Audit of Foreign Assisted Projects Manual

TABLE OF CONTENTS
Table of Contents
Foreword
1
2
I.
II.
Acronym
Introduction
A. Rationale
B. Target Users
C. Structure of the Manual
8
8
8
III. COA at a Glance

A. COA Mandate and Organization
B. Legal Basis for Audit of Foreign-Assisted Projects
C. COA Officers Responsible for Audit of Foreign-Assisted Projects
10
10
11
12
IV. Understanding Foreign-Assisted Projects (FAPs)

A. Purpose
B. Overview
C. Types of Financing
D. Funding Requirements
E. Sources of Financing
F. Modes of Availment
G. Funds Flow
H. Debt Service
I. Terms of Financing
J. Project Development Cycle
K. DPs Relevant Rules and Regulations
13
13
13
13
14
15
15
16
20
22
22
26
V.
28
28
28
28
29
29
55
Guidelines in the Audit of FAPs

A. Purpose
B. Overview
C. Audit Framework
D. Scope of Audit
E. Types of Audit
F. Preparation and Submission of Audit Reports
VI. Annexes
58
VII. Definition of Terms
125
VIII. References
127
Guidelines on the Audit of Foreign-Assisted Projects
1|Page
FOREWORD
These Guidelines for the Audit of Foreign-Assisted Projects (GAFAP) attempt to put
together all existing pertinent guidelines of the Commission on Audit (COA) into a single
user manual to equip COA auditors with an easy reference in the performance of the
audit of foreign-assisted projects (FAPs). Recently, there have been changes in COA
operations, and in the countrys initiatives to improve and maximize benefits from aid
effectiveness, that have significant implications for the audit of FAPs and have also
necessitated revision or updating of the existing guidelines. The changes include the
following:
Growing concern for improved transparency, accountability, effectiveness and
timeliness of the audit of FAPs to better achieve the desired development results by
identifying and analyzing audit risks, and formulating appropriate audit programs, in
accordance with standard auditing rules and regulations;
Adopting COAs integrated results and risk-based audit (IRRBA) methodology in
performing its audit functions, and providing a general framework to ensure
consistent delivery of quality financial audit services;
Explicit use in the audit of FAPs of the criteria and procedures of financial and
compliance audit, and performance audit, as specified in these GAFAP; and
Supporting the use of the logical framework in project preparation, implementation,
monitoring and evaluation.
For this purpose, a Sub-Technical Working Group (STWG) was reconstituted pursuant to
COA Office Order No. 2010-145 dated March 1, 2010 to finalize the GAFAP. The STWG
was composed of Supervising Auditor Fatima A. Rafer, as leader; and Supervising Auditor
Carmelita O. Antasuda, Auditors Ellen T. Sison, Ma. Theresa B. Ferreros and Anniely P.
Ibanez, as members, and Auditor Rhea D. Piano, as secretariat.
The STWG was under the Technical Working Group (TWG) as reconstituted pursuant to
COA Office Order No. 2010-088 dated February 4, 2010 composed of Director Bato S. Ali,
Jr, as chair, and Directors Luz L. Tolentino, Marietta M. Lorenzo and Roland A. Rey, as
members. The TWG enlisted the support of Director Melanie R. Anonuevo and
Supervising Auditors Villa DJ. Bernaldo and Myrna K. Sebial as Resource Persons to assist
both the STWG and the TWG. Technical assistance was also provided by Director Adelina
Concepcion L. Ancajas, Cluster 2-National Government Sector, who has audit jurisdiction
over Department of Finance (DOF), Bureau of the Treasury (BTr), Department of Budget
and Management (DBM) and National Economic and Development Authority (NEDA).
The project output was subject to the review and recommendation of the Steering
Committee composed of then Commissioner Juanito G. Espino, Jr., as chair, and
Assistant Commissioners Emma M. Espina, Carmela S. Perez and Isabel D. Agito, as
members, pursuant to COA Office Order No. 2010-088.
The preparation of these GAFAP benefited from the technical and financial support
provided by the Kreditanstalt fur Wiederaufbau (KfW), German bank, under the
2|Page
Technical Assistance (TA) for the Capacity Strengthening of the Philippine Government
for Improving and Demonstrating Development Effectiveness and Managing for
Development Results (MfDR) from March 2010 up to the completion of the draft GAFAP,
and the conduct of orientation and training for COA officials and auditors assigned to
audit FAPs. Lastly, the GAFAP preparation also gained facilitation and technical support
from the Sustainable Development Solutions, Inc, (SDS) - the managing contractor for
KfW TA.
3|Page
I.
ACRONYMS
AASC
ABM
ADB
ADDO
AGDB
AM
BAR
BED
BSP
BTr
CAMC
CC
COA
CPPR
DAC
DBM
DFS
DILG
DMCs
DMF
DOF
DOJ
DPs
EA
EO
EoPR
FA
FAPs
FCA
FLIs
FS
GA
GAA
GAFAP
GFIs
GOCCs
GOP
GPA
GPFS
GTZ
IA
IAASB
IAR
Auditing and Assurance Standards Council

Agency Budget Matrix
Asian Development Bank
Aging of Due and Demandable Obligations
Authorized Government Depository Bank
Alert Mechanism
Budget Accountability Report
Budget Execution Document
Bangko Sentral ng Pilipinas
Bureau of the Treasury
Construction and Agricultural Machinery Import and Export Corporation
Cabinet Committee
Commission on Audit
Country Portfolio performance Review
Development Assistance Committee
Department of Budget and Management
Detailed Feasibility Study
Department of Interior and Local Government
Developing Member Countries
Design and Monitoring Framework
Department of Finance
Department of Justice
Development Partners
Executing Agency
Executive Order
End of Project Report
Financial Assistance
Foreign Assisted Projects
Financial and Compliance Audit
Foreign Lending Institutions
Financial Statements
Grant Agreement
General Appropriations Act
Guidelines for the Audit of Foreign-Assisted Projects
Government Financial Institutions
Government Owned and/or Controlled Corporations
Government of the Philippines
Good Practices Award
General Purpose Financial Statements
Gesellchaft fur Technische Zusammenarbeit
Implementing Agency
International Auditing and Assurance Standards Board
Independent Auditors Report
4|Page
IBRD
ICB
ICC
ID
IED
IEG
IFAD
IFR
IMA
IACs
IRA
IRRBA
ISA
ISSA
JAW
JEV
JICA
KfW
LA
LASA
LC
LCB
LCE
LGUs
LIBOR
LogFrame
M&E
MB
MCP
MDFO
MfDR
MTPDP
MOD
MOU
MRD
NCA
NCAA
NCB
NEDA
NG
NGAs
NGOs
NIB
NPMC
OA
ODA
OECD
International Bank for Reconstruction and Development

International Competitive Bidding
Investment Coordination Committee
International Department
Independent Evaluation Department
Independent Evaluation Group
International Fund for Agricultural Development
Interim Financial Reporting
Imprest Account
Inter-agency Committees
Internal Revenue Allotment
Integrated Results and Risk-Based Audit
International Standard on Accounting
International Standards of Supreme Audit Institutions
Joint Analytical Review
Journal Entry Voucher
Japan International Cooperation Agency
Kreditstanstalt fur Wiederaufbau
Loan Agreement
List of Allotments and Sub-Allotment
Letter of Credit
Limited Competitive Bidding
Local Chief Executive
Local Government Units
London Interbank Offered Rate
Logical Framework
Monitoring and Evaluation
Monetary Board
Monthly Cash Program
Municipal Development Fund Office
Managing for Development Results
Medium-Term Philippine Development Plan
Minutes of Discussion
Memorandum of Understanding
Monthly Report of Disbursements
Notice of Cash Allocation
Non-Cash Allocation Authority
National Competitive Bidding
National Economic and Development Authority
National Government
National Government Agencies
Non-Governmental Organization
Nordic Investment Bank
National Project Monitoring Council
Obligational Authority
Official Development Assistance
Organization for Economic Cooperation and Development
5|Page
OED
OP-PMS
OPEC
PA
PAD
PCR
PDC
PDM
PDP
PER
PF
PFP
PFS
PPFS
PIOs
PIP
PIU
PMO
PMS
PMU
PO
PP
PPE
PPMS
PSC
QPRO
RA
RME
ROW
RPMC
RPMES
SA
SAAODB
SAAODBOE
SAR
SARO
SB
SDS
SEER
SOE
SP
SPFS
SPLA
SSAF
STWG
Operations Evaluation Department

Office of the President Presidential Management Staff
Organization of Petroleum Exporting Countries
Project Account
Project Appraisal Document
Program/Project Completion Reports
Project Development Cycle
Project Design Matrix
Philippine Development Plan
Project Evaluation Report
Project Framework
Physical and Financial Plan
Project Feasibility Study
Pre- Project Feasibility Study
Project Implementation Offices
Project Implementation Plan
Project Implementing Unit
Project Management Office
Project Monitoring Staff
Project Management Unit
Peoples Organization
Project Proposals
Property, Plant and Equipment
Project Performance Management System
Project Steering Committee
Quarterly Physical Report of Operation
Republic Act
Results Monitoring and Evaluation
Right-of-Way
Regional Project Monitoring Council
Regional Project Monitoring and Evaluation System
Special Account
Statement of Appropriation Allotment Obligations, Disbursements and
Balances
Statement of Appropriation Allotment Obligations, Disbursements and
Balances by Object of Expenditures
Staff Appraisal Report
Special Allotment Release Order
Sangguniang Bayan
Sustainable Development Solutions
Sector Efficiency and Effectiveness Review
Statement of Expenditures
Sangguniang Panlalawigan
Special Purpose Financial Statements
Sub-Project Loan Agreement
Statement of Sources and Application of Funds
Sub-Technical Working Group
6|Page
TA
TB
TACR
TL
TT
TWG
USAID
WA
WB
ZOPP
Technical Assistance
Technical Board
Technical Assistance Completion Report
Team Leader
Task Team
Technical Working Group
United States Agency for International Development
Withdrawal Application
World Bank
Zielorienterte Projektplanung
7|Page
II. INTRODUCTION
A.
Rationale
Government agencies have long recognized the difficulties and challenges
associated with the management, supervision and execution of foreign-assisted
projects (FAPs). It is for this reason that these agencies have exerted efforts to
strengthen and streamline their existing systems of managing FAPs.
Parallel efforts should be taken by the Commission on Audit (COA) to synchronize
the audit of FAPs with the initiatives of these agencies. It is therefore imperative
that the auditors acquire a wide grasp and understanding of what FAPs are, and
how these are managed, supervised and implemented by government agencies.
This Manual will serve as guide for the auditors to be able to address the
requirements of audit of FAPs, including those of the development partners (DPs).
It is applicable to the audit of projects funded by foreign loans and foreign loans
with grant released thru BTr.
B.
Target Users
This Manual is primarily for the use of COA auditors assigned to audit FAPs.
C.
Structure of the Manual

The Manual is divided into eight parts:
Part
I
Title
Acronyms
Particulars
contains the meaning of the acronyms used in
the Manual
II
Introduction
describes the rationale and the target users
III
COA at a Glance
gives a glimpse of the COAs mandate and

organization, as well as the legal basis for the
audit of FAPs and the units or officers of COA
responsible for this task
IV
Understanding FAPs
defines FAPs and describes the types, sources and

terms of financing FAPs in the Philippines, as well
as the various modes of availment/disbursement.
It also describes the typical project cycle of FAPs
within which the audit function takes place,
particularly during the implementation phase and
after completion of FAPs
8|Page
Part
Title
Particulars
Guidelines in the
Audit of FAPs
discusses the pertinent guidelines on the two

types of audit of FAPs (i.e., financial and
compliance audit, and performance audit)
normally carried out by COA, including the
preparation and submission of audit reports
VI
Annexes
contains, among others, the sample audit

programs for identified possible risks, illustrations
of independent auditors report, DPs pro-forma
special purpose financial statements.
VII
Definition of Terms
contains the meaning of selected terminologies

used in the Manual
VIII
References
lists the materials used as references in the

development of the Manual
9|Page
III. COA AT A GLANCE

A.
Mandate and Organization

The mandate of COA is defined in Article IX-D of the 1987 Philippine Constitution,
particularly in the following sections:
SECTION 2 (1). The Commission on Audit shall have the power,
authority, and duty to examine, audit, and settle all accounts
pertaining to the revenue 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 with original charters, and on a postaudit basis: (a) constitutional bodies, commissions and offices
that have been granted fiscal autonomy under this Constitution;
(b) autonomous state colleges and universities; (c) other
government-owned or controlled corporations and their
subsidiaries; and (d) such non-governmental entities receiving
subsidy or equity, directly or indirectly, from or through the
Government, which are required by law or the granting institution
to submit to such audit as a condition of subsidy or equity.
However, where the internal control system of the audited
agencies is inadequate, the Commission may adopt such
measures, including temporary or special pre-audit, as are
necessary and appropriate to correct the deficiencies. It shall keep
the general accounts of the Government and, for such period as
may be provided by law, preserve the vouchers and other
supporting papers pertaining thereto.
SECTION 2 (2). The Commission shall have exclusive authority,
subject to the limitations in this Article, to define the scope of its
audit and examination, establish the techniques and methods
required therefor, and promulgate accounting and auditing rules
and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and
properties.
SECTION 3. No law shall be passed exempting any entity of the
Government or its subsidiary in any guise whatever, or any
investment of public funds, from the jurisdiction of the
Commission on Audit.
SECTION 4. The COA shall submit to the President and Congress,
within the time fixed by law, an annual report covering the
financial condition and operation of the Government, its
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subdivisions, agencies, and instrumentalities, including

government-owned or controlled corporations, and nongovernmental entities subject to its audit, and recommend
measures necessary to improve their effectiveness and efficiency.
It shall submit such other reports as may be required by law.
The COA carried out its constitutional mandate through an organizational structure
that is headed by a Chairman and two Commissioners, all of whom are appointed
by the President, and supported by a group of Assistant Commissioners, a Public
Sector Accounting Standards Board, a Public Sector Auditing Standards Board, a
Commission Secretariat, and nine sectors, as shown in Figure 1.
Figure 1. COA Organizational Structure
B.
Legal Basis for the Audit of FAPs

In addition to its Constitutional duties, Section 8 of Republic Act (RA) No. 8182, also
known as the Official Development Act (ODA) of 1996, further reinforces the
mandate of COA to discharge oversight functions on ODA-funded projects, as
follows:
(b) The COA shall conduct an audit of each ongoing and
completed project and report to Congress not later than June 30
of each year.
COAs audit of FAPs is also guided by financial covenants of loan and grant
agreements (LAs/GAs) governing the implementation of specific FAPs. These
financial covenants indicate the types of audit required for each FAP.
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C.
COA Officers Responsible for the Audit of FAPs

Auditors assigned to government agencies with FAPs, as well as special audit
teams, are responsible to undertake audit as specified in this Manual.
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IV. UNDERSTANDING FOREIGN-ASSISTED PROJECTS

(FAPs)
A.
Purpose
The purpose of this chapter is to give a brief description of FAPs to assist the
auditors in their understanding of its operation - knowledge of which is not only
necessary in planning the audit but in the entire audit exercise itself.
B.
Overview
As defined, FAPs are development projects partly or fully financed by foreign
loans and/or grants. This chapter distinguishes the characteristics of foreign loans
and grants, and discusses the four types of loans which the Government of the
Philippines (GOP), Government Financial Institutions (GFIs) and other GovernmentOwned and/or Controlled Corporations (GOCCs) may enter into agreements with
DPs.
This chapter explains that, once agreements are entered into with DPs, the entire
funding requirements may consist of loan proceeds, GOP counterpart or equity,
and/or grant proceeds. The funds are sourced from different types of
creditors/donors who have their own peculiar rules and regulations.
This chapter also discusses the different modes of availment through which the
loan proceeds can be withdrawn. A short explanation is also given regarding the
financial cost which the GOP, GFIs, GOCCs or local government units (LGUs) bear as
a result of their loans. This cost includes interests, commitment charges, and
front-end fees, among others.
The auditors understanding of the executing agency (EA)/implementing agency
(IA) and its projects require familiarity with the major phases of DP-financed
projects. These phases are collectively referred to as the project cycle. Lastly, the
chapter briefly describes these phases including the steps and the responsible
agency/institution for each phase as well as the documents produced in each step
of the phases.
C.
Types of Financing
There are two main types of financing for FAPs, namely:
(i)
Foreign Loans external indebtedness covered by LAs entered into by the

