ppt presentation 2012

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National Guidelines on Internal National Guidelines on Internal Control System (NGICS)Control System (NGICS)

Presented by:Presented by:

ALBERTO A. BERNARDO, CPA, Esq., CESO IALBERTO A. BERNARDO, CPA, Esq., CESO IDeputy Executive Secretary, Office of the PresidentDeputy Executive Secretary, Office of the President

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I. Legal Bases for Internal ControlI. Legal Bases for Internal Control 1.1. Responsibility for Internal ControlResponsibility for Internal Control 2. Adequate Internal Control System 2. Adequate Internal Control System 3. Corruption Preventive Measure3. Corruption Preventive Measure 4. National Guidelines on Internal Control Systems4. National Guidelines on Internal Control Systems

II. Definition and Concept of Internal ControlII. Definition and Concept of Internal Control 1. 1. Internal ControlInternal Control 2. 2. Fiscal ResponsibilityFiscal Responsibility 3. COA Guidelines on Internal Control3. COA Guidelines on Internal Control 4. INTOSAI Guidelines on Internal Control4. INTOSAI Guidelines on Internal Control 5. Internal Controls are Management Controls 5. Internal Controls are Management Controls

O R D E R O F P R E S E N T A T I O N

III. Internal Control ObjectivesIII. Internal Control Objectives 1. Safeguard Assets1. Safeguard Assets 2. Check Accuracy and Reliability of Accounting 2. Check Accuracy and Reliability of Accounting

DataData 3. Adhere to Managerial Policies3. Adhere to Managerial Policies 4. Comply with Laws, Rules and Regulations4. Comply with Laws, Rules and Regulations 5. Ensure Economical, Efficient, and Effective 5. Ensure Economical, Efficient, and Effective

Operations Operations

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2. Risk Assessment 2. Risk Assessment 2.1. Risk 2.1. Risk 2.2. Risk Management Principles, Framework and 2.2. Risk Management Principles, Framework and

ProcessProcess2.3. Risk Management Framework 2.3. Risk Management Framework 2.4. Risk Management Process2.4. Risk Management Process2.5. Establishing the Context2.5. Establishing the Context2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment2.7. Applicability of Tools Used for Risk Assessment2.7. Applicability of Tools Used for Risk Assessment2.8. Attributes of a Selection of Risk Assessment Tools 2.8. Attributes of a Selection of Risk Assessment Tools

IV. Internal Control ComponentsIV. Internal Control Components 1. Control Environment1. Control Environment 1.1. Public Service Sector Context1.1. Public Service Sector Context

1.2. The Plan of Organization 1.2. The Plan of Organization 1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

3. Control Activity3. Control Activity 3.1. Risk Responses3.1. Risk Responses 3.2. Performance Review and Improvement of 3.2. Performance Review and Improvement of

Operations,Operations, Processes and ActivitiesProcesses and Activities3.3.3.3. Compliance Review and Improvement of Compliance Review and Improvement of

Operations,Operations, Processes and ActivitiesProcesses and Activities3.4. Monitoring and Reviewing3.4. Monitoring and Reviewing

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V. Functions Related to Internal ControlV. Functions Related to Internal Control 1. Nature and Purpose of Review1. Nature and Purpose of Review

2. Scope, Coverage, and Frequency of Review2. Scope, Coverage, and Frequency of Review 3. Actions to be Taken3. Actions to be Taken

4. Information and Communication4. Information and Communication 4.1.4.1. InformationInformation 4.2.4.2. CommunicationCommunication

5. Monitoring5. Monitoring 5.1.5.1. Ongoing MonitoringOngoing Monitoring 5.2. Separate Evaluation 5.2. Separate Evaluation

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The legal bases for internal control in the The legal bases for internal control in the Philippines include 1) Presidential Decree (PD) Philippines include 1) Presidential Decree (PD) 1445, as amended; 2)1987 Philippine 1445, as amended; 2)1987 Philippine Constitution; 3)Executive Order (EO) 292 s. Constitution; 3)Executive Order (EO) 292 s. 1987 or the “Administrative Code of 1987”; 1987 or the “Administrative Code of 1987”; 4)Administrative Order (AO) No. 119 s. 1989; 4)Administrative Order (AO) No. 119 s. 1989; 5)United Nations Convention Against 5)United Nations Convention Against Corruption (UNCAC); 6) Department of Budget Corruption (UNCAC); 6) Department of Budget and Management (DBM) Circular Letter No. and Management (DBM) Circular Letter No. 2008-8; and 7) Commission on Audit (COA) 2008-8; and 7) Commission on Audit (COA) Memorandum No. 2009-004.Memorandum No. 2009-004.

Office of the President

Internal Audit Office

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1. Responsibility for Internal Control1. Responsibility for Internal Control

““SECTION 124. SECTION 124. Installation.Installation. It shall be the It shall be the

direct responsibility of the agency head to direct responsibility of the agency head to

install, implement, and monitor a sound install, implement, and monitor a sound

system of internal control.” system of internal control.” (Presidential Decree (Presidential Decree

(PD) No. 1445, the(PD) No. 1445, the““Government Auditing Code of the Philippines,” as amended, 11 Government Auditing Code of the Philippines,” as amended, 11 June 1978June 1978) )



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2. Adequate Internal Control System2. Adequate Internal Control System

2.1. “Section 2 (1). x x x. However, where the 2.1. “Section 2 (1). x x x. However, where the internal control system of the audited internal control system of the audited agencies is inadequate, the Commission agencies is inadequate, the Commission may adopt such measures, including may adopt such measures, including temporary or special pre-audit, as are temporary or special pre-audit, as are necessary and appropriate to correct necessary and appropriate to correct the deficiencies. x x x.” the deficiencies. x x x.” (Article IX-D, (Article IX-D,

CommissionCommissionon Audit, 1987 Philippine Constitution and Section 11(1), on Audit, 1987 Philippine Constitution and Section 11(1), Chapter 4, Subtitle B COMMISSION ON AUDIT, Title I Chapter 4, Subtitle B COMMISSION ON AUDIT, Title I CONSTITUTIONAL COMMISSION, Book V, Executive Order (EO) CONSTITUTIONAL COMMISSION, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987) amended, 25 July 1987)



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2.2. “Likewise, this Commission shall 2.2. “Likewise, this Commission shall intensify the evaluation of internal intensify the evaluation of internal control systems of government agencies control systems of government agencies to ensure that government resources are to ensure that government resources are safeguarded against loss or wastage, and safeguarded against loss or wastage, and that government operations are efficient, that government operations are efficient, economical and effective.”economical and effective.” (Commission on Audit (Commission on Audit(COA) Circular No. 2011-002, “Lifting of Pre-audit of (COA) Circular No. 2011-002, “Lifting of Pre-audit of Government Transactions,” 22 July 2011)Government Transactions,” 22 July 2011)



2. Adequate Internal Control System2. Adequate Internal Control System

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““2. Each State Party shall, in accordance 2. Each State Party shall, in accordance with the fundamental principles of its with the fundamental principles of its legal system, take appropriate measures to legal system, take appropriate measures to promote transparency and accountability in promote transparency and accountability in the management of public finances. Such the management of public finances. Such measures shall encompass, inter alia: measures shall encompass, inter alia:

x x xx x x

3. Corruption Preventive Measure3. Corruption Preventive Measure

(d)(d)Effective and efficient systems of Effective and efficient systems of risk risk managementmanagement and and internal controlinternal control; ;

x x x.x x x.” ” [underscoring supplied] (Article 9 [underscoring supplied] (Article 9 Public Procurement and Public Procurement and Management of Public FinancesManagement of Public Finances, Chapter II, , Chapter II, Preventive MeasuresPreventive Measures, , United Nations Convention Against Corruption (UNCAC), 31 United Nations Convention Against Corruption (UNCAC), 31 October 2003)October 2003)



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4.1. “SEC. 2. 4.1. “SEC. 2. Implementing Rules, Implementing Rules, Regulations, and Circulars.Regulations, and Circulars. - The Department - The Department of Budget and Management shall of Budget and Management shall coordinate with the Commission on Audit coordinate with the Commission on Audit in the organization and strengthening of the in the organization and strengthening of the internal control systems and procedures.internal control systems and procedures.

4. National Guidelines on Internal Control Systems


The Department of Budget and The Department of Budget and Management shall promulgate the proper Management shall promulgate the proper and appropriate rules, regulations or and appropriate rules, regulations or circulars to implement this circulars to implement this Administrative Order.”Administrative Order.”[underscoring in the original] (Administrative Order No. 119, (Administrative Order No. 119, “Directing the Strengthening of the Internal Control Systems of “Directing the Strengthening of the Internal Control Systems of Government Offices, Agencies, Government-Owned or Controlled Government Offices, Agencies, Government-Owned or Controlled Corporations and Local Government Units in their Fiscal Corporations and Local Government Units in their Fiscal Operations,” 29 March 1989; and Memorandum Order No. 277, Operations,” 29 March 1989; and Memorandum Order No. 277, “Directing the Department of Budget and Management to “Directing the Department of Budget and Management to Promulgate the Necessary Rules, Regulations and Circulars for Promulgate the Necessary Rules, Regulations and Circulars for the Strengthening of the Internal Control Systems of Government the Strengthening of the Internal Control Systems of Government Offices, Agencies, Government-Owned or Controlled Corporations Offices, Agencies, Government-Owned or Controlled Corporations and Local Government Units,” 17 January 1990)and Local Government Units,” 17 January 1990)



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• strengthened strengthened governance and governance and accountabilityaccountability; ;

• ethical, economical, efficient and effective ethical, economical, efficient and effective operationsoperations; ;

• improved ability improved ability to address risksto address risks; ;

• better systems of better systems of responding to citizens’ responding to citizens’ needsneeds; and ; and

• quality quality outputs and outcomesoutputs and outcomes. . [underscoring [underscoring supplied]supplied]

4.2. The NGICS shall achieve the following: 4.2. The NGICS shall achieve the following:





(Department of Budget and Management (DBM) Circular Letter No. (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p.2)(NGICS),” 23 October 2008, p.2)

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4.3. “All concerned are hereby enjoined to monitor 4.3. “All concerned are hereby enjoined to monitor adherence by the audited agencies to the adherence by the audited agencies to the provisions of the said Circular Letter. x x xprovisions of the said Circular Letter. x x x..””

((Commission on Audit (COA)Commission on Audit (COA)

Memorandum No. 2009-004, “DBM Circular Letter No. 2008-8 Memorandum No. 2009-004, “DBM Circular Letter No. 2008-8 dated October 23, 2008 entitled ‘NATIONAL GUIDELINES ON dated October 23, 2008 entitled ‘NATIONAL GUIDELINES ON INTERNAL CONTROL SYSTEMS (NGICS)’” 16 February 2009)INTERNAL CONTROL SYSTEMS (NGICS)’” 16 February 2009)





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1. Internal Control1. Internal Control

““SECTION 123. Definition of Internal Control. – SECTION 123. Definition of Internal Control. – Internal Control is the plan of organization and Internal Control is the plan of organization and all the coordinate methods and measures all the coordinate methods and measures adopted within an organization or agency to adopted within an organization or agency to safeguard its safeguard its assetsassets, check the accuracy and , check the accuracy and reliability of its reliability of its accounting dataaccounting data, and encourage , and encourage adherence to prescribed adherence to prescribed managerial policiesmanagerial policies.” .” [underscoring supplied][underscoring supplied](Presidential Decree (PD) No. 1445, the “Government Auditing Code of (Presidential Decree (PD) No. 1445, the “Government Auditing Code of the Philippines,” as amended, 11 June 1978)the Philippines,” as amended, 11 June 1978)



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2. Fiscal Responsibility2. Fiscal Responsibility

““SEC. 1. SEC. 1. Declaration of Policy. - Declaration of Policy. - All All resources of the government shall be managed, resources of the government shall be managed, expended or utilized in accordance with law expended or utilized in accordance with law and regulations and safeguarded against and regulations and safeguarded against loss or wastage through illegal or improper loss or wastage through illegal or improper disposition disposition to ensure efficiency,to ensure efficiency, economy and economy and effectiveness in the operationseffectiveness in the operations of government. of government. The responsibility to take care that such The responsibility to take care that such policy is faithfully adhered to rests policy is faithfully adhered to rests directly directly with the chief or headwith the chief or head of the government of the government agency concerned.”agency concerned.”[underscoring supplied] (Chapter 1, Subtitle B, Title I, Book V, Executive [underscoring supplied] (Chapter 1, Subtitle B, Title I, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)



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“ “Section 32. Definition of internal control. - Section 32. Definition of internal control. - Internal control comprises Internal control comprises the plan of the plan of organizationorganization and all and all the methods and the methods and measures measures adopted within an agency adopted within an agency to ensureto ensure that that resourcesresources are used consistent with laws, are used consistent with laws, regulations and policies; resources are regulations and policies; resources are safeguarded against loss, wastage and misuse; safeguarded against loss, wastage and misuse; financial and non-financial financial and non-financial informationinformation are are reliable, accurate and timely; and reliable, accurate and timely; and operationsoperations are economical, efficient and effective.”are economical, efficient and effective.”

3. COA Guidelines on Internal Control3. COA Guidelines on Internal Control

[underscoring supplied] (Title 2-Internal Control System, Vol. III, [underscoring supplied] (Title 2-Internal Control System, Vol. III, Commission on Audit (COA) Circular No. 91-368, GAAM, 19 December Commission on Audit (COA) Circular No. 91-368, GAAM, 19 December 1991, p. 63)1991, p. 63)



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4. INTOSAI Guidelines on Internal Control4. INTOSAI Guidelines on Internal Control

““Internal control is an Internal control is an integral processintegral process that is that is effected by an entity’s management and effected by an entity’s management and personnel and is designed personnel and is designed to address risksto address risks and and toto provide reasonable assuranceprovide reasonable assurance that in pursuit of that in pursuit of the entity’s mission, the following general the entity’s mission, the following general objectives are being achieve:objectives are being achieve:

● ● Executing orderly, ethical, economical, Executing orderly, ethical, economical, efficient and effective efficient and effective operationsoperations;;

●● Fulfilling Fulfilling accountabilityaccountability obligations; obligations;

●● Complying with Complying with applicable lawsapplicable laws and and regulations;regulations;

●● Safeguarding Safeguarding resourcesresources against loss, against loss, misuse and damage.” misuse and damage.” [ [underscoring supplied] underscoring supplied] (International(International



Organization of Supreme Audit Institutions (INTOSAI), Organization of Supreme Audit Institutions (INTOSAI), “Guidelines for Internal Control Standards for the Public “Guidelines for Internal Control Standards for the Public Sector”, 2004,Sector”, 2004, p. 6)p. 6)

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5. Internal Controls are Management Controls

5. Internal Controls are Management Controls5.1.5.1. “ “Sec. 33. Distinction from other systems within Sec. 33. Distinction from other systems within

the organizationthe organization. – . – Except for the Internal Audit Except for the Internal Audit Office which is part of the internal control system, Office which is part of the internal control system, internal controls are not separate specialized internal controls are not separate specialized systems within an agency. They consist of systems within an agency. They consist of control control features interwoven into and made an integral features interwoven into and made an integral part of each systempart of each system that management uses that management uses to to regulate and guide its operationsregulate and guide its operations. In this sense, . In this sense, internal controls are management controls.” internal controls are management controls.” [underscoring supplied[underscoring supplied]] (Title (Title

II-Internal Control SystemII-Internal Control System Vol. III, Commission on Audit (COA) Vol. III, Commission on Audit (COA) Circular No. 91-368, GAAM, 19 December 1991, p. 64)Circular No. 91-368, GAAM, 19 December 1991, p. 64)



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5.2.5.2.“Just as internal control in 1992 was “Just as internal control in 1992 was not not limited to the traditional view of financial limited to the traditional view of financial and related administrative controland related administrative control and and included the broader concept of included the broader concept of management control, this document also management control, this document also stresses the importance of non-financial stresses the importance of non-financial information.” information.” [underscoring supplied] [underscoring supplied] (International Organization of Supreme Audit Institutions (INTOSAI), International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, pp. 3-4)Sector,” 16 October 2004, pp. 3-4)



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The general objectives of internal control are The general objectives of internal control are based on Section 123 of PD 1445, as amended based on Section 123 of PD 1445, as amended and Section 1, Chapter 1, Subtitle B, Title and Section 1, Chapter 1, Subtitle B, Title I, Book V of the Administrative Code of 1987. I, Book V of the Administrative Code of 1987. Internal control general objectives are as Internal control general objectives are as follows:follows:1. 1. Safeguard Assets;Safeguard Assets;

2.2. Check Accuracy and Reliability of Accounting Check Accuracy and Reliability of Accounting Data;Data;

3.3. Adhere to Managerial Policies; Adhere to Managerial Policies;

4.4. Comply with Laws and Regulations; Comply with Laws and Regulations; 5.5. Ensure Economical, Efficient, and Effective Ensure Economical, Efficient, and Effective

Operations. Operations. (Department of Budget and Management (DBM) (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, pp.10-14)Control Systems (NGICS),” 23 October 2008, pp.10-14)



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1. Safeguard Assets

1.1. “SEC. 42. 1.1. “SEC. 42. Accounting for Money and Accounting for Money and Property Received by Public Officials. – Property Received by Public Officials. – x x x x x all moneys and property officially x all moneys and property officially received by a public officer received by a public officer in any capacity in any capacity or upon any occasionor upon any occasion must be accounted must be accounted for as government funds and government for as government funds and government property. Government property shall be property. Government property shall be taken up in the bookstaken up in the books of the agency of the agency concerned at acquisition cost or an concerned at acquisition cost or an appraised value.” appraised value.” [underscoring supplied] (Sec. [underscoring supplied] (Sec. 42, 42,



Chapter 7, Subtitle B, Title I, Book V, Executive Order (EO) No. Chapter 7, Subtitle B, Title I, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, July 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 September 2007 and Art. 4057 September 2007 and Art. 405, , Rule XXXIV, Rules and Rule XXXIV, Rules and Regulations Implementing the Local Government Code of 1991, Regulations Implementing the Local Government Code of 1991, 21 February 1992)21 February 1992)

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1. Safeguard Assets

1.2. “1.2. “SEC. 43. Liability for Illegal Expenditures. — x x x Every payment made in violation of said provisions shall be illegal and every official or employee authorizing or making such payment, or taking part therein, and every person receiving such payment shall be jointly and severally liable to the Government for the full amount so paid or received.

x x x.”



(Sec. 43 Chapter 5, Book VI, Executive Order (EO) No. 292 s. (Sec. 43 Chapter 5, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 September 2007)September 2007)

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1. Safeguard Assets

1.3. 1.3. “SEC. 43. Liability for Illegal Expenditures. —

x x x



(Sec. 43 Chapter 5, Book VI, Executive Order (EO) No. 292 s. (Sec. 43 Chapter 5, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 1987; Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 September 2007)September 2007)

Any official or employee of the Any official or employee of the Government knowingly incurring any Government knowingly incurring any obligation, or authorizing any expenditure obligation, or authorizing any expenditure in violation of the provisions herein, or in violation of the provisions herein, or taking part therein, shall be dismissed taking part therein, shall be dismissed from the service, after due notice and from the service, after due notice and hearing by the duly authorized hearing by the duly authorized appointing official. x x x.” appointing official. x x x.”

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1. Safeguard Assets

1.4.1.4. “SEC. 80. “SEC. 80. Misuse of Government Funds Misuse of Government Funds and Property. – and Property. – Any public official or Any public official or employee who shall apply any employee who shall apply any government fund or property government fund or property under his under his administration or controladministration or control to any use other to any use other than for which such fund or property is than for which such fund or property is appropriated by law, shall suffer the appropriated by law, shall suffer the penalty imposed under the appropriate penalty imposed under the appropriate penal laws.” penal laws.” [underscoring supplied] (Chapter 7, Book [underscoring supplied] (Chapter 7, Book

VI, VI,

Executive Order (EO) No. 292 s. 1987, the “Administrative Code Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987 and Manhit vs. Office of the of 1987,” as amended, 25 July 1987 and Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 September 2007)Ombudsman, G.R. No. 159349, 7 September 2007)



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1. Safeguard Assets

1.5. 1.5. “In sum, petitioner’s “In sum, petitioner’s signing the checksigning the check, , with full knowledge that it is to be drawn, with full knowledge that it is to be drawn, as it in fact was, from the as it in fact was, from the special account special account sourced from the donationsourced from the donation, and that the , and that the proceeds of the check are to be used, as proceeds of the check are to be used, as they in fact were, they in fact were, for the procurement of a for the procurement of a vehiclevehicle, coupled with the fact that the , coupled with the fact that the purchase was effected purchase was effected without public without public biddingbidding, renders him liable for conduct , renders him liable for conduct prejudicial to the best interest of the prejudicial to the best interest of the service, aggravated by simple service, aggravated by simple misconduct.” misconduct.” [underscoring supplied][underscoring supplied](Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 (Manhit vs. Office of the Ombudsman, G.R. No. 159349, 7 September 2007)September 2007)



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1. Safeguard Assets

1.6. 1.6. “Although there is nothing in petitioners’ “Although there is nothing in petitioners’ annexes that would show that petitioners annexes that would show that petitioners themselves personally approved and themselves personally approved and signed SPCDFI’s loan application, signed SPCDFI’s loan application, petitioners were the petitioners were the officers directly officers directly charged with the power of processing,charged with the power of processing, reviewing and evaluatingreviewing and evaluating CMP loan CMP loan documents. Office Order No. 361dated 28 documents. Office Order No. 361dated 28 September 1989 creating the Task Force September 1989 creating the Task Force on CMP appointed petitioner Olaguer as on CMP appointed petitioner Olaguer as head of the CMP with the power of head of the CMP with the power of ‘processing, review, and evaluation of CMP ‘processing, review, and evaluation of CMP loan documents.’” loan documents.’” [underscoring supplied][underscoring supplied](Olaguer vs. Domingo, G.R. No. 109666, 20 June 2001)(Olaguer vs. Domingo, G.R. No. 109666, 20 June 2001)



1.7. “In the exercise of the power to process, 1.7. “In the exercise of the power to process, review and evaluate CMP loan review and evaluate CMP loan applications, petitioners had the applications, petitioners had the power to compel submission of power to compel submission of documentary requirements x x x. documentary requirements x x x. Notably, despite non-compliance with the Notably, despite non-compliance with the documentary requirements, SPCDFI-documentary requirements, SPCDFI-AMAKA’s revised loan application AMAKA’s revised loan application which was submitted on October 3, which was submitted on October 3, 1989 was approved by the APED 1989 was approved by the APED on October 5, 1989 -- in a span on October 5, 1989 -- in a span of only three (3) days of only three (3) days.”.”



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1. Safeguard Assets

[Olaguer vs. Domingo, G.R. No. 109666, 20 June 2001][Olaguer vs. Domingo, G.R. No. 109666, 20 June 2001]

1.8. “Petitioners also had the power to 1.8. “Petitioners also had the power to conduct surveys and ocular inspection on conduct surveys and ocular inspection on the subject property. x x x. Indeed, the subject property. x x x. Indeed, there is nothing in the records that there is nothing in the records that would show that petitioners would show that petitioners conducted an actual physical inspection conducted an actual physical inspection of the AMAKO site before or even after of the AMAKO site before or even after release of the loan proceedsrelease of the loan proceeds.” .” [Olaguer [Olaguer

vs. Domingo, G.R. No. 109666, 20 June 2001]vs. Domingo, G.R. No. 109666, 20 June 2001]



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1. Safeguard Assets

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1.Safeguard Assets 1.9.1.9. “Petitioner’s liability herein does not arise “Petitioner’s liability herein does not arise

from an ordinary civil transaction but from from an ordinary civil transaction but from their position as public officials held their position as public officials held accountable for public funds. Presidential accountable for public funds. Presidential Decree No. 1445, the Government Auditing Decree No. 1445, the Government Auditing Code of the Philippines, in Section 103 Code of the Philippines, in Section 103 provides: provides: ‘‘Section 103. General liability for unlawful Section 103. General liability for unlawful

expenditures - Expenditures of government expenditures - Expenditures of government funds or uses of government property in funds or uses of government property in violation of law or regulations shall be aviolation of law or regulations shall be a personal liability of the official or employeepersonal liability of the official or employee found to be directly responsible found to be directly responsible therefor.’”therefor.’”



