Professional Documents
Culture Documents
Chapter 5
Problem:
Accounting for Disbursements
'ffi #ffi;$:,,ii"i*i"J#"#T:i:tr1"^3H:l'"-1:J";lTl"*" and Related Transactions
Total Released Released
Genergl-ApPlgPriarions
o*t*fr:'gl: +ffi -Hfuil
Personal Servlces The disbursement activities of the National Government Agencies start from the
MaintenanceandOther 330.000 120,000 ?9,999 receipt of Notice of Cash Allocation (NCA) from the Department of Budget and
operating Expenses Management. The NCA received by the agency may be net of the amount of the
";;,000 230,000
200,000
caPital.lglaY ;il:;00 iL
taxes to be withheld by the agency, because of the Tax Remittance Advice (TRA)
r+,ooo 12'000
System. The NCA may be used for payment of personnel services, maintenance and
Financial ExPenses
other operating expenses, financial expenses, capital outlay, and other miscellaneous
Special Purpose Fund transactions.
Maintenance and Other 230,000 1s0,000 125'000
Disbursements constitute all cash paid out during a given period either in cash or by
Operating ExPenses
chcck. The Disbursement System involves the preparation and processing of
obligations
The DPWH incuned the following disbursement voucher, preparation and issuance of check; payment by cash; granting,
utilization, and liquidation/replenishment of cash advances.
Obligations
ons Incurred
General
Persona 1 Services
F too,ooo
Maintenance and Other Fundamental Principles for Disbunement of Public Funds
80,000
OPerating ExPenses
180,000
Capital outlay No. 1445, the Govemment Auditing Code of the Philippines, provides that all
10,000
Financial ExPenses financial transactions and operations of any government entity shall be govemed by
I the following fundamental principles:
Spec ial Purpose Fund
P 120,000 l.
Maintenance and other No money shall be paid out of any public treasury or depository except in
230,000 pursuance ofan appropriation law or other specific statutory authority.
Operating ExPenses
3. Trust funds shall be available and may be spent only for the specific purpose
2. What is thg.amounl-ol-T"ffi?".d;drrg ripenses, Capital outlav, for which the trust was created or the funds received.
ExPenses?
Transoctions Chapter 5 - Accountingfor Disbursements and Related Transactions 165
ChqPtet 5 - Accounling lot Disbursemenls and Related
164
bv all those e Legality of the transactions and conformity with existing rules and
shall' to the great:sl extent' T:lT* of regulations. The requesting and approving officials shall ensure that the
4. Fiscal responsibilitv "frn-aicia"-1-affairs' transactions' and operations
exercising authority over tne disbursements of government funds are legal and in conformity with
the government agency' applicable rules and regulations;
NCA issued and credited to the Special MDS Accounts for Trust to cover payments
And in accordance with Book [V, Chapter.5, Section 4l of Executive Order No. 292, of authorized claims shafl be valid within the period prescribed under exising
no expenditure or obligation shall be incurred in excess of a,llotments released by the regulations.
DBM Secretary. Parties responsible for the incurrence of overdrafo shall be held
personally liable therefore. For NCA issued for foreign assisted projects such as grants from foreign country with
a separate MDS account maintained by the spending agency with Government
Servicing Banks (GSBs), MDS check/ADA shall be issued only for specific purpose
DISBI]RSEMENT AUTHORITIES until fitll implernentation of the projec! subject to pertinent DBM issuances
prescribing the validity of the NCA.
As discussed in Chapter 4 - Accounting for Budgetary Accounts, the following
disbursement authorities shall be used to pay obligations and payables of govemment
agencies: ILLUSTRATION:
1. Notice of Cash Allocation (NCA)
2. Notice of Transfer of Allocation (NIA) Agency X of national govemment received the following NCA from DBM for
3. Non-Cash Availment Authority (NCAA) the first quarter ofthe current year:
4. Cash Disbursement Ceiling (CDC)
Regular Agency Fund P 500,000
Note that these documents are similar in a way that these &re used to pay obligations Special account in the Ceneral Fund 300,000
and payables but differ in a way that who will use these. Therefore, the format of Trust Receipt Fund 200,000
recording its t'ansactions are similar.
The accounting entries to recognize receipt ofNCA are as follows:
Account
The Notice of Cash Allocation shall be the authority, issued by DBM to central, Account Title Debit Credit
Code
regional and operating mi* of an agency, to pay operating expenses, purchases of
Cash-Modifi ed Disbursement System
supplies and materials, acquisition of PPE, accounts payable, and other authorized (MDS), Regular 10104040 500,000
disbursements through the issue of Modified Disbursement System (MDS) checks,
Subsidy from National Government 40301010 500,000
Authority to Debit Account (ADA) or other modes of disbursements. No MDS
Receipt ofNCA for Regular Agency Fund.
check/ADA shall be issued without the covering NCA. The NCA specifies the
maximum amount of withdrawal that an entity can make from a government bank for
the period indicated. Hence, the total MDS checks/ADA issued shall not exceed the Special Account in the General Fund
total NCA received. The Collecting Officer shall not issue an Offrcial Receipt (OR)
for the receipt of NCA. Account
Account Title Code Debit Credit
NCA issued and crtdited to the Special MDS Accormts of agencies for payment of Cash-Modifi ed Disbursement System
retirement gatuity/terminal leave benefits as well as prior years'accounts payable (MDS), Special Account 10104050 300,000
shall be valid within the period prescribed under existing rules and regulations. The Cash-Treasury/Agency Deposig
NCA shall be monitored through the maintenance of the Registry of Allotnehts and Special Account 10104020 300,000
Notice of Cash Allocation (RANCA) by the Accounting Division/Unit. Receipt ofNCA for Special Account in the General Fund.
168 Chapter 5 - Accountingfor Disbursements and Related Trqn$actions Chapter 5 - Account lor Disbursements dnd Related Trqnsqctions 169
Trust Receipt Fund The Non-Cash Availment Authority is an authority issued by the DBM to agencies to
cover the liquidation of their actual obligations incurred against available allotments
Cash-Modifi ed Disbursement System for availment of proceeds from loans/grants through supplier's credit/constructive
(MDS), Trust 10104060 200,000 cash. (For more details about NCAA, see Chapter 4 - Accounting for Budgetary
Cash-Treasury/Agency Deposit, Accounts, Guidelines on lhe Release of Disbursement Authorities.)
Trust 10104030 200,000
Receipt ofNCA for Trust Rec€ipts Fund.
Cash Disbursement Ceiling (CDC)
the Petty Cash Fund or advances for operating expenses. Checks issued shall be
reported and recorded in the books of accounts whether released or unreleased to the
respective payees. There are two types of checks being issued by govemment
Advarce palrnent to Procurement Service (P 20,000)
agencies as follows: Account Title Account Code Debit Credit
Due from NGAs 10303010 P 20,000
a. Modlfud Dbbursement Stalem Check - are checks issued by govemment Cash - MDS, Regular 10 r 04040 P 20,000
agencies chargeable against the account of the Treasurer of the philippines, Advance pa).rnent to Procurement Service for the purchase of Office Equipment-
which are.maintained with different MDS-GSBs.
trlustrative Accounting Entries for Disbursements by Check Account Title Account Code Debit Credit
Retirement & Life Insurance hemiums 50103010 P 8,500
Assume the following independent transactions: Pag-IBIG Contributions 50103020 1,400
PhilHealth Contributions 50103030 3,800
a Payment of the following utility bills: (P 4,000) Cash - MDS, Regular 10104040 P 13,700
Remittance of govemment's share.
