Background of the Study
Internal Auditing Defined. Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes (The Institute of Internal Auditors). Internal audit, a component of the internal control system, is a strategic function in ensuring good governance throughout the bureaucracy (NGICS).
Evolution of Internal Audit in Philippine Public Sector. Internal audit in the Philippine Government was enacted through the Republic Act No. 3456 known as “The Internal Auditing Act of 1962” on June 16, 1962 which was later amended by the Republic Act No. 4177 on March 26, 1965. Several presidential decrees were promulgated thereafter to strengthen the internal control system and establish an internal audit service/ unit (an independent unit) in all branches, subdivisions and instrumentalities of the government including government owned and/or controlled corporations, i.e. Executive Order No. 292 (Administrative Code of 1987), Administrative Order No. 119 of 1989, Memorandum Order No. 277 of 1990, Administrative Order No. 278 of 1992, Administrative Order no. 70 of 2003 and Memorandum Circular No. 89 of 2005.
In pursuit of these decrees, there had been guidelines and several issuances to assist the agencies in establishing and implementing the internal audit service. These are the following: DBM Budget Circular No. 2004-4 Guidelines on the Organization and Staffing of Internal Audit Units (IAUs) issued on March 22, 2004; CSC Memorandum Circular No. 12 Qualification Standards for Internal Audit Service (IAS) Positions issued on June 22, 2006; DBM Circular Letter No. 2008-8 National Guidelines in Internal Control Systems (NGICS) issued on October 23, 2008; and DBM Circular...
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