COMMISSION ON AUDIT

DEPARTMENT OF FINANCE
DEPARTMENT OF BUDGET AND MANAGEMENT

JOINT CIRCULAR NO. 4-86A

January 2, 1988

TO : All Heads of Department, Bureaus and Offices, Self-Governing

Boards/Government-Owned and/or Controlled Corporations Concerned and
Commissions, State Universities and Colleges, Schools and Hospitals, Chiefs of
Financial and Management Services, Chief Accountants/Heads of Accounting
Units, Budget Officers, Disbursing Officers, Cashiers, COA State Auditors and All
Others Concerned

SUBJECT: Implementation of a New Disbursement System Pursuant to Memorandum

Order No. 12 deated June 10, 1986 Directing the Improvement of the Cash
Disbursement Operations of the Government thru the Treasury Warrant Funding
Scheme

1.0 Purposes

1.1 To streamline the accounting system and disbursement operations of the

government by instituting a simplified disbursement scheme through the
issuance of funding treasury warrant;

1.2 To prescribe budgetary and accounting system and procedures in the

implementation of the New Disbursement Scheme;

1.3 To minimize/eliminate irregular cash disbursements; and

1.4 To facilitate the timely preparation of treasury/bank reconciliation statement.

2.0 Coverage

2.1 This Circular shall cover all funds appropriated in the General Appropriations Act
(GAA), Public Works Acts and other supplemental appropriations for the
different departments including their bureaus, offices and agencies/hospitals. It
shall, likewise, cover all other funds deposited with the Bureau of the Treasury
whether requiring special budget or not including the Special Accounts
maintained by the National Government Agencies and those maintained by
Government Corporations performing regulatory functions such as the
Philippine Ports Authority, Philippine Coconut Authority, Sugar Regulatory
Administration and Others.

2.2 Pilot department/agencies covered by Joint Circular Nos. 4-86 and 5-86 shall
now follow the provisions of this Circular

3.0 Exemptions

This Circular shall not apply to the following:

 3.1 Type "A" treasury warrants issued to personnel of the Department of Education,
Culture and Sports (DECS), Department of National Defense, Department of
Justice, Commission on Elections and all other agencies using Type "A"
warrants pending revisions of their existing centralized payroll system.

3.2 Requirements of the Bureau of the Treasury for debt service, subsidy and equity
contributions as well as loans outlays given to government corporations.

3.3 Utilization of foreign collections of the Department of Foreign Affairs, Bureau of

Internal Revenue, Department of Trade and Industry and DECS.

3.4 Constructive cash requirement/disbursement scheme covering loan availments

for Foreign Assisted Projects (FAPs) for which Non-Cash Availment Authority
(NCAA) shall be issued by DBM implementing agencies.

3.5 Revolving Fund transactions for business-type activities authorized to be

deposited with the government depository bank.

Notwithstanding these exemptions, agencies shall continue to submit

accountability reports required under existing regulations to DBM-National Accounting
and Finance Bureau (NAFB).

4.0 General/Policy Guidelines

4.1 The operation of the Treasury Checking Account for Agencies (TCAA) System
shall be discontinued as soon as the agency is covered by the treasury warrant
funding scheme.

4.2 The decentralized/sub-allotment accounting procedures established between

the Agency Central Office (ACO) and Agency Regional Office (ARO)/Operating
Units (OUs) shall be modified in accordance with the procedures prescribed
herein.

4.3 Treasury Warrants Type "B" shall, henceforth, be used only by the Department
of Budget and Management (DBM) to fund agency operations instead of Notice
of Cash Disbursement Ceiling (NCDC). It shall also be used by other agency
central offices not yet covered by the treasury warrant funding scheme. The
Advice to Release Treasury Warrant/NCDC shall now serve as a budget control
mechanism of DBM only.

4.4 Funding warrants shall be issued and deposited by DBM in an authorized

government depository bank/accredited private commercial bank for the account
of the respective ACOs, Staff Bureaus, AROs and Attached agencies including
their OUs maintaining set of books of accounts and where there are PNB/LBP
branches and other authorized servicing bank branches funding commercial
checks shall be issued by the AROs to OUs.

