OFFlOt\

R S I, B A S

REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
DEPARTMENT OF BUDGET AND MANAGEMENT

JOINT CIRCULAR NO. s. 2021

March 8, 2021

TO HEADS OF DEPARTMENTS, AGENCIES, STATE UNIVERSITIES

AND COLLEGES (SUCs), HEADS OF CONSTITUTIONAL OFFICES
ENJOYING FISCAL AUTONOMY AND OTHER OFFICES OF THE
NATIONAL GOVERNMENT; HEADS OF GOVERNMENT-OWNED
AND/OR CONTROLLED CORPORATIONS (GOCCs); HEADS OF
BUDGET AND ACCOUNTING UNITS; COA AUDITORS; AND ALL
OTHERS CONCERNED

SUBJECT GUIDELINES IMPLEMENTING EXECUTIVE ORDER (E.O)

NO. 87 DIRECTING THAT ALL ACCOUNTS PAYABLE
WHICH REMAIN OUTSTANDING FOR TWO YEARS OR
MORE IN THE BOOKS OF NATIONAL GOVERNMENT
AGENCIES BE REVERTED TO THE ACCUMULATED
SURPLUS OR DEFICIT OF THE GENERAL FUND OF THE
NATIONAL GOVERNMENT

1.0 PURPOSES
v\
1.1 To prescribe guidelines procedures relative to the reversion of
accounts payable (A/Ps),^rsuant to E.O. No. 87 dated 13 August
2019; and ''
A’

1.2 To provide the guidelines required in the release of funds for legitimate
obligations that may arise after the reversion of A/Ps.

2.0 COVERAGE

This Circular covers all Accounts Payable (A/Ps) of National Government

Agencies (NGAs) and Government Owned/or Controlled Corporations (GOCCs)
maintaining Special Account in the General Fund (SAGF). It shall apply to all
funds of NGAs, except for: (1) Trust or Fiduciary Funds for as long as the
purposes for its creation have not been accomplished; and (2) A/Ps
 corresponding to Foreign-Assisted Projects for the duration of the said
project.

3.0 DEFINITION OF TERMS

The following terms as defined and used under existing guidelines are hereby
reiterated or modified for the purpose of E.O No. 87 and this joint circular:

3.1 Accounts Payable (A/Ps) or Due and Demandable Obligations

- refer to valid and legal obligations of NGAs/GOCCs for which
goods/services/projects have been deiivered/rendered/completed and
accepted regardless of the year when these obligations were incurred.

3.2 Obligation - a commitment, by a government entity arising from an

act of a duiy authorized official, which binds the government to the
immediate or eventuai payment of a sum of money. Obligation may be
referred to as a commitment that encompasses possible future
liabilities based on current contractual agreement. A government
agency is authorized to incur obligations only in the performance of
activities which are in pursuit of its functions and programs, authorized
in appropriation acts/laws within the limit of the allotment released by
the Department of Budget and Management (DBM).

3.3 Not Yet Due and Demandable Obligations - commitments or

obligations incurred by government agencies for which items have not
yet been delivered or services not yet rendered.

3.4 Accumulated Surplus/(Deficit) - refers to the cumulative results of

normal and continuous operations of an agency including prior period
effects of changes in accounting policy and errors, and other capital
adjustments.

3.5 Custodial Funds - refer to receipts or cash received by any

government agency — whether from a private source or another
government agency — to fulfill a specific purpose. Custodial receipts
include receipts coilected as an agent for another entity. These include
trust receipts - both from an individual or corporation - that are
required to be held by government until the outcome of a court's case
or procurement activity is determined, as well as cases where a
department or agency holds receipts as a trustee for the fulfiliment of
some obligations.

3.6 Foreign-Assisted Projects - Government projects which are whoily

or partiy financed by foreign loans and/or foreign grants.
4.0 GENERAL GUIDELINES

4.1 In line with Section 1 of E.O. No. 87, NGAs/GOCCs shall revert all A/Ps
for FY 2017 and prior years thereto in the Accumulated
Surplus/(Deficit) on or before the end of 2021.

4.2 The following shall apply to FAPs-A/Ps:

4.2.1 Those which have remained outstanding for two (2) years after
the completion date of the project per loan/grant documents,
shall be reverted to the Accumulated Surplus/(Deficit); and

4.2.2 Those falling under direct payment scheme of loan availment

shall not be reverted to the Accumulated Surplus/(Deficit); and
instead be reviewed by the agencies concerned for purposes of
requesting the issuance of a Non-Cash Availment Authority from
the DBM pursuant to the provisions of DBM-COA-DOF Joint
Circular No. 2-97 dated March 21,1997.

