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COMMISSION ON AUDIT
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NO
?016 -005
DATE: DEC 1 9
CIRCULAR
2016
TO
All Heads of Departments, Bureaus, Offices, Agencies and
Instrumental iti es of the National Government; Provincial Governors,
C ity/M uni cjpal Mayors; Managing Heads of Government Owned and
Controlled Corporations; Heads of Finance/Comptrollership/Financial
Management Services; COA Assistant Commissioners, Directors and
Aud itors; and All Others Concerned
SUBJECT
Guidelines and Proced ures on the Write-off of Dormant Receivable
Accounts, Unliquidated Cash Advances, and Fund Transfers of National
Government Agenci es (NGAs), Local Government Units (LGUs) and
Government-Owned and Controlled Corporati ons (GOCCs)
1.0
BACKGROUND
As a rule, cash advances must be liqu idated within the prescribed periods
depending upon the nature and purpose of the particular cash advance. as provided
under COA Circular No . 97-002 dated February 10, 1997, restating with
amendments. the rules and regulations on the granting, utilizati on and liquidation of
cash advances.
Likewise, liquidation of fund transfers to implementing entities is required
under COA Circular No. 94-013 dated December 13, 1994 and those to NonGovernmental Organizations (NGOs)/People's Organizations (POs) under COA
Circular No. 2007-001 dated October 25, 2007.
COA C ircular No. 201 2-004 dated November 28, 20 12 was issued as a final
notice and demand to all concerned accountab le officers to settle and liqu idate all
cash advances outstanding as of December 31 , 201 1, on or before January 3 1, 2013.
In spite of the above issuances, material amounts of cash advances and fund
transfers remained unliquidated.
The Annual Financial Reports (AFRs) invariably show the consolidated
common audit observations on unrel iable receivable account balances. sign ificant
amounts of unliquidated cash advances, and fund transfers of a number of entities
due to unsupported/undocumented dormant . ace un
which have long been
outstanding/remained past due/dormant, thus, de 1 g the government of funds for
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its operations and affecting the fair presentation of accounts m the Financial
Statements (FSs).
2.0
PURPOSE
This Circular is issued to prescribe the guidelines and procedures in
reconciling and cle~ning the books of accounts of NGAs, LGUs, and GOCCs of
dormant receivable accounts, unliquidated cash advances, and fund transfers for fair
presentation of accounts in the FSs.
3.0
LEGAL BASIS
The Commission shall have exclusive authority, subject to the limitations in
this Article, to define the scope of its audit and examination, establish the techniques
and methods required therefor, and promulgate accounting and auditing rul es and
regulations, including those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures, or uses of
government funds and properties [Section 2 (2), Article IX-D, 1987 Ph ili ppine
Constitution].
The Government Accountancy Sector (GAS) of this Commission is mandated
to formulate/recomm end policies, rules and regulations on government accounting
for consideration of the Public Sector Accounting Standards Board
(PSAcSB)/Chairman/Commission Proper (CP). The GAS is al so mandated to
provide technical assistance to entities' finance official s, accountants, and auditors
on matters pertaining to accounting and financial management (COA Resolut ion No.
2013-021 dated November 20, 2013).
4.0
COVERAGE
This Circular covers dormant receivables ansmg from regular trade and
business transactions, claims from entities' officers and employees and other
dormant receivable accounts; dormant unliquidated cash advances for operating
expenses, payroll , special purpose/time-bound activities or undertakings and travel as
well as advances granted to Civil Society Organ ization s (CSOs)/NGOs/POs; and
dormant unliquidated fund transfers to/from NGAs, LGUs, and GOCCs.
Specifically, the following are the accounts used relat~
·ve to
ceivab les, cash
advances and fund transfers as defined/described in the revise
of accounts:
• Accounts Receivable
Due from Officers and Employees
Other Receivables
• Advances for Operating Expenses
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Advances for Payroll
Advances to Special Disbursing Officer
Advances to Officers and Employees
Due from National Government Agencies
Due from Government-Owned and Controlled Corporations
Due from Local Government Units
Due from Non-Government Organizations/People ' s Organizations
Du~ froiD Central Office
Due from Bureaus
Due from Regional Offices
Due fi-om Qperating Units
Due rrom Other Funds
Due to National Government Agencies
Due to Government-Owned and Controlled Corporations
Due to Local Government Units
Due to Central Office
Due to Bureaus
Due to Regional Offices
Due to Operating Units
Due to Other Funds
This Circular shall not cover the write.:off of loans and advances of
Government Financial Institutions which are governed by pertinent provisions of the
General Banking Act.
Likewise, it shall not cover the following:
a. Receivables arising from disallowances and charges;
b. Receivables arising from cash shortages; and
c. Claims from entities' officers and employees and other parties for
transactions which are the subject of a pending case in court or before
investigative authorities.
