Bir NCS2003 04B

Republic of the Philippines
Commission on Audit
MANAGEMENT SERVICES
Commonwealth Avenue, Quezon City, Philippines
Telephone Nos.: 931-9235 , 931-74-55
September 24, 2004
Hon. Comm. Guillermo L. Parayno, Jr.

Bureau of Internal Revenue
Agham Road, Quezon City
Sir:
We are pleased to transmit the report on the sectoral performance audit

of the National Collection System of the Government as implemented by the
Bureau of Internal Revenue (BIR). The audit was conducted in compliance
with MS/TS Office Order No. 2003-008 dated June 24, 2003. The results of the
audit were forwarded to that office for comments on June 9, 2004.The
comments thereon were incorporated in the report where appropriate.
The audit focused on the evaluation of the existing system, policies and
procedures in ensuring that collections are deposited and remitted to the BTr
account and are accurately reported and recorded. The validation of the
existing system was tested on recorded collections and remittances between the
period January 2002 to June 2003. The audit covered five national government
agencies including the BIR.
The team assessed the adequacy of the policies and procedures adopted
by the BIR on the basis of the following audit criteria:
a. Adequate, clear and well-defined policies and procedures

on the deposit, remittance, and recording of collections;
b. Sound monitoring and control mechanism; and
c. Accurate and reliable accounting and recording system.
We look forward to the proper implementation of the recommendations

and we would appreciate being informed on the actions taken on this report
within one month from receipt hereof.
We acknowledge the cooperation and assistance extended to the audit
team by the officials and staff of the BIR.
Very truly yours,
By Authority of the Chairman:
ILUMINADA M.V. FABROA

Director IV
Management Services
Report No. 2003-04B
Sectoral Performance Audit
National Collection System
Bureau of Internal Revenue

Contents Page
Part I Executive Summary 1
Introduction 2
Audit Objective 4
Audit Scope and Methodology 4
Audit Conclusion 5
Management’s Reactions to Audit Observations 6
Part II The National Collection System 7
Introduction 8
Agencies Responsible in the Collection Function 8
The BIR 10
Governing Rules and Regulations 13
Total Collections for CY 2002 16
The Depository Accounts 17
The Collection Flow 18
The System of Recording Collections 26
The System of Reporting Collections 28
Part III Audit Observations 34
Chapter 1 Adequate, Clear and Well-Defined

Policies and Procedures 35
Introduction 36
Observations 37
Chapter 2 Sound Monitoring and Control

Mechanisms 56
Introduction 57
Observations 58
Chapter 3 Accurate and Reliable Accounting

And Reporting System 86
Introduction 87
Observations 88
Part IV Recommendations 94
Part I
Executive Summary
1
EXECUTIVE SUMMARY
INTRODUCTION
It is the policy of the state to provide basic services and uphold and protect
the rights of the people for a peaceful and dignified life. The realization of
this policy, however, requires adequate funding.
Government’s funds are mainly sourced from collections by authorized

government agencies from taxes, customs duties and fees for services
rendered. These collections are intended to finance the government’s
budgetary requirements. Any deficiency from collection are financed from
domestic and foreign borrowings.
The efficiency of the collection system, therefore is crucial in the

performance of government’s functions particularly, in the implementation
of government programs and projects.
The collection function is being performed by several government agencies

in charge of collecting taxes, duties and other fees required under existing
laws, rules and regulations. One of the collection arms of the government is
the Bureau of Internal Revenue (BIR).
Collections are undertaken either by the National Collecting Officers

(NCOs) or Local Treasurers (LTs) designated as such, and the Authorized
Agent Banks (AABs) in the case of the BIR. They are governed by rules
and regulations issued by the Department of Finance (DOF), the Bureau of
the Treasury (BTr), the Bangko Sentral ng Pilipinas (BSP), the Department
of Budget and Management (DBM), the Commission on Audit (COA), and
the BIR.
As required under existing guidelines, collections should be accounted for

as follows:
• Over-the-counter collections by AABs of BIR are remitted to the

BSP on the 6th day from the date of collection, while the Electronic
Filing and Payment System(EFPS) collections by AABs are remitted
to the BSP on the 5th day from the date of collection, except
collections by the LBP and the DBP from large taxpayers which are
directly credited to BTr account maintained with these banks;
• Collections by the designated Revenue Collection Officers (RCOs)

are deposited to the BTr account maintained with the Authorized
2
EXECUTIVE SUMMARY
Government Depository Banks (AGDBs) on the day of collection or

on the following day for collections after the deposit has been made.
These deposits are available for withdrawal by the BTr on the 6th day
after the date of deposit.
As of audit date, the BIR has 22 AABs and 5 AGDBs.
For CY 2002, the BIR reported total collections of P 394.549 Billion which
accounts for at least 70% of the government’s total collections. The role of
the BIR is therefore very crucial.
The BIR’s performance was perceived to have been greatly affected by

changes in the global economy and a tax administration system that had
become unresponsive to the needs of the taxpayer and the government.
It is in this light that the BIR transformation process was initiated. As the
country’s primary revenue-generating agency, efforts have been made to
introduce changes in the quality of tax administration. There was a decline
though in the BIR’s performance for the past years that translated into a
widening gap between actual and targeted collection.
The role of BIR in the national collection system can best be described by
its Mission which is to raise revenues for the government through effective
and efficient collection of taxes, quality service to taxpayers, and impartial
and uniform enforcement of tax laws. With this, the BIR envisioned to
achieve the following:
• Taxpayers’ satisfaction with BIR services;

• Efficient and effective tax administration;
• Streamlined and more productive organization;
• Agency with fiscal and administrative flexibility;
• Professional, highly skilled, morally upright, motivated and satisfied
employees; and
• Improved image of the agency.
One of the measures undertaken by BIR, in coordination with the Bankers

Association of the Philippines (BAP), to enhance tax revenue collection and
remittance, was the introduction of Electronic Filing and Payment System
(EFPS). The system allows the automatic debiting of the taxpayer’s
account for payment of tax liabilities and crediting the account of the
Treasurer of the Philippines (TOP). Such an electronic set up will eliminate
the need to issue checks that could be diverted to other accounts. The new
system is open to small and medium-scale corporations and other taxpayers
that pay taxes through the AABs of the BIR. Large Taxpayers are required
to pay their taxes through this system since August 1, 2002.
3
EXECUTIVE SUMMARY
AUDIT OBJECTIVE
The audit was conducted to assess the adequacy of existing policies,

procedures and controls on national collections and effectiveness of their
implementation in ensuring that collections by the AABs and the RCOs are
deposited and remitted to the BTr account on time and are accurately
reported and recorded in the books of the BTr and the BIR.
AUDIT SCOPE AND METHODOLOGY
The audit focused on the evaluation of existing systems and procedures in

ensuring that collections are deposited and remitted to the BTr and are
accurately reported and recorded. The validation of existing systems was
tested on recorded collections and remittances between the period January
2002 to June 2003. The audit covered five (5) national government agencies
including the BIR.
The team assessed the adequacy of policies and procedures on the basis of
the following criteria:
• Adequate, clear and well-defined policies and procedures on

deposit, remittance, reporting and recording of collections;
• Sound monitoring and control mechanism; and
• Accurate and reliable accounting and recording system.
During the audit, the team performed the following procedures, among
others:
• Studied the system of national collection and existing

guidelines affecting the deposit/remittance, reporting,
recording and reconciliation;
• Assessed the adequacy of the existing system;
• Interviewed personnel involved in the collection system;
• Prepared and evaluated flowcharts for various collection
schemes such as collection by NCOs/RCOs, thru Electronic
Filing and Payment System (EFPS), Over-the-Counter
(OTC) for Large and Regular Taxpayers and Payment of
Banks’ Own Tax Liabilities;
• Compared the agency records with the BSP’s and BTr’s
records, and evaluated and assessed the discrepancies noted;
• Assessed the accuracy of records of the BIR; and
4
EXECUTIVE SUMMARY
• Analyzed remittance of collections by AABs and

