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GOVERNMENT

ACCOUNTING, AUDITING
AND PROCUREMENT
GOVERNMENT ACCOUNTING
Encompasses the process of analyzing, recording,
classifying and communicating all transactions involving
the receipts and disposition of government funds and
property, interpreting the results thereof.
GOVERNMENT ACCOUNTING
Government accounting gives substance to the concept
of public accountability of public officers and employees
as regard
1. Safeguarding govt. resources against loss or wastage
2. Adherence to the requirement of law and administrative
policies and regulations
3. Economy and efficiency in operations; and
4. Delivering the desired results of government programs and
activities
GOVERNMENT ACCOUNTING
1. Budgetary Accounting-
Appropriation/allotment/obligations
2. Accounting for Disbursements- Payment of checks/
cash advances/petty cash fund
3. Accounting for Income
4. Accounting for Miscellaneous transactions- loss of
property/stale
checks/disallowances/shortage/overage/relief
FUNDAMENTAL PRINCIPLES
GOVERNING FINANCIAL
TRANSACTIONS AND OPERATIONS
OF ANY GOVERNMENT AGENCY:
No money shall be paid out of any treasury or
depository except in pursuance of any
appropriation law or other specific statutory
authority. (Sec 138, GAAM; Sec 4, PD 1445)
Government funds or property
shall be spent or used solely for
public purposes. (sec. 4, PD
1445; Sec. 16B GAAM; G.P. of
GAA)
Trust funds shall be available and may be
spent only for the specific purpose for
which the trust was created or funds
received. (Sec. 4, PD 1445; Secs. 138, 168
and 169, GAAM)
Fiscal responsibility shall, to the
greatest extent, be shared by all those
exercising authority over the financial
affairs, transactions and operations of
the government agency. (Sec 4, PD
1445; Sec 168, GAAM)
Disbursement or disposition of government funds
or property shall invariably bear the approval of the
proper officials. (Sec. 4, PD 1445, Sec. 168, GAAM;
COA Cir. 97-004)
All laws and regulations applicable to
financial transactions shall be
faithfully adhered to. (Sec. 4, PD 1445)
Generally accepted principles and practices of
accounting as well ass of sound management and
fiscal administration shall be observed, provided
that they do not contravene existing laws, rules
and regulations. (Sec. 4, PD 1445)
OBJECTIVES OF GOVERNMENT
ACCOUNTING
Aims to:
1. Produce information concerning past operations
and present conditions
2. Provide a basis for guidance of future operations
3. Provide for control of the acts of public bodies and
officers in the receipt, disposition and utilization of
funds and property and
4. Report on the financial position and results of
operations of government agencies for the
information of all persons concerned
USERS OF GOVERNMENT ACCOUNTING
INFORMATION

1. Citizens
2. Resource Citizens
1. Donors and Grantors
2. Taxpayers
3. Lenders, suppliers and employees3.
3. Governing and oversight bodies
1. President
2. Cabinet
3. Congress
4. DBM
4. Managers and administrators
5. Students
ACCOUNTING BOOKS
1. Regular Agency (RA) books- this shall be used to record
the regular transactions of the agency like the receipt and
utilization of NCA and collections of income and other
receipts w/c the agency can use
2. National Government (NG) books- this shall be used to
record income/collections w/c the agency cannot use and
are required to be remitted to the BTR.
WHAT IS APPROPRIATION?
Appropriation refers to an authorization made by law or
other legislative enactment of obligations to be incurred
and allowing payments to be made with funds of the
government under specified conditions and/ or specified
purposes.
APPROPRIATION MAY TAKE THE
FOLLOWING FORMS:
General Appropriation Law
Supplemental Appropriation Laws
Certain Automatic Appropriations Intended for Specific Purposes
WHAT IS ALLOTMENT?
Allotment is the authorization issued by the DBM to the Agency,
which allows agencies/offices to incur obligations up to a specified
amount that is within a legislative appropriation as reflected in
the advice of allotment.
WHAT IS AN ALLOTMENT RELEASE ORDER
(ARO)?
The ARO is a formal document issued by the DBM to the head of
the agency containing the authorization, conditions and amount of
an agency allocation. The document may be the ABM, where the
amount of allocation not needing clearance is indicated, or the
Special Allotment Release Order (SARO), where the release of
which is subject to compliance with specific laws or regulations or
is subject to approval or clearance by competent authority.
WHAT IS AN OBLIGATION?
Obligation refers to a commitment by a government agency arising
from the act of a duly authorized official which binds the
government to the immediate or eventual payment of a sum of
money. The agency is authorized to incur obligations only in the
performance of activities which are in pursuit of its functions and
programs authorized in appropriation acts/laws within the limit of
the ARO.
CATEGORIES OF OBLIGATIONS OR
EXPENSE ACCOUNTS
PERSONAL SERVICES
MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE)
CAPITAL OUTLAY
FINANCIAL EXPENSES (FE)
BUDGETARY RECORDS OF THE AGENCY
Registry of Allotment Obligations Capital Outlay (RAOCO)
Registry of Allotment and Obligations-Maintenance & Other
Operating Expenses (RAOMO)
Registry of Allotment & Obligations Personal Services (RAOPS)
Registry of Allotment & Obligations Financial Expenses (RAOFE)
TRANSFER OF ALLOCATION FROM
CENTRAL OFFICE TO REGIONAL
OFFICE THRU NTA