5.0
DEFINITION OF TERMS
The following terms when used in this Circular shall be construed to mean as
follows:
5.1
Account - refers to Accounts Receivable, Due from Off~cers nd Employees,
Oth er Receivables, and other accounts, as enumerated 1
ection 4 of this
Circular.
5.2
Condonation of Receivables - amnesty of debt where the creditor is blocked
or estopped from attempting to collect the debt later.
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6.0
5.3
Debtor- a person or organization whether public or private that owes money to
the government.
5.4
Donnant Receivable Accounts - accounts which balances remained inactive
or non-moving in the books of accounts for ten (1 0) years or more and where
settlement/co.Uectability could no longer be ascertained.
5.5
Donnant Unliquidated Cash Advances - advances granted to disbursing
officers, agency ~officers and employees wh ich remained non-moving for ten
(I 0) years or more and where settlement/collectability could no longer be
ascertained.
5.6
Donnant Unliquidated Fund Transfers- advances granted by the source entity
to implementing entity for the implementation of programs/projects which
remained non-moving for ten (10) years or more and where settlement could no
longer be ascertained.
5.7
Government Entity - a national government agency, a government-owned
and controlled corporation or a local government uni t.
5.8
Impairn1ent - a loss in the future economic benefits due to uncertainty of
collectabil ity of the receivables or the amount in respect of which recovery has
ceased to be probable.
5.9
Write-off of Donnant Accounts - the process of derecognizing the asset
account and the corresponding allowance for impairment from the books of
accounts and transferring the same to the Registry of Accounts Written off
(RA WO). This does not mean condoning/extinguishing the obl igation of the
accountable officer/debtor.
GENERAL GUIDELINES
6.1
All government entities shall conduct regular monitoring and analysi s of
receivable accounts to ensure that these are collected when these become due
and demandable and that cash advances and fund transfers are liquidated within
the prescribed period depending upon their nature and purpose; and
6.2 All government entities shall prepare th~ . sc~e ule of all receivables,
unliquidated cash advances, and fund transfer~ f December 31 , 20 15 and
quarterly thereafter. (see Appendix 55 of Vol. I},\}) M) .
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7.0
SPECIFIC GUIDELINES
T he Accountant shall:
7.1 Conduct regular and periodic verification, analysis, and validation of the
existence of the receivabl es, unliquidated cash advances, and fund transfers,
and determine the concerned debtors, accountable officers (Regular and Special
Disbursi'ng Dfficers, Collecting Officers, Cash iers) and the source and
implementing government entiti es concerned;
7.2
Reconcile the unliquidated fund transfers between the source and implementing
government entities, prepare the adjusting entries for the reconciling items
noted, and require liquidation of the balances;
7.3
Prepare the necessary adjusting entry/ ies for the following:
a. Recognition of the computed/determined impairment in accordance with
the Philippine Public Sector Accounting Standards or Philippine Financial
Reporting Standards
b. Correction of inadvertent errors, or inaccurate calculation or computation
c. Reclassification of accounts
d. Recovery/settlement of previously written off accounts
Adj ustments made pursuant to 7.2 and 7.3 need not be submitted to the COA
for approval but are subject to the usual audit. However, the accountant or the
auditor may seek assistance from the GAS for proper accounting treatment: and
7.4
8.0
Prepare aging of dormant receivables, unliquidated cash advances. and fund
transfers on a quarterly basis (Annexes 1-3) to support the request for write-off,
and indicate in the remarks column the existence of the appl icable condi tions,
as follows:
a. Absence of records or documents to validate/support the cla im and/or
unreconciled reciprocal accounts
b. Death ofthe accountable officer/empl oyee/debt or
c. Unknown whereabouts of the acco untabl e officer/employee/debtor, and that
he/she could not be located despite diligent efforts to find him/her
d. incapacity to pay or insolvency
·
e. Exhaustion of all possible remedies by the Management to collect the
receivables and to demand liquidation of :~.l~~ces and fund transfers
f. No pending case in court involving the su~'~rmant accounts.
