CH 1.0-UNDERSTAND CASH MANAGEMENT

Handbook on Cash Examination Chapter 1 3
Chapter 1
UNDERSTAND CASH
MANAGEMENT
Chapter Overview
To ensure the effectiveness of the cash examination that you will

conduct, you must first have a thorough knowledge of the cash
management system in the agency. In this chapter we will
identify who the accountable officer is and review the applicable
laws, rules and policies in cash management and the
responsibilities of the officers in ensuring that the funds are kept
and disposed off in accordance with said laws and rules. We
shall also look at how the agency collection and disbursement
systems work. All these are to be used as the standards in your
conduct of the examination
Learning Objectives
At the end of the Chapter, you will be able to:
* Tell who is an accountable officer;

* Tell his/her responsibilities;
* Enumerate some laws, rules and policies in cash
management; and
* Enumerate the components of the agency collection and
disbursement system and some guidelines on how the
System works.
Basic Concepts
WHAT IS AN ACCOUNTABLE OFFICER?
The Glossary of Terms for Auditors defines accountable officer

as "the person who by reason of his office or duty ought to be or
deemed to be in possession or custody of government funds or
property." Thus there are accountable officers for government
funds such as treasurers, cashiers, disbursing officers, collecting
November 2002 Professional Development Center (PDC)

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Commonwealth, Quezon City
officers, tellers and accountable officers for government

property such as the property officer or the supply officer.
ACCOUNTABILITY, RESPONSIBILITY AND

LIABILITY IN CASH MANAGEMENT
There are certain accountability, responsibility and liability

requirements inherent in the work of the Head of the Agency
and the accountable officers. The auditor should be familiar with
them and in his/her examination must determine that these are
undertaken efficiently and effectively.
1. The Head of a government agency and all those who exercise

authority over the financial affairs, transactions, and
operations of the agency, shall take care of the management
and utilization of government resources in accordance with
law and regulations, and that they are safeguarded against
loss or wastage to ensure efficient, economical, and effective
operations of the government (Sections 2 and 4 (4), PD
1445). As such, he is immediately and primarily responsible
for all government funds and property pertaining to his
agency. He shall also be responsible in ensuring the proper
granting, utilization and liquidation of all cash advances in
accordance with existing rules and regulations.
2. The persons entrusted with the actual possession or custody

of the funds under the agency head shall be immediately
responsible to him without prejudice to the liability of either
party to the government (Section 102, PD 1445).
3. The person accountable or having custody of funds shall,

immediately notify the Commission on Audit or the Auditor
concerned, when loss occurs while they are in transit or the
loss is caused by fire, theft, or other casualty or force
majeure, and within thirty (30) days or such longer period as
the Commission or Auditor may in the particular case allow,
shall present his application for relief, with the available
evidences (Section 73, PD 1445).

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4. When an officer accountable for government funds or

property absconds with them, dies or becomes incapacitated
in the performance of his duties, the proper agency head
shall designate a custodian to take charge of the funds and
property until a successor shall have been appointed and
qualified. The agency may appoint a committee to count the
cash and take an inventory of the property for which the
officer was accountable and to determine the responsibility
for any shortage therein. One copy of the inventory and of
the report of the Committee duly certified shall be filed with
the Commission on Audit but the findings of the committee
shall not be conclusive until approved by the Commission or
its duly authorized representative (Sec. 78(1), PD 1445; Sec.
103 GAAM Vol. I).
If the absconding, deceased, incapacitated, or superseded

officer is accountable for funds or property of a province or
city, the custodian and committee shall be designated by the
Secretary of Finance, and if accountable for municipal or
barrio (barangay) funds or property by the provincial
treasurer. In all other respects, the above prescribed
proceedings shall be observed (Sec. 78 (2), PD 1445).
If the absconding, deceased, incapacitated, or superseded

officer is responsible to another who is accountable, the
latter may himself designate the committee or take other
lawful measure for the protection of his interest (Sec. 78, PD
1445).
5. The Commission on Audit shall be furnished with

photographs of collecting and/or disbursing officers upon
their filing of application for bond with the Fidelity Fund on
General Forms No.57 (A) and 58 (A).
Photographs submitted shall be turned over by the Unit

Auditor to the COA Director concerned, upon proper receipt,
who will keep a permanent, confidential and systematic file
thereof, in a locked cabinet. No photograph shall be
withdrawn from the file without the prior approval of the
Director concerned.

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6. Government cashiers are prohibited from holding positions

as Cashiers or treasurers of savings and loan association or
organization (Section 67,GAAM Vol. I)
7. Each accountable officer with a total accountability of

P2,000.00 and above shall be bonded with the Bureau of
Treasury Fidelity Bond Division. Those whose
accountability is less than P2,000.00 shall be insured in the
fidelity bond only when COA or its authorized representative
shall in his discretion so direct. The amount of the bond shall
depend on the total cash accountability (cash and cash items)
of the officer as fixed by the head of the agency. In no case
shall cash advances be granted in amounts less than
P2,000.00 each just to circumvent this requirement (Sec.
182, GAAM Vol. I).
8. The schedule of the bonds necessary for the cash

accountability of the accountable officer is in pursuant to
Treasury Order No. 1-99, please refer to Appendix 1.
9. Moreover, when a person insured or about to be insured in

the fidelity fund is not, in the judgment of the COA
Chairman or Treasurer of the Philippines, a safe and
conservative risk, or habits, the facts shall be reported to the
Secretary of Finance, who, if he disapproves the risk, will
recommend to the President of the Philippines or to the
proper Head of Department the removal or relief of the
officer of such duties, which require insurance (Sec. 320,
Revised Administrative Code).
10.Unit Auditors and provincial and city auditors shall fix and
approve for the COA Chairman the bonds of all accountable
officers in their respective jurisdictions.
11. No sheriff or officer whose fidelity is or has been insured in

the fidelity fund shall leave or attempt to leave the
Philippines until he shall secure a certificate from the COA
Chairman showing that his accounts have been finally settled
(Sec. 335, Revised Administrative Code).

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Accountability of Cash Accountable Officers
Every officer of any government agency whose duties permit or

require the possession or custody of government funds shall be
accountable thereof in accordance with law and shall be
properly bonded in accordance with law (Section 66, GAAM
Vol. I and Section 305 (f), RA 7160).
Liability of Cash Accountable Officers
1. Expenditures of government funds or uses of government

property in violation of law or regulations shall be a personal
liability of the official or employee found, to be directly
responsible therefor (Section 103, PD 1445).
2. Every officer accountable for government funds shall be

liable for all losses resulting from the unlawful deposit, use,
or application thereof and for all losses attributable to
negligence in the custodianship of the funds (Section 105
(2), PD 1445).
3. An officer who fails to notify and apply for relief from cash
accountability within the prescribed time, in time of loss,
shall not be relieved of liability or allowed credit for any
such loss in settlement of his accounts (Sec. 73, PD 1445).
4. No accountable officer shall be relieved from liability by

reason of his having acted under the direction of a superior
officer in paying out, applying, or disposing of the funds or
property with which he is chargeable, unless prior to the act,
he notified the superior officer in writing of the illegality of
the payment, application, or disposition. The officer directing
any illegal payment or disposition of the funds or property
shall be primarily liable for the loss, while the accountable
officer who fails to serve the required notice shall be
secondarily liable (Section 171, GAAM Vol. I; Section 106,
PD 1445).
5. Any public officer who unlawfully leaves or attempts to

leave the Philippines without securing a certificate from the

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COA Chairman showing that his accounts have been finally

settled, shall be punished by “arresto mayor”, or a fine
ranging from 200 to 1,000 pesos, or both (Article 219,
Revised Penal Code).
APPLICABLE POLICIES ON CASH MANAGEMENT
An examiner when examining the cash and accounts of a

Collecting and/or Disbursing Officer shall determine whether
the accountable officer concerned observes/complies with the
following laws, rules and policies:
1. The accountable officer shall be a holder of permanent

position in the government or duly designated to be a
custodian of government funds. As such, s/he shall be
properly bonded in accordance with law.
2. The highest standards of honesty, objectivity and consistency

shall be observed in the keeping of accounts to safeguard
against inaccurate or misleading information.
3. The head of the agency shall be directly responsible to

install, implement, and monitor a sound system of internal
control.
4. In relation to the keeping of cashbook, the AO shall

reconcile her/his cashbook entries with the accounting
records at least quarterly.
5. It is the common practice of banks not to accept mutilated

bills unless the serial numbers at both ends are intact. Refer
also to CB Circular 10, Feb. 24,1949 or Section 58 of RA
265.
6. An accountable officer, upon ceasing to act in his/her official

capacity as such, shall submit to the Auditor of the agency
concerned a report of his/her accountability.
Any remaining balance of such accountability shall be

deposited in the proper treasury without unnecessary delay.

