24 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS

certified copy of the CRReg together with the required supporting documents, duplicate
copies of ORs and Deposit Slip (DSs) shall be submitted within five (5) days after the end
of each month to the concerned mother unit (central/regional/division office) by the FOs
(a unit under the central/regional/ division office) for review and recording of the
transactions in the CRJ by the Chief Accountant.

Basic Requirements for Disbursements and the Required Certifications

Disbursements of government funds shall comply with the following basic requirements and
certifications:
a. Availability of allotment/budget for obligation/utilization certified by the Budget
Officer/Head of Budget Unit;
b. Obligations/Utilizations properly charged against available allotment/budget by the Chief
Accountant/Head of Accounting Unit;
c. Availability of funds certified by the Chief Accountant. The Head of the Accounting Unit
shall certify the availability of funds before an Agency Head or his duly authorized
representative enter into any contract that involves the expenditure of public funds based
on the copy of budget release documents;
d. Availability of cash certified by the Chief Accountant. The Head of the Accounting Unit
shall certify the availability of cash and completeness of the supporting documents in the
disbursement voucher and payroll based on the Registry of Allotments and Notice of
Cash Allocation/Registry of Allotment and Notice of Transfer of Allocation;
e. Legality of the transactions and conformity with existing rules and regulations. The
requesting and approving officials shall ensure that the disbursements of government
funds are legal and in conformity with applicable rules and regulations;
f. Submission of proper evidence to establish validity of the claim. The Head of the
Requesting Unit shall certify on the necessity and legality of charges to allotments under
his/her supervision as well as the validity, propriety and legality of supporting documents.
All payments of government obligations and payables shall be covered by Disbursement
Vouchers (DV)/Payrolls together with the original copy of the supporting documents
which will serve as basis in the evaluation of authenticity and authority of the claim. It
should be cleared, however, that the submission of the supporting documents does not
preclude reasonable questions on the funding, legality, regularity, necessity and/or
economy of the expenditures or transactions; and
g. Approval of the disbursement by the Head of Agency or by his duly authorized
representative. Disbursement or disposition of government funds or property shall
invariably bear the approval of the proper officials. The DVs/Payrolls shall be signed and
approved by the head of the agencies or his duly authorized representatives.

Modes of Disbursements
The different modes of disbursements are as follows: (a) checks (MDS or commercial checks),
(b) cash (out of cash advance granted to authorized Disbursing Officer), (c) advice to debit the
account, (d) tax remittance advice, (e) working Fund/CDC, and (f) direct payment method.

Disbursements by Check
Checks shall be drawn only on duly approved Disbursement Voucher (DV) or Payroll). These
shall be used for payment of regular expenses which cannot be conveniently nor practically paid
using the ADA or not authorized to be paid using the Petty Cash Fund or advances for operating
expenses. Checks issued shall be reported and recorded in the books of accounts whether
 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS 25

released or unreleased to the respective payees. There are two types of checks being issued by
government agencies as follows:
a. Modified Disbursement System Checks are checks issued by government agencies
chargeable against the account of the Treasurer of the Philippines, which are maintained
with different MDS-GSBs.
b. Commercial Checks are checks issued by NGAs chargeable against the Agency
Checking Account with GSBs. These shall be covered by income/receipts authorized to
be deposited with AGDBs.

The documentary requirements for common government transactions depending on the nature
of expenses to be paid by checks shall be complied with as prescribed in COA Circular No. 2012-
001 dated June 14, 2012, amended by COA Circular No. 2013-001 dated January 10, 2013.

All checks drawn during the day, whether released or unreleased including cancelled checks
shall be recorded chronologically in the Checks and ADA Disbursements Record (CkADADRec)
maintained by the Cash/Treasury Unit. The dates the checks were actually released shall be
indicated in the appropriate column provided for in the CkADADRec. All checks/ADA drawn
whether released or unreleased shall be included in the Report of Checks Issued (RCI) or Report
of ADA Issued (RADAI), which shall be prepared daily by the Cashier. The RCI/RADAI together
with the original copies of the supporting documents (SDs) shall be submitted to the Accounting
Division/Unit for the preparation of JEV. At the end of the year, a Schedule of Unreleased
Commercial Checks shall be prepared by the Cashier for submission to the Accounting
Division/Unit.