GOP, GFIs and GOCCs with DPs to finance specific programs and projects. The
GOP may avail of these loans for budgetary support, development projects of
national government agencies (NGAs), or for re-lending to GFIs/GOCCs/LGUs.
Foreign loans directly entered into by GFIs/GOCCs may or may not be
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guaranteed by the GOP. Generally, there are four types of foreign loans,
namely:
a.
Program loans are provided by DPs to assist in developing a sector as a

whole and improving its performance through appropriate policy and
institutional reforms from medium to long-term period of time. It is a
relatively quick disbursing system. Proceeds from this type of loans are
directly deposited to the BTr to finance regular program expenditure
items that are authorized in the General Appropriations Act (GAA).
b.
Project loans are obtained to finance specific development projects such

as infrastructure, human development and environmental projects.
c.
Commodity loans are provided by DPs in the form of goods for the direct
use of the project or to be subsequently monetized to finance such
project of the EA/IA.
d.
Mixed Credit composed of one or more loans and one or more grants,
usually from bilateral and commercial DPs.
(ii) Foreign Grants are assistance in cash or in kind (goods/technical assistance)

covered by GAs with DPs for purposes of financing specific projects without
any obligation on the part of the EAs/IAs to pay.
Grants may be administered by DP or its representative, or the EA/IA. Funds
received by the NGAs, GFIs, GOCCs and LGUs are subject to the usual
accounting and auditing rules and regulations. However, in case of conflict
between existing laws, rules and regulations, the GA provisions shall prevail.
D.
Funding Requirements
The total funding requirements of a FAP are usually composed of loan/grant
proceeds and GOP counterpart (for NGAs) or equity (for GFIs, GOCCs, LGUs and
beneficiaries), as briefly described below:
Loan proceeds are funds coming from DPs which should be used exclusively for
purposes specified in the LA.
GOP counterpart is the component of the project cost to be financed out of

the GOP appropriated funds as part of its commitment to the implementation
of the FAP. It may be in the form of contribution in cash (incremental) and/or
in-kind (imputed) by the GOP as specified in LAs/GAs. An imputed GOP
counterpart represents the peso value of existing manpower, facilities of the
EA/IA, and taxes on goods and services that will be utilized for the duration of
the project.
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E.
GFI/GOCC/LGU equity is a component of the project cost sourced from the

appropriated funds of the GFI, GOCC or LGU as part of its commitment in the
implementation of the FAP.
Beneficiary counterpart is a component of the project cost sourced from the

contribution of beneficiaries which may be in cash or in kind [e.g., labor, rightof-way (ROW)].
Grants are assistance received either in cash or in-kind, which may be in the
form of goods and/or services for project development and implementation.
Sources of Financing
Funds for FAPs could be sourced from multilateral, bilateral and/or commercial
DPs. The distinct features of these DPs are described below:
Multilateral DPs are institutions organized by a group of countries to provide

financing and professional advice to developing member countries (DMCs) for
development purpose/s. The members of multilateral DPs are from developed
and developing countries. The Asian Development Bank (ADB), International
Bank for Reconstruction and Development (IBRD) or World Bank (WB),
International Fund for Agricultural Development (IFAD), Nordic Investment
Bank (NIB), and Organization of Petroleum Exporting Countries Fund for
International Development (OFID) are among the multilateral DPs.
Bilateral DPs are countries which extend assistance on a government-togovernment basis. Among the GOPs bilateral DPs are the Government of Japan
[through Japan International Cooperation Agency (JICA)], Government of the
United States of America [through United States Agency for International
Development (USAID)], and Federal Republic of Germany [through
Kreditstanstalt fur Wiederaufbau (KfW) and Gesellchaft fur Technische
Zusammenarbeit (GTZ)].
Commercial DPs are commercial banks, financial institutions, investment

houses and private/supplier companies that provide loans and suppliers credit.
Among the commercial banks where the GOP has existing credits are Deutsche
Bank, Banque Paribas, etc.
Commercial loan component of mixed credits is classified as sourced from
bilateral DPs.
F.
Modes of Availment
The loan becomes effective when all requisite conditions or the period/date for
loan effectivity as stipulated in the LA have been fulfilled by a borrower. Common
conditions for loan effectivity are the establishment of Project Steering Committee
(PSC), Project Management Office (PMO), adoption of the Project Implementation
15 | P a g e
Plan (PIP), and engagement of an independent audit firm with qualifications and
under terms of reference acceptable to the DPs. Once the loan is effective, the
borrower can start loan availment and the commitment fees start to accrue.
The modes of availment, whether cash or non-cash, through which the loan
proceeds can be withdrawn as stated in the LA are discussed below:
Cash Availment - in the form of:
Imprest Fund (for ADB)/Special Account Procedure (for IBRD, JICA) is when
the DP makes an advance disbursement from the loan account for deposit to a
designated bank account of the project to be used exclusively for DPs share of
eligible expenditures; and/or
Reimbursement Procedure (ADB, IBRD, JICA) is when the DP pays from the
loan proceeds to the borrowers account for expenditures for goods and
services that have already been incurred and paid by the borrower from its
own resources.
Non-Cash Availment - in the form of:
Direct Payment Procedure (ADB, IBRD, JICA) is when the borrower requests
the DP to pay from loan funds the amount due directly to the designated
beneficiary (consultant/supplier); and/or
Commitment Procedure (ADB, IBRD, JICA) is when the DP, at the request of
the borrower, provides an assurance in the form of a commitment letter from
the Bank to a commercial bank/third party for payment made or to be made to
a supplier in accordance with the terms and conditions specified in the letter of
credit (LC)/agreement between the DP and the borrower.
Grants that pass through BTr are deposited to the designated account of the
Treasurer of the Philippines, and eventually transferred to an Imprest or Special
account specifically opened by the EA/IA for the purpose. Other grants that do not
pass through BTr are directly deposited to the designated account of the EA/IA or
administered by a Fund Manager as designated by the donor.
G.
Funds Flow
The funds flow for the receipt of loan proceeds varies depending on the mode of
availment and on whether the EA/IA is an NGA, a GFI/GOCC or an LGU. For LGUs,
loans are availed through relending from the Municipal Development Fund Office
(MDFO) or a GFI. Initially, the loan proceeds are availed of by the MDFO or GFI, as
the EA, following the procedures diagrammed in A.1 and A.2, respectively. The
MDFO or a GFI relends the funds received to the LGU.
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The process for each mode and type of borrower is illustrated below:
A.
Cash Availment
1.
Availment of loan proceeds by NGAs through Special Account

(SA)/Imprest Account (IMA) procedure
2.
Availment of loan proceeds by GFIs/GOCCs through SA/IMA

procedure
EA/IA
DP
Opens Project
PA and submits WA to
DPs
Receives,
Processes WA and
Credits EA/IAs PA
Receives loan
proceeds and records
receipt
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3.
Availment of loan proceeds by LGUs
LGU
MDFO/GFIs
Submits feasibility
study Sanggunian
Panlalawigan (SP)/
Sanggunian Bayan
(SB) Resolution to
MDFO/GFIs
Receives FS, SP/SB

Resolution
Approves loan and
informs LGU of loan
approval
Processes WA and
credits EA/IAs PA
Receives loan
proceeds and
records receipt
Note: If through MDFO, MDFO instructs AGDB to credit LGUs Project Account
B.
Non-Cash Availment
1.
Availment of loan proceeds by NGAs through direct payment
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2.
Availment of loan proceeds by GOCCs through direct payment
EA/IA
DPs
Supplier/Contractor
Submits WA for
Direct Payment to
DPs
Receives,
processes WA and
pays the
Supplier/Contractor
Receives payment
Receives Notice of
Disbursements/ WA/
Payment Advice and
records availment
Notifies GOCCs
of disbursement
made
Loan Cancellation
While the loan is still effective, any unwithdrawn amount of the loan may be
cancelled by the DPs, upon notice to the borrower and the guarantor under
any of the following conditions:
The borrowers right to make withdrawals from the loan account has
been suspended or the reasons for suspension have remained
unremedied;
DP determines, at any time and after consultation with the borrower,
that the loan is no longer required for purposes of the project;
DP determines, with respect to any contract to be financed out of the
proceeds of the loan, that corrupt or fraudulent practices were engaged
in by representatives of the borrower, the guarantor, or any beneficiary
of the loan during the procurement of goods or services, consultants
selection or the execution of the contract, without the borrower or
guarantor having taken appropriate action to remedy the situation;
DP determines that the procurement of any goods and services to be
financed out of the proceeds of the loan is inconsistent with the
procedure set out in the LA; or
An amount of the loan remains unwithdrawn from the loan account at
loan closing date.
The EA/IA should request cancellation of the unwithdrawn amount of the

loan through the DOF when a project component is not viable or feasible, or
can no longer be implemented, or when project activities have been
completed, among others. This request could also emanate from the results
of the oversight agencies review of project implementation, subject to the
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ICC approval. Undrawn loan proceeds resulting from improved foreign

exchange condition should be applied for cancellation by the EA/IA. The
cancellation shall be concurred by the DPs after which a revised amortization
schedule shall be issued.
Loan Closing Date
After the loan closing date specified in the LA, the borrowers right to make
withdrawals from the loan ceases unless there is an extension approved by
the DPs. The loan closing date may be extended upon request by the EA/IA
through the ICC for approval, and the DOF for negotiation with the DPs.
Expenditures incurred after the loan closing date will not be financed under
the loan. The DPs, however, usually allow several months after the loan
closing date for the borrowers withdrawal applications to reach them to fully
liquidate expenditures prior to loan closing date and to refund any IMA/SA
balances.
H.
Debt Service
Debt service refers to the repayment of the principal, payments of interest, fees
and charges such as front-end fee, commitment fee, and service charges, other
fees/charges as well as penalties on a loan. It is usually a scheduled payment
made semi-annually based on an amortization schedule as agreed between the
DPs and borrower country or agency. Under some loan agreements, interests,
commitment fees, services charges, and other fees/charges are no longer paid by
the borrower to the DPs but by the DP to itself, thus, are capitalized expenses
which form part of the availments/drawdowns from the loan.
Debt Servicing Process (by Borrower Type)
Loans of the NG
In the NG, the BTr effects debt servicing through the BSP and it involves the
following procedures:
BTr, based on the billing statements of DPs, prepares Letter/Debit Authority
for BSP to effect payments to DPs through its designated bank; and
BSP issues debit advice to BTr and the latter records loan repayment, interest
payment and other financing charges in the NG books of accounts.
Loans of GOCCs/GFIs
The GOCCs/GFIs may obtain loans through the NG or directly from the DPs. The
loan repayment involves the following processes:
20 | P a g e
Direct Loans
DPs directly send bills to the GOCCs/GFIs.
Based on the billing statements, the GOCCs/GFIs send payment to DPs
through the designated banks and in the currency stipulated in the LA or in
the billing statement.
The GOCCs/GFIs deposit cash with the BTr and request it to pay the DPs.
In case the GOCCs/GFIs have no available funds to pay the amortization due,
the GOCCs/GFIs request DOF for the NG to advance said amortizations and
submit the required documents for review.
After the review, DOF recommend to the BTr for the NG to advance the
amortization due as requested.
The BTr effects payment to the DPs.
Loans through the NG
DPs send bills to the BTr;
BTr sends bills to GOCCs/GFIs;
GOCCs/GFIs pay DPs through the BTr; and
In case the GFIs/GOCCs are unable to pay amortizations due, BTr advances
payment of loan amortization for the GOCCs/GFIs. The process follows the
repayment process for GOCCs/GFIs direct loans.
Loans of LGUs
Foreign funding availed by LGUs through the NG or conduit GFIs are called relent
loans. The MDFO manages relent loans from NG while the Land Bank of the
Philippines (LBP) and the Development Bank of the Philippines (DBP) manage other
relent loans to the LGUs.
The repayment of MDFO-managed relent loans involves the following processes:
In the grant of loans, MDFO requires LGUs to execute the Sub-Project Loan
Agreement (SPLA) which defines the terms, conditions and requirements for
the loan, the repayment mode and schedule of amortization.
SPLA also requires the inclusion of a Sanggunian resolution authorizing the
local chief executive (LCE) to secure loan from MDFO and authorizing further
the intercept of the Internal Revenue Allotment (IRA) in case of default in
amortization payment.
SPLA also requires the maintenance of a bank account where loan
amortizations will be deposited for further remittance to MDFO.
In case of default in amortization payment, MDFO requests DBM to withhold
the loan amortization due from IRA releases.
21 | P a g e
DBM informs LGU of the withheld IRA through the Notice of Funding Check
Issued which shows the deduction for the loan amortization from the IRA.
The repayment of GFI-managed relent loans is made directly to the specific GFI
through a designated bank account in accordance with the amortization schedule
specified in the LA, and the statement of account or bill is sent to the LGUs
concerned.
I.
Terms of Financing
When the NG, GFIs and GOCCs borrow from DPs for their development projects,
such borrowed funds are coupled with financing costs such as interests,
commitment charges and front-end fees, among others. A sample comparative
table of the loan charges, repayment and grace period for ADB, IBRD JICA and KfW
is shown in Annex A.
J.
Project Development Cycle (PDC)

The PDC refers to the stages/phases in the life of the project. Documents
produced for each phase can be valuable sources of information in the audit of
FAPs. Generally, each project undergoes a cycle consisting of seven phases. This
section will discuss the phases as drawn from the NEDA Reference Manual on
Project Development Evaluation (2005).
Project Cycle
Source: Reference Manual on Project Development Evaluation, NEDA (2005)
Phase 1: Concept or Identification

This phase is about the conceptualization and identification of projects that are
supportive of the national development goals and objectives specified in the
22 | P a g e
Philippine Development Plan (PDP) and the development of the necessary prefeasibility study.
1
Institution
EA/IA/DP
Activity
Conceptualizes and identifies Project/s
Prepares Project Proposal/s (PP)
Output
Project Proposal/s
Phase 2: Definition or Preparation

Upon project identification, preparation process is initiated which includes
necessary steps to bring the project to the appraisal stage. In general, preparation
begins with a description of project objectives, identification of principal issues,
and setting up a timetable for the different phases of the development cycle.
Preparation must cover the full range of technical, institutional, financial and
economic issues relevant to achieving the project objectives.
1
Agency
EA/IA
Activity
Reviews existing policies and procedures
which can affect project
Examines technical and institutional
alternative
Assesses costs, time schedules and
operational requirements.
Output
Project concept note
Situational analysis
Indicative cost
assessments, time
schedule and
operational
requirements
Risk assessment
Phase 3: Feasibility
The projects overall potential or viability is examined using data and information
gathered at the preparation stage. The feasibility stage is critical as it is the
culmination of all preparatory work and provides a comprehensive review of all
aspects of the project before a final decision about its viability is taken.
1
Agency
EA/IA
Activity
Prepares the various modules of the
Project Feasibility Study (PFS).
Determine if project is worthwhile to
implement
Output
PFS
Other required
documents (Annex B)
Phase 4: Approval and Financing

The project must be examined to see if it can meet the financial, economic and
social criteria set by the government [e.g., the Investment Coordination Committee
(ICC)] for investment expenditures. This is the final part of project appraisal and is
meant to improve the accuracy of the measures of key variables if the project
shows a potential for success. At the end of this stage, the most important decision
to approve or disapprove a project has to be made.
23 | P a g e
The general sequence of activities during project approval and financing phase is
listed in the table below.
Agency
EA /IA
Activity
Submits PFS and other requirements to ICC
through the ICC Secretariat
NEDA ICC
Secretariat
ICC-Technical
Board
Includes the program/project in its 2- month

rolling calendar of projects to be presented to
the ICC-Technical Board (TB), studies and
evaluates the PFS and other requirements,
prepares and finalizes Project Evaluation
Report (PER)
Appraises/reviews the agency proposal for
endorsement to the ICC-CC
DBM
EA/IA
ICC CC
7
8
NEDA Board
DOF
DBM
10
Bangko Sentral
ng Pilipinas
(BSP)
International
Department (ID)
Office of the
President (OP)
11
12
DOF
13
DP
During ICC - TB review, EA/IA submits Funding

Strategy for certification that strategy to be
adopted is possible
Requests from DBM for Certificate of Funding
Strategy (CFS)
Reviews the agency proposal endorsed by ICCTB
Output
PFS
ICC-PE Forms
Regional
Development Council
(RDC) Endorsement
Environmental
Compliance
Certificate (ECC)
Calendar of Projects
PER, (contents as
shown in Annex B)
Endorsement to ICC Cabinet Committee

(CC) of the PER at least
3 days prior to ICC CC
meeting
Certified Funding
Strategy
Request for CFS
ICC CC approval letter
Confirms the ICC CC approval

Determines financial term of the proposed
loan and compliance with foreign borrowings
law (RA 4860 Foreign Borrowing Act as
amended or RA 8182, ODA Act, as amended)
Evaluates and verifies availability of resources
for the GOP counterpart requirement/s, if
needed
Facilitates MB approval-in-principle
NEDA Board Resolution

Request for Monetary
Board (MB) approval in
principle
Issues Presidential Special Authority
Special authority to
negotiate and sign in
behalf of the President
Request for FA
Prepares formal request for financial

assistance (FA) and submits to DPs
Evaluates request for FA and notifies DOF of
their willingness to assist.
Forward Obligational
Authority (FOA)
MB approval in
principle
Draft LA and Invitation

to negotiate
Sends an appraisal team to review the project,

and based on the recommendation of the
24 | P a g e
Agency
14
DOF/BSP/
Department of
Justice (DOJ)
15
DOF
16
17
18
BSP
DOJ
BSP, DOF, BTr
(for GOP loans
and GOCC
relent) IA/EA
EA/IA
19
20
DBM/OP
21
22
Congress/OP
EA/IA
23
DBM
Activity
team, sends the preliminary LA and Invitation
to negotiate to the DOF and IA
Reviews the LA as part of Inter-Agency
Committee Review of Foreign Loan
Documents (BSP-ID, Chair; DOF, Co-Chair &
DOJ), except for JICA, ADB & IBRD
Signs the LA and request for MB final approval
and DOJ legal opinion
Facilitates MB final approval
Reviews and issues legal opinion
For implementation once loan becomes
effective
Submits to DBM the funding requirements for
the project in its annual budget
For projects funded by loan that become
effective without appropriation, EA/IA submits
approved special budget request at CC level
by March 31, of each year per Budget call
Evaluates and includes in the proposed budget
for submission to Congress
Undertakes the budget review and approval
Prepares and submits the Physical and
Financial Plan (PFP) to the DBM and Monthly
Cash Program (MCP)GOP
Reviews the PFP and releases the Agency
Budget Matrix (ABM)/ Special Allotment
Release Order (SARO)
Output
Reviewed LA
Signed LA
Final Approval
Legal Opinion
Proposed Annual
Budget of the Project
Proposed annual
budget
GAA
PFP and MCP
ABM/SARO
Phase 5: Detailed Design

Preliminary design criteria must be established when the project is identified and
appraised, but expenditures on detailed technical specifications are usually not
warranted at that time. Once the project has been approved for implementation,
the design task should be completed in more detail. Details of the basic programs
should be provided, tasks allocated, resources determined, and functions to be
carried out along with their priorities set down in operational form. Technical
requirements such as manpower needs by skill class should also be completed at
this stage. After the blueprints and specifications for construction of facilities and
equipment are completed, operating plans and schedules along with contingency
plans must be prepared and consolidated.
In summary, the detailed design phase in project appraisal is that stage when the
accuracy of the data from all previous modules is ascertained so that an
operational plan of action can be developed. Not only is the projects physical
design complete at this stage but even the programs for administration, operations
and marketing are now final.
25 | P a g e
Agency
EA /IA
Activity
Prepares detailed basic programs
Allocates tasks
Determines resources
Completes blueprints and specifications.
Output
Detailed design
Detailed
engineering
Task and resource
allocation
Phase 6: Project Implementation

Project implementation covers the following activities:
1.
2.
3.
4.
1
Setting up of Project Management Office (PMO);

Procurement of Consultants, Goods and Services;
Monitoring and Evaluation; and
Recording and Reporting.
Agency
EA/IA
Activity
Implements, operates, monitors, evaluates and
reports on progress of project.
Output
Regular progress
reports
Project implementation
completion report
Phase 7: Ex-post Evaluation

More extensive than the audit is the ex-post evaluation, where the projects
performance is assessed and given a verdict on its overall contribution to the
countrys development. Such an evaluation also identifies the critical variables in
the project design and implementation that may have determined its success and
failure.
From such an evaluation should emerge well-considered
recommendations about improving each aspect of the project design and actual
implementation. Based on this evaluation, ongoing projects may be modified and
subsequent projects in the sector can be improved. New policies, better
management practices and improved procedures can also be adopted to improve
future project performance.
This phase involves checking on progress and performance against pre-defined
plans, and determining the relevance, efficiency, effectiveness, impact and
sustainability of the project.
1
K.
Agency
EA /IA
Activity
Re-estimates projects outcomes based on
actual performance
Identifies critical variations from plan
Output
Ex-post evaluation
report
DPs Relevant rules and Regulations

