The New Government Accounting System: Issues in Public Audit 1 Introduction Historically, the growth of government auditing and accounting in the Philippines was greatly influenced by the administrative practices in the United States, so much so that during the time that the General Accounting Office in the United States was responsible for the government’s accounting, that concept was similarly introduced in the Philippines. Unfortunately, by the time the practice was abandoned in the United States in favor of a better system, the Philippines has then become independent and hence the change was not followed here.2 COA Promulgates New Accounting System Unlike in the United States where accounting standards are formulated by the Federal Accounting Standards Advisory Board (FASAB) and subsequently enacted into law, such as the Federal Financial Management Act of 19963, the Philippines new government accounting system was formulated almost single-handedly by a team of highly professional and competent COA officials in only a span of four months4. Parenthetically, the FASAB is the standard-setting body in the U.S. composed of the Secretary of the Treasury, the Director of the Office of Management and Budget, and the Comptroller General, which body is also recognized by the American Institute of Certified Public Accountants as the official board that promulgates generally accepted accounting principles (GAAP) for federal entities.5 Thus, invoking the 1987 Constitution of the Philippines which vests the Commission on Audit with the exclusive authority to promulgate accounting and auditing rules and regulations, the COA promulgated COA Circular No. 2001-004 prescribing a New Government Accounting System (NGAS) for national government agencies, and COA Circular No. 2001-005 for local government units, to take effect January 1, 2002. Subsequently, COA Circular No. 2002-002 was issued prescribing the Manual on the NGAS. In the Foreword to the Manual the need to revamp the old accounting system was justified as follows: “After almost five decades of faithful adherence to the rigid and complicated government accounting procedures designed by foreign consultants, the Commission on Audit, based on the authority granted under Sec. 2 (2), Art. IX-D of the 1987 Constitution, made a sweeping revamp of the existing government accounting system. On October 30, 2001, it issued COA Circular No. 2001-004 prescribing the use by national government agencies of the New Government Accounting System (NGAS) effective January 1, 1 A policy paper written by Atty. Sofronio B. Ursal Former Commissioner, Commission on Audit (Excerpts from the unpublished book entitled PHILIPPINE GOVERNMENT AUDIT (2007) by Sofronio B. Ursal) for the Third Volume of the series of policy papers of the Strategic Studies Council (SSC) entitled, Center and Localities: Dynamics of Intergovernmental Relations. 2 Refer to The Booz Allen Report: An appraisal of the Accounting and Auditing Systems of the Philippines as of 1957. GAO Philippines Monograph. 3 American Journal of Accountancy, Dec. 01, 1996 issue. 4 COA: “Foreword”, Manual of the New Government Accounting System (2002). 5 FASAB Facts. See http://ww.fasab.gov (07.25.07).
2002. The new system was developed in response to one of COA’s priority reform measures which is the “Government Accounting Simplification and Computerization”.
It further explains why the new accounting system is a milestone in the history of the Government: “This change (in the accounting system) is considered a milestone in the history of the Government, particularly the COA, as it was formulated in a span of four months by a team of highly professional and competent COA officials.” (Ital. supplied.) The steering committee of highly professional and competent COA officials that formulated the new accounting system in a span of only four months was headed by COA Chairman Guillermo N. Carague. Issues in Public Audit. The drastic revamp of the...
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