Republic of the Philippines

COMMISSION ON AUDIT
Quezon City
NATIONAL BUDGET CIRCUALR NO. 342
COMMISSION ON AUDIT CIRCULAR NO. 81-160
April 21, 1981
TO

The Minister of Finance, Presidential Executive Assistant, President & General

Manager of Government Service Insurance System, Administrator of General
Services Administration, Director of Building Services and Real Property
Management Office, All Heads of Ministries, Bureaus, Offices and Agencies
including State Colleges and Universities of the National Government Chief
Accountants, Auditors and All Others Concerned

SUBJECT :

Rules, Regulations and Accounting Procedures for the Receipt and Disposition of
Insurance Proceeds on Damaged/Lost Government Property

1.0

Purpose
This Circular is issued to provide guidelines, rules, regulations and procedures in
the disposition and accounting of insurance proceeds received on damaged/lost national
government property pursuant to Letter of Instruction No. 999 dated March 13, 1980.

2.0

Coverage
Insurance proceeds referred to in this circular include all insurance proceeds
received on damaged/lost national government property such as inventories, land
improvements, buildings and structures, furniture, equipment and work animals of
national government agencies.

3.0

General Policies and Guidelines

3.1

Government properties shall be insured against fire or other insurable risks with
the General Insurance Fund (GIF) of the Government Service Insurance System
(GSIS). Premiums shall be charged against the appropriate appropriations.

3.2

Proceeds from insurance of national government properties paid directly to the

insured government office or beneficiary shall be deposited with the National
Treasury and shall be considered as income of the General Fund.

3.3

The Ministry of the Budget shall release an amount equivalent to the insurance
proceeds plus any additional funds needed to fully restore the damaged property
chargeable against the Calamity Fund to be released either to the Ministry of
Public Works (MPW) or the agency concerned.

4.0

3.4

Releases from the Calamity Fund shall be used solely for the
restoration/reconstruction/rehabilitation of the damaged property covered by the
insurance.

3.5

Allotments release and obligations incurred out of the Calamity Fund shall be
identified in the books of accounts of agencies.

3.6

The Building Services and Real Property Management Office (BSRPMO) and
other agencies shall close the balance of the trust liability account (8-84-000),
insurance reserve account (8-87-200) and any other account appearing in their
books representing the insurance proceeds prior to the issuance of LOI No. 999
to general fund income. However, in order not to disrupt on going construction,
any balance of the above accounts pertaining to such construction shall continue
to be used until such time that construction has been completed.

Responsibilities
4.1

Agency Head/Accountable Officer/Chief Accountant

4.1.1

In case of damaged/loss of the insured property, the head of the agency

or the accountable officer having custody thereof shall immediately notify
the GSIS and the unit auditor of the agency concerned.

4.1.2

Where the damage/loss involves buildings, the head of the agency shall
notify the Director of the BSRPMO who shall determined the extent of the
damage/loss.

4.1.3

The agency whose property is damaged by fire or other insured risks

shall take the initiative for immediately filing the claim in coordination with
the BSRPMO and for collecting the proceeds from the GIF of the GSIS.

4.1.4

The officer accountable for the damaged, lost property shall, within thirty
(30) days from the date of loss or damage, request relief from
accountability. Such request shall be submitted to the Commission on
Audit (COA) supported by sufficient evidence to prove the validity of the
loss such as affidavits containing statement of facts and circumstances
surrounding the loss.

4.1.5

Where the relief from accountability is granted by the COA, the

accountant of the agency concerned shall drop the property from the
accounts

4.1.6

The agency chief accountant shall record claims against the GIF only
after the GSIS exercises its option not to repair/replace the property
damaged/lost.

4.1.7

The agency chief accountant shall record in the agency books the receipt
of insurance proceeds as income of the General Fund. Such proceeds
shall be deposited with the National Treasury.

4.1.8

The agency chief accountant shall record the allotment and obligation in a
separate JAO sheet properly identified as release against the Calamity
Fund.

