CoA’s unmodified opinion (2)
To be globally competitive, the Philippines, under the stewardship of the Commission on Audit (CoA), is complying with the International Public Sector Auditing and International Public Sector Financial Reporting.
Accordingly, with the global trend, CoA is simultaneously moving toward digitalizing its audit approaches and processes pursuant to President Ferdinand Marcos Jr.’s strategic thrust to embrace digitalization and adopt technical innovations to make the country competitive.
CoA is now modernizing audits by leveraging technology. It is taking steps to enable a technology-driven government accounting system, digitizing government transactions in partnership with government agencies, and paving the way for e-audit as the manner of conducting audits.
What is a performance audit? The performance audit determines whether government undertaking systems, operations, programs, activities, or organizations are operating in accordance with the principles of economy, efficiency, and effectiveness and whether there are reasons for improvement.
Audit criteria for a performance audit are not always readily available to the auditor. They are typically based on knowledge of best practices for how activities are carried out to be most economical and efficient or what conditions are most favorable for good performance and effectiveness.
The result of a performance audit is a report containing conclusions. What is a compliance audit? A compliance audit determines whether activities, financial transactions, and information comply in all material respects with the authorities that govern the audited entity.
The audit criteria include laws, rules and regulations.
The result of a compliance audit is a management letter containing the audit conclusions for direct reporting engagement.
International Standards on Auditing, or ISA, and the International Standards of Audit Institutions, or ISSAI, are the authoritative international standards requiring compliance by the Philippines in matters pertaining to public sector auditing and reporting.
As the basis for the auditor’s opinion in the financial audit, ISSAIs/ISAs require the auditor to obtain a reasonable assurance that the financial statements as a whole are free from material misstatements, whether due to fraud or error.
Reasonable assurance is a high level of assurance. It is obtained when the auditor has acquired sufficient appropriate audit evidence to reduce audit risk (that is, the risk that the auditor expresses an appropriate opinion on when the financial statements are materially misstated to an acceptably low level).
However, reasonable assurance is not an absolute level of assurance because an audit has inherent limitations that result in the auditor’s opinion being merely persuasive rather than conclusive.
As such, an audit opinion only covers the financial audit and does not reflect the agency’s level of compliance with laws, rules, and regulations reported under the compliance audit unless these have a financial impact, nor the application of the principles of economy, efficiency, and effectiveness in the agency’s operations reported under a performance audit.
We hope the Revised Government Auditing Act will soon be enacted into law.
One welcome aspect of the bill is the “custodial responsibility of auditors by embracing digital transformation. Auditors will be empowered to use digital copies of audited vouchers, supporting papers, official receipts, and other relevant documents.”
Another crucial step towards embracing the digital era is institutionalizing electronic collection, receipts, payments, and other digitalized transaction audit trails. This forward-looking approach is pivotal in enhancing the efficiency, accuracy, and receipt of financial transactions within the government.
The bill passed by the House is now in the Senate. It is a testament to the government’s dedication to fostering accountability, transparency, and efficiency in the digital age. The legislative initiative not only marks a departure from tradition but also heralds a new era in which CoA is equipped to navigate the challenges and opportunities presented by the evolving landscape of governance and technology.
“CoA is now modernizing audits by leveraging technology.
“Another crucial step towards embracing the digital era is institutionalizing electronic collection, receipts, payments, and other digitalized transaction audit trails.