Illustrative Accounting Entries for Disbursements By Check

Account Title Account Code Debit Credit

1. Payment of the following utility bills:

Meralco Bill P 1,200
PLDT Bill 500
Maynilad Bill 200
Total P1,900

Water Expenses 50204010 P 200

Electricity Expenses 50204020 1,200
Telephone Expenses 50205020 500
Cash-Modified Disbursement System (MDS), Regular 10104040 P 1,900
To recognize payment of bills from utility companies based on individual checks
issued

2. Grant of cash advance for travel

Advances to Officers and Employees 19901040 P 1,000
Cash-Modified Disbursement System (MDS), Regular 10104040 P 1,000
To recognize granting of travel allowance to employees

3. Advance payment to Procurement Service

Due from NGAs 10303010 P 2,500
Cash-Modified Disbursement System (MDS), Regular 10104040 P 2,500
To recognize advance payment to Procurement Service for the purchase of
Office Equipment
26 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS

4. Establishment of Petty Cash Fund (PCF) P 20,000

Petty Cash Fund 10101020 P 20,000
Cash-Modified Disbursement System (MDS), Regular 10104040 P 20,000
To recognize establishment of PCF to cover petty expenses

Disbursements by Cash
Cash disbursements constitute payments out of cash advances granted to the regular and
special disbursing officers for personal services, petty expenses and MOOE for field operating
requirements. All cash payments shall be covered by duly approved DVs/payrolls/petty cash
vouchers (PCVs). The cash advances may be granted to the cashiers/disbursing officers/officials
and employees to cover the following: salaries and wages, travels, special time-bound
undertakings and petty operating expenses. The granting and liquidation of cash advances shall
be governed by the following existing COA rules and regulations and other pertinent issuances:
a. No cash advance shall be given unless for a legally authorized specific purpose;
b. A cash advance shall be reported on and liquidated as soon as the purpose for which it
was given has been served;
c. No additional cash advance shall be allowed to any official or employee unless the
previous cash advance given to him/her is first settled/liquidated or a proper accounting
thereof is made;
d. Except for cash advance for official travel, no officer or employee shall be granted cash
advance unless he/she is properly bonded in accordance with existing laws or
regulations. The amount of cash advance which may be granted shall not exceed the
maximum cash accountability covered by his/her bond;
e. Only permanently appointed officials shall be designated as disbursing officers;
f. Only duly appointed or designated disbursing officer may perform disbursing functions.
Officers and employees who are given cash advances for official travel need not be
designated as Disbursing Officers;
g. Transfer of cash advance from one accountable officer to another shall not be allowed;
and
h. The cash advance shall be used solely for specific legal purpose for which it was granted.
Under no circumstance shall it be used for encashment of checks or for liquidation of a
previous cash advance.

The specific rules and regulations on the granting, utilization and liquidation of cash advances
are provided for under COA Circular No. 97-002 dated February 10, 1997, as amended by COA
Circular No. 2006-005 dated July 13, 2006.

Disbursements through List of Due and Demandable Accounts Payable-Advice to Debit

Account (LDDAP-ADA)
The use of LDDAP-ADA as a mode of settlement of accounts payable due the creditors/payees
of all NGAs and their OUs was prescribed under DBM Circular Letter No. 2013-16 dated
December 23, 2013 which implemented the ExMDPS, amended by DBM Circular Letter Nos.
2013-16A and 2013-16B dated February 6, 2014 and February 25, 2014, respectively. The
following are excluded from the implementation of ExMDPS:
a. Payment of Terminal Leave and Retirement Gratuity (TL/RG) benefits which is governed
by Republic Act No. 10154 as implemented by CSC Resolution No.1300237 and Budget
Circular No. 2013-1;
 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS 27

b. Remittance of social insurance premium contributions to government corporations, such

as GSIS, PHILHEALTH, and HDMF;
c. Payment of Accounts Payable to utility companies, such as: supplier of petroleum, oil and
lubricants, water, illumination and power services, telephone, internet and other
communication services; and
d. Other payables which cannot be conveniently nor practicably paid using the ADA.

-Modified
Disbursement System (MDS),
RADAI supported with DV and SDs. The JEV shall be recorded in the ADA Disbursements
Journal (ADADJ).

LLDAP-ADA may be invalidated due to any inconsistency of information (i.e., bank branch,
account name/number) between the bank records and LDDAP-ADA or errors stated in item 8.0
of DBM Circular Letter 2013-16 dated December 23, 2014. An invalidated ADA shall be reported
as follows:
a. New LDDAP-ADA may be issued for the replacement of invalidated LDDAP-ADA, upon
submission of the validated LDDAP-ADA indicating non-payment to creditors/payees due
to any inconsistency of information (i.e., bank branch, account name/number) to the
Accounting Division/Unit by the Cash/Treasury Unit. A certified copy of the previously
paid DVs shall be attached to the request for replacement.
b. A JEV shall be prepared to take up the cancellation of the invalidated LDDAP-ADA. The
replacement LDDAP-ADA shall be reported in the RADAI.