RCOs/NCOs for selected months.
The audit was conducted from July 1, 2003 to February 23, 2004 pursuant
to MS/TS Office Order No 2003-008 dated June 24, 2003.
AUDIT CONCLUSION
The audit disclosed that the existing policies and procedures to ensure that
AAB collections are accurately established and corresponding remittances
are properly reported and recorded were inadequate. Likewise, the control
mechanisms required under existing regulations to monitor unremitted
collections were not in place. These deficiencies are evident on the
following instances:
• The documents to be used by the BIR and the BTr as basis for
recording collections and remittances under various schemes were not
specifically identified under existing rules and regulations. In other
cases, the specified documents were no longer appropriate under the
newly established collection schemes. In view of this deficiency, the
BIR sometimes records collections only upon remittance or based on
BTr collection data. The BTr collection data were also used to record
remittances. This resulted then in a situation where the BIR’s
reported remittances exceeded the reported collection by P2.204B for
CY 2002 alone. The abnormal balance of the tax revenue account
was also affected by errors in recording collections and remittances as
noted by the team in the sampled transactions. Under this condition,
any unremitted collection was not at all established and monitored by
the BIR.
In like manner, the BTr was not also able to properly monitor
remittance of collection due to its failure to maintain the required
subsidiary ledger per AAB to monitor unremitted collections at any
given time. The presence of huge outstanding balance of
P3,087,839,353.91 as of January 2003 under the BTr account “Other
Receivable-Due from AABs” implies unremitted collections for the
period August-December 2002. Several errors in recording were,
however, noted by the team in the two sampled months transactions.
• The AABs’ failure to remit collections on time was also manifested in

the penalties and surcharges imposed by the BIR amounting to
P19,099,411.16 from CYs 1998 to 2002 remained uncollected as of
December 2003. The AABs were also penalized for late submission
of reports which amounted to P2,213,686.86 for the same period.
5
EXECUTIVE SUMMARY
Even collections by the RCOs were not also properly controlled. In several
instances, an RCO was accumulating his collections for 3 to 7 days before
these were deposited in tranches with amounts retained ranging from
P85,240.76 to P4,418,408.40. Other RCOs were submitting reports from 3
to 146 days after the deadline. The total deposited collections could not
also be established in the presence of unreconciled books of the BIR and
the BTr with a difference of P2,350,217,523.33 for CY 2002 alone.
Despite this condition, the BIR did not take any action to impose
compliance by the RCOs on existing regulations and to reconcile the BTr
and BIR records when data on deposited collections could be secured from
the BTr District Office upon request.
These deficiencies not only exposed government collections to possible loss

or misappropriation but also adversely affected the cash position of the
government and the required funding to finance government projects.
As collection function is a vital component in ensuring economic

development, these concerns should be immediately addressed by the BIR
and the BTr. The team recommended certain measures to address these
concerns for consideration by these agencies.
MANAGEMENT’S REACTIONS TO AUDIT OBSERVATIONS
The results of the audit were forwarded to the BIR on June 10, 2004.
Overall, the Management acknowledged the existence of the problems and
enumerated constraints affecting their performance. Nonetheless, they are in
the process of initiating changes to address these concerns.
6
THE NATIONAL COLLECTION SYSTEM
A. Collections by RCOs/SCO
NATIONAL COLLECTION THROUGH REVENUE/SPECIAL

COLLECTING OFFICER - BIR
CONTEXT DIAGRAM
Collection Data
(10.0)
lines
Guide
(1b.0)
COA
BRS Data
(9a.0)
BTr-JEV ns
io
(7.0) ct Guide
ll e ata EV lines
o D -J (1d.0)
C )
Tr 0
B (8. es
in
BTr Co
De llec ui
del 0)
.
po tio G (1e
si ns
AN ts D & DOF
(6. C ata
0)
BIR's es
lin
BR
S
MB
S
RCOs/ de 0)
ui 1a.
G (
(9 D (5. Dat
b. at
0) a 0) a SCO
Co
lle d
cti ate
(4. on D lid ion
0) ata Va llect
Co Data )
0
(3.
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an es
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Co epos .0) ui .
D (2 G (1c
AGDB
LEGEND:
AGDB - Authorized Government Depository Bank

ANC - Abstract of National Collections
BRS - Bank Reconciliation Statement
BTr - Bureau of the Treasury
BTr-JEV - BTr- Journal Entry Voucher
COA - Commission on Audit
DOF - Department of Finance
MBS - Monthly Bank Statement
RCOs/SCO - Revenue/Special Collecting Offiicer
20
Part II
The National Collection System
7
INTRODUCTION
National Collection refers to all fees, charges, assessments, and revenues

collected by departments, bureaus, offices or agencies in the exercise of
their functions, at such rates as are now or as may be approved by the
Secretary concerned, for remittance to the BTr. The collection function is
guided by the following principles:
• Collection by NCOs should be deposited intact on the day of

collection or the following day for collections after the deposit
had been made to the designated AGDBs; and
• Collections by the AABs of BIR should be remitted on the 6th day
for OTC collections and 5th day for EFPS collections, counted
from the date of collection.
AGENCIES RESPONSIBLE IN THE COLLECTION FUNCTION
The agencies that play a great role in the collection system follow:
AGENCIES FUNCTIONS
Department of Formulates fiscal policy; and

Ensures adequate financing needs of the country.
Finance
Maintains books of accounts of cash transactions of the

National Government (NG);
Manages the NG cash resources;
Issues, services, redeems government securities for the
account of the NG as may be authorized by the President
Bureau of the pursuant to law; and
Treasury Administers the Securities Stabilization Fund by purchase
and sale in the open market of government bills and bonds
to increase the liquidity and stabilize the value of said
securities in order to promote private investment in
government securities.
Assesses and collects national internal revenue taxes, fees

and charges;
Enforces all forfeitures, penalties, fines and executes
Bureau of Internal judgments in all cases decided in its favor by the Court of
Revenue Tax Appeals and the ordinary courts; and
Administers supervisory and police powers conferred under
the National Internal Revenue Code as amended by R.A.
8424 or other laws.
8
AGENCIES FUNCTIONS
Receives remittances of the BIR and other collecting

Bangko Sentral agencies and maintains the TOP accounts; and
Ng Pilipinas Informs the BIR and the BTr on amounts remitted by the
AABs.
Maintains TOP account;

Informs the BTr of the balance of the TOP account;
At present, there are five AGDBs accredited by the BTr:
Authorized
¾ Land Bank of the Philippines
Government
Depository Banks
¾ Development Bank of the Philippines
¾ Philippine National Bank
¾ Philippine Postal Savings Bank
¾ Philippine Veterans Bank(PVB)
Collect taxes and fees for the account of the BIR;

Remit to the BTr the amount collected on the 6th day for
BIR-OTC collections, 5th day for BIR-EFPS collections
and on the 11th day for BOC collections; and
At present, there are 22 AABs accredited by the BIR:
¾ Allied Banking Corporation
¾ Bank of America
¾ Bank of Commerce
¾ Banco de Oro Universal Bank
¾ BPI-FEBTC
¾ China Banking Corporation
¾ Dev’t. Bank of the Philippines
Authorized Agent
¾ Equitable-PCIB
Banks
¾ International Exchange Bank
¾ Land Bank of the Philippines
¾ Metropolitan Bank and Trust Company
¾ Phil. Bank of Communication
¾ Philippine National Bank
¾ Philippine Trust Company
¾ Philippine Veterans Bank
¾ Prudential Bank
¾ Rizal Commercial Banking Corporation
¾ Security Bank Corporation
¾ Standard Chartered Bank
¾ Union Bank of the Philippines
¾ United Coconut Planters Bank
¾ United Overseas Bank, Philippines
9
THE BIR
The BIR is created through the passage of Reorganization Act No. 1189
dated July 2, 1904. Since then, the BIR had undergone series of
reorganization including enhancement in tax administration system. Under
Executive Order No. 937 dated March 7, 1984, the BIR is vested with the
primary responsibility of enforcing collection of national internal revenue
taxes through the banking system. As such, the BIR was authorized to
accredit agent banks to accept taxpayers’ payment of internal revenue taxes.
The BIR is tasked to raise revenues for the government through effective
and efficient collection of taxes, quality service to taxpayers and impartial
and uniform enforcement of tax laws. These functions are implemented by
the following offices and divisions:
OFFICE DIVISION/SERVICE
• Policy and Planning Sevice;

OFFICE OF THE
COMMISSIONER
• Enforcement Service; and
• Large Taxpayers Service
• Information Systems Operations