4.5 Funding warrants shall be the bases of authorized government depository

banks/other servicing banks to credit the regular current account agencies
concerned. In no case shall other deposits be made to this account except the
 funding warrant(s) issued by DBM and refund of cash advances made within the
year when the corresponding obligations and necessary adjustment were
effected. Moreover, transfer/realignment of deposits from one
agency/office/bureau/organizational unit to another within a department shall be
done only upon prior approval of and notice from DBM.

4.6 Separate current accounts shall be opened for each fund (fund codes 101, 102,
151, etc) to facilitate the preparation of bank reconciliation statement.

4.7 Commercial Checks shall henceforth be used for agency disbursements

chargeable against the bank account. Disbursement shall not, at any one time
exceed the total cash balance of the current account minus the P1,000.00
minimum cash balance requirement to the bank.

4.8 Any balance of the bank account at the end of each month may be used in the
succeeding month(s) of the same year.

4.9 Subsequent issuance of funding warrants shall be made by DBM after

evaluation of the Monthly status of Funds submitted by agencies.

4.10 The transfer of funds from a source agency to an implementing agency thru
issuance of a journal voucher shall be discontinued. Henceforth, authorized
transfer of funds shall be done through the issuance of commercial check(s)
which shall be taken up by the recipient agency as trust liability and deposited to
a separate current account with the authorized government depository
bank/servicing bank.

4.11 The provisions of Joint Circular Nos. 9-81 and 9-81A shall still be enforced
provided they are not inconsistent with the provisions of this circular.

4.12 All Fiscal Agency service (FAS) transaction shall be charged against the regular
current account of the agency concerned. However, availments from the
foreign currency denominated Special Account-Working Fund of the Bureau of
the Treasury (BTR with the Central Bank of the Philippines (CBP) provided
under Joint Circular No. 5-82A dated October 26, 1983, shall be in accordance
with the procedures herein prescribed.

4.13 The depository/servicing banks shall furnish the department/agencies/ offices

concerned with bank statements within (10) days after the end of each month
which shall be the basis of the agencies in preparing the monthly reconciliation
statements.

4.14 Balances pertaining/equivalent to the unobligated allotment as of the end of the

year shall be withdrawn from the bank account and deposited by the agency to
BTR. Please refer to item 7.1 (k) for the details.

4.15 All collections except refund of current year's cash advance and transfer of
funds provided in paragraph 4.10 hereof, shall be deposited with the BTR, thru
the authorized government depository bank (PNB, LBP, DBP, Amanah Bank)
only.
5.0 Specific Guidelines

5.1 The BTR shall furnish departments/agencies/offices copies of the

agency/treasury account current statements for the treasury disbursement
accounts 8-70-702, 8-70-703 and 8-70-709 as of the end of the month
preceding the implementation of the New Disbursement System (NDS).
Adjustments of the reconciling items shall be made in the Treasury or Agency
books, as the case may be. The usual reconciliation statement for all deposits
made with the National Treasury under account 8-70-700 shall continue to be
prepared and submitted.

5.2 Balances of all treasury disbursement accounts 8-70-702, 8-70-703, and 8-70-
709 of departments/agencies as of the applicable quarter end shall be closed to
the National Clearing Account - CDC (account 0-99-200). Copies of the journal
Voucher (JV) shall be furnished to BTR as a basis for the responding closing
entry.

5.3 All unused TCAA checks and Type "B" treasury warrants as of the applicable
quarter end shall be inventoried by the disbursing officers, certified correct by
them, verified by the procedures prescribed under Joint COA-MOF-MBM
Circular No. 7-81 dated August 31, 1981 and Treasury Memorandum Circular
No. 8-73 dated June 27, 1973. Banks shall no longer honor TCAA checks and
treasury warrants Type "B" issued by department/agencies covered by this
Circular after the applicable quarter end except funding warrants issued by
DBM.

5.4 The use of the following reciprocal accounts shall be discontinued:

8-71-199-1 8-81-199-1
8-71-199-2 8-81-199-2
8-71-199-3 8-81-199-3
8-71-191 8-81-191
8-71-192 8-81-192
8-71-193 8-81-193

The balances of these accounts shall be closed/converted in accordance with

the accounting entries shown in Annex "A". However, the reciprocal accounts
shall first be reconciled and adjusted before the required conversion to the
appropriate account(s) shall be made.

