COMMISSION ON AUDIT CIRCULAR NO.

85-55-A September 8, 1985

TO : All Heads of Ministries, Chiefs of Bureaus and Offices of the National
Government; Managing Heads of Government-Owned and/or Controlled
Cororations, !elf-Governing Boards, Commissions and Agencies; "rovincial
Governors, Cit# and Municial Ma#ors; "rovincial, Cit# and Municial
$reasurers, Chief Accountants, Cororate $reasurers, COA Managers/%egional
&irectors, Ministr#, Bureau, Cororate, "rovincial and Cit# Auditors and all
others concerned'
SUBJECT : Amended %ules and %egulations on the "revention of (rregular, )nnecessar#,
*+cessive or *+travagant *+enditures or )ses of ,unds and "roert#'
(n -eeing with the Constitutional mandate for the Commission on Audit to .romulgate
accounting an auditing rules and regulations including those for the revention of irregular,
unnecessar#, e+cessive or e+travagant e+enditures or uses of funds and roert#./!ec' 0 123,
Art' 4((-&, New Constitution5, the herein rules and regulations /otherwise -nown as .$H*
%)6*!.5 which amended, revised and/or amlified the e+isting rules contained in COA
Circular No' 77-88 dated March 09, 2977, are here:# romulgated, for the guidance of all
concerned'
RATIONALE
;hile the ower of the Commission to revent the incurrence of irregular, unnecessar#,
e+cessive e+travagant /()**5 e+enditures or uses of funds and roert# has :een vitali<ed
and made more effective uon the ratification of the 297= Constitution, e+cesses in government
sending have remained uncontrolled' %eali<ing the fat that such una:ated oversending and
missending with ultimatel# result in the dissiation of the scarce fiscal resources of
government, the Commission found it imerative to ut a sto thereto and to ensure that fraud,
a:uses and wastage of the eole>s mone# are revented'
(n ursuance, therefore, of its rule-ma-ing ower, the Commission initiated various
legal and secial studies which rovide the legal ro for .$H* %)6*!. which aim?
/a5 to amlif# the e+isting rules and regulations governing the revention of ()**
e+enditures or uses of government funds and roert#;
/:5 to udate fiscal controls to attain higher government efficienc# and roductivit#;
/c5 to set realistic limits and arameters for government sending'
BASIC FEATURES
$his comilation of rules and regulations has the following salient features, to wit?
2' (t contains the oerational definitions of ()** e+enditures or uses if government
funds and roert# em:odied in COA Circular No' 77-88 dated March 09, 2977
with certain modifications;
0' (t rescri:es standards for such e+enditures or uses that set the arameters
thereof;
=' (t rovides a list of situational cases on such e+enditures or uses that shall :e
udated from time to time;
@' (t restates with certain modifications rules and regulations on certain
transactions'
.$H* %)6*!. do not cover illegal e+enditures or uses of government funds and
roert#' !uch e+enditures or uses shall :e disallowed in audit on the :asis of alica:le
laws'
ALICABILIT! OF T"E RULES:
,or the roer and effective imlementation of the .$H* %)6*!., the following
rocedural guidelines shall :e o:served?
a5 $he oerational definition of ()** e+enditures or uses of government funds and
roert# shall not :e e+clusivel# used as :asis for disallowing e+enditure or
uses of this nature'
:5 $he determination of ()** e+enditures or uses of government funds or
roert# as :asis for disallowance shall :e made :# ma-ing reference to :oth the
oerational definitions and standards or :oth oerational definitions and the list
of situational cases as recedents of such e+enditures or uses'
/c5 !hould the case in oint not fall under the standards or list of situational cases,
the auditor shall elevate the matter to the Commission "roer in accordance with
the rocedures rescri:ed in .$H* %)6*!.'
/d5 &ecisions of the Commission "roer and those romulgated :# courts of law on
()** e+enditures or uses of government funds and roert# shall form art of
the list of situational cases uon which audit action shall :e :ased'
EFFECTI#IT!:
$hese rules and regulations shall ta-e effect immediatel#'
$S%D.& FRANCISCO S. TANTUICO, JR., C'()rm(*
$S%D.&. "ERMO%ENES . OBRE, C+mm),,)+*er
RULES AND RE%ULATION
FOR T"E RE#ENTION OF IRRE%ULAR,
UNNECESSAR!, E-CESSI#E, OR E-TRA#A%ANT $IUEE&
E-ENDITURES OR USES OF
%O#ERNMENT FUNDS AND ROERT!
