COMMISSION ON AUDIT CIRCULAR NO.

90-328 March 22, 1990

TO : The Governor and the Commissioner for Finance, Metropolitan Manila

Commission; Provincial Governors, City and Municipal Mayors; City (District)
and Municipal Treasurers; COA Directors of Central and Regional Offices;
Provincial and City (District) Auditors, and Heads of Municipal and Circuit
Municipal Audit Units; and All Others Concerned.

SUBJECT: Withdrawal of municipal and national funds deposited with or held in trust by
Provincial and City (District) Treasurers and countersignature of checks issued
therefor.

I. MUNICIPAL FUNDS

Under the provisions of Batas Pambansa Blg. 337 and Presidential Decree No. 921,
funds of municipalities shall be deposited with the Provincial or /city (District) Treasurer
concerned. Funds released to the municipalities form other government agencies may also
be coursed through the Provincial or City (District) Treasurer concerned as official depository,
under existing regulations. In view of this responsibility of the Provincial or City (District)
Treasurers concerned as depository, the following accounting and auditing rules and
regulations are issued to facilitate the withdrawals of municipal funds pursuant to the
constitutional mandate of this Commission and Batas Pambansa Blg. 337 and Presidential
Decree No. 921:

1. The Provincial or City (District) Treasurer shall open immediately and without
delay a separate bank account in a duly designated bank for all funds accruing to
each and every municipality, which are deposited with him pursuant to Section
155(4)(f) of Batas Pambansa Blg. 337 and Presidential Decree No. 921. Such
bank account shall be in the name (official title) of the Provincial or City (District)
Treasurer in behalf of the municipality concerned.

2. The present practice of retaining part of the collections of municipal funds as cash
reserve for the municipality is hereby discontinued. Instead, the entire collections
shall be deposited intact promptly by the Municipal Treasurer or his duly
authorized representative with the Provincial or City (District) Treasurer and
withdrawal therefrom shall be by checks in accordance with this Circular.

3. Upon receipt by the Provincial or City (District) Treasurer, all collections of

municipal funds shall be deposited by him or by his duly authorized representative
in subject bank account of the Municipality immediately, or in any event not later
than the next banking day. Collections pertaining to national and provincial funds
shall likewise be promptly deposited in the proper bank accounts in accordance
with existing regulations and this Circular.

4. Withdrawal from the bank deposit of the municipality shall be effected solely on
the basis of duly approved Disbursement Voucher, General Form 5A, of the
municipality concerned issued for that purpose, and shall solely be by check of
the municipality signed by the Municipal Treasurer and countersigned by the
Municipal Mayor, the issuance of which shall be in accordance with the pertinent
law or ordinance and the applicable auditing regulations.
5. If the municipal transaction involved is subject to pre-audit, the Municipal
Treasurer concerned, prior to his issuance of the corresponding check, shall
ensure that such transaction has been pre-audited by the Provincial or City
(District) Auditor or by the Municipal or Circuit Municipal Audit Unit with authority to
pre-audit such transaction.

6. The following accounting procedures shall be observed:

(a) Collections of municipalities shall be classified immediately to determine

the amount to be accounted for as deposit of municipal funds with the
Provincial or City (District) Treasurer. The use of the account Undistributed
Collections (8-86-200) for this purpose shall be discontinued. Existing
procedures for the accomplishment of the corresponding accounting
records and forms should be modified accordingly. The Summary of
collections, Provincial Form No. 60(a), at the end of the month shall
continue to be accomplished by the Municipal Treasurer in reporting on
accountability for accountable forms.

(b) The Provincial or City (District) Treasurer shall send to the Municipal
Treasurer concerned a true copy of the corresponding deposit slip
immediately after every bank deposit of municipal funds.

(c) For every bank withdrawal of municipal funds, the Municipal Treasurer
shall promptly issue a debit request to the Provincial or City (District)
Treasurer concerned, in accordance with Annex A hereto attached as an
integral part hereof.

(d) Monthly reconciliation of the bank deposits/withdrawals of municipal funds

shall be made by and between the Municipal Treasurer and Provincial or
City (District) Treasurer concerned, within ten (10) days following the end
of every month, in accordance with annexes B and B-1 hereto attached as
integral parts hereof.

(e) Every Municipal Treasurer shall accomplish a monthly bank reconciliation

of the municipality's. cash in bank, within ten (10) days after receipt from
the Provincial or City (District) Treasurer of the duplicate copy of the bank
statement, in accordance with Annex C, hereto attached as an integral part
hereof. Within the same period, the Provincial or City (District) Treasurer
shall submit to the Provincial or City (District) Auditor the original of the
bank statement, together with the paid checks and advices pertaining
thereto.

(f) A new account, Cash in Treasury, Cash Reserve (8-70-103), shall be set
up to be used to record the cash funds maintained to pay claims which
may be paid in cash under existing regulations. This account is debited for
the cash withdrawn by the Municipal Treasurer from his deposits to pay
authorized disbursements in cash, and credited for authorized official
payments made by the Municipal Treasurer, and for redeposit of the cash
reserve. Withdrawals for this cash reserve shall be supported by a
statement certified by the Municipal Treasurer showing the status of his
 cash reserve fund which should not exceed the authorized cash reserve
limits.

(g) A modified weekly cash report shall be prepared by the Municipal

Treasurer in accordance with Annex D hereto attached as an integral part
hereof and shall be submitted by him promptly to the office concerned.

(h) The Municipal Treasurer shall submit to the Provincial or City (District)
Auditor all disbursement voucher and their supporting documents not later
than the fifth day of the ensuing month.

7. The Provincial or City (District) Treasurer concerned shall call the attention of the
Municipal Treasurer and the Provincial or City (District) Auditor to any violation of
any law, rule or regulation that may have been committed in the withdrawal of
municipal funds.

All accounting and auditing procedures not inconsistent herewith shall

continue to have legal force and effect.

Attached as integral parts of this Circular are illustrative accounting entries

and documentation thereof (Annex E).

8. This Circular shall not apply to municipal funds which are governed by special
regulations regarding their deposit, as well as to municipalities which are
authorized to maintain their own bank accounts under the pertinent provisions of
the Local Government Code.

II. NATIONAL FUNDS

Shares of the national government in collection made by the Municipality, Province or City
(District) shall be deposited with the bank by the Provincial or City (District) Treasurer under the
account of the Province or City (District) as the case may be.

In accordance with existing regulations, the Municipal Treasurer and the Provincial or City
(District) Treasurer shall each prepare the appropriate remittance advices. On the basis of
these remittance advices, the Provincial or City (District) Treasurer shall remit the funds due
the national government by issuing a check a payable to the National Treasurer which shall be
jointly signed by the Provincial or City (District) Treasurer and the Assistant Provincial or City
(District) Treasurer.

III. EFFECTIVITY

This Circular shall take effect immediately. It supersedes COA Circular No. 88-284 dated
November 27, 1987. All other COA Circulars, memoranda and other issuances inconsistent
herewith are hereby revoked or modified accordingly.

(SGD.) ALBERTO P. CRUZ, Commissioner

(SGD.) BARTOLOME C. FERNANDEZ, JR., Commissioner
(SGD.) EUFEMIO C. DOMINGO, Chairman
NOTE: See Attachments:

DEBIT REQUEST
STATEMENT OF BANK RECONCILIATION
STATEMENT OF DEPOSITS AND WITHDRAWALS/DISBURSEMENTS/
ADJUSTMENTS