Account Title Acct Debit Credit


Code

Cash-NT, MDS
Subsidy Income from Natl Govt
TRANSFER OF ALLOCATION FROM
CENTRAL OFFICE TO REGIONAL
OFFICE THRU NTA
Account Title Acct Debit Cred
Code it

Cash-NT, MDS
Subsidy Income from Natl Govt
RECEIPT OF NOTICE OF CASH
ALLOCATION
(NCA)
TO CENTRAL OFFICE FROM DBM

Account Title Acct Debit Credi


Code t

Cash-NT, MDS
Subsidy Income from Natl Govt
BASIC REQUIREMENTS APPLICABLE TO
ALL CLASSES OF DISBURSEMENTS
CERTIFICATE OF AVAILABILITY OF
FUNDS existence of lawful
appropriation, the unexpended balance of
which, free from other obligations, is
sufficient to cover the expenditure,
certified as available by an accounting
officer or any other official required to
accomplish the certificate.
APPROVAL OF CLAIM OR EXPENDITURE
BY HEAD OF OFFICE OR HIS DULY
AUTHORIZED REPRESENTATIVE as to
validity, propriety and legality of the
claim.
DOCUMENTS TO ESTABLISH VALIDITY OF
CLAIM does not preclude reasonable
questions on funding, legality, regularity,
necessity or economy of the expenditure or
transaction.
LEGALITY OF TRANSACTIONS AND
CONFORMITY OF THE EXPENDITURE TO
EXISTING LAW AND REGULATIONS
PROPER ACCOUNTING TREATMENT proper
classification and use of the code of accounts
shall be followed to achieve uniformity in
recording of transactions.
PREVENTION OF IRREGULAR,
UNNECESSARY, EXCESSIVE,
EXTRAVAGANT OR UNCONSCIONABLE
(IUEEU) EXPENDITURES*
(COA CIRCULAR NO. 85 55A)
SIX MODES OF PAYMENT
TRANSACTIONS
1. BY CHECK (MDS or Commercial Checks);
2. BY CASH, thru cash advance granted to Disbursing Officer;
3. BY NON-CASH AVAILMENT AUTHORITY;
4. BY TAX REMITTANCE ADVICE;
5. BY ADVICE TO DEBIT ACCOUNT (ADA);
6. OTHER DISBURSEMENTS.
MODIFIED DISBURSEMENT SYSTEM
(MDS)
Covers all funds appropriated in the General
Appropriations Act (GAA) and other
supplemental appropriations for the
departments/bureaus. It shall also cover all other
funds deposited with the National Treasury
whether or not requiring special accounts
maintained by NGAs and those maintained by
govt corporations.
GENERAL POLICY GUIDELINES FOR
MDS
Under the NGAS, the NCA issued by DBM to the agency is
recorded.
The GSB maintains separate accounts or ledgers for each agency
and by funds.
Regional Offices release funds to Operating Units not receiving
NCA directly from DBM by issuing Notice of Cash Allocation
(NTA).
GENERAL POLICY GUIDELINES FOR
MDS
All MDS and commercial checks are covered by
duly approved Disbursement Vouchers.
Refunds of cash advances and overpayments are
remitted to the National Treasury by offices
receiving NCAs directly from DBM.
Balance of the NCA at the end of the month
automatically expires and is no longer valid for
use in the ensuing year.
Auditing as a tool for effective governance has been recognized and practiced
since the Spanish colonial era. One proof of this was the residencia, an inquiry into the
administration of an outgoing Governor General and consequently of other officials.
Conducted by the Royal Audiencia, it was designed to hold colonial officials to strict
accountability for all acts during their term of office. Another was the visita de tierra, a
visit of inspection made every three years, which often revealed glaring anomalies in
the handling of local government accounts.
Colonial officials also performed investigations akin to audit at the time. One was a
fraud audit of sorts for galleon trade conducted in the early 1700s. Another, which
involved the inspection of the Misericordia de Manila in 1751, had shades of financial
audit.
In 1739, a Royal Decree by the King of Spain established the royal exchequer
which was the national treasury of that era. All books of accounts of the Spanish
colonial government were required to pass through the scrutiny and certification of
the contador or the accountant and that of the oidor, a representative of the Spanish
crown, who by the nature of his duties may be considered as the precursor of the
auditor.
By mid-19th century, the Tribunal de Cuentas was created. It functioned as the
supreme auditing institution of the islands until the end of the Spanish rule in 1898.
Staffed by a president, two auditors, a fiscal, accountants and examiners, the Tribunal
had exclusive jurisdiction over the audit of all financial matters affecting the colony.
These personnel, all appointees of the King, were required by law to review all vouchers
and to cross-check them against corresponding entries in the books of accounts.
The Birth of an Institution
Nurturing a nascent government requires a mixture of boldness and
prudence. And at a time when the early Philippine government was being
zealously fleshed out by its American rulers emboldened by their newfound
power, then President William McKinley ensured a healthy dose of prudence in
these activities.
An unnumbered memorandum signed on May 8, 1899 by McKinley gave
birth to the Office of the Auditor for the Philippine Islands.
By 1900, the Office had become a fixture of government. The civil
government was formally ushered in 1901 under William Howard Taft. The major
