Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City NO: 2017-_ O10 DATE: MEMORANDUM To : The Assistant Commissioners, Directors, Supervising Auditors (SAs), Regional SAs (RSAs), Audit Team Leaders (ATLs) of the National Government Sector (NGS), Corporate Government Sector (CGS), Local Government Sector (GS), and all Others Concerned Subject Restatement with Amendment of All Issuances Governing Submission of Status Reports of Unliquidated Cash Advances, Fund Transfers and other Receivables 1. RATIONALE While the Commission recognizes the susceptibility of cash advance to abuse, it also recognizes the grant of cash advances as a facilitation tool in the financial operation of the government. Thus, to strengthen internal control, rules and regulations in the grant, utilization and liquidation of cash advances were prescribed, the latest of which is under COA Circular No, 97-002 dated February 10, 1997. This was supplemented by COA Memorandum No. 2004-014 issued on February 24, 2004 requiring submission of Reports on Unliquidated Cash Advances to the Civil Service ‘Commission, Presidential Anti-Graft Commi n, Office of the Ombudsman (OMB) or Department of Justice, and COA Circular No. 2012-004 issued on November 28, 2012, demanding for immediate liquidation and settlement of all cash advances outstanding as of December 31, 2011. COA also issued COA Circular Nos. 94-013 dated December 13, 1994 prescribing the rules and regulations in the grant, utilization, and liquidation of funds transferred to Implementing Agencies and 2007-001 dated October 25, 2007 prescribing the guidelines in the grant, utilization, accounting and auditing of funds released to Non-Governmental Organizations/People’s Organization (NGOs/POs). Despite considerable measures adopted by the Commission, significant amounts of unliquidated cash advances and fund transfers, and other receivables were reported as of end of CY 2016 In view thereof, there is a need to assess and establish the status of unliquidated cash advances, fund transfers, and other receivables as of end of CY 2016 for purposes of taking appropriate action and/or demanding settlement thereof. For this purpose, the monitoring reports prescribed under existing COA regulations are hereby revised. ILIl. LEGAL BASIS Section 2 (2), Article [X-D, 1987 Philippine Constitution granted the Commission the exclusive authority, subject to limitations prescribed therein, 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 IILCOVERAGE, This Guidelines shall cover unliquidated cash advances granted to Accountable Officers (AO) and employees, for operating expenses, payroll, special purpose/time-bound activities or undertakings and travel; funds released to Ci Society Organizations (CSOsVNGOs/POs; unliquidated fund transfers to/from NGAs, LGUs and GOCCs; and all other receivable accounts. IV.GENERAL GUIDELINES Audit Teams shall analyze the schedules of all receivables, unliquidated cash advances, and fund transfers as of December 31, 2016 prepared by the Auditees, including reports on dormant accounts, to determine their status and assess collectability considering available documents and to prepare Status Report thereon to be submitted not later than June 30, 2017. The status report shall be updated semi- annually to be submitted to the concerned Cluster/Regional Directors (CD/RD) within 30 days after the end of each semester. The Audit Team Leader (ATL) shall request from the Accountant proof of exhaustion of all remedies to collect receivables and liquidate cash advances and fund transfers as basis for the issuance of the final demand letter. There is therefore a need for the Accountant to issue demand letter to the AO/employce/recipient/NGOs to liquidate their due and demandable cash advances/fund transfers. V. SPECIFIC GUIDELINES. 1. The ATLs shall submit to their respective SAs/RSAs for review and submission to the CD/RD, the status of all receivables, unliquidated cash advances and fund transfers as of December 31, 2016 using the form attached as Annexes A to D not later than June 30, 2017. The Report shall include all accounts covered under COA Circular No. 2016-005 dated December 19, 2016. The Report shall be updated semi-annually to include newly granted cash advances and actions taken by both agency officials and the ATL as of reporting period, to be submitted to their respective CD/RD within 30 days after the end of each semester. 