OFFICE OF THE
DEPUTY
Service;
COMMISSIONER, • Information Planning & Quality
INFORMATION Service; and
SYSTEM GROUP • Information Systems Development
Service.
OFFICE OF THE • Taxpayers Assistance Service;

DEPUTY • Assessment Service; and
COMMISSIONER,
• Collection Service.
OPERATIONS
GROUP
10
OFFICE DIVISION/SERVICE
OFFICE OF THE
DEPUTY • Legal Service; and
COMMISSIONER, • Inspection Service.
LEGAL &
INSPECTION
GROUP
OFFICE OF THE
DEPUTY • Human Resource Development
COMMISSIONER, Service; and
RESOURCE • Financial and Administration
MANAGEMENT Service.
GROUP
The BIR has 19 Revenue Regions and 115 Revenue District Offices
distributed as follows:
REVENUE REGION NO./LOCATION NO. OF RDOs
1 / Calasiao, Pangasinan 6(1-6)
2 / Cordillera Administrative Region 5(7-12)
3 / Tuguegarao, Cagayan 4(13-16)
4 / San Fernando, Pampanga 7(17-23)
5 / Valenzuela 4(24-27)
11
REVENUE REGION NO./LOCATION NO. OF RDOs
6 / Manila 9(29-37)
7 / Quezon City 9(28,38-

43,45,46)
8 / Makati City 8(44,47-53)
9 / San Pablo City 10(54-63)
10 / Legaspi City 7(64-70)
11 / Iloilo City 5(71-75)
12 / Bacolod City 4(76-79)
13 / Cebu City 5(80-84)
14 / Tacloban City 6(85-90)
15 / Zamboanga City 6(91-96)
16 / Cagayan de Oro City 6(97-102)
17 / Butuan City 4(103-106)
18 / Cotabato City 5(107-111)
19 / Davao City 4(112-115)
12
The BIR National and the Revenue Regional/District Offices are

authorized to collect the following types of taxes:
• Taxes on Net Income and Profit;

• Excise Taxes;
• Value Added taxes;
• Percentage Taxes;
• Withholding Taxes;
• Transfer Taxes; and
• Other Taxes
GOVERNING RULES AND REGULATIONS
The BIR’s RCOs and AABs are guided by various BIR Revenue
Regulations (RRs) and Revenue Memorandum Orders (RMOs) as well as
by the rules and regulations issued by the DOF and BTr. Some of these
rules and regulations are enumerated below:
ISSUING CIRCULAR/MEMO
OFFICE NUMBER PARTICULARS
Simplify the system of deposit of

Dept. Order No. 52-96
national collections to the TOP
and 20-99 dated 5/22/96
account with authorized
and 8/01/99
government depository banks.
Requiring all NCOs/LTs to

Dept. of
submit Monthly Report of
Finance Dept. Order No. 20-99 Collections and Deposits to the
(DOF) dated 8/01/99 Treasury Fiscal Examiners
concerned.
Creating and maintaining of

deposit accounts by the BTr
Dept. Order No. with BIR/BOC AABs
73-02 dated 9/20/02
including imposition of
penalties by BTr.
13
Guidelines on handling manual

E. O. No. 26, s of 2003 tax payments of large and excise
dated 8/14/03 taxpayers by LBP branches and
BIR tellering booths.
LBP
E. O. No. 28, s. of 2003 Amendments to the guidelines on

the BIR EFPS.
Collection of internal revenue

Memorandum of taxes and remittance of the same
BIR/LBP Agreement to the BTr in accordance with
/AAB dated 7/02/02 BIR issuances listed in Annex-1
of the MOA.
BSP/ Adoption and implementation of

MOA dated 7/03/97 EFTIS.
BAP
Order Nos. 01- Prescribing the codes to be used

2002 dated for government transactions
05/06/02 and pertaining to revenues/income and
01-2002A dated expenses.
08/22/02
BTr
Circular No. 5- Procedures in reporting deposited

2003 dated national collections.
10/08/03
Circular No. Secs. 22 to 23, Manual for

COA 2002-02 dated National Government Accounts
06/18/02 (NGAS) Vol. 1.
14
Making Electronic Filing/

RR No. 2-2002 dated Payment mandatory for large
3/5/02 taxpayers and optional for certain
identified non-large taxpayers.
RR 9-2002 dated
6/28/02
RR 26-2002 dated Guidelines for filing and payment
11/19/02
thru EFPS for large and non-large
RMO 5/2002 dated
4/01/02 taxpayers.
RMO 19/2002 dated
7/09/02
BIR RR No. 16-2002

Prescribing the modes for the
dated 10/11/02
payment of internal revenue taxes
RMO 19-97 dated
thru AABs.
04/18/97
Prescribing the policies,

guidelines and procedures for
RMO No 42-98 processing payment data from
dated 05/18/98 AABs under non-computerized
RDOs using the LBDES
replacing the New Payment
Control System (NPCS).
Prescribing the policies and

procedures for processing and
RMO No. 4-99
monitoring of commercial &
dated 10/27/98
universal banks’ own tax
liabilities.
15
Standard procedures for the

submission and processing of
payment data & documents from
RMO 20-99 dated AABs under RDOs within &
02/10/99 outside Metro Manila/Metro
Cebu amending RMO 1-99 &
42-98.
Policies, guidelines & procedures

RMO 32-99 dated for AABs conversion from NPCS
3/11/99 to LBDE/EDT.
Revised policies, guidelines

and procedures in the
processing of
BIR application/renewal of bank
accreditation of AABs;
RMO 30-2001 dated Disaccreditation of AABs;
11/12/01 AABs’ merger/buy out, change
of name or addresses;
Monitoring of performance of
AABs; and imposition of
penalties on AABs’ violations
and settlement of unremitted
collections.
Revision of RMO No. 63-94

RMO 25-2001 dated clarifying the procedures on
10/16/01 receipt, processing, control,
transmittal and collection of
Returned/ Dishonored Checks
received thru AABs.
TOTAL COLLECTIONS FOR CY 2002
For CY 2002, the reported total collections of internal revenue taxes

amounted to P394.549
P billion which accounts for at least 70% of the
government’s total collections.
16
2002 COLLECTION BY MAJOR TYPE OF TAX
OTHER PERCENTAGE TAXES –6%
Banks/Financial Institution P 9.645

Insurance Premiums 1.125 OTHER TAXES – 5%
Amusements 0.142 Transfer Taxes P 0.528
Other Percentage 11.714 Documentary
Taxes on use of goods Stamp Tax 14.064
or permission to perform Travel Tax 0.380
activities (Franchise Tax) 1.392 Miscellaneous 6.124
Total P24.018B Total P 21.096B
Value-Added Taxes – 17%

Total P 65.932
INCOME TAXES – 58%

EXCISE TAXES – 14% Company, corporate enterprise P 100.758
Alcohol Products P 12.862 (Corporate, Withholding at source)
Tobacco Products 20.064 Individual 86.436
Petroleum Products 21.957 (Individual, Withholding on wages,
Mining/Mineral Products 0.152 Capital gains, Withholding at source)
Miscellaneous Products 1.960 Others 39.039
Tobacco Inspection Fee 0.004 (Bank deposits, Treasury Bills)
Total P56.999B Total P226.503B
THE DEPOSITORY ACCOUNTS
The collections of internal revenue taxes are deposited/remitted to the

accounts of the BTr in the following manner:
COLLECTIONS THRU
RCOs/NCOs COLLECTIONS THRU AABs
The BTr maintains three Savings The BTr maintains deposit account
Accounts in each AGDB, one each for with the AABs where collections
BIR, for BOC and for Other Agencies from internal revenue taxes and
where all collections by NCOs/LTs are customs duties are being deposited
deposited. Each agency has a before these are remitted to the BSP
designated depository bank. on the 6th day following the
collection date.
17
THE COLLECTION FLOW
The flow of the different collection modes are briefly discussed

below and presented in context diagrams on the next pages:
After collecting fees and other revenues, the collecting officers

deposit their collections with the AGDBs for the account of the
BTr. The collection flow under this mode is presented in the
context diagram on page 20 with the detailed flowchart attached as
Annex 1.
B. Collections by AABs
The BIR at present is adopting the following collection schemes:
¾ Electronic Filing and Payment System (EFPS)
The EFPS is a payment scheme of the BIR wherein taxpayers instruct

their respective AABs to debit their accounts representing payments
of taxes and credit the BTr/BIR account. Before a taxpayer can use
this scheme, the BTr/BIR first accredits the AABs to their EFPS
facility after satisfying certain requirements. As of audit date, there
are eight (8) AABs accredited to use this payment scheme namely:
Land Bank of the Phils. (LBP), Development Bank of the Phils.
(DBP), Equitable-PCI Bank, Metropolitan Bank and Trust Co.,
Philippine National Bank (PNB), Security Bank and Trust Co., Union
Bank, Bank of the Philippine Islands (BPI).
Collections by LBP are credited to the BTr-BIR Large Tax Savings

