Escolar Documentos
Profissional Documentos
Cultura Documentos
RESTRICTED
i
RESTRICTED
RESTRICTED
ii
RESTRICTED
Philippine Army Manual 11-07 (PAM 11-07) dated 06 May 2014 is promulgated
on authority of the Commanding General, Philippine Army
RESTRICTED
iii
RESTRICTED
RESTRICTED
iv
RESTRICTED
CONDITIONS OF RELEASE
Released to : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Released by : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Signature Above Printed Name and Designation)
...................................................
Date Released : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RESTRICTED
v
RESTRICTED
AMENDMENT CERTIFICATE
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
RESTRICTED
vi
RESTRICTED
DISTRIBUTION
Unit/Office Nr of Copies
OJ3, GHQ, AFP 3
OJ2, GHQ, AFP 3
AFP Doctrine Development Center 2
AFPCGSC Library 3
GHQ Library 2
DND Library 1
PMA Library 2
Doctrine Center, TRADOC 10
ACSS, TRADOC 5
TRADOC Library 10
CAS, TRADOC 5
CSS, TRADOC 5
CSSS, TRADOC 10
OCS, TRADOC 5
NCOA, TRADOC 5
OG1, PA 2
OG2, PA 2
OG3, PA 2
OG4, PA 2
OG5, PA 2
OG6, PA 2
OG7, PA 2
OG8, PA 2
OG9, PA 2
ARMO 3
MFO, PA 3
ASPA, PA 3
PAPC 3
APMC 2
ASR, PA 1
ISG,PA 5
ARESCOM 5
SOCOM 5
ASCOM 5
LAD, PA 5
1ID 15
2ID 15
3ID 15
4ID 15
5ID 15
6ID 15
7ID 15
8ID 15
9ID 15
10ID 15
Total 279
Note: This is just a sample distribution list.
RESTRICTED
vii
RESTRICTED
PREFACE
1. Purpose
2. User Information
The proponent of this manual is the Office of the Army Internal Auditor
which serves as a personal staff to the Commanding General, Philippine
Army.
3. References
RESTRICTED
viii
RESTRICTED
4. Rescission
5. Gender
RESTRICTED
ix
RESTRICTED
CONTENTS
Title Page i
Promulgation Note ii
Conditions of Release iii
Amendment of Certificate iv
Distribution v
Preface vii
Contents ix
CHAPTER 1 INTRODUCTION
RESTRICTED
x
RESTRICTED
CHAPTER 5 METHODOLOGIES
ANNEXES
RESTRICTED
xi
RESTRICTED
CHAPTER 1
INTRODUCTION
In compliance with above AO, the Philippine Army activated the Office
of the Army Internal Auditor on 16 January 2004, the first in the AFP.
RESTRICTED 1-1
RESTRICTED
The Office of the Army Internal Auditor (OAIA), the Internal Audit Office
(IAO) in the Philippine Army, plays a vital role in DSOM implementation
specifically in the budget accountability phase. In this budget cycle, the
checks and balances in the management of resources are installed and are
analyzed by the internal auditors as to propriety, legality, completeness,
reliability and validity of all financial transactions. The adequacy of existing
internal controls as to application of policies / implementation of system is
regularly subjected to evaluation as to their responsiveness for better
operational efficiency and effectiveness. It integrates linkages among units /
offices and other systems and procedures for monitoring, system
improvement and tightened control. The accountability, transparency,
responsibility and ethical concerns of all stakeholders (Accountable and Non-
Accountable Officers) are clearly identified in order to promote stricter
1-2 RESTRICTED
RESTRICTED
RESTRICTED 1-3
RESTRICTED
1-4 RESTRICTED
RESTRICTED
CHAPTER 2
INTERNAL AUDIT SERVICE
RESTRICTED 2-1
RESTRICTED
The Office of the Army Internal Auditor conforms to the standards set
forth by the Association of Government Internal Auditors (AGIA).
b. Independence
d. Quality control
e. Audit planning
f. Fieldwork
g. Reporting
Audit standards were developed and are followed for the following
reasons:
2-2 RESTRICTED
RESTRICTED
THE ARMY
MANAGEMENT
REFERENCE INSPECTOR INTERNAL
FISCAL OFFICE
GENERAL AUDIT
Nature and 1) Performan 1) Reviews 1) Appraises
Purpose of ce review and whether internal whether
Review improvement of controls are applied controls are
operations, at all levels within well
processes and and across the designed
activities; and agency and sector; and properly
2) Complianc and implemented
e review and 2) Recommends ; and
improvement of measures for 2) Determines
operation, management the
processes and improvement adequacy of
activities. internal
control or
whether it is
achieving the
objectives.
