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Government Disbursement System: Accounting & Related Transactions Guide
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PARTV DISBURSEMENTSYSTEM ACCOUNTINGFORDISBURSEMENTANDRELATEDTRANSACTIONS This part covers the rules and regulations tobefollowedinthedisbursementofpublicfunds,the onitoring of receipt and utilization of NCA/NTA, preparation and processing of DV/Payroll; m preparationandissueofchecks;paymentbycash;granting,utilizationandliquidation/replenishmentof cash advances; payment through ADA; and remittance of taxes withheld through Tax Remittance Advice(TRA.) efinitionofTerms. D Thefollowingaretermsusedtomeanasfollows: a.AccountsPayable–referstovalidandlegalobligationsofNGAs/OUs,forwhich,goodsorservices orprojectshavebeendelivered/rendered/completedandaccepted,regardlessoftheyear whentheseobligationswereincurred. b.AdvicetoDebitAccount–referstoanauthorizationissuedbytheNGA/OUappearinginthelower portionof theListofDueandDemandableAccountsPayable-AdvicetoDebitAccount (LDDAP-ADA).ItservesasinstructiontotheModifiedDisbursementSystem,Government ServicingBanks(MDS-GSBs)todebitaspecifiedamountfromitsavailableNCAbalance underregularMDSsub-accountforpaymentofcreditors/payeesthroughtheExpanded ModifiedDirectPaymentScheme(ExMDPS). c.Agency–referstoanydepartment,bureauorofficeofthenationalgovernment,oranyofitsbranches andinstrumentalities,oranypoliticalsubdivision,aswellasanyGOCCs,includingits subsidiaries,orotherself-governingboardorcommissionofthegovernment. d.CommercialCheck–referstoacheckissuedbygovernmentagencieschargeableagainsttheagency’s checkingaccountwithAGDBs.Thesearecoveredbyincome/receiptsauthorizedtobe depositedwithAGDBs;andfundingchecksreceivedbyOperatingUnitsfromCentralor RegionalorDivisionOffices,respectively. e.Disbursements–constituteallcashpaidoutduringagivenperiodincurrency(cash)orbycheckor ADA.Itmayalsomeanthesettlementofgovernmentpayables/obligationsbycash,check orADA.ItshallbecoveredbyDV/PettyCashVoucher(PCV)/Payroll. f.DirectPaymentSystem–referstothepaymentprocedurewherebytheMDS-GSBshall,uponreceipt ofNCAanLDDAP-ADAfromDBMpaytheCreditCardCompany(CCC)notearlierthan 24hoursbutnotlaterthan48hours,throughdirectcredittotheCCCcurrentaccount. g.ImplementingAgency–referstotheagencytowhichthefundsaretransferredforthepurposeof prosecuting/implementingtheproject. h.Inter-AgencyTransferredFund–referstocashormoneytransferredtoanImplementingAgency(IA) fortheundertakingofaprojectbySourceAgency(SA)inwhichtheallotmentwas released. i.ListofDueandDemandableAccountsPayable-AdvicetoDebitAccount–referstoanaccountable formintegratingtheAdvicetoDebitAccount(ADA)withtheLDDAP,whichisalist reflectingthenamesofcreditors/payeestobepaidbytheNGA/OUandthecorresponding amountsoftheunpaidclaims. j.ModifiedDisbursementSystem(MDS)Check–referstoacheckissuedbygovernmentagencies chargeableagainsttheaccountoftheTreasurerofthePhilippines,whicharemaintained withdifferentMDSAGDBs.MDSchecksarecoveredbyNCA. k.ModifiedDisbursementSystem,GovernmentServicingBanks–referstotheauthorizedgovernment servicingbanks,suchasLandBankofthePhilippines(LBP),DevelopmentBankofthe hilippines(DBP),andPhilippineVeteransBank(PVB),towhichDBMissuestheNCAs P forcreditingtotheMDSsub-accountsofNGAs. l.PettyCashFund–referstotheamountgrantedtodulydesignatedPettyCashFundCustodianfor paymentofauthorizedpettyormiscellaneousexpenseswhichcannotbeconvenientlypaid throughchecks/LDDAP-ADA. m.Project–referstoanundertaking,whetherconstructionwork,researchortrainingprogram,computer engagementorotherauthorizedactivitieswhichanagencyshallprosecuteorimplementin favororinbehalfofanotheragency. n.RegularCashAdvance–referstotheamountgrantedtocashiers,disbursingofficers,paymasters, andorotheraccountableofficersforthepaymentofexpensessuchassalariesandwages, commutableallowances,honorariaandothersimilarpaymentstoofficialsandemployees. o.SpecialCashAdvance–referstotheamountgrantedontheexplicitauthorityoftheHeadofthe Agencyonlytodulydesignateddisbursingofficersoremployeesforotherlegallyauthorized purposes,suchaspaymentofcurrentoperatingexpenditures,includingsalaries,wagesand allowances,travelexpenditures,andmaintenanceandotheroperatingexpenses,ofthefield officeorforspecialpurpose/time-boundundertakingoftheagencywhenitisimpracticalto paythesamebycheck. p.SourceAgency–referstotheagencytowhichtheallotmenthasbeenoriginallyreleasedandinwhose behalforbenefittheprojectwillbeprosecuted/implemented. q.TaxRemittanceAdvice–referstoaserially-numbereddocumentprescribedbytheDBMthatshould beusedbytheNGAsintheremittanceofwithheldtaxesonfundscomingfromDBM.This formisbeingdistributedbytheBIRtobeaccomplishedbytheNGAs.Thesameshallbe dulycertifiedbytheChiefAccountantandapprovedbytheHeadoftheconcernedNGAor hisdulyauthorizedrepresentative,andattachedtoeverywithholdingtaxreturnfiledas paymentfortaxeswithheld.ThisshallbethebasisfortheBIRandtheBureauofthe Treasury(BTr)torecordthetaxcollectionintheirrespectivebooksofaccounts. Mostofthetransactionsinthegovernmentinvolvesthereceiptanddisbursementofcash. Thecash transactions affect every classification within the financial statements – assets, liabilities, residual equity,incomeandexpenses.bycheck. Thusitisessentialthatcashtransactionsarerecordedcorrectly forreliabilityinthefinancialstatement. Disbursementsconstituteallcashpaidoutduringagivenperiodeitherincurrency(cash)orby c heck. Itmayalsomeanthesettlementofgovernmentpayables/obligationbycashorbycheck. Itshall becoveredbyDisbursementVoucher(DV),PettyCashVoucher,orPayroll. HowtodistinguishDisbursementfromExpenditures? Expenditures are theobligationsincurredbytheAgency. Itincludesboththeamountactually paid and those incurred and recorded as liabilities to be paid in the future. WhileDisbursementsare paymentsmadeforsuchgovernmentobligationsbycashorcheck. Typicaltransactionsfordisbursementsincludethefollowingmajorclassesofpayments: A. CurrentOperatingExpenses 1. PersonalServices - Salariesandwages - OtherCompensation - Personnelbenefits - Otherpersonnelbenefits 2. MaintenanceandOtherOperatingExpenses - travellingexpenses - trainingandscholarshipprogram - suppliesandmaterialexpenses - repairs,etc…. 3. FinancialExpenses - bankcharges, commitmentfees,documentarystamps - interestandotherfinancialcharges B. CapitalExpenditures–theseexpendituresneedallotmentforCO. Asopposedtothecurrent operatingexpenses,thisinvolvesinvestmentsandprocurementofassetsthat isexpectedtobeusedforalongerperiodoftime. C. Inter-agency fund transfers - this covers the transfer of funds to other agencies for the implementation of specific projects. This is taken up in the booksunder“Dueto–“bythereceiving agencyand“Duefrom–“bythereleasingagency. BasicRequirementsforDisbursement: 1. Existenceofalawfulandsufficientallotmentcertifiedasavailablebythebudgetofficer. 