2. For long outstanding cash advances/fund transfer/other receivables not yet issued by the ATL with final demand letters, the ATL shall immediately issue the same upon receipt of the Schedules from the Auditees and proof of action taken by the accountant to demand liquidation/settlement thereof in preparation for the filing of hraccountant to demand liquidation/settlement thereof in preparation for the filing of appropriate charges by the concerned CD/RD before the OMB in case the accountable officersirecipient/NGO failed to comply therewith. In this case, the accumulation of unliquidated cash advances/fund transfers can be minimized if not totally avoided, Format of demand letters are attached as Annexes E and F 3. If the filing of administrative and/or criminal charges is warranted, the SA and ATL shall attach a swom Narrative Report (format attached as Annexes G and H) for each cash advance’ fund transfer, supported by the following documents: a) For Cash Advances to AOs and employees and other Receivables: Appointment of the AO granted CA, if applicable Designation or authority to draw CA, if authorized Authenticated copy of AO’s Fidelity Fund, if applicable Photocopy of demand letter and proof of receipt by the AO and/or employee or recipient and answer/explanation thereto, if any * Authenticated copy of disbursement voucher/s and supporting documents pertinent to CA granted to the AO/employee/recipient or equivalent and partial liquidation documents, if any * Authenticated copy of the paid check for the CA Pertinent Audit Observation Memorandum, if any © Notice of Suspension and/or Notice of Disallowance for the grant of and liquidation of CA, if any * Other relevant documents immediately available b) For Grant/Fund Transfers to NGO/PO: * Photocopy of Demand Letter and Proof of Receipt by the NGO/PO and answer/explanation thereto, if any © Authenticated copy of the Memorandum of Agreement or Trust ‘Agreement + Authenticated copy of the Official Receipt issued by the NGO upon receipt of fund transfer ‘* Authenticated copy of disbursement voucher/s and supporting documents pertinent to the grant/fund transfer or equivalent and partial liquidation documents, if any « Authenticated copy of the paid check for the grant/ fund transfers, if immediately available + Pertinent Audit Observation Memorandum, if any ‘* Notice of Suspension and/or Notice of Disallowance for the grant/fund transfer and corresponding liquidation, if any © Other relevant documents: 4. Upon receipt of the Status Report, the CD/RD concerned, with the assistance of their Legal Officer, shall evaluate the Status Report and accompanying sworn Narrative Report and its attachments within 30 days upon receipt. If there are bases for filing charges, the CD/RD shall execute complaint affidavit for the ‘Commission to be supported by Narrative Report, together with certified copy of pertinent documents, to be forwarded to the OMB within 15 days upon completion of the evaluation. {u 3Vi. 5. For unliquidated cash advances, fund transfers, and other receivables with no available document but are not yet considered dormant as defined under COA Circular No. 2016-005, the Accountant and the SA/ATTL shall separately execute a sworn Certification, samples attached herein as Annexes I and J, which shall be submitted as an attachment to the Report, indicating, among others, the reasons for the loss of documents, and the person/s responsible thereof. This is to promote accountability in safeguarding documents in their possession. There is no need to resubmit the same sworn Certifications in the following reporting period, 6. In case of non availability of documents, and considering that filing of criminal case is no longer feasible, the CD/RD shall determine the appropriate administrative charges to be filed against. AOs and employees and other responsible persons such as Grave Misconduct (for violation of an established rule requiring the timely liquidation of CA), Neglect of Duty (to liquidate or to safeguard public documents), or Conduct Prejudicial to the Interest of the Service, against those who failed to liquidate, and or failed to enforce liquidation or are responsible in the safekeeping of documents or granted clearance to accountable officers despite unliquidated cash advances. The CD/RD shall then instruct the SA/ATL of the appropriate action to be taken and additional documents to be gathered to support filing of the appropriate administrative charges. 7. For dormant Receivable Account/Untiquidated Cash Advances and Fund Transfers as defined under COA Circular No. 2016-005 dated December 19, 2016, the ATL shall advise the auditees to file the appropriate request for authority to write-off dormant accounts pursuant to the said circular. Once the request for write off was approved and reported, the account will no longer be included in the Status Report for the next reporting period. For those covered by Narrative Report, they shall continue to be included in the Status Report 8. It is the responsibility of the CD/RD to ensure that appropriate criminal and administrative cases are filed before the OMB as soon as the AO or employee or NGO/PO failed to liquidate cash advances or funds transferred to them within the period prescribed under existing laws and regulations despite demand, 9. The submission of the Status Report shall be included in the Sector Performance Commitment and Review (SPCR), Office Performance Commitment and Review (OPCR), Division Performance Commitment and Review (DPCR), and Individual Performance Commitment and Review (IPCR) of the concemed officials and employees. 