change in the nature of government had ripple effects in the structure of
government. One result of such change was the conversion of the Office of the
Auditor of the Philippine Islands to the Bureau of the Insular Auditor.
However, it was more than a mere change of name. A provincial audit
division was created for the Bureau. Moreover, double-entry bookkeeping was
introduced which accounted for fuller analysis of settlements and ensured a
higher degree of correctness.
In 1905, a change of guard took place. Taft resigned as Civil Governor and
was replaced by Luke E. Wright who led as Governor General. Under his
administration, Act No. 1402 was passed whereby the Bureau of the Insular
Auditor was renamed the Bureau of Audits.
Growth and Changes: Becoming A Stronger Institution
As the nation celebrated its independence with the promulgation of the 1935
Constitution, the institution also reached a milestone. The 1935 Constitution expressly
provided for a General Auditing Office, thereby elevating the audit institution to a
constitutional body. Renamed as the General Auditing Office or GAO, it now embarked on a
full Filipinization of the institution as a reflection of the government-wide transition to self-
governance. For the first time, the institution was headed by a Filipino Auditor Genera l in
the person of the Hon. Jaime Hernandez.
As a major stride towards the independence of the audit institution, the GAO was
explicitly placed under the direction and control of an Auditor General to separate it as an
organization from the Executive and other departments of the government.
In 1972, the country was placed under Martial Law. Government experienced a major
upheaval, and the GAO was not exempted. The GAO was renamed the Commission on
Audit (COA) and was granted broader powers under the new Constitution promulgated in
1973. Under this Constitution, COA was given a broader area of audit coverage by including
the accounts of all subdivisions, agencies, instrumentalities of government and government-
owned-and-controlled corporations among those to be examined, audited and settled.
As opposed to having an Auditor General single-handedly leading the GAO, the new
Constitution provided for a three-man collegial Commission on Audit. This change aimed to
strengthen the independence of the auditing office and improve the quality of its decisions,
given the rationale that a three-man body was less susceptible to pressure than an office
held by a single person. It worked as a built-in internal check within the Commission and
encouraged opposing views to surface thereby resulting in earnest consultation and better
deliberation
In the years that ensued, the Commission was a hub of activity. A
landmark legislation on auditing, Presidential Decree 1445 or the
Government Auditing Code, was promulgated in 1978. A Standard
Government Chart of Accounts was likewise issued which greatly
facilitated financial audit for computerization purposes. The Commission
also implemented its comprehensive audit program focusing on the 3Es:
economy, efficiency and effectiveness. Installation of this program
represented a break from tradition that laid undue emphasis on
compliance and voucher audit. And on top of all these, the Commission
embarked on a massive reorganization and professionalization of its
personnel.
This era will also be remembered for the significant involvement of
COA in international events such as initiating the establishment of the
Asian Organization of Supreme Audit Institutions (ASOSAI), on to
sponsorships of trainings for Asias auditors and culminating with the
hosting of the XI International Congress of Supreme Audit Institutions
(INCOSAI) in 1983. It was also during this time that a COA Chairman was
first elected to the United Nations Board of Auditors.
Years later, the world witnessed the 1986 EDSA Revolution. It was
truly a historical event that highlighted the need for reforms in
government as a whole. It provided everyone a chance for introspection
and created an avenue towards change. As fate would have it, the COA
again found itself working under a new government, under a new
Constitution and with an even broader scope of authority.
The 1987 Constitution maintained the independence of the
Commission on Audit as the supreme auditing arm of the Philippine
government. Moreover, the Constitution reiterated COAs role as the sole
official external auditor of government agencies as well as government-
owned- and-controlled corporations (GOCCs). In other words, the
previous practice of some GOCCs and other government agencies of
hiring private accounting firms as a requirement of foreign funding
institutions to act as their auditors for foreign-assisted projects was no
longer allowed.
Change, it seems, is the inescapable destiny of the Commission. But
as history proves, whatever the nature of change brought about by
national political events, the Commission manages to make it for the
better.
1987 PHILIPPINE CONSTITUTION
ARTICLE IX-D THE COMMISSION ON AUDIT