Illustrative Accounting Entries for Disbursements By ADA

Account Title Account Code Debit Credit

1. Payment for delivery of supplies and materials for consumption

Office Supplies Inventory 10404010 P 2,500
Cash-Modified Disbursement System (MDS), Regular 10104040 P 2,500
To recognize payment for the delivery of supplies and materials based on Delivery
Receipt No. 12451

2. Payment of rent
Prepaid Rent 19902020 P 1,300
Cash-Modified Disbursement System (MDS), Regular 10104040 P 1,300
To recognize payment of one year rent of photocopying machine (July, 2015
June, 2016)

3. Advances to Contractors
Advances to Contractors 19902010 P 8,000
Cash-Modified Disbursement System (MDS), Regular 10104040 P 8,000
To recognize 15% mobilization fees to contractors to be recouped from progress
billings
28 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS

4. Payment of Accounts Payable

Gross P 40,000
Less: Withholding Tax (VAT) 3,600
Net P 36,400

Accounts Payable 20101010 P40,000

Due to BIR 20201010 P 3,600
Cash-Modified Disbursement System (MDS), Regular 10104040 36,400
To recognize payment of payables based on duly approved DV and SDs

Disbursements Through electronic Modified Disbursement System as part of the Modified

Disbursement Scheme
As part of the implementation of the Treasury Single Account (TSA) system for government
disbursement, the electronic Modified Disbursement System (eMDS) has been adopted as one
of the modes of disbursement under Joint Administrative Order (JAO) No. 2015-1 dated March
12, 2015 of the DBM and DOF. This is to facilitate an efficient and prompt reconciliation of
-à-vis the accounts of the BTr maintained at the LBP as
Authorized Government Servicing Bank (AGSB).

This JAO shall apply to all spending agencies, offices and instrumentalities under the Executive
Branch, including SUCs, together with other Executive Offices using LBP as GSB. The Judicial
Branch, the Legislative Branch, Constitutional Offices, and all other Agencies, Offices and
Instrumentalities banking with LBP and therefore maintaining MDS sub-accounts with said bank
are likewise covered by the JAO for NG to have a holistic view of the budgetary transactions of
all spending agencies.

The policy guidelines are as follows:

a. Heads of Departments, Bureaus, Offices and other instrumentalities under the Executive
Branch, maintaining MDS sub-accounts with LBP, including SUCs, together with other
Executive Offices, are enjoined to enroll and subscribe to the eMDS to perform selected
MDS transactions online; and to monitor disbursements and generate MDS reports under

b. Enrolment in the eMDS shall be free of charge; and

c. All other spending agencies, offices, and instrumentalities of government maintaining
MDS sub-accounts with GSBs other than LBP shall continue to observe the current
procedure of the MDS System, unless they voluntarily transfer their accounts with LBP

upon amendment or repeal of Memorandum Order Nos. 276 (s. 1990) and/or (s. 1994).

Disbursements through Tax Remittance Advice

The Tax Remittance Advice (TRA) refers to a serially-numbered document prescribed by the
DBM that should be used by the NGAs in the remittance of withheld taxes on funds coming from
DBM. With the inclusion of all NGAs among the taxpayers who are mandated to use the
Electronic Filing and Payment System (eFPS) under the Bureau of Internal Revenue Regulations
No. 1-2013 dated January 23, 2013, the TRA is accomplished on-line which is called the
Electronic TRA (eTRA). The eTRA is certified correct by the Chief Accountant/Head of
Accounting Division/Unit and approved by the Head of Agency/Authorized Official, and used to
record the remittance of taxes withheld to the BIR. The same document shall be the basis for the
 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS 29

BIR and the BTr to draw a JEV to record the tax collection and deposit in their respective books
of accounts. The JEV shall be recorded in the GJ.

The eTRA shall be supported with the Summary of Taxes Withheld (STW) certified by the Chief
Accountant. The STW is the document which summarizes the type and amount of taxes withheld.
The Accounting Division/Unit shall maintain SL to monitor remittances of taxes withheld from
individual employees, suppliers and contractors.