[underscoring supplied] (Olaguer vs. Domingo, G.R. No. 109666, [underscoring supplied] (Olaguer vs. Domingo, G.R. No. 109666, 20 June 2001; Section 52, Chapter 9, Subtitle B, Title 1, Book V, 20 June 2001; Section 52, Chapter 9, Subtitle B, Title 1, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Art. 454(r), Rule XXXVI, of 1987,” as amended, 25 July 1987; and Art. 454(r), Rule XXXVI, Rules and Regulations Implementing the Local Government Code Rules and Regulations Implementing the Local Government Code of 1991, 21 February 1992)of 1991, 21 February 1992)

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2. Check Accuracy and Reliability of Accounting Data

““SEC. 41. SEC. 41. Objectives of Government Objectives of Government Accounting. – Accounting. – Government accounting shall aim Government accounting shall aim to produce information concerning past to produce information concerning past operations and present conditions; provide a operations and present conditions; provide a basis for guidance for future operations; basis for guidance for future operations; provide for control of the acts of public bodies provide for control of the acts of public bodies and officers in the receiptand officers in the receipt, , disposition and disposition and utilization of funds and propertyutilization of funds and property; and report on ; and report on the financial position and results of operations the financial position and results of operations of government agencies for the information of of government agencies for the information of all persons concerned.” all persons concerned.” [[underscoring underscoring



supplied] (Chapter 6, Subtitle B, Title I, Book V, Executive Order (EO) supplied] (Chapter 6, Subtitle B, Title I, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Alejandro vs. Sandiganbayan, G.R. No. 81031, 20 July 1987; and Alejandro vs. Sandiganbayan, G.R. No. 81031, 20 February 1989)February 1989)

3. Adhere to Managerial Policies

3.1. “SEC. 38. 3.1. “SEC. 38. Definition of Administrative Definition of Administrative Relation-shipRelation-ship. – x x x . – x x x

(1) (1) Supervision and ControlSupervision and Control. – x x x . – x x x to act directly whenever a specific to act directly whenever a specific function is entrusted by law or regulation function is entrusted by law or regulation to a subordinate; direct the performance to a subordinate; direct the performance of duty; restrain the commission of of duty; restrain the commission of acts; review, approve, reverse or modify acts; review, approve, reverse or modify acts and decisions of subordinate officials acts and decisions of subordinate officials or units; determine priorities in the or units; determine priorities in the execution of plans and programs; and execution of plans and programs; and prescribe standardsprescribe standards, , guidelines,guidelines, plans and plans and programsprograms. . x x x.”x x x.” [[underscoring supplied] (Chapter 7, Book underscoring supplied] (Chapter 7, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Albert vs. Gangan, G.R. of 1987,” as amended, 25 July 1987; and Albert vs. Gangan, G.R. No. 126557, 6 March 2001)No. 126557, 6 March 2001)



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3.2. “[I]t can be placed under the control and 3.2. “[I]t can be placed under the control and supervision of the Secretary of National supervision of the Secretary of National Defense, who Defense, who consequentlyconsequently has the power to has the power to conduct an extensive management audit of conduct an extensive management audit of petitioner corporation.” petitioner corporation.” [underscoring supplied] [underscoring supplied]

(The(The


Veterans Federation of the Philippines vs.Veterans Federation of the Philippines vs. Reyes, G. R. No. 155027, Reyes, G. R. No. 155027, 28 February 2006)28 February 2006)



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x x x x x x

3.3. “SEC. 39. 3.3. “SEC. 39. Secretary’s AuthoritySecretary’s Authority. – (1) The . – (1) The Secretary shall have supervision and control Secretary shall have supervision and control over the bureaus, offices, and agencies over the bureaus, offices, and agencies under him, subject to the following under him, subject to the following guidelines: guidelines:

(b) With respect to functions involving (b) With respect to functions involving discretion, experienced judgment or discretion, experienced judgment or expertise vested by law upon a expertise vested by law upon a subordinate agencysubordinate agency, control shall be , control shall be exercised in accordance with said law; exercised in accordance with said law; and and

x x x” x x x” [underscoring supplied] (Chapter 8, Book IV, Executive Order (EO) [underscoring supplied] (Chapter 8, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)25 July 1987)



3333

3.4. “SEC. 7. 3.4. “SEC. 7. Powers and Functions of the Powers and Functions of the SecretarySecretary. – The Secretary shall: . – The Secretary shall:


x x x” x x x”

(2) Establish the (2) Establish the policies and standardspolicies and standards for the for the operation of the Department pursuant to operation of the Department pursuant to the approved programs of government; the approved programs of government;

(3) Promulgate (3) Promulgate rules and regulationsrules and regulations necessary to carry out department necessary to carry out department objectives, policies, functions, plans, objectives, policies, functions, plans, programs and projects; . . . programs and projects; . . .



3434

3.4. . . .3.4. . . .


(5) Exercise (5) Exercise disciplinary powersdisciplinary powers over over officers and employees under the officers and employees under the Secretary in accordance with law, Secretary in accordance with law, including their investigation and the including their investigation and the designation of a committee or officer to designation of a committee or officer to conduct such investigation; . . .conduct such investigation; . . .

((4) Promulgate 4) Promulgate administrative issuances administrative issuances necessary for the efficient necessary for the efficient administration of the offices under the administration of the offices under the Secretary and for proper execution of Secretary and for proper execution of the laws relative thereto. These the laws relative thereto. These issuances shall not prescribe penalties issuances shall not prescribe penalties for their violation, except when for their violation, except when expressly authorized by law; expressly authorized by law;



3535

3.4. . . 3.4. . . ..


(6) Appoint all officers and employees of (6) Appoint all officers and employees of the Department except those whose the Department except those whose appointments are vested in the appointments are vested in the President or in some other appointing President or in some other appointing authority; Provided, however, that authority; Provided, however, that where the Department is regionalized where the Department is regionalized on a department-wide basis, the on a department-wide basis, the Secretary shall appoint employees to Secretary shall appoint employees to positions in the positions in the second levelsecond level in the in the regional offices as defined in this regional offices as defined in this Code; . . . Code; . . .



3636

3.4. . . 3.4. . . ..


x x x” x x x” [underscoring supplied] (Chapter 2, Book IV, Executive [underscoring supplied] (Chapter 2, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)

(7) Exercise jurisdiction over (7) Exercise jurisdiction over all bureausall bureaus, , officesoffices, , agencies and corporationsagencies and corporations under the Department as are under the Department as are provided by law, and in accordance provided by law, and in accordance with the applicable relationships as with the applicable relationships as specified in Chapters 7, 8, and 9 of specified in Chapters 7, 8, and 9 of this Book; this Book;



3737

3.5. “SEC. 38. 3.5. “SEC. 38. Definition of Administrative Definition of Administrative Relation-shipRelation-ship. – x x x . – x x x

(1) x x x (1) x x x (2)(2) Administrative SupervisionAdministrative Supervision. – (a) x x . – (a) x x

x to generally oversee the operations of x to generally oversee the operations of such agencies and such agencies and to insure that they are to insure that they are managed effectively,managed effectively, efficiently and efficiently and economicallyeconomically but without interference with but without interference with day-to-day activities; or require the day-to-day activities; or require the submission of reports and cause the submission of reports and cause the conduct of management audit, performance conduct of management audit, performance evaluation and inspection evaluation and inspection to determine to determine compliancecompliance with policies, standards and with policies, standards and guidelines of the department; . . . guidelines of the department; . . .




3838

3.5. . . . 3.5. . . . to take such actionsto take such actions as may be as may be necessary for the proper performance of necessary for the proper performance of official functions, including rectification of official functions, including rectification of violations, abuses and other forms of violations, abuses and other forms of maladministration; and to review and pass maladministration; and to review and pass upon budget proposals of such agencies but upon budget proposals of such agencies but may not increase or add to them;may not increase or add to them;

x x x.”x x x.”




[underscoring supplied] (Section 38, Chapter 7, Book IV, Executive [underscoring supplied] (Section 38, Chapter 7, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Albert vs. Gangan, G.R. No. 126557, 6 amended, 25 July 1987; and Albert vs. Gangan, G.R. No. 126557, 6 March 2001)March 2001)

3.6. “3.6. “Sometime in June 1990, petitioner instructed the Community Mortgage Management Office (CMMO) to conduct a routine inspection of the AMAKO Project. Upon verification, it was discovered that the AMAKO project was three (3) months in arrears in their amortization.” [Albert vs. [Albert vs.

Gangan, Gangan,

3939Office of the President


G.R. No. 126557, 6 March 2001]G.R. No. 126557, 6 March 2001]


3.7. “3.7. “As a consequence, petitioner, sometime in July 1990, tasked the Committee on Evaluation of Originating Institutions to investigate the originators with respect to their compliance with corporate circulars, other rules and regulations issued by NHMFC regarding its lending programs. One of the originators investigated was the Foundation which was instrumental in the granting of the loan to the AMAKO Project.”



[Albert vs. Gangan, G.R. No.[Albert vs. Gangan, G.R. No. 126557, 6 March 2001]126557, 6 March 2001]


3.8. “In fact, petitioner immediately filed a 3.8. “In fact, petitioner immediately filed a complaint before the Ombudsman against complaint before the Ombudsman against the subordinate employees who appeared the subordinate employees who appeared to be responsible for the fraud. He also to be responsible for the fraud. He also directed the filing of a civil case directed the filing of a civil case against the originator and other persons against the originator and other persons responsible for misrepresentation.responsible for misrepresentation.” ”

[Albert vs. [Albert vs.



Gangan, G.R. Gangan, G.R. No. 126557, 6 March 2001]No. 126557, 6 March 2001]


3.9. “That it is the duty and responsibility 3.9. “That it is the duty and responsibility

of respondent, as register of deeds, to of respondent, as register of deeds, to

directdirect and and supervisesupervise the activities of the activities of

her officeher office can never be overemphasized. can never be overemphasized.

Whether respondent exercised prudence Whether respondent exercised prudence

and vigilance in discharging her and vigilance in discharging her

duties, she has not shown.” duties, she has not shown.” (underscoring (underscoring

and emphasis in the and emphasis in the

original) [Office of the Ombudsman (Mindanao) vs. Cruzabra, G.R. No. 183507, 24 February 2010]

4242Office of the

PresidentInternal Audit Office


original) original) [Office of the Ombudsman (Mindanao) vs. Cruzabra, G. [Office of the Ombudsman (Mindanao) vs. Cruzabra, G. R. No. 183507, 24 February 2010]R. No. 183507, 24 February 2010]

3.10. “Respondent’s guilt of neglect of duty 3.10. “Respondent’s guilt of neglect of duty becomes more pronounced as note is becomes more pronounced as note is taken of her taken of her admitted inactionadmitted inaction upon upon learning of the irregularity. Her learning of the irregularity. Her justification for such inaction – that to do justification for such inaction – that to do so would subject her to a charge of so would subject her to a charge of falsification – reflects her indifference, to falsification – reflects her indifference, to say the least, to her say the least, to her duties and duties and functionsfunctions.” .” (underscoring in the(underscoring in the

4343Office of the



(2)(2)Supervise all the operational activities Supervise all the operational activities of the units assigned to him, for of the units assigned to him, for which he is responsible to the which he is responsible to the secretary; andsecretary; and

x x x.”x x x.”(Chapter 2, Title V, Book IV, Executive Order (EO) No. 292 s. (Chapter 2, Title V, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987)

3.11. “SEC. 6. 3.11. “SEC. 6. UndersecretariesUndersecretaries. x . x x x x x

4444




3.12. “SEC. 15. Bureau of Research and 3.12. “SEC. 15. Bureau of Research and

Standards. - The Bureau of Research and Standards. - The Bureau of Research and

Standards shall develop and set effective Standards shall develop and set effective

standards and reasonable guidelines to standards and reasonable guidelines to

ensure the safety of all infrastructure ensure the safety of all infrastructure

facilities in the country and to assure facilities in the country and to assure

efficiency and proper quality in the efficiency and proper quality in the

construction of government public works. x construction of government public works. x

x x.” x x.”(Chapter 4, Title(Chapter 4, Title

4545Office of the


V, Book IV, EO 292,V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as s. 1987 the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)


3.13. “SEC. 16. Bureau of Design. - The 3.13. “SEC. 16. Bureau of Design. - The Bureau of Design shall ascertain that all Bureau of Design shall ascertain that all government infrastructure project government infrastructure project implementation plans and designs are implementation plans and designs are consistent with current standards and consistent with current standards and guidelines. x x x ” guidelines. x x x ” (Chapter (Chapter

4646Office of the


4, 4, Title V, Book IV, EO 292, s. 1987 the “Administrative Code of Title V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)


3.14. “SEC. 17. Bureau of Construction. – The 3.14. “SEC. 17. Bureau of Construction. – The Bureau of Construction shall provide technical Bureau of Construction shall provide technical services on construction works for services on construction works for infrastructure projects and facilities. For this infrastructure projects and facilities. For this purpose, it shall have the following duties and purpose, it shall have the following duties and responsibilities: responsibilities:

4747Office of the


(Chapter 4, Title V, Book IV, EO 292, s. 1987 the “Administrative (Chapter 4, Title V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as amended, 25 July 1987)Code of 1987,” as amended, 25 July 1987)

x x x.”


(1) Formulate policies relating to (1) Formulate policies relating to construction management and contract construction management and contract administration; administration;

3.15. “SEC. 17. Bureau of Construction. – x x 3.15. “SEC. 17. Bureau of Construction. – x x xx

4848Office of the



(3) Inspect, check and monitor (3) Inspect, check and monitor construction and works supervision construction and works supervision activities of field implementing offices for activities of field implementing offices for the purpose of ensuring that such activities the purpose of ensuring that such activities are being conducted in accordance with the are being conducted in accordance with the current standards and guidelines of the current standards and guidelines of the Department;Department;

x x x

x x x.”


3.16. “SEC. 18. Bureau of Maintenance. – The 3.16. “SEC. 18. Bureau of Maintenance. – The Bureau of Maintenance provides technical Bureau of Maintenance provides technical services on the maintenance and repair of services on the maintenance and repair of infrastructure projects and facilities. For this infrastructure projects and facilities. For this purpose, it shall have the following duties purpose, it shall have the following duties and responsibilities: and responsibilities:

4949Office of the



x x x.”

(1) Formulate policies relating to the (1) Formulate policies relating to the maintenance of infrastructure projects and maintenance of infrastructure projects and facilities; facilities;


3.17. “SEC. 18. Bureau of Maintenance. – x x 3.17. “SEC. 18. Bureau of Maintenance. – x x xx

5050Office of the



(3) Inspect, check, and monitor (3) Inspect, check, and monitor maintenance activities of implementing field maintenance activities of implementing field offices for the purpose of ensuring that such offices for the purpose of ensuring that such activities are being conducted in accordance activities are being conducted in accordance with the current standards and policies of with the current standards and policies of the Department; the Department;

x x x

x x x.”


3.18. “SEC. 19. Bureau of Equipment. – The 3.18. “SEC. 19. Bureau of Equipment. – The Bureau of Equipment provides technical Bureau of Equipment provides technical services on the management of services on the management of construction and maintenance equipment construction and maintenance equipment and ancillary facilities. For this purpose it and ancillary facilities. For this purpose it shall have the following duties and shall have the following duties and responsibilities: responsibilities:

5151Office of the



x x x.”

(1) Formulate policies relating to the (1) Formulate policies relating to the management of infrastructure equipment management of infrastructure equipment and ancillary facilities; and ancillary facilities;


3.19. “SEC. 19. Bureau of Equipment. – x x x3.19. “SEC. 19. Bureau of Equipment. – x x x

5252Office of the



(3) Inspect, check and monitor the (3) Inspect, check and monitor the management of equipment by regional management of equipment by regional equipment services and area shops for the equipment services and area shops for the purpose of ensuring that such activities are purpose of ensuring that such activities are being conducted in accordance with the being conducted in accordance with the current standards and policies of the current standards and policies of the Department; Department;

x x x

x x x.”


3.20. “SEC. 21. 3.20. “SEC. 21. Regional Director. - Regional Director. - x x x x x x Towards this end, and in line with the Towards this end, and in line with the policy of decentralization, he shall, policy of decentralization, he shall, within his defined powers, exercise within his defined powers, exercise functional and administrative supervision functional and administrative supervision over District Offices x x x.” over District Offices x x x.” (Chapter (Chapter

5, Title V, Book IV, 5, Title V, Book IV, Executive Order (EO) No. 292, s. 1987, the “Administrative Executive Order (EO) No. 292, s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)Code of 1987,” as amended, 25 July 1987)

5353




3.21. “SEC. 23. 3.21. “SEC. 23. District EngineerDistrict Engineer. – x x x . – x x x Within his defined powers, he shall Within his defined powers, he shall exercise functional and administrative exercise functional and administrative supervision over district operations x x supervision over district operations x x x.” x.” (Chapter 5, Title V, (Chapter 5, Title V, Book IV, Executive Order (EO) No. 292 s. 1987, the Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)

5454




5555

4.1. “The Code is a general law and 4.1. “The Code is a general law and ‘incorporates in a unified document ‘incorporates in a unified document the the major structural,major structural, functional and procedural functional and procedural principles of governance’principles of governance’ and ‘embodies and ‘embodies changes in administrative structures and changes in administrative structures and procedures designed procedures designed to serveto serve the the people.’’ people.’’ [underscoring[underscoring

4. Comply with Laws, Rules and Regulations

supplied]supplied] (3(3rd rd and 4and 4thth WHEREAS clauses of Executive Order (EO) No. WHEREAS clauses of Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Ople vs. Torres, et. al., G.R. No. 127685, 23 July July 1987; and Ople vs. Torres, et. al., G.R. No. 127685, 23 July 1998)1998)



5656

4.2. “The Code covers both 4.2. “The Code covers both the internal the internal administration of governmentadministration of government, , i.e,i.e, internal internal organization, personnel and recruitment, organization, personnel and recruitment, supervision and discipline, supervision and discipline, and the effects of and the effects of the functions performedthe functions performed by administrative by administrative officials on private individuals or parties officials on private individuals or parties outside government.”outside government.”


[[underscoring supplied]underscoring supplied] (Ople vs. Torres, et. al., G.R. No. 127685, 23 (Ople vs. Torres, et. al., G.R. No. 127685, 23 July 1998)July 1998)



5757




4.3.4.3. “In government, the organizations, “In government, the organizations, programs, activities, and functions are programs, activities, and functions are usually created by law and are usually created by law and are subject to subject to specific rules and regulations specific rules and regulations.” .” [[underscoring underscoring

supplied]supplied] (Section 10 (a), (Section 10 (a), Chapter 3, Title I-Government Auditing Standards and Chapter 3, Title I-Government Auditing Standards and Procedures, Volume III, Commission on Audit (COA) Circular No. Procedures, Volume III, Commission on Audit (COA) Circular No. 91-368, GAAM, 19 December 1991)91-368, GAAM, 19 December 1991)

4.4. “All heads of offices have to rely to a 4.4. “All heads of offices have to rely to a reasonable extent on their subordinates reasonable extent on their subordinates and on the good faith of those who and on the good faith of those who prepare bids, purchase supplies, or prepare bids, purchase supplies, or enter into negotiations. x x x. There enter into negotiations. x x x. There has to be some has to be some added reasonadded reason why he why he should examine each voucher in should examine each voucher in such detail. x x x. There should be such detail. x x x. There should be other grounds than the mere signature or other grounds than the mere signature or approvalapproval appearing on a voucher to sustain appearing on a voucher to sustain a conspiracy charge and conviction.” a conspiracy charge and conviction.”

(underscoring supplied) (underscoring supplied) [Arias vs. [Arias vs.



5858


Sandiganbayan, G.R. No. 81563, 19 December 1989]Sandiganbayan, G.R. No. 81563, 19 December 1989]

4.5. “Petitioner might have indeed been lax 4.5. “Petitioner might have indeed been lax and administratively remiss in placing and administratively remiss in placing too much reliance on the official too much reliance on the official reports submitted by his subordinate reports submitted by his subordinate (Engineer Enriquez), but for conspiracy to (Engineer Enriquez), but for conspiracy to exist, it is essential that there must be exist, it is essential that there must be a conscious design to commit an a conscious design to commit an offense. Conspiracy is offense. Conspiracy is not the product of not the product of negligence but of intentionalitynegligence but of intentionality on on the part of cohorts.”the part of cohorts.”

5959Office of the


[Magsuci vs. [Magsuci vs. Sandiganbayan, G.R. No. L-101545, 3 January Sandiganbayan, G.R. No. L-101545, 3 January 1995]1995]


4.6. “Fairly evident, however, is the fact 4.6. “Fairly evident, however, is the fact that the action taken by Magsuci that the action taken by Magsuci involved the very functions he had to involved the very functions he had to discharge in the performance of his discharge in the performance of his official duties. There has been no official duties. There has been no intimation at all that he had intimation at all that he had foreknowledge of any irregularityforeknowledge of any irregularity committed by either or both Engr. committed by either or both Engr. Enriquez and Ancla.” Enriquez and Ancla.” (underscoring (underscoring

supplied) supplied) [Magsuci vs.[Magsuci vs.



6060

Sandiganbayan,G.R. No. L-101545, 3 January 1995]Sandiganbayan,G.R. No. L-101545, 3 January 1995]


4.7. “When, however, that infraction 4.7. “When, however, that infraction consists in the reliance in good faith, consists in the reliance in good faith, albeit misplaced, by a head of office albeit misplaced, by a head of office on a subordinate upon whom the on a subordinate upon whom the primary responsibility rests, absent a primary responsibility rests, absent a clear case of conspiracy, the Arias clear case of conspiracy, the Arias doctrine must be held to prevail.” doctrine must be held to prevail.”

[Magsuci vs. Sandiganbayan, [Magsuci vs. Sandiganbayan, G.R. No. L-101545, 3 January 1995]G.R. No. L-101545, 3 January 1995]




4.8. “Petitioner, as head of the agency, cannot 4.8. “Petitioner, as head of the agency, cannot

be held personally liable for the disallowance be held personally liable for the disallowance

simply because he was the final approving simply because he was the final approving

authority of the transaction in question and authority of the transaction in question and

that the officers/employees who processed that the officers/employees who processed

the same were directly under his the same were directly under his

supervision.supervision.””(Albert vs. Gangan, G.R. No. 126557, 6(Albert vs. Gangan, G.R. No. 126557, 6 March 2001; Salva vs. March 2001; Salva vs. Carague, G.R. No. 157875, 19 December 2006 )Carague, G.R. No. 157875, 19 December 2006 )




4.9. “He has 4.9. “He has to rely mainly on the to rely mainly on the certifications,certifications, recommendations and recommendations and memoranda of hismemoranda of his subordinates in subordinates in approving the loan. The processing, review approving the loan. The processing, review and evaluation of the loan application and evaluation of the loan application passes through the responsible and passes through the responsible and authorized officersauthorized officers of the CMP Task of the CMP Task Force.Force.”” (underscoring supplied) (underscoring supplied) [Albert vs. [Albert vs. Gangan, G.R. No. 126557, 6 March 2001]Gangan, G.R. No. 126557, 6 March 2001]




4.10. “We have consistently held that every 4.10. “We have consistently held that every person who signs or initials person who signs or initials documents in the course of transit documents in the course of transit through standard operating procedures through standard operating procedures does not automatically become a does not automatically become a conspirator in a crime which transpired at conspirator in a crime which transpired at the stage where he had no participation. the stage where he had no participation. His knowledge of the conspiracy and his His knowledge of the conspiracy and his active and knowing participationactive and knowing participation therein therein must be proved by positive evidence.must be proved by positive evidence.””

(underscoring supplied) (underscoring supplied) [Albert vs. [Albert vs.