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When the AO ceases to be one, all his/her cashbooks shall be

submitted to the Chief Accountant or Local Treasurer and
shall form part of the accounting record.
No clearance shall be issued by the Chief Accountant or

Local Treasurer should the accountable officer fail to submit
his cashbooks as required (Section 181(e), GAA Vol. I).
7. Cashiers and disbursing officers are prohibited from acting as

cashiers or treasurers of savings and loan associations and
other organizations (Sec. 67 GAAM Vol. I).
8. Transfer of government funds from one officer to another

shall, except as allowed by law or regulation, be made only
upon prior direction or authorization of the Commission on
Audit or its representative (Sec. 104, GAAM Vol. I).
9. At the close of each month, depositories shall report to the

Agency Head, in such form as he may direct the condition of
the agency account standing on their books. The head of the
agency shall see to it that a reconciliation is made between
the balance shown in the reports and the balance found in the
books of the agency.
10.Every cash accountable officer shall record his/her

transactions in the prescribed official cashbook. Entries in
the cashbook shall be made personally by her/him. However,
in offices where the volume of transactions is heavy, the AO
may be assisted in recording in the cashbook by a
subordinate duly designated by the agency head with the
concurrence of the auditor concerned. The work of his/her
assistant shall be under his/her close supervision and direct
responsibility.
11.A newly appointed or designated cash accountable officer

shall start with a new cashbook. Before discharging his/her
duties, the new AO shall undergo training in the office of the
auditor on how to correctly record the transactions in the
cashbook and other matters related to his /her work. For

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record purposes, the completion of such training shall be

noted by the Auditor in the inside cover of the cashbook.
12.The cashbook shall be kept in the office of the AO and

placed inside the safe or cabinet when not in use. It shall not
be removed from his custody without the written approval of
the auditor concerned, and if removed, receipt shall be
secured from the recipient thereof.
COLLECTION SYSTEM
Records and Books of Accounts
Under the New Government Accounting System (NGAS), the

following are the records of the accountable officers and the
books of accounts maintained for collections:
National Government Agencies:
1. Cash Receipts Records (CRR)- to be used by the designated

Collecting Officer to record his/her collections and deposits.
Local Government Unit:
1. Cashbook – Cash in Treasury –shall be maintained by the

Treasurer to record collections and deposits to the bank
based on the Report of Collection and Deposit (RCD).
2. Cashbook – Cash in Bank – shall be maintained by the AO

to record deposits of collections and withdrawals from the
bank thru issuance of checks.
Books of Accounts Common to Both Sectors
1. Cash Receipts Journal (CRJ) - shall be used to record all

collections and deposits reported during the month for the
RA book. The source of entries are the JEVs which shall be
prepared based on the RCDs submitted by the Cashier or
Collecting Officers to the Accounting Unit or the official
receipts acknowledging collections.

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2. Cash Journal (CJ) - shall be used to record all collections

and deposits reported during the month for the NG books.
The source of entries is the Journal Entry Voucher (JEV)
which shall be prepared based on the Report of Collections
and Deposits (RCDs) submitted by the Cashier or Collecting
Officer to the Accounting Unit or the official receipts (ORs)
acknowledging collections.
3. General Ledger (GL) - this is a book of final entry

containing accounts arranged in the same sequence as in the
chart of accounts. Totals of columns in the special journals
and the individual entries in the General Journal (GJ) are
directly posted in this book. At the end of each month, the
accounts are footed and at the end of each year, these are
totaled, ruled and closed and the balance extracted to serve
as the opening balance of the new fiscal year. Likewise, the
account with balances shall appear in the trial balance.
4. Subsidiary Ledger (SL) - is a book of final entry

containing the details or breakdown of the balance of the
controlling account appearing in the GL. Postings to the SL
generally come from the source documents. Examples of GL
accounts which have SL are Cash-Collecting Officers, Cash
in Bank – Local Currency, Current Account, Accounts
Receivable, Notes Receivable, etc. The totals of the SL
balances shall be reconciled with their respective control
account regularly or at the end of each month. Schedules
shall be prepared periodically to support the corresponding
controlling GL accounts.
Reports
The following are the reporting requirements for collections

under the NGAS:
National Government Agencies
1. Report of Collections and Deposits (RCD)- shall be prepared

by the Cashiers/Collecting Officers to report all collections
received and deposits made. The report lists all the ORs

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issued in numerical sequence, including the cancelled ones.

The report shall be the basis in preparing the JEV for
recording in the CRJ/CJ, as the case maybe.
Local Government Units
1. Report of Collections and Deposits (RCD). – shall be

prepared by the following:
 Collectors – for collections received and remittances

made.
 Liquidating Officers – for collections received from
collectors and remittances to the Treasurer/Cashier.
 Treasurer/Cashier – for collections received from
liquidating officers, taxpayers and other sources and
deposits to depository banks.
The RCD consists of four (4) sections, namely: Section A

for Collections; Section B for Remittances/Deposits; Section
C for the Report on the Accountability for Accountable
Forms; and Section D for the Summary of Collections and
Remittances/Deposits.
The accountable officer shall certify as to the correctness of

the report. The liquidating officer/treasurer shall verify the
report and acknowledge receipt of collections/remittances.
The report and all supporting documents shall be submitted

to the Accountant for the preparation of the JEV.
2. Report of Accountability for Accountable Forms (RAAF). –

shall be used to report the quantity of accountable forms
received, issued or cancelled by the accountable officer as of
the end of the month.
Treasurers/Collectors/tellers and other accountable officers

shall render this report of accountability for accountable
forms at the end of the month for consolidation by the local
treasurer. Such report shall also be prepared in case of
transfer of office or accountability by the accountable officer.

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3. Consolidated Report of Accountability for Accountable

Forms (CRAAF). –shall be prepared by the Treasurer to
consolidate the RAAF of accountable officers. The
consolidated report accompanied by the individual reports
shall be submitted to the unit auditor concerned for
verification not later than the fifth day of the ensuing month.
Accountable Forms
Accountable forms are serially pre-numbered forms and/or

forms with fixed amount or official documents like Import Entry
Declaration for which the custodian thereof shall be
accountable.
Kinds of Accountable Forms
1. Accountable forms without money value

1.1 Official Receipts
1.2 Checks
1.3 Treasury Warrants
1.4 Money Orders
1.5 Cattle Registration Certificates
1.6 Marriage Licenses
1.7 Driver’s Licenses
1.8 Motor Vehicle Registration Receipts
1.9 Other specifically designed form(s)
2. Accountable forms with money value

2.1 Postage Stamps
2.2 Cash Tickets
2.3 Documentary Stamps
2.4 Money Orders
Guide of AO in Maintaining the Records:
A cash accountable officer (collecting and disbursing) is

required to maintain a cashbook for each fund handled to
facilitate verification of his/her accountability at any given time.
As such, he/she shall observe the following guidelines in the

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handling, custody and disposition of the cashbook as stipulated

in Section 174, GAAM Vol. I:
1. A newly appointed or designated AO shall start with a new

cashbook. Before discharging his duties, the accountable
officer shall be briefed by the Accountant and the Auditor on
the proper recording of transactions and other matters related
to his work.
2. The AO shall maintain separate cashbooks for salaries,

wages, allowances, etc. and for petty operating expenses. He
shall record the transactions in the prescribed cashbook
daily. He shall record each invoice/receipt/voucher
individually for the day or the totals for the day depending
on the volume of transactions.
3. All transactions shall be personally recorded by the AO in

the cashbook in ink and in the order they occur. The
cashbook shall be balanced, ruled and closed at the end of
the day.
4. The AO shall reconcile the cashbook balance with the cash

on hand daily. S/He shall foot and close the books at the end
of each month. The AO and the Accountant shall reconcile
their records (the cashbook and the subsidiary/general
ledger) at least at the end of each quarter.
5. If the agency is maintaining a checking or a combo account,

the AO shall maintain a passbook, a check register and a
bank cashbook. The entries in the bank cashbook shall be
reconciled with the accounting records as well as with the
bank statement at the end of each month.
6. The cashbook shall be kept at the office of the

AO and placed inside the safe or cabinet when not in use. It
may be taken from his/her custody only by the Auditor or an
official duly authorized by the Agency Head, who shall issue
the necessary receipt.
7. When the AO ceases to be one, the cashbook shall be
submitted to the Accountant and shall form part of the

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accounting records. No clearance shall be issued to an AO if

she/he fails to submit the cashbook as required.
Specific Policies on Collections
1. Except as may otherwise be specifically provided by law

or competent authority all moneys and property officially
received by a public officer in any capacity or upon any
occasion must be accounted for as government funds and
government property (Sec. 42, Chapter 7, Title I (B) Book V,
1978 Administrative Code).
2. No payment of any nature shall be received by a collecting

officer without immediately issuing an official receipt in
acknowledgment thereof. The receipt may be in form of
postage, internal revenue or documentary stamps and the
like, or officially numbered receipts, subject to proper
custody, accountability and audit (Section 44 (1), Chapter 7,
Title I(B), Book V, 1987 Administrative Code);
3. Official receipts are designed to cover a particular kind of

collection only. Unless otherwise, specifically authorized, an
OR shall be used only for which it is intended. General
forms shall be used only for collections for which no specific
form has been authorized.
4. At no instance shall temporary receipts be issued to

acknowledge receipt of public funds (Sec. 72, GAAM Vol. I)
5. Pre-numbered ORs, shall be issued in strict numerical

sequence. All copies of each receipt shall be exact copies or
carbon reproduction in all respects of the original.
If payment has been tendered in money order or check, the

OR shall be prepared with the date, number and the amount
of such money order or check together with the purpose for
which the payment has been received. The address of the
payor shall also be indicated in the official receipt to
facilitate communication with him if necessary (Section 73,
Article 2, Chapter 3, Book II, GAAM).

