Crooks incorporated: Safeguards in the budget process

At the Budget Execution phase when funds, programs, projects, and activities move, several builtin safeguards are designed to ensure that spending strictly follows the law, remains within approved limits, and delivers on intended outcomes.

- NEPOMUCENO MALALUAN, MALOU MANGAHAS, and JENINA JOY CHAVEZ

All agencies are presumed to have a system of internal controls. Where the internal control system of the audited agencies is inadequate, the Commission on Audit (CoA) is authorized by the Constitution to adopt measures, including temporary or special pre-audit, to correct the deficiencies.

The Government Auditing Code defines internal control as the plan of organization and all the coordinate methods and measures adopted within an organization or agency to safeguard its assets, check the accuracy and reliability of its accounting data, and encourage adherence to prescribed managerial policies.

To help agencies strengthen their internal controls, the Department of Budget and Management (DBM) issued Circular Letter No. 2008-8 (Oct. 23, 2008), introducing the National Guidelines on Internal Control Systems (NGICS). These guidelines provide department and agency heads with a framework for designing, installing, implementing, and monitoring their respective Internal Control System. Under the guidelines, internal control in the public sector must conform to five general objectives: Safeguard assets; Check accuracy and reliability of accounting data; Ensure economical, efficient and effective operations; Comply with laws and regulations; and Adhere to managerial policies.

Internal controls create a structured environment of accountability where transactions are documented, approvals are tracked, and fraud is easier to detect and prevent.

In addition to internal controls within individual agencies, the DBM plays a central oversight role during budget execution through its authority over the release of funds. This oversight function ensures that government spending strictly follows the General Appropriations Act and other relevant fiscal policies. It also allows the DBM to maintain fiscal discipline, safeguard public resources, and support cash and debt management objectives throughout the year.