RULES and REGULATIONS

on
Settlement of Accounts

COA Cir 2009-006

dated September 16, 2009
(Effectivity: October 6, 2009)

 Legal Bases,
 General Principles and
 Salient Features
 LEGAL BASES
1987 CONSTITUTION
 Article IX-D Section 2(1)- to examine,

audit and settle all accounts

 Article IX-D Section 2(2)- to define scope

of audit, establish techniques and

methods and promulgate accounting and
auditing rules and regulations, including
those for the prevention and disallowance
of the IUEEU
 LEGAL BASES
 1987 RAC
 Sec 11, Ch. 4, Subtitle B, Title I, Book
V (JURISDICTION, POWERS AND FUNCTIONS OF THE
COMMISSION)
 R.A. 7160
 Sec 347- rendition of accounts by
local auditors
 LEGAL BASES
PRIMARY COA FUNCTIONS
 Audit

 All agencies
 Private entities as provided by law
 Adjudication
 Quasi-judicial function incident to audit
 Money claims
 LEGAL BASES
 Rule-making
 Accounting and auditing rules
 Prevention and disallowance of IUEEU
 SETTLEMENT OF ACCOUNTS

COA’S AUDIT FUNCTION (discharged by

performing audit procedures such as the ff-)
1. examine an account, compare it with the
vouchers, adjust the same and state the
balance
2. verify the accuracy of the statements
submitted to the auditing officer/body
 SETTLEMENT OF ACCOUNTS
COA’S AUDIT FUNCTION -
3. verify accounts of persons entrusted
with money, compare the charges with
the ORs/(JE)Vs, allow or reject charges
and state the balance
4. determine a claim by its allowance or
disallowance or rejection in toto or in
part and includes deciding whether
items should or should not be included
SCOPE of the RRSA
 Covers only audited accounts –
revenues and receipts of and
expenditures or uses of govt funds and
property (Sec 3, 1st par.)

 Does not cover the settlement of

property accounts (Sec 3, 2nd par.)
 Gen. Principles, Rules & Procedures
- Settlement of Accounts
Settlement of Accounts - an audit function
1. process of determining the balance of the
accounts of an accountable officer – thru
audit and examination;
-verifying total dr and cr that may be
allowed; balance means disallowance or
charge which shall be his accountability;
(financial audit)
 SETTLEMENT OF ACCOUNTS

 The formal determination of the

legality/propriety of one or more
disbursements/ uses and/or receipts of
funds (compliance audit)
 SETTLEMENT OF ACCOUNTS
 Account- record of an accountable officer
wherein transactions and events pertaining
to fund , obligation, expense, revenue or
collection affecting his accountability are
entered as items of debit and credit
 To settle an account –
to see that the AO is charged with everything that he
is justly chargeable, to make up the debits and
credits, and ascertain the balance remaining in his
hand -
(thru the exercise of COA’s audit function)
 SETTLEMENT OF ACCOUNTS
SETTLEMENT
BY AUDITOR AND
BY ACCOUNTABLE OFFICER (AO) -
 The auditor settles the account of
an AO;

 The accountable officer settles his

accountability
SETTLEMENT OF ACCOUNTS
 Accountability- is the answerability
for government funds of every public
officer whose duties permit or require
the possession or custody of such
government funds in conformity with
laws or regulations;
 The AO’s accountability to be settled
is the balance of the accounts as
determined by the auditor
Gen. Principles, Rules & Procedures -
Settlement of Accounts

2. Settlement of Accts- evidenced by

appropriate marking in the documents
audited as prescribed by COA –
- “ Allowed in Audit” if no diff/balance
is found;
- Otherwise, issue NS, ND, NC pursuant
to Rule III hereof, documents marked
accordingly;
 Gen. Principles, Rules & Procedures -
Settlement of Accounts

3. Audit and examination of transactions

pertaining to an account shall be done
in accordance with laws, rules,
regulations, and standards

- to determine whether transactions

maybe allowed, suspended, disallowed
or charged in audit (NS, ND, NC)
 Gen. Principles, Rules & Procedures -
Settlement of Accounts
 ND/NC partakes of an audit decision
 ND/NC to be supported by recital of facts;
evidence; laws, rules and regulations
violated; and persons liable
 ND- for IIUUEE
 NC- loss of revenue/under-collection
 NS- temporary disallowance
 Service of copy of ND/NC to agency head
and persons liable
 Gen. Principles, Rules & Procedures -
Settlement of Accounts

