Manual On The New Government Accounting System For National Government Agencies Accounting Policies

MANUAL ON THE
NEW GOVERNMENT ACCOUNTING SYSTEM

For National Government Agencies
ACCOUNTING POLICIES
Volume I
Chapter 1. Introduction
Sec. 1. Objectives of the Manual. The New Government

Accounting System (NGAS) Manual presents the basic policies and
procedures; the new coding system; the accounting systems, books,
registries, records, forms, reports, and financial statements; and
illustrative accounting entries to be adopted by all national government
agencies effective January 1, 2002. The objectives of the Manual are to
prescribe the following:
a. Uniform guidelines and procedures in accounting
for government funds and property;
b. New coding structure and chart of accounts;
c. Accounting books, registries, records, forms,
reports and financial statements; and
d. Accounting entries.
Sec. 2. Coverage. This Manual shall be used by all

national government agencies.
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Sec. 3. Legal Basis. This Manual is prescribed by the
Commission on Audit pursuant to Article IX-D, Section 2 par. (2) of the
1987 Constitution of the Republic of the Philippines which provides
that:
The Commission on Audit shall have exclusive authority,
subject to the limitations in this Article, to define the scope of its
audit and examination, establish the techniques and methods
required therefor, and promulgate accounting and auditing rules
and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and
properties". (underscoring supplied)
Chapter 2. Basic Features and Policies
Sec. 4. Basic Features and Policies. The NGAS has the

following basic features and policies, to wit:
a. Accrual Accounting. A modified accrual basis of

accounting shall be used. Under this method, all expenses
shall be recognized when incurred and reported in the
financial statements in the period to which they relate.
Income shall be on accrual basis except for transactions
where accrual basis is impractical or when other methods are
required by law.
b. One Fund Concept. This system adopts the one fund

concept. Separate fund accounting shall be done only when
specifically required by law or by a donor agency or when
otherwise necessitated by circumstances subject to prior
approval of the Commission.
c. Chart of Accounts and Account Codes. A new chart of

accounts and coding structure with a three-digit account
numbering system shall be adopted. (See Volume III, The
Chart of Accounts)
d. Books of Accounts. All national agencies shall maintain

two sets of books, namely:
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Regular Agency (RA) Books. These shall be used
to record the receipt and utilization of Notice of Cash
Allocation (NCA) and other income/receipts which the
agencies are authorized to use and to deposit with
Authorized Government Depository Bank (AGDB) and the
National Treasury. These shall consist of journals and
ledgers, as follows:
Journals
Cash Receipts Journal (CRJ)
Cash Disbursements Journal (CDJ)
Check Disbursements Journal (CkDJ)
General Journal (GJ)
Ledgers
General Ledger (GL)
Subsidiary Ledgers (SL) for:
Cash
Receivables
Inventories
Investments
Property, Plant and Equipment
Construction in Progress
Liabilities
Income
Expenses
National Government (NG) Books. These shall be

used to record income which the agencies are not authorized
to use and are required to be remitted to the National
Treasury. These shall consist of:
Cash Journal (CJ)

General Journal (GJ)
General Ledger (GL)
Subsidiary Ledger (SL)
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With the implementation of the computerized agency
accounting system, only the General Journal shall be used
together with the ledgers by both books.
e. Financial Statements. The following statements shall be

prepared:
Balance Sheet
Statement of Government Equity
Statement of Income and Expenses
Statement of Cash Flows
Notes to Financial Statements shall accompany the

above statements.
f. Two-Money Column Trial Balance. The two - money

column trial balance showing the account balances shall be
used.
g. Allotment and Obligation. Obligation accounting is

modified to simplify procedures in the incurrence and
liquidation of obligations and the recording of the
budgetary accounts (allotments and obligations incurred and
liquidated). Separate registries shall be maintained to
control the allotments and obligations for each of the four
classes of allotments, namely:
Registry of Allotments and Obligations - Capital

Outlay (RAOCO)
Registry of Allotments and Obligations -
Maintenance and Other Operating Expenses
(RAOMO)
Registry of Allotments and Obligations - Personal
Services (RAOPS)
Registry of Allotments and Obligations- Financial
Expenses (RAOFE).
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h. Notice of Cash Allocation (NCA). The receipt of NCA by
the agency shall be recorded in the books as debit to account
Cash-National Treasury, Modified Disbursement System
(MDS) and credit to account Subsidy Income from
National Government.
i. Financial Expenses. Financial expenses such as bank

charges, interest expenses, commitment charges and other
related expenses shall be separately classified from
Maintenance and Other Operating Expenses (MOOE).
j. Perpetual Inventory of Supplies and Materials. Supplies

and materials purchased for inventory purpose shall be
recorded using the perpetual inventory system. Regular
purchases shall be coursed thru the inventory account and
issuances thereof shall be recorded as they take place except
those purchased out of Petty Cash Fund which shall be
charged directly to the appropriate expense accounts.
k. Valuation of Inventory. Cost of ending inventory of

supplies and materials shall be computed using the moving
average method.
l. Maintenance of Supplies and Property, Plant and

Equipment Ledger Cards. For appropriate check and
balance, the Accounting Units of agencies, as well as the
Property Offices, shall maintain Supplies Ledger
Cards/Stock Cards by stock number and Property, Plant and
Equipment Ledger Cards/Property Cards by category of
property, plant and equipment, respectively.
m. Construction of Assets. For assets under construction, the

Construction Period Theory shall be applied for costing
purposes. Bonus paid to the contractor for completing the
work ahead of time shall be added to the total cost of the
project. Liquidated damages charged and paid for by the
contractor shall be deducted from the total cost of the
project. Any related expenses incurred during the
construction of the project, such as taxes, interest, license
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fees, permit fees, clearance fee, etc. shall be capitalized, and
those incurred after the construction shall form part of
operating cost.
n. Registry of Public Infrastructures/Registry of
Reforestation Projects. For agencies that construct public
infrastructures, such as roads, bridges, waterways, railways,
plaza, monuments, etc., and invest on reforestation projects,
a Registry of Public Infrastructures (RPI)/Registry of
Reforestation Projects (RRP) shall be maintained for each
category of infrastructures/reforestation projects. Examples
are:
Registry of Public Infrastructures - Bridges (RPIB)

Registry of Public Infrastructures - Roads (RPIR)
Registry of Public Infrastructures - Parks (RPIP)
Registry of Reforestation Projects (RRP)
A Summary of Public Infrastructures/Reforestation
Projects shall be prepared and included in the Notes to
Financial Statements.
o. Depreciation. The straight-line method of depreciation shall

be used. Depreciation shall start on the second month after
purchase of the property, plant and equipment, and a residual
value equivalent to ten percent of the purchase cost shall be
set-up. Public infrastructures/reforestation projects as well as
serviceable assets that are no longer being used shall not be
charged any depreciation.
p. Reclassification of Assets. Serviceable assets no longer

being used shall be reclassified to Other Assets account
and shall not be subject to depreciation.
q. Allowance for Doubtful Accounts. An Allowance for

Doubtful Accounts shall be set up for estimated uncollectible
trade receivables to allow for their fair valuation.
r. Elimination of Contingent Accounts. Contingent accounts
shall no longer be used. All financial transactions shall be
recorded using the appropriate accounts. Cash shortages and
disallowed payments, which become final and executory,
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shall be recorded under receivable accounts Due From
Officers and Employees or Receivables-Disallowances/
Charges, as the case may be.
s. Recognition of Liability. Liability shall be recognized at

the time goods and services are accepted or rendered and
supplier/creditor bills are received.
t. Interest Accrual. Whenever practical and appropriate,

interest income and/or expense shall be accrued and
recognized in the books of accounts.
u. Accounting for Borrowings and Loans. All borrowings

and loans incurred shall be recorded to the appropriate
liability accounts.
v. Elimination of corollary and negative journal entries. The

use of corollary and negative journal entries shall be
stopped. Acquisition/Disposition of assets shall be
debited/credited to the appropriate asset accounts. If an error
is committed, a correcting entry to adjust the original entry
shall be prepared.
w. Petty Cash Fund. The Petty Cash Fund shall be maintained

under the imprest system. As such, all replenishments shall
be directly charged to the expense account and at all times,
the Petty Cash Fund shall be equal to the total cash on hand
and the unreplenished expenses. The Petty Cash Fund shall
not be used to purchase regular inventory/items for stock.
x. Foreign Currency Adjustment. Cash deposits in foreign

currency and outstanding foreign loans shall be computed at
the exchange rate prescribed by the Bangko Sentral ng
Pilipinas at balance sheet date. The total cash deposits and
foreign loans payable shall be adjusted at the end of each
month and any gain or loss on foreign exchange shall be
recognized. The subsidiary ledger for foreign currency
obligations shall reflect the appropriate foreign currency in
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which the loan is payable. The liability shall be expressed
both in the foreign and local currency.
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Chapter 3. Accounting Systems
Sec. 5. General Accounting Plan. The General Accounting

Plan (GAP) shows the overall accounting system of a government
agency/unit. It includes the source documents, the flow of transactions
and its accumulation in the books of accounts and finally their
conversion into financial information/data presented in the financial
reports. Presented on next page is the General Accounting Plan for
national government agencies.
The following accounting systems are:

a. Budgetary Accounts System;
b.Receipts/Income and Deposit System;
c. Disbursement System; and
d.Financial Reporting System.
A. BUDGETARY ACCOUNTS
Sec. 6. Budgetary Accounts System. The Budgetary

Accounts System encompasses the processes of preparing Agency
Budget Matrix (ABM), monitoring and recording of allotments received
by the agency from the DBM, releasing of Sub-Allotment Release Order
(Sub-SARO) to Regional Offices (RO) by the Central Office (CO);
issuance of Sub-SARO to Operating Units (OU) by the RO; and
recording and monitoring of obligations.
Sec. 7. Budgetary Accounts. Budgetary accounts consist of

the appropriations, allotments and obligations. Appropriations refer to
authorizations made by law or other legislative enactment for payments
to be made with funds of the government under specified conditions
and/or for specified purposes. Appropriations shall be monitored and
controlled through registries and control worksheets by the DBM and
COA, respectively. Budgetary accounts allotments and obligations are
discussed in the succeeding sections.
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INSERT GENERAL ACCOUNTING PLAN
for
National Government Agencies
10
Sec. 8. Agency Budget Matrix (ABM). The ABM refers to
a document showing the disaggregation of agency expenditures into
components like, among others, by source of appropriations, by
allotment class and by need of clearance.
Sec. 9. Procedures for the Preparation of the ABM
Area of Seq.
Responsibility No. Activity
Budget Unit
Concerned Staff 1 Based on the approved General
Appropriations Act (GAA) and in
coordination with the DBM, prepares the
ABM by appropriations/financing sources
to support expenditures to be made during
the year broken down by allotment
class/expenses.
Note 1
The ABM shall contain, among others, the
following information:
The amount to be released categorized
under Not Needing Clearance
column, and
The amount that will be released
through the issuance of Special
Allotment Release Order (SARO)
categorized under "Needing
Clearance column including
continuing appropriations based on
the Statement of Allotments,
Obligations and Balances (SAOB).
2 Initials under 'Prepared by' portion of the

ABM.
Head, Budget Unit 3 Reviews and signs Prepared by portion of
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Area of Seq.
the ABM.
Concerned Staff 4 Forwards the ABM together with a
transmittal letter for the DBM to the Head
of the Agency for signature/approval.
Head of the Agency 5 Approves/Signs the ABM and the

transmittal letter.
Concerned Staff 6 Records in the logbook maintained and

submits the signed ABM to the DBM for
approval.
Sec. 10. Allotment Release Order (ARO). The ARO is a

formal document issued by the DBM to the head of the agency
containing the authorization, conditions and amount of an agency
allocation. The document may be the ABM, where the amount of
allocation not needing clearance is indicated, or the Special Allotment
Release Order (SARO), where the release of which is subject to
compliance with specific laws or regulations or is subject to separate
approval or clearance by competent authority. In the case of agencies
with decentralized accounting procedures, Sub-ARO/Sub-SARO is
issued/released.
Sec. 11. Recording of Allotments. Upon receipt of the

approved ABM and ARO, the Budget Officer/Head of the Budget
Unit/Designated Budget Officer shall record the allotment in the
respective registries through the Allotment and Obligations Slip
(ALOBS). Separate registries shall be maintained for the four allotment
classes by Program/Project/Activity (P/P/A), to wit:
1. Registry of Allotments and Obligations - Capital Outlay