TABLE OF CONTENTS
2'A "urose
0'A &eclaration of "olicies
='A &efinition, !tandards, and !ituational Cases
@'A %evised %ules and %egulations on Certain $ransactions
8'A (nclusion of !ituational Cases &eemed ()** in the )dated 6ist
B'A 6ist of COA Circulars (ssued for the "revention of ()** *+enditures or )ses of
,unds and "roert#
7'A Alica:ilit# on Government Agencies
C'A !eara:ilit# Clause
9'A Glossar# of $erms
1.. UROSE
$hese rules and regulations serve to guide the actions of auditors and the
management in a common Duest for the revention of the incurrence of irregular, unnecessar#,
e+cessive or e+travagant e+enditures or uses of government funds and roert#'
/.. DECLARATION OF OLICIES
0'2 $he COA adheres to the olic# that government funds and roert# should :e
full# rotected and conserved, and that irregular, unnecessar#, e+cessive or
e+travagant e+enditures or uses of such funds and roert# should :e
revented'
0'0 $he service mission, si<e, s#stems, structure, strateg#, s-ills, st#le, sirit and
financial erformance of a government agenc# are the rimar# considerations
in determining whether or not their e+enditures are irregular, incisor,
e+cessive, or e+travagant'
2.3 $he rules and regulations that will :e alica:le to government cororations
e+ercising rorietar# functions and local government, in the e+ercise of their
e+travagant e+enditures or uses of government funds and roert# shall ta-e
into consideration factors such as rofita:ilit# of its oerations, availa:ilit# of
resources - financial or otherwise to sustain their oerations, their a:ilit# to
oerate on their own without aroriation or su:sid# from the government, the
industrial setting, the nature of their :usiness oerations, and other aroriate
erformance standards'
0'@ (n line with COA>s effort to :e constantl# resonsive to the changing needs of
government, on udated list of situational cases of ()** e+enditures or uses of
government funds and roert# in the three /=5 government sectors - national,
local and cororate -shall :e drawn u from time to time to serve as reference for
auditors and management in the erformance of their official duties'
0'8 $he formulation of these rules and regulations recogni<es the interla# of certain
factors, such as :ut not limited to urgenc# of need, caacit# to a#, time of
urchase, lace of urchase, and availa:ilit# of needed goods and services in
the mar-et'
0'B (t is recogni<ed that the regulations for e+travagant e+enditures are largel#
determined :# the level/ran- of user, the nature of agenc# oerations, agenc#
missions, rofita:ilit# of ast oerational erformance and financial resources' As
regards e+cessive e+enditures, the# shall :e determined :# lace and origin of
goods, volume or Duantit# of urchase, service warranties, Dualit#, secial
features of units urchased and the li-e'
0'7 (t is recogni<ed that generall# acceted industr# ractices ma# :e considered in
the rocurement of goods and services'
0'C $he Commission on Audit as an indeendent constitutional :od# is endowed with
secial rule-ma-ing owers encomassing the :road sectrum of government
oerations' (n the e+ercise of such rule-ma-ing owers, it can enforce sanctions
in case of violation of auditing rules and regulations which can serve as :asis
for administrative, civil, or criminal action as ma#:e
warranted under e+isting law'
0.. DEFINITION, STANDARDS, AND SITUATIONAL CASES
$he succeeding rovisions are artl# :ase on COA Circular No' 77-88 dated March 09,
2977, issued in ursuance of the Constitutional mandate for the COA to revent the incurrence
of ()** e+enditures or uses of government funds and roert# through the romulgation of
rules and regulations' All rovisions, statements and situational cases omitted from the
enumeration contained in COA Circular No' 77-88, are deemed modified or revised
accordingl# as herein rovided' However, illegal e+enditures or uses of government funds
and roert# are not covered :# this Circular' !uch e+enditures or uses shall :e disallowed
on the :asis of alica:le laws'
='2 .(%%*G)6A%. *4"*N&($)%*!