Gangan, G.R. No. 126557, 6 March 2001]Gangan, G.R. No. 126557, 6 March 2001]

4.11. “In fact, petitioner immediately filed a 4.11. “In fact, petitioner immediately filed a complaint before the Ombudsman against complaint before the Ombudsman against the subordinate employees who appeared the subordinate employees who appeared to be responsible for the fraud. He also to be responsible for the fraud. He also directed the filing of a civil case directed the filing of a civil case against the originator and other persons against the originator and other persons responsible for misrepresentation. All responsible for misrepresentation. All these acts are these acts are indicative that he had no indicative that he had no knowledgeknowledge of the fraudulent scheme of the fraudulent scheme perpetrated by certain officials or perpetrated by certain officials or employees of his agency.”employees of his agency.”[underscoring supplied] (Albert vs. Gangan, G.R. No. 126557, 6 March 2001)



6565


4.12. “Escara had 4.12. “Escara had foreknowledge of the foreknowledge of the irregularityirregularity attendant in the delivery of attendant in the delivery of the lumber supplied by Guadines. In the lumber supplied by Guadines. In his letter (Exhibit “I”) dated January 23, his letter (Exhibit “I”) dated January 23, 1993 x x x he acknowledged that 1993 x x x he acknowledged that the materials intended for the construction the materials intended for the construction of the Navotas Bridge had been confiscated of the Navotas Bridge had been confiscated by the DENR officials. Such foreknowledge by the DENR officials. Such foreknowledge should have should have put him on alert and put him on alert and prompted himprompted him, at the very least, to make , at the very least, to make inquiries into the transaction and to inquiries into the transaction and to verify x x x.”verify x x x.”



6666


(underscoring supplied) (underscoring supplied) [Escara vs. People of the Philippines, G.R. [Escara vs. People of the Philippines, G.R. No. 164921, 8 July 2005]No. 164921, 8 July 2005]

4.13. “There was evident bad faith and 4.13. “There was evident bad faith and manifest partiality when he signed the manifest partiality when he signed the inspection report and the disbursement inspection report and the disbursement voucher because he had voucher because he had foreknowledgeforeknowledge that the materials delivered by Guadines that the materials delivered by Guadines have already been confiscated by the have already been confiscated by the DENR, which caused undue injury to the DENR, which caused undue injury to the Government and gave unwarranted Government and gave unwarranted benefit to Guadines in the amount of benefit to Guadines in the amount of P70, 924.00.” P70, 924.00.” (underscoring supplied) (underscoring supplied) [Escara vs. [Escara vs.

People of People ofthe Philippines, G.R. No. 164921, 8 July 2005]the Philippines, G.R. No. 164921, 8 July 2005]

6767Office of the



4.14. “The added reason contemplated in Arias 4.14. “The added reason contemplated in Arias which would have which would have put petitioner on his put petitioner on his guard and examineguard and examine the check/s and the check/s and vouchers with some degree of vouchers with some degree of circumspection before signing the same circumspection before signing the same was obtaining in this case. x x x. The was obtaining in this case. x x x. The discrepancydiscrepancy between the names between the names indicated indicated in the checksin the checks on one hand, on one hand, and those and those in the disbursement vouchersin the disbursement vouchers on the other, on the other, should have alerted the should have alerted the petitionerpetitioner. x x x.”. x x x.” (underscoring supplied) (underscoring supplied)

[Cruz[Cruz



6868


vs. Sandiganbayan, G.R. No. 134493, 16 August 2005]vs. Sandiganbayan, G.R. No. 134493, 16 August 2005]

4.15. “x x x it is not unreasonable to expect 4.15. “x x x it is not unreasonable to expect petitioner to exercise the necessary petitioner to exercise the necessary diligence in making sure at the very least diligence in making sure at the very least that the that the proper formalitiesproper formalities in the in the questioned transaction were observed – questioned transaction were observed – that a public bidding was conducted. This that a public bidding was conducted. This step does not entail delving into intricate step does not entail delving into intricate details of product quality complete details of product quality complete delivery for fair and accurate pricing.” delivery for fair and accurate pricing.” [underscoring supplied][underscoring supplied](Nava (Nava vs. Palattao, et. al, G.R. No. 160211, 28 August 2006)




4.16. “Unlike other minute requirements in 4.16. “Unlike other minute requirements in government procurement, compliance government procurement, compliance or non-compliance with the rules on or non-compliance with the rules on public bidding is readily apparentpublic bidding is readily apparent; and ; and the approving authority can easily call the approving authority can easily call the attention of the subordinates con-the attention of the subordinates con-cerned. x x x. The process of cerned. x x x. The process of approval is not a ministerial dutyapproval is not a ministerial duty of of approving authorities to sign every approving authorities to sign every document that comes across their document that comes across their desks, and then point to their desks, and then point to their subordinates as the parties responsible subordinates as the parties responsible if something goes awry.”if something goes awry.”



7070


(underscoring supplied(underscoring supplied) [Nava vs. Palattao, et. al, G.R. No. ) [Nava vs. Palattao, et. al, G.R. No. 160211, 28 August 2006]160211, 28 August 2006]

4.17. “The fact that the Maysilo estate has 4.17. “The fact that the Maysilo estate has spawned conflicting claims of ownership spawned conflicting claims of ownership which invariably reached the courts, a fact which invariably reached the courts, a fact which petitioner cannot ignore which petitioner cannot ignore on account of on account of her long exposure and experienceher long exposure and experience as a as a register of deeds, register of deeds, should have impelledshould have impelled petitioner to be more prudent even to petitioner to be more prudent even to the extent of deliberately holding action the extent of deliberately holding action on the papers submitted to her relative to on the papers submitted to her relative to the estate until she shall have fully satisfied the estate until she shall have fully satisfied herself that everything was above board. herself that everything was above board. x x x.” x x x.”



7171


(underscoring supplied) (underscoring supplied) [Alfonso vs. Office of the President, G.R. [Alfonso vs. Office of the President, G.R. No. 150091, 2 April 2007]No. 150091, 2 April 2007]

4.18. “4.18. “By merely looking at Formal Entry and By merely looking at Formal Entry and Internal Revenue Declaration No. 118302 Internal Revenue Declaration No. 118302 and the invoiceand the invoice, one can readily see the , one can readily see the discrepancy between what are declared discrepancy between what are declared in the former and in the latter. In Formal in the former and in the latter. In Formal Entry and Internal Revenue Declaration Entry and Internal Revenue Declaration No. 118302, what were mentioned No. 118302, what were mentioned were men’s and ladies’ accessories. were men’s and ladies’ accessories. However, in the invoice, electronic However, in the invoice, electronic equipment and appliances such as VHS, equipment and appliances such as VHS, Betamax, television and the like Betamax, television and the like were stated.”were stated.”



7272


(underscoring supplied) (underscoring supplied) [Francisco vs. People of the [Francisco vs. People of the Philippines, G.R. No. 177430, 14 July 2009; Ojeda vs. People of Philippines, G.R. No. 177430, 14 July 2009; Ojeda vs. People of the Philippines, G.R. No. 178935, 14 July 2009]the Philippines, G.R. No. 178935, 14 July 2009]

4.19. “From the entry and the invoice alone, 4.19. “From the entry and the invoice alone, one can definitely see something strange one can definitely see something strange and irregular. His claim of good faith will and irregular. His claim of good faith will not stand. As principal examiner and the not stand. As principal examiner and the superior of Francisco, his duty was to superior of Francisco, his duty was to carefully review the evaluation made carefully review the evaluation made by his subordinateby his subordinate. This, he miserably . This, he miserably failed to do. On the face of the failed to do. On the face of the documents, there were admittedly documents, there were admittedly glaring glaring discrepanciesdiscrepancies and suspicious entries that and suspicious entries that should have alerted himshould have alerted him.” .” (underscoring (underscoring supplied) supplied) [Francisco vs. People of the [Francisco vs. People of the



7373


Philippines, G.R. No. 177430, 14 July 2009; Ojeda vs. People Philippines, G.R. No. 177430, 14 July 2009; Ojeda vs. People of the Philippines, G.R. No. 178935, 14 July 2009]of the Philippines, G.R. No. 178935, 14 July 2009]

7474

5. Ensure Economical, Efficient and Effective Operations

5.1.5.1. Economical. Being able to perform functions Economical. Being able to perform functions and tasks using and tasks using the least amount of the least amount of resourcesresources within a specific timeframe. within a specific timeframe.

5.2.5.2. Efficient. Means “doing things right” given Efficient. Means “doing things right” given the available resources/inputsthe available resources/inputs and within a and within a specified timeframe.specified timeframe.

5.3.5.3. Effective. Means “doing the right things”. Effective. Means “doing the right things”. Operating units must be able to achieve Operating units must be able to achieve the the expected resultsexpected results and contribute to the and contribute to the achievement of the sectoral and societal achievement of the sectoral and societal goals. goals. [underscoring supplied] (Department of Budget [underscoring supplied] (Department of Budget andand



Management (DBM) Circular Letter No. 2008-8, the “National Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, Guidelines on Internal Control Systems (NGICS),” 23 October 2008, pp. 11-12)pp. 11-12)

7575

5.4. “SEC. 6. Authority and Responsibility of the 5.4. “SEC. 6. Authority and Responsibility of the Secretary. – The authority and Secretary. – The authority and responsibility for the exercise of the responsibility for the exercise of the mandate of the Department and for the mandate of the Department and for the discharge of its powers and functions shall discharge of its powers and functions shall be vested in the Secretary, who shall have be vested in the Secretary, who shall have supervision and control of the supervision and control of the Department.”Department.” (Chapter 2, Book IV, (Chapter 2, Book IV, ExecutiveExecutive Order (EO) No. 292 s. 1987, the “Administrative Code Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)of 1987,” as amended, 25 July 1987)




(3)(3)Perform such other duties and Perform such other duties and responsibilities as may be assigned or responsibilities as may be assigned or delegated by the Secretary to promote delegated by the Secretary to promote efficiency and effectiveness in the efficiency and effectiveness in the delivery of public services or as may be delivery of public services or as may be required by law.” required by law.” (Chapter 2, Title V, Book IV, (Chapter 2, Title V, Book IV,

ExecutiveExecutive

7676




5.5. “SEC. 6. 5.5. “SEC. 6. UndersecretariesUndersecretaries. x x . x x x x

Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)

7777

5. Ensure Economical, Efficient and Effective Operations5.6. “SEC. 13. 5.6. “SEC. 13. Planning ServicePlanning Service. – The Planning . – The Planning

Service shall provide the department with Service shall provide the department with economical, efficient and effective services economical, efficient and effective services relating to relating to planningplanning, , programmingprogramming, and , and project developmentproject development, and discharge such , and discharge such other functions as may be provided by other functions as may be provided by law. x x x” law. x x x” [underscoring supplied] (Chapter 3, [underscoring supplied] (Chapter 3,

Book Book IV, Executive Order (EO) No. IV, Executive Order (EO) No. 292 s. 1987, the “Administrative 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)Code of 1987,” as amended, 25 July 1987)



7878

5. Ensure Economical, Efficient and Effective Operations5.7. “SEC. 14. 5.7. “SEC. 14. Financial and Management Financial and Management

ServicesServices. – The Financial and Management . – The Financial and Management Services shall advise and assist the Services shall advise and assist the Secretary on financial and management Secretary on financial and management matters and shall perform such other matters and shall perform such other functions as may be provided by law. functions as may be provided by law. (Chapter 3, Book IV, Executive(Chapter 3, Book IV, ExecutiveOrder (EO) No. 292 s. 1987, the “Administrative Code of 1987,” Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)as amended, 25 July 1987)



7979


5.7.1. “SEC. 1. 5.7.1. “SEC. 1. Declaration of Policy. - Declaration of Policy. - All All resources of the government shall resources of the government shall be managed, expended or utilized be managed, expended or utilized in accordance with law and in accordance with law and regulations and safeguarded against regulations and safeguarded against loss or wastage through illegal or loss or wastage through illegal or improper disposition improper disposition to ensureto ensure efficiency, economy and effectiveness efficiency, economy and effectiveness in the in the operations of governmentoperations of government. . x x x.”x x x.”[underscoring supplied] (Chapter 1, Subtitle B, Title I, [underscoring supplied] (Chapter 1, Subtitle B, Title I, BookBook V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)

5.7. Financial and Management Service 5.7. Financial and Management Service



8080

5. Ensure Economical, Efficient and Effective 5. Ensure Economical, Efficient and Effective OperationsOperations

5.7.2. “SEC. 3. 5.7.2. “SEC. 3. Declaration of Policy. Declaration of Policy. – x – x x x. The budget shall be x x. The budget shall be supportive of and consistent with the supportive of and consistent with the socio-economic development plan socio-economic development plan and shall be oriented towards the and shall be oriented towards the achievement of explicit objectives achievement of explicit objectives and expected results, and expected results, to ensure to ensure that that fundsfunds are utilized and are utilized and operationsoperations are conducted are conducted effectively, economically and effectively, economically and efficiently. x x x.” efficiently. x x x.” [underscoring [underscoring supplied] (Chapter 2, Book VI, Executive Order (EO) supplied] (Chapter 2, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)




8181


5.7.3. “SEC. 3.5.7.3. “SEC. 3. Powers and FunctionsPowers and Functions. - . - The Department of Budget and The Department of Budget and Management shall assist the Management shall assist the President in the preparation of a President in the preparation of a national resources and expenditures national resources and expenditures budget, x x x, achievement of budget, x x x, achievement of more economy and efficiency in more economy and efficiency in the the management of government management of government operationsoperations, x x x.”, x x x.”[underscoring supplied] (Chapter 1, Title XVII, Book IV, [underscoring supplied] (Chapter 1, Title XVII, Book IV, Executive Order (EO) No. 292 s. 1987, the Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July “Administrative Code of 1987,” as amended, 25 July 1987)1987)




8282

5. Ensure Economical, Efficient and Effective Operations5.8. “SEC. 15. 5.8. “SEC. 15. Administrative ServiceAdministrative Service. – The . – The

Administrative Service shall provide the Administrative Service shall provide the Department with economical, efficient and Department with economical, efficient and effective services relating to effective services relating to personnelpersonnel, , legal assistancelegal assistance, , informationinformation, , recordsrecords, , delivery and receipt of delivery and receipt of correspondencecorrespondence, , suppliessupplies, , equipmentequipment, , collectionscollections, , disburse-disburse-mentment, , security and custodial worksecurity and custodial work. It shall . It shall also perform such other functions as also perform such other functions as may be provided by law.” may be provided by law.” [underscoring supplied] [underscoring supplied]

(Chapter 3, (Chapter 3, Book IV, Executive Order (EO) No. Book IV, Executive Order (EO) No. 292 s. 1987, the 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)



5.9. “SEC. 14. 5.9. “SEC. 14. Bureau Head.Bureau Head. – Each Bureau – Each Bureau shall be headed by a Bureau Director shall be headed by a Bureau Director who shall be responsible for efficiently who shall be responsible for efficiently and effectively carrying out the and effectively carrying out the functions of the Bureau.”functions of the Bureau.” (Chapter 4, Title V, Book (Chapter 4, Title V, Book

IV, Executive Order) IV, Executive Order)

8383




(EO) No. 292, s. 1987, the “Administrative Code of 1987,” as (EO) No. 292, s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)

5.10. “SEC. 21. 5.10. “SEC. 21. Regional Director. - Regional Director. - The Regional The Regional Office shall be headed by a Regional Office shall be headed by a Regional Director who shall be responsible for Director who shall be responsible for efficiently and effectively carrying out efficiently and effectively carrying out the duties and responsibilities of the the duties and responsibilities of the Regional Office. x x x.” Regional Office. x x x.” (Chapter 5, Title V, (Chapter 5, Title V,

BookBook

8484




IV, Executive Order (EO) No. 292, s. 1987, the “Administrative IV, Executive Order (EO) No. 292, s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)Code of 1987,” as amended, 25 July 1987)

5.11. “SEC. 23. District Engineer. – The District 5.11. “SEC. 23. District Engineer. – The District Engineer of or within a province or city Engineer of or within a province or city shall be accountable for the efficient and shall be accountable for the efficient and effective conduct of the duties and effective conduct of the duties and responsibilities of the District Office of responsibilities of the District Office of which he is the head. x x x.” which he is the head. x x x.” (Chapter 5, Title V, (Chapter 5, Title V,




Book IV, Executive Order (EO) No. 292 s. 1987, the Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)

8686

““There is a direct relationship between the There is a direct relationship between the general objectives, which represent general objectives, which represent what an what an entity strives to achieveentity strives to achieve, and the internal , and the internal control components, which represent control components, which represent what is what is needed to achieve the general objectives needed to achieve the general objectives. . x x x.”x x x.”

1.1. Control environmentControl environment2.2. Risk assessmentRisk assessment3.3. Control activitiesControl activities4.4. Information and communicationInformation and communication5.5. Monitoring Monitoring (Department of Budget and Management (Department of Budget and Management

( DBM)( DBM)

The Components of Internal Control are:The Components of Internal Control are:



[underscoring supplied][underscoring supplied] (2. Components of Internal Control, (2. Components of Internal Control, International Organization of Supreme Audit Institutions (INTOSAI), the International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 14)October 2004, p. 14)

Circular Letter No. 2008-8, the “National Guidelines on Internal Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 16)Control Systems (NGICS),” 23 October 2008, p. 16)

8787

Relationship in a Three-Dimensional MatrixInternal Control Objectives

Internal ControlComponents

Control Environment

Risk Assessment

Control Activities

Information and Communication

Monitoring

Public

Service

O

rganizations

1) Public

Entity

Safeguard

ing A

ssets

Check A

ccura

cy and

R

eliabili

ty of A

ccountin

g

Data

Ensu

re Eco

nomica

l,

Effi

cient a

nd Effect

ive

Operatio

ns

Comply

with

Laws

and R

egulatio

ns

Adhere

nce to

Manageria

l Polic

ies

2) Private

Entity

Provid

ing Public

Services



8888

1.1. Public Service Sector Context1.1. Public Service Sector Context

1.1.1.1.1.1. Public Service Organization Providing Public Service Organization Providing Public Service as Mandated or Authorized Public Service as Mandated or Authorized by Law;by Law;

1.1.2.1.1.2. Constituents or Public to Serve;Constituents or Public to Serve;

1.1.3.1.1.3. Stakeholders. Stakeholders. (Department of Budget and (Department of Budget and Management Management

1. Control Environment



(DBM) Circular Letter No. 2008-8, the “National Guidelines on (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 18)Internal Control Systems (NGICS),” 23 October 2008, p. 18)

8989

a)a) Public EntityPublic Entity

1.1. Public Service Sector Context1.1. Public Service Sector Context1.1.1. Public Service Organization 1.1.1. Public Service Organization


i)i) “(4) “(4) Agency of the GovernmentAgency of the Government refers to any of the various refers to any of the various units of the Government, units of the Government, including a department, bureau, including a department, bureau, office, instrumentality, or office, instrumentality, or government-owned or controlled government-owned or controlled corporation, or a local corporation, or a local government or a distinct unit government or a distinct unit therein.” therein.” (Section 2, (Section 2,



Introductory Provision,Introductory Provision, Executive Order (EO) No. Executive Order (EO) No. 292 s. 1987, the292 s. 1987, the “ “Administrative Code of 1987,” Administrative Code of 1987,” as amended, 25 July 1987)as amended, 25 July 1987)

9090

ii)ii) “A public office is the right, authority “A public office is the right, authority and duty, created and conferred and duty, created and conferred by law, by which, for a given by law, by which, for a given period, either fixed by law or period, either fixed by law or enduring at the pleasure of the enduring at the pleasure of the creating power, an individual is creating power, an individual is invested with some portion of the invested with some portion of the sovereign functionssovereign functions of the of the government, to be exercised by government, to be exercised by him him for the benefit of the publicfor the benefit of the public. The . The individual so invested is a public individual so invested is a public officer.” officer.” [underscoring supplied][underscoring supplied] (Laurel vs. (Laurel vs. Desierto, Desierto,

a)a) Public EntityPublic Entity

1.1. Public Service Sector Context1.1. Public Service Sector Context1.1.1. Public Service Organization 1.1.1. Public Service Organization




Serana vs. Sandiganbayan, and Javier vs. Sandi-Serana vs. Sandiganbayan, and Javier vs. Sandi-ganbayanganbayan))

9191

b)b) Private Entity Providing Public Private Entity Providing Public ServiceService


1.1.1. Public Service Organization 1.1.1. Public Service Organization


““While purposely organized for the While purposely organized for the gain or benefit of its members, they gain or benefit of its members, they are are required by law to discharge required by law to discharge functions for public benefitfunctions for public benefit.. Examples Examples of these corporations are utility, of these corporations are utility, railroad, warehouse, telegraph, railroad, warehouse, telegraph, telephone, water supply corporations telephone, water supply corporations and transportation companies.” and transportation companies.” [underscoring supplied](Philippine Society[underscoring supplied](Philippine Societyfor the Prevention of Cruelty on Animals vs. COA, G.R. No. for the Prevention of Cruelty on Animals vs. COA, G.R. No. 169752, 25 September 2007)169752, 25 September 2007)



9292

a) Internal and External Publicsa) Internal and External Publics

“ “This means that it has one way or the This means that it has one way or the other affected the efficient distribution other affected the efficient distribution of service to the public. Moreover, of service to the public. Moreover, depending on the particular duties and depending on the particular duties and responsibilities attached to the responsibilities attached to the position of the official or employee position of the official or employee concerned, this can mean service to concerned, this can mean service to the public in general or the employees the public in general or the employees of the agency to which the latter of the agency to which the latter belongs.belongs.” ” [underscoring[underscoring

1.1. Public Service Sector Context1.1. Public Service Sector Context 1.1.2. Constituent or Public to Serve 1.1.2. Constituent or Public to Serve

1. Control Environment1. Control Environment



supplied]supplied] (CSC Resolution No. 01-0973, Rimas, Anthony C., (CSC Resolution No. 01-0973, Rimas, Anthony C., 5 June 2001 and CSC Resolution No. 040688, Saldana, 5 June 2001 and CSC Resolution No. 040688, Saldana, Carmelo R., 21 June 2004)Carmelo R., 21 June 2004)

9393

b) Subject and Object of Public Serviceb) Subject and Object of Public Service

1.1. Public Service Sector Context1.1. Public Service Sector Context 1.1.2. Constituents or Public to Serve 1.1.2. Constituents or Public to Serve


“ “Thus, persons who desire to Thus, persons who desire to engage in the learned professions engage in the learned professions requiring scientific or technical requiring scientific or technical knowledge may be required to take knowledge may be required to take an examination as a prerequisite to an examination as a prerequisite to engaging in their chosen careers. This engaging in their chosen careers. This regulationregulation takes particular pertinence takes particular pertinence in the field of medicine, in the field of medicine, to protect to protect the public the public from the potentially deadly from the potentially deadly effects of incompetence and ignorance effects of incompetence and ignorance among those who would practice among those who would practice medicine.”medicine.”



