State of Compliance and Implementation of National Internal Audit Mandates by Local Government Units in the Philippines

Abstract

Internal auditing is gaining more and more recognition as an important tool for improving organizational performance. In many countries, both public and private sectors advance internal audit as a profession, process and body of knowledge. The Philippines is one such country having put in place the policy framework mainstreaming internal audit in government operations. However, at the local level, confusion has emerged among the local government units as a result of conflicting policy pronouncements by the national government. This paper presents a fairly substantial description of the current state of internal audit practice and compliance to relevant policies among Philippine local government units. Specifically, it establishes a preliminary profile of the internal audit units within the local government units in terms of organizational placement, staff composition, linkages and key activities. The findings indicate that the local government units possess good potential for meeting local and international standards for internal auditing. But this would require addressing a range of issues they are currently faced with from compliance to rules and regulations to the need for capacity building for professional internal audit advancement.