COMMISSION ON AUDIT MEMORANDUM NO.

87-480 March 18, 1987 TO : COA Directors, Central and Regional Offices; Heads of Auditing Units; and All Others Concerned.

SUBJECT : Redefining Contract Review and Inspection Responsibilities of Auditing Units and the Central and Regional Offices of the Commission This Memorandum is issued to redefine the levels of authority and responsibility of COA Offices in connection with the review of contracts and the inspection of project accomplishments and materials and services deliveries. 1. On Contract Review 1.1 The review of contracts, contract variation/changes, and letter/purchase orders pursuant to COA Circular No. 76-34 dated July 16, 1976, and No. 86-257 dated March 31, 1986, both as amended, shall be the responsibility of the Head of the Auditing Unit, irrespective of the amount, except as provided herein. Copies of contracts and the documents forming part thereof shall be furnished the COA Technical Services Office for review in the case of auditing units in the National Capital Region, and the COA Regional Offices concerned in the case of all other auditing units, only in the following instances: a. b. c. contracts awarded thru public bidding the individual amounts of which exceed P5 million; contracts awarded thru negotiations the individual amounts of which exceed P2 million; contract variations and supplemental agreements over 25% of the original contract amount or over P1 million, regardless of the amount of the original contract.

1.2

The Technical Services Office and the Regional Offices shall be responsible for the review only of the engineering and similar technical aspects of contracts. All other aspects of contract review, such as certification of availability of funds, legality and propriety of terms and conditions, compliance with pertinent laws and regulations, etc., shall be the responsibility of the Heads of the Auditing Units. 2. On Inspection 2.1 All inspection in pre- and post-audit of project accomplishments and materials and services deliveries, including pre-repair and post-repair inspection work, shall be the responsibility of the Head of the Auditing Unit except in the following cases where the inspection shall be performed by the Technical Audit Specialist (TAS) of the COA Central Office in the case of auditing units in the National Capital Region, or by the TAS of COA Regional Offices in the case of all other auditing units:

a. b. c. d.

Inspection of project accomplishment under a first payment and final payment on a contract with a total contract price of more than P1 million. Post-repair inspection of property involving an amount of more than P20,000.00 per job order. Review of appraisal of property for disposal with a book value of more than P100,000.00. Inspection of deliveries of technical items as listed below with a total value of more than P50,000.00 per purchase order: (a) (b) (c) d) (e) (f) (g) (h) (i) (j) (k) medicines, drugs, medical supplies/ equipment chemicals, laboratory supplies/ equipment electrical supplies including wires, telephones, cables motor vehicles and heavy equipment and their spare parts and accessories electronic and communication supplies/equipment vessels, ship and marine equipment refrigeration and air-conditioning systems aircraft, its accessories and components weapons, ammunitions generating machines, engines and accessories fabricated furniture, equipment, etc.

3.

Heads of Auditing Units shall elevate to the COA Central or regional Offices concerned contract review and inspection matters that are fully within their responsibility only when they believe that such request for assistance is necessary. Such referrals shall be supported by adequate justification. COA Technical Services Office and Regional Offices concerned may likewise perform contract review and inspection work in addition to that already performed by the Audit Units within their authority when circumstances warrant, or in connection with special audit activities such as Project Evaluation, Procurement and Systems Evaluation and spot inspections. All COA Offices concerned shall continue to observe strictly contract review and inspection rules, regulations and requirements not inconsistent with this Memorandum. Requests for exemptions from these rules, regulations and requirements, such as those that may be necessary because of the particular nature of the audited agency's operations, may be submitted to this Commission for consideration, on a case-to-case basis.

4.

5.

This Memorandum shall take effect immediately. All COA Circulars, Memoranda, and instructions inconsistent with this Memorandum are hereby repealed, amended or modified accordingly. (SGD.) EUFEMIO C. DOMINGO, Chairman