4.3 All A/Ps that were reverted to the Accumulated Surplus/(Deficit); and
which have been validated by competent authorities or by final and
executory decisions, to be legitimate claims, shall be charged against
the following:

4.3.1 Contingent Fund for the payment of validated claims and

determined by DBM as urgent; and/or

4.3.2 The specific budget of the agency concerned under succeeding

year's annual General Appropriations Act (GAA).

4.4 Item 4.3 hereof shall in no way be construed as authority to revive or

validate claims and accounts payable that are already barred by
prescription or disallowed by final judicial or administrative
determination.

4.5 A Special Allotment Release Order (SARO) shall be issued for reverted
and legitimate claims for which the actual transactions, i.e., delivery of
goods and services, have already been completed. The SARO to be
issued shall have the following conditions:

4.5.1 It shall be effective only during the year it is issued;

4.5.2 It shall be treated as a "specific transaction release document"

which cannot be re-issued. Thus, if for any reason the SARO for
the reverted claim was not obligated during the year it was
released, there can be no re-issuance of a SARO for the same
purpose; and
 4.5.3 It cannot be modified for whatever other purpose.

4.6 All government entities concerned shall prepare an inventory of A/Ps

incurred in FY 2017 and years prior thereto, as of December 31, 2020.
It shall reflect the name of creditor. Obligation Request and Status
(ORS) Number, allotment class, funding source, year of incurrence and
obligations, etc., and shall be submitted to DBM and COA not later
than June 30, 2021. Such inventory shall serve as one of the bases for
reversion of the A/P and for the purpose of payment after reversion,
subject to agency validation procedures.

4.7 All agencies concerned are reminded of their submission of the

Financial Accountability Report (FAR) No. 3, before January 31, 2021
which provides an inventory of Not Yet Due and Demandable
Obligations (NYDDO) as of December 31, 2020.

5.0 PROCEDURAL GUIDELINES

5.1 NGAs/GOCCs shall review and analyze all recognized A/Ps in their
respective books of accounts. On the other hand, A/Ps for
infrastructure capital outlays, including those subsidy releases for
GOCCs for infrastructure projects which remained outstanding for two
(2) years or more, may not be reverted immediately if the following
conditions are present;

5.1.1 On-going construction projects with at least 15% overall

physical accomplishments as of December 31, 2020; and

5.1.2 Said on-going construction project shall be completed by

December 31, 2021.

5.2 To effect the reversion of A/Ps, a Journal Entry Voucher (JEV) shall be
prepared for the reversion to the Accumulated Surplus/(Deficit). A copy
of the JEV certified by the Chief Accountant and supported with List of
Reverted A/Ps (Annex A), shall be submitted to DBM and GAS-COA.

The Accounting Unit shall furnish the Budget Unit copies of JEV for the
reversion of A/Ps, to adjust the Registry of Allotments, Obligations and
Disbursements (RAOD) and ORS.

The Chief Accountant shall record the reverted A/Ps to the Registry of
Reverted Accounts Payable (RRAP) (Annex B). The registry shall be
maintained by the Accounting Division/Unit.
 5.3 All A/Ps that were reverted to the Accumulated Surplus/(Deficit),
pursuant to Section 1 of E.O No. 87, may be considered for payment
upon determination, thru administrative processes, of the existence,
validity and legality of the claims, subject to the following procedures:

5.3.1 The claimants shall take the initiative to file their requests with
the agency concerned;

5.3.2 The claimants shall submit pertinent documents such as:

approved contracts; proof that services had been rendered;
proof that assets and other properties had been delivered;
projects have been completed and accepted by the agency and
other documentation to prove the validity and legitimacy of their
claims;

5.3.3 Upon establishment of the proof of validity to settle the claim,

the agency head shall request for the issuance of SARO from
DBM. The request shall be supported by the following:

5.3.3.1 Certified copy of the specific JEV showing that the

A/Ps had been reverted to the Accumulated Surplus/
(Deficit); and

5.3.3.2 Justification for the non-payment of the claims during

the past years.

5.3.4 The SARO and Notice of Cash Allocation chargeable against the
fund/s identified for the purpose, shall be released by the DBM
after which the agency shall process the payment of the claims.

5.3.5 Upon receipt of the SARO by the Agency, the Budget Unit shall
furnish the Accounting Unit of the copy thereof, for
posting/recording in the RRAP.

6.0 ACCOUNTING ENTRIES

Accounting entries pertinent to the provisions of this Circular is hereto

attached as Annex C.