[underscoring supplied][underscoring supplied] (PRC vs. De Guzman, et al, G.R. (PRC vs. De Guzman, et al, G.R. No. 144681, 21 June 2004)No. 144681, 21 June 2004)

9494


1.1.3. Stakeholder - person or 1.1.3. Stakeholder - person or organization that can affect, be organization that can affect, be affected by, or perceive themselves affected by, or perceive themselves to be affected by a decision or to be affected by a decision or activity. activity. (Clause 3, 3.2.1.1, PNS(Clause 3, 3.2.1.1, PNS


ISO Guide 73:2010 (ISO published 2009), the “Risk ISO Guide 73:2010 (ISO published 2009), the “Risk management – Vocabulary,” 11 March 2010)management – Vocabulary,” 11 March 2010)



9595

1.1. Public Service Sector Context1.1. Public Service Sector Context1.1.3. Stakeholders 1.1.3. Stakeholders


a)a) Internal StakeholdersInternal StakeholdersThese are the individuals and groups These are the individuals and groups that can affect and be affected that can affect and be affected by the agency’s operation by the agency’s operation within a within a particular public service sectorparticular public service sector. .

b)b) External StakeholdersExternal StakeholdersThese are the persons, organizations These are the persons, organizations and other service groups that are and other service groups that are outside a specific public service outside a specific public service sectorsector but may have an interest but may have an interest and can influence the achievement and can influence the achievement of the sectoral goals of the agency of the sectoral goals of the agency concerned. concerned. [underscoring supplied] (Department [underscoring supplied] (Department of of



Budget and Management (DBM) Circular Letter No. Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 20)Systems (NGICS),” 23 October 2008, p. 20)

9696

a) “SEC. 32. a) “SEC. 32. Nature of Public Office. – Nature of Public Office. – Public office is a Public office is a public trustpublic trust. Public . Public officers and employees must at all officers and employees must at all times be times be accountableaccountable to the people, to the people, serveserve them with utmost responsibility, them with utmost responsibility, integrity, loyalty, and efficiency, integrity, loyalty, and efficiency, actact with patriotism and justice, and with patriotism and justice, and leadlead modest lives.” modest lives.” [underscoring[underscoringsupplied] (Chapter 9, Book I, Executive (supplied] (Chapter 9, Book I, Executive (EO) No. 292 s. EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 1987, the “Administrative Code of 1987,” as amended, 25 July 1987July 1987))




1.2. The Plan of Organization1.2. The Plan of Organization

1.2.1. Function1.2.1. Function

b) “Factual findings of administrative b) “Factual findings of administrative agencies are generally respected agencies are generally respected and even accorded finality because and even accorded finality because of the special knowledge and of the special knowledge and expertise gained by these agencies expertise gained by these agencies from handling matters falling under from handling matters falling under their specialized jurisdiction.” their specialized jurisdiction.” (Modesto (Modesto

vs.

9797


1.2. The Plan of Organization1.2. The Plan of Organization



1.2.1. Function1.2.1. Function

Urbina, G.R. No. 189859, 18 October 2010)

9898

1. Control Environment1.2. The Plan of Organization1.2. The Plan of Organization



1.2.2. Structure1.2.2. Structure

a) “SECTION 1. a) “SECTION 1. Purpose and Number of Purpose and Number of Departments. – Departments. – The Executive Branch The Executive Branch shall have such Departments as are shall have such Departments as are necessary necessary for the functional distribution for the functional distribution of the work of the Presidentof the work of the President and and for the performance of their for the performance of their functions.”functions.”[underscoring supplied] (Chapter I, Book IV, Executive [underscoring supplied] (Chapter I, Book IV, Executive Order (Order (EO) No. 292 s. 1987, the “Administrative Code of EO) No. 292 s. 1987, the “Administrative Code of 1987,” 25 July 1987.1987,” 25 July 1987.))

b)b) “SEC. 2. “SEC. 2. Declaration of Policy. – Declaration of Policy. – x x x. x x x. (3) The functions of the different Depart-(3) The functions of the different Depart-ments shall be decentralized in order ments shall be decentralized in order to reduce red tape, x x x Adequate to reduce red tape, x x x Adequate authority shall be delegated to subordi-authority shall be delegated to subordi-nate officials. Administrative decisions nate officials. Administrative decisions and actions shall, as much as and actions shall, as much as feasible, be at the level closest to feasible, be at the level closest to the public.”the public.”

9999





(Section 2(3), Chapter I, Book IV, (Section 2(3), Chapter I, Book IV, EO 292 s. 1987, the EO 292 s. 1987, the “Administrative Code of 1987”“Administrative Code of 1987”))

c) “The extent and size of departmentation/ c) “The extent and size of departmentation/ divisionalization shall take into divisionalization shall take into account the account the functional distributionfunctional distribution, , workload, span of control, type and workload, span of control, type and variety of skills/variety of skills/expertise requiredexpertise required, the , the number of personnel for each type of number of personnel for each type of expertise, and the geographical expertise, and the geographical location of the work station in location of the work station in order to ensure clear and effective order to ensure clear and effective performance accountability.” performance accountability.” [underscoring [underscoring

supplied] (Item III supplied] (Item III

100100




ORGANIZATION GUIDELINESORGANIZATION GUIDELINES,, (A), CSC-DBM Joint Resolution (A), CSC-DBM Joint Resolution No. 1 s. 2006, the “Rationalization Program’s Organization No. 1 s. 2006, the “Rationalization Program’s Organization and Staffing Standards and Guidelines,” 12 May 2006)and Staffing Standards and Guidelines,” 12 May 2006)


d) “SEC. 4. d) “SEC. 4. Organizational Structure. – Organizational Structure. – The Department shall be composed The Department shall be composed of:of:

101101





(1) The Department Proper consisting (1) The Department Proper consisting of the Office of the Secretary, of the Office of the Secretary, the Offices of the Undersecretaries the Offices of the Undersecretaries and Assistant Secretaries, the and Assistant Secretaries, the Internal Audit Service, Monitoring Internal Audit Service, Monitoring and Information Service, Planning and Information Service, Planning Service, Comptrollership and Service, Comptrollership and Financial Management Service, Financial Management Service, Legal Service, and the Legal Service, and the Administrative and Manpower Administrative and Manpower Management Service;Management Service; . . .. . .

d) (2) The Bureau of Research and d) (2) The Bureau of Research and Standards, Bureau of Design, Standards, Bureau of Design, Bureau of Construction, Bureau Bureau of Construction, Bureau of Maintenance, and Bureau of of Maintenance, and Bureau of Equipment; andEquipment; and

(3) The Field Offices, consisting (3) The Field Offices, consisting of x x x Regional Offices x x x, of x x x Regional Offices x x x, and their respective District and their respective District Offices.”Offices.”

102102




1.2.2. Structure 1.2.2. Structure (continuation)(continuation)

(Section 4, Chapter I, Title V, Book IV, Executive (Section 4, Chapter I, Title V, Book IV, Executive Order (Order (EO) No. 292 s. 1987, the “Administrative EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987Code of 1987,” as amended, 25 July 1987))

103103


1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

““These are the control processes that are These are the control processes that are implemented and which implemented and which form part of the form part of the normal recurring operationsnormal recurring operations of an of an organization. They guide and communicate organization. They guide and communicate management actions management actions at all levelsat all levels and and ensureensure that operating activities are performed within that operating activities are performed within the standards prescribed the standards prescribed in each systemin each system.” .” [underscoring supplied][underscoring supplied](Department of Budget and Management (DBM) Circular Letter No. (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, pp. 27-28)(NGICS),” 23 October 2008, pp. 27-28)



104104

1. Control Environment1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

1.3.1. Control Methods and Measures 1.3.1. Control Methods and Measures a)a) Delegation of authority and Delegation of authority and

supervision;supervision;b) Segregation of functions for b) Segregation of functions for

processing, reviewing, approval, processing, reviewing, approval, recording and custody;recording and custody;

c)c) Access to resources and records; Access to resources and records; d)d) Completeness and integrity of Completeness and integrity of transaction documents and transaction documents and reports;reports;

e) Verification of transactions; ande) Verification of transactions; and f) f) Reconciliation of records and Reconciliation of records and

data. data. (Department of Budget and Management (DBM) (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, pp. Internal Control Systems (NGICS),” 23 October 2008, pp. 27-28)27-28)



105105

1.1. Control EnvironmentControl Environment


1.3.2. Planning 1.3.2. Planning a) “ART. 405. a) “ART. 405. Fundamental Principles. – Fundamental Principles. – x x x x x x

(a) National Planning shall be based on (a) National Planning shall be based on local planning to ensure that local planning to ensure that the the needs and aspirations of the peopleneeds and aspirations of the people as well as those of the LGUs shall be as well as those of the LGUs shall be considered in the formulation of considered in the formulation of budgets of NGAs;budgets of NGAs;

x x x.”x x x.”[underscoring supplied] (Rule XXXIV, Rules and Regulations [underscoring supplied] (Rule XXXIV, Rules and Regulations Implementing the Local Government Code of 1991, 21 Implementing the Local Government Code of 1991, 21 February 1992)February 1992)



b) “SEC. 10. b) “SEC. 10. Planning Service. – x Planning Service. – x x x x x

106106

1.1. Control EnvironmentControl Environment1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

1.3.2. Planning 1.3.2. Planning



x x x x x x (3) Formulate long-range, medium-(3) Formulate long-range, medium-

term and annual development term and annual development plans and programs for in-plans and programs for in-frastructure, especially frastructure, especially highways, flood control and highways, flood control and water resource development water resource development systems, and other public works systems, and other public works projects, including projects, including phasing of phasing of implementationimplementation;;

x x x.”x x x.”[underscoring supplied] (Section 10, Chapter 3, [underscoring supplied] (Section 10, Chapter 3, Title V, Book IV, EO 292, s. 1987 the Title V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as amended, 25 “Administrative Code of 1987,” as amended, 25 July 1987)July 1987)

c) “SEC. 20. c) “SEC. 20. Regional Offices. - x x x Regional Offices. - x x x

(5)(5) Coordinate with other departments, Coordinate with other departments, agencies, institutions and agencies, institutions and organizations, especially local organizations, especially local government units within the region in government units within the region in the planning and implementation of the planning and implementation of infrastructure projects; infrastructure projects;

x x x.” x x x.” (Chapter 5, Title V, Book IV, EO 292, s. 1987 the (Chapter 5, Title V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)

107107

1. Control Environment1. Control Environment1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures




x x x x x x

d) “SEC. 22. d) “SEC. 22. District Office. – x x x District Office. – x x x

(5)(5) Coordinate with other departments, Coordinate with other departments, agencies, institutions and agencies, institutions and organizations, especially local organizations, especially local government units in the district government units in the district in the planning and in the planning and implementation of infrastructure implementation of infrastructure projects; projects;

x x x.” x x x.”

108108

1. Control Environment1. Control Environment1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures




(Chapter 5, Title V, Book IV, EO 292, s. 1987 the (Chapter 5, Title V, Book IV, EO 292, s. 1987 the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)

x x x x x x

109109

1.1. Control EnvironmentControl Environment1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

a) “SEC. 3. a) “SEC. 3. Declaration of Policy. Declaration of Policy. – x x x – x x x The budget shall be supportive of and The budget shall be supportive of and consistent with the socio-economic consistent with the socio-economic development plan and shall be oriented development plan and shall be oriented towards the achievement of towards the achievement of explicit explicit objectivesobjectives and and expected resultsexpected results, , to to ensureensure that funds are utilized and that funds are utilized and operations are conducted effectively, operations are conducted effectively, economically and efficiently. x x economically and efficiently. x x x.”x.”

1.3.3. Budget 1.3.3. Budget

[underscoring supplied] (Chapter 2, Book VI, Executive [underscoring supplied] (Chapter 2, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)



110110

1.1. Control Environment Control Environment


b) “(7) ‘Expected result’ means service, b) “(7) ‘Expected result’ means service, product, or benefit that will accrue product, or benefit that will accrue to the public, estimated in to the public, estimated in terms of performance measures or terms of performance measures or targets.”targets.”

1.3.3. Budget 1.3.3. Budget



(Section 2, Chapter 1, Book VI, Executive Order (EO) No. (Section 2, Chapter 1, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987; and Art. 406 (g), Rule XXXIV, amended, 25 July 1987; and Art. 406 (g), Rule XXXIV, Rules and Regulations Implementing the Local Rules and Regulations Implementing the Local Government Code of 1991, 21 February 1992)Government Code of 1991, 21 February 1992)

111111

a) “SEC. 10. a) “SEC. 10. Statement of Objectives. - x x Statement of Objectives. - x x x x

x x xx x x(3) Institute control measures through (3) Institute control measures through the promulgation of auditing and the promulgation of auditing and accounting rules and regulations accounting rules and regulations governing the receipts, disbursements, governing the receipts, disbursements, and uses of funds and property, and uses of funds and property, consistent with the total economic consistent with the total economic development efforts of the development efforts of the Government: Government:

x x x.”x x x.”


1.3.4. Auditing and Accounting1.3.4. Auditing and Accounting1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures



(Chapter 4, Subtitle B, Title I, Book V, EO 292 s. 1987, the (Chapter 4, Subtitle B, Title I, Book V, EO 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)

112112

b) b) “The responsibilities of the Heads of the “The responsibilities of the Heads of the Requesting Unit, the Budget Unit and Requesting Unit, the Budget Unit and the Accounting Unit are hereby set forth the Accounting Unit are hereby set forth as follows:as follows:2.1. 2.1. The Head of the Requesting The Head of the Requesting

Unit x x x shall certify on the Unit x x x shall certify on the necessity and legality of necessity and legality of charges to charges to appropriations/allotment under his appropriations/allotment under his direct supervision as well as the direct supervision as well as the validity, propriety and legality of validity, propriety and legality of supporting documents. . . . supporting documents. . . .





113113

b) . . . 2.2. The Head of the Budget Unit b) . . . 2.2. The Head of the Budget Unit shall certify the availability of shall certify the availability of allotment and obligations allotment and obligations incurred in the ObR or budget incurred in the ObR or budget and utilization in the BUR.and utilization in the BUR.

2.3. x x x2.3. x x x2.4. For contract or purchase order, For contract or purchase order,

the Head of Accounting Unit the Head of Accounting Unit shall certify the availability of shall certify the availability of funds based on the ObR or BUR funds based on the ObR or BUR duly certified by the Budget duly certified by the Budget Officer. Officer.

. . .. . .


1.3.4. Auditing and Accounting 1.3.4. Auditing and Accounting (continuation)(continuation)




114114

b) . . . 2.5.b) . . . 2.5.The Head of the Accounting The Head of the Accounting Unit shall certify the availability Unit shall certify the availability of cash and completeness of of cash and completeness of supporting documents in the supporting documents in the DV.DV.

2.6. x x x.” 2.6. x x x.” (Commission on Audit (COA) (Commission on Audit (COA)

CircularCircular






No. 2006-003 “Restatement with Amendments No. 2006-003 “Restatement with Amendments of COA Circular No. 2005-001 on Accounting of COA Circular No. 2005-001 on Accounting Policies Related to the Budget, Accounting and Policies Related to the Budget, Accounting and Disbursement Functions in National Disbursement Functions in National Government Agencies under the New Government Agencies under the New Government Accounting System (NGAS), 31 Government Accounting System (NGAS), 31 January 2006)January 2006)

115115

c) “11. Approved for Payment (Box B) c) “11. Approved for Payment (Box B) – approval by the Head of – approval by the Head of the Agency or his Authorized the Agency or his Authorized Representative on the payment Representative on the payment covered by the DV. covered by the DV.

x x x.”x x x.”





(Annex B, Commission on Audit (COA) Circular No. (Annex B, Commission on Audit (COA) Circular No. 2006-003 “Restatement with Amendments of COA 2006-003 “Restatement with Amendments of COA Circular No. 2005-001 on Accounting Policies Circular No. 2005-001 on Accounting Policies Related to the Budget, Accounting and Related to the Budget, Accounting and Disbursement Functions in National Government Disbursement Functions in National Government Agencies under the New Government Accounting Agencies under the New Government Accounting System (NGAS)”, 31 January 2006)System (NGAS)”, 31 January 2006)

116116

d) “The authority of the Head of d) “The authority of the Head of Office to approve the Disbursement Office to approve the Disbursement Voucher is dependent on the Voucher is dependent on the certifications of the Budget Officer, certifications of the Budget Officer, the Accountant and the Treasurer on the Accountant and the Treasurer on the principle that it would be the principle that it would be improbable for the Head of Office to improbable for the Head of Office to check all the details and conduct check all the details and conduct physical inspection and verification of physical inspection and verification of all papers considering the all papers considering the voluminous paperwork attendant to voluminous paperwork attendant to his office.” his office.” Roque vs. Court of Appeals, et.al., G.R.Roque vs. Court of Appeals, et.al., G.R.





No. 179245, 23 July 2008)No. 179245, 23 July 2008)

e) “Specifically, C.V. Canchela & Associates e) “Specifically, C.V. Canchela & Associates is similar to the case at bar, in that the is similar to the case at bar, in that the contracts involved in both cases failed to contracts involved in both cases failed to comply with the relevant provisions of comply with the relevant provisions of Presidential Decree No. 1445 and the Presidential Decree No. 1445 and the Revised Administrative Code of 1987. Revised Administrative Code of 1987. Nevertheless, ‘(t)he illegality of the Nevertheless, ‘(t)he illegality of the subject Agreements proceeds, it bears subject Agreements proceeds, it bears emphasis, from an express declaration emphasis, from an express declaration or prohibition by law, not from any or prohibition by law, not from any intrinsic illegality. As such, the intrinsic illegality. As such, the Agreements are not illegal per se, and Agreements are not illegal per se, and the party claiming thereunder may the party claiming thereunder may recover what had been paid or recover what had been paid or delivered.’” delivered.’” [Vigilar vs. Aquino, G.R. No. [Vigilar vs. Aquino, G.R. No.

180388, 18 180388, 18

January 2011]January 2011]




1.3.4. Auditing and Accounting 1.3.4. Auditing and Accounting 1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

f) “Even if a certification of f) “Even if a certification of appropriation is not applicable to appropriation is not applicable to PNR if the funds used are internally PNR if the funds used are internally generated, still a certificate of fund generated, still a certificate of fund availability is required. Thus, the three availability is required. Thus, the three contracts between PNR and Kanlaon contracts between PNR and Kanlaon are void for violation of Section 46, 47, are void for violation of Section 46, 47, and 48, Subtitle B, Title I, Book V of and 48, Subtitle B, Title I, Book V of the Administrative Code of 1987, as the Administrative Code of 1987, as well as Sections 85, 86, and 87 of the well as Sections 85, 86, and 87 of the Government Auditing Code of the Government Auditing Code of the Philippines.Philippines.” ” [Philippine National Railways vs. [Philippine National Railways vs.



118118

Kanlaon Construction Enterprises Co, Inc., G.R. No. Kanlaon Construction Enterprises Co, Inc., G.R. No. 182967, 6 April 2011]182967, 6 April 2011]



f) “Section 48 of the Administrative Code f) “Section 48 of the Administrative Code of 1987 provides that ‘the officer or of 1987 provides that ‘the officer or officers entering into the contract shall officers entering into the contract shall be liable to the Government or other be liable to the Government or other contracting party contracting party for any consequent for any consequent damagedamage to the same extent as if the to the same extent as if the transaction had been wholly between transaction had been wholly between private parties. Kanlaon could go after private parties. Kanlaon could go after the officers who signed the contract the officers who signed the contract and hold them personally liable.and hold them personally liable.” ” [underscoring supplied][underscoring supplied][Philippine National Railways vs. Kanlaon Construction [Philippine National Railways vs. Kanlaon Construction Enterprises Co, Inc., G.R. No. 182967, 6 April 2011]Enterprises Co, Inc., G.R. No. 182967, 6 April 2011]



119119




120120


1.3.5. Procurement1.3.5. Procurement1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

a) “Section 20. Pre-procurement a) “Section 20. Pre-procurement ConferenceConference. .

a) Confirm the description and a) Confirm the description and scope of the scope of the contractcontract, the , the ABCABC, , and contract and contract durationduration..

b) Ensure that the procurement is b) Ensure that the procurement is in accordance with the project in accordance with the project and and annual procurement plansannual procurement plans; ; . . . . . .

20.1.20.1.During this conference, the During this conference, the participants, led by the BAC shall:participants, led by the BAC shall:



121121


1.3.5. Procurement 1.3.5. Procurement (continuation)(continuation)


i)i) availability of availability of appropriations appropriations and and programmed budget for contract.programmed budget for contract.

ii)ii) completeness of the completeness of the Bidding Bidding DocumentsDocuments and their adherence and their adherence to relevant general procurement to relevant general procurement guidelines; . . .guidelines; . . .

a). . . c)a). . . c)Determine the readiness of the Determine the readiness of the procurement at hand, including, procurement at hand, including, among other aspects, the following:among other aspects, the following:



122122




iv)iv) confirmation of the availability confirmation of the availability of of ROWROW and the ownership of and the ownership of affected properties.affected properties.

iii)iii) completion of the completion of the detailed detailed engineeringengineering according to the according to the prescribed standards in the prescribed standards in the case of infrastructure projects; case of infrastructure projects; andand

a). . . a). . .

d)d) Review, modify and agree on Review, modify and agree on the the criteriacriteria for eligibility screening, for eligibility screening, evaluation and post-evaluation and post-qualification; . . .qualification; . . .



123123




a). . . e)a). . . e)Review and adopt the procurement Review and adopt the procurement scheduleschedule, including deadlines and , including deadlines and timeframes, for the different timeframes, for the different activities; andactivities; and

f)f) Reiterate and emphasize the Reiterate and emphasize the importance of importance of confidentialityconfidentiality, in , in accordance with Section 19 of accordance with Section 19 of this IRR, and the applicable this IRR, and the applicable sanctions and penalties, as well sanctions and penalties, as well as agree on measures to ensure as agree on measures to ensure compliance with the foregoing.” compliance with the foregoing.” [underscoring supplied][underscoring supplied]



(Rule VII-INVITATION TO BID, Revised Implementing (Rule VII-INVITATION TO BID, Revised Implementing Rules and Regulations of RA 9184 or the Rules and Regulations of RA 9184 or the “Government Procurement Reform Act”, 2 “Government Procurement Reform Act”, 2 September 2009)September 2009)

124124



in parenthesis supplied] (Suarez vs. COA, G.R. No. 131077, in parenthesis supplied] (Suarez vs. COA, G.R. No. 131077, 7 August 1998)7 August 1998)

b) “Clearly, petitioner’s participation in b) “Clearly, petitioner’s participation in the PBAC does not render her liable for the PBAC does not render her liable for the disallowed amounts. As the solicitor the disallowed amounts. As the solicitor general correctly argued, petitioner general correctly argued, petitioner had had nothing to do with the preparation nothing to do with the preparation and the computationand the computation of the AAE (now of the AAE (now ABC) and, thus, should not have been ABC) and, thus, should not have been held liable for the amounts held liable for the amounts disauthorized during the post-audit.” disauthorized during the post-audit.”

[underscoring and words [underscoring and words



c) “It should be noted that the disallowance c) “It should be noted that the disallowance fell under Mobilization and fell under Mobilization and Demobilization, and Earthfill and Demobilization, and Earthfill and Compaction expenses, as appearing in Compaction expenses, as appearing in the Approved Agency Estimates (AAE) the Approved Agency Estimates (AAE) [now ABC]. x x x. [P]etitioner [now ABC]. x x x. [P]etitioner had had nothing to do with the preparation nothing to do with the preparation and the computationand the computation of the AAE. of the AAE. Therefore, she should not have been Therefore, she should not have been held liable for the amounts disallowed held liable for the amounts disallowed during the post-audit. during the post-audit.” ” (initial(initialin bracket supplied; underscoring supplied) [Salva vs.in bracket supplied; underscoring supplied) [Salva vs. Carague, G.R. No. 157875, 19 December 2006]

125125Office of the


1. Control Environment1.3 All the Coordinate Methods and Measures1.3 All the Coordinate Methods and Measures

1.3.5. Procurement1.3.5. Procurement

c) “It is evident that the additional c) “It is evident that the additional expense was for the benefit of the expense was for the benefit of the PSU, x x x. The additional expense was PSU, x x x. The additional expense was also within the Approved Agency also within the Approved Agency Estimates. Further, there is no showing Estimates. Further, there is no showing that the petitioner was ill-motivated, or that the petitioner was ill-motivated, or that she had personally profited or that she had personally profited or sought to profit from the transactions, sought to profit from the transactions, or that the disbursements have been or that the disbursements have been made for personal or selfish ends.made for personal or selfish ends.””