&efinition? $he term .irregular e+enditure. signifies an e+enditure incurred
without adhering to esta:lished rules, regulations, rocedural guidelines,
olicies, rinciles or ractices that have gained recognition in law' (rregular
e+enditures are incurred without conforming with rescri:ed usages and
rules of disciline' $here is no o:servance of an esta:lished attern, course,
mode of action, :ehavior, or conduct in the incurrence of an irregular
e+enditure' A transaction conducted in a manner that deviates or dearts
from, or which does not coml# with standards set is deemed irregular' An
anomalous transaction which fails to follow or violates aroriate rules of
rocedure, is li-ewise irregular' (rregular e+enditures are different from
illegal e+enditures since the latter would ertain to e+enses incurred in
violation of the law whereas, the former is incurred in violation of alica:le rules
and regulations other than the law'
!ituational Cases of .(rregular. *+enditures of )ses of Government ,unds and
"roert#
A' ,unds - /alica:le to all national, local, and cororate sectors5
2' "a#ment of claims under a contract awarded not strictl# in
accordance with the rescri:ed modes of rocurement of sulies,
materials and eDuiment'
0' "urchase of items from Eo::ers or middlemen in violation of a
government olic# to acDuire the same directl# from reuta:le
manufacturers or their dul# licensed distri:utions'
=' "a#ment of allowances and other forms of additional comensation
without roer 'authorit#'
@' "a#ment for reair of government roert# or eDuiment underta-en :#
shos, mechanics or contractors not dul# accredited in accordance with
an e+isting government olic# e+cet in laces where there is no
accredited sho in the localit# or where the accredited sho does not
have sufficient facilities or where the cost of services of the accredited
sho is relativel# high or comletion of reairs will suffer dela# as
certified to :# he Agenc# Head or his dul# authori<ed reresentative'
8' "a#ment for emergenc# urchase where there is no emergenc# as herein
defined'
B' %eim:ursement of e+enses incurred :# ersons other than authori<ed
reresentatives of a government agenc# for attending conference,
meetings and other official functions'
7' "a#ment of salaries or wages of la:orers under a la:or a#roll to
ersons other than the a#ees unless roerl# authori<ed :# the
a#ees'
C' "a#ments made on the :asis of slit reDuisitions, urchase orders,
vouchers or chec-s, unless aroved :# roer authorit# of the agenc#'
B' "roert# - /alica:le to all national, local and cororate sectors5
2' $he use of government motor vehicle with an imroerl# accomlished
tri tic-et, or without the mar-ing .,or Official )se Onl#. and the name of
the office e+cet when aroriate e+emtion is secured in accordance
with e+isting regulations'
0' Bringing home government motor vehicles after office hours :#
officials to whom these are assigned, e+cet when the agenc# does
not have a garage that could ensure the safet# of the vehicle or when
in terms of mileage/time it is more economical for the official to ar- the
vehicle/s5 at his residence'
=' Office eDuiment and roert# without roer identification or inventor#
mar-ings'
0./ 1UNNECESSAR!1 E-ENDITURES
&efinition? $he term ertains to e+enditures which could not ass the test
of rudence or the diligence of a good father of a famil#, there:# denoting
non-resonsiveness to the e+igencies of the service' )nnecessar# e+enditures
are those not suortive of the imlementation of the o:Eectives and mission of
the agenc# relative to the nature of its oeration' $his would also include
incurrence of e+enditure not dictated :# the demands of good government,
and those the utilit# of which can not :e ascertained at a secific time' An
e+enditure that is not essential or that which can :e disensed with without loss
or damage to roert# is considered unnecessar#' $he mission and thrusts of
the agenc# incurring the e+enditures must :e considered in determining in
whether or not an e+enditure is necessar#'
!tandards for .)nnecessar#. *+enditures
A' $ime of Need
2' $he volume of urchases must :e enough to fill the three /=5 month>s
reDuirements of the agenc# e+cet when circumstances or the
e+igencies of the service would demand otherwise' "urchases made in
e+cess of three /=5 month>s reDuirements should not, however, e+ceed
the current #ear>s needs, e+cet as herein rovided'
0' Novem:er/&ecem:er urchases shall :e limited to three /=5 months>
sul# onl#'
=' $hree /=5 months> sul# is determined :# comuting the average
monthl# consumtion of the agenc# for he last si+ /B5 months lus
2AF allowance for contingencies multilied :# three' However, the 2AF
allowance for increase ma# :e e+ceeded when the circumstances call
for additional rocurement, such as :ut not limited to seminars,
conferences and the li-e or in case where the activities cannot :e
dela#ed without causing detriment to the u:lic service'
,ormula for A'=? ,or arriving at one month>s sul#
6et $ G total consumtion for the last B months
A G $/B average consumtion for the last B months
" G estimated one /25 month sul#
*+amles? Month Consumtion
Hanuar# " 0=,=77'==
,e:ruar# 0C,=8='A@
March @=,@22'BC
Aril 8A,B0='C@
Ma# @=,BB@'=@
Hune @2,B@B'C0
$otal " 0=2,A77'A8
Average Consumtion for one month will :e?
" /one month sul#5 G 0=2,A77'A8 I /'2A5 /0=2,A77'A85
B B
G =C,820'C@ I /'2A5 /=C,820'C@5
G =C,820'C@ I =,C82'0C
G @0,=B@'20
Note? $o comute for the = months> consumtion, multil# the "
/estimated one month sul#5 :# ='
@' !ulies :ought or services rendered should :e used or availed of :efore
the utilit# of said items or services e+ires'
B' ,reDuenc#/Nature of )se

An e+enditure is unnecessar# if the item/o:Eect is not used according to normal
usage/ractice'
*+' - A warehouse is used as elota court'
C' 6ocation
(tem :ought or service rendered is unnecessar# when it is not needed or useful
in the lace were it is intended to :e used'
*+' - ;hen an air-conditioner is :ought in Baguio Cit# or in a
municialit# where there is no electricit#'
!ituational Cases of .)nnecessar#. *+enditures or )ses of funds and "roert#
A' ,unds - /alica:le to N6C sectors5
2' Grant of overtime a# for wor- that is not of urgent nature as to reDuire
comletion within a secified time or that can :e underta-en during
regular office
hours'
0' *+enses for advertisements of anniversaries, etc' in newsaers, $J, or
radio merel# for u:licit# or roaganda uroses e+cet when the
nature of the agenc#>s mission would reDuire such e+enses as in the
case of romotion of trade and :usiness'
B' "roert# - /alica:le to N6C sectors5
2' )se of air-conditioners when not needed, or even during the
a:sence of the official in whose room the airconditioner is installed'
0' )se of ta:le lams while wor-ing in the office where the room is
adeDuatel# illuminated from the ceiling lights'
='= .*4C*!!(J*. *4"*N&($)%*!