2. ExistenceofavalidobligationcertifiedbytheChiefAccountant/HeadofAcctg.Unit; 3. Legalityoftransactionsandconformitywithlaws,rulesandregulation. 4. ApprovaloftheexpensebytheChiefofOfficeorbyhisdulyauthorizerepresentative;and 5. Submissionofproperevidencetoestablishtheclaim. Sec.6ofGAMforNGAS.BasicGovernmentAccountingandBudgetReportingPrinciples. Eachentityshallrecognizeandpresentitsfinancialtransactionsandoperationsconformablytothe following: a.GenerallyacceptedgovernmentaccountingprinciplesinaccordancewiththePPSASandpertinent laws,rulesandregulations; b.accrualbasisofaccountinginaccordancewiththePPSAS; c.budgetbasisforpresentationofbudgetinformationinthefinancialstatements(FSs)inaccordance withPPSAS24; d.RCAprescribedbyCOA; e.doubleentrybookkeeping; f.financialstatementsbasedonaccountingandbudgetaryrecords;and g.fundclusteraccounting. DisbursementSystem –involvesthepreparationandprocessingofdisbursementvoucher;preparation andissuanceofcheck,paymentofcash,granting,utilization,andliquidationorreplenishmentof cashadvances. Alldisbursementofthegovernmentrequiresthecertificationas: 1)tovalidity,propriety,legalityoftheclaimbytheheadofofficewhohascontrolofthefunds;and 2)certificationthatfundsareavailableforthepurpose. Modesofdisbursementinthegovernment: 1. bycheck–thruMDSchecksorcommercialchecks 2. bycash–cashadvancesgrantedtodisbursingofficerandpettycashfund. 3. AdvicestoDebitaccount 4. TaxRemittanceAdvice 5. DirectPaymentMethod isbursementbyChecks–ChecksshallbedrawnonlyondulyapprovedDVorPCV. Theseshallbe D reportedandrecordedinthebooksofaccountsonlywhenactuallyreleasedtotherespectivepayees. Twotypesofchecksarebeingissuedbygovernmentagencies: 1. Modified Disbursement System (MDS) checks – issued by government agencies chargeable against the account of the Treasurer of the Phil which are maintained with different MDS GovernmentServicingBanks. ThesearecoveredbyNoticeofCashAllocation,anauthorization issued by the DBM to all government agencies to withdraw cash from the National Treasury throughtheissuanceofMDSchecksorotherauthorizedmodeofdisbursements. 2. Commercial checks – issued by government agencies chargeableagainsttheagencychecking accountwithGSBs. Thesearecoveredbyincome/receiptsauthorizedfordepositswithAGDBs andfundingchecksreceivedbyRO/OUsfromCO/ROsrespectively. AccountingBooks,Records,FormsandReportstobePreparedandMaintained. Allchecksdrawnduringtheday,whetherreleasedorunreleasedincludingcancelledchecksshallbe recordedchronologicallyintheChecksandADADisbursementsRecord(CkADADRec)maintainedby theCash/TreasuryUnit.Thedatesthecheckswereactuallyreleasedshallbeindicatedintheappropriate columnprovidedforintheCkADADRec.Allchecks/ADAdrawnwhetherreleasedorunreleasedshall beincludedintheReportofChecksIssued(RCI)orReportofADAIssued(RADAI),whichshallbe prepareddailybytheCashier.TheRCI/RADAItogetherwiththeoriginalcopiesofthesupporting documents(SDs)shallbesubmittedtotheAccountingDivision/UnitforthepreparationofJEV.Atthe endoftheyear,aScheduleofUnreleasedCommercialChecksshallbepreparedbytheCashierfor submissiontotheAccountingDivision/Unit.Anadjustingaccountingentriesforunreleasedcommercial checksaremade. RecordingofCheckDisbursementsbyFieldOfficeswithoutCompleteSetofBooks. FieldOffices(FOs)withoutcompletesetofbooksshallrecordchronologicallyintheCashinBank Register(CBReg)allchecksissued/chargedtodepositswiththeAGDB.Thecertifiedcopyofthe CBRegtogetherwiththerequiredSDsshallbesubmittedwithinfivedaysaftertheendofeachmonthto theconcernedmotherunit(central/regional/divisionoffice)bytheFOs(aunitunderthecentral/regional/ divisionoffice)forreviewandrecordingofthetransactionsinthebooksofaccounts. ll unreleased and cancelled as of the reporting date shall be enumerated inthe“ListofUnreleased A Checks”tobeattachedtotheRCI. NoticeofCashAllocation. TheNCAshallbetheauthorityofanagencytopayoperatingexpenses,purchasesofsuppliesand materials,acquisitionofPPE,accountspayable,andotherauthorizeddisbursementsthroughtheissueof MDSchecks,ADAorothermodesofdisbursements. a.NoMDScheck/ADAshallbeissuedwithoutthecoveringNCA.Hence,thetotalMDSchecks/ADA issuedshallnotexceedthetotalNCAreceived.TomaximizetheavailableNCAsoftheagency,the CommonFundSystempolicyshallbeadoptedwherebycashallocationbalancesofagenciesunder theRegularMDSAccountmaybeusedtocoverpaymentofcurrentyear’saccountspayablei.e., goodsandserviceswhichhavebeendeliveredandacceptedduringtheyearchargedagainst appropriationsofprioryear/s,aftersatisfyingtheirregularoperatingrequirementsasreflectedin theirMonthlyCashProgram. b. NCAissuedandcreditedtotheSpecialMDSAccountsofagenciesforpaymentofretirement gratuity/terminalleavebenefitsaswellasprioryears’accountspayableshallbevalidwithinthe p eriodprescribedunderexistingrulesandregulations.TheNCAshallbemonitoredthroughthe maintenanceoftheRegistryofAllotmentsandNoticeofCashAllocation(RANCA)bythe Budget/Unit. c. NCAissuedandcreditedtotheSpecialMDSAccountsforTrusttocoverpaymentsofauthorized claimsshallbevalidwithintheperiodprescribedunderexistingregulations. d. ForNCAissuedforforeignassistedprojectssuchasgrantsfromforeigncountrywithaseparate MDSaccountmaintainedbythespendingagencywithGovernmentServicingBanks(GSBs),MDS check/ADAshallbeissuedonlyforspecificpurposeuntilfullimplementationoftheproject,subject topertinentDBMissuancesprescribingthevalidityoftheNCA. he agency received Notice of Cash Allocation for payment of its obligations. It maybe either for T paymentofprioryear’sorcurrentyearobligations,thesamearerecordedas: Cash–ModifiedDisbursementSystem,Regular SubsidyfromNationalGovernment 10104040 0301010 4 XXX XXX his entry will show that the NCA received,istheshareoftheAgencyintheincomeoftheNational T Government, and it is a proof that there was an allocation of cash for the Agency by the National Treasury. TheNCAreceivedbytheagencyisnetoftheamountoftaxestobewithheldbytheagency. isbursementsbyCash. Cashdisbursementsconstitutepaymentsoutofcashadvancesgrantedtothe D regularandspecialdisbursingofficersforpersonalservices,pettyexpensesandMOOEforfield operating requirements. All cashpaymentsshallbecoveredbydulyapprovedDVs/payrolls/pettycash 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 followingexistingCOArulesandregulationsandotherpertinentissuances: a.Nocashadvanceshallbegivenunlessforalegallyauthorizedspecificpurpose; b.Acashadvanceshallbereportedonandliquidatedassoonasthepurposeforwhichitwasgiven hasbeenserved; c.Noadditionalcashadvanceshallbeallowedtoanyofficialoremployeeunlessthepreviouscash