IRREGULAR, UNNECESSARY, and industry accepted practices shall be

considered in determining IUEEU

EXCESSIVE, EXTRAVAGANT, AND  The COA is an independent constitutional body
UNCONSCIONABLE EXPENSES endowed with special-rule making powers
o Special-rule making powers – can
Circular No: 2012- 03 enforce sanctions in case of violation of
Circular Date: October 29, 2012 auditing rules and regulations which can
serve as a basis for administrative, civil,
Circular To: All Heads of Departments, Bureaus, or criminal action.
Offices, Agencies, and Instrumentalities of the NG,
Heads of the LGU, Managing Heads of GOCCs, COA IRREGULAR EXPENDITURES
Assistant Commissioner, COA Auditors, COA Directors, - Do not adhere to established rules that are
and all others concerned. recognized by the law
Circular Subject: Updated Guidelines for the Prevention - Not in conformance with prescribed usage and
and Disallowance of Irregular, Unnecessary, Excessive, rules
Extravagant, and Unconscionable Expenditures - Deviates from the standard set
- Fail to follow/ violates appropriate rules
Sec 2 (2) Art. IX-D of the 1987 Constitution
CASES OF IRREGULAR EXPENDITURES
Commission on Audit (COA) shall have exclusive
authority to promulgate accounting and auditing rules Salaries, Allowances, and other forms of
and regulations including those for the prevention of Compensation
IUEEU expenditures or uses of government funds and 1. Payment of salaries where the logbook signatory
properties is different from the worker in the payroll
Sec 33 of PD No. 1445 2. Payment of salaries under a payroll to persons
other than payees (unless properly authorized)
Prevention of IUEE expenditures of funds and uses of 3. Honoraria for private individuals sitting as a
property; power to disallow such expenditures. The member of special committee without the
Commission shall promulgate accounting and auditing approval of DBM
rules and regulations as shall prevent IUEE expenditures 4. Honoraria or RATA granted to members of
or uses of government funds and properties. different committees in various Regional and
The list of situational cases under COA Circular No. 85- District Offices
55A dated September 8, 1985 is hereunder updated 5. Honoraria paid to members of Bids and Awards
with additional cases. Committee and Technical Working Group in
excess of rates provided by DBM
PURPOSE 6. Christmas bonuses, gifts, and other fringe
 To guide the agency officials in the discharge of benefits to consultants and members of the
their official functions and the COA in their Board who are not salaried officials of the
auditorial functions government agencies
 Elaboration by presenting actual 7. Grant of Amelioration allowance or any similar
transactions/expenditures declared as IUEEU benefits to private employees of service
under various jurisprudence, decisions, and contractors contrary to AO 365
audit reports 8. Loyalty service awarded for employees that
 The differentiation of illegal from irregular and have not yet rendered minimum of 10 years in
unconscionable expenditures. service
9. Annual payment of anniversary bonus because
DECLARATION OF POLICIES the milestone year is on the 15th anniv and 5th
 COA adheres that government funds and year thereafter
properties shall be protected should be fully 10. Payment of COLA and other allowances
protected and conserved and that IUEEU deemed integrated in the salary
expenditures shall be prevented 11. Grant of food allowance, rice subsidy, and
 The level/rank of users and mission, size, health care allowance as there is no law
system, structure, strategy, skills, style, and authorizing such grant
nature of operation shall be considered when 12. Payment of health care insurance except for
determining IUEEU LGU
 The list of situational cases shall be updated 13. Attorney’s fee paid to regular employees
from time to time 14. Payment of Collective Negotiation Agreement
 The interplay of certain factors such as (CNA) signing bonus to members of governing
urgency, time and place of purchase, availability, board (non-organic employees) and those
place and origin of goods, volume or quantity, occupying managerial positions higher than the
service warranties, quality, and special features, division chief rank
 15. Payment of CAN to rank and file employees Payment of foreign travel expenses to private
where the conditions required in determining individuals purportedly as representatives of an
savings are not met international organizations which governs government
16. Premiums paid for personnel accident insurance personnel only
without prior authority from the DBM and or
Including names or initials or images or pictures of
Office if the President
government officials in billboard and signages on
17. Procurement and payment of corresponding
government projects and programs