&efinition? $he term .e+cessive e+enditures. signifies unreasona:le
e+ense or e+enses incurred at an immoderate Duantit# and e+or:itant rice (t
also includes e+enses which e+ceed what is usual or roer as well as
e+enses which are unreasona:l# high, and :e#ond Eust measure or amount'
$he# also include e+enses in e+cess of reasona:le limits'
!tandards for .*+cessive. *+enditure
$he term .e+cessive e+enditures. ertains to the varia:les of "rice and Kuantit#'
2' "rice - $he rice is e+cessive if it is more than the 2AF allowa:le rice
variance :etween the rice aid for the item :ought and the rice of the
same item er canvass of the auditor'
0' Jolume &iscounts - $he rice is deemed e+cessive if the discounts
allowed in :ul- urchases are not reflected in the rice offered or in the
award or in the urchases/a#ment document'
=' ,actors to :e Considered - (n determining whether or not the rice is
e+cessive, the following factors ma# :e considered'
A - !ul# and demand forces in the mar-et'
*+' - ;here there is a sul# shortage of a articular roduct, such as
cement or G( sheets, rices or these roducts ma# var# within a
da#'
B - Government "rice Kuotations
C- ;arrant# of "roducts or !ecial ,eatures
$he rice is not necessaril# e+cessive when the
service/item/item is offered with warrant# or secial features which
are relevant to the needs of the agenc# and are reflected in the
offer or award'
& - Brand of "roducts
"roducts of recogni<ed :rand coming from countries
-nown for roducing such Dualit# roducts are relativel# e+ensive'
*+' - !olingen scissors and the li-e which are made in German# are
more e+ensive than scissors which do not carr# such :rand and
are not made in German#'
!ituational Cases of .*+cessive. *+enditures - /alica:le to N6C sectors5
2' Overricing of urchases, characteri<ed :# grossl# e+aggerated
or inflated Duotations, in e+cess of the current and revailing mar-et
rice :# a 2AF variance from the urchased item are considered
e+cessive e+enditures'
0' "a#ment for reair of government eDuiment at a cost e+ceeding =AF of
the current mar-et rice of the same or similar eDuiment is also an
e+cessive e+enditure'
=' *+enditures for sulies and materials in Duantities :e#ond that reDuired
herein and that needed :# the agenc# for a determina:le eriod
resulting in overstoc-ing is e+cessive'
='@ .*4$%AJAGAN$. *4"*N&($)%*!
&efinition? $he term .e+travagant e+enditure. signifies those incurred
without restraints, Eudiciousness and econom#' *+travagant e+enditures
e+ceed the :ounds of roriet#' $hese e+enditures are immoderate, rodigal,
lavish, lu+urious, waste grossl# e+cessive, and inEudicious'
!tandards for .*+travagant. *+enditures
,actors such s the nature of the agencies> oerations, agenc# missions,
rofita:ilit# of their ast oerational erformance, and availa:ilit# of financial resources
derived from income or retained earnings must :e ta-en into account in the matter of
determining whether or not an e+enditure is e+travagant' $he term .e+travagant
e+enditure. ertains to the varia:les of Dualit# relative to level or ran- of the user and
the urose for such e+enditure'
!ituational Cases of *+travagant *+enditures - /alica:le to N6C sectors5
2' "urchase of lu+urious and e+ensive office furnishings for office :uildings
/e'g', rugs, carets, draeries, wall decors, utensils, des-s, chairs,
lams5 is e+travagant, e+cet for the Offices of the !ureme Court,
(ntermediate Aellate Court and other courts of eDuivalent ran-;
!ea-er of the Batasang "am:ansa and Mem:ers of "arliament; Heads
and Mem:ers of the Constitutional Commissions; Ministries; Governors;
Ma#ors; Bureau &irectors and their eDuivalents in government
cororations and other agencies, as warranted :# their resources'
0' 6u+urious furnishings for government :uildings are e+travagant e+cet
those intended for showcase, trade and commerce, romotion of arts
and culture and use of dignitaries'
=' "urchase of e+ensive cars is e+travagant, e+cet for the following level
of users?