(Salva vs. Carague, G.R. No. 157875, 19 December 2006)(Salva vs. Carague, G.R. No. 157875, 19 December 2006)

126126Office of the




127127



d) “13.1. d) “13.1. To enhance the transparencyTo enhance the transparency of of the process, the BAC shall, the process, the BAC shall, in all in all stagesstages of the procurement process, of the procurement process, inviteinvite, in addition to the representative , in addition to the representative of the COA, at least two (2) of the COA, at least two (2) observers, who shall not have the observers, who shall not have the right to vote, right to vote, to sit in its proceedingsto sit in its proceedings where:where:1. 1. At least one (1) shall come from a At least one (1) shall come from a

duly recognized private group in a duly recognized private group in a sector or discipline relevantsector or discipline relevant to the to the procurement at hand, x x x; andprocurement at hand, x x x; and

2. The other observer shall come 2. The other observer shall come from a non-government organization from a non-government organization (NGO).” (NGO).” [underscoring supplied][underscoring supplied] (Rule V-BIDS AND (Rule V-BIDS AND AWARDS COMMITTEE, Revised Implementing Rules and AWARDS COMMITTEE, Revised Implementing Rules and Regulations of RA 9184 or the “Government Regulations of RA 9184 or the “Government Procurement Reform Act, 2 September 2009)Procurement Reform Act, 2 September 2009)



128128



e)e) “The post-qualification shall “The post-qualification shall verifyverify, , validatevalidate, , and ascertainand ascertain all statements all statements made and documents submitted by the made and documents submitted by the bidder with the Lowest Calculated bidder with the Lowest Calculated Bid/Highest Rated Bid, Bid/Highest Rated Bid, using non-using non-discretionary criteriadiscretionary criteria, as stated in the , as stated in the Bidding DocumentsBidding Documents. These criteria shall . These criteria shall consider, but shall not be limited to, the consider, but shall not be limited to, the following: following:

a) Legal Requirements. x x x.a) Legal Requirements. x x x. b) Technical Requirements. x x x.b) Technical Requirements. x x x. c) Financial Requirements. x x x.” c) Financial Requirements. x x x.”

[underscoring supplied] (Section 34.3, Rule X – POST-[underscoring supplied] (Section 34.3, Rule X – POST-QUALIFICATION, Revised Implementing Rules and Regulations QUALIFICATION, Revised Implementing Rules and Regulations of RA 9184 or the “Government Procurement Reform Act”, 2 of RA 9184 or the “Government Procurement Reform Act”, 2 September 2009)September 2009)



129129



f) “The fact is all too glaring that during f) “The fact is all too glaring that during the post-qualification stage, the BAC the post-qualification stage, the BAC considered some factors which were considered some factors which were extraneous to and not included in the extraneous to and not included in the bid documentsbid documents, x x x, and, at the , x x x, and, at the same time, same time, glossed over two of the glossed over two of the requirements which were indicated in the requirements which were indicated in the bid documentsbid documents, x x x. Essentially, it , x x x. Essentially, it can be said that the eligible bidders can be said that the eligible bidders did not bid upon the same thing.”did not bid upon the same thing.” [underscoring supplied] (Commission on Audit vs. Link [underscoring supplied] (Commission on Audit vs. Link Worth International, Inc., G.R. No. 182559, 13 March 2009)Worth International, Inc., G.R. No. 182559, 13 March 2009)



130130

g) “12.2. The BAC shall be g) “12.2. The BAC shall be responsible for ensuringresponsible for ensuring that the that the procuring entity abides by the procuring entity abides by the standards set forth by the Act and this standards set forth by the Act and this IRR, and it shall prepare a IRR, and it shall prepare a procurement procurement monitoring reportmonitoring report x x x shall cover all x x x shall cover all procurement activities specified procurement activities specified in the in the APPAPP, whether ongoing and completed, , whether ongoing and completed, from the holding of from the holding of the pre-the pre-procurement conference toprocurement conference to the the issuance of issuance of notice of awardnotice of award and and the the approval of the contractapproval of the contract, including , including the the standard and actual timestandard and actual time for each major for each major procurement activity. x x x .” procurement activity. x x x .” [underscoring supplied] (Rule V-Bids [underscoring supplied] (Rule V-Bids


1.3 All the Coordinate Methods and Measures1.3 All the Coordinate Methods and Measures1.3.5. Procurement1.3.5. Procurement

and Awards Committee, “Revised Implementing Rules and and Awards Committee, “Revised Implementing Rules and Regulations of RA 9184”, 2 September 2009)Regulations of RA 9184”, 2 September 2009)



h) “In this case, it was clearly h) “In this case, it was clearly shown that the CDA could have shown that the CDA could have purchased the same quality purchased the same quality computers with similar technical computers with similar technical specifications at much lower cost specifications at much lower cost and the result of technical and the result of technical evaluation was manipulated to evaluation was manipulated to favor one bidder, for which the favor one bidder, for which the COA found the petitioner to be COA found the petitioner to be directly responsible.directly responsible.””(Verzosa, Jr. vs Carague, G.R. No. 157838, 8 (Verzosa, Jr. vs Carague, G.R. No. 157838, 8 March 2011)March 2011)

131131Office of the





h) “As pointed out in our Decision, h) “As pointed out in our Decision, records showed it was petitioner who records showed it was petitioner who ordered the reconstitution of the PBAC ordered the reconstitution of the PBAC which nullified the previous bidding which nullified the previous bidding conducted in December 1991. He conducted in December 1991. He further secured the services of the further secured the services of the DAP-TEC for technical evaluation and DAP-TEC for technical evaluation and signed the agreement for the said signed the agreement for the said technical assistance when it is technical assistance when it is already the duty of the PBAC already the duty of the PBAC Chairman.” Chairman.” (Verzosa, Jr. vs (Verzosa, Jr. vs

132132Office of the




Carague, G.R. No. 157838, 7 February 2011)Carague, G.R. No. 157838, 7 February 2011)

i) i) “Moreover, despite patent and glaring “Moreover, despite patent and glaring defects in the typewriters which could defects in the typewriters which could be determined by a reasonable be determined by a reasonable inspection of the units, petitioner inspection of the units, petitioner signed the Reports of Inspection that signed the Reports of Inspection that mentioned only that the delivered mentioned only that the delivered typewriters met the typewriters met the quantityquantity ordered. ordered. The report was silent on the The report was silent on the quality of the typewriters. Yet, she quality of the typewriters. Yet, she hastily signed it, conveniently hastily signed it, conveniently overlooking the deficiencies in the overlooking the deficiencies in the transaction.” transaction.” (underscoring original) (underscoring original) [Dugayon vs. [Dugayon vs. People of the Philippines, G.R. No. 147333, 12 August People of the Philippines, G.R. No. 147333, 12 August 2004]2004]

133133Office of the




i)i) “She accepted the secondhand type-“She accepted the secondhand type-writers, contrary to the requirement to writers, contrary to the requirement to buy brand new units, and allowed buy brand new units, and allowed payment for them at the price of brand payment for them at the price of brand new units. She admitted that the new units. She admitted that the specification for the typewriters should specification for the typewriters should be brand new.” be brand new.” (Dugayon vs. People of the (Dugayon vs. People of the

Philippines, Philippines,

134134Office of the




G.R. No. 147333, 12 August 2004)G.R. No. 147333, 12 August 2004)

j) “Section 54. Terms and Conditions for j) “Section 54. Terms and Conditions for the use of Alternative Methodsthe use of Alternative Methods

4.1. Splitting of Government Contracts 4.1. Splitting of Government Contracts means the division or breaking means the division or breaking up of GOP contracts into smaller up of GOP contracts into smaller quantities and amounts, or dividing quantities and amounts, or dividing contract implementation into contract implementation into artificial phases of sub-contracts artificial phases of sub-contracts for for the purpose of evading or the purpose of evading or circumventing the requirementscircumventing the requirements of of law and this IRR, especially the law and this IRR, especially the necessity of public bidding and necessity of public bidding and the require-ments for the the require-ments for the alternative methods of alternative methods of procurement.” x x x.”procurement.” x x x.” (underscoring (underscoring supplied) [Rule XVI, Revised Implementing Rules and supplied) [Rule XVI, Revised Implementing Rules and Regulations of Republic Act 9184, 2 September 2009]Regulations of Republic Act 9184, 2 September 2009]



135135



k) “Splitting may be in the form of (1) k) “Splitting may be in the form of (1) Splitting of Requisitions which Splitting of Requisitions which consists in the non-consolidation of consists in the non-consolidation of requisitions for one or more requisitions for one or more items items needed at about the same timeneeded at about the same time by by the requisitioner; (2) Splitting of the requisitioner; (2) Splitting of Purchase orders which consists in Purchase orders which consists in the issuance of two or more the issuance of two or more purchase orders based on two or purchase orders based on two or more more requisitions for the same or requisitions for the same or at about the same timeat about the same time by the different by the different requisitioners; and (3) Splitting of requisitioners; and (3) Splitting of payments which consists in making payments which consists in making two or more payments for one or more two or more payments for one or more items items involving one purchase involving one purchase orderorder.”.”

(underscoring(underscoring supplied) [Preagido vs. Sandiganbayan, G.R. No. 52341-46, 25 November 2005]



136136


1.3.5. Procurement 1.3.5. Procurement

k) “He could not have failed to notice k) “He could not have failed to notice that there was only one set of request that there was only one set of request for sealed quotation for the total of 9, for sealed quotation for the total of 9, 369 cubic meters of anapog binders 369 cubic meters of anapog binders and one purchase order which and one purchase order which supported the three GVs all for supported the three GVs all for amounts less than P50,000.00 each to amounts less than P50,000.00 each to the same contractor/ supplier James the same contractor/ supplier James Tiu. The issuance of three GVs for Tiu. The issuance of three GVs for amounts less that P50, 000.00 each amounts less that P50, 000.00 each was resorted to since a higher amount was resorted to since a higher amount would have required the vouchers to would have required the vouchers to be forwarded to the Regional Auditor be forwarded to the Regional Auditor for action and review.” for action and review.” [Preagido vs. [Preagido vs. Sandiganbayan, G.R. No. 52341-46, 25 November 2005]Sandiganbayan, G.R. No. 52341-46, 25 November 2005]





l) “The flowchart clearly shows that, l) “The flowchart clearly shows that, after the PROJECT IMPLEMENTATION after the PROJECT IMPLEMENTATION stage, the project must be inspected stage, the project must be inspected by the PROJECT INSPECTORATE TEAM by the PROJECT INSPECTORATE TEAM before there can be before there can be ACCEPTANCE/TURNOVER and ACCEPTANCE/TURNOVER and thereafter, PAYMENT. x x x. [I]t can thereafter, PAYMENT. x x x. [I]t can be be deduced from the flow chart deduced from the flow chart that that prior examination of the project by the prior examination of the project by the Inspectorate Team is Inspectorate Team is necessarynecessary before there can be acceptance or before there can be acceptance or turnover of PSB projects and payment turnover of PSB projects and payment to the contractors concerned.” to the contractors concerned.” (emphasis and (emphasis and

underscoring originalunderscoring original) [Leycano vs. Commission on Audit, ) [Leycano vs. Commission on Audit, G.R. No. 154665, 10 February 2006]G.R. No. 154665, 10 February 2006]

138138Office of the




l) “Thus, petitioner l) “Thus, petitioner should have should have perceived the anomalyperceived the anomaly in the in the existence of Acceptance Reports existence of Acceptance Reports executed by DECS officials executed by DECS officials priorprior to the to the Inspectorate Team’s assessment of Inspectorate Team’s assessment of the projects and its issuance of a the projects and its issuance of a certificate of inspection. Strangely, certificate of inspection. Strangely, rather than rather than being alerted by this being alerted by this circumstancecircumstance, petitioner even claims , petitioner even claims that these Acceptance Reports were that these Acceptance Reports were among his bases for signing the among his bases for signing the Certificate of Inspection.” Certificate of Inspection.” (underscoring supplied)(underscoring supplied)[Leycano vs. Commission on [Leycano vs. Commission on Audit, G.R. No. 154665, 10 February 2006]Audit, G.R. No. 154665, 10 February 2006]

139139Office of the




140140


1.3.6. Qualification Standards (Personnel)1.3.6. Qualification Standards (Personnel)1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

a)a) ““SEC. 22. SEC. 22. Qualification StandardsQualification Standards. – (1) . – (1) x x x Qualification standards x x x Qualification standards shall be used as basis for civil shall be used as basis for civil service examinations for service examinations for positions in the career service, as positions in the career service, as guides guides in appointment and other in appointment and other personnel actionspersonnel actions, in the , in the adjudication of protested adjudication of protested appointments, in determining training appointments, in determining training needs, and as aid in the inspection needs, and as aid in the inspection and audit of the agencies personnel and audit of the agencies personnel work programs. x x x.” work programs. x x x.” [underscoring [underscoring supplied] (Chapter 5, Subtitle A, Title I, supplied] (Chapter 5, Subtitle A, Title I,

Book V, Executive Order (EO) No. 292 s. 1987, the Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)



141141


(2) The establishment, administration and (2) The establishment, administration and maintenance of qualification standards maintenance of qualification standards shall be the shall be the responsibility of the responsibility of the department or agencydepartment or agency, with the assistance , with the assistance and approval of the Civil Service and approval of the Civil Service Commission and in consultation with the Commission and in consultation with the Wage and Position Classification Wage and Position Classification Office.”Office.” [underscoring supplied] (Chapter [underscoring supplied] (Chapter 5, Subtitle A, Title I, Book V, Executive Order No. 292, or the 5, Subtitle A, Title I, Book V, Executive Order No. 292, or the “Administrative Code of 1987,” as amended, 25 July 1987)“Administrative Code of 1987,” as amended, 25 July 1987)



1.3.6. Qualification Standards (Personnel)1.3.6. Qualification Standards (Personnel)

b) “SEC. 22. b) “SEC. 22. Qualification Standards Qualification Standards – (1) x x – (1) x x x x

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1. Control Environment1. Control Environment1.3. All the Coordinate Methods and Measures 1.3. All the Coordinate Methods and Measures

c) “Since the responsibility for the estab-c) “Since the responsibility for the estab-lishment, administration and lishment, administration and maintenance of qualification standards maintenance of qualification standards lies with the concerned department or lies with the concerned department or agency, the role of the CSC is agency, the role of the CSC is limited to assisting the department limited to assisting the department or agency with respect to these or agency with respect to these qualification standards and approving qualification standards and approving them. The them. The CSC cannot substitute its CSC cannot substitute its own standards for those of the own standards for those of the department or agencydepartment or agency, specially in , specially in a case like this in which an a case like this in which an independent constitutional body is independent constitutional body is involved.” involved.” [underscoring supplied] (Office [underscoring supplied] (Office of the Ombudsman vs. Civil Service Commission, G.R. No. of the Ombudsman vs. Civil Service Commission, G.R. No. 162215, 30 July 2007)162215, 30 July 2007)



1.3.6. Qualification Standards (Personnel)1.3.6. Qualification Standards (Personnel)

143143


1.3.7. Performance (Personnel)1.3.7. Performance (Personnel)1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

a)a) “SEC. 33 “SEC. 33 Performance Evaluation Performance Evaluation System. – x x x System. – x x x Such performance Such performance evaluations system shall be evaluations system shall be administered in such manner as to administered in such manner as to continually foster the improvement of continually foster the improvement of individual employee efficiency and individual employee efficiency and organizational effectivenessorganizational effectiveness.”.”[underscoring supplied] (Chapter 5, Subtitle A, Title I, Book V, [underscoring supplied] (Chapter 5, Subtitle A, Title I, Book V, the “Administrative Code of 1987,” as amended, 25 July 1987)the “Administrative Code of 1987,” as amended, 25 July 1987)



144144

b) “(1) Governing Principles - x x x b) “(1) Governing Principles - x x x (d) A performance-based incentive (d) A performance-based incentive scheme which scheme which integrates personnel integrates personnel and organizational performanceand organizational performance shall shall be established to reward exemplary be established to reward exemplary civil servants and well-performing civil servants and well-performing institutions; x x x” institutions; x x x” [underscoring [underscoring

supplied] supplied]


(Joint Resolution No. 4, the “Joint Resolution Authorizing (Joint Resolution No. 4, the “Joint Resolution Authorizing the President of the Philippines to Modify the the President of the Philippines to Modify the Compensation and Position Classification System of Compensation and Position Classification System of Civilian Personnel and the Base Pay Schedule of Military Civilian Personnel and the Base Pay Schedule of Military and Uniformed Personnel in the Government, and for and Uniformed Personnel in the Government, and for other Purposes,” 17 June 2009)other Purposes,” 17 June 2009)



1.3.7. Performance (Personnel)1.3.7. Performance (Personnel)

145145


c) “Section. 93. Grounds and Procedure for c) “Section. 93. Grounds and Procedure for Dropping from the Rolls. - x x x.Dropping from the Rolls. - x x x.

[underscoring supplied] (Rule 19, Revised Rules on [underscoring supplied] (Rule 19, Revised Rules on Administrative Cases in the Civil Service, CSC Administrative Cases in the Civil Service, CSC Resolution No. 1101502, 8 November 2011)Resolution No. 1101502, 8 November 2011)

1.1. An official or employee who is given An official or employee who is given two (2) consecutive unsatisfactorytwo (2) consecutive unsatisfactory ratingsratings may be dropped from the rolls may be dropped from the rolls after due notice. x x x.after due notice. x x x.

2.2. An official or employee, who for An official or employee, who for one one evaluation period is rated poorevaluation period is rated poor in in performance, may be dropped from performance, may be dropped from the rolls after due notice. x x the rolls after due notice. x x x ” x ”



b. Unsatisfactory or Poor Performance b. Unsatisfactory or Poor Performance a. x x x a. x x x

1.3.7. Performance (Personnel)1.3.7. Performance (Personnel)

146146


1.3.8. Discipline (Personnel)1.3.8. Discipline (Personnel)1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

a) “SEC. 47. Disciplinary Jurisdiction. – a) “SEC. 47. Disciplinary Jurisdiction. – (1) x x x (2) The Secretaries and (1) x x x (2) The Secretaries and heads of agencies and instrumentalities, heads of agencies and instrumentalities, provinces, cities and municipalities shall provinces, cities and municipalities shall have jurisdiction have jurisdiction to investigate and to investigate and decide decide matters involving disciplinary matters involving disciplinary action against officers and employees action against officers and employees under their jurisdiction. x x x .” under their jurisdiction. x x x .” [underscoring supplied][underscoring supplied](Chapter 6, Subtitle A, Title I, Book V, Executive Order (EO) (Chapter 6, Subtitle A, Title I, Book V, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)



147147


b) “SEC. 30. b) “SEC. 30. Authority to Appoint and Authority to Appoint and DisciplineDiscipline. – x x x In the case of . – x x x In the case of the line bureau or office, the head the line bureau or office, the head shall also appoint the shall also appoint the second level second level personnel of the regional officespersonnel of the regional offices, , unless such power has been unless such power has been delegated. He shall have the delegated. He shall have the authority to discipline employees in authority to discipline employees in accordance with the Civil Service accordance with the Civil Service Laws.” Laws.” [underscoring supplied][underscoring supplied] (Chapter 6, Book IV, Executive Order (EO) No. 292 s. (Chapter 6, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987”, 25 July 1987)1987, the “Administrative Code of 1987”, 25 July 1987)



1.3.8. Discipline (Personnel)1.3.8. Discipline (Personnel)

148148

c) “SEC. 27. c) “SEC. 27. Duties of a Regional Duties of a Regional DirectorDirector. – The Regional Director shall: . – The Regional Director shall:

x x xx x x(4) Appoint personnel to positions in (4) Appoint personnel to positions in

the the first level and casual and first level and casual and seasonal employeesseasonal employees; and exercise ; and exercise disciplinary actions over them in disciplinary actions over them in accordance with the Civil Service accordance with the Civil Service Law; Law;

[underscoring supplied] (Chapter 5, Book IV, Executive [underscoring supplied] (Chapter 5, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)

x x x.”x x x.”





149149

d) “Section 1. Public Office is d) “Section 1. Public Office is a public a public trusttrust. Public officers and employees . Public officers and employees must at all times be must at all times be accountableaccountable to the to the people, people, serveserve them with utmost them with utmost responsibility, integrity, loyalty, and responsibility, integrity, loyalty, and efficiency, efficiency, actact with patriotism and with patriotism and justice, and justice, and leadlead modest lives.” modest lives.” [underscoring supplied] [underscoring supplied] Article XI [ACCOUNTABILITY Article XI [ACCOUNTABILITY OF PUBLIC OFFICERS], 1987 Philippine Constitution)OF PUBLIC OFFICERS], 1987 Philippine Constitution)






150150

e) “SEC. 35. e) “SEC. 35. Ethics in GovernmentEthics in Government. – All . – All public officers and employees shall public officers and employees shall be bound by a Code of Ethics to be bound by a Code of Ethics to be promulgated by the Civil Service be promulgated by the Civil Service Commission.” Commission.” (Chapter 9, Book I, Executive ((Chapter 9, Book I, Executive (EO) EO)

No. No. 292 s. 1987, the “Administrative Code of 1987,” as 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987amended, 25 July 1987))






151151

f)f) “Section 1. x x x (d) Those who render “Section 1. x x x (d) Those who render free voluntary service to the free voluntary service to the government are covered by the government are covered by the following: following:

2) 2) Norms of conduct and ethical Norms of conduct and ethical standards; standards;

1)1) Laws on rewards and incentives; Laws on rewards and incentives;


3) Duties and obligations of public 3) Duties and obligations of public officers and employees;officers and employees;

4) Prohibitions and sanctions 4) Prohibitions and sanctions enumerated in these Rules; and enumerated in these Rules; and

5) Civil and criminal liability5) Civil and criminal liability.”(Section 1(d), (Section 1(d), Rule XII, Rules Implementing The Code of Conduct and Rule XII, Rules Implementing The Code of Conduct and Ethical Standards for Public Officials and Employees Ethical Standards for Public Officials and Employees pursuant to Section 12 of Republic Act (RA) No. 6713, 21 pursuant to Section 12 of Republic Act (RA) No. 6713, 21 April 1989)April 1989)




152152



g) “The principle is that when an g) “The principle is that when an officer or employee is disciplined, the officer or employee is disciplined, the object sought is not the punishment object sought is not the punishment of such officer or employee but of such officer or employee but the the improvement of the public serviceimprovement of the public service and and the preservation of the public’s faith the preservation of the public’s faith and confidence in the and confidence in the government.”government.”[underscoring supplied] (Remolana[underscoring supplied] (Remolanavs. CSC, G.R. No. 137473, 2 August 2001; and CSC vs. vs. CSC, G.R. No. 137473, 2 August 2001; and CSC vs. Cortez, G.R. No. 155732, 3 June 2004)Cortez, G.R. No. 155732, 3 June 2004)




153153

h) “x x x the powers so delegated to the h) “x x x the powers so delegated to the officer are held in trust for the people officer are held in trust for the people and are to be exercised in behalf of and are to be exercised in behalf of the government or the government or of all citizens who of all citizens who may need the intervention of the may need the intervention of the officersofficers. Such trust extends to all . Such trust extends to all matters within the range of duties matters within the range of duties pertaining to the office. In other pertaining to the office. In other words, public officers are but words, public officers are but the the servants of the peopleservants of the people, and , and not their not their rulersrulers.” .” [underscoring supplied] (Sabio vs.[underscoring supplied] (Sabio vs.Gordon, G.R. No. Gordon, G.R. No. 174340, 17 October 2006)174340, 17 October 2006)






154154

i) “x x x conduct prejudicial to the i) “x x x conduct prejudicial to the best interest of the service refers best interest of the service refers to acts or omissions that to acts or omissions that violate the violate the norm of public accountabilitynorm of public accountability and and diminish – or tend to diminish – the diminish – or tend to diminish – the people’s faithpeople’s faith in the Judiciary. x x in the Judiciary. x x xx The image of the Judiciary is The image of the Judiciary is mirrored in the conduct of its mirrored in the conduct of its personnel personnel whether insidewhether inside or outsideor outside the court. Thus, court personnel the court. Thus, court personnel must exhibit a high sense of must exhibit a high sense of integrity integrity not only in the not only in the performance of their official duties but performance of their official duties but also in their personal affairsalso in their personal affairs.” .” [emphasis [emphasis




in the original; underscoring supplied] (Toledo vs. Perez, in the original; underscoring supplied] (Toledo vs. Perez, A.M. Nos. P-03-1677 and P-07-2317, 15 July 2009)A.M. Nos. P-03-1677 and P-07-2317, 15 July 2009)


155155

j) “j) “As an employeeAs an employee, he is required to , he is required to render service for the prescribed render service for the prescribed working hours. This is working hours. This is one of the one of the conditions for payment of his conditions for payment of his salariessalaries. x x x . x x x As a public servantAs a public servant, it , it is also incumbent upon him to serve the is also incumbent upon him to serve the public at least for the required amount public at least for the required amount of time. In fact he is even encouraged of time. In fact he is even encouraged to work beyond the prescribed working to work beyond the prescribed working hours hours in order that public service will in order that public service will not be prejudicednot be prejudiced. It is evident that he . It is evident that he does not take does not take his duty his duty to heart to heart considering the amount of undertime he considering the amount of undertime he incurred. x x x.” incurred. x x x.” [underscoring[underscoring




Supplied] (CSC Resolution No. 020766, Lalao, Usop M., 28 Supplied] (CSC Resolution No. 020766, Lalao, Usop M., 28 May 2002)May 2002)


156156

k) “x x x k) “x x x failed to uphold the law and failed to uphold the law and provide a sound legal assistance and provide a sound legal assistance and supportsupport to the mayor in carrying to the mayor in carrying out the delivery of basic services and out the delivery of basic services and provisions of adequate facilities provisions of adequate facilities when he advised [the mayor] to when he advised [the mayor] to proceed with the construction of the proceed with the construction of the subject projects without prior subject projects without prior competitive bidding.”competitive bidding.” [underscoring supplied, [underscoring supplied,

words in parenthesis in words in parenthesis in the original] (Salumbides vs. Ombudsman, G.R. No. the original] (Salumbides vs. Ombudsman, G.R. No. 180917180917,, 23 April 2010) 23 April 2010)






157157

a) “SEC. 51 a) “SEC. 51 Evaluation of Agency Evaluation of Agency Performance . - Performance . - The President, through The President, through the Secretary, shall evaluate on a the Secretary, shall evaluate on a continuing basis the continuing basis the quantitative and quantitative and qualitative measuresqualitative measures of agency of agency performance as reflected in the performance as reflected in the units of work measurement and other units of work measurement and other indicators of agency performance, indicators of agency performance, including the including the standard and actual standard and actual costs per unit of workcosts per unit of work.”.”[underscoring [underscoring supplied]supplied]


1.3.9. Performance (Agency)1.3.9. Performance (Agency)1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

(Chapter 6, Book VI, Executive Order (EO) No. 292 s. (Chapter 6, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)25 July 1987)



158158


1.3.9. Performance (Agency)1.3.9. Performance (Agency)1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

b)b) “SEC. 8. “SEC. 8. Submission of Performance Submission of Performance Evaluation Reports. - Evaluation Reports. - The Secretary The Secretary shall formulate and shall formulate and enforce a system of enforce a system of measuring and evaluatingmeasuring and evaluating periodically periodically and objectively the performance of and objectively the performance of the Department and submit the same the Department and submit the same annually to the President.”annually to the President.” [underscoring[underscoringsupplied] (Chapter 2, Book IV, Executive Order (EO) No. supplied] (Chapter 2, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)



a) “Systems/Process Approach. x x x. a) “Systems/Process Approach. x x x. The organization should identify its The organization should identify its customers and other interested customers and other interested parties as well as their parties as well as their requirements, needs and requirements, needs and expectations, expectations, to define the to define the organization’s intended outputsorganization’s intended outputs.”.”

