipt’ column of RAAF.

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Audit Thrust Areas Audit Instructions Audit Procedures

Properly Authorized and Covered with

Appropriation

4. Verify whether the disbursement vouchers

(DVs) and their supporting documents were
properly signed by the SK Officials.
Specifically, check if the Budget Monitoring
Officer (BMO) signed the ‘Availability of
Funds’ portion of the DVs, Purchase Orders
(POs), or Contracts.

5. Ensure that the DVs, POs and/or Contracts

signed by BMO were properly recorded in the
Registry of Budget, Commitments, Payments
and Balances (RBCPB) and the Registry of
Specific Purpose Fund, Commitments,
Payments and Balances (RSPFCPB). Check if
the expenditures and/or purchases were
incurred within the Approved Budget.

Furthermore, the audit thrust areas listed below, along with the audit instructions outlined
in the GAI, require verification to ensure compliance with applicable laws, rules, and regulations.

Audit Thrust Areas Audit Instructions with Applicable Laws, Rules and Regulations
Procurement Verify whether the SK has constituted a Bids and Awards Committee
(BAC) in accordance with GPPB Circular 07-2019 dated July 17,
2019.

Also, assess whether the procurements adhere to the SK Annual

Procurement Plan and if the procurement method employed complies
with the stipulations of Republic Act No. 9184 and its Implementing
Rules and Regulations (IRR)

SK Programs Evaluate whether programs/projects/activities (PPAs) comply with

Item 3.5 of the Basic Standards and Policies outlined in HFTSK.

Notes to Financial Check the full disclosure in accordance with Financial Reporting under
Statements the Cash Basis of Accounting of International Public Sector
Accounting Standards, and Volume II, 2017 Edition of Handbook of
International Public Sector Accounting Pronouncements of the
International Federation of Accountants

5. Follow-up of Implementation of Audit Recommendations

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 The AG/ATs shall require the submission of an Agency Action Plan and Status of
Implementation (AAPSI) indicating the status of implementation of audit recommendations
stated in the SAOR. The AAPSI shall be validated and Action Plan Monitoring Tool (APMT)
shall be prepared by the Audit Teams to be submitted to the Supervising Auditor concerned on or
before December 20, 2024, for further validation.

6. Quality Control Review

The ATLs are responsible for the initial review of the working papers prepared by the
ATMs, namely: results of evaluation and validation of controls over identified risks, substantive
work reducing residual audit risks to acceptable levels, supporting documents for the audit report,
and other working papers.

7. Audit Documentation and Archiving of Working Papers

The AG/AT’s working papers should be properly titled, dated, signed by the preparer and
reviewer, and clearly referenced and cross-referenced to supporting evidence/documents using
the standard tickmarks developed for that purpose. To prove that the audit responded to the
assessed risks of material misstatements, audit procedures actually performed are summarized on
the main audit working paper. Deviations to the planned audit procedures (in terms of the nature,
extent and timing of audit procedures) must be documented through an Audit Memorandum,
revision/updated of the particular Audit Program and fully explained with the Supervising
Auditor acknowledging acceptability of the changes done upon signing of the working papers as
reviewer.

The Audit Teams Leaders (ATLs) are primarily responsible for the timely assembly of the
final audit file in accordance with Section A21 of International Standard on Auditing (ISA) 230.
Accordingly, all ATLs are required to assemble the audit documentation in an audit file and
complete the administrative process of assembling the final audit file within 60 days from the
transmittal of the SAOR.

An audit file may be in physical or electronic form containing the records that comprise the
audit documentation for a specific audit engagement, classified as follows: a) Current Audit File
(CAF) – containing working papers relating to a single audit engagement; and b) Permanent
Audit File (PAF) – a set of records that serves as an ongoing reference for successive audit.

For strict compliance.

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