Aside from the approved feasibility studies, Project Appraisal Document (PAD) for
IBRD projects, Reports and Recommendation of the President (RRP) or the Staff
26 | P a g e
Appraisal Report (SAR) for ADB, and Minutes of Discussion (MOD) for JICA, the LA
and its attached Schedules and Operations Manual required by the DP, if any, each
DP has its own rules and regulations that the auditor should know, some of which
are shown below:
DPs
1. ADB
IBRD
Guidelines/Manuals/Handbooks
Loan Disbursement Handbook, January 2007
ADBs Guidelines on the Use of Consultants by Asian Development Bank and
its Borrowers, April 2010
ADBs Procurement Guidelines, April 2010
Handbook on Policies, Practices, and Procedures Relating to Procurement
under Asian Development Bank Loans
Disbursement Handbook, February 2001

Disbursement Guidelines for Projects, May 2006
Disbursement Handbook for World Bank Clients, May 2006
Guidelines: Selection and Employment of Consultants under IBRD and IDA
Credits and Grants by World Bank Borrowers, January 2011
Standard Request for Proposal Selection of Consultants, December 2008,
revised May 2010
Guidelines: Procurement of Goods, Works and Non-Consulting Services
under IBRD Loans and IDA Credits and Grants, January 2011
Standard Bidding Document, Procurement of Goods, May 2004, Revised
May 2005, September 2006, May 2007 and May 2010
Standard Bidding Document, Procurement of Works & Users Guide, May
2006
Standard Bidding Document, Procurement of Works Smaller Contracts,
April 2008 November 2010
2. KfW
KfWs Guidelines on Procurement and Consulting Services,

Guidelines for Procurement of Supply and Work Contracts under Financial
Cooperation with Developing Countries, May 2007
Guidelines for the Assignment of Consultants in Financial Cooperation with
Developing Countries, June 2008
3. JICA
Guidelines for Procurement under Japanese ODA Loans dated March 2009
Reimbursement Procedure for Japanese ODA Loans dated October 2008
Commitment Procedure, October 2008
Special Account Procedure, October 2008
Reimbursement Procedure, October 2008
The auditors should also consider the relevant amendments to the above DPs rules
and regulations as applicable to the grant or loan agreement.
27 | P a g e
V. GUIDELINES ON THE AUDIT OF FAPs

A.
Purpose
The purpose of this chapter is to provide detailed guidelines in the conduct of
financial and compliance audit (FCA) and performance audit (PA) of FAPs within
the context of the COAs audit framework (i.e., IRRBA).
B.
Overview
This chapter provides the framework in conducting FCA and PA of FAPs. The
objective of FCA is to express an opinion on the fairness of presentation of the
general purpose financial statements (GPFS) or special purpose financial
statements (SPFS) generated by the EA/IA for its FAPs, and on the EAs/IAs
compliance with laws, rules and regulations with regard to FAPs. The objective of
PA is to evaluate the efficiency, economy, effectiveness and sustainability of FAPs.
This chapter also identifies the audit areas for PA such as project readiness,
procurement of goods/services/consultancies, monitoring and evaluation, asset
management and project sustainability. It also includes the different ways by
which the DPs, oversight agencies and the respective Project Management Offices
(PMOs) of the EAs/IAs conduct project monitoring and evaluation during
implementation and after completion.
C.
Audit Framework
COA is committed to promote good governance and be a vibrant partner in nation
building by providing adequate, reliable and current information on the affairs of
government through appropriate approaches and impartial exercise of its powers
so that accountability, transparency, economy, productivity and effectiveness in
the conduct of government operations are promoted.
In this pursuit, COA uses the IRRBA methodology in performing its audit functions.
Its purpose is to provide a common framework to ensure consistent delivery of
quality audit services.
The IRRBA methodology is designed to enable the team:
(i)
To express an opinion on the Auditees FS by assessing FS misstatement risk

identified relating to error risks, fraud risks and failure risks;
(ii) To recommend opportunities to improve agency operations through

identification of agency information and information processing risks; and
28 | P a g e
(iii) To provide numerous value-added deliverables. The nature of expected

deliverables and agreement on appropriate restrictions on their use should
be communicated as part of the audit arrangements.
It also aims to give management and other users a higher level of assurance that
the EA/IAs processes are designed appropriately and operating effectively to
produce FS that meet all standards and requirements. It helps the EAs/IAs
improve their risk management and risk control processes.
In a nutshell, the IRRBA framework is illustrated by the following diagram:
Strategic Planning and Risk Identification
Planning
Agency Audit
Planning and
Risk Assessment
Delivery
Execution
Conclusion and
Reporting
Monitoring
D.
Scope of Audit
The audit of FAPs will cover: (i) program loans of investment type, (ii) all project
loans, and (iii) grants that pass through BTr and those that require audit as
specified in the GAs.
E.
Types of Audit
(i) Financial and Compliance Audit
This audit is conducted to enable the auditor to express an opinion on the fair
presentation of the GPFS or SPFS generated for FAPs, as well as on the EA/IAs
compliance with applicable laws, rules and regulations, and LAs/GAs.
a.
General Purpose Financial Statements (GPFS)

The GPFS pertain to the financial statements prepared in accordance with
the general purpose framework. The general purpose framework is
designed to meet the common financial information needs of a wide
range of users. GPFS include the statement of financial position, the
statement of financial performance, the cash flow statement and
statement of changes in net assets and equity.
29 | P a g e
A complete set of financial statements for public sector entities other

than Government Business Enterprises (GBEs) comprises: a) statement of
financial position, b) statement of financial performance, c) statement of
changes in net assets/equity, d) cash flow statement, e) A comparison of
the budget and actual amounts either as a separate additional financial
statement or as budget column in the financial statements, and f) notes,
comprising a summary of significant accounting policies and other
explanatory notes.
For GBEs, a complete set of financial statements comprises: a) a
statement of financial position as at the end of the period, b) a statement
of comprehensive income for the period, c) a statement of changes in
equity for the period, d) a statement of cash flows for the period,
e) notes, comprising a summary of significant accounting policies and
other explanatory information, and f) a statement of financial position as
at the beginning of the earliest comparative period when an entity
applies an accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements, or when it reclassifies
items in its financial statements.
In the NG, the BTrs GPFS integrate the transactions on the receipt of the
loan proceeds and debt servicing. On the other hand, the implementing
NGA maintains a separate fund (with complete set of books of accounts)
for FAPs which account the utilization of the loan proceeds for project
implementation. At year-end, this fund is consolidated in the GPFS of the
NGA.
In the GFIs, GOCCs and LGUs, the receipt of loan proceeds, utilization of
funds and debt servicing are included in their GPFS.
The illustrative accounting entries for availment and debt servicing are
shown in Annex C.
Audit of the GPFS involves the review of all accounts affected in the
agency processes prioritized for audit. The audit of accounts related to
project implementation follows the procedures for financial and
compliance audit. However, considering the peculiarity of the debt
service process which varies depending on the borrowers, i.e. NGAs,
GFIs/GOCCs and LGUs, this Section of the Manual focuses on the audit of
debt service accounts such as Loans Payable-Foreign, Interest Expense,
Commitment Fees and Other Financing Charges.
The identified possible risks and the corresponding sample Audit
Programs (APs) are presented in Annex D. However, the auditors are not
precluded to include other risks identified and prepare the corresponding
APs to address such risks.
30 | P a g e
b.
Special Purpose Financial Statements (SPFS)

The SPFS are financial statements prepared in accordance with a special
purpose framework, designed to meet the financial information needs of
specific users. For FAPs, the SPFS refer to the specific financial
statements or reports for the loan or grant as may be required in the LA
or GA, which may be: Statement of Sources and Application of Funds,
Sources and Uses of Funds Statement, and Statement of Expenditures.
Statement of Sources and Application of Funds (SSAF)

The EA/IA prepares the SSAF showing replenishments of and
disbursements from the SA/IMA. An example of the SSAF is
presented in Annex E.
An SA/IMA is a special bank account established from an advance
disbursement from the loan account for the DPs share of project
eligible expenditures. Its main purpose is to help the EA/IA reduce
cash flow difficulties in pre-financing project expenditures thereby
facilitating project implementation.
Disbursements from the SA/IMA are made either for payments or for
reimbursement of local project expenditures by the EA/IA. The DP
then replenishes the special bank account on the basis of
appropriate withdrawal applications submitted for these
disbursements.
An annual audit of the SSAF and its related reconciliation statement
(Annex F) is necessary to provide assurance that the disbursements
are project-related and in accordance with the LA.
The identified possible risks and the corresponding sample APs are
presented in Annex G. However, the auditors are not precluded to
include other risks identified and prepare the corresponding APs to
address such risks.
Statement of Expenditures (SOE)

The SOE is a summary statement indicating the expenditures for
certain items referred to in the LA. (Annex H)
The EA/IA periodically requests withdrawal of loan proceeds through
submission of the SOE. It simplifies and accelerates the DPs loan
disbursement process by eliminating the requirement for DP staff to
review supporting documentation for eligible expenditures within
31 | P a g e
the threshold prior to authorizing disbursements. The SOE is not

accompanied by supporting documentation.
The audit of SOE is part of the overall audit of the EA/IAs FS.
However, a greater effort of compliance checking is usually necessary
to check EA/IAs assertions that expenditures are incurred and paid
for under the terms and conditions of the LA; payments have not
been split to enable it to pass through the threshold prescribed
under the SOE; expenditures are properly authorized and fully
supported by documentation; and records on expenditures are
maintained and are available for examination by the DPs
disbursement/review missions and independent auditor.
presented in Annex I. However, the auditors are not precluded to
address such risks.
(ii) Performance Audit
This type of audit is conducted to evaluate the efficiency, economy,
effectiveness and sustainability of FAPs.
The identified audit areas subject to performance audit are the following, but
not limited to: Project Readiness, Procurement of Goods/Civil Works/Services,
Asset Management, Monitoring and Evaluation, and Project Sustainability.
a.
Project Readiness
Project readiness refers to the timely compliance of the EAs/IAs with the
start-up requirements during appraisal and prior to project
implementation which may include the following:
Appraisal
Alignment with GOP objectives
Institutional Readiness (IAs
technical
and
financial
preparedness)
Ownership
Design of the Project
Risk Assessment
Quality at Entry (Implementation)

ICC conditionalities met
Right-of-way negotiations
Land acquisition plan prepared
Funding for the 1st year of
implementation included in
the budget
Availability of counterpart
funds
Bidding documents for the
initial
12
months
of
implementation ready
PMO/PIUs established and
staffed by appraisal
32 | P a g e
Appraisal
Quality at Entry (Implementation)

Adoption
of
project
implementation
plan/
operations manual acceptable
to the DP
Procurement/financial
management
requirements
complied
M&E indicators identified
The auditor shall verify the compliance of these start-up requirements by

the EA/IA to prevent incurrence of additional commitment fees, delayed
project completion and cost overrun. The evaluation of the project
readiness should be conducted once there is a withdrawal of the loan
proceeds for the implementation of the project and not after the
completion of the project.
Among the requirements for project readiness, the establishment of a
PMO is deemed vital, it being the office/unit that will undertake project
implementation, monitoring and evaluation. Hence, the following section
focuses on the PMO.
Establishment of a PMO
PMO is the department or group within the organization that defines and
maintains the standards and processes related to project management. It
is responsible for overall project management, coordination, monitoring
and evaluation of the project and is the source of documentation,
guidance and standards on the practice of project management and
execution.
It tries to equip project managers with the best
methodologies and tools available, and also works to ensure that projects
adhere to adopted standards and processes. A PMO may manage one or
more projects, assign project managers and directly oversee their work.
All PMOs share the common goal of improving project performance. A
successful PMO enables more projects to deliver high quality results on
time and within the budget.
A PMO may also be called Project Management Unit (PMU) or Project
Implementation Office (PIO).
PMO Structures and Responsibilities required by DPs
PMOs/PMUs/PIOs have been established by the EAs/IAs to specifically
monitor and oversee implementation of its FAPs. The required staffing,
terms of reference and other resources applicable to the EA/IA and
acceptable to the DP are agreed upon by the contracting parties in the
33 | P a g e
relevant project documents. As stipulated in the LA, the EA/IA and DP

approve the creation and maintenance of a PMO.
In terms of manpower support to all the FAPs, the EAs/IAs determine the
number of project personnel needed by engaging organic and contractual
staff and consultants, or employing them in combination.
Examples of DPs requirements on the creation of PMOs are enumerated
below:
IBRD/WB
o Establish and maintain a PMO responsible for implementing the
project at acceptable standards, ensuring that project output/assets
are maintained in good condition, asset management is improved
and corporate structure and processes in place are streamlined to
improve service delivery, accountability and integrity.
o Establish within the EA/IA and thereafter maintain until the
completion of the project, a PMO to be headed by a qualified Project
Manager, assisted by qualified personnel in adequate numbers. The
PMO shall be responsible for the overall management,
administration and coordination of the day-to-day implementation of
the project, including, among others, the preparation and
consolidation of project plans and budgets, the preparation of semiannual reports referred to in the LA, and the procurement of all
goods, works and services required for the project.
ADB
o A PMU shall have the overall responsibility in the implementation of
the project and provide administrative and technical support,
counterpart staff, documentation and other services that may be
required. The borrower shall ensure that the PMU is headed by a
Project director acceptable to the ADB and is appropriately staffed
for day-to-day coordination throughout the project implementation
period.
KfW
o The borrower thru the PIU shall prepare, implement, operate and
maintain the project in conformity with sound financial and
engineering practices and substantially in accordance with the
project conception agreed upon between the PMU, the Bank and DP.
The auditor shall determine whether the PMO structure is in accordance
with the requirements in the LA or project documents and that the PMO
staff/personnel are qualified to undertake the functions of the PMO.
presented in Annex J. However, the auditors are not precluded to include
34 | P a g e
other risks identified and prepare the corresponding APs to address such
risks.
b.
Procurement
The categories of goods, services and civil works and the applicable
procurement methods are stipulated in the LA between the DP and the
EA/IA. In the absence of specific requirements in the LA, the provisions
of Republic Act No. 9184 (RA 9184), the Government Procurement
Reform Act shall apply.
Goods and Civil Works
The following are the selection methods of the funding institutions:
International Competitive Bidding (ICB);

Limited Competitive Bidding (LCB);
National Competitive Bidding (NCB);
Shopping (International/National);
Direct Contracting;
Force Account; and
Procurement from United Nations agencies.
Consulting Services
The selection and employment of consultants may be undertaken
through the following selection methods:
Quality and cost-based selection;

Quality-based selection;
Selection under a fixed budget;
Selection based on consultants qualification;
Single source selection;
Commercial practitioners;
Selection of particular types of consultants; and
Selection of individual consultants.
These procurement methods are amply discussed in the specific

guidelines enumerated under the DPs Relevant Rules and Regulations in
Part III of this Manual.
The auditor shall determine eligibility of the goods to be procured as
specified in the LA or PAD (for IBRD/WB), RRP/SAR (for ADB) and MOD
(for JICA) and ensure that these are procured in compliance with the DPs
respective procurement guidelines and RA 9184. In the absence thereof,
the provisions of RA 9184 will apply.
35 | P a g e
presented in Annex K. However, the auditors are not precluded to
address such risks.
c.
Asset Management
Asset management refers to the whole range of activities and processes
in the safeguard, proper operation, maintenance of assets, and keeping of
pertinent records to achieve the following:
a)
b)
c)
d)
e)
ensure proper handling, storage/warehousing, adequate controls to

safeguard assets from theft or loss;
preserve the value of physical assets and maximize the benefits that
can be derived out of the goods acquired using the projects funds;
ensure the judicious and optimal utilization of assets during their
economic lives;
comply with the provisions of the LA on disposition of asset after
project completion; and
comply with the pertinent rules and regulations on the accurate
reporting of all inventory.
The auditor should look into the achievement of the above objectives.
presented in Annex L. However, the auditors are not precluded to
address such risks.
d.
Monitoring and Evaluation

Monitoring is the regular tracking of inputs, activities, outputs, outcomes
and impact of operation. It is an ongoing, internal process, to check on
progress and performance against pre-defined plans. It is a continuing
function that uses systematic collection of data on specified indicators to
provide management and the main stakeholders of an ongoing
development intervention with indications of the extent of progress and
achievement of objectives and progress in the use of allocated funds
[Organisation for Economic Cooperation and Development -Development
Assistance Committee (OECD -DAC)].
Types of
Monitoring
Input
Output
Description
Tracking of inputs or resources employed to implement a
project
Tracking of production of goods or delivery of service for
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Types of
Monitoring
Description
an intended beneficiary
Tracking of pre-implementation processes, procurement
processes, right of way (ROW) acquisition and
resettlement activities, negotiation with LGUs
Sector
Tracking of sector performance either based on the
consolidated project performance on sub-sector or
sector-wide basis or through the Sector Efficiency and
Effectiveness Review (SEER)
Source: Manual for Project Monitoring, NEDA (2004)
Process
Evaluation is a systematic and objective assessment of an on-going or

completed project, program or policy, design, implementation and
results. The aim is to determine the relevance and fulfillment of
objectives, development efficiency, effectiveness, impact and
sustainability. An evaluation should provide information that is credible
and useful, enabling the incorporation of lessons learned into the
decisionmaking process of both recipients and donors. Evaluation also
refers to the process of determining the worth or significance of an
activity, policy or program and an assessment, as systematic and
objective as possible, of a planned, on-going, or completed development
intervention (OECD- DAC).
The OECD-DAC laid out five development criteria for evaluation of
development assistance as enumerated in the table below.
OECD-DAC
Criteria
Relevance
Description
Extent to which the aid activity is suited to the priorities