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6. Collections received through the mail shall be acknowledged

and remitted or deposited, and recorded just like other
collections. Basic control shall, however, be maintained
using the procedures mentioned in Section 75, GAAM Vol. I.
7. An officer charged with the collection of revenue or the

receiving of money payable to the government shall accept
payment for taxes, dues or other indebtedness to the
government in the form of checks and warrants issued in
payment of government obligations, upon proper
endorsement and identification of the payee or endorsee.
Checks drawn in favor of the government in payment of any
such indebtedness shall likewise be accepted by the officer
concerned.
8. At no instance should money in the hands of the collecting

officer be utilized for the purpose of encashing private
checks (Sec.67(1) and (3), P.D. 1445).
9. Checks presented for payment must be drawn by the payor

himself and made payable to the agency or head of agency.
In the latter case, only the official title or designation of the
agency head concerned shall be stated as the payee ( Sec. 77,
Article 3, Chapter 3, Book II, GAAM).
Under no circumstance shall the following checks be

accepted –
- checks drawn payable to the name of the agency
head or any of its officers
- indorsed private checks
- post-dated checks
- stale checks
- out-of-town checks, except those which are drawn
by the Government or its instrumentalities.
10.Before issuing an OR, the collecting officer shall carefully

scrutinize the check presented to her/him and make sure that
it is complete and correct particularly as to date, signature or

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countersignature, and amount in words and figures appearing

on the face of the check (Section 78, GAAM Vol. I).
The number and the date of the official receipt issued shall be
indicated at the back of the check. Likewise, the collecting
officer shall, in all cases, indicate on the official receipt, the
address of the payor to facilitate communication with him, if
necessary.
11.Where mechanical devices are used to acknowledge cash

receipts, the Commission may approve, upon request
exemption from the use of accountable forms (Sec.44 (2),
Chapter &, Title I(B), Book V, 1987 Adm. Code).
12.When a check drawn in favor of the government is not

accepted by the drawee bank for any reason, the drawer shall
continue to be liable for the sum due and all penalties
resulting from delayed payments (Section 67(2), PD 1445).
13.Whenever a payor has a record of a previously dishonored

private check drawn by him in payment of taxes and dues,
even if such check has already been settled, any private
check presented by him shall no longer be accepted. In such
case, the payor shall be required to pay only in cash or by
certified check (Section 80, GAAM Vol. I).
Each agency head, or provincial or city treasurer, in the case

of local governments, shall make a list of payors whose
checks have been dishonored and shall circularize the list to
all collecting officers under his jurisdiction.
14. No change shall be given to the payor in the event that the
amount of the taxes or dues is less than the face of the check
in payment thereof. The difference shall be receipted for by
the issuance of a separate general receipts and shall be
accounted for simultaneously with the collection as Trust
Liabilities – Miscellaneous (Sec. 81, GAAM Vol. I).
15.When payment for goods or services is made by private
check, no such service shall be rendered or goods delivered
by the government agency concerned unless the check in

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payment thereof has been honored by the drawee bank (Sec.

82, GAAM Vol. I).
16.An official receipt is an accountable form held in trust by the

Collecting Officer/Treasurer/Property Officer or other person
duly authorized to possess or have custody thereof. He shall
be responsible for its safekeeping the proper and authorized
use or application thereof and the reporting of its use and
condition; and shall be liable for loss, damage or
deterioration occasioned by negligence in the keeping or use
thereof (Section 91, GAAM Vol. I).
17.Collecting Officer / Treasurers / Property Officers

accountable for receipts, stamps and other accountable forms
in their possession or in the hands of deputies and other
employees entrusted therewith, shall keep adequate
permanent record books which should show, among other
things, the whereabouts of the accountable forms with which
they are charged, the name and title of the officer or
employee to whom such forms have been given, and the
evidence of the receipt and subsequent sale and issuance of
the same. The column headings of the record books are
enumerated in Section 95, GAAM Vol. I.
18. All official receipts being issued by an agency shall bear the
name of the agency printed and stamped on the face thereof
(Sec. 96, GAAM Vol. I).
19.Accountable Officer shall render a report to the COA Unit

Auditor on their accountability for accountable forms at least
once a month in the prescribed form as shown in Appendix
2. Such report shall also be prepared in case of transfer of
office or accountability by the accountable officer (Section
98, GAAM Vol. I).
20.Accountable officer shall submit to the COA Unit Auditor all

obsolete, spoiled, and cancelled official receipts and other
accountable forms for inspection and destruction in
compliance with Section 99, GAAM Vol. I

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21.Any loss of accountable forms in the custody of collecting

and property officers shall immediately be reported by the
accountable officers concerned to the head of the agency by
adopting the procedures mentioned in Section 100, GAAM
Vol. I.
22.The encashment of public school teachers’ treasury warrants

is allowed. In the case of GSIS check, encashment of the
same should be limited only to one salary and policy loan
checks.
The following safeguards shall be observed in cashing

government checks:
22.1 The check should be paid only to the payee who

should be properly identified if not known
personally by the paying officer.
22.2 The check should not be a stale check.
22.3 The accountable officer should comply strictly
with auditing regulations requiring the deposit
of collections, daily and intact with the bank
to preclude intentional holding of cash to meet
encashment of government checks.
23.Private checks drawn for purposes other than payment of

taxes or dues in favor of the government shall not be
accepted for encashment or exchange (Section 105, GAAM
Vol. I). The auditor who finds any such check in the
possession of the collecting officer shall immediately
disallow it and shall declare the collecting officer short to the
extent of the amount of the check (GAO General Circular
No. 110).
24.Local treasurers and other accountable officials shall keep

personal monies separate and distinct from local public funds
in their custody and shall not make profit out of public
money or otherwise apply the same to any use not authorized
by law or ordinance (Sec. 312, RA 7160).

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25.The Treasurer may designate liquidating officers from

among the collectors/tellers whenever necessary.
Collectors/tellers shall turn over their collections to their

designated liquidating officer. The RCD shall be prepared
in five copies, four copies to be submitted to the liquidating
officer, the fifth copy to be retained by the collector/ teller.
The liquidating officer shall perform the procedures for the

receipt and verification of collections turned over to him. He
shall also accomplish the RCD in four copies to summarize
the collections turned over to him by the collectors/ tellers as
well as his own collections.
The liquidating officer shall turn over intact the cash

collections to the Treasurer/ Cashier together with the
originals and two copies of the RCDs of collectors/ tellers
and the duplicates of the official receipts issued. The
Treasurer/Cashier shall acknowledge receipt of the cash and
all accompanying documents by signing all copies of the
RCD of liquidating officer on the certification and receipt
portion of the form. The fourth copy of the RCD of the
liquidating officer and RCDs of collectors/tellers shall be
retained by the liquidating officer.
26. Receipts from non-tax sources authorized by law for

specific purposes which are collected /received by a
government office or agency acting as trustee, agent or
administrator, or which have been received as guaranty for
the fulfillment of an obligation, and all other collections
classified by law or regulations as a trust receipt shall be
treated as trust liability of the agency concerned and
deposited in an authorized government depository bank or in
the National Treasury, as the case subject to the condition
prescribed under the Special Provisions of the agency
concerned and to the rules and regulations as determined by
the Permanent Committee created under Sec. 51 of PD 1177
(Sec. 44, Book VI, Executive Order No. 292).