premiums for Directors and Officers Liability
Insurance (DOLI) Acceptance of a project as 100% complete when it is
not just for the Certificate of Inspection Report
Hiring of private lawyer by the GOCCs to handle their
cases and legal matters without prior written conformity Acceptance of goods without passing quality test
and acquiescence of Solicitor General or Government
Use of government motor vehicles for private social
Corp Counsel
functions unless properly authorized.
Hiring of casual and probationary employees under
job order with entitlement and benefits enjoyed by a
regular employee UNECESSARY EXPENDITURES
Hiring of Retired Employees - Do not pass the test of prudence (conservatism)
- Not supportive of the implementation of
18. Hiring of consultants and retired employees that
objectives and mission of the agency
will exercise control and supervision over regular
- Do not dictate the demand of good government
employees
- Not essential and can be dispensed without loss
19. Continuous extension of services of a foreign
consultant to undertake relatively simple CASES OF UNECESSARY EXPENDITURES
supervisory work that can be done by the local
consultant 1. Creation or continued operation of subsidiaries
20. Hiring of employees who had been previously with function duplicate of the parent
opted to retire or separated from the service as 2. Hiring public relation companies
a result of rationalization efforts of their agency 3. PR expenses by government insurance
within 5 years after retirement corporations where members and government
property are compulsory insured
Payment for damages, litigation costs, and atty’s fee 4. Hiring of consultants whose functions are
awarded by the court to a contractor caused by serious redundance to respective functions of concerned
lapses and omission of a public officer officials
5. Hiring of consultants rendering services not
Reimbursement of expenses
aligned or related to the mandate/thrust of the
21. Reimbursement of expenses incurred by hiring agency or exceeding the agreed
persons who are not authorized to attend consultancy period including renewals
conferences and other special functions 6. Professional service contract for design of a
22. Reimbursement of legal expenses incurred by building with already existing design/plan
public officials and employees against whom 7. Purchase of high-end or expensive
criminal/civil/admin suits have been filed in models/brands of electronic gadgets
relation to their public functions 8. Construction of buildings and/or procurement of
equipment not actually needed or without any
Payment of rental contracts for service vehicles
intended purpose or not put into use, or used for
covering a continuous period of more than 15 days
purpose other than the intended ones
without the authority of secretary of DBM
9. Construction of housing units which were not
Release of funds for NGOs for investments distributed/awarded or disposed without
considerable period of time by deterioration of
Release of farming assistance not intended for farmer
units
beneficiaries
10. Replacement of serviceable structure/equipment
Advertisements 11. Continuous repair of vehicles and equipment
already considered as beyond economic repair
23. Advertisements except those required for 12. Grant of overtime pay for work not yet urgent
issuance of guidelines and important public where work can be done during regular office
announcements hours
24. Advertisements of anniversaries except when
the nature of agency’s mission would require EXCESSIVE EXPENDITURES
such expenses for promotion of trade and
- Immoderate quantity and exorbitant price
business
- Exceeds what is usual or proper
Donations, contributions, grants, and gifts except if they - Exceeds the market price and beyond the
are a donor-agency standard price set
CASES OF EXCESSIVE EXPENDITURES 2. Payment of rent of expensive halls and luxury
hotels except when such are used for
1. Overpricing of purchases where prevailing
government-sponsored international
market price has excess of 10% variance from
conventions
the purchased item
3. Conduct of out of town meeting which can be
2. Repair of government equipment at a cost
made within the office premises
exceeding 30% of the current market price of the
4. Hiring of expensive cans, cars, aircrafts where is
similar equipment
an available ordinary vehicle except in
3. Expenditures for supplies and material including
meritorious cases and justified prevailing market
fuel inventory in quantities exceeding normal 3-
circumstances
month requirements
5. Use of decorative lamp post and similar fixtures
4. Granting of cash advance in excess of estimated
6. Procurement and use of luxury vehicles by
budget
government officials except those allowed under
5. Provision of mobile phone in excess of one unit
Sec 6 AO No. 3 Feb 27, 2001