a5 $he "resident of the "hiliines, "rime Minister, !ea-er of
Batasang "am:ansa, Hustice of the !ureme Court, and Heads
of Constitutional Commissions - Mercedes Ben< or its eDuivalent
-ind'
:5 $he Mem:ers of "arliament, Mem:ers of the Constitutional
Commissions, Ministers, Heads of Agencies, Governors of Class
A rovinces, Ma#ors of Class A cities and municialities, Hustices
and Hudges of 6ower Courts - Heav# and Medium cars'
@' (nstallation of highl# sohisticated outdoor signs, :ill:oards and neon
signs advertising the office is e+travagant, e+cet for :an-s, trading
cororations, hotels, or :uildings used for culture and arts'
8' "urchase of wines, liDuors, cigars and cigarettes is e+travagant, e+cet
when served to foreign dignitaries during state functions and government-
sonsored international conferences and conventions'
B' "a#ment for rent of e+ensive halls or rooms in lu+ur# hotels or
restaurants used for meetings and other official functions is e+travagant
e+cet when such hotels or restaurants are used for government-
sonsored international conventions, meeting and the li-e'
2.. RE#ISED RULES AND RE%ULATIONS ON CERTAIN TRANSACTIONS
(n ursuit of the o:Eectives to udate fiscal controls for higher government
efficienc# and roductivit# and to set realistic limits and arameters for government
sending, this ortion of the .%)6*!. rovides revisions to e+isting rules and regulations
on secific government transactions' 6et it :e stressed that in the drafting of the
.%)6*!., the Commission has :een guided :# the following considerations?
2' (t is the intention of the Constitution the COA now assume a more
active role in the revention of irregular, unnecessar#, e+cessive, and
e+travagant e+enditures or uses of government funds and roert#'
0' $he rule-ma-ing ower of COA ertaining to the revention of such ()**
e+enditures or uses as distinguished from the rule-ma-ing function of
administrative or oerational details, is not in nature of .su:ordinate
legislation., COA>s rule-ma-ing ower is direct mandate of the
Constitution against which the doctrine of non-delegation of legislative
ower will not al#'
=' $he grant of rule-ma-ing ower to COA does not reclude the Batasang
"am:ansa from enacting laws on the same su:Eect'
@' $he grant of rule-ma-ing ower to COA encomasses :oth su:stantive
and rocedural rules'
8' $he e+ercise of such rule-ma-ing ower is su:Eect to Constitutional
rovisions which limit he e+ercise of legislative and e+ecutive owers,
such as the right to due-rocess, eDual rotection of the laws,non-
imairment of o:ligations and contracts, etc'
@'2 "%OC)%*M*N$
a' "u:lic Bidding
"u:lic :idding shall :e reDuired on urchases of sulies,
materials and eDuiment in e+cess of "8A,AAA'AA unless the law or the
agenc# charter rovides otherwise'
:' *mergenc# "urchase
2' )nless otherwise rovided :# law or the charter, agencies are
authori<ed to ma-e emergenc# urchase of sulies, materials
and sare arts to meet an emergenc# which ma# involve the loss
of or danger to life and/or roert#, or are to :e used in connection
with a roEect or activit# which cannot :e dela#ed causing
detriment to the u:lic service' /alica:le to N6C sectors5
0' An emergenc# urchase shall :e allowed onl# uon a roer
showing of the nature of the urchase' ,or this urose, a
certification shall :e made :# the agenc# head or his dul#
authori<ed reresentative articularl# stating the actual conditions
o:taining at the time of urchase, the Duantit# of items needed
and the time or eriod when such items are to :e used'
=' (n an emergenc# urchase, canvass of rices of items from at
least three /=5 :onafide reuta:le suliers shall :e reDuired,
e+cet when the amount involved is less the "2,AAA'AA or in case
of reeat orders where he rice is the same or less than the
original rice'
A sulier ma# :e deemed a :onafide and reuta:le if it
satisfies the following criteria'
a5 it should :e dul# licensed and registered with
aroriate :odies;
:5 it is not .:lac-listed. :# an# government agenc#
at the time of canvass; and
c5 it should :e in :usiness for at least si+ /B5 months'
c' Negotiated "urchase
Negotiated urchase, recogni<ed as another mode of
rocurement shall :e allowed under of the following grounds?
2' failure of the reDuired u:lic :idding
0' if urchase is made from reuta:le manufacturers or
e+clusive distri:utors rovided the# offer the lowest or
most advantageous rice'
=' an# urchase made from the "rocurement !ervice
@' on emergenc# urchase as herein defined
d' %eeat Order
A reeat order is a mode of rocurement where:# an agenc#
:u#s from the same suliers the same items at the same rices as or
lower rices than those covered :# the original contract :etween the
arties?
