NATIONAL BUDGET CIRCULAR NO. 330
COMMISSION ON AUDIT CIRCULAR NO. 80-136
TO
: The Minister of Justice, Director of Prisons, Penal Superintendents,
Resident/Regional Auditors, Chief Accountant/Colony Accountants, Budget
Officer of the Bureau of Prisons and Others Concerned
SUBJECT : Implementing Guidelines and Procedures on the Use of Income Derived
from the Operations of Prison Agro-Industries of the Bureau Of Prisons
1.0
2.0
Purposes. This Circular is issued to:
1.1
Identify the various income derived from prisons' agro-industries specified in
the special provisions of Batas Pambansa Blg. 40;
1.2
Provide proper guidelines/procedures to be followed
availment, utilization and accounting of such income.
in the collection,
Background Information
2.1
Legal Basis
2.1.1
Section 3, Special Provisions for the
Pambansa Bldg. 40
Bureau
of
Prisons, Batas
2.1.1.1
Income of the Bureau of Prisons derived from the operation
of prison
agro-industries shall be deposited in
an
authorized government depository bank as a trust liability and
shall be made available for additional supplies and
materials, for expansion and development of its facilities, for
other operating expenses of the agro-industries, and for
payment of allowance to prisoners working in said projects at a
rate not exceeding P100 a month after deducting amounts paid
from the regular appropriations of the bureau for the same
purpose.
2.1.1.2
The Director of Prisons is authorized to charge up to 70% of
the market price of agro-industries products either issued for
institutional use or for prisoners' subsistence against its general
fund regular allotment for maintenance and other operating
expenses to the credit of its Trust Liability Account for as
long as the said regular allotments can absorb such charges.
2.2 Sources of Income
2.2.1
The Bureau of Prisons derives income from its regular business
operation such as sales of manufactured articles; farm and dairy
products; royalties derived from export of bananas in a joint venture.
2.3
2.2.2
Reimbursement from the regular allotment for maintenance and other
operating expenses, for agro-industries products either issued for
institutional use or for prisoners subsistence.
2.2.3
Agency share in prisoners' wages from private entities.
Uses of Income
Income derived from the operation of prisons' agro-industries and sale of
agro-industries products shall be made available in whole for agro-industries
expenditures such as:
2.3.1
2.3.2
2.3.3
2.3.4
3.0
purchase of additional supplies and materials;
expansion and development of its facilities;
other operating expenses; and
payment of allowance to prisoners working in said projects at a rate not
exceeding P100 a month after deducting amount paid from the
regular appropriations of the Bureau for the same purpose.
Procedural Guidelines
3.1
Collections
The collecting officer shall issue separate set of official receipts for all types of
income collected under the Trust Liability Account.
3.2
Deposit
All collections in respect of the produce of agro-industries shall be deposited
in
authorized government depository bank and shall be treated as Trust
Liability (84-000).
3.3
Availment/Utilization
3.3.1
The agency shall prepare a special budget for one year, broken down into
quarters, covering the projected expenditures for which availment of
income is necessary. It shall be based on the estimate of realizable
income for the year, likewise, broken down into quarters. Said
special budget shall be submitted to the Ministry of the Budget not
later than 30 days before the end of the fiscal year. The approved
special budget shall be the basis for the comprehensive release of
allotment under the Trust Liability Account.
3.3.2
The quarterly amount covered by the special budget shall not be more
than the projected income for that particular quarter.
3.3.3
The National Accounting Office shall review such special budget to
determine the reasonableness of the amount of income realizable
as reflected on the special budget.
3.4
4.0
3.3.4
Expenditures out of the trust liabilities shall be limited to the income
actually collected duly certified by the Chief Accountant and verified
and found correct by the Resident Auditor.
3.3.5
Total allowance paid to prisoners working in industrial or agricultural
projects out of the regular appropriations (Sec. 2 of Special Provisions,
B.P. Blg. 40) must first be deducted from the maximum allowance of
P100.00 allowed in Sec. 3 of the Special Provisions before determining
the allowance to be paid out of the income from agro-industries.
3.3.6
Withdrawals from the bank account shall be made by commercial
checks to be signed jointly by the authorized representative of the
agency and the COA Resident Auditor.
3.3.7
The unexpended balance, if any, of amounts deposited with the bank
shall be retained under the same fund and may be made available for
the succeeding year for authorized expenditures subject to a special
budget.
Accounting
3.4.1
A separate set of books of accounts under the General Fund with fund
code "102" shall be kept wherein all income collections, releases of
allotment and expenditures shall be recorded.
3.4.2
The agency shall prepare separate trial balance for the fund and other
accountability reports as required under existing regulations.
Sample Journal Entries
4.1
To take up income from agency share in prisoners' wages and royalties
derived from export of bananas.
Fund 101
No entry
Fund 102
70-400
xxx
84-000
4.2
xxx
To record income from manufactured articles
No entry
1. Receipt of Advice of
Allotment per approved
Special Budget
84-000
90-000
1,000
1,000
2. Obligation
90-000
82-000
1,000
1,000
3. To take up inventory for
work in process
72-200
86-900
1,000
1,000
4. Liquidation
83-000
70-300
1,000
1,000
5. To take up finished
products for sale
72-360
72-200
900
900
6. To record sale
6.1 To the public
a. Collection
70-400
600
84-000
600
b. Dropping from inventory
86-900
500
72-360
500
6.2 For agency use
a. To obligate agency purchase
90-000
82-000
280
280
b. To take up liquidation
83-000
280
81-100 (102)
a. To take up receivable
280
c. To take up payment (at
the end of the month)
81-100(102)
70-703
71-100(101) 280
84-000
280
b. To take up payment
280
70-400
280
280
71-100 (101) 280
c. Dropping from inventory
86-900
400
72-360
400
7. To record deposit
70-300
70-400
4.3
880
880
Sample journal entries for income from production
4.3.1
Production/sale of agro-industry produce
Fund 101
Fund 102
1. Purchase of seedlings
No entry
90-000
82-000
10,000
10,000
2. To take up liquidation
83-000
70-703
10,000
10,000
3. To take up production of agro-industry
72-360
86-900
40,000
40,000
4. To drop sale of
production from
inventory
86-900
72-360
1. To take up collection
from income from
sale
30,000
30,000
70-400
30,000
84-000
30,000
2. Deposit
70-300
30,000
70-400
30,000
3. Receipt of Advice of
Allotment
84-000
20,000
90-000
20,000
4. Obligation
90-000
10,000
82-000
10,000
5. Liquidation
83-000
5,000
70-300
5,000
4.3.2
Agency produce either issued for institutional use
subsistence at 30% below market price.
Fund 101
Fund 102
1. To obligate prisoners
consumption
No entry
90-000
82-000
or for prisoners'
7,000
7,000
2. To take up issues
for prisoners consumption
86-900
72-360
10,000
10,000
3. To take up liquidation
83-000
7,000
81-100 (102)
7,000
4. To take up payments
(at the end of the
month)
81-100(102)
7,000
70-703
7,000
1. To take up receivable
8-71-100(101) 7,000
84-000
7,000
2. To take up payment
70-400
7,000
71-100(101)
7,000
3. To take up deposit
70-300
70-400
7,000
7,000
4. Proceed as in No.
3 under Fund 102 in 4.3.1
4.4
Closing entries at the end of the year
Fund 102
1. Closing entries at the
end of the year
84-000 (xxx)
90-000
(xxx)
2. Closure of obligation
and liquidation accounts
82-000
xxx
83-000
81-400
5.0
xxx
xxx
Valuation of Agro-Industry Produce
The value of agro-industry produce shall be based on the prevailing market price of
the locality where the prison colony is located as determined by a committee
composed of the
representative of the COA Regional Office,
Chief
Accountant/Colony Accountant and Supply Officer and approved by the Penal
Superintendent of the colony concerned.
6.0
Reporting Requirements
Strict compliance with reporting requirements under Budget Circulars Nos. 263 and
284 dated September 15, 1976 and March 6, 1978, respectively, as well as National
Budget Circular No. 317 dated November 21, 1979 is hereby reiterated.
7.0
Repealing Clause
The provisions of all circulars or instructions which are in conflict with this Circular are
hereby rescinded and/or modified accordingly.
8.0
Effectivity
This Circular shall take effect January 1, 1980.
(SGD.) SILVESTRE D. SARMIENTO
Commissioner
Commission on Audit
(SGD.) JAIME C. LAYA
Minister of the Budget