Uneven Institutionalization of Internal Control in Philippine Local Government Units: Evidence from Six Metro Manila Cities

Abstract Sound internal control underpins accountability in the public sector, yet little empirical evidence shows how consistently Philippine local government units (LGUs) have institutionalized the internal control regime prescribed by the Internal Audit Manual for Local Government Units. This study examined how internal control unit (ICU) staff in six of the wealthiest cities of the National Capital Region (NCR), Makati, Quezon City, Pasig, Manila, Caloocan, and Marikina assessed the attainment of five internal control objectives and compliance with five internal control standards, and whether these assessments differed across cities. A descriptive–comparative design was used. A researcher-developed, pilot-tested questionnaire (Cronbach’s α = .86) with a four-point forced Likert scale was administered to 131 ICU staff in 2019, and the data were analyzed using frequencies, percentages, means, one-way analysis of variance (ANOVA), and Tukey post hoc tests. Most indicators were rated at a “Greater Extent,” indicating functioning but incomplete institutionalization, and 64.1% of respondents reported that no dedicated ICU had been formally established. All 15 objective indicators and 12 of 15 standard indicators differed significantly across cities; both null hypotheses were therefore largely rejected. Only three indicators—issuance of receipts by bonded personnel, treatment of public complaints, and the study of process vulnerabilities—showed uniform practice. Aggregate rankings identified Makati and Quezon City as the most compliant and Marikina and Pasig as most in need of strengthening. The findings support city-specific capacity building and the establishment of operationally independent internal audit units, in line with the 2023 edition of the manual. Keywords: internal control, internal audit, local government units, public financial management, Philippines