A reeat order ma#:e allowed su:Eect to the following conditions;
2' $he rice must :e the same as or lower than the original
rice aid for the same items;
0' $he reeat order, if resorted to, will not result to slitting of
reDuisitions, urchase orders, contracts and a#ments
which is rohi:ited in these .%)6*!.;
=' $he total rice of items covered :# the reeat order
should not e+ceeded "8A,AAA'AA e+cet when the
revious urchase was done through u:lic :idding;
@' $he use of reeat orders ma# :e availed of onl# within the
si+/B5 months eriod from the date of original urchase
order'
@'0 !$OCL(NG
!u:Eect to availa:ilit# of funds, agencies ma# :e allowed to enter into
contracts for the urchase of sulies and materials for one #ear su:Eect to
the condition that deliveries shall :e made on a staggered :asis, and the
agencies three /=5 months> sul# reDuirements are not e+ceeded and
a#ments shall :e made after each deliver# onl#'
@'= 6*A!* ")%CHA!*
$he national government ma# enter into agreement for the lease
urchase of eDuiment su:Eect to u:lic :idding, the aroval of the Office of
the Budget and Management, and to other ertinent accounting and auditing
regulations' &etails of the a#ments shall :e indicated in the lease urchase
agreement and accomanied with a certification of availa:ilit# of eDuiment
outla# authori<ed for the agenc# to cover the full contract cost' $he lease
urchase agreement ma# :e entered into onl# for seciali<ed eDuiment such
t#ewriters, adding machines and automo:iles, the urchase rice of which is at
least "8A,AAA'AA' All lease urchase agreement of eDuiment the total value of
which e+ceeds "0AA,AAA'AA shall :e su:Eect to the aroval of the "resident'
Cororations/local governments ma# adot the mechanisms of these
lease-urchase agreement su:Eect to the aroval of their legislative or
governing :oards' /alica:le to N6C sectors5
@'@ 6*A!* &*"O!($!
A deosit made under a lease contract shall not :e considered as an
advance a#ment' $he deosit, however, ma# :e alied to the a#ment of
rentals in anticiation of or negotiation for the termination of the contract'
/alica:le to N6C sectors5
@'8 $%AJ*6 *4"*N!*!/%A$*!
*+enses for the official travel of officials and emlo#ees of government
shall :e aid in accordance with the rates rescri:ed under %A =C@7 as
amended :# "'&' =@@ and imlemented :# COA General Circular No' 207
dated Novem:er 07, 297=' However, rofit earning cororations e+ercising
rorietar# functions ma# fi+ their own travel rates su:Eect to aroval :#
the "resident' /!ec' 79 "'&' 22775
@'B OJ*% $(M*
An emlo#ee has not rendered the reDuired minimum num:er of wor-ing
hours for the wee- ma# :e allowed to claim overtime a# rovided he has
sufficient leave credits and uon roer showing that his rendition of overtime
service is e+tremel# necessar# and cannot :e disensed with without causing
unnecessar# dela# in an# government activit#' (f the overtime service covers
onl# three /=5 hours or less, continuous wor- is allowed without :rea-time, :ut if it
e+ceeds three /=5 hours, a :rea-time for one hour shall :e maintained'
@'7 *4$%AO%&(NA%M AN& M(!C*66AN*O)! *4"*N!* /,O%M*%6M
&(!C%*$(ONA%M ,)N&5
@'7'2 ,or National Government !ector
*+traordinar# and miscellaneous e+enses shall include,, :ut not
limited to, e+enses incurred for or during meetings, seminars and
conferences, official entertainment of the official or through his authori<ed
reresentative, u:lic relations, educational, athletic and cultural
activities, contri:utions to civic or charita:le institutions, mem:ershi fees
in government associations, informative maga<ines, li:rar# :oo-s and
materials, office eDuiment and sulies and other similar e+enses that
are not suorted :# the regular :udget allocations, "%OJ(&*&, that
no ortion of the amounts authori<ed thereon shall :e used for the
creation of ositions, nor for salaries, wages, allowances, intelligence
or confidential e+enses'
@'7'0 6ocal Government and Cororate !ectors
$he a:ove rovision contained in @'7'2 shall also al# to the local
government and cororate sectors'
5.. INCLUSION OF SITUATIONS DEEMED IUEE IN T"E UDATED LIST
8'2 Need/Hustification
As these COA rules and regulations on ()** e+enditures cannot
e+haust the situations which are deemed such, there is need to set u a
s#stem :# which a list of disallowed e+enditures eculiar to an agenc# or a
class categor# shall :e made a self-roelling or time-adEusting mechanism
such that a case declared ()** in a articular situation/sector is li-ewise
deemed ()** in other cases/sectors !imilarl# situated'
8'0 Criteria for Araising ;hether an ()** !ituation is %ie ,or (nclusion in the
)dated 6ist or not'
/As situation is included in the udated list if it corresonds ositivel# to at
least one of the following criteria5
/A5 (s there no esta:lished Eudicial recedence relative to the case/ro:lemN
/B5 (s there a high num:er of recurrence of a articular ro:lem within a ver#
limited timeN
/C5 ;ould it result to losses on non-oeration of the agenc#
/&5 (s the case an accurate e+emlifaction of the su:stantive area of the
()** definitionN
8'= "rocedure for (nclusion
(n case an ()** !ituation corresonds to an#, several or all of the criteria
set and discussed a:ove, the following stes should :e o:served in drafting the
()** !ituation into the )dated 6ist?
