COMMISSION ON AUDIT CIRCULAR NO.

92-381 July 3, 1992

TO

: Heads of Departments, Agencies, Bureaus and Offices of the National

Government; Provincial Governors, City and Municipal Mayors; Provincial, City
and Municipal Treasurers; Chief Accountants/Heads of Accounting Units of the
National Government, and Local Accountants; COA Directors; Heads of
Auditing Units and All Others Concerned.

SUBJECT:

I.

Accounting and auditing rules and regulations on the transfer of assets,

liabilities and surplus, including accounting records, of national government
agencies whose functions are totally or partially devolved to the local
government units.

PURPOSE

This circular is issued to prescribe accounting and auditing rules and regulations in
connection with the transfer of the assets, liabilities and surplus including accounting records,
of national government agencies whose functions are totally or partially devolved to the
local government units pursuant to Section 17,Republic Act No. 7160, the Local Government
Code of 1991.
II.

DEFINITION OF TERMS
For the purpose of this circular the following terms shall be construed to mean as follows:

III.

1.

Totally devolved national government agencies are those whose functions,

assets/resources, liabilities and surplus are completely transferred to the local
government units.

2.

Partially devolved national government agencies are those whose functions,

assets/resources, liabilities and surplus are partially transferred/devolved to the
local government units.

GENERAL GUIDELINES
1.

The books of accounts of the national government agencies (NGAs) whose

functions are to be devolved totally to the local government units (LGUs) shall be
closed as of the cut-off date. The balances of all transferred assets, liabilities and
surplus shall be recorded in the books of accounts of the recipient LGUs.

2.

The books of accounts of the NGAs whose functions are to be devolved partially to
the LGUs shall be closed/adjusted and transferred to the extent of the balances of
actual assets, liabilities and surplus.

3.

The unobligated or unexpended balances of allotment as of the cut-off date shall be

reverted by the NGAs concerned to the current surplus of the national government
agency.

4.

The cash equivalent to the amount of unobligated or unexpended balances of

allotments of provincial offices and operating units of NGAs receiving funding

checks shall be remitted to the National Treasury.

5.

Devolved NGAs maintaining multiple funds shall prepare consolidated final trial
balances before the actual transfer.

6.

NGAs whose functions are totally devolved to the LGUs shall prepare and submit
reports and statements as of the cut-off date as required under the following COA
Circulars:
No./Date

IV.

Subject

COA Cir. No. 92-89E dated

March 4, 1992

Updated guidelines and procedures on the

presentation and submission of quarterly and
year-end trial balances and supporting
statements pursuant to Section 26 (2),
Chapter 4, Title I-B, Book V, Executive Order
No. 292, S. 1987, the Administrative Code of
1987.

COA Cir. No. 92-374 dated

March 5, 1992

Format of quarterly reports pursuant to

Section 61 of the General Provisions,
Republic Act
No. 7180 (General
Appropriations Act of 1992)

COA Cir. No. 92-142A dated

March2, 1992

Restatement with amendments of COA

Circular No. 80-142 dated June 1, 1980 on
the Submission of the Analyses of the
National Clearing Accounts (8-99-000) and 899-100) and copies of Journal Vouchers
taking up transactions in said accounts.

COA Cir. No. 92-125A dated

March 4, 1992

Updated procedures and use of new formats

in the reconciliation of treasury warrants. In
the case of NGAs whose functions have
been partially devolved to the LGUs, the
usual year-end reports and statements shall
contain disclosures on differences of
balances as a result of the devolution.

7.

Balances of assets, liabilities and surplus transferred by NGAs shall be recorded in

the books of accounts of the recipient LGUs.

8.

Financial transactions after the transfer pertaining to the devolved functions of

NGAs shall henceforth be recorded in the books of accounts of recipient LGUs.

9.

Subsidiary ledgers of the various devolved funds shall be maintained by LGUs for
monitoring and control purposes.

SPECIFIC GUIDELINES

A.

For totally devolved NGAs

1.

The heads of the devolved NGAs shall on or before the cut-off date:
a.

Require the inventory taking of all supplies, equipment and other

tangible assets duly witnessed by the auditors of the devolved NGAs
or their authorized representatives to be receipted by the general
services officer/local treasurer of the recipient LGU. Unserviceable
properties shall be identified and segregated for disposal by the
devolved NGAs.

b.

Require the reconciliation of the physical inventory reports against the

property and accounting records.

c.

Instruct the collecting officers to remit/deposit all collections either

directly to the National Treasury or thru the authorized government
depository banks for the account of the agency Central/Regional Office
Accounting Unit and submit the corresponding Reports of Collections
and Deposits.
Reports of Accountability for Accountable Forms shall likewise be
submitted to the Auditor.

d.