Scope, 1) Performan 1) Organizational 1) Management
Coverage ce is reviewed structure, audit and
and on a regular manpower, and operations
Frequency basis. If actual operations; audit are
accomplishmen 2) Existing conducted to
ts do not meet methods, systems determine
established and the extent of
objectives or procedures/processe compliance.
standards, the s; and 2) Depends
process and 3) On-going and primarily on
activities recurring activities. the
established to assessment
achieve the of the risks,
objectives the
should be effectiveness
reviewed to of the on-
determine if going
improvements monitoring,
are needed; and the
and adequacy of
2) Operation internal
s, processes control; and
and activities 3) Takes place
RESTRICTED 2-3
RESTRICTED
The OAIA follows the qualification standards for Internal Audit Service
positions to include the specific duties and responsibilities as prescribed by
the Civil Service Commission. (Annex B & C)
2-4 RESTRICTED
RESTRICTED
CHAPTER 3
INTERNAL AUDITING
In fulfilling its mandates and mission, the IA office must achieve the
objectives of internal control in their respective agencies.
A public office is a public trust that demands a higher set of general
objectives be established, a step beyond the internal control practices that
prevail in private sector organizations. Hence, internal control in any agency
must conform with five (5) general objectives as stipulated in the National
Guidelines on Internal Control Systems (NGICS):
a. Safeguard assets;
e. Adhere to managerial
RESTRICTED 3-1
RESTRICTED
1. Control Environment
2. Risk Assessment
3. Control Activities
3-2 RESTRICTED
RESTRICTED
auditor is to assess the adequacy of the ICS and adopt measures that are
deemed necessary and appropriate to correct the deficiencies of such system.
RESTRICTED 3-3
RESTRICTED
3-4 RESTRICTED
RESTRICTED
CHAPTER 4
AUDIT PROCESS AND PROCEDURES
The audit process follows the specific phases as shown in the diagram below:
The main objective in the first phase of audit process is to identify problem
areas which need additional review and to obtain information for the preparation of
audit program.
b. Organization structure;
d. Financial data;
h. Manual of Operations.
a. Mission and Functions. The audit team must review the mission
and functions of the unit / priority area.
RESTRICTED 4-1
RESTRICTED
The audit program serves as a guide during the conduct of actual audit. It
enables the auditor to keep his objectives in sight. It is the basis for the
division/distribution of work among the audit staff, and it serves as a record of work
done or as a measure of the progress of work as it indicates completion of steps
performed.
4-2 RESTRICTED
RESTRICTED
b. Audit objectives These are what the audit aims to achieve. The
audit objectives must be clearly defined at the outset so that only necessary
procedures are included in the audit program.
c. Staff assignment the members of the audit staff who will carry out
each procedure is indicated. The particular skills of each member are considered in
deciding who is to be assigned to do what. Care is taken that the assignment of work
is clear and concise to facilitate the pinpointing of responsibility and evaluation of
performance.
f. Time budget the estimated time required to carry out each audit
procedure is indicated. The total time budget approximates the total man-hours
available.
RESTRICTED 4-3
RESTRICTED
The second phase of the audit process primarily involves implementing the
audit program. The main activities of the operation phase are as follows:
1. Carrying Out the Audit Procedures. The audit program already spells
out the procedures, how to carry them out, when to do so, and who will do the task.
What the auditor does at this point is to follow the program. Frequently; however, as
the audit progresses, the auditor discovers some deficiencies uncovered in the
survey phase. At this point, the auditor may have to add more objectives to the audit
program, make some procedures more detailed or changes some altogether,
changes staff assignment and the time-frames and take other necessary steps.
However, this does not mean that a new audit program will be made. What is
important is that the additions or modifications also follow the guidelines for
determining audit objectives, procedures and other requirements set-forth in the
preparation of the audit program.
2. Evaluating the Evidence. After the procedures to attain one objective are
carried out, the auditor may now be in a position to make a conclusion on the
particular area covered by that objective. He must then determine whether the
evidences he has on hand are adequate to support his conclusion. He must
ascertain that he has obtained sufficient and competent evidential matter to afford
himself a reasonable basis for his opinion, judgment, conclusions and
recommendations.
The causes identified the reasons for the deviation and who or what are
responsible for the identified deviation / deficiency. A cause may be a continuing
practice such as poor internal control, or a single event, such as an erroneous journal
entry. It is usually a combination of events that produces a deviation.
4-4 RESTRICTED
RESTRICTED
c. Causes and effects are interrelated and the knowledge of one assists
understanding of the other;
RESTRICTED 4-5
RESTRICTED
d. It is clearly worded and specifies what action should be taken and who
should do it. A good recommendation avoids a statement like appropriate action
should be taken as soon as possible; and
This procedure is usually done right after accomplishing the audit mission
with the view of informing the auditee of the findings of the audit team, both
propitious or adverse, to thresh out problems that can be corrected by management
in the operating levels or to shove to higher authorities problems that cannot be
resolved by management or the internal auditors; thereby, eliminating friction and
insuring harmony between the auditor and auditee.