Electic Bill P 2,300
PLDT BiII 1,100
Water Bill 600 Remittance of salary deductions (P 14,600)
Total P 000
Account Title Account Code Debit Credit Retirement and Life Insurance Premium p 8,500
Water ses 502040t0 't 600 PagJBIG Contributions 1,400
Electricity Expenses 50204020 PhilHealth Contributions 3,800
2,300
GSIS-Salary Loan 700
Telephone Expenses 50205020 1,100
Cash- MDS, Regular 10104040 P 4,000 il Employees' Association
Total
200
P 14,600
Paynent of bills from utility companies based on individual checks issued.
=
Account Title Account Code Debit Credit
Grant of cash advance for travel @ 3,000) Due to GSIS 20201020 P 9.200
Account Title Account Code Debit Credit Due to Pag-IBIG 20201030 I,400
Advances to Officers and Employees 19901040 P 3,000 Due to PhilHealth 20201040 3,800
Cash- MDS, Regular 10104040 p 3,000 Other Payables 29999990 200
Granting of tavel allowance to loyees
Cash - MDS, Regular l0l 04040 B 14,600
Remittance of salary deductions
172 Chapter 5 * Accounlingfor Disburseme s and Related Transactiotts Chapter 5 - Accountingfor Disbursements and Relaled Transactions 173
Accounting for Inventory Specific identification method shall be used in assigning cost to inventories that are
not ordinarily interchangeable; while, Weighted Average shall be used for
As discussed in Chapter l, COA Resolution No. 2014403 dated January 24,2014 interchangeable items. (PAG 2 and Par. 35, PPSAS l2)
provides the adoption of the International Public Sectors Accounting Stardards
(IPSAS) to be referred to as the Philippine Public Sector Accounting Standards When inventories are sold, exchanged or distributed, the carrying amount of those
(PPSAS). In order to improve the International Accounting Standards and its own inventories shall be recognized as an expense in the period in which the related
policy to converge public sector accounting standards with private sector strndards to revenue is recognized. If there is no related revenue, the expense is recognized when
the extent appropriate, IPSAS 12, Inventories (issued in July 2001) was revised in the goods are distributed or the related service is rendered. Loss on inventory write-
200E.
downs shall be recognized as an expense in the period the write-down or loss occurs.
The amount ofany reversal ofany write-downs shall be recognized as a reduction in
A primary issue in accounting for inventories is the amount of cost to be recogrized the amount of inventories recognized as an expense in the period in which the
as an asset and carried forward until sold or consumed. Inventories are required to be reversal occurs. For a service provider, expenses are recognized when services are
measured at the lower of cost and net realizable value; except inventories acquired rendered or upon billing for chargeable services. Inventories allocated to other assets
(e.g., used as a componenf of self-constructed fixed asset) are recognized as an
through a non-exchange transaction where their cost shall be measured at their fair
value at acquisition date. The standard further provides that inventories are required expense during the useful life of that asset.
to be measured at the lower ofcost and current replacement cost wherc they are held
for distribution at no charge or for a nominal charge; or, consumption in tle
production process ofgoods to be distributed at no charge or for a nominal charge. Perpetual Inventory Method
When the govemment has determined to distribute goods at no charge or for a Purchase of supplies and materials for stock, regardless of whether or not they are
nominal amount, the future economic beneftts or service potential of the inventory consumed within the accounting period, shall be recorded as Inventory account
for financial reporting purposes is reflected by the amount the entity would need to following the Perpetual Inventory method. Under this niethod, detailed perpetual
pay to acquire the economic benefits or service potential. Howeveq if it cannot be inventory records, in addition to the usual ledger accounts are maintained for each
acquired in the market, an estimate of replacement cost will need to be made. inventory item, and aa inventory control account is maintained in the general ledger
on a current basis. The perpetual inventory record for each item must provide
The cost of inventories includes purchase price, the cost of conversion of inventories information for receipts, issues, and balance on hand, usually both in units and peso
(labor and overhead), taxes (except those supgequently recovered from the taxing
.
amounts. Regular purchases shall be coursed through the inventory account and
issues thereof shall be recorded as they take place except for supplies and materials
authorities), and other costs to bring inventory to its present location and condition,
purchased out of Petty Cash Fund for immediate use or on emergency cases which
but not foreign exchange diflerences and selling costs; reduced by any trade
discounts, rebates and other similar items. shall be charged directly to'appropriate expense accounts. With this information, the
physical quantity and the valuation of goods on hand at any time are available from
Net realizable value refers to the amount an entity expects to realize from the sale of the accounting records.
inventory in the ordinary course ofbusiness. In other words, it is the estimated selling
price less the estimated cost to complete and to sell.
Semi-expgndable Property
Fair value is the amount for which the same inventory could be exchanged between
knowledgeable and willing parties in an arm's length trarsaction. The Govemment Accounting Manual (GAM) provides that tangible items below the
capitalization threshold ofPl5,000 shall be accounted as semi-expendable property.
Current replacement cost is the cost the entity would incur to acquire the inventory Semi-expendable property which were recognized as Prbperty, Plant and Equipment
on the reporting date. shall be reclassified to the affected accounts. These tangible items shall be recognized
Chopter 5 - Accounl for Dishursements and Related Trans qcl iotB Chapter 5 - Accountingfor Disbursements and Relaled Trarcqctioru 175
174
At the beginning of the first quarter, Agency ABC received its P2'000'000 C. STATUS OF OBLIGATION
;ii#J?;;-M;intenance and'other operating Expenses (MooE) and the Reference Amount
Notice of Cash Atlocation (NCA)' This transaction was
""*rp""ai"g
;;;r.;;ly p"tted in ttre Registry of Appropriations and Allotments (RAPAL) ORSIEV/ChecU Obligation Payabie Payment
Balance
fLgit,.y of Allotments and Notice Li iash Allocation (RANCA) and the Datc Padiculars ADTTRA No.