5.5 The use of account Cash Disbursement Authority (CDA) and Cash Earmarked
for CDA represented by account codes 8-99-300 and 8-99-703 presently being
used by the BTR to control agency disbursements shall be discontinued. Hence,
the balances of these accounts after charging all treasury disbursements made
before the applicable quarter end by departments/agencies shall be closed as
of the same date.

5.6 Unless authorized, bank accounts presently being maintained for the
operational and other requirements of departments/agencies/regional offices
including the balance of the BTR-Agency funded account (8-70-303) and funds
pertaining to trust receipts shall be discontinued and the book balances as of
 the applicable quarter end shall be closed and remitted to the BTR duly covered
by a remittance advice.

The authorization herein referred to is in the provision of the law creating

the trust receipt, that such collection may be deposited with authorized
government depository bank.

The last check to be issued against said bank account shall be the check
for deposit with the BTR. If the allotments were obligated in prior years when
such bank accounts were opened, the corresponding accounts payable may be
liquidated upon receipt of the funding warrant duly requested from the DBM. If
the allotments were obligated within from the current year, agencies shall also
close the bank account but payment of unpaid obligations shall be made
against the Current Account.

Operating units presently receiving funding checks for current operations

pursuant to Budget Circular No. 249 shall continue to maintain their bank
accounts.

5.7 A copy of the Work and Financial Plan (WFP) and any modifications thereto,
submitted by agencies in accordance with NBC No. 386, dated December 10,
1986 shall be forwarded to the DBM-NAFB, not later than fifteen (15) days
before the date of implementation of the NDS by the agency concerned.

Requests for funding requirements covering accounts payable, trust

receipts, revalidation of CDC, etc. shall be submitted direct to the NAFB.

5.8 Based on the agency WFP, the funding treasury warrants shall be issued
monthly by DBM for deposit to the regular current account(s) of
departments/agencies/ ROs/OUs to finance their operations in accordance with
the Memo of Agreement between DBM and PNB/Land Bank of the Philippines
(LBP) and other authorized servicing banks.

5.9 The Advice of Allotment covering releases from the National Assistance to Local
Government Units (NALGU) and other Lump-sum appropriation (LSA) in favor of
the Local Government Units (LGU) shall be released to the NAFB which shall
record the allotment and prepare the corresponding funding warrants.

5.9.1 Funding warrants covering the "Sharing of National Revenue",

specifically internal revenue and specific tax allotments and LGUs
shares from the second/subsequent sales tax to cities and municipalities
and "Local Government Revenue Stabilization Fund" shall be drawn and
deposited in favor of the Treasurer of the Philippines supported by a list
of beneficiary LGUs. The BTR shall, in turn, issue checks or effect bank
transfers corresponding to the respective shares of the various
beneficiary LGUs, deducting from such checks the unremitted collections
of the City/Municipal treasurers concerned that should have accrued to
the National Government.

5.9.2 Funding warrants covering all other LSAs intended for LGUs shall be
drawn in favor of the respective LGU and shall be released to them
 directly.

5.10 DBM shall submit to the special Clearing Division (SCD), BTR a Daily Report of
Funding Warrants Released and Cancelled (DRFWRC) supported by legible
carbon copies of treasury warrants issued and copies of NFWI. Likewise, it shall
submit to the Cash Division, BTR and Treasury Vault Auditor the Report of TWs
Countersigned by Agency Officials (RTWCAO) at the same time the original
warrants are released.

5.11 BTR shall open an account current for the DBM-NAFB covering funding
warrants issued under the Scheme.

5.12 The ACOs shall open regular current account(s) for their operational expenses
with the PNB/LBP or other duly authorized servicing banks prior to their
scheduled implementation of the NDS. The AROs and OUs, shall, likewise,
open regular current accounts which shall be used for their operations prior to
the initial receipt of the credit advice from the authorized servicing banks.