7.0 APPLICABILITY

This Circular shall have a continuing application. Henceforth, agencies shall

pay only those A/Ps which are outstanding for less than two (2) years, except
those pertaining to exemptions as mentioned in this Circular.
8.0 SANCTIONS

Failure of the officials and employees concerned to comply with the provisions
of this Circular shall subject them to penalties imposed under Section 43,
Chapter 5, Book VI of E.O. No. 292, the revised Administrative Code of the
Philippines.

9.0 REPEALING CLAUSE

All provisions of existing circulars and other Issuances inconsistent with this
Circular are hereby rescinded/repealed and/or modified accordingly.

10.0 SAVING CLAUSE

Cases not covered in this Circular shall be referred to the DBM and shall be
jointly resolved with COA.

11.0 EFFECTIVITY
This Circular takes effect immediately.

WENDEL E. AVI MICHAEMSu'AQjUINALDO

Secretary fhairperson
Department of Budget and gement !!6mmission on Audit
 Annex A

LIST OF REVERTED ACCOUNTS PAYABLE

As at December 31, 2021
Department
Agency/Entity
Operating Units
Fund Cluster
(e.g. UACS Fund Cluster: 01-Regular Agency Fund, 02-Forelgn Assisted Projects Fund, 03-Special Account-Locally Funded/ Domestic Grants Fund,
04-Special Account-F;orelgn Assisted/Foreign Grants Fund, 05-lnternally Generated Funds, 06-Buslne$s Related Funds and 07-Trust Receipts)

ACCOUNTS PAYABLE
Obligation Request and St
Name of Creditors Utilization Request anc Status* 2017 2016 Other Years (pis. spec Ify) Total Amount
Reverted
Number Date Amount PS MOOE CO Total PS MOOE CO Total PS MOOE CO Total

1 2 3 4 5 6 7 8 = 5+6+7 9 10 11 12 = 9+10+11 13 14 15 16=13+14+15 17=8+12+16

Creditor A (p/ease specify name of creditor/s...)

GRAND TOTAL
—------- —
'For Fund Clusters 05 to 07, Budget Utilization Request and Status shall be used.

Certified Correct by: Recommending Approval by: Approved by:

Chief Accountant Director of Financial Management Service (FMS) or Equivalent Agency Head or Authorized Official
Date' Date: _______________________ Date:______________ ___________
 LIST OF REVERTED ACCOUNTS PAYABLE
Instructions

1 The List of Revelled Accounts Payable shall:

a. be prepared by the National Goveinment Agencies (NGAs), and Govemmcnl Cotporalions (GCs) maintaining Special Account in the General Fund (SAGF) with Accounts Payable (A/P) which are outstanding as at
December 31, 2017;
b. be prepared by fund clusters as follows: 01-Regular Agency Fund; 02-Foreign Assisted Projects Fund; 03-Special Account-Locally Funded/ Domestic Grants Fund; 04-SpeciaI Account-Foreign Assisted/Foreign Grants
Fund; 05-InternalIy Generated Funds; 06-Business Related Funds; and 07-Trust Receipts;
c. be certified correct by the Chief Accountant and approved by the Agency/Entity Mead or authorized official as recommended by the Director of Financial Management Service (FMS) or equivalent; and
d. be submitted on or before January 31.2022 to the COA Auditor. Department of Budget and Management (DBM) and COA-Govemment Accountancy Sector (GAS), copy fiiniishcd the Budget Division/Unit.

2. Columns 1 to 17 shall reflect the following information;

Column 1 - Particulars indicating the names of creditors of the outstanding A/P incurred in fiscal year (FY) 2017 and years prior tliereto
Columns 2 to 4 - ORS/BURS number, dote, and total amount
Column 5 to S - Amount of A/P per creditor and per allotment class that were incuixcd in FY 2017
Column 9 to 12 - Amount of A/P per creditor and per allotment class that were incurred in FY 2016
Column 13 to 16 - Amount of A/P per creditor and per allotment class that were incun ed in years prior to FY 2016 (please specify the year the A/Ps were incun'ed)
Column 17 - Total amount of revelled A/P
 Annex B

REGISTRY OF REVERTED ACCOUNTS PAYABLE

As at December 31, 2021

Department
Agency/Entity
Operating Unit
Fund Cluster
(e.g. UACS Fund Cluster: 01-Regular Agency Fund, 02-Foreign Assisted Projects Fund, 03-Speclal Account-Locally Funded/ Domestic Grants Fund, 04-Special Account-Foreign Assisted/Foreign Grants Fund,
05-lnternally Generated Funds, 06-Business Related Funds and 07-Trust Receipts)

