CHAPTER 5: Accounting for Disbursements and Related Transactions

This chapter covers the accounting for disbursements and related transactions under the NGAS. As
updates, some modifications about accounting for payroll, advances to officers and employees, and
advances to disbursing officers were introduced. This chapter also introduces the accounting for
purchases of fixed assets, and supplies and materials for stock. The discussions will focus on the types of
disbursements made supported by Journal entries. It also covers RA # 9184: an act providing for the
modernization, standardization, and regulation of the procurement activities of the government and for
other purposes.

Disbursements

This constitutes all cash paid out during a given period either in currency cash or by check

Disbursement system

This involves the preparation and processing of disbursement Vouchers, preparation and issuance of
checks; payment by cash; granting utilization and liquidation replenishment of cash advances

Disbursement shall be covered by Disbursement vouchers or petty cash vouchers or payroll

The basic requirement applicable to all types of disbursements made by national government
agencies are as follows:

1. Existence of lawful and sufficient allotment certified as available by the budget officer

2. Existence of a valid obligation certified by the chief accountant

3. Legality of transactions and conformity with laws, rules and regulation

4. Approval of the expense by that chief of office or by duly authorize representative

5. Submission of proper evidence to establish the claim

The daily cash position report shall be prepared by the Head to be accounting unit

Two types of disbursement

1. Disbursements by check

The two types of checks being issued by government agencies

 Modified disbursement system checks - You should buy the government agencies chargeable
against the account of the treasure of the Philippines

Notice of cash allocation

Authorization issued by the department of management to government agencies to withdraw cash from
the national treasury, through the issuance of MDS checks or other authorize mode of disbursement

 Commercial checks - Issued by the government agencies chargeable against the agency checking
account with government servicing bank
Commercial checks are covered by Income/receipt authorized to be deposited with authorize
government depository bank and funding checks received

2. Disbursements by cash

Advances for payroll

This account is debited for the amount granted to regular disbursing officer for payment of the salaries
wages honorariums allowances and other personnel benefit

Advances to officers and employees

Is used to record amount advanced to officers and employees for official travel and credited the same
for liquidation of advances

Due from officers and employees

Shall be used to record claims from these officers and employees for overpayment, cash shortage, loss
of assets and other bills issued by the agency and credited the same for collection of this receivable

Liquidation report

The report prepared for cash advances for travel

Imprest system - The petty cash fund shall be maintained under this system

Disbursement from the petty cash fund shall be through Petty cash voucher (PCV).

Asset method will be followed in recording disbursements when expenditures applied to more than just
the accounting period

Asset used for general public such as roads, bridges, waterways, railways, etc. shall be classified as
Infrastructure assets

Capital expenditure is an expenditure classified as an asset and is therefore capitalize

Revenue expenditure is an expenditure classified as an expense

For construction or general repair, a fixed asset, such as; building, motorcycle, other structures, etc.,
undertaken by administration, the materials purchased shall be entered into the Construction materials
inventory account

Advances to special disbursing officer

Is an account use to record the amount granted to agency's accountable officers and employees for
special purpose/time-bound undertaking to be liquidated within a specific period

basket price is used to allocate the cost to the land and building on the basis of the relative fair value or
appraised value

The disbursement Activities of the national government agencies shall start from the receipt of Notice of
cash allocation.