4.1.9

The chief accountant of the agency concerned shall close the balanced of
the trust liability account (8-84-000) insurance reserve account (8-87200) and any other account appearing in the books representing
insurance proceeds prior to the issuance of LOI No. 999 to General Fund
income, except for on-going construction, wherein any balance of the
above accounts pertaining to such construction shall continue to be used
until such time that construction has been completed.

4.1.10 The chief accountant of the agency concerned shall submit to the
National Accounting Office of the Ministry of the Budget the list of ongoing projects and the amount still available for its project. He shall also
submit to the National Accounting Office a copy of the journal voucher
closing the balance of the trust liability account, insurance reserve
account and any other account representing insurance proceeds received
prior to the issuance of LOI No. 999 to general fund income.
4.2

4.3

Government Service Insurance System (GSIS)

4.2.1

The GSIS, after approval of the claim, shall immediately effect payment
directly to the agency concerned.

4.2.2

Where option to repair/replace the property damaged or lost is exercised

by the GSIS, notice of such intention shall be given to the agency
concerned within fifteen (15) days after receipt of proof of loss.

Ministry of Public Works (MPW)/Agency Concerned

4.3.1

4.4

5.0

The Minister of Public Works or Head of the agency concerned as the

case may be, shall estimated the total cost requirements for the
restoration of the damaged property and shall submit to the Ministry of the
Budget the corresponding WFP together with the certification of the chief
accountant that the insurance proceeds were deposited with the National
Treasury.

Ministry of the Budget

4.4.1

The Ministry of the Budget shall effect the transfer of programmed

appropriation from the Calamity Fund to the agency concerned for the
rehabilitation/repair of damaged/lost properties.

4.4.2

The Ministry of the Budget shall release the Advice of Allotment (AA) and
the corresponding Cash Disbursement Ceiling (CDC) to the agency
concerned pertaining to par. 4.4.1.

Journal entries to record transactions arising from damaged lost property.

5.1

Fixed Assets -

5.1.1

5.1.2

5.1.3

5.2

To drop from the account the fixed assets lost:

r. Dr.
Invested Surplus
losses, Destruction or Other
Involuntary Disposition
0-94-240 xx

r. Cr.

Fixed Assets - Land and

Land Improvements

8-77-?

xx

Fixed Assets Buildings

and Structures

8-78-?

xx

Fixed Assets - Furniture,

Equipment and Work
Animals

8-79-?

xx

To record the book value of fixed assets lost for which claims for
insurance or request for relief has already been filed:
Contingent Assets Claims
Unrelieved Losses of Fixed
Assets

8-74-200

Contingent Liabilities Insurance Reserve/Fixed

Assets

8-87-200

xx

xx

To record grant of relief:

Contingent Liabilities Insurance Reserve/Fixed
Assets

8-87-200

Contingent Assets Claims for

Unrelieved Losses of Fixed
Assets

8-74-200

xx

xx

Inventories - Supplies & Materials, etc. without contra accounts.

5.2.1

To drop from the account the amount of inventories lost:

Inventories:
- Supplies and materials
- Work in process
- Finished products
- Items for sale
- In transit
- Miscellaneous Livestock

8-72-100
8-72-200
8-72-300
8-72-360
8-72-400
8-72-950

(xx)
(xx)
(xx)
(xx)
(xx)
(xx)

Current Surplus Unappropriated Surplus Adjustments

Losses of Current Assets
7-92-416
5.2.2

5.2.3

xx

To record book value of inventories lost pending final settlement:

Contingent Assets Claims for
Unrelieved losses of current
Assets

8-74-100 xx

Contingent surplus

8-96-000

xx

To record relief of accountability granted:

a) On the same year when damage/loss occurred
Appropriations allotted/
Expenditures Losses of
Assets
8-90-013 xx
Current Surplus Unappropriated
Surplus Adjustments Losses
of Current assets
7-92-416 (xx)
Contingent surplus