Account (LTSA) maintained at LBP Intramuros Branch and become
available for disposal by the BTr on the 5th day. Collections by other
participating banks are remitted to the Regular Demand Deposit
Account (RDDA) of the TOP maintained at the BSP on the 5th day
following the collection date.
¾ Over-the-Counter (OTC) Large Tax Payment Scheme
This scheme covers large taxpayers paying their taxes to LBP, DBP
and PNB either in cash or in check. Such collections are credited to
18
the BTr/BIR accounts maintained at these banks. Collections are

made available for use by the BTr on the 6th day.
¾ Over-the-Counter (OTC) – Regular/Other Taxpayers

[Commercial Banks and Authorized Government
Depository Banks (AGDBs)]
This system covers payments of other taxpayers paying their taxes to

AABs other than the LBP and DBP in cash or in check. Collections
are credited to the BTr account maintained with the respective bank.
Collections are remitted by the AABs to the BSP on the 6th day by
instructing the BSP to debit their demand deposit accounts maintained
thereat. The BSP then notifies the BTr thru the BSP FTI-Registry that
they have credited the TOP-RDDA.
¾ Banks’ Own Tax Liabilities
The banks pay their own tax liabilities by instructing the BSP to debit
their demand deposit account thereat and credit the TOP RDDA.
The collection flows under the different modes are presented in

context diagrams on pages 21 to 25 with the detailed flowcharts
attached as Annexes 2 to 5.
19
NATIONAL COLLECTION THROUGH REVENUE/SPECIAL

COLLECTING OFFICER - BIR
CONTEXT DIAGRAM
Collection Data
(10.0)
lines
Guide
(1b.0)
COA
BRS Data
(9a.0)
BTr-JEV ns
io
(7.0) ct Guide
ll e ata EV lines
o D -J (1d.0)
C )
Tr 0
B (8. es
in
BTr Co
De llec ui
del 0)
.
po tio G (1e
si ns
AN ts D & DOF
(6. C ata
0)
BIR's es
lin
BR
S
MB
S
RCOs/ de 0)
ui 1a.
G (
(9 D (5. Dat
b. at
0) a 0) a SCO
Co
lle d
cti ate
(4. on D lid ion
0) ata Va llect
Co Data )
0
(3.
d
an es
tion ata in
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Co epos .0) ui .
D (2 G (1c
AGDB
LEGEND:
AGDB - Authorized Government Depository Bank

ANC - Abstract of National Collections
BTr-JEV - BTr- Journal Entry Voucher
DOF - Department of Finance
RCOs/SCO - Revenue/Special Collecting Offiicer
20
BIR COLLECTION OF BANKS' OWN TAX LIABILITIES
CONTEXT DIAGRAM
ta
nce Da
Remitta )
(8.0
Penalty on Late
Data
BTr
Payment/
ction
Remittance Gui
dl Colle r-JEV
BT
(10.0) (2b eine (9.0)
.0) s
AAB/AGDB
Rem
(Taxpayer) itta
Da JEV
D nce
TR/ ata BIR
(12 ta
r-
B
.0)
Reg S P
BT
istr FTI Gui
y deli
(7.0 Data (2a. nes
BS
) 0)
P
BIR
FT (EF 0)
-JE
V
G (1
LR /BRS
I R TIS
ce
ui e.
Da /
an
de 0)
eg )
Dat ons
itt ta (11. ta
lin
(4
ist
0)
em a )
es
Re ( (3
COA
.
i
ry
(16. a
lect
R D 5.0
0)
m EF .0)
Da
( Gu (1a
itt TI
Co Dat 0)
Co l
an S)
ta
id .0)
lle a
ce
el
cti
in
(13
Da
0) es
es
on
(1 elin
ta
d
b.
ui
G
es
lin
uide .0)
Note: BSP G (1d
Guidelines
Payments
remitted
(1c.0) DOF
ta
to BSP Da
nce
tta )
a mi (6.0
Dat Re
BRS .0)
ata (15
MBS D
(14.0)
LEGEND:
BIR - Bureau of Internal Revenue

IR-JEV - BIR - Journal Entry Voucher
BSP - Bangko Sentral ng Pilipinas
BSP FTI Registry - BSP Fund Transfer Instruction
BTr-JEV - Bu. of the Treasury - Journal Entry Voucher
EFTIS - Electronic Fund Transfer Instruction System
TR - Tax Return
21
BIR COLLECTION OF TAXES through ELECTRONIC FILING &

PAYMENT SYSTEM (EFPS)
Other Banks
CONTEXT DIAGRAM
or
ail Bank Statement
( E-m
ta (19.0)
n Da x)
t i o Fa . 0 ) bit Data
ll ec 0 to D e
Co (1 Authority )
(EFTIS BR
(11.0) S
(2 2 Da ta
.0)
Guidelines
(3a.0) BSP Gu
a
id
t
Da
Re (3 elin
y m b.
0) es
(1 TIS istr
itt
a
(L n c
(E eg
0) )
Taxpayer
0) es
( 1 NS e D
IR
3a )
F
(3 elin
at
2.
FT
St Ba . a
at nk 0)
id
P
c.
Note: (2 em
BS
Gu
ta 1. en
Da S)
a
0) t
BTr
(4. S) ta
a t
collections TR FP )
a
D
(5. S) o.
remitted to ( E 6 .0 ( E nt D
( L nc e
N
( ta
(13 S)
ta Da
)
(EF Ref.
FP
e
BSP
b.0
Da 0)
N
tta
ce
ym
n
tta
P
n
mi
0)
io mi
Pa
at S) i ng
Re
/ Re - J E V
irm EFP 0)
Fil
n
f tio BTr .0)
/ FS
n ( 7. ec
Co ( ol l (1 4
Da -JEV
C
Guidelines Gu
(15 ta
Tr
id
.0)
AABs (2b.0)
BIR (2 elin
S/B
a.
0) es
BR
C
Re oll
ct ay m n/
.0 D t/ /
mi ec
(9 ion en ent
lle P dge tio
tta tio
Co Tax le rma
BI n n
R ce D /
TR kno x P ion
Ac E-T llec (8.0
(1 6 -J E V a ta
E- now nfi
at
m
/C wl ay Da
. 0)
on ed m ta
ata
COA
Ac R/ C
C
Co
fir ge ent
ol
a t
(18 ns D
m m /
le (1
k
at en
ct 7.
io 0)
.0)
io t/
s
s
(1b line
ns
(2 c n e
n/
c ti
D
i
.0)
lle
)
.0)
l
ide
at
i de
Co
a
. 0) s
Gu
(1a line
Gu
ide
AYALA
0) es
Gu
(1 elin
PORT
id
c.
Gu
Guidelines DOF
(1d.0)
BRS Data
(20.0)
LEGEND:
AABs - Authorized Agent Banks BTr-JEV - Bu. of the Treasury - Journal Entry Voucher
BIR - Bureau of Internal Revenue COA - Commission on Audit
BIR-JEV - BIR - Journal Entry Voucher DOF - Department of Foreign Affairs
BRS - Bank Reconciliation Statement EFPS - Electronic Filing & Payment System
BSP - Bangko Sentral ng Pilipinas EFTIS - Electronic Fund Transfer Instruction System
BSP FTI - BSP Fund Transfer Instruction LNS - Lotus Notes System
BTr - Bureau of the Treasury TR - Tax Return
22
BIR COLLECTION THROUGH OTC FROM LARGE TAXPAYERS

