Answer CoA’s AOM with gratitude, honesty, devotion
Agency heads realize the AOM is an official warning that can escalate into a Notice of Suspension or Notice of Disallowance if left unaddressed.
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Agency heads realize the AOM is an official warning that can escalate into a Notice of Suspension or Notice of Disallowance if left unaddressed.
An Audit Observation Memorandum (AOM) of the Commission on Audit (CoA) is a formal written notification to inform the head of a government agency and the officers concerned about deficiencies, errors, or exceptions found during an audit of accounts, operations, or transactions.
It is an initial step in the audit process and serves as a preliminary finding, not a final judgment or definitive conclusion (Supreme Court E. Library + 1).
All heads of government agencies receive their respective Audit Observation Memorandum from the CoA every year.
Based on experience, here are some of the typical reactions of heads of government offices who have received the AOM from CoA. The general reaction is typically a mix of immediate anxiety, urgency and defensive strategizing.
Common reaction and behaviors
1. Panic and Urgency: Agency heads realize the AOM is an official warning that can escalate into a Notice of Suspension or Notice of Disallowance if left unaddressed.
2. Delegation and Scramble: The head immediately summons the city accountant, budget officer, and property custodian to trace the transaction in question.
3. Defensiveness or Justification: Management often feels the auditors are being too rigid or fail to understand operational realities, prompting a search for counter-arguments or missing paperwork.
4. Damage Control: Concern over public perception and media scrutiny drives a strong desire to clear the record before the findings make it into the Annual Audit Report.
Key features of an AOM
1. Preliminary Nature: It is an initial step in the audit process and serves as a preliminary finding, not a final judgment or definitive conclusion.
2. Call for Response: It requires the agency management to submit comments or explanations, and requires supporting documents within a reasonable specified period.
3. Scope of Deficiency: It covers issues discovered in financial accounts, day-to-day operations and specific government transactions.
4. Purpose and Next Steps
a) Due Process: It gives the audited agency an official opportunity to explain its side, rectify errors, and provide missing documents before CoA finalizes its final audit report.
b) Resolution: Responses to an AOM typically include factual statements, management action plans, and financial evidence and records to clear the noted exceptions.
How agencies respond to an AOM
When a government agency receives an AOM, it must follow a strict legal and administrative protocol to address the findings:
1. The 15-day deadline:
a) The agency head and officials concerned must submit a written reply.
b) This reply is typically due within 15 calendar days from receipt of the AOM.
2. Gathering Evidence:
a) The agency compiles missing financial documents, receipts, and legal justifications.
b) They gather written explanations from the specific personnel involved in the transactions.
3. Drafting the Management Reply:
a) The reply must directly address every deficiency noted by the auditor.
b) It explains the context of the transaction and cites relevant laws.
If the AOM highlights simple procedural errors, the agency will often correct it immediately.
This coming Tuesday, 25 August, I’ll show how to answer a 15-page AOM on only one page of short bond paper. Once you know the technique, you will find answering the AOM like eating biscuits.