10. The Assistant Commissioner concemed shall monitor compliance by the Directors and Auditors to these guidelines and shall report non compliance thereto to the Chairperson, SAVING CLAUSE ‘This Guidelines shall not be interpreted to either condone the written-off accounts or to extinguish the obligations. The SA/ATL shall continue to monitor actions taken by management on unliquidated amount and to take appropriate action thereon. Further, this shall not be construed as a ground to exonerate the liability of the officers/employees for infidelity in the custody of documents,VII. REPEALING CLAUSE COA issuances that are inconsistent herewith are hereby repealed or modified accordingly, particularly, the Auditors responsibilities under Item 9.3.3 of COA. Circular No. 97-002 dated February 10, 1997. Reports on cash advances being submitted by the SA/ATL pursuant to COA Circular Nos. 97-002 and 2012-004, and COA Memoranda Nos. 2004-014 and 2005-001 are replaced by the Status Report prescribed herein, The submission of Quarterly Report on Request for Write-Off prescribed under COA Circular No. 2016-005 dated December 19, 2016 shall ren VI. EFFECTIVITY ‘These guidelines shall take effect immediately. UINALDO. Chairperson WI 8 1{nlustration Example Only) annex "A" [name of Agency) Status of Unliquidated Cash Advances As of December 2016 Tameo! | Purpase | Sete] Uniqudeted | Gue Datefor | Ageah ora co an | “it | aecounaieotcer crates | amount | qutistion | Caen Writen of (A0)/Employee evans subjet of NR a] aw 8 wo | o o m s os a Note: *Indicateif the AO/employee is stil connected with the Agency, retired, resigned, dead or can no longer be traced, et ** For Agency Official, indicat tthe agency requested oft For Auditor, indicate iF Narrative Report was prepared Column Nos. 2-9 tobe filed up by responsible Agency Official/Accountant Column Nos. 10:16 to be filled up bythe concerned ATL vu Certified Correct: ‘ecountant ‘Avait Team LeaderAomex"B" (Warne of Agency) Status of Fund Transfers to other Government/implementing Agencies (As) As of December 2015 Purpose | Ome] vnioumed | OveDatefor] Ageot | *situse? | A@ISENVETGOSMS | aonvanany [SAFO Reqven Tor] Arcane] Renan Account Granted | Amouet | Liquidation | Fund | Acount warteofard/or | writen oft/ MT aed ‘renter wih] witout | Aeeney | Audie | Narrative Report | subject of wR w 7 ol» a w |» o o w om ny) 7 st be Note led up by responsible Agency Official/Accountant Column Nos. 10-16 to be filled up by the concerned ATL Certified Correct: "accourtant ‘ausit Team Leader(ame of Agency! ‘Status of Fund Transfers to Non-Governmental Organizations/People’s Organization (NGOs/POs) Annex "C ‘As of December 2016 Tame aiNGOWro | Papas | ome Due Dawtor] Agect | *Sataect | Hvalabinyfasconen arma eran wo, | acount Granted Uavdstion | rune | NGO. see ‘ransfer wih] without | Ageney | poston subject of ow f ‘ » 1 ‘6. @ ®) fa i al as st T Note ‘existing or essolved, or can no longer be traced, or cannot be located etc the agency requested for write oft Narrative Report was prepared up by responsible Agency Offi 7 upby the concerned ATL Certified Correct: ‘accountant ‘ausitTeam LeaderAnnex0" ustraton Exam On) {tame ot agency) ‘Stats of Other Receivables As of December 2016 TWareuiAecourabe | Parse | Die] Uniguaated | Bue Doeter[Ageot ra] "Simro TECITET | mpc taken by SUSE Rewve To] Around] Rear fice AO amount | aueaon | Trarste? | Ao/employee! wre candor | wttenot | MESH | empoye/Recoiert Can | Repent, wine Taian | NarateReper | Subject of Nk Advances! w va Geant |e w | ws i 1 oo eo |i | an out | os Note: = Indieate if the AO/Empioyee/Respintis sil connected withthe Agency, rete, resigned, dead or can no longer be weed, et ** For Agency Official, indicate tthe agency requested for wre off For huctor,indeate Ifa Noratve Report was prepared Colum Nos. 19 tobe files up by responsible Agency Ofia/Accountant Colum Nos. 10-16 tobe filed up the concerned AT Centfied Correct: “Accountant ‘Audie Team Leader(ilustration Example Only for Cash Advances) ANNEX “E* Republic of the Philippines (Name of the Agency) (Address) (OFFICE OF THE AUDITOR (Date) DEMAND LETTER Sir/Madam: Record of this Office show that as of advances in the total amount of 0°. you have outstanding unliquidated cash per attached Statement o vances and Liquidations. Under Section 5.1 of COA Circular No. 97-002, you are required to liquidate your cash advances for (cite the nature of cash advance such as salaries, travels, etc.) within [cite the period within which to liquidate). In addition, Section 5.8 of COA Circular No, 97-002, requires that all cash advances should be fully