5.13 DBM shall directly notify the ACOs, staff bureaus, attached agencies and AROs
and in the case of DOH and DECs, the OUs, of the monthly funding warrants
deposited in their respective current accounts. Medical Centers, Regional
Hospitals, Sanitaria and District Hospitals shall, upon receipt, send a copy of the
servicing bank's credit advice to the Regional Health Office or Provincial Health
Office concerned.

5.14 For expediency, the ARO should at the outset determine the funding allocation
of its OUs, maintaining complete books of accounts, and situated in places
where there are PNB/LBP and other servicing banks so that the funds shall be
transferred direct to the servicing bank of solid OUs identifiable units.

For purposes of this Circular, OUs refer to organizational units below the
ARO's level except Division Offices of DECS. OUs may be categorized into:

a. those with complete set of books of accounts

b. those without books of accounts

For OUs without books of accounts, AROs shall request their respective
depository banks to make necessary bank transfer from their Current Account to
the respective bank accounts of such OUs. The distribution shall be based on
the list furnished the banks.

5.15 Initial funding deposit shall cover one (1) month requirement of
departments/agencies/offices/ROs and OUs. The funding requirement for the
ensuing month shall be issued automatically by DBM, ten (10) days before the
start of the month. Thereafter, the issuance of the monthly funding warrants
shall depend on the submission of the Monthly Status of Fund (MSF) (Format
shown in Annex "E") by the agencies as illustrated below:

Date Funding Period Covered Month Covered Date DBM

Warrant Should By Funding By The Should
 be Forwarded Warrant MSF Receive
to PNB MSF
-------------------- --------------------- --------------------- --------------
June 20, 1987 July, 1987 - -
July 20, 1987 Aug., 1987 - -
Aug. 20, 1987 Sept., 1987 July, 1987 On or before
Report Aug.15, 1987
Sept.20, 1987 Oct., 1987 Aug., 1987 On or before
Report Sept.15,1987

5.16 ACOs, AROs and OUs shall issue commercial checks in numerical sequence to
cover their operational requirements chargeable against the Current Account.

5.17 The regular Current Account shall have a minimum cash balance of P1,000.00,
as required in the amended Memo of Agreement executed between the DBM
and PNB/LBP/other servicing banks.

5.18 Agencies authorized to avail of the BTR Special Account - Working Fund
provided under item no. 4.12 above shall, as usual, submit to the CBP thru the
BTR their request for FAS. The FAS shall be supported by a letter authority
from the agency concerned to its servicing bank to debit/charge its account in
favor of the CBP. Upon approval of the request by CBP, the Servicing Bank in
turn issues debit authority to CBP to charge its account with CBP for the peso
equivalent of the approved FAS plus charges and CBP shall credit the same
amount against the regular Demand Deposit Account of the Treasurer of the
Philippines.

The agency concerned shall submit a copy of the approved FAS and the
Debit Authority of the Servicing Bank to BTR for endorsement to CBP. The
agency shall record the transactions by using a JV for the disbursement with the
approved FAS and letter authority as supporting documents.

5.19 Cash advance refunded within the year shall be duly acknowledged by an
official receipt and shall be deposited to the agency current account. However,
refund of cash advance extended/given in prior year(s) shall be deposited with
the BTR.

5.20 Separate current account(s) may be opened by agencies for collection(s)

authorized by law to be deposited in an authorized government depository bank
for the implementation of projects as provided for under JC Nos. 9-81 and 9-
81A, for which such collection(s) are received using account 8-70-300. In no
case shall this be mingled with the current account established under the
funding warrant scheme.

5.21 The cashier shall prepare and submit the Weekly Report of Checks Issued to
the Accounting Division on the 7th, 15th, 22nd and end of the month under
report.