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27. When the exigencies of the service so require, under such

rules and regulations as the COA and the Department of
Finance may prescribe, postmasters may be authorized to use
their collection to pay money orders, telegraphic transfers
and withdrawals from the proper depository bank whenever
their cash advance funds for the purpose of collections to be
used shall be restored upon receipt by the postmaster of the
replenishment of his cash advance [Section 69 (2), PD
1445].
28. Collections made by foreign service posts of internal

revenue taxes and service fees for the conduct of verification
of overseas employment documents by the labor
attaches/overseas officers, and the authentication of said
documents by the embassy/consulate officials consulate
officials concerned shall be governed by special regulations
issued on the subject (DFA- DOF Memo of Agreement,
recommended by COA and BIR, Dec. 1, 1976; DOF-DBM-
COA-DOLE-DFA Joint Cir. 3-87, Oct. 1,1978).
29. Public officers authorized to receive and collect monies

arising from taxes, revenues, or receipts of any kind shall
remit or deposit intact the full amount so received and
collected by them to the treasury of the agency concerned
and credited to the particular accounts to which the said
monies belong. The amount of collections ultimately payable
to other agencies of the government shall thereafter be
remitted to the respective treasuries of these agencies [Sec
69(1) PD 1445.]
Specific Policies on Deposits
1. Unless otherwise specifically provided by law, all income

accruing to the agencies by virtue of the provisions of law,
orders and regulations shall be deposited in the National
Treasury or in any duly authorized government depository
bank, and shall accrue to the unappropriated surplus of the
General Fund of the Government (Section 44, Book VI, 1987
Administrative Code).

COMMISSION ON AUDIT
2. All Collecting Officers shall deposit intact all their

collections, as well as collections turned over to them by
sub-collectors/tellers, with the Authorized Government
Depository Bank (AGDB) daily or not later than the next
banking day. They shall record all deposits made in the CRR.
3. At the close of each business day, the Collecting Officers

shall accomplish the RCD. The report lists all the ORs issued
in numerical sequence including the cancelled ones. It shall
be the basis in preparing the Journal Entry Voucher (JEV) for
recording in the Cash Receipt Journal (CRJ)/Cash Journal
(CJ), as the case may be. All collections shall be deposited
with Authorized Government Depository Bank (AGDB) for
the account of the agency or the Treasurer of the Philippines
daily or not later than the next banking day. (NGAS VOL II-
National).
4. Local treasurers shall maintain depository accounts in the

name of their respective LGU with banks, preferably
government-owned, located in or nearest to their respective
areas of jurisdiction. Earnings of such depository account
shall accrue exclusively thereto (Sec. 311, RA 7160). He/She
shall deposit intact all collections as well as the collections
turned over to him/her by the collectors/tellers with the
authorized depository bank daily or not later than the next
banking day. He/She shall record all deposits made in the
cashbook and prepare the RCD. (NGAS Vol II-Local)
5. Collections by field collectors shall be remitted to the

Cashier or designated liquidating officer of the field office of
the LGU. When travel distance of the field office to the local
treasury may expose government funds to the risk of loss
while in transit, the Cashier or designated liquidating officer,
upon authorization by the Treasurer, may deposit the
collections in the authorized depository bank near the field
office of the LGU. (NGAS Manual for LGUs.)
Barangay treasurers shall deposit all collections with the
city or municipal treasury or in the depository account
maintained in the name of the barangay within five (5) days
after receipt hereof (Sec. 334, RA 7160).

COMMISSION ON AUDIT
6. Funds of government-owned or controlled corporations other

than the government financial institutions may be deposited
only in demand, savings or time deposit accounts with
government financial institutions. They may however be
placed in trust with such financial institutions in cases where
funds are expected to be available for investment purposes
for a relatively long period of time (LOI 1115; Sec. 131,
GAAM Vol. I).
7. All authorized depository banks shall acknowledge receipt of

all funds received by them, the acknowledgement bearing
the date of actual remittance or deposit and indicating from
whom and on what account it was received (Sec. 70,PD
1445).
8. Where Combined Savings and Current Accounts (COM- BO)

are authorized to be maintained, deposits shall be made only
through the Savings Account and withdrawals shall be made
only by the issuance of checks to be drawn on approved
vouchers against the current account (Sec.113, GAAM Vol.
I).
Procedures
National Government Agency
Process Person/Unit
Responsible
Collections and Deposits Through the Collecting Officer
1 Receive cash/check from payor Designated staff,
representing collection based on the Cash Unit
Order of Payment (OP) prepared by
the Accounting Unit.
2 Issue OR to acknowledge receipt of -do-
cash/ check.
Note 1
Funding Checks received by the

COMMISSION ON AUDIT
Cashier/Collecting Officer of the

Regional Office (RO)/Operating
Unit (OU) for its operational
requirements shall be issued
corresponding OR.
Note 2
Separate sets of ORs shall be used
for the Regular Agency (RA) and
National Government (NG) Books.
Note 3
The OR shall be prepared in three
copies and shall be distributed as
follows:
Original – Payor
Copy 2 – To be attached to RCD
Copy 3 – Cash Unit file
-do-
3 Record collections in the CRR.
Note 4
Separate CRR shall be maintained
for collections under the RA and NG
Books.
4 Prepare Deposit Slip (DS) in three -do-

copies.
Note 5
The DS shall be distributed as
follows:
Original – AGDB
Copy 2 – To be attached to RCD
5 Deposit collections with AGDB. -do-
Note 6

COMMISSION ON AUDIT
Collections pertaining to NG Books

shall be deposited with the AGDB
for the account of the Treasurer of
the Philippines.
6 Based on the validated DS from the -do-

AGDB and copy of the ORs on file,
prepare RCD in two copies. Initial
on the RCD and forwards the same
together with copy 2 of the ORs and
DS to the Head of the Cash Unit for
review and signature.
7 Review and sign the RCD. Head of the Cash

Forwards original of RCD, copy 2 Unit
of the ORs and DS to the
Designated Staff for submission to
the Accounting Unit.
Note 7
The RCD shall be distributed as
follows:
Original –Accounting Unit together
with copy No. 2 of the
ORs and DS – to
support the JEV
8 Record the RCD in the logbook Designated Staff

maintained and forward with the
ORs and DS to the Accounting Unit
for recording in the books of
accounts.
9 Receive original of RCD with copy
2 of the ORs and DS from the Cash Accounting Unit
Unit. Record receipt in the logbook Accounting Staff
maintained for the purpose and
forward to the Bookkeeper for

COMMISSION ON AUDIT
review and preparation of the

Journal Entry Voucher (JEV).
10 Based on the RCD, prepare JEV in Bookkeeper

two copies and sign “Prepared by”
portion of the JEV. Forward the
JEV and documents to the Head of
the Accounting Unit for review and
signature.
11 Review and sign ‘Certified Correct Head of the

by’ portion of the JEV. Forward the Accounting
JEV and documents to the Unit
Bookkeeper for recording in the
Cash Receipt Journal(CRJ)/Cash
Journal(CJ).
Note 8
CRJ shall be used to record
collection under the RA Books while
the CJ shall be used to record
collections under the NG Books.
Collections through Accredited Agent Banks (AAB)
1 Receive collection documents from Accounting Unit

the AAB/AGDB. Record receipt in Receiving/
the logbook maintained for the Releasing Staff
purpose. Forward the same to the
Bookkeeper for preparation of the
JEV.
2 Based on the received collection Bookkeeper

documents, prepare JEV in two
copies. Sign “Prepared by” portion
of the JEV. Forward the JEV and
documents to the Head of the
Accounting Unit for review and
signature.

COMMISSION ON AUDIT
3 Review and sign “Certified Correct Head of the

by” portion of the JEV. Forward the Accounting
JEV and documents to the Unit
Bookkeeper for recording in the
General Journal (GJ).
Local Government Units
Process Responsible
Person/Unit
1. Receive payment from taxpayers Collector/Teller
and/or creditors and issue official
receipt. Prepare RCD. Remit to
Liquidating Officer (if one is
designated) or Treasurer.
2 Check remittances and verify Liquidating
accountable forms of collectors/tellers. Officer
Consolidates collections and remits to
the Treasurer/Cashier. Prepare the
RCD. Forward to Treasurer/Cashier
3 Receive remitted collections, Treasurer

consolidate and prepare the RCD.
Record in the Cashbook-Cash in
Treasury.
4 Deposit collections in the appropriate Treasurer
bank account per authorized
depository bank. Record deposit in
Cashbook- Cash in Bank.
5 Forward RCD to Accounting Unit with Treasurer
copies of ORs and validated deposit
slips.
6 Prepare JEV and record in CRJ. Accountant