advancegiventohim/herisfirstsettled/liquidatedoraproperaccountingthereofismade; d.Exceptforcashadvanceforofficialtravel,noofficeroremployeeshallbegrantedcashadvance unlesshe/sheisproperlybondedinaccordancewithexistinglawsorregulations.Theamountof cashadvancewhichmaybegrantedshallnotexceedthemaximumcashaccountabilitycoveredby his/herbond; e.Onlypermanentlyappointedofficialsshallbedesignatedasdisbursingofficers; f.Onlydulyappointedordesignateddisbursingofficermayperformdisbursingfunctions. Officers andemployeeswhoaregivencashadvancesforofficialtravelneednotbedesignatedasDisbursing Officers; g.Transferofcashadvancefromoneaccountableofficertoanothershallnotbeallowed;and h.Thecashadvanceshallbeusedsolelyforspecificlegalpurposeforwhichitwasgranted.Underno circumstanceshallitbeusedforencashmentofchecksorforliquidationofapreviouscashadvance. RecordingthedifferenttypesofCashDisbursements: A. CashAdvanceforPayroll. AdvancesforPayrollshallbegrantedtoRegularDisbursingOfficers forpaymentofsalaries,wages,honoraria,allowancesandotherpersonnelbenefitsofofficialsand employees.TheAdvancesforPayrollshallnotbeusedforencashmentofchecksorforliquidation ofpreviousorothertypesofcashadvances.Itshallbeequaltothenetamountoftheprocessed payrollcorrespondingtothepayperiod.Liquidationoftheadvancesshallbemadewithinfive(5) daysaftertheendofthepayperiod.Anyunclaimedsalaries/allowancesshallberefundedandissued officialreceipttoclosetheaccount.OrthepaymentofsalariesshallbethruATM. nderthenewaccountingsystempaymentofsalariesandwagesandotherremunerationtothe U personneloftheAGENCYmaybemadethroughthefollowing: 1. PayrollFundinthehandsofaDisbursingOfficer(DO)ascashadvance.Paymentsaremadeby theDOincashtotheemployees. 2. PayrollFunddepositedinanauthorizeddepositorybank,withdrawalbytheemployeesis throughtheautomatedtellermachine(ATM). 3. Directpaymenttoemployeesbyindividualcheck. Example, AssumethefollowingpayrollfundforsalariesandwagespaidthruATM: alariesandwages S PersonnelEconomicReliefAllowance(PERA) Gross Less: Withholdingtax P 49,260 GSIScontribution(9%ofthebasic) 54,000 PAG-IBIGcontribution 2,500 PHILHEALTH contribution 10,000 NetPayroll P600,000 40,000 P640,000 115,760 P524,240 ======= a) Enterstheobligation–RAOD-PS ObligatetheP640,000salariesandwagesforthemonthandpostintheRAOD-PS. b) Recognizetheexpensesandliabilities(ThruATM) alariesandwages–Regular S PERA DuetoBIR DuetoGSIS DuetoPAG-IBIG DuetoPhilHealth DuetoOfficersandEmployees 0101010 5 50102020 20201010 20201020 20201030 20201040 20101020 600,000 40,000 49,260 54,000 2,500 10,000 524,240 d) TorecordcheckissuanceforATMemployee’saccounts DuetoOfficersandemployees Cash–MDS,Regular 20101020 0104040 1 524,240 524,240 e)Torecordremittanceofmandatorycontributionsincludingwithholdingtaxessupportedwith approvedTRAfromDBM. uetoGSIS D DuetoPag-ibig DuetoPhilHealth Cash–MDS,Regular 0201020 2 20201030 20201040 10104040 54,000 2,500 10,000 Cash–TRA SubsidyfromNG 0104070 1 40301010 49,260 DuetoBIR Cash–TRA GovernmentCounterpart: 0201010 2 10104070 49,260 66,500 49,260 49,260 f) Obligationandrecordingofthegovernmentshareofmandatorycontributions. Theagency paidP1,000forECC bligatethegovernmentcounterpartofthemandatorydeductions,72,000(12%XP600,000) O forGSISlifeandretirement.Then,ECC,atotalofP1,000. g) Torecordpaymentandremittanceofthecorrespondingcounterparts ECCInsurancepremiums 50103040 1,000 RetandLifeInsPremium 50103010 72,000 Pag-ibigcontribution 50103020 2,500 PhilHealthcontribution 50103030 10,000 Cash–MDS,Regular 10104040 85,500 OtherJEifcoursethruAdvancestoDO: 1. ObligatetheamountofP640,000andrecordinRAOD-PS. 2. Set-upsalarydeductionsandDuetoOfficersandEmployees Salariesandwages–Regular 50101010 600,000 PERA 50102020 40,000 DuetoBIR 20201010 DuetoGSIS 20201020 DuetoPAG-IBIG 20201030 DuetoPhilHealth 20201040 DuetoOfficersandEmployees 20101020 9,260 4 54,000 2,500 10,000 524,240 3. Torecordgrantofadvancestocoverpaymentofsalariesandwages. AdvancesforPayroll 19901020 524,240 Cash-MDS,Regular 10104040 524,240 4.. TorecognizeliquidationofAdvancesforPayrollbasedontheRCDisb DuetoOfficersandEmployees AdvancesforPayroll 0101020 2 19901020 524,240 524,240 5. Followandrefertoentry(e-g)forremittancesofmandatorydeductionsandwithholdingtaxes thruTRA. 6. R efundifthereisunclaimedsalariesandwagesinordertoavailofanothercashadvancetopay salariesandwages.Ex.P24,000unclaimedsalariesisbeingrefunded. a) recognizeliquidation: DuetoOandE 20101020 500,240 AdvancesforPayroll 19901020 500,240 b) recordtherefund: Cash-CollectingOfficers 10101010 24,000 AdvancesforPayroll 19901020 24,000 c) recordthedeposit/remittancetothetreasury: Cash–Treasury/AgencyDeposit,Reg.10104010 24,000 Cash–collectingofficer 10101010 24,000 d) Adjustfortherefundedamount: DuetoOandE 20101020 Salariesandwages–Reg 50101010 PERA 50102020 24,000 20,000 4,000 e)AdjusttheobligationfortherefundbyanegativeentryinRAOD-PStotalingP24,000. PettyCashFund(PCF) ThePettyCashFund(PCF)tobesetupshallbesufficientfortherecurringpettyoperatingexpenses o ftheagencyforonemonth.ItshallbemaintainedusingtheImprestSystem. Allreplenishmentsshall bedirectlychargedtotheexpenseaccountandatalltimes,thePCFshallbeequaltothetotalcashon handandtheun-replenishedexpenses.ThePCFshallbereplenishedassoonasdisbursementsreachat least75%orasneeded.ThefollowingaretheaccountingpoliciesregardingcashadvanceforPCF: a.Thefundshallbekeptseparatelyfromtheregularcashadvances/collectionsandshallnotbeusedfor paymentofregularexpensessuchasrentals,subscriptions,lightandwaterbills,purchaseofsupplies andmaterialsforstockpurposes,andthelike. PaymentsoutofPCF,whichshallbemadethrougha PettyCashVoucher(PCV),shouldbeallowedonlyforamountsnotexceedingtheallowedpayment foreachtransaction,exceptwhenahigheramountisallowedbylawand/orspecificauthoritybythe COA.Splittingoftransactionstoexceedthedisbursementceilingshallnotbeallowed.All disbursementsoutofPCFshallbecoveredbydulyaccomplishedandapprovedPCVsupportedby cashinvoices,ORsorotherevidenceofdisbursements; b.TheunusedbalanceofthePCFshallnotbeclosed/refundedattheendoftheyear.Thefundshallbe closedonlyupontermination,separation,retirementordismissalofthePettyCashFundCustodian (PCFC),whointurnshallrefundanybalancetoclosehis/hercashaccountability;and c.Attheendoftheyear,thePCFCshallsubmittotheAccountingDivision/Unitallun-replenished PettyCashVouchers(PCVs)forrecordinginthebooksofaccounts. he PCF shall not be used to purchase regular inventory items for stock nor for the liquidation of T outstandingcashadvances.Itshallbeusedonlyfordisbursementswhichcannotbeconvenientlypaidby check. DisbursementthroughPettyCashFund- shallbethroughthePCVoucherwhichshallbeapproved byauthorizedofficialsandsignedbythepayeetoacknowledgereceiptoftheamountfromthePC