COMMISSION ON AUDIT CIRCULAR NO.

86-256 April 3, 1986

TO : All Heads of National Government Ministries, Bureaus, and Agencies;

Provincial Governors, an City/Municipal Mayors; Managing Heads of
Government-owned and/or Controlled Corporations; All Treasurers, Finance
Officers, Regular and Special Disbursing Officers, and Other Accountable
Officials of the aforesaid Government Agencies; COA Managers, Regional
Directors, and Heads of Auditing Units; and Others Concerned.

SUBJECT : Immediate Liquidation and Settlement of All Cash Advances Granted Prior to
March 1, 1986.

1.0 Rationale. Under existing regulations, cash advances are, as a rule, granted
only for the purpose of paying salaries and wages as well as for petty operating expenses of
government agencies. This is so since government obligations are generally required to be
paid by check. A recent survey by this Commission, however, reveals that unliquidated
cash advances in government have reached a tidy sum in the aggregate, with certain
officials having been granted hundreds of thousands and even millions of pesos in cash
advances for unspecified or vague purposes.

2.0 Objective. Such irresponsible handling of public funds thru indiscriminate

grant of cash advances for dubious purposes must immediately be stopped, and the parties
involved must be held accountable therefor. Towards that end, all outstanding cash
advances granted prior to March 1, 1986 must be settled or liquidated by the accountable
officer concerned within five (5) days from receipt of advice hereof. Appropriate
administrative, civil and/or criminal proceedings shall be instituted against those who fail or
refuse to settle their cash advances accordingly.

3.0 Notice to Settle Cash Advance. Immediately upon receipt of a copy of this
Circular, it shall be the responsibility of all heads of government agencies, as well as heads
of COA auditing units, to disseminate in writing the contents thereof to all accountable
officials within their respective agencies or audit jurisdiction who have outstanding cash
advances granted prior to March 1, 1986 and at the same time to demand the settlement or
liquidation thereof within five (5) days from receipt of such written advice.

4.0 Settlement and Liquidation of Cash Advance. A cash advance is settled or

liquidated either by returning the money advanced if unspent, or by the presentation of
regularly accomplished vouchers, giving satisfactory detail of the items thereon paid which
must be in accordance with the purpose for which the cash advance was granted, and
further supported by proper receipts and other evidence of payment.

4.1 In the case of outstanding cash advances of accountable officers who

are either deceased or have been separated from the service, the
head of the government agency or COA auditor concerned shall make
representations with the proper prosecuting agencies of the
government towards the institution of the necessary proceedings for
the recovery of the amount of the cash advance.

4.2 A cash advance is not an indebtedness to the government of the

officer or employee receiving it; neither is it a loan which may be
 settled thru installments.

5.0 Responsibility to Conduct Cash Examination. If the cash advance still

remains unliquidated after the lapse of five (5) days from the date of notice to settle the
same as herein directed, it shall be the responsibility of the head of the COA auditing unit to
forthwith conduct a cash examination of the officer with the unsettled cash advance.

5.1 At all times, the amount of the cash advance is subject to instant
production upon demand by an authorized representative of this
Commission, in the form of cash or paid vouchers for which the officer
or employee concerned would be entitled to reimbursement by reason
of his official duties and the nature of the expenses he has incurred.

5.2 Cash advances which could not be accounted for upon demand shall
be declared a shortage by the examining auditor.

6.0 Duty to Institute Administrative, Civil and/or Criminal Proceedings. The

Auditor who conducted the cash examination shall immediately submit his report of
examination to the COA Regional Director concerned, who shall have the duty to
immediately order the withholding of payment of the salary and other money due the
accountable officer, as well as the institution of appropriate administrative, civil and/or
criminal proceedings.

6.1 The failure of an accountable officer to produce the amount of the

cash advance upon demand is deemed prima facie evidence of
misappropriation or malversation of public funds, which could subject
him to criminal prosecution under the provisions of Article 217 of the
Revised Penal Code, or Section 128 of the Government Auditing Code
of the Philippines.

6.2 All COA Regional Directors shall submit to the undersigned, thru the
COA Central Office operating manager concerned, a monthly report
on the implementation of this Circular, including the suspensions of
salaries and institution of administrative, civil and criminal proceedings
by virtue of this directive.

7.0 Monitoring Compliance. The COA Central Office operating managers

concerned shall submit to the undersigned a monthly report on the enforcement of this
Circular within their respective responsibility sectors by the COA Regional Directors, and the
compliance therewith by the field unit auditors.

8.0 Effectivity. This Circular shall take effect immediately. All previous
issuances by this Commission inconsistent herewith are deemed amended or modified
accordingly.

FOR THE COMMISSION PROPER:

(SGD.) TEOFISTO T. GUINGONA, JR., Chairman