for each entitled official which should not be
7. Luxurious furnishings for government buildings
lower than Division Chief Rank
except when it is for trade and commerce,
6. Cash advance for intelligence funds in excess of
showcase, promotion of arts and culture, and
one month requirement. For emergency cases, it
use of dignitaries
shall not exceed the 3 month requirement
8. Installation of highly sophisticated signs except
7. Release of funds to NGOs in excess of the
for banks, trading corps, hotels, or buildings for
project requirements
culture and arts
8. Using expensive thermoplastic materials with
longer lifespan on asphalt overlay with shorter UNCONSCIONABLE EXPENDITURES
lifespan
- No man in his right sense would make, nor a fair
9. Installation of materials in excess of
and honest man would accept as reasonable.
requirements prescribed
10. Procurement of materials that will eventually CASES OF UNCONSCIONABLE EXPENDITURES
expire in excess of the requirements
1. Grant of exorbitant and unreasonable bonuses,
11. Inclusion in the contract of specific infrastructure
allowances, and fringe benefits to public officials
project such as motors and computers which
and employees and members of governing
unnecessarily increased project cost due
boards.
12. Procurement and distribution of seeds to
2. Live-in seminars in 5-star hotels with significant
farmers in excess of the required bags per
numbers of participants and unreasonable
hectare
period of time
13. Purchase of expensive specialized folder with
3. Payment of excessive and unreasonable
limited useful life
retirement benefits
14. Payment cost of imported equipment in excess
4. Purchase of supplies and materials exceeding
of the cost of importation required by the BIR
the requirements and were not actually needed
and BOC
thus left idle and unused
15. Excessive expenditures in the celebration of
5. Extension of loans in significant and
Christmas, anniversaries, and other special
unreasonable amount to unqualified borrowers
occasions
whereby recovery of loan is remote
16. Excessive allowance to participants and
6. Overpricing in significant amount exceeding 100
expenses in relation to lakbay-aral. Seminars, or
percent of the current market price
training
7. Payment for repairs of government equipment
17. Excessive allowances to participants and
involving significant amount exceeding 100% of
expenses
the current market price of the same equipment
EXTRAVAGANT EXPENDITUERES 8. Release of significant amounts to NGOs without
evaluating the necessity of the project, the
- Wasteful, not wise, and severe than excessive
needs of intended recipients and the
- It is within the market price but could have
reasonableness of the project
purchased something cheaper
- Incurred without restraint, judiciousness, and INCLUSIONS OF SITUATION DEEMED IUEEU
economy EXPENDITURES IN THE UPDATED LIST
- Immoderate, prodigal lavish, luxurious, grossly
There is a need to set-up a system whereby a list of
excessive
disallowed expenditures peculiar to an agency or a
CASES OF EXTRAVAGANT EXPENDITURES class/category shall be made using a self-propelling or
time-adjusting mechanism such as IUEEU particular to a
1. Purchase of wines, liquors, cigars, and
sector or situation
cigarettes except when it is served in a
government sponsored international Criteria for Inclusion (at least one of the following)
conferences and conventions
 1. There is no established judicial precedents
relative to the case or issue
2. Substantial and notable recurrence of a
particular problem within a very limited time
3. Results in losses or non-operation of the agency
4. An accurate illustration of substantive area of
IUEEU definition
Procedure for Inclusion
1. Recommendation
o Supervising Auditor or Audit Team
Leader through the Cluster
Director/Assistant Commissioner
recommends it to the Commission
Proper
2. Deliberation of the Commission Proper
3. Issuance of the Resolution by the Commission
Proper effecting the inclusion of IUEEU
4. Resolution shall be published and circularized
for all sectors concerned
RULES AND REGULATION
- It shall be guided by the general and special
provisions of GAA, PD No, 1445, RA no. 7160
and existing laws, rules, and regulations.
APPLICABILITY CLAUSE
- Shall apply, whenever possible, to all
government agencies
SEPARABILITY CLAUSE
- Any part that is declared invalid or inoperative,
the other provisions, so far as they are
separable from the invalid or inoperative one,
shall remain in full force and effect
EFFECTIVITY
- The Circular shall take effect 15 days after
publication in the newspaper and general
circulation.

SIGNATORIES
Chairman: Ma. Gracia M. Pulido Tan
Commissioners: Juanito Espino, Jr. And Heidi
Mendoza

Current COA Chairperson: Gamaliel Cordoba

Department of Budget and Management (DBM)
Secretary: Amenah F. Pangandaman