1. Conducting the Exit Conference. Except where the possibility of fraud and
other compelling reasons require otherwise, the auditor then arranges for the holding
of an exit conference. The purpose of the conference is to inform the auditee of the
auditors findings and recommendations.
The third phase of the audit process involves reporting the result of the audit
through an audit report submitted to the audited unit/office and other authorized
bodies. This includes summarization of the work that was conducted, a description
of the scope of the audit, a detailed account of the major findings and a discussion of
the alternatives which are available to upper management for eliminating the problem
conditions which exist.
4-6 RESTRICTED
RESTRICTED
1. Drafting the Audit Report. The initial draft of the audit report is the
responsibility of the auditor, who prepares the draft on the basis of the updated
permanent file, audit working papers, accomplished forms for analysis of findings and
recommendations. The auditor must ensure that the audit findings and
recommendations are understood by mastering three important writing skills:
2. Finalizing the Audit Report. The final draft incorporating the matters
discussed or agreed upon in the exit conference, as well as relevant facts arising
thereafter, is prepared by the auditor and discussed with his team members to
evaluate the proposed reports conformity with the prescribed reporting standards
and requirements.
The auditor should also learn to appreciate the value of preparing the outline
before he starts writing the report. With an outline, he is unlikely to forget important
details and writing becomes focused on activity with direction, rather than a random
activity.
The duty of the internal auditors does not end on the submission of the report
as they go to the extent of making follow-up on previous recommendations made if
there were actions done to assure that the results are satisfactory.
RESTRICTED 4-7
RESTRICTED
b. By special reviews.
c. By succeeding audit.
Follow-up work is also performed during succeeding audits of the same area.
The first job of the audit team is to check on actions taken on recommendations
made during the last audit. This approach is used in cases where the first two
approaches are impossible to perform or are too expensive to resort to. This is true
when the follow-up assignments are in connection with field units audits which are
too far from the headquarters office making the travel too expensive just for that
purpose.
4-8 RESTRICTED
RESTRICTED
CHAPTER 5
METHODOLOGIES
1. Appropriated Funds
6) Requires the FO/DO to close his cash book and have him
certify as to the correctness of the cash book transactions up to and including
the last day of audit by affixing his signature thereon;
RESTRICTED 5-1
RESTRICTED
5-2 RESTRICTED
RESTRICTED
(b) Counts and lists all cash and cash items on hand;
RESTRICTED 5-3
RESTRICTED
b. Procurement Officer
c. Mess Officer
5-4 RESTRICTED
RESTRICTED
RESTRICTED 5-5
RESTRICTED
n. For Purchases
o. For Sales
p. For Inventories
5-6 RESTRICTED
RESTRICTED
RESTRICTED 5-7
RESTRICTED
7) Tests discount;
5-8 RESTRICTED
RESTRICTED
RESTRICTED 5-9
RESTRICTED
8) Verifies genuineness;
3. Property
1) Receipts
5-10 RESTRICTED
RESTRICTED
2) Storage
RESTRICTED 5-11
RESTRICTED
3) Issuances
Issues appear as credits in the stock cards of the FPAO
and in the Property Book of the RSO/RSNCO. Internal auditors should check
on the basis of the credit entries, excluding disposals, the supporting
documents of which are:
5-12 RESTRICTED
RESTRICTED
4) Disposals
5) Accounting
b. Take note of the projects and objects. One must observe that
the programs are sub-classified by projects and objects;
RESTRICTED 5-13
RESTRICTED
5-14 RESTRICTED
RESTRICTED
with that of the preceding year. The following are the procedures in
undertaking this audit:
3) A liability account.
RESTRICTED 5-15
RESTRICTED
5-16 RESTRICTED
RESTRICTED
RESTRICTED 5-17
RESTRICTED
5-18 RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
ANNEX C
DEMAND
To :
Unit :
Designation :
Demand is hereby made of you to produce all your cash, checks, treasury
warrants, money orders, paid vouchers, etc. and other cash items in your possession
held for safekeeping or deposit for which you are officially accountable as
___________________________________________________________________
of the office _____________________________________________.
________________________________
(Internal Auditor)
_________________________
(Accountable Officer)
CASH COUNT
RESTRICTED
RESTRICTED
CHECKS, TW
CERTIFICATION
I HEREBY CERTIFY that the official cash that the Internal Auditor(s)
demanded of me to produce all cash, checks, warrants, paid vouchers and other
cash items for which I am officially accountable and that the inventory of such cash
items in my possession at the time of cash count today, ________ 20 ____, is
correctly stated above totaling to ___________________________ (P
_________________was disallowed by said Internal Auditors. That the said cash
and cash items were returned to me intact after the cash count.