159159


1.3.10. Systems/Process Approach1.3.10. Systems/Process Approach1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures



[underscoring[underscoring supplied] (Clause 5.1.1. ISO 9000, the supplied] (Clause 5.1.1. ISO 9000, the “Introduction and Support Package: Guidance on the “Introduction and Support Package: Guidance on the Concept and Use of the Process Approach for Management Concept and Use of the Process Approach for Management Systems,” ISO/TC 176/SC 2/N 544R3, 15 October 2008; Systems,” ISO/TC 176/SC 2/N 544R3, 15 October 2008; Executive Order 605, “Institutionalizing the Structure, Executive Order 605, “Institutionalizing the Structure, Mechanisms and Standards to Implement the Government Mechanisms and Standards to Implement the Government Quality Management Program, Amending for the Purpose Quality Management Program, Amending for the Purpose Administrative Order No. 161, s. 2006,” 23, February Administrative Order No. 161, s. 2006,” 23, February 2007)2007)

160160


1.3.10. Systems/Process Approach 1.3.10. Systems/Process Approach 1.3. All the Coordinate Methods and Measures1.3. All the Coordinate Methods and Measures

b)b) Process refers to the “set of Process refers to the “set of interrelated or interacting activities interrelated or interacting activities of the public sector organization of the public sector organization which transforms input elements which transforms input elements ((policiespolicies, , resourcesresources, , citizen needs citizen needs and expectationsand expectations, etc.) into , etc.) into outputs/outcomes (outputs/outcomes (the products the products and services and services provided to the provided to the citizens).”citizens).”

[underscoring supplied] (Clause 3.5., Government [underscoring supplied] (Clause 3.5., Government Quality Management System Standards (GQMSS), the Quality Management System Standards (GQMSS), the “Quality Management Systems - Guidance Document for “Quality Management Systems - Guidance Document for the Application of ISO 9001:2000 in Public Sector the Application of ISO 9001:2000 in Public Sector Organizations”, 21 June 2007; Executive Order (EO) No. Organizations”, 21 June 2007; Executive Order (EO) No. 605 s. 2007; and Republic Act (RA) No. 9013605 s. 2007; and Republic Act (RA) No. 9013))



161161

““ValidationValidation shall demonstrate the shall demonstrate the ability of these processes ability of these processes to achieve to achieve planned results planned results. .

a)a) defined defined criteriacriteria for review and approval of the for review and approval of the processes, processes,

b)b) approval of approval of equipmentequipment and qualification of and qualification of personnelpersonnel,,

c)c) use of use of specific specific methodsmethods and procedures, and procedures,

d) requirements for d) requirements for recordsrecords, and, and e) e) revalidationrevalidation.”.” [underscoring supplied] [underscoring supplied]

(Clause (Clause


1.3.11. Results 1.3.11. Results

x x xx x x

7.5.2., PNS ISO 9001:2008 “Quality Management7.5.2., PNS ISO 9001:2008 “Quality Management Systems – Requirements”, 15 November 2008)Requirements”, 15 November 2008)



162162



““A documented procedure shall be A documented procedure shall be established to define the controls established to define the controls neededneeded

a)a) to approve documents to approve documents for for adequacyadequacy prior to use, prior to use,

b)b) to review and to review and updateupdate as as necessary and re-approve necessary and re-approve documents,documents,

c)c) to ensure that changes and to ensure that changes and the the current revision statuscurrent revision status of of documents are identified, . . .documents are identified, . . .

1.3.12. Control of Document1.3.12. Control of Document



163163

e) to ensure that documents remain e) to ensure that documents remain legible and readily identifiablelegible and readily identifiable, ,


1.3.12. Control of Document 1.3.12. Control of Document (continuation) (continuation)

d)d) to ensure that relevant versions to ensure that relevant versions of of applicable documentsapplicable documents are are available at points of use, available at points of use,

f) to ensure that documents of f) to ensure that documents of external origin determined by the external origin determined by the orga-nization to be necessary for orga-nization to be necessary for the planning and operation of the the planning and operation of the quality management system are quality management system are identified and their distribution identified and their distribution controlledcontrolled, and . . . , and . . .



164164

g) to prevent the g) to prevent the unintended useunintended use of of obsolete documents, and to apply obsolete documents, and to apply suitable identification to them if suitable identification to them if they are retained for any they are retained for any purpose.”purpose.”



[underscoring supplied][underscoring supplied] (Clause(Clause 4.2.3., PNS ISO 4.2.3., PNS ISO 9001:2008 “Quality Management Systems – 9001:2008 “Quality Management Systems – Requirements”, 15 November 2008)Requirements”, 15 November 2008)



1.3.12. Control of Document 1.3.12. Control of Document (continuation) (continuation)

165165

““The organization shall establish a The organization shall establish a

documented procedure to define the documented procedure to define the

controls needed for the identification, controls needed for the identification,

storage, storage, protectionprotection, , retrievalretrieval, retention , retention

and disposition of records.” and disposition of records.” [underscoring[underscoring



1.3.13. Control of Records 1.3.13. Control of Records

supplied] (Clause 4.2.4., PNS ISO 9001:2008 “Quality supplied] (Clause 4.2.4., PNS ISO 9001:2008 “Quality Management Systems – Requirements”, 15 November 2008)Management Systems – Requirements”, 15 November 2008)



166166

“ “The organization shall determine The organization shall determine

a)a) requirements requirements specified by the customerspecified by the customer, , including the re-quirements including the re-quirements for delivery and post-delivery for delivery and post-delivery activities,activities,

b)b) requirements requirements not stated by the customer not stated by the customer but but necessary for specified necessary for specified or intended useor intended use, where , where known, . . . known, . . .



1.3.14. Requirements1.3.14. Requirements



167167

c)c) statutory and regulatorystatutory and regulatory requirements applicable to the requirements applicable to the product, andproduct, and

d)d) any additional any additional requirements con-sidered requirements con-sidered necessary necessary by the organiza-tionby the organiza-tion.” .” [underscoring [underscoring

supplied] (Clause 7.2.1., supplied] (Clause 7.2.1., PNS



1.3.14. Requirements 1.3.14. Requirements (continuation) (continuation)

ISO 9001:2008 “Quality Management Systems – Requirements”, 15 November 2008))



168168



““A documented procedure shall be A documented procedure shall be established to define requirements established to define requirements for for

1.3.15. Preventive Action 1.3.15. Preventive Action



a)a) determining determining potentialpotential noncon- noncon-formities and formities and their causestheir causes,,

b)b) evaluating the need for action evaluating the need for action to prevent occurrenceto prevent occurrence of noncon- of noncon-formities,formities, . . . . . .



1.3.15. Preventive Action 1.3.15. Preventive Action (continuation)(continuation)

c) determining and implementing c) determining and implementing action neededaction needed

d)d) records of records of resultsresults of action taken, and of action taken, and

e)e) reviewing reviewing the effectivenessthe effectiveness of the of the preventive action taken.” preventive action taken.” [underscoring [underscoring supplied] (Clause 8.5.3., PNS ISO 9001:2008 “Quality supplied] (Clause 8.5.3., PNS ISO 9001:2008 “Quality Management Systems – Requirements”, 15 November Management Systems – Requirements”, 15 November 2008)2008)



169169

170170


“ “A documented procedure shall be A documented procedure shall be established to define requirements established to define requirements for for

1.3.16. Corrective Action1.3.16. Corrective Action



a)a) reviewing reviewing nonconformitienonconformities (inclu-s (inclu-ding customer complaints),ding customer complaints),

b)b) determining determining the causesthe causes of noncon- of noncon-formities,formities,

c)c) evaluating the need for action to evaluating the need for action to ensure that nonconformities ensure that nonconformities do not do not recurrecur,, . . . . . .

171171



d) determining and implementing d) determining and implementing action neededaction needed,,

e)e) records of records of the resultsthe results of action of action taken, andtaken, and

f)f) reviewing the reviewing the effectivenesseffectiveness of the of the corrective action taken.”corrective action taken.” [underscoring [underscoring

1.3.16. Corrective Action 1.3.16. Corrective Action (continuation) (continuation)



supplied] (Clause 8.5.2., PNS ISO 9001:2008 “Quality supplied] (Clause 8.5.2., PNS ISO 9001:2008 “Quality Management Systems – Requirements”, 15 November Management Systems – Requirements”, 15 November 2008)2008)

172172

“ “As one of the measurements of the As one of the measurements of the performance of the quality manage-performance of the quality manage-ment system, the organization shall ment system, the organization shall monitor information relating to monitor information relating to customer perceptioncustomer perception as to whether as to whether the organization has met customer the organization has met customer requirements. The methods for requirements. The methods for obtaining and using this information obtaining and using this information shall be determined.” shall be determined.” [underscoring [underscoring

supplied]supplied]


1.3.17. Monitor Perception1.3.17. Monitor Perception



(Clause (Clause 8.2.1 PNS ISO 9001:2008, 15 November 8.2.1 PNS ISO 9001:2008, 15 November 2008)2008)

“ “The design and implementation of an The design and implementation of an organization’s quality management organization’s quality management system is influenced by: a) its system is influenced by: a) its organizational environment, changes organizational environment, changes in that environment, and the in that environment, and the risks risks associated with that environmentassociated with that environment; ; b) its varying needs; c) its particular b) its varying needs; c) its particular objectives; d) the products it provides; objectives; d) the products it provides; e) the processes it employs; f) its size e) the processes it employs; f) its size and organization structure. x x and organization structure. x x x” x”


1.3.18. Assess Risk 1.3.18. Assess Risk



[underscoring supplied] (Clause 0.1, PNS ISO 9001:2008 [underscoring supplied] (Clause 0.1, PNS ISO 9001:2008 Quality Management System, Quality Management System, 15 November 2008)15 November 2008)

2. Risk Assessment

Risk assessment is the process of Risk assessment is the process of identifyingidentifying, , analyzing analyzing and and evaluating evaluating relevant risks to relevant risks to the achievement of the control objectives the achievement of the control objectives and determining the and determining the appropriate appropriate responseresponse. . [underscoring supplied] (Department of Budget and Management [underscoring supplied] (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 29; and International Control Systems (NGICS),” 23 October 2008, p. 29; and International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, for Internal Control Standards for the Public Sector,” 16 October 2004, p. 22)p. 22)



2.1.1. “Objectives can have different aspects 2.1.1. “Objectives can have different aspects (such as financial, health and safety, (such as financial, health and safety, and environmental goals) and can and environmental goals) and can apply at different levels (such as apply at different levels (such as strategic, organization-wide, project, strategic, organization-wide, project, product and process).” product and process).” (Clause 1, 1.1, Note 2, (Clause 1, 1.1, Note 2,

ibid.) ibid.)

2. Risk Assessment

2.1. Risk - “effect of uncertainty on 2.1. Risk - “effect of uncertainty on objectives”objectives” (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March published 2009) the “Risk management – Vocabulary,” 11 March 2010; 2010;



2. Risk Assessment

2.1.2. “Uncertainty is the state, even 2.1.2. “Uncertainty is the state, even partial, of deficiency of information partial, of deficiency of information related to, understanding or related to, understanding or knowledge of, an event, its knowledge of, an event, its consequences, or likelihood.”consequences, or likelihood.”

a) Eventa) Event -- “occurrence or change of “occurrence or change of a particular set of circumstances” a particular set of circumstances” (Clause 3, 3.5.1.3, ibid.)(Clause 3, 3.5.1.3, ibid.)

b) Consequences -b) Consequences - “outcome of an “outcome of an event event (3.5.1.3) affecting (3.5.1.3) affecting objectives” objectives” [emphasis in the original] (Clause 3, [emphasis in the original] (Clause 3, 3.6.1.3, ibid.)3.6.1.3, ibid.)

2.1. Risk - “effect of uncertainty on 2.1. Risk - “effect of uncertainty on objectives”objectives” (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March published 2009) the “Risk management – Vocabulary,” 11 March 2010) 2010)

(Clause 1, 1.1, Note 5, ibid.)(Clause 1, 1.1, Note 5, ibid.)



2. Risk Assessment

2.1.3. “An effect is a deviation from the 2.1.3. “An effect is a deviation from the expected – positive and/or negative” expected – positive and/or negative” (Clause 1, 1.1, Note 1, ibid.) (Clause 1, 1.1, Note 1, ibid.)


a) “(7) ’Expected result’ means a) “(7) ’Expected result’ means service, product, or benefit that will service, product, or benefit that will accrue to the public, estimated in accrue to the public, estimated in terms of performance measures or terms of performance measures or targets.” targets.” (Section 2, Chapter 1, Book VI, Executive (Section 2, Chapter 1, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” 25 July 1987; and Art. 406 (g), Rule XXXIV, of 1987,” 25 July 1987; and Art. 406 (g), Rule XXXIV, Rules and Regulations Implementing the Local Rules and Regulations Implementing the Local Government Code of 1991, 21 February 1992)Government Code of 1991, 21 February 1992)



2. Risk Assessment

2.1.3. “An effect is a deviation from the 2.1.3. “An effect is a deviation from the expected – positive and/or negative” expected – positive and/or negative” (Clause 1, 1.1, Note 1, ibid.) (Clause 1, 1.1, Note 1, ibid.)

2.1. Risk - “effect of uncertainty on objectives”2.1. Risk - “effect of uncertainty on objectives” (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk (Clause 1, 1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010) management – Vocabulary,” 11 March 2010)

b) “SEC. 3. b) “SEC. 3. Declaration of Policy. Declaration of Policy. – x x x. – x x x. The budget x x x shall be oriented The budget x x x shall be oriented towards the achievement of towards the achievement of explicit explicit objectives and expected resultsobjectives and expected results, to , to ensure that funds are utilized and ensure that funds are utilized and operations are conducted effectively, operations are conducted effectively, economically and efficiently. x x economically and efficiently. x x x.” x.” [underscoring supplied] (Chapter 2, Book VI, Executive [underscoring supplied] (Chapter 2, Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” 25 July 1987)1987,” 25 July 1987)



2.1.4. “Risk is often expressed in terms 2.1.4. “Risk is often expressed in terms of a combination of the of a combination of the consequences of an event (including consequences of an event (including changes in cir-cumstances) and the changes in cir-cumstances) and the associated associated likelihoodlikelihood (3.6.1.1) of (3.6.1.1) of occurrence.” occurrence.” [emphasis in the original] (clause 1, [emphasis in the original] (clause 1, 1.1, Note 4, ibid.)1.1, Note 4, ibid.)

2. Risk Assessment




180180

2.2. Risk Management Principles, Framework and Process2.2. Risk Management Principles, Framework and Process

a) Creates value

b) Integral part of organizational processes

c) Part of decision making

d) Explicitly addresses uncertainty

e) Systematic, structured and timely

f) Based on the best available information

g) Tailored

h) Takes human and cultural factors into account

i) Transparent and inclusive

j) Dynamic, iterative and responsive to change

k) Facilities continual improvement and enhancement of the organization

Principles (Clause 3)

Mandate and Commitment

(4.2)

Design of framework

for managing risk (4.3)

Implementing risk

management (4.4)

Monitoring and review

of the framework

(4.5)

Establishing the context(5.3)

Risk assessment (5.4)

Risk identification (5.4.2)

Risk treatment (5.5)

Process (Clause 5)

Co

mm

un

icat

ion

an

d c

on

sult

atio

n (

5.2)

Mo

nit

ori

ng

an

d r

evie

w (

5.6)

Risk evaluation(5.4.4)

Continual improvement

of the framework

(4.6)

Risk analysis(5.4.3)

Framework (Clause 4)


Internal Audit Office2. Risk Assessment

““Risk assessment comprises the core Risk assessment comprises the core elements of the risk management process elements of the risk management process which are defined in ISO 31000 and contain which are defined in ISO 31000 and contain the following elements:the following elements:

2. Risk Assessment

•communication and consultation;communication and consultation;

•establishing the context;establishing the context;

•risk assessment (comprising risk risk assessment (comprising risk identification, risk analysis and risk identification, risk analysis and risk evaluation);evaluation);

•risk treatment;risk treatment;•monitoring and review.” monitoring and review.” (Clause 4, 4.3.1, PNS (Clause 4, 4.3.1, PNS

ISO/IECISO/IEC

2.3. Risk Management Process2.3. Risk Management Process



31010:2010 (ISO published 2009), the “Risk management – Risk 31010:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)assessment techniques,” 11 March 2010)

““For a specific risk assessment, For a specific risk assessment, establishing the context should include the establishing the context should include the definition of the external, internal and risk definition of the external, internal and risk management context and classification of management context and classification of risk criteria: x x x”risk criteria: x x x”

2. Risk Assessment

2.4. Establishing the Context2.4. Establishing the Context

Clause 4, 4.3.3, PNS ISO/IEC 31010:2010 (ISO published 2009, the Clause 4, 4.3.3, PNS ISO/IEC 31010:2010 (ISO published 2009, the “Risk management – Risk assessment techniques,” 11 March 2010)“Risk management – Risk assessment techniques,” 11 March 2010)



a) “the cultural, a) “the cultural, socialsocial, political, , political, legallegal, , regulatory, financial, regulatory, financial, technologicaltechnological, , economiceconomic, , naturalnatural and and competitivecompetitive environment, whether international, environment, whether international, national, regional or local; . . . national, regional or local; . . .

““External context can include:External context can include:

2.5.1. External context - “external 2.5.1. External context - “external environment in which the organization environment in which the organization seeks seeks to achieve its objectivesto achieve its objectives””

2. Risk Assessment 2. Risk Assessment




b) “b) “key drivers and trendskey drivers and trends having having impact on the objectives of the impact on the objectives of the organization; andorganization; and

c) “relationships with, and perceptions c) “relationships with, and perceptions and values of and values of external external stakeholdersstakeholders (3.2.1.1.)” (3.2.1.1.)” [emphasis in [emphasis in

the original; underscoring the original; underscoring supplied] (Clause 3, 3.3.1.1., PNS ISO Guide 73:2010 supplied] (Clause 3, 3.3.1.1., PNS ISO Guide 73:2010 (ISO published 2009), the “Risk management – (ISO published 2009), the “Risk management – Vocabulary,” 11 March 2010)Vocabulary,” 11 March 2010)



2.5.1. External Context 2.5.1. External Context (continuation)(continuation)



a) “governance, organizational a) “governance, organizational structurestructure, roles and , roles and accountabilities; accountabilities;

b)b) “policies, objectives, and the “policies, objectives, and the strategiesstrategies that are in place to that are in place to achieve them; . . .achieve them; . . .



““Internal context can include:Internal context can include:

2.5.2. Internal context - “internal 2.5.2. Internal context - “internal environment in which the environment in which the organization seeks organization seeks to achieve its to achieve its objectivesobjectives””



e) “relationships with, and perceptions e) “relationships with, and perceptions and values of and values of internal stakeholdersinternal stakeholders; ; . . . . . .

d) “information systems, information d) “information systems, information flows and flows and decision-making processesdecision-making processes (both formal and informal); (both formal and informal);

2. Risk Assessment 2.5. Establishing the Context2.5. Establishing the Context

2.5.2. Internal Context 2.5.2. Internal Context (continuation)(continuation)

c) “the c) “the capabilitiescapabilities, understood in , understood in terms of resources and knowledge terms of resources and knowledge (e.g. capital, time, people, (e.g. capital, time, people, processes, systems and processes, systems and technologies); technologies);



g) “g) “standardsstandards, guidelines and models , guidelines and models adopted by the organization; andadopted by the organization; and

h) “form and extent of h) “form and extent of contractual re-contractual re-lationshipslationships.” .” [underscoring supplied] [underscoring supplied] (Clause

3,

f) “the organization’s f) “the organization’s cultureculture;;

2. Risk Assessment


2.5.2. Internal Context 2.5.2. Internal Context (continuation)(continuation)



3.3.1.2., PNS ISO Guide 73:2010 (ISO published 2009), the “Risk management – Vocabulary,” 11 March 2010)

2. Risk Assessment


b) “the way in which b) “the way in which probabilities are probabilities are to be expressedto be expressed,,

c) “c) “how a level of risk will be deter-how a level of risk will be deter-minedmined, . . . , . . .