SECTION 1 (1). There shall be a Commission on Audit composed of a


Chairman and two Commissioners, who shall be natural-born citizens of
the Philippines and, at the time of their appointment, at least thirty-five
years of age, certified public accountants with not less than ten years of
auditing experience, or members of the Philippine Bar who have been
engaged in the practice of law for at least ten years, and must not have
been candidates for any elective position in the elections immediately
preceding their appointment. At no time shall all Members of the
Commission belong to the same profession.
SECTION 1 (2). The Chairman and the Commissioners shall be
appointed by the President with the consent of the Commission on
Appointments for a term of seven years without reappointment. Of those
first appointed, the Chairman shall hold office for seven years, one
Commissioner for five years, and the other Commissioner for three years,
without reappointment. Appointment to any vacancy shall be only for the
unexpired portion of the term of the predecessor. In no case shall any
Member be appointed or designated in a temporary or acting capacity
SECTION 2 (1). The Commission on Audit shall have the power,
authority, and duty to examine, audit, and settle all accounts pertaining to
the revenue and receipts of, and expenditures or uses of funds and
property, owned or held in trust by, or pertaining to, the Government, or
any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations with original charters, and
on a post-audit basis: (a) constitutional bodies, commissions and offices
that have been granted fiscal autonomy under this Constitution; (b)
autonomous state colleges and universities; (c) other government-owned
or controlled corporations and their subsidiaries; and (d) such non-
governmental entities receiving subsidy or equity, directly or indirectly,
from or through the Government, which are required by law or the
granting institution to submit to such audit as a condition of subsidy or
equity. However, where the internal control system of the audited
agencies is inadequate, the Commission may adopt such measures,
including temporary or special pre-audit, as are necessary and
appropriate to correct the deficiencies. It shall keep the general accounts
of the Government and, for such period as may be provided by law,
preserve the vouchers and other supporting papers pertaining thereto.
SECTION 2 (2). The Commission shall have exclusive authority, subject to
the limitations in this Article, to define the scope of its audit and
examination, establish the techniques and methods required therefor, and
promulgate accounting and auditing rules and regulations, including those
for the prevention and disallowance of irregular, unnecessary, excessive,
extravagant, or unconscionable expenditures, or uses of government funds
and properties.
SECTION 3. No law shall be passed exempting any entity of the
Government or its subsidiary in any guise whatever, or any investment of
public funds, from the jurisdiction of the Commission on Audit.
SECTION 4. The Commission shall submit to the President and Congress,
within the time fixed by law, an annual report covering the financial
condition and operation of the Government, its subdivisions, agencies, and
instrumentalities, including government-owned or controlled corporations,
and non-governmental entities subject to its audit, and recommend
measures necessary to improve their effectiveness and efficiency. It shall
submit such other reports as may be required by law.
1. Examine, audit and settle all accounts pertaining to the revenue and
receipts of, and expenditures or uses of funds and property owned or held
in trust by, or pertaining to, the government.

2.Promulgate accounting and auditing rules and regulations including


those for the prevention and disallowance of irregular, unnecessary,
excessive, extravagant or unconscionable expenditures, or uses of
government funds and properties.

3.Submit annual reports to the President and the Congress on the financial
condition and operation of the government.

4.Recommend measures to improve the efficiency and effectiveness of


government operations.