PROCEDURES IN THE WRITE-OFF OF DORMANT ACCOUNTS
8.1
As a general rul e, pleadings. mode of filing. docketing of cases, and filin g fe~
shell be governed by the 2009 Revised Rules of Procedure of the COA
(RRPC), unless specified in this Circular;
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8.2
The Head of the government entity shall file the request for authority to writeoff dormant receivable accounts, unliquidated cash advances, and fund
transfers to the COA Audit Team Leader (ATL) and/or Supervising Auditor
(SA). No filing fee is required;
8.3
The request shall be supported by the following documents:
a. Schedul e of dormant accounts by accountable offi cer/debtor/government
entity and by account, certified by the accountant and approved by the
Head of the government entity;
b. Certified relevant documents validating the existence of the conditions, as
applicable, such as:
b. I
Death Certifi cate issued by Philippine Statistics Authority (formerly
N ational Statistics Office)
b.2
Proof of Insolvency
b.3
Certification from the Department of Trade and Industry that the
debtor has no registered business
b.4
Certification from the Securiti es and Exchange Commission that the
Corporation is no longer active
b.S
Certificate of no resid ence in the barangay of the muni cipality/city of
last known address
b.6 Proof of exhaustion of all remedies to co llect the receivables and
demand to liquidate the cash advances and fund transfers, such as but
not limited to copies of served or returned demand letters
b.7
Certification by Legal Officer of the entity of no pending case
relative to the account
b.8 Certification by the responsible officials of the entity to the effect
that there are no records/documents available to validate claim
b.9
Other justifications, like in the case of request for write-off due to
Joss of documents, the circumstances of the loss shou ld be stated in
the letter-request
b.l 0 In case of fund transfer, the unliqui dated amount after reconciliation
shall be supported by certification by the Chief Accountants and
approved by the Heads of the source and implementing entities that
the fund was utilized for the purpose, and certifi cation from the
recipi ent that the proj ect was partiall y or fully implemented,
supported by pictures of the implemented projects.
8.4
The A TL and SA, upon receipt of the request, sha~~assign reference number,
· on the req uests for
verify and validate the above documents and
authority to write off for amounts not exceeding P 0 000.00 per accountable
officer/debtor/government entity and by account with in 15 working days from
receipt thereof;
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8.5
In case the basis for denial of the request for write-off by the A TL and SA is
failure to comply with the conditions and requirements under paragraph s 7.4
and 8.3, the aggrieved party may refile the request for write-off before the ATL
and SA provided that the basis for denial has been satisfactorily complied
with/met. The ATL and SA shall decide on the request within 15 workin g days
from receipt thereof;
8.6
The aggrieved party oay appeal from the decision of the ATL and SA to the
COA Cluster Director (CD)/Regional Director (RD) who has jurisdiction over
the government ~ntity under audit within 15 working days from receipt of the
decision. The CD/RD shall decide on the appeal within 15 working days from
receipt thereof. The decision of the CD/RD on appealed request is final and
non-appealable;
8.7
For amounts exceeding P1 00,000.00 per accountable officer/debtor/
government entity and by account, the A TL and SA shall forward the entire
records of the requests to the CD/RD , together with their comments and
recommendations, within 15 working days from receipt thereof;
8.8
The CD/RD shall review the entire records of the requests and shall decide on
amounts involving more than PIOO,OOO.OO but not exceeding Pl ,OOO,OOO.OO
per accountable officer/debtor/government entity and by account within 15
working days from receipt thereof;
8.9
ln case the basis for denial of the request for write-off by the CD/RD is fai lure
to comply with the conditions and requirements under paragraphs 7.4 and 8.3,
the aggrieved party may refile the request for write-off before the CD/RD
provided that the basis for denial has been satisfactorily complied with/met;
"'
8.1 0 The aggrieved party may appeal from the decision of the CD/RD to the
Assistant Commissioner (AC) concerned within 15 working days from receipt
of the deci sion. The AC shalL decide on the appeal within 15 working days
from receipt thereof. The decision of the AC on appealed request is final and
non-appealable;
8.11 For amounts exceeding Pl ,OOO,OOO.OO per accountable officer/debtor/
government entity and by account, the CD/RD shal~fo
ar the entire records
of the requests together with his/her recommendati
e AC of the Sector
within 15 working days from receipt thereof;
8.12 The AC of the Sector shall review the entire records of the requests and shall
decide on amounts exceeding Pl ,000,000.00 per accountable officer/debtor/
government entity and by account within 15 working days from receipt thereof:
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8.13 In case the basis for denial of the request for write-off by the AC of the Sector
is failure to complywith the conditions and requirements under paragraphs 7.4
anct 8.3, the aggrieved party may refile the request for write-off before the AC
of the Sector provided that the basis for denial has been satisfactoril y compl ied
with/met; and
8.14 The aggrieved party may appeal from the decision of the AC of the Sector to
the CP within 15 working days from receipt of the decision. F iling fee is
required at a rate prescribed in the 2009 RRPC. The decision of the CP is final
and non-appealable.
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8.15 The Accountant shall:
a. Prepare the JEV within 15 working days upon receipt of the decision
granting the authority to write-off, for approval of the Head of the
government entity, effect the adjusting entries in the books, and enter the
gross amount of the receivables in the RA WO. A sample form of the
RA WO is anached as Annex 4 (Appendix 56, Vol. II, GAM);
b. Submit the JEV to the COA A TL;
c. Maintain a RA WO to record the accounts written-off and keep a copy of
the approved request for write-off including the records and documents
pertaining thereto: and
_
d. At the end of the year, foot entries in the RA WO and make the appropriate
disclosures in the Notes to FS.
