Accounting for
Disbursements &
Related
Transactions
B-ACTG316
Learning Objectives
•
Discuss the fundamental principles on disbursement of
public funds.
•
Account for the different modes of disbursements.
How should government
agencies disburse public
funds?
Solon bats for pre-audit of public funds vs. graft, corruptionHouse Bill 7124 (San Jose Del Monte City Rep. Florida Robes)
•
seeks to establish a mandatory pre-audit system of all government
disbursements to ensure that public funds are not lost to graft and corruption,
plunder, or leakage
•
all expenditures and uses of public funds pertaining to infrastructure projects,
procurement of goods and consulting services, including the
, of any branch, office agency or instrumentality of the
government shall undergo mandatory pre-audit before any funds are released for
such projects or contracts
goods and real property
lease of
•
transactions and contracts are reviewed before public funds are released, was implemented in
the 1920s but former president Ferdinand Marcos shifted to a post-audit system in
the 1970s
•
“The present system of post-audit is prone to abuse and graft and corruption
because it reviews disbursements after they have been released and therefore
almost impossible to recover if irregularities are discovered” (Robes, 2020)
•
https://www.pna.gov.ph/articles/1117907
Philippine Public Payment Act bill filed
(House Bill No. 7714)
•
digitize the way the government institutions and authorities make
payments (Surigao del Norte Rep. Robert Ace Barbers)
•
all payments made by its institutions and authorities will be deposited
directly into a citizen’s bank account to be called as “One Account”
•
all citizens of the Philippines who are 18-years-old and above and have a
PhilSys Number (PSN) shall have a government bank account called One
Account, which shall be covered by the Bank Secrecy Law
•
all payments made by the government authorities and institutions, such as
but no limited to tax refunds, pensions, government subsidies, social
ameliorations, will be directly deposited into citizen’s bank account
•
https:www.mb.com.ph/2020/09/26/philippine-public-payment-act-bill-filed/
Disbursements
-
constitute all payments in cash, in
whatever manner, i.e., cash, check or
cashless payment.
-
shall be supported by Disbursement
Vouchers (including Petty Cash
Vouchers) or Payroll.
Fundamental Principles for Disbursement of
Public Funds (P. D. No. 1445)
•
All gov’t. resources shall be used only in accordance with
the law and only for public purposes.
•
Trust funds shall be used only for their specific purpose.
•
Fiscal responsibility shall be strictly shared by all those
exercising authority over a government agency.
•
The use of government resources shall be approved by
proper officials.
Fundamental Principles for Disbursement of
Public Funds (P. D. No. 1445)
•
Claims against government funds shall be supported
with complete documentation.
•
All laws and regulations applicable to financial
transactions shall be faithfully adhered to, including
generally accepted principles and practices of
accounting, management and fiscal administration,
provided that they do not contravene existing laws
and regulations.
Disbursement Authority
a.
Notice of Cash Allocation (NCA)
b.
Notice of Transfer of Allocation (NTA)
c.
Tax Remittance Advice (TRA)
d.
Non-Cash Availment Authority (NCAA)
e.
Cash Disbursement Ceiling (CDC)
Notice of Cash Allocation (NCA)
• an
authority issued by the DBM to central,
regional and provincial offices and
operating units to cover their cash
requirements
• specifies
the maximum amount of cash
that can be withdrawn from a government
servicing bank in a certain period
Notice of Transfer of Allocation
(NTA)
• an
authority issued by an agency’s
Central Office to its regional and
operating units to cover the latter’s
cash requirements
Tax Remittance Advice (TRA)
•
The TRA is used to recognize:
(1) in
the books of national government agencies, the
constructive remittance to BIR and BOC of taxes
and customs’ duties withheld, and the constructive
receipt of NCA for those taxes and customs duties;
(2) in
the books of the BIR and BOC, the constructive
receipt of tax revenue and customs duties; and
(3) in
the books of the BTr, the constructive receipt of
the taxes and customs duties remitted.