iquidated at the end of each year, except for petty cash fund. The prescribed period for you to liquidate your cash advance has already lapsed, but to date, we have neither received any of your liquidations nor a written explanation for your failure to do so. In View of this, demand Is hereby made of you to settle your accountabilities with the Accounting Office/Division within 30 days from receipt hereof, through the submission of the necessary supporting documents, and to refund any excess amount or submit a written explanation for your fallure to do so. Failure on your part to comply herewith shall constitute a ground for the withholding of payment of any money due you as provided for under COA Circular No. 97-002 dated February 10, 1997, and a “prima facie” presumption under Article 217 of the Revised Penal Code that you have malversed the funds for your personal use and benefits (Martinez vs. Sandiganbayan, GR No. 126413 dated August 20, 1999). Your failure shall likewise constitute violation of Article 218 of the Revised Penal Code and Section 89 of PD 1445 for fallure to render accounts which is punishable under Section 128 of PD 1445, ‘Auditor Cc: the Agency Head(illustration Example Only for Fund Transfers) ANNEX "F” Republic ofthe Philippines (Name of the Ag vy) (Address) OFFICE OF THE AUDITOR ~ Date) DEMAND LETTER Sic/Madam: Record of this Office show that 25 of __. you have outstanding unliquidated fund transfers from {Name of Agency) in the total amount of ___ (@__), por attached Statement of Fund Transfers and Liguidations Under Section 5.4 of COA Circular No. 2007-001, you are required to submit the Fund Utitzation Report certified by your Accountant and approved by your President/Chairman to the (Name of ‘Agency) __, together with the inspection report and certificate of project completion rendered/issued by the Agency authorized representative, and list of | beneficiaries with _ their acceptance/acknowledgment of the project/funds/goods/services received, within 60 days after the completion of the project. These documents shall support the liquidation of funds granted to that NGO/PO. ‘The prescribed period for you to liquidate the funds received from __(Name of Agency] has already lapsed, but to date, we have neither received any of your liquidations nor a written explanation for your failure to do so. In view of this, demand is hereby made of you to settle your accountabilities with the ‘Accounting Office/Division within 30 days from receipt hereof, through the submission of the necessary liquidation report with supporting documents, and to refund any excess amount or submit a written explanation for your failure to do so. Auditor Ce: the Agency Head{ilustration Example Only for Cosh Advances} ANNEX “6” Narrative Report On Unliquidated Cash Advances In compliance with COA Memorandum No. dated particularly item No, V.3 thereof, | identified and verified outstanding cash advances aged 30 days or over from thelr due dates of liquidation. Asa result, it was discovered that Mr_ » an (employee/official/AO) _of __{Name of Agency} _ has outstanding unliquidated cash advance as of December 31, 20__for__{state the nature of cash advance) _ in the amount of P in Violation of Section —_(cite 5.1.1 oF 5.1.2 or $.1.3 2s the case maybe) of COA Circular No. 97-002 and Section 89 of PD 1445. Section __(cite 5.1.1 of 5.1.2 or 5.1.3) of COA Circular No. 97-002 provides that the Accountable Officer shall liquidate his cash advance within __ (cite the applicable provisions of Section S.1.1or 5.1.2 or 5.1.3 as the case maybe) _, while Section 89 of PD 1445 provides among others, that a cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served. Failure of the AO/employee to liquidate his/her cash advances within the prescribed period shall constitute a valid cause for the withholding of his salary and institution of other sanctions provided for under paragraphs 9.2 and 9.3 of COA Circular No. $7-002 or of the Penal provision under Section 28 of PD 144s, It was observed that as of, Mr. has not yet liquidated his/her cash advances which had a balance of P. (Annex A) as of Under the aforesaid rules and regulations, Mr, should have liquidated his/her cash advance not later than The liquidation therefore of his cash advance is overdue by more than __ days in violation of the COA Circular cited above. ‘A demand letter was served to Mr/Ms demanding liquidation or explanation for non-liquidation. However, as of date of this report, after the lapse of the 30 day period given him/her within which to liquidate or explain why he/she has not liquidated his/her outstanding cash advances, he/she stil failed to comply with our demand. Signature over Printed Name Designation ID No. SUBSCRIBED and sworn to before me this__day of _ _, 2017 in with affiant exhibiting his/her 1D issued by at NOTARY PUBLIC be(ilustration Example Only for Fund