WITNESSES:
____________________
____________________
______________________________
(Signature of Accountable Officer)
RESTRICTED
RESTRICTED
ANNEX D
________________
(Account)
_____________________________________
(Name of DO) (Unit/Office)
As of ________________________
(Date)
II. Add:
(a) Replenishment not yet
debited by DO - - - - -- - - - P x x x
(b) Final Disallowance x x _______
___________________ _____________________
(Signature of Examiner) (Signature of DO)
_________________________
__________________________
(Designation)
(Rank & Serial Number)
RESTRICTED
RESTRICTED
ANNEX E
As of ________________________
(Date)
PARTICULARS
1.Beginning Balance_______________
(Date)
2.RECEIPTS:______________________
(Period Covered)
1.DISBURSEMENT:_________________
(Period Covered)
2.CASH ITEMS:
3.CASH IN BANK:
4.CASH ON HAND:
DIFFERENCE
_____________________________________________________________________________________
RESTRICTED
RESTRICTED
ANNEX F
CASHBOOK CERTIFICATION
This is to certify that I/We have examined and verified the cash book this
____________ day of ______20__, and found a balance due the government in the
total amount of ___________________ (in words) P___________ broken down as
follows:
Cash - - - - - - - - P x x x
Cash Items - - - xxx
Total - - - - - - - Pxxxxx
___________________________
___________________________
(Signature over printed name)
___________________________
(Designation)
RESTRICTED
RESTRICTED
ANNEX G
TO: _________________
___________________
Credits to accountability:
Cash, TW, Checks and
Other cash items produced
by you & counted by us - - - - - P __________ P _________ P _________
Shortage - - - - - - - - - - - - - - - P __________ P__________ P _________
______________________
(Signature of Examiner)
______________________
(Designation)
Received Original:
____________________________ __________________
(Signature of Accountable Officer (Time and Date)
RESTRICTED
RESTRICTED
ANNEX H
No:
JOURNAL ENTRY VOUCHER
Date:
Agency:
ACCOUNTING ENTRIES
Responsibility
Accounts and Account Amount
Center P
Explanation Code Debit Credit
RESTRICTED
RESTRICTED
ANNEX I
SHORTAGE/
OVERAGE
Balance On Hand
Stock Unit of Unit
Article Description Per Card Per Count Remarks
No Measures Value
(Qty)) (Qty)
Quantity Value
RESTRICTED
RESTRICTED
ANNEX J
RESTRICTED
RESTRICTED
ANNEX K
3. Audit Objectives. These are the results / targets aimed to be achieved after
the conduct of audit. Oftentimes, these serve as the main focus / guides of the
internal auditors in the course of the audit activity. For Terminal Audit, the basic
objective is to apprise the incoming Commander on the status of resources to be
received.
4. Scope of Audit and Limitations. This indicates the duration of the audit,
coverage of the financial transactions to be confirmed / evaluated in areas/units
to be audited.
RESTRICTED
RESTRICTED
5. Resources. This contains the complete data on the latest Personnel Status,
Property Resources, Financial Resources and status of transactions of the Fund
Accountable Officers of the unit/offices to be audited as follows:
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
RESTRICTED
GLOSSARY
Definition of Terms
RESTRICTED 1
RESTRICTED
Annual Plan and Budget (APB) & Operating Program and Budget
(OPB) - refers to the document that contains the AFP Major Services,
Separate units and/or Project Administrators objective, control programs for
resources and functions, budget or program or expenditures.
2 RESTRICTED
RESTRICTED
Fund It is the sum of money or other resources set aside for the
purpose of carrying out specific activities or attaining certain objectives in
accordance with special regulations, restrictions or limitations and constitutes
an independent fiscal and accounting entity.
RESTRICTED 3
RESTRICTED
the fund accountable officers, adequacy of bonding and the timely submission
of reports such as Report of Disbursements, checks issued, prompt liquidation
of cash advances and others.
4 RESTRICTED
RESTRICTED
RESTRICTED 5
RESTRICTED
6 RESTRICTED
RESTRICTED
RESTRICTED 7
RESTRICTED
Source Agency (SA) It is the agency from which the allotment has
been originally released and in whose behalf or benefit, the project will be
implemented.
Trust Fund It refers to funds that have come officially into the
possession of any agency of the government or of a public officer as trustee,
agent or administrator, or that which have been received for the fulfillment of
an obligation.
8 RESTRICTED
RESTRICTED
Variable Cost It is the cost that varies with changes in the quantity of
output produced when other factors are held constant. The cost of materiel
handling to an activity for example, varies according to the number of materiel
delivery and pickups to from that activity.
RESTRICTED 9
RESTRICTED
10 RESTRICTED