 AOM
- issued when audit decision is not
yet reached due to incomplete
documentation, deficiencies refer
to financial/operational matters
which do not involved pecuniary
loss.
 Gen. Principles, Rules & Procedures -
Settlement of Accounts
4. NS/ND shall be settled by persons responsible
or liable therefor thru-
NS - compliance with the requirements, or
ND- payments/restitution, or any of the modes
of extinguishment of obligation provided by
law;
Notice of Settlement of S/D/C (NSSDC) –
issued for each settlement
 Gen. Principles, Rules & Procedures -
Settlement of Accounts
 Statement of Audit Suspensions,
Disallowances and Charges (SASDC)
- issued by Auditor within 15 days after
e-o-quarter;
- informs agency of the total S D and C
as at e-o-q audited;
 For transf/retiring officer- updated list

of SDC shall be issued w/I 5 days from

receipt of a request for such list;
 Gen. Principles, Rules & Procedures -
Settlement of Accounts
 AAR
- to include total unsettled NS/ND/NC at
the end of CY as reflected in the Q4
SASDC (Sec 6.1);

- to include comments and observations

on other deficiencies noted in the audit
of accounts as indicated in the AOM
Rules and Regulations on
Settlement of Accounts

SALIENT FEATURES
SALIENT FEATURES OF RRSA
 Use of AOM for deficiencies in
documentation or information
requirements or for financial/
operational deficiencies such as
in accounting, internal control,
property management or similar
issues which do not involve
pecuniary loss;

 Signaturein AOM/ND/NC/NS by
both SA and ATL;
SALIENT FEATURES OF RRSA

 Reply by the Auditor

to management ‘s
comments on the AOM
required;
SALIENT FEATURES OF RRSA
 Conduct of special audit by FAIO
based on fraud audit referral of audit
sector, or request from Ombudsman,
or complaint from other parties
 Special Audit Team’s Team
Leader and SA - to issue the
ND/NC; no NS

 Appeal from ND/NC to RD/CD of FAIO

or office that conducted special audit
 SALIENT FEATURES OF RRSA
 ND/NC (regardless of issuing officer)
which are not yet final and executory as
of RRSA effectivity shall be appealed to
the Regional Director

 Approving officer for NFD and COE

shall be in accordance with Secs. 22.3
and 23.2 of RRSA
- regardless of the signatory to the
decision that has become final/executory
SALIENT FEATURES OF RRSA

 Notice of Finality of Decision

- to be issued for a final and
executory decision to serve as
basis for recording the
disallowance/ charge in the
agency books (Sec 22.6);
 NOTICE OF FINALITY OF DECISION (NFD)
Republic of the Philippines
COMMISSION ON AUDIT
JKL City, Manila
Date: December 12, 2009
NOTICE OF FINALITY OF DECISION (NFD)
Hon. Lito M. Paras
City Mayor
JKL City, Metro Manila
Attention: Mr. Lauro T. Lorenzo
City Accountant
Reference: ND/NC No. - _________________
Date of NC - _________________
Amount - _________________
Nature of ND/NC - Collection of City License tax in the amount of P63,189.00 which was
deficient by P2,700.00 since the correct amount should be P65,889.00.
Persons Liable and date 1. Edna P. Gamba – Assessment Clerk II -
______________
of receipt of ND/NC 2. Joseph R. Santos – Chief, License Division - ______________
3. ABC Enterprise – payor - ______________
Please be informed that the above ND/NC has become final and executory, there being no
appeal filed within the reglementary period.
Accordingly, the above named persons liable shall pay the above amount immediately to the
agency cashier. Failure to pay the same shall authorize the agency cashier to withhold
payment of salary and other money due to persons liable in accordance with COA Order of
Execution to be issued to the agency cashier.
CARLITO G. ODULLO
Audit Team Leader
GINA H. LANDICHO
Supervising Auditor
NOTICE OF FINALITY OF DECISION (NFD)
PROOF OF SERVICE OF NFD TO PERSONS LIABLE

Name Position Received by Date

1. Edna P. Gamba _______________ _____________ ___________

2. Joseph R. Santos _______________ _____________ ___________
3. ABC Enterprise _______________ _____________ ___________

Copy furnished:
The Director
Local Government Sector

• If decision of the Director/ASB or CP attains finality, par 1 may be restated as follows:

Please be informed that the decision of the Director/ Adjudication and Settlement
Board/Commission Proper No. __________ dated _________ has become final and executory in the
absence of an appeal filed within the prescribed period. The said decision affirmed the above
ND/NC.