(RAOCO)
2. Registry of Allotments and Obligations - Maintenance and
Other Operating Expenses (RAOMO)
3. Registry of Allotments and Obligations - Personal Services
(RAOPS)
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4. Registry of Allotments and Obligations - Financial
Expenses (RAOFE)
Sec. 12. Procedures in the Monitoring and Recording of

Allotments Received from DBM
Area of Seq.
Budget Unit 1 Receives the approved ABM/SARO from

Concerned Staff the DBM. Records the same in the logbook
and forwards the ABM/SARO to Budget
Staff for preparation of an Allotment and
Obligation Slip (ALOBS).
Budget Staff 2 Prepares ALOBS in two copies, assigns

number and initials the same. Forwards the
ALOBS and ABM/SARO to the Head of
the Budget Unit for review and signature.
Note 1
The numbering structure of the ALOBS
shall be as follows:
PS 00 00 0000
Serial Number
(One series for
the whole year)
Month
Year
Allotment Class
(PS, MOOE, CO
and FE) shall be
used only when
obligations are
recorded in the
ALOBS
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Area of Seq.
Note 2
The ALOBS shall be prepared in two
copies and shall be distributed as follows:
Original-Retained by the Budget Unit to
support recording in the
registries
Copy 2 -Accounting Unit
Head of the Budget 3 Reviews, checks the small box opposite

Unit the 'Received' portion in Box A of the
ALOBS and affixes signature certifying
receipt of allotment. Returns to the Budget
Staff for recording in the appropriate
Registry of Allotments and Obligations
(RAOs).
Budget Staff 4 Records the ALOBS in the appropriate

RAOs. Files the ALOBS for reference.
Note 3
The following RAOs shall be maintained
by the Budget Unit:
Registry of Allotments and
Obligations - Personal Services
(RAOPS)
Obligations -Maintenance and Other
Operating Expenses (RAOMO)
Obligations -Capital Outlays
(RAOCO)
Registry of Allotments and Obligations
- Financial Expenses (RAOFE)
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Area of Seq.
5 Forwards Copy 2 of the ALOBS to the

Accounting Unit for reference.
Sec. 13. Procedures for the Recording of Sub-Allotment
Release Order (Sub-ARO) by RO/ OU
Area of Seq.
Central Office/
Regional Office
Budget Unit 1 Based on the approved ABM received
Budget Staff from the DBM, prepares Sub-ARO for
RO/OU. Forwards the Sub-ARO to the
Head of the Budget Unit CO/RO for
review.
Head of the 2 Reviews and signs Sub-ARO. Forwards

Budget Unit the same to the Head of the CO/RO for
approval.
Head of Central 3 Approves the Sub-ARO.

Office/Regional
Office/
Authorized
Officer
Budget Staff 4 Based on the approved Sub-ARO, prepares

ALOBS in two copies. Assigns number
and initials the ALOBS. Forwards the
same with a copy of approved Sub-ARO to
the Head of the Budget Unit for review and
signature.
Note 1
Distribution of ALOBS shall be as
follows:
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Area of Seq.
Original - CO/RO Budget Unit

Copy 2 - CO/RO Accounting Unit
Note 2
Refer to ALOBS numbering structures in
Note 1 Sec. 12, Procedures in the
Monitoring and Recording of Allotments
Received from DBM
Head of the 5 Reviews, checks the small box opposite

Budget Unit the Sub-allotted portion of Box A of the
ALOBS and affixes signature certifying as
to the amount sub-allotted to RO/OU.
Forwards the same with the approved Sub-
ARO to Budget Staff for recording in the
appropriate RAOs.
Budget Staff 6 Records the ALOBS in the appropriate

RAOs. Files the ALOBS and a copy of the
Sub-ARO.
Note 3
The ALOBS covering sub-allotment for the
RO/OU shall be entered in the RAOs as
negative entry in the Allotment column
and shall be deducted from the allotment
balance.
Note 4
A copy of the ALOBS covering allotment of
the RO/OU shall be furnished the
Concerned Staff 7 Records in the logbook the release of the

Sub-ARO to RO/OU.
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Area of Seq.
Regional Offices/
Operating Units
Budget Unit
Concerned Staff 8 Receives the approved Sub-ARO from the
CO/RO. Records the same in the logbook
maintained. Forwards the Sub-ARO to the
Budget Staff for the preparation of
ALOBS.
Budget Staff 9 Prepares ALOBS in two copies, assigns

number and initials the same. Forwards
the ALOBS and Sub-ARO to the Head of
the Budget Unit for review and signature.
Note 5
Refer to Notes 1 and 2 of Sec.12,
Procedures for the Monitoring and
Recording of Allotments Received from the
DBM.
Head of the 10 Reviews the ALOBS based on the

Budget Unit Sub-ARO. Checks the small box opposite
the Received portion of Box A of the
ALOBS and affixes signature certifying
that the allotment was received. Forwards
the ALOBS and Sub-ARO to the Budget
Staff for recording in the appropriate
RAOs.
Note 6
Refer to Note 3, of Sec.12, Procedures for
the Monitoring and Recording of
Allotments Received from the DBM.
Budget Staff 11 Records the ALOBS in the RAOs. Files the

Sub-ARO and original of the ALOBS.
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Area of Seq.
12 Forwards copy 2 of the ALOBS to the

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Sec. 14. Accounting for Obligation. Obligation refers to a
commitment by a government agency arising from an act of a duly
authorized official which binds the government to the immediate or
eventual payment of a sum of money. The agency is authorized to incur
obligations only in the performance of activities which are in pursuits of
its functions and programs authorized in appropriation acts/laws within
the limit of the ARO.
Obligations shall be taken up in the registries through the
ALOBS prepared/processed by the Budget Unit. The Budget Officer/
Head of the Budget Unit/designated Budget Officer shall certify to the
availability of allotment and such is duly obligated by signing in the
appropriate box of the ALOBS. On the other hand, the Accountant/Head
of the Accounting Unit shall certify to the correctness and validity of
obligations, and availability of funds. Both Budget and Accounting
Units shall coordinate in the filling up of the Status of the Obligation in
their respective copies of the ALOBS
Sec. 15. Procedures for the Recording of Obligations
Area of Seq.
Budget Unit
Concerned Staff 1 Receives the Disbursement
Voucher/Payroll (DV/P), and supporting
documents, Contract/ Purchase Order
(C/PO) from concerned offices/personnel.
Verifies completeness of the documents. If
incomplete, returns the documents to
concerned offices for completion. If
complete, records the same in the logbook
maintained. Forwards the documents to
Budget Staff for the preparation of the
ALOBS.
Budget Staff 2 Verifies availability of allotment based on

the RAOs. If no allotment is available,
returns the documents to the
office/personnel concerned except as
authorized by the DBM.
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Area of Seq.
3 If there is an available balance of allotment
to cover the obligations, prepares an
ALOBS in three copies. Initials the
ALOBS and forwards the same to the
Head of the Budget Unit for review and
signature.
Note 1
Copy 3 of ALOBS shall be attached to the
DV. Refer to Note 2, Sec. 12, Procedures
for the Monitoring and Recording of
Allotments Received from DBM for the
distribution of the other copies of ALOBS.
Head of the 4 Reviews, checks the small box opposite
Budget Unit the Available and duly obligated portion
of Box A of the ALOBS and affixes
signature. Forwards the ALOBS and
documents to the Budget Staff for
recording in the appropriate RAOs.
Budget Staff 5 Records the amount obligated under the
Obligation column of the RAOs.
Forwards all copies of the ALOBS and the
documents to the Accounting Unit for
processing and signature.
Note 2
Obligations shall be posted in the
Obligation Incurred column of the RAOs
to arrive at the balance of allotment still
available at a given period.
6 Receives original of ALOBS from the
Accounting Unit. If there is no correction,
files the same to support the RAOs.
Otherwise, effects correction in the RAOs
or prepares a new ALOBS, as the case may
be.
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Area of Seq.
Note 3
For the succeeding activities, refer to
Sec. 34, Procedures for Disbursements By
Checks.
Note 4
There is no need to prepare a new ALOBS
for corrections/adjustments made by the
Accounting Unit after the processing of the
claims but before payment is made.
Adjustment in the RAOs shall be effected
thru a positive entry (if additional
obligation is necessary) or a negative
entry (if reduction) in the Obligation
Incurred column.
Note 5
Preparation of new ALOBS for the
following adjustments of obligations as
negative entries in the Obligation
Incurred column shall be made:
refund of cash advance granted during

the year
overpayment of expenses during the
year
disallowances/charges which become
final and executory
Certified copies of official receipts for the

overpayments/refunds, copies of bills for
overpayments and Notice that the
disallowances are final and executory
shall be furnished the Budget Unit by the
Accounting Unit for the preparation of
new ALOBS taking up the adjustments.
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B. INCOME/COLLECTIONS AND DEPOSITS
Sec. 16. Receipts/Income Collections and Deposits System.

The Receipts/Income Collections and Deposits System covers the
processes of acknowledging and reporting income/collections, deposits
of collections with Authorized Government Depository Bank (AGDB) or
through the AGDB for the account of Treasurer of the Philippines, and
recording of collections and deposits in the books of accounts of the
agency.
Sec. 17. Sources of Income of the National Government.

The income of the National Government are classified into general
income accounts and specific income accounts. The following comprise
the general income accounts, among others:
1. Subsidy Income from National Government
2. Subsidy from Central Office
3. Subsidy from Regional Office/Staff Bureaus
4. Income from Government Services
5. Income from Government Business Operations
6. Sales Revenue
7. Rent Income
8. Insurance Income
9. Dividend Income
10. Interest Income
11. Sale of Confiscated Goods and Properties
12. Foreign Exchange (FOREX) Gains
13. Miscellaneous Operating and Service Income
14. Fines and Penalties-Government Services and Business
Operations
15. Income from Grants and Donations
The specific income accounts of national government
agencies are classified as follows:
1. Income Taxes
2. Property Taxes
3. Taxes on Goods and Services
4. Taxes on International Trade and Transactions
5. Other Taxes
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6. Fines and Penalties-Tax Revenue
7. Other Specific Income
The descriptions of all the accounts and the instructions as to

when these are to be debited and credited are provided in Volume III of
the NGAS Manual.
Sec. 18. Methods of Accounting for Income. National
government agencies adopt the following accounting methods of
recording income:
1. Accrual Method - Accrual method
of accounting shall be used by national government agencies
when income is realized (earned) during the accounting
period regardless of cash receipt. Accounts receivable is set
up and the general or specific income accounts according to
nature and classification are credited.
2. Modified Accrual Under the
modified accrual basis, income of an agency is recorded as
Deferred Credits to Income and the appropriate receivable
account is debited. The income account is recognized upon
receipt of collection and the Deferred Credits to Income
account is adjusted accordingly.
3. Cash Basis - Cash basis of
accounting shall be used for all other taxes, fees, charges and
other revenues where accrual method is impractical. The
income account is credited upon collection of the cash or its
equivalent.
Sec. 19. Fines and Penalties. Fines and penalties, either on
tax revenues or other specific income accounts, shall be recognized as
income of the year these were collected.
Sec. 20. Other Receipts. Other receipts of national
government agencies shall be comprised of, but not limited to the
following:
1. Refund of cash advances - When cash advances for official
travels are granted, the account Due from Officers and
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Employees is debited and when refunds are made, the
same account is credited. Cash advances for salaries and
wages shall be recorded as debits to the account Cash-
Disbursing Officers and any refunds thereof shall be
credited to the same account.
2. Receipts of performance/bidders/bail bonds - Performance

bond posted by contractor or supplier to guaranty full and
faithful performance of their contract may be in the form of
cash or certified checks or surety. Performance bond in cash
or certified check shall be acknowledged by the issuance of
official receipt and recorded in the book of accounts by the
Accountant thru a Journal Entry Voucher (JEV) for the
purpose. In case of surety bond, an acknowledgement
receipt shall be issued by the authorized official.
3. Refund for overpayment of expenses - Refunds as a result of

