SOP Library

SOP NO: FS-CS08

Mission: Corporate Administration

Area: Financial Services (FS)

Activity: Cashiering (FS-CS)

Title: Revised SOP on Check Issuance and Disbursement Control System

Date Approved/Issued: 12/09/96

Date Effective: 12/09/96

Digest:

1. To update policies and set up additional internal control measures for disbursement of
funds thru the use of banking system facility.

2. To emphasize responsibility and accountability for safekeeping of unused, issued, paid

checks, and preparation, approval and releasing of checks.

3. To update the levels of authority for signing and counter-signing of checks in

accordance with the provisions of General Memorandum Order No. AO-96-10-001 on
Delegation of Authority.
 This SOP shall cover policies and procedures for disbursements and check issuances
against current accounts being maintained by NFA Central and Field Offices.

1. SOP NO. FS-CS03 - SOP on Check Issuance and Disbursement Control System
issued on August 10, 1987 and made effective September 1, 1987;

2. SOP No. FS-CS03.A - Amendment/Addendum to SOP on Check Issuance and

Disbursement Control System issued on September 21, 1987 and made effective
December 1, 1987; and

3. General Memorandum Order No. AO-96-10-001 on Delegation of Authority effective

September 30, 1996.

A. Maintenance of Current Accounts

1. Opening and closing of current accounts shall be authorized by the Department

Management for Department for Treasury, Budget, and Fund Management (DTBFM). The
accounts shall be maintained under the name of National Food Authority.

2. The drawing accounts shall be deposited with the authorized depository banks, as follows:

a) Philippine National Bank

b) Other Government Banks
c) Private banks as may be authorized by the Central Bank

3. The bank shall be furnished with the specimen signatures of authorized signatories and
counter signatories on checks. The bank shall be notified whenever there is a change in
management and authorized signatories and counter-signatories.

4. Drawing accounts shall be maintained under current accounts to be utilized for various
check disbursements in payment for expenses, acquisition of assets and settlement of
liabilities. For field offices' accounts, deposits to drawing accounts will come from Central
Office/Regional Offices remittances based on quarterly allotment as advised by Budget
Division. The drawing accounts and specific purpose for each fund is discussed in Annex
A.
B. Disbursements Payable in Checks

1. All disbursements payable to creditors for obligations incurred shall be paid in check.

2. The following claims of NFA employees shall be paid in checks:

a. Travelling expenses amounting to more than P1,000;

b. Refund of TEV payable to employees amounting to more than P500;

c. All kinds of loans;

d. Honoraria; and

e. All reimbursements/replenishments of RDO/SDO.

C. Other Disbursements Drawn Against Bank Account

1. As a general rule, disbursement shall be drawn against bank accounts thru the issuance of
checks, however, for facility, Central Office payroll thru PNB permits that the same be
drawn against NFA account and be credited to employees' account based on a duly
approved payroll voucher and a bank debit memorandum.

2. Payment of NFA's obligations whether local or foreign and other bank charges are
likewise directly debited by the bank against NFA's accounts based on
letter/communication sent by Fund Management Division, DTBFM or in the form of a
Manager's Check if the payee is not the depository bank.

D. Check Preparation, Approval and Payment

1. Only one (1) checkbook per bank account shall be opened and used at a time for check
issuances. Checks shall be prepared and issued in sequential order regardless of
expense category, e.g. TEV, discretionary, other expenses.

2. The checks shall be made payable to a specific payee. In no case shall it be drawn
payable to "CASH" or to "BEARER".

3. The checks shall be properly dated and the amount payable shall be stated in words and
in figures. If possible, check writers shall be used.

4. The check shall be prepared in four (4) copies (with half sheets of bond paper used as
duplicates) distributed as follows:

Copy 1 - (the check) - payee

2 - Disbursing Officer
 3 - Provincial Accountant/GAD
for recording to Cash and Check Register
4 - Commission on Audit

The Disbursing Officer/Cashier I shall see to it that all relevant data in the check such as
check number, bank account number, date of check, payee, amount and signatures are
reflected in all copies prepared.

