COMMISSION ON AUDIT CIRCULAR NO.

92-375 March 9, 1992

TO : All Heads of Departments; Managing Heads of Government-Owned and/or

Controlled Corporations; Chiefs of Bureaus and Offices of the National
Government; Chief Accountants/Heads of Accounting Units, COA Directors,
State Auditors and Others Concerned.

SUBJECT: Accounting guidelines and procedures for the closing of books of accounts of
abolished/transferred/merged/consolidated/converted/sub-divided agencies and
the opening of books of accounts for agencies affected by such
abolition/transfer/merger/consolidation/conversion/ subdivision pursuant to
provisions of law.

1.0 PURPOSE

This circular is issued to restate with amendment COA-DOF-DBM Joint Circular No.
3-82 dated January 18, 1982, regarding the accounting guidelines and procedures to be
followed by government agencies which were either abolished, transferred, merged,
consolidated, converted, or subdivided and agencies which were affected by such
abolition, transfer, merger, consolidation, conversion or subdivision pursuant to provisions
of law.

2.0 COVERAGE

This circular shall cover all national government agencies and government-owned
and/or controlled corporations which were either abolished, transferred, merged,
consolidated, converted or subdivided and agencies affected by such abolition, transfer,
consolidation, conversion or subdivision in accordance with the provisions of law.

3.0 DEFINITION OF TERMS

3.1 Agency is any department, bureau or office of the national government or any of its
branches and instrumentalities, as well as government-owned and/or controlled
corporations including its subsidiaries or other self-governing boards or
commissions and state colleges and universities.

3.2 Abolished agencies are agencies which are dissolved pursuant to provisions of law.

3.3 Transferred agencies are agencies, the functions and/or supervision of which are
transferred to another agency.

3.4 Merged agencies are agencies which have been acquired/absorbed by another
agency. The acquired agency/ies is/are dissolved while the acquiring agency
continues to maintain its identity.

3.5 Consolidated agencies are agencies which have been dissolved and combined to
form a new agency.

3.6 Converted agencies are agencies wherein their identity and organization are
changed from corporation to national or vice-versa, from operating unit to regional
 office, etc.

3.7 Subdivided agencies are agencies which are formed out of one agency.

3.8 Old agency shall refer to the abolished, transferred, merged, dissolved,
consolidated, and/or converted agencies.

3.9 New agency shall refer to the agency which absorbed or was formed in view of the
transfer, merger, consolidation, subdivision and/or conversion.

4.0 CUT-OFF DATE

The cut-off date to effect the transfer of balances of accounts from the old to the
new agency is the effective date of abolition, transfer, merger, consolidation or sub-
division pursuant to the provisions of law. However, for purposes of reconciliation,
consolidation, adjustment, closing of books of accounts of the old agency and opening of
books of accounts of the new agency, a maximum of six (6) months transitory period from
the cut-off date shall be allowed to effect such transfer.

5.0 GENERAL GUIDELINES

5.1 The books of accounts of the old agency shall be closed as of the cut-off date and
the balances of all existing assets, liabilities, and surplus/capital shall be transferred
to the new agency/agencies.

5.2 A new set of books of accounts shall be opened for the new agency to record the
balances of all existing assets, liabilities, and surplus/capital transferred from the old
agency.

5.3 In the case of an agency which was subdivided, its assets and liabilities and
surplus/capital shall be distributed and transferred to the new agencies in
accordance with laws, rules and regulations.

5.4 Pending the final transfer, the new agency shall transact business and record in the
new set of books of accounts such transactions including expenses incidental to the
winding-up process.

6.0 INTERIM PROVISIONS

In the meantime that the abolition/merger/transfer/consolidation/conversion/

subdivision has not been fully effected, the "old" and the "new" agencies shall ensure that
the following are complied with:

6.1 The heads of the old and the new agencies shall require existing personnel to
analyze, reconcile and effect the transfer of accounts as provided herein.

6.2 Officials and employees of the old agency shall be issued clearances only after they
have fully liquidated/settled their accountabilities/liabilities and/or submitted the
required financial reports.

6.3 The head of the old agency shall be issued clearance only after all the required
 financial reports/ statements have been submitted and accountabilities settled.

