REVENUE MEMORANDUM CIRCULAR NO. 47-2009 issued on August 20, 2009 publishes the full text of Circular No. 2009-002 dated May 18, 2009 issued by the Commissioner and Chairman of the Commission on Audit (COA), entitled “Reinstituting Selective Pre-Audit on Government Transactions”.
     Pre-audit shall be selectively reinstituted in national government agencies (NGAs), local government units (LGUs) and government-owned and controlled corporations (GOCCs) with original charters (as indicated in Annex A of the Circular), with any, some or all of the following transactions:

1. 1. 1. 1. Cash advances;
         2. Payments of salaries and terminal leave benefits;
         3. Payments for infrastructure projects;
         4. Payments for road right-of-way;
         5. Payments for procurement of capital assets, goods and services;
         6. Payments made thru automatic debit advice (ADA);
         7. Releases of funds to NGOs/POs;
         8. Transfers of funds between government agencies subject to the exceptions provided in the Circular;
         9. Disbursements from trust funds of LGUs, as limited in the Circular;
         10. Disposal of real property and unserviceable property, subject to the limitations provided in the Circular.

     Subsequent identification of the NGAs, LGUs and GOCCs and their respective transactions that may be included or excluded in pre-audit shall proceed from the results of an evaluation of the internal control system put in place and operating in each agency. National high schools, GOCCs audited under the team approach and barangays shall be initially exempt from pre-audit.
     Except for cash advances for payroll, intelligence funds, petty cash funds and those granted for local travel expenses of officers and employees, all other cash advances including those for foreign travels funded out of the local funds regardless of amount shall pass through pre-audit.
     The liquidation of cash advances shall first be audited and the corresponding Credit Notice issued before the same shall be taken up in the books. The grant of cash advances and their liquidation shall be governed by the following guidelines and by the provisions of COA Circular No. 97-002 dated February 10, 1997, which are not inconsistent herewith:

1. 1. 1. 1. No cash advance shall be given unless for legally authorized specific
         2. No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first liquidated and accounted for in the
         3. A cash advance shall be liquidated/reported on as soon as the purpose for which it was granted has been served.
         4. Except for cash advances for travel, no officer or employee shall be granted cash advance unless he is properly bonded in accordance with law or regulations. The amount of cash advance which may be granted shall not exceed the maximum cash accountability covered by his bond.
         5. Only permanently appointed and duly designated disbursing officers shall be granted cash advance. However, these requirements shall not apply to cash advances for travel.
         6. Transfer of cash advance from one accountable officer to another shall not be
         7. The cash advance shall be used solely for the specific purpose for which it was granted. Under no circumstance shall it be used for encashment of checks or for liquidation of a previous cash advance.
         8. No cash advance shall be granted for payments on account of infrastructure projects or other undertaking on a project basis.
         9. Cash advance for special time-bound undertaking shall be liquidated by the accountable officer concerned within one month from the date the purpose of the cash advance was accomplished.
         10. Cash advances which are no longer needed or have not been used for a period of two months shall be returned to or deposited immediately with the proper collecting officer or treasurer.
         11. All cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the accountable officer shall refund any unexpected balance to the cashier/collecting officer who shall issue the necessary official receipt.

     All infrastructure projects with contract amounts falling under the following categories shall be covered by pre-audit:

1. 1. 1. 1. For natio nal government agencies:
            
            1. 1. Department/Bureau/Agency Main/Central/Head Offices, General Headquarters, Projects Management Offices – P 25 Million and above
               2. Regional Offices/Operating Units/Area Commands/Field Offices or their equivalents – P 10 Million and above
               3. Provincial/District/Division/Satellite Offices – P 2 Million and above
               4. Tertiary and/or specialized hospitals – P 5 Million and above
         2. For LGUs:
            
            1. 1. Cities within Metro Manila, other highly urbanized cities and first class provinces – P 5 Million and above
               2. Provinces/cities below first class – P 3 Million and above
               3. Municipalities – P 1 Million and above
         3. For GOCCs/government financial institutions
            
            1. 1. Head Offices, Project Management Offices – P 25 Million and above
               2. Regional/Provincial Branches/Field Offices – P 10 Million and above

     Only the advance payments granted to contractors as well as the first and last progress billings of contracts for infrastructure projects, the contract amount of which falls within the aforecited threshold shall be subject to pre-audit. First progress billing represents claims made for the first collection on the work accomplished in a particular project. In the pre-audit of the last progress billing, all previous payments shall be considered.
     All claims for road right-of-way shall be subject to pre-audit taking into consideration the provisions of Republic Act (RA) No. 8974 and its implementing rules and regulations.
     Procurement of capital assets shall include land and building. Procurement of goods and services includes acquisition of supplies, materials, general support services, labor, equipment and motor vehicles by the government, regardless of the source of fund. For this purpose, procurement of construction materials for projects implemented by administration shall be treated as procurement of goods and services and shall be subject to the same rules provided in the Circular, taking the total project cost and not the individual transactions as basis of its coverage in or exclusion from pre-audit.
     General support services shall include only those which are recurring and fixed in nature, such as but not limited to rentals, janitorial and security services, and solid waste management regardless of the amount involved. Only the first payment for said services shall be subject to pre-audit. First payments involving extension of contracts shall also be pre- audited.
     First and last payments of contracts entered into through any of the various modes of procurement involving an amount of at least P 2 Million for NGAs, GOCCs, cities within Metro Manila, other highly urbanized cities and first class provinces; P1 Million for provinces/cities below first class; and P 500,000.00 for municipalities, shall be subject to pre- audit. Procurement between government agencies or instrumentalities shall be exempt from pre-audit.
     Procurement of goods and services to address natural calamities or emergencies shall be subject to pre-audit, except procurement involving life saving medicines, food and other similar items which shall be exempt from pre-audit.
     For foreign- funded or locally- funded infrastructure projects that shall be paid through Automatic Debit Advice (ADA), pre-audit shall be performed on the documents to be submitted as basis for payment, such as but not limited to the approved disbursement vouche rs, if applicable, statement of expenditures, list of due and demandable accounts payable and their supporting documents. For procurement paid through ADA, pre-audit shall be performed on the approved disbursement voucher duly supported by the regular documentary requirements for the specific transaction.
     All releases of funds to NGOs/POs shall be subject to pre-audit. The audit shall be carried out taking into consideration the requirements and guidelines provided in COA Circular No. 2007-001 dated October 25, 2007 and subsequent amendments thereto. No subsequent releases shall be made unless the previous release is liquidated, and the liquidation documents are post-audited and properly taken up in the books.
     All transfers of funds either thru funding check or bank transfer between and among bank accounts of government agencies or between different bank accounts of the same government agency regardless of amount shall be subject to pre-audit.
     Fund transfers within and between government banks, transfers of funds to address an emergency or calamity, releases of NCAs by the Department of Budget and Management (DBM), and releases of NTAs from department/central offices to operating units shall be exempt from pre-audit.
     The pre-audit of trust funds of LGUs sha ll only cover disbursements of the trust funds received from the national government or from GOCCs.
     Pre-audit of disposal of real property shall cover only those undertaken through negotiated sales involving an amount of at least P 1 Million. Negotiated sale of acquired assets of government financial institutions amounting to at least P 50 Million, except those disposed to previous owners in the exercise of their right of redemption, shall be subject to pre-audit. For unserviceable property and those no longer needed, only negotiated sales involving an amount of at least P 500,000.00, whether valued individually or by lot, shall be subject to pre-audit.