Public Funds Management

1. Good governance is the efficiency in the management of public

funds with high standards of integrity, transparency and
accountability.
2. Government Funds include public money and other resources of
a government agency.
3. Fundamental Principles
a. No money shall be paid out of the Treasury without
authorization and appropriations ordinance.
b. Shall be spent solely for public purposes.
c. Local revenues are generated only from sources expressly
authorized by law and at all times be acknowledged
properly.
d. All money received shall be accounted as local funds.
e. Trust Funds shall be paid out only for the purpose it was
created or received.
f. All accountable officers shall be bonded.
g. LGUs shall formulate sound financial plans in terms of
expected results.
h. Local budget plans and goals shall be practicable and in line
with national development goals to avoid duplications in
the use of funds.
i. LGUs shall ensure and provide equitable allocation of
resources among component units.
j. National Planning shall be based on local planning.
k. Fiscal responsibility shall be shared by all those exercising
financial authorities.
 4. Classification of Public Funds
a. General Fund or Local Fund
- Special Accounts
b. Special Funds
- SEF and Trust Fund
5. General Funds are for the payment of accruing expenditures
and those that are not chargeable to other funds.
6. Special Accounts are from public utilities and other economic
enterprises, loans , interests and bonds.
7. In excess of the profit from Special accounts after deducting all
expenses, shall form part of the General fund.
8. SEF or Special Education Fund comes from the additional 1% levy
on RPT .
9. Trust Funds come from private or public money entrusted to
LGUs for specific project or purpose.
10. Basic Maintenance of Funds
a. Separation of Books and Depository accounts for each
fund.
b. Separation of Personal Money from public funds.
Principles on Fund Disbursements
11. The official fiscal year January 1- December 31
12. The local accountant shall furnish the Sanggunian with
financial statements within 30 days after the close of each
month.
13. For the year- end statement of accounts, financial
statements shall be furnished within 60 days after December 31.
14. Funds shall be available exclusively for the specific purpose
which they have been appropriated.
15. Funds cannot be transfer from one item to another.
 16. Total disbursement from any local fund shall not exceed
50% of the uncollected estimated revenue accruing to such local
fund.
17. No cash overdraft at the end of the fiscal year.
18. No advance payment on services/goods not rendered or
delivered yet.
19. No public money or property shall be applied for religious
or private purposes.
20. No public money or property shall be paid for
entertainment except for representation allowance of foreign
missions authorized by the president.
21. Requirements for Disbursements from the general fund
and special funds.
a. Certification in the disbursement voucher by the Local Accountant.
b. Certification in the disbursement voucher by the Local Treasurer.
c. Approval by the LCE, except for regularly recurring administrative
expenses.
d. The disbursement voucher for expenditures of Sanggunian shall be
approved by Vice Mayor or Vice-Governor.
e. The disbursement for SEF shall be approved by the LCE as
chairperson of the Local School Board.
f. Trust Funds shall be strictly utilized in compliance with MOA.
g. under the IMPREST SYSTEM, all payments must be made in check.
h. Only payments in small amount may be made in cash through the
petty cash fund.
I. Payrolls are usually paid either by check or in cash.
j. checks shall always be made payable to a specific person or entity
and never to “cash or bearer.”
k. All checks shall be crossed for deposit except those payable to
government employees, financial Assistance not exceeding 15 000.
l. Unused checks shall be kept in the vault accessible only to local
treasurer.
m. Signing or countersigning of blank checks are not allowed.
n. Checks shall be released only when the accountant’s advice of local
check disbursement has been prepared and submitted to the bank.
o. All issued checks shall be recorded chronologically in the Control
Book of Checks Issued.
p. Official receipt must be issued by the payee upon receiving the
check and sign the receipt, disbursement voucher and the Control
Books of Checks Issued.
q. The disbursement voucher and supporting documents shall be
stamped PAID by the local treasurer.
r. All checks issued including cancelled or voided checks shall be
recorded in the Report of Checks Issued in 3 copies daily by the local
