February 24, 2014 To whom it may concern, We are issuing this statement in order to clarify the matter regarding

the issuance of the disclaimer opinion and to answer the statement issued by OVPIA. We would first discuss the structure of COA and its processes, followed by the narration of facts and then the analysis and implications of what happened. CHARACTER OF COA IN RELATION TO THE JUDICIARY The Commission on Audit (COA) is a constitutional commission, independent and separate from all the branches of the University Student Government. It is a constitutional commission because it was created by the supreme law that governs the university student government. However, one may find that in Article XIX of the USG Constitution - Constitutional Commissions, both the COA and COMELEC shall report directly to the Judiciary. This means that the Judiciary Branch exercises supervisory powers over both COA and COMELEC. Notwithstanding such fact, COA is an autonomous body vested with jurisdiction, which includes powers and functions in relation to auditing. Again, being in the Constitution, this serves as enough notice to everyone of its existence. For the past few months, the COA is undergoing a state of reestablishment, with the Judiciary helping it. The Judiciary is tasked to ensure that the COA will be exercising their duties to prevent the unit from disappearing. For the past few years, COA underwent two cycles of existence then demise but it doesnt mean that the COA can no longer go back in track. The Judiciary sought to build it again by recruiting members and trained them under the supervision of Ms. Clarissa Ramos, a Certified Public Accountant and the former Vice Chairman for Administration. JURISDICTION OF COA The general jurisdiction of the Commission is to examine and audit all accounts pertaining to the receipt and disbursement of funds pertaining to any University Student Government unit. An audit is being carried out by the Commission on Audit to objectively obtain and evaluate evidence regarding assertions about actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to its intended users. The objective is to plan and perform the audit to obtain appropriate audit evidence that is sufficient to support the opinion expressed in the auditors report. This includes the power of the Commission to require the submission of records and supporting documents relative to a USG unit's transactions.

OTREAS, on the other hand, serves as the financial manager of the whole University Student Government which enforces standard operating procedures with regards to the financial system of the whole USG and formulates new and necessary policies for the benefit of the latter. As financial managers of the USG, they oversee and handle monitoring and managing of the other units budgets and as part of their responsibility to uphold proper enforcement of the latter, they gather financial documents necessary to be able to collect and summarize data to prepare trimestral financial reports dealing with all phases of the financial activities of all offices under USG. These trimestral reports are made up of periodic reviews of income and expenditure status of each unit as well as receipts and disbursement of funds within the USG. One of the jurisdictions of the OTREAS is to also be able to prepare an annual financial report of the whole USG which is to be audited by COA. While it can be noticed that some functions are found in both units and one may think of redundancy, the OTREAS and COA is in reality, different. What OTREAS conducts is an internal audit, whereas COA carries out external audit. Internal audit is focused on the continuous monitoring of processes, policies and procedures - making sure that processes are carried out as designed, policies are complied with and procedures are properly implemented. External audit is concerned with the examination: 1. Of compliance with accounting standards in preparing the financial statements 2. As to the fairness & faithful representation by the financial statements of the unit's transactions. What is more relevant for the student body is the results of the external audit. Since the COA is an independent body, it provides an unbiased and objective opinion on the truthfulness of the financial statements of each and every USG unit. It ensures that everything is well-accounted for. Given the jurisdictions of COA and OTREAS, their responsibilities differ in the manner that OTREAS serves the purpose of internal audit whereas COA carries out the responsibility of external audit. OTREAS initially designs the processes, formulates the policies and is consequently responsible for the implementation of these procedures. Internal audit focuses on the continuous monitoring of processes, policies and procedures - making sure that processes are carried out as designed, policies are complied with and procedures are properly implemented. It serves as the oversight

commission that exercises independence through providing an objective opinion on the truthfulness of the financial statements of the units and perform work on a test basis to ensure compliance with rules and regulations in relation to handling financial resources. AUDITING PROCESS By Section 4 of the COA Manual, the auditing process of COA starts with the requisition of the following documents through the Letter of Request for Documents from the Government units being audited primarily through the OTREAS; however these can also be obtained from other USG units, if it is deemed necessary: a. Books of Records b. Income Statement, both the hard and soft copy; c. Photocopy of the Supporting Documents d. Statement of Government Units Responsibility; and e. Other documents deemed necessary by the auditors The Government units are given 2 to 3 weeks to comply and submit all required documents from the date of the letter. Failure to submit the documents at the given deadline, the succeeding procedure enumerated in the Section 12 of the Manual shall be implemented. a. A Letter of Demand shall be sent to the OTREAS and/or Government unit concerned. The Letter of Demand sent enumerates the lacking documents that the unit must submit. When there has been no response to the Letter of Demand within three days after the date stated in the aforesaid letter, a Notice of Audit Disengagement shall be sent to the Government unit concerned. Failure to respond to the Notice of Disengagement within one week from the date stated in the Letter of Demand, the Commission on Audit shall issue a Disclaimer Opinion bearing the signatures of the Vice Chairman for Audit and the Chairman. A Disclaimer Notice shall also be coursed through the student body noting that

b.