Custodian. ADVshallbepreparedtoreplenishthefund. ttheendoftheyear,thePCCshallsubmittotheAccountingunitalloutstandingPCVs. Incasethe A fundcouldnotbereplenishedforlackoffunds,aJEVshallbepreparedtorecognizeallun-replenished expenses in the books and thePCFaccountshallbecredited. Atthestartoftheyear,assoonascash becomesavailable, thefundshallbereplenishedbyadebittoaccount“PettyCashFund”andcreditto the appropriate “Cash-MDS, Regular/Cash in Bank, LCCA” accounttorestorethefundtoitsoriginal amount. I ncasethePCCustodianresignsorceasesasthecustodianofthefund,fullaccounting/liquidation shallbemade. AnyexcesscashshallberefundedandallthePCVstogetherwiththeoriginalsupporting documentsshallbesurrenderedtotheAccountingUnitandprepareaJEVtotakeuptheexpensesinthe books and credit the account “Petty Cash Fund”. In no case shall the remaining cash of the former custodianbetransferredtotheincomingPCC. hePettyCashFundrecordshallbeusedtorecordallthePCsreceivedbythePCCustodianaswell T asopeningofPCFatthebeginningoftheyearorwhenanewPCCustodianisdesignatedtoreplacethe previousone. AllPCVshallbesupportedwithvaliddocumentstoprovetheproprietyofdisbursements, suchasORs,invoices,etc. ExampleofPettyCashFundtransaction: 15,000wasmaintainedbytheagencyundertheImprestsystem.AsofDec.31,2024theused P pettycashsupportedwithreceiptsamountingtoP12,000remainedunreplenished.Thereceipteduseof PCconsistedofthefollowing: Officesuppliesexpense P6,000 Repairsandmaintenance–Transp.Equiptment 2,500 Repairsandmaintenance–MachineryEquipt 3,000 Transpanddeliveryexp 500 RecordtheTransaction: (ThePCcustodianretireseffectiveDec.31/2024) a. Obligation–RAOD-MO,P15,000 b. Recordthegrantingofcashadvances PettyCash Cash–MDS,Regular 10101020 15,000 10104040 15,000 c. Recordun-replenishedexpenses,returnandclosethecashonhand. fficesuppliesexpense O Repandmaintenance–Transp.Equipt Repandmaintenance–MachEquipt 50203010 0213060 5 50213050 6,000 ,500 2 3,000 Transportationanddeliveryexpenses PettyCash 0299040 5 10101020 500 0101010 1 10101020 3,000 . Cash–Treasury/AgencyDeposit,Regular 10104010 3,000 d. Returnthecashonhand,P3,000. Cash-collectingofficer PettyCash Cash–collectingofficer 12,000 3,000 10101010 3,000 e. AdjusttheobligationforthereturnedPCFthruanegativeentryintheobligationcolumn intheamountofP3,000. Or Note: IfareplenishmentisrequestedandanMDScheckwillbeissued,thereisaneedtoobligatethe totalamounttobe replenished. IfonlypartialamountofPCfundistobereplenishedandclosed toPCaccountattheendoftheyear,thegrantingofthePCequivalentamountatthebeginning oftheyearshallbeobligatedandrestorethetotalamountoftheoriginalPCFund. hejournalentryatthebeginningofthefollowingyear:(Example:P20,000isthePCFgranted T whileP14,000isthetotalamountof expensespaidfromthePCFbutnotreplenishedattheend oftheyear.TheexpenseswasrecordedandpartiallyclosedthePCFaccount.Then,acheckis beingissuedatthebeginningofthecurrentyeartorestorethe(PCF). a) obligatetheamountofP14,000-RAOD-MO b) PettyCash 1 0101020 Cash–MDS,Regular 10104040 14,000 14,000 Aftertheabovejournalentry,thepettycashfundisrestoredtoP20,000. RegularJournalEntriesforDisbursementsOutofPettyCash PCFgrantedisP30,000. 1. ObligateP30,000ofPCFinRAOD-MO. 2. GrantingofPCF: PettyCash Cash–MDS,Regular 0101020 1 10104040 P30,000 P30,000 3. ObligatetheamountofP25,000representingareplenishmentofPCFandpostinthe ObligationcolofRAOD-MO. 4.ReplenishmentwasrequestedtotalingP25,000ofvariousexpenses: ravellingexp.–local T 50201010 Officesuppliesexpenses 50203010 Fuel,oilandlubricants 50203090 PostageandCourierexpenses 50205010 Othermaintenanceandoptgexp50299990 Cash–MDS,Regular 10104040 P 9,000 8,000 2,000 2,500 3,500 25,000 TorecordthereplenishmentofPCbasedontheDV,RPPCVsandSDs . Cash advances granted for travel shall be accounted for asAdvancestoOfficersandEmployees C (19901040) and these are subject to liquidation upon completion. For liquidation of travel where the amount of cash advance is equal to or more thanthetravelexpensesincurred,theLiquidationReport form shall be prepared by the officers/employees concerned and submitted to the accounting unit as basisforJEVpreparation.Thisshallclosethereceivableaccount. Iftherearechangesintheitineraryof travel,areviseditineraryoftravelshallbepreparedandwillsupporttheliquidationofcashadvancefor travel.(SecureordownloadfromGAMII,theItineraryoftravelformandlearnhowtofillupsincethis document will be attached to the request of cash advancefortravelandtheamountoftotalestimated travellingexpensesintheitineraryoftravelwillbetheamountgrantedforcashadvance.) heexcesscashadvanceshallberefundedandanORshallbeissuedtoacknowledgereceiptthereof T and shall be noted in the Liquidation Report. Inthecasetheamountofcashadvanceislessthanthe travel expenses incurred, a Liquidation Report shall be submitted to liquidate the cash advance previously grantedandaDVshallbepreparedtoclaimreimbursementoftheadditionaltravellingexpense. The Report of Disbursement shall serve as the liquidation report of the cash advance granted to the DisbursingOfficer. (Exampleoftravellingexpensethrucashadvancetransactions:) TheRegionalDirectorof COAXwasdirectedtoattendanExecutiveCommitteeConference inManila. Thetravelwasfor3daysbutitwascutshortby1dayduetoanemergencymeetingat theregionaloffice. AnItineraryofTravelwaspreparedshowingthefollowinginformation: Transportationexpense(1st andlastday)andotherincidental Expensesduringthedurationofthetravelperiod P 1,600 Perdiem (1,800x3days) 5,400 Planefare (rdtrip) 12,000 Anamendeditinerarywasmadeandshowedareductionofthe Perdiemequivalentto P (1,800) JournalEntries: 1. ObligatethecashadvancefortraveltotheRAOD-MOamountingtoP19,000. 2. TorecordthegrantingofcashadvancesbasedonITandApprovedTravelDocuments: AdvancestoOfficersandEmployees Cash-MDS,Regular 19901040 10104040 P19,000 P19,000 3. TorecordliquidationuponreturnfromtravelandsubmissionofLR: TravelingExpenses-Local AdvancestoOfficersandEmployees 0201010 5 19901040 P17,200 10101010 9901040 1 1,800 P17,200 4. TorecordrefundsafterissuedwithOR: Cash–collectingofficers AdvancestoOfficersandEmployees 5. ToremitthecollectionstotheBTr: 1,800 Cash-Treasury/AgencyDeposit,Regular Cash–collectingofficer 0104010 1 10101010 1,800 1,800 6. AdjustbyanegativeentryintheobligationcolumntherefundamountingP1,800. djusttheobligationbypostinganegativeentryintheobligationcolumnoftheRegistry.The A obligationfortravellingexpensesshallbeadded/deductedfortheactualamountoftravelling expensesincurred. oradditionalclaimoftravellingexpensesmaybeduetoanextendedofficialstay,obligatethe F equivalentamountoftheextendedstayandithastobeprocessedintheaccountingofficefor payment/reimbursement. Itshouldbeanofficialtraveldulysupportedwithproperdocumentation. If the travel is not fully supported, the auditor will disallow the claim upon post-audit of said transaction. AdvicetoDebitAccount(ADA)– hisisasystembywhichnocheckisissuedtothepayeeinpaymentofgovernmentobligations,but T instead,thecurrentaccountnumberofthepayeeinthebankwherethegovernmentmaintainsadeposit, shallbeobtainedbytheaccountingunit. Ifpaymentistobemade,theADAshallbeissuedbythe AccountingUnitoftheagencytothebankwhereitmaintainsanaccount. Allpaymentsshallbemade tothecreditofthepayee’saccountandadebittotheaccountmaintainedbythegovernmentagencyin the samebank. AJEVshallbepreparedtorecordthetransactionintheGJ.