Not yet Due &
"ll
corresp6ndingjournal entry to record the receipt ofNCA' du€ Demandable
(a) (b) (c) (a-b) (b-c)
Asencv ABC, then, issued Obligation Request and Status
(ORS) for the purchase MOOE - P30,000 P30,000 P30,000
project in the amount )o(, Offcc
*ppf i.. ,o be used in its research and development )o(- Supplies
x)o(
"f""#ii"
oft30,000. Accordingly, said amount was obligated'
net ofPl'800
I Ioon deliverv bv the supplier, the agency paid the purchase order' Note: For MFO/PAP code 103-00-2-131I-XXXXX reler to Chapter 4, Major
*i,[i"raru e""nt rily, offi"" iuppliis amounting to P10'000 were issued Final Output (MFO)/Programs, Activity & Project (PAP) Codes.
based on the "lr]
Requisition and lssue Slip'
176 Chapter 5 - Accountingfor Disbursements and Relqled Trqnsaclions Chapter 5 - Accountingfor Disbursements and Related Trqnsactions 177
r-T--r----T----
|-T--T II
1000,000
I-IIII Responsibility
Center
Particulars MFO/PAP object'Code Amount
r-T--tT II
TI
MOOE - Office r03-00-2-r3l l-xxxx 1040401000 P30,000
Supplies
Total P30,000
REGISTRY OT AI-IOTMEMTS AND NONCE OF CASH AI.I-OCATION Heritage assets are those assets with historical, cultural, and environmental
forthe period 15t Quarter 20XX significance; and are intended to be preserved in trust for future generations. Heritage
assets shall be measured at cost. If acquired through non-exchange transaction, its
Entity Name: AgencyABC Fund Clusten Regular Agency Fund cost is its fair value at tle date of acquisition. Depreciation shall not be recognized
sheet Number:0o1 but these shall be subject to impairment. Generally, their service potential is timited
to their heritage characteristics; however, in cases of heritage assets with future
AMOUNT
economic benefits or service potential other than their heritage value, these may be
Notace of cash Allocation Balance
recognized and measured on the same basis as other items of property, plant and
Allotment Unutillzed Unfunded
equipment in accordance with ppSAS 17, property, plant and Equipment.
Date Reference Received Received tltilized NCA Allotment
(a) {b) (c) (Ec) (a-b)
xr 20xx GARO - MOOE 2,000,000 2,d)0,000 30,000 1,970,000 0
IIfrastructure Assets
tttlttl According to IPSAS 17, the ownership of infiastructure asset is not cohfined for
entities in the public sector, however significant intasEucture assets are frequently
found in the public sector. To identifo these assets as infrastructure, the foliowing
characteristics may be useful:
Account Title Account Code Debit Credit I . They are part ofthe system or network.
Office supplies expense
Office supplies inventory
50203010
10404010
P 10,000
E P 10,000
I 2. They are specialized in nature and do not have alternativc uses.
3. They are immovable.
Issuance ofoffice supplies based on the Requisition and Issue Slip. 4. They are subjestto constraints on disposal.
Examples of infrastructure assets, provided by this standard, incrude road networl<,
Property, Plant and Equipment sewer systems, water and power supply systems, and communication networks. In
Movers Construction Co. for the said project with a total contract price of . Request obligation for the construction ofroads.
P20,000,000. Upon signing ofthe contmct, the agency received surety bond from
Earth Movers as performance bond in the amount of *1,500,000. An obligation OBLICATION REQUEST AND STATUS
request was approved and the contract price was obligated. A 15% mobilization Serial No. XX-XXX-XXX-X
fee was released to the contractor. When the project is 50% completed, a progress Bureau x Date: XX-XX-XXXX
billing was received by the agency and the accounts payable was set-up and Entity Nam€ Fund Cluster: Foreisn Assiste d Proiects
eventually paid, net of l0o% retention fee and withholding tax. Upon completion Fund
of the project, a final billing was received from the contractor. The project was Payee Earth Movers Construction Co.
inspected, accepted and paid the final billing by the agency. Accordingly, the Office
Address
retention fee was refunded to the contractor and the 1yo withholding tax was
UACS
remitted to the Bureau of Internal Revenue. Responsibility Particulars MFO/PAP . Object Code Amount
Center
Capital Outlay - 10600-l -0503-xxxx 1060301000 P2OM
FOREIGN ASSISTED PR(xECTS FLIND lnfrastructure
Total P2OM
Post receipt of Notice of Cash Allocation in RANCA Certified: Charges to appropriatiorl/ B Certified: Allonnent available and
REGISTRY Of AIIOTME'{IS AND NOTICEOF CASH AIIOCATION allotment are necessary, Iawful and under obligated for the purpose/adjustment
Forthe period 15t Quart€r 20)(x my direct supervision and supporting necessary as indicated above.
documents valid, proper and legal.
Entity Name: Bureau X Fund Cluster: Foreign Assisted Proiects Fund
Sheet Number: OO1 Signafire: Jcruz Signatuxe: "/Jran
Printed Name: Juan dela Cruz Printed Name: Juana Juan
AMOUNT Position: Head, Requesting Oflice/ Position:Head,Budget Division/Unit/
Authorized RepresentatiYe Authorized Representative
Notic€ of ca5h Allocation Balance
Date: XX-XX-XXXX Date: XX-XX-XXXX
Allotment Unutilized Unfunded
t r
xx
Date
20xx
Ref€rence
GARO - CO
Received
(a)
25,m0,000
Received
(b)
20,000,000
utilized
(c)
NCA
( b-c)
20,mo,000
Allotment
- (a-b)
5,om,mo
C
Reference
STATTJS OF OBLIGATION
Amount
o Post utilized Notice of Cash Allocation for l5% mobilization fee il RANCA.
in RAOD-CO'
Post obligation for the construction of roads
REGISTRY OT AIIOTMENTS AND I{OTICE OF CASH AUOCATION
DISB(XS]E]\'LrIT8
,dGTSITY OT AJIOI!IE.T'T8' OELTGATIONS A\-D Forthe period
CAYITAL OLTLAY . 15t Quarter2oxx
fd ih' Y'r 20'O(
MFOIPAI loc00 l -oto3_)ooooa Ehtity Name: Bureau X Fund Clusteri Foreign Assisted Proiects Fund
ri crao r'"b r.'aa r'"j*r, r-a
sheet Number:0ol
L.sat a$i5r Gd{.I A{4tuFi.liod Act
--- t-,n"d oUa"ti*
u-\cs
AMOUNT
Notice of Cash Allocation Balance
2/lt/20rr 1060t0I000 I
|- 5,000 001
Allotment Unutilized Unfunded
Date Reference Received Received Utilized NCA Allotment
(a) (b) (c) (b-c) {a-b)
No entry.,
I
19902010 3, 000.000
Ad vances to contractors
Cash in Bank - Foreign
l0 103020 3,000 000
Currencv. Current Account Title Account Code Debit Credit
o f 5 rTt o b ZAti 0 I] fee
Pa to co n ractor
il Accounts paydble
Due to BIR
20101010
20201010
8,500,000
595,000
Guaranty/Security deposit
Post payment of 15% mobilization fee in RAOD-CO payable 20401040 850.000
Cash in Bank - Foreign
nISBURSiEllElrIs
RECISIRI Or AIroTlENrs, OEtlcalloNs AND Currency, Current r 0103020 7.055,000
CAPIIAL OT'TLAI
rq 6' Yd 2OO( Payment of accounts payable
Nfi OIPAP: IOGOG t_o5or-loooq
rs; cr,s6 rdas! Asin d Pro,..$ ru'd
L.sd B.ni CEE I Arrrori.id An Accounts payable P8,500,000
Less: l0% retention fee P 850,000
7% withholding tax 595.000 1,,145,000 I
I
r-- r- I I Net Amount P7,055,000
25.ooo,ool 20,1m,00 s,ooo,oo
ro6ororooo
|--
r84 Chapter 5 - Accounti. for Disbursements and Related Transqctions Chapter 5 Accountingfor Disbursements and Related Transactions t85
t-- r
2tt5/20^ r5,000,000 20,000.ofi) t,0{t0,000 I7.m0,000
l
- 7,055,000 q941,000
Entlty Name: Bureau X Fund Cluster: Forelgn Asristed Proiects Fund 2t15nod l0@101000 2J,000,0@ 20,000.000 1,000,(x)0 17.000,000
f-------r--------
AMOUNT
Notice of Cash Allocation Balance
Allotment Unutllized Unlunded
Recelved Utilized NCA Allotment Post utilized Notice of Cash Allocation in RANCA for the final billing paid.