COMMISSION ON AUDIT

COMMISSION ON AUDIT
Procedures in taking up Dishonored Checks
Process Responsible
Unit/Person
1 Receive from AGDB the Debit Memo Cash Unit
(DM) and copies of dishonored checks.
2 Verify the dishonored checks against Cash Unit

the previous months’ RCDs maintained
on file. Ascertain that the checks were
included in the previous months’
collections. If not included, verify
from AGDB the details of the
dishonored checks.
3 If dishonored checks are included in the Cash Unit
RCDs, prepare Notice of Dishonor to
inform the drawers/indorsers/payors
that the checks were dishonored by the
AGDB.
Note 1
The Notice shall be prepared in three
copies:
Original – Drawer (To be delivered
personally or thru registered mail)
Copy 2 – Accounting Unit file
4 Retrieve from file copy of the OR Cash Unit
covering the dishonored check and
indicate in the OR the following
notation:
“Cancelled (date of Notice of

Dishonor) per Bank Debit/ Voucher
No._________ dated
______________”
5 Prepare list of dishonored checks in Cash Unit

COMMISSION ON AUDIT
two copies. Forward Copy 2 of the list

and the dishonored checks to the
Accounting Unit.
6 Based on the list, prepare JEV in two Accounting Unit

copies. Record in the journal.
Local Government Unit
Process Responsible
Person/Unit
1 Upon receipt of the debit memo Treasurer
and the dishonored check(s) from
the bank, effect constructive
cancellation of the official receipt
in his/her possession covering the
dishonored check.
“Cancelled, (date of notice of
dishonor)
Check dishonored per Bank/

Treasury Debit
Voucher/Memo No. ___

dated ____”
2 Photocopy the check, record in Treasurer

Cashbook-Cash in Bank (credit),
adjust taxpayer’s index card.
Notify collector/teller and auditor
if OR already submitted for audit.
Forward debit memo and
photocopy of the check to
Accountant.
3 Take note of cancellation in the Auditor/Collector/Tell

copy of the OR in their possession. er
4 Cancel OR, if in his/her Accountant

COMMISSION ON AUDIT
possession, prepare the JEV by

crediting cash in bank account and
debiting the appropriate income
account*. Furnish Treasurer copy
of approved JEV.
*In case of dishonor of check
payment for Real Property Tax
(RPT) or Special Education Tax
(SET), the RPT/SET Receivables
and corresponding Deferred
RPT/SET Income shall be
restored. The accounts Due to
LGUs, RPT Income, Cash in Bank
and RPT Discount shall be
adjusted accordingly.
5 Record JEV number in his/her Treasurer

Cashbook- Cash in Bank.
THE DISBURSEMENT SYSTEM
Records and Books of Accounts
1. Cash Disbursement Records (CDR)-to be used by the

Disbursing Officer to record the cash advance received and
the disbursements made out of the cash advance.
2. Check Disbursement Records (CkDR) –to be used by the

Disbursing Officer to record checks released charged against
the Notice of Cash Allocation (NCA)/funding checks
received/deposits in a bank current account of government
agencies. A separate record shall be maintained for each
source of fund.

COMMISSION ON AUDIT
1. Cashbook – Cash in Bank – shall be maintained by the AO to

record deposits of collections and withdrawals from the bank
thru issuance of checks.
2. Cashbook – Cash Advances – shall be maintained by the AO

to record cash advances received and payments, refunds and
adjustments made.
3. Check Register – shall be used to record all checks issued

and where claimants shall be required to acknowledge
receipt of the check.
Books of Accounts Common to Both Sectors
1. Check Disbursements Journal (CkDJ)- shall be used to

record check payments made by the Cashier or Disbursing
Officers. Recording to this Journal shall be based on the
JEVs supported with paid Disbursement Vouchers (DVs) and
duplicate copies of checks listed in the RCI submitted by the
Cashier/Disbursing Officers.
2. Cash Disbursements Journal (CDJ) - shall be used to record

all payments made in cash by the Regular/Special Disbursing
Officers out of their cash advances. Recording to this
journal shall be based on the JEVs supported with the Report
of Disbursements (RD) and pertinent documents like the
paid payroll, disbursement voucher, etc.
3. General Ledger (GL) - this is a book of final entry

containing accounts arranged in the same sequence as in the
chart of accounts. Totals of columns in the special journals
and the individual entries in the GJ are directly posted in this
book. At the end of each month, the accounts are footed and
at the end of each year, these are totaled, ruled and closed
and the balance extracted to serve as the opening balance of
the new fiscal year. Likewise, the account with balances
shall appear in the trial balance.

COMMISSION ON AUDIT
4. Subsidiary Ledger (SL). -is a book of final entry containing

the details or breakdown of the balance of the controlling
account appearing in the GL. Postings to the SL generally
come from the source documents. Examples of GL accounts
which have SL are Cash-Disbursing Officers, Cash in Bank
– Local Currency, Current Account, Accounts Payable, etc.
The totals of the SL balances shall be reconciled with their
respective control account regularly or at the end of each
month. Schedules shall be prepared periodically to support
the corresponding controlling GL accounts.
Reports
1. Report of Checks Issued (RCI)- shall be prepared by the

Cashiers/Disbursing Officers to report checks actually
received by the payor or authorized representatives during
the period. Separate RCI shall be prepared for Modified
Disbursement System (MDS) and commercial checks
released. The report shall be the basis in preparing and
recording the JEV in the CDJ. It shall be supported with the
List of Unreleased and Cancelled Checks.
2. Report of Disbursements (RD) - shall be prepared by the

Regular/Special Disbursing Officers to support liquidations
of their cash advances. The report shall be certified as to
correctness by the Disbursing Officer and forwarded to the
Accounting Unit for preparation of the JEV and final
recording in the CDJ.
3. Petty Cash Replenishment Report (PCRR) - shall be prepared

by the Petty Cash Custodian to report all disbursements
made out of his Petty Cash Fund (PCF).
4. Liquidation Report (LR)- shall be prepared by the concerned

employees/officers to liquidate cash advances for travel or
for other purposes except those cash advances granted to
Regular/Special Disbursing Officers.

COMMISSION ON AUDIT
5. Report of Accountability for Accountable Forms (RAAF)-

The Report of Accountability for Accountable Forms shall be
prepared by the Accountable Officer to report on the
movement and status of accountable forms in his possession.
The accountable forms include those with or without face
value.
1. Accountant’s Advice of Local Check Disbursements- shall

be prepared by the Accountant daily for each depository
account, in four copies to be distributed as follows:
Original – Bank
Duplicate – Accountant
Triplicate – Treasurer
Quadruplicate – Auditor
2. Liquidation Report (LR). – shall be prepared by the

concerned employees/officers concerned to liquidate cash
advances for travel or for other purposes except those cash
advances granted to Regular/Special Disbursing Officer.
3. Report of Disbursements (RD). –shall be prepared by the

Accountable/Disbursing Officers to support the liquidation
of their cash advances. The report shall be certified as to
correctness by the Disbursing Officer and forwarded to the
Accounting Unit for the preparation of the JEV.
4. Report of Checks Issued (RCI). –shall be prepared by the

Cashier/Disbursing Officers daily to report checks issued
during the period including cancelled ones.
5. Report of Accountability for Accountable Forms

(RAAF)- The Report of Accountability for Accountable
Forms shall be prepared by the Accountable Officer to report
on the movement and status of accountable forms in his
possession. The accountable forms include those with or
without face value.

COMMISSION ON AUDIT
Policies
1. Revenue funds shall not be paid out of any public treasury

or depository except in pursuance of an appropriation law or
other specific statutory authority.
2. Trust fund shall not be paid out of any public treasury or

depository except in fulfillment of the purpose for which the
trust was created or the funds received, and upon
authorization of the legislative body or head of an agency of
the government having control thereof, and subject to
pertinent law, rules and regulations.
3. Temporary investment of investible cash in the National

Treasury in any securities issued by the National
Government and its political subdivisions and
instrumentalities shall not be construed as disbursements of
funds (Sec. 84, PD 1445; Sec. 169, GAAM Vol. I).
4. No money shall be paid out of any public treasury or

deposited except in pursuance of an appropriation law or
other specific statutory authority;
5. Government funds or property shall be spent or used solely

for public purpose.
6. Disbursements or disposition of government funds or

property shall invariably bear the approval of the proper
officials.
7. Claims against government funds shall be supported with

complete documentation.
8. All laws and regulations applicable to financial transactions

shall be faithfully adhered to.
9. Except with the prior approval of the President, the

government shall not be obliged to make advance payment
for services not yet rendered or for supplies and materials not
yet delivered under any contract therefor. No payment,

COMMISSION ON AUDIT
partial or final, shall be made on any such contract except

upon a certification by the head of the agency concerned to
the effect that the services or supplies and materials have
been rendered or delivered in accordance with the terms of
the contract and have been duly inspected and accepted (Sec.
88 (1) PD 1445).
10. No accountable officer shall be relieved from liability by

reason of having acted under the direction of a supervisor
officer in paying out, applying, or disposing of the funds or
property with which he is chargeable, unless prior to that act,
he notified the superior officer in writing of the illegality of
the payment, application or disposition (Sec. 106, PD 1445).
In the LGUs, unless he registers his objection in writing,

the local treasurer, accountant, budget officer or other
accountable officer shall not be relieved of liability for
illegal or improper use or application or deposit of
government funds or property by reason of his having acted
upon the direction of a superior officer, elective or
appointive, or upon participation of other department heads
or officers or equivalent rank (Sec. 342, RA 7160).
11. Only permanently appointed officials and employees shall

be granted cash advances.
12. Only duly appointed or designated disbursing officer may

perform disbursing functions. Officers and employees who
are given cash advances for foreign travel need not be
designated as disbursing officer.
13. Only one disbursing officer shall be assigned/designated

for a specific legal purpose. Additional disbursing officers
may be assigned/designated for the same purpose only when
fully justified by the agency head;
14. Transfer of cash advance from one accountable officer to

another shall not be allowed.