Illustrative Accounting Entries for Remittance of Taxes Withheld through TRA

Account Title Account Code Debit Credit

Agency Books
1. Constructive Receipt of NCA for TRA
Cash-Tax Remittance Advice 10104070 P 5,000
Subsidy from National Government 40301010 P 5,000
To recognize constructive receipt of NCA for TRA

2. Remittance of taxes withheld through TRA

Due to BIR 20201010 P 5,000
Cash-Tax Remittance Advice 10104070 P 5,000
To recognize remittance of taxes withheld through TRA

BIR Books
1. Constructive Receipt of Tax Revenue through TRA from the NGAs
Cash-Tax Remittance Advice 10104070 P 5,000
Income Tax 40101010 P 5,000
To recognize constructive receipt of tax revenue based on the TRA received
from the agency

BTr Books
1. Constructive Utilization of NCA for TRA by the remitting NGAs
Subsidy to NGAs 50214010 P 5,000
Cash-Tax Remittance Advice 10104070 P 5,000
To recognize remittance of taxes withheld by the agency based on the TRA
received

Disbursement for Inter-Agency Transferred Funds (IATF)

The following are the accounting policies for the transfer of funds:
a. A Memorandum of Agreement (MOA) shall be entered into by the SA and the IA for the
undertaking by the latter of the project of the former. The MOA shall provide for the
requirements for project implementation and reporting.
b. The fund to be transferred or sub-allotted to the IA shall be a) in an amount sufficient for
three months operation subject to replenishment upon submission of the reports of
disbursements by the IA, or b) the total project cost, as may be determined by the Heads
of the two agencies in either case.
c. The check shall be issued in the name of the IA for deposit to its trust account in its
authorized government depository bank. The IA shall issue its official receipt in
acknowledgment.
30 ACCOUNTING FOR GOVERNMENT AND NOT-FOR-PROFIT ORGANIZATIONS

d. Depending on the MOA, the fund transfers may be treated as a) If the MOA provides a
condition that the fund shall be spent as specified and any excess shall be returned to
the SA, the IA shall recognize the receipt of the fund as asset at its fair value with a
corresponding liability, while the SA shall recognize a receivable corresponding to the
fund transfer; or b) If the MOA provides stipulations or no condition, the IA shall recognize
the receipt of the fund as asset at its fair value with a corresponding revenue, while the
SA shall recognize an expense corresponding to the fund transfer.
e. A separate subsidiary record for each account shall be maintained by the IA whether or
not a separate bank account is opened.
f. Within ten (10) days after the end of each month/end of the agreed period for the Project,
the IA shall submit the RCI and the RCDisb to report the utilization of the funds. Only
actual project expenses shall be reported. The reports shall be approved by the Head of
the IA.
g. The IA shall return to the SA any unused balance upon completion of the project, if
stipulated in the MOA.
h. The SA shall draw a JEV to take up the reports. The amount to take up the liquidation in
the RCI shall be net of the cash advances granted by the IA to its accountable officers.
i. The IA Auditor shall audit the disbursements out of the trust accounts in accordance with
existing COA Regulations
j. The Chief Accountant/Head of the Accounting Division/Unit of the IA shall, on the basis
of the Notice of Finality of Decision (NFD), record in the books of accounts any audit
disallowance as receivable.
k. When the IA is a Bureau/Regional Office of the SA, the procedures for centrally managed
projects shall be followed in accordance with entries herein provided.

Disbursements by Foreign-based Government Agencies

CDC is an authorization issued by the DBM to DFA and other agencies with foreign posts to
utilize their collections retained by their Foreign Service Posts (FSPs) to cover operating
requirements, but not to exceed the released allotment to the said post. (National Budget Circular
No. 535 dated December 29, 2011). The following are the accounting policies regarding
disbursements by Foreign-based Government Agencies (FBGAs):
a. Based on the proposed budget of FSP/Foreign Attaché, a Working Fund shall be
established to cover payment of PS and MOOE. The Finance Officer shall be required to
maintain CBReg and CDReg to monitor and control the Working Fund.
b. All disbursements from the Working Fund shall be covered by duly approved DV/Payroll
with the required SDs. At the end of the month, the Finance Officer of FSPs/Foreign
Attachés shall prepare and submit RCDisb together with the SDs to the Central Office
concerned for preparation of JEV to record the liquidation made by the accountable
officer. The JEV shall be recorded in the CkDJ and CDJ based on the CBReg and
CDReg, respectively.

Disbursements through Direct Payment Method

This type of disbursement should be covered by an NCAA. This mode of disbursement is made
through the JEV issued by the BTr to the availing/implementing agency to record payment of
goods and services made directly by the lending institution to the supplier or contractor. The JEV
shall be recorded in the GJ.