and policies of the target group, recipient and donor
Efficiency
Extent to which aid activity attains its objectives
Effectiveness Measures outputsqualitative and quantitativein
relation to the inputs
Impact
Positive and negative changes produced by a
development intervention, directly or indirectly, intended
or unintended
Sustainability Measures benefits of an activity that is likely to continue
after project completion
Source: OECD-DAC
In the context of the PDC, monitoring is conducted during the project
implementation phase while evaluation may be conducted during
approval and financing, implementation, and ex-post evaluation phases.
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By the GOP
a. NEDA
Executive Order (EO) 230 provides the organization and functions of
both the NEDA Board and the NEDA Secretariat. The Project
Monitoring Staff (PMS) of NEDA is tasked to: (i) monitor the progress
of implementation of approved development programs, based on
reports from the central offices of line agencies and NEDA regional
offices; (ii) identify bottlenecks and propose solutions to problems of
implementation; (iii) prepare integrated reports on the status of
approved development projects; (iv) monitor the implementation of
ongoing projects, including the utilization of foreign exchange
proceeds by these projects; (v) provide technical assistance to NEDA
regional offices in project monitoring and assessment; and (vi)
conduct post project evaluation and impact analyses.
Under RA 8182 or the ODA Act of 1996, NEDA is mandated to
conduct an annual review of the status of all projects financed by
ODA, identify causes of delays, reasons for bottlenecks, cost overruns,
both actual and prospective, and continued viability, and report to
Congress not later than June 30 of each year. The Act likewise
provides for assessing the performance of individual ongoing
projects as well as the overall performance of all projects that are
funded in whole or in part by ODA.
ODA Portfolio Review
The NEDA PMS, with the participation of oversight agencies (e.g.,
DOF, DBM), DPs (e.g., ADB, WB, JICA) and various EAs/IAs, conducts
annual ODA Portfolio Reviews of active loans and grants. In general,
the Review aims to: (i) assess the performance of all ODA-funded
projects; (ii) report on results and outcomes; (iii) identify key
implementation issues/problems and address cross-cutting issues that
hamper project implementation; (iv) determine actions taken and
actions that should be taken by concerned entities to ensure smooth
project implementation; (v) track development on recommendations
made in previous portfolio reviews; and (vi) identify lessons learned
and best practices.
Project Implementation Officers (PIO) System
The PIO system, created in 1999, designates individuals at the
Undersecretary level to be held accountable for overseeing the
implementation of ODA-funded projects in their respective agencies.
With the NEDA PMS as the Secretariat, regular PIO meetings are
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conducted on a quarterly basis to thresh out project implementation

issues and foster sharing of experiences on project implementation.
Alert Mechanism (AM)
The AM, institutionalized in June 2009, is an internal system for
flagging projects for priority monitoring and facilitation. The AM
classifies ODA projects into potential and actual problem projects
using four indicator categories (i.e., financial, physical, cost overrun
and project completion). Actual problem projects are further
classified into two alert levels: (i) Level I, which is the early warning
stage; and (ii) Level II, which is the critical stage. An actual problem
project that stays in the early warning stage for at least six months
gets elevated to the critical stage.
Good Practices Award (GPA)
Instituted in 2010 under the auspices of the PIO system, the GPA
documents strategies adopted by IAs in managing ODA programs and
projects towards achieving sector outcomes and addressing recurrent
implementation issues. The GPA aims to encourage IAs to take stock
of their performance in implementing critical ODA projects, recognize
IAs which developed good practices, and multiply the benefits of such
practices by allowing other IAs to learn and possibly adopt them.
Project Re-evaluation
The ICC Secretariat conducts re-evaluation of ongoing ODA projects
for any of the following reasons: (i) loans/grants extension; (ii) project
scope change; (iii) project cost increase; and (iv) loan cancellation. The
Project Evaluation Report (PER) contains the Secretariats evaluation
of the project being re-evaluated. In general, the report contains
project background, implementation status, agency proposal,
technical and financial evaluation, issues/ comments and
recommendations.
Joint Supervision Missions
In FY2008, NEDA signed a three-year Memorandum of Understanding
(MOU) with the International Fund for Agriculture Development
(IFAD) to achieve: (i) efficient and effective implementation of IFAD
assisted-projects and programmes through the improvement of
supervision and implementation support (SIS), monitoring and
evaluation (M&E), as well as appropriate feedback mechanisms for
the results of such supports to concerned stakeholders (IAs and policy
makers); (ii) institutional improvement through harmonization of SIS
and M&E mechanisms of the GOP and IFAD; and (iii) efficient and
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effective implementation of overall development operations through

mainstreaming SIS and M&E activities.
The MOU entails the conduct of annual project-level joint supervision
missions between GOP and IFAD of all ongoing IFAD-assisted projects.
PMS participates in the site visits and prepares reports on assigned
topics as well as inputs to the aide memoire for the projects.
Joint Analytic Work (JAW)
Spearheaded in FY2010, the JAW to ODA Portfolio Review aims to
provide a platform for joint analysis, action planning, and consensus
decision-making on selected issues relevant to ODA-PR and DPs'
portfolios. JAW findings are to be: (i) discussed/shared at ODA-PR
wrap-up meetings and/or quarterly Project Implementation Officers
(PIO) meetings; and (ii) incorporated in ODA Review report and DPs
country portfolio reviews, as appropriate.
JAW were acted upon mainly by oversight agencies and participating
DPs through the Forward Action and Support Taskforce (FAST). Also
organized in 2010, FAST (composed of NEDA, DBM, GPPB, MDFO,
COA, BTr, LBP, ADB, JICA and WB) would firm up and operationalize
the recommended actions, as well as explore other options intended
to address implementation issues.
M&E Reports
Regular reports are prepared in order to disclose the status of the
ODA portfolio.
Project
Profiles
A Profile contains basic project information on the

project implementation and funding details. Also
included is the projects implementation status
which covers overall assessment, physical
accomplishment and financial accomplishment.
Project Status The Status Brief is a supplement to the more detailed
Brief
project profile. It contains information on
assessment of project status (whether the project is
ahead of, on, or behind schedule), basis of
assessment (e.g. physical performance, financial
performance, review findings, etc.) and important
notes to the management (e.g. ongoing ICC reevaluation request, reported in media, etc.).
Regional
The Regional Matrix contains a complete list of all
Matrix
ODA projects implemented in a specific region. The
Matrix includes basic project information, project
location (province), description, project cost and
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status. The projects are either classified as regionspecific, multi-regional, and nationwide projects.
End of Project The EOPR is prepared by NEDA PMS for all
Report (EoPR) completed projects or closed loans. Each EOPR
contains details on project design, divergence
between appraisal and actual targets, reasons for
deviations, actual inputs and outputs and initial
assessment.
Ex-post Evaluation
Joint ex-post evaluation of projects is being done by NEDA and JICA
through a series of MOUs signed since 2006. The MOUs aim to
capacitate NEDA and other concerned EAs/IAs through the transfer of
evaluation techniques in the course of jointly conducting postevaluation for selected ODA projects in the country.
b. PMOs
PMOs of the EAs/IAs usually have M&E Units that undertake the M&E
activities and report the results based on the PIPs or Implementation
Manuals or its equivalent. Implementing arrangements for FAPs vary.
Below are some of the categories or modalities, among others.
Project management unit (with or without contractual personnel)

mainstreamed in organization implementing FAPs (organic unit )
Project management unit (with or without contractual personnel)
coordinating with individual PMOs
Clustered PMOs (by subsector or by DP) under senior official
(Undersecretary)
Regular units handling project management functions
One PMO per FAP (organic unit with/without contractual
personnel)
PMOs undertake progress monitoring, project benefit monitoring and

evaluation/impact evaluation.
Progress monitoring is focused on determining the progress or status
of implementation of the various components and sub-projects at
certain stages of the project against their set targets and
implementation schedule in the PIP/PAD and respective sub-project
implementation plans. It alerts the project management on
components/sub-projects
experiencing
delays
and
other
implementation problems so that timely and appropriate corrective
actions can be undertaken. Both the physical and financial progress
of a project is monitored.
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Physical monitoring pertains to the determination of the physical

status of construction of infrastructures; procurement, delivery and
distribution of goods and equipment; institutional development/
capacity building activities; and other components of the project
whose physical progress could be assessed. To be able to monitor
physical progress, milestones should be identified against which the
projects progress could be measured. In order to determine the
overall progress of a project, a percentage weight may be assigned to
each milestone to define physical progress in terms of percentage. In
some cases, the progress of the implementation of a project may be
determined by comparing the actual accomplishment vs. planned
physical targets using quantifiable indicators or planned vs. the actual
implementation schedule.
Financial monitoring tracks disbursements of funds for a project
against its accomplishments. Allocations/budgets, releases and
expenditures are recorded and reported by the EAs/IAs at various
levels and usually consolidated at the national level.
On the other hand, project benefit monitoring and evaluation/impact
evaluation involves evaluating benefits and impact to assist policy
makers and project managers towards continuous improvement of
project design and implementation through an effective feedback
mechanism. It is important to determine if the completed facilities
are operational and are being used by the beneficiaries, and if
expected benefits from them are being realized.
c. Other Inter-agency Committees (IACs)
At the national level, the National Project Monitoring Council (NPMC)
is composed of designated officials from NEDA as Chairman, DBM as
Co-chairman, from the Department of the Interior and Local
Government (DILG) and Office of the President-Presidential
Management Staff (OP-PMS) as members, with NEDA as the
Secretariat. Its functions include: (i) coordination of RPMES and
implementation at the national level; (ii) formulation of policies,
strategies, and guidelines for effective M&E; (iii) maintenance of upto-date information on FAPs and national development projects;
(iv) conduct of problem-solving sessions; and (v) development and
maintenance of information systems.
At the regional level, the Regional Project Monitoring Council (RPMC)
is composed of NEDA regional director as Chairman, DBM regional
director as Co-chairman, and representatives from DILG, OP-PMS and
three non-governmental organizations/Peoples Organizations
(NGOs/POs). Its functions include: (i) provision of list and schedule of
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projects to be monitored; (ii) collection and processing of reports;

(iii) identification of problems and verification of information;
(iv) provision of feedback on the remedial actions of the development
council; (v) preparation of monitoring reports; and (vi) elevation of
issues not resolved at their level to higher level bodies.
Meanwhile the Regional Project Monitoring and Evaluation System
(RPMES) was established through EO 376 series of 1989 and amended
through EO 93 series of 1993. The System provides a scheme for
monitoring and evaluating projects at the national, regional,
provincial, city and municipal levels with the participation of various
government agencies, LGUs and NGOs at all levels. The System aims
to expedite project implementation as well as devolve project
facilitation, problem solving and M&E to the regional and sub-regional
levels. Under the System, the PMCs elevate problems and issues of
projects which are not resolved at their levels.
By the DPs
The table below describes the M&E processes, reports and practices of
some of the countrys major DPs:
ADB
IBRD
DP
M&E Processes/Reports/Practices
Evaluation is an important part of its project cycle. Its
evaluation has two levels: a) self-evaluation by the
operations department of the EA/IA responsible for
preparing and implementing projects, programs and TA
operations, and b) independent evaluation by the
Operations Evaluation Department (OED), now
Independent Evaluation Department (IED) of ADB. Selfevaluation uses a number of instruments, such as:
project/program performance reports; review reports
prepared during the course of project implementation,
usually at mid-term; project/program completion
reports (PCRs), TA completion reports; and country
portfolio performance review (CPPR). For the
independent evaluation, project performance evaluation
reports and program performance evaluation reports
are prepared by the IED. With the exception of project
preparation TA resulting in a loan, ADBs policy is to
conduct PCRs and TA completion reports on all
completed projects, programs and TA.
Responsibility for supervision of a Bank-financed project
rests with a task team (TT) assigned to the project. The
TT includes Regional staff designated by the Region, as
well as a lawyer and finance officer designated by their
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DP
vice presidential units. The team leader (TL) serves as
the Bank's principal point of contact for the borrower.
Preparation for supervision begins during project
preparation, when the TT and borrower staff agree on
arrangements for project implementation, including a)
monitoring and evaluating of progress and achievement
of development outcomes, with a common set of
criteria to be used for project monitoring and
evaluation; (b) the use of results frameworks,
performance indicators, and associated outcome targets
(the latter reflected in, or derived from project
development objectives and performance indicators);
and (c) the reports -- such as audit reports, Interim
Financial Reporting (IFR) and other reports required for
effective project monitoring, evaluation, and disclosure - to be provided by the borrower, along with their
outlines, content, and format.
The TT ascertains that the borrower has included the
agreed arrangements in the Project Implementation
Plan (PIP), and summarizes the arrangements for
implementation and supervision specified in the PAD.
During project implementation, the TT, among others,
regularly (a) monitors progress in all substantive aspects
of the project against the targets, development
objectives, and performance monitoring indicators set
out in the PAD and PIP; (b) monitors procurement
implementation and disbursement, recommending ways
to ensure that procurement activities and loan
disbursements proceed smoothly in line with the
planned schedule; and (c) assesses risks to successful
implementation, operation, and sustainability of the
project.
As appropriate, the TT visits the project sites and
facilities to review progress, provide advice, meet with
project beneficiaries and stakeholders, perform sample
reviews
of
the
documentation
supporting
disbursement, review IFR, carry out ex post reviews of
procurement, and obtain additional information.
After the completion of a project, the Banks
Independent Evaluation Group (IEG) measures the
outcome against original objectives, and assesses
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DP
JICA
whether or not the projects results can be maintained
over the long-term. A number of projects are further
scrutinized in detailed impact evaluation reports.
The JICA undertakes two types of evaluation classified
into levels: project level evaluation and program level
evaluation. Project level evaluation covers individual
projects and is classified into four types and conducted
at different stages during the project cycle: ex-ante
evaluation, mid-term evaluation, terminal evaluation,
and ex-post evaluation as explained below:
Ex-ante evaluation is conducted when a project is
requested by a recipient country. It first involves a study
of the project to determine its necessity as well as its
conformity with JICA's Country Program, and have been
performed for all ODA loan projects that have been
appraised since FY 2001, and the results have been
released as Ex-Ante Evaluation Reports immediately
after the conclusion of loan agreement.
Mid-term evaluation/review is carried out 5 years after
the conclusion of a loan agreement in principle as a
means of verifying whether or not project plans are
maintaining their relevancy, whether or not the
effectiveness of the project will manifest in line with
initial projections once the project is complete, and so
forth.
Terminal evaluation is performed upon the completion
of a project, focusing on its efficiency, effectiveness and
sustainability. Based on the results of the evaluation,
JICA determines whether it is appropriate to complete
the project or necessary to extend follow-up
cooperation.
Ex-post
evaluation
assesses
the
relevance,
effectiveness, efficiency, impacts and sustainability of
each project on the basis of international evaluation
criteria. It is carried out for all projects two years after
completion in principle so as to ensure full
accountability and to enhance effectiveness and
efficiency of ODA operations.
Program level evaluation is a comprehensive evaluation
of such group of projects which have the same overall
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DP
KfW
goal and development issues and is classified into
country-program evaluation and thematic evaluation.
Country-program evaluation examines the overall
effects of JICAs cooperation on the development of a
targeted country across projects while thematic
evaluation looks at a number of projects by focusing on
specific sectors, issues or cooperation schemes.
The KfW, a development bank that works for the federal
government, has responsibility towards its partner
countries, the German Government and German
taxpayers. This is why KfW depends on reliable
information on whether the Financial Cooperation
projects it funds on behalf of the federal government
are successful or not. Every single project that is
completed is subjected to an intensive, independent expost evaluation, also called a final evaluation. Three to
five years after the start of operation, all projects are
subjected to an ex-post evaluation. Final evaluation
serves a dual purpose: a) the impacts of each individual
project are recorded, analyzed and compared with the
costs incurred. KfW reports these results to the German
federal government and the general public. This
provides accountability for its work as a development
bank; and b) additionally, KfW wants to learn from past
projects and apply these lessons to future projects. A
uniform, basic methodological approach is applied in
every final evaluation: the actual project impacts are
systematically compared with the target impacts
expected at the time of the project appraisal. In order to
evaluate a project's developmental efficacy, the project
is analyzed against three main criteria: its effectiveness,
relevance/significance, and efficiency.
The M&E Framework

Results Monitoring and Evaluation (RME), as a management approach,
aims to enhance the likelihood of achieving both the desired outcome
and longer-term impact of development projects. The RME process
encompasses the PDC, explicitly linking one phase to another, and
consistently focusing on the planned results. This contrast with the inputoutput monitoring commonly adopted, whereby the main focus is on
project activities and outputs, with emphasis on meeting project
specifications within a given timeframe and budget.
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The NEDA Board Resolution No. 3 s. 1999 mandates the ICC and
implementing agencies to report on project outcomes and objectives to
ensure accomplishment of project objectives. Further, NEDA Board
Resolution No. 14 s. 1999 incorporates RME in the ICC Approval Process.
Project proponents shall submit a project framework (PF) containing the
project's objectives at goal, purpose and output levels, their
corresponding performance indicators and targets with relevant baseline
values, the means of verification and key assumptions/risks that may lead
to project failure. Likewise, the implementing agency (IA) shall submit to
NEDA during project implementation, a RME report consistent with the
approved PF. Adjustments from the ICC-approved PF shall reflect changes
in actual/current project conditions, including those in the broader
environment within which the project is situated. Any such deviation shall
be explained clearly.
The PF with its required information is shown in Figure 2 below. In
addition, an M&E Plan shall be prepared by IAs to describe in detail how
data required by the set of indicators will be obtained and by whom, the
specific sources of data (whether primary or secondary), the frequency of
data collection, and how data will be processed, reported, and used in
managing project implementation.
Figure 2. Project Framework
Project Title: ___________
Indicators/Targets
Goal
Purpose
Outputs
Means of
Verification
Key Assumptions/
Risks
The PF has the following definitions as stated in the Guidelines in

Incorporating Results Monitoring and Evaluation in the ICC Process:
Goal - the long-term development objective of the project which

relates to broader sector and/or country concerns
Purpose - the immediate-term development objective of the

program/project, the immediate reason for the program/project, the
outcome expected shortly after completion of the program/project
implementation.
Output - program/project deliverables arising from the activities

carried out with the program/project resources
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Indicators/Targets - an explicit statement of results desired for an

indicator over a specified period of time.
Means of verification - show how data required will be obtained and

by whom, the specific sources of data, the frequency of data
collection and how data will be processed, reported and used.
Key assumptions/Risks represent necessary conditions to project

success and determine risks that could occur and undermines project
success. These include political, social, financial, environmental,
institutional, and climatic factors.
Assumptions are positive
statements of conditions, events, or actions that are necessary to
achieve the results at each level of the framework. On the other hand,
risks are negative statements of conditions, events, or actions that
would adversely affect or make it impossible to achieve the intended
results.
Frameworks used by various DPs have different names and terminologies

but are essentially the same. The table below shows the various
frameworks used by the countrys major DPs:
Development Partner
ADB
WB
GOJ-JICA
KfW
Framework
Design and Monitoring Framework (DMF)
Logical Framework (LogFrame)
Project Design Matrix (PDM)
Zielorienterte Projektplanung (ZOPP)
The Design and Monitoring Framework (DMF) for ADB funded projects or
Logical Framework for IBRD/WB funded projects is a results-based tool
for analyzing, conceptualizing, designing, implementing, monitoring and
evaluating FAPs. It structures the project planning process and helps
communicate essential information about the project to stakeholders in
an efficient, easy-to-read format. It derives its name from the logical
linkages set out by the planner(s) to connect a projects means with its
ends. The logframe is only one monitoring and evaluation tool and its use
does not pre-empt the use of other evaluation tools.
In ADB, the preparation of the DMF as shown in Figure 3, previously
called project or TA framework, has been mandatory since 1996 and is
included in TA papers and the Report and Recommendation of the
President. The logical framework has been renamed DMF to reflect its
application in all stages of the project cycle. It is the core link between
project design, implementation and evaluation, and the basis for ADBs
project performance management system (PPMS). It also makes
developmental interventions focus on achievable and measurable results
through performance targets and indicators, and draws attention to the
risks that projects may face during implementation. The terminology
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used in the ADBs DMF is adopted from the OECD as part of the
harmonization effort. It replaces goal with impact, and purpose with
outcome.
At the time of commencing work on the M&E Framework, a key
document that describes the Project, its objectives, outputs, activities,
risks and schedules is the PAD or its equivalent developed by the DPs with
GOP support or at times with consultants.
Figure 3. Design and Monitoring Framework
Performance
Indicators/
Targets
Design Summary
Data Sources/
Reporting
Mechanisms
Assumptions/
Risks
Impact
Outcome
Outputs
Activities with Milestones
Inputs
A look into the logframe for some projects revealed that different formats
were used and elements included vary. NEDAs Project Logframe includes
the same elements as ADBs DMF as shown in Figure 3, except for the
activities with milestones and inputs.
For the Framework to be fully useful in the monitoring and evaluation of
projects and the review of the project design as well, it should ideally
have the following elements and should conform with the manner each
element should be stated/ presented:
a. Impact - also termed goal or longer-term objective, refers to the
sectoral, sub-sectoral or, in some cases, national objectives. The
impact is wide in scope, will accrue at a date - medium to long-term following project completion, and is influenced by many factors other
than the project itself. When determining the impact statement,
ensure that there is a direct means-end relationship between the
outcome and the impact.
b. Outcome - describes what the project intends to accomplish by the
end of project implementation and by doing so makes it clear what
development problem the project will address. The decision on and
phrasing of the outcome statement determines the nature and scope
of the outputs that will be necessary to achieve the outcome. Hence,
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the starting point for preparing the M&E Framework must be the
outcome statement. Specifically, the outcome should be:
(i)
limited to one succinct statement to ensure clarity and focus.