overpayment of expenses shall be recorded as a credit to the
appropriate expense account if paid in the same year or to
Prior Years Adjustments if paid in the ensuing year. This
transaction shall reduce the amount of expense previously
recorded.
4. Collections made on behalf of another agency or private

companies - Collections made on behalf of other agencies
which are later remitted to them are recorded under accounts
Due to NGAs, Due to LGUs or Due to GOCCs as
the case maybe. Authorized collections made on behalf of
private entities, like shares of proponents of Built-Operate-
Transfer (BOT) Projects are recorded as Other Payables.
5. Inter-agency transferred funds - Cash received from another

agency for the purpose of implementing projects of that
agency is recorded in the books as a credit to account Due
to NGAs or Due to LGUs, as the case maybe.
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Sec. 21. Deposit of Collections. All Collecting Officers shall
deposit intact all their collections, as well as collections turned over to
them by sub-collectors/tellers, with AGDB daily or not later than the next
banking day. They shall record all deposits made in the Cash Receipts
Record.
Sec. 22. Reporting of Collections and Deposits. At the

close of each business day, the Collecting Officers shall accomplish the
Report of Collections and Deposits (RCD) in accordance with the
instructions provided in Volume II of the NGAS Manual for the RCD.
All collections shall be deposited with AGDB for the account of the
agency or the Treasurer of the Philippines daily or not later than the next
banking day.
Sec. 23. Procedures for Collections and Deposits Through

the Collecting Officer
Area of Seq.
Cash Unit Daily

Designated Staff 1 Receives cash/check from payor
representing collection based on the Order
of Payment (OP) prepared by the
Accounting Unit.
2 Issues Official Receipt (OR) to

acknowledge receipt of cash/check.
Note 1
Funding Checks received by the Cashier/
Collecting Officer of the RO/OU for its
operational requirements shall be issued
corresponding OR..
Note 2
Separate sets of ORs shall be used for the
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Area of Seq.
RA and NG Books.
Note 3
The OR shall be prepared in three copies
and shall be distributed as follows:
Original - Payor
Copy 2 - To be attached to the Report
of Collections and Deposits
(RCD)
Copy 3 - Cash Unit file
3 Records collections in the Cash Receipts

Record (CRR).
Note 4
Separate CRR shall be maintained for
collections under the RA and NG Books.
4 Prepares Deposit Slip (DS) in three copies.
Note 5
The DS shall be distributed as follows:
Original - AGDB
Copy 2 - To be attached to RCD
5 Deposits collections with AGDB.
Note 6
Collections pertaining to NG Books shall
be deposited with the AGDB for the
account of the Treasurer of the Philippines
6 Based on the validated DS from the AGDB
and copy of the ORs on file, prepares
26
Area of Seq.
Report of Collections and Deposits (RCD)

in two copies. Initials on the RCD and
forwards the same together with Copy 2 of
the ORs and DS to the Head of the Cash
Unit for review and signature.
Head of the Cash 7 Reviews and signs the RCD. Forwards
Unit original of RCD, Copy 2 of the ORs and
DS to the Designated Staff for submission
to the Accounting Unit.
Note 7
The RCD shall be distributed as follows:
Original - Accounting Unit together
with Copy No. 2 of the
ORs and DS - to support
the JEV
Designated Staff 8 Records the RCD in the logbook

maintained and forwards the same with the
ORs and DS to the Accounting Unit for
recording in the books of accounts.
Accounting Unit
Accounting Staff 9 Receives original of RCD with Copy 2 of
the ORs and DS from the Cash Unit.
Records receipt in the logbook maintained
for the purpose and forwards the same to
the Bookkeeper for review and preparation
of the JEV.
Bookkeeper 10 Based on the RCD, prepares JEV in two

copies and signs Prepared by portion of
the JEV. Forwards the JEV and documents
to the Head of the Accounting Unit for
27
Area of Seq.
review and signature.

Head of the 11 Reviews and signs Certified Correct by
Accounting portion of the JEV. Forwards the JEV and
Unit documents to the Bookkeeper for
recording in the Cash Receipt Journal
(CRJ) and/or Cash Journal (CJ) as the case
may be.
Note 8
CRJ shall be used to record collection
under the RA Books while the CJ shall be
used to record collections under the NG
Books.
Note 9
Sec. 71, Preparation and Submission of
Trial Balances and Other Reports.
Sec. 24. Procedures for Collections through Accredited

Agent Banks (AAB)
Area of Seq.
Accounting Unit
Receiving/ 1 Receives collection documents from the
Releasing Staff AAB/AGDB. Records receipt in the
logbook maintained for the purpose.
Forwards the same to the Bookkeeper for
preparation of the JEV.
Bookkeeper 2 Based on the received collection

documents, prepares JEV in two copies,
Signs Prepared by portion of the JEV.
Forwards the JEV and documents to the
28
Area of Seq.
Head of the Accounting Unit for review

and signature.

Accounting Unit portion of the JEV. Forwards the JEV and
documents to the Bookkeeper for
recording in the General Journal (GJ).
Note 1
Sec. 71, Preparation and Submission of
Sec. 25. Dishonored Checks. There are instances that checks

received by Collecting Officers in payment of taxes, fees and other debt
due the government are dishonored by the drawee banks. A check is said
to be dishonored by non-payment when, upon its being duly presented
for payment, such payment is refused or cannot be obtained. (Sec. 83,
RA No. 2031, Negotiable Instrument Law). It may also be defined as
those checks paid to the agency, which were dishonored by the AGDB
due to Drawn Against Insufficient Fund (DAIF) or Drawn Against
Uncleared Deposits (DAUD).
29
Sec. 26. Procedures in Recording Dishonored Checks
Area of Seq.
Cash Unit
Designated Staff 1 Receives from AGDB the Debit Memo
(DM) and copies of dishonored checks.
2 Verifies the dishonored checks against the

previous months RCDs maintained on file
to ascertain that the checks were included
in the previous months collections. If not
included, verifies from AGDB the details
of the dishonored checks.
3 If dishonored checks are included in the

RCDs, prepares Notice of Dishonor to
inform the drawers/indorsers/payors that
the checks were dishonored by the AGDB.
Note 1
The Notice of Dishonor shall be prepared
in three copies and shall be distributed as
follows:
Original - Drawer (To be delivered
personally or thru registered mail)
Copy 2 - Accounting Unit file
4 Retrieves from file copy of the OR

covering the dishonored check and
indicates in the OR the following notation:
Cancelled (date of Notice of Dishonor) per

Bank Debit/Voucher No._____ dated
_________
30
Area of Seq.
5 Retrieves CRR on file and records the

dishonored checks with the following
notation:
To take up Banks Debit Memo No. ___
dated ____ covering Check No. ___ for
P ____________ acknowledged under
OR No. _____ dated _______.
6 Prepares list of dishonored checks in two

copies. Forwards Copy 2 of the list and the
dishonored checks to the Accounting Unit
for preparation of the JEV.
Accounting Unit 7 Receives the list together with originals of

Accounting Staff dishonored checks and the Debit Memo
from the Cash Unit and records the same in
the logbook maintained for the purpose.
8 Based on the list, prepares the JEV in two

copies. Signs Prepared by portion of the
JEV and forwards the same to the Head of
the Accounting Unit for review and
signature.

Accounting Unit portion of the JEV. Forwards the JEV
supported by the list, originals of
dishonored checks and notice of dishonor
to the Bookkeeper for recording in the
books of accounts.
Note 2
Sec.71, Preparation and Submission of
31
C. DISBURSEMENTS
Sec. 27. Disbursements Defined. Disbursements constitute

all cash paid out during a given period either in currency (cash) or by
check. It may also mean the settlement of government
payables/obligations by cash or by check. It shall be covered by
Disbursement Voucher (DV)/Petty Cash Voucher (PCV) or payroll.
Sec. 28. Basic Requirements for Disbursements. The basic

requirements applicable to all types of disbursements made by national
government agencies are as follows:
1. Existence of a lawful and sufficient allotment certified as

available by the Budget Officer;
2. Existence of a valid obligation certified by the Chief

Accountant/Head of Accounting Unit;
3. Legality of transactions and conformity with laws, rules and

regulation;
4. Approval of the expense by the Chief of Office or by his

duly authorized representative; and
5. Submission of proper evidence to establish the claim.
Sec. 29. Disbursements System. The Disbursements System

involves the preparation and processing of disbursement voucher (DV);
preparation and issuance of check; payment by cash; granting,
utilization, and liquidation/replenishment of cash advances.
Sec. 30. Certification on Disbursements. Disbursements

from government funds shall require the following certifications on the
DV:
1. Certification and approval of vouchers and payrolls as to
validity, propriety and legality of the claim (Box A of DV)
by head of the department or office who has administrative
control of the fund concerned;
32
2. Necessary documents supporting the DV and payrolls as
certified and reviewed by the Accountant/Head of
Accounting Unit (Box B of DV); and
3. Certification that funds are available for the purpose by the

Accountant/Head of Accounting Unit (Box B of DV).
Sec. 31. Disbursements by Checks. Checks shall be drawn

only on duly approved DV or PCV. These shall be reported and recorded
in the books of accounts only when actually released to the respective
payees.
Two types of checks are being issued by government agencies as

follows:
1. Modified Disbursement System (MDS) Checks -

issued by government agencies chargeable against the
account of the Treasurer of the Philippines, which are
maintained with different MDS - Government Servicing
Banks (GSBs). These are covered by Notice of Cash
Allocation, an authorization issued by the DBM to
government agencies to withdraw cash from the National
Treasury through the issuance of MDS checks or other
authorized mode of disbursements.
2. Commercial Checks - issued by government

agencies chargeable against the Agency Checking Account
with GSBs. These are covered by income/receipts authorized
to be deposited with AGDBs; and funding checks received
by RO/OUs from COs/ROs, respectively.
Sec. 32. Recording of Check Disbursements in the Check

Disbursements Record (CkDR). All checks issued including cancelled
checks shall be recorded chronologically in the CkDR. The dates checks
were actually released shall be indicated in the appropriate column
provided for in the CkDR.
33
Sec. 33. Reporting of Checks Issued/Released. All checks
actually released to claimants shall be included in the Report of Checks
Issued (RCI), which shall be prepared daily by the Cashier. The RCI
shall be submitted to the Accounting Unit for the preparation of JEV. All
unreleased checks as of the report date shall be enumerated in a List of
Unreleased Checks to be attached to the RCI.
Sec. 34. Procedures for Disbursements by Checks.
34
Area of Seq.
A. Processing of Disbursement Voucher

(DV)
Accounting Unit
Receiving/ 1 Receives Copies 1-3 of DV, originals of
Releasing Staff supporting documents and Copies 1-3 of
ALOBS from the Budget Unit. Checks
completeness of supporting documents. If
incomplete, returns to the concerned party
for compliance.
2 If complete, stamps Received and

indicates date of receipt and initials on the
stamped Received portion of the DV.
Note 1
DV that shall be paid out of non-budgetary
receipts shall not pass the Budget Unit.
No ALOBS is needed. (Example - refund of
cash bond).
3 Assigns DV number and records in the

logbook the DV number and date, payee,
particular and amount. Forwards Copies
1-3 of DV, originals of supporting
documents and Copies 1-3 of ALOBS to
the Designated Staff for processing.
Note 2
The numbering structure for DV shall be
as follows:
00 - 00 - 0000
Serial Number
(One series for each year)
35
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
36
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
37
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
38
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
39
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
40
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
41
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
42
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
43
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
44
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
45
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
46
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
47
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
48
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
49
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
50
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
51
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
52
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
53
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
54
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
55
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
56
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
57
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
58
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
59
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
60
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
61
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
62
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
63
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
64
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
65
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
66
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
67
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
68
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
69
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
70
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
71
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
72
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
73
Area of Seq.

(DV)
Accounting Unit
for compliance.

Note 1
cash bond).