Transfers) ANNEX “HY” Narrative Report on Unliquidated Fund Transfers to NGOs/POs In compliance with COA Memorandum No. dated , particularly item, No. V.3 thereof, | identified and verified outstanding fund transfers aged 30 days or over from their due dates of liquidation. As a result, it was discovered that _(Name of NGO) __, with fund transfers from Name of Agency) has outstanding unliquidated fund transfers as of December 31, 20__ in the ‘amount of P in violation of Section 5.4 of COA Circular No. 2007-001, Section 5.4 of COA Circular No. 2007-001 provides that within sixty (60) days after the completion of the project, the NGO/PO shall submit the final Fund Utilization Report certified by its ‘Accountant and approved by its President/Chairman to the Government Organization (GO), together with the inspection report and certificate of project completion rendered/issued by the GO authorized tepresentative, and the list of beneficiaries with their acceptance/acknowledgment of the project/funds/goods/services received. These documents shall support the liquidation of funds granted to the NGO/PO. Under Section 9 of the same Circular, legal remedies pursuant to existing laws, rules and regulations applicable for violations by any party of any provisions of COA Circular No. 2007-001 shall be imposed/charged by the GO, the Commission on Audit, or any aggrieved/interested party. It was observed that as of , {Name of the NGO/PO) _ has not yet liquidated the funds transferred by _ (Name of Agency) which had a balance of P, {annex A) as of, Under the aforesaid rules and regulations, __ (Name of NGO) should have liquidated the funds transferred to it not later than The liquidation therefore of funds transferred to the NGO by the _(Name of Agency] is overdue by more than __ days in violation of the COA Circular cited above. ‘A demand letter was served to the __(Name of the NGO) _ demanding liquidation or explanation for non-liquidation, However, as of date of this report, after the lapse of the 30 day period given the NGO within which to liquidate or explain why it has not liquidated its outstanding fund transfers, it still failed to comply with our demand. Signature over Printed Name Designation ID No, SUBSCRIBED and sworn to before me this__ day of , 2017 in with affiant exhibiting his/her 1D issued by at NOTARY PUBLIC a(llustrative Example Only) ANINEX “I” Republic of the Philippines (Name of the Agency) (Address) OFFICE OF THE ACCOUNTANT (Date) ‘CERTIFICATION This fs to certify that there are no documents in my possession pertaining to cash advance granted to, (or funds transferred to Jas under Check No. dated {or that the only documents available in my possession pertaining to cash advance granted to (or funds transferred to as. under Check No. dated are as follows:-enumerate available documents). The pertinent documents were [indicate the specific reason for non availability of document in your possession such as submitted to the Office of the Auditor under a letter dated or that the record on submission of the said documents to the Office of the Auditor are no longer available as the Office had already disposed accounting records as of __ » or documents under the responsibility of were fully (or partially) lost due to or that the same cannot be located despite earnest effort to locate them.) ‘This is to further certify that | have demanded for the liquidation of the cash advances granted, to her/him {or funds transferred to __(Name of NGO} _} and despite the lapse of the period give him/her to liquidate, he/she still failed to comply with our demand, Signature over Printed Name Designation ID No. SUBSCRIBED and sworn to before me this__day of _. , 2017 in with at NOTARY PUBLIC(Illustrative Example Only) ANNEX“ Republic of the Philippines (Name of the Agency) (address) ‘OFFICE OF THE AUDITOR (Date) CERTIFICATION This is to certify that there are no documents at the Office of the Auditor pertaining to cash advance granted to, __(or funds transferred to, das under Check No. dated (or the only documents available in the office are as follows:- enumerate available documents). The pertinent documents were (indicate the specific reason for non availability of all or some documents in the office such as there were no records that the same were submitted to the Office of the Auditor, or that the record on submission of documents to the Office of the Auditor are no longer available as the Office had already disposed accounting records as of or documents under the responsibility of, were fully or partially lost due to or that the documents were not among those turned over to the undersigned upon assumptionon___, or the documents cannot be located despite diligent search.) Signature over Printed Name ‘Audit Team Leader 1D No. SUBSCRIBED and sworn to before me this__ day of 2017 in with affiant exhibiting his/her 1D issued by at NOTARY PUBLIC