The New Government Accounting System: Issues in Public Audit 1 Introduction Historically, the growth of government auditing and accounting in the Philippines was greatly influenced by the administrative practices in the United States, so much so that during the time that the General Accounting Office in the United States was responsible for the government’s accounting, that concept was similarly introduced in the Philippines. Unfortunately, by the time the practice was abandoned in the United States in favor of a better system, the Philippines has then become independent and hence the change was not followed here.2 COA Promulgates New Accounting System Unlike in the United States where accounting standards are formulated by the Federal Accounting Standards Advisory Board (FASAB) and subsequently enacted into law, such as the Federal Financial Management Act of 19963, the Philippines new government accounting system was formulated almost single-handedly by a team of highly professional and competent COA officials in only a span of four months4. Parenthetically, the FASAB is the standard-setting body in the U.S. composed of the Secretary of the Treasury, the Director of the Office of Management and Budget, and the Comptroller General, which body is also recognized by the American Institute of Certified Public Accountants as the official board that promulgates generally accepted accounting principles (GAAP) for federal entities.5 Thus, invoking the 1987 Constitution of the Philippines which vests the Commission on Audit with the exclusive authority to promulgate accounting and auditing rules and regulations, the COA promulgated COA Circular No. 2001-004 prescribing a New Government Accounting System (NGAS) for national government agencies, and COA Circular No. 2001-005 for local government units, to take effect January 1, 2002. Subsequently, COA Circular No. 2002-002 was issued prescribing the Manual on the NGAS. In the Foreword to the Manual the need to revamp the old accounting system was justified as follows: “After almost five decades of faithful adherence to the rigid and complicated government accounting procedures designed by foreign consultants, the Commission on Audit, based on the authority granted under Sec. 2 (2), Art. IX-D of the 1987 Constitution, made a sweeping revamp of the existing government acc...