Note 2
as follows:
00 - 00 - 0000
Serial Number
74
Sec. 35. Disbursements by Cash. Disbursements by cash
shall be made from cash advances drawn and maintained in accordance
with COA rules and regulations. Cash payments shall be made based on
duly approved payrolls/disbursements vouchers.
Sec. 36. Cash Advances for Travel. Cash advances granted
for travel shall be accounted for as Due from Officers and Employees and
these are subject to liquidation upon travel completion. For liquidation of
travel where the amount of cash advance is equal to or more than the
travel expenses incurred, the Liquidation Report form shall be prepared by
the officers/employees concerned and submitted to the Accounting Unit as
basis for JEV preparation. The excess cash advance shall be refunded and
an OR shall be issued to acknowledge receipt thereof. In case the amount
of cash advance is less than the travel expenses incurred, a Liquidation
Report shall be submitted to liquidate the cash advance previously granted
and a DV shall be prepared to claim reimbursement of the deficiency in
amount.
Sec. 37. Procedures for Disbursements by Cash - Payment

for Payroll and Other Expenses
Area of Seq.
Cash Unit
Accountable/ 1 Receives the approved check from the
Disbursing Cashier. Records in the Cash
Officer Disbursements Record (CDR) the date,
reference, name of payee, particulars and
the amount of check in the debit column.
2 Encashes check in a GSB.
3 Pays officials and employees/other payees.
Note 1
Employees/payees shall sign on the
received portion of the payroll/DV to
75
Area of Seq.
acknowledge receipt of payment.
Note 2
If there are unclaimed salaries, refund the
same within a reasonable time. OR
representing the refund shall be issued by
the Cashier.
4 Records payment including the refund for

unclaimed salary in the credit column of
the CDR.
At the End of the Month
5 Based on the paid payroll/DV and

supporting documents, prepares Report of
Disbursements (RD) in two copies. Signs
the Certification portion of the RD.
Note 3
The RD shall serve as the liquidation
report of the cash advance granted to the
Disbursing Officer.
Note 4
The RD shall be distributed as follows:
Original - Accounting Unit together with
the originals of the paid
DVs/Payrolls and supporting
documents for JEV preparation
Accounting Unit
Releasing/ 6 Records in the logbook, indicates
Receiving Clerk Received and signs all copies, forwards
the RD to the Bookkeeper for JEV
preparation, and returns Copy 2 to the Cash
76
Area of Seq.
Unit.
Bookkeeper 7 Prepares JEV based on the RD and

supporting documents received.
Note 5
Sec.71, Preparation and Submission of
8 Records payroll payment in the individual

Index of Payments (IP) of officials and
employees.
77
Sec. 38. Disbursements Through Bank - Payroll Payment
Area of Seq.
Cash Unit
Cash Staff 1 Receives the approved check, DV and
Following Months' Payroll (FMP), signs
the logbook of the releasing office, and
forwards the documents to the Cashier.
2 Deposits the check to the Bank Payroll
Account together with the original of the
Summary of Employees Net Earnings
(SENE) received from Accounting Unit.
Files temporarily Copies 1-2 of FMP, copy
2 of the check, and Copies 1-3 of DV for
the preparation of RCI.
Note 1
The payee of the check is the Servicing
Bank whose authorized representative shall
acknowledge receipt of the check by
signing on the original of the DV.
Note 2
Refer to Seq. No. 19, Sec.34, Procedures
for Disbursements by Checks.
Note 3
Payroll payment through bank shall also
be recorded in the IP maintained by the
Accounting Unit.
78
Sec. 39. Disbursements Through Petty Cash Fund. Petty
Cash Fund shall be maintained under the imprest system. The fund shall
be sufficient for the non-recurring, emergency and petty expenses of the
agency. Disbursements from the fund shall be through the Petty Cash
Voucher (PCV) which shall be approved by authorized officials and
signed by the payee to acknowledge the amount received. The official
receipt or its equivalent is attached to the PCV.
Sec. 40. Procedures for Disbursements Through Petty

Cash Fund
Area of Seq.
Receipt of Check for the Establishment/

Various Unit Replenishment of Petty Cash Fund
Petty Cash
Custodian 1 Receives check from Cashier for the
establishment/replenishment of petty cash
fund. Retrieves Cash Disbursement Record
(CDR) and records the date, reference and
the amount of check in the
Disbursements column.
2 Encashes check in GSB and keeps the cash

in a safety vault.
Utilization of Petty Cash Fund
Requesting 3 Accomplishes Box A Requested by

Personnel portion of the Petty Cash Voucher (PCV).
Immediate 4 Signs Box A Approved by portion of the

Supervisor PCV and returns to Requesting Personnel.
Requesting 5 Submits to the Petty Cash Custodian for

Personnel the release of fund.
79
Area of Seq.
Petty Cash 6 Receives from the Requesting Personnel

Custodian the PCV duly approved by concerned
official.
7 Upon granting of the petty cash advance

and signs in Box B Paid by portion of the
PCV.
Requesting 8 Receives petty cash and signs in Box B

Personnel Cash Received by portion of the PCV.
Petty Cash 9 Issues Copy 2 of the PCV to requesting

Custodian personnel
10 Retrieves CDR from file and records paid

PCVs. Fills up the following columns:
date, reference, name of payee, nature of
payment, amount in the credit column and
cash advance balance.
11 Files the original of PCV awaiting

liquidation.
Liquidation of Petty Cash Advance
12 Receives from Requesting Personnel
Copy 2 of the PCV together with
supporting documents. Checks and reviews
completeness of documents such as the
date, amount and nature of expenses paid
as shown in the supporting documents.
If incomplete, returns to Requesting
13 Personnel for completion of needed
supporting documents.
If complete, retrieves the original of PCV
80
Area of Seq.
from file and fills up Box D Liquidation

Submitted portion of the original and
Copy 2 of PCVs.
14 Checks the appropriate boxes for

Received Refund or Reimbursement
Paid portion and signs Box C of the PCV.
Requesting 15 Checks and fills up the appropriate boxes

Personnel for Liquidation Submitted and
Reimbursement Paid upon submission of
necessary supporting documents and
receipt or reimbursement of cash, if any,
and signs the PCV.
Petty Cash Fund 16 Returns Copy 2 of the PCV to the

Custodian Requesting Personnel.
17 If the amount granted is equal to the

amount paid as shown in the liquidated
PCV, proceeds to Sequence No. 18.
If the amount is not equal to the amount

paid, retrieves from file the CDR and
records the necessary adjustments based
on the liquidated PCV. Fills up the
following columns: date, reference, name
of payee, and nature of payment, amount
in the appropriate debit, credit and
balance columns.
18 Files the original of the PCV together with

the supporting documents awaiting
replenishment.
81
Area of Seq.
Replenishment of Petty Cash Fund
Petty Cash Fund 19 Retrieves from file the original of the PCV
Custodian together with the supporting documents.
Checks the completeness of all PCVs for
replenishment.
20 Prepares the Petty Cash Replenishment

Report (PCRR) in two copies based on
PCVs in numerical sequence and fills up
the following columns: date, PCV No.,
particulars and amount.
21 Signs in the Certified Correct by portion

of the PCRR.
22 Based on the PCRR, prepares DV in three

copies. Forwards Copies 1-3 of the DV,
original of the PCRR and PCV, and
supporting documents to Authorized
Official for review and signature.
Authorized 23 Signs in Box A portion of the DV.

Official
Petty Cash Fund 24 Forwards Copies 1-3 of the DV, originals

Custodian of PCRR and PCVs and supporting
documents to Budget Division for
preparation of the ALOBS.
Note 1
Sec.15, Procedures in the Recording of
Obligations.
82
G. PROPERTY, PLANT AND EQUIPMENT, AND INVENTORY
ACCOUNTS
Sec. 41. Purchase or Construction of Property, Plant and

Equipment. Property, plant and equipment acquired through purchase
shall include all costs incurred to bring them to the location necessary for
their intended use, like transportation costs, freight charges, installation
costs, etc. These are recorded in the books of accounts as Assets after
inspection and acceptance of delivery.
During construction period, property, plant and equipment shall

be classified and recorded as Construction in Progress with the
appropriate asset classification. As soon as these are completed, the
"Construction in Progress" account shall be transferred to the appropriate
asset accounts.
Accounts Public Infrastructures and Reforestation Projects

are closed to Government Equity account and the asset is recorded in
the Registry of Public Infrastructures/Reforestation Projects at the end of
the year.
Sec. 42. Property and Inventory Accounting System. The

Property and Inventory Accounting System consists of the system of
monitoring, controlling and recording of acquisition and disposal of
property and inventory.
The system starts with the receipt of the purchased inventory

items and equipment. The requesting office in need of the inventory
items and equipment after determining that the items are not available in
stock shall prepare and cause the approval of the Purchase Request (PR).
Based on the approved PR and after accomplishing all the required
procedures adopting a particular mode of procurement, the agency shall
issue a duly approved Purchase Order. Procedures relative to the
obligation of the purchase order and payment of the deliveries are
83
discussed under Sections 14 and 31, Accounting for Obligation and
Disbursements by Check, respectively.
The sub-systems are as follows:
1. Receipt, Inspection, Acceptance

and Recording Deliveries of Inventory Items and Equipment
2. Requisition and Issuance of
Inventory Items
3. Requisition and Issuance of
Equipment
Sec. 43. Perpetual Inventory Method. Purchase of supplies

and materials for stock, regardless of whether or not they are consumed
within the accounting period, shall be recorded as Inventory account.
Under the perpetual inventory method, an inventory control account is
maintained in the General Ledger on a current basis.
Regular purchases shall be recorded under the Inventory account

and issuance thereof shall be recorded based on the Report of Supplies
and Materials Issued. Purchases out of the Petty Cash Fund shall be
charged immediately to the appropriate expense accounts.
The Accounting Unit shall maintain perpetual inventory records,

such as the Supplies Ledger Cards for each inventory stock, Property,
Plant and Equipment Ledger Cards for each category of plant, property
and equipment including work and other animals, livestock, etc. The
subsidiary ledger cards shall contain the details of the General Ledger
accounts.
For check and balance, the Property and Supply Office/Unit shall
maintain Property Cards (PC) for property, plant and equipment, and
Stock Cards (SC) for inventories. The balance in quantity per PC and SC
should always reconcile with the ledger cards of the Accounting Unit.
84
Sec. 44. Moving Average Method. The moving average
method of costing shall be used for costing inventories. This is a method
of calculating cost of inventory on the basis of weighted average on the
date of issue. The Accounting Unit shall be responsible in computing the
cost of inventory on a regular basis.
Sec. 45. Procedures in the Receipt, Inspection, Acceptance

and Recording Deliveries of Inventory Items and Equipment
Area of Seq.
Property and Delivery of Equipment and Inventory

Supply Unit Items
Property/
Supply Officer 1 Signs Received portion of the original
and Copy 2 of the Delivery Receipt (DR).
Files the original and returns Copy 2 of the
DR to the Supplier/Procurement Service.
2 Prepares Inspection and Acceptance Report

(IAR) in three copies. Forwards IAR,
original of DR, and Copy 2 of approved
PO from file to Property Inspector for
inspection of deliveries.
Note 1
Distribution of the IAR shall be as follows:
Original - Supplier (to be attached to
the DV)
Copy 2 - Property Inspector/
Inspection Committee
Copy 3 - Property and Supply Unit file
Property 3 Inspects and verifies items as to quantity

Inspector and conformity with specifications based
on the DR and approved PO. If in order,
85
Area of Seq.
signs and indicates date of inspection in

the Inspection column of the IAR.
Retains copy 3 of IAR and forwards the
items and Copy 1-2 of IAR, original of DR
and Copy 2 of PO to Property/Supply
Officer for acceptance.
4 If specifications are not in order or

delivery is not complete, indicates notation
on the IAR that the deliveries are not in
conformity with specifications agreed
under the approved PO or deliveries are
not complete. Forwards the IAR to the
Property/Supply Officer.
Property/Supply 5 Signs in Acceptance column,

Officer acknowledging receipt of the items
delivered. Checks the appropriate box
whether complete or partial (indicate
quantity received) delivery, and indicate
the date of receipt and remarks, if any.
Forwards items to Property/Supply
Custodian for safe-keeping/storage.
6 Prepares DV indicating the Supplier as

Payee. Attaches the original IAR, Copy 2
of DR, PO and photocopy of PR.
Forwards documents to Budget Unit for
the preparation of ALOBS. Forwards copy
2 of IAR and copy of PO to the
Property/Stock Card Keeper for recording
in the Property/ Stock Cards.
Note 2
For succeeding activities on processing of
86
Area of Seq.
payment for delivered inventory items and

equipment, refer to Sec.15, Procedures in
the Recording of Obligations and Sec. 34
Procedures in Disbursements by Checks.
Note 3
For purchases made through the
Procurement Service (PS), the DV shall be
prepared on the basis of the Approved
Agency Procurement Request. The
payment shall be made directly to the PS.
Accounting Unit After Payment of Deliveries

PPELC/SLC
Keeper 7 Posts necessary information to the
Property, Plant and Equipment Ledger
Card (PPELC)/Supply Ledger Card (SLC)
based on the paid documents forwarded by
the Cash Unit.
Sec. 46. Procedures in the Requisition and Issuance of

Inventory Items
Area of Seq.
Concerned Office Inquiry for the availability of supplies

Requesting
Personnel 1 Prepares the Supplies Availability Inquiry
(SAI) in two copies. Accomplishes the
form for item description, unit and
quantity.
2 Fills up the Inquired by portion of SAI
87
Area of Seq.