(RefertoCOACircular No.2018-14,12/28/18) SuppliesandMaterials: Assumethefollowingtransactionsregardingpurchaseofofficesupplies: 1. IssuedPurchaseOrder(PO)forofficesupplies, a. Obligation b. Payment(thruProcurementService). Comparewithpurchasesmadetooutsidesupplier. c. Recordtheassetreceived/delivered d. Recordtheusedsupplies. e. RemittanceofwithholdingtaxthruTRAifprocurementnotthrutheProcurementService Liketheprepaidexpenses,theexpenseshallbetakenupuponutilization/consumption. roperty and Inventory Accounting System - consists of monitoring, controlling and recording P systemforacquisitionanddisposalofpropertyandinventory. hesystemstartswiththereceiptofthepurchasedinventoryitemsandequipment. Therequesting T office determinestheirneedofinventoryitemsandequipment. Checkiftheitemsarenotavailablein stock and shall prepare and cause the approvalofthePurchaseRequest(PR). Basedontheapproved PR,followtheproceduresinadoptingaparticularmodeofprocurement.Afterthecanvass,thesupplier willbeawardedandtheagencyshallissueadulyapprovedPurchaseOrder. Proceduresrelativetothe obligationofthepurchaseorderandpaymentofthedeliveriesshallfollowtheproceduresofobligation accountingsystemanddisbursementsystem. Thesub-systemareasfollows: 1.Receipt,Inspection,AcceptanceandRecordingDeliveriesofInventoryItemsandEquipment, 2.RequisitionandIssuanceofInventoryItems 3.RequisitionandIssuanceofEquipment erpetualInventoryMethod–purchaseofsuppliesandmaterialsforstockregardlessofwhetherornot P they are consumed within the accounting period, shall be recorded as Inventory account. Under the perpetual inventory method, an inventory control account is maintained in the General Ledger on a current basis, and issuance thereof shall be recorded based on the Report of Supplies and Materials Issued. urchasesoutofPettyCashFundshallbechargedimmediatelytotheappropriateexpenseaccounts. P TheaccountingUnitshallmaintainperpetualinventoryrecords,suchastheSuppliesLedgerCards for each inventory stock, Property, Plant and Equipment Ledger Cards for each category of plant, property and equipment including work andotheranimals,livestock,etc. Thesubsidiaryledgercards shallcontainthedetailsoftheGeneralLedgeraccounts. orcheckandbalance,thePropertyandSupplyOfficer/UnitshallmaintainPropertyCards(PC)for F property, plant and equipment, and Stock Cards (SC) forinventories. ThebalanceinquantityperPC andSCshouldalwaysreconcilewiththeledgercardsoftheAccountingUnit. heMovingAverageMethodofcostingshallbeusedforcostinginventories. Thisisthemethodof T calculatingcostofinventoryonthebasisofweightedaverageonthedateofissue. TheAccountingUnit shallberesponsibleincomputingthecostofinventoryonaregularbasis. Example: Theagencyprocesstheir6monthsrequisitionofofficesuppliesamountingtoP500,000. The purchase was made to the Procurement Service of DBM, hence, no bidding was conducted, while P150,000purchaseofequipment(2air-conditioningunits)wasmadetoanoutsidesupplierorto SM Applicance Center considering the lowest bid offer and no available stock in the Procurement ServiceOffice. Theseweredeliveredandinspected.Thereisenoughallotmentbalanceinobligatingthe purchases. Aweekafterthedelivery,P220,000ofofficesupplieswereusedinoperationandrecorded bytheaccountantsupportedbyMRSMI. Purchase(ProcurementService) 1. ObligateP500,000andpostundertheobligationcol.intheRAOD-MO. 2. RecordtheadvancepaymentofthepurchasetotheProcurementServiceOffice. DuefromNGAs Cash, MDS–Regular 10303010 0104040 1 500,000 500,000 3. Torecordtheacceptanceofthedeliveryofofficesupplies. Officesuppliesinventory 10404010 500,000 DuefromNGAs 10303010 4. Torecordissuesofofficesuppliestodifferentrequisitionerasperrequest. Officesuppliesexpense 50203010 220,000 500,000 Officesuppliesinventory 10404010 220,000 Purchase(OtherSupplier) 1. Aftertheconductofbidding/canvass, thepurchasewillbeawardedtothelowestbidder/supplier afterademoisbeingconducted(ifapplicable)andPurchaseOrderisbeingpreparedtobesigned byboththeagencyandsupplier. 2. Upondeliveryoftheequipment,obligatetheamount,P150,000,(RAOD-CO)forthepurchaseof equipmenttoanoutsidesuppliersupportedbythePOandpostedtotheregistryundertheobligation columnforCO. 3. Torecordthedeliveryandacceptanceofthedeliveredequipment: Officeequipment 10605020 150,000 DuetoBIR 20201010 AccountsPayable 20101010 9,000 141,000 4. Torecordpaymentofofficeequipment. AccountsPayable Cash–MDSRegular 141,000 20101010 0104040 1 5. TorecordremittancetoBIRsupportedwithapprovedTRA. Cash–TRA 40301010 SubsidyfromNG 40301010 DuetoBIR Cash–TRA 0201010 2 40301010 141,000 9,000 9,000 9,000 9,000 ( If the purchase was charged to a trust account and not come from an NCA when paid, no obligationisnecessaryandpaymentshallbechargedtotheCashinBank–LCCAaccount) nderNGAS, theAssetMethodwillbeusedinrecordingdisbursementswhenexpendituresapplyto U morethantheaccountingperiod. Example, Assumethefollowingtypesofexpenditures: Rent:Thegovernmentsignedacontractfortherentalofofficespacewith1yearadvancepayment of P1,200startingNovember. (1yr,11/18-10/19) TheAgencyenterstheobligationofP1,200intheRAOD-MO,andrecordsthepaymentas: PrepaidRent 19902020 P1,200 AccountsPayable 20101010 P1,200 AccountsPayable Cash–MDS,Regular 0101010 2 10104010 P1,200 P1,200 orecordtheexpenseasofendoftheyearoryoucanincludeinmakingtheadjustmentattheendofthe T year. Rentexpense Prepaidrent 0299050 5 19902020 200 200 Paymentofutilities: Ex. Theagencyreceivedtheirbillsofthefollowing: PLDT P12,000 BIR- 240 MCWD 5,000 100 VECO 18,000 360 Recordthetransaction. a. Obligatethebilledaccountsandpostundertheobligationcol.ROD-MO. b. Recordthebills Telephoneexpenses Waterexpenses Electricityexp AccountsPayable 50205020 5 0204010 50204020 20101010 c. Recordpaymentoftheabovebills. AccountsPayable 20101010 DuetoBIR 20201010 Cash–MDS,Regular 10104010 12,000 5,000 18,000 35,000 35,000 00 7 34,300 d. TorecordremittancetoBIRsupportedwithapprovedTRA. DuetoBIR 20201010 700 Cash–TRA 10104070 700 FinancialExpenses Theseareexpenseswhicharenotusedintheactualoperationoftheagencysuchasinterest