LBP/DBP/PNB
CONTEXT DIAGRAM
BTr
BRS )
(13.0
ta
ta
BI
Da
Da B/S
R-
n -
(8. JEV nce
JE (12.
tio SA
c T
V/ 0)
C
lle A/L .0)
ta
BR
ol
o
BT emit
Note: Collections 7
le (1
C / D (
Gu (1b.0
S
ct 4.
credited to the CA
io 0 )
0)
Da
i de )
r-
n/R
ns
respective
ta
lin
D
tio
at
accounts
es
c
a
lle
maintained by
es
Co
BTr in each bank. lin
/ ide )
te ce Gu (2b.0 ata
L a ta n SD
on mit rors Gu / BR )
lty e Er
na g/ R a l
i de
(2a line
.0) s BT
E V
r-J (11
.0 COA
Pe rtin dur ta
p o ce Da .0)
Re Pro (1
0
LBP/DBP/ Collection/ BIR

Adjustments Data
PNB BCS(LBDES)
Guid c.0)
(6.0)
Co
me ata
(1
ll ec
elin
nt s
tio
(5. Docu ts D
(15 ns
es
.0) Dat
ta
en
a
0) tte Da
tin m
Va
or ire
(9. Le yt.
0)
lid (4
r
pp qu
nd Pa
at .0)
Gu
Su x Re
ed
ma ate
i de
Pa AD OL .0)
(1a line
DP
De n L
ym /DP Sy
(O
Ta
.0) s
S
N
en S / T st e
o
-C (3
tD R m
lty
at
na
a
DOF
Pe
)
Taxpayer
ines
Guidel
(1d.0)
LEGEND:
AD - Authority to Debit DA - Debit Advice

BCS - Batch Control Sheet DBP - Development Bank of the Philippines
BIR - Bureau of Internal Revenue DPS - Deposit Payment Slip
BIR-JEV - BIR - Journal Entry Voucher LBDES - Limited Bank Data Entry System
BRS - Bank Reconciliation Statement LBP - Land Bank of teh Philippines
BTr - Bureau of the Treasury LTSA B/S- Large Taxpayers Savings Account Bank Statement
BTr-JEV - Bu. of the Treasury - Journal Entry Voucher ON-COL - On-Line Collection System
CA - Credit Advice TR - Tax Return
23
BIR COLLECTION OF TAXES THROUGH OTC

FROM REGULAR/OTHER TAXPAYERS
CONTEXT DIAGRAM
a at a
Dat nD MB S D
ata
BRS 0.0) ectio
(1 Coll (5b.0) (9.0)
BRS Data
(12.0)
BTr
BSP ce Data a
ittan ) at
Rem S D ns
(8a.0 MB 3.0) io
(1 ct
o lle a t a )
C D 8 .0
y
FT a ce ( FT a istr
(1
0) es
(E Dat eg
Gu
(1 elin
Re ide
IR
d
(1c line
BTr-
b.
m
7. IS)
FT
ui
Colle r-JEV
D itta .0) s
G
P
0)
(8 ata n c
BS
JEV/B )
b. e
BT
ction
0)
(14.0
(11.0
DOF
(E Dat tan
R SD
Data
t
)
i
m
.0 )
(6 IS
Note: es
Re
ata
Guidelin
)
(1e.0)
collections Gu
remitted to id
Penal (1d eline
BSP AAB/ Report ty on Late
ing/R .0) s
(1a line
.0) s
Proced emittance/
ide
AGDB ural Err

ors
Gu
Data s
Da tion
(16.0) (18 ta
c
.0)
lle
Va Gu
lid Collec id
COA
Co
D a te Adjustm tion/ (2b eline

(4 P S d ents D . 0) s es
.0 BCS(L ata lin
) B DE S ) i de )
DP (5a.0) G u (2a. 0
S RS
(O /TR V/B
-J E
Sy N- D
s C a
(3 tem OL ta ta
BIR BIR Data
)
.0 Da (15.0
) ) TR 5.0)
(
Taxpayer ate
nL
y o ta
n alt t.Da
Pe Pay 7.0)
(1
LEGEND:
BCS - Batch Control Sheet DPS - Deposit Payment Slip

BIR - Bureau of Internal Revenue EFTIS - Electronic Fund Transfer InstructionSystem
BIR-JEV - BIR - Journal Entry Voucher LBP - Land Bank of the Philippines
BRS - Bank Reconciliation Statement LBDES - Limited Bank Data Entry System
BSP FTI - Bangkop Sentral ng Pilipinas Fund Transfer LR - List of Remittance
Instruction MBS - Monthly Bank Statement
BTr - Bureau of the Treasury ON-COL - On-Line Collection System
BTr-JEV - BTr- Journal Entry Voucher TR - Tax Return
24
BIR COLLECTION OF BANKS' OWN TAX LIABILITIES
CONTEXT DIAGRAM
ta
n ce D a
Remitta )
(8.0
Penalty on Late
ta
BTr
Payment/ Da
ction
Remittance Gui Colle r-JEV
dl BT
(10.0) (2b eine (9.0)
. 0) s
AAB/AGDB
(Taxpayer) Re m
itta
Da JEV
D nce
TR/ ata BIR
(12 ta
r-
.0)
B
Reg SP F
BT
istr TI Gui
y del
(7.0 Data (2a ines
BS
) .0)
P
BI R
FT (EF 0)
-JE
LR V/BRS
G (1
ce
I R TIS
ui e
an Da /
de .0)
eg )
Dat ons
i tt ta (11 ta
lin
(4
ist
.0)
em Da .0)
Re ( (3
es
.
i
COA
ry
a
lect
.0)
R
m EF .0)
(5
Da
G
itt T
Co Dat )
(16
Col
ui 1a.0
an IS
ta
lle a
de )
ce )
(
lin
ct i
( 13
0) es
Da
es
on
(1 elin
ta
.0
d
b.
ui
G
es
lin
ide )
BSP Gu (1d.0
Note:
Guidelines
Payments (1c.0) DOF
remitted
at a
to BSP eD
ta nc
t )
a mi (6.0
Dat Re
BRS 5.0)
ata (1
MB S D
(14.0)
LEGEND:

IR-JEV - BIR - Journal Entry Voucher
BSP FTI Registry - BSP Fund Transfer Instruction
BTr-JEV - Bu. of the Treasury - Journal Entry Voucher
TR - Tax Return
25
THE SYSTEM OF RECORDING COLLECTIONS
The BIR’s accounting system for collections by NCOs is decentralized.

Collections and deposits are recorded at the Revenue Regional Offices
(RROs) based on report of collections and deposits submitted by
RCOs/RDOs. Based on Trial Balance submitted by RROs, accounts are
posted in the General Ledger at the BIR’s National Office. On the other
hand, collections thru AABs are accounted and booked at the National
Office. For CY 2002, these collections and deposits/remittances are
recorded in the books of accounts of the BIR and BTr using the following
entries:
BIR Books BTr Books

Basis of Basis of
Journal Entries Recording Journal Entries Recording
A. Collections by RCOs/SCOs
Collections Collections
None Cash Collecting RCD

Officer xx
Due to National
Treasury xx
Deposits/Remittances Deposits/Remittances
Cash in Bank xx Credit Due to National

Tax Revenue -700 xx Advice(CA) Treasury xx -do-
from the Cash collecting
Bank Officer xx
B. Collections by AGDBs andAABs

• EFPS (LBP and DBP)
Cash in Bank-Local Currency Other Demand Deposit

Savings Receivables-Due Account Statement
Account (LCSA) xx BTr JEV for from LBP or DBP xx Inquiry (DDASI) of
Tax Revenue xx collections Tax Revenue xx the Mother or Sub-
hinged Accounts.
26
BIR Books BTr Books

Basis of Basis of
Remittances Remittances
Tax Revenue xx BTr JEV for Cash in Bank-BIR LTSA DDASI of the
Cash in Bank collections (LBP No. 0011-2597-82 xx Mother or Sub-
LCSA xx Cash in Bank BIR-LTSA hinged Accounts
(DBP No.5-10729-405-1) xx
Other
Receivables-
Due from
AABs (LBP) xx
• EFPS – Commercial Banks

Cash in Bank- BSP List of Other Daily e-mail

LCSA xx Remittances Receivables- messages from the
Tax Revenue xx Due from AABs of the total
AABs xx amount credited to
Tax Revenue xx the TOP accounts.
Tax Revenue xx BTr JEV for Cash in Bank- BSP List of

