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COMMISSION ON AUDIT CIRCULAR NO.

94-013 December 13, 1994

TO

: All Heads of Departments, Bureaus, Offices, Self-Governing Boards and Commissions, State Universities and Colleges, Chiefs of Financial and anagement Services, Chief Accountants!Heads of Accounting Units, Budget Officers, COA Auditors and others Concerned"

SUBJECT : #ules and #egulations in the Grant, Utili$ation and %i&uidation of Funds 'ransferred to (mplementing Agencies"

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#A'(O*A%+ 'here are pro,ects -hich re&uire inter-agenc. implementation" 'he funds are released to the agenc. -hich programmed the pro,ect in its Budget" (n turn, these funds are transferred!su/-allotted to the government agenc. -hich -ill implement the pro,ect" 'his Circular is, therefore, issued to ensure that0 the transfer is properl. ta1en up in the /oo1s of /oth agencies, the transferred funds are used onl. for the intended purpose, and that proper accounting and reporting is made of the utili$ation of the funds"

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CO3+#AG+ 'his Circular shall appl. to financial transactions of *ational Government agencies and instrumentalities involving grant, utili$ation and li&uidation of funds transferred to implementing agencies"

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D+F(*('(O* OF '+# S As used in this Circular, the terms herein shall /e understood to mean as follo-s0 4") (nter-Agenc. 'ransferred Funds - 'he cash or mone. transferred or su/allotted /. the agenc. to -hich the allotment -as originall. released in favor of another agenc. -hich -ill implement the pro,ect" 5ro,ect - 'he underta1ing, -hether construction -or1, research or training program, computer engagement or other authori$ed activities -hich an agenc. shall prosecute or implement in favor or in /ehalf of another agenc."

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Source Agenc. 6SA7 - 'he agenc. -hich the allotment has /een originall. released and in -hose /ehalf or /enefit the pro,ect -ill /e prosecuted!implemented" (mplementing Agenc. 6(A7 - 'he Agenc. to -hich the funds are transferred for the purpose of prosecuting!implementing the pro,ect" Agenc. - An. department, /ureau or office of the national government, or an. of its /ranches and instrumentalities, or an. political su/division, as -ell as an. government-o-ned or controlled corporation, including its su/sidiaries, or other self-governing /oard or commission of the government"

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G+*+#A% GU(D+%(*+S 8") 'he SA shall enter into an agreement -ith the (A for the underta1ing /. the latter of the pro,ect of the former" 'he Agreement shall provide for the re&uirements for pro,ect implementation and reporting" 'he cash!mone. transferred shall /e ta1en up as Cash, (nter-agenc. 'ransferred Funds 6:-;<-=:87 /. the source agenc. 6SA7 and as a trust lia/ilit. 6:-:8-)<<7 /. the implementing agenc." For this purpose, a special /udget to /e su/mitted to and approved /. the Department of Budget and anagement 6DB 7 is not re&uired" 'he fund to /e transferred or su/-allotted to the (A shall /e 6a7 in an amount sufficient for three months operation su/,ect to replenishment upon su/mission of the reports of dis/ursements /. the (A, or 6/7 the total pro,ect cost, as ma. /e determined /. the Heads of the t-o agencies in either case" 'he chec1 shall /e issued in the name of the (A for deposit to its trust account in its authori$ed government depositor. /an1" 'he (A shall issue its official receipt in ac1no-ledgment" A separate su/sidiar. record for each account shall /e maintained /. the (A -hether or not a separate /an1 account is opened" >ithin ten 6)<7 da.s after the end of each month!end of the agreed period for the 5ro,ect, the (A shall su/mit the #eport of Chec1s (ssued 6#C(7 and the #eport of Dis/ursement 6#D7 to report the utili$ation of the funds" Onl. actual pro,ect e?penses shall /e reported" 'he reports shall /e approved /. the Head of the (A" 'he SA shall dra- a @ournal 3oucher to ta1e up the reports" 'he amount to ta1e up the li&uidation per the #C( shall /e net of the cash advances granted /. the (A to its accounta/le officers in accordance -ith Commission on Audit Circular *o" A<-44) dated a. 4, )AA<"

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'he (A Auditor shall audit the dis/ursements out of the trust accounts in accordance -ith e?isting COA #egulations" 'he (A shall return to the SA an. unused /alance upon completion of the pro,ect" >hen the (A is a Bureau!#egional Office of the SA, the procedures for centrall. managed pro,ects shall /e follo-ed in accordance -ith entries herein provided"

