Article IX of the 1987 Philippine constitution created the Commission on Audit (COA), one of three constitutional commissions, which prevents the irregular use of government funds or properties. Armed with this crucial mandate, the COA is the praetorian of the national treasury. It is endowed with constitutional dependence and fiscal autonomy. A report by the Philippine Centre on Transnational Crime states that The COA is the watchdog of the financial operations of the government. It is empowered to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property under the custody of government agencies and instrumentalities. It promulgates accounting and auditing rules and regulations for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or use of government funds and properties.

COA forms task forces to conduct special audits for selected infrastructure projects, supplies and equipment purchases. It reports violations of the law, as in the special audit of six cities and a town in which it found overwhelming irregularities amounting to millions of pesos every year (although no prosecutions followed these discoveries). Yet in 2005 it received less than half a per cent of the national budget.

In terms of regulatory support, pursuant to Section 6 of Article IX-A of the constitution, the commission en banc crafts its own rules. Aside from this, other internal rules in the form of COA issuances, circulars, memoranda, letters and resolutions exist. COA has its own Code of Ethics for Government Auditors; it prohibits making loans within audit jurisdictions and forming unholy alliances as well as fraternisation with contractors in karaoke establishments and bars. The current chairman, Guillermo Carrague, is a reform champion who is also an innovator. He has introduced a new system of risk-based auditing and has internationally been nominated as United Nations Industrial Development Organisation External Auditor. He spearheads the New Government Accounting System; when an electronic version now in development is fully implemented, it is expected to speed the preparation of the Annual Financial Report (AFR) of the national government. The chairman leads a group of commissioners who are untainted, highly professional and independent – traits that are crucial to the highest guardian of public accountability and performance. Gifts over PHP 5,000 are not allowed by the commission, and civil service post-employment restrictions apply for a year, during which employees are not allowed to join the private sector.

Concerning reporting lines, the COA delivers an annual financial report to the president and Congress. The commission has taken proactive steps to reach out to the public and to be more transparent through an interactive portal that maintains a Fraud Alert Form advising whistleblowers to report fraud, waste, abuse or mismanagement of funds; it also warns of lack of anonymity. COA also maintains an Audit Help Desk, which reaches out to the ordinary citizen and COA’s audit clientele who need help relating to government financial transactions, accounting and audit.

As with all civil servants, disclosure rules apply to COA officials. In terms of transparency, the latest annual audit reports are downloadable and available to audit clientele. COA policy decisions, procurement processes and an Invitation to Bid are on its website. Complaint enforcement mechanisms are dictated by the CSC code. In pursuit of anti-corruption activity, COA is a member of the LSC and a leading member of inter-agency committees battling corruption.

Although COA investigations have led to exposés, the lack of prosecutions and convictions can jeopardise investigators’ lives and has led has to demoralisation among auditors. They have expressed fear, saying, ‘We're scared of Congressmen, we're scared of the system. Babalikan kami. [They'll seek revenge.] We don't want to tolerate corruption, but nothing happens to our reports. We just become subjects of harassment, and other people even make money out of our reports’.

Auditors feel helpless, as ‘small people waging a war against political giants’.52 The appointment of COA officials lies in the hands of a 25-member Congressional Commission on Appointments, and threats are used to stop investigations. For example, there were allegations that the Commission would bypass the chairman’s appointment unless an auditor, who turned out to be a personal friend, was reinstated in Metro Manila. Horse-trading occurs in the area of auditor assignments, and auditors who have questioned irregular or corrupt practices have been promptly re-assigned.