expenses,bankcharges,etc. Purchaseand/orConstructionofFixedAssets Property,PlantandEquipmentandInventoryAccountsacquiredthroughpurchaseshallinclude a llcostsincurredtobringthemtothelocationnecessaryfortheirintendeduse,liketransportationcost, freight charges, installation costs, etc. These are recorded in the books of accounts as Asset after inspectionandacceptanceofdelivery. ConstructionPeriodTheory Fixedassetsarechargedagainstcapitaloutlay. Sincecorollaryentryisnolongermade,theasset a ccount is taken up upon purchase. Under the depreciation accounting, depreciation will be taken up starting on the month succeeding the month of purchase or completion of construction. Straight-line method will be used. The rate of depreciationshalldependonthenatureoftheassets,guidelinesfor thisshallbeissuedbytheCOA. I nrecordingthefixedassets,theConstructionPeriodTheoryshallbefollowed. Allexpenses suchasinterests,licensefees,etc.,duringtheconstructionperiodshallbecapitalized. uringtheconstructionperiodproperty,plantandequipmentshallbeclassifiedandrecorded D as “Construction in Progress” with the appropriate asset classification. As the construction is completed, the “Construction in Progress” account shall be transferred to the appropriate asset account. ccounts “Public Infrastructures” and“ReforestationProjects”arerecordedintheRegistry A ofPublicInfrastructures/ReforestationProjectsattheendoftheyear. Purchase/ConstructionofFixedAssets Example: PurchaseofofficeequipmenteitherthrutheProcurementService/outsidesuppliers. 1. IssuePOfortheofficeequipment 2. Recordtheobligation,RAOD-CO 3. Recordpayment(ProcurementService/outsidesupplier)orrecognizetheliability andtaxeswithheld 4. Recordtheassetreceive/delivered 5. RemittaxeswithhelduponreceiptofTRA ConstructionofBuildingbyContract 1. Signedtheconstructioncontract. Recordtheobligation–RAOD-CO 2. Recordperformancebondpostedbythecontract(cash-5%,bankguarantee-10%, andsuretybond-30%ofthecontractcost) 3. Grant15%advancestothecontractorifrequested 4. Paymentbasedonthepercentageofcompletionbilled 5. Imposedretentionfeesandobservedifneededuptothelastclaims 6. Requiredwithholdingtaxestobedeductedforeverybilling 7. Recordcompletionandturn-over 8. Returntheperformancebond,retentionfeesandremittanceofwithholdingtaxes InfrastructureAssets.BesidesthefivecriteriaforrecognizingPPE,infrastructureassetshavethe followingadditionalcharacteristics: a.Partofasystemornetwork; b.Specializedinnatureanddonothavealternativeuses; c.Immovable;and d.Maybesubjecttoconstraintsondisposal. InaccordancewithPPSAS17,publicinfrastructuresshallberecognizedasPPEintheentity’s f inancialstatements.TheseshallberecordedinthebooksofaccountsasinfrastructureAssetssuchas roadnetworks,sewersystem,waterandpowersupplysystems,communicationnetworks,etc. Example. Theagencywantedtoexpanditsbuilding. Theprojectwasincludedintheapprovedbudget amountingtoP7,500,000. ItwasawardedtoafinanciallycapablecontractorandmadetostartinMay 15,2021tobecompleted4monthsafter. However, thereweredelaysinthecompletion,whichmadethe agencytochargealiquidatingdamagestotalingP25,000. Thereweredeficienciesnotedduringtheinspectionconductedwhenitwas35%completionand c laimedthepaymentofitsfirstbillingafterbeingprocessed. The2n d billingfollowedwhenitwas65% completionandfinalbillingwhenitwas100%completion. Journalizethefollowing: 1.ObligateP7,500,000constructionandpostintheobligationcolumnoftheRAOD-CO. 2. Torecord thereceiptofcashfromthecontractorpaidasperformancebond(cashbondof5%). Cash–collectingofficer 10101010 375,000 Guaranty/AgencyDeposit-Trust 20401040 375,000 (5%XP7,500,000) 3. TorecordthetemporarydepositoftheperformancebondtotheNationalTreasury. Cash–Treasury/AgencyDeposit–Trust 10104030 375,000 Cash–collectingofficer 10101010 375,000 4. Torecordthe15%ofthecontractamountasadvancestocontractor. Advancestocontractors 19902010 1,125,000 Cash–MDS,Regular 10104040 1,125,000 (P7,500,000x15%=1,125,000) 5. Torecordthe1st progressbilling,35%completion. ConstructioninProgress–Bldgand OtherStructures 10610030 2,625,000 AccountsPayable 20101010 2,231,250 AdvancestoContractors 19902010 393,750 6. Torecordpaymentofthe1st billing. AccountsPayable 20101010 Cash- MDS,Regular 10104040 Guaranty/SecurityandDepPayable 20401040 DuetoBIR 20201010 (Retentionfees) 7. Torecordthereceiptof2n d billing. ConstructioninProgress–Bldg &OtherStructures AccountsPayable Advancestocontractors 0610030 1 20101010 19902010 8. Torecordpaymentofthe2n d billing. AccountsPayable 20101010 Cash–MDS,Regular 10104040 Guaranty/SecurityandDepPayable 20401040 DuetoBIR 20201010 9. Torecordthereceiptofthefinalbilling. (Cost–7,500,000–LD 55,000,Advances393,750) ConstructioninProgress–Bldgand 2,231,250 1,736,625 262,500 232,125 2,250,000 1,912,500 337,500 1,912,500 1,489,250 225,000 198,250 OtherStructures AccountsPayable Advancestocontractor 0610030 1 20101010 19902010 2,570,000 2,176,250 393,750 10. ToadjustobligationbynegativeentryintheobligationcolumnoftheRAOD-CO,reducingthe originalamountbyP25,000LD. 11. Recordthefinalpayment. AccountsPayable 20101010 Cash–MDS,Regular 0104040 1 Guaranty/SecurityandDepPayable 20401040 DuetoBIR 20201010 2,176,250 1,697,800 257,000 221,450 12. Torecordtheturn-overandacceptanceofthebuildingextension. ontractamount C Less:LD Netcost 7,500,000 55,000 7,445,000 Building CIP–BldgandOtherStructure 10604010 0604030 1 7,445,000 7,445,000 13. TorecordreceiptofNCAandremittanceofwithholdingtaxesthruTRA. Cash–TRA 10104070 651,825 SubsidyfromNG 40301010 DuetoBIR Cash–TRA 0201010 2 10104070 651,825 651,825 651,825 14. TorecordreceiptofNCAfordepositedperformancebondtobereturned. Cash–MDS,Trust 10104060 375,000 Cash–Treasury/AgencyDeposit,Trust10104030 375,000 15. Torecordreleaseofperformancebond. Guaranty/SecurityDepositsPayable (PB) 2 0401040 Cash–MDS,Trust 10104060 375,000 16. Refundofretentionfeestocontractor. Guaranty/SecurityDepositsPayable(RF) Cash–MDS,Regular 744,500 0401040 2 10104040 375,000 744,500 17. AdjusttheobligationthruanegativeentrytheamountofP55,000representingLiquidating Damagesdeductedfromthecontractcostoriginallyobligated. eforestationProjects.WiththeimplementationofPPSAS,reforestationprojectsarerecognizedas R LandImprovements,ReforestationProjectsinthebooksofaccountsoftheDENRorotherentity. InitialCostsforReforestationProjects.ThefollowingconstitutestheinitialcostsofLand Improvements-ReforestationProjects: a.Survey,MappingandPlanning(SMP) b.NurseryOperationandSeedlingProductionorProcurement c.PlantationEstablishment(Sitepreparation,haulingofseedlingsandplanting) hysicalCountofPPE.TheentityshallhaveaperiodicphysicalcountofPPE,whichshallbedone P annuallyandpresentedontheReportonthePhysicalCountofProperty,PlantandEquipment (RPCPPE)asatDecember31ofeachyear.ThisshallbesubmittedtotheAuditorconcernednotlater thanJanuary31ofthefollowingyear.Equipmentfoundatstationandlossesdiscoveredduringthe physicalcountshallbereportedtotheAccountingDivision/Unitforproperaccounting/recording. MiscellaneousTransactions Thesearethetransactionsthatareuniqueandnotrecurringintheordinarycourseofgovernment operations. Theseseldomtakeplaceorshouldnothappenatall. 