8-96-000 xx

Contingent Assets Claims

for Unrelieved Losses of
Current assets

8-74-100

xx

b) On the ensuing year

Closing entry at year-end when
damaged/loss of property
occurred
National Clearing Account

8-99-000 xx

Current surplus Unappropriated

Surplus Adjustments
Losses of Current Assets
7-92-416
Contingent surplus

8-96-000 xx

Contingent assets - Claims for unrelieved

Losses of current Assets
8-74-100
5.3

xx

xx

Inventories with contra accounts 5.3.1

To drop from the account the amount of inventories lost:

Inventories:

- Goods/Merchandise confiscated
- Semi-expendable supplies,
Containers,Furniture &
Equipment
- Supplies & Materials Charged
to Appropriations
- Supplies & Materials Acquired
Free of Charge
- Miscellaneous

8-72-500

(xx)

8-72-600

(xx)

8-72-700

(xx)

8-72-800
8-72-900

(xx)
(xx)

Miscellaneous Liabilities &

Deferred Credits:
- Goods/Merchandise confiscated
- Semi-Expendable Supplies,
Containers, Furniture &
Equipment
- Supplies & Materials Charged
to Appropriations
- Supplies & Materials Acquired
Free of Charge
- Miscellaneous
5.3.2

5.3.3

8-86-500

(xx)

8-86-600

(xx)

8-86-700

(xx)

8-86-800
8-86-900

(xx)
(xx)

To record book value of inventories lost pending final settlement:

Contingent Assets Claims
for Unrelieved Losses of
Current Assets

8-74-100

Contingent Surplus

8-96-000

xx
xx

To record grant of relief:

Contingent Surplus

8-96-000

xx

Contingent Assets Claims for

Unrelieved Losses of Current
Assets
8-74-100
5.4

5.5

xx

Claims against the GIF, GSIS Receivables Government Owned

or Controlled Corporations

8-71-300

Miscellaneous Liabilities and

Deferred Credits - MiscellaneousInsurance

8-86-920

Receipt of Insurance Proceeds -

xx

xx

5.5.1

To record receipt of insurance proceeds:

Cash - Collecting Officers
8-70-400
Receivables Government Owned
or Controlled Corporations 8-71-300

5.5.2

xx
xx

To record income:
Miscellaneous Liabilities and Deferred Credits Miscellaneous Insurance
8-86-920 xx
Income (1-58-900)

5.6

5.7

0-91-000

Deposit with the National Treasury Cash - Treasury/Agency Account

Current Deposits

8-70-700

Cash - Collecting Officers

8-70-400

xx

5.7.1

Where
the
MPW
or
agency
concerned
undertakes
repair/replacement,
the
usual
accounting
entries
for
acquisition/restoration of the damaged property shall be followed.

5.7.2

Where the GSIS undertakes the repair/replacement, the entry shall be:

Invested Surplus Adjustments

(addition) - Insurance

the
the

xx

0-94-172

xx

Closure of balances of trust liability account (8-84- 000), insurance reserve

account (8-87-200) and other accounts appearing in the books of the BSRPMO
and other agencies representing insurance proceeds.
Payables Trust liabilities
Contingent liabilities Insurance reserve
Income (1-58-900)

6.0

xx

Acquisition/restoration of the damaged property

Fixed Assets - Furniture, Equipment &

Work Animals
8-79-?

5.8

xx

8-81-?
8-84-?

xx
xx

8-87-? xx
0-91-00

xx

Repealing Clause
All provisions of circulars, guidelines and instructions which are inconsistent with
this circular are hereby repealed, superseded or otherwise modified.

7.0

Saving Clause
Cases not covered by this Circular shall be referred to the National Accounting
Office, Ministry of the Budget.

8.0

Effectivity
This Circular shall take effect immediately.
(SGD.) FRANCISCO S. TANTUICO, JR.
Acting Chairman

(SGD.) MANUEL S. ALBA

Acting Minister of the Budget