5. All checks shall be signed and countersigned by the officials/employees in accordance

with the following:

Amount Involved Signatory Counter Signatory

Central Office

P200,000 and below Cashier Division Chief, Cash DTBFM

Above P200,000 to Division Chief, Asst. Department Manager,

P300,000 Cash, DTBFM DTBFM

Above P300,000 to Asst. Department Department Manager,

P500,000 Manager, DTBFM DTBFM

Above P500,000 to Department Manager, Asst. Administrator for

P2.0M DTBFM Finance and Administration

Above P2.0M to Asst. Adm. for Deputy Administrator for

P3.0M Finance and Adm. Finance and Administration
or in his absence, Deputy
Administrator for Operations

Above P3.0M Dep. Adm. for Finance Administrator*

and Adm. or in his absence
Dep. Adm. for Operations

Regional Office/FOUs

P.O.

P20,000 and below Provincial Cashier Asst. Provincial Manager

Above P20,000 Provincial Cashier Provincial Manager

R.O.

P30,000 and below Regional Cashier Asst. Regional Manager

 Above P30,000 Regional Cashier Regional Manager*

* In the absence of the Administrator the Deputy Administrator for

Operations can countersign the checks.

**The Assistant Regional Manager can countersign the checks in he absence

of the Regional Manager.

6. All checks payable to outside creditors shall be crossed and stamped "FOR THE
ACCOUNT OF THE PAYEE ONLY" for control purposes, except when the payee
requested otherwise.

7. There shall be no post-dating and pre-signing of checks. The Disbursing Officer and the
signatories shall be held liable for any misappropriation of funds that may arise as a result
of such action.

8. Issued checks shall be released only to the payee as specified in the check or to his duly
authorized representative. Disbursing Officer shall require the identification of
payee/authorized representative and obtain the acknowledgement of payment on the
voucher and require an official receipt, whenever applicable, from the payee/authorized
representative upon release of checks.

9. All paid vouchers including supporting documents shall be stamped "PAID" by the
Disbursing Officer immediately upon payment. All paid voucher shall be forwarded to the
Commission on Audit post-auditing.

E. Custodianship of Unused, Issued and Paid Checks

1. Check booklets and check stub shall be kept and controlled by the Disbursing Officer. A
record of used and unused check booklets shall be kept.

2. An inventory of unused checks shall be conducted every end of the month in the presence
of the Provincial Accountant/Cashier IV to attest that check issuances are properly
controlled.

3. Issued checks ready for release to payees shall be properly safeguarded. A logbook,
containing date of check, payee, amount, date received and signature of recipient shall be
maintained to monitor releasing of checks.

4. Spoiled checks must be mutilated at the signature portion of the check and attached to
the stub after notation by the Provincial Accountant/Chief, General Accounting Division
(GAD).

5. Paid checks returned by the bank together with the monthly bank statement shall be kept
under the custody of the Provincial Accountant/GAD.
 6. Stale checks shall likewise be under the custody of the Provincial Accountant/GAD.

F. Fund Monitoring, Reporting and Books of Accounts

1. A cash book for each drawing account shall be maintained by the Disbursing Officers to
record all checks issued for the day and to update the daily balance of each bank account.
The Disbursing Officers shall be responsible for bank overdraft. The balances of each
drawing account shall be properly monitored to ensure that all checks will be honored by
the bank.

2. At Central Office, bank balances shall be controlled by the Fund Management Division,
DTBFM.

3. The Disbursing Officer shall prepare a Daily List of Checks Issued in five (5) copies,
distributed as follows:

Copy 1 - Provincial Accountant/Claims and Inter-branch Division

2 - Commission on Audit
3 - Drawee Bank
4 - Disbursing Officers; File
5 - Fund Management Division (for C.O. only)

4. The List of Checks Issued shall be used as basis for recording in the Cash and Checks
Register Journal (CCRJ). The disbursement drawn against NFA account shall be
recorded as credit to account Cash with other Banks, Current.

