COMMISSION ON AUDIT CIRCULAR NO.

85-240 February 6, 1985

TO : The city Mayor City Treasurer and All Others Heads of Departments, Quezon
City; the Governor and the Commissioner of Finance, Metro Manila
Commission; COA Managers, the COA Regional Director of the National
Capital Region, the Auditor of Metro Manila Commission, and the City Auditor
and Assistant Auditor of Quezon City; and All Others Concerned.

SUBJECT : Institution of Temporary Special Controls for Certain Classes of Transactions of

the Quezon City Government.

1.0 RATIONALE

A number of reports concerning various transactions of the Quezon City

Government indicate the existence of weaknesses in that City Government's internal
control system.

In order to pinpoint specific deficiencies and develop appropriate remedies, it is

necessary to closely observe and monitor all phases of financial transactions, Particular
procurement and infrastructure projects, and evaluate their efficiency in meeting the City
Government's requirements.

Accordingly, the audit of Quezon City Government's financial transactions is

hereby considered an exceptional case and temporarily exempted from the provisions of
COA rules and regulations with respect to review of contracts, evaluation of projects
whether undertaken by contract or administration, and inspection of deliveries of
supplies, materials and equipment of any nature and amount.

2.0 AUDIT ACTIVITIES WHICH SHALL BE PRE-REQUISITES TO PAYMENT OF CLAIMS

The following audit activities of the Commission on Audit shall be pre-requisites

to the payment of claims by the Quezon City Government, irrespective of amount:

2.1 Inspection of supplies materials and equipment delivered, and services

rendered, and pre-repair inspection of property.

2.2 Inspection and evaluation of infrastructure and other construction projects

accomplishment.

3.0 AUDIT REQUIREMENTS WHICH SHALL BE STRICTLY ENFORCED

The following audit requirements are hereby reiterated and shall be strictly
enforced:
 3.1 Submission to the purchase/letters orders) and of all the documents
forming part thereof by reference or incorporation, within (5) days from
the execution or issuance the contract in accordance with COA Circular
No. 76-4 dated July 15, 1976, as amended.

3.2 Disallowance in audit of all claims for of supplies, materials and

equipment, delivered, and services rendered, or for first payment on
contracts variations thereto unless a copy of the contract and other
documents herein referred to are first submitted.

4.0 DUTIES AND RESPONSIBILITIES OF CITY OFFICIALS

4.1 The City Treasurer shall see to it that no claims covered by this Circular are paid
without evidence of the audit action to the Assistant City Auditor required under
Sec. 20 hereof (in addition to the other audit requirements under existing laws
and rules), specially the following:

4.1.1 Pre-repair inspection report.

4.1.2 Inspection report on project accomplishment for each payment on a

contract

4.1.2 Inspection report on all deliveries of supplies, materials and

equipment, and services rendered

4.2 The City Mayor shall submit to the Assistant City Auditor for review copies of
contracts and supporting documents within five (5) days from the execution or
issuance of the contract in accordance with COA Circular No. 76-34 dated July
15, 1976 as amended.

5.0 DUTIES AND RESPONSIBILITIES OF COA OFFICIALS ANDREPRESENTATIVES

5.1 The contract review and inspection as provided herein shall be the responsibility
of the Assistant City Auditor of Quezon City. His contract review and
inspection authority shall be without limit. He may elevate to this
Commission, through the Technical Service Office, for the decision matters
on which he entertain some doubts. His letter of referral shall contain a
detailed statement of the grounds and reasons for the referral. The
reasonableness of prices may also be referred to the Commission for
determination.

5.2 The Assistant City Auditor shall communication formally in writing to the city
officials concerned the results of his review action on a contract submitted to
him within five (5) days from receipt of copy of the contract and its required
supporting documents unless referred to this Commission as provided herein.

5.3 In the review of contracts the Assistant City Auditor shall be assisted by
 personnel of the Technical Service Office of the Commission who shall be
assigned to his office in such number and with such types of skills and expertise
as may be needed.

5.4 All inspection and evaluation of project accomplishment and deliveries of

supplies, materials and equipment and services rendered, including pre-repair
inspection and evaluation of proposed change orders, extra work orders,
supplemental contracts, price escalation and other variation orders shall be
made by COA Technical Property Inspectors. TPIs in such number and with such
types of skills and expertise as may be needed shall be assigned the
Commission to the Office of the City Auditor. The TPIs so assigned shall
reshuffled every two months.

5.5 The Assistant City Auditor shall note the inspection report to be prepared by the
TPIs. His notation shall signify that the inspection has actually been conducted
and that the inspector is the one duly assigned for the purpose.

5.6 The City Auditor shall discharge his duties and responsibilities as head of the
auditing unit in accordance with existing laws and rules.

5.7 Except as otherwise provided herein, all COA Rules and regulations on
contract review and inspection shall be observed.

6.0 REPEALING CLAUSE

All COA Circulars and Memorandum which are inconsistent herewith are hereby
repealed, amended or modified accordingly.

7.0 EFFECTIVITY

This Circular shall take effect immediately.

(SGD.) FRANCISCO S. TANTUICO, JR., Chairman