Requesting
quantity.
and forwards the same to Accounting Unit

for processing.
Accounting Unit
Accounting Staff 3 Receives SAI from Requesting Personnel.
Reviews and verifies the completeness of
information.
4 Retrieves from file the SLC and
determines availability/status of stocks.
5 Fills up the number, stock number, status

of stock and Status provided by portion
of the SAI. Returns the original to the
Requesting Personnel and files Copy 2 of
the SAI.
Concerned Office
Requesting
Personnel 6 Receives the original of SAI from the
Accounting Staff. If stock is not available,
prepares Purchase Request (PR) for the
item requested and forwards the same to
Property and Supply Unit for processing of
the request. If stock is available, prepares
Requisition and Issue Slip (RIS) in three
copies. Fills up all the necessary
information except for the issuance portion
and signs Requested by portion of the
RIS. Forwards the RIS to Authorized
Official for approval.
88
Area of Seq.

Requesting
quantity.
Note 1
The RIS shall be distributed as follows:
Original - Accounting Unit
Copy 2 - Property and Supply Unit
Copy 3 - Requesting Office
Authorized 7 Signs the Approved by portion of the

Official RIS.
Requesting 8 Receives signed RIS and forwards to the

Personnel Property and Supply Unit together with the
original of SAI for withdrawal of inventory
items requested.
Property and Supply
Unit
Supply Officer 9 Reviews and verifies RIS as to
completeness of information. Fills up the
RIS No./Date, and Quantity, Remarks and
initials Approved by portion of the RIS,
and records RIS in the logbook.
Head of the 10 Signs the Approved by portion of RIS

Property and and returns to the Supply Officer for
Supply Unit issuance of the stock.
Supply Officer 11 Fills up and signs the Issuance portion of
the RIS and issues inventory items
requested to the Requesting Personnel.
89
Area of Seq.

Requesting
quantity.
Concerned Office
Requesting 12 Receives supplies requested and sign in the
Personnel Received by portion of the RIS.
13 Files permanently in numerical order Copy

2 of RIS and files temporarily the originals
of RIS and SAI for the preparation of
Report of Supplies and Materials Issued
(RSMI).
Preparation of RSMI
14 Retrieves the original copies of RIS and

SAI from temporary file. Checks the
completeness of the RIS. If not complete,
verifies with the Supply Officer. If
complete, prepares RSMI in three copies.
15 Initials in the Certified by portion of the

RSMI.
Property and Supply

Unit
Head of the 16 Signs in the Certified by portion of the
Property and RSMI.
Supply Unit
Stock Card 17 Receives signed RSMI and forwards to
90
Area of Seq.

Requesting
quantity.
Keeper Accounting Unit the original and Copy 2

of RSMI together with originals of RIS
and SAI. Files Copy 3 of RSMI.
At the Start of the Day

Accounting Unit
Accounting Staff 18 Receives original and Copy 2 of RSMI,
and original SAI and RIS. Checks and
verifies the completeness of information.
Retrieves SLC from file and fills up the
To be filled up in the Accounting Unit
portion of RSMI. Records RSMI in the
SLC.
19 Signs in the Posted by/date portion of the

RSMI.
20 Files permanently in numerical order Copy
2 of RSMI and files temporarily the
original RIS, SAI and RSMI for recording
issuance of inventory items in the books of
accounts.
At Month End
21 Retrieves the original RIS, SAI and RSMI

from temporary file.
22 Prepares JEV in two copies based on the

RSMI to record the issuance of stock.
91
Area of Seq.

Requesting
quantity.
23 Signs in the Prepared by portion of the

JEV.
Head of the 24 Sign in the Certified Correct by portion

Accounting Unit of the JEV.
Accounting Staff 25 Receives signed JEV and forwards to

Bookkeeper the JEV, RSMI, RIS, and SAI
for recording in the General Journal. Files
copy 2 of JEV.
Note 2:
For succeeding activities, refer to Sec. 71,
Preparation and Submission of Trial
Balances and Other Reports.
Sec. 47. Procedures in the Requisition and Issuance of

Equipment
Area of Seq.
Concerned Office
Requesting
Personnel 1 Upon receipt of notice of availability of the
equipment requested, prepares RIS in three
copies.
Fills up the necessary information

pertaining to requisition, except Issuance
92
Area of Seq.
column of the RIS.
Authorized 2 Reviews RIS and signs Requested By in

Official the Requisition column.
Requesting 3 Records the signed RIS in the logbook and

Personnel indicate date, particulars and remarks.
Forwards the same to Property and Supply
Unit for processing of the requisition.
Property and Supply

Unit
Receiving Staff 4 Receives signed RIS from Requesting
Office. Records the date, particulars and
Requesting Office in the logbook. Assigns
number on RIS and issues Copy 3 to
Requesting Personnel for file.
Property Officer 5 Verifies RIS and checks against the PR.
6 Initials RIS and forwards the original and

Copy 2 of RIS to the Head of the Property
and Supply Unit for review and approval.
Head of the 7 Reviews RIS and signs the Approved By

Property and portion of RIS. Forwards Copies 1-2 of
Supply Unit RIS to Property Custodian.
Property 8 Based on the approved RIS, assigns

Custodian number on the property being transferred/
issued. Indicates the number in the RIS.
9 Prepares Acknowledgment Receipt of

Equipment (ARE). Indicates the quantity,
unit, description and property number of
the items being issued. Signs in the
93
Area of Seq.
Received from and Issued by portions

of the ARE and RIS, respectively. Records
the date, number and particulars in the
ARE logbook.
Note 1
ARE shall be distributed as follows:
Original - Property and Supply Unit file
Copy 2 - Recipient or user of the
property file
Concerned Office
Requesting 11 Retrieves Copy 3 of RIS. Checks item if it
Personnel is in conformity with RIS. Signs
Received By portion of original and
Copy 2 of ARE and RIS.
12 Returns original ARE and Copies 1-2 of

RIS to Property Custodian/Officer for
recording in the Property Card. Files Copy
2 of ARE and Copy 3 of RIS.
Supply and Property
Unit
Property Officer 13 Files original of ARE per accountable
officer/employee and Copy 2 of RIS.
Forwards the original RIS to the
Accounting Unit.
Accounting Unit 14 Receives original of the RIS. Retrieves the

PPELC Keeper PPELC and posts information pertaining
to issuance/transfer of property.
E. MISCELLANEOUS TRANSACTIONS
94
Sec. 48. Miscellaneous Transactions. Miscellaneous transactions
are transactions types that are unique and not recurring in the ordinary
course of government operations. These seldom take place or should not
happen at all. Some of the miscellaneous transactions are as follows:
1. Loss of Cash and Property

2. Request for Relief from Accountability
3. Cash Overage
4. Stale MDS and Commercial Checks
5. Set-up and Settlement of Disallowances
6. Refund of Overpayments
Sec. 49. Accounting for Loss of Cash and Property. Loss of
cash and property may be due to malversation, theft, robbery, fortuitous
event or other causes.
Cash shortage discovered during cash examination conducted by
auditors is reported through the Report of Cash Examination. The
Auditor issues an audit report in case of shortage in property
accountability. As soon as a shortage is definitely established, the Auditor
shall issue a memorandum pertaining thereto and the Accountant shall
draw a JEV to record the shortage as a receivable from the Accountable
Officer concerned.
In case of loss of property due to other causes like, theft, force
majeure, fire, etc., a report thereon shall be prepared by the Accountable
Officer concerned for purposes of requesting relief from accountability.
No accounting entry shall be made but the loss shall be disclosed in the
notes to financial statements pending result of request for relief from
accountability.
Sec. 50. Grant of Relief from Accountability. When a
request for relief from accountability for shortages or loss of funds is
granted, a copy of the decision shall be forwarded to the Chief
Accountant who shall draw a JEV to record the transaction. The loss
shall be debited to the Loss of Assets account and credited to the
appropriate receivable account. In case the request for relief is denied,
immediate payment of the shortage shall be demanded from the
Accountable Officer. Restitution shall be acknowledged by the issuance
of an official receipt.
95
In case the request for relief from accountability for loss of
property caused by fire, theft, force majeure or other causes is granted, a
copy of the decision shall likewise be forwarded to the Chief Accountant
for the preparation of the JEV. The loss shall be debited to the Loss of
Assets account and credited to the appropriate asset account. If request
for relief from accountability is denied, the loss shall be taken up as a
receivable from the Accountable Officer or employee liable for the loss
and shall be credited to the appropriate asset account.
Sec. 51. Accounting for Cash Overage. In case the cash
examination disclosed cash overage, as determined by the Auditor during
cash examination, the amount shall be forfeited in favor of the
government and an official receipt shall be issued by the Cashier. The
cash overage shall be taken up as Miscellaneous Income.
Sec. 52. Accounting for Stale Checks. Checks may be

cancelled when they become stale. The depository bank considers a
check stale, if it has been outstanding for over six months from date of
issue or as prescribed.
reported in the RC
A stale check shall be marked cancelled on its face and reported
as follows:
1. Unclaimed stale checks which are

still with Cashier shall be cancelled and reported in the List
of Unreleased Checks as cancelled. The List of Unreleased
Checks is attached to the RCI.
2. For stale checks which are in the

hands of the payees or holders in due course and requested
for replacements, new checks may be issued upon
submission of the stale checks to the Accounting Unit. A
certified copy of the previously paid DVs shall be attached
to the request for replacement. A JEV shall be prepared to
take up the cancellation. The replacement check shall be
reported in the RCI.
96
Sec. 53. Accounting for Disallowances. Disallowances shall
be taken up in the books of accounts only when they become final and
executory. The Accountant shall prepare the JEV to take up the
Receivable-Disallowances/Charges and credit the appropriate expense
account for the current year or Prior Years Adjustment account if
pertaining to expenses of previous years.
Cash settlement of disallowances shall be acknowledged through the

issuance of an official receipt and reported by the Cashier in the RCD.
Sec. 54. Accounting for Overpayments. Sometimes

overpayments or even double payment of expenditures do happen in
agencies. These could be avoided with the institution of proper controls
but some could not be avoided because of built-in procedures. One
example is the payment of payrolls. Payrolls are prepared in advance
and some agencies pay their employees through the banking system. All
these are done before reports of attendance are submitted, making it
impossible to know the exact amount to be paid in case there are
absences without pay during the pay periods. In case of overpayments,
refunds shall be demanded of the employees concerned.
Sec. 55. Pro-forma Accounting Entries. The following are

the pro-forma accounting entries for miscellaneous transactions:
Acct.
Particulars Account Title Code Dr. Cr.
1. Cash Shortage
a. Cash shortage of the Disbursing Officer
To take up cash Due from Officers and Employees 128 150

shortage Cash-Disbursing Officers 107 150
b. Cash Shortage of the Collecting Officer
To take up cash Due from Officers and Employees 128 150

shortage Cash-Collecting Officers 106 50
97
Acct.
2. Relief from Accountability for Loss of Government Funds and Property
a. Request for Relief from Accountability Granted.
To take up relief from

accountability
for current year - - Loss of Assets 948

or
for prior years - - Prior Years Adjustments 533 50
Due from Officers and
Employees 128 50
b. Request for Relief from Accountability Denied.
To record the loss of Due from Officers and Employees 128 150
fund by a Disbursing Cash-Disbursing Officers 107 150
Officer (allegedly
thru theft ) - P150
c. Cash Settlement/Restitution in case of denial of Request for Relief from

