SOP Exhibits

Title:

Suspensions, Disallowances and Deficiencies

SOP Number : FS-GP16

ANNEX E

SUSPENSIONS, DISALLOWANCES, AND DEFICIENCIES

1. SUSPENSIONS

1.1 A suspension is made on a transaction which would
otherwise have been settled except that some supporting
documents or signatures are missing. The transaction
is normally lawful and proper, however, because of some
missing requirements, such could not be settled. A
transaction may also be suspended if the Auditor is not
yet sure of its lawfulness or propriety, perhaps
because of the special circumstances surrounding the
transaction.

1.2 "Notice of Suspension" is issued by the Auditor to the
concerned accountable/responsible officer whenever in
the course of post-audit, he makes a suspension on any
transaction. Such suspensions will not yet be recorded
in the CSB pending the accountable/responsible officer's
submission of supporting documents or a written
explanation of whatever is needed to satisfy the
Auditor that the suspended transactions are indeed
lawful and proper, and this should be settled.

1.3 If the concerned officer has not yet complied with
these requirements when the next CSB is issued, that
supension will then be included in that CSB. The
concerned employee is given ninety (90) days from his
receipt of the "Notice" within which to submit the
documents; or written explanation, otherwise the
suspension ripens into a disallowance and shall be
subject to the provisions covering disallowances. If
the Auditor is not satisfied with the submitted
explanation or justification, the suspension may be
made into a disallowance even though the 90-day period
has not yet elapsed.

1.4 The accountable/responsible officer, if he disagrees
with the suspension, may elevate the matter to the COA
Regional Director/Manager concerned within thirty (30)
days from his receipt of the "Notice", who shall
resolve the matter within thirty (30) days from receipt
thereof. If the Regional Director/Manager affirms the
Auditor's action, the concerned officer may appeal the
suspension which will then be already considered a
disallowance, with the Commission Proper of the COA
following the appeals procedure covering disallowances.

2. DISALLOWANCES

2.1 A disallowance is made on a transaction which is, in
itself, inherently defective because it is unlawful
(violates a law) and/or improper (violates auditing/
aadministrative rules). A disallowance can only be
settled by restitution of the amount disallowed or, in
exceptional cases, by a decision of the Auditor/higher
authorities lifting the disallowance.

2.2 "Auditor's Notice to Persons Liable" is issued by the
Auditor to each employee determined to be liable for
disallowed transactions whenever there are
disallowances in the CSB. These employees are given a
thirty-day grace period within which to voluntary
restitute the amount. Otherwise, the Auditor will
issue an "Auditor's Order" to the Cashier/Disbursing
Officer to withhold payment of any money due the
persons found liable to cover the disallowed amount.

2.3 The persons determined to be liable have the right,
however to appeal the disallowance. They have six (6)
months, computed from the day they received the
"Auditor's Notice to Person Liable" in which to lodge
an appeal with the COA's Commission Proper, which must
decide the case within sixty (60) days. If they are
dissatisfied with the decision of the CP, they may
bring the case to the Supreme Court within 30 days from
receipt of the CP decision, but only on certiorari.

2.4 The Auditor may withhold money due to persons
determined to be liable even if they already appealed
the disallowances. This may happen if the appeal was
made after the 30-day grace period, if the disallowance
is a patent disregard of the law or clearly a case of
error in computation or if the Auditor has reason to
suppose that the liable persons are planning to
abscond. The money so withheld will be put in trust
fund to be given if the disallowance is lifted or be
reclassified if the disallowance is affirmed.

NOTE: Appeals to be made whether for a suspension or disallowance should
be coursed thru the resident COA Auditor. This shall avoid the possibility of routing back the case to the Regional Director/Manager/ Auditor by the Commission Proper of COA for clarification/comments.

3. DEFICIENCIES

3.1 A deficiency is neither a suspension nor a disallowance
and ordinarily does not involve pecuniary laibility.

There are three general classes of deficiencies:

a) a defect in agency procedure, control mechanisms
and policy;
b) deviations from accepted procedures; and
c) willful violations of procedures with intent to
defraud.

3.2 It is the duty of management to see toit that the deficiencies noted by the Auditor are remedied following the Auditor's recommendations. Depending on the circumstances, deficiencies noted may lead to criminal, civil, or administrative sanctions.

3.3 The accountable/responsible official to whom the CSB is addressed must correct the deficiencies. Where no accountable/responsible officer can be specifically identified, the Chief Accountant/Bookkeeper is deemed responsible.

In all cases, the Agency Head bears final responsibility for the correction of deficiencies.