9.0
MONITORING AND REPORTING
9.1
Quarterly Report on Requests for Write-off (QRRWO) shall be prepared and
submitted by the:
a. SA/A TL to CD/RD
b. CD/RD to AC concerned
c. ACto CP Secretariat
d. CP Secretariat for CP Decision
A·sample form ofQRRWO is attached as Annex 5.
9.2
The CD/RD shall consolidate the QRRWOs submitted by the SA/ATL and the
AC of the Sector shall consolidate the QRRWOs submitted by the CD/RD.
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9.3
10.0
•
The consolidated QRRWOs of the Sectors shallMkfsubm
itted to the CP
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Secretariat.
0IV .
ILLUSTRATIVE ACCOUNTING ENTRIES
The illustrative accounting entries to record the adjustment for the writing off
of dormant receivable accounts, unliquidated cash advan ces, and fund transfers are
shown below:
(
.
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10.1 Writing Off of Receivable Accounts
'""
Account Title
Credit
Accumulated Surplus/(Deficit)
Allowance for Impairment- Accounts Receivable
Allowance for Impairment- Other Receivables
Accounts.Receivable
Due from Offic..ers and Employees
Other Receivables
To recognize writing off of dormant Receivable
Accounts
XXX
XXX
XXX
XXX
XXX
XXX
10.2 Writing Off of Unliquidated Cash Advances
Account Title
Accumulated Surplus/(Deficit)
Advances for Operating Expenses
Advances for Payroll
Advances to Special Disbursing Officer
Advances to Officers and Employees
To recognize writing off of dormant unliquidated
cash advances
Debit
XXX
XXX
XXX
XXX
XXX
10.3 Writing Off of Fund Transfers (Intra/Inter-Agency Receivables!Payables)
A. Source Agency 's Books
Account Title
Debit
Accumulated Surplus/(Deficit)
Due from National Government A gencies
Due from Government-Owned or Controll ed
Corporations
Due from Local Government Units . __ ;
1
Due· from Non-Government Organi~\\s/People' s
Organizations
·
Due from Central Office
Due from Bureaus
Due from Regional Offices
Due from Operating Units
Due from Other Funds
To recognize writing off of intra/inter-agency
receivables
XXX
L
N ote: Furnish copy of the JEV to the Implementing Agency
(
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Credit
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
-xxx
B. Implementing Agency's Books
...,.
Account Title
Debit
Due to NGAs
XXX
Due to GOCCs
XXX
Due to LGUs
XXX
Due to Central Office
XXX
XXX
Due to Bur~a~s
Due to Regional Oifices
XXX
Due to Operating Units
XXX
Due to Other Funds
XXX
Accumulated Surp1us/(Deficit)
To recognize writing off of intra/inter-agency payables
Credit
XXX
10.4 Recovery ofAccounts Written-Off
A.
Receivable Accounts
Account Title
Accounts Receivable
Due frcm Officers and Em!)loyees
Other Receivables
Miscellaneous Income
To recognize the restoration of recoverable
Receivabl e accounts written off
Cash- Co llecting Officers
Accounts Receivable
Due from Office.rs and Employees
Other Receivables
To recognize collection of recovered dormant
Receivable accounts
B.
Debit
Credit
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
Unliquidated Cash Advances
Account Title
·Debit
Advances for Operating Expenses
Advances for Payroll
Advances to Special Disbursing Officer
Advances to Officers and Employees
Accumulated Surplus/(Deficit)
To recognize the restoration of recoverable
unliquidated cash advances written off
XXX
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Credit
XXX
XXX
XXX
XXX
·.
Account Title
Cash- Collecting Officers
Advances for Operating Expenses
Advances for Payroll
Advances to Special Disbursing Officer
Advances to Officers and Employees
To recognize collection of recovered dormant
unliquidated -sash advances
11.0
XXX
XXX
XXX
XXX
SAVING CLAUSE
This Circular shall not be interpreted to neither condone the written off
accounts nor to extinguish the obligations. The Management shall continue to exert
effort to collect the accounts appearing in the RA WO when circumstances would
warrant. Further, this shall not be construed as a ground to exonerate the liability of
the officers/employees for infidelity in the custody of documents.
12.0
REPEALING CLAUSE
All circulars, memoranda, and other issuances or parts thereof which are
inconsistent with the provisions of this Circular are hereby repealed/modified
accordingly.
13.0
EFFECTIVITY
This Cit:cular shall take effect immediately.
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CtNll'll!S..SIOt.l ON A.Ut)lT
OFFIC~ 0' TH~
C:OlU11SSlCIN $E:CIIt£TA1tlt.T
1 1 11111
Chairperson
I Ct\.BEL D. AGITO
Commissioner
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