Cash in Bank- collections TOP RDDA xx Remittances
LCSA xx Other
Receivables-
Due from
AABs xx
• Over-the-Counter – Large, Excise Large Taxpayers and Large Taxpayers District

Office (LBP, DBP and PNB)
Cash in Bank- BTr JEV for Cash in Bank-LTSA Credit side of the
LCSA xx collections (LBP No.0011-2597-82/ Large Tax Inquiry
Tax Revenue xx 11-2799-45 ) xx Account (LTIA)
(DBP No.5-00125-460-0/ and/or credit advices.
5-00201-460-7/
5-00343-460-4) xx
( PBB No.072-570049—0/
072-561042-4/
072-552027-1) xx
Tax Revenue xx
Remittance Remittance
Tax Revenue xx BTr JEV for Same entry

Cash in Bank- collections
LCSA xx
• Over-the-Counter – Regular/Other Taxpayers

Cash in Bank- Other Receivables- Daily e-mail

LCCA xx Consolidated Due from AABs messages of the total
Tax Revenue xx Report of Daily (beg. 9/2002 to amount credited to
Collections 12/2002) xx the TOP
(CRDC)
27
BIR Books BTr Books

Basis of Basis of
submitted by Cash in Bank-

the AABs AABs (effective
1/2003) xx
Tax Revenue xx
Tax Revenue xx BTr JEV for Cash-BSP- BSP List of

Cash in Bank collections RDDA xx Remittances
LCCA xx Other
Receivables-
Due from
AABs
(beg. 9/2002
to 12/2002) xx
Cash in Bank-
AABs (effective
1/2003) xx
• Bank’s Own Tax Liabilities

Cash in Bank- BSP List of Cash in Bank- BSP List of

LCCA xx Remittances (RDDA) xx Remittances
Tax Revenue xx and DTR Tax Revenue xx
Tax Revenue xx BTr JEV for

Cash in Bank- collections Same entry
LCCA xx
THE SYSTEM OF REPORTING COLLECTIONS
The BIR’s RCOs/NCOs and the AABs prepare the reports shown on the
next page.
28
RESPONSIBLE SUBMITTED
OFFICER REGULATIONS REPORTS CONTENTS TO
NGAS Detailed
Report of schedule of
Manual,
Collections & collections
Vol. I,
Deposits and deposits.
Acctg.
Policies
Detailed
breakdown
of checks
RCOs/ dishonored
Report of
NCOs Dishonored including
(Monthly) Checks date notice
of dishonor Collection
was sent to Section,
Revenue taxpayer. RDO;
Admin. Finance
Order Division,
(RAO) Revenue
No. 10- Beginning, Regional
2000 Report of issuance and Office
Account- ending
ability for balance of
Accountable Ors/RORs
Forms by serial
numbers.
Schedule of
Consolidated revenue
Monthly collections
Statistical by RDO,
Report of type of tax,
Revenue mode of
Collection payment
(CASH or
TDM).
Complete
RCO/DMT/
information
Batch
RCOs/ Control on Collection
RAO No. taxpayer’s Section,
NCOs 10-2000
Sheet A &
payment
B (BIR RDO
(Daily) details and
Form 2850
other tax
& 2853-1)
information
data.
29
Contains
financial data on
assets, income
and expenses
with the
Financial following
Statement attachments:
and Trial -Statement of
Balance Cash Flow;
(monthly) -Statement of
Tax Revenue;
-Statement of CS/RAD,
REVENUE RAO Management’s Collection
REGIONAL No. responsibility Service,
OFFICES 10-2000 for FS. National
Office
Monthly
List of Detailed
RCOs’ schedule of
Collections deposited
Deposited collections.
with
AGDBs
Revenue
Consolidated collected by
Statistical tax
Report of classification
Revenue collected RDOs
Collection thru AABs,
(Form No. TRA,
12.09) RCOs
(Cash &
COLLECTION TDM).
SECTION/RDO RAO
No. CS,
10-2000 REG’L
Summary OFFICE
of
Bank Branch procedural
Performance errors per
Statistics bank by
(Form No. RDO, by
28.41) BCS, by CS, NAT’L
collection OFFICE
date.
30
BANKS’ OWN
TAX ADA
LIABILITIES contains
specific
Authority instructions BSP
to Debit for BSP to
Account debit their
(ADA) demand
deposit
BSP-FTI account for CS-
Registry tax remittance RAD
RAO for a
4-2000 particular
Bank- date.
Taxpayer RMO
4-99
Complete
information
on the
taxpayer and LTS-
TR amount paid. LTDPQAD
TR form is
based on
type of tax.
LBP/AABs Detailed
schedule of
collections
Batch per taxpayer/
Control per bank
submitted DPQAD
Sheet
(BCS),TRs usually
containing 50
entries per
batch.
LARGE- RAO 4-
OTC 2000
Collection
Report which
Monthly had been
Collection reconciled RAD
Report with AABs/
Tax Returns
filed.
31
Summary of
accepted and
rejected tax
-SETP payments LTS/
-SAETP transactions LTDPQAD
-SRETP with AND ISG
taxpayers’ (Nat’l
name, TIN Office)
and amount
paid.
RMO
EFPS 5-2002
Summary of
daily
collections by
all branches
CRDEC and head
office of a
particular
AAB on a per
RDO basis.
Contains
accumulated
CRDC collections for
CS/ RAD-
with the month per
RMAS
Authority previous
(Nat’l
to Debit report,
Office)
Account collections for
(ADA) the day, total
accumulated
for the month.
Corrected BTr
RR 5- CRDC with
REGULAR- 84 notification of
OTC Adjusted error.
RMO CRDC “Adjustment”
29-91 is indicated
opposite
affected date.
Consolidated RDO (hard

ARDC total collections copy)
for the day.
RDC /ITS
Summary of (uploaded
daily files)
BCS
collections.
32
Monthly Detailed lists

Report on of dishonored/
RR
Returned/ returned
5-84;
Dishonored checks with
CONCERNED
Checks accumulated
AABs RMO
(Form No. total for the
25-2001
12.58) month.
CS/RAD
Daily
remittances
by AABs
containing:
collection
date; amount
remitted; date ISOS-DC
List of of
Remittances remittance;
(LR)/CBCA name of
AAB (109-
Bank as
Taxpayer;
101-Bank as BTr
collecting
RR agent).
BSP
5-85
Issued to
BSP-FTI acknowledge
Registry bank’s AAB
remittance.
33
Part III
Audit Observations
34
Chapter 1
Adequate, Clear and Well-defined Policies

and Procedures
35
ADEQUATE, CLEAR AND WELL-DEFINED POLICIES AND PROCEDURES
INTRODUCTION
Money matter is one of the most important and vulnerable elements in the
management of one’s operations. Thus, revenue management has been the
subject of a number of rules and regulations defining the policies and
procedures governing its management. The presence of effective control,
policies and procedures can help the agency manage/mitigate risks, detect and
prevent irregularities and safeguard assets and records as it addresses the
following benefits:
• Improve accountability and program delivery;

• Promote ethical and professional business practices;
• Advance risks management;
• Enhance communications, decision-making and performance reporting;
and
• Contribute to quality outcomes.
The effectiveness of control measures, however, depends on several factors,

among which are as follows:
• Agency’s culture which is reflected in the management’s leadership,

philosophy and operating style;
• Level of competence and qualifications of the staff performing the
particular job;
• Organizational structure ensuring adequate monitoring of actions and
effective flow of information across the agency; and
• Clear assignment of authority and responsibility.
To address these concerns, the Department of Finance (DOF), along with other
government agencies involved in the collection system issued rules and
regulations to guide both RCOs/NCOs/LTs and AABs in the deposit and
remittance of such collections. In the case of BIR, in addition to the regulations
issued by other governing agencies, the collection and deposit/remittance
system is also guided by a number of issuances by the BIR under Revenue
Regulations (RR), Revenue Memorandum Orders (RMO), Revenue
Administrative Orders (RAO) and the Memorandum of Agreement (MOA)
between the BIR/BTr and the concerned AAB. The MOA requires the AABs
to remit their total daily collections to the Treasurer of the Philippines’ (TOP)
account with the BSP on the 6th day from the date of collection.
36
The team, however, noted that the rules and regulations to ensure accurate
recording of collections and remittances by the AABs are inadequate resulting
in difficulty of establishing actual collection and remittance. The basis used by
Both the BIR and the BTr in recording both collections and remittances did not
provide accurate results.
The team further noted that the BIR’s policy of accepting personal check as
payment for internal revenue taxes had adversely affected collection. From
January 2002 to June 2003, 720 checks amounting to P18.119M were
dishonored by the banks of which only 121 checks amounting to P3.695M
were redeemed leaving 599 checks amounting to P14.424M unredeemed.
Despite the presence of this condition, the BIR has not imposed sanction
available under existing regulations.
OBSERVATIONS
1. The total collections and remittances of the AABs could not be

