Association of Government Internal Auditors, Inc.

AGIA Position Paper on the Institutionalization of Internal Audit in the Government Agencies

POSITION PAPER
ON THE INSTITUTIONALIZATION OF INTERNAL AUDIT SERVICE 

IN THE NATIONAL GOVERNMENT AGENCIES (NGAs), GOVERNMENT- OWNED 
AND/OR CONTROLLED CORPORATIONS/GOVERNMENT FINANCIAL INSTITUTIONS (GOCCs/GFIs), 
STATE UNIVERSITIES AND COLLEGES (SUCs) AND LOCAL GOVERNMENT UNITS (LGUs)

The institutionalization of Internal Audit Service (IAS) in all agencies of the national government is mandated under Republic Act No. 3456, otherwise known as the Internal Auditing Act of 1962.  This law was later amended by Republic Act No. 4177 in 1965, which provided for the creation of Internal Audit Service in government-owned and/or controlled corporations.  Subsequently,  Administrative Order No. 278 was issued by then President Corazon C. Aquino directing all heads of government offices, agencies, government-owned and/or controlled corporations, including  government financial institutions and local government units to organize Internal Audit Service in their respective offices, as an integral part of the organization.

 To further ensure that IAS is institutionalized, Administrative Order No. 70 dated April 14, 2003 and Memorandum Circular No. 89 dated August 2005 were issued. These latest issuances provided for the strengthening of internal control systems in government offices, agencies, government-owned and/or controlled corporations, government financial institutions, state universities and colleges and local government units through the institutionalization of Internal Audit.

The guidelines for the institutionalization of IAS was initially laid down in the Department of Budget and Management (DBM) Budget Circular No. 2004-4 dated March 22, 2004.  The most recent issuance on the guidelines in the organization and staffing of the IAS is DBM Circular Letter No. 2008-5 dated April 14, 2008.   

Under AO Nos. 278 and 70, the Association of Government Internal Auditors (AGIA), Inc. is mandated to “ensure that internal audit practices, methods and procedures are improved and updated through continuing education and that all audit works for each government agency are conducted in conformity with the standards of the internal audit profession” and “to best serve the interests of their Offices, in particular, and of the government service, in general, all Heads and Staff of the Internal Audit Service shall cooperate and actively participate in the activities of the AGIA.”

The recently concluded Annual Convention of the Association of Government Internal Auditors (AGIA), Inc.  held in Cagayan de Oro was attended by five hundred eighty six (586) government employees, representing the following agencies:

Sectors Represented

No. of Agencies/Sectors

No. of Participants

National Government Agencies

60

320

Local Government Units
 

27

73

Government-Owned and/or Controlled Corporations/Government Financial Institutions

26
 

121
 

State Universities and Colleges

18

72

TOTAL

131

586
 

 

In the said convention, the AGIA Board of Directors was again confronted with some of the most basic, but serious problems of public sector workers which were identified during the workshop conducted, the highlights of which are:

1.  Absence/Lack of Internal Audit Service/Unit in their respective agencies

2.  Absence/Lack of Plantilla Positions

The 68 agencies with IAS and those without IAS have indicated that there are no available plantilla positions for the staff of the IAS.  This means that they carry their original plantilla items while they perform IAS functions.  In some cases, those designated in the IAS are performing dual functions, that of IAS and the functions of their original positions.

3.  Unclear Functions of IAS

It was disclosed that majority of the agencies, both those with IAS and without IAS are encountering problems on the functions of IAS.  Though the DBM circulars and memoranda clearly state the functions of IAS in promoting efficiency and effectiveness in all government agencies, it seems that the functions of IAS are perceived in so many different ways and there is no clear delineation of functions.

 

In the light of the above, the AGIA strongly recommends the implementation of the provisions of RA 3456 as amended by RA 4177.  Hence, the AGIA being the organization composed of different government internal auditors, shall take active participation in revisiting the related issuances on internal control and internal auditing to address the above issues and concerns.

Actual Letter (Click Here)