More than one outcome implies that there are a number of subprojects/components under the umbrella of a more generalized
project. These need to be either rephrased into outputs or
summarized into a single statement associated with several
indicators outlining the dimensions of the outcome;
(ii)
expressed in change language instead of action language to

reflect accomplishments;
(iii) phrased as an improvement over a baseline situation, which is

described in the performance targets and indicators column;
(iv) reasonably achievable - subject to assumptions and risks - by the
end of the project implementation to be reflected in the Project
or TA Completion Report (PCR/TCR); and
(v)
necessary but not sufficient to achieve the impact.
Outcome statements typically describe the change of behavior of the

beneficiaries using the outputs of the project. Outcome statements
can also describe performance changes of systems, organizations, and
institutions, e.g., financial services are more accessible to small
enterprises; public service is more accountable. Capacity plans
financed, implemented, and sustained is an example of an outcome
statement for projects with focus on organizational capacity building.
c. Outputs - are the physical and/or tangible goods and/or services
delivered by the project and describe the scope of the project. These
outputs must be necessary to achieve the outcome and the meansend relationship has to be clearly identified. The statement of outputs
must observe the following:
(i)
Each output has to be necessary to achieve the stated outcome;
(ii)
Include only outputs that can be delivered by the project and

are feasible with the resources available;
(iii) Do not use the infinitive tense (e.g., To assess, To prepare) at

the beginning of output statements as it implies activities;
(iv) Components are not outputs i.e., components are a collection
of outputs conveniently grouped for finance or administrative
purposes; and
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(v)
For complex projects and programs, include an output for

project management, e.g., project management system
operational. This output summarizes routine events and
activities of the project implementation team or unit, including
planning, monitoring and evaluation, procurement, and
reporting. Tasks can also include communicating with
stakeholders, providing input on strategic and policy issues, and
instigating mitigation measures in the event that a risk hinders
project implementation;
d. Performance Targets/Indicators include both qualitative and

quantitative specifications for the desired project results. As
performance measures, they indicate how to recognize the successful
accomplishment of objectives. An indicator outlines what will be
measured. A performance target specifies quantity and time - how
much and when. They specify precisely each result at the output
level, at the outcome level, and at the impact level. The key concepts
related to indicators are:
(i) If we can measure it, we can manage it;
(ii) All indicators have to be measurable and therefore expressible in
numeric terms, in terms of quality, time, access, cost/price, or
customer satisfaction.
There are various ways to present the critical attributes of welldefined indicators:
(i)
SMART: specific relate to the results the project seeks to

achieve, measurable stated in quantifiable terms,
achievable realistic in what is to be achieved, relevant
useful for management information purposes, and timebound stated with target dates; and
(ii) CREAM: clear precise and unambiguous, relevant

appropriate and timely, economic available at reasonable
cost, adequate sufficient to assess performance, and
monitorable can be independently verified.
In addition, indicators have to be practical such that:
these measure only what is important;

these are limited to the minimum necessary to measure the
respective results level; and
the means of measuring is cost-efficient.
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e. Data Sources/Reporting Mechanisms - show where information on

the status of each indicator can be obtained, who provides the
information, and how the information is collected, e.g., surveys.
Reporting mechanisms state where the information is documented.
f. Risks and assumptions - projects are not isolated from external
events and are influenced by factors outside the direct control of the
project management. These include political, social, financial,
environmental, institutional, and climatic factors.
Termed
assumptions and risks, they are highlighted in the fourth column of
the M&E Framework. Assumptions are positive statements of
conditions, events, or actions that are necessary to achieve the results
at each level of the M&E Framework. Risks are negative statements of
conditions, events, or actions that would adversely affect or make it
impossible to achieve the intended results.
g. Activities with milestones - activities are the groups of tasks carried
out using project inputs to produce the desired outputs. Points to
note are:
(i)
List only the activities that represent the main steps in the
transformation process, turning inputs into outputs. They should
not be a restatement of an output as an action;
(ii) Activities should be possible with the available inputs;

(iii) Include completion dates and/or important milestones for each
activity. This list of core activities forms the basis for preparing
the implementation schedule. This information is essential not
only for preparing the implementation schedule, but also as the
basis for a critical path analysis, which gives a more realistic view
of the necessary project implementation period.
h. Inputs - are the main resources required to undertake the activities
and to produce the outputs. These include: consulting services,
personnel, civil works, equipment, materials, and operational funds,
which are provided by DPs, government, co-financiers, and others,
including beneficiaries, if applicable. Inputs to be listed should
include, as a minimum, the following:
(i)
Inputs by financier and main cost categories in financial and/or

physical terms; and
(ii) In-kind contributions from other stakeholders.
52 | P a g e
For instance, ADB has a Quality Review and Assessment Checklist

which contains 44 generic reminders about project design criteria that
should be incorporated in a Project DMF.
Project M&E Requirements
NEDA
For the purposes of M&E of ODA programs and projects, implementing
agencies are required to submit to the NEDA-PMS the following:
Requirement
Progress reports (containing physical, financial,
results or outcomes)
Annual ODA Portfolio Review Forms
Annual Work, Physical and Financial Plan
Project Completion Report
Frequency/Schedule
Quarterly for loans;
Semestral for grants
Annually
Annually
Within 3 months upon
project completion
DBM and COA

The following budget and financial accountability reports embodied
under Joint Circular 2014 - 1 dated July 2, 2014 are required to be
submitted to DBM and COA to monitor and/or evaluate performance of
the agencies and to provide the President and other fiscal agencies
necessary information for sound policy decision:
Budget and Financial Accountability
Reports (BFARs)
Quarterly Physical Report of
Operation (QPRO)
Report
Form
BAR No.
1
Statement
of
Appropriations,
Allotments,
Obligations,
Disbursements
and
Balances
(SAAODB)
Summary
of
Appropriations,
Allotments,
Obligations,
Disbursements and Balances by
Object of Expenditures (SAAODBOE)
List of Allotments and SubAllotments (LASA)
FAR No.
1
Aging of Due and Demandable

Obligations (ADDO)
FAR No.
3
Deadline of
Submission
Not later than 30
days following the
end
of
each
quarter
Within 30 days
after the end of
each quarter
FAR No.
1-A
Within 30 days
after the end of
each quarter
FAR No.
1-B
Within 30 days
after the end of
each quarter
On or before the
30th day following
the end of the
53 | P a g e
Budget and Financial Accountability

Reports (BFARs)
Monthly Report of Disbursements
(MRD)
Report
Form
FAR No.
4
Deadline of
Submission
year
On or before the
30th day of the
following month
covered by the
report
In addition to the above reports, FAPs are required to submit once during
the projects implementation (after the loan/grant documents have been
signed) Project Profile Form as required under DBM, COA and DOF Joint
Circular No. 2-97 dated March 1997.
DPs
Requirements by the DPs on project M&E are usually provided in the
project documents or as a schedule to the LA. The office responsible for
M&E, M&E method to be used, reports to be submitted, report coverage
and the reporting frequency or deadline are identified. However, the
requirements vary among the DPs or others may have none. It is thus
necessary for the auditor especially at the lead/head office of
implementing agencies to review the project documents and loan
agreements to check compliance by the implementing agencies with the
requirements. The auditor should also determine whether the PF was
properly formulated and all the necessary elements are present to be
able to assess if the required data are available to facilitate monitoring
and evaluation and result/impact assessment of the project. Due to the
absence of or limited access of auditors in the regional and LGU levels to
the project documents, the loan agreements and M&E framework
should at the least be available to the said auditors for appreciation of the
relevance of activities undertaken at their levels to the overall project
impact.
The identified risks and the corresponding sample APs are presented in
Annex M. However, the auditors are not precluded to include other risks
identified and prepare the corresponding APs to address such risks.
e.
Project Sustainability
Sustainability is the realization of the desired effects of the
projects/programs in its future operation.
Evaluation on sustainability looks into whether the effects are being
realized as planned and whether the effects are likely to continue in the
future.
54 | P a g e
It is not a separate evaluation category in the final evaluation reports

because the sustainability aspect is already included in the evaluation of
the key criteria of effectiveness, relevance/significance and efficiency. In
addition to the assessment of the criteria, the evaluation will consider
provision for counter-measures required to resolve problems that may
exist or occur in the maintenance of the desired effects in the future
operation or in the entire period of operation of the project.
For example, in a waterworks project, the desired effect is to be able to
supply the target consumers with potable water. In the evaluation for
sustainability, it is not enough to determine whether the target group is
supplied with adequate water since the waterworks began operating.
Rather, it is important to find out whether the requirements are fulfilled
to ensure that in all probability, the supply of potable water will remain
adequate for the entire technical/economic life of the project.
After project completion, with the project already in operation,
considerations on the availability of (a) budget for maintenance, (b)
supply of frequently used supplies and materials, and (c) qualified
supervisors and `maintenance crew, top management support, among
others, are provided to ensure continuous delivery of the desired output.
The details of the expected output and outcome are incorporated in the
Logical Framework of the project which is usually attached to the project
implementation agreement or in the terms of reference.
The auditor shall determine whether the projects desired impact has
been attained and whether funds/manpower were requested by the
EA/IA and provided by the concerned NGA/GOCC/LGU to sustain the
project benefits after project completion.
presented in Annex N. However, the auditors are not precluded to
address such risks.
F.
Preparation and Submission of Audit Reports

The requirements of DPs for the audit of accounts and financial statements related
to the expenditures financed out of the loan proceeds and the submission of the
report of such audit are provided in the LA. The scope of the audit and its detail as
well as the reporting deadline as stated in the LAs vary among DPs.
For ADB, LAs generally contain specific provisions on the submission of certified
copies of the audited accounts and financial statements and the report of the
auditors which includes the auditors opinion on the use of the loan proceeds and
55 | P a g e
compliance with the financial covenants of the LA as well as the use of the
procedures for IMA/SOE.
The IBRD usually requires the audit of a projects financial statements covering a
period of one fiscal year.
In its LAs, JICA requires a certified copy of the auditors report in such scope and
detail as it may request. The audit report is to contain a separate opinion on
whether the SOEs submitted during a given fiscal year, together with the
procedures and internal controls can be relied upon to support the related
disbursements.
Implementation arrangements differ according to, among others, the nature and
scope of projects. There are projects which are implemented by only one agency
or various agencies, at different levels of the organization while others involve
LGUs. Considering that the IAs/EAs have their respective auditors, the following
shall be observed in the preparation and submission of the required reports:
FAPs with LGUs as IA/EA
1. The Supervising Auditors/Audit Team Leaders (SAs/ATLs) of the LGUs
(provincies/cities) shall prepare and submit to the ATL, Municipal Development
Fund Office (MDFO) the audited SSAF and/or SOE, as the case may be, together
with the Independent Auditors Report (IAR), four and seven months after the
end of each fiscal year for Audit Reports (ARs) due to DPs not later than six and
nine months after the end of such period, respectively.
2. The ATL, MDFO shall consolidate the IARs submitted by the SAs/ATLs, LGUs and
prepare an AR with a Consolidated Independent Auditors Report (CIAR).
3. The SA, DOF shall then transmit the required AR together with the CIAR to the
MDFO.
4. In case the project has a lead IA/EA, the SA, DOF shall submit the AR together
with the CIAR to that IA/EA.
FAPs implemented by one agency/corporation only
1. The SA/ATL of the agency/corporation shall prepare and submit the AR on the
audit of the FS, SA/IMA, SSAF and/or SOE, as the case maybe, together with the
IAR, not later than the period stated in the LA for the submission of the AR.
2. The SA/ATL shall transmit the required AR and the corresponding IAR to
Management.
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FAPs implemented by one agency/corporation including its regional offices (ROs)

1. The SA/ATL of ROs of the agency/corporation shall prepare and submit to the
SA/ATL of the head office of that agency/corporation the management letter
(ML) with audited FS, SSAF and/or SOE, as the case maybe, together with the
corresponding IAR, four and seven months after the end of each fiscal year for
ARs due to DPs not later than six and nine months after the end of such period,
respectively.
2. The SA/ATL of the head office of the agency/corporation shall consolidate the
MLs and IARs submitted by the SAs/ATLs of the ROs, and prepare a
consolidated AR with IAR.
3. The SA/ATL shall transmit the required AR together with the IAR to the
Management.
FAPs with more than one IA/EA
1. The SA/ATL of the IA/EA other than the lead IA/EA shall prepare and submit to
the SA/ATL of the latter the AR with the audited FS, SA/IMA, SSAF and/or SOE,
as the case may be, together with the IAR, four and seven months after the end
of each fiscal year for AR due to DPs not later than six and nine months after
the end of such period, respectively.
2. The SA/ATL, lead IA/EA shall consolidate the ARs and IARs submitted by the
SAs/ATLs of the IA/EA and prepare a consolidated AR and IAR.
3. The SA/ATL, lead IA/EA shall transmit the required consolidated AR and IAR to
Management of the lead IA/EA.
FAPs which pass thru an agency/corporation as conduit
1. The SA/ATL of the conduit agency/corporation shall prepare and submit the
required AR with IAR on the audit of the FS, SA/IMA, SSAF and/or SOE, as the
case maybe, not later than the period stated in the LA for the submission of the
AR.
2. The SA/ATL shall transmit the required ARs and the corresponding IARs to
Management.
The audit reporting requirements of the DPs will prevail, in the absence of which,
COAs rules and regulations will apply.
The form and content of the IAR on different forms of audit opinions on the GPFS
and SPFS are shown in Annexes O and P, respectively.
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VI. ANNEXES
Annex A
Comparative Terms of Financing
Annex B
ICC Requirements
Annex C
Illustrative Entries
Annex D-1
(NG) Loans
Sample Audit Program Debt Service for National Government
Annex D-2
Sample Audit Program Debt Service for National Government

(NG) Loans Relent
to GFIs/GOCCs
Annex D-3
Sample Audit Program Debt Service for GFIs/GOCCs
Annex D-4
Sample Audit Program Debt Service for LGUs
Annex E
Statement of Sources and Application of Funds (SSAF) Format
Annex F
SA/IMA and Reconciliation Statement
Annex G
Sample Audit Program Statement of Sources and Application of

Funds (SSAF)
Annex H-1
Statement of Expenditures (Free Format)
Annex H-2
Statement of Expenditures for Contracts of US$100,000 and

below
Annex H-3
Statement of Expenditures for Contracts of Over US$100,000
Annex H-4
Statement of Expenditures for Operating Cost
Annex I
Sample Audit Program Statement of Expenditures (SOE)
Annex J
Sample Audit Program Project Management Office (PMO)
Annex K
Sample Audit Program Procurement of Civil Works, Goods and

Consulting Services
Annex L
Sample Audit Program Asset Management
Annex M
Sample Audit Program Monitoring and Evaluation
Annex N
Sample Audit Program Project Sustainability
Annex O
Illustrations of Independent Auditors Report on Financial

Statements Without Modification to the Opinion
Annex P
ISSAI 1800
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Annex A
Comparative General Terms of Financing (Sample Only)

Development
Partners
1 Front-end fee
2 Commitment Fee
ADB
IBRD
JICA
KfW
N/A
0.15 % per
annum of the
undrawn
amount
0.25 %
N/A
N/A
0.10 % per
annum of the
undrawn
amount
3 Interest Rate
ADBs LIBORbased lending

rate (6-month
USD LIBOR +
.30%)
1.4 % p.a.
and 0.01 %
for
consultancy
services
component
4 Maturity
25 years
(inclusive of 5
years grace
period) or
15 years
(inclusive of 3
years grace
period)
Semi-annual
6-month USD
LIBOR + fixed
spread
(1.15%) or
variable
spread
(0.48%)
25 years
(inclusive of
10 years
grace period)
N/A
0.25% per
annum of
the
undrawn
amount
0.75% per
annum
25 years
(inclusive of 7
years grace
period)
40 years
(inclusive of
10 years
grace
period)
Semi-annual
Semi-annual
Semi-annual
5 Payment Terms
Source: DOF
59 | P a g e
Annex B
ICC Requirements (NEDA Website: www.neda.gov.ph)

Documents Needed for ICC Approval
1. Feasibility Study
2. Investment Coordination Committee PE Forms/ ICC Project Evaluation Forms 1-6
3. Regional Development Council (RDC) endorsements for regional, municipal and local
projects
4. Endorsement from other concerned agencies (e.g. ITECC for IT programs, respective
mother agency/department level endorsement for proposals of Bureaus or attached
agencies
5. Department of Finance (DOF) Corporate Affairs Group (CAG) review for GOCC projects
6. NCC review for relending programs
7. Right of Way (ROW) acquisition and resettlement action plan
8. Location Map
9. Department of Budget and Management (DBM) certification of budget cover availability
for the project
10. Environmental Impact Statement/Environmental Compliance Certificate/Certificate on
Non-Coverage
Contents of the Project Evaluation Report (PER)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Historical Background
Sectoral Program Context Recommendation
Regional and Spatial Context Recommendation
Project Objectives
Project Description
Cost and Financing
Institutional Arrangement
Implementation Schedule
Technical/Market/Environmental Analysis
Financial Analysis
Economic Evaluation
Social Analysis
Issues
Recommendations
Timelines of ICC Approval

