Disallowance notice
Dear Atty. Chris,
I work in the government. Lately, my co-worker has not been himself. I didn't know what happened because we were not in the same department. When I asked him, he told me that he was included in a "Notice of Disallowance" or ND from the Commission on Audit. If I may ask, what is a "disallowance"? Thank you.
Mark
***
Dear Mark,
To start, allow me to define the power of CoA. According to Section 2, Part D, of Article IX of the 1987 Constitution, the power, authority, and duty of the Commission on Audit is "to examine, audit and settle all accounts pertaining to the revenue and receipts of and expenditures or uses of funds and property owned or held in trust by, or pertaining to, the Government or any of its subdivisions, agencies, or instrumentalities," viz:
"The Commission shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties."
Furthermore, the CoA declared in its 2009 Revised Rules of Procedure that "disallowance" is as follows:
"n. Disallowance — the disapproval in an audit of a transaction, either in whole or in part. The term applies to the audit of disbursements as distinguished from 'charge,' which applies to the audit of revenues/ receipts"
On this note, the case of Miralles vs Commission on Audit (GR 210571, 19 September 2017), penned by Chief Justice Lucas Bersamin, clarifies the instances when CoA exercises the authority to disallow, to wit:
"Accordingly, the CoA's power and authority to disallow upon audit can only be exercised over transactions deemed as irregular, unnecessary, excessive, extravagant, illegal or unconscionable expenditures or uses of government funds and property. Otherwise put, NDs should issue only for these kinds of transactions."