(Signatory shall be the Director, General Counsel or Commission Secretary as provided under
Section 22.3 of these Rules. A copy of the CFD issued by the Commission Secretary shall be
furnished the General Counsel)
SALIENT FEATURES OF RRSA
 Notice
of Settlement of
S/D/C (NSSDC)

- to be issued whenever an
ND/NC/NS/Decision is
settled;(Sec 13.1) to drop AR
from agency books;
 SUMMARY
AOM OF THE SETTLEMENT
OF ACCOUNT PROCESS
If not settled

If settled
NDs/ NCs/ Ns NSSDC
If not settled

If settled
APPEALS NSSDC
If not settled SASDC
If settled
Notice of Finality of Decision NSSDC
If not settled

If settled
COE NSSDC
If not settled

Referral to the Legal Office

 SALIENT FEATURES OF RRSA

 COA Order of Execution

- to be issued to enforce settlement if the

persons liable refuse or fail to settle
disallowance/charge
 COA Order of Execution (COE)
Republic of the Philippines
COMMISSION ON AUDIT
Office of the General Counsel
Date: July 20, 2010
COA ORDER OF EXECUTION (COE)
Mr. Romeo Formoso
President, GHI Corp.
Roxas Blvd., Manila
Attention: Ms. Erlinda Manrique
Cashier

Reference: CP/ASB Decision No. & date - 2009-023 dated March 10, 2009
ND No. & date - 06-051-101-05 dated July 14, 2006
Amount - P42,000.00
Date of NFD - July 5, 2008
Nature of transaction - Payment for sports equipment under DV No. 03- 07-25 dated
5/28/2006 in the total amount of P142,826.00
Persons Liable 1. Jose L. Unciano – Property Inspector - ___________
2. Gloria G. Manalili – Chief, General Services - ___________
3. Sandra P. Baylon – Chief, Research Division - ___________

You are hereby instructed to withhold the payment of the salaries or any amount due to the above-named
persons liable, for the settlement of their liabilities pursuant to the ND/Decision referred to above, copy
attached and made an integral part hereof.

Payment of salaries or any money due them in violation of this instruction will be disallowed in audit and you
will be held liable therefore.

Wilma C. Jardin
WILMA C. JARDIN
Assistant Commissioner
General Counsel
 COA Order of Execution (COE)

PROOF OF SERVICE OF COE TO AGENCY OFFICIALS

Name Position Received by

Date
1. Mr. Romeo Formoso President, GHI Corp. _____________
_______________
2. Ms. Erlinda Manrique Cashier _____________
_______________

Copy furnished:

Persons liable:
Mr. Jose L. Unciano
Ms. Gloria G. Manalili
Ms. Sandra P. Baylon
All of GHI Corp., Manila

The Accountant
GHI Corp.

The Auditor
GHI Corporation, Manila

The Director, Cluster C

Corporate Government Sector
SALIENT FEATURES OF RRSA
Motion for Recon and APPEALS

 No Motion for Reconsideration at

all adjudication levels, except at
CP;

 Automatic review by CP of
reversal/revision by Director of
Auditor’s decision;
SALIENT FEATURES OF RRSA
 Levels of Appeal
 CD

 ASB

 CP

 SC

 Appeal fee to be paid prior to

assuming jurisdiction over the
appeal
SALIENT FEATURES OF RRSA

 Auditor/RD/CD/ASB, as the
case may be, to comment
on appeals prior to
adjudication by the
appropriate body
SALIENT FEATURES OF RRSA
 Recordsof COA decisions to be
maintained by auditor
 Notice of Disallowance/Notice of Charge
 Appeal to RD/CD
 RD/CD Decision
 Appeal to ASB/CP
 ASB/CP Decision
 NFD
 COE
 NSSDC