Require all disbursing officers to liquidate outstanding cash advances

and submit Report of Disbursements, Report of Checks Issued and
Report of Accountability for Accountable Forms.

e.

Direct the turnover of all unused Official Receipts (ORs), and other
accountable forms as of the cut-off date to the property officers of the
recipient LGUs under proper invoice and receipt (Gen. Form No. 30A),
copy furnished the property officers of the devolved NGAs.

f.

Require the reversion of the unobligated balance of allotment as of the

date of transfer to the current surplus of the national government
agencies.

g.

Require the remittance to the National Treasury of the cash equivalent to

the unobligated balance of allotment covered by funding check. Any
unutilized balance of Notice of Cash Allocation pertaining to unobligated
allotment and unliquidated obligations shall automatically lapse as of the
date of transfer.

h.

Require the Accountant to secure from the depository banks and or the
BTR bank/treasury statements as of the cut-off date and submit the
necessary reconciliation statements pursuant to COA Circular No. 92125A dated March 4, 1992.

i.

Serve notice to banks and/or BTR for the cancellation of designation of

disbursing officials of devolved NGAs as of the cut-off date and the
transfer of the cash balance of bank accounts of devolved NGAs to the
account of the recipient LGUs. The Local Chief Executive shall be

furnished a copy of the transfer.

2.

The Chief Accountants/Heads of Accounting Units of the totally devolved

NGAs shall on or before the cut-off date:
a.

Bill all realized but uncollected income and take these up in the books of
accounts.

b.

Revert to the current surplus of the National Government any

unobligated or unexpended balance of allotment as of the cut-off date.

c.

Revert to the current surplus of the National Government all accounts

payable outstanding for more than two (2) years pursuant to EO 181.

d.

Cause the remittance to the National Treasury of the cash equivalent to

the unobligated balance of allotment in the manner shown in Annexes 2
and 3.

e.

Update recording of transactions in the books of accounts. Preliminary

Trial Balances as of the cut-off date shall be prepared for all devolved
funds supported by the required schedules of subsidiary ledger
balances and submitted in accordance with COA Circular No. 92-89E
dated March 4, 1992.

f.

Reconcile the following

g.

all subsidiary ledger balances with the general ledger control

accounts;

reciprocal accounts maintained between the Central Office (CO)

and Regional Offices (ROs); CO and Operating Units (OUs); ROs
and OUs;

Bank/treasury statements and Cash in Bank/Treasury accounts;

Balances of continuing appropriations, overdrafts and National

Clearing Accounts with the Accountancy Office, Commission on
Audit. In this connection, detailed guidelines shall be issued
separately.

Prepare the Final Trial Balances after effecting closing and adjusting
entries as of the cut-off date. For NGAs maintaining multiple funds, a
consolidated Final Trial Balance shall be prepared in accordance with
the following guidelines.

Reconciled balances of accounts pertaining to devolved Special

Accounts in the General Fund shall be consolidated before the
transfer to General Fund (101) of the LGUs.

Reconciled balances of accounts pertaining to General and

Revolving Funds 101,108, 109, 161, 162 and 163) shall be

consolidated and a Trial Balance shall be prepared. However,

before the transfer and consolidation to Fund 101 of the LGU shall
be effected, conversion of the National Clearing accounts shall be
made in accordance with the entries provided under Annexes 5 and
7.

Balances of totally devolved accounts pertaining to foreign-assisted

projects under Fund 102 and Special Account under the General
Fund which are not included in the devolution process pursuant to
Sec. 17 (c), RA 7160, shall be transferred to the Agency
Central/Regional Office Accounting Unit (AC/ROAU). In this regard,
account balances of these funds shall be integrated in the books of
accounts of the respective funds maintained by the AC/ROAU.

h.

Draw a journal voucher (JV) to close the balances of accounts to be

transferred to the LGUs as of the cut-off date. For NGAs maintaining
multiple funds, separate Journal Vouchers (JVs) shall be drawn to close
balances of accounts of each fund. The Treasury Account Reconciliation
Division, Bureau of Treasury shall be furnished copies of Journal
Voucher effecting Treasury Accounts (8-70-700, 8-70-702).

i.

Conduct an inventory of accounting records necessary for turnover to

recipient LGUs to be witnessed by the Auditors of the devolved offices or
their authorized representatives. Inventory reports shall be prepared in 5
copies to be distributed as follows:
Original
one copy
one copy
one copy
one copy

Accountant of recipient LGU

Auditor of devolved agency
Auditor of recipient LGU
Accountant of devolved NGA
Regional Director (for devolved operating units only)
Head of Agency (for devolved Regional Offices and
operating units)

The said report shall be receipted by the accountant of the recipient

LGU.
B.

For Partially Devolved NGAs

1.