5.Keep the general accounts of government and preserve the vouchers and
supporting papers pertaining thereto.

6.Decide any case brought before it within 60 days.

7.Performs such other duties and functions as may be provided by law.


(Article IX-D of the 1987 Philippine Constitution)
Chief azure three mullets argent representing the national scope of
jurisdiction of the Commission on Audit; on base gules seven beasants or
representing the seven functions of the Commission. The shield is an
ethnic Igorot design.

The three silver (argent) stars (mullets) on the blue (azure) background
represent the national scope of jurisdiction of the Commission on Audit;
the seven gold (or) coins (besants) on red (gules) base represent the seven
functions of the Commission.
VISION
A credible, trustworthy and independent Supreme Audit
Institution; a vibrant partner in nation-building; a
bulwark of integrity and competence; an organization of
professionals with a culture of excellence; a respected
member of international organizations of supreme audit
institutions.

MISSION
To carry out our constitutional mandate with the highest
degree of professionalism, competence, integrity,
teamwork and organizational efficiency, and promote the
people's trust in government by upholding public
accountability.
STRUCTURE OF COA
The Chairman and the two Commissioners shall
together be known as the Commission Proper and as
such shall be distinguished from the other components
of the Commission consisting of the central and
regional offices subsisting or which may hereinafter be
created. (2) The Commission Proper shall sit as a body
to determine policies, promulgate rules and
regulations, and prescribe standards governing the
performance by the Commission of its powers and
functions. (3) The Chairman shall act as the presiding
officer of the Commission Proper and the Chief
Executive Officer of the Commission.
TYPES OF AUDIT
Financial Audit Includes financial statement and
financial related audits
1. financial statement audits determine whether
-the financial statements present fairly the financial
position, results of operations and cash flows in accordance
with GAAP
- the entity has complied with laws and regulations for
those transactions and events that may have a material
effect on the FS
2. financial related audits determine whether
Financial reports and related items are fairly presented
Finacncial information is presented in accordance with established
criteria
And the entity has adhered to sepcific financial compliance
requirements

given reliance to the credibility of the financial statements


TYPES OF AUDIT

Compliance Audit to check if it is in compliance


with the laws
Performance Audit-audit the performance of the
agency
Economy reasonably price, lowest cost obtainable
Efficiency input and output
Effective objectives were met
FRAUD AUDIT
Check irregularities intended to defraud the govt
Determine existence, extent, methods/means and
persons liable
To plan the audit (to whom) and duration of audit
Internal control needed
REVENUE AUDIT
Check the revenue earned a correct assessment
of revenue in accordance with rates
1. Assessments rates
2. Collections whether the amount collected is the
same as the OR
3. Recording
4. Remittance recorded; remitted wholly
AUDIT TYPES

Pre- audit
Before transactions
proposed expenditure to submitted to COA

Post-Audit
Disbursements
Disallowance Notice of Disallowance
Suspension Notice of Suspension

Revenue
Charge Notice of Discharge
STATISTICS AS AN AUDIT TOOL
Auditors use inferential statistics to draw
conclusions about populations based on
samples of data.

Why do auditors use samplesusually too


costly and time-consuming to examine entire
universe
AUDIT SAMPLING
The definition of audit sampling in ISA 530 is:
the application of audit procedures to less than
100% of items within a class of transactions or
account balance such that all sampling units
have a chance of selection.
the application of an audit procedure to less
than 100% of the items within an account
balance or class of transactions for the purpose of
evaluating some characteristic of the balance or
class
AUDIT SAMPLING
Sample items should be selected in a way so that
the sample can be expected to be representative
of the population;