Non-Cash Availment Authority
(NCAA)
• the
authority issued by the DBM to
agencies to cover the liquidation of their
actual obligations incurred against
available allotments for availment of
proceeds from loans/grants through
supplier’s credit/constructive cash
Cash Disbursement Ceiling (CDC)
• the disbursement authority issued by the
DBM to agencies with foreign operations
allowing them to use the income collected
by their Foreign Service Posts to cover
their operating requirements
Basic Requirements &
Certifications for Disbursements
•
Budget Officer - certifies the availability of allotment.
•
Chief Accountant - certifies the availability of funds
and the completeness of the supporting documents.
•
Head of the Requesting Unit - certifies the necessity
and legality of disbursements.
•
Head of Agency - approves all Disbursement Vouchers
(DVs) and Payroll.
Modes of Disbursements
•
Check
•
Cash
•
Cashless payments:
• Advice to Debit Account (ADA)
• Electronic Modified Disbursement System (eMDS)
• Cashless Purchase Card System (Credit Card)
• Non-Cash Availment Authority (NCAA)
• Tax Remittance Advice (TRA)
Disbursements through Check
MDS Check
Asset/Expense/Liability account xxx
Cash-Modified Disbursement
System (MDS), Regular
xxx
Commercial Check
Asset/Expense/Liability account
Cash in Bank-Local
Currency, Current Account
xxx
xxx
Disbursements through Cash
Advances for/to… (Appropriate Account) xxx
Cash-Modified Disbursement
System (MDS), Regular
xxx
To record the grant of cash advances
Expenses (Appropriate Account)
xxx
Advances for/to… (Appropriate Account)
To record the liquidation of cash advances
xxx
Disbursements through Advice to Debit
Account (ADA)
•
The ADA is an accountable form used as an authorization
issued by a government agency to the MDS-GSB instructing
Accounts
Payable
the
bank to debit
a specified amount from its xxx
available NCA
to payCash-Modified
the creditors/payees
listed in the LDDAP-ADA.
Disbursement
System (MDS), Regular
To recognize payment of payables to
suppliers/contractors through ADA
xxx
Disbursements through electronic
Modified Disbursement System (eMDS)
•
The eMDS is like the ADA except that
disbursements are made directly from the
accounts of the BTr that are maintained with the
Land Bank of the Philippines (LBP).
•
Agencies subscribed under LBP’s eMDS can make
online disbursements for selected transactions.
Disbursements through Cashless Purchase
Card (CPC) System
•
Disbursements under the CPC System are made through the use of
an electronic card (i.e., credit card).
Office Supplies Inventory
xxx
Accounts Payable
xxx
To recognize purchase of office supplies through CPC
Accounts Payable
xxx
Cash – Modified Disbursement
System (MDS), Regular
xxx
To recognize settlement of CPC billing statement
Disbursements through Non-Cash Availment
Authority (NCAA)
Books of Entity A
Books of BTr
Communication Equipment 1M
Accounts Payable
1M
To recognize receipt of PPE
procured through the direct payment
scheme
Accounts Payable
1M
Subsidy from National Gov’t. 1M
To recognize receipt of NCAA
and payment of payable
Subsidy to NGAs
1M
Loans Payable – Foreign
1M
To recognize the replenishments
made to AGSB negotiated MDS-checks
and payments on account of the NGA
Disbursements through Tax Remittance
Advice (TRA)
Books of Entity A
Cash-Tax Remittance Advice
10,000
Subsidy from National Government
10,000
To recognize the constructive receipt of NCA for TRA
Due to BIR
10,000
Cash-Tax Remittance Advice
10,000
To recognize constructive remittance of taxes withheld to the BIR through TRA
Books of BIR
Cash-TRA ………...10,000
Income Tax……………10,000
Books of BTr
Subsidy to NGAs….10,000
Cash-TRA……………...10,000
To recognize constructive receipt of
taxes remitted by National Government Agencies
(NGAs) through TRA
To recognize constructive receipt of
remittance of taxes by NGAs through TRA
Disallowances
• refer to expenditures made by an agency that
are subsequently invalidated or disallowed by
the COA because they are found to be irregular,
unnecessary, excessive, extravagant or
unconscionable
• recorded in the books of accounts only when
they become final and executory
Illustrative Examples
• Please refer to the excel file Disbursements
Illustrative Examples