c.

the Government unit concerned presented incomplete audit documents or did not submit the required audit evidences, or both which will ultimately freeze the account of the unit. Meanwhile, complying Government units are audited. Result of the audit will be stated in the Independent Auditor's Report, which includes audit opinion, financial statements, and some necessary conclusions and recommendations. The audit opinions may be qualified, unqualified, adverse or disclaimer. The kind of audit opinion that will be issued will be based on the standard and regulation stated in the Philippine Standards on Auditing. NARRATION OF FACTS TIMELINE FOR THEIR COMPLIANCE Date the letter of request was sent - December 11, 2013 Deadline of submission - originally, it was January 3 but was extended to January 10, 2014 Date the letter of demand was sent - January 13, 2014 Extended time allotted for submission of late documents - January 11 - January 26, 2014 Another demand, this time through Facebook by posting in the elected's group January 22, 2014 Date when an updated checklist of requirements was uploaded - January 25, 2014 Last day of submission for the 2nd demand - January 26, 2014 Extended deadline for the 2nd demand - January 29, 2014 Date when the letter of disengagement was sent - January 30, 2014 The timeline presented clearly speaks of the fact that COA requested and extended the supposed deadlines in order to give all the USG units a fair chance to comply so that the former will be able to audit the latter. Successive delay of some units delayed the entire audit process. The Notice of Audit Disengagement was sent to the five units reported which states that: 1. First, the COA is resigning from the audit engagements with the offices and will

no longer provide any further audit services, by virtue of them not being able to submit sufficient evidence. 2. Second, the COA is not responsible for completing any unfinished work. 3. Finally, they must see the ombudsman and provide an explanation for the misdemeanor COA did not hear anything from them. It was only when the article in The LaSallian was published did they react. The OVPIA told us they submitted the documents to one of Judiciary officers which supposedly will hand these over to the COA. We received such documents but it is incomplete. After not receiving the said required documents, COA requested the re-submission of the lacking documents, to which the OVPIA refused as they insisted they have submitted already. This was even affirmed in the statement they issued through The LaSallian. ANALYSIS AND IMPLICATIONS 1. The claim of OVPIA that the custody of documents had already been transferred to the Judiciary Branch which then has the responsibility of giving the documents to COA is untenable. As already mentioned, COA is an entirely different entity from the Judiciary. 2. Even assuming arguendo that the OVPIA can validly course through the documents to the Judiciary who should hand it over to COA, this is not a rational way to do it. Common sense dictates that he/she who demands documents must be the one who will receive it. 3. Since they opted to do such, the loss of the documents can be actually considered to be negligence on their part especially if we will follow stare decisis or the rule of precedence to which we can apply the case of DLSU vs. FAST2010. An officer gave the money to another person, the person who she does not know. It was held to be negligence which warranted disbarment. The documents requested by COA can be interconnected to the money in the case. It may be true that they know the person in this case, but they gave it to a judiciary officer. COA is the one who requested the

documents and by giving it to another person who did not even request the documents makes them negligent. 4. It follows then that their refusal to re-submit the documents cannot be justified by the ground that it was COA's fault that the documents was lost. 5. The documents must be sufficient enough to enable the auditor to check, examine and verify the corroboration between the transactions on the records and supporting evidence. As one of the powers of the Commission and by practice of audit, it is very clear that COA can demand for the documents anytime there is a need for it through the course of the audit process as it will support the validity of the nature and undertaking of the transactions. Thus, even if it was lost for reasons unknown to both the auditor and the client (unit under audit), the former can still request for the latter to re-submit documents. If the intention of the framers of the Constitution was not to require re-submission, then it would be impossible for COA to audit which negates the very reason it was created. Thus, for situations like this, a demand for re-submission of such documents could be a remedy for COA and the said unit under audit. 6. The re-submission of documents is possible because what COA requires are just copies, not originals. Thus, it wouldn't be hard for the units to re-photocopy or reprint the documents needed.. 7. When Mr. Rowell Macalino signed the OVPIA letter, he acknowledges the receipt of such letter. Yes, he has understood the letter but he and the COA do not agree with the contention of OVPIA that is why the need for this official statement arose. The COA has already disclosed substantial information and regarding the matter and sufficiently argued its side. With such, we rest our case. This will be the first and last time we are issuing a statement for the issue because we want this to be brought in a more appropriate forum - before the Judiciary.

Prepared by:

Rowell Macalino Chairman

Jessamine Alvaro Vice Chair for Audit

Jasmin Borja Vice Chair for Administration

Melissa Pascual Chief Executive Advisor