established due to inaccurate amounts recorded in the books of
both the BTr and the BIR. The accuracy of records was adversely
affected by inadequate rules and regulations to ensure accurate
recording of collections and remittances. The required report
under existing regulations to be used as basis for recording
collection is no longer relevant due to the introduction of new
collection schemes. In view of this deficiency, the BIR records
collection either only upon remittance or based on BTr collection
reports. Remittances were also recorded using BTr collection data.
This resulted in a condition where the BIR’s reported remittance
exceeded the reported collections by P2.204B for CY 2002 alone.
Collection of internal revenue taxes, fees and other charges is a regular

activity of several government agencies. Considering the importance of
this function and its impact in the implementation of government activities,
the DOF and other concerned agencies issued policies and guidelines on
the manner of accounting, recording and reporting deposit and remittance
of collections by RCOs/NCOs/LTs and AABs.
The existing regulations governing national collections are enumerated on

the next page:
37
AGENCY REGULATIONS RELEVANT PROVISIONS
Deposit / Remittance
The NCOs shall:
Circ. 14-94 and DO 52- • Deposit their collections

daily to the Savings
96 dated March 24, 1994
Accounts of the TOP.
and May 22, 1996,
• Prepare and submit Monthly
respectively. DO No.
DOF Report of Collections and
20-99 dated August 1, Deposits(MRCD) to the
BTr 1999. concerned TFEs.
• Prepare and submit List of
Treasury Circular No. 5- Deposited Collections
2003 dated October 8, (LDC) in hard copy and in
2003. diskette form to the AGDBs.
In lieu of diskette, the
agencies can e-mail the
LDCs to the concerned
BTr Dos/POs.
• All internal revenue taxes

shall be credited to the
demand deposit account
opened and maintained by
the BTr for the BIR with
the respective AABs.
Revenue Regulations • AAB Head Office shall
No. 16-2002 dated assign and maintain a
BIR separate general ledger
October 11, 2002.
account for said BTr
demand deposit accounts.
• Using on-line tellering
system, the bank teller
shall immediately post the
BIR tax payments.
• All collections shall be

transferred to the TOP
account with the BSP on
BSP Circular No. 844 the 6th day from the day of
BSP dated Feb. 16, 1982. collections for BIR.
• BSP shall debit the demand
deposit accounts of the
banks concerned for the
total daily collections.
38
AGENCY REGULATIONS RELEVANT PROVISIONS
Recording
Sec. 24. Procedures for
collections thru AABs:
- The accounting unit
receives collection
documents from AABs.
- Based on received
NGAS Manual. collection documents, the
Vol. I -
COA Bookkeeper prepares JEV
Accounting & forwards to Head,
Policies Accounting Unit for
review/signature.
- After signing, Bookkeeper
records the JEV in the
General Journal.
- Based on Consolidated
Abstract of Collection of
Internal Revenue Taxes,
the BIR shall account for
the total collections
reported by the AABs in
Joint Circular
their respective books of
5-85 by COA,
accounts.
DBM, DOF
- The BIR shall maintain
dated June 6,
subsidiary ledgers for each
1985
AAB into which
collections and remittances
to BSP by said banks shall
be posted to ascertain at
any given time their
unremitted collections.
The team noted that these guidelines maybe considered adequate in terms
of ensuring that all collections are deposited and remitted to the national
government. However, the guidelines were inadequate in terms of
recording collections and remittances in the books of both the BTr and the
BIR. This deficiency resulted in the difficulty of determining the actual
collections and remittances due to the presence of double and erroneous
recording or unrecorded transactions.
39
The basis for recording collections in the BTr and BIR books as defined
under Joint Circular No. 5-85 should be the Abstract of Internal Revenue
Collections. This document, however, became irrelevant and is no longer
being submitted in view of the enhancement in BIR’s tax collection
system. Under the newly issued NGAS Manual, it was provided that the
BIR should record collections based on reports submitted by the AABs.
Under various BIR regulations, the AABs should submit the following
reports:
SCHEME REPORTS
EFPS Summary of E-Tax Payment (SETP)

Summary of Accepted E-Tax Payment (SAETP)
Summary of Rejected E-Tax Payment (SRETP)
Consolidated Report of Daily EFPS Collection
(CRDEC)
OTC-Regular/Other Consolidated Report of Daily Collections (CRDC) /
Taxpayers Adjusted CRDC
Advance Report of Daily Collection (ARDC)
Batch Control Sheet (BCS)
OTC-Large Consolidated Report of Daily Collections (CRDC)
BCS
Bank’s Own Tax Authority to Debit Account (ADA)
Liabilities BSP-FTI Registry
BSP List of Remittances (BSP-LR)
Dishonored Checks Monthly Report on Returned/ Dishonored Checks
The team noted that in most cases, the BIR did not use these reports in
recording collection. Instead, as a matter of practice, the BIR is using the
BSP List of Remittances and the BTr collection data as basis for recording
collections. The BSP List of Remittances could not be considered as an
appropriate basis for recording collections as it does not represent actual
daily collections but collections electronically remitted to the BSP.
Collections manually remitted for one reason or another which are covered
by Departmental Ticket Register and any unremitted collections are,
therefore, not recorded.
Even the use of the BTr collection data could not be considered as a sound
practice as this would not provide an opportunity for counterchecking.
Under this condition, any BTr error is replicated in the BIR records. The
BIR’s errors were further aggravated by its practice of recording
remittances based on the BTr collection data. It would appear then, that
all collections reported to the BTr were already remitted. This also led to a
condition where even unrecorded collections were already recorded as
40
remitted. The BIR’s records on remittances should have been based on

the BSP List of Remittances and Departmental Ticket Register.
This practice then resulted in a situation where BIR remittance was bigger
by P2,204,226,018.59 as tabulated below:
MONTH COLLECTIONS REMITTANCES VARIANCE
January P 32,341,387,707.51 P 32,442,881,912.85 P ( 101,494,205.34)

February 23,130,969,426.64 23,114,247,195.05 16,722,231.59
March 25,044,852,918.34 25,043,677,301.51 1,175,616.83
April 40,805,431,798.89 40,804,976,438.97 455,359.92
May 30,182,713,304.64 30,182,579,876.39 133,428.25
June 26,140,804,695.50 26,140,804,695.80 ( 0.30)
July 27,691,363,403.14 27,686,888,253.37 4,475,149.77
August 32,168,944,280.01 35,537,323,298.00 (3,368,379,017.99)
September 27,915,198,138.78 28,036,576,516.08 ( 121,378,377.30)
October 30,440,353,809.56 29,121,691,255.00 1,318,662,554.56
November 33,902,962,099.74 33,780,215,791.71 122,746,308.03
December 46,339,572,127.36 46,416,917,193.97 ( 77,345,066.61)
TOTAL P 376,104,553,710.11 P 378,308,779,728.70 P (2,204,226,018.59)
The specific documents being used by the BIR under each scheme for
recording collections and remittance and the team’s comments follow:
BASIS FOR RECORDING

COLLECTION -----------------------------------------------
SCHEME COLLECTION REMITTANCE REMARKS
The bank is furnishing

the BIR a copy of the
CRDEC. The banks
BTr JEV BTr JEV also send SAETPT to
EFPS – for for the BIR on the next
LBP/DBP collections collections banking day following
the date of collection.
This can be used as
basis for recording
collection. These two
documents could be
EFPS compared by the BIR
(Private BTr JEV to assess subsequent
Comm’l BSP-List of for changes in collection
Banks & Remittances collections data. Any change
PNB) should be properly
investigated and the
BIR books adjusted if
warranted.
41
BASIS FOR RECORDING