6.0 Responsibilities

6.1 Departments/Offices shall:

a. Designate the official(s) authorized to sign and countersigned checks,
authenticating/recommending official(s) and other official(s) authorized to
deal with servicing/depository bank.

b. Comply with the requirements of the servicing bank regarding the

maintenance and operation of the current account.

c. Request DBM for the issuance of funding warrant covering trust receipts,
accounts payable, revalidation of CDC, etc.

d. Prepare inventory report of unused blank TCAA checks and Treasury

Warrants Type "B" as of the last day of the month immediately preceding
the implementation of the System by listing therein the inclusive serial
numbers of the unused blank TCAA checks and TW Type "B" to be
certified by the custodian and verified by the State Auditor. This report
shall be prepared in five (5) copies to be distributed as follows:

Original - State Auditor

Duplicate - Special Clearing Div., BTR
Triplicate - Treasury Provincial Fiscal Examiner (TPFE)
Quadruplicate - Agency File
Quintuplicate - Administrative Service (AS) BTR

The custodian shall immediately surrender the unused TCAA checks and
TWs to the state auditor pending final disposal/burning.

e. Dispose the unused blank TCAA checks and Treasury Warrants Type "B"
in accordance with the procedures prescribed under Joint COA-MOF-
OBM Circular No. 7-81 and Treasury Memorandum Circular Order No. 8-
73. A certificate of burning attesting to the disposition of the aforesaid
TCAA checks and TWs shall be prepared in five (5) copies to be
distributed as follows:

Original - State Auditor

Duplicate - SCD, BTR
Triplicate - TPFE concerned
Quadruplicate - Agency File
Quintuplicate - AS, BTR

f. Require all Deputized Disbursing Officers (DDOs) to surrender

deputation appointments to TPFE concerned and request cancellation of
the deputation of signing and countersigning officials before the
implementation of the System.

g. Furnish a copy of the Certificate of Last TCAA Check and TW"B" issued
as of the last quarter immediately preceding the implementation of the
System to the TPFE concerned and SCD, BTR as well as State Auditor
of the agency concerned.

h. Submit the Monthly Bank Reconciliation Statement and other required

 accountability reports and related financial statements to central fiscal
agencies concerned.

i. Post the appropriate Fidelity bonds with the BTR for agency officials
authorized to sign and countersign commercial checks.

6.2 The Philippine National Bank (PNB)/Land Bank of the Philippines (LBP)/other
authorized servicing banks shall:

a. Effects the opening of the current account(s) for the offices/operating

units of the departments/agencies/offices consistent with the terms of the
amended Memorandum of Agreement with DBM.

b. Credit to the current account(s) of the agencies concerned the deposits

made by DBM as indicated in the Notice of Funding Warrants Issued
(NFWI).

c. Acknowledge receipt of all deposits made by DBM for the Current

Accounts.

d. Send to the departments, agencies, bureaus/offices. ROs and OUs

concerned the credit advices covering the deposits made by DBM for
credit to their respective Current Account(s).

e. Service the current account transactions of departments/ agencies/

offices/ROs/OUs.

f. Render within ten (10) days after the end of the month the bank
statements to the agencies/offices, copy furnished the BTR, NCAD thru
the depository/servicing bank Head Office.

g. Submit within ten (10) days after the end of the month to the NAFB,
DBM and Fiscal Management Div. (FMD), BTR the Monthly Summary
Report of Bank Balances of Government Agencies covered by the NDS
supported by the actual reports of PNB/LBP/other authorized Servicing
Bank branches.

6.3 The Department of Budget and Management shall:

a. Accomplish the specimen signature cards required by the BTR and the
authorized depository/servicing banks.

b. Determine the monthly funding requirements of the departments/

agencies/offices in undertaking their regular/special programs using the
WFP as basis in the preparation of the funding treasury warrants.

c. Requisition blank treasury warrants from the BTR and issue monthly
funding warrants using the prescribed agency and fund codes for
deposit to the respective agency's current accounts(s).

d. Issue within ten (10) days before the start of each month the funding
 warrants to the credit of the current account(s) of departments/agencies/
offices/ROs and OUs based on actual needs. However, the funding
warrants for the first month of the year shall be issued on the first
working day of the month.

e. Submit the Daily Report of Funding Warrants Issued and Cancelled to

the SCD-BTR supported by a duplicate copy of the Funding Warrants
and NFWI, copy furnished the Cash Division, BTR, BTR Auditor and
Accountancy Office, COA.

f. Issue the necessary agency and fund codes to the AROs for purposes of
remitting their collections and the amount pertaining to the unobligated
allotment.

