Audit, Control, Compliance, and

Nomination
Desired Learning Outcomes:

• Described the salient concepts of audit

• Recognized control, compliance, and
nomination principles
 Audit
Audit is the examination or inspection of various books
of accounts by an auditor followed by physical checking of
inventory to make sure that all departments are following
documented system of recording transactions. It is done to
ascertain the accuracy of financial statements provided by
the organization (Economic Times).
 Control
A management control system (MCS) is a system which
gathers and uses information to evaluate the performance
of different organizational resources like human, physical,
financial and also the organization as a whole in light of the
organizational strategies pursued.
 Compliance
In general, compliance means conforming to a rule, such
as a specification, policy, standard or law. Regulatory
compliance describes the goal that organizations .
2009 Revised Rules of Procedure of the Commission
on Audit (RULE II)
JURISDICTION AND POWERS OF THE COMMISSION
ON AUDIT
Section 1. General jurisdiction. -

The Commission on Audit shall have the power, authority, and duty to
examine, audit and settle all accounts pertaining to the revenues and receipts
of, and expenditures or uses of funds and property, owned or held in trust by,
or pertaining to the Government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned and controlled corporations
with original charters, and on a post-audit basis
 who???
(a) constitutional bodies, commissions and offices that have
been granted fiscal autonomy under the 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,
 Specifically, such jurisdiction shall extend over but
not be limited to the following cases and matters:
1.Disallowance of expenditures or uses of government
funds and properties found to be illegal, irregular,
unnecessary, excessive, extravagant or unconscionable;
2.Money claims due from or owing to any government
agency;
3.Determination of policies, promulgation of rules and
regulations, and prescription of standards governing the
performance by the Commission of its powers and
functions;
4.Resolution of novel, controversial, complicated or difficult
questions of law relating to government accounting and
auditing;
5.Charges made in the audit of revenues and receipts
resulting from under-appraisal, under-assessment or under-
collection;
6.Audit of the books, records and accounts of public utilities
as provided by law;
7.Visitorial power over non-governmental organizations (1)
subsidized by the government, (2) those required to pay levies or
government share, (3) those funded by donations through the
government, (4) those for which government has put up a
counterpart fund, or (5) those entrusted with government funds or
properties;
8.Authorization and enforcement of the settlement of accounts
subsisting between agencies of the government;
9.Compromise or release in whole or in part, of any settled claim or
liability to any government agency;
10.Power to require the submission of papers relative to
government obligations;
11.Opening and revision of settled accounts;
12.Retention of money due to a person for satisfaction of
his indebtedness to the government;
13.Seizure by the Auditor of the office of the local treasurer
found to have a shortage in cash;
14.Checking and audit of all property or supplies of the
government agency;
15.Constructive distraint of property of any accountable
officer with shortage in his accounts upon a finding of a
prima facie case of malversation of public funds or property
against him;
16.In coordination with appropriate legal bodies, collection
of indebtedness found to be due a government agency in
the settlement and adjustment of its accounts by the
Commission
 Revised Code of Corporate Governance
Internal Audit and Audit Committee
According to SEC Memorandum Circular No. 6 Series of 2009
Revised Code of Corporate Governance the Internal audit is an
independent and objective assurance activity designed to add
value to and improve the corporation’s operations, and help it
accomplish its objectives by providing a systematic and
disciplined approach in the evaluation and improvement of the
effectiveness of risk management, control and governance
processes.
• Audit Committee shall consist of at least three
(3) directors
*shall preferably have accounting and finance
backgrounds, one of whom shall be an
independent director and another with audit
experience. The chair of the Audit Committee
should be an independent director.
 Functions of Audit Committee
1. Assist the Board in the performance of its oversight responsibility for the
financial reporting process, system of internal control, audit process, and
monitoring of compliance with applicable laws, rules and regulations;
2. Provide oversight over Management’s activities in managing credit, market,
liquidity, operational, legal and other risks of the corporation. This function shall
include regular receipt from Management of information on risk exposures and
risk management activities;
3. Perform oversight functions over the corporation’s internal and external
auditors. It should ensure that the internal and external auditors act independently
from each other, and that both auditors are given unrestricted access to all
records, properties and personnel to enable them to perform their respective audit
functions;
4. Review the annual internal audit plan to ensure its conformity with
the objectives of the corporation. The plan shall include the audit
scope, resources and budget necessary to implement it;
5. Prior to the commencement of the audit, discuss with the external
auditor the nature, scope and expenses of the audit, and ensure
proper coordination if more than one audit firm is involved in the
activity to secure proper coverage and minimize duplication of
efforts;
6. Organize an internal audit department, and consider the
appointment of an independent internal auditor and the terms and
conditions of its engagement and removal;
 Compliance Officer
The Board shall appoint a Compliance Officer who shall
report directly to the Chair of the Board. He shall perform
the following duties:
• (i) Monitor compliance by the corporation with this Code
and the rules and regulations of regulatory agencies and,
if any violations are found, report the matter to the Board
and recommend the imposition of appropriate disciplinary
action on the responsible parties and the adoption of
measures to prevent a repetition of the violation;
(ii) Appear before the Commission when summoned in
relation to compliance with this Code; and
(iii) Issue a certification every January 30th of the year on
the extent of the corporation’s compliance with this Code for
the completed year and, if there are any deviations, explain
the reason for such deviation.