Statistical Techniques
Random sampling
Systematic (interval) sampling
Stratified sampling
Non-Statistical Sampling
Haphazard sampling
Block selection
Judgement selection
AUDIT SAMPLING
Random Number Sampling - A random sample is
obtained by selecting numbers from a random number
table or by generating numbers randomly by computer
and matching them with document numbers, such as
check numbers and invoice numbers.
AUDIT SAMPLING
Systematic Sampling - A systematic sample is
obtained by selecting items at uniform intervals. The
interval is determined by dividing the number of
physical units in the population by the sample size. A
starting point is selected at random in the first
interval, and one item is selected from the population
at each of the uniform intervals from the random
starting point. Neither the size nor the unusualness of
an item should be allowed to influence selection. The
auditor can select large and unusual items in addition
to items sampled, however.
AUDIT SAMPLING
Stratified Sampling
This is a technique where the auditor will split
items in a sample into their various
stratas. For example, in a payroll sample the
auditor might split the sample between full-
time males, full-time females, part-time males
and part-time females and work out the
percentage of the strata in the population (the
population being the total amount that makes
up a figure). For example if 30% of the
population are full-time males, 40% full-time
females, 20% part-time males and 10% part-
time females, then the sample will consist of
30% full-time males, 40% full-time females etc.
AUDIT SAMPLING
Haphazard Sampling - A haphazard sample is
obtained by selecting, without any conscious bias,
items regardless of their size, source, or other
distinguishing characteristics. It is not the selection of
sample units in a careless manner; the units are
selected in a manner so that the sample can be
expected to be representative of the population. For
example, the sample may consist of vouchers pulled
from all vouchers processed for the year. Excluding
items from the sample on the basis of judgment
invalidates the requirement for a representative
sample.
AUDIT SAMPLING
Block Sampling - A block sample is obtained by
selecting several items in sequence. Once the first item
in the block is selected, the remainder of the block is
chosen automatically. For example, the sample may
consist of all vouchers processed during a two-week
period or all vouchers processed on specific days. Block
samples could theoretically be representative samples
but are rarely used because they are inefficient. The
time and expense to select sufficient blocks so that the
sample could be considered representative of the total
population is prohibitive.
AUDIT SAMPLING
Judgment sampling
Auditors can use their judgment in selecting
items for sampling. There are three basic issues
which determine which items are selected:
The value of items

The relative risk (items prone to error should be


given special attention)
The representativeness (the sample should be
representative of the population)
PROCUREMENT
1. Defined under RA 9184 and its IRR,
refers to the acquisition of goods,
consulting services, and the
contracting for infrastructure projects
by the procuring entity.
FACTORS CONSIDERED
IN PROCUREMENT