Accountability
To take up receipt of Cash-Collecting Officers 106 50

settlement Due from Officers and
Employees 128 50
To record deposit
c.1 current year Subsidy Income from National 601 50
Government
Cash-Collecting Officers 106 50
c.2 prior year Prior Years Adjustment 533 50

3. Cash Overage
To take up cash Cash Collecting Officers 106 50

overage discovered Due to National Treasury 433 50
during cash Miscellaneous Operating
examination and Service Income 50
To record deposit Due to National Treasury 433 50

Miscellaneous Operating
and Service Income 50
98
Acct.
4. Stale Checks
a. Stale MDS check issued in the current year for replacement
Check cancellation Cash-National Treasury, MDS 102 50

Accounts Payable 401 50
Replacement Accounts Payable 401 50

Cash-National Treasury, MDS 102 50
b. Stale MDS check issued in the prior years for replacement
Check cancellation Prior Years Adjustments 533 50


c. Stale commercial check issued in the current and prior years for replacement
Check cancellation Cash in Bank-Local Currency,

Current Account 110 50

Cash in Bank-Local Currency,
Current Account 110 50
5. Disallowances
a. Recording of disallowances for current years transaction
When the disallowances

becomes final and Receivables-Disallowances/
executory - Charges 138 10
overpayment of office Office Supplies Expenses 849 10
supplies
Amount paid - P100
Should be - 90
Difference - 10
99
Acct.
Settlement of Cash-Collecting Officers 106 10
Disallowance Receivables-Disallowances/
Charges 138 10
Deposit of collection Subsidy Income from National

Government 601 10
Acct.
Particulars Account Title Code Debit Credit
b. Recording of disallowance for prior years transaction
When the disallowance Receivables - Disallowances/

becomes final and Charges 138 10
executory Prior Years Adjustments 533 10
Settlement of Cash - Collecting Officers 106 10

disallowance Receivables - Disallowances/
Charges 138 10
Deposit of collection Prior Years Adjustments 533 10

6. Refund of Overpayment
a. Overpayment taken up as receivable
To record Due from Officers and Employees 128 10

overpayment of Salaries and Wages - Regular
salaries and wages Pay 801 10
(When overpayment
is ascertained)
To record receipt of Cash-Collecting Officers 106 10

refund Due from Officers and
Employees 128 10

Government 601 10
100
Acct.
Particulars Account Title Code Debit Credit
b. Refund of overpayment not taken up as receivable
To record receipt of Cash - Collecting Officers 106 10

refund of Salaries and Salaries and Wages Regular
Wages - Regular Pay Pay 801 10
during the current
year

Government 601 10
To record receipt of Cash-Collecting Officers 106 10

refund of Prior Years Adjustments 533 10
0verpayment in the
ensuing year
Deposit of collection Prior Years Adjustments 533 10

101
Chapter 4. Trial Balances, Financial Reports
and Statements
The Financial Statements Process
Statement of
Pre-Closing
Income and
TB
Expenses
Unadjusted
Trial Sec. 1. Statement of Government Equity. The
Balance
Statement of Government Equity (Appendix
Statement of48) shows the
Cash
Closing Journal Entries Flows
Adjustin
g Post-Closing
Entries Balance
TB
Sheet
Sec. 56. Financial Reporting System. This Financial

Reporting System (FRS) includes the preparation and submission of trial
balances, financial statements and other reports needed by fiscal and
regulatory agencies. The sub-systems are as follows:
1. Preparation and Submission of Trial Balances and

Other Reports
2. Preparation and Submission of Financial Statements
102
Sec. 57. Trial Balance. The Trial Balance shows the equality
of debit and credit balances of all general ledger accounts as of a given
period. It is prepared and submitted monthly, quarterly and annually. At
the end of the fiscal year, the pre-closing and the post-closing trial
balances shall be prepared.
Sec. 58. Purposes of the Trial Balance. The trial balance is

prepared to:
1. prove the mathematical equality of

the debits and credits after posting;
2. uncover errors in journalizing and posting; and
3. serve as basis for the preparation of the financial
statements.
Sec. 59. Pre-Closing Trial Balance. The Pre-Closing Trial

Balance (Appendix 2) shall be prepared after recording the adjusting
journal entries in the General Journal and posting the same to the
General Ledger. It shows the adjusted balances of all accounts as of a
given period. This is also described as the adjusted trial balance.
Sec. 60. Adjusting or Correcting Journal Entries. Under

the matching principle, adjustments shall be made for economic activities
that have taken place but are not yet recorded at the time when the
financial statements are prepared. Such adjusting journal entries are
made to ensure that revenues and expenses are recorded in the period
when they are earned or incurred. Adjustments are of two main types:
accrued items and deferred items.
Sec. 61. Adjustment for Accrued Item. It is an adjusting

entry for an economic activity already undertaken but not yet recorded
into an asset and revenue accounts or a liability and expense accounts. It
requires asset/revenue adjustments and liability/expense adjustments.
Sec. 62. Asset/Revenue Adjustment. It involves earned

revenues not yet recorded as assets and income at the end of the
accounting period. Examples are receivables for revenues already
earned but not yet collected nor billed as of the year end.
103
Account
Account Title Code Debit Credit
Interest Receivable 161 500
Interest Income 624 500
Sec. 63. Liability/Expense Adjustment. It involves

expenses, which already exist but remain unpaid at the end of the
accounting period. Examples are salaries, wages and other expenses
already incurred but not yet paid.
Account
Salaries and Wages-Regular Pay 801 1,000
Due to Officers and Employees 428 1,000
Sec. 64. Adjustment for Deferred Items. These are

adjusting entries transferring data previously recorded in an asset account
to an expense account, or data previously recorded in a liability account
to a revenue account. It also requires asset/expense adjustments and
liability/revenue adjustments.
Sec. 65. Asset/Expense Adjustments. These pertain to

assets, portion of which shall be recorded as expense of the agency at the
end of the accounting period. Examples are prepaid expenses, bad debts
and depreciation.
Account
Original Entry:
Prepaid Rent 161 1,000
Cash-National Treasury, MDS 102 1,000
Adjusting Entry:
Rent Expenses 841 900
Prepaid Rent 161 900
Sec. 66. Bad Debts. Trade receivables shall be valued at

their face amounts minus, whenever appropriate, allowance for doubtful
accounts. Bad Debts expense and/or any anticipated adjustments, which
in the normal course of events will reduce the amount of receivables
from the debtors to estimated realizable values, shall be set up at the end
of the accounting period.
104
The Allowance for Doubtful Accounts shall be provided in an
amount based on collectibility of receivable balances and evaluation of
such factors as aging of the accounts, collection experiences of the
agency, expected loss experiences and identified doubtful accounts.
The determination of bad debts expense shall be derived from

computations based on percentages and aging of accounts receivable as
follows:
Age of Accounts Percentage
1 - 60 days 1%
61 - 180 days 2%
181- 1 year 3%
More than 1 year 5%
An adjusting journal entry to take up bad debts expense is as follows:
Account
Bad Debts 929 1,000
Allowance for Doubtful Accounts 301 1,000
Sec. 67. Depreciation for Property, Plant and Equipment.

The costs of property, plant and equipment are allocated to the periods
benefited through the provision of accumulated depreciation.
Depreciation is the systematic and gradual allocation of the depreciable
amount of asset over its useful life. The depreciable or estimated useful
life for different types of agency assets are presented as Appendix 1.
Sec. 68. Method of Depreciation. Depreciation shall be

computed using the Straight Line Method. Depreciation shall start on the
second month from purchase. A residual value equivalent to ten percent
of the cost shall be set. Annual depreciation is computed as follows:
Annual Depreciation = Asset Cost less Estimated Residual/Salvage Value
Estimated Useful Life
Asset Cost - Purchase or Acquired Value of the Asset

Estimated Salvage Value - 10% of the asset cost
Estimated Useful Life - Estimated number of years the asset shall be
used as determined by the Commission
on Audit
105
A sample adjusting journal entry for
depreciation expense is as follows:
Account
Depreciation-Office Equipment 922 1,000
Accumulated Depreciation-Office 322 1,000
Equipment
Sec. 69. Closing Journal Entries. Closing journal entries are

general journal entries which close out the balances of all nominal/
temporary and intermediate accounts at the end of the accounting period.
The nominal and intermediate accounts that shall be closed at the end of
the accounting period are as follows:
1. Reversion of the unused or
unutilized Subsidy Income from National Government at the
end of the year due to the DBM policy that NCA will only be
valid within the year of issue except NCA for accounts
payable, which is valid one month after its issuance. There
is no need to issue an MDS Check when reverting the
account.
Account
Account Title Code Debit Credi
t
Subsidy Income from National 601 100
Government
2. Close the balance of the Subsidy

Income from National Government account to Income and
Expense Summary account.
Account
t
Subsidy Income from National 601 1,000
Government
Income and Expense Summary 532 1,000
3. Close the balance of all income
accounts to Income and Expense Summary account.
Account
t
Income from Government Services 611 500
106
Income from Government Business
Operations 612 400
Income and Expense Summary 532 900
4. Close the balance of all expense
accounts to Income an Expense Summary account.
Income and Expense Summary 532 800
Salaries and Wages-Regular Pay 801 800
5. Close the balance of the Income and
Expense Summary Account to the Retained Operating
Surplus account.
Income and Expense Summary 532 1,100

Retained Operating Surplus 534 1,100
5. Close the balance of the Prior Years Adjustments account to
Retained Operating Surplus account
10. .
Prior Years Adjustments 533 200

Retained Operating Surplus 534 200
Retained Operating Surplus 534 1,300

Government Equity 501 1,300
Government Equity 501 1,300

Public Infrastructures/ 243/
Reforestation Projects 244 1,300
Sec. 70. Post-Closing Trial Balance. The Post-Closing Trial
Balance (Appendix 3) shall be prepared after recording the closing
journal entries in the General Journal and posting to the General Ledger.
It contains a listing of all general ledger accounts that remain open after
the closing process is completed.
107
Sec. 71. Procedures in the Preparation and Submission of
Trial Balances and Other Reports
Area of Seq.
Preparation of Unadjusted Trial Balance

Accounting Unit
Bookkeeper 1 Records JEVs for the month in the Special
Journals and General Journal.
2 Posts the journal entries from the Special

Journals and General Journal to the
respective General Ledgers.
3 Records the source/summarizing

documents to the respective Subsidiary
Ledgers.
Note 1
The summarizing/source documents are the
following:
Report of Checks Issued (RCI)
Report of Collections and Deposits
(RCD)
Report of Disbursements (RD)
Journal Entry Voucher (JEV)
Disbursement Voucher (DV)
Other Supporting Documents (OSD)
4 Foots and extracts the balances of the

General Ledgers and Subsidiary Ledgers.
5 Based on the General Ledgers, prepares the
Unadjusted Trial Balance (UTB) to check
the postings made on the General Ledgers
or the equality of debit and credit balances
of the general ledger accounts. Files
temporarily.
108
Area of Seq.
Preparation of Pre-Closing Trial Balance
6 Prepares adjusting journal entries thru the

JEV for unrecorded transactions and for all
accounts that need to be adjusted/
corrected. Records the JEV in the General
Journal.
Note 2
Adjusting journal entries shall be prepared
for the following transactions:
Adjustment for Accrued Items

Adjustment for Deferred Items
Correction/Reclassification Entries
Provision for Allowance for Doubtful
Accounts
Provision for Accumulated Depreciation
7 Posts the adjusting journal entries from the

General Journal to the General Ledgers and
Subsidiary Ledgers.
8 Foots and extracts balances of the General

