Requirement of Prior Review by the Commission on Audit of Proposed Service Contracts with Private Persons or Firms

December 11, 1973 REVENUE MEMORANDUM CIRCULAR NO. 71-73 TO : All Internal Revenue Officials, Employees and Others Concerned For the information and strict compliance by all those concerned, there is quoted hereunder General Circular No. 123 of the Acting Chairman, Commission on Audit, dated October 9, 1973, which is self-explanatory: "GENERAL CIRCULAR NO. 123 "TO : All Heads of Department; Chiefs of Bureaus and Offices; Local Chief Executives; Managing Heads of Government-Owned and/or Controlled Corporations; Self-Governing Boards, Commissions or Agencies of the Government; All Auditors; and Others Concerned. "SUBJECT : Requirement of prior review by the Commission on Audit of proposed service contracts with private persons or firms for studies relating to government accounting, auditing and management systems, including pay or job classifications of government personnel, and for the conduct of seminars of workshops for government employees on any of the said subjects. "This Commission has time and again observed that certain government agencies and instrumentalities, government-owned and/or controlled corporations and local government units, upon their own initiative or at their instance, hire the services of private persons or firms to undertake studies relating to accounting, auditing and management systems obtaining in these government agencies, entities or instrumentalities, including pay or job classifications of the government personnel involved. Likewise, government agencies, entities and instrumentalities sometimes contract the services of private persons or firms to conduct, for a fee, seminars or workshops for certain groups of government employees on any of the subjects just enumerated. "The expenditures of public funds that such service contracts entail may be deemed unnecessary or extravagant considering that the services contemplated therein can be rendered with the same efficacy by some agencies or instrumentalities of the Government, such as the Commission on Audit, Budget Commission, University of the Philippines, Civil Service Commission and the like. Moreover, the subject matter of these contracts especially those affecting government accounting and auditing fall under the jurisdiction of some government functionaries. In this connection, attention is invited to the following constitutional and statutory provisions, to wit: 'The Commission on Audit shall have the following powers and functions: '(1) . . .; and promulgate accounting and auditing rules and regulations including those for the prevention of irregular, unnecessary, excessive, or extravagant expenditures or uses of funds and property. 'xxx xxx xxx '(3) Submit to the President, the Prime Minister, and the National Assembly, within the time fixed by law, an annual financial report of the Government, its subdivisions, agencies, and instrumentalities, including government-owned or controlled corporations, and recommend measures necessary to improve their efficiency and effectiveness . . . ' (Sec. 2, Art. XII-D, New Constitution; emphasis supplied) 'The authority and powers of the General Auditing Office (now Commission on Audit) extend to and comprehend all matters relating to accounting procedure , including the keeping of the accounts of the Government, . . ., the methods of accounting , . . . The said jurisdiction shall also extend to all corporations established and organized in accordance with the laws of the Philippines wherein the Government of the Philippines or any of its branches or any corporation owned or controlled by it owned the majority of stock as well as to all other self-governing boards, commissions, or agencies of the government. . . ' (Sec. 584, Revised Administrative Code, as amended; emphasis supplied) "In view thereof, and to enable the Commission on Audit to effectively discharge its afore-defined responsibility under the Constitution and the law, no contract for services to undertake studies relating to government accounting, auditing and management systems including pay or job classifications of the government personnel involved, as well as for services to conduct, for a fee, seminars or workshops on any of the subjects just enumerated for certain groups of government employees, shall be entered into by any government agency and instrumentality, government-owned or controlled corporation or local government unit with any private person or firms unless the proposed contract together with its supporting documents and all other paper pertinent thereto is first submitted to this Commission for review. Any contract of this nature already entered into prior to the issuance, and existing as to the date of effectivity, of this Circular shall be submitted by the auditor concerned to this Commission for the same purpose. "This Circular shall take effect immediately. "Strict compliance herewith is enjoined. cdta "(SGD.) ISMAEL MATHAY, SR. "Acting Chairman" MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5