The count of the timeframe of review shall start upon submission of complete documents.
Activity
1
Project evaluation and preparation of PER
Submission to the proponent for official response
Dissemination of PERs to ICC-TB members
ICC TB Deliberation
ICC CC Deliberation
NEDA Board confirmation
No. of Days/Weeks
4-6 weeks
At least 5 working days before ICC meeting
At least 1 day before the ICC-TB meeting
7-10 days after ICC deliberation
nd
Every 2 week of the month
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Annex C
Illustrative Entries
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Annex D - 1
Sample Audit Program Debt Service for National Government (NG)

Loans
(For BTr accounts only)
AUDIT PROGRAM
Audit Focus
Risk Statements
Audit Objectives
Debt Service-National Government (NG) Loans

Debt service may not be correctly billed.
Debt service payments to development partners (DPs) for NG loans may not
be correctly recorded in the books of the NG.
Debt service payments may not be within the Debt Service Program for the
year under audit and not covered by allotment.
To determine whether debt service are correctly billed
To determine whether debt service payments for NG loans are correctly

recorded in the books of the NG
To determine whether total debt service is within the Debt Service Program
for the year and is covered by allotment
No.
Audit Procedures
1.1 Review the following:

Loan Agreement (LA)
Billing Statement (BS)
Schedules of Loans Payable, Interest
Expense, Commitment Charge, Other
Financial Charges
and Gain/Loss on
Foreign Exchange Schedules for NG loans
General Ledger/Subsidiary Ledger (GL/SL)
Trial Balance (TB)
1.2 Re-compute
debt
service
(interest,
commitment fees and other charges) and
compare with BS.
1.3 Verify reasons for discrepancies noted.
2.1 Trace GL and SL beginning balances of the

account and sub-accounts, respectively, to
prior years/ months balances in the
respective Schedules, where applicable.
W.P.
Ref.
Audit Period
Target
Actual
2.2 Trace entries in the SL to JEVs and vouch

supporting documents on a sampling basis to
check the following:
Recorded transactions are for the year
under audit
JEVs and supporting documents are duly
74 | P a g e
Persons
Responsible
No.
Audit Procedures
signed by the responsible personnel
Completeness/adequacy and relevance of
supporting documents
Transactions are properly/accurately
journalized
In case of adjustment, evaluate adequacy
of supporting documents and analyze
prior entries made to ensure necessity and
accuracy/ correctness of adjustment.
W.P.
Ref.
Audit Period
Target
Actual
2.3 Check payment due date and principal

repayment per BS with amortization schedule
(AS)/revised AS.
2.4 Verify if the Debt Monitoring and Analysis
Division (DMAD)s payment instructions to
the Fund Transfer Division (FTD) reconcile
with the BS.
2.5 Check whether payment for principal, interest
and commitment fees per bank debit advice
are as billed in the BS, and correctly recorded
under the respective accounts SL/GL.
2.6 Check whether other charges per bank debit
advice are correctly recorded in the
appropriate accounts SL/GL.
2.7 For ADB and IBRD loans billed in a currency
other than the currency in which the loan is
payable per AS, check whether Loans
Payable-Foreign is debited for the Philippine
Peso equivalent of the principal repayment
per AS and any difference in the Philippine
Peso equivalent between the AS and actual
principal repayment is taken up under
Gain/Loss on Foreign Exchange.
2.8 Trace each accounts month-end/year-end SL
balances to the respective accounts
Schedule.
2.9 Compare and trace each accounts monthend/year-end balance per Schedule to GL and
TB.
2.10 Verify and evaluate reasons for errors/
discrepancies, if any.
75 | P a g e
Persons
Responsible
No.
Audit Procedures
W.P.
Ref.
3.1 Obtain and review the following:

Debt Service Program for the year
Appropriation for interest payment
Special Allotment Release Orders (SAROs)
3.2 Compare recorded debt service with the
Program.
Audit Period
Target
Actual
3.3 Compare recorded debt service with total

SAROs issued.
3.4 Verify and evaluate reasons for discrepancies,
if any.
4.
Communicate deficiency/ies noted thru the

issuance of an AOM.
Prepared by:
Reviewed by:
______________________
Printed Name & Position
Date:
______________________
Date:
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Persons
Responsible
Annex D - 2
Sample Audit Program Debt Service for National Government (NG)

Loans Relent to GFIs/GOCCs
AUDIT PROGRAM
Audit Focus
Risk Statements
Audit Objectives
No.
1
Debt Service-National Government (NG) Loans Relent to GFIs/GOCCs

Debt service payments on loans relent by the NG to government financial
institutions/government-owned and/or controlled corporations (GFIs/
GOCCs) may not be billed and paid in accordance with the Subsidiary Loan
Agreement (SLA) between the NG and GFIs/GOCCs.
Debt service payments received from GFIs/GOCCs may not be correctly

recorded in the NG books.
Debt service payments to Development Partners (DPs) for NG-relent loans

may not be correctly recorded in the NG books.
To determine whether debt service payments on relent loans to GFIs/GOCCs

are billed and paid in accordance with the SLA
To determine whether the debt service payments received from GFIs/GOCCs

are correctly recorded in the NG books
To determine whether debt service payments to DPs are correctly recorded

in the NG books
Audit Procedures
1.1
1.2
1.3
Review the following:

Loan Agreement (LA)
Subsidiary Loan Agreement (SLA)
Billing Statement (BS)
BSP Reference Exchange Rate Bulletin
Schedules of Loans Payable-Foreign,
Loans Receivable-GOCCs, Other
Payables, Other Financial Charges
and Gain/Loss on Foreign Exchange
(Schedule) and Interest Income
General Ledger/Subsidiary Ledger
(GL/SL)
Trial Balance (TB)
Compare the amortization schedule per
LA and SLA and ensure that funds are
available for payment of debt service to
DPs.
W.P.
Ref.
Audit Period
Target
Actual
Check whether loans relent to GFIs/

GOCCs are billed the respective GFIs/
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Persons
Responsible
No.
Audit Procedures
1.4
1.5
1.6
1.7
2
2.1
2.2
2.3
3
3.1
3.2
GOCCs within a reasonable period of

time to ensure receipt of payment prior
to or on the payment due date in the
SLA.
Compare interest rate per LA and SLA
to determine if there is a spread on the
interest due from GFIs/GOCCs.
Check whether principal and interest
billed the GFIs/GOCCs are in
accordance with the amortization
schedule in the SLA.
Re-compute principal repayment,
interest, commitment fees and other
charges received from GFIs/GOCCs and
check whether payment received is as
billed the GFIs/GOCCs and within
payment due date.
Verify and evaluate reasons for errors/
Check if principal repayments received
from GFIs/GOCCs are correctly credited
to Loans Receivable-GOCCs and
charges to Other Payables.
Check if spread on interest, if any, is
taken up under Interest Income.
Verify and evaluate reasons for errors/
Trace GL and SL beginning balances of
the accounts and sub-accounts,
respectively, to prior years/ months
balances in the respective Schedules,
where applicable.
Vouch entries in the SL to JEVs and
supporting documents on a sampling
basis and check the following:
Completeness/adequacy and
relevance of supporting documents
Recorded transactions are for the
year under audit
JEVs and supporting documents are
duly signed by the responsible
personnel
Transactions are properly/accurately
journalized
In case of adjustment, evaluate
adequacy of supporting documents
and analyze prior entries made to
ensure necessity and accuracy/
W.P.
Ref.
Audit Period
Target
Actual
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Persons
Responsible
No.
Audit Procedures
W.P.
Ref.
correctness of adjustment.
3.3 Check payment due date and principal
repayment per BS with amortization
schedule (AS)/revised AS.
3.4 Verify if the Debt Monitoring and
Analysis Division (DMAD)s payment
instructions to the Fund Transfer
Division (FTD) reconcile with the BS.
3.5 Check if principal repayment, and
charges per bank debit advice are as
billed in the BS and correctly taken up
under Loans Payable-Foreign and Other
Payables, respectively.
3.6 For ADB and IBRD loans billed in a
currency other than the currency in
which the loan is payable per AS, check
whether Loans Payable-Foreign is
debited for Philippine Peso equivalent
of the principal repayment per AS and
any difference in the Philippine Peso
equivalent between the AS and actual
principal repayment is taken up under
Gain/Loss on Foreign Exchange.
3.7 Compare actual debt service with
payment received from GFIs/GOCCs
and check if any shortfall in payment is
taken up under Due from GOCCs.
3.8 Trace each accounts month-end/yearend SL balances to the respective
accounts Schedule.
3.9 Compare and trace each accounts
month-end/year-end balance per
Schedule to GL and TB
3.10 Verify and evaluate reasons for errors/
4. Communicate deficiency/ies noted thru the
issuance of an AOM.
Audit Period
Target
Actual
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
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Persons
Responsible
Annex D - 3
Sample Audit Program Debt Service of GFIs/GOCCs

AUDIT PROGRAM
Audit Focus
Risk Statements
1
2
3
Audit Objectives
No.
Debt Service - (GFIs/ GOCCs)

Debt service payments for each loan may not be in accordance with the
amortization schedule.
Debt Service Payments maybe erroneously billed.
Debt service payments may not be correctly recorded in the books of
accounts.
To determine the actual debt service for the year and whether the amount
and frequency of debt servicing are in accordance with the loan amortization
schedule
To determine whether debt service is correctly billed
To determine whether debt service payments are correctly recorded in the

books of accounts
Audit Procedures

Loan amortization schedule
Billing/Invoices from FLIs
Subsidiary Ledger
Creditors Statement
1.2 Check whether the amount and timing
of payments for debt service are in
accordance with the loan amortization
schedule and billing/invoices from DPs.
2
2.1 Based on the LA provisions re-compute
principal amortization, interest charges,
commitment fees, and other fees and
reconcile
with the BS.
Note
discrepancies.
3
3.1
Check whether said payments are
properly
recorded
in
the
Subsidiary/General Ledger.
3.2 Compare actual debt service for the year
as recorded in the books of accounts
against the creditors statement and
take note of any discrepancy.
issuance of an AOM.
Prepared by:
______________________
Date:
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
Reviewed by:
______________________
Date:
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Annex D 4
Sample Audit Program Debt Service of LGUs

AUDIT PROGRAM
Audit Focus
Risk Statements
Audit Objectives
Debt Service- (LGUs)

Debt service payments for each loan may not be in accordance with the
amortization schedule.
Debt service payments may not be correctly recorded in the books.
To determine the actual debt service for the year and whether the amount
and frequency of debt servicing are in accordance with the loan
amortization schedule
2
No.
To determine whether debt service payments are correctly recorded in the

books of accounts
Audit Procedures
W.P.
Ref.

Loan Amortization Schedule
Sub-Project Loan Agreement
Subsidiary Ledger
Creditors Statement
Journal Entry Voucher
1.2 Compare Creditors Statement with
the Loan Amortization Schedule and
note differences.
1.3 Trace amount of amortization and
interest payments from the creditors
statement to the journal entry
voucher and to the subsidiary and
general ledger of each account
involve. Note differences.
Communicate deficiency/ies noted thru the
issuance of an AOM.
Audit Period
Target
Actual
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
Persons
Responsible
81 | P a g e
Annex E
Statement of Sources and Application of Funds (SSAF) Format

(To be prepared by Management)
SPECIAL ACCOUNT
Statement of Sources and Application of Funds
As of December 31, 201_
Beginning Balance, 01 January 201_

Add: Receipts of Funds
Date
JEV No.
1
2
3
Total Funds Available
Less: Disbursements
Date
Check
1
2
3
Total Disbursements
Balance
Add/(Deduct): Adjustments
1
2
Ending Balance, 31 December 201_
Particulars
USD
0.00
Php
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Particulars
0.00
0.00
Certified Correct:
Approved by:
______________________
______________________
Date:
Date:
82 | P a g e
Annex F
SA/IMA and Reconciliation Statement

(To be prepared by Management)
For Year Ending
Account No.
Depository Bank
Address
:
:
:
:
Loan No.
Currency
:
:
___________________________
___________________________
___________________________
________________________________________________
________________________________________________
___________________________
___________________________
PART A ACCOUNT ACTIVITY

Amount Deposited by World Bank
Less:
Amount Recovered by World Bank
Amount Withdrawn and Claimed but not yet credited as of
December 31, 201_
Amount Withdrawn but not yet Claimed
Outstanding Checks
Interest Earnings to be remitted to the Bureau of the Treasury
Bank Service Charges/Cable Cost to be offsettted against interest
earnings
Interest earnings remitted to BTr in 201_
Difference in USD equivalent in CY 201_ Outstanding Checks
Bank Service Charges/Cable Cost offsetted against interest earnings
remitted to BTr in 201_
Ending Balance, December 31, 201_
Amount
USD
0.00
0.00
USD
Certified Correct:
Approved by:
______________________
______________________
Date:
Date:
83 | P a g e
0.00
PART B ACCOUNT RECONCILIATION

1
2
3
4
5
6
7
8
9
10
11
12
13
Total amount Advanced by World Bank

Total Amount Recovered by World Bank
Gain (Loss) on Foreign Exchange Rate
Amount paid by Bank
Amount Applied
Increase/(Decrease) on Foreign Exchange Rate
Equals Present Outstanding Amount advanced to
Special Account
Ending Balance Special Account as of December 31,
201_
Plus amount applied not yet credited as of December
31, 201_
Amount Withdrawn but not yet claimed
Interest Earnings to be remitted to BTr
Interest earnings remitted in 201_
Bank Service Charge/Cable Cost to be offsetted
against interest earnings remitted to BTr
Outstanding Checks
Difference in USD equivalent on the CY 201_
Outstanding Checks
Equals Total Advance to Special Account accounted
for as of December 31, 201_
USD
Php
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Certified Correct:
Approved by:
______________________
______________________
Date:
Date:
Note:
Format may vary among GFIs.
84 | P a g e
Annex G
Sample Audit Program Statement of Sources and Application of Funds

(SSAF)
AUDIT PROGRAM
(Name of the Agency)
For the Year ____
Audit Focus
Risk Statements
Audit Objectives
Statement of Sources and Application of Funds (SSAF)

Funds may not be used for the purpose intended.
Funds received from Development Partners (DPs) may not be properly

accounted and recorded in the books of accounts.
Disbursements may not be properly recorded in the books of accounts.
To determine whether funds are being used for the purpose intended.
To determine whether funds received from DPs are properly accounted for
and recorded in the books of accounts.
To determine whether disbursements are properly recorded in the books

of accounts.
No.
Audit Procedures
1.1 Review the following documents:

Statement of Sources and Application
of Funds (SSAF)/ Sources and Uses of
Funds Statement (SUFS)
Loan Agreement (LA)
1.2 Trace disbursements reported in the
SSAF/SFUS to the disbursement
vouchers to check whether they are
eligible for financing under the LA.
1.3 Validate or confirm transactions and
conduct inspection, if necessary.
Sub- Allotment Release Order (SARO)
Notice of Cash Allocations (NCAs)
received
Bank Statements
Bank Reconciliation Statements (BRS)
General/Subsidiary Ledger
2.2 Verify whether funds received as
reported in the SSAF/SUFS are covered
by SAROs and NCAs issued by the DBM.
2.3 Check whether funds received are
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
85 | P a g e
No.
Audit Procedures
W.P.
Ref.
properly recorded in the books.

2.4 Compare Cash Balance in the SSAF/SUFS
with Cash Balance per bank
statements/BRS.
2.5 Take note of deficiency/ies, if any.
3
3.1 Trace disbursements to the General
Ledger to check if they are recorded in
the books of accounts.
3.2 Take note of deficiency/ies, if any.
issuance of an AOM.
Audit Period
Target
Actual
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
Persons
Responsible
86 | P a g e
Annex H - 1
Statement of Expenditures (Free Format)
87 | P a g e
Annex H - 2
Statement of Expenditures for Contracts of US$100,000 and below
88 | P a g e
Annex H - 3
Statement of Expenditures for Contracts of Over US$100,000
89 | P a g e
Annex H 4
Statement of Expenditures for Operating Cost
90 | P a g e
Annex I
Sample Audit Program Statement of Expenditures (SOE)
AUDIT PROGRAM
For the Year ____
Audit Area
Statement of Expenditures (SOE)
Risk Statement
Expenditures may not be fully documented, properly authorized, and eligible

under the LA.
Audit Objective
To ascertain whether expenditures were fully documented, properly

authorized, and eligible under the LA
No.
Audit Procedures

Staff Appraisal Report for WB
Report and Recommendation to the
President for ADB
Minutes of Discussion for JBIC/JICA
Loan Agreement
SOE
1.2 Check completeness of supporting
documents relative to the SOEs
submitted.
1.3 Evaluate the adequacy of the
supporting documentation which should
normally include the following:
Purchase contract/ Purchase order
Suppliers invoice/Official Receipt
Delivery Receipt or other evidence of
receipt of goods and services
Inspection Report
Acceptance Report
Other necessary supporting
documents
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
1.4 Verify whether the expenditure was

approved by authorized officials.
1.5 Verify whether expenditure is eligible for
financing under the LA and within the
threshold under the SOE procedure.
1.6 Check the mathematical accuracy of the
SOE.
91 | P a g e
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
2. Communicate noted deficiencies, if any, thru

the issuance of an AOM.
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
92 | P a g e
Annex J
Sample Audit Program Project Readiness

Name of the Agency
AUDIT PROGRAM
For the Year __________
Audit Area
Availability of Government of the Philippines (GOP) Counterpart Fund
Risk Statement
Audit Objective
The GOP Counterpart Fund for financing of project start-up activities may not
have been requested by the EA/IA and not released by the DBM within a
reasonable period of time to ensure that those activities are completed prior to
the scheduled loan effectivity.
To determine whether the EA/IA has requested the DBM for funds necessary
for project start-up activities and whether the same were accordingly released
by the DBM in time to complete the activities prior to the scheduled loan
effectivity
Audit Procedures
WP
Ref.
Estimated Man-hour
Target
Actual
Responsible
Person

or its equivalent
Loan agreement (LA)
Request by the EA/IA for
funding of project for the first
year of implementation
Appropriation for the project
Special Allotment Release
Order (SARO)
Notice of Cash Allocation
(NCA)
EA/IAs Work and Financial
Plan (WFP) or its equivalent
1.2 Check conditions for loan
effectivity as provided in the LA,
if any.
1.3 Check with the PAD or its
equivalent the activities to be
undertaken
for
each
condition/project
start-up
activities and the planned
schedules/timelines.
1.4 Verify if funds for the activities
under each of the stated
conditions/project start-up have
been requested by the EA/IA
93 | P a g e
Date
Accomplis
hed
Audit Procedures
WP
Ref.
Estimated Man-hour
Target
Actual
Responsible
Person
with the DBM.