Ledgers and Subsidiary Ledgers.
9 Based on the General Ledgers, prepares

Pre-Closing Trial Balance in four copies.
Files temporarily the Pre-Closing Trial
Balance.
Note 3
Use of a Worksheet to facilitate the
preparation of the trial balances is
encouraged. The preparation of the
Worksheet is discussed in Sec. 82.
109
Area of Seq.
Note 4
The preparation of the adjusting journal
entries is at month end or as necessary.
Preparation of Other Reports
10 Reconciles the totals of the Subsidiary

Ledgers with the totals of the General
Ledgers accounts. If unreconciled, checks
the difference and prepares adjusting/
correcting entries as maybe necessary thru
the JEV.
11 If reconciled, prepares individual

supporting schedules per account based on
the Subsidiary Ledgers.
12 Initials the supporting schedules and the

Pre-Closing Trial Balance and forwards the
same to the Head of the Accounting Unit
for review and signature.
Head of the 13 Reviews and signs the Certified Correct

Accounting portion of the Pre-Closing Trial Balance
Unit and the supporting schedules.
Designated 14 Submits the Pre-Closing Trial Balance to

Staff the Offices concerned. Records submission
in the logbook maintained. Files Copy 4 of
the Pre-Closing Trial Balance and Copy 4
of supporting schedules for preparation of
financial Statements.
110
Area of Seq.
Preparation of Post-Closing Trial Balance

at year-end.
Bookkeeper 15 Prepares closing journal entries thru JEV

and records the same in the General
Journal.
Note 5
The following accounts shall be
closed/reverted at year-end:
Unused Subsidy Income from National

Government(Balance of account Cash-
National Treasury, MDS)
Nominal/Intermediate Accounts
Income accounts (including
Subsidy Income from National
Government, RO and OU) to
the Income and Expense
Summary (IES) account
Expense accounts to IES account
Prior Years Adjustments
account to Retained Operating
Surplus (ROS) account
Balance of IES account to ROS
account
ROS account to Government
Equity account
.
Note 6
In addition to the closing journal entries,
the account Infrastructure Projects/
Reforestation Projects shall be
transferred at year- end to the Registry of
Infrastructures/Registry of Reforestation
Projects.
111
Area of Seq.
16 Posts the journal entries from the General

Journal in the respective General Ledgers.
17 Foots and extracts the balances of the

General Ledgers and the Subsidiary
Ledgers.
18 Based on the General Ledgers, prepares

Post-Closing Trial Balance in four copies.
19 Reconciles the supporting schedules with

Post-Closing Trial Balance. If not
reconciled, prepares the necessary
corrections thru JEV. Records the JEV in
the General Journal.
20 Initials the Certified Correct by portion of

the Post-Closing Trial Balance and
Prepared by portion of supporting
schedules.
21 Prepares transmittal letter and forwards the

same together with the Post-Closing Trial
Balance and supporting schedules to the
Head of the Accounting Unit.

Accounting portion of the Post-Closing Trial Balance,
Unit supporting schedules and transmittal letter,
and forwards the same to the Accounting
Staff for distribution.
Accounting Staff 23 Distributes the Post-Closing Trial Balance

and supporting schedules to the Concerned
Offices. Records in the logbook the
submission of the same.
112
Area of Seq.
Note 7
Trial Balances and supporting schedules
shall be distributed as follows:
Copy 1 COA Resident Auditor
Copy 2 Accountancy Office, COA
Copy 3 DBM
Copy 4 Accounting Unit File
Note 8
The frequency of submission of Pre-
Closing Trial Balance/Post-Closing Trial
Balance and other reports shall be as
follows:
Pre-Closing Trial Balance and
other reports monthly, within ten
days after the end of the month to the
COA Resident Auditor and DBM
Year-end Pre-Closing Trial
Balance/ Post-Closing Trial Balance
and other reports on or before Feb.
14 of the following year to the COA
Resident Auditor, DBM and COA,
Accountancy Office.
Sec. 72. Generation of Financial Statements and

Supporting Schedules. Financial statements and their supporting
schedules are the products of the government accounting processes.
These are the principal comprehensive means by which the information
accumulated and processed in the state accounting system is periodically
communicated to those who use them. The financial statements generally
prepared in the National Government are: the Balance Sheet, Statement
of Income and Expenses, Statement of Government Equity, and
Statement of Cash Flows.
113
Sec. 73. Responsibility for Financial Statements.
Responsibility for the fair presentation and reliability of financial
statements rests with the management of the reporting agency. This
responsibility is discharged by applying generally accepted state
accounting principles that are appropriate to the entitys circumstances,
by maintaining effective system of internal control and by adhering to the
chart of accounts prescribed by the Commission on Audit.
To achieve fair presentation and reliable information of the
financial statements, the following standards shall be observed.
a. Fairness of
presentation. This refers to the overall propriety in
disclosing financial information. Full disclosure in financial
aspects requires observance of the following standards of
reporting:
All essential facts relating to the scope and purpose of
each report and the period involved shall be included and
clearly displayed.
All financial data
presented shall be accurate, reliable, and truthful. The
requirement for accuracy does not rule out the
inclusion of reasonable estimates when the making of
precise measurements is impracticable, uneconomical,
unnecessary, or conducive to delay. All appropriate
steps shall be taken to avoid bias, unclear facts, and
presentation of misleading information.
Financial reports shall
be based on official records maintained under an
adequate accounting system that produces information
objectively and discloses the financial aspects of all
events or transactions taking place. Where financial
data or reports based on sources other than the
accounting systems are presented, their basis shall be
clearly explained.
The financial data
reported shall be derived from accounts that are
maintained in all material respects on a consistent
114
basis from period to period; material changes in
accounting policies or methods and their effect shall be
clearly explained.
Consistent and non-
technical terminology shall be used in financial reports
to promote clarity and usefulness.
b. Compliance. The report
shall be in accordance with prescribed government
requirements and international accounting standards of
reporting.
c. Timeliness. All needed
reports shall be produced promptly to be of maximum
usefulness.
d. Usefulness. Financial
reports shall be carefully designed to present information
that is needed and useful to reports users.
Sec. 74. Statement of Management Responsibility for
Financial Statements. The Statement of Management Responsibility for
Financial Statements (Appendix 4) shall serve as the covering letter in
transmitting the agencies financial statements to the Commission on
Audit, Department of Budget and Management, other oversight agencies
and other parties. It shows the agencys responsibility for the preparation
and presentation of the financial statements. The statement shall be
signed by the Director of Finance and Management Office or
Comptrollership Office, or the Chief of Office who has direct supervision
and control over the agencys accounting and financial transactions, and
the Head of Agency or his authorized representative.
Sec. 75. Balance Sheet. The Balance Sheet (Appendices 5
and 6) is a formal statement which shows the financial condition of the
agency as of a certain date. It includes information on the three elements
of financial position - assets, liabilities and government equity. It shall
be prepared from information taken directly from the year-end Post-
Closing Trial Balance. The Balance Sheet shall be supported with the
following schedules/statements:
115
Schedules of Accounts Receivables (SAR)
(Appendix 7)
Schedules of Accounts Payables (SAP)
(Appendix 8)
Schedules of Public Infrastructures (SPI)
(Appendix 9)
Other schedules as may be required
Although the allotments and obligations of the agency are not
recorded in the books of accounts, the Statement of Allotments,
Obligations and Balances (SAOB) (Appendix 10) shall be submitted to
the Commission on Audit by the Budget Officer/Agency Officer
concerned. This statement shall to be included among the
aforementioned schedules for information of government officials and
oversight agencies.
Sec. 76. Statement of Income and Expenses. The

Statement of Income and Expenses (Appendices 11 & 12) shows the
results of operation/performance of the agency at the end of a particular
period. This statement shall be prepared by the Accounting Unit from
information taken directly from the Pre-Closing Trial Balance.
Sec. 77. Statement of Government Equity. The Statement

of Government Equity (Appendix 13) shows the financial transactions,
which resulted to the change in Government Equity account at the end of
the year.
Sec. 78. Statement of Cash Flows. The Statement of Cash

Flows (Appendix 14) is a statement summarizing all the cash activities of
an agency. This includes the operating, investing and financing activities
of the entity and provides information on the cash receipts and cash
payments during the period. The primary purpose of the Statement of
Cash Flows is to give relevant information on the agencys overall cash
position, liquidity and solvency. Using the Statement of Cash Flows,
managers, investors and creditors could easily assess if the agency could
meet its obligations in operating, investing and financing activities.
116
Sec. 79. Preparation of the Statement of Cash Flows. To
facilitate the preparation of the Statement of Cash Flows, the use of a
Working Paper is encouraged. It shall show the increase or decrease in
the cash accounts between two periods. The net increase in cash
provided by 1) operating 2) investing and 3) financing activities in
addition to the cash balance at the beginning shall equal to the cash
balance at the end of the period.
1) Operating Activities. Operating activities involves the

principal resources producing activities of the enterprise and
other activities that are not investing or financing (SFAS 22).
Generally, these include the cash effect on transactions that
enter in the Income and Expense Summary account.
2) Investing Activities. Investing activities involves the

acquisition and disposal of long-term assets and other
investments not included in cash equivalent (SFAS 22). These
activities include cash transactions covering non-operating
assets, such as the purchase of property, equipment, short and
long-term investments and other non-current assets.
Non-cash investing activities are not included in the

statement of cash flows.
3) Financing Activities. Financing activities are derived from

the equity capital and borrowings of the agency (SFAS 22).
These include cash transactions involving the government
equity and non-operational liabilities.
Non-cash financing activities are not included in the

statement of cash flows.
The increase or decrease in the cash accounts are analyzed and

the following computations are made:
Cash flows from operating activities
Cash Inflows:
Receipt of Notice of Cash allocation (NCA)
117
from the DBM
Receipt of Notice of Transfer of Allocation to
Agency RO/OU from CO
Cash receipts from all sources of revenues
Receipt of Inter agency cash transfers (Due to)
Cash receipts from the sale of goods or rendition
of services
Cash receipt of interest income, rental income,
dividend income, etc.
Receipt of payment for liquidated damages
Receipt of refund of deposits
Receipt of refunds of cash advance or excess
payments
Collection of receivables
Cash receipt of grants and donations
Receipt of cash dividends from enterprises (e.g.
PLDT)
Cash Outflows:
Payments of accounts payable
Cash purchase of merchandise for sale
Cash advances granted for travel
Inter-agency transfers (Due from)
Notice of Transfer of Allocation to Agency
RO/OU issued by the NGA Main Office to RO/OU
and/or attached agencies through Government
Servicing Banks
Return of unused NCA
Cash payment for operating expenses
Remittance of taxes withheld not covered by
TRA and other deductions (if any)
Cash purchase of supplies and equipment
Cash payment of retirement benefits
Cash payment of claims for damages
Cash payment for liabilities incurred in
operations
Cash payments for interest
Cash flows from investing activities:
118
Cash Inflows:
Proceeds from sale of marketable stocks and
bonds
Cash proceeds from the sale/disposal of
equipment and other property, plant and equipment
Redemption of long-term investments or
repayment by GOCC/GFI of long-term loans
Cash Outflows:
Purchase of property, plant and equipment
Purchase of land
Investment in stocks/bonds
Investment in GOCC/GFI
Exposure as other long-term investments
Cash flows from financing activities:
Cash Inflows:
Cash received from domestic and foreign loans
Issuance of treasury bills
Cash Outflows:
Payment of domestic and foreign loans
Redemption of treasury bills outstanding
Payment of cash dividend
The net increase in cash provided by operating activities,

investing activities and financial activities for the year, and the
cash balance at the start of the year, shall equal the cash balance
at the end of the year. Such amount shall tally with the total cash
account shown in the balance sheet.
Sec. 80. Notes to Financial Statements. Notes to Financial