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DU'(+S A*D #+S5O*S(B(%('(+S OF 'H+ SOU#C+ AG+*CB 'he SA shall0 9") 9"2 9"4 9"8 o/ligate the allotment for the pro,ect to /e implemented /ased on the advise of allotment and!or memorandum of agreement or similar documentC issue a chec1 in the name of (AC maintain a su/sidiar. ledger of the cash transferred pertaining to the pro,ectC re&uire the (A to su/mit the reports and furnish the (A -ith a cop. of the ,ournal voucher ta1ing up the e?penditures" Upon receipt of the cop. of the Certificate of Settlement and Balances 6CSB7 and the Credit *otice 6C*7 issued /. the (A Auditor, the Accountant shall dra- a ,ournal voucher restoring /ac1 the amount previousl. credited for an. disallo-ance" He shall furnish the (A -ith a cop. of the @3C and issue the official receipt for the une?panded /alance and the refunded disallo-ance remitted /. the (A"

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DU'(+S A*D #+S5O*S(B(%('(+S OF 'H+ ( 5%+ +*'(*G AG+*C(+S 'he (A shall0 =") ="2 6.3 ="8 issue an official receipt for ever. amount received from the SAC deposit the amount -ith its authori$ed depositor. /an1C ee! "e!#r#$e "%b"&'&#r( rec)r'" *)r $+e $r%"$ ,&#b&,&$( -+e$+er )r .)$ # "e!#r#$e b#. #cc)%.$ &" m#&.$#&.e'/ -ithin five 697 da.s after the end of each month, the Accounta/le Officer 6AO7 shall prepare the #C( and the #D and shall su/mit them -ith all supporting vouchers!pa.rolls and documents to the Accountant" 'hese reports shall /e approved /. the Head of the Agenc.C

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-ithin ten 6)<7 da.s after receipt from the AO, the Accountant shall verif. the #eports, provide accounting entries, record and su/mit the duplicate copies of the #eports -ith all the originals of vouchers!pa.rolls and all supporting documents to the (A Auditor" 'he Accountant shall ensure that onl. e?penses for the pro,ect are included in the #eports" He shall su/mit the original cop. of the #eports to the SA 6Attention0 'he SA Accountant7" record the disallo-ance in audit after receipt of the CSB and the C* issued /. the (A Auditor and re&uire the settlement of an. suspension and disallo-anceC return to the SA an. unused /alance and refund of disallo-ance upon completion of the pro,ect"

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DU'(+S A*D #+S5O*S(B(%('(+S OF 'H+ AUD('O# OF 'H+ SA 'he Auditor of the SA shall0 ;") ensure that the fund transferred is for a pro,ect of the SA -ith appropriate allotment and covered /. a OA!similar documents and that it is properl. recordedC advise the (A Auditor of the funds transferredC see that reports of dis/ursements are recorded, transmit the CSB and the C* from the (A Auditor to the Head and Accountant of the SA and ensure that the disallo-ances are immediatel. ta1en up in the SA /oo1sC coordinate -ith the Auditor of the (A for the regular reconciliation of the accountsC ensure that provisions of COA Circular *o" A<-42= are follo-ed -hen the (A audited is a Bureau!#egional Office of the SA"

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DU'(+S A*D #+S5O*S(B(%('(+S OF 'H+ AUD('O# OF 'H+ (A 'he Auditor of the (A shall0 :") :"2 :"4 :"8 ensure that the fund transferred is ta1en up as trust lia/ilit. in the /oo1s and that a separate su/sidiar. ledger is maintainedC audit the transactions for the pro,ect -ithin thirt. 64<7 da.s upon receipt of the reports from the (A AccountantC issue separate CSB and C* for the trust account and furnish the SA Auditor -ith a cop.C see that the une?pended /alance and the refund of the disallo-ance are remitted to the SA"

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%( ('A'(O* (* 'H+ US+ OF 'H+ FU*D '#A*SF+# (n no case shall the fund transferred /e utili$ed for the pa.ment of additional compensation to emplo.ees in the form of allo-ances, incentive pa., /onuses, honorarium, or other forms of additional compensation, e?cept as ma. /e authori$ed /. la- or e?isting regulations, nor shall it /e used to create ne- positions, to augment salaries of regular personnel or in case of purchase motor vehicles -ithout prior approval of the Office of the 5resident"

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ACCOU*'(*G +*'#(+S 'he accounting entries in recording the transfer and utili$ation of the transferred funds are prescri/ed in Anne? A"

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#+5+A%(*G C%AUS+ All circulars!issuances inconsistent here-ith are here/. modified accordingl."

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'his Circular shall ta1e effect immediatel."

0S1D.2 CELSO D. 1AN1AN, C+#&rm#. 0S1D.2 RO1ELIO B. ES3IRITU, C)mm&""&).er 0S1D.2 SO4RONIO B. URSAL, C)mm&""&).er