g. Post the appropriate Fidelity bonds with the BTR for DBM officials
authorized to sign and countersign treasury warrants.

h. Maintain appropriate books and records and submit trial balances to

COA in accordance with COA Circular No. 84-89C.

i. Prepare treasury reconciliation statements and other related reports on

the status of the treasury disbursement for the departments.

j. Submit the Monthly Report of Accountability of TWs (General Form 16A)

to the State Auditor, copy furnished the SCD, BTR.

k. Deduct from the monthly funding warrant(s) of agencies the amount

pertaining to unremitted balance representing year-end unobligated
allotments.

l. Maintain separate books of accounts to record allotments released to

LGUs.

m. Submit the Report of TWs Countersigned by Agency Officials

(RTWCAO) the original to the Cash Division, BTR and the duplicate to
the Treasury Vault Auditor (both originally signed) at the same time the
original warrants are released.

6.4 The Bureau of the Treasury shall:

a. See to it that funds are available to cover funding treasury warrants.

b. Reflect as a footnote in the National Treasury Daily Cash Statement, the

total month-end bank balances of the accounts of
departments/agencies/ offices.

c. Consolidate the agency balances shown in the Monthly Status of Fund

by object of expenditures to determine the actual payments made by the
departments/agencies/offices against the funding warrants.

d. Report to DBM any discrepancy found between the original funding

 warrant and its duplicate submitted to the BTR.

e. Notify DBM whenever free cash balances of the Treasury with the CBP
are relatively low.

f. Dishonor TWs not reported by DBM. Dishonor likewise, TCAA

checks/TWs issued by agencies that have already adopted the system.

g. Submit monthly to DBM-NAFB the Statement of Account Current for TW

"B" Issued and TW "B" paid.

h. Issue checks to LGUs covering the LGUs shares from the

second/subsequent sales tax to cities and municipalities, internal
revenue and specific tax allotments and local government revenue
stabilization fund, after deducting from the total allotment released by the
DBM the unremitted collections of the local treasurer that should have
accrued to the National Government.

i. Return dishonored TCAA check to the issuing agency for replacement

with a commercial check to be charged against its current account.

6.5 The Commission on Audit (State Auditor) shall:

a. Confirm fund releases made to the agencies, AROs/OUs.

b. Ensure that expenditures charged against the current account are in

accordance with the regular and special programs authorized under the
General Appropriations Act.

c. Assure the prompt preparation, submission and verification of the

treasury/bank reconciliation statements.

d. Ensure that the cash pertaining to the unobligated allotment at year-end

is remitted to the BTR.

e. Ensure that no TCAA/TW shall be issued by an agency upon the latter's

adoption of the System.

f. Ensure that funding warrants issued by DBM are duly acknowledged and
accounted by recipient agencies.

7.0 Specific Instructions

7.1 The Central Office Chief Accountant/Budget Officer/ Cashier/Disbursing Officer

shall:

a. Record the usual release of allotment of ACO only upon receipt of the
AA. Sub-allotment to AROs shall, likewise, be recorded.

b. Record the cash deposited in the agency bank account upon receipt of
the credit advice from the depository/servicing bank concerned.
c. Inform the cashier of all deposits made to the ACO regular account upon
receipt of the NFWI.

d. Maintain control records of ARO's allocations of allotments and funding

warrants received.

e. Record the expenditures in the Journal and Analysis of Obligations

(JAO).

f. Record the issuance of commercial checks for payments of expenditures

and/or prior years accounts payable upon receipts of the Reports of
Checks Issued (format provided in Annex F), from the Disbursing Officer.
Issuance of commercial checks shall be within the limits of the current
account(s) which shall not exceed the P1,000.00 minimum cash balance
requirement of the bank.

g. Maintain Journal of Checks Issued for commercial checks drawn against

the current account(s) in accordance with the format provided in Annex
G hereof.

h. Prepare and submit the Monthly Status of Funds to DBM in accordance

with the format shown in Annex E. This report shall be the basis of DBM
in the issuance of funding warrants for deposit to the agency current
account. It shall be prepared by fund and by object class of
expenditures indicated in the NFWI covering the period under report.