Date Reference Receaved
{a) (b) (c) (b-c) (a-b)
I RECBT Ot LLOrrEmt, OBITCAIION! AlrD IrIlll,rSEi,lAYJS
xx 20xx GARO - CO 25,000,000 20,000,000 3,0@,otx) 1Z(m,OoO 5,ofl),000 CalrIAL ogtLAY
'
I r I
7,055,000
l
9,945,000
r FEd ctat6 Fd.is! Asi$.d Proietl ltrd
LcS:l Edb: C.r@l A$r.9ri{ib tut
F6lb!6 2!DO(
25,000.000 20,@0,000
E"rrN.T ou..i c.d"
m
ffi l@l0L00o
ffi
20,000,000 5,000.000
7,05J,0@ 9,945.000
I,190,000
t
350.000
0
Post utilized Notice ofCash Allocation in RANCA for retention fee refunded.
-r Post utilized Notice of Cash Allocation in RANCA for withholding tax
REGISTRY OF AI.TOTMET{IS A'{D OF CISH AIIOCATIOI{ remitted to BIR.
Forthe period lst'{OTICE
Quarter 20XX
REGISTRY OF AI1OTMEITIS AiID ]{ONCE OF CASH AIIOCATIOT{
For the period lsl quarter mXX
Entity Name: Bureau X Fund Cluster: Forei8n Assisted projects Fund
Sheet Number: ml Entity Name; Sureau X Fund Cluster: Foreign Alsisted Prorects Fund
sheet Number: (x)l
AMOUNT
Notice of Cash Allocatlon Balance AMOUMT
Allotment Unutilized Unfunded Notice of c€5h Allocation Balance
Date Reference Received Received Lltllized NCA Allotment Allotment unutili2ed Lhfunded
ttxx 20xr GARO - CO
(al
5,(m,mo
(b)
20,0@,000
(c)
3,mo,000
(Fc)
1Z0m,fxm
(a-b)
5,000,000
Date
f-----r-----t
Refercnce Received
(a)
Received
(b)
Utllized
(c)
NCA
(b-c)
Allotment
(a-b)
xx 20xx GARO. CO 25,000,0,00 20,000,000 3,ooo,o(n 17,0m,0{x) 5,000,000
E
7,055,000 9,9d5,000
III
7,055,0(n 9,945,(m
290s,0o0 2,040,mo
7,905,0O0
r--r---t--------l
2,A4O,OoO
850,000 t19O,mO
850,000 1,190,000
lt 1,190,000 o l
Chapter 5 - Accountingfor Disbursements and Relaled Transaclions r89
18E Chapter 5 - A for Disburseme* ond Relaed Transactions
Recognltlon Principle
Post all payments made to contractor in ORS.
Section 3, Chapter l0 - Property, Plant and Equipmen! GAM provides that the cost
OBLIGATION REQUEST AND STATUS ofan item ofPPE shall be recognized as an asset i( and only if:
Serial No. )O(-)O(X-X)O(-X I . It is probable that future economic benefits or service potenti;t associated
Bureau X DAtC: XX-)O(-XXXX with lhe items will flow to the entiS l and
Entity Name Fund Cluster: Foreiu Assisted Proiecb 2. The cost or fair value can be measured reliably.
Frmd
3. Beneficial ownership and control clearly rest with the govemment.
Payee Earth Movers Construction Co.
0ffice
4. The asset is used to achieve govemment objectives.
Address
5. It meets the capitalization threshold ofPl5,000.
UACS
Responsibility Particulars MFO/PAP Object Code Amount The capitalization threshold of 115,000, as initially discussed in the preceding
Centea section, represents the minimum cost of an individual asset recognized as a PPE on
Capital Outlay - 106-00-l-0501-xxxx 1060301000 P2OM the Statement of Financial Position. Some items may have individual values below
lnfrastsucture the tkeshold but which work together as a group of network asset whose total value
Total P2OM
exceeds the threshold shall be recognized as part of the primary PPE (e.g., computer
-f,i8is.
Certified: Charges to appropriationi t]. Certified: Allomrent available and network, etc.) This threshold shall be applied on an individual asset or per itdrir
allotment are necessary, lawful and under obligated for the purpose/adjustment Each item within the bulk acquisition with total value of PPE will need to meet the
my direct supervis'ion and supporting necessary as indicated above. capitalization threshold to be recognized as PPE.
documents vali4 proper and legal.
Major spare parts and stand-by equipment qualifr as PPE when an entity expects to
Signature: Jcluz Signanre: JJuaz use them for more than one period. Simila y, if the spare parts and servicing
Printed Name: Juan dela Cruz Printed Name: Juana Juan equipment can be used only in connection with an item of PPE, they may be
Position: Head, Requesting Office/ Position:Head,Budget Divisionrunit/
accounted as PPE. An entity evaluates all its PPE costs at the time they are incurred.
Authorized Representative Authorized Reprcsentative
These costs include those incurred initially to acquire or construct an item ofPPE and
Date: XX-XX-XXXX DAIC: XX:XX.XXXX
subsequent costs incurred to add, to replace part of, or service it.
C STATUS OF OBLIGATlON
Reference Amount Some PPE may not directly increase the future economic benefits or service potential
of any particular existing items of PPE but may be necessary to obtain the future
Bdlancc economic benefits or service potential from its other assets likc those items that may
ORYJEV/ChccU Obligation Payable Payment
I)ale Paniculars ADA-/TRA No. be requi.red for safety or environmental reasons. For example, fire regulation safety
Not yct Due &
due Dernandable
may require a building new sprinkle system. These enhancements are recognized as
(a) (b) (c) (a-b) (b-c) an asset because without them the entity may not operate the building in accordance
xx co- P2OM P2OM P3M 0 0 with the regulations.
Infrasfucture 7.055M
xxx 7.905M
.85M ln case of regular major inspection performed on some items of PPE, the cost of this
l.l9M inspection may be recognized as PPE regardless of whether parts of the item are
replaced. Any carrying amount of the cost of previous inspection (as distinct from
physical parts) is derecognized.
t90 Chapter 5 - Accountingfor Disbursements and Related Tt rJactions Chapter 5 - A ccounting for Disbursements and Related Trqnsaclions r9l
The Property Accounting System consists ofthe following procedures: 4 If promotionalitems are received upon purchase ofppE and it is the same as
l.
Recording of Receipt, Inspection and Aoceptance PPE the PPE purchased, the total purchase price shall be allocated to the total
2.
Recording of Requisition and Issue of PPE units purchased plus the promotional item. However, if the promotional item
3.
Construction ofPP by Administration received is different from the PPE purchased, the fair value of the
4.
Construction ofPPE by Contract promotional iteui is deducted tom the total cost of,the units purchased and
the balance shall be allocated to the total units purchased.