/A5 $he )nit Auditor recommends to the Commission "roer ()** !ituations
deemed rie for (nclusion in the )dated 6ist'
/B5 $he ()** !ituation, if deserving will :e ta-en u in the Commission
"roer meeting, All the merits and demerits of the inclusion will :e
deli:erated and decided uon ta-ing secial attention as to whether or
not the situation will al# onl# to the agenc# classification involved, or
to the three !ectors of government'
/C5 As soon as a decision shall have :een arrived at, the Commission "roer
issues a %esolution effecting the inclusion of the ()** !ituation in the
)dated 6ist'
/&5 ,inall#, for the information of all sectors concerned, the %esolution
shall :e u:lished and circulari<ed'
3.. LIST OF COA CIRCULARS ISSUED FOR T"E RE#ENTION OF IRRE%ULAR
UNNECESSAR!, E-CESSI#E AND E-TRA#A%ANT E-ENDITURE AND USE OF
FUNDS AND ROERT!
!u:seDuent to the issuance of COA Circular No' 77-88 on March 09, 2977
which initiall# set the concets, definitions and e+emlifications of irregular
unnecessar#, e+cessive and e+travagant e+enditures and uses of roert#, a series
of circulars have :e conseDuentl# issued all in ursuance of COA constitutional
mandate to issue rules and regulations to revent irregular, unnecessar#, e+cessive
and e+travagant e+enditures and uses of roert# and these are considered integral
ortions of these .%)6*!.'
C(%C)6A% NO' &A$* !)BH*C$
27-B Nov' 7, 2978 %egulating the use of Government motor vehicles,
;atercrafts'
27-2A Nov' 0A, 2978 "a#ment of !alaries and 6iving Allowances of ,ield
Auditing "ersonnel :# the Agenc#, !u:division or
(nstrumentalit# of Government where the# are
assigned'
78-20 Nov 0C, 2978 Accounting and Auditing (nstructions for the
(mlementation of "& @77 /&ecree on 6ocal ,iscal
Administration5 and "& 87'
7B-08 March =2, 2978 !ervice and/or incentive fees, remunerations,
honoraria and all other forms of e+tra comensation
aid to government official and emlo#ees'
7B-08C Hune =A, 297B "olicies on the a#ment of additional comensation,
such as allowance, honoraria, incentive fees, service
fees, etc', made out of funds of government-owned or
controlled cororations'
7B-=C Oct' 0A,297B Guidelines in the imlementation of longevit# a#
grants'
77-@-A Hul# 0A, 2977 )nliDuidated cash advances of the officials and
emlo#ees of the National Government, 6ocal
Government,-owned or controlled Cororations'
7C-7= ,e:' 2=, 297C "urchase of Motor Jehicles'
7C-77 ,e:' 0C, 297C %ules and %egulation to (mlement the (nstructions on
Overtime "a#ment as em:odied in 6O( 8B8'
7C-C@ Aug' A2, 297C %estating and )dating Audit %eDuirements for
"urchase of !ulies, Materials and *Duiment
79-2A2 Ma#' 08, 2979 "rescri:ing olicies, guidelines, rules and regulations
for government infrastructure contracts under "'&'
289@'
79-222 Aug' 0C,2979 Guidelines on the imlementation of 6O(>s ertaining
to ersonnel effectiveness, Audit and reduction of
government e+enditure'
79-228 !et' B, 2979 Clarification on the articiation of COA officials and/or
ersonnel in the disosal either :# destruction or sale
of unservicea:le roert#'
CA-20= ,e:' B, 29CA 6O( 9C2 entitled .&irecting the imlementation of
*conom# Measures in Government for "urose of
C(%C)6A% NO' &A$* !)BH*C$
Generation Constingenc# %eserves'
CA-20B
Han' 0, 29CA Accounting and related rocedures for government
agencies including government-owned or controlled
cororations, entitled to and Dualified for the ta+ and
dail# e+emtions under su:sisting laws, :eing reDuired
to a# ta+es and duties under !ection0= of "'&' 2277'
CA-20C ,e:' B, 29CA General guidelines and related rocedures for the
esta:lishment of fund for medicines and drugs in
hosital sanitaria'
C2-2802 Han' A7, 29C2 "roosed investment of the National Commission on
the %ole of ,iliino ;omen in the Art "atrons of
Manila'
C2-8A-A Han' 2@, 29C2 "rescri:ing the )se of the %evised Auditing Manual for
%esearch Oerations'
C2-28= Mar' AB,29C2 "rohi:ition on the )se of aroriation for
maintenance and other oerating e+ences for lease-
urchase agreement'
C-2BA Ar' 02, 29C2 %ules, regulations and accounting rocedures for the
receit and disosition of insurance roceeds on
damaged/lost government/roert#'
C2-2BB Hul# =, 29C2 (mlementation of 6O( C= regarding government
urchase of sulies and materials from
NAC(N&A/C(&* manufacturers/suliers'
C2-2B7 Hul# =A, 29C2 6O( 2=B entitled .adoting !tandard "rocedures and
%eDuirements Governing Claims for "a#ment on
(nfrastructure "roEects'.
