ACCOUNTING FOR

DISBURSEMENTS AND Carl Vincent L. Alaan

RELATED
TRANSACTIONS
OVERVIEW
The chapter covers the rules and regulations to be followed in the
disbursement of public funds, the monitoring of receipt and
utilization NCA/NTA, preparation and processing of DV/Payroll;
preparation and issue of checks; payment by cash; granting
utilization and liquidation and replenishment of cash advances;
payment through ADA; remittance of taxes withheld through
TRA; availment of foreign loans through suppliers
credit/constructive cash. Specifically accounting for Inventories
and PPE will be discussed.
DIBSURSEMENT SYSTEM
1. Preparation and processing of disbursement
voucher
2. Preparation and issuance of check or
payment by cash
3. Granting, utilization and
liquidation/replenishment of cash advances.
 BASIC REQUIREMENTS FOR
DISBURSEMENTS
No Requirement Document Responsibility
1 Availability of allotment/budget for obligation/utilization ORS/BURS Budget Unit Head
2 Obligations/Utilizations properly charged, lawful, proper and legal ORS/BURS Head, Requesting
Office
3 Availability of funds prior to entering into a contract/agreement Purchase Order Head, Accounting
4 Availability of Cash and completeness of supporting documents Disbursement Voucher Head, Accounting
5 Legality of the transaction and conformity with existing rules and Disbursement Voucher Head of the
regulations Agency
6 Charges are necessary and legal in relation to allotments under Disbursement Voucher Head, Requesting
his/her supervision as well as the validity and propriety and legality Office
of supporting documents
7 Approval of the Head of Agency Disbursement Voucher Head of Agency
Succeeding
Documents
1. Disbursement
Vouchers

Preceding Document
1. Purchase Request
2. Purchase Order
Preceding Documents
1. Purchase Request
2. Bid Documents/Canvass
3. Abstract of Bids

Succeeding Documents
1. Inspection and
Acceptance Reports
2. Invoices
Succeeding
Documents
1. Check or ADA

Preceding Document
1. All Supporting
Documents
MODES OF DISBURSEMENTS
1. Modified Disbursement System (MDS) Checks
2. Commercial Checks
3. Cash
4. LDDAP – ADA
5. Electronic Modified Disbursement System
6. Cashless Purchase Card System
7. Direct Payment Method
RECORDS/REPORTS
1. RANCA RANTA
 RECORDS
2. Report of Checks Issued RADAI
RECORDS
3. Report of Cash Disbursements
RECORDS
4. Journals
 Check Disbursement Journals- All Check Issuance (RCI)
 Cash Disbursement Journals - All Cash Disbursements (RD)
 ADA Disbursement Journas - All Disbursements through ADA
 General Journal - All Other Modes of Disbursements

5. Ledgers
 General Ledgers
 Subsidiary Ledgers
INVENTORY (PPSAS 12)
1. Measured at Lower of Cost and Net Realizable Value
2. Cost of inventories – Purchase Price, Conversion Cost, Irrecoverable Taxes, and
Other Cost to bring inventory to present condition less discounts and rebates
3. Uses Perpetual Inventory Method
4. Semi-expandable Property – tangible items below Php 15,000 that are expected
to be used beyond one period.
5. Inventory of Accounting System
Receipt, inspection, acceptance and recording of deliveries of inventory
Requisition and issue of inventory items
Transfer and/or disposal of inventory items
 PROPERTY, PLANT AND
1. EQUIPMENT
Recognition Principle (PPSAS 17)
 Probable that economic benefits or service potential associated with the items will flow to the entity
 The cost or fair value can be measured reliably
 Beneficial ownership and control rest with the government
 Asset is used to achieve government objectives
 It meets the capitalization threshold of Php 15,000

2. Modes of Acquisition
 Purchase
 Cash – Cost plus all cost incurred in brining the asset to the location
 On Account – Purchase Price, Import duties and irrecoverable taxes less trade discounts and rebates
 Installment – difference between cash price vs installment price is recognized as interest over the period of credit
 Lump Sum – lump sum price x relative fair value
 Construction – All costs to CIP Account then reclass to asset once completed
 Exchange Transaction
 With Commercial Substance – at fair value
 Without commercial substance – at carrying amount
 Non Exchange Transaction – fair value at date of acquisition
 Finance Lease
MEASUREMENT AFTER
RECOGNITION
PPE Subsequent Recogntion
1. Cost Model – cost less accumulated depreciation and
accumulated impairment losses
 GAM Provides guidelines for useful lives
 Residual value is @ 5% of the cost
2. Revaluation Model – revalued amount (fair value at
measurement date) less any subsequent accumulated
depreciation and impairment losses.
 Revaluation surplus account – records all increases and decreases of an asset
measured at revalued amount
 DISBURSEMENTS BY CASH
1. Cash advance for payroll
 Only for Regular Disbursing Officers
 Not to be used for encashment of checks or liquidation of previous types of cash advances
 Liquidation within 5 days after the end of pay period

2. Cash Advances for Operating Expense without complete set of books

 Field/Extension/Satellite Offices
 Cash advances may be granted for 2 months operating requirements
 Only to appointed disbursing officers
 Reporting of transactions on 5 days after month end

3. Cash Advances for Travel

 Cash advance to cover travelling expenses
 No additional cash advances shall be granted except the previous cash advance has been liquidated
 Liquidation for local travel – 30 days upon return to official station, for foreign travel – 60 days upon return
to OS
 DISBURSEMENTS BY CASH
4. Cash Advance for Specific Purpose/Time Bound Undertaking
 Only to duly authorized accountable officer/special disbursing officer
 To be liquidated once the purpose has been served

5. Cash Advance for Petty Operating Expenses

 Petty operating expenses for 1 month
 Maintained under Imprest System
 Replenished as soon as disbursements reach at least 75% or as needed