When an item of PPE being requested is not available in stock, a Purchase Request
(PR) shall be prepared for approval then a duly approved oontractlPurchase Order 5 In case of lump sum price acquisition, the total cost paid shall be allocated to
shall be issued. Procedures relative to the obligation of allotment and payment ofthe the asset acquired based on the relative fair value ofthe asset acquired.
inspected and accepted deliveries are thoroughly discussed from preceding chapter to
this chapter. Physical count, which is required annually, is an indispensable
procedure for checking the integity of property custodianship. Construction
Exchange transaction may be exchange with commercial subsarrce or exchsflge A finance lease is a kind of lease that transferc substantially all the risks and rewards
without commercial substance. Where the exchonge transaction is with commercial incident to ownership of an asset. At the start of the lease term, the lessee shall
substance, an item of'PPE is measured at its fair value. However, if the exchapge recognize the lease assert as asset and the related lease obligation as liability. The
ffansaction lacks commercial substance or the frir value of tlte asset given or the fair depreciable amount ofa leased asset is allocated to each accounting period during the
value of the a-sset received is not reliably measured,; the exchange is recogrized at period of expected use on a systematic basis consistent with the depreciation policy
carrying amount. Consequently, no.gain or loss shall be rbcognized. the lessee adopts for depreciable assets that are owned. If there is a reasonable
certainty that the lessee will obtain ownership by the end ofthe lease term, the period
of expected use is the useful life of the asset; otherwise, the asset is depreciated over
Non-exchange Trahsrs{ld the lease term or useful life, qhichever is shorter.
within the same class ofPPE must be offset against one another within that class and Trains 10-20 years
must not be offset in respect ofassets in different classes. Aircrafts & Aircrafts ground equipment 10-20 years
Watercrafts l0-25 years
Furniture, Fixtures and Books 2-15 years
Depreciation Leased Assets, excluding Land Useful life of the leased asset or the
lease term, including any renewal
Depreciation is charged systematically over the useful life of the depreciable asset.
option, whichever is shorter.
Depreciation begins when it is available for use and even it is idle or retired from
Leased Assets Improvements Useful life of the improvement or
active use and held for disposal because depreciation ceases when derecognized or
fully depreciated. However, under the usage method of depreciation, no depreciation
the lease term, including any
renewal option, whichever is
is recognized when there is no production. The depreciation charge for each period
shorter.
shall be recognized in surplus or deficit unless it is included in the carrying amount of
Service Concession Assets Useful life ofthe service concession
another asset where the future economic benefits or service potential embodied in an
asset or the term of the service
asset is absorbed in producing other assets; in which case, depreciation charge
concession arrangement, including
constitute part of the cost of the other asset and is iniluded in its carrying amount.
any renewal oplion, whichever is
For example, the depreciation of manufacturing plant and equipment included in the
shorter.
conversion cost of inventory. Depreciation is recognized even if the fair value of the
Other Property, Plant and Equipment 2-l5 vears
asset exceeds its carrying amount, as long as the assets residual value does not exceed
its carrying amount. The depreciable amount ofan asset is detennined after deducting
its residual value. The residual value may increase to an amount equal to or greater
A residual value equivalent to at least five percent (5%) of the cost shall be adopted
unless a more appropriate percentage is determined by the entity based on its
than its carrying amount, if so, no depreciation is recorded unless and until its
operations subject to the approval of COA. Generally, infrastructure assets have no
residual value subsequently decreases to an amount below its carrying amount.
residual value. h case, residual value of parts of the infiastructure assets can be
determined, the polcy of at least five percent (5%) of the cost of that part shall be
The useful life of an asset is the asset's expected utility to th€ entity. The useful life
applied.
may be shorter than its economic life due to asset management policy involving the
disposal of asset after a specified time or after consumption ofa specified proportion
The residual value and useful life ofan asset shall be reviewed at least at each annual
ofthe future economic benefits or service potential ofthe asset.
reporting date and, if expectations differ from previous estimate, the change shall be
accounted for as a change in accounting estimate.
The estimation of the useful life of the asset is a matter ofjudgment based on tle
experience of the entity with similar assets. As a guideline, the GAM provides the
following lifespan of PPE: Each part ofan item ofPPE with a cost that is significant in relation to the total cost
ofthe item shall be depreciated separately. Examples include pavements, formations,
curbs and channels, footpaths, bridges and lightings within a road system. To the
Properry, Plant and Equipment Estimated Useful Life
extent that an entity depreciates some parts of an item of PPE separately, it also
Land lmprovements I Useful life of the asset or the depreciates separately the remainder of the item that are insignificant. And if an
I improvement whichever is shorter. entity has varying expectations for these parts, approximation techniques maybe
Infiastructure Assets 20-50 years
necessary to depreciate the remainder in a manner that faithfully represents the
Building and Other Structures 30-50 vears
consumption pattem and/or useful life of its parts.
Machinery and Equipmenl 5-15 years
Motor vehicles 5-15 years The depreciation method shall reflect the pattem in which the asset's future economic
Motor vehicles (Military vehicles) 3-20 vears benefits or service potential is expected to be consumed by the entity. A variety of
196 Chaptet 5 - Accounlingfor Disbursements and Relaled Tronsactions
Chapter 5 - Accountingfor Disbursements and Related Transactions 197
deprcciation methods can be used to allocate the depreciable amount ofan assot ooa
systematic basis over its useful life. These methods include the stmight-line nethod, Only permanently appointed officials shall be designated as disbursing
the diminishing balance method, and the units of production method. The entity shall officers;
select the method that most closely reflects the expected pattem of consurnption of
the future economic benefits or service potential embodied in the asset. The selected f. Only duly appointed or designated disbursing officer may perform disbursing
method is then applied consistently from period to period unless there is a ohange in functions. Officers and employees who are given cash advances for official
the said pattern of consumption; in which case, the change shall be accounted for as a travel need not be designated as Disbursing Officers;
change in accounting estimate in accordance with IPSAS 3, Accounting Policies,
Change in Accounting Estimates and Errors g. Transfer of cash advance fiom one accountable officer to another shall not be
allowed; and
Land and building that are acquired together at a lumpsum amount are accountd
separately. Land is normally had aa unlimited useful life; thus, not depreciated. h. The eash advanee shall be used solely for specific legal purpose for which it
was granted. Under no circumstance shall it be used for encashment of
I checks or for liquidatibn ofa previous cash advance.