C0-200-B Han' 2C, 29C0 Certificate as to Availa:ilit# of ,unds as !ec CB of "'&'
2@@8, "' &' 227C7 /!ec'@B5 and 6O( 9BC'
C0-279 Mar' =2, 29C0 (mlementation of Memorandum Circular No' 20=7 of
the Office of the "resident'
C0-29A Aug' A0, 29C0 Grant of honoraria to the school administrators and the
non-teaching ersonnel of the &ivision of Cit# !chools,
Manila in relation to !ec' 7= of "'&' 2277'
C0-298 Oct' 0B, 29C0 6ifting of "re-Audit of Government $ransactions'
C=-0A= &ec' 0@, 29C0 Guidelines, instructions and accounting for Multi-#ear
o:ligational authorit# for contracts
C(%C)6A% NO' &A$* !)BH*C$
C=-0AB Ma# 0=, 29Cd= *+ecutive Order No' CCC authori<ing Ministers and
Heads of Ministries/Agencies to disose of their
resective unservicea:le eDuiment and disosa:le
roert# and creating a &isosal Committee to
facilitate disosal of said roert#'
C=-0A7 Ma# 0@, 29C= 6O( 2=A0 dated March 08, 29C= directing that
urchase and sales of government securities :# the
National >$reasur# and government-owned or
controlled cororations :e done with the central Ban-
or with government financial institutions'
C@-00= Mar' A0,29C@ (mlementation of 6O( 2@B re-&irecting the
(mlementation of *conom# Measures in Government
and Generation of !avings for CM 29C@'
C@-009 Aug' 28, 29C@ Guidelines on allowance of Hudges'
C@-0=0 Oct' 00, 29C@ Amendment of 6etter of (mlementation No' 9B re-
grant of additional allowance :# local government units
to mem:ers and ersonnel of the Eudiciar#'
C@-0=C Nov AB,29C@ !afeguarding Government Motor Jehicles and
reiterating the restrictions in the use thereof'
C@-0=9 Aug' 28 29C@ %ules and regulation governing the accounting for
agricultural roducts'
C8-@C0 Ma#' 2C, 29C8 (nEuction to the effect that reDusitioning government
agencies should secure the most advantageous rice
and should not :ase the rice of sulies and
eDuiment to :e urchased solel# on 8AA rice
listings'
C8-08-* Ar' 08,- 29C8 %e-service and/or incentives fees renumerations
honoraria in all other e+tra comensation aid to
government officials and emlo#ees articularl# the
manner of a#ment and accounting treatment thereof'
4.. ALICABILIT! CLAUSE
$he rules and regulations for the revention of ()** e+enditures or uses of
government funds and roert# shall al# whenever ossi:le to all government
agencies e+cet as herein rovided'
8.. SEARABILIT! CLAUSE
!hould an# rovisions of these %)6*! or an# art thereof :e declared invalid or
inoerative, the other rovisions, so far as the# are seara:le from the invalid or
inoerative one, shall remain in full force and effect'
9.. %LOSSAR! OF TERMS
Agenc# - shall include all the three /=5 :ranches of government (ts (nstrumentalities,
local government-owned or controlled cororations including their su:sidiaries'
Agenc# Head - shall refer to the head of ministries, commissions, :ureaus, local and
national government and cororations e+ercising governmental or
rorietar# functions or :oth'
"ermanent Committee O shall refer to a Committee created :# the Chairman,
Commission on Audit eseciall# tas-ed to underta-e further stud# on agenc#
classifications which focus on their mission/thrusts' (t also serves as a
research arm the Commission "roer in assessing whether or not situation is
rie for inclusion in the )dated 6ist of !ituational Cases of ()**'
)dated 6ist of !ituational Cases &eemed ()**-shall refer to the aroved and
udated listing of ()** cases following the stes/rocedures rovided in the
COA rules and regulations on ()** e+enditures or uses of government
funds and roert#'
!tandards - as used in this set of regulations, shall refer the recogni<ed factors then
e+isting, the interla# of which largel# determine the oeration of ()**
e+enditures'
Criteria - this term as used in the )dated 6ist of !ituational Cases of ()** refers to
the recogni<ed circumstances e+isting in given situations, the e+istence of
which Dualifies a situation for inclusion in the )dated 6ist uon aroval of
the Commission "roer'