7.0 PROCEDURES FOR NATIONAL GOVERNMENT AGENCIES

7.1 For the Old Agency

7.1.1 The Head of the Central Office shall:

a) Require inventory-taking of equipment, supplies and other tangible

assets which shall be witnessed by the auditor and reconcile the result
of physical count with property and/or inventory ledger cards and
books of accounts. Any shortage/overage shall be the responsibility of
the accountable officer. At the same time, determine/ segregate all the
unserviceable properties for proper disposal. The inventory report
shall be turned over to the newly designated accountable officer of the
new agency under proper Invoice and Receipt (Gen. Form No. 30A).

b) Require all collecting officers to deposit immediately with the National

Treasury or thru authorized government depository banks all
undeposited collections, submit the Report of Collections and the
Report of Accountability for Accountable Forms, and turn over all
unused accountable forms as of the cut-off date to the newly
designated accountable officer under proper Invoice and Receipt
(Gen. Form No. 10A).

c) Require all disbursing officers to refund or liquidate immediately the

balance of any cash advance and submit Reports of Disbursements,
Reports of Checks Issued and the Monthly Reports of Accountability
for Accountable Forms, and turn over blank checks and other unused
accountable forms as of the cut-off date to the newly designated
disbursing officer under proper Invoice and Receipt (Gen. Form No.
10A).

d) Secure from the depository bank and/or the Bureau of the Treasury
(BTR) bank/treasury statement as of the cut-off date.

e) Serve notice to bank for the cancellation of designation of disbursing

officers signing/countersigning authority.

f) Serve notice to bank and/or BTR for the cancellation of designation of

collecting officers.

7.1.2 The Head of the Regional Office/Field Office of the old agency shall ensure
that all procedures enumerated in sub-paragraph 7.1.1 (letters a to f) are
complied with in the Regional Office/Field Office.

7.1.3 The Chief Accountant/Head of Accounting Unit of the Central Office shall:

a) Update the recording of transactions in the books of accounts.

b) Reconcile the following:

 - All subsidiary ledger balances with the general ledger control
accounts as well as reciprocal accounts (8-71-170 and 8-81-170)
for Central Offices and Regional Offices receiving Notice of
Allocation directly from the Department of Budget and
Management (DBM) and for Operating Units receiving funding
checks from Regional Offices.

- Bank/Treasury Statements

- Releases of allotment with the Budget Operations Office of the

Department of Budget and Management (DBM) and the
Accountancy Office (AO) of the COA.

- Balances of continuing appropriations, overdraft and National

Clearing Accounts with the AO, COA.

c) Prepare a preliminary trial balance (PTB) supported by the required

schedules of subsidiary ledger balances, certify the same and submit
to the unit auditor for verification.

d) Use account 8-81-0?? (old) to denote the unliquidated obligations as of

the cut-off date. The purpose is to segregate the unliquidated
obligations prior to the cut-off date from the obligations that may be
incurred after the transfer or merger of the offices affected.

e) Draw a journal voucher (JV) to close the balances of accounts as of

the cut-off date and prepare a Final Trial Balance (FTB) which shall be
the basis for the transfer of account balances.

f) For agencies with decentralized accounting system, prepare

consolidated PTBs and FTBs of the agency's Central Office with
Regional Office.

g) Submit PTB, FTB and other supporting statements and schedules to

the AO, COA through the Auditor.

h) Draw a JV supported with the Invoice and Receipts, certified by him,

approved by the Head of Agency and verified by the Auditor, to take up
the transfer of the balances of accounts and record the JV in the books
of accounts.

i) Conduct an inventory of all accounting records and other documents.

Such records and documents shall be turned over under proper
Invoice and Receipt (GF No. 30A) to the Chief Accountant through the
Head of the new agency.

7.1.4 The Chief Accountant/Head of Accounting Unit of the Regional Office shall:

a) Follow the procedures prescribed under paragraph 7.1.3 insofar as

they may be applicable to the Regional Office.
 b) Submit PTB and FTB to the Central Office for consolidation.

7.2 For the New Agency

7.2.1 The new agency shall open a new set of books of accounts. It shall draw a
journal voucher to record the balances of all accounts transferred to the
agency as of the cut-off date.

7.2.2 All inventories of current and fixed assets as well as accountable forms and
accounting records received from the old agency shall be receipted for by
the proper accountable officer of the new agency.

7.2.3 All new accountable officers shall be bonded before they are allowed to
discharge their duties and responsibilities.

8.0 PROCEDURES FOR GOVERNMENT-OWNED AND/OR CONTROLLED

CORPORATIONS

8.1 For the Old Agency

8.1.1 The old agency shall close its books of accounts as of the cut-off date as
stated in paragraph 3.0.

8.1.2 The head of the agency shall:

a) Require inventory-taking of equipment, supplies and other tangible

assets which shall be witnessed by the auditor and reconcile the result
of physical count with property and/or inventory ledger cards and
books of accounts. Any shortage/overage shall be the responsibility of
the accountable officer. At the same time determine/segregate all the
unserviceable properties for proper disposal. The inventory report
shall be turned over to the newly designated accountable officer of the
new agency under proper Invoice and Receipt (Gen. Form No. 30A).

b) Require all collecting officers to deposit immediately with the proper

treasury/bank all undeposited collections, submit the Report of
Collections and the Monthly Report of Accountability for Accountable
Forms and turn over all unused accountable forms as of the cut-off
date to the newly designated collecting officer under proper Invoice
and Receipt (Gen. Form No. 10A).