1. Issuanceofofficesupplies,equipmentandmaterials. Torecordissuances. itshallbesupported byaMonthlyReportofSuppliesandMaterialsIssued(MRSMI)preparedbythepropertycustodian regularly. Thissummarizesallrequisitionedandissuedinventoryitemstovariousrequisitioner.For issuedequipmenttoanemployee,aMemorandumReceipt(MR)mustbeissuedtoevidencethatthe recipientmustkeepthepropertywithutmostcaresinceitwillbehisaccountabilityandresponsibility. TheMRisrenewableevery3yearsinordertoupdatethecurrentholder/ownershipifeverthereare transfersmade. OfficeSuppliesexpense 50203010 XXX OfficeSuppliesinventory 10404010 XXX 2. DepreciationforProperty,PlantandEquipment. Thecostofproperty,plantandequipmentare allocatedtotheperiodsbenefitedthroughtheprovisionofaccumulateddepreciation. Depreciation isthesystematicandgradualallocationofthedepreciableamountofassetsoveritsusefullife. Tocomputeandrecorddepreciation: a. Shallusestraight-linemethod. b. Shallstartonthesecondmonthafterpurchaseoftheproperty c. Apply5%residualvalueofthepurchasecost. d. Serviceableassetsthatarenolongerusedshallnotbechargedanydepreciation AnnualDepreciation=AssetsCostlessEstimatedResidual/SalvageValue Estimatedusefullife AssetCost- PurchaseorAcquiredValueoftheAsset EstimatedSalvagevalue- 5%ofthepurchaseprice EstimatedUsefullife–estimatednumberofyearstheassetshallbeusedas determinedbytheagency Example: 1.DSWDpurchasedanequipmentcostingP25,000last5/12/2016. Theusefulnessofthe equipmentwasdeterminedfor5years. Computethedescriptionasof9/30/2019. No depreciationwasrecognizedandrecordedinprioryearsfromthedateofpurchase. Depreciation=P25,000-(5%ofP25,000) = P4,750/yr 5yrs. =P4,750/12mos.=P359.83/mo. Depreciationasof9/30/2018: 2016 = 7mos X P395.83 = P2,770.81 2 017-18 = P4,750X 2yrs = 2019 = 9mos X P395.83= ,500.00 9 3,562.47 P15,833.28 ========= JournalEntry: Depreciation-Machinery&Equipment 5 0501050 AccumulatedSurplus 30101010 AccumulatedDep’n-M&E 10605021 3,562.47 P 12,270.81 P15,833.28 2. OnDec.31,2019,theagencytransfertheequipmenttootherregion. Required: a. JErecordingthetransferredequipmentandJEtobemadebythe Receivingagency. TransferorBook AccumulatedSurplus Depreciation–M&E Accum.Dep’n–M&E Machinery&Equipment 0101010 P12,270.81 3 50501050 4,750.00 10605021 7,979.19 10605000 P25,000 TransfereeBook Machinery&Equipment AccumulatedDep’n–M&E 0605000 1 30101010 P 7,979.19 P7,979.19 3. BadDebts–shallberecordedforuncollectiblesfromtrade/businessreceivables. Thedetermination ofbaddebtsexpenseisderivedfrompercentageandagingofaccountsreceivablesasfollows: Ageofaccounts Percentage 1-60days 1% 61-180 2% 181-1yr 3% Morethan1yr 5% Example: AnationalgovernmentagencyhasatotalaccountsreceivableofP150,000whichremained outstandingfor3yrs. ItwasapprovedbyCOAforwriteoff. a. Recordthecorrespondingallowanceforbaddebts. Impairmentloss–Loansandreceivables 50503020 P7,500 Allowanceforimpairment–A/R 10301011 P7,500 b. Recordthewriteoff: Allowanceforimpairment–A/R AccountsReceivable 4. Saleofassetsnolongerusedinoperation: Example: Officeequipment Cost P4,500 Accum.Dep’n 4,050 Bookvalue 450 0301011 1 10301010 7,500 P4,500 4,050 450 7,500 Sellingprice Loss 400 - ------- ( 50) ===== a. Saleataloss Cash–collectingofficer Accum.Dep’n–OE OtherLosses OfficeEquipment Gain 500 -------- 50 ==== 0101010 1 10605021 50504990 10605020 400 P 4,050 50 Toremit: Cash-Treasury/AgencyDeposit,Regular Cash-collectingofficer 0104010 1 10104010 400 Toclose: AccumulatedSurplus Cash-Treasury/AgencyDep,Regular 30101010 0104010 1 400 0101010 1 10605021 10605020 40501990 00 5 4,050 0104010 1 10101010 500 b. Gainonsale Cash-collectingofficer Accum.Dep’n.-OE OfficeEquipment OtherGains Toremit: Cash-Treasury/Agencydep,Regular Cash-collectingofficer Toclose: Accumulatedsurplus 0101010 3 Cash-Treasury/AgencyDep.,Regular 10104010 P4,500 400 400 4,500 50 500 500 500 5 . AccountingforOverpayments. Sometimesoverpaymentsorevendoublepaymentofexpenditures do happen in agencies. These could be avoided with proper controls but some could not beavoided because of built-in procedures. One example is the payment of payroll. Payrolls are prepared in advance and some agencies pay their employees through the banking system (ATM). Allthesewere donebeforereportsofattendanceweresubmitted,makingitimpossibletoknowtheexactamounttobe paidincasetherewereabsenceswithoutpayduringthepayperiods. Incaseofoverpayments,refunds shallbedemandedoftheemployeesconcern. Example: Refundofoverpaymenttakenupasreceivable. Duefromofficersandemployees 10305020 Salariesandwages,regular 50101010 Cash–collectingofficers Duefromofficersandemployees 10101010 0305020 1 100 100 100 100 Cash-|Treasury/AgencyDep.,Regular Cash–collectingofficers 0401010 1 10101010 100 Accumulatedsurplus 0101010 3 Cash–Treasury/AgencyDep.,Regular 10401010 Adjustobligationfortherefunds…. 100 100 100 6 . AccountingforCashOverage. Incasethecashexaminationoftheauditordisclosedanoverage, the amount shall be forfeited in favor of the government and an official receipt shall be issued by the cashier. ThecashoverageshallbetakenupasMiscellaneousIncome. Totakeupcashshortagediscoveredduringcashexamination,P500. Cash-collectingofficers OtherBusinessIncome Toremit: Cash-Treasury/AgencyDep.,Regular Cash-collectingofficer Toclose: AccumulatedSurplus Cash–Treasury/AgencyDep.,Regular 0101010 1 40202990 500 0401010 1 10101010 500 0101010 3 10401010 500 500 500 500 7 . Accountingforstalechecks. Checksmaybecancelledwhenitbecamestale.Thedepositorybank considers a check stale, if it has been outstanding for over six months from date of issue or as prescribed. Astalecheckshallbemarkedcancelledonitsfaceandreportedasfollows: 1. UnclaimedstalecheckswhicharestillwithCashiershallbecancelledandreportedintheListof UnreleasedChecksascancelled. TheListofUnreleasedChecksisattachedtotheRCI. 2. Forstalecheckswhichareinthehandsofthepayeesorholdersinduecourseandrequestedfor replacements,newchecksmaybeissueduponsubmissionofstalecheckstotheaccountingunit. AcertifiedcopyofthepreviouslypaidDVsshallbeattachedtotherequestforreplacement. A JEVshallbepreparedtotakeupthecancellation.Thereplacementcheckshallbereportedinthe RCI. StaleMDSchecksissuedinthecurrentyearforreplacement,P15,000 Checkcancellation: Cash-MDS,Regular 10104040 P15,000 AccountsPayable 20101010 P15,000 Adjustobligation.