DISBURSEMENT

DISBURSEMENT – constitute all payments in cash, in whatever manner. Disbursement shall be

supported by Disbursement Vouchers or Payroll.

NOTES:

 All government resources shall be used only in accordance with the law and only for public
purposes.
 Trust funds shall be issued only for their specific purpose.
 Fiscal responsibility shall be strictly shared by all those exercising authority over a government
authority
 The use of government resources shall be approved by proper officials.
 Claims against government funds shall be supported with complete documents.
 All laws and regulations applicable to financial transactions shall be faithfully adhered to
including generally accepted principles and practices of accounting, management, and fiscal
administration, provided that they do not contravene existing laws and regulations.

AUTHORITY TO DISBURSE/PAY

 An entity can make disbursement only after it has received a disbursement authority, based on
the following:
a. Notice of Cash Allocation
b. Notice of Transfer of Allocation
c. Tax Remittance Advice
d. Non-Cash Availment Authority
e. Cash Disbursement Ceiling

Entries related to CDC: Under Books of DFA or DOLE

Date Cash-Collecting Officer 100

Passport and Visa Fees 100
To recognize collection of revenue of FSP’s
Cash in bank-Foreign 100
Currency, current Account 100
Cash collecting officer
To recognize deposit of collection to authorized
servicing bank of the FSP’s
Cash -Constructive Income 80
Subsidy from NGA 80
To recognize receipt of CDC from DBM
Rents-Building and structures 80
Cash in Bank – Foreign 80
Currency, Current Account
To recognize payment of expenses charged to CDC
Entries under Books of BT’r

NO ENTRY
NO ENTRY
Subsidy to NGA’s 80
Cash-Constructive Income Remittance 80
To recognize constructive receipt of remitted
collections by FSP’s and Disbursement charged to
the issued CDC’s to FSP’s
NO ENTRY

REQUIREMENTS & CERTIFICATIONS FOR DISBURSEMENT

 The budget Officer shall certify the availability allotment

 The Chief Accountant shall charge obligations against available allotment
 The Chief Accountant shall certify the availability of funds/cash and the completeness of the
supporting documents before the Head of Agency can enter into any contract involving the
expenditure of public funds.
 The requesting and approving official shall ensure that the disbursement are legal and conform
to applicable rules and regulations
 The head of the requesting Unit shall certify the necessity and legality of disbursements.
 The Head Agency shall approve all Disbursement Vouchers or Payrolls.

MODES OF DISBURSEMENTS

A. DISBURSEMENT THROUGH CHECKS

 Checks are used whenever payments cannot conveniently or are not authorized to be made
through cash or ADA. There are two types of checks issued by the government entities.

a. Modified Disbursement System Checks – Checks chargeable against the account of the
Treasurer of the Philippines maintained with Different Modified Disbursement System
Government Servicing banks (MDS-GSBs)
b. Commercial Checks – checks chargeable against the Agency checking account with the GSBs.
These are covered by income/receipts to be deposited with Authorized Government
Depository Banks (AGDBs).

EXAMPLE 1: Entity A disburses P10,000 electricity expense. How do we record the expense under the
Modified Disbursement System checks and Commercial Checks.
 B. DISBURSEMENT THROUGH CASH
 Cash disbursement constitute payments through cash advances, including payment out of the
petty cash fund. The cash Advances are govern by the following rules:
a. Cash advances shall be made only for a legally authorized specific purpose.
b. Cash advances, other than advances for travel, shall be given only to duly appointed
Disbursing Officers who must be properly bonded. The amount of cash should not exceed
the maximum cash accountability under the bond.
c. Only designated Disbursing Officers are allowed to perform disbursing functions and only
permanently appointed officials shall be designated as disbursing officers.
d. Cash Advance must be liquidated as soon as the purpose which it was given has been
served.
 Cash Advance for Payroll shall be liquidated within 5 days after the end of the pay period.
Unclaimed salaries shall be refunded and issued official receipt to close the account.
 Cash advances for travel shall be liquidated:
 For Local travel – within 30 days upon return to the Personnel’s workstation.
 For Foreign travel – within 60 days upon return to the Philippines. No official or
employee is allowed to go on a official foreign travel if he is due to retire within 1 year
after the foreign travel.
e. No additional cash advance shall be given to any official or employee unless the previous
cash advance given to him is first liquidated.
f. Transfer of cash advance from one officer to another is prohibited.
g. A cash advance shall not be used to encash checks or liquidate a previous cash advance.

DISBURSEMENT THROUGH ADA (Advise to Debit Account)

o The ADA works like a check, except that one ADA can be drawn to pay various payees, as long as
they all maintain accounts in the same bank where the ADA is drawn.
o An ADA is an authorization for a fund transfer (between accounts in the same banks) from the
issuing agency’s NCA bank account to the bank account of specified payees.

DISBURSEMENT TROUGH ELECTRONIC MODIFIED DISBURSEMENT SYSTEM

o The eMDS is like the ADA except that disbursement are made directly from the accounts of the
BRT’s that are maintained with the Land Bank of the Philippines.

DISBURSEMENT THROUGH CASHLESS PURCHASE CARD (CPC) SYSTEM

o Disbursement under the CPC are made through the use of an electronic card (such as credit
card). The authprized credit card company is citibank
DISBURSEMENT THROUGH NON-CASH AVAILMENT AUTHORITY (NCAA)

o Non-Cash availment authority (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.
o Disbursement through NCAA (also called Direct Payment Method or Direct Payment Scheme of
loan availment) are made through the Journal Entry Voucher issued by the BT’r to the agency to
record payments of goods and services made directly by the lending institution to the supplier
or contractor.

NOTES:

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

***END OF THE CHAPTER***