Disbursements by Cash
Cash disbursements constitute payrnents out of cash adyances granted to the regular Cash Advance for Pairoll
and special disbursing officers for personal services, petty expenses and MOOE for
field operating requirements. All cash payments shall be covered by duly approved Advances for Palroll shall be granted to Regular Disbursing Officers for payment of
DVVpayrollVpetty cash vouchers (PCVs). The cash advances may be ganted to the salaries, wages, honoraria, allowances and other personnel benefits of officials and
cashiers/disbursing ofticerVoffrcials and employees to cover the following: salaries employees. The Advances for Payroll shall not be used for encashment of checks or
and wages, travels, special time-bound undertakings and petty operating expenses. for liquidation of previous or otler !,pes of cash advances. It shall be equal to the
The granting, utilization and liquidation of cash advances shall be governed by the net amount of the processed payroll corresponding to the pay period. Liquidation of
following existing rules and r€gulations, per COA Circular No. 97 -002 dated the advahces shall be made within five (5) days after the end of the pay period. Any
February 10, 1997, as amended by COA Circular No. 2006-005 dated July 13,2006. unclaimed salarieVallowances shall be refunded and issued offrcial receipt to close
a. No cash advance shall be given unless for a legally authorized specific the account. The Disbursing Officer shall maintain the Cash Disbursements Record
purpose; (CDRec) to monitor the cash advances/payroll, current operating expenses, and
special purpose/time-bound undertakings and prepare the Report of Cash
b. A cash advance shall be reported on and liquidated as soon as the purpose for Disbursements (RCDisb) to report its utilization.
which it was given has been served;
d. Except for cash advance for official travel, no officer or employee shall be
PERA 2O,OOO
198 Chapter 5 - Accountingfor Disbursements and Related Trotsaclions Chapter 5 - A for Disbursements and Related Transactions r99
PhilHealth premiums 3,800 attendance are submitted, making it impossible to know the exact amount to be paid
Employees' Association 200 23,600 in case there are absences without pay during the pay periods. In casi of
Net Amount P46,400 overpa)"rnents, refrurds shall be demanded ofthe employees concemed.
Account Title Account Code Debit Credit Using the data from the preceding illustration, that after payments were made
Salaries and Wages-Regular 50101010 P50,000 to those employees, the agency discovered overpayments in the amount of
PERA 50102010 20,000 P5,000 due to the preparation of payroll before reports of attendance are
Due to BIR 20201010 P 9,000 submitted making it impossible to know the exact aniount to be paid in case
Due to GSIS 20201020 9,200 thery.are absences without pay during.the pay periods. Accoidingly, the
resulting overpayment was refunded by the concerned employees.
Due to Pag-IBIG 2020't030 1,400
Due to PhilHealth 20201040 3,800
Other Pavables 29999990 200
The following journal entries shall be prepared to record the above
transactions:
Due to Ofiicers and Employees 2010r 020 46,400
Set-up ofDue to Officers and Employees and Salary Deductions.
t taken uo as ivable
P 46,400
Em s
Salaries and Wages-Reeular
10305020
50101010
5,000
5 000
Overpayment ofsalaries and wages.
. Refund of ovemayment not taken up as rcceivable accounting units of their respective Central/RegionayDivision Offices and Operating
Units for JEV preparation or whenever a request for replenishment is made.
Account Title {ccount Code Debit Credit
Cash-Collecting Officers 10101010 s,000
Salaries and Wages-Regular 5010I 0l 0 5,000
Receipt of refund of Salaries and Wages-Regular during the current year. ILLUSTRATION:
Field/Extension/Satellite Offices are some of the government units under the Office Supplies Expenses 50203010 P 22.000
central/regional/district offices without complete set of books of accounts. Those Traveling Expenses-Local 50201010 13,000 I
offices may be granted cash advances covering t$)o (2) months requirements fot Water Expenses 50204010 6,000
MOOE/authorized expenses to finance their operations. The cash advance shall be Electricity Expenses 50204020 1,000
grarted to the duly designated or appointed Disbursing Officers. Telephone Expenses 50205020 15,000
Advances for Operating
A Cash Disbursements Register (CDReg) shall be maintained to record, monitor and Expenses I 990 I010 P 59,000
report transactions involving the grant, utilization and liquidation of the cash L uidation of cash advance.
advance. The Disbursing Officer shall submit within five days after month-end the
certified copies ofthe CDReg with supporting paid DVs and other documents to the
202 Chqpter 5 - Accountingfor Disbursements and Related Transactions I Chapter 5 - Accout li, fot Disbursemenrs and Related Trarcactiors 203
. Foreign Travel
Offi ce Supplies Expenses P15,000
Traveling Expenses 3,000
Advances to Oflcers and
Printing and Publication
Employees 19901040 p250,000 2.000
Total p?g&Q
Training Expenses 50202010 50,000
Cash - MDS, Regular 10 r 04040 P300,000
The following joumal entries shall be prepared to record the above
Granting of cash advance for training abroad. transactions:
The following are the accounting policies regarding cash advance for PCF:
The following journal enkies shall be prepared to record the above
transactions:
a. The fund shall be kept separately from the regular cash advances/collections
and shall. not be used ftr payment of regular expenses such as rentals'
subscriptions, light and watir bills, purchase of supplies and materials for
"und
rto"f ju.po."t, the like. Payments out of PCF, which shall be made Account Title Account Code Debit Credit
ttrrougi a eetty Cash Voucher (PCV), should be allowed only for amounts Petty Cash 10101020 P 15,000
nor ftS,000 for each transaction, except when a higher amount is Cash - MDS, Regular 10104040 F 15,000
"law
"i"""airg
allowed by and/or specific authority by the COA' Splitting of Establishment ofPetty Cash Fund
transaction; to avoid exceeding the ceiling shall not be allowed' All
disbursements out of PCF shail be covered by duly accomplished and
apiroved PCV supported by cash invoices, ORs or other evidence of Traveling Expense-Local 50201010 P 5,000
disbursements; Office Supplies Expenses 50203010 1,800
Fuel, Oil and Lubricans 50203090 2,100
b.TheunusedbalanceofthePCFshallnotbeclosed/refundedattheendofthe
year. The fund shall be closed only upon termination, separatiol' retirement
Postage and Courier Expenses
MOOE
50205010
50299990
400
3,200
I
or dismissal of the Petty Cash Fund Custodian (PCFC), who in tum shall Cash - MDS, Regular 10 r 04040 p 12,500
refund any balance to close hiVher cash accountability; and Re lenishment before the
c. At the end of the year, the PCFC shall submit to the Accountingin
Divisionfunit all unreplenished Petty Cash Vouchers (PCVs) for recording
the books ofaccounts.
Assuminq. PCF was replenished in the ensuinq year.
The PCFC shall prepare the Report on Paid Petty Cash Vouchers (RPPCV) and . No replenishment before the year-end.
."irt in m r"tty'caih Fund Record (pcFR) to monitor and control the grantingDVardto
utilization oftheiund. The RPPCVs shall be the basis in the preparation ofthe
replenisn the PCF. The Accounting Division/unit shall maintain SL to monitor
and Traveling Expense-Local
Office Supplies Expenses
502010 t 0
50203010
P 5,000
1,800
I
control accountabilitY.
Fuel, Oil and Lubricants 50203090 2,100
Postage and Courier Expenses 50205010 400
ILLUSTRATION: MOOE s0299990 f ,200
Petty Cash I 01 0l 020 p 12,500
Assume the following data from the accounting records of Agency Y: Expenses incurred and the actual size ofthe fund.
Estimated ExPenses:
Traveling ExPenses P 5,000 Nole that adjustment is necessdry at year-end in order to report the expenses
OfIice Supplies ExPenses 2,000 incurred and the acnal size of the petty cash fund. llithout this adjusting
Postage and Courier Expenses l'500 joumal entry, expenses will be tmderstated; while the petty cash fund is
Fuel, bil and Lubricants Expenses 2'500 ovefitated.