REVERTED ACCOUNTS PAYABLE PAYMENT OF REVERTED ACCOUNTS PAYABLE

Obligation Request and Allotments Obligations Disbursements/Payments
Status/Budget Utilization Refer*mce
Name of Creditors 2017 2016 Other Years (pis. specify) Total
Request and Status* SARD ORS/BURS* (LDDAP ‘ADA/
Amount
Amount Amount Check. etc.) Amount
Reverted
Number Date Amount PS MODE CO Total PS MOOE CO Total PS MOOE CO Total Number Date Number Date Number Date

1 16=13+14+15 17=8+12+16 IS 19 20 21 22 23 24 25 26
2 3 4 5 6 7 8 =5+6+7 9 10 11 12 • 9+10+11 13 14 15

Creditor A {please specify name

of creditor/s...)

GRAND TOTAL
’For Fund Clusters 05 to 07. Budget Utilization Request and Status shall be used
 REGISTRY OF REVERTED ACCOUNTS PAYABLE
Instructions
1. The Registry of Reverted Accounts Payable shall;
a. be prepared by the National Govemment Agencies (NOAs) and Govcmnicnl Corporations (GCs) maintaining Special Account in the General Fund (SAGE) with Accounts Payable (A/Pl which arc outstanding
as at December 31, 2017;
b. be maintained by fund clusters as follows: 01-Regular Agency Fund; 02-Foreign Assisted Projects Fund; 03-Special Account-Locally Funded/ Domestic Grants Fund; 04-Special Account-Foreign Assisted/Foreign
Grants Fund; 05-lnternally Generated Funds; 06-Business Related Funds; and 07-Trust Receipts; and
c. be maintained by the Accounting Division/Unil for monitoring of the reverted A/P.

2. Columns I to 19 shall reflect the following infomiation:

Column I - Particulars indicating the names of creditors of the outstanding A/P incurred in fiscal year (FY) 2017 and years prior thereto
Columns 2 to 4 - ORS/BURS number, date and total amount
Column 5 to 8 - Amount of A/P per creditor and per allotment class that were incurred in FY 2017
Column 9 to 12 - Amount of A/P per creditor and per allotment class that were incurred in FY 2016
Column 13 to 16 - Amount of A/P per creditor and per allotment class that were inclined in years prior to FY 2016 (please specify the year the A/Ps were incurred)
Column 17 - Total amount of reverted A/P

3. Columns 18 to 26 shall reflect the following information;

Column 18 to 20 - Special Allotment Rclca.se Order (SARO) number, date and total amount
Column 21 to 23 - ORS/BURS number, date and total amount
Column 24 to 26 - Disbursemcnls/Paymenls reference number, dale and total amount
 Annex C

ILLUSTRATIVE ACCOUNTING ENTRIES ON THE IMPLEMENTATION OF E.O. No. 87 PRESCRIBING

THE REVERSION OF ACCOUNTS PAYABLE OUTSTANDING FOR AT LEAST TWO YEARS

Account
Particulars Source Document Account Title Debit Credit
Code

1. REVERSION OF ACCOUN I S PAYABLE (A/P)

a. Recognition of Reverted A/P List of Reverted A/P Accounts Payable 20101010 100,000.00
Accumulated Surplus/( Deficit) 30101010 100.000.00
To recognize reversion of A/P to ihe Accmniihiled Surplus/
(Deficit} of the General Fund

b. Posting of the reverted A/P in the Registry JEV Posting of the reverted A/P in the Registry of Reverted Accounts Payable (RRAP)
List of Reverted A/P

2. PAYMENT OF REVERTED A/P

a. Receipt ofSARO from the DBM sourced from SARO Posting to Ihe appropriate RAPAI. and RAOD by the Budget Unit
Contingent Fund/Specific budget of the Agency Posting to the RRAP by the Accounting Division/Unit

b. Incurrence of Obligations ORS I’osting of ORS in Ihe RAOD by the Budget Unit
Posting to the RRAP by the Accounting Division/Unit

c. Receipt of the Notice of Cash Allocation NCA Cash-Modified Disbursement System (MDS), Regular 10104040 lOO.OOO.OO
Subsidy frcmi National Government 40301010 ino.otio.on
To recognize receipt of NCA from DHM

(I. Recognition of goods received/services rendered lAR Appropriate expense or asset 100,000.00
Certificate of Completion/ Accounts Payable 20101010 100,000.00
Progress Report To set up the validated A/Ppreviously reverted
DV
other SDs

0. Payment of reverted A/P ORS Accounts Payable 20101010 100,000.00

DV Cash-Modified Disbursement System (Ml)S), Regular 10104040 100.000.00
other SDs To recognize payment of reverted A/P