1. Right Quality
2. Right Quantity
3. Right Price
4. Right Time
5. Right Source
GENERAL PROCEDURES IN PROCUREMENT
1. Procurement Planning and the
Preparation of the APP
2. Approval of Requisition
3. Bidding
4. Preparation, Approval of Purchase
Order/Letter Order/Contract
5. Preparation of ObR
6. Delivery of Purchase Order/Letter Order/
Contract
7. Delivery, Inspection and Acceptance of
the items;
8. Payment for the items delivered
MODES OF PROCUREMENT (IRR OF RA
9184)
1. Public Bidding
2. Alternative modes of procurement
1. Limited source bidding
2. Direct contracting
3. Repeat order
4. Shopping
5. Negotiated procurements
1. PROCUREMENT PLANNING AND THE
PREPARATION OF THE APP
All procurement should be within the approved
budget of the procuring entity and should be
meticulously and judiciously planned by the
procuring entity concerned.
No government procurement shall be undertaken
unless it is in accordance with an approved Annual
Procurement Plan (APP).
1. PROCUREMENT PLANNING AND THE
PREPARATION OF THE APP
The APP shall bear the approval of the head of the
procuring entity or second-ranking official
designated by the head of the procuring entity to
act on his behalf, and must be consistent with its
duly approved yearly budget.
2. REQUISITIONING
Definition
Is the art of requiring that something be furnished.
In the procurement function, it is the submission of
written requests for supplies, materials and the
like.
2. REQUISITIONING
Requirements for Requisition:
Agencies may be allowed to enter into contracts for
the purchase of the supplies and materials for one
year subject to the condition that deliveries shall be
made on a staggered basis and the agencies three
(3) months supply requirements are not exceeded
and payments shall be made after each delivery
only.
2. REQUISITIONING
Requisitions of drugs and medicines should comply
with the Generics Act of 1988 (RA 6675) which
prescribes the use of generic terminology or generic
names in all transactions related to purchasing,
prescribing, dispensing and administering of drugs
and medicines.
2. REQUISITIONING
How to Requisition?
The Requisitioning Unit/Office (RU/O) shall submit
the approved Requisition and Issue Slip (RIS) to
the Supplies and Property Unit (SPU) or its
equivalent office. If the items being requisitioned
are available or in stock, the SPU shall release or
issue the same to the RU/O. in case stocks are not
available, SPU shall indicate this on the RIS and
return the same to the RU/O.
(Sec. 3 COA Circular No. 2003-06)
2. REQUISITIONING
Approval of Requisitions:
The head of office or department within a
reasonable time approves requisitions after its
submission.
The authority to approve requisitions depends
on the agencys authority to enter into contract.
The department or agency head, without the
need of prior approval may enter into contracts
for public services or for furnishing of supplies,
materials or equipment by higher authorities.
COMPETITIVE BIDDING (SECTION 10)
All procurement shall be done through competitive
bidding, except as provided in Rule XVI of this
IRR-A.
3. BIDDING
Bid. Refers to a signed offer or proposal to
undertake a contract submitted by a bidder in
response to and in consonance with the
requirements of the bidding documents. For the
purposes IRR-A, the term bid shall be equivalent
to and be used interchangeably with proposal and
tender, particularly when referring to the
procurement of consulting services. (IRR-
A_RA9184)
3. BIDDING
BAC Structure Regular Members:
Chairman, who is at least a third ranking
permanent official of the procuring entity;
An officer, who is at least a fifth ranking
permanent official, with knowledge, experience
and/or expertise in procurement who, to the
extent possible, represents the legal or
administrative area of the procuring entity,
provided that in the case of bureaus, regional
offices, BAC members shall be at least a third
ranking permanent personnel;
3. BIDDING
An officer, who is at least a fifth ranking
permanent official with knowledge, experience
and/or expertise in procurement who, to the
extent possible, represents the finance area of the
procuring entity, provided that in the case of
bureau regional offices and sub-regional/district
offices, BAC members shall be at least a third
ranking permanent personnel;
BIDDING
Provisional Members:
An officer who has technical expertise relevant to
the procurement at hand, and, to the extent
possible, has knowledge, experience and/or
expertise in procurement; and
A representative from the end user limit who has
knowledge of procurement laws and procedures.
The members of the BAC, including the Chairman
and the Vice- Chairman, shall be designated by the
head of the procuring entity. Moreover, the Vice-
Chairman shall be a regular member of the BAC.
For purposes of this IRRA, the term permanent
shall refer to a plantilla position within the
procuring entity concerned.
3. BIDDING
The members to be designated by the head of the
procuring entity to the BAC shall be at least five
(5), but not more than seven (7).
Unless sooner removed for a cause, the members of
the BAC shall have a fixed term of one (1) year
reckoned from the date of appointment, renewable
at the discretion of the head of the procuring entity.
In case of resignation, retirement, separation,
transfer, re-assignment, removal, death, the
replacement shall serve only for the unexpired
term: provided, however, that in case of leave or
suspension, the replacement shall serve only for the
duration of the leave or suspension. For justifiable
causes, a member shall be suspended or removed
by.
3. BIDDING
In no case shall the head of the procuring entity
and/or the approving authority be the Chairman
or a member of the BAC.
ALTERNATIVE METHODS LIMITED SOURCE
BIDDING, OTHERWISE KNOWN AS SELECTIVE
BIDDING
Is a method of procurement of goods and consulting
services, that involves direct invitation to bid by the
concerned procuring entity from a set of pre-selected
suppliers or consultants with known experience and
proven capability on the requirements of the particular
contract.
CONDITIONS LIMITED SOURCE
Bidding
Limited source bidding may be employed by
concerned procuring entities under any of the
following conditions:
Procurement of highly specialized types of
goods (e.g. sophisticated defense equipment,
complex air navigation systems, coal) and
consulting services where only a few suppliers
or consultants are known to be available, such
that resorting to the public bidding method will
not likely result in any additional suppliers or