Other MOOE
rotal P ljPqo
208 Chqpter 5 - Accountingfor Disbursements dnd Related Transaclions Chapter 5 - Accountingfor Disbursements qnd Relqted Trataactions 209
Petty Cash 10101020 P 12,500 4. Other payables which cannot be conveniently or practicably paid using the
Cash - MDS, Regular 10104040 P 12,s00 ADA
Replenishment in the ensuing year.
All LDDAP-ADA prepared/issued during the day shall be recorded chronologically
In the event of retirement, resignation, separation and termination of the Petty in the CkADADRec maintained by the Cash/Treasury Unit, which also shall rnonitor
Cash Custodian, the unused PCF shall be returned. the receipt of the validated LDDAP-ADA from the MDS-GSB and the issue of
O{ficial Receipt (OR) or other acceptable evidence of receipt of payments by the
Cash-Collecting Offi cer l0l0l0l0 P 2,500 creditors/payees.
Petty Cash 10101020 P 2.500
Retum of unused petty cash fund. Upon receipt from the Cash/Treasury Unit ofthe duly supported Report of Authority
to Debit Account Issued (RADAI), the accounting unit shall prepare a Joumal Entry
Voucher (JEV), to be recorded in ADA Disbursements Journal (ADADJ), and credit
Govemment Units without complete set of books of accounts may be granted cash
advance covering two months operating requirements for authorized petty and other
the Cash - MDS, Regular account. The MDS Govemment Servicing Bank (MDS-
miscellaneous expenses to finance their operations. The cash advance shall be
GSB) shall effect payment throirgh the Modified Disbursements payment System
granted to the duly designated or appointed Disbursing Officer.
(MDPS) not earlier than 24 hours but not Iater thair 48 hours after receipt of the said
i
document.
Disbursements through List of Due and Demandable Accounts Payable. Sometimes, due to inconsistency of information (i.e., bank branch, account
name/number) between the bank records and LDDAP-ADA or errors stated in DBM
ADVICE to DEBIT ACCOUNT (LDDAP-ADA)
Circular Letter 2013-16 dated December 23. 2Ol4 (i.e., typographical errors),
The use of LDDAP-ADA as a mode of settlement of accounts payable due the LDDAP-ADA may be invalidated. Along this line, a new LDDAP-ADA may be
issued for the replacement of the invalidated upon submission of the validated
creditors/payees of all NGAs and their OUs was prescribed under DBM Circular
Letter No. 2013-16 dated December 23,2013 which implemented the Expanded LDDAP-ADA indicating non-payment to creditors/payees due to inconsistency of
Modified Direct Payment Scheme (ExMDPS), amended by DBM Circular Letter information. Accordingly, a JEV shall be prepared for the ,cancellation of the
invalidated LDDAP-ADA and the replacement shall be reported in RADAI.
Nos. 2013-16,4 and 2013-168 dated February 6,2014 and February 25, 2014,
respectively.
For creditors without existing accounts with the agency's MDS-GSB (i.e., other
GSBs or private banks), the payments of their claims shall be through bank transfer.
The following are excluded from the implementation of ExMDPS:
Payment through the issuance ofa Manager's Checks by the MDS-GSB ofan agency
l. Payment of Terminal Leave and Retirement Gratuity (TLIRG) benefits which shall be discontinued to minimize cases oflate pal,rnents.
is govemed by Republic Act No. 10154 as implemented by CSC Resolution
No.1300237 and Budget Circular No. 2013-l;
1. Set up of'payables and payment to suppliers and contractors 3. Payment ofsalaries through ATM
(P700,000).
Assume the same data in #2.
Account Code Debit Credit
Buildings
Accounts Payable
106040 r 0
20 r 01010
P 700,000 I
P 700,000 Salaries and Wages
Account Code
501 01 0l 0
Debit
P s0,000
Credit
The CPC System was prescribed as an alternative mode of payment for goods and
services under Joint Memorandum Circular (JMC) No. 2014-l dated May 15, 2014
7. Payment of Accounts Payable of the Departrnent of National Defense (DND), Armed Forces of the Philippines
Gross P 100,000 (AFP) and the DBM.
Less: Withholding tax 6,000
Net P 94,000 The general guidelines on the implementation ofthe CPC System are as follows:
Account Code Debit Credit l. The CPC System to be implemented by participating agencies is a mode to
Accounls Pavable 20101010 P 100,000 procure specific eligible items through the use of an electronic card. The CPC
Due to BIR 20201010 P 6,000 functions similarly to a credit card and shall only be used for pre-identified
Cash - MDS, Regular r 0104040
Payment ofpayables based on duly approved DV
I 94,000
items within body limits mutually agreed upon by members of the Steering
Committee. It shall also be used only with specific merchant groups already
enumerated under agreement with the credit card company.
ln the event the CPC is lost or stolen, the cardholder must immediately notiry the
8 The cost of purchasing unauthorized itoms using the CPC shall be for the
Program Administrator. To prevent unauthorized utilization of the lost CPC, thc
personal account of th-'e individual who undertook the transaction' This is
cardholder must also report this to the CCC via phones or electronic modes. Due to
without prejudice to the suspension of the cardholder's privilege to use
this incident, the privilege of the cardholder to procure goods through CPC shall be
the issued 6PC and other penalties which the panicipating agencies may I
Adminisfator shall NGAs among taxpayers who are mandated to use the Electronic Filing and Pa),rnent
Drivilese or restoration ofthe same. In all instances, the Program
System under the Bureau of Internal Revenue Regulations No. l-2013, the TRA is
i;;%; s',;.t * cornrnin"" on the measures taken. The cardholder shall be held accomplished on-line which is called the Electronic TRI(eTRA). The eTRA shall be
a-ccountaUte in teins of payment for the
purchases made against the cardholder
supported with the Summary of Taxes Withleld (STW), which is the document
during the period it was lost or stolen'
summarizing the type and amount oftaxes withheld. The same document shall be the
basis for the BIR and Bureau of Treasury to draw a Joumal Entry Voucher to record
the tax collection and deposit in their respective books ofaccounts.
Disbursements Through Tax Remittance Advice
New Government Specifically, in the books of National Govemment Agencies, the TRA is recognized
Tax Remittance Advice (TRA) system was originally irrtroducedin
Januarv 3' for the consfuctive receipt ofNCA for taxes and custom duties, and for the eventual
;;;;iili;; CNces)'tt'ougt Joint Circular.No l-2000 dated2001 of rhe remittance to BIR and Bureau of Customs (BOC) of taxes and custom duties
31'
ziio-o', -i"ri*a"a iy foint Circllar No' l-2MoA dated July
(DBM)' withheld. In the books of the BIR and BOC, it is recognized for the constructive
n"o-ui.""t of Financa (DOF), the Departmont of Budget and Management receipt ofthe remitted tax revenue and custom duties. And in the books of the Bureau
#;;E;;;rt". on'nuai't (coa), providing that the Notice of cash Allocation
(NCA) released to the govemment agency amount of the estimated
is reduced by the of Treasury (BTr), the same is recognized for the constructive receipt ofthe taxes and
-agencv custom duties remitted by BIR and BOC. It is noteworthy that NCA received by the
;;;;;;;;" t"Iiin"a bv the through TRA^' In other words' the Notice
DBM is net of the National Govemment Agencies from.DBM may include or net of the TRA. (Refer to
of i^itiUo*tion received by the gJvernment agency from the
NCA received' Estimated taxes are Problems I and 2 at the end of this chapter)
annlicable Dercentage of TRA basid on the
;ilil; ;;; ; the following percentages: Personnel Services - 870;
iiriii""** *a o,rter operating Expenies - 5%; and capital outlay - 5%'
ILLUSTRATION:
receipt of NCA' net of
Based on the foregoing, the journal entry to recognize the
Subsidy from National frst quarter of the current year,
Part of its total Notice of Cash Al location for the
fne i" u AeUt toi Castr - MOS, Regular; and a credit to: joumal entry because the Agency Xreceived P50,000 NCA for the purchase of office equipment,
in that
C"rL."rt. Note that no TRA was-recognizedsubsequent remittance of TRA to including P3,000 for TRA. The corresponding withholding tax was later remitted
;";; "i NCA received is net of TRA' The to BIR through TRA, and eventually remitted by BIR to Bureau of Treasury
s;; of Inte*"I Revenue (BIR) is recorded by a debit to:thatDuethe total subsidya credit
to BIR; and
from (BTr).