COMMISSION ON AUDIT
15. The cash advance shall be used only for the specific legal
purpose for which it was granted. Under no circumstances
shall it be used for encashment of checks or for liquidation
of a previous cash advance;
16. No additional cash advance shall be allowed to any official

or employee unless the previous cash advance given to him
is first settled or a proper accounting thereof is made (Sec.
89, PD 1445).
17. No cash advance shall be granted on account of

infrastructure or other undertakings on a project basis.
18. The accountant shall obligate all cash advances granted. He

shall see to it that cash advances for a particular year are not
used to pay expenses of other years.
19. Whenever a cash advance is subjected to cash examination

by auditors, any money taken from the accountable officer
supported merely by chits and forms of IOUs shall not be
considered valid disbursement even if it was actually given
to the official or employee who signed them.
20. No cash advance shall be given unless for a legally

authorized specific purpose. A cash advance shall be
reported on and liquidated as soon as the purpose for which
it was given has been served.
21. Under the NGAS, cash given to a disbursing officer

officers (Cash, Disbursing Officer) shall be limited for the
payroll fund, specific/special projects and for postmasters for
authorized purposes. Under COA Circular No 97-002, the
amount for personal services shall be equal to the net amount
of the payroll payable for one pay period. for field/activity
current operating expenses shall be limited to the
requirements for two months. The special cash advance shall
be used to pay the salaries and wages of employees, and the
miscellaneous operating expenses of the activity. Payment
for each transaction shall not be subject to the amount
limitation.

COMMISSION ON AUDIT
22. Under the NGAS, a PCF is established which shall be used

for miscellaneous expenditures which cannot be
conveniently paid by check. There is no limitation for the
national government agencies for the PCF. Prudence and
experience will determine the amount of the Fund
established. However, for the LGU, the PCF is good for the
needs for one month only.
The PCF shall be maintained under the imprest system. The

disbursements shall be through the Petty Cash Voucher
(PCV) which shall be approved by the authorized official.
Under the NGAS, in the LGU the PCV shall not exceed
P1,000.0
23. Cash advances granted for travel shall be accounted for as

“Due from Officers and Employees” which are subject o
liquidation upon travel completion. When the travel expense
is equal to, or more than, the amount of the cash advance, the
official/employee shall prepare the Liquidation Report to be
submitted to the Accounting Unit for the JEV preparation.
The excess cash shall be refunded to the Collecting Officer
who shall issue the OR. In case the amount of cash advance
is less than the expense, a Liquidation Report is to be
submitted to liquidate the cash advance granted and a
Disbursement Voucher shall be prepared to claim
reimbursement of the deficiency. (NGAS Manual)
24. A cash advance shall not be used for encashing warrants

and checks (GAO Memo Circular No. 139). Thus, any
check/warrant found in the possession of a disbursing officer
shall be disallowed by the auditor unless the check presented
is a replenishment check of the accountable officer being
audited.
25. When a cash advance is no longer needed or has not been

used for a period of two months, the same should be returned
to, or deposited immediately with the collecting officer
(COA Circular No. 97-002).

COMMISSION ON AUDIT
26. The AO shall liquidate his/her cash advance as follows:

26.1 Salaries, wages, etc – within 5 days after each
15 day/end of the month pay period.
26.2 Petty Cash Fund – within 20 days after the end
of the year; subject to replenishment during the
year.
26.3 Foreign travel – within 60 days after return to
the Philippines.
26.4 Local travel – immediately upon completion of
the official travel.
Failure of the AO to liquidate his/her cash advance within

the prescribed period shall constitute a valid cause for the
withholding of his/her salary (COA Cir. 97-002).
27. All cash advances shall be fully liquidated at the end of

each year. Except for the PCF, the AO shall refund any
unexpended balance to the Cashier/Collecting Officer who
will issue the necessary official receipt.
28. Under no circumstance, shall a cash advance be allowed to

remain unliquidated at the end of the fiscal year even if the
officer concerned should again need the cash advance (COA
Circular No. 97-002, COA Circular No. 75-12 and PD 477).
29. When no liquidation of the previous cash advance is

received on or before January 20, the Accountant shall cause
the withholding of the AO’s salary .
30. No officer or employee shall be granted a cash advance

unless s/he is properly bonded in accordance with law. The
amount of cash advance which may be granted shall not
exceed the maximum amount covered by the bond.
31.Every official or employee authorized to travel abroad shall

render an account of the cash advances received by him
within sixty (60) days after his return to the Philippines.
32. At all times, upon demand by an authorized officer, the

amount of the cash advance shall be subject to instant
production, either in the form of cash or paid vouchers. The

COMMISSION ON AUDIT
failure of the accountable officer to produce the cash

advance upon demand shall be a prima facie evidence of
misappropriation or malversation of public funds and shall
render him criminally liable under the provisions of Article
217 of the Revised Penal Code and Section 128 of PD
1445.
Procedures:
National Government Agency:
Responsible
Process Unit/Person
Disbursements by Checks
1 Processing of Disbursement Voucher (DV)
1.1 Receive copies 1-3 of DV, originals Accounting Unit

of supporting documents and copies Receiving/
1-3 of Allotment and Obligations Slip Releasing Staff
(ALOBS) from the Budget Unit.
check completeness of supporting
documents. If incomplete, return to
the concerned party for compliance.
1.2 If complete, stamp “Received”, -do-

indicate date of receipt and initial on
the stamped ‘Received’ portion of the
DV.
Note 1
DV that shall be paid out of non-
budgetary receipts shall not pass the
Budget Unit. No ALOBS is needed.
(Example – refund of cash bond).
-do-
1.3 Assign DV number, record in the
logbook the DV number and date,
payee, particular and amount.
Forward copies 1-3 of DV, originals
of supporting documents and copies

COMMISSION ON AUDIT
1-3 of ALOBS to the Designated

Staff for processing.
Note 2
The numbering structure for DV shall be as follows:
00 – 00 – 0000
Serial Number
(One series for each year)
Month of Issue
Year of Issue
Note 3
DV number shall also be indicated on
every sheet of the supporting
documents.
1.4 Receive copies 1-3 of DV, originals of Designated

supporting documents and copies 1-3 Staff
of ALOBS from the Receiving/
Releasing Staff. Review DV for
completeness and propriety of
supporting documents.
-do-
1.5 Check Index of Payments (IP) from
file, determine whether there was prior
payment of the same claim. If the
claim was already paid, return the DV
and supporting documents to the
Receiving/Releasing Staff to be
returned to claimant.
-do-
1.6 If not yet paid, record the following in
the IP: name and address of creditor,
DV date and number, particulars and
amount.
1.7 Accomplish Box B of ALOBS and -do-
initial.

