Commission on Audit warns against misuse of audit reports

August 04, 2019
Commission on Audit

THE Commission on Audit (CoA) has warned against the misuse of its audit and performance reports, especially to imply mismanagement of public funds by government officials.

According to CoA Public Information Office (PIO) chief Jonathan Beltran, the agency is alarmed by the increasing practice of citing CoA reports to suggest misuse of government finances and property by both appointed and elected government officials.

Beltran explained that CoA is concerned that people are using their reports to defame others.

He stressed that this is also the reason why the agency stopped its fraud audits in the financial and performance reports to avoid being used to vilify and smear the reputation of public officials -- especially during election period.

Beltran pointed out that CoA even identifies and advises the concerned officials of problems its auditors have come across during the audit and then works with them to correct these issues. Implementation of these corrections are included in subsequent annual audit reports.

Beltran explained that while all the agency’s reports are posted on the CoA website in line with 2016 Freedom of Information Act, there is a process before the existence of fraud, waste or abuse by public officials is finally decided. “The Ombudsman -- not CoA -- will decide on whether a case should be filed,” he said.

“We suggest that when citing CoA reports, they should take precaution to read the entire audit report in order to provide the full picture of these transactions,” the CoA official said.

A number of government officials and news organizations have been observed citing CoA reports that do not fully provide the full and corrected audit account.

After an audit, CoA renders an “auditor’s opinion” which is the outcome of the review of the financial statements. The agency explained that an auditor’s opinion does not judge the financial position of the reporting entity, nor does it interpret accounting data. Instead, the published opinion addresses two questions – if the statements conform to Generally Accepted Accounting Principles (GAAP), and if these fairly represent the entity’s financial accounts.

Formal opinions of auditors fall into four categories. Unmodified or unqualified opinion means the financial statements conform to GAAP and that the statements represent the entity’s financial accounts fairly. A qualified opinion, meanwhile, is given when a company’s financial records have not entirely been presented in accordance with GAAP. Although the wording of a qualified opinion is very similar to an unqualified opinion, the auditor provides an additional paragraph explaining the reasons why certain exclusions to a clean opinion exist.

CoA pointed out that the most unfavorable opinion is an adverse opinion, indicating that the financial records violate many key GAAP rules and contain material misstatements.