i. Consolidate the Monthly Status of Funds submitted by the Regional

Offices and prepare a Consolidated Monthly Status of Funds for
submission to DBM, copy furnished the BTR (Fiscal Management
Division).

j. Submit to the depository/servicing bank daily or as often as necessary

the original and one (1) copy of the "Agency Advice of Commercial
Checks Released and Checks Cancelled" in accordance with the format
hereto attached as Annex "H".

k. Deposit direct to the BTR at year-end, cash in bank pertaining to the

unobligated allotment as of December 31 of each year. Likewise, require
all regional offices to deposit direct to the BTR the cash in bank
pertaining to the unobligated allotment as of the end of each year. The
deposit shall be covered by remittance advice. A journal voucher shall
be drawn for the purpose using as supporting documents a copy of the
remittance advice and a duplicate copy of the check issued/released.
The following phrase shall be indicated in the check: "For deposit only
with the Bureau of the Treasury for credit to the account of (depositing
agency)."

l. Notify DBM (NAFB) and COA (Accountancy Office) of the year-end

deposits in item 7.1 (k) by furnishing a copy of the covering closing and
adjusting journal voucher on or before February 28 of each year.
 m. Prepare pertinent accountability reports and consolidated year-end trial
balance for submission to fiscal agencies.

n. Furnish NAFB-DBM a copy of the agency closing journal voucher(s).

o. Submit to COA the Monthly Bank Reconciliation Statement, copy

furnished NAFB-DBM.

7.2 The AROs Chief Accountant/Head of accounting Unit/ Budget

Officer/Cashier/Disbursing Officer shall:

a. Record only the Sub-allotment Advice received.

b. Record in the proper journals the AROs allocations including those for
the OUs under coverage immediately upon receipt of the NFWI.
Likewise, record in the subsidiary ledgers the disbursements made
against said subsidiary ledgers the disbursements made against said
allocations including those from OUs without accounting units.

c. Record the cash deposited in their Bank Account upon receipt of the
credit advice from the PNB/LBP/duly authorized servicing bank branch.

d. Record funding check as cash advance with the corresponding

obligation if recipient OUs do not maintain complete set of accounting
books. The usual reports in the liquidation of cash advance shall be
required. OUs with complete accounting books presently using the
procedure prescribed under Budget Circular No. 249 dated September 5,
1975 shall continue adopting said procedure. The applicable accounting
entries for these transactions are shown in Annex "B".

e. Submit direct to the DBM-NAFB a copy of the Monthly Status of Funds,

copy furnished BTR and the ACO. The ACO shall use said copy for
consolidation and submission to central fiscal agencies as herein
required.

f. Deposit to the BTR income collected during the year and any balances
of cash in bank pertaining to the unobligated allotments as of December
31 of each year including those balances returned by the OUs.

g. Furnish DBM of the voucher and the closing journal voucher(s)

pertaining to the year-end remittance made to the BTR.

8.0 Illustrative Accounting Entries:

The accounting entries to be followed by all concerned are provided under the following
annexes.

Annex A Closing and Conversion Entries to be done by agencies immediately

before the adoption/implementation of the NDS.
 Annex B Accounting entries reflecting the typical transactions of NDS - For
agencies already operating under the NDS.

Annex C For agencies maintaining Special Accounts in the General Fund.

Annex D Specifically of the Department of Health Central Office, Regional Offices,

attached agencies, special and district hospitals, medical centers and
sanitaria.

9.0 Penal Clause

The signing and countersigning officials of the departments/agencies shall be

jointly and severally liable for all checks issued in excess of the authorized minimum
balance of the current account.

10.0 Repealing Clause

Provisions of circulars, memoranda and/or regulations inconsistent herewith are

hereby revoked or modified accordingly.
11.0 Effectivity

This circular shall take effect immediately.

(SGD.) JAIME V. ONGPIN (SGD.) GUILLERMO N. CARAGUE

Secretary of Finance Secretary of Budget & Management

(SGD.) EUFEMIO C. DOMINGO

Chairman
Commission on Audit

Concurred In:

(SGD.) EDGARDO B. ESPIRITU (SGD.) DEOGRACIAS N. VISTAN

President President
Philippine National Bank Land Bank of the Philippines

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