Statements (Appendix 15) are integral parts of financial statements,
which pertain to additional information necessary for fair presentation in
conformity with generally accepted accounting principles. These may
explain the headings captions or amounts in the statements of present
119
information that cannot be expressed in money terms, and description of
accounting policies.
Information shall be presented in a way that will facilitate

understanding and avoid erroneous implications. The headings, captions
and amounts shall be supplemented by enough additional data so that
their meaning would be clear and not overshadowed by so much
information that important matters are buried in mass trivia.
Where Notes to Financial Statements appear on a separate page,

indicate the phrase See accompanying Notes to Financial Statements
placed at the bottom of said statements.
Material changes in classification of accounts shall be indicated

and explained as notes to financial statements.
The four types of disclosure considered necessary are as follows:
a. Customary or routine disclosure. Information about

measurement bases of important assets, restrictions on assets
and government equity, important long-term commitments
not recognized in the body of the statements, information on
terms of owners equity and long-term debt, and certain
other disclosures required by pronouncements of the
Philippine Institute of Certified Public Accountants,
Accounting Standards Council, and regulatory bodies that
have jurisdiction are necessary for full disclosure.
b. Disclosure of changes in accounting principles. Changes

in accounting principles, practices, or the methods of
applying them, together with the financial effect, and the
justification for the change shall be disclosed in the financial
statements or a note thereto.
In particular, it shall include any of the following:
Selection from existing acceptable

alternatives
120
Principles and methods peculiar to the
agency
Unusual application of generally
accepted accounting principles.
c. Disclosure of subsequent events. Disclosure of events that

affect the agency directly and that occur between the date of,
or end of the period covered by, the financial statements and
the date of completion of the statements is necessary if
knowledge of the events might affect the interpretation of the
statements, even though the events do not affect the
propriety of the statements themselves.
d. Disclosure of accounting policies. Description of the

accounting policies adopted by the reporting entity is
required as an integral part of the financial statements. It is
usually captioned Summary of Significant Accounting
Policies, and placed as first item in the Notes. It shall be
limited to description of the policies and no quantitative data
shall be included.
Examples of accounting policy disclosures

commonly required:
Consolidation principles
Accounting for long-term investments
Adoption of policy on increasing benefit
entitlements of the program members. The
effect of the increase shall be disclosed.
Basis of revenue recognition
In general, disclosures shall include important

judgment as to appropriateness of principles relating to
recognition of revenues and allocation of asset costs to
current and future periods.
121
Sec. 81. Interim Reports. Interim reports are the financial
statements required to be prepared at any given period or at a financial
reporting period without closing the books of accounts. The following
interim financial statements shall be prepared and submitted quarterly
with the Notes to Financial Statements:
a. Statement of Income and Expenses;

b. Balance Sheet; and
c. Statement of Cash Flows.
The interim financial statements shall be prepared employing the

same accounting principles used for annual reports. Adjusting and
closing journal entries shall be prepared. However, only the adjusting
journal entries are recorded in the books of accounts. To facilitate the
preparation of the interim financial statements, the use of the worksheet
is recommended.
Sec. 82. Worksheet. A worksheet is a tool for accumulating

and sorting information needed for the preparation of the financial
statements. It is a columnar sheet used to adjust and close account
balances in preparation for the preparation of the financial statements.
The format of the worksheet shall be as follows:
Agency Name
Worksheet
As of __________, 20__
Statement Post-
Unadjusted Adjusted/Pre-
Closing of Income Closing Balance
Accounts Trial Adjustments Closing Trial
Entries and Trial Sheet
Balance Balance
Expenses Balance
Title Code Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
a. Account Title and Code columns show the accounts of the

General Ledger.
b. The Unadjusted Trial Balance columns reflect the amount

balances of the General Ledger accounts.
122
c. Adjustments columns show adjusting journal entries effected
for the accounts.
d. Adjusted/Pre-Closing Trial Balance columns show the

balances of all the accounts after adjustments are
added/deducted from the balances of accounts in the
unadjusted trial balance.
e. Closing Entries debit and credit columns show the amounts

debited and credited to close the nominal accounts.
f. Statement of Income and Expenses columns show all the

debit and credit amount balances of the nominal accounts
(subsidies, income and expenses) and intermediate accounts.
g. Post-Closing Trial Balance columns show the debit and

credit amount balances of all accounts after posting the
closing entries.
h. Balance Sheet columns show all the debit and credit amount
balances of all real accounts in the post-closing trial balance
(assets, liabilities and government equity).
Chapter 5. Responsibility Accounting
Sec. 83. Responsibility Accounting Defined. Responsibility

accounting is a system that relates the financial results to a responsibility
center, which provides access to cost and revenue information under the
supervision of a manager having a direct responsibility for its
performance. It is a system that measures the plans (by budgets) and
actions (by actual results) of each responsibility center.
Sec. 84. Responsibility Center Defined. It is a part, segment,

unit or function of a government agency, headed by a manager, who is
accountable for a specified set of activities. Except for some, which
derive most of their income from collection of taxes and fees, national
government agencies are basically cost centers whose primary purpose is
to render service to the public at the lowest possible cost. Cost centers
are established to provide each government agency accessibility to cost
123
information and to facilitate cost monitoring at any given period. While
the use of Subsidiary Ledgers is sufficient to control cost, it requires
considerable time to summarize the cost incurred by agency for its
different programs, projects, activities and offices/divisions, hence,
responsibility accounting shall be done only under the computerized
accounting system.
Sec. 85. Objectives of Responsibility Accounting.

Responsibility accounting aims to: a) ensure that all costs and revenues
are properly charged/credited to the correct responsibility center so that
deviations from the budget can be readily attributed to managers
accountable therefore; b) provide a basis for making decisions for future
operations; and c) facilitate review activities, monitoring the
performance of each responsibility center and evaluation of the
effectiveness of agencys operations.
Sec. 86. Concepts of Responsibility Accounting. The

following are the concepts of responsibility accounting:
a. Responsibility accounting involves accumulating and

reporting data on revenues and costs on the basis of the
managers action who has authority to make the day-to-day
decisions about the items;
b. Evaluation of a managers performance is based on the matters

directly under his control;
c. Responsibility accounting can be used at every level of

management in which the following conditions exist:
1. Cost and
revenues can be directly associated with the specific
level of management responsibility;
2. Costs and revenues are controllable

at the level of responsibility with which they are
associated.
124
3. Budget data can be developed for
evaluating the managers effectiveness in controlling
the costs and revenues.
d. The reporting of costs and revenues under responsibility

accounting differs from budgeting in two respects:
1. A
distinction is made between controllable and non-
controllable costs.
a) A cost is considered controllable at a given level

of managerial responsibility if that manager has
the power to incur it within a given period of
time. It follows that (1) all costs are controllable
by top management because of the broad range
of its activity; (2) fewer costs are controllable as
one moves down to lower level of managerial
responsibility because of the managers
decreasing authority.
b) Non-controllable costs are costs incurred

indirectly and allocated to a responsibility level.
2. Performanc
e reports either emphasize or include only items
controllable by individual manager.
e. A responsibility reporting system involves the preparation of a

report for each level of responsibility. Responsibility reports
usually compare actual costs with flexible budget data. The
reports show only controllable costs and no distinction is made
between variable and fixed costs.
f. Evaluation of a managers performance for cost centers is

based on his ability to meet budgeted goals for controllable
costs.
125
Sec. 87. Responsibility Center Code Structure. Each
government agency shall be assigned a responsibility center code. The
coding structure shall be as follows:
000-00-000-000-000
Department/Agency/Province/City
Responsibility Area (CO/RO)
Sub-responsibility Area (District/

Division)
Sub-responsibility Area
(Office/Unit/Program/Project)
Account Code
Examples:
Example 1
000 -01- 000 -122 - 831
Department of ABC
Office of the Secretary
Central Office
None
126
Accounting Unit
Travelling Expense-Local
Example 2
000 - 06- 021 - 401 - 831
Department
Office of the Secretary
Regional Office III
Operating Unit I
Local Project -
Computerization
Travelling Expense - Local
Sec. 88. Computerized Accounting System. Since

responsibility accounting cannot be done under the manual system, the
details of this shall be discussed on the Manual for Computerized
Accounting system to be issued by the Commission on Audit.
Chapter 6. Illustrative Accounting Entries
Sec. 89. Illustrative Accounting Entries in Regular

Agency (RA) Books.
a. Illustrative Accounting Entries for Typical

Transactions of Central/Regional Offices and Operating
Units (CO/RO/OU) receiving Notice of Cash Allocation
127
(NCA) from the Department of Budget and Management
(DBM).
Central/Regional Offices and Operating Units receiving

NCA directly from the DBM shall be guided by the
illustrative accounting entries shown in Annex A.
b. Illustrative Accounting Entries for Decentralized

Agencies
Regional Offices and Operating Units receiving NCA

directly from the DBM and funding checks from CO/RO
shall be guided by the illustrative accounting entries shown
in Annex B.
Sec. 90. Illustrative Accounting Entries in National

Government (NG) Books.
National Government Agencies whose income/collections are

required to be recorded in the NG Books and remitted to the National
Treasury through Authorized Government Depository Banks shall follow
the illustrative accounting entries shown in Annex C.
128

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MANUAL ON THE

NEW GOVERNMENT ACCOUNTING SYSTEM

Sec. 1. Objectives of the Manual. The New Government

Sec. 2. Coverage. This Manual shall be used by all

Chapter 2. Basic Features and Policies

Sec. 4. Basic Features and Policies. The NGAS has the

a. Accrual Accounting. A modified accrual basis of

b. One Fund Concept. This system adopts the one fund

c. Chart of Accounts and Account Codes. A new chart of

d. Books of Accounts. All national agencies shall maintain

National Government (NG) Books. These shall be

Cash Journal (CJ)

e. Financial Statements. The following statements shall be

Notes to Financial Statements shall accompany the

f. Two-Money Column Trial Balance. The two - money

g. Allotment and Obligation. Obligation accounting is

Registry of Allotments and Obligations - Capital

i. Financial Expenses. Financial expenses such as bank

j. Perpetual Inventory of Supplies and Materials. Supplies

k. Valuation of Inventory. Cost of ending inventory of

l. Maintenance of Supplies and Property, Plant and

m. Construction of Assets. For assets under construction, the

Registry of Public Infrastructures - Bridges (RPIB)

o. Depreciation. The straight-line method of depreciation shall

p. Reclassification of Assets. Serviceable assets no longer

q. Allowance for Doubtful Accounts. An Allowance for

s. Recognition of Liability. Liability shall be recognized at

t. Interest Accrual. Whenever practical and appropriate,

u. Accounting for Borrowings and Loans. All borrowings

v. Elimination of corollary and negative journal entries. The

w. Petty Cash Fund. The Petty Cash Fund shall be maintained

x. Foreign Currency Adjustment. Cash deposits in foreign

Sec. 5. General Accounting Plan. The General Accounting

The following accounting systems are:

Sec. 6. Budgetary Accounts System. The Budgetary

Sec. 7. Budgetary Accounts. Budgetary accounts consist of

Sec. 9. Procedures for the Preparation of the ABM

2 Initials under 'Prepared by' portion of the

Head, Budget Unit 3 Reviews and signs Prepared by portion of

Head of the Agency 5 Approves/Signs the ABM and the

Concerned Staff 6 Records in the logbook maintained and

Sec. 10. Allotment Release Order (ARO). The ARO is a

Sec. 11. Recording of Allotments. Upon receipt of the

1. Registry of Allotments and Obligations - Capital Outlay

Sec. 12. Procedures in the Monitoring and Recording of

Budget Unit 1 Receives the approved ABM/SARO from

Budget Staff 2 Prepares ALOBS in two copies, assigns

Head of the Budget 3 Reviews, checks the small box opposite

Budget Staff 4 Records the ALOBS in the appropriate

5 Forwards Copy 2 of the ALOBS to the

Head of the 2 Reviews and signs Sub-ARO. Forwards

Head of Central 3 Approves the Sub-ARO.

Budget Staff 4 Based on the approved Sub-ARO, prepares

Original - CO/RO Budget Unit

Head of the 5 Reviews, checks the small box opposite

Budget Staff 6 Records the ALOBS in the appropriate

Concerned Staff 7 Records in the logbook the release of the

Budget Staff 9 Prepares ALOBS in two copies, assigns

Head of the 10 Reviews the ALOBS based on the

Budget Staff 11 Records the ALOBS in the RAOs. Files the

12 Forwards copy 2 of the ALOBS to the

Sec. 15. Procedures for the Recording of Obligations

Budget Staff 2 Verifies availability of allotment based on