G. Accountability of Signatory and Counter-Signatory

1. Signatory and counter-signatory are responsible for check disbursements and no amount
will be drawn against the bank account unless properly authorized by them, as such, they
are accountable officers.

2. They shall be held liable for all losses attributable to negligence in the keeping and
disbursement of funds. They shall see to it that the disbursement is approved by proper
authority and duly supported by authentic evidence.

H. Bank Reconciliation Statement

1. The monthly bank statement together with the paid checks shall be picked-up by the
Provincial Accountant/GAD or delivered to him at the end of every month for the
preparation of bank reconciliation statement.

2. The bank shall be immediately notified of any error committed by it for the adjustment of
the bank records.
 3. The Disbursing Officer (F.O.) shall be notified of the bank charges for updating of cash
book. Bank charges shall be entered to the credit column of the cash book to update the
balance of the bank account.

I. Accounting for Returned and Stale Checks

1. Checks already released to creditors which remained outstanding for more than six (6)
months shall be considered stale checks and shall be reverted to account Cash with
Other Banks, Current thru a Journal Voucher.

Checks not claimed by the payee after six (6) months shall also be considered stale
checks. Replacement check shall be prepared only upon request of the claimant.

2. The drawee bank shall be notified accordingly to dishonor stale checks.

3. The Disbursing Officer shall cancel the stale checks returned by the payee and prepare
the replacement check. Upon approval of the replacement check, the stale check shall be
stamped "replaced". The Disbursing Officer shall disclose in the List of Checks Issued
that the specific check issued is a replacement and the number of the check replaced
shall also be indicated in the report.

J. Returned Check for Cancellation

In such cases where the payee returned his check for cancellation, he shall prepare and
submit a letter request for cancellation of check (e.g. returned TEV check when the travel is
cancelled), the check shall be cancelled by the disbursing officer and the cancelled check
together with the DV shall be forwarded to the Provincial Accountant/GAD for proper
accounting. A journal voucher shall be prepared to record the cancellation of check.

K. Pro-Forma Journal Entries

1. To record check issuances based on List of Check Issued:

DR: Voucher Payable xxx

CR: Cash, Other Banks Current xxx

2. To revert stale checks to cash account:

DR: Voucher Payable (xxx)

CR: Cash, Other banks, Current (xxx)

3. To record replacement of stale check:

Cash and Check Register Journal

 DR: Voucher Payable xxx
CR: Cash, Other Banks, Current xxx

1. Disbursing Officer/Cashier I

a) Prepares check based on duly approved disbursement voucher/payroll;

b) Keeps unused checks and issued checks in safe, maintains logbook for issued checks
to monitor their release.

c) Releases checks to payees. Requires identification of payee/authorized representative

and acknowledgement of payment on the voucher. Stamps "PAID" on the
disbursement voucher and supporting documents.

d) Prepares list of checks issued.

e) Maintains cash book for each drawing account.

f) Monitors unclaimed checks and notifies payee/s to pick-up said checks before getting
stale.

g) Prepares report of checks cancelled/ or replaced for submission to Provincial

Accountant/General Accounting Division.

2. Signatory/Counter-signatory

a) Checks accuracy of the prepared check or disbursement.

b) Signs/countersigns on the check.

3. Provincial Accountant/GAD

a) Records List of Checks Issued on the Cash/Checks Register Journal.

b) Prepares bank reconciliation statement.

c) Prepares adjusting entries for checks cancelled/replaced.

4. Cash Clerk/Cashier's Aide (F.O.)

 Assists the Disbursing Officer in the preparation of checks list of checks issued and in other
cashiering activities.

The foregoing SOP supersedes SOP No. FS-CS03 and SOP No. FS-CS03.A effective
September 1, 1987 and December 1, 1987, respectively.