Check if funds have been
appropriated for the activities
and if the corresponding SARO
and NCA have been released by
the DBM.
Evaluate if the NCA had been
released within a period which
would allow completion of the
activities as scheduled/per WFP
and prior to loan effectivity.
Verify reason/s for failure to
request funding for the said
activities and late release/s of
funds, if any.
Communicate
deficiency/ies
noted thru the issuance of an
AOM.
1.5
1.6
1.7
1.8
Date
Accomplis
hed
AUDIT PROGRAM
Audit Area
2. Establishment of Project Management Office (PMO)
Risk Statements
The PMO structure and composition created by the EA/IA may not be in
accordance with the requirements of the LA.
The personnel constituting the PMO may not be selected in accordance with
the approved/required qualification standards and criteria.
The PMO resources may not be adequate and available when needed to
implement the FAPs.
To determine whether the EA/IA has established a PMO structure and

composition in accordance with the requirements of the LA
To determine whether the personnel constituting the PMO are selected in

conformity with the approved qualification standards and criteria
To determine whether the PMO resources are adequate and available when
needed to implement the FAPs
Audit Objectives
No.
1
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
94 | P a g e
Responsible
Person
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
Loan Agreement (LA)

Project reports
Feasibility studies and other documents
relative to the creation of the PMO
Memorandum circulars and/or office
orders on the creation of the PMO
Organizational and functional chart of the
PMO
List of personnel complement of the PMO,
and the detailed descriptions and
statements of their functions and
responsibilities
Other related documents
1.2 Conduct interviews and verify authenticity of
documents of project personnel to confirm:
Qualifications
Functions and responsibilities
Actual number of personnel
1.3 Verify whether the PMO complies with the
requirements of the LA as to organizational
and functional structure.
2.1 Review the following documents related to
recruitment, selection and training of the
PMO personnel:
Memorandum circulars and/or office
orders pertinent to recruitment, selection
and training of personnel assigned at the
PMO;
List of PMO personnel and their job
descriptions;
Appointments and/or contracts of
services;
Personnel Data Sheet including training
records;
Other related documents.
2.2 Verify whether PMO personnel were selected
in accordance with the required
standards/criteria. Note deficiencies, if any.
List of consultants and corresponding
Contracts of Services;
Inventory list of equipment and office
supplies;
Approved Project Procurement Plan
(PPP), including revisions.
3.2 Conduct an ocular inspection of the PMO to
verify the existence of the physical
resources including office space.
95 | P a g e
Responsible
Person
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
3.3 Compare existing PMO resources with the

approved/revised PPP (availability and
timeliness of delivery of resources). Note
deficiencies, if any.
Communicate noted deficiencies, if any, thru
issuance of AOM.
Responsible
Person
Audit Area
3. Adoption of Project Implementation Plan/Operations Manual
Audit Risk
1.
Audit Objective
1.
A Project Implementation Plan (PIP)/Operations Manual (OM) may not be

prepared and completed prior to the loan effectivity/project
implementation.
To determine whether a PIP/OM has been prepared and completed prior
to loan effectivity/project implementation
No.
Audit Procedures

PIP/OM
Planned and actual activities for the
preparation and completion of the
PIP/OM, together with the timetables
1.2 Check if activities for the preparation and
completion of the PIP/OM were scheduled
to be completed prior to loan
effectivity/project implementation.
1.3 Compare the timetables for the planned
and actual activities.
1.4 Verify reason/s for deviations, if any.
the issuance of an AOM.
W.P.
Ref.
Audit Period
Target
Actual
Responsible
Person
Audit Area
4. Right of Way (ROW)/Site/Location Acquisition
Audit Risk
1.
ROW/Site/Location for the project may not have been acquired prior to
loan effectivity/project implementation.
Audit Objective
1.
To determine if ROW/Site/Location of the project has been acquired prior

to loan effectivity/project implementation
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
96 | P a g e
Responsible
Person
No.
Audit Procedures
1.

Documents on the acquisition of
ROW/site/ location for the project
EA/IAs request for budget for the
ROW/site/location
Appropriation
SARO
NCA
1.2 Check if the acquisition was completed
prior to the loan effectivity provided in
the LA/project implementation.
1.3 In case the ROW/site/location is still in
the process of acquisition through
expropriation, verify if funds to pay the
amount equivalent to the sum of 100 per
cent of the value of the property based
on the current relevant zonal valuation of
the Bureau of Internal Revenue (BIR) and
the value of the improvements/
structures are available.
1.4 Verify and evaluate reason/s for delay in
the acquisition, if any.
issuance of AOM.
W.P.
Ref.
Audit Area
5 Procurement of Consultant/s
Audit Risk
Audit Objective
No.
Audit Period
Target
Actual
Responsible
Person
The initial activities for the procurement of consultants up to the

preparation of the Terms of Reference/s (TOR/s) may not have been
undertaken and completed prior to loan effectivity/project
implementation.
To determine whether the initial activities for the procurement of
consultants as well as the preparation of the Terms of Reference/s
(TOR/s)
have been undertaken and completed prior to loan
effectivity/project implementation
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
1 1.1 Review the following:

List of studies/areas to be undertaken
by consultants
Procurement plan for the hiring of
consultants
Planned and actual timetables for the
procurement of consultants
TORs
97 | P a g e
Responsible
Person
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
1.2 Check if the initial procurement activities up

to TOR preparation are scheduled to be
completed prior to loan effectivity/project
implementation.
1.3 Compare the planned and actual
timetables for the procurement of
consultants.
1.4 Verify if all TORs for consulting services are
available to be able to proceed to the next
procurement stage.
1.5 Verify reason/s for deviations, if any.
1.6 Evaluate how the noted deficiencies for
each of the audit area have affected
project implementation, the incurrence of
additional commitment fees due to
delayed project implementation and the
delivery of project benefits/outputs to the
intended users/beneficiaries.
Communicate deficiencies noted, if any,
through issuance of an AOM.
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
98 | P a g e
Responsible
Person
Annex K
Sample Audit Program Procurement of Civil Works, Goods and

Consulting Services
Audit Area
Risk Statements
Audit Objectives
Name of the Agency

AUDIT PROGRAM
For the Year __________
Procurement of Civil Works, Goods and Consulting Services
1 Procurement of civil works, goods and consulting services may not be in
accordance with the provisions of the loan agreement (LA)/Project Document,
bank guidelines and/or pertinent government laws, rules and regulations.
2 Civil works, goods and consulting services procured may not be
delivered/completed on time, not in accordance with specifications and/or
maybe incomplete as to quantity.
3 Civil works, goods and consulting services procured may not be recorded in the
books of accounts at the proper amount and within proper accounting period.
4 Goods and consulting services procured and transferred to other Co-EA/IA may
not be properly documented and recorded in the books of procuring and
receiving agency.
5 Goods and consulting services, particularly vehicles, purchased out of
payments for consulting services may not be completely turned over to the
EA/IA upon termination of the consultancy contract and properly recorded in
the books of accounts.
1 To determine whether the procurement of civil works/goods/consulting
services were as prescribed in the project documents and in accordance with
the provisions of the LA, bank guidelines, and/or pertinent government laws,
rules and regulations
2 To determine whether procured civil work, goods and consulting services are
delivered/completed on time, in accordance with specifications and/or
complete as to quantity.
3 To determine whether goods and equipment procured are recorded in the
books of accounts at the proper amount and within proper accounting period
4 To determine whether goods and equipment procured and transferred to
other Co-EA/IA were properly documented and recorded in the books of the
procuring and receiving agencies
5 To determine whether goods and equipment, particularly vehicles, purchased
out of payments for consulting services are completely turned over to the
EA/IA upon termination of the consultancy contract and properly recorded in
the books.
Audit Procedures

Loan/Grant Agreement
Project document (ProDoc), such as:
a. Project Appraisal Document
(PAD) for World
Bank(WB)/International Bank for
Reconstruction and Development
WP
Ref.
Audit Period
Target
Actual
99 | P a g e
Responsible
Person
Audit Procedures
(IBRD);
b. Project Administration
Memorandum (PAM) for ADB;
and
c. Minutes of Discussion (MOD) for
JICA (formerly JBIC)
Work and Financial Plan (WFP)
Project Procurement Management
Plan (PPMP)
Procurement contracts
Annual project accomplishment
report
1.2 Check the following if in accordance with
the ProDoc, PPMP and the No Objection
Letter (NOL):
a. mode of procurement
b. nature and type of goods/services
and civil works procured
c. quantity of goods procured
d. cost of goods/services and civil
works procured
1.3 Verify if the procurement process is in
accordance with the LA, DPs
procurement guidelines and/or existing
rules and regulations.
1.4 Take note of discrepancy/ies, if any.
2.1 Compare the actual deliveries indicated
in Delivery Receipts against the POs, to
check the following:
a. quantity of deliveries
b. compliance with specifications
c. delivery date
d. amount of delivery
2.2 Take note of discrepancy/ies, if any
3.1 Verify from accounting records whether
goods and equipment procured are
properly taken up in the books of
accounts.
4.1 Check whether there were equipment
subsequently transferred to co-EA/IA.
Verify whether these were properly
documented and recorded in the books
of accounts of the EA/IA and co-EA/IA.
5.1 Verify whether the consultancy contract
stipulates that after project completion,
the ownership of procured equipment,
including vehicles, will be transferred to
WP
Ref.
Audit Period
Target
Actual
100 | P a g e
Responsible
Person
Audit Procedures
WP
Ref.
the EA/IA.
5.2 If there is a provision on the turn-over
of goods procured under in the
consulting services contract, verify if the
goods have been turned over to the
intended beneficiaries/end-users.
5.3 Check if the above-mentioned
equipment are existing and properly
recorded in the books of accounts of the
recipient.
Audit Period
Target
Actual

6. Communicate noted deficiencies, if any,
through issuance of an AOM.
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
101 | P a g e
Responsible
Person
Annex L
Sample Audit Program Asset Management

AUDIT PROGRAM
For the Year ____
Audit Area
: Asset Management
Risk Statements 1 Property acquired from loan may not be properly accounted for and issued to
accountable persons.
2
Adequate controls may not be in place to safeguard assets against loss or

misuse.
Assets may not be insured.
Disposal or transfer of assets upon completion of the project may not be

properly accounted for.
Audit Objectives 1
To determine whether property acquired from loans are properly accounted

for and issued to persons with proper documentation
To determine whether controls are in place to provide regular maintenance of

asserts and safeguards against loss or misuse
To determine whether assets are insured
To determine whether assets procured from the loan and eventually

transferred after the completion of the project were properly accounted for in
the books of accounts
No.
Audit Procedures

Project Documents (pls specify in
relation to the audit objective)
List of properties acquired out of
the loan proceeds
1.2 Verify assets to be acquired from the
loan proceeds and assets that should
have been acquired as of the project
status.
1.3 Compare the list of properties acquired
out of the loan proceeds with identified
assets to be procured per project
documents. Note differences.
1.4 Vouch the procurement of sampled
properties based on the list and trace
to accounting records (Journals &
Ledgers).
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
102 | P a g e
No.
Audit Procedures
W.P.
Ref.
1.5 Obtain ARE for the sampled properties

and verify to persons accountable.
Note existence and condition of the
asset.
2
2.1 Secure and evaluate agency policy on
maintenance, storage/safekeeping and
utilization of assets.
2.2 Obtain reports on asset maintenance,
storage/safekeeping and utilization.
Evaluate compliance with agency
policy. Note deviations.
2.3 Validate reported asset maintenance
activities with the subsidiary records of
properties.
For assets subject of
safekeeping policy, secure list and
verify the asset movement from control
records (logbook, trip tickets, other
equivalent
documents).
Conduct
random inspection.
3
3.1 Trace assets procured from loan to
inventory list of assets insured with the
GSIS. Note difference.
4
4.1 From the project documents, verify
provisions on the beneficiaries of assets
procured from the loan proceeds upon
completion of the project.
4.2 Prepare a list of assets and disposition
based on project documents. For
assets transferred to the agency, trace
recording to the agencys books of
accounts.
5. Communicate noted deficiencies through an
Audit Observation Memorandum.
Audit Period
Target
Actual
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
Persons
Responsible
103 | P a g e
Annex M
Sample Audit Program Monitoring and Evaluation

AUDIT PROGRAM
For the Year ____
Audit Area
Risk Statements
Audit Objectives
Monitoring and Evaluation (M&E)

1 The Project Framework (PF) may not be prepared, updated and submitted to
NEDA as required under pertinent NEDA guidelines.
2
The elements of the PF may not be properly/correctly stated/ presented and

may not have clear linkages with each other.
Adequate indicators and baseline data may not be used to monitor and
evaluate the progress and results of the project.
The PMO M&E Units may not have sufficient and competent personnel to
undertake M&E activities.
M&E activities may not be undertaken as scheduled; and related reports

may not be prepared and submitted to DPs and oversight agencies as
required and within the prescribed period.
M&E data/results may not be used for project implementation and policy
formulation/enforcement.
To determine whether a PF has been prepared, updated and submitted to

NEDA for each project as required under the pertinent NEDA Guidelines.
To determine whether the elements of the PF are properly/correctly stated/

presented and there are clear linkages of the elements with one another.
To determine whether there are adequate indicators and baseline data

which will guide monitoring and evaluation of the projects progress.
To determine whether the PMO/M&E Units have sufficient and trained

personnel to undertake M&E activities.
To determine whether M&E activities are undertaken as scheduled, and

reports are prepared as required and submitted to DPs and oversight
agencies within the prescribed period.
To determine whether data/results on M&E are utilized by the concerned

office for project implementation and policy formulation/enforcement.
No.
Audit Procedures

NEDA Guidelines on Incorporating
Results Monitoring and Evaluation
W.P.
Ref.
Audit Period
Target
Actual
Responsible
104 | P a g e
No.
Audit Procedures
1.1
1.2
1.3
1.4
1.5
1.6
2
2.4
(RME) In the Investment

Coordinating Council (ICC) Approval
Process
PAD)/Staff Appraisal Report (SAR)/
Minutes of Discussion (MOD) or
their equivalent
Loan agreement (LA)
Project Implementation Plan
Project Framework (PF) submitted
with the project proposal
Updated PF
Progress Reports
Project Completion Reports
Check if the elements/formats of the PF
as submitted to the ICC are compliant
with NEDA Guidelines.
Verify if an updated MEF has been
prepared and submitted to NEDA
within the first year of project
implementation.
Check if the updated PF included
baseline data on the performance
indicators.
Compare the updated PF with the
previous ICC-approved PF and evaluate
whether changes in current and actual
project conditions were shown in the
updated PF and any change is clearly
explained.
Verify if an annual RME report is
prepared and submitted to NEDA not
later than 30 October of each year.
Verify reasons for discrepancies/
deviations.
Check if each of the M&E elements of
the PF has the following characteristics:
W.P.
Ref.
Audit Period
Target
Actual
Responsible
Impact
there is a direct means-end
relationship between the outcome
and the impact
Outcome
expressed in change language
instead of action language to
reflect accomplishments
phrased as an improvement over a
baseline situation, which is
105 | P a g e
No.
Audit Procedures
described in the performance

targets and indicators column
reasonably achievable - subject to
assumptions and risks
W.P.
Ref.
Audit Period
Target
Actual
Responsible
Output
must be necessary to achieve the
outcome
can be delivered by the project
and is feasible with the resources
available
does not use the infinitive tense
(e.g., To assess, To prepare) at the
beginning of output statement as
this implies activity
Performance targets/indicators
SMART:
specific relate to the results
the project seeks to achieve
measurable stated in
quantifiable terms
achievable realistic in what is
to be achieved
relevant useful for
management information
purposes
time-bound stated with
target dates
CREAM:
clear precise and
unambiguous
relevant appropriate and
timely
economic available at
reasonable cost
adequate sufficient to assess
performance
monitorable can be
independently verified
Risks and assumptions

factors outside the direct control
of the project management and
include political, social, financial,
environmental, institutional, and
climatic factors.
Risks
106 | P a g e
No.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
Responsible
negative statements of conditions,

events, or actions that would
adversely affect or make it
impossible to achieve the intended
results.
Assumptions
positive statements of conditions,
events, or actions that are
necessary to achieve the results at
each level of the M&E Framework
Data sources
show where information on the
status of each indicator can be
obtained
who provides the information
how the data is collected
Reporting mechanisms
state where the information is
documented
2.5 Analyze/evaluate the effects of
elements which are not stated/
presented as required to the M&E of
the project.
2.6 Analyze if each of the element has a
cause and effect relationship.
2.7 Verify the causes/reasons for the
absence of the necessary elements and
linkages of the elements to one
another as required, if any.
3.1 Check if there are performance
indicators and baseline data and target
values for the projects implementation
period.
3.2 Using the PF, evaluate if the
performance indicators, baseline data
and target values for the projects
implementation period are adequate to
assess the progress of the project
toward the achievement of its expected
impact.
3.2 Evaluate if the baseline data and target
values could be used to determine if
there are significant changes and
improvements to the target
beneficiaries.
3.4 Verify if periodic surveys are conducted
107 | P a g e
No.
Audit Procedures
to determine/update progress from
baseline data.
3.5 Verify if the project has a MIS where the
baseline and target data for the
projects implementation are collected
and how these are used to monitor and
evaluate the projects progress.
3.6 Verify and evaluate reason/s for
absence of /deficiencies in the
performance indicators, baseline and
target data, and MIS, if any.
4.1 Review PMO/M&E Units organizational
structure and functional chart
4.2 Check if the PMO/M&E Units
organizational structure is compliant
with the agreed structure per Project
Appraisal Document or its equivalent or
as approved by the Department of
Budget and Management (DBM).
4.3 Review the Curriculum Vitae of PMO/
M&E Units personnel and evaluate if
they have the necessary experience and
training to undertake M&E.
4.4 Verify if only organic personnel are sent
on training.
4.5 Verify and evaluate reason/s for
deviations/deficiencies, if any.
5.1 Review M&E requirements of DPs in the
PAD or its equivalent and in the LA.
5.2 Verify whether all the M&E activities
were undertaken and within the
required period.
5.3 Verify if the related reports for the
activities undertaken are prepared and
submitted and within the period
required.
5.4 Verify/evaluate reason/s for noncompliance, if any.
6.1 Review M&E reports and verify actions
taken on project implementation
issues.
6.2 Check whether implementation issues
requiring policy issuances have been
addressed and necessary policies are
formulated.
W.P.
Ref.
Audit Period
Target
Actual
Responsible
6.3 Verify/evaluate reasons for deficiencies,

if any.
108 | P a g e
No.
Audit Procedures
W.P.
Ref.
7. Communicate noted deficiencies through an