2.5.3. “Defining risk criteria involves deciding2.5.3. “Defining risk criteria involves deciding

a) “the nature and type of a) “the nature and type of conse-conse-quencesquences to be included and how to be included and how they will be they will be measuredmeasured,,



2. Risk Assessment 2.5. Establishing the Context2.5. Establishing the Context

d) “the criteria by which it will be d) “the criteria by which it will be decided decided when a risk needs when a risk needs treatmenttreatment,,

e) “the criteria for deciding e) “the criteria for deciding when when a risk is acceptablea risk is acceptable and/or and/or tolerable, tolerable,

f) “f) “whether and how combina-whether and how combina-tions of risks tions of risks will be taken into will be taken into account.”account.” [underscoring supplied] (Clause 4, [underscoring supplied] (Clause 4, 4.3.3d), PNS ISO/IEC 31010:2010 (ISO published 4.3.3d), PNS ISO/IEC 31010:2010 (ISO published 2009, the “Risk management – Risk assessment 2009, the “Risk management – Risk assessment techniques,” 11 March 2010) techniques,” 11 March 2010)

2.5.3. Risk Criteria 2.5.3. Risk Criteria (continuation)(continuation)



2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment

2. Risk Assessment2. Risk Assessment

2.6.1. Risk Identification2.6.1. Risk Identification

a) “[I]dentify sources of risk, areas of a) “[I]dentify sources of risk, areas of impacts, events (including changes impacts, events (including changes in circumstances) and their causes and in circumstances) and their causes and their potential consequences. x x x their potential consequences. x x x risks based on those events that risks based on those events that might create, enhance, prevent, might create, enhance, prevent, degrade, accelerate or delay the degrade, accelerate or delay the achievement of objectives. x x x the achievement of objectives. x x x the risks associated with not pursuing an risks associated with not pursuing an opportunityopportunity. . x x x”x x x”(Clause 5, 5.4.2, 1 sr par., PNS ISO 31000:2010 (ISO published 2009), the “Risk management – Principles and guidelines,” 11 March 2010)



b) Risk source - “element which b) Risk source - “element which alone or in combination has the alone or in combination has the intrinsic potential to give rise to intrinsic potential to give rise to riskrisk (1.1)” (1.1)”[emphasis in the original] (Clause 3, 3.5.1.2, PNS ISO [emphasis in the original] (Clause 3, 3.5.1.2, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)management – Vocabulary,” 11 March 2010)






2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment2. Risk Assessment


c) “[C]ritical, because a risk that is not c) “[C]ritical, because a risk that is not identified at this stage will not be identified at this stage will not be included in further analysis.”included in further analysis.”(Clause 5, (Clause 5,

5.4.2,5.4.2,



11stst par, PNS ISO/IEC 31000:2010 (ISO published 2009, par, PNS ISO/IEC 31000:2010 (ISO published 2009, the “Risk management – Principles and guidelines,” the “Risk management – Principles and guidelines,” 11 March 2010) 11 March 2010)


2. Risk Assessment


d) Risk description - “structured statement of risk usually containing four elements: sources, events (3.5.1.3), causes and consequences (3.6.1.3)” [emphasis in theoriginal] (Clause 3, 3.5.1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)



2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment2. Risk Assessment




i) Control - “measure that is modifying i) Control - “measure that is modifying risk risk (1.1)” (1.1)” [emphasis in the original](Clause 3, [emphasis in the original](Clause 3, 3.8.1.1, PNS ISO Guide 73:2010 (ISO published 2009) the 3.8.1.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)“Risk management – Vocabulary,” 11 March 2010)

ii) “Control includes any process, policy, ii) “Control includes any process, policy, device, practice, or other actions device, practice, or other actions which modify risk.”which modify risk.” (Clause 3, 3.8.1.1, Note (Clause 3, 3.8.1.1, Note 1, ibid.)1, ibid.)

e) “Once a risk is identified, the e) “Once a risk is identified, the organization should identify any organization should identify any existing existing controls such as design controls such as design featuresfeatures, , peoplepeople, , processes and processes and systemssystems.” .” [underscoring supplied] (Clause 5, 5.2, [underscoring supplied] (Clause 5, 5.2, 22ndnd par, PNS ISO/IEC 31010:2010 (ISO published 2009, the par, PNS ISO/IEC 31010:2010 (ISO published 2009, the “Risk management – Risk assessment techniques,” 11 “Risk management – Risk assessment techniques,” 11 March 2010) March 2010)

a) “Risk analysis involves a) “Risk analysis involves consideration of the causes and consideration of the causes and sources of risk, their consequences sources of risk, their consequences and and the probability that those the probability that those consequences can occurconsequences can occur. . Factors that Factors that affectaffect consequences and probability consequences and probability should be identified.”should be identified.”

2.6.2. Risk Analysis2.6.2. Risk Analysis2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment


[underscoring supplied] (Clause 5, 5.3.1, PNS ISO/IEC [underscoring supplied] (Clause 5, 5.3.1, PNS ISO/IEC 31010:2010 (ISO published 2009, the “Risk 31010:2010 (ISO published 2009, the “Risk management – Risk assessment techniques,” 11 March management – Risk assessment techniques,” 11 March 2010)2010)



2.6.2. Risk Analysis2.6.2. Risk Analysis

b) “Risk analysis consists of b) “Risk analysis consists of determining determining the consequencesthe consequences and and their probabi-lities for identified risk their probabi-lities for identified risk eventsevents, taking into account the , taking into account the presence (or not) and presence (or not) and the the effectiveness of any existing effectiveness of any existing controlscontrols. The consequences and their . The consequences and their probabilities are then combined to probabilities are then combined to determine a determine a level of risklevel of risk.” .” [underscoring[underscoring

2.6. Elements of Risk Assessment2.6. Elements of Risk Assessment2. Risk Assessment2. Risk Assessment

supplied] (Clause 5, 5.3.1, PNS ISO/IEC 31010:2010 supplied] (Clause 5, 5.3.1, PNS ISO/IEC 31010:2010 (ISO published 2009, the “Risk management – Risk (ISO published 2009, the “Risk management – Risk assessment techniques,” 11 March 2010)assessment techniques,” 11 March 2010)



““The level of risk will depend on the The level of risk will depend on the adequacy and effectiveness of adequacy and effectiveness of existing controls. Questions to be existing controls. Questions to be addressed include:addressed include:

i) “what are the existing controls i) “what are the existing controls for a particular riskfor a particular risk? . . . ? . . .



c) Controls Assessmentc) Controls Assessment



ii) “are those controls capable of ii) “are those controls capable of adequately treating the risk adequately treating the risk so that it is so that it is controlled to a controlled to a levellevel that is tolerable? that is tolerable?

iii) “in practice, are the controls iii) “in practice, are the controls operating operating in the manner in the manner intendedintended and can they be and can they be demonstrated to be effective demonstrated to be effective when required?” when required?” [underscoring [underscoring supplied] (Clause 5, 5.3.2, PNS ISO/IEC supplied] (Clause 5, 5.3.2, PNS ISO/IEC 31010:2010 (ISO published 2009), the “Risk 31010:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” management – Risk assessment techniques,” 11 March 2010]11 March 2010]



c) Controls Assessment c) Controls Assessment (continuation)(continuation)





d) “Consequence analysis can involve :d) “Consequence analysis can involve :

i) “taking into consideration existing i) “taking into consideration existing controls to treat the consequences, controls to treat the consequences, together with all relevant together with all relevant contributory factors that have contributory factors that have an effect on the consequences;an effect on the consequences;

ii) “relating the consequences of ii) “relating the consequences of the risk to the original the risk to the original objectives; . . .objectives; . . .






iii) “considering both immediate consequences and those that may arise after a certain time has elapsed, if this is consistent with the scope of the assessment; . . .

d) Consequence Analysis d) Consequence Analysis (continuation)(continuation)





d) Consequence Analysis d) Consequence Analysis (continuation)(continuation)

iv) “considering secondary con-sequences, such as those impacting upon associated systems activities, equipment or organizations.” (Clause 5.3.3,

PNSISO/IEC 31010:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)



Consequence Ex. 1

Catastrophic 5

Major 4

Moderate 3

Minor 2

Insignificant 1

Consequence Ex. 2

Critical 4

Severe 3

Medium 2

Negligible 1

Consequence Ex. 3

Significant 3

Moderate 2

Insignificant 1

It is up to each organisation to define the severity of impact that allow users to assess consequence. (DBM Briefing on ISO 31000:2009 – Risk Management System-Principles and Guidelines and the ISO/IEC 31010:2009 – Risk Management-Risk Assessment Techniques conducted by Mr. Kevin W. Knight and DES Alberto A. Bernardo, 8-9 February 2012)



d) Consequence Analysis d) Consequence Analysis



Examples of Consequence TablesExamples of Consequence Tables

202202




e) Likelihood Analysis and Probability e) Likelihood Analysis and Probability EstimationEstimation

i) Likelihood – “chance of i) Likelihood – “chance of something happening” something happening” (Clause 3,

3.6.1.1, PNS ISO



Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)

ii) Probability – “measure of the ii) Probability – “measure of the chance of occurrence expressed chance of occurrence expressed as a number between 0 to 1, as a number between 0 to 1, where 0 is impossibility and 1 is where 0 is impossibility and 1 is absolute certainty” absolute certainty” (Clause 3, 3.6.1.4,

PNSGuide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)





iii) Frequency – “number of iii) Frequency – “number of eventsevents (3.5.1.3) or outcomes (3.5.1.3) or outcomes per defined unit of time” per defined unit of time” [emphasis in the



original] (Clause 3, 3.6.1.5, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)




iv) “Three general approaches are iv) “Three general approaches are commonly employed to commonly employed to estimate probability; they may estimate probability; they may be used individually or jointly:be used individually or jointly:

1) “use of relevant 1) “use of relevant historical data x x x. . . historical data x x x. . . . .






2) “Probability forecasts using 2) “Probability forecasts using pre-dictive techniques such as pre-dictive techniques such as fault tree analysis and event fault tree analysis and event tree analysis x x x. tree analysis x x x.

3) “Expert opinion can be 3) “Expert opinion can be used in a systematic and used in a systematic and structured process to structured process to estimate probabi-lity. x x x”estimate probabi-lity. x x x” (Clause 5.3.4, (Clause 5.3.4, PNS ISO/IEC 31010:PNS ISO/IEC 31010:2010 (ISO published 2009), the “Risk 2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” management – Risk assessment techniques,” 11 March 2010)11 March 2010)



e) Likelihood Analysis and Probability e) Likelihood Analysis and Probability Estimation Estimation iv) General Approaches iv) General Approaches (continuation)(continuation)

Likelihood Ex. 1

Almost Certain

5

Likely 4

Possible 3

Unlikely 2

Rare 1

Likelihood Ex. 2

Common 4

Potential 3

Low Potential

2

Almost Never

1

Likelihood Ex. 3

High Frequency

3

Moderate Frequency

2

Low Frequency

1

It is up to each organisation to define the parameters that allow users to assess likelihood. (DBM Briefing on ISO 31000:2009 – Risk Management System-Principles and Guidelines and the ISO/IEC 31010:2009 – Risk Management-Risk Assessment Techniques conducted by Mr. Kevin W. Knight and DES Alberto A. Bernardo, 8-9 February 2012)






Examples of Likelihood TablesExamples of Likelihood Tables




f) “Uncertainty analysis involves the f) “Uncertainty analysis involves the determination of the variation or determination of the variation or imprecision in the results, resulting imprecision in the results, resulting from the collective variation in from the collective variation in the parameters and assumptions the parameters and assumptions used to define the results.” used to define the results.” (Clause (Clause

5.3.6, PNS ISO/IEC5.3.6, PNS ISO/IEC31010:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)






g) “Sensitivity analysis involves the g) “Sensitivity analysis involves the determination of the size and determination of the size and significance of the magnitude significance of the magnitude of risks to changes in individual of risks to changes in individual input parameters.” input parameters.” (Clause 5.3.6, (Clause 5.3.6,

PNS ISO/IEC PNS ISO/IEC 31010:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)



Risk Rating Ex. 1

Very High 5

High 4

Tolerable 3

Low 2

Very Low 1

Risk Rating Ex. 2

Extreme 4

Significant 3

Medium 2

Low 1

Risk Rating Ex. 3

High 3

Medium 2

Low 1

It is up to each organisation to define the terminology for risk rating levels, and how this is set in the risk rating matrix. (DBM Briefing on ISO 31000:2009 – Risk Management System-Principles and Guidelines and the ISO/IEC 31010:2009 – Risk Management-Risk Assessment Techniques conducted by Mr. Kevin W. Knight and DES Alberto A. Bernardo, 8-9 February 2012)

2.6.2. Risk Analysis2.6. Elements of Risk Assessment

2. Risk Assessment



h) Examples of Risk Rating Matrices

210210

LIKELIHOOD

CONSEQUENCE Rare Unlikely Possible Likely Almost Certain

Catastrophic High Very High Very High Very High Very High

Significant High High Very High Very High Very High

Major Tolerable High High Very High Very High

Moderate Low Tolerable Tolerable High High

Minor Low Low Tolerable Tolerable Tolerable

Insignificant Very Low Low Low Tolerable Tolerable

Negligible Very Low Very Low Low Tolerable Tolerable

ISO 31000:2009 emphasises that organisations must tailor the criteria that drives assessment and analysis to reflect the nature and business environment of their operations. (DBM Briefing on ISO 31000:2009 – Risk Management System-Principles and Guidelines and the ISO/IEC 31010:2009 – Risk Management-Risk Assessment Techniques conducted by Mr. Kevin W. Knight and DES Alberto A. Bernardo, 8-9 February 2012)

i) Examples of Risk Rating Matrix 211211Office of the President


2.6.3. Risk Evaluation2.6. Elements of Risk Assessment

2. Risk Assessment

a) Risk evaluation - “process of comparing the results of risk analysis (3.6.1) with risk criteria (3.3.1.3) to determine whether the risk (1.1) and/or its magnitude is acceptable or tolerable” [emphasis in

the original] (Clause 3, 3.7.1, PNS IEC Guide 73:2010 (ISO published 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)



2.6.3. Risk Evaluation2.6.3. Risk Evaluation

b) “Risk evaluation involves comparing b) “Risk evaluation involves comparing estimated levels of risk with risk estimated levels of risk with risk criteria defined when the context was criteria defined when the context was established, in order to determine the established, in order to determine the significance of the level and type of significance of the level and type of risk.”risk.”(Clause 5, 5.4, PNS ISO/IEC 31010:2010 (ISO (Clause 5, 5.4, PNS ISO/IEC 31010:2010 (ISO

publishedpublished2009), the “Risk management – Risk assessment 2009), the “Risk management – Risk assessment techniques,” 11 March 2010)techniques,” 11 March 2010)




c) This is the process of evaluating the significance of the risk and assessing the likelihood of its occurrence. With risk evaluation, management would become aware of the actions which need to be undertaken and their relative priority. [underscoring supplied] (National

2.6.3. Risk Evaluation2.6. Elements of Risk Assessment

2. Risk Assessment

Guidelines on Internal Control System, DBM Circular Letter No. 2008-8, 23 October 2008, p. 31 and 2.2 Risk Assessment, INTOSAI “Guidelines for Internal Control Standards for the Public Sector”, 2004, pp. 22-23)



Tools and Techniques

Risk Assessment Process

Risk Analysis

Risk Eva-luation

See Anne

x

Risk Identifi-cation

Conse-quence

Proba-bility

Levelof

Risk

Environmental Risk Assessment SA SA SA SA SA B 08

Structure <<What if?>> (SWIFT) SA SA SA SA SA B 09

Root Cause Analysis NA SA SA SA SA B 12

Failure Mode Effect Analysis SA SA SA SA SA B 13

Human Reliability Analysis SA SA SA SA A B 20

Reliability Centred Maintenance SA SA SA SA SA B 22

FN Curves A SA SA A SA B 27

Risk Indices A SA SA A SA B 28

Consequence/Probability Matrix SA SA SA SA A B 29

Cost/Benefit Analysis A SA A A A B 30

Multi-criteria Decision Analysis (MCDA)

A SA A SA A B 31

1)1) Strongly applicableStrongly applicable2)2) Not applicableNot applicable3)3) ApplicableApplicable

2.7. Applicability of Tools Used for Risk Assessment 2.7. Applicability of Tools Used for Risk Assessment

Annex A, Table A.1, PNS ISO/IEC 31010:2010 (ISO published2009), the “Risk management – Risk assessment techniques,” 11 March 2010.)

2. Risk Assessment 215215Office of the President


Type of Risk Assessment Technique

Relevance of Influencing FactorsCan

Provide Quantita-

tive Output

Resources and

Capability

Nature and Degree of

Uncertainty Com-plexity

SWIFT Structured “what-if” Medium Medium Any No

Human Reliability Analysis (HRA)

Medium Medium Medium Yes

Root Cause Analysis (Single Loss Analysis)

Medium Low Medium No

FMEA and FMECA Medium Medium Medium Yes

Cause/Consequence Analysis

High Medium High Yes

Reliability-Centred Maintenance

Medium Medium Medium Yes

2.8. Attributes of a Selection of Risk Assessment Tools 2.8. Attributes of a Selection of Risk Assessment Tools 2. Risk Assessment

Annex A, Table A.2, PNS ISO/IEC 31010:2010 (ISO published2009), the “Risk management – Risk assessment techniques,” 11 March 2010.)



3. Control Activity

““Control activities are the policies and Control activities are the policies and procedures established to address risks and to procedures established to address risks and to achieve the entity’s objectives.” achieve the entity’s objectives.” (Department of (Department of

Budget and Management Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, pp. 31-32 and 2.3 Control Control Systems (NGICS),” 23 October 2008, pp. 31-32 and 2.3 Control Activities, International Organization of Supreme Audit Institutions Activities, International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 28) Sector,” 16 October 2004, p. 28)



3.1. Risk Responses3.1. Risk Responses3.1. Risk Responses3.1. Risk Responses

3.1.13.1.1“Internal control activities are a “Internal control activities are a response to risk in that they are response to risk in that they are designed to contain the uncertainty of designed to contain the uncertainty of outcome that has been identified.” outcome that has been identified.” (Department of Budget (Department of Budget

3. Control Activity

and Management (DBM) Circular Letter No. 2008-8, the and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 32 and23 October 2008, p. 32 and 2.2 Risk Assessment, 2.2 Risk Assessment, International Organization of Supreme Audit Institutions International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004 p. 23) the Public Sector,” 16 October 2004 p. 23)



3.1.2. Risk Treatment - “process to modify 3.1.2. Risk Treatment - “process to modify risk risk (1.1)”(1.1)”

a)a) ““avoiding the risk by deciding not to avoiding the risk by deciding not to start or continue with the activity start or continue with the activity that gives rise to the risk;that gives rise to the risk;

b)b) ““taking or increasing risk in order to taking or increasing risk in order to pursue an opportunity;pursue an opportunity;

c)c) “ “removing the removing the risk source risk source (3.5.1.2);(3.5.1.2);d)d) “ “changing the changing the likelihood likelihood (3.6.1.1);(3.6.1.1);e)e) “ “changing the changing the consequences consequences

(3.6.1.3.);(3.6.1.3.);f)f) ““sharing the risk with another party sharing the risk with another party

or parties [including contracts and ror parties [including contracts and risk isk financing financing (3.8.1.4)]); and (3.8.1.4)]); and

g)g) ““retaining the risk by informed retaining the risk by informed decision.”decision.”

““Risk treatment can involve:Risk treatment can involve:““Risk treatment can involve:Risk treatment can involve:



3.1. Risk Responses3.1. Risk Responses3.1. Risk Responses3.1. Risk Responses3. Control Activity

[[emphasis in the original] (Clause 3, 3.8.1, PNS ISO Guide 73:2009 emphasis in the original] (Clause 3, 3.8.1, PNS ISO Guide 73:2009 (ISO published 2009), the “Risk management – Vocabulary,” 11 (ISO published 2009), the “Risk management – Vocabulary,” 11 March 2010)March 2010)

““If performance reviews determine that If performance reviews determine that actual accomplishmentsactual accomplishments do not meet do not meet established objectives or standards, the established objectives or standards, the processes and activitiesprocesses and activities established to established to achieve the objectives should be achieve the objectives should be reviewed to determine if improvements reviewed to determine if improvements are needed.” are needed.” [underscoring supplied] (Department [underscoring supplied] (Department

of Budget of Budget

3.2.3.2. Performance Review and Improvement of Performance Review and Improvement of Operations, Processes and ActivitiesOperations, Processes and Activities

3.2.3.2. Performance Review and Improvement of Performance Review and Improvement of Operations, Processes and ActivitiesOperations, Processes and Activities

3. Control Activity

and Management (DBM) Circular Letter No. 2008-8, the and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 33 and 2.3 Control Activities, October 2008, p. 33 and 2.3 Control Activities, No. 6. Reviews No. 6. Reviews of Operating Performance,of Operating Performance, International Organization of International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October Internal Control Standards for the Public Sector,” 16 October 2004, p. 30) 2004, p. 30)



3. Control Activity

““Operations, processes and activities Operations, processes and activities should be periodically reviewed should be periodically reviewed to ensure to ensure that they are in compliancethat they are in compliance with current with current regulations, policies, procedures, or other regulations, policies, procedures, or other requirements. This type of review of the requirements. This type of review of the actual operations of an organization should actual operations of an organization should be clearly be clearly distinguished from the distinguished from the monitoring of internal controlmonitoring of internal control x x x.” x x x.” [underscoring supplied] (Department of[underscoring supplied] (Department of

3.3.3.3. Compliance Review and Improvement of Compliance Review and Improvement of Operations, Processes and ActivitiesOperations, Processes and Activities

3.3.3.3. Compliance Review and Improvement of Compliance Review and Improvement of Operations, Processes and ActivitiesOperations, Processes and Activities



Budget and Management (DBM) Circular Letter No. 2008-8, the Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 33 and 2.3 Control Activities, October 2008, p. 33 and 2.3 Control Activities, No. 7. Reviews of No. 7. Reviews of operations, processes and activities,operations, processes and activities, International Organization of International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 30-Control Standards for the Public Sector,” 16 October 2004, p. 30-31)31)

3.4.1. Monitoring - “continual checking, 3.4.1. Monitoring - “continual checking, supervising, critically observing or supervising, critically observing or determining the status in order to identify determining the status in order to identify change from the performance level change from the performance level required or expected.”required or expected.”

3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing

(Clause 3, 3.8.2.1, PNS ISO Guide 73:2010 (ISO published 2009) (Clause 3, 3.8.2.1, PNS ISO Guide 73:2010 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)the “Risk management – Vocabulary,” 11 March 2010)

3. Control Activity

3.4.2. Review - “activity undertaken to 3.4.2. Review - “activity undertaken to determine the suitability, adequacy and determine the suitability, adequacy and effectiveness of the subject matter to effectiveness of the subject matter to achieve established objectives.” achieve established objectives.” (Clause 3, (Clause 3, 3.8.2.2, PNS ISO Guide 73:20103.8.2.2, PNS ISO Guide 73:2010(ISO published 2009) the “Risk management – Vocabulary,” 11 (ISO published 2009) the “Risk management – Vocabulary,” 11 March 2010)March 2010)



““The risk assessment process will The risk assessment process will highlight context and other factors highlight context and other factors that might be that might be expected to vary expected to vary over time and which could change or over time and which could change or invalidateinvalidate the risk assessment. These the risk assessment. These factors should be factors should be specifically identifiedspecifically identified for on-going monitoring and review, so for on-going monitoring and review, so that the risk assessment can be that the risk assessment can be updated when necessary. updated when necessary. [underscoring [underscoring

supplied] (Clause 5, 5.6, supplied] (Clause 5, 5.6,

3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3. Control Activity

3.4.3. Risk Assessment3.4.3. Risk Assessment3.4.3. Risk Assessment3.4.3. Risk Assessment

PNS ISO/IEC 31010:2010 (ISOPNS ISO/IEC 31010:2010 (ISO published 2009), the “Risk published 2009), the “Risk management – Risk assessment techniques,” 11 March management – Risk assessment techniques,” 11 March 2010)2010)



3.4.4. “SEC. 9. 3.4.4. “SEC. 9. Performance and Financial Performance and Financial Review. – Review. – The analysis of agency The analysis of agency operating performanceoperating performance, the evaluation , the evaluation of of performance relative to costs performance relative to costs incurred and the review of agency incurred and the review of agency operating systemsoperating systems and procedures and procedures are inherent parts of the budget are inherent parts of the budget process. . . .process. . . .

3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing

3. Control Activity



Agencies shall therefore design Agencies shall therefore design and implement (1) management and implement (1) management informa-tion systems yielding both informa-tion systems yielding both per-formance and financial per-formance and financial information which will adequately information which will adequately monitor and control budget monitor and control budget implementationimplementation, and (2) , and (2) improvements in operating systems, improvements in operating systems, procedures and practices, so as procedures and practices, so as to to ensureensure that the targets approved that the targets approved in budget authorization are in fact in budget authorization are in fact attained at minimum cost.”attained at minimum cost.”