toi-ioUriay from National dovernment. It is noteworthy
plus the TRA; no
national govemment now represents tlte total amount ofNCA
and
*as recorded in the remittance of withholding tax to BIR' Journal Entries:
".o"ri# "*rt Books ofAsencv X
Philippine Public
However, due to recent developments brought. about _by.the
field of govemment Account Title Account Code Debit Credit
Eii-"iui fnf*ug"ment Reforms and significant changes. in the
;;;il;g that-prompted the harmonization of the existing accounting standards Cash- MDS, Regular 10104040 47,000
on Audit revised the Cash - TIIA 10104070 3,000
*iii trt" ilt"-"tional accounting standards, the Commission 2002.
NdAi f"f**f prescribed ,,nd"iCOA Circular No. 2OO2-OO2 dated June 18, of the Subsidy fiom NG 40301010 s0,000
Puisuant to Article D(-D, Sec. 2(2) of the 198? Constirution of the Republic Receipt of NCA including TRA.
i{il;;i;;; ih" coA prescribed the Government Accounting Manual (GAM)'
Account Title Account Code Debit Credit
Government Agencies'
According to Chapter 6, Sec. 60, Vol' I of GAM.for Natiolal Office equipment 1060s020 50,000
prescribed
iil i* f".i*rie Advice (TRi) refers to a serially-numbered document
in the
Accounts payable 20101 0l 0 50.000
;; ;; ;iM tnat stroula b" ut"d uy the National Government Agencies Purchase of office equipment.
.omirionnp wilhhcl.l taxes on funds'comins from DBM. With the inclusion of all
^f
218 Chapter 5 -A ccountingfur Dis bursements and Related Trdnsactions Chapt er 5 - Accountingfor Disbursements and Related Transactions 219
The amount due to BOC representing custom duties was remitted by Agency X
Account Title Account Code Debit Credit and appropriately recognized in the books ofBOC and BTr.
Accounts payable 20101010 50,000
Cash - MDS, Regular i 0104040 47,000 To reflect the above transactions, the followingjoumal entries shall be prepared:
Due to BIR 20201010 3,000
Payment of accounts payable of x withhold
Account
Account Title Debit Credit
Account Title Account Code Debit Credit Code
Due to BIR 20201010 3,000 Military, Police & Security Equipt. 106051 00 P900,000
Cash TRA Cash - MDS, Regular 10104040 P880,000
- 10104070 3,000
Remittance of withholding tax to BIR. Due to NGAs 20201050 20,000
Purchase of mil ul t.
ILLUSTRATION:
Agency X received NCA for custom duties charged against Tax Expenditure
Books ofBTr
Fund (TEF) in relation to the purchase of military equipmen! as follows:
Subsidy to NGAs 50214010 P20,000
Cash-Tax Remittance Advice 10104070 P20,000
Cost P 880,000
Constructive receipt of remittance oftaxes by NGAs through TRA
Custom duties 20;000
Total P 900,000
Chaplar 5 - Accountingfor Disbursements and Relqted Transactions 22t
220 Chqpter 5 - Accounlingfor Di;burserqents and Relaled Trqnsaclions
Disbursements by Foreign-based Government Agencies Account Title Account Code Debit Credit
Cash-Collecting Offi cers 10101010 p200.000
CDC is an authorization issued by the DBM to DFA and other agencies with foreign Passport and Visa Fees 40201120 P200,000
posts to utilize their collections retained by their Foreign Service Posts (FSPs) to Collection ofrevenue of FSPs.
cover operating requirements, but not to exceed the released allohnent to the said
post. (National Budget Circular No. 535 dated December 29, 2011).
ClB-Foreign Currency, Current
Account 10103020 P200,000
The following are the accounting policies regarding disbursements by Foreign-based
Government Agencies (FBGAs):
Cash-Collecting Offrcers I 01 01 010 I
Deposit ofcollections to authorized servicing bank ofthe FSPs.
P200,000
BTr Books:
TI ,USTRATION:
Account Title Account Code Debit Credit
Assume the following data: Subsidy to NGAs 50214010 p100,000
Cash-Constructive Income
Passport and visa fee collected P 200,000 Remittance 10104080 P100,000
Cash Disbursement Ceiling (CDC) received 150,000 Constructive receipt of remitted collections.
Expenses paid:
Allowances - Civilian ernployees 80,000
Rent 20,000 100,000
DisbuEements through Direct Payment Method
The accounting entries for the collection of revenue and the constructive receipt
This type of disbursement should be covered by a Non-Cash Availment Authority
of disbursement authority to, Foreign Service Posts (FSPs) of DFA and DOLE (NCAA).This mode of disbursement is made through the JEV issued by the BTr to
are as follows:
,the availing/implementing agency to record payment of goods and services made
223
222 Chapter 5 - Accounlingfor Disbursemenls and Relaled Trsnsqctions Chapt er 5 - Accourning for Disbursements and Related T/o$ actions
directly by the lending institution to the supplier or contractor. The JEV shall be Questions
recorded in the General Joumal (GJ).
.1. Enumerate to fundamental principles for the disbursement of public funds.
ILLUSTRATION: 2. Identif the basic requirements and certification for disbursement of public
funds.
Agency AB purchased communication equipment in the amount of P500,000
through Direct Payment Scheme of Foreign Loan Availment. A liability was set- 3. Explain the use ofNotice of Cash Allocation.
up. The corresponding NCAA was received and payment through Direct
Payment Scheme was made. The BTr recognized the above transactions in its 4. Explain the use ofNotice of Transfer ofAllocation.
books.
5. Enumerate and discuss the two t)?es of checks being issued by government
The followingjoumal entries shall be prepared to record the above transactions: agencies.
6. List down the COA rules and regulations (and other issuances) governing the
Books of Aeency AB grant and liquidation of cash advances.
Accounts Payable
Subsidy from National
20101010 p s00,000 I 8. Discuss briefly the modes of acquiring PPE and the related accounting policies
and principles.
Government 40301010 P 500,000
Receipt ofNCAA and payment of payables. 9. Discuss accounting policies for cash advances.
10. Explain briefly the Tax Remittance Advice according to Government Accounting
Manual (GAM) for National Govemment Agencies.
Books ofBTr