c) Require all disbursing officers/cashiers to refund or liquidate the

balance of any cash advance and submit the Report of Disbursements,
Reports of Checks Issued or their equivalents, and the Monthly Report
of Accountability for Accountable Forms and turn over blank checks
and other unused accountable forms to the newly designated
disbursing officer as of the cut-off date under proper Invoice and
Receipt (Gen Form No. 10A).

d) Secure from the depository bank or BTR bank/treasury statement as of

 the cut-off date.

e) Serve notice to bank and/or BTR for the cancellation of designation of

disbursing officers/signing/countersigning authorities.

f) Serve notice to bank and/or BTR for the cancellation of designation of

collecting officers.

8.1.3 The Chief Accountant/Head of Accounting Unit shall:

a) Reconcile all subsidiary ledger balances with the general ledger control
accounts.

b) Prepare Bank/Treasury Reconciliation Statement and effect the

necessary adjustments.

c) Update all accounting records and effect the necessary adjusting

entries for items requiring adjustments in the books of accounts.

d) Prepare a preliminary trial balance (PTB) and furnish a copy to the

Corporate Audit Office (CAO), of the COA. GOCCs maintaining
Special Accounts in the General Fund shall likewise prepare PTB and
furnish a copy to the AO, COA thru the Auditor.

e) On the basis of the preliminary trial balance thus prepared, prepare the
usual adjusting and closing entries as though it were the end of the
year using applicable accounts in the Standard Government Chart of
Accounts.

f) Thereafter, prepare a final trial balance, certify it and have it verified by

the auditor concerned. This shall be the basis for the final transfer of
the balances of the accounts.

g) Draw a journal voucher (JV) supported with the Invoice and Receipts,
certified by him, approved by the Head of the Agency and verified by
the auditor to effect the transfer of the balances of the accounts and
record the JV in the books of accounts.

h) Conduct an inventory of all accounting records and other documents

and turn over such records and documents to the new agency
head/chief accountant.

8.1.4 The Chief Accountant/Head of Accounting Unit of the Branch/Field Office

shall:

a) Follow the procedures prescribed under paragraph 8.1.3 insofar as

they may be applicable to the Branch/Field Office.

b) Submit PTB and FTB to the Central Office for consolidation.

8.2 For the New Agency

 8.2.1 The new agency shall open a new set of books of accounts. It shall draw a
journal voucher to record the balances of all accounts transferred from the
old agency as of the cut-off date.

8.2.2 All inventories of current and fixed assets as well as accountable forms and
accounting records received from the accountable officers of the old agency
shall be receipted for by the accountable officers of the new agency.

8.2.3 A Board Resolution authorizing the incurrence of expenditures shall be

made by the new Board.

8.2.4 All new accountable officers shall be bonded before they are allowed to
discharge their duties and responsibilities.

9.0 RESPONSIBILITIES OF THE RESIDENT AUDITOR

9.1 The Resident Auditor of the Old Agency shall:

a) Ensure that the procedures herein provided in paragraph 7.1 for National
Government Agencies (NGAs) and 8.1 for Government Owned and/or
Controlled Corporations (GOCCs) are duly complied with.

b) Witness the inventory taking of all equipments, supplies and other tangible
assets turned-over to the head of the new agency.

c) Post audit all transactions and issue the corresponding Certificate of

Settlement and Balances.

d) Conduct the required cash examination of all outgoing accountable officers as

of cut-off date.

e) Ensure that the head of the old agency and other accountable/responsible
officials shall be issued clearance only after all the required financial
reports/statements have been submitted and accountabilities settled.

9.2 The Resident Auditor of the New Agency shall:

a) Ensure that the procedures as provided in paragraph 7.2 for NGAs and 8.2
for GOCCs are duly complied with.

10.0 ACCOUNTING ENTRIES

The accounting treatment applicable to each case together with a listing of the
same is attached as Annex A and Annexes A.1 to A.7.

11.0 ADMINISTRATIVE SANCTION

Failure of the officials/employees concerned to comply with the requirements of this

circular shall subject them to administrative disciplinary action in accordance with the
provisions of Section 122(2), Chapter 3, P.D. 1445 and Section 55, Chapter 10, Title I-B,
 Book V of Executive Order 292, series of 1987, the Revised Administrative Code of the
Philippines.

12.0 REPEALING CLAUSE

All circulars and memoranda or parts thereof which are inconsistent with the
provisions of this circular are hereby rescinded/repealed/modified accordingly.

13.0 EFFECTIVITY

This circular shall take effect immediately.

(SGD.) EUFEMIO C. DOMINGO, Chairman

(SGD.) ROGELIO B. ESPIRITU, Commissioner