[underscoring[underscoring

3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing (continuation) (continuation) 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing (continuation) (continuation)

3. Control Activity

3.4.4. 3.4.4.



supplied] (Section 9, Chapter 2,supplied] (Section 9, Chapter 2, Book VI, Executive Book VI, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)1987,” as amended, 25 July 1987)

3.4.5. “SEC. 9. 3.4.5. “SEC. 9. Monitoring and Information Monitoring and Information Service. Service.

x x x x x x (2)(2) Develop and maintain a system for Develop and maintain a system for retrieving and processing monitoring retrieving and processing monitoring information on all projects and activities information on all projects and activities of concern to the Secretary; of concern to the Secretary;

(3) (3) Provide accurate and timely Provide accurate and timely status and exception reports to the status and exception reports to the Secretary;Secretary;

(4) (4) Generate monitoring reports for Generate monitoring reports for the President, the Cabinet, or for any the President, the Cabinet, or for any other purpose as required by the other purpose as required by the Secretary;Secretary;

x x x.” x x x.”

(Chapter 3, Title V, Book IV, EO 292 or the “Administrative (Chapter 3, Title V, Book IV, EO 292 or the “Administrative Code of 1987,” as amended, 25 July 1987)Code of 1987,” as amended, 25 July 1987)

3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3.4. Monitoring and Reviewing 3. Control Activity



4. Information and Communication

(Department of Budget and Management (DBM) Circular Letter No. (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 33 and 2.4 Information and (NGICS),” 23 October 2008, p. 33 and 2.4 Information and Communication, International Organization of Supreme Audit Communication, International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, pp. 36-39)Standards for the Public Sector,” 16 October 2004, pp. 36-39)

Information and communication are vital in Information and communication are vital in attaining the control objectives. They go attaining the control objectives. They go hand in hand and cut hand in hand and cut across all the other across all the other internal control componentsinternal control components. Relevant . Relevant information must be communicated information must be communicated throughout the agencythroughout the agency, , as well as to its as well as to its network of organizations and sectorsnetwork of organizations and sectors. . [underscoring supplied][underscoring supplied]




The The prompt recordingprompt recording and and proper proper classification of transactions and eventsclassification of transactions and events are are preconditions for a reliable and relevant preconditions for a reliable and relevant information. Relevant information should be information. Relevant information should be identified, captured and communicated identified, captured and communicated in a in a form and timeframe form and timeframe that enables a that enables a personnel to carry out internal controls and personnel to carry out internal controls and other responsibilities. Therefore, the other responsibilities. Therefore, the internal control systeminternal control system as such and as such and all all transactionstransactions and and significant eventssignificant events should should be be fully documentedfully documented. . [underscoring supplied][underscoring supplied]

4.1. Information4.1. Information



(Department of(Department of Budget and Management (DBM) Circular Letter No. Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 34 and(NGICS),” 23 October 2008, p. 34 and 2.4 Information and 2.4 Information and CommunicationCommunication,, INTOSAI, the “Guidelines for Internal Control INTOSAI, the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 36) Standards for the Public Sector,” 16 October 2004, p. 36)


4.1. Information4.1. Information

4.1.1.4.1.1. “Section 2. x x x. They shall establish “Section 2. x x x. They shall establish information systems that will information systems that will inform the inform the publicpublic of the following: (a) policies, rules, of the following: (a) policies, rules, and procedures; (b) work programs, and procedures; (b) work programs, projects, and projects, and performance targetsperformance targets; (c) ; (c) performance reportsperformance reports; and (d) all other ; and (d) all other documents as may hereafter be documents as may hereafter be classified as public information. classified as public information.

x x x.” x x x.” [underscoring supplied] (Rule IV, Rules Implementing [underscoring supplied] (Rule IV, Rules Implementing Republic Act (RA) No. 6713, the “Code of Conduct and Republic Act (RA) No. 6713, the “Code of Conduct and Ethical Standards for Public Officials and Employees,” 21 Ethical Standards for Public Officials and Employees,” 21 April 1989)April 1989)



4. Information and Communication4.1.4.1. InformationInformation

4.1.2. Review and Compliance Procedure4.1.2. Review and Compliance Procedure

a) “Section 7. a) “Section 7. Statements of Assets Statements of Assets and Liabilities. and Liabilities. – x x x a true, – x x x a true, detaileddetailed and sworn statement of and sworn statement of assetsassets and and liabilitiesliabilities, including a statement of , including a statement of the amounts and sources of his the amounts and sources of his incomeincome, the amounts of his personal , the amounts of his personal and family and family expensesexpenses and the amount and the amount of of income taxes paidincome taxes paid for the next for the next preceding calendar year: x x x.” preceding calendar year: x x x.”

[underscoring supplied] (Section 7, Republic Act (RA) [underscoring supplied] (Section 7, Republic Act (RA) No. 3019, the “Anti-Graft and Corrupt Practices Act,” No. 3019, the “Anti-Graft and Corrupt Practices Act,” as amended, 17 August 1960; and Pleyto vs. PNP-as amended, 17 August 1960; and Pleyto vs. PNP-CIDG, G.R. No. 169982, 23 November 2007) CIDG, G.R. No. 169982, 23 November 2007)



4. Information and Communication4.1. Information4.1. Information


b) “(A) b) “(A) Statements of Assets and Statements of Assets and Liabilities and Financial Disclosure. Liabilities and Financial Disclosure. – – x x x shall file under oath their x x x shall file under oath their Statements of Assets, Liabilities and Statements of Assets, Liabilities and Net Worth and a Disclosure of Net Worth and a Disclosure of Business InterestsBusiness Interests and and Financial Financial ConnectionsConnections and those of their and those of their spousesspouses and and unmarried childrenunmarried children under eighteen (18) years of age under eighteen (18) years of age living in their households.” living in their households.” [underscoring supplied][underscoring supplied]

(Section 8, Republic Act (RA) No. 6713, the “Code of (Section 8, Republic Act (RA) No. 6713, the “Code of Conduct and Ethical Standards for Public Officials and Conduct and Ethical Standards for Public Officials and Employees,” 20 February 1989; and Concerned Employees,” 20 February 1989; and Concerned Taxpayer vs. Doblada, Jr., A.M. No. P-99-1342, 20 Taxpayer vs. Doblada, Jr., A.M. No. P-99-1342, 20 September 2005)September 2005)



c) “The following shall have the authority c) “The following shall have the authority to establish compliance procedures to establish compliance procedures for the review of statements to for the review of statements to determine whether said statements have determine whether said statements have been properly accomplished:been properly accomplished:

((a) x x xa) x x x(b) In the case of the Executive Department, (b) In the case of the Executive Department,

the heads of department, offices and the heads of department, offices and agencies insofar as their respective agencies insofar as their respective departments, offices and agencies are departments, offices and agencies are concerned subject to the approval of the concerned subject to the approval of the Secretary of Justice.Secretary of Justice.

(c) x x x.” (c) x x x.” (Civil Service Commission (CSC) MC NO. 10, s. (Civil Service Commission (CSC) MC NO. 10, s. 2006, 2006,

4.Information and Communication4.1.4.1. InformationInformation


““Review and Compliance Procedure in the Filing and Review and Compliance Procedure in the Filing and Submission of the Statement of Assets, Liabilities and Networth Submission of the Statement of Assets, Liabilities and Networth and Disclosure of Business Interests and Financial and Disclosure of Business Interests and Financial Connections,” 17 April 2006)Connections,” 17 April 2006)



d) Formal Defectsd) Formal Defects

i) “The notice and correction referred i) “The notice and correction referred to in Section 10 are intended merely to in Section 10 are intended merely to ensure that SALN’s are to ensure that SALN’s are ‘submitted on time, are complete, ‘submitted on time, are complete, and are in proper form.’ Obviously, and are in proper form.’ Obviously, these refer to formal defects in the these refer to formal defects in the SALNs. SALNs. The charges against Carabeo, however, are for falsification of the assets side of his SALNs and for declaring a false net worth.” ” (Carabeo vs. Sandiganbayan, (Carabeo vs. Sandiganbayan,

G.R.G.R.

Nos. 190580-81, 21 February 2011)Nos. 190580-81, 21 February 2011)





ii) “Furthermore, the only concern of ii) “Furthermore, the only concern of the Review and Compliance the Review and Compliance Procedure, as per paragraph (a), is Procedure, as per paragraph (a), is to determine whether the SALNs are to determine whether the SALNs are complete and in proper form.complete and in proper form. x x x. x x x. If it finds that required information If it finds that required information has been omitted, the appropriate has been omitted, the appropriate Committee shall so inform the Committee shall so inform the official who prepared the SALN and official who prepared the SALN and direct him to make the necessary direct him to make the necessary correction.”correction.”(underscoring supplied) [PAGC vs. Pleyto, G.R. No. (underscoring supplied) [PAGC vs. Pleyto, G.R. No. 176058, 23 March 2011]176058, 23 March 2011]






iii) “The Court cannot accept the view iii) “The Court cannot accept the view that the review required of the that the review required of the Committee refers to the Committee refers to the substancesubstance of what is stated in the SALN, of what is stated in the SALN, i.e.i.e., , the truth and accuracy of the the truth and accuracy of the answers stated in it, for the answers stated in it, for the following reasons: . . .following reasons: . . .




4.Information and Communication

4.1.4.1. InformationInformation4.1.2. Review and Compliance Procedure4.1.2. Review and Compliance Procedure

iii) FirstFirst. Assuring the truth and . Assuring the truth and accuracy of the answers in the SALN accuracy of the answers in the SALN is the function of the is the function of the filer’s oathfiler’s oath x x x. x x x. Any falsity in the SALN makes him Any falsity in the SALN makes him liable for falsification of public liable for falsification of public documents under Article 172 of the documents under Article 172 of the Revised Penal Code.” Revised Penal Code.”

d) Formal Defects d) Formal Defects (continuation) (continuation)





Second. The law will not require the impossible, namely, that the Committee must ascertain the truth of all the information that the public officer or employee stated or failed to state in his SALNs and remind him of it.” (emphasis in the original, underscoring supplied) [PAGC (emphasis in the original, underscoring supplied) [PAGC vs. Pleyto, G.R. No. 176058, 23 March 2011]vs. Pleyto, G.R. No. 176058, 23 March 2011]

e) For RA 6713e) For RA 6713

i) “i) “While Section 10 of RA 6713 indeed allows for corrective measures, Carabeo is charged not only with violation of RA 6713, but also with violation of the Revised Penal Code, RA 1379, and RA 3019, as amended, x x x.”

[Carabeo vs. Court of[Carabeo vs. Court ofAppeals, G.R. Nos. 178000 and 178003, 4 Appeals, G.R. Nos. 178000 and 178003, 4 December 2009]December 2009]





ii)ii) ““Significantly, Carabeo failed to show any requirement under RA 3019 that prior notice of the non-completion of the SALN and its correction precede the filing of charges for violation of its provisions. Neither are these measures needed for the charges of dishonesty and grave misconduct, which Carabeo presently faces.”” (Carabeo vs. Court (Carabeo vs. Court

ofof

Appeals, G.R. Nos. 178000 and 178003, 4 December Appeals, G.R. Nos. 178000 and 178003, 4 December 2009)2009)

e) For RA 6713e) For RA 6713





i) “[I]t is apparent that it primarily i) “[I]t is apparent that it primarily imposes upon the heads of offices imposes upon the heads of offices the duty to review the SALNs of the duty to review the SALNs of their subordinates. If a head of their subordinates. If a head of office finds that the SALN of a office finds that the SALN of a certain subordinate is incomplete certain subordinate is incomplete or not in the proper form, or not in the proper form, then the head of office must inform then the head of office must inform the subordinate concerned and the subordinate concerned and direct him to take corrective action. direct him to take corrective action. Unquestionably, it is an internal procedure limited within the office concerned.” ” (underscoring supplied) [Pleyto (underscoring supplied) [Pleyto vs. PNP-CIDG, G.R. No. 169982, 23 November 2007]vs. PNP-CIDG, G.R. No. 169982, 23 November 2007]

f) Internal Proceduref) Internal Procedure





ii) “[Pii) “[P]etitioner’s SALN was not being reviewed or questioned by his head of office, but by the Office of the Ombudsman. Whether or not petitioner’s SALN was actually reviewed by his head of office is irrelevant and cannot bar the Office of the Ombudsman from conducting an investigation x x x x.” x x.” [Pleyto vs. [Pleyto vs. PNP-CIDG, GR No. 169982, 23 November 2007)PNP-CIDG, GR No. 169982, 23 November 2007)






iii) “[T]hat when the head of office finds iii) “[T]hat when the head of office finds the SALN of a subordinate incomplete the SALN of a subordinate incomplete or not in the proper form such head of or not in the proper form such head of office must call the subordinate’s office must call the subordinate’s attention to such omission and give attention to such omission and give him the chance to rectify the same. him the chance to rectify the same. But this procedure is an internal office But this procedure is an internal office matter. Whether or not the head of matter. Whether or not the head of office has taken such step with respect office has taken such step with respect to a particular subordinate to a particular subordinate cannot bar cannot bar the Office of the Ombudsmanthe Office of the Ombudsman from from investigating the latter.”investigating the latter.” (underscoring (underscoring supplied) [Carabeo vs. Sandiganbayan, G.R. Nos. 190580-supplied) [Carabeo vs. Sandiganbayan, G.R. Nos. 190580-81, 21 February 2011]81, 21 February 2011]







4.2.4.2. CommunicationCommunication

Effective communication should flow Effective communication should flow down, across, and up the organization, down, across, and up the organization, throughout all components and the throughout all components and the entire structure. There should also be entire structure. There should also be effective communication with external effective communication with external individuals and organizations. individuals and organizations. (Department (Department

of of Budget and Management (DBM) Circular Letter No. 2008-8, Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control System the “National Guidelines on Internal Control System (NGICS),” 23 October 2008, p. 36; and 2.4 Information and (NGICS),” 23 October 2008, p. 36; and 2.4 Information and CommunicationCommunication,, International Organization of Supreme International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, Control Standards for the Public Sector,” 16 October 2004, p. 38) p. 38)





4.2.1.4.2.1. “Section 8. Government “Section 8. Government officials shall make themselves officials shall make themselves available to their staff for available to their staff for consultations and dialogues.”consultations and dialogues.”(Rule III, Rules Implementing Republic Act (RA) No. (Rule III, Rules Implementing Republic Act (RA) No. 6713, the “Code of Conduct and Ethical Standards for 6713, the “Code of Conduct and Ethical Standards for Public Officials and Employees,” 21 April 1989) Public Officials and Employees,” 21 April 1989)





4.2.2. “Communicate frequently with 4.2.2. “Communicate frequently with customers and other interested parties customers and other interested parties to ensure continual understanding of to ensure continual understanding of their re-quirements, needs and their re-quirements, needs and expectations.”expectations.”(Clause 5.1.1. ISO 9000, the “Introduction and Support (Clause 5.1.1. ISO 9000, the “Introduction and Support Package: Guidance on the Concept and Use of the Process Package: Guidance on the Concept and Use of the Process Approach for Management Systems,” ISO/TC 176/SC 2/N Approach for Management Systems,” ISO/TC 176/SC 2/N 544R3, 15 October 2008; Executive Order (EO) No. 605 s. 544R3, 15 October 2008; Executive Order (EO) No. 605 s. 2007; and Republic Act (RA) No. 90132007; and Republic Act (RA) No. 9013))





4.2.3.4.2.3. “Section 5. Every department, “Section 5. Every department, office and agency shall office and agency shall consult the consult the publicpublic they serve for the purpose of they serve for the purpose of gathering feedback and gathering feedback and suggestions on the suggestions on the efficiency,efficiency, effectiveness and economy of effectiveness and economy of servicesservices. They shall establish . They shall establish mechanisms to ensure the conduct mechanisms to ensure the conduct of public consultations and of public consultations and hearings.” hearings.” [underscoring supplied] (Rule III, [underscoring supplied] (Rule III,

RulesRules

Implementing Republic Act (RA) No. 6713, the “Code Implementing Republic Act (RA) No. 6713, the “Code of Conduct and Ethical Standards for Public Officials of Conduct and Ethical Standards for Public Officials and Employees,” 21 April 1989) and Employees,” 21 April 1989)



4. Information and Communication4. Information and Communication4.2. Communication 4.2. Communication

4.2.4. Communication and consultation 4.2.4. Communication and consultation “should address issues relating to “should address issues relating to the the riskrisk itself, itself, its causesits causes, , its consequencesits consequences (if known), and (if known), and the measuresthe measures being being taken to treat it. Effective external and taken to treat it. Effective external and internal com-munication and internal com-munication and consultation should take place consultation should take place to ensureto ensure that those accountable for implementing that those accountable for implementing the risk management process and the risk management process and stakeholders understand the basis on stakeholders understand the basis on which decisions are made, and the which decisions are made, and the reasons why particular actions are reasons why particular actions are required.” required.” [underscoring supplied] (Clause 5 , 5.2, [underscoring supplied] (Clause 5 , 5.2, PNSPNS

ISO/IEC 31000:2010 (ISO published 2009), the “Risk ISO/IEC 31000:2010 (ISO published 2009), the “Risk Management – Principles and Guidelines,” 11 March 2010]Management – Principles and Guidelines,” 11 March 2010]



4.2.5. “SEC. 20. 4.2.5. “SEC. 20. Regional Offices. – x x x Regional Offices. – x x x

x x xx x x

(6)(6) Conduct continuing Conduct continuing consultations with the local consultations with the local communities, take appropriate communities, take appropriate measures to make the services of the measures to make the services of the Department responsive to the needs Department responsive to the needs of the general public, compile and of the general public, compile and submit such information to the submit such information to the central office and recommend such central office and recommend such appropriate actions as may be appropriate actions as may be necessary; andnecessary; and

x x x.” x x x.”




(Chapter 5, Title V, Book IV, Executive Order (EO) No. (Chapter 5, Title V, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as 292 s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)amended, 25 July 1987)

4.2.6. “SEC. 22. 4.2.6. “SEC. 22. District Office. – x x x District Office. – x x x

x x x x x x (5)(5) Conduct continuing Conduct continuing

consultations with the local consultations with the local communities, take appropriate communities, take appropriate measures to make the services of the measures to make the services of the Department responsive to the needs Department responsive to the needs of the general public, compile and of the general public, compile and submit such information to the submit such information to the Regional Office and recommend such Regional Office and recommend such appropriate actions as may be appropriate actions as may be necessary; andnecessary; and

x x x.”x x x.”(Chapter 5, Title V, Book IV, Executive Order (EO) No. 292 (Chapter 5, Title V, Book IV, Executive Order (EO) No. 292 s. 1987, the “Administrative Code of 1987,” as amended, s. 1987, the “Administrative Code of 1987,” as amended, 25 July 1987)25 July 1987)




““Monitoring internal control is aimed at Monitoring internal control is aimed at ensuring that ensuring that controls are operating as controls are operating as intendedintended and that they are and that they are modified modified appropriatelyappropriately for changes in conditions. x for changes in conditions. x x x. Monitoring the internal control activities x x. Monitoring the internal control activities themselves should be clearly themselves should be clearly distinguished from distinguished from reviewing an organization’s operations which reviewing an organization’s operations which is an internal control activityis an internal control activity x x x.” x x x.” [underscoring supplied] (Department of Budget and[underscoring supplied] (Department of Budget and

5. Monitoring

Management (DBM) Circular Letter No. 2008-8, the “National Guidelines Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 37-38; and on Internal Control Systems (NGICS),” 23 October 2008, p. 37-38; and 2.5 Monitoring, International Organization of Supreme Audit Institutions 2.5 Monitoring, International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 41)Sector,” 16 October 2004, p. 41)



5. Monitoring

5.1. Ongoing Monitoring5.1. Ongoing Monitoring

““Ongoing monitoring of internal control occurs Ongoing monitoring of internal control occurs in the course of normal, recurring in the course of normal, recurring operations of an organization. It is operations of an organization. It is performed performed continually and on a real-time basiscontinually and on a real-time basis, reacts , reacts dynamically to changing conditions and is dynamically to changing conditions and is ingrained in the entity’s operationsingrained in the entity’s operations. x . x x x.” x x.” [underscoring][underscoring]supplied] (Department of Budget and Management (DBM) Circular supplied] (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008,Systems (NGICS),” 23 October 2008, p. 38; and 2.5 Monitoring, p. 38; and 2.5 Monitoring, International Organization of Supreme Audit Institutions (INTOSAI), International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 41)16 October 2004, p. 41)



5. Monitoring5.2. Separate Evaluation5.2. Separate Evaluation

““Separate evaluations of control can also be Separate evaluations of control can also be useful by focusing directly on the useful by focusing directly on the control’s control’s effectiveness at a specific timeeffectiveness at a specific time. Separate . Separate evaluations may take the form of self-evaluations may take the form of self-assessment as well as a assessment as well as a review of control review of control designdesign and and direct testing of internal controldirect testing of internal control. . Separate evaluations also may be performed Separate evaluations also may be performed by the SAIs, by external or internal by the SAIs, by external or internal auditors.” auditors.” [underscoring[underscoringsupplied] (Department of Budget and Management (DBM) Circular supplied] (Department of Budget and Management (DBM) Circular Letter No. 2008-8, the “National Guidelines on Internal Control Letter No. 2008-8, the “National Guidelines on Internal Control Systems (NGICS),” 23 October 2008, p. 39; and 2.5 Monitoring, Systems (NGICS),” 23 October 2008, p. 39; and 2.5 Monitoring, International Organization of Supreme Audit Institutions (INTOSAI), International Organization of Supreme Audit Institutions (INTOSAI), the “Guidelines for Internal Control Standards for the Public Sector,” the “Guidelines for Internal Control Standards for the Public Sector,” 16 October 2004, p. 41)16 October 2004, p. 41)



Bureau, Regional, District, Operating and Support

Offices/Units

Undersecretary and Assistant Secretary

Internal Audit Service

1) Performance review of operations, processes and activities; and

2) Compliance review of operations, processes and activities.

1) Monitoring internal control activities are applied at all levels within and across the agency and sector.

1) Appraise whether in-ternal control compo-nents are well de-signed and properly implemented; and

2) Evaluate whether in-ternal control objec-tives are achieved.

1. Nature and Purpose of Review




Offices/Units



1)Performance is reviewed on a regular basis. If actual accomplishments do not meet established objectives or standards, the processes and ac-tivities established to achieve the objectives should be reviewed to determine if improve-ments are needed;

1)Require the submission of reports;

2) Conduct performance eva-luation and inspection to determine compliance with policies, standards and guidelines of the depart-ment;

1) Determine the degree of compliance with laws, rules, policies and constitutional obligations;

2) Evaluate the control effectiveness of opera-ting systems and support systems for a specific period or date;

2. Scope, Coverage, and Frequency of Review




Offices/Units



2) Operations, processes and activities are periodically reviewed to ensure that they are in compliance with current regulations, policies and other re-quirements; and

3) Monitor and control implementation of operating and support systems.

3) On-going monitoring and on a real-time basis; and

4) Ingrained in the opera-tions.

3) Evaluate whether ope-rations are conducted effectively, efficiently, ethically, and econo-mically; and

4) Takes place “after the fact” and covers a complete cycle of operations.

2. Scope, Coverage, and Frequency of Review (Continuation)



Bureau,Regional,District, Operating and Support

Offices/Units



1) Institute process im-provements to meet objectives or standards to achieve efficiency and effectiveness in operations;

2)Institute process im-provements to achieve compliance with regula-tions, policies and other requirements in operations;

1) Oversee all the operational activities and shall be responsible to the Sec-retary/;

2) Coordinate the programs and projects and be responsible for its economical, efficient, ethical and effective ad-ministration; and

1) Advise/report to the Department Secre-tary or the Audit Committee of the Governing Board all matters relating to management con-trol and operations audit; and

2) Recommend realis-tic courses of ac-tion.

3. Actions To Be Taken




Offices/Units



3) Develop new or improved methods, measures and other support systems and processes; and

4)Conduct trainings and provide staff supervision on the application of new or improved methods, measures and other support systems and processes.

3) Take such actions as may be necessary for the proper performance of official functions, in-cluding rectification of violations, abuses and other forms of mal-administration.

3. Actions To Be Taken (continuation)



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