treasurer.
s. A stale check is over 6 months older and must not be accepted.
t. Checks caused by theft, robbery, misplaced, and force majeure
which after diligent search, cannot be found or recovered, are
considered lost.
22. Requirements for the Replacement of Lost, Destroyed and
Obsolete Checks
a. Submission of the original check
b. MDS checks or Modified Disbursement System fraudulently
encashed shall be dishonored and charge back to GSB through
the BTR.
23. Special Cash Advances are granted by the LCE to disbursing
officers for legally authorized purposes.
24. Only permanently appointed officials or employees shall be
granted cash advances.
25. Only one disbursing officer shall be designated for a specific legal
purpose.
26. Additional disbursing officers may be assigned when fully justified
by the Agency purpose
27. The accountant shall obligate all cash advances granted.
28. The cash advance for salaries and wages shall be equal to the net
amount of the payroll for a pay period.
29. Documents needed for Cash Advances
• Copy of designation by the Agency Head in case the AO is not a
disbursing officer.
• Copy of Approved application for bond.
• payroll with their net payments
30. The cash advance for petty operating expenses is good for one
month.
31. The AO may request replenishment when 75% has been disbursed
or as the need requires and after submitting all requirements and
reports.
32. It shall not be used for payments of regular expenses.
33. Payments out of cash advance shall be allowed not exceeding
P5000 for each transaction except with a specific authority by COA.
34. It shall be supported by :
• copy of authority by agency head
• copy of Approved application bond
• estimate of expenses
35. The special cash advance for current operating expenses is not
subject to amount limitation, provided that it is approved by agency
head.
36. It is limited for 2 – month expenses.
37. Additional cash advance shall be granted on the basis of activities
or requirements for 2 months, whichever is lower.
38. It shall be supported by :
• copy of authority by agency head
• copy of Approved application bond
• Budget for COE of the Agency
39. The cash advance for foreign travel shall be supported by:
• Authority to travel
• Itinerary of travel
• Authority from the office of the president for representation
allowance
Liquidation of Cash Advances
40. The AO shall liquidate his cash advance as follows
• salaries and wages within 5 days after each 15th day/end of the
month.
• operating expenses within 20 days after the end of the year.
• local travel within 30 days after return.
• foreign travel within 60 days after return.
41. Failure to liquidate will cause withholding of salary.
42. The AO shall prepare the Report of Disbursement in 3 copies and
submit it to the accountant.
43. The accountant shall verify the report within 10 days, record it in
the books and submit to the Auditor.
44. The Auditor shall complete the Audit in 30 days and issue Credit
Notice to AO on amount allowed and any disallowances made.
45. The copy for Credit Notice will be furnished to the accountant for
restoration of the cash advances.
46. When a cash advance is no longer needed for 2 months, it must
be returned to the collecting officer.
47. A new cash advance may be granted at the start of an ensuing
year provided all requirements are submitted.
Reports and Documents to support the Liquidation
48. Salaries and Wages
• Disbursement report
• Signed payrolls
 • Time records
• Approved LOA

49. Petty operating expenses

• Disbursement Report
• Approved requisitions and issue voucher
• Certificate of emergency purchase
• Receipts, sales invoices
• Certificate of acceptance
• Approved ticket for gasoline
50. Current Operating expenses
• Same requirements with salaries and wages and Petty operating
expenses
• Canvass of at least 3 suppliers
51. Foreign Travel
• Itinerary
• Certificate of travel completed
• Report on trip undertaken
• Plane, boat or bus ticket
• Receipts for hotel bills and incidental expenses
52. Cash advance for Confidential Fund and Intelligence Fund
a. for NGAs and GOCCs
• approval of the President of the Philippines and Department
Secretary
• certified SARO or Special Allotment Release Order from DBM.
b. For LGUs
 • certification of Appropriation Ordinance of the approved
budget.
• certification from PNP Chief of the need to use CF
• certification of the approval of Local Peace and Order
Council.
53. Liquidation of Cash Advance for CF and IF shall be audited by the
COA- ICFAU or Intelligence and Confidential Funds Audit Office.
54. They shall be liquidated within 30 days of each quarter or from the
date of completion of the project.