2.

The Heads of partially devolved NGAs shall on or before cut-off date:

a.

Require the inventory taking of all supplies, equipment and other

tangible assets pertaining to the devolved functions for transfer to the
recipient LGUs, duly witnessed by the auditors of the devolved
agencies or their authorized representatives.

b.

Require the reconciliation of the physical inventory reports against the

property and accounting records.

The Accountant of partially devolved NGAs shall on or before cut-off date:

C.

2.

V.

Draw a JV effect the transfer of assets, liabilities and surplus

pertaining to the devolved functions and powers of the NGAs to the
LGUs.

b.

Prepare separate JVs for the accounts of each Fund corresponding to

the devolved functions and powers transferred to the recipient LGUs.
Thereafter, a consolidated trial
balance shall be prepared in
accordance with the following guidelines:

Balances of accounts of NGAs maintaining Special Accounts in the

General Fund (151 and 158) shall be consolidated and a Trial
Balance shall be prepared before the transfer to General Fund
(101) of the LGU.

Balances of accounts pertaining to General and Revolving Funds

(101, 108, 109, 161, 162 and 163) shall be consolidated and a Trial
Balance shall be prepared. However, before the transfer and
consolidation to General Fund (101) of the LGU shall be effected,
conversion of the National Clearing Accounts (8-99-000 and 8-99100) shall be made in accordance with the entries provided under
Annexes 5 and 7.

For Recipient Local Government Units

1.

D.

a.

The heads of the recipient LGUs shall:

a.

Require the property officers to verify and confirm the transferred

properties as to their location, completeness, condition, quantity, etc.

b.

Require the accountants to verify and confirm the completeness of

transferred accounting records and documents.

c.

Instruct the accountants to record all transferred assets, liabilities and

surplus in the books of accounts.

The Accountant of the recipient LGUs shall:

a.

Draw a journal voucher to take up receipt of transferred assets, liabilities

and surplus and effect the recording in the general journal and the
posting to the general ledgers maintained by LGUs.

b.

Open and maintain subsidiary ledgers for all accounts of each

function/program/project devolved to the LGUs using the general ledgers
which shall be turned over by the NGAs for the purpose.

Responsibilities for the Implementation of this Circular Heads of totally or partially

devolved NGAs and the heads of the recipient LGUs shall see to it that the
guidelines herein provided are properly implemented.

Illustrative Accounting Entries Applicable to the Different NGAs concerned are shown in
the annexes listed below.

A.

Closing of Accounts as of the cut-off date/date of transfer.

A.1.
A.2.
A.3.
A.4.

B.

B.2.
B.3.

B.4.

For Devolved NGAs receiving Funding

Checks from the Regional Office (RO)

Annex 2

For Devolved NGAs receiving both

Funding Checks and NOA

Annex 3

For devolved NGAs maintaining Special

Accounts in the General Fund (SAGF)

Annex 4

For Devolved NGAs receiving Notices of

Allocation (NOA) from DBM

Annex 5

For Devolved NGAs receiving Funding

Checks from the Regional Office (RO)

Annex 6

For Devolved NGAs receiving both

Funding Checks and from RO and
NOA from DBM

Annex 7

For Devolved NGAs maintaining Special

Accounts in the General Fund (SAGF)

Annex 8

Recording of transferred balances of accounts in the books of recipient LGUs.

C.1.
C.2.
C.3.
C.4.

VI.

Annex 1

Transfer of Balances of Accounts

B.1.

C.

For Devolved NGAs receiving Notices of

Allocation (NOA) from DBM

For Devolved NGAs receiving Notices of

Allocation (NOA) from DBM

Annex 9

For Devolved NGAs receiving Funding

Checks from the Regional Office (RO)

Annex 10

For Devolved NGAs receiving both

Funding Checks and NOA

Annex 11

For Devolved NGAs maintaining Special

Accounts in the General Fund (SAGF)

Annex 12

SAVING CLAUSE
Cases not covered in this circular shall be referred to the Commission on Audit
through the Auditor concerned and the Local Government Audit Office, and shall be
resolved on a case to case basis.

VII. REPEALING CLAUSE

All circulars and memoranda or parts thereof which are inconsistent with the
provisions of this circular are hereby repealed or modified accordingly.
VIII. EFFECTIVITY
This circular shall take effect immediately.
The devolution to the local
government units from the national government of the functions enumerated in the Local
Government Code of 1991, and the transfer of the corresponding assets, liabilities,
personnel, equipment and records shall be completed in accordance with the provisions
of Executive Order 503.
(SGD.) SOFRONIO B. URSAL, Commissioner
(SGD.) ROGELIO B. ESPIRITU, Commissioner
(SGD.) EUFEMIO C. DOMINGO, Chairman