Audit Observation Memorandum.
Audit Period
Target
Actual
Prepared by:
Reviewed by:
______________________
______________________
Date:
Date:
Responsible
109 | P a g e
Annex N
Sample Audit Program Project Sustainability

AUDIT PROGRAM
For the Year ____
Audit Area
Risk Statement
Project Sustainability
1 The desired results (outputs, outcome and impact) of the project may not
be sustainable after project completion.
Audit Objective
No.
To determine whether the desired results of the project could be sustained

after project completion.
Audit Procedures
W.P.
Ref.
Audit Period
Target
Actual
Persons
Responsible
Review the following:

Project Loan Agreement
Project Completion/Terminal Report
Project Evaluation Report (by NEDA
and independent evaluator)
Project Sustainability Plan (includes
Project Operation and Maintenance
Plan, agency budget allocation for
project sustainability, manpower
support after project completion,
among others)
2 Verify the existence and adequacy of the
Project Sustainability Plan, specifically the
following:
existence of an Operation and

Maintenance Plan;
sufficiency of agency budget allocation

after project completion;
existence and adequacy of manpower

support to sustain the project
reporting requirements
3 Using the project reports, validate the
implementation of the Project Sustainability
Plan, through ocular inspections, focus group
discussions, interviews, etc. Note
deficiency/ies, if any.
4 Communicate the deficiency/ies noted
through an Audit Observation Memorandum
(AOM).
Prepared by:
Reviewed by:
______________________
Date:
______________________
Date:
110 | P a g e
Annex O
Illustrations of Independent Auditors Report on Financial Statements

(For GOCCs)
A. Unqualified Opinion
INDEPENDENT AUDITORS REPORT
[Appropriate Addressee]
Report on the Financial Statements
We have audited the accompanying financial statements of (Name of Agency), which comprise
the statement of financial position as at December 31, 20XX, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entitys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
111 | P a g e
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial
position of (Name of Agency) as at December 31, 20XX, and its financial performance and its
cash flows for the year then ended in accordance with International Financial Reporting
Standards. 1, 2
Report on Other Legal and Regulatory Requirements 3
[Form and content of this section of the auditors report will vary depending on the nature of the
auditors other reporting responsibilities]
[Auditors signature]
[Date of the auditors report]
[Auditors address]
B. Qualified Opinion
Report on the Consolidated Financial Statements 4
We have audited the accompanying consolidated financial statements of (Name of Agency) and
its (subsidiaries/regional offices/attached agencies), which comprise the consolidated statement
of financial position as at December 31, 20XX, and the consolidated statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information.
Managements Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards, 5 and for
such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
Our responsibility is to express an opinion on these consolidated financial statements based on
our audit. We conducted our audit in accordance with International Standards on Auditing.
1
If the auditee is not adopting IFRS, replace IFRS with State accounting principles
Deleted (or give a true and fair view of) and (of) in the Illustration of ISA 700
3
The sub-title Report on the Financial Statements is unnecessary in circumstances when the second sub-title Report on Other
Legal and Regulatory Requirements is not applicable (see A34 to A36 of ISA 700).
4
5
If the auditee is not adopting IFRS, replace International Financial Reporting Standards with State accounting principles.
2
112 | P a g e
Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are
free from material misstatement.
disclosures in the consolidated financial statements. The procedures selected depend on the
auditors judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entitys preparation and fair
presentation of the consolidated financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
Bases for Qualified Opinion
We rendered a qualified opinion on the financial statements due to the following:
a. xxx
b. xxx
Opinion
In our opinion, except for the effects of the matter described in the Bases for Qualified Opinion
paragraph, the financial statements present fairly, in all material respects, the financial position
of (Name of Agency) as at December 31, 20XX, and its financial performance and its cash flows
for the year then ended in accordance with International Financial Reporting Standards. 6, 7
[Auditors address]
If auditee is not adopting IFRS, replace International Financial Reporting Standards with State accounting principles.
8
7
113 | P a g e
C. Adverse Opinion
fraud or error.
Bases for Adverse Opinion
We rendered an adverse opinion on the financial statements due to the following:
9
10
114 | P a g e
a. xxx
b. xxx
Opinion
In our opinion, because of the significance of the matters discussed in the Basis of Adverse
Opinion paragraph, the financial statements do not present fairly the financial position of the
(name of project) as the financial statements do not present fairly the financial position of
(Name of Project) as at December 31, 20XX, and its financial performance and its cash flows for
the year then ended in accordance with International Financial Reporting Standards. 11, 12
[Auditors address]
D. Disclaimer of Opinion
fraud or error.
11
If auditee is not adopting IFRS, replace International Financial Reporting Standards with State accounting principles.
13
12
14
15
115 | P a g e
Bases for Disclaimer of Opinion
We do not render an opinion on the financial statements due to the following:
a. xxx
b. xxx
Opinion
Because of the significance of the matters discussed in the Bases for Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a
basis for an audit opinion. Accordingly, we do not express an opinion on the financial
statements.
[Auditors address]
16
116 | P a g e
(For NGAs and LGUs)

A. Unqualified Opinion
Report on the Financial Statements17
Pursuant to (specific provision on the audit in the LA) between the (DPs and Borrower), we have
audited the Accompanying statement of financial condition (of the Project) as of (Period) and
the related statements of financial performance and cash flows for the year ended (December
31, 20XX)/period from (01 January 2012 to 30 June 2013), and the summary of significant
accounting policies and other explanatory information.
statements in accordance with generally accepted accounting principles in the Philippines. This
responsibilities includes: designing, implementing, and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free from material
misstatements, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
conducted our audit in accordance with generally accepted state auditing standards. Those
standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material
misstatement.
disclosure in the financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risk of material misstatement of the financial
statements,
whether due to fraud or error. In making those risk assessment, the auditor
circumstances, for the purpose of expressing an opinion on the effectiveness of the entitys
internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as
We believe that the audit evidence we have obtained are sufficient and appropriate to provide
17
117 | P a g e
Basis for Unqualified Opinion

There is reasonable assurance that the financial statements are free of material misstatements
and were prepared in accordance with laws, rules and regulations and in conformity with
generally accepted accounting principles.
Unqualified Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial condition of the (name of the project) as of (December 31, 20XX), and the results
of its financial performance and its cash flow for the year ended December 31, 20XX)/period
from (01 January 20XX to 30 June 20XX), in accordance with applicable laws, rules and
regulations and in conformity with the generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Supervising Auditor/Audit Team Leader
Date
B.
Qualified Opinion

Report on the Financial Statements 18
18
118 | P a g e
misstatement.
statements,
Bases for Qualified Opinion
We rendered a qualified opinion on the financial statements due to the following:
a. xxx
b. xxx
Opinion
In our opinion, except for the effects of the matters described in the Bases for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the
financial condition of the (name of the project) as of (December 31, 20XX) and the results of its
financial performance and its cash flow for the year ended December 31, 20XX)/period from (01
January 20XX to 30 June 20XX), in accordance with applicable laws, rules and regulations and in
conformity with the generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Date
119 | P a g e
C. Adverse Opinion
Report on the Financial Statements 19
misstatement.
statements,
19
120 | P a g e
Bases for an Adverse Opinion

We rendered an adverse opinion on the financial statements due to the following:
a. xxx
b. xxx
Adverse Opinion
In our opinion, because of the significance of the matters discussed in the Basis of Adverse
Opinion paragraph, the financial statements do not present fairly the financial position of the
(name of project) as at December 31, 20XX and the results of its financial performance and its
cash flow for the year ended December 31, 20XX)/period from (01 January 20XX to 30 June
20XX), in accordance with applicable laws, rules and regulations and in conformity with the
generally accepted accounting principles.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Date
D. Disclaimer Opinion
Report on the Financial Statements20
20
121 | P a g e
misstatement.
statements,
Bases for Disclaimer of Opinion
We do not render an opinion on the financial statements due to the following:
a. xxx
b. xxx
Opinion
Because of the significance of the matters described in the Bases of Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide
bases for an audit opinion. Accordingly, we do not express an opinion on the financial
statements.
COMMISSION ON AUDIT
By:
_____________________
Printed Name
Date
122 | P a g e
Annex P
ISA 800
Independent Auditors Report SPFS (ISA 800)
Illustrations of Auditors Reports on Special Purpose Financial Statements
Illustration 1: An auditors report on a set of financial report prepared in accordance
with the financial reporting provisions of a contract (for purposes of this illustration, a
compliance framework).
Illustration 2: An auditors report on a set of financial report prepared in accordance
with the financial reporting provisions established by a regulator (for purposes of this
illustration, a fair presentation framework).
Illustration 1:
Circumstances include the following:
o The financial reports have been prepared by management of the entity in
accordance with the financial reporting provisions of a contract (that is, a
special purpose framework) to comply with the provisions of that contract.
Management does not have a choice of financial reporting frameworks.
o The applicable financial reporting framework is a compliance framework.
o The terms of the audit engagement reflect the description of managements
responsibility for the financial statements in ISA 210.
o Distribution and use of the auditors report are restricted.
We have audited the accompanying (Imprest Account/Special Account Reconciliation
Statement, Statement of Sources and Application of Funds, Statement of Expenditures)
as at December 31, 20XX, of the project entitled (name of the project). The financial
reports have been prepared by management of (agency) based on the financial
reporting provisions of (section) of the Loan Agreement dated (January 1, 20XX)
between (debtor agency) and (creditor).
Management is responsible for the preparation of these financial reports in accordance
with the financial reporting provisions of (Section ) of the Loan Agreement, and for such
internal control as management determines is necessary to enable the preparation of
financial reports that are free from material misstatement, whether due to fraud or
error.
123 | P a g e
Our responsibility is to express an opinion on these financial reports based on our audit.
We conducted our audit in accordance with Philippine Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial reports are free from
material misstatement.
An audit includes examining, on test basis, evidence supporting the amounts and
disclosures on the above mentioned financial report/s. An audit also includes evaluating
assessing the accounting principles used and estimates made by management, as well as
evaluating the overall presentation of the financial reports. This audit also involved
evaluating (agency) compliance with the applicable Agreement Terms and Conditions for
the Project and which are set out in (list/specify/describe Financial Agreement, or other
documents).
We believe that our audit provide a reasonable basis for our opinion.
Opinion
In our opinion, the financial report/s of the (Project) for the period from (date) to (date)
present in all material respects accurately the expenditures actually incurred and the
cash received for the Project in conformity with the applicable Agreement Terms and
Conditions.
Basis of Accounting and Restriction on Distribution and Use
Our report is intended solely for the information and use of the (Agency creditor) and
(Agency Debtor).
[Auditors address]
124 | P a g e
VII. DEFINITION OF TERMS

Commitment Charge is levied on undisbursed portion of the loan, payable in the
currency in which the loan is denominated. Accrual commences 60 days after loan
signing date unless otherwise stated in the LA. This charge can be collected or
capitalized based on the LA when the loan becomes effective.
(i)
Flat Commitment Charge is applied on the full undisbursed balance of a public

sector program loan.
(ii) Staggered Commitment Charge is applied on the full undisbursed balance of a

public sector project loan.
Currency Conversion change in the loan currency of all or part of the undisbursed
and/or disbursed loan amounts at any time during the life of the loan.
EURIBOR the Europe Interbank Offered Rate is the new European interbank base rate
that replaced the national interbank rates (IBOR) in the countries participating in the
European Monetary Union from January 1, 1999. It is the average rate at which the euro
interbank term deposits within the euro zone are offered by one prime bank to another.
Executing Agency entity or entities responsible for carrying out the program/projects
which maybe an NGAs, GOCCs and LGUs.
Front-end Fee - is a one-time fee charged to the borrower at the time of signature of
the loan contract.
Implementing Agency is an agency responsible for implementing the Project
components and parts which may be an NGAs, GOCCs or LGUs.
Interest is levied on disbursed and outstanding amount of a loan.
LIBOR the London Interbank Offered Rate measures the approximate cost to banks of
funds which they obtained in the London Interbank market. Each bank has its own IBOR
which reflects the banks borrowing costs. LIBOR rates are always related to deposits for
a defined period of time.
Loan Closing Date is the date the DP may terminate the right of the borrower to make
withdrawals from the loan account.
Market-based Loan (MBL) is single currency loan in US dollar or Japanese yen or Swiss
francs and carries either floating or fixed interest rate at borrowers choice.
Pool-based Single Currency Loan in Japanese yen (PSCL in JPY)/Pool-based MultiCurrency Loan (PMCL) carries variable interest rate that is based on the average cost
of ADBs outstanding borrowings in various currencies undertaken to fund PMCLs plus a
lending spread. PMCL is denominated in US$ but disbursed and repaid in
125 | P a g e
multicurrencies. In 2004, all outstanding PMCL were converted to PSCL. After the
conversion loan accounts and amortization schedule are converted to Japanese yen.
Pool-based Single Currency Loan in US dollar (PSCL in USD) is single currency loan and
carries variable interest rate that is based on the average ADBs outstanding US dollar
borrowings to fund PSCLs plus a lending spread.
Withdrawal Application is a written request from the borrower to the DP to pay funds
against the borrowers loan account.
126 | P a g e
VIII. REFERENCES
COA- PDC. 2002. Handbook on Understanding Foreign Assisted Projects
PDAO. Unpublished Manual on FAPs
ICC Approval Process. www.neda.gov.ph
DOF-IFG. General Procedures for the Processing of NG Loans.
KALAHI-CIDSS, DSWD.2007. 16th ODA Portfolio Report.
Asian Development Bank. January 2007. Loan Disbursement Handbook
JBIC. 2008. Loan Agreement JBIC PH-P243
JICA. 2010. Loan Agreement JICA PH-C22
JICA. 2004. Guidelines for Project Evaluation.
ADB. 2007. Guidelines for Preparing a Design and Monitoring Framework. 2nd Edition
UNDP. 2002. Handbook on Monitoring and Evaluating for Results.
World Bank. Operations Manual BP13.05-Project Supervision.
Project Management Organizational Structures, Project Management for Development
Organization, PM$DEV 2007 Management Development Series,
www.pm4dev.com/info@pm4dev.com
Hauck, Cynthia, Cornelius and Associates. How to Choose the Right Project Management
Office Structure for Your Organizations Structure
NEDA. 2007. 16th Annual ODA Portfolio Review
DAR. 1998. Creation of Foreign-Assisted Projects Office (FAPsO). Department of Agrarian
Reform Memorandum Circular No. 04, series of 1998
DOH. 2001. Implementation Guidelines of Foreign Assisted Projects (FAPs). Department
of Health Administrative Order No. 10-A, s. 2001
UNDP. 2010. Manual for Nationally Executed Programme and Projects.
DOF. BTr Flowchart of Procedures for Servicing Loans and Foreign Denominated
Securities.
DA. 2008. Annual Progress Report- Infrastructure for Rural Productivity Enhancement
Sector (InFRES) Project
MDFO. Sample of Sub-Project Loan Agreement between the Department of Finance and
the Local Government Unit
Local Government Code of 1991
Agra, Alberto C. Compendium on Local Autonomy and Local Government 1992-1997
PIDS: Policy Lending for LGUs: An Innovative Financing Instrument for Local Governments
2005. IFC Sustainability Report 2005 (The Corporate Citizenship Company) External
Assurance Statement and Commentary
127 | P a g e
KfW General Sustainability Paper (Financial Cooperation Projects)

DBM. 2003. Department of Budget and Management Circular Letter No. 2003-9
DBM. 2003. Department of Budget and Management Circular Letter No. 2003-12
UNCTAD Debt Management and Financial analysis System, Glossary of Terms, June 2010
128 | P a g e

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TABLE OF CONTENTS

III. COA at a Glance

IV. Understanding Foreign-Assisted Projects (FAPs)

Guidelines in the Audit of FAPs

VII. Definition of Terms

Guidelines on the Audit of Foreign-Assisted Projects

Guidelines on the Audit of Foreign-Assisted Projects

Auditing and Assurance Standards Council

Guidelines on the Audit of Foreign-Assisted Projects

International Bank for Reconstruction and Development

Guidelines on the Audit of Foreign-Assisted Projects

Operations Evaluation Department

Guidelines on the Audit of Foreign-Assisted Projects

Guidelines on the Audit of Foreign-Assisted Projects

Structure of the Manual

describes the rationale and the target users

gives a glimpse of the COAs mandate and

defines FAPs and describes the types, sources and

Guidelines on the Audit of Foreign-Assisted Projects

discusses the pertinent guidelines on the two

contains, among others, the sample audit

contains the meaning of selected terminologies

lists the materials used as references in the

Guidelines on the Audit of Foreign-Assisted Projects

III. COA AT A GLANCE

Mandate and Organization

Guidelines on the Audit of Foreign-Assisted Projects

subdivisions, agencies, and instrumentalities, including

Legal Basis for the Audit of FAPs

Guidelines on the Audit of Foreign-Assisted Projects

COA Officers Responsible for the Audit of FAPs

Guidelines on the Audit of Foreign-Assisted Projects

IV. UNDERSTANDING FOREIGN-ASSISTED PROJECTS

Foreign Loans external indebtedness covered by LAs entered into by the

Guidelines on the Audit of Foreign-Assisted Projects

Program loans are provided by DPs to assist in developing a sector as a

Project loans are obtained to finance specific development projects such

(ii) Foreign Grants are assistance in cash or in kind (goods/technical assistance)

GOP counterpart is the component of the project cost to be financed out of

Guidelines on the Audit of Foreign-Assisted Projects

GFI/GOCC/LGU equity is a component of the project cost sourced from the

Beneficiary counterpart is a component of the project cost sourced from the

Multilateral DPs are institutions organized by a group of countries to provide

Commercial DPs are commercial banks, financial institutions, investment

Guidelines on the Audit of Foreign-Assisted Projects

Non-Cash Availment - in the form of:

Guidelines on the Audit of Foreign-Assisted Projects

Availment of loan proceeds by NGAs through Special Account

Availment of loan proceeds by GFIs/GOCCs through SA/IMA

Guidelines on the Audit of Foreign-Assisted Projects

Availment of loan proceeds by LGUs

Receives FS, SP/SB

Availment of loan proceeds by NGAs through direct payment

Guidelines on the Audit of Foreign-Assisted Projects

Availment of loan proceeds by GOCCs through direct payment

The EA/IA should request cancellation of the unwithdrawn amount of the

ICC approval. Undrawn loan proceeds resulting from improved foreign

Guidelines on the Audit of Foreign-Assisted Projects

Guidelines on the Audit of Foreign-Assisted Projects

Project Development Cycle (PDC)

Source: Reference Manual on Project Development Evaluation, NEDA (2005)

Phase 1: Concept or Identification

Guidelines on the Audit of Foreign-Assisted Projects

Phase 2: Definition or Preparation