Government Accounting

&
Accounting for non-profit
organizations

by: ZEUS VERNON B. MILLAN

 Chapter 5
Disbursements

Learning Objectives
1. State the main concept(s) in the
disbursement of government funds.
2. Account for the different modes of
disbursements.

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 Disbursements
- constitute all payments in cash, in
whatever manner, i.e., cash, check or
cashless payment.
- shall be supported by Disbursement
Vouchers (including Petty Cash
Vouchers) or Payroll.

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 Disbursement Authority
a. Notice of Cash Allocation (NCA)
b. Notice of Transfer of Allocation (NTA)
c. Tax Remittance Advice (TRA)
d. Non-Cash Availment Authority (NCAA)
e. Cash Disbursement Ceiling (CDC)

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 Notice of Cash Allocation (NCA)
• The NCA is an authority issued by the DBM
to central, regional and provincial offices
and operating units to cover their cash
requirements. The NCA specifies the
maximum amount of cash that can be
withdrawn from a government servicing
bank in a certain period.

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Notice of Transfer of Allocation (NTA)

• The NTA is an authority issued by an

agency’s Central Office to its regional and
operating units to cover the latter’s cash
requirements.

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 Tax Remittance Advice (TRA)
• The TRA is used to recognize: (1) in the
books of national government agencies, the
constructive remittance to BIR and BOC of
taxes and customs’ duties withheld, and
the constructive receipt of NCA for those
taxes and customs duties; (2) in the books
of the BIR and BOC, the constructive receipt
of tax revenue and customs duties; and (3)
in the books of the BTr, the constructive
receipt of the taxes and customs duties
remitted.
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Non-Cash Availment Authority (NCAA)

• The NCAA is the authority issued by the

DBM to agencies to cover the liquidation of
their actual obligations incurred against
available allotments for availment of
proceeds from loans/grants through
supplier’s credit/constructive cash.

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 Cash Disbursement Ceiling (CDC)
• The CDC is the disbursement authority
issued by the DBM to agencies with foreign
operations allowing them to use the
income collected by their Foreign Service
Posts to cover their operating
requirements.

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 Basic Requirements & Certifications
for Disbursements
• Budget Officer - certifies the availability of
allotment.
• Chief Accountant - certifies the availability
of funds and the completeness of the
supporting documents.
• Head of the Requesting Unit - certifies the
necessity and legality of disbursements.
• Head of Agency - approves all Disbursement
Vouchers (DVs) and Payroll.

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 Modes of Disbursements
• Check
• Cash
• Cashless payments:
– Advice to Debit Account (ADA)
– Electronic Modified Disbursement
System (eMDS)
– Cashless Purchase Card System (Credit
Card)
– Non-Cash Availment Authority (NCAA)
– Tax Remittance Advice (TRA)
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 Disbursements through Check

MDS Check
Asset/Expense/Liability account xxx
Cash-Modified Disbursement
System (MDS), Regular xxx

Commercial Check
Asset/Expense/Liability account xxx
Cash in Bank-Local
Currency, Current Account xxx

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 Disbursements through Cash

Advances for/to… (Appropriate Account) xxx

Cash-Modified Disbursement
System (MDS), Regular xxx
To record the grant of cash advances
Expenses (Appropriate Account) xxx
Advances for/to… (Appropriate Account)
xxx
To record the liquidation of cash advances

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Disbursements through Advice to Debit Account
(ADA)
• The ADA is an accountable form used as an
authorization issued by a government agency to
the MDS-GSB instructing the bank to debit a
specified amount from its available NCA to pay
the creditors/payees listed in the LDDAP-ADA.
Accounts Payable xxx
Cash-Modified Disbursement
System (MDS), Regular xxx
To recognize payment of payables to
suppliers/contractors through ADA

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Disbursements through electronic Modified
Disbursement System (eMDS)

• The eMDS is like the ADA except that

disbursements are made directly from the
accounts of the BTr that are maintained with the
Land Bank of the Philippines (LBP). Agencies
subscribed under LBP’s eMDS can make online
disbursements for selected transactions.

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Disbursements through Cashless Purchase Card
(CPC) System

• Disbursements under the CPC System are made

through the use of an electronic card (i.e., credit
card).
Office Supplies Inventory xxx
Accounts Payable xxx
To recognize purchase of office supplies through CPC
Accounts Payable xxx
Cash – Modified Disbursement
System (MDS), Regular
xxx
To recognize settlement of CPC billing statement
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 Disbursements through Non-Cash Availment
Authority (NCAA)
Books of Entity A Books of BTr
Communication Equipment 1M
Accounts Payable 1M
To recognize receipt of PPE
procured through the direct
payment scheme

Accounts Payable 1M Subsidy to NGAs 1M

Subsidy from National Gov’t. 1M
To recognize receipt of NCAA
and payment of payable
Loans Payable – Foreign 1M
To recognize the
replenishments made to AGSB
negotiated MDS-checks and
payments on account of the NGA

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 Disbursements through Tax Remittance Advice
(TRA)
Books of Entity A
Cash-Tax Remittance Advice 10,000
Subsidy from National Government 10,000
To recognize the constructive receipt of NCA for TRA

Due to BIR 10,000

Cash-Tax Remittance Advice 10,000
To recognize constructive remittance of taxes withheld to the BIR through TRA

Books of BIR Books of BTr

Cash-TRA ………...10,000
Income Tax……………10,000
To recognize constructive receipt of
taxes remitted by National Government
Agencies (NGAs) through TRA
Subsidy to NGAs….10,000
Cash-TRA……………...10,000
To recognize constructive receipt of
remittance of taxes by NGAs through TRA

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 Disallowances
• Disallowances refer to expenditures
made by an agency that are
subsequently invalidated or disallowed
by the COA because they are found to
be irregular, unnecessary, excessive,
extravagant or unconscionable.
Disallowances are recorded in the books
of accounts only when they become
final and executory.

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 APPLICATION OF
CONCEPTS
PROBLEM 5-4: FOR CLASSROOM DISCUSSION

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OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

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 END

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