consultants participating in the bidding;
CONDITIONS LIMITED SOURCE BIDDING
Procurement of major plant components where it
is deemed advantageous to limit the bidding to
known qualified bidders in order to maintain
uniform quality and performance of the plant as
a whole.
ALTERNATIVE METHODS DIRECT
CONTRACTING OR SINGLE SOURCE
PROCUREMENT
Is a method of procurement of goods that does not
require elaborate bidding documents. The supplier is
simply asked to submit a price quotation or a pro-
forma invoice together with the conditions of sale.
CONDITIONS DIRECT CONTRACTING
Direct contracting may be resorted to by concerned procuring
entities under any of the following conditions:
Procurement of items of proprietary nature which can
be obtained only from the proprietary source i.e. when
patents, trade secrets and copyrights prohibit others
from manufacturing the same item.
When the procurement of critical plant components
from a specific manufacturer, supplier or distributor
is a condition precedent to hold a contractor to
guarantee its project performance, in accordance with
the provisions of its contract; or
Those sold by an exclusive dealer or manufacturer
which does not have subdealers selling at lower prices
and for which no suitable substitute can be obtained
at more advantageous terms to the Government.
ALTERNATIVE METHODS - SHOPPING
Is a method of procurement of goods whereby the
procuring entity simply requests for the
submission of price quotations for readily
available off-the-shelf goods or ordinary/regular
equipment to be procured directly from suppliers
of known qualifications.
CONDITIONS - SHOPPING
This method of procurement shall be employed only in any of the following cases:
When there is an unforeseen contingency
requiring immediate purchase: Provided,
however, that the amount shall not exceed One
Hundred One thousand pesos
(P100,000); or
Procurement of ordinary or regular office
supplies and equipment not available in the
Procurement Service involving an amount not
exceeding Five hundred fifty thousand pesos
(P500,000): Provided, however, that the
procurement does not result in splitting of
contracts, as provided in Section 54.1 of this IRR-
A. provided, further, that at least three (3) price
quotations from bona fide suppliers shall be
obtained.
ALTERNATIVE METHODS NEGOTIATED
PROCUREMENT
Is a method of procurement of good, infrastructure
projects and consulting services, whereby the
procuring entity directly negotiates a contract with
a technically, legally and financially capable
supplier, contractor or consultant only in the
following cases:
CONDITIONS
Where there has been failure of public bidding
for the second time as provided in Section 35 of
the Act and this IRR-A;
CONDITIONS NEGOTIATED
PROCUREMENT
In case of imminent danger to life or property
during a state of calamity or when time is of the
essence arising from natural or man-made
calamities or other causes where immediate
action is necessary to prevent damage to or loss
of life or property, or to restore vital public
services, infrastructure facilities and other public
utilities.
CONDITIONS NEGOTIATED
PROCUREMENT ALTERNATIVE METHODS
Take-over of contracts, which have been
rescinded or terminated for causes provided for in
the contract and existing laws, where immediate
action is necessary to prevent damage to or loss
of life or property , or to restore vital public
services, infrastructure facilities and other public
utilities;
CONDITIONS NEGOTIATED
PROCUREMENT ALTERNATIVE METHODS
Where the subject contract is adjacent or
contiguous to an on-going infrastructure project:
provided, however, that (i) the original contract is
the result of a Competitive Bidding; (ii) the subject
contract to be negotiated has similar or related
scopes of work; (iii) it is within the contracting
capacity of the contractor; (iv) the contractor uses
the same prices or lower unit prices as in the
original contract less mobilization cost; (v) the
amount involved does not exceed the amount of the
ongoing project; and (vi) the contractor has no
negative slippage: provided, further, that
negotiations for the procurement are commenced
before the expiry of the original contract.
CONDITIONS NEGOTIATED
PROCUREMENT ALTERNATIVE METHODS
Purchases of goods from another agency of the
Government, such as the PSDBM, which is
tasked with a centralized procurement commonly
use Goods for the government in accordance with
Letters of Instruction No. 755 and Executive
Order No. 359, series of 1989.
ALTERNATIVE METHODS REPEAT ORDER
When provided for the APP, is the method of
procurement of good from the previous winning
bidder, whenever there is a need to replenish
goods procured under a contract previously
awarded through Competitive Bidding.
Repeat orders from the previous winning
bidder may be resorted to by procuring entities
only in cases where the procured item is clearly
superior to the other bids not only in terms of
the price quoted but also in terms of equipment
reliability, availability of spare parts, after-
sales service and delivery period, among others.
CONDITIONS REPEAT ORDER
Repeat orders shall likewise be subject to the following
conditions:
Contract prices of the repeat order must be the same as
or lower than those in the original contract, provided that
such prices are still the most advantageous to the
Government after price verification;
The repeat order will not result in splitting of contracts,
requisitions or purchase orders, as provided for in Section
54.1 of this IRR-A;
Except in cases duly approved by the GPPB, the repeat
order shall be availed of only within six (6) months from
the date of the Notice to Proceed arising from the original
contract; and
The repeat order shall not exceed twenty-five
percent(25%) of the quantity of each item in the original
contract.
TERMS AND CONDITIONS FOR THE
USE OF ALTERNATIVE METHODS
Splitting of Government Contracts is not
allowed. Splitting of Government Contracts
means the division or breaking up of
Government Contracts into smaller quantities
and amounts, or dividing contract
implementation into artificial phases or sub-
contracts for the purpose of evading or
circumventing the requirements of law and this
IRR-A, especially the necessity of public
bidding and the requirements for the
alternative methods of procurements.
MODES OF PROCUREMENT (IRR OF RA
9184)
Public Bidding (general rule)
Alternative modes of Procurement (exceptions):
Limited source bidding
Direct Contracting
Repeat Order
Shopping
Negotiated Procurements
THE END

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