The Concept of ‘The Commission on Audit’ and the Post-Audit Power

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SUBJECT: The Concept of ‘The Commission on Audit’ and the Post-Audit Power

I. Introduction

This memorandum provides an exhaustive analysis of the constitutional and statutory concept of the Commission on Audit (COA) and its core function, the post-audit power. As a constitutionally-created independent body, the COA is a central pillar in the Philippine system of public accountability and fiscal responsibility. This research will delineate its constitutional foundations, organizational structure, jurisdictional scope, and the specific nature, mechanics, and legal effects of its post-audit authority. The discussion will also cover the remedies available from its decisions and its role within the broader framework of political law.

II. Constitutional Foundation and Nature

The 1987 Constitution establishes the COA under Article IX-D. It is one of the three independent constitutional commissions, alongside the Civil Service Commission and the Commission on Elections. Its independence is guaranteed by constitutional provisions: fixed tenure for its members, protection from diminution of salary, and constitutional safeguards against removal except by impeachment. The COA is designed to be non-partisan and insulated from political pressure to ensure the integrity of its audit functions. Its mandate is not merely administrative but is imbued with public interest, serving as a key mechanism for enforcing the constitutional principle that public office is a public trust.

III. Composition, Appointment, and Qualifications

The COA is composed of a Chairman and two Commissioners, appointed by the President with the consent of the Commission on Appointments for a term of seven years without reappointment. The Constitution mandates qualifications aimed at ensuring expertise and integrity: they must be natural-born citizens at least thirty-five years old, Certified Public Accountants with not less than ten years of auditing experience, or members of the Philippine Bar with at least ten years of practice. These stringent requirements underscore the technical and legal complexity of the commission’s work.

IV. Jurisdictional Scope: Entities Subject to COA Authority

The COA’s audit jurisdiction is expansive, covering all government agencies, instrumentalities, and entities engaged in the use of public funds. As detailed in Article IX-D, Section 2(1) of the Constitution and the Government Auditing Code of the Philippines (Presidential Decree No. 1445), this includes:
Government agencies and instrumentalities, including government-owned or controlled corporations* (GOCCs) with original charters.
Constitutional commissions, offices, and agencies* granted fiscal autonomy.
Autonomous state colleges and universities*.
Local government units*.
Non-governmental entities* receiving subsidies or equity from the government, which are required by law or the granting institution to be subject to audit.
Public utility franchises and entities* required to pay a franchise tax or share their gross receipts with the government.

V. The Post-Audit Power: Definition and Core Function

The post-audit power is the examination and verification of financial transactions, accounts, and reports after they have been completed or as of a given date. It is the COA’s primary constitutional function. Its purpose is threefold: (1) to verify the legality and propriety of expenditures of public funds; (2) to ensure compliance with relevant laws, rules, and regulations; and (3) to assess the efficiency, effectiveness, and economy (the three E’s) in the utilization of government resources. This power is distinct from pre-audit, which involves prior review and approval before a transaction occurs. The 1987 Constitution generally restricts COA to post-audit, allowing pre-audit only in exceptional cases as determined by the Commission.

VI. Mechanics and Legal Effects of Post-Audit

The post-audit process involves a detailed examination of supporting documents, vouchers, contracts, and reports. Key outputs and legal effects include:
Audit Observation Memorandum* (AOM): A preliminary notice of findings requiring explanation from the audited agency.
Notice of Suspension*: Temporarily disallows a transaction due to perceived legal or regulatory violations, stopping its processing until the issue is resolved.
Notice of Disallowance (ND): A final decision that a specific expenditure was illegal, irregular, excessive, extravagant, or unconscionable. It creates a solidary liability on the part of the approving and certifying officers and the recipients who are liable persons*.
Notice of Charge*: Issued for shortages or losses of government funds or property.
Audit Report*: The formal report containing the auditor’s opinion on the fairness of the financial statements and compliance with laws.
The issuance of an ND is a quasi-judicial act. It is final and executory upon receipt, meaning it is immediately demandable, unless a motion for reconsideration is timely filed.

VII. Comparative Analysis: Post-Audit vs. Pre-Audit and Other Powers

The COA exercises a suite of audit-related powers. The following table compares the core features of post-audit with pre-audit and other ancillary powers.

Feature	Post-Audit Power	Pre-Audit Authority	Special Audit & Fraud Audit
Timing	Conducted after the financial transaction has occurred.	Conducted before the financial transaction is finalized or payment is made.	Can be initiated at any time, not bound by regular audit cycles.
Constitutional Basis	Primary mandate under Article IX-D, Sec. 2(1).	Permitted only in exceptional cases (Art. IX-D, Sec. 2(2)).	Implied from the broad audit power and under Sec. 28, P.D. 1445.
Primary Objective	Verification, evaluation, and accountability for past transactions.	Prevention of irregular, illegal, or wasteful transactions.	In-depth examination of specific accounts/operations; investigation of suspected fraud.
Nature of Action	Corrective and accountability-oriented.	Preventive and control-oriented.	Investigative and forensic.
Key Output	Notice of Disallowance, Audit Report.	Approval or disapproval of the voucher/transaction.	Detailed special audit report, potential referral for criminal prosecution.
Legal Effect	Creates solidary liability for refund.	Prevents an irregular transaction from proceeding.	Exposes systemic weaknesses or criminal acts.

VIII. Remedies and Finality of COA Decisions

A party aggrieved by a COA decision (e.g., an ND) may seek the following remedies in sequence:

Motion for Reconsideration: Filed with the COA Auditor or the Director/Cluster Director within six months from receipt of the decision.

Appeal: To the COA Proper (the Commission en banc) if the motion is denied.

Petition for Certiorari under Rule 64: A final decision or order of the COA Proper may be elevated to the Supreme Court via a petition for certiorari within thirty days from notice. The Supreme Court’s review is limited to jurisdictional errors or grave abuse of discretion amounting to lack or excess of jurisdiction.

It is a settled doctrine that decisions of constitutional commissions like the COA are accorded respect and finality, given their expertise in their specialized field.

IX. Role in the Political Law Framework

Within political law, the COA functions as a critical check-and-balance mechanism. It operationalizes the accountability of public officers enshrined in the Constitution. Its power to disallow expenditures and hold persons liable acts as a powerful deterrent against graft and fiscal irresponsibility. Furthermore, its audit reports inform legislative oversight and provide the basis for potential criminal prosecution by the Office of the Ombudsman. The COA’s independence ensures that this oversight is exercised objectively, contributing to the integrity of the entire public administration system.

X. Conclusion

The Commission on Audit is a constitutionally-independent guardian of the public treasury. Its post-audit power is a comprehensive tool for ex-post review, enforcing fiscal discipline, and ensuring that every peso of public funds is spent according to law. The legal regime surrounding its decisions, particularly the notice of disallowance, imposes a stringent standard of accountability on public officers. As a cornerstone of Philippine political law, the COA’s work is indispensable in promoting transparency, curbing corruption, and upholding the principle that public funds are held in trust for the Filipino people.