Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City, Philippines RESOLUTION No. + 2017-012. Date :_AUG 17 2017 SUBJECT: Establishment of the Performance Audit Office under the Special Services Sector and the transfer thereto of the Government-Wide and Sectoral Performance Audit and the agency-based value-for- money audit component of the comprehensive audit WHEREAS, Section 2, Article IX-D of the 1987 Constitution vested in the Commission on Audit (COA) the authority to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, and recommend measures to improve efficiency and effectiveness of government operations; WHEREAS, to effectively carry out its mandate, this Commission, through Resolution No. 2006-002 dated January 31, 2006, adopted a comprehensive audit approach which includes financial, compliance, and performance or value-for-money (VFM) audits, with instruction to auditors to include the gist of their significant findings and recommendations in the Annual Audit Report (AAR), indicating therein that separate reports on the compliance/VFM audits are available in more detail; WHEREAS, said resolution also directs the then Management Services, now Special Audits Office (SAO), to continue the conduct of Government-Wide and Sectoral Performance Audit (GWASPA), and to coordinate with audit sectors for more concerted effort in the conduct of performance audits in agencies implementing government programs and/or projects; WHEREAS, the SAO cannot fully devote its resources to performance audit since it is also tasked to conduct, among others, rate, subsidy, franchise, and levy audits. Further, as an offshoot of the GWAS! Priority. Development Assistance Fund, the SAO’s absorptive capacity to confayt(more GWASPAS has been significantly affected by its attendance to court and legal processes due to numerous criminal and administrative cases filed against government officials and employees, including private individuals; WHEREAS, a review of the AARs on the comprehensive audit performed by audit teams shows that more focus has been given on financial and compliance audits. The VFM or se Lfperformance audit, for which individual reports' are published by most Supreme Audit Institutions with long experience in the conduct thereof, has not been given sufficient focus by audit teams as evidenced by very few Performance Audit Reports issued by CO. WHEREAS, after evaluation of its performance and assessment of its stakeholders” requirements, the Commission, under Strategic Plan 2016 to 2022, envisions to enhance and focus its resources to performance audit aimed at improving the effectiveness, efficiency, and economy of government programs, projects, and activities; WHEREAS, to enhance and expand performance audit, there is a need to establish a Performance Audit Office (PAO) that shall be solely dedicated to performance audit, and transfer thereto the GWASPA of the SAO and the VFM component of the comprehensive audit at the agency level. The conduct of rate, subsidy, franchise, and levy audits contemplated under Section 7 of the Presidential Decree No. 1445, the Government Auditing Code of the Philippines, shall remain with the SAO; WHEREAS, pursuant to the Special Provisions of Article XXXII of the General Appropriations Act of 2017, the COA Chairperson is authorized to formulate and implement COA’s organizational structure, including the creation of new positions within the limits of its appropriation; NOW, THEREFORE, in view of the above considerations, this Commission, RESOLVES, as it is hereby RESOLVED, to: 1, Establish the PAO under the Special Services Sector; 2. Transfer the GWASPA function of the SAO to the PAO; 3. Transfer the agency-based VFM component of the comprehensive audit to the GWASPA portfolio starting in the audit of Calendar Year (CY) 2018 transactions. In the meantime, the audit sectors shall complete the agency-based VEM audit they have begun until the issuance of the report on CY 2017 transactions. BE IT FURTHER RESOLVED, that the PAC Il be the lead office on performance audit and shall train selected auditors fro ‘udit sectors so that by 2018, each of the sectors shall have a dedicated unit tasked for performance audit to cover more programs and projects, which cut across the sectors. The PAO shall also coordinate with the Professional and Institutional Development Sector on the capacity building of the audit sectors to ensure that a uniform approach on performance audit compliant with the International Standards of Supreme Audit Institutions (ISSAI) shall be adopted across the audit sectors. * Section S.1, ISSAI 3000 or the Implementation Guidelines for Performance Auditing, 69. ~ SaceaceeeeeceBE IT FURTHERMORE RESOLVED, that a Strategic Planning for Performance Audit shall be conducted to ensure proper coordination and systematic assignment of audit topies to PAO and the audit sectors. A risk-based approach on the selection of programs and projects to be audited shall focus on priority programs under the Philippine Development Plan and initiatives for the achievement of the Sustainable Development Goals. BE IT FINALLY RESOLVED, that this Commission shall promulgate the necessary guidelines for the implementation of this Resolution. ] | | ll | MICHAEL G. AGUINALDO. I NH Chairperson JO! TA ISABEL D. AGITO Commissioner Commissioner