COMMISSION ON AUDIT
-do-
1.8 Initial in Box B of DV and forward
copies 1-3 of DV, originals of
supporting documents and copies 1-3
of ALOBS to the Head of Accounting
Unit for review and signature.
1.9 Review DV and supporting Head of the

documents, sign in Box B of DV and Accounting
ALOBS. Forward the documents to Unit
the Receiving/ Releasing Staff.
1.10 Record in the logbook the date of Receiving/

release of copies 1-3 of DV, originals Releasing
of supporting documents and copy 3 of Staff
ALOBS. Forward to the Head of
Agency or Authorized Representative
for approval of the DV. Forward copy
1 of ALOBS to the Budget Unit and
retain copy 2 of ALOBS for file.
1.11 Review and approve DV. Forward Head of Agency

copies 1-3 of DV, copy 3 of the or Authorized
ALOBS and originals of supporting Representative
documents to the Cash Unit for check
preparation.
2. Preparation and Approval of Checks
2.1 Receive copies 1-3 of approved DV, Cash Unit

copy 3 of ALOBS and originals of Receiving/
supporting documents, record in the Releasing Staff
logbook the date of receipt, DV
number, payee, particulars and
amount.
2.2 Verify completeness of signatories on Designated

the DV prepare check in three copies. Staff
2.3 Record in the CDR the date, reference

COMMISSION ON AUDIT
or check number, name of payee,

nature of payment and amount of the
DV and extract the new balance of the
NCA/bank account. Forward copies
1-3 of check, copies 1-3 of DV, copy 3
of ALOBS and originals of supporting
documents to Cashier for review and
signature.
2.4 Verify completeness of signature on Cashier

the DV, reviews the amount of the
check against the DV and supporting
documents. Sign the check.
2.5 Countersign check. Forward copies 1- Authorized

3 of check, copies 1-3 of DV, copy 3 Official
of ALOBS and supporting documents
to the Receiving/Releasing Staff for
return to the Cashier.

release of copies 1-3 of check, copies Releasing Staff
1-3 of DV, copy 3 of ALOBS and
2.7 Release the original of check and copy Cashier

3 of DV to the payee. Attach
OR/Invoice on copy 1 of DV. File
copies 2-3 of check, copies 1-2 of DV,
originals of supporting documents.
3. Preparation of RCI
Daily, Designated
3.1 With copies 1-2 of DV, copy 3 of Staff, Cash Unit
ALOBS, supporting documents,
copies 2-3 of checks, prepare RCI in
two copies.

COMMISSION ON AUDIT
Note 4:
The RCI shall be distributed as
follows:
Original – Accounting Unit together
with the originals of
the paid DVs/payroll
and supporting
documents for JEV
preparation
3.2 Initial in ‘Certification’ portion of the -do-

RCI.
3.3 Review RCI and sign in ‘Certification’ Head of the

portion. Cash Unit
3.4 Forward original of RCI together with Designated

copy 2 of checks, copy 1 of DVs, copy Staff
3 of ALOBS and supporting
documents to the Accounting Unit for
the preparation of JEV. Retain copy 2
of RCI, copy 3 of checks and copy 2
of DVs for file.
Note 5:
The “List of Unreleased and Cancelled
Checks” shall be attached to the RCI
to be submitted to Accounting Unit for
reference.
4. Preparation of JEV
Daily
4.1 Record receipt of copy 1 of RCI Accounting
together with copy 2 of checks, copy Unit
1 of DVs, copy 3 of ALOBS and Receiving/
originals of supporting documents Releasing Staff
from Cash Unit in the logbook.
Forward the documents to the
Designated Staff for JEV preparation.

COMMISSION ON AUDIT
4.2 Examine DVs and checks against Designated

RCI. Verify if the serial number of Staff
checks actually issued, including
spoiled and cancelled ones, are all
accounted for.
4.3 Prepare JEV in two copies and sign in Designated staff

the “Prepared by” portion.
4.4 Review correctness of the journal Head of the

entries and sign on ‘Certified Correct Accounting
by’ portion of the JEV. Forward Unit/
copies 1-2 of JEV and copy 1 of RCI, Authorized
copy 2 of checks, copy 1 of DVs, Signatory
copy 3 of ALOBS and originals of
supporting documents to Designated
Staff for recording in the CkDJ.
5. Recording in the CkDJ
5.1 Receive copies 1-2 of JEV and copy 1 Designated

of RCI, copy 2 of checks, copy 1 of Staff
DVs, copy 3 of ALOBS and
supporting documents. Record the
JEV in the CkDJ. Retain copy 2 of
JEV for file. Forward copy 1 of JEV,
RCI and DV, copy 2 of checks, copy 3
of ALOBS and supporting documents
to the Receiving/Releasing Staff for
submission to COA for audit.

submission of copy 1 of JEV, RCI, Releasing Staff
DVs, copy 3 of ALOBS, copy 2 of
checks and originals of supporting
documents. Forward the documents
to COA for audit.

COMMISSION ON AUDIT
Note 6:
For the succeeding activities, refer to
Sec. 71, Preparation and Submission
of Trial Balances and Other Reports.
Disbursements by Cash – Payment for Payroll and Other
Expenses
Responsible
Process Person/Unit
1 Receive the approved check from the Cash Unit

Cashier, record in the CDR the date, Accountable/
reference, name of payee, particulars Disbursing
and the amount of check in the debit Officer
column.
-do
2 Encash check in a GSB.
-do-
3 Pay officials and employees/other
payees.
Note 1
Employees/payees shall sign on the
received portion of the payroll/DV to
acknowledge receipt of payment.
Note 2
If there are unclaimed salaries, refund
the same within a reasonable time.
OR representing the refund shall be
issued by the Cashier.
-do-
4 Record payment including the refund
for unclaimed salary in the credit
column of the CDR.
5 At the end of the month, based on the -do-

paid payroll/DV and supporting
documents, prepare Report of

COMMISSION ON AUDIT
Disbursements (RD) in two copies,

sign the “Certification” portion of the
RD.
Note 3
The RD shall serve as the liquidation
report of the cash advance granted to
the Disbursing Officer.
Note 4
The RD shall be distributed as
follows:
Original – Accounting Unit together
with the originals of
the paid DVs/Payrolls
and supporting
documents for JEV
preparation
6 Record in the logbook, indicate Accounting

‘Received’ and signs all copies, Unit
forward the RD to the Bookkeeper for Releasing/
JEV preparation, and return copy 2 to Receiving Clerk
the Cash Unit.
7 Prepare JEV based on the RD and Bookkeeper

supporting documents received.
-do-
8 Record payroll payment in the
individual Index of Payments (IP) of
officials and employees.
Disbursements Through Bank – Payroll Payment
1 Receive the approved check, DV and Cash Unit

Following Months’ Payroll (FMP), Cash Staff
sign the logbook of the releasing
office, and forwardthe documents to

COMMISSION ON AUDIT
the Cashier.
-do-
2 Deposit the check to the Bank Payroll
Account together with the original of
the Summary of Employees Net
Earnings (SENE) received from
Accounting Unit. File temporarily
copies 1-2 of FMP, copy 2 of the
check, and copies 1-3 of DV for the
preparation of RCI.
Note 1
The payee of the check is the
Servicing Bank whose authorized
representative shall acknowledge
receipt of the check by signing on the
original of the DV.
Disbursements from the Petty Cash Fund
1. Establishment/Replenishment of Petty Cash Fund
1.1 Receive check from Cashier for the Various Unit

establishment/ replenishment of petty Petty Cash
cash fund. Record in the CDR the Custodian
date, reference and the amount of
check in the ‘Disbursements’ column.
1.2 Encash check in GSB and keep the

cash in a safety vault.
2. Utilization of Petty Cash Fund
2.1 Accomplish Box A ‘Requested by’ Requesting

portion of the PCV. Personnel
2.2 Sign Box A ‘Approved by’ portion of Immediate

the PCV and return to Requesting Supervisor
Personnel.

COMMISSION ON AUDIT
2.3 Submit to the Petty Cash Custodian for Requesting

the release of fund. Personnel
2.4 Receive from the Requesting Petty Cash

Personnel the PCV duly approved by Custodian
concerned official.
2.5 Upon granting of the petty cash Petty Cash

advance, sign in Box B ‘Paid by’ Custodian
portion of the PCV.
2.6 Receive petty cash and signs in Box B Requesting

‘Cash Received by’ portion of the Personnel
PCV.
2.7 Issue copy 2 of the PCV to requesting Petty Cash

personnel. Custodian
2.8 Record paid PCVs in the CDR. Fill up Petty Cash

the following columns: date, reference, Custodian
name of payee, nature of payment,
amount in the credit column and cash
advance balance.
2.9 File the original of PCV awaiting Petty Cash

liquidation. Custodian
3. Liquidation of Petty Cash Advance
3.1 Receive from Requesting Personnel Petty Cash

copy 2 of the PCV together with Custodian
supporting documents. Check and
review completeness of documents
such as the date, amount and nature of
expenses paid as shown in the
3.2 If incomplete, return to Requesting -do-

Personnel for completion of needed

COMMISSION ON AUDIT
If complete, retrieve the original of -do-

PCV from file and fills up Box D
‘Liquidation Submitted’ portion of the
original and copy 2 of PCVs.
3.3 Check the appropriate boxes for -do-

‘Received Refund’ or ‘Reimbursement
Paid’ portion and sign Box C of the
PCV.
3.4 Check and fill up the appropriate Requesting

boxes for ‘Liquidation Submitted’ and Personnel
‘Reimbursement Paid’ upon
submission of necessary supporting
documents and receipt or
reimbursement of cash, if any, and
sign the PCV.
3.5 Return copy 2 of the PCV to the Petty Cash

