Request that Audit Certificate for GOCCs and Their Subsidiaries Be Considered Substantial Compliance with Law

May 27, 1986 BIR RULING NO. 068-86 272 000-00 068-86 S i r : This refers to your letter dated April 10, 1986 requesting that the audit certificate accomplished by COA Auditors after conducting an examination and audit of the books of accounts of government-owned or controlled corporations, including their subsidiaries, be considered substantial compliance with the requirements of Section 272 (formerly Section 321) of the Tax Code, as amended. In support of your request, you pointed out that the audit and examination of the books of accounts of government owned or controlled corporations and their subsidiaries by private auditors or accounting firms constitute a duplication of the audit made by COA Auditors and entail additional expenses on the part of the government. Moreover, you want to assume exclusive audit jurisdiction over those entities. In reply, I have the honor to inform you that after a careful study of the reasons adduced by you, this Office believes and so holds that your request is meritorious. As the auditing arm of the government, that Commission is empowered under the Constitution to "examine, audit and settle, in accordance with law and regulations, all accounts pertaining to the revenues 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 . . . ." Needless to state, the purpose of the periodic checking of the books of accounts of government entities by that Commission is to see to it that the expenditure of public funds and the uses of property are not wasteful or irregular, hence, another audit and examination of the same by independent Certified Public Accountants as required under Section 272 of the Tax Code is unnecessary, if not superfluous. cdtech It is of course understood that the examination of the tax returns of government-owned or controlled corporations including their subsidiaries, for purposes of determining their tax liabilities, belongs to this Office. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner