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Department of Education
Financial Management Manual
The PFMP is a joint initiative of Australia and the Philippines

www.pfmp.org.ph
i
Message from BR. Armin A. Luistro FSC
Secretary, Department of Education
As the largest agency in the Philippines with the

biggest share of the governments budget, the Department
of Education (DepEd) is faced with the daunting task of
managing billions of pesos worth of resources. To ensure
that the funds are invested in quality programs and
services that the Filipino learners deserve, having a
comprehensive and efficient financial management system
is very critical.
The Australian Government has always been one of

the Department of Educations key partners in
implementing education reforms in the Philippines.
Through the Philippines-Australia Public Financial
Management Program (PFMP), this partnership has
extended to improving the management of financial
resources for education as well. With support from the
PFMP team, DepEd finance personnel, both in the Central and field offices, were trained on
the more efficient recording of transactions, consolidation of data, and generation of financial
reports. The team also assisted in the review and the design of an integrated financial
management information system for the Department, and in the crafting of this Financial
Management Manual.
This manual is a valuable resource for our schools and implementing units in
institutionalizing best accounting and financial reporting practices. We hope that with
improvements in data quality and with more efficient internal processes, we can ensure the
timely and appropriate delivery of educational services to Filipino learners nationwide.
We thank the Australian government for its unwavering commitment and strong
support to Philippine education. Let us continue to work together for the advancement of
Filipino learners.
BR. ARMIN A. LUISTRO FSC

Secretary
ii
Message from Bill Tweddell
Australian Ambassador to the Philippines
Supporting education has always been a cornerstone

of Australias development cooperation program with the
Philippines. The Australian Government would like to see
every Filipino child have access to quality education and it
has committed substantial financial resources and
technical assistance to support the countrys education
system.
The Australian Government also supports the

Philippine education system through the Philippines-
Australia Public Financial Management Program or PFMP.
The PFMP aims to promote transparency and
accountability in public financial management across the
whole of government and is implementing a series of
reform initiatives in cooperation with the Government of the
Philippines.
The Department of Education (DepEd) is a critical agency for delivering public financial
management reform initiatives. DepEd represents more than 25 per cent of spending
agencies budget allocations, and this figure is growing year on year. In addition, DepEd is
strategically important to the development of the nation we think it is important that every
peso committed to the education system is invested in the education of Filipino children,
ensuring they get an early start on the path to a better future.
PFMP embedded a team of international and national advisers to work on DepEds

public financial management project titled Strengthening the Financial Management
Systems in DepEd. The program has undergone three phases since work commenced in
2011.
This Financial Management Manual represents the culmination of all PFMPs activities
at DepEd. The Manual will provide users with a guide to ensuring data integrity and quality,
validating financial figures and business processes, as well as harmonizing and
standardizing practices and accounting treatment. I hope this manual will serve as an
important and useful resource for DepEds continuing financial operations.
I would like to thank all the DepEd officials who assisted throughout the development
of the Financial Management Manual. Allow me to also express my heartfelt sadness on the
untimely passing of Undersecretary Francisco Varela, who was a strong and tireless
advocate for our project.
I commend the Manual to you. Mabuhay!
BILL TWEDDELL
Ambassador
iii
Department of Education Financial Management Manual
TABLE OF CONTENTS
1 Overview ................................................................................................................ 16
1.1 Financial Management Framework .............................................................. 16
1.2 Legislation, Regulation and Policy ............................................................... 17
1.3 Values and Principles ................................................................................... 17
1.4 The Financial Management Services (FMS) Structure within DepED ........... 17
1.5 Authority and Accountability ......................................................................... 18
1.6 Roles and Responsibility .............................................................................. 19
1.7 Financial Management Processes ............................................................... 24
1.8 Enablers and Results ................................................................................... 24
1.9 Manual Responsibility .................................................................................. 25
2 Overview of Public Financial Management.......................................................... 26
2.1 Public Financial Management Cycle ............................................................ 26
2.2 Internal Control ............................................................................................ 27
2.3 Scrutiny, Oversight and Audit ....................................................................... 28
3 Generic Catalogue of Accounting Transaction Types......................................... 32
3.1 Overview of Transaction Processing ............................................................ 32
3.2 Major Accounting Transaction Types ............................................................ 32
3.3 Monthly and Quarterly Processes ................................................................ 36
3.4 Year End Processes..................................................................................... 37
3.5 Opening New Year ....................................................................................... 38
4 Planning and Budgeting ....................................................................................... 39
4.1 Budget Cycle Overview ................................................................................ 39
4.2 Budget Call .................................................................................................. 41
4.3 Planning and Programming .......................................................................... 42
4.4 Budget Formulation and Completion of Budget Forms ................................. 45
4.5 Budget Negotiations, Approvals and Enactment of Budget Proposals .......... 49
Page 1 of 224
4.6 Budget Execution Documents ...................................................................... 50
4.7 Reference Materials in the Annexes ............................................................. 50
5 Budget Execution, Monitoring and Management ................................................ 51
5.1 Overview ...................................................................................................... 51
5.2 Processing Approved Budget Appropriations ............................................... 51
5.3 Processing Allotment Releases .................................................................... 52
5.4 Incurring and Processing Obligations ........................................................... 55
5.5 Managing LDDAP and NYDDO .................................................................... 57
5.6 Budget Monitoring Reporting ....................................................................... 58
6 Revenue and Income............................................................................................. 59
6.1 The Standards for Accounting Treatment of Revenues ................................ 59
6.2 Sources of Income of DepED ....................................................................... 59
6.3 Legal Provisions relating to Receipt/Collection and Deposit of Income ........ 59
6.4 Intra-Agency Transfers ................................................................................. 60
6.5 Processing and Recording Revenues in the Books ...................................... 61
6.6 Other General Income ................................................................................. 63
6.7 Gains ........................................................................................................... 63
6.8 UACS Income Account Object Codes .......................................................... 64
7 Capital Outlay ........................................................................................................ 66
7.1 Capital Outlay Policy .................................................................................... 67
7.2 Planning and Budgeting ............................................................................... 67
7.3 Purchase Requisition ................................................................................... 68
7.4 Procurement and Contract Management ..................................................... 69
7.5 Delivery, Inspection and Acceptance of Capital Goods................................. 71
7.6 Capital Outlay through Advance Payments .................................................. 74
7.7 Payment/Disbursement ................................................................................ 75
7.8 Accounting Process ..................................................................................... 76
7.9 Controls over Capital Outlay ........................................................................ 76
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8 Personnel Services ............................................................................................... 78
8.1 Overview of Payroll Payments Processes .................................................... 78
8.2 High Level Outline of the Regular Payroll Process ....................................... 79
8.3 Payroll Paid Through Own Office (Not Through RPSU)................................ 80
8.4 Payrolls Processed through RPSU on Behalf DOs/IUs ................................ 83
8.5 Accounting in RO Books for Payroll Payments on Behalf of DOs/IUs........... 85
8.6 Supplementary Payroll ................................................................................. 89
8.7 Managing Payroll Remittance Accounts ....................................................... 89
8.8 Year End Payroll Processes ......................................................................... 91
9 Maintenance and Other Operating Expenses (MOOE) ........................................ 92
9.1 Overview of MOOE ...................................................................................... 92
9.2 Routine MOOE Expenses ............................................................................ 92
9.3 Non-Cash MOOE Transactions - Accounting for Inventory Issues................ 93
9.4 MOOE through Liquidation of Petty Cash and Cash Advances .................... 93
9.5 MOOE through Year End Accruals ............................................................... 95
10 Other Expenses ..................................................................................................... 96
10.1 Overview of Other Expenses ....................................................................... 96
10.2 Financial Expenses ...................................................................................... 96
10.3 Non-Cash Expenses .................................................................................... 96
10.4 Losses ......................................................................................................... 97
11 Other Payments ..................................................................................................... 99
11.1 Overview ...................................................................................................... 99
11.2 Funding Checks ........................................................................................... 99
11.3 Advances ................................................................................................... 100
11.4 Payment for Remittances to BIR ................................................................ 100
11.5 Payroll Remittances ................................................................................... 100
12 Program Expenditure .......................................................................................... 101
12.1 Overview of Program Expenditure ............................................................. 101
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12.2 Foreign-Assisted Projects (FAPs) .............................................................. 101
12.3 Locally Funded Programs and Projects...................................................... 104
13 Procurement Transaction Processes ................................................................. 110
13.1 Context of the Procure to Pay Transaction Processes ............................... 110
13.2 The Procure to Pay Process ...................................................................... 110
13.3 Central Procurement of Inventory and PPE Assets .................................... 111
14 Managing Cash and Bank Resources ................................................................ 113
14.1 Introduction and Overview of Cash and Bank Resources........................... 113
14.2 Management of Bank Accounts.................................................................. 113
14.3 Online Banking .......................................................................................... 117
14.4 Bank Reconciliation ................................................................................... 118
14.5 Petty Cash ................................................................................................. 118
15 Accounts Receivable, Advances and Prepayments.......................................... 120
15.1 Recording Accounts Receivable................................................................. 120
15.2 Due from National Government Agencies .................................................. 121
15.3 Due from GOCCs and LGUs ...................................................................... 125
15.4 Intra-Agency Receivables .......................................................................... 125
15.5 Other Receivables ..................................................................................... 125
15.6 Advances ................................................................................................... 127
15.7 Prepayments.............................................................................................. 128
15.8 Debt Collection Period and Bad Debts ....................................................... 128
15.9 Write-off Conditions and Procedures.......................................................... 129
15.10 Controls Over Accounts Receivable ........................................................... 129
16 Inventory .............................................................................................................. 130
16.1 Overview of Inventory ................................................................................ 130
16.2 Managing Inventories ................................................................................. 131
16.3 Obligating and Accounting for Inventory Transactions ................................ 135
16.4 Custodianship ............................................................................................ 137
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16.5 Summary of Responsibilities for Receiving and Issuing Inventories ........... 137
16.6 Reconciliations ........................................................................................... 138
16.7 Verification and Validation of Inventories .................................................... 139
16.8 Impairment and Write Off of Inventory ........................................................ 140
16.9 Handing Over Accountability for Inventories ............................................... 140
16.10 Forms and Reports .................................................................................... 141
17 Non-Current Assets ............................................................................................. 142
17.1 Property Plant and Equipment Policy ......................................................... 142
17.2 Property Plant and Equipment Defined ...................................................... 142
17.3 Recognition and Measurement .................................................................. 143
17.4 Maintaining the Asset Registers ................................................................. 148
17.5 Depreciation and Impairment ..................................................................... 149
17.6 De-recognition / Disposal ........................................................................... 152
17.7 Asset Transfers .......................................................................................... 154
17.8 Reporting and Disclosure ........................................................................... 155
17.9 Controls over Non-Current Assets.............................................................. 157
18 Liabilities.............................................................................................................. 159
18.1 Categories of Liabilities Relevant to DepED ............................................... 159
18.2 Financial Liabilities ..................................................................................... 159
18.3 Inter-Agency Payables ............................................................................... 160
18.4 Intra-Agency Payables ............................................................................... 161
18.5 Trust Liabilities ........................................................................................... 161
18.6 Provisions .................................................................................................. 161
18.7 Other Payables .......................................................................................... 161
18.8 Accounting for Year End Accruals .............................................................. 161
18.9 Management of Accounts Payable Balances ............................................. 162
19 Trust and Revolving Funds................................................................................. 163
19.1 Funds Involved .......................................................................................... 163
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19.2 General Trust Funds and Revolving Funds ................................................ 164
19.3 Provident Fund .......................................................................................... 165
19.4 Inter Agency Transfer Fund (IATF) ............................................................. 173
20 Contingent/Other Liabilities................................................................................ 174
20.1 Recognition ................................................................................................ 174
20.2 Measurement ............................................................................................. 174
20.3 Disclosures ................................................................................................ 174
21 Taxation and Regulatory Requirements............................................................. 176
21.1 Legal Requirement to Withhold Tax............................................................ 176
21.2 Categories of Withholding Taxes ................................................................ 176
21.3 Withholding From Payments ...................................................................... 177
21.4 Grossing up Subsidy Income for TRA ........................................................ 177
21.5 Tax Remittances ........................................................................................ 177
21.6 Treatment of Documentary Stamp Tax ....................................................... 180
22 Financial Reporting ............................................................................................. 181
22.1 Reporting Standards .................................................................................. 181
22.2 Responsibility for Financial Reporting ........................................................ 182
22.3 Types of Statutory Financial Reports.......................................................... 182
22.4 Reporting Calendar .................................................................................... 189
22.5 Consolidation ............................................................................................. 189
22.6 Reporting Process ..................................................................................... 190
22.7 Monitoring of Financial Reporting ............................................................... 191
22.8 Monthly Procedures ................................................................................... 191
23 Data and Information Management .................................................................... 193
23.1 Data Management and Responsibility ........................................................ 193
23.2 Managing Data and Information Assets...................................................... 193
23.3 Data Governance ....................................................................................... 194
23.4 Data Security ............................................................................................. 194
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23.5 Data Backup and Filing .............................................................................. 195
23.6 Data Recovery ........................................................................................... 199
Annexes ........................................................................................................................... 202
Annex A. Other Organization Structures ................................................................ 203
Annex B. Samples Forms ........................................................................................ 206
Annex C. Planning and Budget Reference Materials ............................................. 215
Annex D. Capital Outlay & Counterpart PPE Object Codes .................................. 221
Annex E. Forms and Reports Relating to Inventory .............................................. 223
List of Figures
Figure 1: Components of the Financial Management Framework............................. 16
Figure 2: DepED Overall FM Structure: .................................................................... 18
Figure 3: The Public Financial Management (PFM) Cycle ....................................... 26
Figure 4: National Budgeting Process ...................................................................... 39
Figure 5: Synchronized Program and Financial Planning Flowchart ......................... 40
Figure 6: Procurement for Different Categories of Expenditure .............................. 110
Figure 7: Regular P2P Transaction Processes ...................................................... 110
Figure 8: P2P Transaction Processes Payment in Advance ................................ 111
Figure 9: Summary of Accounting Entries in DepED Books of Account .................. 124
Figure 10: Outline Process Flow for Inventory ....................................................... 132
Figure 11: eFPS/TRA System ................................................................................ 178
Figure 12: Flow of Consolidation of Reports........................................................... 190
Figure 13: Process Flow for Preparation and Submission of Reports ..................... 191
Figure 14: Office of the Undersecretary for Finance and Administration ................. 203
Figure 15: Central Office Accounting Division......................................................... 203
Figure 16: Central Office Budget Division .............................................................. 204
Figure 17: Regional Office..................................................................................... 204
Figure 18: Division Office ...................................................................................... 205
Page 7 of 224
List of Tables
Table 1: Authority Spending Limits .......................................................................... 18
Table 2: BED Forms ................................................................................................ 50
Table 3: Common Examples of Object Codes for PPE .......................................... 147
Table 4: List of Forms and Certificates for Tax Withholding .................................... 179
Page 8 of 224
LIST OF ABBREVIATIONS
A/C Account
ABM Agency Budget Matrix
ACIC Advice of Checks Issued and Cancelled
AD Accounting Division
ADA Authority to Debit Account
ADDO Aging of Due and Demandable Obligations
AFRS Annual Financial Reporting System
AGDB Authorized Government Depository Bank
ANC Applied Nutrition Center
ANCAI Advice of Notice of Cash Allocation Issued
ANSAEAP Affiliated Network for Social Accountability in East Asia and the
Pacific
AOM Audit Observation Memorandum
AP Accounts Payable
APDS Automatic Payroll Deduction System
APP Annual Procurement Plan
APR Agency Procurement Request
AR Accounts Receivable
ARA Agency Remittance Advice
ARE Acknowledgment of Receipt of Equipment
ASec Assistant Secretary
ATM Automated Teller Machine
AU Accounting Unit
BAC Bids and Awards Committee
BD Budget Division
BEDs Budget Execution Documents
BEFF Basic Education Facilities Fund
BFARs Budget and Financial Accountability Reports
BIR Bureau of Internal Revenue
BP Business Process
BPR Business Process Reengineering
BRS Bank Reconciliation Statement
BS Bank Statement
BSE Bureau of Secondary Education
BTC Baguio Teachers Camp
Page 9 of 224
BTr Bureau of Treasury

BUB Bottom Up Budgeting
BUDCOM Budget Committee
CAF Certificate of Availability of Funds
CFC Continuous Form Checks
CIP Construction In Progress
CMIs Centrally-Managed Items
CO Central Office [Organizational Context]
CO Capital Outlay [Allotment Class Context]
COA Commission on Audit
CPA Citizen Participatory Audit
Cr Credit
CSO Civil Society Organizations
DA Division Accountant
DBCC Development Budget Coordination Committee
DBM Department of Budget and Management
DBM PS Department of Budget and Management Procurement Services
DBM-AFB DBM-Accounting Finance Bureau
DBP Development Bank of the Philippines
DepED Department of Education
DICP DepED Internet Connectivity Project
DO Division Office
DOF Department of Finance
DPE DepED Project Engineer
DPWH Department of Public Works and Highways
Dr Debit
DR Delivery Receipt
DSWD Department of Social Welfare and Development
DV Disbursement Voucher
eBEIS Enhanced Basic Education Information System
eBMS Enhanced Budget Monitoring System
ECC Employees Compensation Commission
eFPS Electronic Filing and Payment System
eFRS Enhanced Financial Reporting System
eMDS Electronic Modified Disbursement System
Page 10 of 224
eNGAS Electronic National Government Accounting System

EO Executive Order
EoQ End of Quarter
EPIP Education Performance Incentive Partnership
ES Elementary School
eTRA Electronic Tax Remittance Advice
EWT Expanded Withholding Tax
EXECOM Executive Committee
F&A Finance and Administration
FAP Foreign Assisted Projects
FAR Fixed Asset Register [Asset Inventory Context]
FAR Financial Accountability Report [Financial Reporting Context]
FCCA Foreign Currency Current Account
FCR For Comprehensive Release
FE Financial Expenses
FINCOM Finance Committee
FLR For Later Release
FM Financial Management
FMF Financial Management Framework
FMO Financial Management Officer
FMS Financial Management Services
FOREX Foreign Exchange
FRS Financial Reporting System
FS Financial Statement
FTA Field Technical Assistance
GAA General Appropriations Act
GAD Gender and Development
GARO General Allotment Release Order
GAS General Administration and Support
GASTPE Government Assistance for Students and Teachers in Private
Education
GIFMIS Government Integrated Financial Management Information System
GJ General Journal
GL General Ledger
GOCC Government Owned and Controlled Corporations
GPBP Grassroots Participatory Budget Process
Page 11 of 224
GSB Government Servicing Bank

GSIS Government Service Insurance System
HOA Head of Agency
HOPE Head of the Procuring Entity
HS High School
IAR Inspection and Acceptance Report
IAS Internal Audit Service
IATF Inter Agency Transfer Fund
ICS Inventory Custodian Slip
ICT Information and Communication Technology
IFMIS Integrated Financial Management Information System
IIRUP Inventory and Inspection Report of Unserviceable Property
IMCS Instructional Materials Council Secretariat
IPSAS International Public Sector Accounting Standards
IRP Invoice Receipt for Property
IRR Implementing Rules and Regulations
IT Information Technology
IU Implementing Unit
JEV Journal Entry Voucher
JIR Joint Inspection Report
JO Job Order
LASA List of Allotments and Sub-Allotments
LBP Land Bank of the Philippines
LC Learning Center
LCC Literacy Coordinating Council
LCCA Local Currency Current Account
LCSA Local Currency Savings Account
LDDAP List of Due and Demandable Accounts Payable
LGU Local Government Unit
LLOU Lower Level Operating Units
LPRAP Local Poverty Reduction Action Plan
LPRAT Local Poverty Reduction Action Team
LR Liquidation Report
MDP Monthly Disbursement Plan
MDS Modified Disbursement System
Page 12 of 224
MFO Major Final Output

MOA Memorandum of Agreement
MOOE Maintenance and Other Operating Expenses
MS Microsoft
MTEF Medium Term Expenditure Framework
NBV Net Book Value
NCA Notice of Cash Allocation
NCR National Capital Region
NEAP National Educators Academy of the Philippines
NEDA National Economic Development Authority
NEP National Expenditure Program
NG National Government
NGA National Government Agency
NGAS New Government Accounting System
NSTIC National Science Teaching Instrumentation Center
NTA Notice of Transfer Allocation
NTP Notice to Proceed
NYDDO Not Yet Due and Demandable Obligation
OPS Office of Planning Service
OR Official Receipt
ORS Obligation Request and Status
OSBPS Online Submission of Budget Proposals System
OSEC Office of the Secretary
OU Operating Unit
P2P Procure to Pay
PACSVAL Payroll Account Credit System Validation
PAGCOR Philippine Amusement and Gaming Corporation
PCF Petty Cash Fund
PCSO Philippine Charity Sweepstakes Office
PCV Petty Cash Voucher
PFM Public Financial Management
PFMP Public Financial Management Program
PFSED Physical Facilities and Schools Engineering Division
PHILGEPS Philippine Government Electronic Procurement System
PIB Performance Informed Budgeting
Page 13 of 224
PLC Property Ledger Card

PLI Private Lending Institution
PO Purchase Order [Procurement Context]
PO Peoples Organization [Organizational Context]
PPA Programs, Projects, and Activities
PPD Planning and Programming Division
PPE Property Plant and Equipment
PPE-LC PPE Ledger Card
PPMP Project Procurement Management Plans
PPSAS Philippine Public Sector Accounting Standards
PR Purchase Request
PROGCOM Program Committee
PS Personnel Services
PSD Property and Supply Division
PSO Property and Supply Office/Officer
PSO/U Property and Supply Officer/Unit
PSU Payroll Services Unit
PVB Philippines Veterans Bank
RA Republic Act [ Legislative Context]
RA Regional Accountant [Personnel Context]
RA Regular Agency [Fund Context]
RAO Registry of Allotments and Obligations
RAOCO Register of Allotments and Obligations for Capital Outlay
RAOMO Registry of Allotments and Obligations for MOOEs
RCD Report of Collections and Deposits
RCI Report of Checks Issued
RDC Regional Development Council
RELC Regional Education Learning Center
RGB Retirement Gratuity Benefit
RIS Requisition Issue Slip
RLIP Retirement and Life Insurance Premiums
RO Regional Office
ROB Realignment of Budget
RPCI Report on the Physical Count of Inventories
RPCPPE Report on the Physical Count of PPE
Page 14 of 224
RPSU Regional Payroll Servicing Unit

RSD Research and Statistics Division
RSMI Report of Supplies and Materials Issued
SAAODB Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances
SAAODBOE Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances by Object of Expenditures
SABUDB Statement of Approved Budget, Utilizations, Disbursements and
Balances
SABUDBOE Statement of Approved Budget, Utilizations, Disbursements and
Balances by Object of Expenditures
SARO Special Allotment Release Order
SBP School Building Program
SC Stock Card
SDOs Special Disbursing Officers
SDS Schools Division Superintendent
SHNC School Health and Nutrition Center
SL Subsidiary Ledger
SLC Stock Ledger Card
SLIIE Summary of LDDAP-ADA Issued and Invalidated ADA Entries
SPF Special Purpose Funds
SPHERE Support to Philippine Basic Education Reforms
SQL Structured Query Language
SU Spending Unit
Sub-AROs Sub-Allotment Release Orders
TDM Tax Debit Memo
TRA Tax Remittance Advice
TSA Treasury Single Account
UACS Unified Account Code Structure
UEL Useful Economic Life
URL Uniform Resource Locator
USec Undersecretary
VAT Value Added Tax
WFP Work and Financial Plan
WMR Waste Materials Report
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1 Overview
This Manual outlines the systems and processes of the Department of Education (DepED)
clearly identifying internal controls and other financial management practices to be applied
consistently throughout the Department, ensuring the integrity and completeness of financial
data and information provided to stakeholders.
The overall purpose of the manual is to strengthen financial management transparency and
accountability throughout the Department. It will achieve this through ensuring:
Effective planning, budget preparation, execution and monitoring processes are
implemented consistently throughout the Department;
Sufficient internal controls are in operation and effective over the Departments
revenues, expenses, assets, liabilities and contingencies;
Financial Management procedures are standardized and consistently applied by all
offices within the Department;
The capacity of financial management staff throughout the Department by providing
one single reference governing their regular duties and responsibilities; and
Better quality and timeliness of statutory and ad hoc financial reporting.
1.1 Financial Management Framework
The Departments Financial Management Framework (FMF) is driven by the Constitutional

requirements to safeguard public funds. It also ensures mandatory compliance over budget
preparation, budget execution and financial reporting taking into account all legislation which
impacts on the management of public finances. The Components of the FMF are outlined in
Figure 1.
Figure 1: Components of the Financial Management Framework
Legislation &
Policies
Values and
Principles
Enablers
Results
Authority &
Accountability
Roles &
Responsibilities
Financial
Management
Processes
Page 16 of 224
1.2 Legislation, Regulation and Policy
Legislation, regulation and policies provide the foundation for sound financial management.
The primary financial management legislation of the Government is illustrated through:
The Constitution; and
The General Appropriation Act (GAA).
Regulations are issued through the central oversight agencies of the Department of Finance
(DOF), Department of Budget and Management (DBM), Commission on Audit (COA) and
the Bureau of Treasury (BTr). This includes rules established to ensure effective and
consistent recording of Government revenue and expenditure and include Circulars and
Orders issued by these agencies.
There have been a number of significant Financial Management Policies adopted by the
Government in recent years. These include and are not limited to:
Performance Informed Budgeting (PIB);
Treasury Single Account (TSA);
Unified Account Code Structure (UACS); and
Adoption of Philippine Public Sector Accounting Standards (PPSAS).
These policies impact the way in which DepED performs its financial management activities.
DepED has also devised its own policies regarding financial management.
1.3 Values and Principles
This refers to the ethical behavior of Department employees and the whole of government
code of conduct and ethics as outlined in RA 6713.
1.4 The Financial Management Services (FMS) Structure within DepED
The Financial Management Structure is a subset of the overall organizational structure of

DepED. It covers the main organizational units involved in the general accountability of
managing the financial resources in the Department.
Figure 2 below depicts the overall structure and Reporting Lines for the whole of Financial
Management Services (FMS) from The Secretary at the top down to the schools level.
Detailed Organization Structures for each of the levels are contained in Annex A.
Page 17 of 224
Figure 2: DepED Overall FM Structure:
SECRETARY
USEC
Finance and
Administration
ASEC
Finance and
Administration
CENTRAL OFFICE
REGIONAL OFFICES
DIVISION OFFICES
SCHOOLS
1.5 Authority and Accountability
The Department Secretary has the primary authority for financial transactions in DepED.
However, it is the Departments policy to delegate financial signing authorities down to the
lowest practical unit of the organization.
DepED Department Order No. 5 series of 2008 outlines the signing authorities for financial
accountability per organizational levels and categorized depending on the financial
document to be signed. Nevertheless, the following items cover the overall financial authority
and accountability in DepED:
Note: The monetary limits below refer to gross amounts (inclusive of taxes and other deductions). It
covers approval for Purchase Order (PO) and Disbursement Voucher (DV) among other things.
Table 1: Authority Spending Limits
Office Monetary Limits Approving Official

ASEC for Finance and Admin
(for OSEC transactions) and
Not over 5M
Directors (for Bureaus, Centers,
and Project transactions)
Central Office
Over P5M but not over 10M ASEC for Finance and Admin
Over P10M but not over 20M USEC for Finance and Admin
Over 20M Secretary
Regional Office None Regional Director
Division Office Not over 5M Schools Division Supt.
Page 18 of 224
Office Monetary Limits Approving Official

Over 5M Regional Director
Not over 1M Head of School
School with
Over 1M but not over 5M Schools Division Supt.
Financial Staff
Over 5M Regional Director
Regular Disbursing Officers
Regular Disbursing Officers are DepED employees whose inherent functions include
payment for goods and services procured/obtained by the Department. Generally, they are
those with a regular/permanent position of Cashier, Disbursing Officer, and/or
Property/Supply Officer. Principally, they handle cash advances for payments wherein it is
very difficult, impractical or impossible to make payments by check. In such cases, payments
are made by the regular disbursing officer in the form of cash through his cash advance.
Regular cash advances normally granted to Regular Disbursing Officers includes payment
for any of the following purposes:
Salaries and Wages;
Commutable Allowances;
Honoraria and other similar payments to officials and employees; and
Petty operating expenses consisting of small payments for maintenance and
operating expenses which cannot be paid conveniently by check or are required to
be paid immediately.
Special Disbursing Officers
In comparison, Special Disbursing Officers refers to the Head of Agency (HoA) and/or those
employees duly designated by the Head of Agency to be in charge of making disbursement
for Special Cash Advances.
Special cash advances are intended for payments on a specific legally authorized purpose
only. This includes any of the following:
Current operating expenditures of the agency field office or of the activity of the
agency undertaken in the field when it is impractical to pay the same by check, such
as Salaries, Wages, Allowances, Maintenance and other operating expenses.
Foreign travel expenditures, including transportation fare, per diems, allowances, and
other expenses incurred by officials and employees in connection with official travel
abroad.
1.6 Roles and Responsibility
Undersecretary for Finance and Administration
Generally, the main function of all Undersecretaries (USec) of DepED shall be to assist the
Secretary in managing the operations of the department as provided for in the Republic Act
9155. Specifically, the USec as stipulated in the Administrative Code (Book IV, Chapter II,
Section 8), shall be responsible to:
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a. Advise and assist the Secretary in the formulation and implementation of Department
policies, plans and programs;
b. Oversee all the operational activities of the Department for which he will be assigned
and held responsible by the Secretary;
c. Coordinate the programs and projects of the Department;
d. On the basis of an official designation, discharge temporarily the duties of the
Secretary in case of the latters inability to discharge his duties or in case of vacancy
of the said office.
As USec for Finance and Administration, he/she shall ensure that all finances of the
Department are properly managed, government funds are spent accordingly within targets,
and desired goals are achieved. His/her main concern shall include active monitoring of the
overall expenditures vis--vis performance, efficiency and service delivery of the
Departments budget. His/her approval shall be needed for major financial transactions
which value ranges from 10M to 20M pesos and his/her endorsement shall be required for
transactions over 20M pesos prior to the approval from the Secretary.
Assistant Secretary for Finance and Administration
Similarly all Assistant Secretaries (ASecs), at the discretion of the Secretary, may be
assigned to handle any of the following functions:
a. Advise and assist the Secretary or USec in the formulation and implementation of
Department policies, plans and programs;
b. Oversee all the operational activities of the Department for which he will be assigned
and held responsible for by the Secretary or USec;
c. Coordinate the programs and projects of the Department; and
d. On the basis of an official designation, discharge temporarily the duties of the
Secretary or USec in case of the latters inability to discharge his duties or in case of
vacancy of the said office.
As ASec for Finance and Administration, he/she shall ensure that the financial plans for the
year are observed and monitored accordingly by both the budget and accounting divisions.
Chief of Budget Division
The Budget Division Chief shall be responsible for the following roles and functions:
a. Ensures the submission to DBM of the proposed Budget of the DepED for the ensuing
budget year, in collaboration with Planning and Programming Division of the Planning
Service;
b. Manages the recording and controlling of fund allocations for the various DepED
offices and programs/ activities/ projects based on policy considerations and
communicate the same to the various DepED units about their budget performance;
c. Develops and facilitates systems and procedures in monitoring budget allotments and
commitments;
d. Oversees the submission and consolidation of Budget Execution Documents (BEDs),
Financial Accountability Reports (FARs), and other budget-related documents to
oversight agencies, such as DBM and COA; and,
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e. Provides the top management with periodic reports and technical advice on budget-
related matters
Specifically, the Budget Officer shall ensure that the following functions are performed
efficiently and effectively:
Coordinate the conduct of Budget Preparation Orientation-Workshops;
Cause the submission and review/evaluation of budget proposals and recommend to
the Budget Committee for further review and finalization;
Translate the recommended budget level into Budget Preparation Forms for eventual
submission to the DBM;
Prepare budget execution documents and accountability reports for the Central
Offices, and coordinate the submission of DepEd Implementing Units including the
review / evaluation / scrutiny / consolidation of the said reports;
Keep records of allotments and their utilization;
Submit to DBM Special Budget Requests supported by justifications and pertinent
documents for the release of appropriations withheld for later release;
Certify availability of allotment to programs/activities/projects to ensure that funds are
available for their implementation;
Process and approve requests for obligation of allotments;
Process budget-related documents and communications and recommend actions or
prepare direct replies;
Provide technical assistance to other units in terms of application of budgetary
procedures, policies, and systems;
Prepare status of appropriations, allotments, and amounts earmarked for certain
programs, activities, and projects;
Review and Evaluate the Project Procurement Management Plans (PPMP) of DepED
Central Offices, and recommend actions to the DepEd Procurement Service; and
Issue Sub-Allotment Release Orders (Sub-AROs) to effect the transfer or
downloading of allotments to subordinate units to support their requirements for the
implementation of programs, activities, and projects.
Chief Accountant
The Chief Accountant shall oversee the overall accounting and financial reporting of the
whole Department and provide top management financial advices resulting therefrom.
Specifically, he/she shall manage and/or delegate the following roles and responsibilities:
a. Maintain the Books of Accounts of the Department (Staff Bureaus, Centers, Councils
and Offices);
b. Record all financial transactions of the Department in accordance with the PPSAS
c. Control the utilization of Notice of Cash Allocation and certify the availability of funds
in specific documents such as but not limited to contracts, purchase orders,
memorandum of agreements/understanding prior to settlement/payment of
obligations or disbursements;
d. Analyze, review, prepare and consolidate mid-year and year-end financial reports
(composed of detailed and condensed balance sheet, income and expenses
statement, statement of government equity, statement of cash flows, etc.) and other
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supporting subsidiary ledgers ( receivable accounts, fixed assets, payable accounts,

etc) and other accountability reports that may be required by the management and
oversight / fiscal agencies such as the Department of Budget and Management
(DBM), Commission on Audit, Senate and Congress of the Philippines;
e. Analyze and reconcile reciprocal accounts to ensure that inter- and intra-agency
receivable and payable accounts are fully accounted for, disbursed and recorded in
the books of accounts;
f. Provide assistance to proponents of DepED programs and projects in the
preparation of budget estimates of various activities and evaluate the
reasonableness of the funding requirements;
g. Evaluate and review all requests for issuance of agency codes of operating units
prior to its official transmittal by the DepED CO official/s to DBM for appropriate
action;
h. Monitor / handle the updating of the actions taken / compliance of the Department
(both Central and field offices) on the:
Downloading of Miscellaneous and Other Operating Expenses (MOOE) funds;
Liquidation of Cash Advances;
ATM Implementation;
Audit recommendations that would address the audit findings/observations as
reported by the auditors on specific financial transactions;
i. Provide advice and assistance to the management on financial matters for the
efficient utilization of government funds and resources;
j. Propose / issue internal policies that would improve the accounting processes /
practices and strengthen the internal control of specific financial transactions;
k. Exercise oversight and technical assistance over all DepED Accounting field offices,
and provide information, instructions and guidelines on financial matters.
Regional Financial Management Officers
The Regional Financial Management Officer (FMO) shall oversee the overall accounting and
financial reporting of the respective Regional Office (RO) and provide the Regional Director
with financial advices resulting therefrom. In close coordination with the Chief Accountant in
the CO, he/she shall manage and/or delegate the following roles and responsibilities:
a. Install and implement in the ROs the required financial systems (budgeting,
accounting and reporting) for improved productivity, efficiency and timely completion
of government transactions;
b. Prepare/process the payrolls and salary checks/ ATMs of all public elementary and
non-IUs secondary school teachers and non-teaching personnel, including
remittances of authorized deductions and maintain records of the same;
c. Provide the Regional Director with the necessary staff advice, assistance, and
services on budgetary, financial management matters;
d. Develop and establish procedures in monitoring and supervision of divisions physical
and fiscal resources;
e. Formulate, in coordination with the RDC, the budget to support the regional
educational plan which shall take into account the educational plans of the schools
divisions;
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f. Monitor and assess the schools divisions regarding:

Resource mobilization and utilization; and
Compliance with the existing rules and regulations;
g. In coordination with the Field Technical Assistance (FTA) Division, provide technical
assistance to the schools division offices as regards budget and finance services.
Regional Accountants
a. Review accounting documents and statements for the signature of the Department
Chief Accountant;
b. Analyze, verify, sign and consolidate financial statements, supporting schedules and
reports of operating units under it;
c. Monitor the utilization of fund transfers to implementing units and other government
agencies for education related programs and projects;
d. Provide technical supervision to division/school accountants and bookkeepers;
e. Serve as facilitator, resource speaker and consultant for training and development on
accounting/budgetary/auditing matters;
f. Review periodically the accounting system and recommends improvements when
necessary;
g. Act as Chief of Accounting Section;
h. Give instructions and guidance in work methods and procedures of lower level
accounting clerks;
i. Prepare and submit financial statements and reports and certify to availability of
funds and/or allotments and to the correctness of vouchers, journals, bills, and other
financial reports.
Regional Budget Officers

a. Prepare and consolidate budget proposals including supporting justifications and
explanations;
b. Prepare/process the fund estimates to support the Regions plans and programs
subject to set budgetary ceilings and assist in the execution and control of the
approved budget of the Region;
c. Control allotments, sub-allotments and obligations;
d. Prepare Budget Proposals for RO Proper;
e. Prepare and consolidate Financial Accountability Reports (FARs) for Appropriation
allotment and obligations portion;
f. Monitor and advise FMO on the status of allotment and obligations;
g. Monitor the on-line submission of proposed budget.
Division Accountants
a. Plan and manage the effective and efficient use of all fiscal resources of the schools
division in accordance with existing rules;
b. Monitor and ensure proper reporting of the generation and utilization of funds by the
schools and Learning Centers (LCs);
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c. Tap and utilize resources available at the schools division level to support the
implementation of programs and projects at the schools division level or at the
school/LC level;
d. Operationalize the required government financial systems to improve productivity,
efficiency, and timely completion of government transactions and reports;
e. Strengthen and monitor the implementation of the internal control system to ensure
the completeness of supporting documents and validity of transactions;
f. Provide capacity building programs for school heads on fiscal management;
g. Monitor and evaluate the utilization of funds provided by the national government and
by LGUs to the schools and clusters including funds generated by the schools and
LCs;
h. Monitor and assess/audit the schools and LCs regarding: (a) resource mobilization
and utilization; and (b) compliance with the existing rules and regulations;
Division Budget Officer

a. Supervise and coordinate the budget and fiscal activities of units within the schools
division;
b. Coordinate planning and budgeting activities of the schools division;
c. Control allotments, sub-allotments and obligations;
d. Prepare Budget Proposals;
e. Prepare and consolidate the Budget and Financial Accountability Reports (BFARs)
for Appropriation allotment and obligations portion.
1.7 Financial Management Processes
Financial management processes and procedures are the ways in which policies are
operationalized. The remainder of this Manual discusses in detail the processes for
allocating Department resources, collecting and accounting for revenues and Department
expenditure. It will also illustrate the procedures for managing assets and liabilities, the
Departments financial data along with its mandatory requirements for financial reporting and
the processes which support the preparation of financial reports.
1.8 Enablers and Results
To ensure the effective and efficient management of the Departments financial resources,
appropriate enablers must be in place. These include:
Senior Management Commitment; including but not limited to the Executive
Management, Regional Directors and Schools Division Superintendents;
Appropriate skills and competencies for staff engaged with Financial Management
Services;
Adequate management, supervision and oversight of staff ensuring quality and timely
production of financial management information;
Appropriate automation and systems support to the financial business processes.
Currently DepED has implemented the eBMS and eFRS for Budget Monitoring and
Accounting/Reporting respectively. In the longer term it is envisaged that DepED
will implement its own Integrated Financial Management Information System (IFMIS),
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at which time this manual will need to be updated to reflect the more streamlined,
automated and integrated financial business processes.
The review of Financial Management results creates an environment for continuous

improvement and better overall results for the Department. To ensure the desirable results
all components of the FMF must be implemented by the respective offices. This will
ultimately lead to better quality, more timely financial management information upon which
management can make decisions and ultimately linkage resource usage to results achieved.
1.9 Manual Responsibility

It is the responsibility of the Office of the Financial Management Services, DepED Central
Office to ensure that this Manual is maintained up to date. The Manual must be available in
all Financial Management Offices of the Department and be available on the DepED
Website for ease of reference.
This manual is to be read in conjunction with the following:

(i) The Unified Account Code Structure (UACS);
(ii) Philippine Public Sector Accounting Standards (PPSAS);
(iii) NGAS and other Prescribed Manuals;
(iv) Applicable Circulars from the Oversight Agencies.
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2 Overview of Public Financial Management
2.1 Public Financial Management Cycle
The diagram below depicts the Public Financial Management (PFM) Cycle.
Figure 3: The Public Financial Management (PFM) Cycle
Call
Accountability MTEF
Public PPBB
Disclosure
2TBA
COA
GAA
IAS
GAA
JEV GAROs
DV
IAR SAROs
PO Sub-AROs
PR ROB
NCA ORS
RCD
2.1.1 Planning and Budgeting
The figure above outlines some of the key aspects of the Planning and Budgeting
processes: The Budget Call; the Medium Term Expenditure Framework (MTEF); Program
Performance Based Budgeting (PPBB); the 2-Tier Budget Approach (2TBA); and the
General Appropriations Act (GAA). (These are discussed in greater detail in Section 4
below).
The overall objectives of the Planning and Budgeting processes are to facilitate a strategic
approach to planning and strategic allocation of resources through the Budget and GAA,
based on approved objectives and priorities.
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2.1.2 Budget Execution
Figure 3 above shows Budget Execution within the overall PFM cycle, and presents and
oversight of some of the key Budget Execution elements, namely: the GAA as a release
document for all items not held for later release; the General Allotment Release Order
(GARO); Special Allotment Release Order (SARO); Sub-Allotment Release Order (Sub-
ARO); Realignment of Budget (ROB); and the Obligation Request and Status (ORS).
(These are discussed in greater detail in Section 4 below).
The overall objectives of Budget Execution are the effective implementation of activities and
services aligned to the Strategic Objectives and Priorities of the Budget, in terms of
utilization of resources as well as the delivery against targeted outputs and outcomes.
2.1.3 Accounting and Reporting
Accounting and Reporting is an output from the implementation processes, incorporating:

Collections of sundry revenues (income) transacted through the Report on
Collections and Deposits (RCD);
Processing the Notice of Cash Allocation (NCA) and consequent Subsidy Income,
enabling spending and disbursement to commence;
Processing the Purchase Request (PR), Purchase Order (PO) , Inspection and
Acceptance Report (IAR) Disbursement Voucher (DV), and resultant JEV within the
Procure to Pay Process (per Section 13);
Disbursing against Payroll Expenditures;
Other non-procurement related cash and non cash based expenditures;
Budgetary Control ensuring availability of Budget and Cash Funds;
Management of Balance Sheet Items, including: Accounts Receivable (AR);
Accounts Payable (AP); Inventory; Property Plant & Equipment (PPE); and Cash
and Bank Accounts;
Transfer of accountability for Assets between Offices; and
Use of the JEVs as the accounting record for bringing all accounting entries to
account in the Offices books; and
Reporting requirements and responsibilities.
These aspects above make up the bulk of the content on this manual and are covered in
Sections 6 through to 23.
2.1.4 Scrutiny and Audit
This is discussed in detail in Section 2.3 below.
2.2 Internal Control
Internal Controls are fundamental to an effective PFM system and can be categorized into:
Preventive (designed to discourage errors and irregularities from taking place
and ensuring Departmental Objectives are met in a risk minimized
environment);
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Detective (designed to detect errors and irregularities that may have occurred);
and
Corrective (designed to correct errors and irregularities that may have been
detected).
Such controls should be built into all processes within the PFM cycle.
Examples of control features include:

Strong Audit Trails (with Unique, Unbroken Audit References; Identification of
responsibilities for those preparing and approving transactions);
Visibility/Transparency over transaction records through proper maintenance and
archiving of source documents and effective data management (See Section 23)
Effective Authorizations and Approvals processes with appropriate Segregation of
Duties;
Regular and Routine Reconciliations, Verifications and Validations;
Strong oversight, scrutiny and supervision over operations, transactions and
balances, including cascading oversight over lower level operating units;
Exception Reports, Alerts and Escalation of issues, problems, errors and
irregularities;
Standardized and Harmonized (across all levels) rules, policy, procedures processes,
practices and accounting treatment.
2.3 Scrutiny, Oversight and Audit
Scrutiny, Oversight and Audit comprises Internal Aspects such as Internal Audit discussed in
Section 2.3.1 below, as well as External Audit in Section 2.3.2and Public Scrutiny and
Accountability in Section 2.3.3.
2.3.1 DepED Internal Audit Service (IAS)
The DepED IAS is based at Central Office and carries out activities Department wide. It is
headed by a Director IV and reports directly to the Secretary of the Department. Its role and
responsibility is to carry out reviews of priority activities and operations performed by the
Department and assess the effectiveness internal control systems in place. The
Departments IAS is a small unit with a broad scope of work. It has the authority to examine
the records of any office at any time. The activities performed include:
Management Audit;
Compliance Audit; and
Operations Audit.
Their activities go beyond the examination of financial transactions and much of their efforts
focus business process review, the effectiveness of controls, risk management and other
governance related issues. Their mandate also requires the IAS to examine non-financial
activities.
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2.3.2 Commission on Audit (COA)
Purpose of External Audit
The key function of the Commission on Audit is to perform and annual audit of the
Departments Financial Statements.
Upon completion of the annual audit an audit report will be issued providing an opinion on
the Departments Financial Statements. The Commission issues the following opinions:
Opinion Opinion Wording Opinion Meaning
Unqualified An unqualified opinion is expressed The Financial Statements present

when the auditor concludes that the fairly the true financial position of
financial statements are prepared, in the Department
all materials respect, in accordance
with the applicable financial reporting
framework and in conformity with
generally accepted state accounting
principles and that any changes in
accounting policies or in the method of
their application and the effects
thereof, have been properly
determined and disclosed in the
Financial Statement (FS).
Qualified A qualified opinion is expressed when The Financial Statements conform

the auditor concludes, after having generally with Generally Accepted
obtained sufficient appropriate audit Accounting Principles (GAAP) and
evidence, that misstatements, the Philippines Public Sector
individually or in aggregate, are Accounting Standards (PPSAS) but
material but not pervasive in the FS, or there are some (not many) errors
when the auditor is unable to obtain and irregularities. Also, there may
sufficient appropriate evidence on be some limitation on ability/scope
which to base as opinion but the to audit some aspect due to
possible effects of undetected absence of source documentation
misstatements in the FS, though or other reasons, and therefore
possibly material, are not pervasive. there cannot be certainty that the
FS fully reflect a true and fair view.
Disclaimer A disclaimer is issued when the auditor Usually when the auditor is not able
is unable to obtain sufficient to obtain sufficient evidence to
appropriate audit evidence on which to determine if the financial statements
base the opinion on and the possible are fairly presented.
effects of undetected misstatements
on the FS could be both material and
pervasive.
Adverse An adverse opinion is expressed when Financial statement intentionally or

the auditor concludes that materially misrepresented and no
misstatement, individually or in attempt is made to address the
aggregate, are both material and shortcomings.
pervasive in the FS. It is also
expressed when the auditor is unable
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to form an opinion on the FS taken as

a whole due to disagreement with the
management of the Auditee, which is
so fundamental that it undermines the
position presented to the extent that an
opinion which is qualified in certain
respects, would not be adequate. The
wording of such an opinion makes
clear that the FS are not fairly stated,
specifying clearly and concisely all the
matters of disagreement.
Role and Function of COA in DepED
There are resident COA auditors nominated for all Department offices. All JEVs and
supporting documents must be submitted to the auditor within 10 days of completing a
transaction. The auditor will review payment documents and determine if any audit findings
have occurred. At the year end the auditor will consolidate all findings for discussion with
management. These findings will be raised with management who are required to respond
within a pre-determined timeframe. If the management response satisfies the auditor, the
finding will not be included in the final report of the auditor. Each nominated auditor shall
consolidate their audit findings and submit to the respective Regional Auditor. The Regional
Auditor is responsible for consolidating all findings for the regions and submitting to Central
COA for the consolidation of all region findings. The final consolidation of findings will
determine the audit opinion on the Departments Financial Statements and will be
incorporated in the annual report.
Engaging with COA
The relationship between DepED management and COA is an important one. There should
be regular meetings throughout the year to provide both parties the opportunity to raise
issues, ask questions and seek feedback and clarity in a constructive and timely manner.
The primary consideration of issues and the adoption of a no surprises policy will assist in
building a useful relationship between both parties.
Issues which should be discussed between COA and DepED managers include:
Clarity on accounting policies and standards introduced by the Commission and the
effect which they have on the Departments financial reporting;
Standardization of advice provided by all COA officers and the means of
communicating that advice on a Department wide basis;
The manner in which the Department is assessing and addressing risk in relation to
financial management;
How the auditor has determined materiality and calculated material misstatements
(both qualitative and quantitative) if they arise, along with the impact and sanctions
on management if significant misstatements arise. The auditor should also clearly
indicate how the level of misstatement impacts on the audit opinion for the
Department;
The progress of the Department in addressing prior audit findings and implementing
recommendations; and
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Establishing standard process and procedures for writing off bad debts and obsolete
assets and stock to ensure accuracy of the Departments financial reporting.
Preparing for the Annual Audit
In order to ensure that the annual audit is performed as efficiently and effectively as
possible, it is important that a lead auditor is identified as the main contact at CO and all
ROs. The lead audit should agree with the appropriate operational manager [Chief
Accountant/Financial Management Officer] the following:
The audit timetable for completing the audit and preparation of the annual report
including the audit certificate;
List of all working papers and lead schedules to be prepared by the respective
financial management offices;
Ensuring that all business managers and IAS are involved in the audit process;
Prompt issuance of audit findings by the auditors and timely response provided by
the Department to address the issues raised.
2.3.3 Public Accountability and Scrutiny
One dimension of Public Scrutiny is the Citizen Participatory Audit (CPA), which brings
together citizens and government to look into projects that have an impact on a large
number of beneficiaries. Through the CPA, ordinary citizens and citizen groups are able to
conduct joint audits, community surveys, community scorecard process, or provide audit-
related feedback as individuals. In all the CPA activities, the ANSAEAP (Affiliated Network
for Social Accountability in East Asia and the Pacific) is a supporting actor. The main actors
are the COA and the local partner organizations.
Another dimension is the public accountability whereby all Departments in Government are
required by law to publicly disclose details of its operations, spending and outputs and
outcomes achieved.
Public Accountability and Scrutiny are fundamental components of the checks and balances
within an effective PFM system, and a pre-requisite for transparency and good governance.
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3 Generic Catalogue of Accounting Transaction Types
3.1 Overview of Transaction Processing
The financial information in the various reports emanates from transactions processed
through the eFRS and eBMS systems. Fundamentally, there are two high level types of
transactions, Budget Monitoring Transactions and Accounting Transactions.
Budget Monitoring Transactions comprise Appropriations, Allotment Releases and

Obligations, and sub-types of these major transaction categories (these transaction
categories and types are discussed in full in relation to their respective business processes
for Budget Execution, Monitoring and Management, detailed in Section 5.
The Accounting Transactions are undertaken through the Journal Entry Voucher (JEV) at the
high overall level but are broken down into Major Accounting Transaction Types and Sub-
Types, as discussed in the subsequent Sections below.
3.2 Major Accounting Transaction Types
The Major Accounting Transaction Types include the following:

Bank Disbursements;
Cash Disbursements;
Cash Collections;
Bank Deposits;
Other General Journals; and
MOOE Downloading.
Each of these Major Transaction Types result in the posting of a JEV to the books of
accounts (Ledgers), and are discussed further in the Sub-sections below. The specific
business operations scenarios are discussed in detail in the major Section below in this
Manual. The accounting operations utilize these different generic Transaction Types.
3.2.1 Bank Disbursements
Bank Disbursements are used for settlements, payments and funds transfers, and include
the following Sub-Transaction Types 1.
ADA Payments;
Check Payments;
Bank Transfer; and
Stale/Cancelled Check (entered as negative); and
Bank Charges.
1 It should be noted that, although NCA/NTA lapsing impacts on the bank account and is effectively a payment
from the bank account, this is currently managed through Other Transactions (See Section 3.2.5 below) as it is
viewed under the category of General Journal.
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ADA, Check and Bank Transfer Payments
DVs are prepared and issued for all ADA, Check and Bank Transfer Payments. The DV
(where relevant supported by the Obligation Request and Status form, i.e. ORS) is prepared
by the spending office and attached with the supporting documents. The Office Chief of the
Spending Office signs Box B of the DV, confirming the correctness and approving the
disbursement.
The DV (along with supporting documents) is then sent to the Accounting Office, where the
Head of Accounting Unit signs Box A, to certify the payment, confirming
correctness/completeness of documents, availability of funds and directing whether
disbursement is to be made by ADA or not. Where disbursement is by ADA Accounting
Office completes the details on the ADA Form, requesting the bank to effect the payment
(and debit the account accordingly).
All disbursements (as far as is possible) 2 should be made on a basis of:

1 DV = 1 Check/ADA = 1 JEV.
The documents are passed to the Cash Office for payment, and the Cashier makes the
payment either through check or by ADA. The Cashier submits a copy of the Advice of
Checks Issued and Cancelled (ACIC) on a daily basis. The Cashier should also submit the
Report of Checks Issued (RCI) to the Accounting Office on a daily basis (so that transactions
can be processed and brought to account on a daily basis). The Report of ADA Issued will
be prepared daily, on the basis of the Bank Verified Copy of the ADA, upon which the Banks
Payment Reference and details are printed; the Report of ADA Issued is then be sent to
Accounting Office.
The Bookkeeper in Accounting Office enters/processes the transactions in the eFRS. Once
the transaction is processed, the eFRS generates the JEV Number and the JEV is posted in
the books of account. The bookkeeper prints the system copy of the JEV, signs the JEV and
forwards to the Head of the Accounting Unit for signature.
These payment types feature in the various different business case scenarios throughout the
Manual. The accounting treatment specific to each case is shown in those Sections.
Stale/Cancelled Check
When a check becomes stale it may either be cancelled or replaced. The Accountant in
charge of bank reconciliation identifies those checks which have now become stale (i.e.
those which have not been presented and cleared 6 months after issue). The Accountant
notifies the Cashier of the stale checks. The Cashier completes the Advice of Checks
Issued and Cancelled (ACIC) in the lower portion relating specifically to Cancelled Checks.
If a replacement check is issued the details of the new Check issued is entered onto the
ACIC (Checks Issued portion). In this instance there is no accounting entry to be made.
Where the Check is cancelled and not reissued the accounting entry will be reversed
Debiting: the MDS Bank account and Crediting: the original accounting entries for the
2 It should be recognized though that some payments such as those relating to Payroll Expenses entail multiple
payees and therefore for these items the principle of 1JEV=1 Check/ADA Payment will not be possible.
However, for the majority of payments, maintaining this principle is fundamental to the transparency of the
transactions.
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transaction. The cancellation notified in the ACIC is processed by the bank, and is included
in the calculation of NCA lapsing (adding back the unutilized amount).
Where a Check which was posted in the previous year is cancelled, the Credit is made to
Accumulated Surplus Account (30101010 00).
Bank Charges
Bank charges are not levied against MDS Bank Accounts, but some LCCA Accounts may
incur bank charges from time to time. The Cashier should peruse all bank accounts on a
daily basis, through eBanking facilities. Where bank charges are levied, the charges should
be verified and a manual Journal for the charge prepared.
The manual Journal is then passed to the bookkeeper who enters the details into the eFRS,
crediting the specific Bank Sub-Ledger, debiting Bank Charges Account 50301040.
3.2.2 Cash Disbursements
Cash disbursements relate to the payments made in cash from Petty Cash, Payroll
Advances or Other Advances (excluding payments made from cash advances made for
MOOE downloading).
The cash disbursement entries are made from the Liquidations Reports, which reflect the
utilization of the cash advanced. The bookkeeper checks the liquidation report and posts the
entries in the eFRS using the Cash Disbursement menu and the relevant Transaction Sub-
Type, for example:
Petty Cash;
Liquidations; or
Cash Advance Payroll.
3.2.3 Cash Collections
There are two categories of Cash Collections, one where the monies are retained in the
DepED Office and the other where the monies are collected and deposited to the BTr held
Bank Account. The collections are made, and the Receipt details entered onto the Report of
Collections and Deposits (RCD), (the RCD also records the Deposits made on these
collections, as discussed in 3.2.4 below).
For Regular Agency Collections, the details are entered into eFRS from the RCD, Crediting
the various Revenue Accounts (or other Accounts), and Debiting: Cash Collecting Officer
10101010 00. For BTr National Government (NG) Collections, the Credit is made to
Treasury/Agency Deposit, Trust: 10104030 00, and Debited to Cash Collecting Officer
10101010 00.
The Transaction Sub-Types are selected accordingly as follows:

RA Receipt; and
Due to BTr NG.
The Balances on the Cash Collecting Officer Account is ultimately cleared when deposited to
the Bank or to BTr, with the accounting entries as defined in Section 3.2.4 below.
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The JEV is created automatically in the eFRS, printed out and approved with other JEVs as
described in Section 3.2.1, above.
3.2.4 Bank Deposits
Processing Bank Deposits, relates to the entering of the Banking of the Collections recorded
into the eFRS from the RCD, and encompasses the following Transaction Sub-Types:
Deposit of RA Collections;
Deposit to BTr NG; and
Other Deposits 3.
An additional Transaction Sub-Type is included above, Other Deposits. This is used for
direct deposits to the Bank in respect of Foreign Assisted Project Receipts and Inter Agency
Transfer Fund (IATF) Receipts. When these amounts are received they are Credited to:
(Object Code) Subsidies and the relevant Fund Source Code in eFRS. The JEV is created
automatically in the eFRS, printed out and approved with other JEVs as described in Section
3.2.1, above.
3.2.5 Other Transactions
Other Transactions includes General Journals which do not involve transactions against the
Bank or Cash, i.e. they relate to non-cash transactions (Notwithstanding Footnote 3 below).
Remittance to BIR;
Non Cash Expenses; (RSMI, Depreciation, etc.)
Adjustments;
Closing Entries;
Other General Journals;
NCA/NTA Received2;
NCA/NTA Lapsing2.
Remittances to BIR
Tax is deducted at source on payroll payments and tax is withheld (where appropriate) from
payments to suppliers and other payees. These amounts are remitted to BIR at the end of
the month through non-cash 4 transaction using the Tax Remittance Advice (TRA See
Section 21 on TRA balancing and remittance processes).
The TRA is processed in eFRS under Other Transactions with the TRA Forms as the
source document. The Accounting Entry is Debit: Due to BIR 20201010 00; Credit: Subsidy
from National Government 40301010 00. The JEV is printed out from the system and
undergoes approval, as described in 3.2.1, above.
3 NCA/NTA Receipts impact on the bank account as they are effectively receipts into the MDS Bank Account.
However, this is currently managed through Other Transactions (See Section 3.2.5) as it is viewed under the
category of General Journal. Similarly, NCA lapsing which is effectively a MDS Account payment are also
processed, currently, as General Journals.
4 NCAs are received net of Tax, and Reports highlight the TRA remittances.
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Other Non-Cash (Transactions)
Other non-cash Journals include: Non-Cash Expenses, (such as distribution of Inventories,

and accounting for Depreciation): Adjustments, e.g. correcting Journals; Yearend Closing
Entries for closing the books; and Other General Journals.
NCA/NTA Received and Lapsed
These entries are technically bank related, as highlighted above. However, in the current
eFRS they are processed as General Journals. The entry for these transactions is
straightforward in eFRS under the Other Transactions menu function. For NCA/NTA
Received the accounting entry is: Debit: Cash MDS, Regular 10104040 00; Credit Subsidy
from National Government 40301010 00.
For NCA/NTA Lapsed the accounting entry is: Debit Subsidy from National Government
40301010 00; Credit: Cash MDS, Regular 10104040 00.
The JEV is printed out from the system and undergoes approval, as described in 3.2.1,
above.
3.2.6 SUs MOOE Liquidations
MOOE downloading transactions relate to DOs only, whereby each DO downloads the
funding for SUs MOOE via cash advances on a monthly basis. The funds-downloading is
made via Bank Disbursement (in accordance with the procedures set out in Section 3.2.1,
above), as a Cash Advance (Object Code: Advances for Operating Expenses: 19901010
00). SUs must liquidate their Cash Advances promptly every month. The MOOE Liquidation
procedures are discussed further in Section 9.4 below.
The DO Accounting Unit receives the Liquidation Reports on a monthly basis and processes
them through the SU MOOE Liquidations menu. The relevant SU is selected and the
accounting entry is: Debit: Various MOOE Expenditure Accounts; Credit: Advances for
Operating Expenses: 19901010 00.
The JEV is printed out from the system and undergoes approval, as described in 3.2.1,
above.
3.3 Monthly and Quarterly Processes
3.3.1 Submission of Documents to COA
The JEV shall be prepared in a minimum of 2 copies: The Original shall be attached with the
source transactions documents (e.g. DV, RCD, LR, etc.); One Copy shall be filed in the
Accounting Office. The JEV is signed by the person preparing the voucher (usually the
Bookkeeper) and also the Head of Accounting Office, certifying the correctness of the JEV.
At the month end the source transaction documents (including the original JEV) are
submitted to COA, along with the Monthly Reports (See Section 22).
3.3.2 Monthly and Quarterly Reporting
Monthly and Quarterly Reporting is discussed in detail in Section 22. CO, ROs and DOs are
required to consolidate the financial figures of their subordinate offices in the (consolidated)
BFAR Reports.
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3.3.3 Review and Oversight over Financial Information
At the end of the month, the Head of Accounting Office should review must undertake a due
diligence review of the financial being reported, both within the Office Proper as well as the
consolidated figures including subordinate Offices. The head of Accounting Office must
initiate an investigation into any figures which appear to be unusual or questionable and
ensure that the queries are answered to appropriate satisfaction.
3.4 Year End Processes
3.4.1 Reconciliation, Verification and Validation of Balances
Prior to closing the accounts the Head of Accounting Office must ensure that all
reconciliations have been duly accomplished, especially full reconciliation of all Bank
Accounts held by the office. Sub Ledgers should be maintained for balance sheet Account
with analysis by individual open-item (outstanding) invoice/transaction.
All inventory stock takes must be undertaken and the book figures reconciled against the
physical count. Similarly the PPE figures in the books of account must also be reconciled
against the physical count.
Receivables and Payables balances should be verified (where possible) with the respective
debtor and creditor. For example, a statement should be received from DBM-PS and other
suppliers to verify with the figures being carried in the books.
The Head of Accounting Unit must undertake a thorough (due diligence) review of all the
figures in the books and investigate any unusual figures and balances.
3.4.2 Final Accruals, Prepayments and Adjustments
The Head of Accounting Office must ensure that all required adjustments and corrections
are made, that all the depreciation figures have been duly posted and the non-cash
expenses for all issues of Supplies and Materials (See Section 9.3) have been brought to
account.
Accruals must be made in accordance with the items on the List of Due and Demandable
Accounts Payable (LDDAP) (See Sections 5.5.1 and 9.5). Accruals can be made against
MOOE, Inventory and/or PPE Assets.
Prepayments must be made for expenditures made in advance, such as Insurances (paid
annually), and income items outstanding such as rental income (See Section 15.7 on
Prepayments).
3.4.3 Consolidations
Head of Accounting Units in CO, ROs and DOs must (due diligence) review all figures from
their subordinate Offices being consolidated into the aggregate level. Where unusual items
are identified, explanation must be sought from the subordinate level and corrected where
necessary.
For Central Office, the Intra-Agency Receivables and Payables Accounts must be balanced
to zero upon consolidation at the Overall DepED level. If any balances remain the Chief
Accountant must ensure that they are investigated and correcting entries made accordingly.
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3.4.4 Closing the Accounts
Once all the above steps have been undertaken, each level shall close the individual Income
and Expenditure accounts in eFRS to Equity, 30301010 00.
3.5 Opening New Year
At the start of the new financial year, the brought-forward (balance sheet) balances are
brought into the eFRS as opening balances. These figures must reflect the balances
presented and reported in the Financial Statements. All brought forward balances should be
supported with Sub Ledgers, with open item transaction level analysis.
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4 Planning and Budgeting

This Section defines the general principles for Budget Formulation as opposed to the
specific guidelines which usually change slightly year on year. These changes are reflected
in the Budget Call, which may have revised Budget Proposal Forms, updated Calendar and
details of new Budget Reforms, being implemented for the new Budget Year. This Section
should therefore be read in conjunction with the Budget Call.
4.1 Budget Cycle Overview
4.1.1 The Appropriation Act
The Government can only collect and spend money where authorized through Act of Law.
The Appropriations Act is enshrined in the Constitution and specifically, Section 29 (1) of the
Constitution states that:
No money shall be paid out of the Treasury except in pursuance of an appropriation made
by law.
Each Year the Appropriation Act is passed, which permits agencies such as DepED to
spend monies for the specific purposes of undertaking its various operations, programs and
activities. The Planning and Budgeting processes include a sequence of requests for and
approvals of budget funds (monies) to be authorized through the passing of the
Appropriation Act.
4.1.2 Outline of the Planning and Budgeting Processes
Figure 4: National Budgeting Process
Figure 4 above shows that the budget preparation and legislation processes start with the
Budget Call 5 up to submission of the Presidents Budget to Congress and end with the
Presidents signing the approved National Budget into General Appropriations Act (GAA).
5 The Budget Call sets out the policies, guidelines, and reform interventions for formulating and preparing the
Agency Budgets. The details may change year on year and this Section in the manual reflects on the generic
principles, whereas the specific instructions will be prescribed in the Budget Call, so this Section should be read
in conjunction with the latest Budget Call.
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To prepare DepED in the annual Planning and Budgeting exercise, it hence issued
department orders to prescribe the standard financial planning methodology 6. Figure 5
shows a graphical presentation of the synchronized system wherein all DepED Operating
Units (OUs) shall regularly assess their sets of multi-year directions and strategies to ensure
the identification of Programs, Projects, and Activities to include in the years budget.
Figure 5: Synchronized Program and Financial Planning Flowchart
Start
Self- PROGCOM & PROGCOM &

FINCOM FINCOM
Assessment deliberate
recommends
Project FINCOM EXECOM DBM

recommends
Identification evaluates
Submits Plan FINCOM EXECOM DepED submits

to PROGCOM evaluates decides Budget Proposal
PROGCOM PROGCOM
PROGCOM PROGCOM &
recommends returns plan;
evaluates Office re-plans FINCOM
adjust plans
Source: DepED Order 61, s.2005
Only PPAs duly endorsed by both Program Committee (PROGCOM) and Finance
Committee (FINCOM) will be acted upon by the Executive Committee (EXECOM) and
included in DepEDs agency budget. The Planning Office shall serve as the Secretariat for
the PROGCOM, while the Budget Office for the FINCOM.
Early Planning Activities

Situational Analysis;
Review of Existing PAPs;
Review of Planning standards and assumptions;
Firming up of DepED Thrusts and Directions;
Firming up of Program road maps;
Frontloading of Crucial Resources; and
Firming Up of DepEd Menu for Bottom Up Budgeting (BUB)
Planning Refinement and Budget Formulation

Bottom Up Budgeting through Local Poverty Reduction Action Team (LPRAT);
6 DepED Order 61, s.2005, Synchronized Program and Financial Planning (SPFP), reiterated by DepED Order
No. 24, s. 2007, Budget Strategy of 2007 for the Basic Education, and amended by DO 25, s. 2010, Budget
Strategy for Basic Education, FYs 2010-2015 (Strengthening the Planning, Implementation, and Coordination of
DepEd Programs, Projects, and Activities) dated March 8, 2010.
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Review and refinement of Local Government Unit (LGU) Proposals for BUB;
Synchronized Planning and Budgeting Process (See diagram above);
Internal Budget Hearing;
DBMs Technical Hearing; and
Budget Defense in House of Representatives and Senate.
Post Planning Activities

Plan Adjustments based on National Expenditure Program (NEP) through the
Program Committee (PROGCOM);
Triangulation to finalize the Work and Financial Plan (WFP), Monthly Disbursement
Plan (MDP), and the Project Procurement Management Plan (PPMP);
Prep of Implementing Guidelines for the Centrally-Managed Items (CMIs);
Targets Firmed-up;
Approval of Agencys Budget implementation Strategy through the Budget
Committee (BUDCOM);
Submission to DBM.
4.2 Budget Call
4.2.1 Overview of Budget Call
At the start of the year, usually in January of each year, the Department of Budget and
Management issues the Budget Call. The Budget Call defines the budget framework, sets
economic and fiscal targets, prescribe the priority thrusts and budget levels, and spells out
the guidelines and procedures, technical instructions and the timetable for the budget
preparation. It often comes in the form of a National Budget Memorandum, complete with
annexes such as but not limited to:
General Guidelines This specifies the budget years directions, thrusts, and general
framework.
Specific Guidelines This contains guidelines in the preparation of Agency budget
proposals and other budgetary items. It sets the budget framework and the cost
parameters related to expenditure items.
Budget Preparation Forms This describes all forms and templates to support the
Agencys budget proposals. Each form has accompanying specific instructions to
complete it.
Budget Preparation Calendar This sets the dates for the conduct of budget
preparation activities, from issuance of budget forums to submission of budget to
Congress. The dates change every year, but the whole preparatory period usually
falls within the start of January to the end of July.
The call signals the preparation by various government agencies, DepED in particular, to
start the budget planning and formulation processes.
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4.2.2 Specific Guidelines
Budget Reforms are being implemented in a phased manner and specific guidelines may
change from year to year to reflect these reform initiatives, e.g. BUB, Grassroots
Participatory Budget Process (GPBP), CSO Participation and Tier 1 and Tier 2 Budgeting.
Specifically, the two tier budget process relates to the dissemination of Budgets for ongoing
programs versus new programs, and aims to provide a mechanism for prioritizing objectives
and activities.
As these specific guidelines may change from year to year, these are not prescribed in detail
here but this Section should be read in conjunction with the Budget Call.
4.2.3 Budget Forms
The specific Budget Forms, their format and numbering may change slightly year on year.
This Section therefore gives an overview of the different categories of the Forms. This
Section should be read in conjunction with the Budget Call, which will list all Forms for the
year in question.
The Budget Forms are grouped into different categories

MFO Budget Matrix and Performance Measures;
Feedback from External Participants in the Budgetary Process;
Statements of Revenues;
Comparison of Appropriations and Obligations (Current Year actual and forward
projections);
Summary of Obligations and Proposed Programs/Projects by Allotment Class and
Objects of Expenditures;
Profile of Ongoing Programs and Locally Funded Projects;
Profile of Ongoing Foreign Assisted Projects;
HR information such as lists of Non-Permanent Positions and Retirees;
Profiles and Requirements for new or expanded Programs and Projects (Locally
Funded and Foreign Assisted; and
Other Forms, including Special Provisions, and other initiatives such as Gender and
Development (GAD), etc.
The responsible offices for fulfilling these Forms are detailed in the Sections below.
4.3 Planning and Programming
4.3.1 Overview of Planning and Programming
Upon receipt of the Budget Call through the Office of the Secretary, the Planning and
Budgeting processes kick off.
Planning and Programming Division (PPD), which acts as the PROGCOM Secretariat, and
Budget Division (BD), which also acts as the FINCOM Secretariat, shall conduct orientation
in the Central Office (CO) and Regional Offices (ROs) on the budget years Plans and
Budget Proposals preparation.
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PROGCOM calls for an in-house planning workshop for offices within CO. The divisions
and/or bureaus would do situational analysis, identification of strategies, programs/projects
and activities, and estimation of resources. Each division or bureau would review their plans,
approved by their respective Chiefs, and submit proposals to PPD- Office of Planning
Service (OPS). The budget proposals shall include the:
Approved work and financial plan (WFP) with expenditure matrix; and
Project profile for major programs and projects including the budget years detailed
list of proposed recipients,
The committee also conducts meetings with assigned offices to plan for DepEDs Basic
Inputs with forward estimates. The following offices would undertake data collection,
preparation and estimation of requirements for the respective input items:
Office Basic Inputs
Physical Facilities & Schools Classrooms, Furniture, and Water and
Engineering Division (PFSED- sanitation facilities
OPS)
Research and Statistics Division Teachers
Office of the Planning Services
(RSD-OPS)
Instructional Materials Council Textbooks
Secretarial (IMCS)
Schools Health and Nutrition Feeding Program
Center (SHNC)
Technical Service ICT package and internet connectivity
National Science Teaching and Science and math equipment
Instrumentation Centre (NSTIC)
Bureau of Secondary Education TechVoc Equipment
(BSE)
Budget Division (BD) School MOOE
Office of USec for Finance and GASTPE
Admin and BSE
The submission of the outputs to Planning and Programming Division Office of Planning
Services (PPD-OPS) shall include the following:
Three year estimates of requirements (physical and financial) starting from the
budgeting year (e.g. 2016-2018);
Detailed list of proposed recipients; and
Project Profile including the Work and Financial Plan (WFP).
The RO should also conduct their respective operational planning. The divisions and/or units
in ROs should do situational analysis, identification of strategies, programs/projects and
activities, and estimation of resources. Each operating units within the RO would review their
plans, approved by their respective Directors, and submit proposals to PPD-OPS.
Planning and Programming will take on board recent initiatives such as the 2 Tier Budget
Approach (2TBA) whereby a portfolio of new programs may be assessed and prioritized
within the available funding.
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4.3.2 MFO Budget Matrix and Agency Performance Measures
The PPD-OPS (in conjunction with BD) shall prepare and sign the BP Forms A and B.
BP Form A, the MFO Budget Matrix, presents the agency budgetary requirements by
P/A/P statement, reflecting the actual obligations of the immediately preceding year
(e.g. 2014), the approved budgets of the current years programs (e.g. 2015), and the
proposed programs for the budget year (e.g. 2016). All P/A/Ps of the immediately
preceding year and of the current year are listed down and identified as to whether
still On-going (OG) or to be Terminated (T). The P/A/Ps to be proposed for the
budget year are then added to the list and tagged Proposed (P) accordingly.
BP Form B, the Agency Performance Measures, presents the three-year
performance of DepED based on the Organizational Performance Indicators
Framework agreed with DBM. It details the accomplishments, targets, and the
corresponding budgetary allocation that specifically relate to every MFO of DepED as
the provider of the national education services.
The final and consolidated forms shall consider all the feedbacks from Regional
Development Councils (RDCs) of the National Economic Development Authority (NEDA)
and Civil Society Organizations (CSOs). The PROGCOM then forwards the plans/forms to
FINCOM.
4.3.3 Feedback from External Participants in the Budgetary Process
DepEDs planning and budgeting processes include review from NEDA RDCs and
consultation with the CSOs of the departments PAPs.
The CO and ROs shall coordinate with their respective RDCs on the results of NEDAs
review of the departments PAPs. The respective Planning and Budget Officers shall
complete the BP Form C, the Summary of RDCs Feedback on Agency Major Ongoing
Programs and Projects, to reflect therein the recommendations made NEDA RDCs,
identifying whether Included or Not Included in the current budget proposal. The
completed forms shall be forwarded to and consolidated by PPD-OPS.
Both the CO and ROs shall engage the Civil Society Organizations (CSOs) to join in the
planning workshops. At least two or three meetings shall be conducted to consult PAPs with
these organizations. The CSOs shall then provide feedbacks and recommendations on
PAPs, complete the BP Form D (Summary of CSOs Feedback on Ongoing Projects and
Activities), and submit them with supporting documents/evidences to the Office of USEC for
External Linkages. The said office would then consolidate, document them in the prescribed
form, and submit to PPD-OPS including the Budget Partnership Agreement/s. The
consolidation may include Bottom-Up Budgeting (BUB) and non-BUB inputs.
In BUB, aka Grassroots Participatory Budget approach, where LGUs and rural communities
take a more participatory role in designing the National Budget, DepED as a NGA shall aid in
accelerating the overall execution of the prioritized programs and projects that relate to
provision of basic education services in the country. The respective OUs shall coordinate
closely with the target LGUs to validate/qualify LGU projects that will be integrated in the
department budget proposal. The respective Planning and Budget Officers shall identify and
present them in the relevant BP Forms 201s and submit them to PPD-OPS.
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4.4 Budget Formulation and Completion of Budget Forms
4.4.1 The Budget Calendar
The planning and budget formulation of DepED shall coincide with the calendar set by the
Budget Call. The EXECOM shall program the finalization of plans and budget proposals in
such a way that the encoding through the Online Submissions of Budget Proposals System,
(OSBPS) will fall on or before the deadline. An example Indicative Budget Calendar is
contained in Annex C.
4.4.2 Completion of Budget Forms
The PPD-OPS and BD shall conduct jointly the consolidation of plans and budget proposals.
Once the work plans are complete and forwarded to FINCOM, the BD shall consolidate all
budgetary cost items, from the BP Forms submitted by CO, Bureaus, and ROs, and
complete all prescribed forms and templates.
The Budget Call shall prescribe the planning and budgeting processes as a whole. The
compliance of the BP Forms as the outputs of the whole exercise shall also follow the same
process flow. Generally, the following sequence shall be observed:
1. Project Expenditure Plan (BP Form 201-E):
Those DepED PAPs for inter-agency implementation, such as School Building
Program (SBP), School Feeding Program, and Basic Education Facilities Fund
(BEFF), shall be closely coordinated with the partner agencies.
2. Climate Change Expenditures (BP Form 201-F):
DepED shall identify and tag PAPs that relate to climate change adaptation and
mitigation.
3. Summary of RDCs Feedback on Agency Major Ongoing Programs and Projects (BP
Form C):
A consolidated report shall be prepared containing the feedbacks from NEDA RDCs
on the impact and gaps of DepEDs ongoing regional PAPs as well as endorsements
on the needed improvements. (Section 4.3.3 above refers);
4. Summary of CSOs Feedback on Ongoing Projects and Activities (BP Form D):
A consolidated report from various consultations with CSOs, private sector, and other
stakeholders shall be prepared containing the feedbacks on their assessment and
evaluation of the ongoing PAPs of as well as proposed PAPs for DepED. The ROs in
their summary reports shall give priority in the budget allocation, the requested
education-related priority projects of LGUs as a result of BUB. DepED shall ensure
complementation between national and LGU Projects, identify and present them in
the forms (BP Forms 201-A, 201-B, 201-C, 201-D) for tracking and monitoring
purposes. (Section 4.3.3 refers).
5. Statement of Revenues (BP Forms 100, 100-A, 100-B, 100-C):
Consistent with the rationalization 7 of government revenues and for cost recovery
measure, DepED shall prepare reports to reflect estimates of revenues for the budget
year. The estimated revenues with specific purposes as authorized by law, such as
7 Administrative Order No. 31, Directing and Authorizing All Heads of Departments, Bureaus, Commissions,
Agencies, Offices and Instrumentalities of the National Government, including Government-Owned and/or -
Controlled Corporations (GOCCs), to Rationalize the Rates of the Fees and Charges, Increase their Existing
Rates and Impose New Fees And Charges
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those under Special Accounts, Revolving Funds, and Trust Receipts, shall be
identified and reported separately along with the corresponding expenditure items.
6. MFO Budget Matrix (BP Form A) and Agency Performance Measures (BP Form B):
(Section 4.3.2 refers);
7. Gender and Development (BP Forms 400, 400-A):
GAD reports shall reflect all issues and/or mandates identified in the previous years
GAD Plan and Budget, including those that were not previously identified but were
addressed and implemented. The plan and budget for the current GAD issues and/or
mandates shall form part of DepEDs PS, MOOE and CO budget proposals.
8. PS Obligations by Object of Expenditures (BP Forms 201 A, 201 A-1, 204, 205):
The budget proposals for Personal Services shall comply with the cost parameters
set by the Budget Call. Separate forms shall be completed for each Fund
Source/Authorization (New Appropriation, Continuing Appropriation, and Automatic
Appropriation) and each Year of Obligation, including multi-year requirements. The
consolidated current years budget proposals shall include the Salaries/Wages for
Non-Permanent Positions such as Casual, Contractual, Emergency Personnel and
Substitute Teachers/Instructors, and the Retirement Gratuity and Terminal Leave
Benefits for Retirees.
9. Obligations by Object of Expenditures (BP Forms 201 B, 201 B-1, 201 C, 201 C-1,
201 D, 201 D-1):
The budget proposals for MOOE, FE and CO shall comply with the cost parameters
and guidelines set by the Budget Call. Separate forms shall be completed for each
Fund Source/Authorization (New Appropriation, Continuing Appropriation, and
Automatic Appropriation) and each Year of Obligation, including multi-year
requirements.
10. Summary of Obligations (BP Form 201):
Having completed all BP Forms 201s, a summary report shall be prepared based on
the allotment class, PS, MOOE, FE, and CO.
11. Profile and Requirements of New or Expanded Program/Project for Locally-Funded
Project and FAPs (BP Forms 206, 206 A, 206 B, 206 B-1):
To support the New or Expanded Program/Project Proposals for Locally-Funded
Project and FAPs, the profiles and requirements shall be prepared. Separate forms
shall be completed for each program or project.
12. Proposed Special Provisions (BP Form 300):
After having completed all budgetary requirements, DepED shall put into formal
statements the special and/or general provisions authorized in the current year and
the proposals for the budget year, identifying therein those For retention or For
deletion, with adequate justifications for each modification.
The Planning and Budget Officers shall ensure completeness and correctness of all
information in every BP Form (See Annex C), including the required certification or signature
from designated officer/s before submitting to the highest authorized Official for final
approval.
4.4.3 Estimation of Revenues
Consistent with the rationalization of government revenues and for cost recovery measure,
DepED shall prepare reports to reflect estimates of revenues for the budget year.
Page 46 of 224
The Accounting unit shall prepare the Statement of Revenues (BP Form 100) identifying free
portion from earmarked portion. Free portion is the type of revenues, to be remitted to the
Bureau of Treasury (BTr), which is available to finance any daily operations of the national
government. Earmarked portion is the type of revenues which are authorized by law to be
used for specific purpose, such as Special Account under the General Fund. Each object of
income shall be properly coded using the UACS. The approved estimates and the audited
Income Statement for the immediate preceding year shall be the basis to fill the Actual data.
The assigned staff shall follow accordingly the instructions accompanying every form.
All other revenues that accrue to the national government with specific purposes as
authorized by law shall also be identified and reported separately alongside its respective
expenditure estimates. The Earmarked portion of revenues identified in BP Form 100
together with the Special Accounts in the General Fund shall be reported in the Statement of
Revenues and Expenditures for Earmarked Revenues (BP Form 100-A). All DepED receipts
which are authorized by law to be retained and used for specific purposes, the Off-Budgetary
Funds, such as Revolving Funds, and the Custodial Funds, such as Provident Funds and
other Trust Receipts, shall also be identified and reported with its corresponding
expenditures, in the Statement of Other Receipts/Expenditures (BP Form 100-B). All receipts
of non-repayable transfers, in cash or in kind, from other levels of government, private
individuals or institutions, foreign or domestic, including reparations and gifts given for
particular project or program or for general budget support shall be reported in the Statement
of Donations and Grants (BP Form 100-C).
The Accounting Division (AD) in the CO, as a member of FINCOM, shall consolidate all
information, certify the completeness and correctness, and submit to PPD-OPS and BD.
4.4.4 Proposals for Expenditure Requirements
General Planning Considerations
The Program Expenditures Plan containing all existing and proposed PAPs shall be
prepared and those under inter-agency implementation shall be closely coordinated with
other implementing agencies. Consultations shall be conducted with CSOs and LGUs. The
results and/or feedbacks, including those of NEDA RDCs, shall inform the finalization of
PAPs.
GAD Plan and Budget shall be prepared and form part of DepED regular budget. The
Obligations by Object of Expenditures for PS, MOOE, FE, and CO shall be completed,
incorporating therein all cost requirements of all budget items: General Admin and Support,
Support to Operations (PAPs), Operations (MFO/PAPs), and Projects (PAPs).
Ongoing Programs and Projects
DepEDs planning and budgeting processes include review from NEDA RDCs and
consultation with the CSOs of the departments PAPs.
Endorsements from NEDA RDCs, which will identify and recommend PAPs based on
Midterm Development Plan, and the feedbacks as a result of various CSO consultations will
inform the extension or termination of ongoing PAPs. DepED PROGCOM as well shall
review, assess and evaluate the previous MFO Budget Matrix to determine existing PAPs to
reduce, extend, or terminate.
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Proposed New Programs and Projects
Sources of new PAPs shall come from the endorsements from NEDA RDCs and the
feedbacks from various CSO consultations, including the education-related priority
programs/projects from BUB. It shall also consider the updated MFO Budget Matrix and new
FAPs. Identifying new Programs separately enables improved prioritization of budget
resources, based on the new 2 Tier Budget Approach (2TBA) reform initiative. This is
explained in more detail in the Budget Call.
Bottom Up Budget Participation
A consolidated report from various consultations with CSOs, private sector, and other
stakeholders shall be prepared containing the feedbacks on their assessment and evaluation
of the ongoing PAPs of as well as proposed PAPs for DepED.
The BUB administered by the LGUs produce the Local Poverty Reduction Action Plan
(LPRAP). The DepED ROs in their summary reports shall give priority in the budget
allocation, the education-related priority projects of LGUs identified in the LPRAP. DepED
shall ensure complementation between national and LGU projects, and identify and present
them in the forms (BP Forms 201-A, 201-B, 201-C, 201-D) for tracking and monitoring
purposes. (Refer 4.3.3)
Costing and Calculations for Schools MOOE
The MOOEs for all schools shall be computed based on the Boncodin Formula or the prior
years GAA, whichever is higher. The Boncodin formula and how it is applied is shown in
Annex C.
4.4.5 DepED Internal Review and Approval
The FINCOM reviews the cost items, particularly on PAPs, based on parameters set by the
Budget Call, the specific guidelines in the preparation of agency budget proposals and other
budgetary items.
The PROGCOM and FINCOM will conduct a Joint Program and Budget Committee Review
to deliberate on PAPs according to effectiveness and relevance. They will jointly review,
scale up or down, approve, disapprove or defer PAPs. The assigned offices will prepare and
complete the relevant BP Forms.
The budget proposals go through the following approval processes within DepED:
The PROGCOM and FINCOM endorse the years Plan and Budget Proposal to the
EXECOM.
The EXECOM will further review the plans and proposals based on the National
Expenditures Program for the year. The adjustments shall include the revision of
WFPs based on DepEd strategic directions and finalization of list of recipient
Implementing Units (IUs) for major PAPs.
The EXECOM will call and arrange for the Internal Budget Hearing. The agenda
include the approval of the WFP, finalization of Monthly Disbursement Plans (MDP)
and Project Procurement Management Plan (PPMP), and confirmation of recipient
IUs for major PAPs. It will proceed to the Triangulation of Plans, which includes
synchronization of WFP, MDP and PPMP. The PPD-OPS will consolidate the WFP
and forward it to BD. The BD will consolidate and finalize MDP and forward them to
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Procurement Service. The Procurement service will consolidate and finalize the
PPMP.
The EXECOM will conduct committee hearing for the presentation of plans for major
PAPs. They will decide on items for comprehensive release (FCR) and for later
release (FLR). It will then seek confirmation from DBM on FCR and FLR items,
including the transmittal of the BED forms.
4.5 Budget Negotiations, Approvals and Enactment of Budget Proposals
After the budget submission has been made and the details have been entered into the
OSBPS, the Budget Proposals undergo scrutiny and approval through the following stages:
Technical Budget Hearings (between DepED and DBM);
Development Budget Coordination Committee (DBCC) Deliberation;
Cabinet Approval;
Congress Approval; and
Enactment of GAA.
Changes may be required to the Budget at any of the above stages, in which case the
changes will be fed back to DepED to incorporate into the OSBPS, as described below.
4.5.1 Online Processing of Budget Submissions
Once Execom has handed down the decision on the finality of budget proposals, after all
DepED internal budget hearings and consultations, the BD shall revise or update all
pertinent spreadsheets containing cleansed budgetary items and cost allocations. BD shall
then communicate to the lower level operating units, ROs, DOs, and IUs, the final and
clean budget proposals, forwarding the spreadsheets of BP Form 201s (with attached
schedules 8) for inputting into the OSBPS.
All DepED Operating Units shall input the budget per object of expenditures into the OSBPS.
The OSBPS provides ability to print reports for individual offices as well as consolidated
reports. Once, all the data is input by the respective office, each level has the responsibility
to review and check the correctness of the entries from its subordinate offices. For
example, DOs must validate the details from their respective IUs, ROs must validate the
consolidated DO figures, and CO must validate the consolidated figures for the ROs, to
ensure the data captured accords with the approved budget submission to DBM.
After the rounds of Technical Budget Hearings, DBCC deliberations, Cabinet and Congress
approval, culminating in the passing of the GAA, all changes and amendments required to
the Budget will be notified to DepED, Budget Division. BD shall update the budget line
details where necessary in the OSBPS. BD shall notify the various offices of the changes
made. Each office must check and review the entries in OSBPS, and print out their final
budget from the system for their record.
8 ROs, DOs and IUs will complete Schedules A, B and C to Form 201. Schedule D is completed by Central
Office only.
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4.6 Budget Execution Documents
Once the Budget has been approved by Congress and the GAA has been enacted, the
BEDs Forms shall be completed (usually in the December prior to the new financial year.
The BEDs Forms are listed in Table 2 below.
Table 2: BED Forms

Form No. Form Title Description
BED 1 Physical and Financial Overall physical (targeted outputs) and financial
Plan (estimated obligations/expenditures) plan of the
agency consistent with their approved budget
level for the year, broken down by quarters.
BED 2 Monthly Cash Program Monthly disbursement requirements of the agency
which is the basis for issuance of NCA, Cash
Disbursement Ceiling and other disbursement
authorities.
BED 3 Estimate of Monthly Reflects the estimated income for the year by
Income source, as contained under the Budget of
Expenditures and Sources of Financing of the
given year.
BED 4 List of Not Yet Due and Reflects the level of obligations/expenditures
Demandable Obligations charged against prior years budget, for which
goods/services/projects are not yet delivered /
rendered / completed and accepted as of end of
the preceding year.
4.7 Reference Materials in the Annexes
Annex C contains the following for further detailed reference:

Budget Calendar;
List of Budget Forms;
The Boncodin Formula;
List of current DepED MFO/PAP Codes.
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5 Budget Execution, Monitoring and Management
5.1 Overview
This Section of the Manual covers the following aspects:

Processing Approved Budget Appropriations in the System;
Processing Allotment Releases; and
Incurring and Processing Obligations.
5.2 Processing Approved Budget Appropriations
This specifically relates to the processing of the Approved Budget in the Operating Units
books (and systems); the actual Budget Formulation Process is addressed in Section 4
above.
There are two elements to Budget Appropriations, the Current Appropriations and
Continuing Appropriations.
5.2.1 Current Appropriations
Once the GAA is enacted, DepED receives the National Expenditure Program (NEP) for the
Department, with a detailed breakdown by Object Item Code. A notification of the items
falling under the negative list is also received. Each Office (CO, RO, DO and IU) enters the
Appropriation details into the eBMS; this represents the Current Year Appropriations. Firstly
the PPA Internal Code is created in eBMS in the PPA Allotment Release Data Entry
(Screen) Form, the relevant Line Item Budget Code is selected and other details entered
into the Appropriations Data Entry Form.
When entering the detailed Current Year Budget, those items 9 falling on the negative list are
designated For Later Release, (meaning that a Special Allotment Release Order [SARO] is
issued at a later date to approve the utilization of Budget Funds). The Current Year
Appropriation is posted into eBMS and the items not flagged on the negative list, are
available for processing the Allotment Releases (GAA Automatic Release). The system
cross-validates the entries and ERROR flags are shown in Red or OK flags are displayed
in Green to show the correctness (or otherwise) of corresponding entries (for example,
selection of Current Appropriation agrees with the PPA Internal Code, also for Current Year).
The information captured against the Appropriation, includes: Designation Current

Appropriations; Republic Act Details (RA Number etc.); Document Type and Number and
Purpose (description defaulted by the system); PPA Internal Code (concatenating
MFO_PAP and Fund Source Code); Line Item Object Code.
5.2.2 Continuing Appropriation
Based on the BEDs and BFARs at the end of the previous year, the total obligation position
for the year, by detailed line item (full UACS Code Classification), is calculated against the
9 These items are in the minority and include items such as multi-year releases such as the Department
Computerisation Program and the Department Internet Connectivity Program. (The majority of line items are not
on the negative list and the GAA serves as the release document).
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Appropriations to determine the remaining balance. A Report is produced of remaining

Unobligated Budget Funds and these details are entered into the eBMS for the new Budget
Year as Continuing Appropriations (updating the Appropriations Balances for the Budget
Year). Similar detail is entered into eBMS as described above, except that Continuing
Appropriation is selected and the Republic Act details will relate to the previous years
Republic Act.
DBM may issue notification that some Continuing funds are to be diverted back to DBM for
purposes such as responding to national disasters, etc. In such cases, the Continuing
Appropriation (and commensurate Allotment) posted to the system will be reduced in
accordance with the notification.
5.2.3 General Allotment Release Order (Retirement and Life Insurance Premium)
The GARO is received at the start of the year in respect of funds held under DBMs Budget,
such as RLIP and automatic appropriations. These items are separately identifiable through
the UACS Funding Source Code (RLIP utilizes Funds Source Code 01104102). The GARO
is processed through the Appropriations Menu in the eBMS.
5.3 Processing Allotment Releases
5.3.1 Categories of Allotment Release Orders
From the Appropriations, Allotment Releases are made to authorize spending offices to
obligate, expend and disburse funds against the line items.
There are three mechanisms for primary Allotment Releases:

The General Appropriations Act (GAA) as a release document;
Release of funds held under DBMs budget, such as RLIP and other items falling
under automatic appropriations, which is released through the General Allotment
Release Order (GARO); and
Releases of funds through Special Allotment Release Orders (SAROs), for items on
the negative list and Special Purpose Funds.
In addition, Operating Units may also make:

Realignment of Budget (ROB) from one Allotment Class to another; and
Sub-Allotment Releases (Sub-AROs) from their offices to subordinate Operating
Units
The Sub-sections below show the processes for Budget Fund and Cash Fund Releases to
Operating Units.
5.3.2 Release through GAA
As highlighted above, the GAA is the automatic release document for the Current Year
Budget for all items not on the Negative List. Allotment Releases for the Continuing Budget
are based on un-obligated (unutilized) Budget from the Previous Year.
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Allotment Releases are processed in eBMS through the Registry of Allotments and
Obligations (RAO) Menu (Data Entry Form) option. The details of the Allotment Releases
are recorded, including: Amount; PPA Internal Code; UACS Object Code; Document
References (e.g.GAA-FCR-001); Description Particulars, etc. The relevant GAA Year is
displayed based on the PPA Internal Code, and whether this relates to Current or Continuing
Budget.
Once the Allotment Releases are processed as above, funds can be obligated and
disbursed up to the total amount of the Allotment Release.
5.3.3 Release through GARO (RLIP and Others)
The GARO is deemed to be a comprehensive release document, so once the GARO is

received and entered into the Appropriations Menu Data Entry Screen it is entered as an
Allotment Release under the RAO Data Entry Screen. Details are entered as with other
Allotment Releases above. The system cross validates the PPA Internal Code against the
Document Reference (SARO/ABM Number) and warns the user where there is a mismatch
through a red ERROR flag; when the cross validation is correct, the entry noted with a
green OK flag.
5.3.4 Special Allotment Release Orders (SAROs)
Items included in the negative list are not released automatically but require a Special
Allotment Release Order (SARO). Special Purpose Funds (SPF), (Codes 101401 to 20), are
also released through SARO. Example items under SARO include: PS, Salaries and
Allowances for New Teachers (on negative list); Calamity Fund (Fund Source: 01101401);
DepED School Building Fund (Fund Source: 01101403), etc.
Spending in respect of items on the negative list and SPFs must be included in the Work and
Financial Plan (WFP). Based on the WFP a decision is made to incur spending (e.g.
through a procurement activity). The Spending Office must submit a request to DBM for
SARO and NCA, through their respective Budget Unit/Office (i.e. at CO, RO, DO or IU). The
Head of Budget Unit 10 signs the request documents and submits to DBM.
DBM reviews and processes the request for SARO and NCA, and if approved issues the
SARO and NCA. The NCA is received in the office (and by the bank) in the usual manner
and processed by the Accounting Office through the Other Transactions Menu and NCA
Received Transaction Sub-Type.
The Budget Officer in the Budget Unit processes the SARO in eBMS, in the same manner as
other Allotment Releases (detailed above), but entering the SARO document number.
The Allotment is updated in the system and is now available for undertaking obligations and
disbursements;
5.3.5 Realignment of Budget
Realignment Of Budget (ROB) is where funds are realigned from one Budget Line Item (full
UACS Code) to another. These can be either within Allotment Class or between Allotment
Classes but the two categories have different approvals processes.
10 In Budget Division in Central Office, the respective Section Chiefs will also initial the documents to certify
correctness etc.
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Where the Realignment is between items within the same Allotment Class, the Budget
Officer will determine the need for realignment, including the identification of the Object
Code where surplus funds or savings can be realized. The Head of Budget Unit approves
the ROB.
Where the Realignment is between Allotment Classes, a request must be made to DBM for
prior approval. The ROB request is prepared by the Budget Officer and approved by the
Head of the Budget Unit, who signs the request to DBM.
When the ROB is approved the entries are made through the RAO Data Entry Form in
eBMS, reducing the Account with savings and supplementing the receiving Account
balance.
5.3.6 Sub-Allotment Release Orders (Sub-AROs)
Sub-AROs Issued (Issuing Office Procedures)
Sub-AROs are transfers of (generally lump sum) Budget Funds to subordinate Operating
Units, and are only issued at either CO or RO but may be received at any subordinate level,
down to IU. The Sub-ARO is prepared through the eBMS in Central Office but prepared
manually in the ROs. (The Sub-ARO Screen Entry Form in eBMS in CO is only used for
preparing and printing the Sub-ARO Form, as the majority of Sub-AROs are made through
CO).
The Budget Officer prepares the Sub-ARO, showing the PPA Internal Code from where
(lump sum) funds are being released and details of the recipient Operating Units. The Head
of Budget Unit and Head of Office signs and approves the Sub-ARO.
The Budget Office processes the Sub-ARO Issued in eBMS through the RAO Data Entry
Screen, under the Transfer To column. (This now reduces the net balance available to the
office against those (lump sum) Budget Funds. The Sub-ARO document number provides
the reference in the system for the transaction record.
Release of Cash Funds is undertaken in one of two ways, either through:

(i) Notice of Transfer of (Cash) Allocation (NTA); or
(ii) Issuing of Check, which is managed/liquidated via Cash Advance.
Where the NTA is issued, this is processed through DBM, and the amount is deducted from
the relevant eMDS (for release to the subordinate Operating Unit see below). The Budget
Execution of these Funds is now managed by the subordinate Operating Unit. The NTA
reduces the available cash in the releasing office and accounted for under Other
Transactions Menu and NCA/NTA lapsed, as described under Intra-Agency Transfers in
Section 6.4.
Where a Funding Check is issued to another Operating Unit within DepED, this is managed
through the Cash Advance process, discussed in Section 15.4. Effectively, this amount is
now treated as disbursed (executed) in the releasing Office. The process for managing
and liquidating (Intra-Agency) Cash Advances is detailed in Section 15.4. When the
Advance is liquidated the expenditure is brought to account in the financial statements.
The Sub-ARO is released to the recipient Operating Unit, which then processes the Sub-
ARO received.
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Processing Sub-AROs Received (Receiving Office Procedures)
When the Operating Unit receives the Sub-ARO the Budget Officer, checks the documents
and the details of the Sub-ARO received. The Budget Officer records the Sub-ARO entry
into eBMS through the PPA and Allotment Releases Data Entry (Screen) Form, creating a
new PPA Internal Code for the item. The document type Sub-ARO is selected and the
document reference (Sub-ARO) entered into the system, along with: the Amount by
Allotment Class; Description; Date; Purpose and Legal Basis (RA Reference). The details
are then entered into the RAO Data Entry Form in eBMS, selecting the newly added PPA
Internal Code and other details, and entering amount in Transfer From column.
If the Sub-ARO is issued using NTA for Cash Funds, it is treated as with other Allotment
Releases (accompanied by NCA), and the Allotted Funds are increased accordingly. The
NTA is brought to account through the eFRS as detailed in Section 6.4.
Where the Sub-ARO is received as a Cash Advance, the Budget Execution is accounted for
and disbursed under the releasing office. The Cash Advance is liquidated by the receiving
Office via Liquidation Report returned to the releasing Office. The process for liquidating
Cash Advances is detailed in Section 6.4.
5.4 Incurring and Processing Obligations
Before funds can be disbursed, they must be obligated against the Allotment Releases
received.
The Obligations processes depend on the nature of Obligation, e.g. Procurement Related
Obligations and Non-Procurement Obligations. In addition Obligations may be amended or
cancelled. These processes are discussed further in the following Sub-sections below.
5.4.1 Procurement Related Obligations
Prior to signing and releasing a Contract or Purchase Order, a check must first be made to
ensure availability of funds. These types of Obligations relate to procurements of goods and
services (for MOOE and COs). This process Obligates (commits) the funds prior to the
release of Contract (or Order) to the supplier.
The Spending Office collates all the documents, including draft contract or purchase order
and prepares the Obligation Request and Status (ORS) Form. The Head of the Spending
Unit approves and signs the ORS as Requesting Office in Box A. The documents are sent
to the Budget Unit to check for availability of Budget Funds. The Budget Officer checks the
documents, ensures that the procurement is included in the WFP and makes a note on the
documents verifying availability of funds (or notifies Spending Office that funds are not
available). Head of Budget Unit signs and approves the ORS, in Box B, formally obligating
the Funds.
The signed and approved ORS is processed in eBMS, including: the Amount; Payee; PPA
Internal Code; Fund Source Document (SARO/ABM Reference); UACS Object Code; and
Detail Particulars. The approved original of the ORS is returned to the Spending Office,
which is now permitted to release the contract or Purchase Order (PO) to the Supplier (for
signing). The Spending Office receives the signed Contract (or PO) back from the Supplier,
and arranges signatures from DepED Executive on Contract and PO and the contract is
implemented.
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5.4.2 Non Procurement Obligations
In these instances, no procurement process is involved and no prior contractual obligation is

entered into. These types of Obligations include Travel Advances, Other Categories of
Advances, Personal Services and Other non-procurement MOOE items (e.g. utilities, etc.).
In these instances the SO will prepare the manual ORS (and also the Disbursement Voucher
(DV) at the same time).
Payroll Expenses Preparation of the ORS
Personnel Office receives and checks the correctness and validity of the payrolls from the
Payroll Servicing Unit (PSU), and prepares the manual ORS and DV and attaches with
payroll documents. The Head of Personnel Office approves and signs the ORS in Box A.
The ORS is then submitted to the Budget Unit for approval.
Other Non PS Expenses
The Spending Office receives the invoice from the supplier, (or supporting documents for
travel, advances, etc. from an approved official), checks the correctness and validity and
efficacy of the documents and prepares the ORS and DV and attaches with documents.
Head of Spending Office approves and signs the ORS in Box A. The ORS is then submitted
to the Budget Unit for approval.
Budget Unit Processing and Approval of the ORS
After receiving the ORS, DV and accompanying documents, the Budget Officer checks the
ORS for correctness, completeness of accompanying documents and availability of Budget
Funds. The Head of Budget Unit 11 then approves and signs the ORS in Box B.
The Budget Office then processes the Obligation into eBMS through the RAO Data Entry
Form. All the details are entered including: Amount; Payee; PPA Internal Code; Fund
Source Document (SARO/ABM Reference); UACS Object Code; and Detail Particulars.
The Documents are then sent to Accounting Unit for processing the Disbursement.
5.4.3 Amendments to and Cancellation of Obligations
The ORS is designed to track the ongoing status of the Obligation, including ongoing
availability of funds. Where an Obligation has been completely fulfilled and the disbursed
Amount is less than the Obligation, the Obligation Amount in the eBMS should be edited in
order to re-avail the unutilized Funds.
Where a disbursement results in the total disbursement exceeding the Obligation amount an
additional ORS amount or Amended ORS must be processed for approving the additional
required funds. This will be processed through the RAO Data Entry Screen in similar fashion
to other Obligations.
Where an Obligation is no longer required it may be cancelled in order to re-avail the Funds.
The Obligation in the system should then be edited reflecting zero balance, using the RAO
Data Entry Form.
11 In Budget Division in Central Office the Section Chiefs will also review and verify the ORS and accompanying
documents, etc.
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5.5 Managing LDDAP and NYDDO
5.5.1 Managing and Processing LDDAP at the Year End
As far as is possible, all due and demandable Accounts Payable will be settled in the year in
which they arise. All effort should be undertaken at the year end to process the payment
disbursement where the DV and all supporting documents have been received before the
year end.
Where there is insufficient NCA to process the payment (but all the documents are received
and payment is due) at the year end, the items and details are collated into the List of Due
and Demandable Accounts Payable (LDDAP). Accruals are made to bring these items to
account in the books of account for the office concerned (See Accounting Treatment Below).
The LDDAP is provided to DBM, who will make NCA available under MDS-AP Bank Account
for settlement in the new financial year. In the Budget Execution Reports, once the accrual
is made against the specific Object Code, the item is deemed expensed (disbursed).
Accounting Treatment for LDDAP
At the Yearend Accruals for all the LDDAP items, as follows:

Accrual for LDDAP Items
Dr Expense Item 12 (for example) 50xxxxxx 00
Cr Accounts Payable 20101010 00
In the New Year, when the NCA is received and payment is made against AP, the
accounting entry is recorded as follows:
Settlement of Accrual AP
Dr Accounts Payable 20101010 00
Cr Cash in Bank - MDS Regular 10104040 00 (AP SL for DOs/IUs)
Note for Future Move to a fully Integrated System, e.g. DepED IFMIS
Technically, in accordance with IPSAS/PPSAS, the accrual should be made on the basis of
the receipt of the goods or services (i.e. upon exchange/transfer), rather than upon receipt of
full invoicing documentation. However, without an IFMIS which integrates all steps in the
Procure to Pay Process it is not technically feasible to tie the accrual to the goods receiving
process. However, in the event that an IFMIS does get implemented sometime in the future,
the accruals will be automated from the goods receiving process.
5.5.2 Managing Unpaid Obligations
For routine Obligations where the disbursement is processed almost immediately after the
approval of the Obligation, the ORS is received by the Accounting Office along with the DV.
Where a lengthy procurement is involved the signed ORS is received and filed in the
Accounting Office pending subsequent receipt of the DV and supporting documents.
12 The Accrual could be against an Expense (PS or MOOE), a Non-Current Asset (Obligated against Capital
Outlay) or Inventory depending on the nature of the transaction. The example here uses the General Accounts
Payable Account but the accrual could also be made against other categories of Payables, e.g. Pension Benefits
Payable, etc. (See Section 18.6).
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The files maintain an archive of all the unfulfilled Obligations. Once the goods are received,
along with the suppliers invoice, the DV is processed and the ORS attached to support the
payment/disbursement. The status section of the ORS is updated and the Budget Office
notified of all disbursements so that their copies of the ORS can be updated accordingly.
Where an Obligation is only partially fulfilled, a photocopy is made for attachment to the DV
and the original is retained on file until the Obligation is completely fulfilled. Both the
Accounting Office and Budget Office update the Obligation status on the ORS.
BED 4: List of Not Yet Due and Demandable Obligations (NYDDO)
At the end of the Year the Budget Office prepares the List of NYDDO and completes BEDs
Form 4. The items are reflected in the balances of undisbursed funds on the BFARs. The
Obligations will be ultimately fulfilled and disbursed in the subsequent Financial Year.
5.6 Budget Monitoring Reporting
The eBMS facilitates the printing and exporting of various Budget Monitoring and
Management Reports. The majority of reports are now integrated, e.g. budget monitoring
information integrated with disbursement and accounting information obtained from the
eFRS. Specifically these reports are titled the Budget and Financial Accountability Reports
(BFARs). The BFARs and other reports are discussed in detail in Section 22.
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6 Revenue and Income

6.1 The Standards for Accounting Treatment of Revenues
Revenue of National Government Agency arises from the exchange transactions and
events, such as the rendering of services, the sale of goods, and the use by others of entity
assets yielding interest, royalties, and dividends.
6.1.1 PPSAS 9 Revenue from Exchange Transactions
Revenue from Exchange Transactions IPSAS 9, as adopted PPSAS 9 based on COA

Resolution No. 2014-003 dated January 24, 2014, prescribes the standards for identification,
measurement and disclosure of revenues of public sector entities derived from exchange
transactions.
6.1.2 Revenue Recognition
PPSAS 9 provides that revenues shall be measured at the fair value of the consideration
received or receivable. For DepED, the cash basis of accounting shall be used for all income
receipts where accrual method is impractical. Accrual method shall be used when the
income is realized or earned during the accounting period regardless of cash receipt.
6.2 Sources of Income of DepED
The income accounts of the national government agencies are classified as follows:
1. Tax Revenues (Stamp Tax);
2. General Income;
a. Service income;
b. Business Income;
3. Subsidy Income
4. Other General Income
5. Gains/Losses
6. Other Non-operating Income
A detailed list of Relevant Income Accounts is contained in the Text Box at the end of this
Section.
6.3 Legal Provisions relating to Receipt/Collection and Deposit of Income
6.3.1 General Provisions
The Cashier or Collecting Officer who is appropriately bonded is responsible for the receipt
or collection of incomes. He/she has the authority to issue the Official Receipt to
acknowledge the transaction. He/she shall deposit intact all the collections daily or not later
than the next banking day with Authorized Government Depository Bank (AGDB) or through
the AGDB for the account of Bureau of Treasury.
Executive Order (EO) No. 431 (of 30th May 2005) reinforces EO 338, 1996, and re-
stipulates the requirement for transfer of all funds to Bureau of Treasury, regardless of
income source. Joint circular 4-2012 sets out the rules and regulations for implementing
Page 59 of 224
EO 431. However, the GAA General Provisions sets out some exceptions to this case,
which includes Section 9: Revolving Funds, which is of particular relevance to DepED,
specifically in regards to (but not limited to) the Operations of the Regional Education
Learning Centers (RELCs). The Provision stipulates:
Revolving Funds shall be established and maintained only for receipts derived from
business-type activities of departments.......
The revolving fund shall be separately recorded and deposited in an authorized
government depository bank and considered self perpetuating and self liquidating.
6.3.2 DepED Special Provisions in the GAA
The following Special Provisions are made in the GAA, specific to DepED:
1. Fees, Charges and Assessments of National Elementary and Secondary Schools:
The income earned by national elementary and secondary schools from fees,
charges and assessments........ shall be deposited in an authorized government
depository bank and shall be used to augment the schools MOOE and other
instructional programs.
2. Revolving Fund for Manufacturing and Production Programs:
All income earned by national schools under DepEd from manufacturing and
production programs....... ........shall be deposited in an authorized government
depository bank.......
3. Revolving Fund for Rentals in Use of Buildings and Facilities of Training Centers:
The Income of Baguio Teachers Camp (BTC), National educators Academy of the
Philippines (NEAP), Regional Education Learning Centers (RELC), Eco-Tech,
Boracay National High School Hostel, Applied Nutrition Centre (ANC), and National
Science Teaching Instrumentation Centre (NSTIC), and other sources shall be
deposited in an authorized government depository bank.......
6.3.3 Specific Purpose Income
Those incomes received for specific purpose, e.g. Seminar/Training Fees, where
subsequent disbursements related thereto are netted against the income, shall be deposited
to the account of DepED, using an existing LCCA. Upon completion of the activity, the
excess funds shall be deposited to the account of Bureau of Treasury.
6.4 Intra-Agency Transfers
There are DepED budget allocations, categorized as lump-sum funds and Centrally
Managed Items (CMIs), which are distributed among its Operating Units during actual
Budget Execution. Upon release of allocation from DBM, the CO or RO shall transfer
allotments, via Sub-ARO, to lower-level Operating Units (OUs). The transfer of allocation
shall be made either through issuance of Notice of Transfer of Allocation (NTA) (also See
Section 5.3.6 on the Budget Management processes for Sub-AROs and NTA) or granting a
cash advance.
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The Transfer of the NTA shall be recorded in the eFRS in the CO (or RO) Books through the
Other Transactions Menu option and the Transaction Sub-Type Bank Disbursement. The
Receipt of NTA is processed in the Lower Level Operating Units, using the NTA Receipt
Sub-Type, under Other Transactions. These entries in the respective books are accounted
for as follows:
Processing NTA (Released) in CO (or RO) Books
Dr Financial Assistance to NGAs 50214020 00
Cr Cash in Bank - MDS, Regular 10104010 00
Processing NTA (Received) in RO/DO/IU Books
Dr Cash in Bank - MDS, Regular 10104010 00 (DOs/IUs: PS/MOOE SL)
Cr Subsidy from Other NGAs 40301020 00
Where the Transfer is made via cash advance, no actual income account is involved, and
the transactions shall be recorded in the CO or RO Books under the Bank Disbursement
Menu, as follows:
Processing Cash Advance Issued/Granted in CO/RO Books
Dr Due from Bureaus 10304020 00 or
Dr Due from Regional Offices 10304030 00 or
Dr Due from Operating Units 10304040 00
The receipt of the advance is processed in the Lower Level Operating Units through the
Bank Deposit Menu, Sub-Transaction Type Other Deposits, and accounted for as follows:
Processing Cash Advance Received in RO/DO/IU Books
Dr Cash in Bank LCCA, Current 10102020 00 (SL Trust Fund Account)
Cr Due to Central Office 20301010 00 13
6.5 Processing and Recording Revenues in the Books
At the close of each business day, the Collecting Officers shall accomplish the Report of
Collections and Deposits (RCD) in accordance with the instructions provided in Volume II of
the NGAS Manual for the RCD. The RCD shall be accompanied with duplicate copies of the
Official Receipts and Deposit Slips and a copy shall be furnished to the Accounting Unit for
accounting purposes. The collections are recorded on the left hand side of the RCD,
including the details of: the Payee; the Official Receipt (OR) Number; Amount; and Income
Account (Object Code) for the receipt. The deposit to the Bank or to Treasury is recorded on
the right hand side of the RCD.
The Collection and the Deposit represent two separate transactions (and 2 separate JEVs)
processed in the DepED books, as defined below.
13 If the Sub-ARO is issued by the RO, the Credit shall be made to Account 20302030 (Due to Regional Offices).
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6.5.1 Processing Receipts of Income Deposited to DepED Accounts Held with

AGDBs
All collections deposited with AGDB for the account of the agency shall be recorded. The
Income Account is credited upon collection of the cash or its equivalent, and recorded by the
Bookkeeper in the eFRS, under the Cash Collection Menu and RA Receipt Sub-
Transaction Type, accounting for the collection as follows:
Processing the Collection of Income from the RCD (all levels) 14
Dr Cash Collecting Officer 10101010 00

Cr Income Account (by Category) 4xxxxxxx 00
The Collection is Deposited into the LCCA and processed (from details on the RCD) into
eFRS, using the Bank Deposit Menu and the Deposit of Collections of RA Sub-
Transaction Type. This clears the balance against the Cash Collecting Officer, via the
Accounting Entry is as follows:
Processing the Deposit to DepED Held Accounts with AGDBs (all levels)
Dr Cash in Bank LCCA, Current 10102020 00 (SL Trust Fund Account)
Cr Cash Collecting Officer 10101010 00
6.5.2 Processing Receipts for Income Deposited with Treasury
All collections deposited with AGDB for the account of the Bureau of Treasury (BTr) shall be
recorded. The income account is credited upon collection of the cash or its equivalent, with
the transaction in eFRS processed through Cash Collection Menu and Due to BTr NG
Sub-Transaction Type and accounted for as follows:
Processing the Collection of Income from the RCD (all levels)
Cr Income Account (by Category) 4xxxxxxx 00
The Deposit to the Account of the BTr is processed in the eFRS under the Bank Deposit
Menu and Deposit to BTr NG Sub-Transaction Type, and accounted for as follows:
Processing the Deposit to Bureau of Treasury (all levels)
Dr Cash - Treasury/Agency Deposit - Regular 10104010 00
NB: It should be noted that the Cash - Treasury/Agency Deposit Account is netted against
Government Equity at the end of the Financial Year. This is based on the management of
the Consolidated Accounts of Government being undertaken centrally (and NGAs not
maintaining the actual Cash or Bank Account).
14 Where the income is deposited directly to the Bank, e.g. via funds transfer, the collections stage is omitted and
the Income is recorded directly against Bank Deposit (i.e. Crediting the specific Income Items and Debiting LCCA
Bank Account).
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6.6 Other General Income
Other income includes items such as share from PAGCORP/PCSO and Income from Grants
and Donations in Cash and in Kind. The cash receipts for these incomes are processed in
the usual manner in eFRS usually directly through the Bank Deposit Menu, where the
monies are deposited directly to the bank. Where the monies are received through Check,
the Income will be initially recorded against the Cash Collecting Office, under the Cash
Collection Menu, with the deposit recorded subsequently against the Bank Deposit Menu.
See Section 6.5.1, above, on processing of Cash Collections and Bank Deposits.
Income from Grant and Donations in Kind do not involve any transactions in cash. These
are therefore processed through the Other Transactions Menu using the Others Sub-
Transaction Type.
6.7 Gains
6.7.1 Currency Gains
PPSAS 4 prescribes the treatment for the Effects of Changes in Foreign Exchange Rates,
specifically dealing with Exchange Differences resulting in gains and losses.
Since DepED maintains bank accounts in foreign currency, primarily due to the
implementation of Foreign-Assisted Projects, the financial effects of changes in exchange
rates, either gain or loss, shall be accounted for in the financial statements at each reporting
date. The foreign currency monetary items shall be translated using the closing rate.
PPSAS 4 prescribes the standards on Foreign Currency Gains (and losses). However,
DepED shall not apply the standards in its entirety. During the preparation of Trial Balance,
the Accounting unit shall prepare JEV to recognize the FOREX difference. It shall be
processed in the eFRS under the Transaction and Sub-Transaction Types, and accounted
for as follows:
Recognizing FOREX difference
Dr Cash in Bank FCCA 10103020 00
Cr Gain on Foreign Exchange 40501010 00
Or
Dr Loss on Foreign Exchange 50504010 00
Cr Cash in Bank FCCA 10103020 00
6.7.2 Gain on Sale of PPE and Agricultural Produce
Gain on Sale of PPE
The processes for disposing and selling Non-Current Assets are detailed in Section 17.6.
Gain on Sale of Agricultural Produce
In the case of DepED, the agricultural schools do not particularly engage in business of
producing and selling agricultural produce but for research and development purposes. The
sale is purposely to augment MOOE funds and the proceeds of which are used to purchase
materials and/or supplies for the laboratories.
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IPSAS 27 prescribes the accounting treatment and disclosures related to agricultural activity.
However, DepED shall not apply the standards in its entirety. All costs related to the
purchase and production shall be treated as an outright expense. All proceeds of the sale of
agricultural produce shall be considered Gain on Sale of Agricultural Produce.
The Accounting unit shall prepare JEV to record cash receipts and deposits. Reference shall
be made to 1.5.2 if remitted directly to BTr. Reference shall also be made to 1.5.1 if the
collection and deposit will be used to augment MOOE funds. The Bookkeeper shall record
the transaction as follows:
Accounting for Sale of Agricultural Produce
Cr Gain on Sale of Agricultural Produce 40501090 00
6.8 UACS Income Account Object Codes
The individual income accounts relevant to DepED comprise the following:
INCOME ACCCOUNT OBJECT CODES

Tax Revenues
o 40104010 00 Documentary Stamp Tax
General Income
o Service income
40201010 00 Permit Fees
40201020 00 Registration Fees
40201040 00 Clearance and Certification Fees
40201100 00 Inspection Fees
40201110 00 Verification and Authentication Fees
40201140 00 Fines and Penalties-Service Income
40101990 00 Other Service Income
o Business Income
40202010 00 School Fees (not currently used in DepED)
40202020 00 Affiliation Fees
40202030 00 Examination Fees
40202040 00 Seminar Fees/Training Fees
40202050 00 Rent/Lease Income
40202150 00 Income from Printing and Publication
40202160 00 Sales Revenue
40202210 00 Interest Income
40202230 00 Fines and Penalties - Business Income
40202990 00 Other Business Income
Subsidy Income
o 40301010 00 Subsidy from National Government
o 40301020 00 Subsidy from Other National Government Agencies
o 40301030 00 Assistance from Local Government Unit
o 40301050 00 Subsidy from Other Funds
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INCOME ACCCOUNT OBJECT CODES.....continued

Other General Income
o 40401020 00 Share from PAGCOR/PCSO
o 40402010 00 Income from Grants and Donations in Cash
o 40402020 00 Income from Grants and Donations in Kind
Gains
o 40501010 00 Gain on Foreign Exchange (FOREX)
o 40501040 00 Gain on Sale of Property, Plant and Equipment
o 40501090 00 Gain on Sale of Agricultural Produce
o 40501990 00 Other Gains
Other Non-operating Income
o 40601010 00 Sale of Garnished/Confiscated/Abandoned/Seized Goods
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7 Capital Outlay
Capital Outlay is the money spent by DepED to acquire, overhaul or upgrade its capital
assets. Capital Outlays are commonly referred to as capital expenditures and relate to the
Budget Management perspective of the capital acquisitions from Budget Formulation, and
Budget Release up to Obligation.
From the Accounting perspective, the Asset is capitalized in the books when received
officially. Section 17 discusses the accounting treatment for Non-Current Assets. General
Procurement Transactions (covering Inventory and MOOE, as well as Capital Outlay) are
discussed in Section 13. The Procure to Pay (P2P) processes described below should be
read in conjunction with Section 13, with specific reference to Figure 7.
The Department is required to follow appropriate procurement procedures as outlined in RA

9184 and the associated Implementing Rules and Regulations (IRR). The procedures
outlined in this Section describe the administrative and accounting activities to be performed
in conjunction with those procurement procedures supporting the end to end process for
capital expenditure. The Financial Management steps in the Departments Capital Outlay
process include:
Step 1: Capital Planning and Budgeting
Step 2: Goods and Services Requisitioning
Step 3: Procurement and Contract Management
Step 4: Delivery, Inspection and Acceptance of Goods
Step 5: Payment for Goods
Step 6: Accounting for Assets
Procurement is performed by either:

(i) The Departments Procurement Services and the established Bids and Awards
Committee (BAC); or
(ii) The Department of Budget and Management Procurement Services (DBM PS).
Generally, DepED Procurement Services will be utilized; however DBM PS may be utilized
for:
The procurement of common-use supplies as guided by Administrative Order No. 17
dated 28 July 2011
The procurement of Goods when earmarked funding required for a particular activity
is due to lapse.
The Department usually incurs the following types of Capital expenditure:

Procurement of Goods e.g. ICT equipment, textbooks, desks and chairs and routine
supplies;
Procurement of Services, e.g. Engagement of consultancy or professional services;
and
Procurement of Civil Works, e.g. school / office building and classroom construction.
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7.1 Capital Outlay Policy
The Departments overall policy regarding Capital Expenditure and the subsequent
procurement is to ensure that value for money is obtained. This does not mean that the
Department is obliged to accept lowest cost. The concept of value for money is centered
on obtaining the best quality and value for the price and that the quality of the goods or
services meets the stipulated criteria and budgetary constraints that are in place. The
following factors are considered when making significant investments in the Departments
assets:
Fitness for Purpose;
Lifecycle costs;
Time to site / availability;
Service support and warranty;
Build quality; and
Efficiency of product or service.
All capital procurements must be formally approved and processed in accordance with RA
9184 and its IRR and other government legislation for ensuring the probity, accountability
and transparency in Government operations.
7.2 Planning and Budgeting
Capital expenditure planning must be performed in accordance with the Governments

Medium Term Expenditure Framework (MTEF) and also Section 7 of the RA 9184 IRR.
The MTEF requires the Department to link its capital expenditure to its strategic plans with
clearly defined performance measurement criteria. Projected capital expenditure forward
estimates for three years must be prepared and submitted by each business unit for review
and approval prior to inclusion in the Departments budget request.
In order to prepare the Capital Outlay budget it is essential that the Departments Fixed
Asset Register (FAR) is maintained up to date as this will provide the starting point for capital
investment and replacement decisions. It is therefore essential that the FAR is maintained
and that all business units preparing a Project Procurement Management Plan (PPMP)
incorporate the relevant portions of a validated FAR in their proposals as justification for
acquiring new Property Plant and Equipment.
Approved PPMPs will be included in the Departments Annual Procurement Plan (APP) for
the current financial period. No capital procurement shall be undertaken unless it is included
in the Departments APP.
The APP may be updated or amended in accordance with RA9184 and its IRR. PPMPs and
the APP must be updated every six months.
All budget proposals for Capital Outlay items shall be correctly coded to the appropriate
UACS Object Codes. Annex D shows the Capital Outlay Object Codes alongside their
corresponding, counterpart Non-Current Asset/PPE Codes used for Accounting purposes.
Capital Outlay is primarily undertaken with Central Office and Region Offices.
However, DOs may also undertake Capital Outlay upon receipt of a Sub-ARO.
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7.3 Purchase Requisition
The purchase requisition (PR) is an internal request to purchase from a business unit. For
large capital expenditure programs or projects the following process is observed. The
requesting business unit reviews the prior approval request submitted when preparing the
PPMP. This will require a review of the initial technical specifications and costings for the
proposed goods or services. The prior costings and technical specifications should then be
updated against current records and information. This may include a comparison with
existing data maintained in the FAR and the eBEIS.
Once the business unit completes the comparison, a decision can be made on whether to
proceed with the original specification and costing for the goods and services or whether
amendments are required prior to commencing the purchase order. If amendments are
required, this requires approval from the head of the respective business unit and the total
value of any proposed purchase may not exceed the approved budget allocation in the APP.
7.3.1 Purchase Request Preparation
The purchase request is prepared by the business unit. A sample purchase request is
included in Annex B. It must include the following details:
Requestor name and business unit;
Account classification code details;
Description of goods/services;
Quantity of goods and services;
Expected completion / delivery date;
Value of goods/services requested including breakdown of amount and taxes;
Copy of APP; and
Approval of the head of the business unit.
Once completed on the standard proforma document the purchase request becomes an
Agency Procurement Request (APR). The APR must be initialed by the preparer.
7.3.2 Funds Availability and Purchase Request Approval
The APR and supporting documents are submitted to Budget Division (BD). They are
inspected by a budget officer and funds availability determined. If all the documents are
complete with funds available, the budget officer submits the APR to the head of budget for
approval. This is granted through affixing initials on the APR. If the documents are not
complete or the funds are unavailable the APR is returned to the responsible business unit.
The approved APR is then submitted to Planning Division to verify that the proposed
procurement is included in the APP. The planning chief certifies the APR if this is the case. If
the proposed procurement is not included in the APP, the APR is returned to the responsible
business unit.
If certified by the chief of Planning Division, the APR and all supporting documents are
submitted to Accounting Division (AD) to check for completeness. If verified complete, the
chief accountant/head of accounting, affixes their signature on the APR.
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The final steps in the APR approval process are determined by the value of the procurement
and the procuring entity, i.e. whether it is CO or a RO. If the procurement is high value and
completed through CO, the APR will be submitted to the following individuals depending on
value:
Assistant Secretary for Finance: [10 million and below]
Undersecretary for Finance and Administration: [20 million and below]
Department Secretary: [20 million and above]
If final approval is provided by the appropriate designated individual, the APR is returned to
the requesting business unit which must then submit the approved APR to DepED / DBM
Procurement Services with the approved APP, PPMP and Technical Specifications.
The Regional Director authorizes Capital Outlay expenditure up to the amount provided for
in the Budget Release
7.4 Procurement and Contract Management
Formal procurement procedures are outlined in RA9184 and its IRR. The administrative
activities associated with the procurement process are outlined below in accordance with the
various steps of that process. The procurement process is completed through the Bids and
Awards Committee (BAC) with assistance from the BAC Secretariat.
Step 1 Procurement Preparation
The BAC Secretariat prepares the bidding documents for the proposed procurement. This
should be completed within 7 days and includes the following activities:
Ensure budget availability;
Prepare instructions to bidders;
Prepare Terms of Reference;
Determine eligibility requirements, plans and technical specifications;
Determine form of bid, price form, list of goods or bill of quantities;
Determine delivery schedule, bid and performance securities; and
Determine any special contract conditions.
Step 2 Pre-procurement Conference
The purchasing business unit presents their procurement readiness to the BAC.
Step 3 Invitation to Bid
The BAC advertises the procurement on the Department website, PHILGEPS, local
newspapers and on the Departments premises. The procurement must be advertised for at
least 7 days. The BAC will also issue bidding documents during this period.
Step 4 Pre-bid Conference
For contracts in excess of 1million, a pre-bid conference must be held at least 12 days prior
to the bid closing. During the conference, bidders may request clarification on the bid and all
clarifications must be submitted by bidders at least 10 days prior to the closing of the bid. If
Page 69 of 224
there are supplemental information or requirements this must be posted by the BAC on
PHILGEPS and the Department website at least 7 days prior to the bid closing.
Step 5 Receipt and Opening of Bids
The BAC should ensure that at least 45 days is provided from advertising to the bid opening
for the procurement of all goods. Bidder eligibility requirements can be assessed at any time
during this period. The bid opening will occur immediately after the bid close on a pre-set
time and date.
Step 6 Bid Evaluation
A preliminary evaluation of bids is performed by the BAC to ensure completeness of

submissions from bidders and checked against a ceiling for bid prices. The bids are then
evaluated against pre-determined criteria and the bidders proposals ranked. The bid
evaluation should be completed within 7 days of the bid opening and a short list of bidders
drawn up.
Step 7 Post Qualification of Bids
During this phase, legal, technical and financial requirements are verified. This should take
no more than 7 days, and under no circumstances is it permitted to take longer than 30
days.
Step 8 Contract Award
The BAC recommends the award of the contract to the highest scoring bidder to the Head of
the Procuring Entity (HOPE) who can then either approve or disapprove the contract. The
HOPE should make this decision within 7 days. If the contract is approved, a notice of
award is processed.
The ORS is prepared and approved to Obligate the Budget Funds prior to release of the
contract to the winning bidder (See Section 5.4) and a Purchase Order is also prepared and
attached with the contract and other documents. The winning bidder is notified for contract
signing. The contract signing and deposit of the performance security should be completed
within 10 days of the HOPE decision to award the contract.
The Notice to Proceed (NTP) is then issued by the BAC Secretariat and should be posted on
PHILGEPS within 3 calendar days. The entire procurement process must be completed
within 90 days. If this is not achieved the process will have to be re-performed.
If the winning bidder does not accept the contract awarded, the BAC moves for the second
highest scoring bidder and if the second highest bid is unacceptable, the procurement is re-
bid and a failed procurement announced. If the second advertised procurement fails, the
Department may enter into a negotiated contract.
Note: For smaller scale Capital Purchases the award may be processed through the issue
of a Purchase Order only without a detailed contract.
Step 9 Contract Implementation
The contract is managed by the purchasing business unit and must be completed within 180
days of the issuance of the NTP. The delivery schedule will be discussed and agreed with
the winning contractor as early as possible along with regular contract implementation
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progress meetings. In instances where goods are delivered directly to operating

units/schools in large quantities, the business unit may need to perform school orientation to
equip schools for the delivery, inspections and utilization of the new PPE which they are due
to receive. The operating unit orientation must be performed prior to the delivery of PPE by
the contractor.
In these instances the contractor will notify the operating unit of the delivery dates and an
operating unit inspection team will be formed for inspecting the goods upon delivery.
Contract Management System
The Department does not currently operate dedicated contract management software. This
places great significance on the business unit to manage the critical dates of all contracts, to
ensure the contract outputs and outcomes are achieved.
Defining the Term Contractor
A contractor is an independent entity such as an individual, partnership, trust or company

that agrees to produce a designated result for an agreed price. Generally a contractor will
meet the following requirements;
Is paid for results achieved;
Is independent of the Department;
Performs work for other entities;
Is free to accept and reject work; and
Will make a profit or loss from performing the work.
Contract Variations
Contract variations are performed in accordance with RA 9184. The reasons for all variations
must be clearly stated and agreed in writing through a Variation Order duly approved by the
Head of the Procuring Entity. Variation Orders may be issued by the procuring entity to cover
any increase/decrease in quantities, including the introduction of new work items that are not
included in the original contract or reclassification of work items. The cumulative amount of
the positive or additive Variation Order should not exceed ten percent (10%) of the original
contract price.
In addition, Variation Orders may come either through a Change Order (for any
decrease/increase in quantities) or an Extra Work Order (for introduction of new work
necessary for the completion, improvement or protection of the project which was not
included as items of work in the original contract).
7.5 Delivery, Inspection and Acceptance of Capital Goods
This stage of the process involves the following activities:

Preparation of the Invoice Receipt for Property (IRP) [for centrally procured items];
Agreement of the Delivery Schedule;
Pre-delivery inspection of goods;
Site inspection of goods;
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IRP verification and completion;

Supplier invoicing; and
Recording goods delivery Inspection and Acceptance Report (IAR).
Many of these goods receiving steps (except for pre-preparation of the IRP) are common to
all procurement, including Inventory and directly expensed MOOE items (See Section 13).
Invoice Receipt for Property with Pre-Drafted IAR (Centrally Procured Items Only15)
Once the NTP has been provided the concerned business unit (e.g. PFSED, Technical
Services, etc.) should submit an allocation list to Property and Supply Division (Central
Office) of all goods on soft and hard copy to be delivered to the respective operating units on
a geographic basis. A Property and Supply admin officer will prepare the IRP based on the
details provided by the business unit, as well as a pre-drafted copy of the Inspection and
Acceptance Report (IAR) for the forthcoming delivery.
The admin assistant will then print IRP and affix their signature. This will be reviewed and
submitted to the chief/head of the Property and Supply office. After review the IRP will be
submitted to the appropriate manager for final approval for transfer of property. For CO, it
will be submitted to the Undersecretary for Finance and Administration for final approval.
Once approved the electronic/facsimile signature of the Undersecretary will be provided on
the IRP which is then to be returned to the supply officer for organizing the distribution to the
respective operating units. Records Division manages the distribution of the IRP through the
designated courier services of the Department.
When the operating unit is a school, the IRP will be distributed to the Schools Division
Superintendent at the Division Office which is responsible for the school. The DO will then
validate the IRP with the actual goods received by the designated school as outlined below
under IRP verification.
The IAR is channeled via the supplier, who attaches with the Delivery Receipt (DR) when
delivering the goods to the recipient DepED office.
Delivery Schedule
The delivery schedule should be prepared by the contractor and agreed with the business
unit responsible for managing the contract. The delivery schedule should include dates for all
the key deliverables in the contract e.g. stipulated goods to be delivered to an operating unit
by an agreed date. Once the delivery schedule is agreed, the contractor will notify the
operating unit of any goods or services to be delivered. It is the responsibility of the business
unit managing the contract to ensure that the delivery schedule is achieved. This requires
regular monitoring and updates between the contractor and the respective business units.
If there are significant delays in the delivery schedule the business unit should notify the
responsible executive manager for the area as well as the Undersecretary for Finance and
Administration. Early notification is required to enable the Department to best manage its
finances and service delivery.
15 In this context, this relates to centrally procured items which are delivered direct to the recipient offices as
opposed to items centrally procured and received centrally for later distribution. This latter scenario is covered
under Transfers of Non-Current Assets in Section 17.7.
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Pre-delivery Inspection
Prior to delivery of goods, the contractor should invite a DepED team for completing a pre-
delivery inspection. The team should compose of individuals from accounting, property and
supply and the requesting business unit. The team will check a random sample of goods
against the contract specifications.
The inspection team will prepare and inspection report. If the inspection fails, a second
inspection must be performed prior to the delivery of goods to the operating units.
Site Inspection
The contractor should deliver the goods to the operating unit as per the agreed delivery
schedule. A Delivery Receipt (DR) will be provided by the contractor. The operating unit
property custodian will inspect the DR, affix their signature and submit the DR to the
operating units designated inspectorate team. The inspectorate team comprising of three
individuals inspects the goods and confirms receipt of goods. The inspectorate team is
responsible for identifying all items not received and making a note of those items. The
inspectorate team will prepare an Inspection and Acceptance Report (IAR) in standard
format and submit it along with the DR to the operating unit property custodian for approval.
The original IAR and DR are then returned to the contractor for payment purposes.
IRP Verification
The DO receives the IRP from the CO or RO. The DO supply officer will then validate the
IRP against the goods actually received. If there are differences between the IRP and the
actual delivery, the supply officer will notify the business unit managing the contract. The
business unit may then choose to perform their own inspection depending on the extent of
the differences discovered by the supply officer.
If there are no differences found between the IRP and the physical inspection, the supply
officer should affix their signature on the IRP and submit it to the DO SDS for final approval /
signing. Once the IRP is signed, it is returned, usually through courier to the office which
prepared it. There are four copies of the IRP prepared and retained as follows:
(i) One for DO records by the supply officer;
(ii) One for DO records by the accounting officer;
(iii) One for Property and Supply at CO/RO; and
(iv) One for Accounting at CO/RO.
Supplier Invoicing
When the contract is consists of a number of sites/operating units which require numerous
DRs and IARs, it is the responsibility of the business unit managing the contract to match
and inspect all DRs and IARs received, and compare these against the contract and the
contractors invoice.
Recording Property/Goods Received Issue of the IAR
The IRP, DR and IAR are the key documents for recording the receipt of goods, especially
the reconciliation of centrally procured items. All three documents must be matched prior to
the receipt of goods being recognized by the Department and accepting the Suppliers
Invoice. The process of matching these documents is managed through Property and Supply
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Division in Central Office for centrally procured items to support the payment by Central
Office.
The Property and Supply Officer (PSO) in the Receiving Office takes delivery and inspects
the capital goods. If the items are in good condition and conform to the standards, quality
and quantities specified in the pre-drafted IRP and IAR, the PSO signs acceptance on the
IAR, as well as signing the suppliers Delivery Receipt (DR). A copy of the DR is retained in
the receiving office and other copies are retained by the Supplier. The Head of Office
reviews the documents and signs/approves the IRP. The Receiving Office dispatches
copies (by courier) of the IRP, DR and IAR to Central Office for reconciling the goods
received for the contract as a whole, and for accounting purposes. The IRP is used as the
basis for preparing the JEVs both in the centrally procuring and in the Receiving Offices.
These JEVs relate to bringing the Non-Current Assets into the Books of Accounts and are
accounted as described in Section 17.7.
PSD in Central Office receives the IRP from the Receiving Office. The IAR and the DR are
received via the (procuring) business unit responsible for managing the contract. Once the
three documents are matched the items are recorded in a registry of deliveries.
If deliveries are divided into batches, a batch summary is prepared once all the documents
for a batch are obtained. All documents for the batch are scanned and filed electronically by
Property and Supply. Once the documents for the batch are complete, they are forwarded to
the accounting officer for entry into the accounting system.
Notes:
1. Where goods are received by the procuring office (not centrally procured), the IAR and
DR are signed, approving the Inspection and Acceptance of the Capital Items, and no
IRP is required. These documents are used to support the DV for payment to the
supplier.
2. For centrally procured items, the Budget Execution is realized against the procuring
office (e.g. Central Office) in the same way as items procured for the offices own
purposes. However, for accounting purposes, the custodianship and accountability for
the Non-Current Assets (NCA) is passed to the Receiving Offices via the IRP and IAR
and the resulting JEV (this follows the same process as transfer of assets described in
Section 17.7.2. Accountability is passed to individual officers through the
Acknowledgment of Receipt of Equipment (ARE). See Section 17 for management and
accounting treatment of NCA.
7.6 Capital Outlay through Advance Payments
7.6.1 Advances to GOCCs and LGUs for Construction of Assets
Advances are usually provided to NGAs, LGU or GOCC which acquire or constructed assets
on behalf of DepED. Prior to making advance payments to these agencies or corporations
the funds must be obligated through an ORS. The ORS is coded to the relevant Capital
Outlay Object Code, whereas the DV is coded to Inter-Agency Receivables Due from
GOCCs/LGUs (1030403020/030); this is discussed in more detail in Section 15.3. The
Asset is ultimately brought to account upon liquidation of the Advance. The recognition of
the Asset is discussed in Section17.3.5.
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7.6.2 Payments to Suppliers in Advance of Delivery of Capital Goods
Budget Execution is accomplished once the Advance Payment is made. The DV is allocated
as an advance to Inter-Agency Receivables. Ultimately, the liquidation is made on the basis
of the Delivery Receipt, e.g. from DBM-PS, and the IARs. (Also See Section 15.2.1
regarding management of the Receivable).
7.7 Payment/Disbursement
The primary payment mechanisms for the Departments Capital Outlay are:
Direct Payment of Suppliers Invoice;
Payment in Advance (See Section 15.3); and
Foreign currency payments.
7.7.1 Direct Payment of Suppliers Invoice
Contractors/Suppliers deliver their invoices to the business unit responsible for managing the
contract. If invoices are submitted to the accounting office, these will be forwarded to the
responsible business unit. The invoice is matched with the IAR, the DR and the ORS, and
the procuring business unit prepares and approves the DV for submission to the Accounting
Office for Payment. Budget Execution is accomplished against the Capital Outlay item once
the disbursement is made. The Asset is brought to Account to the relevant PPE Account, as
shown below (a list of Capital Outlay Codes against their corresponding PPE Codes are
contained in Annex D.
Payment of Suppliers Invoice for Capital Outlay
Dr PPE ICT Equipment 10605030 00 (for example)
Cr Cash in Bank MDS, Regular 10104040 00 (CO SL for DOs/IUs)
7.7.2 Advance Payments to GOCCs and LGUs for Construction on Behalf of DepED
Budget Execution is accomplished once the Advance Payment is made. However the PPE
Asset is not brought to Account until the Advance is liquidated. See Section 15.3 for the
accounting treatment for these advances.
7.7.3 Advance Payments to Suppliers
Primarily, this relates to payments made in advance of supply to DBM-PS. These advances
are made for various reasons as described in Section 15.2.1 below. Budget Execution is
accomplished as soon as the advance payment is made. The Asset is brought to account
upon liquidation of the advance against the DBM Delivery Receipt (DR), which proxies as
the supplier invoice as well as receipt of delivery. The Accounting treatment is prescribed in
Section 15.2.1.
7.7.4 Foreign Currency Payments
The Department treats foreign currency payments in the same manner as domestic
payments when they arise.
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7.7.5 Payment Completion
The accounting unit will issue a payment advice to the supplier upon and request an Official
Receipt (OR) from the supplier as evidence of the payment being made.
7.8 Accounting Process
The accounting process is made up of the following steps:

Receipt of Disbursement Voucher (DV)
Pre-audit of DV this includes document inspection and review for completeness
and accuracy of computations.
Payment Approval this includes the validation checks performed by the Chief of
Accounting Division, the Assistant Secretary for Finance (F&A), and final approval by
the Undersecretary for Finance and Administration.
Payment Release this includes checking for the availability of cash, processing
ADA or checks and final approval from the Undersecretary for F&A prior to payment
release.
Entry of Transactions into eFRS the clerk responsible for processing transactions
into eFRS should maintain all transaction up to date on a daily basis.
Updating sub ledger accounts and advance registers
Document filing all JEVs with supporting documents should be filed in accordance
with Government mandatory requirements. The Department should maintain all
supporting documents electronically for their own records. The JEV are created and
stored electronically in eFRS.
Reconciling General Ledgers with AP and AR Accounts as described in Section 18.8
Transfer Assets to Operating Units as outlined in Section 19.
7.9 Controls over Capital Outlay
The key controls surrounding the Capital Outlay process are similar to those outlined in other
Sections of this Manual. They include:
Robust capital planning and budget controls;
Financial and purchasing delegations;
Dedicated procurement processes and procedures;
Segregation of duties between those ordering, making payment and receiving goods;
Authorizations over ordering, payment and asset transfers;
Accounting controls over recording and reporting capital expenditure; and
Management of Accounts Payable including aging of AP.
Other key controls specific to capital outlay include:
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Reconciliation of General Ledger with AP and AR Ledgers
AP sub ledgers should be reconciled by the accounting officer for all payments released
based on receipt of invoice. The reconciliation will ensure the completeness and accuracy of
classification and valuation for all purchases. Completeness is further confirmed through the
reconciliation of AP accounts with supplier statements. For advance payments, the
accounting officer is responsible for reconciling the AR sub ledger with the General Ledger
as outlined in Section 16. This will also include a reconciliation of supplier statements and
ensure that all liquidation reports have been recorded and properly classified.
Project Management
The Department benefits significantly by knowing and understanding the markets in which it
operates and the key suppliers within those markets. It also benefits significantly through
having personnel with expertise in managing large capital projects. This includes having
managers with sufficient skills for setting up projects and dealing with all the necessary
administration, financial management and monitoring requirements. The overall success of
any capital project will be determined by the successful management of the key components
of the project and hence the person responsible for the daily operations of the program.
Managing Supplier Complaints
Complaints of an operational nature including the level of service supplied and the timing
and quality of goods received from a particular supplier, and goods not received should be
made in writing to the Director of Procurement Services Central Office. The concerns raised
should be actioned immediately directly with the contractor. If other similar complaints are
raised against the same contractor the Department will take this into consideration when
awarding future contracts. A list of all complaints raised must be maintained up to date in a
Complaints Register.
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8 Personnel Services
8.1 Overview of Payroll Payments Processes
This Manual focuses on the Financial Management (Budget Execution and Accounting)
processes and this section only gives a very brief overview of the Human Resource aspects
and Payroll calculation processes.
8.1.1 Process and Control Objectives
The Control Objectives of this process include the following:

Proper accounting for payroll expenses;
Full and proper settlement of 3rd Party Payroll Liabilities (Remittances), reconciling
and clearing any liability balances in the process;
8.1.2 Types of Payrolls and Payment Mechanisms
Offices process two types of payrolls: the regular payroll and supplementary payrolls, for
employees and teachers who have not yet been taken onto the regular payroll. The
supplementary payrolls are calculated manually using MS Excel. The regular payrolls are
processed (computed) by Systems Division for Central office and the Regional Payroll
Servicing Unit (RPSU) for the RO, DO and Schools payrolls. Offices operate two FoxPro
systems:
1. The Payroll System, for computing the payrolls and related documents; and
2. The Automatic Payroll Deduction System (APDS), for managing the payroll
deductions.
CO and the ROs manage their own Payroll Payment processes fully. In some instances,
where the DOs and IUs have been successful in mobilizing their banks to make ATM
Payments direct, they also manage their Payroll Payment processes fully. In other DOs and
IUs, the RO facilitates the Payroll Payments, either through ATM or through Continuous
Form Checks (CFCs). Currently, only 2 Regions are yet to achieve full ATM implementation;
Sections 8.4 and 8.5 detail the processes for CFCs specific to the offices in those Regions.
However, it is envisaged that full implementation will be achieved in due course, at which
time they will take up the processes as for other DOs and IUs, at which time Sub-section can
be deleted from this manual.
8.1.3 Use of UACS Account Codes
Within the system the UACS account codes are selected from drop down lists of relevant
codes. Some of the main codes are described below.
Funds Source
Main Payroll Expenditures: General Fund, Specific Budget of Agency: 01101101
RLIP: Government Contributions 01104102
Special Purpose Funds - Pensions and Gratuities: 01101407
Automatic Appropriations: Pension under R.A. No. 2087: 01104103
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MFO_PAP
The MFO_PAP code is determined from the Pay Code and Category of School, with Pay
Code identifying whether the pay is for Administration Staff or Teachers:
Admin Staff: GAS - General Management and Supervision: 260 00 1000010000
Teachers: Operations of Schools - Kindergarten: 261 00 3020500001
Teachers: Elementary Schools: Operations of Schools - Elementary: 261 00
3020500002
Teachers: Secondary Schools: Operations of Schools - Secondary: 262 00
3020500003
Organization Code
Payroll expenditures are processed according to Organizational Code. In CO, separate GJs
are posted for each Bureau. Each RO and IU only has one Organization Code. DO payrolls
are allocated to multiple Organizational Codes, with the DO Proper, Elementary Schools and
Kindergartens allocated to the DOs Organizational Code, and Secondary Schools being
allocated to each specific UACS Organization Code.
Object Code
For expenditures, these include all the PS Items that start with 501xxxxxxx. These items
can be seen in detail in the drop down lists, and include Regular Salaries, PERA, Pag-IBIG,
RLIP, and other Government Contributions, etc.
Remittance deduction codes include: Due to BIR (20201010 00); Due to GSIS (20201020
00); Due to Pag-IBIG (20201030 00); Due to Phil-Health (20201040 00), etc. Other
Remittance Accounts can be found in the drop down lists, when selecting Object Code.
8.2 High Level Outline of the Regular Payroll Process
The overall Payroll Payments process is broken down into major process groups in the
following sections below. CO and the ROs manage their own payroll payment processes
fully.
The DOs and IUs rely on their Regional Payroll Servicing Units (RPSUs) for processing the
payrolls (and all payroll reports, payslips and other outputs) through their Regional Payroll
Systems. In some instances, the DOs and IUs also fully manage the whole payment
process to the bank to credit funds to the ATM accounts. In others, the DOs and IUs make
payment to their RO, who effects onward payment to the Bank for crediting ATM, or in the
case of the Non-ATM Regions, for printing the CFCs payable to the employees/teachers.
The Regular Payroll processes are prescribed in detail throughout this Section. At the High
Level, these processes include:
Payroll where the Payments to employees and teachers are made by the specific
responsible office (See Section 8.3);
Payroll where the Payments to employees and teachers are made by the RPSU
(See Section 8.4); and
Processes and Accounting Treatment in ROs for managing the Payroll Payments on
behalf of the responsible (DO and IU) offices (See Section 8.5);
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8.3 Payroll Paid Through Own Office (Not Through RPSU)
This Sub-Section covers the following processes:

(i) Preparations of Obligation and DV in Personnel Office (Section 8.3.1);
(ii) Approval and processing of Obligation by Budget Office (Section 8.3.2);
(iii) Approval and Processing of DV by Accounting Office (Section 8.3.3);
(iv) Cash Office processes for preparing the Payments, direct to employee/teacher
ATM recipients (Section 8.3.4);
(v) Processing the DV and JEV - Direct Payment to Bank (Section 8.3.5); and
(vi) Settlement of Payroll Deduction Inter-Agency and 3rd Party Liabilities (Section
8.3.6).
8.3.1 Preparation and Approval of ORS, DV and Supporting Documents in Personnel
The Payrolls are processed on a Regional Basis through the Regional Payroll Servicing
Units, and through Systems Division for CO. The payroll computations are based on the
Forms 7 submitted from all schools and offices, coordinated through their respective DOs.
The Payrolls (once corrected and processed) are printed and submitted to the Personnel
Office, along with payroll listings, pay slips, summary and detail listings of payroll deductions.
A soft copy of the payroll, including deductions is sent to Accounting Office
(Accounting Division in CO) for managing the accounting aspects for the deductions
and remittances, including Provident Fund, etc.
The Payroll Account Credit System Validation (PACSVAL) is sent to the Accounting
Office (AD in CO) for accompanying the ADA payment for payroll in CO.
Personnel Officer prepares Manual ORS (formerly OBR), DV and attaches with the payroll
documents. Head of Personnel signs and certifies ORS and DV that the supporting
documents are valid, that they are proper and legal, there is available allotment, and that the
payment is necessary, lawful and under his/her supervision. The Head of Personnel signs
Box A of the ORS and Box B of the DV. The documents are then submitted Budget Office
for funds checking and approval.
8.3.2 Approval and Processing of Obligation by Budget Staff

The Budget Officer checks the ORS verifying that Allotment (for each line in Obligation) is
available, that the charge for the approved purpose, and that all the documents are present
and correct (arithmetically and otherwise). The Budget Officer annotates the UACS coding
onto the ORS, including Fund, MFO/PAP, Organization Code, and Object Code (for the PS
Expenditures), (See Section 8.1.3 above).
The Budget Officer enters the details into eBMS: ORS Number; Payee; Amount; Particulars
(narrative description); Allotment Class/Period; Date; Responsibility Centre (where
applicable); and Full UACS Code. (Note: The Payee will be the Bank making the ATM
Payments, except for DOs and IUs which make the funding 16 payment to the Regional
Office, to effect ATM or CFC payments to employees on their behalf, as described in
16 These payments are often referred to as funding checks. However, with the greater uptake of payments
through ADA, these could also be funding ADA payments. In this Manual, the generic term funding payments is
used.
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Section, 8.4, following.) Budget Officer initials the ORS and submits to the Head of Budget
Unit, who must sign Box B on the ORS before submitting to Accounting Office for processing
the Disbursement Voucher (DV).
8.3.3 Approval and Processing of DV by Accounting Office
The Accounting Office checks and approves the DV before passing to the Cashier for
payment. The Bookkeeper checks and verifies the DV, checks for completeness of
supporting documents, and for availability of Budget Funds. If the payment is to be made by
ADA the Bookkeeper ticks the relevant box on the DV and prepares the ADA.
In CO, the ROs and some DOs and IUs, the net payroll payment is payable to the Bank
which effects the salary payment via the ATM system. Some DOs and IUs make funding
payments to their RO, which then either (a) effects the payment to the Bank for ATM
payments to employees and teachers; or (b) makes payments directly to the employees and
teachers via Continuous Form Check (CFC). The different scenarios (i.e. with and without
funding payment) are described in the Section 8.3.5 and 8.4.2 below, including the
processing, approving and accounting treatment.
The Bookkeeper annotates the payroll summary and DV with the UACS codes for payments,
deductions and remittances codes. The Bookkeeper also prepares the DVs (and where
appropriate the ADA) for Remittances in settlement of 3rd Party Payroll Liabilities (See
Section 8.7 below).
ADA Payments for Net Payroll
For Net Payroll payments made by ADA, the Bookkeeper prepares the ADA, incorporating
all the relevant details, including the Bank Account from which payment is to be made,
receiving bank account (either the RO Payroll Funding Account or the ATM Bank), Relevant
UACS Codes, ORS Number and Payment Amount.
The ADA is checked, approved and signed by the Head of the Accounting Unit and the Chief
Official for the Office, e.g. Assistant Secretary, FMS in CO; RD in RO; SDS in DO; and
Principal in IU. The ADA is then sent to the Cashier for processing with the Bank.
Check Payments for Net Payroll
Where payment for the Net Payroll is to be made by Check, all the documents are submitted
to the Cash Office for Check preparation.
8.3.4 Processing the Payments in the Cash Office
ADA Payment in Cash Office
The Head Cashier checks the correctness of the ADA, signs the instruction to the Bank at
the Bottom Left hand side of the ADA, and submits to the Bank for payment. Once the Bank
processes the Payment a copy of the ADA is returned and stamped with the payment
details, including the Banks ADA Reference Number.
Check Payment in Cash Office
Where the payment is to be made by Check, the Cashier checks all the documents and
prepares the Check. The Head of Cash Office and Chief of Office, sign the Check, which is
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then released to the RO or Bank. The Cashier incorporates the Check payment into the
Advice of Checks Issued and Cancelled (ACIC) which goes to the Bank.
Reports of Checks and ADA Issued
The Cashier produces the Report of Checks and ADA Issued based on the ACIC and
processed ADAs for all payments made during the day. 17 The RCI is submitted to the
Accounting Office for posting the accounting entries in the books.
8.3.5 Processing the DVs/JEVs Direct Payment to Bank (No Funding Payment)
Under this business case scenario, the Accounting Office brings the Net Pay posting to
Account directly, immediately after notification from the Cash Office. The Bookkeeper enters
the details into the eFRS for the following transactions:
The DV for the Total Net Payroll to the Bank; and
The separate General Journal for Government contribution to GSIS (this Journal is
required because the RLIP contribution to GSIS falls under a separate Fund Source
and the DV for settlement of both Governments and employees contributions.
The details entered include: ORS Reference Number; JEV Number; Date; Payee; Allotment
Class and Period; Description/Explanation; UACS Codes; DV Number; Check/ADA Number
and Date; and Amounts against Debit and Credit line entries as shown below.
Payroll Accounting Treatment for CO/ROs and DOs/IUs (Direct to Bank):
JEV for DV Payment for Net Payroll
Dr Payroll Expenses various 501xxxxx 00
(Regular Salaries; PERA; Pag-IBIG; & other Government contributions)
Cr Due to BIR (Tax Deductions) 20201010 00 (see TRA in Section 21)
Cr Due to GSIS 20201020 00
...... Plus other remittance accounts
Cr Cash in Bank - MDS, Regular 10104040 00 (PS SL for DOs/IUs)
JEV for RLIP (Government Contribution) to GSIS
Dr RLIP 50103010 00 General Journal (GJ)
Cr Due to GISIS 20201020 00 Government Contribution
Fund 01104102
Settlement of payroll deductions, including GSIS, is discussed in the following section.
Printing and Approving JEVs
The Bookkeeper prints the JEVs (4 as detailed above) from the eFRS and checks the details
(and if any errors are found the transaction entries are corrected in the eFRS). Once the
entries are verified as correct, the Bookkeeper signs the printed copies of the JEVs. The
Head of Accounting Unit checks, approves and signs the JEVs.
17 Historically, the RCI was prepared on a monthly basis, often significantly in arrears. Daily processing of the
RCI and daily posting of transactions is a fundamental improvement in financial and internal control.
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8.3.6 Settlement of Payroll Deduction Inter-Agency and 3rd Party Liabilities
Deductions in respect of tax payable to BIR are settled through the TRA system, as detailed
in Section 21; these are accounted for as book entries and do not require any bank payment
for settlement. Many Payroll Deductions relate to Intra-Agency Payables, such as GSIS,
Pag-IBIG and Phil-Health, etc. which require settlement through bank disbursement. Others
relate to 3rd Party Private Lending Institutions (PLIs), which are accounted for under Other
Payables and also settled via Bank Disbursement.
Note that the settlement for GSIS relates to both the employee contribution deducted from
the Payroll, as well as the Government Contribution made via RLIP (Fund 104).
DVs are drawn up in the usual manner for settling the remittances, and undergo the normal
approvals processes. The Accounting Treatment is as follows:
JEV for DV Payment for each Remittance A/C
Dr Due to various 20201xxx 00 (various Payables)
or
Dr Due to GISIS 20201020 00 Total Payment to GSIS
Cr Cash in Bank - MDS, Regular 10104040 00 (PS SL for DOs/IUs)
Section 8.7 details the additional administrative arrangements for the various payroll
deductions.
8.4 Payrolls Processed through RPSU on Behalf DOs/IUs
This Sub-section relates to the processes and accounting treatment in the DO and IU
offices, where the RPSU undertakes the Payroll Payments on their behalf. Specifically, this
Section relates to the Processes and Accounting Treatment for the Funding Checks and
bringing the Payroll Expenditures to account.
In outline the processes are:

(i) Obligating and processing the DV (Section 8.4.1);
(ii) DO/IU Processing of the DVs, GJs and JEVs for the processing the Funding
Payment (Section 8.4.2);
(iii) Processing the GJ for posting Payroll Expenses (Section 8.4.3);
(iv) Settlement of GSIS remittances by DOs for Elementary Schools (ES) only
(Section 8.4.4);
(v) Printing and approving the JEVs. (Section 8.4.5).
The treatment of the Funding Check in the RO is detailed in Section 8.5 below.
8.4.1 Obligating and Processing the DV
The processes for preparing the ORS, the DV and the making the payment is primarily the
same as detailed in Sections 8.3.1 to 8.3.4 above, except that the beneficiary for the DV
and the Payment is the RPSU as opposed to the ATM Bank.
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8.4.2 DO/IU Processing DVs and JEVs for Funding Payments
Processing the Funding Payment
This business case scenario relates to DOs and IUs only where they make Funding
Payments to their respective ROs, which then make the Net Payroll payments on their
behalf, either via the ATM Banking system or through CFC (where ATM is not yet fully rolled
out). In these cases, the RO also makes the payments for settlement of Remittances for 3rd
Party Payroll Liabilities, with the exception of GSIS settlement on Behalf of Elementary
Schools (ES), which are processed via the DO. (Also, Tax Deductions are processed
through book entry to BIR, i.e. TRA, rather than by payment). This Section relates
specifically to the processes and accounting treatment in the DOs and IUs. The processes
and accounting treatment in the ROs for processing the Fund Payments is detailed in
Section 8.5 below.
The Bookkeeper enters all the details (as with disbursements discussed above) into the
eFRS for the following documents and transactions:
The DV for the disbursement of Total Net Payroll - payable to the RO; and
The DV for Total Remittances (excluding ES GSIS) - payable to the RO.
The accounting entries are posted in eFRS, (once they are verified as paid by the Cash
Office), for the Funding Payment, through the Bank Disbursement Menu, as follow:
DO/IU Accounting Treatment for Funding Payment:
JEV for Payment to RO for Net Payroll
Dr Due from Regional Office 10304030 00
Cr Cash in Bank - MDS, Regular 10104040 00 (PS Sub Ledger)
JEV for Payment to RO for Remittances
Dr Due from Regional Office 10304030 00
Cr Cash in Bank - MDS, Regular 10104040 00 (PS SL)
Effectively, the two Funding Payments (Bank Disbursements) above create an Intra-Agency
Receivable, which is cleared by the Payroll Posting Journal, described below. The Payment
to GSIS is in settlement of the Liability created from the Payroll Posting Journals, below.
8.4.3 Processing the GJ for Posting Payroll Expenses in the DO/IU Books
The Bookkeeper prepares the Payroll Expenditure and Remittances General Journal based
on the Payroll Summary information. The Bookkeeper signs the General Journal and enters
the details into eFRS through the Other Transactions Menu, as follows:
DO/IU Accounting Treatment for Payroll Expenditures & Remittances
General Journal (GJ) For Posting Payroll
Dr Payroll Expenses 501xxxxx 00 (various)
Cr Due to BIR 20201010 00 Tax deductions - TRA
Cr Due to GSIS 20201020 00 For ES only
Cr Due from Regional Office 10304030 00 Total Other Deductions
Cr Due from Regional Office 10304030 00 (Net Pay)
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General Journal (GJ) For Charging Government Contribution to RLIP

Dr RLIP 5010301000 Govt. RLIP contribution
Cr Due to GISIS 2020102000
Fund: 01104102
8.4.4 Settlement of Remittances
All offices are required to undertake settlement of their Payables Due to BIR for payroll Tax
Deductions, through the TRA (and eFPS) System. See Section 21 for details on processing
the settlements and balancing of the TRA.
Where the payroll payments are undertaken by the RPSU, the settlements are also made by
the RSPU on behalf of the DOs/IUs, except for GSIS remittance settlements on behalf of
Elementary Schools. The DO prepares the DV for the combined Government (RLIP) and
employee contributions to GSIS. The Accounting Treatment is as follows:
JEV for Payment/DV to GISIS For ES Contributions
Dr Due to GISIS 2020102000 Combined Govt/Employee
Cr Cash in Bank - MDS, Regular 1010404000 (PS SL)
Settlement of other payroll deductions undertaken by the RSPU is discussed in Section 8.5.4
below.
8.4.5 Printing and Approving the JEVs
In summary the JEVs for the accounting entries in the DO/IU include the following:
The Bank Disbursement for Funding Payment for Net Payroll;
The Bank Disbursement for Funding Payment for Total Remittances (excluding GSIS
for ES);
The Bank Disbursement for settlement of GSIS Liability (DO only);
General Journal for posting the total Payroll Expenditures and Deductions; and
General Journal for charging the Government Contribution to GSIS (RLIP); this is
posted to a different Fund Source Code to that of the General Payroll Posting
Journal.
The JEVs are printed out from eFRS and signed by the Bookkeeper. The Head of
Accounting Unit approves and signs the JEVs.
8.5 Accounting in RO Books for Payroll Payments on Behalf of DOs/IUs
This Section describes the processes and accounting treatment undertaken in the ROs for
posting the receipt of Funding Payments and processing the Net Pay to the employees and
teachers, made on behalf the DOs and IUs. An outline of the processes involved is as
follows:
(i) Processing the receipt of the Funding Payments - Net Pay and Remittances
(Section 8.5.1);
(ii) Processing the Net Payroll Payments made on behalf of DOs/IUs (Section 8.5.2);
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(iii) Journalizing the DO/IU Deduction to Specific Accounts payable (Section 8.5.3);
and
(iv) Settlement of Remittances on behalf of DOs/IUs.
8.5.1 Processing the Receipt of the Funding Payment in the RO Books
The RO receives two Funding Payments, one for Net Pay and one for Total Remittances,
from each DO/IU (whose ATM Payments or CFC Payments are processed by the RPSU),
which are deposited to the ROs Payroll Parking Accounts (again separate accounts for Net
Pay and Remittances). The receipts are processed by Cashier who raises the Official
receipt and completes the RCD.
The RCD is received in the Accounting Office and the Bookkeeper processes the receipts in
eFRS through the Bank Deposit Menu, with the following Accounting Entries:
RO Accounting for Receipt of Funding Payments

JEV for Receipt of Net Payroll Funding Payment
Dr Cash in Bank LCCA, current 10102020 00 (Net Payroll Funding SL)
Cr Due from Operating Units 10304040 00
JEV for Receipt of Funding Payment for Remittances
Dr Cash in Bank LCCA, current 10102020 00 (Payroll Remittance SL)
Cr Due from Operating Units 1030404000
As highlighted above the Remittances Funding Payments in respect of deductions, exclude

tax and GSIS contributions on behalf of Elementary Schools.
8.5.2 RO Processing of Net Payroll Payments (Made on Behalf of DO/IU)
Using the payrolls, the Bookkeeper in the RO prepares the DVs for payment of Net Salaries
and payment to each Remittance Creditor (with the exception of GSIS for Elementary
Schools). The DVs are for payments drawn against the respective Payroll Funding LCCA
Accounts. The Regional Accountant signs Box A of the DV and RPSU signs Box B.
The payments to the employees and teachers will be made either through the ATM system
or via Continuous Form Check (CFC). The RO will also settle the Remittances for the 3rd
Payroll Liability Creditors.
Net Salary Payments to the Bank through the ATM System
The DV for the Net Payroll is payable to the Bank managing the ATM. The payment is
processed by the Cash Office, which prepares the Check made payable to the Bank, drawn
against the Net Payroll Funding LCCA Account. The RD and RA sign the Check and then
the Cashier remits the Check to the Bank, which then credits the ATM Accounts of all the
employees and teachers. The check payment is then included in the RCI of that days
Checks Issued, which is sent to the Accounting Office for processing in the RO Books of
Account.
The DV supporting the Net Pay is processed in eFRS via the Bank Disbursement Menu
Option. Where the Payment is made to the Bank for ATM payment of salaries, the principle
of 1 DV = 1 Check = 1 JEV shall prevail. However, it should be noted that where Salary
Payments are made through CFC (see below), this is one of the few exceptions to this rule,
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and the complete Check run will be made against a single DV and JEV. The DV is
accounted for as follows:
Accounting for Net Payroll Payments to Bank (ATM) or through CFC
JEV for Receipt of Net Pay Funding Check in RO:
Dr Due from Operating Units 10304040 00
Cr Cash in Bank LCCA, current 10102020 00 (Net Payroll Funding SL)
This entry clears the Credit entry on the Due from Operating Units Account.
Salary Payments Made through Continuous Form Checks (CFCs)
The RPSU prints out from the Payroll System, the CFCs for all the employees and teachers,
with a separate payment run being made for each individual DO or IU. A soft copy listing of
the Checks printed with their control numbers is also produced through the system. All the
hard and soft copy documents (including the printed CFCs) are forwarded to the Cash
Office.
The Head of Cash Office and Regional Director sign the Checks (using automatic check
signing stamp). The RO Cashier then distributes the Checks to the Cashier in the DO/IUs
for onward releasing to the individual employees, and submits the ACIC (soft copy from the
payroll system) to the Bank. The RCI is then forwarded to the Accounting Office for
processing in the RO Books of Account. The Accounting Treatment for the DV for CFC
payments is the same as shown above for ATM payments, except that a single JEV/DV will
cover the entire Check run.
8.5.3 Journalizing DO/IU Deductions to Specific Payables Accounts
The RO should journalize the deductions (with the exception of Tax and GSIS deductions) to
the Specific Payable Accounts, e.g. Inter-Agency Payables to Pag-IBIG and Phil-Health, and
Other Payables to specific PLIs 18.
Processing Remittance Payments on Behalf of DOs/IUs
Based on the payrolls and details of the deductions (from APDS) for 3rd Party Liabilities, the
Bookkeeper prepares the General Journal to journalize the deductions: Crediting the
Accounts of each Creditor and Debiting the Due from Operating Units Account. This GJ
should ensure that all items from the Receipt of the Remittances Funding Payment
(discussed above) are cleared. The GJ will undergo the normal preparation and approval
process, undertaken by the bookkeeper and Head of Accounting Unit respectively. This GJ
now creates the individual liability amounts which will be settled through DV and Check
payment.
The Bookkeeper prepares the DVs for the settlement of each of the 3rd Party Payroll
Liabilities. These DVs are processed and Checks prepared and signed in the normal
manner. The RCI and DVs are received in the Accounting Office and the JEV is posted as
described below.
18 It is more transparent to create the specific payable account prior to settlement rather than coding the
settlement directly to Due From Operating Units. Also this step of journalizing the deductions would be a
requirement within an IFMIS, as part of the integrated AP process.
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The GJ for journalizing the 3rd Party Liabilities is posted in eFRS via the Other Transactions
(General Journal) Menu Option. This entry clears the entry for the Receipt of the Funding
Check in the Due from Regional Office Receivables Account. The details are entered into
eFRS and the Accounting Entry is as follows:
RO Accounting for Journalizing the 3rd Party Payroll Liabilities

Remittances JEVs:
Dr Due from Regional Office 10304030 00 Total Remittances, excl GSIS:ES
Cr (Various) Payables 202xxxxx 00: Amount for each Remittance A/C
(Includes Pag-IBIG; GSIS; Phil-Health; various PLIs (other payables)
(See Section 8.7 below for administrative details on managing Remittances)
8.5.4 Settlement of Remittances on Behalf of the DOs/IUs
The DV for each Payment (in settlement of the 3rd Party Payroll Liabilities) is entered into the
eFRS through the Bank Disbursement Menu Option, with the Accounting Entries as follows:
Accounting for Disbursements in Settlement of Remittance Liabilities

Dr (Various) Payables 202xxxxxx 00 (Clearing Payables Balances)
Cr Cash in Bank LCCA 10102020 00 (Payroll Remittances SL)
8.5.5 Printing and Approving the JEVs in the RO
The JEVs for the Accounting Entries in the RO for their Payroll Payments processing on
behalf the DOs/IUs include the following:
The Receipt of Funding Payment for Net Payroll;
The Receipt of Funding Payment for Total Remittances (excluding GSIS for ES);
The Bank Disbursements for the Net Pay to Bank (ATM) or through CFC;
The General Journal to bring to Account the Remittance Liabilities, clearing the
Payable Account Due from Operating Units; and
The Bank Disbursements for the Remittance Liabilities (Various Payables).
The JEVs are printed out from eFRS and signed by the Bookkeeper. The RA approves and
signs the JEVs.
Balancing and Reconciling the Payables and Bank Accounts
After processing all the JEVs above, the Payroll Funding (Net Pay) LCCA; the Payroll
Funding (Remittances) LCCA; and the Payables - Due from Operating Units, should all
Balance to zero in the RO Books of Account. At the end of each month the Accountant
checks to ensure that all these Accounts are zero and must instigate an investigation
immediately if any un-cleared balances are identified.
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8.6 Supplementary Payroll
The Supplementary Payrolls are prepared manually, using MS Excel Spreadsheets by the
Bookkeeper in the Accounting Office, based on the payroll forms and timesheets completed
and submitted. Supplementary Payrolls are prepared at all levels within DepED, i.e. CO,
RO, DO and IU.
The Bookkeeper prepares the DV and ORS and attaches with the spreadsheet payroll and
other supporting documents. The Accountant checks the payroll details and calculations in
the Spreadsheet and signs Box A of the ORS. The Head of Budget Unit approves and signs
Box B of the ORS. The Head of Accounting Unit approves and signs Box A of the DV. The
Chief of Office (Agency Head or Authorized Representative) approves and signs Box B of
the DV.
The documents are submitted to the Cashier for payment, and cash is withdrawn as an
advance for paying the salaries. After the cash is withdrawn, the Cashier includes the
details in the RCI. The RCI, DV and supporting documents are forwarded to the Accounting
Office for processing the transaction and JEV.
The transaction is entered into eFRS through the Bank Disbursement Menu Option and the
details entered, and the Accounting Entries as follows:
Accounting for Supplementary Payrolls

Dr Payroll Expenses (various) 501xxxxxx 00
(Regular Salaries; PERA; Pag-IBIG; etc.)
Cr Due to BIR 20201010 00 Tax deductions - TRA
Cr (Various) Remittance Liabilities 20xxxxxx 00 (Deductions)
Cr Cash in Bank - MDS, Regular 10101040 00) 19
Where RLIP contributions to GSIS are involved, a GJ is processed (as described above) for
this expense element, crediting the GSIS remittance liability.
All the remittance deductions from the supplementary payrolls are credited to the respective
liability accounts, effectively aggregating the amounts to be remitted with amounts from the
Regular Payrolls.
8.7 Managing Payroll Remittance Accounts
Deductions are made from the employees and teachers pay in respect of various
contributions, repayments to PLIs and Tax. These deductions are made through Regular
and Supplementary Payrolls, crediting the relevant Payables Accounts, including Inter-
Agency Payables (BIR, GSIS, Pag-IBIG, Phil-Health, etc.), and Other Payables (various
other PLIs, etc.)
19 CO and RO operate only one Regular MDS Bank Account for all Allotment Classes of Expenditures. The DOs
and IUs operate Separate MDS Bank Accounts for PS and MOOE; these are managed through separate Sub
Ledger Accounts in eFRS.
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8.7.1 Government Service Insurance Scheme (GSIS)
This Payable is recorded under Main Object Code 20202020 with the following Sub-Object
Codes:
01 Retirement and Life Insurance Premium (RLIP);
02 Employees Compensation Commission (ECC);
03 Salary Loan;
04 Policy Loan.
At the end of the month, the details of the contributions collected and remitted are entered
into GSISs Electronic Government Contributions System. The details are entered by
employee and above category of collection.
The Bookkeeper in the Accounting Office shall handle the monthly remittances to GSIS, on
or before the 10th day of the following month. Upon receipt of the emailed e-Billing Statement
from GSIS, the responsible staff shall update his/her data of the RLIP personal share per
DepED employee based on the paid payroll. With total RLIP (both personal and government
shares) computed, he/she shall then compare it with the amounts indicated in the GSIS e-
Billing Statement. For those employees with discrepancies in the contribution amounts,
he/she shall draft the Agency Remittance Advices (GSIS Form C: ARA) a list of employees
with salary adjustments for confirmation as to correct amount of monthly salary and effective
date and forward them to the Personnel Division (PD). The PD shall finalize the ARAs and
submit them to GSIS.
The Accounting Office shall prepare the ORS for the RLIP and ECC, and course it around
for the necessary approvals and signatures. The AD shall then complete the DV for the
intended remittances, which include all loan repayments, course it through approvals and
signatures, attach the approved ORS, and forward to Cash Division for check issuance.
Once the DV and Check are approved, the responsible staff shall process the remittance
through the GSIS electronic Billing and Collection System (eBCS), upload the file, print the
electronic Remittance Form (eRF) and attach it to the DV, and deliver the payment to the
nearest GSIS branch.
As highlighted above GSIS contributions for DOs and IUs (except for Elementary Schools
contributions) are remitted by the RO. GSIS contributions for Elementary Schools are
processed and remitted by their respective DO.
8.7.2 Other Remittance Creditors
Deductions for other 3rd Party Payroll Liabilities are made against the payrolls and Remitted
to the respective creditors as described above, including Inter-Agency Payables and Other
Payables. A list of employees for whom deductions have been made and remitted is
forwarded with the Remittance Payment so that the PLIs and Others may credit the
individuals appropriately at their end.
New PLIs are authorized by Management Division in Central Office. Sub Ledger should be
maintained for managing balances where necessary. However balances should not remain
un-cleared for any lengthy period of time; they should be settled as soon as possible at the
month end.
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8.7.3 TRA for Payroll Tax Deductions
The Tax deductions from Payroll are credited to the Due to BIR Account (20201010 00).
The Tax collected from the Payroll is credited alongside Tax withholding against payments to
various suppliers, etc. Section 21 details the forms and processes relating to the TRA
system, through which the tax deductions are managed and remitted.
8.7.4 Month End Processes
At the end of the month, the Accountant should check the balances against the various
Payables Accounts to ensure that all relevant balances are cleared properly and fully.
8.8 Year End Payroll Processes
At the yearend any un-cleared Balances must be supported by appropriate schedules

providing necessary breakdown for yearend verification.
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9 Maintenance and Other Operating Expenses (MOOE)
9.1 Overview of MOOE
This section defines the operating procedures, processes and accounting treatment for
MOOE. This covers MOOE which are generated through cash and non-cash transactions
(i.e. through processing of Book Journals as opposed to passing of cash). Non-cash
transactions should not be confused with Non-Cash Expenses (UACS Object Code
505xxxxx) which are discussed in Section 10.3 below. Non-cash MOOE transactions
include the Journalizing of the issue of Supplies and Materials from Inventories, (which may
fall under various different MOOE Expense codes), plus the Liquidation of Cash Advances.
9.1.1 Control Objective
The control objective is to ensure that cash and non-cash transactions relating to MOOE are
brought account in a timely and correct manner.
9.2 Routine MOOE Expenses
9.2.1 MOOE Incurred through Procurement Channels
Section 13 discusses the broader aspects of procurement/purchasing. Before issuing a

Purchase Order (PO), the item is Obligated through the preparation and approval of the
ORS, as discussed in Section 5.4.1 (Procurement Related Obligations). Once the goods or
services are delivered and the Invoice is received from the supplier, the DV is prepared and
processed in the eFRS through the Bank Disbursement Menu, and the Accounting Entry is
as follows:
Regular MOOE Expenses Settled through Bank Disbursement t
Dr Various MOOE Expense Codes 502xxxxx 00
Cr Cash in Bank MDS, Regular 10104040 00 (In DO/IU only, MOOE SL)
9.2.2 MOOE Items Incurred through Non-Procurement Channels
These Expense Items in DepED, which are not undertaken through procurement, include the
following:
Utility Expenses;
Communication Expenses;
Awards, Rewards and Prizes;
Financial Assistance/Subsidy;
Taxes, Insurance Premiums and Other Fees;
Labour and Wages; and
Other Maintenance and Operating Expenses.
All MOOE items other than these above should undergo some form of procurement (even if
merely national shopping), as described in Section 9.2.1 above.
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The processes and accounting treatment for these items will be similar to those for MOOE
items undertaken through procurement, except that the lead time between Obligating and
Disbursing is usually short, so both the ORS and DV are usually prepared at the same time
based in the suppliers invoice.
9.3 Non-Cash MOOE Transactions - Accounting for Inventory Issues
The processes for receiving, managing and issuing inventories are detailed in Section 16,
including the roles of Property and Supply Officers in those processes. This Section focuses
on the accounting treatment for issue and consumption of supplies (Inventories).
When Inventories are issued for use by the various officers, the Property and Supply Officer
PSO prepares a Report of Supplies and Materials Issued (RSMI), signs attesting correctness
of information and sends to the Accounting Office. The Bookkeeper checks the details and
posts into the eFRS using the Other Transactions Menu Option and Non-cash
Transactions Sub-Type. The Accounting Entry is as shown below:
JEV for Issue of Supplies Through RSMI
Cr Inventory Held for Consumption 20 10404xxx 00
Examples: Office Supplies Inventory (10404010 00); Textbooks and Instructional
Materials Inventory (10404100 00)
Inventory issues are processed on the basis of the Report of Stores and Materials Issued
(RSMI).
9.4 MOOE through Liquidation of Petty Cash and Cash Advances
This Section defines the processes and accounting treatment for Petty Cash, Regular
Advances and Advances for (MOOE) Operating Expenses.
9.4.1 Liquidation of Regular Cash Advances and Petty Cash
The processes and accounting treatment for: Petty Cash; Advances to Special
Disbursement Officers; and Advances to Officers and Employees are very similar, except for
the maintenance of the Cashbook for Petty Cash and the different Accounts used i.e.:
Petty Cash: 10101020 00
Advances to Special Disbursing Officers (SDOs): 19901030 00
Advances to Officers and Employees: 19901040 00
Petty cash is held in perpetuity or until it is no longer required, whereas Advances to SDOs
are made for specific operational purposes and will have a finite duration, and Advances to
Officers and Employees are generally used as advances for their travel and subsistence on
missions outside their main offices.
20 Inventories held for distribution are discussed in Section 16.3.3. Once distributed they are then taken on to
Inventory Held For Consumption and eventually expensed by that receiving and consuming Operating Unit using
this accounting treatment shown here.
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Processing the ORS
For Petty Cash, the ORS and DV are prepared at the same time to support the
reimbursement/replenishment of Petty Cash, allocating the Obligation against the specific
MOOE Expense Items (Accounts) based on the spending shown in the Liquidation Report.
For Advances, the allocation to specific MOOE Accounts is based on anticipated
expenditures to be undertaken from the advance; the ORS is processed to ensure available
funds and the DV is processed for making the advance. The Accounting for the
Disbursement is shown below.
Processing the Replenishment of Petty Cash and Issuing of Advance
Dr Petty Cash 10101020 00 or
Dr Advances to SDOs 19901030 00 or
Dr Advances to Officers and Employees: 19901040 00
Cr Cash in Bank MDS, Regular 10104040 00 (MOOE SL, DO/IU)
Processing the Liquidation
The Liquidation Report (LR) is received in the Accounting Office and the Bookkeeper
processes this in the eFRS through the Cash Disbursement Menu, and Sub-Transaction
Type: Petty Cash for Petty Cash; or Liquidations for liquidation of Advances. The
Accounting Treatment is as follows:
Processing Liquidation Reports Charging MOOE
Cr Petty Cash 10101020 00 or
Cr Advances to SDOs 19901030 00 or
Cr Advances to Officers and Employees: 19901040 00
9.4.2 Processing SU MOOE Liquidations (DOs only)
Non-Implementing Unit Schools, i.e. SUs do not receive NCA or maintain MDS Bank
Accounts. The SUs MOOE expenses are downloaded on a monthly basis via a funding
Check from their managing DO. The SU utilizes the downloaded funds for settling the
operating expenses of the School. At the end of the Month the SU must submit to the DO,
within 5 working days of the end of the month, the Liquidation Report (LR) for the months
expenses.
Processing the ORS for MOOE Downloading
The ORS obligating the MOOE is processed immediately prior to making the Disbursement
for the Advance and is processed in the eBMS (as described in Section 5.4.2).
Processing the Liquidation Report
The Bookkeeper checks and verifies the LR received from the SU to ensure all is correct and
proper, and then enters the details into the eFRS through the SUs MOOE Liquidation Menu
option. The transaction is posted in batch for the whole Months LR. Major Transaction
Type is Cash Disbursement and Sub-Type is Liquidations. The Bookkeeper selects the
relevant SU name on the data entry screen and enters the detailed transaction lines debiting
the relevant expenditure items and crediting Advances for Operating Expenses. When
Page 94 of 224
posting the expenditure lines, it is important to select the correct MFO/PAP Code, depending
on the type of School, i.e. Operations of Schools:
Kindergarten: 261 00 302050001;
Elementary Schools 261 00 302050002;
High Schools/Secondary Schools 262 00 302050003.
The Liquidation is accounted for as follows:

Liquidation of MOOE Expenses Made by SUs
Cr Advances for Operating Expenses 19901010 00 21
Once the entry is complete the JEV is printed out from the eFRS and signed by the
Bookkeeper. The Division Accountant (DA) approves and signs the JEV.
Monitoring and Ensuring Submission of Liquidation Reports
The regulations provide that SUs must liquidate at least 75% of the previous MOOE
downloaded funds before the next months MOOE may be downloaded. The DA must
monitor utilization of MOOE downloaded funs and ensure prompt submission of Liquidation
Reports. The DA should provide advice and where necessary short term assistance in
rectifying any poor compliance.
9.5 MOOE through Year End Accruals
Year End Accruals relate to Obligations made, where the goods or services have been
received but the disbursement has not yet been made. No accrual is made for unfulfilled
obligations where the goods or services have not yet been received. The Budget Execution
process is detailed in Section 5.5 whereby the Obligations are recorded and at the Year End
the Lists of Due and Demandable Accounts Payable (LDDAP) and the Not Yet Due and
Demandable Obligations (NYDDO). No Accrual is made for NYDDO, as these items will be
disbursed in the subsequent year.
The LDDAP details are received in Accounting Division and the Bookkeeper posts the
General Journal in the eFRS using Other Transactions Menu and Others Sub-
Transaction Type. The Funding Source and MFO/PAP Codes is recorded form the details of
the ORS. The Accounting Entry is as follows:
Processing Year End LDDAP for MOOE
Cr Financial Liabilities - Accounts Payable 20101010 00
Many of the LDDAP items will be in respect of Capital Outlay. The LDDAP process is
described further in Section 5.5.1. In the following year when the invoice is received the
Disbursement will be recorded against AP, clearing the item/balance on Account 20101010.
21 The different uses of Other Assets: Advances for Operating Expenses {19901010 00} and Intra-Agency
Receivables: Due from Operating Units {10304040 00} should be noted. Advances for Operating Expenses
relate to units not maintaining their own set of books, whereas Intra-Agency Receivables relates to transfers of
funds (not covered by allotments) to units which do maintain their own set of books.
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10 Other Expenses
10.1 Overview of Other Expenses
Other Expenses include:

Financial Expenses (Separate Allotment Class FE);
Direct Costs (DepED does not incur Direct Costs relating to manufacture); and
Non-Cash Expenses
10.2 Financial Expenses
Financial Expenses incurred in DepED primarily relate to Bank Charges. Bank Charges are
only incurred against the LCCAs held; MDS Bank Accounts do not incur charges.
Consequently, there are no specific provisions for Bank Charges and other Financial
Expenses in the DepED Budget. Accordingly, no Obligation is made in respect of these
Charges.
10.3 Non-Cash Expenses
Non-Cash Expenses incurred in DepED include:

Depreciation;
Impairments; and
Losses.
10.3.1 Calculating and Posting Depreciation
As highlighted in Section 17.4 below, the respective records of the Accounting office and the
Property and Supply Office (PSO) must be reconciled on a regular basis. The PSO records
represent a means of validation and verification of the PPE Registers maintained in the
Accounting Office. The PPE Registers maintain a record of individual assets, their cost, date
of acquisition (age), depreciation rates and accumulated depreciation. The Depreciation is
calculated from the PPE registers and a General Journal is prepared for posting the
Depreciation. The Bookkeeper prepares the GJ, which is then approved by the Accountant.
The GJ is entered into the eFRS through the Other Transactions Menu Option and Non-
Cash Transactions Sub-Type. The Accounting Entry is as follows:
JEV for Posting Depreciation
Dr Various Depreciation Expense Codes 50501xxx xx
Cr Various Accumulated Depreciation Accounts 106xxxxx xx
Examples with Sub-Object Code:
Dr Depreciation - School Buildings 50501040 02
Cr Accumulated Depreciation - School Buildings 10604021 00
Dr Depreciation Furniture and Fixtures 50501070 01
Cr Accumulated Depreciation Furniture & Fixtures 10607011 00
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10.3.2 Impairments
PPSAS/IPSAS 21 defines Impairment as:
A loss in the future economic benefits or service potential of an asset, over and above
the systematic recognition of the loss of the assets future economic benefits or service
potential through depreciation.
Where an Impairment is identified and agreed a GJ is prepared and posted in a similar

manner to the Depreciation posting, except using Account Codes 50503xxx, instead of
50501xxx; and the Accumulated Impairment Losses under PPE (e.g. School
Buildings:10604022 00).
10.4 Losses
Losses relating to DepED operations include:

Loss on Foreign Exchange;
Loss on Sale of PPE;
Loss on Sale of Agricultural Produce;
Loss on Sale of Assets;
Loss of Assets; and
Other Losses.
All these Losses are brought to Account through General Journal. Journals relating to
Losses of Assets need to have the approval of the Commission On Audit (COA).
Loss on Foreign Exchange
Loss on Foreign Exchange in DepED is only relevant to fluctuations in exchange rates

impacting on Bank Accounts maintained in Foreign Currency. These are held primarily in
Central Office and are in respect of Foreign Assisted Projects. During the year all
transactions should be converted at the prevailing rate so no exchange rate differences
should be recoded. However, at the yearend the Bank Account balances should be
converted at the rate prevailing at the year end. This may result in either a gain or a loss on
Foreign Exchange. In the event of a Loss being realized, a JEV should be prepared with the
accounting treatment is as follows:
Accounting for Foreign Exchange Losses
Dr Loss on Foreign Exchange 50504010 00
Dr Cash in Bank Foreign Currency 10103020 00
Losses on Sales (e.g. PPE)
A loss on Sales materializes when the sales proceeds are less than the book value of the
Assets (PPE) or Produce. For Loss on Sale of PPE, the Net Book Value (NBV) is
determined by netting the cumulative depreciation against cost. Example, an office
equipment costing 100,000 with accumulated depreciation of 80,000 is sold for 15,000.
The NBV is 20,000 so the sale at 15,000 results in a loss of 5,000. The accounting
entry must clear the cost and accumulated depreciation from the books, and realize the loss,
with the entries being as follows:
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Accounting for Losses on Sale

Dr Cash - Treasury/Agency Deposit 10104010 00 15,000
Cr Office Equipment (for example) 10605020 00 100,000
Dr Accum. Depreciation - Office Eqpt. 10605021 00 80,000
Dr Loss on Sale 50504040 00 5,000
Losses of Assets
Losses of Assets are incurred when an Asset is lost or destroyed due to theft, fortuitous
events, calamities, civil unrest, etc. The Financial Statements must reflect a true and fair
view of the Assets. The Asset must therefore be written out of the books, with a consequent
Loss being recognized in the books. The Loss represents the NBV less any amounts
recoverable as salvage. The Loss brought to account in the books via JEV entry. The
following example shows the Loss of an Asset.
Accounting for Losses on Sale
Cr Office Equipment (for example) 10605020 00 100,000
Dr Accum. Depreciation - Office Eqpt. 10605021 00 80,000
Dr Loss of Assets 50504040 00 20,000
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11 Other Payments
11.1 Overview
The Sections above describe the processes and accounting treatments for Capital Outlay,
Personnel Services, and MOOE expenditures. Generally, the ORS and DV are coded to the
same (or in the case of Capital Outlay corresponding) Object Account Codes. Other
Categories of Payments where the Disbursement is not made directly to the Account of the
Obligation include:
Funding Checks (Intra-Agency and Inter-Agency Receivables);
Advances;
Payments for remittances to BIR; and
Settlement of Payroll Remittances.
11.2 Funding Checks
The routine payments process is where the Obligation and Disbursement are each made
directly against the specific Accounts in the PS, MOOE or CO Allotment Classes, and where
Payments are made direct to the ultimate Supplier/Vendor. In these instances the Obligation
is fulfilled and matched by an Accounting Entry to the same/corresponding Object Code.
Funding Checks are effectively a type of advance (although the term Advances is used
specifically for items outlined in 11.3 below, which are grouped under the Other Assets
Category), which are ultimately cleared via Liquidation Report.
Funding Checks involve the following Receivables Accounts:

Inter-Agency Receivables (e.g. Advances to NGAs and LGUs for construction, etc.);
Intra-Agency Receivables (e.g. Advances to other levels within DepED); and
Other Receivables (e.g. Advances to NGOs, etc. for implementation of activities).
The initial Obligation for the Funding Checks is coded against the intended ultimate lines of
expenditure, whereas the actual disbursement for the funding Check is coded to the relevant
Receivables Accounts. The Funding Check and subsequent liquidation for the above items
are discussed further in Sections 15.1.3 and 15.4.
Funding Checks to Other Implementing Units versus MOOE Downloading
The different uses of Other Assets: Advances for Operating Expenses {19901010 00} and
Intra-Agency Receivables: Due from Operating Units {10304040 00} should be noted.
Advances for Operating Expenses relate to units not maintaining their own set of books (e.g.
SUs for MOOE downloading), whereas Intra-Agency Receivables relates to transfers of
funds (not covered by allotments) to units which do maintain their own set of books. MOOE
downloading is discussed further in 11.3 below.
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11.3 Advances
Similar to Funding Checks above, when an Advance is requested and approved the
Obligation is made against the intended expenditure items. From a Budget Execution
perspective, once the advance is made, the budget line items are deemed disbursed. In
accounting terms, the Advance is treated as a current asset, and only expensed upon
liquidation.
Disbursement payments for Advances are coded to the following accounts:

Advances of Operating Expenses (for MOOE downloading to non-IUs);
Advances for Payroll (to regular disbursing officers for salary related expenditures not
paid through regular payroll);
Advances to SDOs (Advances for specific purpose time-bound expenditures); and
Advances to Officers and Employees (Advances for official travel, etc.)
11.4 Payment for Remittances to BIR
Remittances to BIR for the tax withholding on payments to suppliers is made in one of two
ways: (i) Via the Tax Remittance Advice (TRA) for payments through MDS Bank Accounts
and (ii) Via Tax Debit Memo (TDM) for payments through Local Currency Current Accounts
(LCCA). Remittances through TRA are processed via book entry 22 as opposed to an actual
bank payment (this is discussed in detail in Section 21.5.1). Remittances through TDM are
processed through Bank Disbursement from the LCCA (See Section 21.5.2).
11.5 Payroll Remittances
Payroll remittances are straightforward in terms of payment. These are not budget items but
settlement of amounts deducted from employees through the payrolls; they therefore do not
have any Obligation per se to support the DV. Payroll Remittances are discussed in Section
8.7 above.
22 The NCA is received Net of the estimated tax element of the disbursements. The Subsidy element is grossed
up in the book entry via the Cash - Tax Remittance Advice Account ( 10104070 00).
Page 100 of 224

12 Program Expenditure
12.1 Overview of Program Expenditure
Program expenditure refers to the disbursement of funds to conduct a program or project for
the benefits of the public. In the DepEDs national budget, it generally refers to the centrally-
managed items (CMIs) including primarily capital outlays - the School Building Program for
example.
DepED is involved in various programs and projects geared towards improving the delivery
of educational services. These are categorized into Foreign-Assisted Projects (FAPs) and
Locally-funded programs, activities, and/or projects (PAPs). All counterpart funds to FAPs
and the locally-funded PAPs are classified in the GAA as For Later Release (FLR), subject
to the issuance of Special Allotment Release Order (SARO) by the DBM.
The specific Program, Project and Activity are identified through the MFO/PAP Code, and
the specific Fund (including Development Partner where it is through Assistance) is identified
via the Fund Source Code. The Programs and Projects of DepED may change year on year
depending on the Strategic Plans of the Department. Annex C sets out a list of the current
MFO/PAP codes.
12.2 Foreign-Assisted Projects (FAPs)
12.2.1 Overview of FAPs
FAP Funds are either received as a grant or availed through a loan. The majority of Funds
are received through the eMDS system, whereby BTr manages the Receipts and cash
releases to DepED on a reimbursement basis through issue of NCA. Some funds such as
EPIP and SPHERE are released direct to DepED and managed through LCCA Bank
Accounts. Other FAPs may be implemented by the Development Partner (Direct Aid), in
which case the funds do not pass through Government, rather the completed project is
donated in-kind (See below). With the exception of Direct Aid, cash funds will be distributed
down to lower level operating units either through Sub-ARO and NTA or through Cash
Advance and funding Check.
Implementation of FAPs may be undertaken in one of the following ways:

Directly by the Development Partner on behalf of DepED;
By DepED, through the Departments procurement channels; or
By other Agencies on behalf of DepED (e.g. LGUs and DPWH)
The FAPs implemented by DepED are managed by an ad-hoc project implementing unit 23
created by the department to supervise and implement FAPs in coordination with concerned
bureaus, offices and various institutions/schools. The Memorandum of Agreement (MOA)
with the funding institution/s shall provide the financial management guidelines about
handling the receipts and disbursements of funds, as well as recording and reporting of
FAPs status of funds. Where cash funds are released to DepED to specific Project LCCA
Bank Accounts, the Cash Office maintains a separate cash book. Where the funds are
23 Currently the Educational Development Project Implementing Task Force (EDPITAF) with Executive Order No.
117 issued in January 1987 reaffirming its continued existence.
Page 101 of 224

channeled via BTr and the MDS Bank Account, the disbursement is made alongside other
MDS payments from the Account.
The Accounting Unit shall follow the provisions of the MOA. The detailed Financial Reports
of the individual FAPs can be ascertained from the MFO_PAP code. Additionally, where
cash funds are received by DepED and deposited in the designated LCCA, the relevant
Fund Source Code will also highlight the specific funding partner.
12.2.2 FAPs Implemented by Development Partners (Direct Aid)
Where the Development Partner implements the Project and manages the funds itself (on
behalf of DepED), there are no cash transactions to process. The Asset (or Expenditure, or
Inventories) is brought to Account by the Accounting Unit, based on the inspection and
acceptance of the receipt of the donated goods. Where this relates to building works the
Accounting Unit (AU) receives the Joint Inspection Report (JIR), where this relates to other
property and equipment, the AU receives the Inspection and Acceptance Report (IAR). The
Bookkeeper records this receipt in the eFRS as follows:
Processing Direct Aid (at All Levels)
Dr Specific Asset by Account Category 106xxxxx 00 24
Cr Income - Grants and Donations in Kind 40402020 00
The relevant MFO_PAP and Fund Source Codes for the specific Project and
Development Partner (respectively) are selected.
12.2.3 Management of Funds Received Through NCA/NTA and MDS Bank Account
Receipt of NCA in Central Office
Under this scenario, the funds from the Development Partner are received by BTr,
Department of Finance. DepED requests reimbursement from BTr for replenishing funds
disbursed (original funds-float is generated by from disbursement from DepED Regular
Fund). All reimbursements are made to Central Office (which, depending on the specific
Project, may distribute funds down to Lower Level Operating Units). The Bookkeeper
processed the NCA in the usual manner (See Section 3.2.5) in eFRS as follows:
Receipt of NCA in CO
Dr Cash in Bank MDS, Regular 10104040 00
Cr Subsidy from National Government 40301010 00
The relevant MFO_PAP and Regular Fund (Fund Source) are selected
Release of Funds Down to Lower Level Operating Units through Sub-ARO and NTA
Where the FAP funds are to be released to lower level operating units, this is normally
undertaken through issuing the Sub Allotment Release Order (Sub-ARO) and Notice of
Transfer of Cash Allocation (NTA). The Sub-ARO is processed in eBMS as described in
Section 5.3.6. The NTA is processed in eFRS through the Other Transactions Menu, as
described in Section 6.4. The accounting entries are as follows:
24 Depending on the nature of the Program and Project, the item could also be brought to account under MOOE,
or Inventories (either for consumption or distribution).
Page 102 of 224

Processing NTA in CO (for Funds Released to Lower Level Operating Units)

Cr MDS Bank Account - Regular 10104040 00
DBM processes the NTA reducing the cash availability at the bank against the CO MDS
Regular Bank Account and credits the Allocation to the MDS Accounts of the receiving
Lower Level Operating Units.
Receipt of Sub-ARO and NTA in Lower Level Operating Unit
When DBM releases the funds to the ROs/DOs/IUs, the NTA is processed in eFRS as
follows.
Receipt of NTA in Lower Level Operating Units
Dr Cash in Bank MDS, Regular 10104040 00 (SL where relevant) 25
Cr Subsidy from NGAs 40301020 00
Distribution of Funds through Funding Checks
In some instances where the MOA permits, cash funds are released down to Lower Level
Operating Units through funding Check, which is then deposited to an LCCA. This is
processed as described below.
12.2.4 Management of FAP Funds Managed Through LCCA
Where the Development Partner releases cash funds directly to DepED (e.g. as previously
with EPIP and SPHERE), the cash is received into the LCCA in Central Office. When the
receipt into the LCCA is notified, the Bookkeeper records the receipt in eFRS as Bank
Deposit.
12.2.5 Implementation through DepED Procurement
Funds are received into Central Office and may then be distributed down to Lower Level
Operating Units (either through NTA or Funding Checks) as described above. The Capital
Outlay is then undertaken at the specific operation unit, i.e. CO, RO, or DO.
The procurement is then undertaken as described in Sections 7 and 13 (including the

processing of the Obligation Request and Disbursement in eBMS and eFRS respectively).
Depending on the nature of the Project and the items procured the Obligation could be
Capital Outlay or MOOE and the Disbursement could be PPE, Inventories or Expense.
25 For RO this will just be the MDS Regular Account. However, DOs and IUs operate separate MDS Accounts
for PS, MOOE and CO. Depending on the nature of the Project and the NTA, the credit will be made to the
specific MDS Account (usually, this will be CO for Program Expenditures).
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12.2.6 Implementation of FAPs by DPWH School and Classroom Building
Where DPWH implements on behalf of DepED, e.g. for school and classroom building,
DepED is not involved in the Budget Execution; this is undertaken and managed in DPWH.
The SARO and NCA are released to DPWH, which implements the Project and manages the
Budget Execution and Reporting.
DepED only become involved once the building is completed and handed over, after
inspection and formal acceptance and release of the JIR. The JIR 26 is received in the
Accounting Office and processed in the eFRS under the Other Transactions Menu and
using the Non-Cash Transactions sub-type to bring the Non-Current Asset (PPE) into the
Books. The Accounting Treatment is as follows:
Receipt of PPE Implemented by DPWH
Dr School Buildings (PPE) 10604010 00
The Sector Outcome Code 268 plus the relevant MFO/PAP and Regular Fund
(Fund Source) are selected
12.3 Locally Funded Programs and Projects
12.3.1 Overview
Locally Funded Program Expenditures include the following Funding Sources:

Projects Funded through National Budget Funds (Fund Source Code: 01 10x403 27 or
01 10x408);
Government Counterpart contributions to FAPs (Fund Source Code: 02 10x150 28 to
02 10x250);
Grant Income from LGUs via Directly Implemented Projects (Fund Source Code: 03
104321 to 03 104300); and
Grant income from GOCCs (Fund Source Code: 03 104321 to 03 104300).
Examples of such Projects include:

School Building Programs (SBP); (Various MFO-PAP Codes preceded with Sector
Outcome Code 268)
Basic Educational Facilities Funds (BEFF): (MFO-PAP Code: 3020700000)
Government Assistance to Students and Teachers in Private Education (GASTPE):
(MFO-PAP Code : 3030300000) and
Other PAPs: (MFO-PAP Codes are listed in the GAA).
26 The Recipient Unit in DepED (DO or IU) must keep track of the DPWH implemented projects and obtain
prompt release of the building and issuance of the JIR.
27 x depends on authorization code, either 01 for New General Appropriations or 02 for Continuing
Appropriations.
28 X refers to Authorization Code, and can be 01, 02, or 05 to denote New General Appropriations; Continuing
Appropriations; Unprogrammed Funds.
Page 104 of 224

These are PAPs specific to DepED and implemented using the Departments Budget
Allocations and other local Assistance (e.g. from Local Government Units (LGUs) and
Philippines Amusement and Gaming Corporation PAGCOR). During the implementation of
these programs and projects, DepED shall issue the department order prescribing the
manner or process of releasing and the guidelines in disbursing the funds.
12.3.2 School Building Programs (SBP)
The provision of adequate resources for education is one of the priority concerns of the
government. One of the components under this program which the government is committed
to provide is adequate school buildings. The School Building Program (SBP), which includes
construction, rehabilitation, replacement, completion and repair of school buildings, is
participated by a number of Government (including Government-Owned and Controlled
Corporations (GOCCs)) and Non-Government Organizations (NGOs) with the DepEd as the
lead agency.
Through Partners Funds
The Local Government Units (LGUs), Government-Owned and Controlled Corporations

(GOCCs), and a number of NGOs are partners of DepED in constructing school buildings.
The LGUs and NGOs undertake their respective implementation of the SBP while the
GOCCs route their funding contributions through DepED.
The MOA entered into by the respective DepED CO and DOs with the partners shall provide
the financial management guidelines about handling the receipts and disbursements of
funds, as well as recording and reporting of FAPs status of funds.
Once the project is completed and the School Buildings are turned over to DepED, and the
JIR is released. The JIR is received in the Accounting Office and recorded by the
bookkeeper in eFRS, as follows:
Processing Directly Implemented Project in DO/IU Books
Dr School Building 10604020 00
Cr Income from Grants and Donations in Kind 40402020 00
For SBP sponsored by GOCCs, the partner-corporation shall provide funds to DepEd,
unless otherwise stated in the MOA. A separate LCCA Bank Account shall be opened for the
receipt and deposit of these Project Funds. The Funds available shall be the basis for the
Accounting Division to issue the Certificate of Availability of Funds (CAF) for all Projects
which will then serve as the basis for procurement.
The Receipt and Deposit of Project Funds shall be recorded by the Bookkeeper in eFRS in
CO, as follows:
Receipt of Project Funds From GOCCs
Dr Cash in Bank LCCA, Current 10102020 00 (SL Specific A/C)
Cr Income from Grants and Donations in Cash 40402010 00
Some of these Funds may be released downwards to ROs/DOs/IUs via funds transfer
Check, which would be processed in the Lower Level Operating Units (LLOU) similar to the
treatment above. The Check disbursement in CO is charged to Financial Assistance to
NGAs (50214020 00).
Page 105 of 224

The building works are then implemented by DepED through normal procurement channels.
Implementation through Regular Funds
The GAA shall provide the guidelines for the release of funds and implementation mode/s.
Implemented by DPWH
The regular School Building Program is a joint project of DepEd and the Department of
Public Works and Highways (DPWH) which aims to address the shortage of classrooms in
the Philippines.
The major amount of the allocations for the construction, rehabilitation, replacement,
completion and repair of elementary and secondary school buildings shall be released
directly to and administered by the DPWH 29. The BD shall get a copy of the SARO related
hereto issued by DBM for budget monitoring purposes and record the amount in the Register
of Allotments and Obligations for Capital Outlay (RAOCO).
After formal turnover to and acceptance by the DepEd of the constructed, rehabilitated,
replaced, completed or repaired school building, the Central Office will prepare JEVs for the
DOs and IUs to bring the buildings to account under PPE. The Bookkeepers in the DOs and
IUs will record the transaction in eFRS as follows:
Posting Receipt of Building (PPE) into DO/IU Books
SBP Implemented by LGU, NGO or Peoples Organization (PO) through Cash Advance
For the construction, rehabilitation, replacement, completion and repair of school buildings
implemented by LGUs or other organizations using the regular funds, the transfer of funds
shall be treated as Cash Advances subject to liquidation. The receipt, transfer and liquidation
shall be recorded as shown below. The funds are fully managed by Central Office and the
DOs and IUs only account for the receipt of the Building Asset in their books.
The request for the NCA is made by CO and based on the MOA with the LGUs and NGOs
together with the lists and Programs of Work for Schools Buildings to be constructed by the
partners. To record receipt of NCA with the SARO (also see 5.3.4 and 6.4):
Posting of NCA in CO Books
Dr Cash in Bank - MDS, Regular 10104010 00
Central Office agrees to make the Cash Advance to the LGU, NGO or PO (A number of
tranches of funds may be released through Cash Advances, in accordance with the
Agreements). The ORS is processed in BD against Capital Outlay (50604040 02) and the
DV is processed against Cash Advances, which is recorded in the eFRS as follows:
29 Republic Act No. 7880 An Act providing for the fair and equitable allocation of the Department of Education,
Culture and Sports budget for Capital Outlay.
Page 106 of 224

Recording of Cash Advances to LGUs or NGOs/Pos in CO Books

Dr Due from LGUs 10303030 00 or
Dr Due from NGOs/POs 10305030 00
The recipient organizations of the Cash Advances must submit Liquidation Reports (LRs) on
a monthly basis for disbursements made in respect of SBP. These LRs are brought to
account in the eFRS in COs books as Construction In Progress (CIP), Buildings and Other
Structures, as follows:
Recording of Liquidation Reports (as CIP) in CO Books
Dr CIP - Buildings and Other Structures 10610030 00
Cr Due from LGUs 10303030 00 or
Cr Due from NGOs/POs 10305030 00
After formal turnover to and acceptance by the DepEd of the constructed, rehabilitated,
replaced, completed or repaired school building, the financial transaction is capitalized in
COs books clearing the Construction In Progress, and recorded as follows:
Recording of the Clearance of CIP against PPE in CO Books
Cr CIP - Buildings and Other Structures 10610030 00
The School Heads shall vouch for the accomplishment and acceptance of the construction/
rehabilitation projects with the assistance from the DepED Project Engineer (DPE) assigned
at each Division and the Physical Facilities Coordinators. Upon completion of the Project
and capitalization of the Asset as described above, CO raises a JEV in its books to transfer
the Building to the DO/IU, and issues a JEV for processing by the receiving DO/IU to bring
the Building into their books. The accounting entries in COs books and the DOs/IUs books
are as follows:
Recording of the Transfer of Building in CO Books
Dr Accumulated Surplus/Deficit 30101010 00
Cr School Building 10604020 00
In the DO/IU Books the entry is posted in eFRS as follows.

Recording of the Receipt of the Building in DO/IU Books
Cr Accumulated Surplus/Deficit 30101010 00
12.3.3 Basic Educational Facilities Funds
The Basic Educational Facilities Funds (BEFF) of DepEd shall be utilized to address the
classroom, water and sanitation facilities, and furniture shortages, the repair and
rehabilitation of classrooms, including heritage buildings as well as water and sanitation
facilities. The procurement may be implemented in one of two ways, either centrally in CO
on behalf of the Operating Units, or by release of funds through Sub-ARO to the Operating
Units, who will implement their own procurement.
Page 107 of 224

For Construction Items, the disbursement is brought to account in the Disbursing Office
against Construction In Progress, in similar manner to that described above. Once
completed the CIP is capitalized against PPE, as described with SBP above. Similarly
where procurement is undertaken centrally, JEVs are prepared for clearing the Asset from
COs Books (Debiting Accumulated Surplus/Deficit) and bringing the Asset into the receiving
Units Books (crediting Accumulated Surplus/Deficit).
Where BEFF is utilized for Inventory Items, such as desks and chairs, the Disbursement is
charged against Inventories for Distribution (if centrally procured) or Inventories for
Consumption (if procured by the Unit through Sub-ARO). Centrally procured inventory items
are brought to account in the beneficiary office, via the Invoice Receipt or Property (IRP).
See Section 16 for detail on regular processing of Inventories.
12.3.4 ICT package and internet connectivity
DepED launched the DepED Internet Connectivity Project (DICP) to provide the public
schools an internet access. The project aims to connect all public high schools to the
Worldwide Web starting school year 2009-2010. It further supports and complements with
the DepED Computerization Program.
Release of Funds
The release of funds shall be initiated by the CO FMS, as provided in Department Orders 30
setting the Guidelines for the Transfer of Funds for the DICP, unless otherwise stated.
a. The BD shall transfer the allotment, upon receipt of SARO from the DBM-CO,
through the issuance of Sub-AROs to the DOs for Non-IU schools and the IUs which
are the direct recipient schools;
b. The DOs and IUs shall record the Receipt of allotment in their respective Registry of
Allotments and Obligations for MOOEs (RAOMO), upon receipt of the Sub-ARO;
c. The DOs and IUs shall submit requests for release of NCA to their respective DBM-
ROs, supported by copies of Sub-AROs; and,
d. The concerned DBM-ROs will issue NCA corresponding to the allotment transferred
to the respective operating units.
The treatment of Sub-AROs (issued and received) is discussed in detail in Section 5.3.6,
and the treatment of the NCA follows the normal process as described above and also in
Section 6.4.
Payment of Subscriptions
Payments to the service providers shall be processed through Authority to Debit Advice
(ADA) in accordance with the DBM Circular No. 2005-2 dated January 28, 2005, Modified
Guidelines for Processing of Payments for Accounts Payable of National Government
Agencies. It may be made out of the available cash of the OUs after due consideration to
the priority activities/payables of the OUs concerned.
a. For IUs, the mother schools shall process the payment for their respective annex or
extension schools; and
30 DepED Order Nos. 50 and 113, s. 2009, and No. 112, s. 2010.
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b. For non-IUs, the DOs shall facilitate and process payments upon submission of
billing documents from the schools.
The disbursement will follow the regular payments process (See Section 3.2.1) charging
Internet Subscription Expense (10304040 00).
12.3.5 Government Assistance to Students and Teachers in Private Education
GASTPE is a private-public sector partnership in making secondary education accessible to

all Filipino children. Its main objective is to decongest public secondary schools by
contracting the excess capacities of private high schools through the provision of subsidies
for students who, otherwise, would have gone to the public high schools.
The BD shall record the amount of allotment in the Register of Allotments and Obligations-
MOOE (RAOMO) upon receipt of the SARO from DBM, and the subsequent receipt of NCA
shall be recorded in the regular manner (See Sections 3.2.5). The disbursement of
Subsidies is made wholly by Central Office, which accounts for the transactions as follows:
Recording of the GASTPE Subsidy Payments in CO Books
Dr Financial Assistance to NGOs/POs 50214050 00
12.3.6 Other PAPs
Year on year, DepED implement more various programs and projects geared towards
improved delivery of education to children. These PPAs with the corresponding MFO-PAP
Codes are listed in the GAA.
With respect to the funding for other programs, activities and projects, such as but not limited
to School Feeding Program, Abot-Alam, Madrasah, and Human Resource Training
Development, the corresponding allotments shall be released by the CO-BD to the
respective OUs through the issuance of the Sub-AROs. A separate memorandum shall be
issued regarding the details of fund releases and payment schemes.
Other PAPs may be implemented centrally, or by the Operating Units either through Sub-
ARO (as discussed above and in Section 5.3.6) or through Cash Advance, (also discussed
above).
Page 109 of 224

13 Procurement Transaction Processes
13.1 Context of the Procure to Pay Transaction Processes
Procurement cuts through: Capital Outlay (See Section 7); Inventory Purchases (See
Section 16); and a large part of MOOE expenditures (See Section 9.2.1). See the figure
below.
Figure 6: Procurement for Different Categories of Expenditure
Directly
Expensed
MOOE
Procurement Inventory
Capital Outlay
PPE
This Section does not delve into the modalities and methodologies of the actual procurement
but focuses on the transaction processes referred to as Procure to Pay (P2P), from
requisitioning, to ordering, receiving and payment/disbursement. For further information on
the specifics of procurement refer to procurement manuals and guidelines.
13.2 The Procure to Pay Process
The Procure to Pay (P2P) process is depicted in the following two Figures.
Figure 7: Regular P2P Transaction Processes
Spending Office Procuring Office Supply Office Accounting Office
Process: Requisitioning Invoicing &

Ordering Receiving
Payment
Form: PR PO IAR DV
Matching: Matching DV, IAR, PO, PR: Specifications; Quality; Condition; Quantities
Accounting:
ORS: MOOE
Budgetary MOOE Inventory
Control: Capital Outlay PPE
Page 110 of 224

Figure 8: P2P Transaction Processes Payment in Advance
Spending Office Procuring Office Accounting Office Supply Office
Process: Requisitioning Invoicing &

Ordering Receiving
Payment
Form: PR PO DV IAR
Matching: Matching DV, IAR, PO, PR: Specifications; Quality; Condition; Quantities
Accounting: Advance
ORS: Liquidation:
Budgetary MOOE MOOE
Control: Capital Outlay Inventory
PPE
Figure 7 above shows the process steps and the relevant Form Documents at each step:
Requisitioning by the Spending Office through preparation of the Purchase Request
(PR);
Ordering by the Procuring Office (e.g. Property and Supply in DOs or specific
Procurement Office in CO and ROs) and issuing the Purchase Order (PO) to the
Supplier;
Receiving of the Goods/Services by the Supply Office and issuing of the Inspection
and Acceptance Report (IAR); and
Processing the expenditure in eFRS from the Suppliers Invoice and DV.
Figure 8 shows the P2P process where payment is made in advance of receipt of delivery
(e.g. Advance Payment to DBM-PS). The overall process steps are primarily the same,
except for the sequencing of receiving. The major difference is in regards to the Accounting
treatment, whereby, under the regular P2P process the ultimate account (MOOE, Inventory
or PPE) is charged directly from the DV, whereas, under the Advance Payment scenario, the
DV is allocated to Advances with a subsequent liquidation against the relevant MOOE,
Inventory or PPE account.
Matching is undertaken between the DV (and suppliers invoice), the IAR, PO and PR, to
ensure that the goods paid for are those ordered and received, in terms of:
Specifications;
Quality;
Quantities; and
Condition.
13.3 Central Procurement of Inventory and PPE Assets
Where procurement for Inventory or PPE is undertaken centrally, (e.g. by CO or ROs on

behalf of other Operating Units), the procurement is undertaken in the same manner except
that the procurement is initially accounted for fully in the procuring offices books, with the
Page 111 of 224

matching of the DV made against the (multiple) IARs from all the receiving offices. The PPE
Assets (or Inventory Items) are then charged to the recipient offices based on the Invoice
Receipt for Property (IRP). Centrally procured Inventory is accounted for as Inventory for
Distribution (See Section 16.3.3). Centrally procured PPE Assets are accounted for in a
similar manner to transferred assets using the IRP as the source document (See Section
17.7.2).
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14 Managing Cash and Bank Resources
14.1 Introduction and Overview of Cash and Bank Resources
Outline of Section
Management of Bank Accounts
Online Banking
Bank Reconciliation
Petty Cash
14.2 Management of Bank Accounts
14.2.1 Legal Authority for Opening Bank Accounts
All operating units of DepED, CO, ROs, DOs, and IUs, shall be required to open bank
accounts, both the MDS Sub-Accounts and current accounts, with Authorized Government
Servicing Banks (AGSBs) only. A Department Order shall be issued to set limits on the
number of bank accounts to open and to be maintained by each operating level, as well as
on the signing authorities and their designated monetary threshold. Respective Cash
Division, Units or Cashiers are therefore responsible for handling and maintaining records for
each Bank Account.
14.2.2 Categories or Types of Bank Accounts
Currently, DepED maintains two types of bank accounts, the Modified Disbursement System
(MDS) and the Local Currency, Current Account (LCCA). DepED Order 37 prescribes the
opening of MDS Bank Accounts for main operations plus one current account for processing
Continuous Form Checks (CFC). DepED Order 46 (Para 8.) prescribes the following
Current Bank Accounts for ROs:
1 Account for CFC salary payments (where no ATM system);
1 Account for settlement of payroll deductions;
1 Account for Provident Fund;
1 Account for Revolving Fund of the Regional Education Learning Centre (RELC);
and
Any other account as may be required under a loan or grant agreement
14.2.3 Modified Disbursement System (MDS)
Maintaining Multiple MDS Bank Accounts
Under the MDS, all operating units shall maintain a minimum of three separate (3) MDS
Bank Accounts 31, namely:
31 Each of these 3 MDS Bank Accounts has a separate UACS Code, i.e. 10104040 00 (Regular); 10104050 00
(Special Account); and 10104060 00 (Trust).
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1. MDS, Regular. The account used for the NCA receipts to pay for the agencys
regular operating requirements. In the case of DOs and IUs, they operate Separate
MDS Bank Accounts (which are managed through Sub-Ledger Accounts in the
Books but operate under the single UACS Code), as follows:
a. Cash MDS, Regular: PS and
b. Cash MDS, Regular: MOOE.
2. MDS, Special Account. The account used for the NCA receipts to pay for claims
related to the agencys Special Accounts under the General Fund. These are used to
pay for Terminal Leaves or Retirement Gratuity benefits and prior years Account
Payables.
3. MDS, Trust. The account used for the NCA receipts to pay for the agencys Trust
Liabilities.
Funding Receipts through NCA
To authorize an agency to pay the obligations it incurs, DBM issues a disbursement authority
in the form of a Notice of Cash Allocation (NCA) to the operating agencies to cover their
cash requirements. The NCA specifies the maximum amount of cash that can be withdrawn
from an AGSB for the period indicated (on a monthly or quarterly basis). The NCA is sent to
the bank and an Advice of Notice of Cash Allocation Issued (ANCAI) to the implementing
agency, signaling that the agency can already pay its obligation with its internal and external
creditors. The release of NCAs by DBM is based on an agencys submission of its Monthly
Cash Program and other related documents.
The Bureau of the Treasury (BTr), replenishes daily the government servicing banks with
funds equivalent to the amount of negotiated checks presented to the government servicing
banks by implementing agencies.
Disbursements from MDS Bank Accounts
In accordance with DBM Circular Letter Nos. 2013-16, 2013-16A, and 2013-16B, as far as
possible, all Disbursements of MDS funds shall be made through the issuance of Advice to
Debit Account (ADA). ADA refers to the pre-signed authorization that serves as instruction to
the AGSB to debit a specified amount from the agencys NCA balance under its special MDS
Bank Account for payment of obligations. ADAs shall be issued only on duly approved DV.
The signing authorities, subject to the assigned monetary limit, shall follow the issued
DepED Order related thereto 32.
ADAs are expected to clear the bank within 48 hours. Thus, no ADA shall be issued 2
banking days before the end of the period where NCA will lapse.
The Cash Unit shall prepare a Report of ADA Issued and Cancelled on a daily basis, with a
copy furnished to the Accounting Unit.
32 DO 5, s. 2008, Dissemination of the Code of Signing Authorities on Admin and Financial Matters to Central
and Field Offices.
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14.2.4 Local Currency Current Accounts
DepED operating units shall also be allowed a limited number of current accounts. These
are generally used for deposits with AGDBs of receipts with very specific purpose, such as
the following:
1. Central Office (CO)
a) 1 for Provident Fund
b) accounts wherein there are international agreements, if any and as required by
the loan or grant agreement
2. Regional Offices (ROs)
a) 1 for CFC or ATM
b) 1 for authorized deductions made from salaries of personnel being serviced by
RPSU for remittance to government financial institutions and private lending
institutions (third party liabilities), and other MOOE items
c) 1 for Provident Fund
d) 1 for Revolving Fund
e) another account wherein there are international agreements, if any and as
required by the loan or grant agreement
3. Schools Division Offices (DOs)
a) 1 for Provident Fund
b) another account wherein there are international agreements, if any and as
required by the loan or grant agreement
4. Schools (ES/HS)
a) account for receipt of MOOE downloading plus own sources to augment MOOE
funding
Disbursement of LCCA funds shall be in the form of Checks. Checks are Accountable
Forms issued by the Cashier to creditors in settlement of an obligation. Checks shall be
drawn only on duly approved DV. The signing authorities, subject to the assigned monetary
limit, shall follow the issued DepED Order related thereto.
The Cash unit shall prepare a Report of Checks Issued and Cancelled on a daily basis, copy
furnished the Accounting unit.
14.2.5 Cancelled Checks
Cancelled Checks are Checks issued but cancelled due to various reasons, such as but not
limited to typographical errors, unmatched Check details between Advice of Check Issued
and Cancelled (ACIC) and the issued Check, error in the basis of computation, there is
change in some details, or the check becomes stale.
Check Cancellations in Same Year as Issue
If the payment transaction had already been recorded, an adjusting entry should be made.
Using the eFRS, the Bookkeeper shall reverse the JEV made in the Bank Disbursement with
sub-transaction type, Stale/Cancelled Checks, by typing in the Net Amount input field a
negative entry equal to the amount of stale check or check to cancel.
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The illustrative accounting entries for the said transactions are as follows:
JEV for Posting Check Cancellation From Current Year
Dr Cash-MDS, Regular 10104040 00 (MOOE for DOs and IUs)
Cr Expense Account by Category 502xxxxx 00 or
Cr Payable Account by Category 2xxxxxxx 00
Check Cancellations where Issued in Prior Year
If the Check to cancel refers to Checks issued in prior years, the adjusting accounting entries
for the said transaction are as follows:
JEV for Posting Check Cancellation - From Prior Year
Dr Cash in Bank - MDS, Regular 10104040 00 (SL MOOE for DOs/IUs)
Cr Accumulated Surplus/(Deficit) 30101010 00
14.2.6 Stale Checks
Checks are generally negotiable with the bank up to 6 months. Check becomes stale when it
has been outstanding for over six (6) months from the date of issuance or as prescribed.
Stale checks as well as checks cancelled after the reporting month shall require necessary
adjusting entries. (See Section 14.2.5 above).
Unreleased checks that become stale shall be marked cancelled. The Cash unit shall
prepare a report and furnish a copy to the Accounting unit as basis for the preparation of
JEV to record the cancellation.
Those claimed checks that remained outstanding in the Bank Reconciliation Statements and
have become stale shall also be cancelled. The Accounting unit shall prepare a report/list
and furnish a copy to the Cash unit. These cancelled Checks shall also be delisted from
Outstanding Checks in the subsequent bank reconciliation.
Cancelled/Stale Checks to be Replaced
For payees or holders of the cancelled Checks who consequently request for replacements,
new checks may be issued upon submission of the stale checks and a certified copy of the
previously paid DVs shall be attached to the request for replacement. The Cash units shall
prepare the corresponding ACIC and RCI. The Accounting unit upon receipt of RCI shall
prepare the JEV through eFRS to record the Bank Disbursement.
Cancelled/Stale Checks where Transaction/Payment is Cancelled in the Year
All cancelled or stale Checks which payees or holders never request for replacements shall
revert back to Cash in Bank; the corresponding expense adjusted and liability re-established.
14.2.7 Reports of Checks and ADA Issued, and Cancelled and Invalidated
Fund disbursements shall arise from Advice of Check Issued and Cancelled (ACIC) and
Advice to Debit Account (ADA).
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On the one hand, ACIC is a report prepared by Cash unit of any DepED operating office and
submitted at least daily to the AGSBs listing down the Checks issued and cancelled for the
day. Certified by the head of the Cash unit and approved by the Head of the Office, the
advice will enable the payees to encash or negotiate the issued Checks with the designated
bank.
Report on Checks Issued (RCI) is a report that contains the lists of all Checks issued and
cancelled that day. The report shall be prepared daily or as often as necessary by the Cash
Unit and submitted to the Accounting Unit with the related paid DVs/payrolls and supporting
documents. One report shall be prepared for each bank account which shall be the basis for
the preparation of Journal Entry Voucher.
On the other hand, ADA is an authorization issued by the DepED as an instruction to the
AGSB to debit a specified amount from its available NCA balance for payment of creditors or
payees through an Electronic Fund Transfer. Each ADA effectively functions as a substitute
for the Check; it is prepared by the Accounting Unit processed through the Bank by the
Cashier. The ADA forms the basis for the preparation of Journal Entry Voucher.
For the purpose of providing BTr advance information on the cash requirements of agencies,
a Summary of LDDAP-ADA Issued and Invalidated ADA Entries (SLIIE) shall be prepared
and submitted by DepED at least daily. The SLIIE contains the list of all LDDAP-ADAs
issued, certified correct by the Head of the Accounting Unit and approved by the Head of
Agency or authorized official. As an advisory on the magnitude of expected disbursements
through LDDAP-ADA, the BTr then replenishes the MDS Seed Fund.
14.2.8 Opening and Closing Accounts
The CO-FMS shall have control over the opening of bank accounts. All Heads of operating
units shall send request to the CO indicating clearly the specific purpose of opening new
bank accounts. All LCCAs shall be closed after the purpose/s has been served. All
remaining amounts shall revert back to the General Fund and deposited to the account of
the Bureau of Treasury 33.
The closing of bank account/s with balances shall be recorded as follows:

Accounting Treatment for Bank Account Closure
Dr Cash - Treasury/Agency Deposit, Regular 10104010 00
Cr Cash in Bank LCCA, Current 10102020 00 (SL Trust Account)
14.3 Online Banking
All AGSBs are equipped with online banking or electronic Banking (e-Banking) facilities: LBP
has eMDS facility available for MDS accounts and weAccess facility for LCCAs; PVB and
DBP also have online Banking, through their respective websites. All DepED Operating
Units should enroll both Accounting and Cash units authorized personnel to e-Banking
facilities for all their bank accounts.
33 DOF-DBM-COA Joint Circular No. 4-2012, Rules and Regulations implementing EO No. 431 dated May 30,
2005 directing the reversion of all dormant accounts, unnecessary Special and Trust Funds to the General Fund
and for other purposes.
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e-Banking system enables the Cash unit to conduct financial transactions on a banks
secured website (specifically for eMDS, this includes online processing of ADA and ACIC
details). eBanking also enables online viewing of transactions, which is useful for the
Accounting unit to do various transactions in real time such as daily balance inquiry and
generation of bank statements without physically visit the banks. The authorized persons
from both Accounting and Cash units shall maintain oversight on the daily balance before
processing DVs and issuing Checks for the day.
14.4 Bank Reconciliation
Bank Reconciliation is an essential internal control process of matching and comparing

figures recorded in the books of accounts with those listed in the bank statements. The bank
reconciliation process shall be performed daily to ensure that both records of financial
transactions are reconciled and correct. e-Banking would be helpful in facilitating this
process simply because the bank statements can be viewed and downloaded real-timely.
Therefore, the General Ledger for cash and/or Subsidiary Ledgers for each bank account
shall be brought up to date on a daily basis. A Bank Reconciliation Statement (BRS) shall be
prepared to report the disparities, complete with supporting schedules on deposits in transit
and outstanding Checks.
The Accounting Unit shall be responsible for the Bank Reconciliation, downloading of Bank
Statements from the AGSBs websites, bringing into account the identified
correcting/adjusting entries for discrepancies/errors and the related submission of BRS to
COA Resident Auditors within 15 days after the end of the month, copy furnished the
Government Servicing Bank (GSB) and DBM-Accounting Finance Bureau (DBM-AFB) for
MDS accounts.
14.5 Petty Cash
A Petty Cash is a fund established by DepED central and field offices to cover non-recurring,
emergency and petty operating expenses.
14.5.1 Establishment
The PCF to be set up shall be sufficient for the recurring petty operating expenses of the
office for one month, in accordance with the COA Circular 2012-001 dated 14 June 2012.
The fund shall not be used for payment of regular expenses, such as rentals, subscriptions,
light and water bills, and the like. A department order therefore shall be issued to set the
number of Petty Cash Fund (PCF) to establish, assign specific PCF Custodians, and specify
the maximum amount for each PCF as well as the allowable single receipt transaction 34
chargeable against the fund.
The Budget unit shall record in the eBMS the obligated amounts based on the established
PCF. The Accounting unit shall also record in the eFRS the amount of PCF established as
follows:
34 Payment out of PCF shall be allowed only for amounts not exceeding P15,000 for each transaction, except
when a higher amount is allowed by law and/or specific authority by the COA.
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Accounting for Establishment of Petty Cash

Dr Petty Cash 10101020 00 (SL PCF Custodian)
Cr Cash in Bank MDS, Regular 10104040 00
The PCF Custodian shall be responsible in keeping the cash in a safety vault.
14.5.2 Disbursement
Payments out of PCF shall be made through a Petty Cash Voucher (PCV), which shall be
approved by authorized officials and signed by the payee to acknowledge the amount
received. The official receipt or its equivalent is attached to the PCV. Splitting of
transactions to avoid the single receipt transaction ceiling shall not be allowed.
14.5.3 Replenishment and Liquidation
The PCF shall be maintained under the imprest system. As such, the PCF shall be equal to
the total cash on hand and the PCVs. As soon as the disbursements reach 75%, the PCF
shall be replenished equal to the total amount of the PCVs made there-from. All
replenishments shall be directly charged to the expense accounts. An Obligation Request
and Status (ORS) and Liquidation Report (LR) are prepared to support the replenishment.
The Budget unit shall record in the eBMS the obligated amounts based on the replenished
PCF and the ORS. The Accounting unit shall also record in the eFRS the amount of
replenishment as follows:
Accounting for Replenishment of Petty Cash
Dr Expenses by Category 502xxxxx 00
In case of termination, resignation, retirement or dismissal of the PCF Custodian, the full
liquidation shall be made including the refunds of excess cash on hand thereafter. The
Accounting unit shall record in the eFRS the final PCF liquidation as follows:
Accounting for Closure of Petty Cash
Dr Expenses by Category 502xxxxx 00
Cr Petty Cash 10101020 00 (SL PCF Custodian)
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15 Accounts Receivable, Advances and Prepayments

Accounts Receivable (AR) is an important area of the Statement of Financial Position and
must be carefully controlled by Accounting Division. AR balances are created in the following
ways:
Invoicing customers for goods or services provided. This account can then be
cleared through the collection, transfer or write-off of a receivable; or
Advancing payments for the purchase of authorized goods and services which are
recorded as receivables. The AR is then cleared upon receipt of goods and services
and the liquidation of the advance payment and the refund of any outstanding
balance.
The detailed accounting treatment of all receivable accounts is outlined in the UACS manual.
This Section will examine the key controls and process steps relating to:
Recognizing and recording the receivables;
Collection or liquidation of receivables;
Uncollectible accounts and providing for bad debts; and
Control over receivables.
15.1 Recording Accounts Receivable
AR is recorded in line with the UACS. It is the responsibility of the accounting officer to
ensure that all AR are recorded correctly in the eFRS. AR is classified in UACS as:
Loans and Receivable Accounts (10301xxx 00);
Lease Receivables (10302xxx 00);
Inter-Agency Receivables (10303xxx 00);
Intra-Agency Receivables (10304xxx 00); and
Other Receivables (10305xxx 00).
The accounts most commonly used by DepED are discussed below.
15.1.1 Trade Receivable Accounts
There are currently no trade receivables recorded by the Department.
15.1.2 Lease Receivables
There are instances when the Department receives rental income from the lease of its
assets e.g. renting space to Land Bank at Central Office. When this occurs, an accrual of
rental income may arise at the year-end which is recorded as a receivable. Rental income
from operating leases is usually brought to revenues through the statement of income and
expenditure. The account treatment for recording the yearend accrual for rent is:
Accounting for Accrual of Rental Income
Dr Operating Lease Receivable 10302010 00
Cr Rent/Lease Income 40202050 00
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15.1.3 Inter-Agency Receivables
The major inter-agency receivables for the Department are:

Due from National Government Agencies (10303010 00);
Due from Government Owned and Controlled Corporations (10303020 00); and
Due from Local Government Units (10303030 00).
15.2 Due from National Government Agencies
For DepED, the majority of National Government Agency (NGA) program implementation
initiatives are performed with DBM Procurement Services for procuring textbooks, computer
equipment and office supplies and the Department of Public Works and Highways (DPWH),
for school building and classroom construction (DBM releases SARO and NCA direct to
DPWH for these works). There are different procedures applied for DBM Procurement
Services and Other NGAs as detailed below.
15.2.1 DBM Procurement Services Receivables
DBM Procurement Services are used by the Department in the following instances:
(i) To procure common use supplies as outlined in the Annual Procurement Plan of
the Department; and
(ii) To procure capital equipment which cannot be procured by the Departments

Procurement Services.
Both types of procurement are processed in a similar manner as outlined in the steps below.
Step 1 Determine Items to be Procured
Common use supplies are outlined in the Departments APP and submitted to DBM PS.
An Agency Procurement Request (APR), providing detailed specification of goods to be

procured, is approved by the head of the Department and submitted to DBP-PS.
Step 2 - Funds Transfer from DepED to NGA
DepED shall obligate the allotment for the items to be procured based on the Special
Allotment Release Order (SARO) or Allotment through the General Appropriation Act.
Prior to funds transfer, the accounting officer and the supply officer will be provided with a
detailed breakdown of the total cost of the program in hard and soft form. The detailed cost
is prepared by the business unit responsible for overseeing the program as part of the APR
process as outlined in Section 7. The soft copy (prepared in MS Excel) must be saved for
future reference by both the accounting and supply officer.
The funds are released as an advance from DepED to DBM upon necessary approval. The
funds will be released through ADA payment.
The fund transfer/advance will be recorded in the eFRS under the Transaction Type Bank
Disbursements and Sub-Transaction Type ADA as:
Page 121 of 224

Advance Transfers to NGAs

Dr Due from NGAs 10303010 00
Cr Cash MDS, Regular 10104040 00
The narrative recorded in the eFRS General Ledger should clearly state the Name of the
NGA, purpose of the advance, and a suitable identifying reference e.g.
DBM Procurement Services DepED ICT Program Batch 25
DBM Procurement Service Textbooks FY2015/Batch#
DepED must obtain and retain an Official Receipt (OR) for all funds advanced to NGAs.
Step 3 - Liquidation of Expenses
DBM PS must submit a monthly report of actual program expenses to DepED within 10
working days of the month end.
It is the responsibility of the accounting officer responsible for AR to follow up the report of
actual program expenses for all active advances to DBM Procurement Services. A monthly
statement of account should be provided through soft copy summarizing the status of all
advances by DBM-PS.
Upon receipt of the statement of expenditures from DBM PS, the accounting officer will verify
the accuracy of the statement internally with the responsible operating unit and the supply
officer.
Once program expenditure is validated and goods received acknowledged, the accounting
officer will prepare a JEV for entering the liquidation of expenses against the original
advance.
The accounting entries in the eFRS under Transaction Type Other Transactions specifying
therein the particular MFO/PAP for the liquidation of the advance are:
Liquidation of Advances to NGAs
Dr Appropriate PPE Asset Code 106xxxxx 00 or
Dr Inventory Held for Distribution 10402xxx 00 or
Dr Inventory Held for Consumption 10404xxx 00
Cr Due from NGAs 10303010 00
The narrative recorded in the eFRS General Ledger should clearly state the Name of
the NGA, liquidation reference, and a suitable identifying reference e.g.
DBM Procurement Services Liquidation of DepED ICT Program Advance
Batch 25
DBM Procurement Service Liquidation of Textbooks Advance FY2015
Page 122 of 224

Step 4 Monitor Advance
It is the responsibility of the accounting officer to follow up all outstanding advances on a

monthly basis. An electronic file with all supporting documents pertaining to the advance
should be maintained, including a copy of the MOA, OR of advance and reports on program
expenses.
In close coordination with the Property & Supply Division, the advance should be monitored
against the agreed program completion date and explanations sought from the operating unit
monitoring program completion activities if the agreed timeframe is not achieved.
A report on aged receivables / advances should be prepared and submitted to the Office
head of finance.
Step 5 Reconciling General Ledger and AR Sub Ledger
A key control activity of the accounting officer is the monthly reconciliation of the sub ledgers
for Accounts Receivable with the GL aggregate AR balance. The sub ledgers should match
liquidations against advances on an open item basis, clearly identifying any un-cleared
amounts from each individual advance.
When entering advances and liquidations for all Due from NGAs accounts into eFRS these
will all appear as one amount in the trial balance. It is therefore essential that separate sub
ledger accounts are prepared for each NGA. The total of the sub ledgers should equal the
amount in the trial balance.
The sub ledger for each NGA should be updated on MS Excel on a monthly basis.
For DBM Procurement Services, separate sub ledgers should be maintained for (i)
Textbooks; (ii) ICT Equipment; (iii) Furniture and Fixtures; and (iv) Office Supplies.
At the month end, a reconciliation statement should be completed which clearly illustrates
the balance of the GL and the total of the sub ledgers with all reconciling differences clearly
identified.
The reconciliation statement should be supported by a list of all NGAs and the current
balance as at the month end. An aged analysis of the outstanding balances should also be
provided.
Step 6 Unused Funds from NGA
Upon completion of the program/project any unused funds advanced to the DBM PS should
be returned to the Bureau of Treasury. This should occur on an advance by advance basis
for the purpose stipulated on the obligation. There should be no accumulated running
balance between the DepED and DBM spanning multiple obligations and advances.
DBM is required to issue a statement indicating that all unused funds against a particular
obligation have been transferred to the National Treasury.
The accounting treatment for DepED to address unused funds advanced to DBM:
Accounting for Funds Returned to Treasury
Dr Cash Treasury/Agency, Regular 10104010 00
Cr Due from NGAs 10303010 00
Page 123 of 224

This must then be reported in the monthly Consolidated Report of Income General Fund.
To clear the treasury cash accounts as the funds have been transferred by DBM the
accounting treatment in DepEDs books are:
Accounting for Unutilized, Returned Funds
Dr Subsidy from NGAs 40301010 00
Cr Cash Treasury/Agency, Regular 10104010 00
Step 7 Closing Agreement and Asset Transfer
A reconciliation of the advance must be performed between the accounting officers of the
two agencies for each advance provided.
A receipt of the unused funds transferred from DBM to the National treasury must be
provided by DBM to DepED. DepEd should file this receipt along with all other supporting
documents for the advance.
A summary of the accounting entries in the Departments accounts for an advance to DBM
Procurement Services are provided in Figure 2. This example illustrates an advance of
1,000,000 for ICT equipment. DepED receive 800,000 worth of equipment and DBM PS
return the balance to the national treasury.
Figure 9: Summary of Accounting Entries in DepED Books of Account

Purpose Account Debit Credit
Inter-Agency Receivables, Due

Create Advance 1,000,000
from NGAs
Agency - MDS 1,000,000

Liquidate Advance Agency Asset or Expense 800,000
Inter-Agency Receivables, Due
800,000
from NGAs
Treasury Cash Account
Unused Funds 200,000
[Regular/Special Account/Trust]
Account Receivable Due from
200,000
NGAs
Clear DepED
Subsidy 200,000
Treasury Account
Treasury Cash Account
200,000
[Regular/Special Account/Trust]
When assets have been procured or created for another office under DepED, these assets
must then be transferred from the procuring office to the office responsible for managing the
new asset. This is addressed under Section 17.7 on Transfer of Property Plant and
Equipment.
15.2.2 Other National Government Agency Receivables
The process relating to other NGAs is similar to that outlined for DBM-PS. The main
difference is that DBM transfers the funding for a particular program or project directly to the
Page 124 of 224

NGA for implementing the program or project which occurs when civil works contracts are
performed by DPWH. In such instances it is the Departments responsibility to oversee the
project implementation and account for any necessary asset recognition and disclosure
within their own books of account.
15.3 Due from GOCCs and LGUs
The process outlined for DBM-PS above should be followed for Amounts due from GOCCs
and LGUs.
15.4 Intra-Agency Receivables
The major intra-agency receivables for the Department are:

Due from Central Office (10304010 00);
Due from Bureaus (10304020 00);
Due from Regional Offices (10304030 00); and
Due from Operating Units (10304040).
Intra-Agency receivable accounts are advances between two offices within the same
organization. These accounts should be used for transferring funds between business units
within DepED.
The accounting treatment for transferring funds between business units are:
Issuing Advances of Funds to Other DepED Offices
Dr Intra-Agency Receivable 10304030 00 (e.g. Due from RO)
Receiving Advances of Funds from Other DepED Offices

Dr Cash in Bank - LCCA 10102020 00
Cr Intra-Agency Payables 20301010 00 (Due to CO)
For DepED as a whole, Intra-Agency Receivable should fully offset Intra-Agency Payables,
upon consolidation.
15.5 Other Receivables
Other receivable consist of:

Receivables disallowances/charges (10305010 00);
Due from officers and employees (10305020 00);
Due from non-government organizations/peoples organizations (10305030 00);
Other receivables (10305990 00);
Allowance for impairment (10305991 00).
Page 125 of 224

15.5.1 Receivables Disallowances / Charges
This account is used to record disallowances identified by the Commission on Audit whereby
a disallowance is expenditure which the COA have deemed inappropriate and therefore
should be recovered from the department. When this occurs the following accounting are
required to create the disallowance in eFRS:
JEV for Recognition of Disallowances/Charges
Dr Disallowances/Charges 10305010 00
Cr Expenditure (various) 50xxxxxx 00 (reversal of expenditure)
Or for prior year expenditures:
Once the AR account has been settled (e.g. by refund by charged party) this should be
recorded in eFRS with the following entries:
Settlement of Disallowances/Charges
Dr Cash Treasury/Agency Deposit 10104010 00
Cr Disallowances/Charges 10305010 00
15.5.2 Due from Officers and Employees
This account is used for recording amounts which are to be recovered from officers and
employees due to overpayments which they have received, or assets which they hold which
are due to be returned to the Department. The accounting entries for creating this AR in
eFRS are:
JEV for Recognizing the Receivable from Officers and Employees
Dr Due from Officers and Employees 10305020 00
Cr Various Accounts of overpayment or loss, e.g. Expenditure or PPE
Once this account has been settle e.g. the employee repays any overpayment made back to
the Department, this should be recorded in eFRS with the following entries.
Receipt from Officers and Employees to clear the Receivable
Dr Cash Treasury/Agency Deposit 10104010 00
Cr Due from Officers and Employees 10305020 00
15.5.3 Due from Non-Government Organizations
This account records advances made to NGOs and the corresponding liquidation of the
advance. The Department may provide the advance to the NGO to perform an activity to
support DepEDs operations (e.g. School Building constructed by Rotary Club and School
Furniture produced by Handicapped-managed/labored shops. The accounting entries to
record the advance are:
Processing the Advance Disbursement
Dr Due from NGOs 10305030 00
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The accounting entries for recording the liquidation of the advance are as follows:
Liquidation of Advance
Dr Various Expenses, Inventory and/or Asset Accounts
Cr Due from NGOs 10305030 00
15.5.4 Other Receivables
This account is created to capture all other possible receivable accounts not specifically
outlined in the UACS. The accounting entries may vary depending on how the receivable
was created.
15.5.5 Allowance for Impairment
This Account is used for making provisions for impairment of other receivables, e.g.
(formerly) provisions for bad debts. The provision is made for conservatism to reflect a true
and fair view in the books. Once the write off is approved the provision is cleared against
the specific receivables account.
When the Receivable becomes doubtful and the Allowance for Impairment is approved, a
JEV is prepared with the accounting treatment as follows:
Allowance for Impairment of Receivables
Dr Impairment Loss Receivables 50503020 00 (for example)
Cr Allowance for Impairment 10305991 00 (Other Receivables)
Once the loss has been realized and the write-off has been approved a JEV is prepared
reducing the specific Receivable Account and clearing the Allowances for Impairment
Account, as follows:
Allowance for Impairment of Receivables
Dr Allowance for Impairment 10305991 00 (Other Receivables)
Cr Due from Officers and Employees 10305020 00 (for example)
15.6 Advances
Certain Payable Transactions are recoded under Advances, which are categorized under
Other Assets in UACS. These include:
Advances of Operating Expenses (used for MOOE downloading to non-IUs);
Advances for Payroll; (used for disbursing supplementary payroll payments via the
Regular Disbursing Officer);
Advances to SDOs (used for specific purpose time bound expenditures) (See Section
9.4 for detailed accounting treatment); and
Advances to Officers and Employees (used for advances for official travel etc.)
The disbursements for these Advances are made in the normal manner through Bank
Disbursement from the MDS Account. Clearance of the Advance Balances is made via
Liquidation Reports.
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15.7 Prepayments
Prepayments prescribed in UACS include:

Advances to Contractors;
Prepaid Rent;
Prepaid Registration;
Prepaid Interest;
Prepaid Insurances; and
Other Prepayments.
In the DepED context, the main Accounts involved relate to Advances to Contractors and
Prepaid Insurances.
Advances to Contractors are processed in the same way as other Advances above. The
advance is liquidated against completion/fulfillment of the contractual arrangements.
Prepayments relate to payments made for items such as insurances, where the benefit is
realized over time, and across financial years. For example, a JEV is prepared at the end of
the financial year for the Prepayment, i.e. that portion of Insurances already paid, which
relates to the following year. For example, if an Insurance is paid on 1st July for 12 months
in advance, 50% (or 6 months benefit) of this payment will relate to the following financial
year. The Accounting Entry for the JEV is as follows:
JEV for Prepayments
Dr Prepaid Insurances 19902050 00 (for example)
Cr Insurance Expenses 50215030 00
15.8 Debt Collection Period and Bad Debts
In order for the Financial Statements to correctly reflect the financial position of the
Department, it is important that any income which is not likely to be collected that the
corresponding receivable be written out of the accounts and a bad debt created. It is the
responsibility of the head of the accounting unit to ensure that AR balances correctly reflect
the balances owed to the Department which are recoverable.
A statement for each debtor account should be generated on a monthly basis and issued to
all debtors with an unpaid balance. This includes advances to employees, NGAs, LGUs and
GOCCs. Each accounting office is responsible for formally following up unpaid balances or
liquidations as follows:
1. Payment/liquidation report is more than 30 days overdue reminder letter
2. Payment/liquidation report is more than 60 days overdue urgent second reminder
3. Payment/liquidation report is more than 90 days overdue final demand
These accounts are actively monitored and pursued by the head of the accounting
office/unit.
Page 128 of 224

15.9 Write-off Conditions and Procedures
15.9.1 Write-off Conditions
Debts are to be written off under the following conditions:

Where the debtor has moved address and all attempts to locate them have failed (or
debtor is deceased);
When it is uneconomical to finalize recovery action due to the relatively small value of
the debt and/or the potential cost of recovery is more than the initial debt;
When the medical, financial or domestic circumstances of a particular customer at
the time does not warrant the taking of recovery action or further recovery action;
Where the debtor is bankrupt, in receivership or in liquidation. The debt is written off
until such time as funds may become available;
Where legal proceedings through the courts have proved, or on legal advice, would
prove unsuccessful; or
When, after a debt has been written off, a customer becomes solvent, or is traced to a new
address, the debt is reinstated to current files and the debt collection process re-activated.
No Department staff member is authorized to inform a customer that action has been taken
to write off their debt.
15.9.2 Write-off Procedures
The process steps for writing off assets are outlined in COA Circular 2014-003 and the
NGAS Manual. Impairment of Receivables (Provisions for Bad Debts) and subsequent
write-off of Receivables is discussed in Section 15.5.5 above.
15.10 Controls Over Accounts Receivable
The key controls to be implemented over AR include:

AR aging analysis and reporting;
Controls surrounding advances and liquidation reports; and
Segregation of duties.
Adequate information regarding the age of outstanding debts is essential for controlling AR.
The accounting officer is responsible for preparing a monthly report on the aging of AR. This
should be prepared based on the updated sub ledger accounts and reported to the chief
accountant/financial management officer. The report on aged AR should result in action
being taken to collect payment or liquidation reports.
The AR balances on individual accounts should be reconciled on a monthly basis. A greater

proportion of time should be spent on the larger balances e.g. DBM-PS accounts for the
largest proportion of all AR balances and therefore should receive a greater amount of time
and attention than the remainder of the AR balances.
The controls over advances and liquidation reports are discussed in Section 15.6 above. It
is important that there is appropriate segregation of duties between those raising invoices,
receiving payments and recording accounting transactions.
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16 Inventory
16.1 Overview of Inventory
16.1.1 Definition of Inventory
The standard for accounting of inventories is PPSAS 12 which is adopted from IPSAS 12. It
defines Inventories as follows:
Inventories are assets:

(a) In the form of materials or supplies to be consumed in the production process;
(b) In the form of materials or supplies to be consumed or distributed in the rendering of
services;
(c) Held for sale or distribution in the ordinary course of operations; or
(d) In the process of production for sale or distribution.
In the context of DepED, Inventories relate primarily to item (b) above, i.e. materials or
supplies to be consumed or distributed in the rendering of services. They relate to items
falling under UACS Object Codes 10402xxx and 10404xxx.
16.1.2 Measurement of Inventory
To all intents and purposes in the DepED context, Inventories shall be measured at the
lower of cost and net realizable value, or where received in kind (donated) shall be
measured at their fair value as at the date of acquisition. (This will normally be notified by
the donating party in terms of the original cost to them).
DepED Dept. Order No. 82 s. 2011 provides the guidelines on the proper recording of all
donated properties. It states that donated assets shall be recorded at cost if determined at
the time of donation. However, the exchange value, fair market value, or appraised value of
the assets will be used when cost is not available. Furthermore, the Property and Supply
Handbook provides details on how to properly appraise government property (i.e. condition
factor, currency fluctuation factor, etc.).
16.1.3 Cost of Inventories
In accordance with the PPSAS, the cost of inventories shall comprise all costs of purchase,
costs of conversion, and other costs incurred in bringing the inventories to their present
location and condition. The cost therefore includes any import duties and taxes and
transport costs getting the Inventories to the DepED store.
The New Government Accounting System (NGAS) Manual provides Valuation of Inventory.
It states that the cost of ending inventory of supplies and materials shall be computed using
the Moving Average Method. The moving average method of costing is based on the
weighted average on the date of issue. The Accounting Unit shall be responsible in
computing the cost of inventory on a regular basis.
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Example:
Assuming DepED has the following items at the given dates:
Item Quantity Cost per piece Date of Purchase

Stapler 30 P200 January 15
Stapler 20 P175 February 10
Stapler 40 P185 March 20
What is the weighted average for a stapler received as of February 15? How about the moving
average for a stapler issued on March 25?
For February 15:
Multiply the quantity by the unit price for all deliveries received as of February 15. Then add the
results. So we have (30 x 200) + (20 x 175) = (6,000) + (3,500) = 9,500.
Divide the sum by the total quantity of items received as of February 15 to get the weighted average.
Thus, 9,500/ (30+20) = 190.
Therefore, the moving/weighted average for a stapler received as of February 15 is P190.
For March 25:
Multiply the quantity by the unit price for all deliveries received as of March 25. Then add the results.
So we have (30 x 200) + (20 x 175) + (40 x 185) = (6,000) + (3,500) + (7,400) = 16,900.
Divide the sum by the total quantity of items received as of March 25 to get the moving average.
Thus, 16,900/ (30+20+40) = 187.78
Therefore, the moving/weighted average for a stapler issued as of March 25 is P187.78
16.1.4 Policy and Standards
The New Government Accounting System (NGAS) manual outlines the policies in recording
inventory items. Additionally, there are DepED specific issuances and manuals developed
to support Inventory (and Property) Procedures. It includes the Handbook on Property and
Supply Management and DepED Order No. 26 Series of 2007.
Generally, there are two (2) classifications of inventory items in DepED, these are
consumable and non-consumable items. Consumable items refer to supplies and materials
which can be used up and after which is either gone, spent, or becomes useless. Examples
of consumable items are paper, ink, medicines, etc. In comparison, non-consumable refer to
inventory items which are reusable in nature and has an estimated useful life of more than
one (1) year i.e. textbooks, chairs, tables, etc.
For monitoring, control, and accountability of non-consumable inventory items, an Inventory

Custodian Slip (ICS) is issued to the requisitioning officer in addition to the approved RIS.
The classification prescribed in UACS for Inventories provides guidance on how to properly
categorize inventory items.
16.2 Managing Inventories
16.2.1 Overview Inventory Process
The inventory stage commences with the delivery receipt of goods and ends with the
usage/consumption of such goods. Generally, it involves Inventory Controls and Stores
Management. Controls include regular reconciliation between the records held by the
Property and Supply Unit and those of the Accounting Unit.
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The following diagram summarizes the overview of the inventory process:
Figure 10: Outline Process Flow for Inventory
16.2.2 Replenishment and Reordering
For DepED, replenishment and reordering is not based on the quantity of stocks available in
the warehouse but rather based on a scheduled and predetermined purchases on a
quarterly basis. These purchases are made through Agency Procurement Requests (APRs)
which is based on their Annual Procurement Plan (APP).
APP is prepared each year detailing the items to be procured and the quantity needed within
a particular year. From the APP, each item is divided into four (4) parts to make up the
required items per quarter to be incorporated in the APR for purchase. All purchases through
APRs are made through the Department of Budget and Management Procurement Service
(DBM-PS) every quarter. This means that each APR contains a quarter of a fraction
specified in the APP. For DepED, all procurement made through an APR is done through
advance payment.
Replenishment/reordering process starts with the PSO/U preparing the quarterly APR
together with the corresponding DV and ORS. Then it will be forwarded to Accounting Unit
for Pre-Audit. From Accounting, it goes to Budget Unit for the approval of the obligation.
From Budget, it goes back to Accounting Unit for certification of availability of funds. If the
amount in the APR is between 5m and 10m, it will be approved by ASEC for Finance,
where it is between 10m and 20M, it will be approved by the USEC for Finance and
Administration. Where the value of the APR exceeds 20m, the approval must come from
the Secretary. DepED Order No. 5 Series of 2008 provides detailed guidelines on signing
authorities for financial documents.
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After all signatories have signed the pertinent documents, it will be forwarded to Cash Unit
for payment wherein a Check/ADA is drawn. PSO/U will then bring the Check/ADA to DBM-
PS as advance payment for the APR. DBM-PS receives payment and sets the delivery
schedule.
16.2.3 Receiving Inventory
General Receiving of Inventory
In receiving goods from a Supplier, the Property and Supply Officer/Unit (PSO/U), together
with the inspectorate team, conducts an inspection on the delivered goods. A copy of the
Purchase Order (PO) should be the basis for verification (i.e. date, quantity, specifications,
etc.) of the delivered goods vis--vis the Delivery Receipt (DR). A physical inspection is
undertaken verifying:
Goods being supplied versus those ordered;
Quantity of items delivered;
Condition of all items (noting and referring back to Supplier in cases of damaged
goods);
Specifications/Quality of items delivered against those ordered;
Availability of Manuals and Warranty Cards if any.
Once the Inspection is completed the Inspection and Acceptance Report (IAR) 35 is prepared
and signed together with the DR. The IAR is prepared in three (3) copies wherein the
original goes to the supplier, the duplicate is for the inspectorate team, and the triplicate for
the PSO/U.
A copy of the IAR and PO is also provided to the Stock Card Keeper for recording in the
Asset Management System (AMS), for those offices using AMS, or Stock Card (SC), for
those offices using manual systems.
Centrally Procured Inventory Items
For centrally-procured items (i.e. textbooks, armchairs, computers etc.), the Inspectorate
Team of the recipient Schools/DOs/ROs should check first the completeness and
authenticity of the documents (i.e. date, signatories, address, etc.) prior to the actual
physical inspection. Moreover, the draft IAR 36 (brought by the Supplier during delivery) will
be used in lieu of the PO as basis for verification during inspection. This will be used for
comparison with the DR of the Supplier. Once everything is in order, the PSO/U together
with the Inspectorate Team, in the receiving Unit, signs the DR and IAR. The Stock Card is
updated on the basis of the IAR.
In addition, the recipient Schools/DOs/ROs, through their respective Property

Custodian/Supply Officer, should notify/report the deliveries made at their level to their
mother office within five (5) days upon receipt of delivery as specified in DepED Order No.
29 Series of 2008. Such notification/report is received by CO, which then validates the
delivery and prepares the Invoice Receipt for Property (IRP). The IRP is signed and
35 In generic terms this represents DepEDs Official Goods Received Note.
36 Central Office prepares the Draft IAR on behalf of the Lower Level Operating Units, but it is the receiving Unit
which approves the inspection and acceptance of the goods.
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approved by: the Schools Division Superintendent (SDS) for DOs and Schools; and the
Regional Director (RD) for ROs. The signed IRPs are used by CO to prepare their JEV a
copy of which provided to the receiving Operating Units, so that their JEVs are prepared
correctly. The Accounting Units in the receiving Offices approve and post the JEV in their
books (See Section 16.3.3 below).
Inventory Held for Distribution
In cases wherein there are inventory items which are delivered directly to either CO or RO or
DO but is intended to be distributed to the lower level units, the receiving unit (PSO/U)
should ensure that all deliveries are temporarily warehoused in the bodega for safekeeping.
Moreover, in order for the accounting unit to differentiate if the inventory items received are
held for distribution and not for consumption, the Allocation List should be attached as a
supporting document to the DV for proper booking with the JEV under Inventories Held for
Distribution.
The recording of the receipt of Inventories Held for Distribution undergoes the same process
as receipt of Centrally Procured Inventory Items, discussed above: CO prepares the IAR,
IRP and JEV, which is processed in the receiving Operating Units books accordingly.
Inventories Received Donated and Received in Kind
All donated inventories received should have a corresponding Deed of Donation from the
Donor detailing the agreements thereof and duly signed and notarized. It should also include
the details of the goods donated including the cost at the time of donation. This will also be
the basis for conducting the inspection of the goods received. If no cost is specified in the
Deed of Donation, the fair market value or appraised value may be used by PSO/U and
Accounting Unit when booking it up. As with all Inventory receipts the inventories are
inspected and formally accepted via the signed and approved IAR.
When accepting donated inventories, PSO/U should record the deliveries in the Stock Card.
If it is meant for distribution, IRPs will be prepared for the transfer of accountability. If it is a
non-consumable item meant for issuance, then ICS will be prepared. For Accounting Unit,
the Deed of Donation is used for accounting purposes including the preparation of the JEV
(See 16.3.1 below).
16.2.4 Issuing Inventory
Issuing Inventories Held for Consumption
Inventories Held for Consumption are items held for utilization and consumption by the
same Operating Unit. The Requisitioning Officer uses the Requisition and Issue Slip (RIS)
to be submitted to the Property and Supply Officer/Unit. If stocks are available, it will be
issued immediately by PSO/U. If not, PSO/U will note in the RIS the non-availability of
stocks. That particular RIS will then be the basis for the Requisitioning Officer to prepare the
PR or purchase it themselves through cash advance.
Immediately after issuance of available stocks, the PSO/U will update the AMS or SC
accordingly, retain a copy of the RIS, and temporarily file the original RIS which will be used
for preparing the RSMI. The RSMI should be prepared daily 37 and forwarded to the
Accounting Unit at the end of the day together with the RIS.
37 It is noted that currently many offices prefer to prepare the RSMI on a monthly basis.
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However, if requested items are non-consumables, PSO/U also prepares the Inventory
Custodian Slip (ICS) in two (2) copies wherein, after signing, the original is retained with
PSO/U and the duplicate goes to the Requisitioning Officer. ICS is issued for non-
consumable inventories similar to the Acknowledgment Receipt of Equipment (ARE) for
PPEs.
At the start of the day, Accounting Unit should update the Stock Ledger Card (SLC) based
on the RSMI submitted by PSO/U, permanently file a copy of the RSMI, and temporarily file
the original RIS and RSMI for recording issuance of inventory items in the books of accounts
Distribution and Transfer of Inventories
Once the supplies and materials held for distribution leaves the bodega for delivery to
intended recipients, PSO/U should remove it in their books and ensure that appropriate IRPs
have been prepared and completely signed/approved by the corresponding signatories.
Consequently, the signed IRPs should be forwarded directly to the accounting unit for
drawing up the appropriate JEVs for the transfer of supplies and materials. Financial
Accounting and Reporting for Inventory Transaction
16.3 Obligating and Accounting for Inventory Transactions
16.3.1 Accounting for Purchases for Inventory Receipts
Obligating the Proposed Purchase of Inventory Items
The Obligation Request and Status (ORS) is prepared prior to approving and releasing the
Purchase Order. The Obligation is therefore made at the initial stage of purchasing the
Inventory items as opposed to expensing the items once they are issued. The Object Codes
recorded on the ORS are based on the items being procured, e.g. their ultimate expense
codes. At this stage the Budget Execution Reports (e.g. BFARs) record the individual
expenditure lines as disbursed.
Accounting for the Purchase of Inventory Items
Once inspection and acceptance is done, the Property and Supply Officer/Unit shall prepare
the Disbursement Voucher (DV) and forwards it to the Accounting Unit together with the
original IAR, copy of DR, PO, PR, and ORS for approval. After approval, Accounting Unit
forwards DV and all supporting documents to Cash Unit for payment.
After payment has been made, Cash Unit prepares Report of Checks Issued (RCI) or Report
of ADA payments and forwards it to Accounting Unit together with the DV and all the
supporting documents. . The Bookkeeper posts the entry in eFRS under the Bank
Disbursement menu, as follow:
Accounting for the Receipt of Inventory
Dr Inventory Held for Consumption 10404100 00 (e.g. Text Books, etc.)
Or
Dr Inventory Held for Distribution 10402070 00 (e.g. Text Books, etc.)
Cr Cash in Bank MDS, Regular 10104040 00 (DO/IUs SL for MOOE)
In addition, the DV, DR, IAR, and the supporting documents will also be used for posting and
updating the SLC in the Accounting Unit.
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Accounting for Receipt of Donated Inventories
Based on the Deed of Donation and IAR, the donated Inventories are brought to account in
eFRS under the Other Transactions Menu, as follows:
Accounting for the Receipt of Donated Inventories
Cr Grants and Donations in Kind 40402020 00
The SLC is updated in Accounting Unit to reflect the receipt of the Inventories.
Accounting for the Receipt of Transferred or Centrally Procured Inventories

Accounting for the Regular Issue of Inventory
Cr Subsidy from other NGAs 40301020 00
The SLC is updated in Accounting Unit to reflect the receipt of the Inventories.
16.3.2 Accounting for Issues of Inventories Held for Consumption
Accounting for Issues of Inventories within an Operating Unit
To account for issues, Accounting Unit prepares the JEV at the end of each month based on
the submitted RSMIs from PSO/U. All RSMIs should be fully supported with their
corresponding RIS and JEV preparation is made through the Other Transactions menu in
eFRS, as follows:
Accounting for the Regular Issue of Inventory
Dr Text Books & Instructional Materials 50203110 00 (Expense)
Cr Inventory Held for Consumption 10404100 00 (e.g. Text Books, etc.)
The issue is recorded in the SLC by the Accounting Unit.
16.3.3 Accounting for Distribution of Inventories and Centrally Procured Inventories
Receipt of Inventories from distribution/transfer and Inventories procured centrally are

accounted for in the same manner based on the IRP and JEV prepared. Receipt of the
transferred (or centrally procured) Inventories) is detailed in Section 16.3.1 above.
The transaction is recorded in the issuing Offices books, through the Other Transactions
menu in eFRS, as follows:
Accounting for the Transferred Inventories Issuing Office
Cr Inventory Held for Distribution 10402070 00 (e.g. Text Books, etc.)
To account for the physical distribution, the Accounting Unit uses the signed IRPs from
PSO/U in order to reflect the reduction in stock in the SLC.
For efficient recording, PSO/U should closely monitor compliance of IRPs for every
distribution delivery and ensure that they are properly received and forwarded to the
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Accounting Unit. In addition, the Accounting Unit should ensure that each IRP has been
recorded in their books and JEVs are drawn for the transfer of accountability.
16.4 Custodianship
For Custodianship, accountability of all stocks in the warehouse is with the head of the
PSO/U. As such, the head of the PSO/U conducts random spot checks on the available
stocks in the warehouse vis--vis the numbers reflected in the Stock Cards (SC). In addition,
the PSO/U conducts physical count of inventories in the bodega every six (6) months. During
this bi-annual stock-take, each item in the SC is checked and verified with the number of
stocks available in the warehouse.
Moreover, for non-consumable items, PSO/U monitors custodianship of inventory items

based on the issued Inventory Custodian Slips (ICS). Likewise, PSO/U conducts physical
count of this particular inventory items every six (6) months from office to office.
16.5 Summary of Responsibilities for Receiving and Issuing Inventories
The following table summarizes the tasks and responsibilities of the Property and Supply
Unit, Cashiering Unit, and the Accounting Unit in receiving supplies and materials from the
Supplier:
Office/Unit Task/Responsibility
Receive and inspect (together with Inspectorate Team), the
supplies and materials delivered;
Prepare IAR, DV, and all other supporting documents. Make sure
Property and Supply that all fields and entries are complete and signed;
Officer/Unit Ensure that Asset Management System and/or Stock Card is
updated with the delivery;
Forward all pertinent documents to Accounting Unit for approval
of disbursement.
Review and double check all documents;
Approve disbursement by certifying the DV;
Forward all documents to Cashiering Unit for payment;
Upon receipt of RCI/ADA report, prepare JEV and update eFRS;
Accounting Unit Ensure that appropriate accounting entries are used;
Ensure that Allocation List is included in the supporting
documents for Inventories Held for Distribution;
Ensure that Stock Ledger Card is updated with the delivery;
File all pertinent documents for easy recovery.
Process Payment;
Prepare Report on Checks Issued and ADA Payments;
Cashiering Unit Forward to Accounting Unit all pertinent documents along with
the RCI/ADA report.
In comparison, the following table summarizes the tasks and responsibilities of the Property
and Supply Unit and the Accounting Unit in issuing supplies and materials:
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Office/Unit Task/Responsibility
Receive RIS form from requesting office and check stock availability
in warehouse. If available, issue immediately. If not, provide note in
RIS form;
Ensure that Asset Management System and/or Stock Card is updated
every time there is an issuance of goods;
Prepare RSMI and file all corresponding RIS daily. Consequently,
Property and Supply
submit to accounting unit at each end of the day;
Officer/Unit
For inventory held for distribution, prepare corresponding IRPs prior
to distribution;
Update AMS and/or SC when supplies and materials leave the
bodega;
Ensure IRPs are complete and signed by signatories. Forward all IRPs
and pertinent documents to accounting unit.
Receive RSMI and RIS from PSO/U;
Review and double check all documents;
Ensure that SLC is updated daily;
Prepare JEV and update eFRS;
Accounting Unit Ensure that appropriate accounting entries are used;
For inventory held for distribution, ensure signed IRPs are received
prior to preparing the corresponding JEVs for the transfer of supplies
and materials;
File all pertinent documents for easy recovery.
16.6 Reconciliations
In NGAS Manual (Vol.1, Chapter 3, Section 43), it states that the balance in quantity per SC
should always reconcile with the balance of the SLC in the accounting unit. This means that
the SC records maintained by the PSO/U and the SLC records maintained by the
Accounting Unit should have the same balances at any given time.
To ensure both records are in agreement, the Department should conduct monthly
reconciliation of both accounts as illustrated below:
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Reconciliation steps:
1. Compare quantity balances for both records. If match, then reconciliation is done.
2. If both records do not match, review posting for each record starting with the earliest
transaction from the last reconciled balance figure.
3. Compare each posting and identify the discrepancy.
4. Make the necessary adjustment/correction.
The following items are the most common reasons for differences between the two records:
1. Wrong posting in SC or SLC.
2. Posting is made only in one record.
3. Entries are made in wrong columns.
4. Mistake in extracting the balances.
Moreover, considering that the Report on the Physical Count of Inventories (RPCI) needs to
be prepared every six (6) months as instructed in Appendix A-62_RPCI of the NGAS
Manual, the Department should also conduct reconciliation of accounts between the
balances of the SC and the actual physical count reflected in the RPCI. This reconciliation
between the SC and RPCI should also be every six months in addition to the monthly
reconciliation between SC and SLC.
16.7 Verification and Validation of Inventories
Verification and validation of inventories is made through the physical stock-taking of

inventories which is done every six (6) months (end of June and December). However, for
school textbooks, armchairs, desks, and tables, stock-taking happens only once a year
which is scheduled at the very end of each school year.
Prior to the actual stock-taking, a physical inventory plan should be prepared by the PSO/U
to be duly approved by Agency Head. It should include the inventory guidelines (i.e. cut-off
dates, inventory tags, etc.) and instructions (i.e. reports, forms, etc.) that need to be
observed during the actual inventory-taking. Also, an Inventory Committee, composing of
two or more regular employees including the Property/Supply Office/Custodian, should be
created. In addition, a COA representative should also serve as a witness during the
physical inventory-taking.
For the actual stock-taking, the following procedure should be covered:

The inventory crew shall take the actual count, weight, or any specific measure of a
particular inventory item, verify tags and labels, and then records all details in a
summary sheet. This process should be supervised by the Inventory Committee and
witnessed by the COA representative.
Results of the physical count should be checked/reconciled with the Stock Card (SC)
(the assumption here is that both the SC and SLC should be always reconciled at
any given time, thus, reconciliation at this stage is only with SC). If there are
discrepancies, investigate and identify the cause. Make adjustments if necessary.
Inventory Committee prepares the Report on the Physical Count of Inventories
(RPCI) duly certified correct and approved by the Head of Office.
Submit RPCI to COA no later than July 31 and January 31 respectively of each year.
The following items should also be considered when doing stock-taking:

Proper cut-offs must be determined and set as a guideline.
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Withdrawal and additions to the inventory must be diligently recorded during stock-
taking to avoid inconsistencies.
Segregate newly received goods wherein they will not be counted during the stock
take.
Freeze warehouse activities if necessary to avoid confusion.
Discrepancies between physical count and property/supply records must be
addressed immediately.
Investigate unusual results. Recount and re-evaluate tags if necessary.
16.8 Impairment and Write Off of Inventory
Impairment of inventory items is similar to the impairment of assets discussed in Section

19.3.4. However, in addition to disposal of unserviceable equipment, the determining factors
of disposing inventory items also include unused supplies, materials, and spare parts that
were procured in excess of the requirements and/or dangerous to be used because of
prolonged storage or deemed hazardous to health and safety.
For disposal of unserviceable property and unused/waste supplies and materials, an

Inventory and Inspection Report of Unserviceable Property (IIRUP) must be prepared to be
accompanied by any of the following items:
List of missing functional parts for unserviceable equipment duly certified by Supply
Officer/Property Custodian and Head of Office; or
Current photograph in two positions; or
Waste Materials Report (WMR) for expendable and consumable materials and
supplies including spare parts and empty containers.
The IIRUP shall be prepared by the Accountable Officer in two (2) copies wherein the
original goes to the Accounting Unit and the duplicate to the PSO/U. The original IIRUP shall
be the basis for the Accounting Unit to adjust accounts affected by means of a JEV.
In case of loss of inventory items due to calamity (force majeure), fire, theft, or any other
incidents, a Relief from Accountability application should be filed by the Accountable Officer.
Requirements for Relief of Accountability are discussed in detail in the Property and Supply
Handbook. Furthermore, only the Commission on Audit (COA) has the main function of
crediting loss of property or act on an application for Relief of Accountability. Only when the
Relief of Accountability has been granted, will Accounting Unit be able to write-off the
affected accounts through a JEV.
16.9 Handing Over Accountability for Inventories
Handing over accountability for inventories is based on its classification either it is held for
consumption or for distribution. For inventories held for consumption, the handing over of
accountability is made through the issuance of a Requisition Issue Slip (RIS) for
consumables while an Inventory Custodian Slip (ICS) is issued for non-consumables in
addition to the RIS. Inventory Custodian Slip (ICS) for inventory items functions similarly to
the Acknowledgment Receipt of Equipment (ARE) for PPE items. Nevertheless, for
inventories held for distribution, an Invoice Receipt for Property (IRP) is needed to transfer
accountability from one office to another.
The table below outlines the differences in handing over accountability:
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Transfer of Accountability
Classification Description
Requirement
Inventory Held for
Requisition Issue Slip (RIS) For consumables only.
Consumption
Requisition Issue Slip (RIS)
Inventory Held for For non-consumables or semi-
and Inventory Custodian Slip
Consumption expendable assets.
(ICS)
Inventory Held for Invoice Receipt for Property For all types of inventories meant
Distribution (IRP) for transferring to another office.
16.10 Forms and Reports
There are a number of forms and reports prescribed in the NGAS Manual for managing
inventories. Each form and report template has a corresponding instruction associated with it
(Please refer to NGAS Manual Appendices for details).
Annex E contains a matrix of the commonly used forms and reports by the Department for
managing its inventories.
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17 Non-Current Assets
The Department makes significant annual investment in tangible physical assets to enable it
to carry out its mandate and deliver its objectives. These physical assets include land,
buildings, vehicles, furniture and fixtures, communication and IT equipment. In many
instances the Department will simply procure the assets however in some instances such as
with classroom construction, the Department will develop its own assets. The period
between project commencing and asset formation is generally referred to as Work in
Progress however in accordance with the UACS, it is termed as Construction in Progress.
These physical assets are referred to Property Plant and Equipment (PPE) and are
accounted for in the Departments financial records in accordance with PPSAS 17.
PPE accounting is the culmination of the Capital Outlay processes, which are described in
Section 7. PPE Assets may be acquired through direct procurement (discussed in Section
13), via Construction by other Agencies, e.g. DPWH or LGUs (See Section 17.3.5) or
donated.
17.1 Property Plant and Equipment Policy
PPE shall be recognized as assets if and only if:

It is probable that the future economic benefits or service potential associated with
the item will flow to the Department.
The cost or fair value of the item can be reliably measured.
All PPE will initially be recognized at cost. This includes all costs associated with getting
the asset ready for its intended use.
The cost accounting model is used to value assets subsequent to acquisition. This means
that the asset is carried at cost less accumulated depreciation and any impairment losses.
Depreciation is charged on a straight line basis and determined by the Useful Economic
Life (UEL) of the asset. UEL is determined as the period over which the Department is
expected to derive benefit from the asset.
PPE will be derecognized immediately on disposal or when no future economic benefits or
service potential is expected from its use.
Gains or losses on de-recognition shall be treated as a surplus or deficit.
17.2 Property Plant and Equipment Defined
A fundamental question relating to PPE is whether or not an item is a non-current asset. In

the majority of cases this will be clear, however there are some instances when it is not so
easy to determine. Therefore some specific criteria need to be met for an item to be
considered a non-current asset. The specific elements that define an asset include:
Future economic benefits The item must enable the Department to better perform
its operations and services. This should be yes for the item to be considered an
asset.
Control The Department must control the item i.e. Can it use or otherwise benefit
from the asset in pursuit of its objectives and also regulate who has access to those
benefits. If yes, this is considered a departmental asset. In some instances the
Department may control an asset but have no legal title to that asset, e.g. school
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buildings are used by the Department but legal title rests with Local Government. In
such instances the Department controls the school buildings and therefore they
should be accounted for as Departmental assets.
Occurrence of past event The asset must already be in existence. A contract to
procure an asset does not give rise to an asset for financial reporting.
Monetary value It must be possible to place a monetary value on the asset.
All criteria must be achieved for the item to be considered a non-current asset.
17.3 Recognition and Measurement
17.3.1 PPE Recognition
PPE can be acquired as follows:

Purchased;
Received through Donation;
Constructed;
Distributed or
Transferred/Distributed from other offices within DepED.
Irrespective of the mode of acquisition, the PPE Asset goes through a similar receiving
process, as described below.
17.3.2 Receiving PPE Assets
First Receipt of PPE into DepED
DepED receives the PPE Assets (first receipt into the Department) via the Inspection and
Acceptance Report (IAR), which will be accompanied by:
The Suppliers Delivery Note for Purchased Assets;
Deed of Donation for donated items; or
Certificate of Final Completion and Acceptance (based on the Joint Inspection Report
(JIR) for Constructed Items.
The Delivery Note and IAR are accompanied by the procurement documents, i.e. Purchase
Order (PO) and attachments, including allocation lists showing the intended ultimate
recipients. Where the PPE Assets have no immediate beneficiary or where the allocation list
shows the items are for distribution to other offices within DepED, the items will be allocated
initially to Inventory Held for Distribution - PPE (10402090 00). (See 17.3.7 below)
Distributing Assets within the Same Office
Where PPE Assets are held in Inventory for Distribution and released to custodians within
the same Operating Unit, this is processed through the Requisition and Issue Slip (RIS),
which is used to bring the Asset into the PPE Accounts (106xxxxx).
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Distribution/Transfer of Assets to Other Offices
Where PPE Assets are held in Inventory for Distribution to other Operating Units within
DepED, an Invoice Receipt for Property (IRP) is prepared. The IRP is then used as the
source for the JEVs for issuing and charging the PPE Asset in the distributing office and for
receiving the PPE Asset in the beneficiary office. (See Section 17.7 below).
Receipt of PPE Assets by Custodian
When the PPE Asset is issued the Asset Custodian (irrespective of handing over, i.e. directly
from procurement, distribution or transfer) an Acknowledgement Receipt of Equipment
(ARE) is prepared and signed transferring accountability for the Asset to the Custodian.
17.3.3 Purchased Asset Items
Asset Items for Immediate Allocation
All items which meet the definition of a non-current asset and which have a value greater
than 10,000 38 should be recognized as PPE at historic cost. Cost includes the purchase
cost and all costs incurred to bring the item to the location necessary for their intended use,
which includes transportation and installation costs as well as dismantling and removing
costs. When a PPE Asset is purchased it is brought to account from the details of the
Inspection and Acceptance Report. The accounting entries for purchased motor vehicles
would be:
Purchase of Motor Vehicle

Dr Motor Vehicles Asset Account 10606010 00
Cr Cash, MDS Regular 10104040 00
Asset Items Purchased for Later Distribution
Where a PPE Asset (e.g. a laptop) is held in store for later release either to an
officer/custodian within the Operating Unit or to another Operating Unit, it is accounted for as
Inventory as follows:
Purchase of PPA Asset (e.g. laptop) Held for Distribution

Dr Inventory Held for Distribution - PPE 10402090 00
Cr Cash, MDS Regular 10104040 00
17.3.4 Donated Items
For assets acquired at no cost or for nominal consideration, cost is determined as the fair
value at the date of acquisition for goods (i.e. the date when the asset was originally
purchased) which is then depreciated in accordance with Departments depreciation policy.
For donated land and buildings, fair value is determined by a qualified surveyor. For
donated Assets a Deed of Donation is received for processing in the receiving books. As
38 This threshold for capitalising non-current Assets applies to the individual items, not the batch total.For
example, where a batch of sports equipment is purchased in bulk, it is the value of each individual item which
must exceed 10,000 for it to be capitalized.
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with all Assets, the IAR and ARE are also prepared for the receipt and assignment of
accountability for the Asset.
The following steps should be followed when accounting for a donated asset.
Step 1 Determine the fair value. If the original cost is not available for the asset, the
fair value should be determined by comparing the donated asset to other similar
assets held by the Department. If the asset is unique in nature, a professional
appraiser should be consulted.
Step 2 Enter the fair value of the asset into eFRS at fair value
Donated Asset (e.g. School Building)
Dr PPE (e.g. School Buildings) 10604020 00
Cr Income from Donations in Kind 40402020 00
17.3.5 Self-Constructed Assets
Construction in Progress
All the costs associated with self-construction are the same as those which relate to
purchased PPE. Such costs will be recorded in eFRS as Construction in Progress (CIP) until
the asset has been fully constructed and handed over for use. CIP costs include site
preparation, direct materials, direct labor, professional fees, asset testing and estimated
dismantling costs. In most instances constructed assets will be performed either through an
NGA or LGU. This will require the Department to make an advance payment to those bodies
for the estimated value of the works to be completed. The advance will be recorded as an
AR until it is fully liquidated. The accounting entries for recording the advance payment and
the CIP costs are:
Initial Advance for Construction, e.g. to LGU
Dr Inter Agency Receivables - LGU 10303030 00
Cr Cash in Bank - MDS Regular 10104040 00
Liquidation of Advance Against CIP
Dr CIP Buildings & Other Structures 10610030 00
Cr Inter Agency Receivables - LGU 10303030 00
Capitalization of Completed (Construction) Asset
When the asset is fully constructed, a certificate of completion must be prepared by the
constructing entity and this should be verified by the respective Department accounting
officer with reference to the MOA (see Section 15). Once the asset is created it should be
recorded as such through the following entries:
Completion of Construction, e.g. School Building
Dr PPE School Buildings 10604020 00
Cr CIP Buildings & Other Structures 10610030 00
If the Central or Region Office is managing the CIP on behalf of a Division Office, then the
asset should be transferred from the CO or RO to the DO at the same time the asset is
brought to account at fair value. See Asset Transfers below.
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17.3.6 Subsequent Recognition Supplemental Capital Investment
Classification of Minor Repairs and Maintenance versus Major Repairs and Overhaul
Minor repair and maintenance occurs when an asset is maintained to ensure it can function
at its existing capacity. Such maintenance is recorded as an expense under MOOE.
Major repair or overhaul occurs through an alteration, addition or reconditioning of the PPE
Asset which materially increases the value of the asset or its UEL. When such overhaul
occurs, this is deemed capital expenditure and is therefore part of the cost of the asset.
Major repairs and overhauls are therefore accounted through the statement of financial
position and the entries recorded in the eFRS are:
Disbursements on Major Repairs and Overhaul
Dr PPE (e.g. Buildings) 10604010 00
Cr Cash in Bank - MDS Regular 10104040 00
17.3.7 Items Distributed Within the Same Operating Unit
Where PPE Assets are held for distribution (e.g. in accordance with Asset Items Purchased
for Later Distribution in Section 17.3.3) they are issued internally within the Operating Unit
through the Requisition and Issue Slip (RIS). The Inventory of PPE is adjusted by the
Supply Officer on the Property Card and Asset Register to reflect the issue made. The
Supply Officer submits one copy of the RIS to the Accounting Office so that the issue can be
reflected in the books of Accounts. The Accountant records the issue on the PPE Ledger
Card (PPE-LC) and prepares the JEV for the issue of PPE.
The issue is processed in the eFRS through the Other Transactions Menu and the
Accounting Entry is as follows:
Distributing PPE within same Operating Unit

Dr PPE (e.g. ICT Equipment) 10605030 00
Cr Inventory Held for Distribution - PPE 10402090 00
17.3.8 Revaluation of Non-Current Assets
There are occasions when certain classes of assets need to be revalued to ensure that their
carrying values are not materially different from their fair value.
Fair value of an asset should be determined by current replacement cost less

accumulated depreciation (if applicable)
All non-current assets should be valued every five years to ensure the valuation is not
materially different from fair value.
However, if at any time management considers that the carrying amount of an asset
materially differs from its fair value then the asset will be revalued regardless of when the
previous valuation took place.
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Increases and Decreases in Asset Value
The accounting entries for increases or decreases in asset valuation are:

Increase in Asset Value due to Revaluation
Dr PPE (e.g. Buildings) 10604010 00
Decrease in Asset Value due to Revaluation
Dr Accumulated Surplus/Deficit 30101010 00
Cr PPE (e.g. Buildings) 10604010 00
Any increases or decreases in asset value must be offset against the same asset class.
17.3.9 Recording
To ensure appropriate control over the Departments resources, it is essential to record fully
the details of all purchased, constructed or donated assets. This requires assets to be clearly
classified, accounted for in the eFRS and recorded in detail in the Asset Register. The
Registers should clearly highlight the officers accountable for each individual asset, based
on the ARE. Where accountability for an Asset has not yet been assigned, (e.g. Asset items
held in the Bodega for later distribution), these should be appropriately recorded as such in
the Asset Register, and subsequently recoded against an officer, once accountability has
been assigned.
Asset Classification
All PPE assets are classified in accordance with the UACS Object Code; some common
examples used in DepED are outlined in Table 3 below.
Table 3: Common Examples of Object Codes for PPE

Asset Classification Sub Classification UEL
(Years)
Property, Plant & Equipment
Land Land 10601010 N/A
Other Land Improvements 10602010 10
Buildings & Other Structures Buildings 10604010 10/20/30 39
School Buildings 10604020 10/20/30
Hostels and Dormitories 10604060 10/20/30
Machinery and Equipment Machinery 10605010 10
Office Equipment 10605020 5
ICT Equipment 10605030 5
Communication Equipment 10605070 10
Printing Equipment 10605120 10
39 All Buildings in general have different UELs based on the predominance of materials used for construction.
For wood it is 10 years while for concrete it is 30 years. If it is mixed, then it is 20 years.
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Asset Classification Sub Classification UEL

(Years)
Other Machinery and Equipment 10605099 10
Transportation Equipment Motor Vehicles 10606010 7
Furniture, Fixtures & Books Furniture and Fixtures 10607010 10
Books 10607020 5
Inventory
Inventory for Distribution PPE for Distribution 10402090 N/A
17.4 Maintaining the Asset Registers
An Asset Register for all asset classes must be maintained up to date by the Supply Officer.
This is the most important control over the Departments non-current assets and is essential
for ensuring adequate asset management. The standard templates provided for these
Registers should be used by all administrative offices in DepED. The Supply Officer
maintains the Property Card supported by the Acknowledgment Receipt for Equipment
(ARE) for all PPE Assets held within the Office. The Property Card forms the basis for
compiling the templates and the Asset Register.
The Asset Register will be used to support the Financial Statement reporting of non-current
assets. As such the head of the Accounting Unit is responsible for ensuring the
reconciliation of the Asset Register with the General Ledger asset balance. This
reconciliation must be performed on a monthly basis. The Accountant maintains a Property
Ledger Card (PLC) to facilitate the verification and breakdown of the Asset figures
maintained in the Financial Statements.
The fundamental purpose of maintaining an asset register is to support the Departments

investments in non-current assets. Proper reconciliation and validation of accurate
information in the Books of Account is therefore paramount.
The asset register should include the following data:

Office Type Model Useful Economic Life
Office Name Serial Number Depreciation for Period
Asset Classification Specification Cumulative Depreciation
Asset Sub Class Asset Number Name of Accountable Officer
UACS Object Code Funding Source Position of Accountable Officer
Asset Item Cost of Acquisition Asset location
Manufacturer Date of Acquisition Asset Condition
When reconciling the Asset Register with the General Ledger the Accounting Officer should
collaborate with the Supply Officer to ensure that all data fields in the asset register are
complete and up to date. This is essential for ensuring the accuracy of financial reporting
and it is a mandatory audit requirement. The reconciliation between the finance officer and
the supply officer should be completed within 5 days of the month end. If it is found that the
Asset Register is not complete, or there are unresolved discrepancies between the two sets
of records, the head of finance for the office should be notified and corrective measures
taken.
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17.5 Depreciation and Impairment
17.5.1 Depreciation
The Accountant is responsible for calculating PPE depreciation. This should be calculated in
the Asset Register in conjunction with the figures in the Books for the Cost value of the
PPE Assets. (Note: The Asset Register is important to identify those assets which may
have already been depreciated to their residual value and no further depreciation is
necessary).
Calculating Depreciation
Principles for calculating Depreciation include the following:

(i) Depreciation should be posted in eFRS on a monthly basis following the
reconciliation of the Asset Register with the General Ledger PPE balances.
(ii) The straight-line method of depreciation shall be used.
(iii) Depreciation shall start on the second month after purchase of the asset. Land is not
depreciated, it is assumed to have an infinite life.
(iv) A residual value equivalent to 10% of the purchase cost shall be set-up for all
(depreciated) assets. Residual value is the expected value which can be gained
from the asset at the end of its UEL.
Depreciation is calculated using the following formula:
Asset Cost Residual Value = Depreciable Amount

Depreciable Amount / UEL = Annual Depreciation
UEL = the period over which the Department is expected to gain benefit from the asset.
Accounting for Depreciation
The depreciation charge is recorded in the eFRS as follows:

Posting of Depreciation (Example Office Equipment)
Dr Depreciation Expense 50501050 00 (Machinery & Equipment)
Cr PPE: Accumulated Depreciation 10605021 00 (Office Equipment)
Example:
A motor vehicle was purchased in January 2014 for 1,000,000. An additional 100,000
was paid in shipping costs. The vehicle has a UEL of 5 years.
Asset Cost = 1,100,000 (1,000,000 + 100,000)

Residual Value = 110,000 (1,100,000 x 10%)
Depreciable Amount = 990,000 (1,100,000 - 110,000)
Annual Depreciation = 198,000 (990,000 / 5)
Depreciation for 2014 = 181,500 (Depreciation commences month after acquisition)
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Construction In Progress assets are not depreciated until they are recognized as assets.
17.5.2 Impairment
Unexpected events may occur which cause an asset to be devalued beyond the level of
depreciation. In such instances an impairment loss should be recorded. Impairment is the
loss of future economic benefits or service potential of an asset. Causes of impairment
include:
Accidents - A motor vehicle is involved in a car collision;
Natural Disasters A typhoon causes significant damage to a school;
Obsolescence IT equipment procured more than ten years ago is no longer
compatible with more modern IT architecture.
Non-compliance A newly constructed school building does not comply with
appropriate safety or construction standards
Decline in usage Manual library books are no longer used as most potential users
prefer e-copies of materials.
Impairment Loss
An impairment loss arises when the carrying amount of an asset in the Departments
statement of financial position is greater than the recoverable service amount.
The recoverable service amount is the higher of an assets fair value less any selling
costs and its value in use. This should be determined by how much the asset could be
sold for, less the cost of selling the asset.
An assets value in use is determined as the present value of an assets remaining
service potential. The Department assesses this through the cost of the asset less
cumulative depreciation, i.e. its carrying amount. This is referred to as the Depreciated
replacement cost approach.
It should be noted that once an impairment loss has been recognized, this will reduce the
depreciable amount of the asset as the value of the asset has decreased. The impairment
may also affect the UEL of the asset. It is the responsibility of the supply officer to provide
the recoverable service amount of the asset and any reduction in the estimated UEL of the
asset to the accounting officer as soon as possible after the impairment has occurred. It is
the responsibility of the accounting officer to ensure than any impairment losses are
recognized timely.
For year-end reporting it is essential that the accounting officer accounts for impairment
losses for all PPE. This can only be achieved if a full asset inventory is performed at the year
end and impaired assets clearly identified. The process for addressing impaired assets
includes:
(i) Perform physical inventory of assets by supply officer and assess if all assets are in
working condition or have been impaired.
(ii) If impaired, the supply officer should determine the recoverable service amount of the
impaired asset along with any selling costs. The quotations and calculations should
be presented to the accounting officer.
(iii) The accounting officer should assess whether the fair value less selling costs is less
than or greater than the value in use.
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(iv) If the fair value less selling costs is greater than the value in use, then the asset will
be sold and accounted for as a disposal as outlined in Section 17.6.
(v) If value in use is deemed greater than fair value the asset will be retained and
possibly repaired, however the impairment loss must be recognized in eFRS along
with adjustments in depreciation.
Example
The Department purchased a vehicle in 2013 for, 1,000,000. It has a UEL of 5 years with
zero residual value. The car was in a significant accident in 2015 and its fair value was
considered 275,000 with selling costs of 25,000. The vehicle was sold in 2016 for
275,000. The impairment loss should be recognized in the financial statements of 2015
and the gain or loss on disposal in 2016.
The following steps should be applied for impairment losses
1,000,000 - 600,000 = 400,000

Step 1 Calculate asset carrying value
Cost Accumulated Depreciation
Determine asset fair value less 275,000 - 25,000 = 250,000
Step 2
cost to sell Fair value cost to sell
Determine asset recoverable
Step 3 250,000
service amount
400,000 250,000 Therefore
Step 4 Determine if there is impairment
impairment loss = 150,000
Reduce vehicle carrying amount in
Step 5 Credit asset impairment loss 150,000
statement of financial position
Recognize impairment loss in
Step 6 Debit impairment loss expense 150,000
statement of financial performance
In the above example, if the asset were retained by the Department, the UEL would be
assessed and the depreciation calculated to reflect the revised carrying value of the asset.
The asset register should be updated with all impairment data. The asset record for the
impaired vehicle would be as follows.
Acquisition Date 2 January 2012

Acquisition Cost 1,000,000
UEL (Years) 5
Residual Value Nil
Depreciation Method Straight Line
Annual Depreciation 2013 200,000 End of year Carrying Amount 800,000
Annual Depreciation 2014 200,000 600,000
Annual Depreciation 2015 200,000 400,000
Impairment 2015 150,000 250,000
Disposal 2016 250,000 Nil
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Accounting for Impairment in the Operating Units Books
Impairment is accounted for in the eFRS under Other Transactions Menu and Non-Cash
Expenses Sub-Transaction Type, as follows:
Accounting for Impairment (Example Office Equipment)
Dr Impairment Loss - PPE 50503090 00
Cr PPE: Accumulated Impairment 10605022 00 (Office Equipment)
Reversal of Impairment Loss
The accounting officer is responsible for ensuring that impairment losses recognized in prior
reporting periods still exist. If it is deemed for any reason that the impairment is no longer
exists, then the impairment loss should be reversed in the Departments accounts in the
eFRS under Other Transactions Menu and Non-Cash Expenses Sub-Transaction Type,
as follows:
Reversal of Impairment (from prior years)
Dr PPE: Accumulated Impairment 10605022 00 (Office Equipment)
17.6 De-recognition / Disposal
De-recognition of an asset refers to its removal from the statement of financial position. This
may occur for the following reasons:
Sale equipment no longer required is sold on the open market.
Transfer assets transferred to regions or divisions or other NGAs.
Donation old equipment donated to charities.
Abandonment old building abandoned due to poor condition, maybe due to a
natural disaster.
Theft Department equipment stolen.
Destruction school destroyed in a typhoon.
17.6.1 Gains and Losses on De-recognition / Disposal
A gain or loss on de-recognition occur when the proceeds from the disposal of an asset are
less than or greater than the carrying value of the asset. Gains and losses are recognized in
statement of financial performance however they are not recognized as revenue from normal
operations. When accounting for asset disposal, the asset must be removed from the
statement of financial position. Where there are proceeds on disposal of an asset the
transaction will be brought to account in the Cash Collections Menu and RA Receipt Sub
Transaction Type. The Accounting Entries will be as follows:
Sale Disposal of Asset (Example Office Equipment)
Dr Cash Collecting Office 10101010 00 (Proceeds collected)
Dr PPE: Accumulated Depreciation 10605021 00 (Office Equipment)
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Cr PPE: Machinery & Equipment (Cost) 10605022 00 (Office Equipment)

Dr Losses on Sale of PPE 50503090 00 or
Cr Gain on Sale of PPE 40501040 00
The balance on the asset disposal account will therefore demonstrate a gain or loss on
disposal. This is illustrated with the following example. A motor vehicle which cost
1,000,000 and had accumulated depreciation of 600,000 was sold for 500,000. The gain
or loss on asset disposal account would include the following entries.
Disposal Account
Debit Amount Credit Amount
Vehicle Cost 1,000,000 Accumulated Depreciation 600,000
Gain on Disposal 100,000 Bank 500,000
1,100,000 1,100,000
Disposal with no Proceeds, e.g. Asset Write-Off
Where an Asset is disposed with no proceeds, e.g. the asset is written off due to being no
longer serviceable. The (10%) residual balance will be effectively written off to Other
Losses. The entry will be made in eFRS under Other Transactions as follows:
Disposal of Asset with no Proceeds
Dr Other Losses 50504990 00
Dr PPE: Accumulated Depreciation 10605021 00 (Office Equipment)
Cr PPE: Machinery & Equipment (Cost) 10605022 00 (Office Equipment)
17.6.2 Asset Disposal Process
Department asset disposal procedures are outlined in detail in the Property and Supply
Handbook. Asset disposal controls include ensuring that the asset is disposed of at a fair
value, that it is no longer required by the Department and that the officer accountable for the
asset cannot benefit directly from the sale of the asset.
The head of the Department is responsible for the disposal of all PPE. In order to achieve
this in accordance with all government legislation and regulation a disposal committee is
formed which is supported by a secretariat and appropriate technical staff. The disposal
process is made up of the following steps.
Step 1 Physical inspection of the asset and determine if the asset is listed in
accordance with all criteria listed in the FAR. Assess the current condition of the
property and state if it is obsolete, unrepairable or repairable. If the asset is repairable
an estimate of the repairs should be provided.
Step 2 Determine the fair value of the asset as outlined in Section 19.3.3
Step 3 If obsolete or unrepairable, the accountable officer should prepare an asset

disposal report and have the disposal authorized.
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Step 4 - The disposal committee will appraise the value of the assets to be disposed in
accordance with Government guidelines.
Step 5 The Commission on Audit approves or rejects the appraisal report prepared
by the disposal committee.
Step 6 If approved, the disposal committee will request bids for the disposal items in
accordance with government procurement procedures.
Step 7 Pending the successful bidding process, the disposal committee awards the
sale of the items to the successful bidder.
Step 8 All proceeds from the sale will be recorded by the accounting officer in the
eFRS as well as removing the asset from the records of the Department. The
accounting entries are outlined above.
Step 9 The FAR will be updated by the supply officer with the disposal data. The
FAR should clearly indicate that the asset has been disposed.
Step 10 - The FAR and the eFRS General Ledger accounts are then reconciled by the
accounting officer.
17.7 Asset Transfers
Asset transfers can occur:

(i) Between Agencies - Interdepartmental; or
(ii) Within the Department - Intradepartmental.
17.7.1 Interdepartmental Asset Transfers
Transfers between agencies should be dealt with through a formal Memorandum of

Agreement MOA with all necessary requirements clearly defined within the MOA.
17.7.2 Intradepartmental Asset Transfers
This transfer occurs when the transferring office procures PPE on behalf of a receiving office
within the Department. The most common type of transactions will be when CO or the RO
procure PPE in bulk on behalf of DOs. This may be achieved through:
Central/Region Office receiving assets from the supplier and distributing then to the
end recipient offices Dos; or
The Asset being received directly by the receiving offices from the Supplier.
The accounting treatment is similar in both instances.
The Accounting Officer will be informed by the Supply Officer through the Invoice Receipt for
Property (IRP) that the assets have been transferred. The Accounting Officer from the
transferring office will also notify the Accounting Officer at the receiving office, through a
copy of their JEV, highlighting that the asset has been transferred and that their records
must be updated to reflect the transfer.
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The receiving Supply Officer records the Asset on the Property Card in the normal manner
and updates the Asset Register. The Accounting Officer at the receiving office updates the
PPE-LC and confirms the receipt of the PPE with the receiving Supply Officer, and if all
records reconcile, the receiving office will update their financial records and Fixed Assets
Register. The receiving office will email the details (through a copy of the JEV details) to the
transferring office, to verify that they have effected the receipt/transfer in their accounts.
If there are any differences in the records of the transferring and receiving office, these
should be examined and the cause of the differences identified. If the differences cannot be
reconciled by the accounting officers, they should be raised to the appropriate senior official
which would be the Financial Management Officer at the Region Level and the Chief
Accountant at Central Office.
All intradepartmental asset transfers should be reconciled on a monthly basis by the

accounting officers at the transferring and receiving offices.
The purpose of the transfers is to reduce the asset values carried by the transferring office
and increase the asset values carried by the receiving office in order to more accurately
reflect the location and office which utilizes the assets.
This will be achieved through the following accounting entries:
For the Transferring Office (usually CO or RO):

Transferring Assets to Another Office
Cr PPE: Machinery & Equipment 10605030 00 (ICT Equipment)
For the Receiving Office the Transaction is recorded as follows:

Accounting for the Receipt of Transferred Assets
Dr PPE: Machinery & Equipment 10605030 00 (ICT Equipment)
Cr Subsidy from Other NGAs 40301020 00
17.8 Reporting and Disclosure
PPE must be disclosed in the following financial reports:
(i) Statement of financial performance (depreciation, impairment, gains or losses);
(ii) Statement of financial position (cost, revaluation, accumulated depreciation and

impairment, Net Book Value);
(iii) Cashflow statement (Cost of new acquisition, proceeds on sale); and
(iv) Notes to the Financial Statements.
The Reporting and Disclosure requirements Reports are outlined in Section 22.3 on
Financial Reporting. This Section focuses on the specific PPE disclosures in the Note the
Financial Statements.
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17.8.1 Notes to Financial Statements
The Notes to the Financial Statements on should clearly state the accounting policies
adopted when reporting PPE in the Financial Statements. The following points provide
examples of the types of statements that would be expected to be included in the notes of
the Financial Statements.
PPE is carried at cost less accumulated cost and impairment losses.

Donated assets are carried at fair value.
Disposals Gains and losses on disposal are recorded in the statement of
financial performance. The total gain loss on disposals during the reporting period
were xxx,xxx.
Subsequent costs costs incurred subsequent to the initial acquisition are
capitalized when they are above the capital threshold of 10,000 and the cost can
be reliably measured.
Depreciation is provided on all assets except land. It will reduce all assets to their
expected residual value over their useful lives. The UEL of asset is determined by
asset class and is established in line with Government rules and regulations.
The residual value of depreciable assets is established at 10% in accordance with
the requirements of the Commission on Audit.
The Department has contractual commitments to procure assets in motor vehicles
and other IT and communication equipment amounting to 100million at the year-
end.
Impairment losses amounting to 1 million were recognized during the reporting
period. The losses arose due to {Insert as appropriate for each class of asset}. The
recoverable service amount of the assets refers to the fair value less costs to sell
and is determined by the active market.
PPE with a carrying value of 50million is fully depreciated but still in use.
The value and class of interdepartmental asset transfers made during the financial
reporting period.
Reconciling PPE Opening and Closing Balances in the Notes
The main disclosure notes for PPE illustrates the reconciliation between the opening and
closing PPE balances. The reconciliation provides important information on the composition
of PPE which are summarized in the statement of financial position. The following format
provides a synopsis of the reconciliation note.
Land Buildings Vehicles Total

Cost 1 Jan 2014 300 600 100 1,000
Accumulated Depreciation and 0 400 40 440
Impairment 1 Jan 2014
Carrying Amount 1 Jan 2014 300 200 60 560
Current Year Additions 20 100 10 130
Current Year Disposals 0 0 5 5
Current Year Impairments 0 50 0 50
Current Year Depreciation 0 30 20 50
Page 156 of 224

Land Buildings Vehicles Total

Cost 31 Dec 2014 320 700 110 1,130
Accumulated Depreciation and 0 480 60 540
Impairment 31 Dec 2014
Carrying Amount 31 Dec 2014 320 220 50 590
This reconciling note is one of the most important aspects for ensuring PPSAS compliance.
17.9 Controls over Non-Current Assets
A large proportion of the Departments net value is determined by its PPE, therefore it is
critical that this resource is carefully managed and controlled. Some fundamental financial
controls which provide the platform for asset management are provided below.
PPE Acquisition and Valuation PPE acquisition is governed through the Departments
capital budgeting process and procedures as outlined in Section 7, on Capital Outlay.
Government procurement procedures are used to control the acquisition process.
All PPE assets should be reviewed for impairment on an annual basis. Depreciation rates
and UEL should also be regularly reviewed. All cost associated with bringing an asset into its
intended use should be capitalized.
PPE Classification and Tracking The UACS should be utilized for classifying all PPE in
both the eFRS and the Fixed Asset Register (FAR). This will help facilitate the reconciliation
of the FAR which is maintained by the supply officer with the accounting system which is
maintained by the accounting officer. The FAR must provide specific details of the asset
specification, location and condition in addition to the regular financial data incorporated in
the accounting system. Each asset should also be provided with a unique reference number
or tag to ensure that it can be easily tacked through the organization by the property
management function. The FAR is the primary control document over PPE and it must be
reconciled on a monthly basis with the accounting system.
Physical Verification Physical counts help to validate data in the asset register and it will
also help to determine whether all assets recorded as functional are in fact functional or
whether the assets are damaged or obsolete. The asset physical count is the responsibility
of the supply officer. Once completed the result of the physical count should be reported to
the accounting officer. Any discrepancies between the physical count and the asset register
should be thoroughly investigated by the supply officer. The year-end physical asset count
should be performed by the Inventory Committee, duly witnessed by a COA representative,
to ensure that all assets are accounted for at the cut-off date. A Report on the Physical
Count of PPE (RPCPPE) shall be submitted to the Auditor no later than January 31 of each
year.
PPE Physical Security It is imperative that only those authorized to use the Departments
assets have access to the assets in order to prevent abuse, misuse and theft. Those officers
given responsibility and accountability over assets (via the ARE), should therefore be clearly
identified in the asset register.
PPE Records Ensure that all PPE balances can be supported, that all subsequent
expenditure has been capitalized where required and revaluation documents are retained.
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Asset Disposal It is vital that officers are held accountable for asset placed under their
responsibility. Asset disposal is a high risk area and should be monitored closely by the
executive. This activity should be performed in accordance with the physical inspection.
There should be appropriate segregation of duties between the officers performing the
physical inspection and those accountable for the assets in question. All asset disposals
should be reviewed regularly by the chief accountant at Central Office.
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18 Liabilities
18.1 Categories of Liabilities Relevant to DepED
The Liabilities most used by DepED include the following:

Financial Liabilities: Primarily Accounts Payable and Due to Officers and Employees;
Inter-Agency Payables;
Intra-Agency Payables;
Trust Liabilities; and
Other Payables.
Year End Accruals
Some Payables Accounts are currently used solely for yearend accrual purposes. These
include:
Accounts Payable: 20101010 00;
Due to Officers and Employees: 20101020 00; and
Provisions Pension Benefits Payable, Leave Benefits Payable, Retirement:
20601010 00, 20601020 00, 20601030 00 (respectively).
Yearend Accruals may also be made against other categories of Payables, e.g. Inter-Agency
Payables and Other Payables.
18.2 Financial Liabilities
18.2.1 Accounts Payable
DepED does not currently recognize the Accounts Payable Liability element on Payments.
For example, when a payment is made one double entry posting is made, namely Dr
Expense (for example) and Cr Cash MDS (Bank Account), as explained throughout this
Manual. The eNGAS system can facilitate recognition of the Accounts Payable Liability, and
in the event that an IFMIS solution is eventually implemented, this recognition of the liability
would be mandatory as part the setups and general transparency 40. Just for information
purposes (but note that the accounting is not currently undertaken in this manner) the
accounting entries with recognition of the Liability would be as follows:
Payments and Accounts Payable (future use)
Processing the invoice
Dr Expense (for example) 50xxxxxx 00
Cr Accounts Payable 20101010 00 (SL for each payee)
Processing Payment
Dr Accounts Payable 20101010 00 (SL for each payee)
Dr Cash in Bank MDS, Regular 10104040 00 (for example)
40 The Liability is recognized when the invoice is processed, bringing the expense to account, and the Payment,
which could be at a later date, would then clear the Liability.
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As highlighted in 18.1 above, the Accounts Payable Account is currently used only for
posting the LDDAP items as yearend accruals, for payments to suppliers and other non-
payroll related expenses. The balance against this Payables Account is cleared in the new
financial year through the disbursement/payment, which is debited to the Payables Account
(See accounting treatment in Section 18.8)
This Account is not currently used for day to day transactions.
18.2.2 Due to Officers and Employees
As highlighted in 18.1 above, the Due to Officers and Employees Account is currently used
only for posting the LDDAP items as yearend accruals, for payroll related payments
excluding Pension Benefits, Leave Benefits and Retirement Gratuities (for these latter
Benefits Payables See Section 18.6 below). Similar to 18.2.1 above, under and IFMIS
integrated system environment, in the future this account would be used as the offset
Payables Account for day to day payroll transactions. The balance against this Payables
Account is cleared in the new financial year through the disbursement/payment, which is
debited to the Payables Account (See accounting treatment in Section 18.8)
18.3 Inter-Agency Payables
Many Inter-Agency Payables are related to payroll deductions, e.g. tax to BIR, GSIS
contributions, Pag-IBIG contributions, etc. The process for undertaking the payroll
deductions is discussed in Section 8.7. The specific processes for tax deductions, credited
to Due to BIR are discussed in Section 21. Tax is also withheld from payments to suppliers
as well as payroll payments and credited to the Due to BIR account. Section 21 describes
the process and accounting treatment for settling the Due to BIR Payables, through the
Treasury Remittance Advice (TRA) and Treasury Debit Memo (TDM) systems.
Liabilities from other Payroll deductions are settled via Check Payment (See Section 8.7.)
Other Inter-Agency Payable Liabilities are incurred, when DepED receives advances for
subsequent liquidation, such as Inter-Agency Transferred Funds (See Section 19.4) and
Special Education Funds advanced by LGUs. These Payable Balances are cleared via
Liquidation Reports (See Section 19.4 for example of incurrence of Payables via receipt of
advance and subsequent liquidation).
In Summary
Inter-Agency Liabilities are incurred via 41:

Payroll deductions;
Withholding of tax from payments to suppliers;
Receipt of Advances from Other Agencies to disburse on their behalf;
Inter-Agency Liabilities are settled by:

BIR Online Processes, i.e. the TRA and TDM (See Section 21);
Direct Settlement, i.e. payment to creditors in respect of payroll deductions; and
41 Although DBM-PS is technically Inter-Agency, it is treated as general Accounts Payable (i.e. 20101010), like
any regular supplier.
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Liquidation of expenditures through processing the Liquidation Reports.
18.4 Intra-Agency Payables
Intra-Agency Payables are used for managing funding Checks from (as opposed to to)
other levels within DepED. When the funds are utilized on behalf of the other Office within
DepED, the Liability is reduced. The Liability entries in the receiving office correspond to the
Receivable entries in the issuing Office. Ultimately, the Intra-Agency Payables Accounts
should balance to zero against the Intra-Agency Receivable Accounts upon consolidation.
The Liquidation Report (LR) showing the disbursements for the utilization of the funds is sent
to the Funding Office, so that they can (correspondingly) liquidate the Receivable in their
books. See Section 15.4 on Intra-Agency Receivables.
18.5 Trust Liabilities
Trust Liabilities are used for managing funds which are not part of the GAA but are funded
via an MDS (Trust) Bank Account. Instead of crediting Subsidy Income, the credit is made
to Trust Liabilities (20401010 00). An example of this is the reimbursement from BTr of
Service Fee collections, under the Provident Fund (See Section 19.3.3 below)
18.6 Provisions
This group of accounts (under 20601xxx) includes Payables for Pension Benefits, Leave
Benefits, and Retirement Gratuity. As with Accounts Payable and Due to Officers and
Employees, this account is currently used solely for posting of LDDAP items against each of
these Benefit/Gratuity items. The balance against this Payables Account is cleared in the
new financial year through the disbursement/payment, which is debited to the Payables
Account (See accounting treatment in Section 18.8).
18.7 Other Payables
Other payables relate to Liabilities not covered under the other categories above. A number
of Private Lending Institutions featuring under payroll deductions fall under this category and
are recorded against this account.
18.8 Accounting for Year End Accruals
Yearend Accruals are processed on the basis of the LDDAP (See Section 5.5.1), where
amounts cannot be settled prior to the yearend due to insufficient balance of the NCA.
Several different Payables Accounts are used depending on the nature of the intended
payment; these are discussed above.
The expenditure (or investment in assets) is recorded in the financial year incurred. The
accounting entry is as follows
Accrual for Regular Supplier Liability
Dr Expense (for example) 50xxxxxx 00
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In the above example, the Debit could also be a Non-Current Assets or an Inventory
depending on the nature of the transaction and goods/services received.
In the new financial year, NCA is provided specifically for the purposes of settlement of AP.
The outstanding DVs are then processed for disbursement/payment. The accounting
treatment is as follows:
Accrual for Regular Supplier Liability
Dr Cash in Bank MDS Regular 10104040 00 (AP SL for DOs/IUs)
The Payable (Accrual) is then cleared in the books.
18.9 Management of Accounts Payable Balances
Oversight must be maintained over the Payables balances, to ensure prompt settlement or
liquidation. As with Receivables, Payables should be managed by open item matching, i.e.
individual Payable amounts matched against their Payments so that the specific outstanding
items (not merely balances) can be identified. This can be achieved through the
maintenance of Sub-Ledger templates. Open (outstanding) Items should be aged so that
items generally more than a few months old can be escalated. For payroll deduction
Liabilities, the Head of Accounting Office should ensure that these balances are cleared at
the end of every month.
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19 Trust and Revolving Funds
19.1 Funds Involved
The funds involved include General Trust Funds, The Provident Fund (which is a special
case Trust Fund) and Revolving Funds. General Trust Funds are accounted under UACS
Fund Source Code: 07308602 42, and can be differentiated in the accounts and financial
statements through the specific Organization Code. The General Trust Funds include the
following:
National Book Development Board: Contributions from PAGCOR and PCSO
R.A. 9521 and Grant from NCCA
National Council for Childrens Television: Contribution from PAGCOR and PCSO
R.A. 8370
Philippine High School for the Arts: Donations, solicitations for various projects
E.O. 420
National Museums: Donations from Patrons.
As the Provident Fund is so significant and important it is suggested it should be accounted

for under a separate UACS Fund Source Code (e.g. 07308604), to enable preparation of
separate books of account for managing the Provident Fund at individual reporting entity
level and also at any level of aggregation, including the overall Provident Fund as a whole.
Revolving Funds each have separate individual Fund Source Codes, in the range 207501 to
207600, as designated in bold, in square brackets below:
School Revolving Fund: Income earned from manufacturing and production
programs, including auxiliary services of national schools [06207511].
Regional Education Learning Centers (RELC) Revolving Fund (by specific RO):
Registration Fees of Regional Education Learning Centers B.P. 6831 [06207512].
Eco-Tech Center Revolving Fund: Income from Seminars, Conferences, Dormitory
Operations and Catering [06207513].
Applied Nutrition Center (ANC) Revolving Fund: Income from Dormitory
Operations, Miscellaneous Income [06207514].
Boracay National High School Hostel Revolving Fund: Income from Dormitory
Operations, Miscellaneous Income [06207515]. (Now dormant).
OSEC - Baguio Teachers Camp (BTC) Revolving Fund: Lodging Fees, Rental of
Facilities, Interest Income. [06207516].
National Educators Academy of the Philippines (NEAP) Revolving Fund:
Registration Fees, Use of Buildings, Interest Income (F 161) [06207517].
42 Given the importance of the Provident Fund DepED should consider requesting a separate Fund Source Code
for these operations.
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National Science Teaching Instrumentation Center (NSTIC) Revolving Fund:

Rental of Staff Houses [06207518].
National Museum Revolving Fund: Income from Museum Operations RA 8492
[06207519].
The UACS Fund Source Code enables accounting and reporting for the Revolving Funds
under separate books of account for their more effective management. In addition, DepED
operates the School Feeding Program, which falls under the Inter-Agency Transfer Fund
IATF: 07308601 (See Section 19.4, below).
19.2 General Trust Funds and Revolving Funds
19.2.1 Outline of General Trust Funds and Revolving Funds
These funds operate as trading funds in nature. They make collections (sources of income
defined against each fund above), and then utilize those funds for operations/activities and
(for Trust Funds) to supplement Budget Funds under the GAA.
Trust and Revolving Fund operations involve three main areas of activities:
Collection of source incomes;
Disbursements of the funds for undertaking related activities;
Reporting and management of the total Fund balance.
Basically, the Trust and Revolving funds transact using the general Receipt (Collections and
Deposits) and Disbursement processes, in the eFRS.
19.2.2 Receipts for General Trust Funds and Revolving Funds
The income is collected by the Cashiers, Official Receipts are issued and details are entered
into the Report of Collections and Deposits (RCD). Cashiers must ensure that collections
are deposited to the Bank on a daily basis. At the end of the month, the weekly deposit
should coincide with the last day of the month, so that all collections match with the deposits.
Collections must be deposited in full to the specific Local Currency Current Account (LCCA).
The deposit portion (right hand side) of the RCD is completed with the details of the deposit,
promptly after deposit.
The RCD is passed to bookkeeping immediately after preparation and the details are
entered into the eFRS (as a normal receipt See Sections 3.2.3 and 3.2.4). The collections
and deposit are processed concurrently at the same time. Depending on the fund in
question the specific UACS Fund Source Code is used, as well as the Object Code
identifying the type of revenue received.
Trust Funds Collections and Deposits to the Bank
Cr Income Account (by Category) 4xxxxxxx 00 (Income to the Trust Fund)
Dr Cash in Bank - LCCA, Current 10102020 00 (SL Trust Fund Account)
Trust Fund Account: Fund Source: 07308602 (or separate Revolving Fund)
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The bookkeeper checks the Bank Account through eBanking on a daily basis to ensure that
all RCDs are received and brought to account promptly.
19.2.3 Expenses and Payments against General Trust Funds and Revolving Funds
Expenses and operating costs are incurred against the funds, drawn against the specific
LCCA. When payments are to be made to settle these expenses, the spending office
prepares the DV (Note: No Obligation Request is raised for payments from these funds).
Before the payment is processed, a check on available bank funds is made. If the balance is
adequate for the payment the DV is processed through the eFRS in similar manner to other
(General Fund) payments, with bookkeeping recording the transaction against the specific
Fund Source Code and Object Code. The specific LCCA Account is selected from which the
payment will be made by Check.
Cashier processes the payments and submits the RCI (Checks and ADA) to bookkeeping on
a daily basis. Bookkeeping processes the payment in eFRS, as follows:
Expenses and Payments from Trust and Revolving Funds
Dr Expenditure by Account category 5xxxxxxx 00 (Income to the Trust Fund)
Cr Cash in Bank - LCCA, Current 10102020 00 (SL Trust Fund Account)
Trust Fund Account: Fund Source: 07308602
19.2.4 Managing and Reporting against the Funds
The Bank Reconciliation must be performed for each Fund within 5 days of the month end
(facilitated by use of eBanking and checking on a daily basis). Any omissions or errors
should be addressed. Through the Fund Source Code (Combined with Organization Code
for Trust Funds), self balancing books of accounts are maintained. At the end of the month
the Accounts (Financial Statements) are printed for each Trust and Revolving Fund, which
are scrutinized and checked by the Accountant. If there are any oddities, these must be
reviewed and explained.
19.3 Provident Fund
19.3.1 Outline of Provident Fund Operations
The Provident Fund for DepED is significantly larger than that of other Departments on
account of the huge number of teachers (as well as employees) in DepED. The Provident
Fund has been established and operates under Administrative Order No. 279, s. 1992, and
DECS order 97, s. 1991, amended in DECS Order 3, s. 1998 and DECS Order 3, s. 1999.
The Fund was mobilized in 1995 through the issuing of seed funding of 75 million. Other
general Government Orders include EO 462 of 2005, EO641 of 2007 and Budget Circular
2008-03 of 20th June 2008. Whereas the general Government Orders provide for
membership contributions, these do not feature in DepEDs Provident Fund.
The Provident Fund provides a lending facility from which employees and teachers can
borrow for various specified purposes. The Fund is also used for meeting expenses related
to the management of the Fund and other expenses related to support to employees (e.g.
previously used for shuttle bus service in CO).
The Fund has been built up over the years from several sources:
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Original seed money for the fund;

Service Fees collected from Private Lending Institutions (PLIs);
Interest earned on lending to employees and teachers; also
Loan principal is paid out and recovered through the payroll; and
Payments of specifically approved categories of expenses are made from the Fund.
The processes for each of these elements are detailed in the following Sub-sections below:
(i) Managing the Service Fees from PLIs;
(ii) Payments from the Provident Fund (Lending);
(iii) Other (Expenditure) Payments from the Provident Fund;
(iv) Recovery of Loan Principal through Payroll and Interest;
(v) Transferring Loan Balances where Employee Transfers Office;
(vi) Managing Balances at Office Level; and
(vii) Managing the Provident Fund as a Whole.
Each Implementing Unit (at all levels in the organization) manages its own part of the
Provident Fund, CO, RO, DO and IU.
19.3.2 Control Objectives
The control objectives of the supporting processes are as follows:

Ensure all Service Fees are duly collected in accordance with the agreements with
the PLIs, and properly accounted for;
Ensure all Service Fee collections are duly and promptly remitted to BTr and
Certificates obtained for all collections remitted;
Provide accurate reporting of collections and remittances to CO through the RO for
future Provident Fund allocations;
Allocation of Service Fees are made equitably in accordance with the prescribed
rules and regulations;
Loans processed are contained within the availability of the Provident Funds for each
office;
Accounts are maintained to provide full transparency and accountability for Provident
Fund operations;
Ensure all pass through accounts are fully reconciled and cleared, i.e. Cash -
Treasury/Agency Deposit, Trust Account; Trust Liabilities; and Other Payables; and
Ensure subsidiary records of individual Provident Fund Loan Balances reconcile
against the total loan position in the Financial Statements and Account for Loans
Receivable Others.
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19.3.3 Managing the Service Fees from PLIs
The Service Fees from the PLIs are managed through the following processes, which are
discussed further below:
(i) Retention from Remittance Payments to PLIs as Service Fees;
(ii) Remittance of Retentions to BTr and BTr Certificates of Collections;
(iii) Reimbursement of Collections through NCA in MDS Trust Fund Account;
(iv) Transfer of Funds from MDS to LCCA Bank Account at National Level;
(v) Distribution of Funds to Regional Offices (and CO);
(vi) Receipt and Redistribution of Service Fee Funds by Region Offices; and
(vii) Receipt of Redistributed Funds in Lower Level Offices.
Retentions from Remittance Payments to PLIs as Service Fees
To assist the PLIs, DepED processes the loan servicing repayments through the payroll
system (RPSU and APDS) on behalf of the employees. Loan repayment amounts are
deducted from (employees and teachers salaries) and remitted to the PLI on a monthly
basis. When the remittance payment is made to the PLI, a percentage is withheld as a
Service Fee; this percentage is based on individual agreements made with each PLI. The
Service Fee is credited to Cash Treasury/Agency Deposit, Trust Account (Object Code
10104030) under Fund Source Code 01101101 which is processed in eFRS as part of the
PLI Remittance Payment (See remittance of 3rd Party Payroll Liabilities in Section 8.7).
Accounting for Retention of Service Fees from PLI Remittances
Dr Other Payables 29999990 00 (Payroll Remittances)
Cr Cash - Treasury/Agency Deposit, Trust: 10104030 00 (Service Fees withheld)
Cr Cash in Bank MDS, Regular 10104040 00 (PS SL for DOs and IUs)
Regular Fund Account: Fund Source: 01101101
Remittance of Retentions to BTr and BTr Certificates of Collections
The Service Fees retained are remitted by Check payment to BTr (Central and Regional
Offices) at the end of the month. The Bookkeeper in each Office checks the details of the
Service Fees collected, and at the end of the month, prepares the BTr Bank Deposit Form
and DV for amount to be remitted to BTr. The payment is made by ADA to BTr and posted
into eFRS and the JEV is posted as follows. (The DV and JEV go through the normal/regular
approval process).
Accounting for Remittance of Service Fees to BTr
Dr Cash - Treasury/Agency Deposit, Trust: 10104030 00
Cr Cash in Bank MDS, Regular 10104040 00 (PS SL for DOs and IUs)
At the end of the Month, the Accountant checks to ensure that the Cash - Treasury/Agency
Deposit Trust is reconciled and balances to zero.
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The Remittance Payment to BTr is made along with a request to the relevant Regional Office
of the BTr for the Certificate of deposit made. The Remittance is always made at the end of
the month whereas Certificates may be requested on a different periodic basis if the
amounts involved are small, e.g. an IU may make a request for Certificate on a 3 monthly
basis.
The relevant BTr Office provides to each office (at CO, RO, DO or IU) the Certificate of
Service Fees collected and remitted. The Accountant checks the certificate to ensure it
reflects the remittances have been made correctly. The Bookkeeper prepares a Report of
Service Fees, supported by the Certificate. The Accountant (individual Office) signs the
Report and submits to CO, along with the Original of the BTr Certificate. The Bookkeeper,
concerned with Provident Fund in CO, evaluates the Report, attaches Certificate and
collates for the whole Region. The Bookkeeper (CO) prepares a Summary Report for the
Region as a whole (and for CO) and prepares the request to DBM for reimbursement (of
Service Fees). The Accountant in CO approves and signs the Report and the Request for
Reimbursement and submits to DBM (for reimbursement through NCA to the MDS Trust
Fund Account).
Reimbursement of Collections through NCA in MDS Trust Fund Account
After receiving the Request for Reimbursement (supported by Summary Report and
Originals of BTr Certificates) DBM checks them and then issues an NCA to CO MDS Trust
Fund Account.
In CO, the Bookkeeper in AD checks the NCA received and agrees the total amount against
the total from all the certificates issued by BTr. The Bookkeeper then processes the NCA in
the eFRS as follows:
Accounting for Receipt of NCA (for Reimbursement) into MDS Trust Account
Dr Cash in Bank MDS, Trust 10104060 00
Cr Trust Liabilities: 20401010 00
In Central Office: Organization Code 07 001 01 00000
Transfer of Funds from MDS to LCCA Bank Account at National Level
Once, the NCA is processed the Bookkeeper prepares the DV against the MDS Bank
Account for Transfer to the National Provident Fund LCCA Bank Account. This entails
processing the payment in Regular Agency Fund Books and the receipt into the Provident
(Trust) Fund Books as discussed below.
The bookkeeper prepares the DV and supporting documents for the funds transfer payment,
and processes the entry in eFRS as follows:
Accounting for Transfer Payment from MDS to OSEC National Provident Fund A/C
Dr Trust Liabilities: 20401010 00
Cr Cash in Bank MDS, Trust 10104060 00
In Central Office: Organization Code 07 001 01 00000
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When the deposit to the National Provident Fund LCCA Bank Account is advised by the
Bank to OSEC, the Bookkeeper processes the transaction in eFRS, in the Provident Trust
Fund Books:
Accounting for NCA Deposit to National Level Provident Fund Account
Dr Cash in Bank - LCCA, Current 10102020 00 (SL Provident Fund Trust A/C)
Cr Other Service Income: 40201990 00
Fund Source: Provident Fund (07308604)
Reporting Entity: National Level (07 001 00 00000)
This reflects the unallocated and undistributed balance of the Provident Fund which must
be accounted separately from COs own share of funds which are utilized for on-lending
to employees etc.
After, processing the transfer in the Regular Agency Books, the Bookkeeper must check to
ensure that the MDS Trust Bank Account and the Trust Liability Account are cleared.
Once the funds are received into the Provident Fund Books of Account in OSEC (National
Level), the funds are distributed down to the various collecting offices, through the RO, as
described below (or to CO own Provident Fund Books of Account).
Distribution of Funds to Regional Offices (and CO)
When the monies are received into the Provident Fund Books (and OSEC National
Provident Fund Bank Account), 50% of the reimbursed funds are then distributed down to
the respective ROs (or CO for its 50% share of collections) and 50% is retained for later
distribution under the Board of Trustees Resolution on the Scheme of Distributing the
Provident Fund Allocation Derived from the Service Fees Collected.
The 50% allocation is distributed to the respective ROs (or CO) through Check or bank
transfer payment from the National Provident Fund LCCA Bank Account held by OSEC. The
Bookkeeper dealing with Provident Fund prepares the DV for funds transfer from the LCCA
Account (SL: National Provident Fund Account). The DV is processed in eFRS through the
Bank Disbursement Menu, as follows:
Accounting for Distribution of Provident Funds to ROs (and CO)
Dr Other Service Income: 40201990 00
Cr Cash in Bank - LCCA, Current 10102020 00 (SL Provident Fund Trust A/C)
Reporting Entity: National Level (07 07 001 00 00000)
The Accounting for the Receipt of the distributions is covered below.
The remaining 50% of Service Fees reimbursed by DBM is retained by the Provident Fund
(at OSEC National Level) for later distribution by the DepED National Provident Fund Board
of Trustees. The Board distributes the remaining Fees on a periodic basis, sometimes
annually and sometimes after several years, once it is assured that the arrangements are
adequate for managing the funds effectively.
The Board makes the allocation based on a formula, which reflects plantilla number of
employees and teachers, and level of utilization of existing funds, within each Region (as
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well as in CO). These bases are referred to as Equity and Performance respectively. The
Board sets the ratio weightings for Equity and Performance, e.g. 60:40, where 60% of the
Reimbursed Collection is distributed to the individual ROs based on their number of plantilla
positions as a percentage of total plantilla positions; and 40% of the Reimbursed Collection
is distributed on the bases of the ROs points scoring for utilization of existing Provident
Funds. The Resolution provides the allocation to each RO, who will re-distribute to the RO
proper, the DOs and the IUs.
Based on the Resolution the Bookkeeper dealing with Provident Fund prepares the DV for
funds transfer from the LCCA Account, which is processed in eFRS and accounted for in the
same manner as the initial 50% Distribution.
In the OSEC National Level Books the Debit to Other Service Income is netted against the
Service Fee Income, to show the net position. The distribution of Service Fees has no net
impact on the consolidate position of the Provident Fund. Amounts debited at the National
Level are credited at the specific Office Level, e.g. CO and RO, and ultimately DO and IU
levels as discussed below. Where the remaining 50% funds are not distributed for a number
of years, there may result an in year net debit at the OSEC National Level for Other Service
Income. It is important to show this Gross in the entity level financial statements, i.e. Total
Service Income Received less Service Income Distributed.
Receipt and Redistribution of Service Fee Funds by Region Offices
The ROs (and CO) receive the distributions from OSEC National Level, which is deposited
into their Provident Fund LCCA Bank Accounts. The Bookkeeper processes the Deposit in
the Provident Fund books in eFRS as follows:
Accounting for Receipt of Distribution of Fees in ROs (and CO)
The ROs have their own Boards of Trustees at the Regional Level. The Board agrees the
distribution of the Service Fee Income to the RO Proper, the DOs and the IUs. When the
Regional Resolution is passed, the Bookkeeper prepares the DV and supporting documents
for transferring funds to the RO Proper, the DOs and the IUs. This is processed in eFRS
and the payment is made by the Cashier transferring the funds. The JEV is created in the
system and the accounting treatment is as follows:
Accounting for Transfer Payment to RO Proper, DOs and IUs
Dr Other Service Income: 40201990 00
The downward distribution of Service Fees are debited and netted at the RO Level against
the Service Fee Income allocated and received.
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Receipt of Redistributed Funds in Lower Level Offices
Notification is received (at RO Proper, DO or IU) from the Bank through credit advice slip of
funds received into the Provident Fund LCCA Bank Account. The Bookkeeper also checks
through eBanking to ensure all amounts are brought to account promptly. The deposit is
processed in eFRS as follows:
Accounting for Receipt of Distributed Service Fees in RO Proper, DOs and IUs
19.3.4 Payments from the Provident Fund (Lending)
After an application is made and a loan from the (office level) Provident Fund is approved,
the Provident Funds accounts (and bank account) are examined to ensure funds are
available. The bookkeeper prepares the DV and collates/attaches the supporting
documents, and processes the DV and payment in eFRS, as follows:
Accounting for Loan Payment from Provident Fund Office Level
Dr Loans Receivable Others 10301990 00
A separate spreadsheet register is maintained of all Provident Fund Loans, repayments,

interest charged and their outstanding balances.
19.3.5 Other (Expenditure) Payments from the Provident Fund
Other non-loan, expenditure payments may be approved from time to time by the Regional
Board of Trustees. In these cases, the payments are made in the same manner as other
payment transactions, except that they will be made under the Provident Fund Books of
Accounts, and no prior Obligation approval is required.
Accounting for Non-Loan Expenditure Payments from Provident Fund
Dr Various Expenditure Codes 5xxxxxxx 00
Cr Cash in Bank - LCCA, Current 10102020 00 (SL Provident Fund Trust)
19.3.6 Recovery of Loan Principal through Payroll and Interest
Where an employee or teacher has an outstanding loan from the Provident Fund, repayment
is recovered through the payroll, by way of deductions. Interest is charged each month
against the employees loan and the repayment made through payroll comprises payment of
interest and repayment of loan principal. In addition, a loan administration fee is charged to
the borrower.
The payroll deduction is accounted for under the Payroll Payment and DV (per Section 8)
and the relevant accounting entries pertinent to the deductions for Provident Fund are as
follows:
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Accounting for Deductions from Payrolls

Dr/Cr Various Expenditure and Remittance Accounts
Cr Other Payables 29999990 00 (Deduction for Loan Repayment)
Cr Cash in Bank, MDS Trust 10104060 00
Fund Source: Regular Fund (01101101)
The Remittance Payment for settlement of payroll deduction liabilities is made in favor of the
Provident Fund. The Bookkeeper prepares the DV for Remittance Payment and the
Accounting Entries are as follows:
Accounting for Transferring Loan Repayment to Provident Fund Books
Dr Other Payables 29999990 00
Cr Cash in Bank- MDS, Trust 10104060 00
Fund Source: Regular Fund (01101101)
When the payment is received into the Provident Fund LCCA Bank Account it is processed
in eFRS, as follows:
Accounting for Receipt for Loan Repayment
Dr Cash in Bank - LCCA, Current 10102020 00 (SL Provident Fund Trust)
Cr Loans Receivable Others 10301990 00 (Principal Repayment)
Cr Interest Income 40202210 00
Cr Miscellaneous Fees: 40201990 00 (Administration fee)
19.3.7 Transferred Staff
Where a member of staff is transferred from one office to another, the newly employing
office deducts the due amounts from their payrolls as a third party deduction. That office
then makes a payment to the employees original office. The original office then processes
the Receipt, Crediting Loans Receivable and Interest Income (as described above).
19.3.8 Managing Balances at Office Level
Each Office maintains a separate book of accounts through the use of the specific Fund
Source Code. This facilitates the preparation of separate Financial Statements for the
Provident Fund at all levels, which can then be consolidated for the whole of DepED
Provident Fund as well as consolidating for all Funds, either at Office Level or at aggregate
DepED Level.
Spreadsheets are maintained for managing individual borrowers loan balances. Each Office
should reconcile the individual loan balances against the aggregate Provident Fund Loan
Balance in the Offices Financial Statements (Account 10301990 00, under Fund 07308604).
When the Financial Statements for the Provident Fund at Office Level are submitted they
must be signed by the Accountant verifying the reconciliation and that the Loan Balance is
fully supported by individual loan amounts.
The Accountant must ensure at the end of the month all accounts which should be netted off
balance to zero, For Example:
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Cash - Treasury/Agency Deposit, Trust: 10104030 00; and

Other Payables Account: 29999990 00.
The Financial Statements for the Provident Fund must be submitted to RO for consolidation
and onward submission to CO. Copies of the Financial Statements ate also provided to the
Regional Board of Trustees to provide information regarding performance and utilization of
the Fund.
19.4 Inter Agency Transfer Fund (IATF)
DepED receives funds through IATF, such as the Schools Feeding Program from the
Department of Social Welfare and Development (DSWD).via cash advance. The receipt of
the cash advance is deposited to the LCCA Trust Bank Account. The Receipt is recorded in
the normal manner and the Accounting Entry is as follows:
Receipt of IATF Funds
Dr Cash in Bank - LCCA, Current 10102020 00 (SL Trust Account)
Cr Inter Agency Payables- Due to NGAs 20201050 00
Fund Source Code: 07308601
When payments are disbursed against the IATF they are accounted for in eFRS as follows:
Liquidation of IATF Funds
Dr Inter Agency Payables- Due to NGAs 20201050 00
Cr Cash in Bank - LCCA, Current 10102020 00 (SL Trust Account)
Fund Source Code: 07308601
Page 173 of 224

20 Contingent/Other Liabilities
PPSAS 19, adopting IPSAS 19, defines contingent liability as a possible obligation from past
events, and which existence will be confirmed only by the occurrence or non-occurrence of
one or more uncertain future events not wholly within the control of an entity, or a present
obligation that arises from past events but is not recognized because it is not probable that
an outflow of resources embodying economic benefits or service potential will be required to
settle the obligation, or the amount cannot be measured with sufficient reliability.
20.1 Recognition
Provisions to recognize Contingent liability should be measured at the best estimate (taking
into account risks and uncertainties) of the expenditure required to settle the present
obligation. When payments are deferred and time value is material, discounting to present
value of the payments may be required.
A provision shall be recognized only when:

An enterprise has a present obligation at the reporting date as the result of a past
event;
An outflow of economic resources or service potential is probable; and
The amount paid can be estimated reliably.
A present obligation is an obligation toward a third party that derives from:

A contract or legislation (legal obligation)
Past practice creating a valid expectation on the part of a third party (constructive
obligation)
20.2 Measurement
The amount to be recognized as a provision shall be the best estimate of the expenditure
required to settle the present obligation at the reporting date.
Best estimate should be described as:

An amount that an enterprise would rationally pay to settle the obligation at the
reporting date or to transfer it to a third party;
Best estimate is usually based on costs incurred by entity (and not on transfer price
to a third party, which could include a margin); and
Takes into account the risks and uncertainties to reach the best estimates.
20.3 Disclosures
DepED shall not recognize a contingent liability in the Financial Statements but shall
disclose only its brief description and nature, an estimate of its financial effect, an indication
of uncertainties that exist, and the possibility of any reimbursement.
The following disclosures are required for each class of provision:
Page 174 of 224

The carrying amount at the beginning and end of the period;

Additional provisions made in the period, including increases to existing provisions;
Amounts used (that is, incurred and charged against the provision) during the period;
Unused amounts reversed during the period; and
Effects of discounting and the effect of any change in the discount rate.
There shall be review of the provisions at each balance sheet date and adjustments, if any,
shall be made to reflect current best estimate. Accounting unit shall reverse provision if it is
no longer probable that an outflow of resources will be required to settle the obligation.
Page 175 of 224

21 Taxation and Regulatory Requirements
21.1 Legal Requirement to Withhold Tax
Pursuant to BIR Revenue Memorandum Order No. 23- 2014 issued on 20 June 2014, along
with all prior rulings, all government agencies, bureaus and instrumentalities are eligible
withholding agents. DepED operating units therefore are responsible to withhold taxes on its
transactions as a customer, on its purchases of goods and services, and as an employer, on
compensation paid to its officials and employees.
As a withholding agent, the Chief Accountant and the Head of Office or the Official holding
the highest position, is required to deduct tax from all money payments subject to applicable
tax rates and remit the amount withheld to the BIR at the time prescribed by law and
regulations. The respective withholding office shall then furnish Withholding Tax Certificates
to recipient of income payments subjected to withholding.
21.2 Categories of Withholding Taxes
There are two main types of withholding tax. These are Creditable Withholding Taxes, which
include the Withholding Tax on Compensation, Expanded Withholding Tax, and Withholding
of Business Taxes (VAT and Percentage Taxes), and Final Withholding Tax.
21.2.1 Withholding Tax on Compensation
Withholding Tax on Compensation is the tax withheld from income payments to individuals
arising from an employer-employee relationship. As an employer, DepED shall withhold an
amount equivalent to the tax on compensation paid to its officials and employees. The
applicable tax rates shall be based on the Income Tax Rate Table for Individual Taxpayers
provided by BIR. The total amount of taxes withheld for the year is creditable against the
income tax due of the employees for the taxable year in which the particular compensation
income was earned.
21.2.2 Expanded Withholding Tax
Expanded Withholding Tax (EWT) is prescribed on certain income payments to suppliers. As

a customer, DepED shall withhold an amount equivalent to the tax imposed on its purchases
of goods and services, such as but not limited to 10% or 15% on professional fees,
depending on the threshold, 2% on contracts of civil works, 1% on purchased goods and 2%
on contracted services. Such withheld amounts are creditable against the income tax due of
the payee for the taxable quarter/year in which the particular income was earned.
21.2.3 Withholding of Business Taxes
Withholding of Business Taxes is prescribed before making any payments to Value Added
Tax (VAT) registered or non-VAT registered taxpayers/suppliers/payees on account of
DepEDs purchases of goods and services. The VAT is a type of sales tax being imposed a
12% tax rate on gross sales or receipts of a business entity, which is an indirect tax that
could be passed on to the customers. All payments thereto shall be subject to a withhold tax
of 5% on its gross sales or receipts before the 12% top up. While the non-VAT
taxpayers/suppliers/payees are subject to sales tax called percentage tax, all payments
thereto shall be subject to a withhold tax of 3% on its gross sales or receipts.
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21.2.4 Final Withholding Tax
Final Withholding Tax is prescribed on certain income payments (e.g. bank deposit interest)
and is not creditable against the income tax due of the payee on other income subject to
regular rates of tax for the taxable year. Income Tax withheld constitutes the full and final
payment of the Income Tax due from the payee on the particular income subjected to final
withholding tax.
21.3 Withholding From Payments
Withholding taxes are made against payments, on the bases described above. When the
amount is withheld from the payment, it is Credited as a Liability, Due to BIR; this is
deducted from the amount ultimately paid to the supplier/payee. Tax is withheld from
payments made from eMDS Bank Accounts (General Fund) as well as LCCA Accounts
(Trust Funds). In the eFRS the withholding can be differentiated through the Fund Source
Code. Remittance in respect of General Fund withholding is Journalized through the Tax
Remittance Advice (TRA) as described below, including the grossing up of the Subsidy
Income. Remittance in respect of Trust Funds is undertaken via Tax Debit Memo (TDM) and
Check settlement as described below.
21.4 Grossing up Subsidy Income for TRA
Withholding Tax on Compensation results from payroll preparation. The receipt of NCA from
DBM is net of the estimated withholding tax for Salaries, so the amount Due to BIR from
periodic payrolls shall be considered a portion of the NCA as Subsidy from National
Government. Similarly, the NCA for MOOE and CO Disbursements are also received net of
estimated withholding Taxes (VAT and other Taxes). When those disbursements are made
to those Payees, the amount withheld is Credited to Due to BIR (20202020 00). At the end
of the month the aggregate amount of the tax withheld (by Category of Withholding Tax, i.e.
per Forms 1600/1601 described in Table 4 below) is grossed up in the books. The
Accounting Unit prepares a JEV, and the Bookkeeper enters into eFRS as Other
Transactions as follows:
JEV for Grossing up Tax Liabilities (General Fund TRA Only)
Dr Cash Tax Remittance Advice 10104070 00
The settlement of the Remittance to BIR to clear the Liability is then posted in eFRS as one
single JEV at the end of the month, Debiting (clearing) BIR Liability and Crediting Cash
TRA, so that each of these accounts are now cleared fully. (Also see 21.5.1 below).
21.5 Tax Remittances
All taxes withheld for the month shall be remitted to the BIR through the Electronic Tax
Remittance Advice (eTRA) on or before the 10th day of the following month 43. The
Accountant shall ensure that all necessary forms such as the following are completely filled
out and correctly filed online with the Electronic Filing and Payment System (eFPS).
43 Where no withholdings have been made during the month, the eTRA must still be completed (as a Zero
return), so that BIR can distinguish between zero withholding and failure to complete electronic remittance.
Page 177 of 224

BIR Revenue Memorandum Order No. 30-2014 issued on 14 August 2014 and other related
rulings 44 prescribe the guidelines and procedures in the remittance of the withholding taxes
by the NGAs through the eTRA system. All DepED operating units shall be enrolled with the
eFPS specifying therein the names of the Accounting unit personnel who are duly authorized
to use the eFPS for filing the withholding tax returns and remittance of the corresponding
withholding tax due thereon through the eTRA System. Such access accounts shall be
immediately revoked in cases where the authority to use the eFPS of these personnel is
already terminated.
At month end, the authorized person shall prepare the summary of all transactions Due to
BIR for the month. He/she shall complete the Data Entry Module, data software from BIR, to
generate remittance forms, except for 1601-C, including 2306 and 2307, the Certificates of
Withholding Taxes to be given to the suppliers. BIR Forms related to taxes on
compensations shall be prepared separately, manually. He/she shall then open the BIR
webpage and log in to eFPS using his/her registered Username and Password.
Figure 11: eFPS/TRA System
The entries in the eFPS differentiate those that relate to those amounts withheld from
General Fund, i.e. remitted through TRA, and those withheld from Trust Funds, i.e. remitted
through Tax Debit Memo and Check settlement.
The Tax withholding Forms and Certificates are listed in the Table below:
44 DOF-DBM Joint Circular No. 1-2000A and Revenue Regulation 1-2013
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Table 4: List of Forms and Certificates for Tax Withholding

Form Description
BIR Form 1601-C Monthly Remittance Return of Income Taxes Withheld on
Compensation
BIR Form 2316 Certificate of Compensation Payment / Tax Withheld For
Compensation Payment With or Without Tax Withheld
BIR Form No. 1601-E Monthly Remittance Return of Income Taxes Withheld (Expanded)
BIR Form 2307 Certificate of Creditable Tax Withheld at Source
BIR Form No. 1600 Monthly Remittance Return of Value-Added Taxes and Other
Percentage Taxes Withheld
BIR Form 2306 Certificate of Final Tax Withheld at Source
BIR Form 1601-F Monthly Remittance Return of Final Income Taxes Withheld
21.5.1 Mode of Payment Using Tax Remittance Advice (TRA)
The use of TRA is applicable only to NGAs, such as DepED, for withholding transactions
under the General Fund (Fund Source: 01101101).
Once logged into the eFPS, the responsible person shall do the following:
Click on the BIR form to file;
Fill up online with data (an offline facility is available);
Upload the completed form;
Validate the entries;
Select the payment mode to TRA;
Supply information about Department Code, Agency Code and Fund Code;
Submit the form;
Print the eTRA; and,
Check the emails confirming the remittance, bearing information on the Filing
Reference Number and EFPS Payment Summary.
Based on the copy of eTRA, the Accountant shall record the monthly remittance of all
Withholding Taxes for the month as Other Transactions in the eFRS, using the following
accounting entry:
JEV for Settling Remittance to BIR (General Fund)
Dr Due to BIR 20201010 00
Cr Cash Tax Remittance Advice 10104070 00
This entry clears the Due to BIR and Cash TRA Accounts (within General Fund). The
Accountant should check at the end of every month to ensure no un-cleared balances are
carried forward.
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21.5.2 Mode of Payment Using Tax Debit Memo (TDM)
All withholding taxes charged to funds other than the General Fund, such as Trust Receipts,
the monthly remittances shall be paid through issuance of funding checks.
The tax filing shall also be made through the eFPS. The authorized person shall then obtain
copies of the duly approved TRA Debit Memo from the eFPS/eTRA reports facility. He/she
shall then remit the check to the AGSB.
The monthly remittance of all types of Withholding Taxes shall be recorded, with the
appropriate Fund Source Code under the Check Disbursement transaction type, as follows:
DV for Settling Remittance to BIR (Trust Funds)
Dr Due to BIR 20201010 00
Cr Cash in Bank LCCA, Current 10102020 00 (Trust A/C SL)
This entry (payment) clears the Due to BIR Liability under Trust Funds. The Account should
check at the end of the Month that the BIR Account for Trust Funds and for all Funds is
cleared to zero.
21.6 Treatment of Documentary Stamp Tax
All other Tax Revenues collected by DepED, such as the Documentary Stamp Tax 45, shall
be recorded and reported as income and remitted to the BTr. The Accountant shall record
the collection in eFRS, processed through Cash Collection Menu and Due to BTr NG
Sub-Transaction Type and accounted for as follows:
Cash Collection of Documentary Stamp Tax
Cr Documentary Stamp Tax 40104010 00
The Deposit to the Account of the BTr is processed in the eFRS under the Bank Deposit
Menu and Deposit to BTr NG Sub-Transaction Type, and accounted for as follows:
Deposit to BTr Bank Account
Dr Cash - Treasury/Agency Deposit - Regular 10104010 00
45 This is primarily collected by the DOs in respect of Teachers Service Records and Certificate of Employment
for teachers and admin staff.
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22 Financial Reporting
Financial Reporting System shall refer to the reports generated from both eFRS and eBMS
system which includes the preparation and submission of trial balances, financial statements
and other reports needed by DepED and oversight agencies, such as COA and DBM.
22.1 Reporting Standards
The preparation of the general purpose financial statements of DepED shall follow the
prescribed standards stipulated in IPSAS 1 as adopted by COA 46 as PPSAS 1 per
Resolution No. 2014-003 dated 24 January 2014. The standards on the presentation of
Financial Statements set out the overall requirements for financial statements prepared
under the accrual principle, including guidance for their structure and minimum requirements
for the content of financial statements of all public sector entities other than Government
Business Enterprises.
To achieve fair presentation and reliable information of the financial statements, the following
standards shall be observed.
a. Fairness of presentation. This refers to the overall propriety in disclosing financial
information. All data presented in the reports have integrity and shall exhibit the
qualities of substance over form, faithful representation, prudence, completeness,
reliability, neutrality and comparability.
That the user might reasonably be expected to comprehend its meaning
That its omission or misstatement could influence the decisions of users or
assessments
That the data are presented in accordance with the substance of the
transactions and other events, and not merely their legal form
That it can identify similarities and differences between that information and
information in other reports
That all the necessary information are presented within the bounds of
materiality and cost
That there is inclusion of a degree of caution in the exercise of judgment
needed in making estimates required
b. Compliance. The report shall be in accordance with prescribed government

requirements and international accounting standards of reporting.
c. Timeliness. All needed reports shall be produced promptly to be of maximum
usefulness.
d. Usefulness. Financial reports shall be carefully designed, with qualities of
understandability and relevance, to present information that is needed, and useful
to reports users.
46 Plus the COA Circular No. 2015-002 dated March 9, 2015, the supplementary guidelines on the preparation of
financial statements and other financial reports, the transitional provisions on the implementation of the Philippine
Public Sector Accounting Standards, and the coding structure
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22.2 Responsibility for Financial Reporting
Responsibility for the fair presentation and reliability of financial statements rests with the
management of the reporting agency. This responsibility is discharged by applying generally
accepted state accounting principles that are appropriate to the entitys circumstances, by
maintaining effective system of internal control and by adhering to the chart of accounts
prescribed by the Commission on Audit.
The primary responsible person/s in the case of DepED shall be the head of
finance/accounting office and the head of agency or his authorized representative. It shall be
understood to mean the following:
Operating Head of Finance / Head of Finance / Head of Agency
Unit Level Accounting Office Budget Office
CO Chief Accountant Budget Division USec for Finance &
Chief Admin
RO Regional Regional Budget Regional Director
Accountant Officer
DO Division Accountant Budget Officer Schools Division
Superintendent
IU Bookkeeper School Principal
The Statement of Management Responsibility for Financial Statements shall serve as the
covering letter in transmitting the agencies financial statements to the Commission on Audit,
Department of Budget and Management, other oversight agencies and other parties. It
shows the DepEDs responsibility for the preparation and presentation of the financial
statements. The statement shall be signed by the Assistant Secretary for Finance and
Admin or an Official who has direct supervision and control over the agencys accounting
and financial transactions, and the Head of Agency or Undersecretary for Finance and
Admin or his authorized representative.
22.3 Types of Statutory Financial Reports
Financial statements and their supporting schedules are the products of the government
accounting processes. These are the principal comprehensive means by which the
information accumulated and processed in the state accounting system is periodically
communicated to those who use them. IPSAS 1 requires a complete set of financial
statements to comprise of the following:
a. Statement of Financial Position;
b. Statement of Financial Performance;
c. Statement of Changes In Net Assets/Equity;
d. Statement of Cash Flows;
e. Statement of Comparison of Budget and Actual Amount;
f. Notes, comprising a summary of accounting policies and other explanatory notes.
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22.3.1 Statement of Financial Position
This is a formal statement which shows the financial condition of DepED as of a certain date.
It presents the Assets, Liabilities and Accumulated Surplus/Deficit at end of accounting
period and shall include information on current and non-current classification of assets and
liabilities. It shall be prepared in both condensed and detailed formats with 2-period
comparative presentation. It shall be supported with the following notes/schedules:
Schedules of Accounts Receivables;
Schedules of Accounts Payables;
Schedules of Public Infrastructures;
Other schedules as may be required.
(Agency Name)
Condensed Statement of Financial Position
As at December 31, 20x4
Fund Code
Location Code
Object Code Note 20X4 20X3
Assets
Current Assets
Cash and Cash Equivalents 8 xxxx xxxx
Investments 9 xxxx xxxx
Receivables 10 xxxx xxxx
Inventories 11 xxxx xxxx
Other Assets 12 xxxx xxxx
Total Current Assets xxxx xxxx
Non-current Assets
Investments 13 xxxx xxxx
Receivables 10 xxxx xxxx
Investment Property 14 xxxx xxxx
Property, Plant & Equipment 15 xxxx xxxx
Biological Assets 16 xxxx xxxx
Intangible Assets 17 xxxx xxxx
Other Assets 12 xxxx xxxx
Total Non-current Assets xxxx xxxx
Total Assets xxxx xxxx
Liabilities and Net Assets/Equity

Liabilities
Current Liabilities
Financial Liabilities 18 xxxx xxxx
Inter-Agency Payables 19 xxxx xxxx
Intra-Agency Payables 20 xxxx xxxx
Trust Liabilities 21 xxxx xxxx
Deferred Credits/Unearned Income 22 xxxx xxxx
Page 183 of 224

Other Payables 23 xxxx xxxx

Total Current Liabilities xxxx xxxx
Non-Current Liabilities
Financial Liabilities 18 xxxx xxxx
Deferred Credits/Unearned Income 22 xxxx xxxx
Provisions 23 xxxx xxxx
Other Payables 23 xxxx xxxx
Total Non-Current Liabilities xxxx xxxx
Total Liabilities xxxx xxxx
Net Assets/Equity
Accumulated Surplus/Deficit xxxx xxxx
Total Net Assets/Equity xxxx xxxx
Total Liabilities/Equity xxxx xxxx
22.3.2 Statement of financial performance
This shows the results of operation/performance of DepED at the end of a particular period.
This statement shall contain all Revenues, Subsidies and Expenses of the agency. It shall
be prepared in both condensed and detailed formats with 2-period comparative presentation.
(Agency Name)
Condensed Statement of Financial Performance
For the Year Ended December 31, 20x4
Fund Code
Location Code
Object Code Note 20X4 20X3
Revenue
Tax Revenues 24 xxxx xxxx
Service and Business Incomes 25 xxxx xxxx
Shares, Grants and Donations 26 xxxx xxxx
Gains 27 xxxx xxxx
Sales of Assets 28 xxxx xxxx
Total Revenues xxxx xxxx
Less: Current Operating Expenses
Personnel Services 29 xxxx xxxx
Maintenance and Other Operating Expenses 30 xxxx xxxx
Total Current Operating Expenses (xxxx) (xxxx)
Surplus/Deficit from Current Operations xxxx xxxx
Assistance and Subsidy 31 xxxx xxxx
Gains 27 xxxx xxxx
Losses 32 (xxxx) (xxxx)
Surplus/Deficit for the Period xxxx xxxx
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22.3.3 Statement of Changes in Net Assets/Equity
This presents the residual interest in the assets of the government in DepED after deducting
all liabilities, disclosing all causes of changes as accumulated surplus or deficit for a given
accounting period. Presentation shall include the balance at the end of the previous period,
changes in the current period, and the balance at the end of the current period.
(Agency Name)
Statement of Changes in Net Assets/Equity
For the Year Ended December 31, 20x4
Fund Code
Location Code
Accumulated Total Net
Surpluses / Assets /
Deficits Equity
Balance at December 31, 20x3 xxxx
Changes in Accounting Policy (xxxx) (xxxx)
Restated Balance xxxx xxxx
Changes in Net Assets/Equity for 20x3
Adjustment of net revenue recognized directly in net assets/equity (xxxx) (xxxx)
Surplus/Deficit for the period xxxx xxxx
Total recognized revenues and expenses for the period xxxx xxxx
Balance at December 31, 20x4 carried forward xxxx xxxx
22.3.4 Statement of Cash Flows
This is a statement summarizing all the cash activities of DepED operating units. Using the
Direct Method, this includes the operating, investing and financing activities of the
department and provides information on the cash receipts and cash payments during the
period. Operating activities are the cash flows derived primarily from the principal cash
generating activities. Investing activities are the cash flows derived from acquisition and
disposal of long-term assets and other investments not included in cash equivalents.
Financing activities are the cash flows derived from the equity capital and borrowings.
PPSAS 2 shall prescribe the standards in preparing the Statement of cash flows.
The prescribed template follows:
Statement of Cash Flows

DEPARTMENT OF ____________
(Agency Name)
(Region)
December 31, 20x4

Fund...................
Particulars 20X4 20X3
Cash Flows from Operating Activities
Cash Inflows
Receipt of NCA xxxx xxxx
Page 185 of 224

Collection of Incomes/Revenues xxxx xxxx

Receipt of Assistance and Subsidy from Other NGAs, LGUs and GOCCs xxxx xxxx
Collection of Receivables xxxx xxxx
Receipt of Inter-Agency Fund Transfers xxxx xxxx
Receipt of Intra-Agency Fund Transfers xxxx xxxx
Receipt of Trust Liabilities xxxx xxxx
Other Receipts xxxx xxxx
Adjustments xxxx xxxx
Total Cash Inflows xxxx xxxx
Cash Outflows
Replenishment of Negotiated MDS Checks (xxxx) (xxxx)
Remittance to National Treasury (xxxx) (xxxx)
Payment of Expenses (xxxx) (xxxx)
Purchase of Inventories (xxxx) (xxxx)
Purchase of Consumable Biological Assets (xxxx) (xxxx)
Grant of Cash Advances (xxxx) (xxxx)
Prepayments (xxxx) (xxxx)
Payment of Deposits (xxxx) (xxxx)
Payment of Accounts Payables (xxxx) (xxxx)
Remittance of Personnel Benefit Contributions & Mandatory Deductions (xxxx) (xxxx)
Grant of Financial Assistance/Subsidy (xxxx) (xxxx)
Release of Inter-Agency Fund Transfers (xxxx) (xxxx)
Release of Intra-Agency Fund Transfers (xxxx) (xxxx)
Other Disbursements (xxxx) (xxxx)
Adjustments (xxxx) (xxxx)
Total Cash Outflows (xxxx) (xxxx)
Cash Provided by (Used in) Operating Activities xxxx xxxx
Cash Flows from Investing Activities
Cash Inflows
Proceeds from Sale of Investment Property xxxx xxxx
Proceed from Sale/Disposal of PPE xxxx xxxx
Sale of Investments xxxx xxxx
Receipt of Cash Dividends xxxx xxxx
Proceeds from Matured/Return of Investments xxxx xxxx
Collection of Long-term Loans xxxx xxxx
Proceeds from Sale of Other Assets xxxx xxxx
Cash Outflows
Purchase/Construction of Investment Property (xxxx) (xxxx)
Purchase/Construction of PPE (xxxx) (xxxx)
Investments (xxxx) (xxxx)
Purchase of Bearer Biological Assets (xxxx) (xxxx)
Purchase of Intangible Assets (xxxx) (xxxx)
Grant of Loans (xxxx) (xxxx)
Page 186 of 224


Cash Provided by (Used in) Investing Activities xxxx xxxx
Cash Flows from Financing Activities
Cash Inflows
Proceeds from Issuance of Bills and Bonds xxxx xxxx
Proceeds from Domestic and Foreign Loans xxxx xxxx
Cash Outflows
Payment of Long-term Liabilities (xxxx) (xxxx)
Payment for Redemption of Bills/Bonds Issued (xxxx) (xxxx)
Payment of Interest Expense (BTr/NG Debt) (xxxx) (xxxx)
Cash Provided by (Used in) Financing Activities xxxx xxxx
Effects of Exchange Rate Changes on Cash and Cash Equivalents xxxx xxxx
Cash Provided by Operating, Investing and Financing Activities xxxx xxxx
Add: Cash Balance, beginning xxxx xxxx
Cash Balance, ending xxxx xxxx
22.3.5 Statement of Comparison of Budget and Actual Amount
IPSAS Standards
IPSAS 24 on the Presentation of Budget Information in the Financial Statements, calls for
the inclusion of a comparison of budget amounts and the actual amounts spent in DepEDs
financial reports especially because their budgets are available to the public. Being publicly
accountable agency, reporting as well the budget executions and actual disbursements
related thereto through transparent financial reporting is imperative. When budgets and
financial statements are prepared on the same basis, compliance with this requirement will
also demonstrate organizations financial performance in achieving their budgeted results.
Budget and Financial Accountability Reports (BFARs)
DBM-COA Joint Circulars No. 2013-1 dated 15 March 2013 and No. 2014-1 dated 2 July
2014, and all related issuances shall provide the guidelines on the submission of
accountability reports, presenting in comparison the departments appropriations, allotments,
obligations and disbursements, with the prescribed templates. The so-called Budget
Accountability Report (BAR) and Financial Accountability Report (FAR) shall at least include
the following:
1. BAR No. 1 Quarterly Physical Report of Operation

2. FAR No. 1 Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances (SAAODB), with related schedules such as:
a. FAR No. 1-A Statement of Appropriations, Allotments, Obligations,
(SAAODBOE);
b. FAR No. 1-B List of Allotments and Sub-Allotments (LASA)
3. FAR No. 2 Statement of Approved Budget, Utilizations, Disbursements and
Balances (SABUDB), with related schedules:
Page 187 of 224

a. FAR No. 2-A Statement of Approved Budget, Utilizations,

(SABUDBOE)
4. FAR No. 3 Aging of Due and Demandable Obligations (ADDO)
5. FAR No. 4 Monthly Report of Disbursements
6. FAR No. 5 Quarterly Report of Revenue and Other Receipts
The FARs to be signed approved by the Head of Agency, shall be prepared and
certified correct by the by the following officers:
Budget Officer or Head of Budget Unit for the portion of the report pertaining
to appropriations, allotments, obligations, unobligated allotments, and
unreleased appropriations;
Chief Accountant or Head of Accounting Unit for the portion of the report
pertaining to disbursements and unpaid obligations
22.3.6 Notes, Comprising Accounting Policies and Other Explanatory Notes
Notes to Financial Statements are integral parts of financial statements, which pertain to
additional information necessary for fair presentation in conformity with generally accepted
accounting principles. These may explain the headings captions or amounts in the
statements of present information that cannot be expressed in money terms, and description
of accounting policies. Information shall be presented in a way that will facilitate
understanding and avoid erroneous implications. The headings, captions and amounts shall
be supplemented by enough additional data so that their meaning would be clear and not
overshadowed by so much information that important matters become obscured.
Where Notes to Financial Statements appear on a separate page, indicate the phrase See
accompanying Notes to Financial Statements placed at the bottom of said statements.
Material changes in classification of accounts shall be indicated and explained as notes to

financial statements.
It shall at least include notes on the following:

Accounting policies
Judgments that management has made that have the most significant effect
in the FS
Key assumptions concerning the future
Other disclosures:
o The domicile and legal form of entity;
o Description of the nature of the entitys operations;
o Reference to the relevant legislation;
o The name of the controlling entity and the ultimate controlling entity of
the economic entity; and
o If it is a limited life entity, information regarding the length of life.
Page 188 of 224

22.4 Reporting Calendar
Financial Statements are generally prepared annually. DepED shall submit to oversight
agencies on or before 31 March of the following year.
Interim reports are also required to be prepared at any given period or at a financial reporting
period without closing the books of accounts. The following interim financial statements
shall be prepared and submitted to oversight agencies, such as COA and DBM:
Monthly:
a. Pre-closing Trial Balance
b. Notes and Schedules
Monthly financial reports shall be submitted to oversight agencies on or before the 30th days
of the following month.
Quarterly:
a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Changes In Net Assets/Equity
d. Statement of Cash Flows
e. Budget and Financial Accountability Reports
f. Notes to Financial Statements
Quarterly financial reports shall be submitted to oversight agencies 30 days after the end of
each quarter, except for FAR No. 4 which shall be on or before the 30th day of the following
month, and FAR No. 3 which shall be on or before 30the day following the end of the year.
Semi-Annually and Annually:

The Reporting requirements and processes follow those for Quarterly Reporting. However,
Annual and Semi-Annual Reports undergo more detailed scrutiny and formal assessment
(vis--vis True and Fair View) by COA.
22.5 Consolidation
In accordance to PPSAS 6, the Consolidated FS of DepEd shall be taken from the financial
statements of all operating units, IUs, DOs, ROs and CO, including Bureaus and Attached
Agencies (if any), and presented as one. The consolidation shall follow the procedures set
below:
1. Combine the FS line by line
2. Balances, transactions, revenues, and expenses between OUs within the department
shall be eliminated in full (i.e. intra-agency accounts, intra-agency fund
transfers/subsidies)
3. FS shall be prepared as of the same reporting date
4. Consolidated FS shall be prepared using uniform accounting principles
Page 189 of 224

Figure 12: Flow of Consolidation of Reports
DOs consolidate ROs consolidate

IUs submits
reports and reports and
reports to DO
forward to RO forward to CO
CO consolidates
Bureaus submit
and submit to
reports to CO
Oversight Agencies
The required semi-annual and annual financial reports shall include the following
1. Pre-Closing Trial Balance
2. Statement of Financial Position
3. Statement of Financial Performance
4. Statement of Changes in Net Assets/Equity
5. Statement of Cash Flows
6. Statement of Comparison Budget and Actual Amounts
7. Statement of Management Responsibility
8. Statement of Regional Consolidation of Revenues
9. Statement of Regional Consolidation of Expenditures
10. Notes to Financial Statements
The above statement shall also be submitted online based on the COA Circular No. 2015-
005 dated July 16, 2015 re: Availability of Web-based Annual Financial Reporting System
(AFRS) and Budget and Financial Accountability Reporting System (BFARS).
22.6 Reporting Process
The book of final entries, SLs and GLs, shall be reconciled first before finalizing the Pre-
Closing Trial Balance to include the necessary adjustments or corrections.
Page 190 of 224

Figure 13: Process Flow for Preparation and Submission of Reports
Prepare JEVs for Prepare Pre- Prepare Statement

Reconcile GL-SL
Adjusting / Closing Trial of Financial
balances
Correcting Entries Balance Performance
Prepare Statement Prepare Statement

Prepare Statement Prepare JEVs for
of Financial of Net Assets /
of Cash Flows Closing Entries
Position Equity
Prepare Notes to
Submit to
Financial
Oversight Agencies
Statements
Using the eFRS, the reconciliation of ledgers shall be made before inputting in the JEVs the
adjusting and correcting entries. The Accounting unit shall first click on the Trial Balance with
complete UACS to determine if all GL balances have coded correctly and completely. The
assigned person shall supply the missing FOLMO codes before generating the Pre-Closing
Trial Balance.
22.7 Monitoring of Financial Reporting
Consolidation of FS starts at the DO level. The DO Accountant shall be responsible in

collecting the complete set of financial reports from all its respective IUs. The consolidated
DO reports shall be escalated to the RO level. The Regional Accountant, with the guidance
of the Financial Management Officer, shall take responsibility in the complete collection of
DO Consolidated FS from all its respective DOs. The RO Consolidated FS shall be
escalated to the CO. The Consolidation and Regional Operations Section of the CO
Accounting Division shall be in charge of the collection and consolidation of the ROs
financial reports.
Same process shall apply to the Budget reports. The CO Budget Division shall be
responsible for the overall consolidation.
22.8 Monthly Procedures
The daily maintenance of books of accounts shall necessitate monthly review and updating
of records and balances. The following transactions shall be observed every month-end:
Collection of RCDs from Cash Division/unit and preparation of JEVs to record
revenues and other receipts;
Collection of RCIs from Cash Division/unit and preparation of JEVs to record most
importantly the adjustments related to cancelled disbursements;
Page 191 of 224

Collection of RSMIs and/or IRPs from Property Division/unit and PFSED to record
movements of inventories and PPEs and the related expenses, if any;
Recognition of Depreciation Expenses and Impairment Losses and preparation of
JEV related thereto;
Other adjustments and/or corrections and preparation of JEV related thereto.
Page 192 of 224

23 Data and Information Management
23.1 Data Management and Responsibility
Data and information management is a function that involves coordination between people,
practices, policies, and systems to ensure that data and information is properly utilized,
controlled, protected, and stored thereby preserving the value of each individual data and
information asset. Data management is a critical process in all organizations because data is
naturally a reusable asset. This means that each data and information acquired over time
may be analyzed and re-analyzed for subsequent reporting, assessment, decision making,
or for whatever purpose it is required.
For the Department, financial data basically comprises budget and accounting data. As
such, it mainly involves both the budget and accounting offices in the creation collation,
storing, presentation, forward transmittal and usage of financial data and information.
Best practices in data management clearly state that primary responsibility should reside
with the organizational unit which has the greatest stake on the data and where data is
basically created and utilized. It basically means that responsibility in managing data should
be placed as close to the action as possible.
Thus, the Department should clearly identify responsibilities for managing the financial data
that they have collated and retained over time. Section chiefs should practice proper
management of financial data and coordinate closely with other stakeholders in utilizing it.
Data must be safeguarded in such a way that it is protected from unauthorized use whilst at
the same time is available to all officers requiring that information. No data or information
should be the domain of individuals in the office. No data should reside on computers
accessible to only a specific individual, such that it cannot be accessed in event of absence
or departure. Data and information must be available for sharing in the office. Data and
information must be stored on computers for which the passwords are unknown to other key
members in the office.
Ideally a central repository should be maintained on a network for all data and information.
The content and file paths for accessing the data should be catalogued, so that file
searching can be made easier. A central repository also provides the capabilities for
undertaking a backup of all office data at one go.
All data and information must be backed up regularly! Data and Information are
important, key, and valuable DepED resources.
23.2 Managing Data and Information Assets
Data Management focuses on four (4) fundamental areas. These are:

Data Governance;
Data Security;
Data Backup; and
Data Recovery.
Each of these components is discussed in detail in the following Sections below. The main
objective of this methodology is to ensure that appropriate controls are in place to check for
Page 193 of 224

completeness and accuracy of data from its creation and utilization including aspects on
proper storage, security, maintenance, and filing for data re-usability and recovery purposes.
Furthermore, general controls should also be covered to ensure that proper system
environment is in place to support development, implementation, maintenance, and
administration for appropriate computer software and infrastructure. This also includes
relevant system documentation to ensure sustainability of the technology that facilitates
easier data and information sharing across the organization.
23.3 Data Governance
Data governance is the core component of data management. It relates to the vital controls
needed to be set in place to ensure utmost data quality. In order for the Department to
properly implement sound data management, the following internal controls should be in
place:
A clearly defined roles and responsibilities should be set in place for those individuals
associated with data. This includes data providers, data owners, custodians, other
users, managers, etc.;
Data accountability should be enforced for each dataset. This means that each
dataset should have an assigned main responsible officer and secondary responsible
officer;
Clearly defined procedures for data storage and backup methods, as well as periodic
testing of data restoration;
Clearly documented catalogue of data/information stored including access protocols
such as passwords, search paths, etc.;
Having the systems, processes and structures in place to ensure timely, high quality
and high availability of data and information to support the business needs of the
Department;
Consideration should be given to maintaining a central repository on a network where
all soft copy files are maintained (or copied), so that they become Departmental
resources as opposed to individuals resource.
For data governance to work effectively, the most senior officer closest in the organizational
structure to the accounting and budget division/office should champion the implementation of
these internal controls. For example, in Central Office, it should be the Assistant Secretary
for Finance and Administration. For Regional Office, it should be the FMO. For Division
Office, it should be the Accountant. However, the main data managers who will ensure that
data governance is executed and followed accordingly should be the individual section
chiefs and to be supported by the Budget and Accounting Division Chief/Heads.
23.4 Data Security
Data security is a critical function of data management. It focuses on the protection of data
from any unauthorized access and unwanted damage/destruction of the data source or
repository. Under the current setup, the Department should comply with the following internal
controls to ensure data security:
All system users should have a discreet Username and Password to access the
system application. Individual passwords should be alphanumeric and should contain
no less than six characters. This means that passwords should be a combination of
alphabetic and numeric characters of at least six characters.
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Passwords should be changed and updated once every month by each user to
ensure utmost data security in a system-wide level.
A pre-defined system user access should be set based on the different roles and
responsibilities identified by the data managers. The following access grouping for
various users may be used:
o encoders add/view transaction records
o supervisors create new users, add/view transactions records, import/export
data files, generate reports
o reporters view transaction records, export data files, generate reports
o administrators create/delete/modify users, edit/modify database
Limit business system and data access to appropriate users only. Section chiefs
should regularly monitor the list of users allowed to access transaction records in the
system. In case a particular user account needs to be removed from the system (i.e.
employee resigns or retires), the section chief should advise the IT Unit/Personnel
promptly for that particular users credentials to be deleted in the system.
Database file should not be openly shared across the network for everybody. It
should only be accessible to assigned individuals based on their role and functions.
Only allow read permissions in the server for majority of the users. Only IT
Unit/Personnel should have the write and delete permissions of the database file.
Ensure antivirus is installed and used in individual computers. Make sure that the
antivirus definition is updated regularly.
A quick anti-virus scan should be done daily preferably during lunch break from 12
noon to 1PM. In addition, a comprehensive general antivirus scan should be done
once every week.
Resetting password procedures should be in place. This should be guided by the IT
Unit/Personnel.
Conduct regular sessions for all users on security awareness. Section chiefs should
initiate this activity to be supported by the IT Unit/Personnel. Ensure all users are
updated on the latest data security guidelines and policies. Always be reminded that
security of data should be of utmost importance.
Conduct regular testing on internal processes to ensure data security and integrity.
Document the design and result of these test processes for assessment and
improvement.
23.5 Data Backup and Filing
Data backup is an integral part of data management as it paves the way for data recovery in
case of system failures, downtimes, or any other disruptions. It involves processes and
procedures in appropriately making file copies of data sources, system instances, logs, etc.
It also covers proper filing practices and guidelines to ensure easy and seamless data
recovery and restoration during interruptions.
In order for the Department to improve their current data management given their existing
system setup, the following backup procedures and guidelines should be followed:
Page 195 of 224

Daily Backup:
The section chief primarily assigned in data encoding should have a daily backup copy of the
system database in his/her local computer. It should be organized in a logical manner. In
eFRS for example, the following computer folders should be created for the backup files to
be copied and saved:
Daily Backup Folder (eFRS Daily Backup) Date (June 29 2015)
System_DBName (eFRS_LCC)
The illustration above shows the organizational hierarchy of the folders and files.
For the daily backup on the following day, a new Date folder should be created instead of
deleting and replacing the previous day copy of the database system. Thus, the folder
structure would be like this:
It is important to retain the previous weeks 5-day backups before deleting the files and
starting a new set of daily backup for the current week. This should be done ONLY after the
weekly backup has been made.
Weekly Backup:
The section chief primarily assigned in data encoding should again ensure to have a weekly
backup copy of the system database in a USB external storage device. It should also be
organized in a logical manner. For example in eFRS, it should have the following folder
structure:
Weekly Backup Folder (eFRS Weekly Backup) Date (June 1-5 2015)
Page 196 of 224

For the weekly backup, only copy the database file of every Fridays database instance. For
example, for the week of June 1-5, June 5 falls on the Friday, thus, for the week of June 1-5,
only backup the database under June 5 for your weekly backup procedures as it contains
already all the data of the previous dates.
In addition, the IT unit/personnel should also make a backup copy of the database on two
locations. One on his/her own local computer and another on an external storage device
while following the same file naming convention as discussed above. This approach will
ensure redundancy in system recovery and support risk mitigation.
Monthly Backup:
Both the section chief primarily assigned in data encoding and the IT unit/personnel should
have a separate monthly backup copy of the system database in a USB external storage
device. It should also be organized in a logical manner. For example in eFRS, the following
folder configuration will be implemented:
Monthly Backup Folder (eFRS Monthly Backup) Date (June 30 2015)
System_DBName (eFRS_LCC).
For the monthly backup, only copy the database file of the last official working days
database instance for the month. For example, for the month of June 2015, June 30 falls on
a Tuesday, thus, only backup the database under June 30 for your monthly backup as it
contains already all the data of the previous dates. Remember, it doesnt necessarily mean
that for the database of June 30, all transactions for the month of June are already encoded
in the system. What you are backing up shows that as of June 30, which is a months end,
the data contained in the system represents the progress on that particular given time
period.
Quarterly Archiving
Apart from proper data backup, data filing and archiving is equally important. To do this, all
data backups should be written in optical disks such as CDs and/or DVDs. The frequency of
data filing should be on a quarterly basis and should follow this file naming structure:
Quarterly Backup Folder (eFRS Quarterly Backup) Date (Jan-Mar 2015)
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Similarly, the file to be backed up and written on the optical disk should only be the database
on the last working day of the month ending that particular quarter. For example, for the 1st
quarter of 2015 (Jan-Mar), the last working day would be March 31, thus, only the database
on that particular day should be saved and archived in the optical disk. This disk should be
filed in a secure location in the office for records purposes and safekeeping.
In addition, all the corresponding databases of the lower level units should also be
archived 47. This means that all units under the responsibility of a particular office should
regularly submit their corresponding databases for proper data filing. As such, all schools
(IUs) should submit their quarterly databases to the Division Office no later than 5 working
days after each end of the quarter. Consequently, all DOs should submit their quarterly
databases to the Regional Office no later than 10 working days after each end of the quarter.
This submission should include all the IUs databases and the DO Propers database.
Subsequently, the Regional Office should also submit to the Central Office all the
submissions from the DOs together with the RO Propers database no later than 15 working
days after each end of the quarter.
Finally, the Central Office will archive all the submissions together with the databases from
the Central Office no later than 20 working days after each end of the quarter. Also, if all files
will not fit in a single DVD, additional DVDs should be used to accommodate all the other
files submitted.
To summarize the flow of data filing and archiving, this methodology should be followed:
Furthermore, the following naming convention should be followed in creating file directory
folders to avoid confusion:
47 This is an important stepping stone towards implementing a fully integrated system such as the DepED IFMIS.
Page 198 of 224

23.6 Data Recovery
Data recovery is an important function of data management as it allows retrieval of lost data
from system downtime and minimizes risks involved in any system disruption. It mitigates
service interruptions and other similar event that could lead to lost productivity resulting to
very costly data recovery.
Under the current systems used, the first point of system and database recovery will be the
latest daily backup made by the section chief. In case this particular backup is not available,
the previous daily backup will be used for recovery and so on and so forth moving
backwards from the latest.
If in case, the daily backup is not available, then the latest weekly backup will be used.
Finally, if the weekly backup is also not available, then the latest monthly backup will suffice.
However, for whatever reason the backup of the Section Chief is not available, then the
latest weekly backup of the IT personnel/section should be used as the reference for
backup. If not available, then the monthly backup will be used.
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In cases both the files from the Section Chief and the IT Personnel/Section is not available,
the archived optical disks/DVDs will be used for data recovery. This particular backup
contingency explains why there is a need to have a well-organized archiving procedure
wherein the DVDs should be placed in a secure location preferably appropriately distanced
from the accounting and budget division.
The approach described above is the main purpose of having redundancy in backing up
data. This will ensure continuity of operation in case any problems arise. With such
methodology, the risks associated with system downtime are mitigated. The following
framework describes the hierarchy of the data recovery procedures:
The data recovery procedure for the current existing system is very straightforward. Simply
copy and paste the backup copy of the database to the assigned network location or directly
to the computer folder set previously prior to the system disruption. However, data recovery
procedures should only be followed after system disruption has been properly assessed and
evaluated by the IT Unit/Personnel. Thus, the IT Unit/Personnel should provide proper
guidance and advice on this particular aspect.
In summary, the following table provides the specific roles of each entity for data recovery
process:
Page 200 of 224

Page 201 of 224

ANNEXES
Page 202 of 224

Annex A. Other Organization Structures

Figure 14: Office of the Undersecretary for Finance and Administration
USEC
Finance and
Administration
ASEC
Finance and
Administration
ADMINISTRATIVE PROCUREMENT
PLANNING FINANCE SERVICE
SERVICE SERVICE
SERVICE Accounting Division
Asset Management Procurement Planning
Planning and Budget Division
Division and Management
Programming Employee Account
Cash Division Division
Division Management Division
Personnel Division Contract Management
REGIONAL OFFICES
DIVISION OFFICES
SCHOOLS
Figure 15: Central Office Accounting Division
ACCOUNTING
DIVISION
CHIEF
ASST.
ACCOUNTING
DIVISION CHIEF
CONSOLIDATED
TRANSACTION/
PRE-AUDIT REPORTING INFOTECH/ BOOKKEEPING
DOCUMENT
Section A AND OTHER RESEARCH Section A
TRACKING
Section B CONCERNS SECTION Section B
SECTION
SECTION
REGIONAL OFFICES
DIVISION OFFICES
SCHOOLS
Page 203 of 224

Figure 16: Central Office Budget Division
BUDGET DIVISION
CHIEF
ASST. BUDGET
DIVISION CHIEF
PLANNING
SECTION A SECTION B
Budget Preparation, Budget Preparation, SECTION C
Execution, and Execution, and Account Management
Reporting for OSEC Reporting for OSEC and Expenditure
Proper and Selected Proper and Selected Monitoring
Regions Regions
REGIONAL OFFICES
DIVISION OFFICES
SCHOOLS
Figure 17: Regional Office
REGIONAL
DIRECTOR
ASST. REGIONAL
DIRECTOR
ADMINISTRATIVE
DIVISION POLICY PLANNING AND
FINANCE DIVISION
Cash
Accounting RESEARCH DIVISION
Payroll
Budget Planning
Personnel
Property and Supply
DIVISION OFFICES
SCHOOLS
Page 204 of 224

Figure 18: Division Office
SCHOOLS
DIVISION
SUPERINTENDENT
ASST. SDS
ADMINISTRATIVE SCHOOLS
FINANCE Cash GOVERNANCE AND
Accounting Payroll OPERATION DIVISION
Budget Personnel Planning and Research
Property and Supply Section
SCHOOLS
Page 205 of 224

Annex B. Samples Forms

This Annex contains the following sample forms in the subsequent pages:
1. Obligation (ORS);
2. Disbursement Voucher (DV);
3. Purchase Request (PR);
4. Purchase Order (PO);
5. Invoice Receipt for Property (IRP);
6. Authority to Debit Account (ADA);
7. Inspection and Acceptance Report (IAR);
8. Journal Entry Voucher (JEV).
Page 206 of 224

Form 1: Obligation Request and Status
Page 207 of 224

Form 2: Disbursement Voucher (DV)
Page 208 of 224

Form 3: Purchase Request (PR)
Page 209 of 224

Form 4: Purchase Order (PO)
Appendix 1
PURCHASE ORDER
Agency
Supplier : P.O. No.: _________________________

Address : Date :_________________________
TIN : Mode of Procurement :______________
Gentlemen:
Please furnish this Office the following articles subject to the terms and conditions contained herein:
Place of Delivery: Delivery Term:

Date of Delivery: Payment Term:
Stock No. Unit Description Quantity Unit Cost Amount

P P
(Total Amount in Words) P
In case of failure to make the full delivery within the time specified above, a penalty of one-tenth (1/10)
of one percent for every day of delay shall be imposed.
Very truly yours,
Conforme: _________________________________
_________________________________ Authorized Official

Signature over Printed Name of Supplier
___________________________
Date
Funds Available: ALOBS No. :

Amount : _______________
Chief Accountant
Page 210 of 224

Form 5: Invoice Receipt for Property (IRP)
Page 211 of 224

Form 6: Authority to Debit Account (ADA)
Page 212 of 224

Form 7: Inspection and Acceptance Report (IAR)
Page 213 of 224

Form 8: Journal Entry Voucher (JEV)
Page 214 of 224

Annex C. Planning and Budget Reference Materials

This Annex includes:
1. Budget Calendar;
2. List of BP Forms;
3. Outline of the Boncodin Formula; and
4. A list of the current DepED MFO/PAP Codes
1. Indicative Budget Calendar

Indicative
DepEDs Budget Preparation Activities
Timeframe
Orientation on the FY 2015 Plans & Budget Proposal Feb 04 - CO;
Preparation Feb 06-07 - ROs
In-House Planning Workshop of Offices within CO Feb 05-March 03
In-House Forward Estimates for Basic Inputs Feb 12-25
Presentation of Senior High School Requirements of ROs Feb 17-19
Operational Planning of Regional Offices Feb 24-Mar 07
Consultation with Civil Society Organizations Feb 10-Mar 05
Rapid Assessment of Major Programs/Projects Jan 10 - Feb. 19
Presentation of Rapid Assessment Findings/Results Feb. 20
Joint Consolidation of PPD-OPS and Budget Div.-FMS Mar 10-15
Joint Program and Budget Committee Review Mar 18-19
EXECOM Mar 20
Feedback to CO and RO Mar 21
Submission to DBM/Encoding to OSBP (start) Mar 25
Page 215 of 224

2. Example Budget Forms (Per 2016 Budget Call)

BP Form Form Title Description
No.
100 Statement of Revenues It shall reflect all revenues collected by DepED
which are deposited in the National Treasury
100-A Statement of Revenues It shall reflect all revenues collected by DepED
and Expenditures for which are deposited in the National Treasury
Earmarked Revenues under the General Fund, which are authorized
by law to be used for specific purpose
100-B Statement of Other It shall report all receipts of DepED which are
Receipts/Expenditures authorized by law to be retained/held and used
(Off-budgetary and for specific purposes that do accrue to the
Custodial Funds) General Fund, such as Revolving Funds,
Provident Fund, and other custodial funds, and
its corresponding expenditures
100-C Statement of Donations It shall report or non-repayable transfers, in cash
and Grants (In Cash or In or in kind, received from other levels of
Kind) government, from private individuals, institutions,
foreign or domestic, including reparations and
gifts given for particular projects or programs, or
for general budget support.
BP Form Title Assigned Description

Form Office/s
No.
200 Comparison of BD and AD For the majority of these Forms the
Appropriations and Description is reflected in the Form Title.
Obligations
201 Summary of Obligations PPD, BD
and Proposed and AD
Programs/Projects
201 A Obligations for PS PPD, BD
and AD
201 A-1 Multi-year Requirements for PPD, BD
New Spending Proposals - and AD
Obligations for PS
201 B Obligations for MOOE PPD, BD
and AD
201 B-1 Multi-year Requirements for PPD, BD
Obligations for MOOE
201 C Obligations for Financial PPD, BD
Expenses and AD
201 C-1 Multi-year Requirement for PPD, BD
Obligations for FE
201 D Obligations for CO PPD, BD
and AD
201 D-1 Multi-year Requirement for PPD, BD
Obligations for CO
Page 216 of 224

201 E Program Expenditure Plan PPD/BD and

AD
201 F Climate Change PPD, BD
Expenditures and AD
202 Profile and Requirements of PPD, BD
Ongoing Programs/ Locally- and AD
Funded Projects
203 Requirements of Ongoing PPD, BD
FAPs and AD
203-A Profile of Ongoing FAPs PPD, BD
and AD
204 Staffing Summary of Non- Personnel
Permanent Positions Division
205 List of Retirees Personnel
Division
206 New or Expanded PPD, BD
Program/Project Proposal and AD
for Locally-Funded Project
and FAPs
206-A Profile and Requirements of PPD, BD
New Programs / Locally- and AD
Funded Projects
206-B Requirements of New FAPs PPD, BD
and AD
206-B.1 Profile of New FAPs PPD, BD
and AD
300 Proposed Special BD
Provisions
400 Annual GAD Plan and GAD Focal It presents the GAD plan and budget of
Budget Person DepED identifying current issues and/or
mandates.
400-A Annual GAD GAD Focal It reports the GAD issues and/or mandates
Accomplishment Report Person identified in the previous years GAD Plan
and Budget, including those that were not
previously identified but were addressed and
implemented.
Page 217 of 224

3. Boncodin Formula
Boncodin Formula
Schools MOOE = Fixed amount + (Allowable amount x Number of

Classrooms) + (Allowable amount x Number of Teachers) + (Allowable
amount x Number of Learners)
There are two components in the formula, the fixed and variable costs. The
fixed amounts for every Elementary School would be P40,000 and for High
School P80,000. The variable costs are the following:
Basis Elementary School High School
Every Classroom P3,000 P6,000
Every Teacher P4,000 P8,000
Every Learner P200 P400
1. Assume that Maria Central Elementary School has 250
enrolees, 6 teachers, and 5 classrooms:
Applying the formula, the schools MOOE would be:
= P40,000 + (P3,000 x 5) + (P4,000 x 5) + (P200 x 250)
= P125,000
2. Assume that Juan National High School has 850 enrolees,
25 teachers, and 20 classrooms:
Applying the formula, the schools MOOE would be:
= P80,000 + (P6,000 x 20) + (P8,000 x 25) + (P400 x
850)
= P740,000
There are cases however when the proposals derived from the
Boncodins formula will be constrained due to the departments budget
ceiling.
Page 218 of 224

4. UACS MFO/PAP Codes
The MFO/PAP Codes may change year on year

MFO/PAP
Sector Outcome Description
Code
260 00 1000000000 General Administration and Support
260 00 1000100000 General Management and Supervision
269 00 2000000000 Support to Operations
269 00 2000100000 Physical fitness and school sports
269 00 2000200000 Development and Implementation of Education Projects
269 00 2000300000 National Assessment System for Basic Education
269 00 2000400000 National Science Teaching Instrumentation
269 00 2000500000 Planning and Management Information Systems
269 00 2000600000 Education Information and Communication Services
269 00 2000700000 Support for Basic Education Research
269 00 2000800000 Human resource development for teaching, teaching-
related, non-teaching and other personnel
269 00 2000900000 Acquisition, Improvements, Survey and Titling of School
Sites
269 00 2001000000 Implementation of the Grant of Cash Allowance,
269 00 2001100000 Health and Nutrition Services
269 00 2001300000 Monitoring and Evaluation of BUB projects
265 00 3000000000 Operations
265 00 3010000000 MFO 1: BASIC EDUCATION POLICY SERVICES
265 00 3010100000 Policy Formulation
265 00 3010100001 Basic Education Curriculum
265 00 3010100002 Continuing Education
265 00 3010100003 Pre-Service Education
265 00 3010100004 Development, procurement and equitable
265 00 3020000000 MFO 2: BASIC EDUCATION SERVICES
265 00 3020100000 Curricular programs, learning management
265 00 3020200000 Co-curricular and special learning support
265 00 3020200001 Every Child A Reader Program (ECARP)
265 00 3020200002 Development and Promotion of Campus Journalism
265 00 3020200003 Financial Assistance to Regional Science High Schools
262 00 3020200004 Support to Secondary Schools with Special
265 00 3020200005 Support to SPED Centers/Schools
262 00 3020200006 Support to ESEP High Schools
261 00 3020200007 Support to Special Elementary Science Schools
262 00 3020200008 Implementation of the Redesigned Tech-Voc High School
Program
265 00 3020200009 Support to Multi-grade Schools
265 00 3020300000 Implementation of Indigenous Peoples Education Program
265 00 3020400000 Implementation of Alternative Learning and Delivery Mode
Programs, including requirement of Learning
265 00 3020500000 Operations of Schools
261 00 3020500001 Kindergarten
261 00 3020500002 Elementary
Page 219 of 224

MFO/PAP
Sector Outcome Description
Code
262 00 3020500003 Secondary
265 00 3020600000 Provision of learning resources
265 00 3020600001 Textbooks/Instructional Materials
265 00 3020600002 Science and Mathematics Equipment
265 00 3020600003 Department of Education Computerization Program
268 00 3020600004 Construction, Repair and/or Renovation of Buildings for
the Library Hub Program and Education Learning Centers
268 00 3020700000 Provision and maintenance of Basic Education Facilities
265 00 3020800000 School effectiveness program
261 00 3020900000 Basic Education Madrasah Program
265 01 3021000000 Quick Response Fund
265 00 3021100000 Implementation of various programs for the LGUs
265 00 3021200000 Abot Alam Program
265 01 3021300000 Disaster Preparedness Program
265 00 3021400000 Digitization Empowerment for Basic Education
266 00 3030000000 MFO 3: REGULATORY AND DEVELOPMENTAL
SERVICES FOR PRIVATE SCHOOLS
266 00 3030300000 Government Assistance to Students and Teachers
266 00 4000000000 Locally-Funded Projects
266 00 4140000000 Social Protection
266 00 4141100000 Peace and Development
266 00 4141100001 Implementation of the Socio-Economic Component of the
Normalization Process
Page 220 of 224

Annex D. Capital Outlay & Counterpart PPE Object Codes

Budget Object Accounting
Capital Outlays Codes (UACS)
Code Object Code
Property, Plant and Equipment Outlay 50604000 00 10600000 00
Land Outlay 50604010 00 10601000 00
Land 50604010 01 10601010 00
Land Improvements Outlay 50604020 00 10602000 00
Aquaculture Structures 50604020 01 10602010 00
Reforestation Projects 50604020 02 10602020 00
Other Land Improvements 50604020 99 10602990 00
Infrastructure Outlay 50604030 00 10603000 00
Road Networks 50604030 01 10603010 00
Flood Control Systems 50604030 02 10603020 00
Sewer Systems 50604030 03 10603030 00
Water Supply Systems 50604030 04 10603040 00
Power Supply Systems 50604030 05 10603050 00
Communication Networks 50604030 06 10603060 00
Seaport Systems 50604030 07 10603070 00
Airport Systems 50604030 08 10603080 00
Parks, Plazas and Monuments 50604030 09 10603090 00
Other Infrastructure Assets 50604030 99 10603990 00
Buildings and Other Structures Outlay 50604040 00 10604000 00
Buildings 50604040 01 10604010 00
School Buildings 50604040 02 10604020 00
Hospitals and Health Centers 50604040 03 10604030 00
Markets 50604040 04 10604040 00
Slaughterhouses 50604040 05 10604050 00
Hostels and Dormitories 50604040 06 10604060 00
Other Structures 50604040 99 10604990 00
Machinery and Equipment Outlay 50604050 00 10605000 00
Machinery 50604050 01 10605010 00
Office Equipment 50604050 02 10605020 00
ICT Equipment 50604050 03 10605030 00
Agricultural and Forestry Equipment 50604050 04 10605040 00
Marine and Fishery Equipment 50604050 05 10605050 00
Airport Equipment 50604050 06 10605060 00
Communication Equipment 50604050 07 10605070 00
Construction and Heavy Equipment 50604050 08 10605080 00
Disaster Response and Rescue Equipment 50604050 09 10605090 00
Military, Police and Security Equipment 50604050 10 10605100 00
Medical Equipment 50604050 11 10605110 00
Printing Equipment 50604050 12 10605120 00
Sports Equipment 50604050 13 10605130 00
Technical and Scientific Equipment 50604050 14 10605140 00
Other Machinery and Equipment 50604050 99 10605990 00
Transportation Equipment Outlay 50604060 00 10606000 00
Motor Vehicles 50604060 01 10606010 00
Page 221 of 224

Budget Object Accounting

Capital Outlays Codes (UACS)
Code Object Code
Trains 50604060 02 10606020 00
Aircrafts and Aircrafts Ground Equipment 50604060 03 10606030 00
Watercrafts 50604060 04 10606040 00
Other Transportation Equipment 50604060 99 10606990 00
Furniture, Fixtures and Books Outlay 50604070 00 10607000 00
Furniture and Fixtures 50604070 01 10607010 00
Books 50604070 02 10607020 00
Heritage Assets 50604080 00 10611000 00
Historical Buildings 50604080 01 10611010 00
Works of Arts and Archeological Specimens 50604080 02 10611020 00
Other Heritage Assets 50604080 99 10611990 00
Other Property Plant and Equipment Outlay 50604090 00 10699000 00
Work/Zoo Animals 50604090 01 10699010 00
Other Property, Plant and Equipment 50604090 99 10699990 00
Biological Assets Outlay 50605000 00 10700000 00
Bearer Biological Assets Outlay 50605010 00 10701000 00
Breeding Stocks 50605010 01 10701010 00
Livestock 50605010 02 10701020 00
Trees, Plants and Crops 50605010 03 10701030 00
Aquaculture 50605010 04 10701040 00
Other Bearer Biological Assets 50605010 05 10701990 00
Intangible Assets Outlay 50606000 00 10801000 00
Patents/Copyrights 50606010 00 10801010 00
Computer Software 50606020 00 10801020 00
Other Intangible Assets 50606990 00 10801990 00
Page 222 of 224

Annex E. Forms and Reports Relating to Inventory

(Section 16.10 Refers)
Dependency/ Prepared/
Form/Report Description
Triggers Maintained by
Used for checking out
RIS
availability of stocks and/or
(Requisition None Requisitioning Office
withdrawing goods from
and Issue Slip)
warehouse.
Used for monitoring the
quantity balances of each stock
SC (Stock AMS and/or Property and Supply
in the warehouse. This is
Card) RIS Office/Unit (PSO/U)
already integrated in the Asset
Management System (AMS).
Used for recording and
Inventory
monitoring the issuance of non- Property and Supply
Custodian Slip RIS
consumable inventory items or Office/Unit (PSO/U)
(ICS)
semi-expendable assets.
RSMI (Report of
Used for reporting the type and
Supplies and Property and Supply
quantity of supplies and RIS
Materials Office/Unit (PSO/U)
materials issued
Issued)
Used for requesting to
PR (Purchase
purchase specific items not RIS Requisitioning Office
Request)
available in the warehouse
Procuring Office/
PO (Purchase Used for itemizing the goods
PR Property and Supply
Order) purchased from the supplier
Office/Unit (PSO/U)
Not found in NGAS manual but
used by DepED for centrally-
procured items. Contains the
list of recipient offices/schools
Procuring Office/
receiving the deliveries
Allocation List PO Property and Supply
including the details of the
Office/Unit (PSO/U)
items to be delivered. It is the
basis for Accounting Unit to
identify inventories held for
distribution.
DR (Delivery Used for itemizing the PO and/or
Supplier
Receipt) deliveries made by the supplier. Allocation List
IAR (Inspection
Used for reporting the results in DR, PO, Property and Supply
and
the inspection and acceptance and/or Office/Unit (PSO/U) /
Acceptance
of the delivery. Allocation List Inspectorate Team
Report)
Used for acknowledging receipt
IRP (Invoice
of inventory items being Property and Supply
Receipt for DR and IAR
transferred from one unit/office Office/Unit (PSO/U)
Property)
to another.
Used for certification of
DV availability of funds and Requisitioning Office /
APR or Sales
(Disbursement approval of its disbursement for Property and Supply
Invoice
Voucher) purchased goods delivered to Office/Unit (PSO/U)
the office.
Page 223 of 224

ORS
Used for certifying allotment Requisitioning Office /
(Obligation
availability and approval of PR or APR Property and Supply
Request and
obligation. Office/Unit (PSO/U)
Status)
RCI (Report of Used for reporting issued
Check Issues Cash Unit
Checks Issued) checks.
Although not found in NGAS, it
Report of ADA is similar to RCI. Instead of ADA
Cash Unit
Payments checks, it covers ADA Transactions
transactions.
Used for recording all types of
transactions whether for DV, RCI, ADA
JEV (Journal
deliveries, issuance, or Payments, Accounting Unit
Entry Voucher)
transfers. It updates the books RSMI, or IRP
of accounts through eFRS.
Used for recording and
SLC (Stock monitoring the quantity and DV, DR, IAR,
Accounting Unit
Ledger Card) cost of each stock type in the RSMI, or IRP
warehouse.
Used for reporting the actual
RPCI (Report
physical count of inventory
on the Physical Property and Supply
items. It also used for SC, ICS, IRP
Count of Office/Unit (PSO/U)
reconciliation of all supplies and
Inventories)
materials.
Inventory and
Inspection Used for disposal of
Property and Supply
Report of unserviceable property and
WMR Office/Unit (PSO/U) /
Unserviceable unused/waste supplies and
Accountable Officer
Property materials.
(IIRUP)
Used for reporting all waste
materials which needs to be
Waste Materials disposed for proper dropping in Waste Property and Supply
Report (WMR) the book of accounts. It Materials Office/Unit (PSO/U)
supports IIRUP for disposal of
waste materials.
Page 224 of 224

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Department of Education

Financial Management Manual

The PFMP is a joint initiative of Australia and the Philippines

As the largest agency in the Philippines with the

The Australian Government has always been one of

BR. ARMIN A. LUISTRO FSC

Supporting education has always been a cornerstone

The Australian Government also supports the

PFMP embedded a team of international and national advisers to work on DepEds

I commend the Manual to you. Mabuhay!

1.1 Financial Management Framework .............................................................. 16

1.2 Legislation, Regulation and Policy ............................................................... 17

1.3 Values and Principles ................................................................................... 17

1.5 Authority and Accountability ......................................................................... 18

1.6 Roles and Responsibility .............................................................................. 19

1.7 Financial Management Processes ............................................................... 24

1.8 Enablers and Results ................................................................................... 24

1.9 Manual Responsibility .................................................................................. 25

2 Overview of Public Financial Management.......................................................... 26

2.1 Public Financial Management Cycle ............................................................ 26

2.2 Internal Control ............................................................................................ 27

2.3 Scrutiny, Oversight and Audit ....................................................................... 28

3 Generic Catalogue of Accounting Transaction Types......................................... 32

3.1 Overview of Transaction Processing ............................................................ 32

3.2 Major Accounting Transaction Types ............................................................ 32

3.3 Monthly and Quarterly Processes ................................................................ 36

3.4 Year End Processes..................................................................................... 37

3.5 Opening New Year ....................................................................................... 38

4 Planning and Budgeting ....................................................................................... 39

4.1 Budget Cycle Overview ................................................................................ 39

4.2 Budget Call .................................................................................................. 41

4.3 Planning and Programming .......................................................................... 42

4.4 Budget Formulation and Completion of Budget Forms ................................. 45

4.5 Budget Negotiations, Approvals and Enactment of Budget Proposals .......... 49

4.6 Budget Execution Documents ...................................................................... 50

4.7 Reference Materials in the Annexes ............................................................. 50

5 Budget Execution, Monitoring and Management ................................................ 51

5.1 Overview ...................................................................................................... 51

5.2 Processing Approved Budget Appropriations ............................................... 51

5.3 Processing Allotment Releases .................................................................... 52

5.4 Incurring and Processing Obligations ........................................................... 55

5.5 Managing LDDAP and NYDDO .................................................................... 57

5.6 Budget Monitoring Reporting ....................................................................... 58

6 Revenue and Income............................................................................................. 59

6.1 The Standards for Accounting Treatment of Revenues ................................ 59

6.2 Sources of Income of DepED ....................................................................... 59

6.3 Legal Provisions relating to Receipt/Collection and Deposit of Income ........ 59

6.4 Intra-Agency Transfers ................................................................................. 60

6.5 Processing and Recording Revenues in the Books ...................................... 61

6.6 Other General Income ................................................................................. 63

6.7 Gains ........................................................................................................... 63

6.8 UACS Income Account Object Codes .......................................................... 64

7 Capital Outlay ........................................................................................................ 66

7.1 Capital Outlay Policy .................................................................................... 67

7.2 Planning and Budgeting ............................................................................... 67

7.3 Purchase Requisition ................................................................................... 68

7.4 Procurement and Contract Management ..................................................... 69

7.5 Delivery, Inspection and Acceptance of Capital Goods................................. 71

7.6 Capital Outlay through Advance Payments .................................................. 74

7.7 Payment/Disbursement ................................................................................ 75

7.8 Accounting Process ..................................................................................... 76

7.9 Controls over Capital Outlay ........................................................................ 76

8 Personnel Services ............................................................................................... 78

8.1 Overview of Payroll Payments Processes .................................................... 78