(CheckwhattypeofexpenditurebeingpaidandtheRAOD). CheckReplacement:(Ifreplaced,noadjustmentintheobligation) AccountsPayable 20101010 15,000 Cash-MDS,Regular 10104040 15,000 StaleMDSchecksissuedinprioryearsforreplacement: Checkcancellation: AccumulatedSurplus 30101010 AccountsPayable 20101010 CheckReplacement: AccountsPayable Cash-MDS,Regular 20101010 0104040 1 15,000 15,000 15,000 15,000 Stalecommercialchecksissuedinthecurrentyearandprioryearsforreplacement, P5,000: Checkcancellation: CIB-LCCA 10102020 5,000 Accts.Payable 20101010 5,000 Checkreplacement: Accts.Payable 20101010 5,000 CIB-LCCA 10102020 5,000 8.AccountingforDisallowance. Disallowancesshallbetakenupinthebooksofaccountsonlywhen theybecomefinalandexecutory. TheaccountantshallpreparetheJEVtotakeupthe Receivable-Disallowance/Chargesandcredittheappropriateexpenseaccountforthecurrentyearor AccumulatedSurplus accountifpertainingtoexpensesofpreviousyears. Cashsettlementfordisallowancesshallbeacknowledgedthroughtheissuanceofanofficialreceipt andreportedbythecashierintheRCD. 9 .Accountingforlossofcashandproperty. Thismaybeduetomalversation,theft,robbery,fortuitous eventorothercauses. Cashshortagediscoveredduringcashexaminationconductedbyauditorsis reportedthroughtheReportofCashExamination. TheAuditorissueanauditreportincaseofshortage inpropertyaccountability. Assoonasashortageisdefinitelyestablished,theauditorshallissuea memorandumpertainingtheretoandtheaccountantshalldrawaJEVtorecordtheshortageasa receivablefromtheaccountableofficerconcerned. I n case of loss of property due to other causesliketheft,forcemajeure,etc.,areportthereonshallbe preparedbytheaccountableOfficerconcernedforpurposesofrequestingrelieffromaccountability. No accounting entry shall be made but the loss shall be disclosed in the notes to financial statements pendingresultorrequestforrelieffromaccountability. rantofRelieffromAccountability. Whenarequestforrelieffromaccountabilityforshortageorloss G offundsisgranted,acopyofthedecisionshallbeforwardedtotheChiefAccountantwhoshalldrawa JEVtorecordthetransaction. ThelossshallbedebitedtotheLossofAssetsaccountandcreditedtothe appropriate receivable account. In case the request for relief is denied, immediate payment of the shortage shall be demanded from the AO. Restitution shall be acknowledged by the issuance of an officialreceipt. In case the request for relief fromaccountabilityforlossofpropertycausedbyfire,theft,etc,is grantedacopyofthedecisionshalllikewisebeforwardedtotheChiefAccountantforthepreparationof the JEV. The loss shall be debited totheLossofAssetsaccountandcreditedtotheappropriateasset account. Ifrequestforreliefisdenied,thelossshallbetakenasreceivablefromtheaccountableofficer andshallbecreditedtotheappropriateassetaccount. Exercises 1. Thefollowinginformationweremadeavailablerelativetotheconstructionofanannexbuildingof DTI,RegionVIII: Appropriation P20M AllotmentforCapitalOutlay 18M NCAreceivedfromDBMisnetofestimatedtax Costoftheproject 16M 5%performancebondpaidbythecontractor. 15%mobilizationfeewasadvancedtothecontractor P8,500liquidatingdamageswasimposedduetodelayincompletion. 10%retentionwasdeductedforeachbillinguntilcompleted. Billings: 1st - 25%completion 2n d –55%completion 3rd andfinalcompletion Theprojectwasturned-overafterthecompletionoftheproject. Allliabilitiesweresettledand remittedallduepayments. Required: Givethejournalentriesofthefollowing: a.1)performancebondcollectedwastemporarilydepositedtothenationaltreasury. a.2)grantingofcashadvancetothecontractor. a.3)whenthe3rd andfinalcompletionwasreceivedandpaid. Taxrates:(CCx8.5%x10/12=) (CCX2% x10/12=) a.4)theprojectisturned-overandtheperformancebondwasalsoreleased. 2.AninventoryofficesuppliesaccounthasabeginningbalanceofP55,750.Apurchasewasmadefrom theProcurementServiceamountingtoP200,000. Allthesesuppliesweredeliveredafterpayment. Threemonthslater, MRSMIshowedthat60%ofofficesupplieswerereportedissuedandusedin operationandrecordedinthebooks. a . Recordthepurchase,deliveriesandissuancestotheend-users. b. DeterminethebalanceofOfficeSuppliesatyearend. 3.TheaccountantreceivedabillfromVECOfortheirelectricityconsumptionandwaterfromMCWD. VECO–P8,500whileMCWDbillwasP3,250. a).Givethejournalentrywhenbothutilitieswerepaid. b )TRAwasreceivedandremittedthewithholdingtaxestoBIR.(VECOandMCWD franchisetaxrate,2%straight) 4. TheAuditorexaminedtheP10,000pettycashfundofMr.Sy,thepettycashcustodianisduetoretire thefollowingmonth.HecountedthecashonhandtotalingP3,150andnotedthattherewere receiptedcashitemscomposedofthefollowing:P4,000–officesupplies,P1,000-postageand deliveries,andP1,850ofmessengertransportationexpenses.Thepettycashfundwillbeclosedand refundedtheunusedcash. ecordtheexpensespaidfromthepettycashfund,closure,refundofunusedcashandremittanceto R thenationaltreasury 5 . On December 15, 2024, theRegionalDirectoroftheDSWD,RegionVII, receivedatravelorder from DSWD CO to attend the 10th National Convention. He was granted a cash advance totaling P26,050 for a 5 days official travel to Davao to attend the 10th NationalConventionofDSWD. His itinerary of travel showed his claims of per diem, plane fare, transportation and other incidental expenses. TheperdiemallowedwasP1,800/day.TheitineraryalsoshowedthatheleftforManilaon the 1st day at 1pm and leftManilaonthelastdayat11:45am.UponreturnonDecember23,2024,he liquidated his cash advance and requested for reimbursementofhis2daysextendedofficialstay.The totaltransportationandotherincidentalexpenseswas P2,200whiletheroundtripplanefareamounted toP12,600.. nFebruary15,2025, thedirector’sliquidationwaspost-auditedandtheauditorissueda O ManagementLetterrequiringhimtorefundthe1dayextendedstaysinceitwasfoundnotofficial. Thedirectorimmediatelyrefundedandwasreceipted. Therefundwasimmediatelyremittedtothe NationalTreasury. Journalizethefollowing: a. Grantingofcashadvance. b. Liquidationandrecognizingtheactualtravellingexpenses. c. Claimforreimbursement. d. RefundofdisallowedclaimandremittancetoBTr. 6. Payrollwaspreparedforthemonthsummarizedasfollows: Salariesandwages–regular P750,000 PERA 80,000 GrossPay P830,000 Deductions: Withholdingtaxes P210,000 Lifeandretirementpremium(GSIS) 67,500 Pag-ibigpremium 30,000 PhilHealthpremium 10,000 317,500 NetPay P512,500 ======== Additionalinformation: GovernmentcontributionforGSIS–12% ECCInsurancepremium 3,000 PaymentofsalariesandwagesweremadethruATM. Requirement: Journalizetherecognitionofsalariesandwages,mandatorycontributionandits governmentcounterpart,andremittancestotherespectiveoffices
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