Requesting Personnel. Fund
Custodian
3.6 If the amount granted is equal to the Petty Cash

amount paid as shown in the liquidated Fund
PCV, proceeds to No. 3.7 Custodian
If the amount is not equal to the Petty Cash

amount paid, retrieve from file the Fund
CDR and record the necessary Custodian
adjustments based on the liquidated
PCV. Fill up the following columns:
date, reference, name of payee, and
nature of payment, amount in the
appropriate debit, credit and balance
columns.
3.7 File the original of the PCV together Petty Cash

with the supporting documents Fund
awaiting replenishment. Custodian
4. Replenishment of Petty Cash Fund

COMMISSION ON AUDIT
4.1 Retrieve from file the original of the Petty Cash

PCV together with the supporting Fund
documents. Check the completeness Custodian
of all PCVs for replenishment.
4.2 Prepare the Petty Cash Replenishment Petty Cash

Report (PCRR) in two copies based on Fund
PCVs in numerical sequence and fills Custodian
up the following columns: date, PCV
No., particulars and amount.
4.3 Sign in the ‘Certified Correct by’ Petty Cash
portion of the PCRR. Fund
Custodian
4.4 Based on the PCRR, prepare DV in Petty Cash

three copies, forward Copies 1-3 of Fund
the DV, original of the PCRR and Custodian
PCV, and supporting documents to
Authorized Official for review and
signature.
4.5 Sign in Box A portion of the DV. Authorized
Official
4.6 Forward Copies 1-3 of the DV, Petty Cash

originals of PCRR and PCVs and Fund
supporting documents to Budget Custodian
Division for preparation of the
ALOBS.
Process Responsible
Person/U
nit
Check Disbursement
1. Gather supporting documents, and
approved ALOBS, prepare DV and
forward to Head of Department.
2. Sign Box A of DV and submit to the

COMMISSION ON AUDIT
Accounting Unit. Supervisor/

Head
of Department
3. Check completeness of documents, Accounting

assign number to DV, sign Box B and Unit
forward to Treasurer.
4. Verify claim, certify cash availability Treasurer

(Box C) and forward to approving
officer.
Note: If funds are not available, return to

Accountant for recording in the books as
Accounts Payable (AP). For AP, JEV shall
be prepared by Accounting Unit and JEV
number reflected in the DV. JEV for AP is
recorded in General Journal. Accountant
retains copy of DV and forwards to
Treasurer.
5. Approve transaction (Box D) and Local Chief

forward DV to Cashier. Executive or
authorized
approving
officer
6. Prepare, sign check and forward check

with DV to countersigning officer.
7. Countersign check and forward to Treasurer

Accountant for preparation of the
Accountant’s Advice of Local Check
Disbursements.
8. Prepare Accountant’s Advice of Local Accountant

Check Disbursements and submit to
bank. Return DV, check and
supporting documents to

COMMISSION ON AUDIT
Cashier/Treasurer.
9 Record check in the Check Register Treasurer

and release check to claimant. Record
disbursement in Cashbook – Cash in
Bank. Prepare RCI. Forward RCI with
DV and supporting documents to
Accounting Unit.
10 Prepare the JEV based on individual Accounting

checks/voucher; sign “Prepared By” Unit
portion (approved by Chief
Accountant), and record JEV in the
CDJ. Post monthly to the GL and SL.
11. Forward RCI, DV, supporting Accountant

documents and JEV to the Office of the
Auditor.
Cash Disbursement Process- payment of salaries and wages

out of cash advances
1 Processing of Payrolls to be paid by

cash is the same as that of steps (1) to
(5) for check disbursements.
2. Gather duly certified and approved Office of the

payrolls to be paid out of cash advance. Treasurer
Prepare DV for cash advance
corresponding to the net amount of
payroll/s. Sign Box A of DV and
submit to the Accounting Unit.
3. Check completeness of Accounting

documents/previous cash advance Unit
liquidated, assign number to DV, sign
Box B and forward to Approving
Officer.

COMMISSION ON AUDIT
4. Approve DV and forward to Treasurer Local Chief

for preparation of checks. Executive
5. Prepare and sign check, and forward Treasurer

check with DV to countersigning
officer.
Administr
6 Countersign check and forward to ator
Accountant for preparation of Advice.
7. Prepare Accountant’s Advice of Local Accountant

Check Disbursements and return DV,
check and supporting documents to
Cashier/Treasurer.
8. Encash check and pay claimants. Treasurer/

Record disbursement in Cashbook – Disbursing
Cash Advances. Officer
9. Return unused cash to the Treasurer/ Disbursing

Cashier. (An official receipt (OR) shall Officer
be issued by the Treasurer/ Cashier to
acknowledge the return of unused cash
and indicate check no. of cash advance
granted on the face of OR.) Record the
refund as credit to cash advance and
attach OR to the Cashbook – Cash
Advances.
10. Prepare RD, attach paid payrolls/ Disbursing

supporting documents and copy of OR Officer
for unused cash advance returned to
Treasurer/Cashier. Sign “Certified
Correct” portion of RD and submit to
Accounting Unit.
11. Prepare JEV to record the liquidation of Accountant

cash advance. Record JEV in the CDJ.
Post monthly to the GL and SL.
12. Forward RD and supporting documents

COMMISSION ON AUDIT
including JEV to the Office of the Accountant

Auditor.
Summary
We defined "accountable officer" and we said that fund
accountable officer may be a cashier, a treasurer, teller, and
collecting or disbursing officer. We also learned their
responsibilities and the laws, rules and policies on cash
management which, you will use as the standards in the conduct
of the examination. We also discussed how the agency's
collection and disbursement systems work. These can guide you
in determining whether or not the system which is the focus of
your examination is working effectively.

COMMISSION ON AUDIT

CH 1.0-UNDERSTAND CASH MANAGEMENT

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CH 1.0-UNDERSTAND CASH MANAGEMENT

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Handbook on Cash Examination Chapter 1 3

To ensure the effectiveness of the cash examination that you will

At the end of the Chapter, you will be able to:

* Tell who is an accountable officer;

WHAT IS AN ACCOUNTABLE OFFICER?

The Glossary of Terms for Auditors defines accountable officer

November 2002 Professional Development Center (PDC)

officers, tellers and accountable officers for government

ACCOUNTABILITY, RESPONSIBILITY AND

There are certain accountability, responsibility and liability

1. The Head of a government agency and all those who exercise

2. The persons entrusted with the actual possession or custody

3. The person accountable or having custody of funds shall,

November 2002 Professional Development Center (PDC)

4. When an officer accountable for government funds or

If the absconding, deceased, incapacitated, or superseded

If the absconding, deceased, incapacitated, or superseded

5. The Commission on Audit shall be furnished with

Photographs submitted shall be turned over by the Unit

November 2002 Professional Development Center (PDC)

6. Government cashiers are prohibited from holding positions

7. Each accountable officer with a total accountability of

8. The schedule of the bonds necessary for the cash

9. Moreover, when a person insured or about to be insured in

11. No sheriff or officer whose fidelity is or has been insured in

November 2002 Professional Development Center (PDC)

Accountability of Cash Accountable Officers

Every officer of any government agency whose duties permit or

Liability of Cash Accountable Officers

1. Expenditures of government funds or uses of government

2. Every officer accountable for government funds shall be

4. No accountable officer shall be relieved from liability by

5. Any public officer who unlawfully leaves or attempts to

November 2002 Professional Development Center (PDC)

COA Chairman showing that his accounts have been finally

APPLICABLE POLICIES ON CASH MANAGEMENT

An examiner when examining the cash and accounts of a

1. The accountable officer shall be a holder of permanent

2. The highest standards of honesty, objectivity and consistency

3. The head of the agency shall be directly responsible to

4. In relation to the keeping of cashbook, the AO shall

5. It is the common practice of banks not to accept mutilated

6. An accountable officer, upon ceasing to act in his/her official

Any remaining balance of such accountability shall be

November 2002 Professional Development Center (PDC)

When the AO ceases to be one, all his/her cashbooks shall be

No clearance shall be issued by the Chief Accountant or

7. Cashiers and disbursing officers are prohibited from acting as

8. Transfer of government funds from one officer to another

9. At the close of each month, depositories shall report to the

10.Every cash accountable officer shall record his/her

11.A newly appointed or designated cash accountable officer

November 2002 Professional Development Center (PDC)

record purposes, the completion of such training shall be

12.The cashbook shall be kept in the office of the AO and

Records and Books of Accounts

Under the New Government Accounting System (NGAS), the

National Government Agencies:

1. Cash Receipts Records (CRR)- to be used by the designated

Local Government Unit:

1. Cashbook – Cash in Treasury –shall be maintained by the

2. Cashbook – Cash in Bank – shall be maintained by the AO

Books of Accounts Common to Both Sectors