COLLECTION -----------------------------------------------
The AABs furnish the

BIR with BCS
containing the amount
of payment per
taxpayer and the
CRDC. The BIR can
OTC- also capture collection
LARGE data using the
TAXPAYE BTr JEV BTr JEV Collection and Bank
R LTDO, for for Reconciliation (CBR),
EXCISE collections collections a facility of the BIR’s
(LBP, DBP,
Integrated Tax System
PNB)
which allows viewing
of daily collections per
bank. The BCS data
which can be viewed
via the CBR could be
considered as basis for
recording collections.
The CRDC could not

be considered as
appropriate basis for
recording collections
since it covers only
collections due for
remittance. Any
collection that is not
OTC- BTr JEV remitted is therefore
CRDC
REGULAR for not included in this
from
(LBP,
AABs collections report. In addition to
DBP, PNB,
this report, the AABs
AABs)
also furnish the BIR
with a copy of
ARDC. This report
reflects the actual
collection for the day
and could be used as
basis for recording
collection.
42
BASIS FOR RECORDING

COLLECTION -----------------------------------------------
The AABs are

furnishing the BIR
with a copy of the
BSP-FTI Registry
representing BSP’s
acknowledgement that
the AABs’ instructions
were already given due
BSP-List of BTr JEV
BANKS’ course. This can be
Remittances for
OWN TAX used as basis for
and BSP- collections
LIABILITIES recording collection.
Departmental (Based on
(Thru EFTIS The BSP on the other
Ticket BSP List of
and Manual) hand, provides BIR
Register Remittance)
with BSP-LR and
DTR as evidence of
banks’ payment of
their own tax
liabilities. These
could be used as basis
for recording
remittance.
The BSP is sending

message to the BIR
DIRECT on the amount of
CREDIT taxes paid and
TO BTr JEV BTr JEV remitted to the TOP
TOP for for account. This
ACCOUNT collections collections message could be
(FOR BSP used as basis for
ONLY) recording collection.
The remittance could
be booked using
credit advice from
the BSP.
The team also noted that the use of the same document to record both
collection and remittance is not ideal as this would not allow an automatic
countercheck of unremitted collection.
43
The effects on the BIR books particularly on the use of BTr JEVs, the
apparent laxity in the review process and the failure to record manual
remittance is tabulated as follows:
BANK/ EFFECT
SCHEME PERIOD NATURE COLLECTION REMITTANCE
PNB - EFPS 10/2002 Double recording of collections P 1,019,689,111.07 P -

PNB - EFPS 12/2002 Double recording of collections and 2,148,192,398.98
remittances 2,148,192,398.98
PNB - EFPS 12/2002 Overstatement of remittances - 130,245,065.10
LBP - EFPS 12/2002 Understatement of recorded ( 929,683.68) ( 929,683.68)
collections and remittances
-do- 01/2003 Overstatement due to unadjusted 4,791,762.81 4,791,762.81
double e-payment
PNB-EFPS 01/2003 Unrecorded remittance ( 48,413,101.33)
Union-EFPS 12/2002 Overstatement of remittances 110,000,000.00
OTC-Regular 12/2002 Overstatement of remittances 116,739,769.32
Banks’ Own Tax 12/2002 Unrecorded remittances ( 2,097,823.28)
Total P3,171,743,589.18 P 2,458,528,387.92
Detailed discussions follow:
a) Double recording of PNB collections amounting to

P1,019,689,111.07 for October 2002:
JEV No. BASIS OF DATE AMOUNT Remarks

RECORDING
02-12-191 BSP List of 21-Oct P 127,443,499.01 Recorded again

Remittances 24-Oct 385,530,723.56 Under JEV No.
(BSPLR) 25-Oct 264,495,095.22 02-12-203 based on
30-Oct 242,219,793.28 BTr JEV No. 02-10-
8573
Total 1,019,689,111.07
02-12-203 1-Oct 63,716,652.50
2-Oct 40,735,511.64
3-Oct 19,683,161.27
4-Oct 74,966,085.56
7-Oct 29,890,740.58
BTr JEV 02-10-8069 8-Oct 58,127,948.00
( P 1,108,223,250.11) 9-Oct 52,035,030.90
10-Oct 5,847,755.53
11-Oct 86,321,825.66
14-Oct 317,211,289.70
15-Oct 299,687,248.77
16-Oct 37,124,752.36
17-Oct 15,908,945.39
18-Oct 73,817,575.48
21-Oct 127,443,499.01
22-Oct 52,212,967.42 Already recorded
BTr JEV 02-10-8573 23-Oct 102,406,164.55 based on BSPLR
( P 1,146,540,384.30) 24-Oct 230,911,591.59
25-Oct 264,495,095.22 P 1,019,689,111.07
28-Oct 31,027,104.29
29-Oct 75,788,280.74
30-Oct 135,404,408.25
Total P 2,254,763,634.41
44
Collections from October 21 to 30, 2002 were already recorded under

BIR JEV No. 02-12-191 based on BSP List of Remittances and again
recorded under JEV No. 02-12-203 based on BTr JEV, thus overstating
recorded collections for the period.
b) Double recording of PNB collections and remittances for December

2002:
BASIS OF COLLECTIONS
JEV No. RECORDING DATE AMOUNT REMITTANCE DIFFERENCE
02-12-222 2-Dec P 1,040,681.49 P 1,040,681.49

3-Dec 903,928.63 903,928.63
For Collection and 4-Dec 313,669.21 313,669.21
Remittance (Dec 2-18) ; 5-Dec 96,972,259.49 96,972,259.49
BTr JEV 02-12-10051 9-Dec 43,532,194.45 43,532,194.45
(P 1,150,075,066.26) 10-Dec 84,875,110.89 84,875,110.89
11-Dec 37,439,489.82 37,439,489.82
12-Dec 104,317,689.94 104,317,689.94
13-Dec 347,849,010.18 347,849,010.18
16-Dec 357,344,793.63 357,344,793.63
17-Dec 44,169,924.83 44,169,924.83
18-Dec 31,316,313.70 31,316,313.70
For Collection and 19-Dec 54,758,826.57 54,758,826.57
Remittance (Dec 19-27) : 20-Dec 216,113,907.92 216,113,907.92
BTr JEV 02-12-10198 23-Dec 338,740,991.61 338,740,991.61
(P 998,117,332.72 ) 26-Dec 82,917,907.57 82,917,907.57
27-Dec 305,585,699.05 305,585,699.05
Total 2,148,192,398.98 2,148,192,398.98
02-12-223 For Collection (Dec 2-27) 2-Dec - 1,040,681.49

(Collection) BSP List of Remittances 3-Dec - 903,928.63
And ( P 2,148,192,398.98) 4-Dec - 313,669.21 99,230,538.82
02-12-225 5-Dec 99,230,538.82 96,972,259.49
(Remittance
) 9-Dec 43,532,194.45 43,532,194.45
10-Dec 226,632,290.65 84,875,110.89
For Remittance (Dec 2-18) 11-Dec - 37,439,489.82 226,632,290.65
BTr JEV 02-12-10051 12-Dec - 104,317,689.94
(P 1,150,075,066.26) 13-Dec 347,849,010.18 347,849,010.18
16-Dec 357,344,793.63 357,344,793.63
17-Dec - 44,169,924.83
For Remittance (Dec 19) 18-Dec - 31,316,313.70
BTr JEV 02-12-10366 19-Dec 130,245,065.10 130,245,065.10
For Remittance (Dec 19-27) 19-Dec - 54,758,826.57
BTr JEV 02-12-10198 20-Dec 216,113,907.92 216,113,907.92
(P 998,117,332.72 ) 23-Dec 338,740,991.61 338,740,991.61 998,117,332.72
26-Dec - 82,917,907.57
27-Dec 388,503,606.62 305,585,699.05
Total P 2,148,192,398.98 P 2,278,437,464.98 130,245,065.10
The December 2002 collections were booked twice by the BIR using BSP List
of Remittances and BTr JEVs. Moreover, the erroneous booking was even
over by P130,245,065.10 due to the BTr’s error of including the Dec. 19,
2002 remittances on both JEV Nos. 02-12-10366 and 02-12-10198.
c) Unrecorded remittance by PNB for January 2003 by P48M.
Remittance reflected in the BTr books in January 2003 was understated by

P48M as tabulated on the next page.
45
BASIS OF COLLECTIONS
JEV No. RECORDING DATE AMOUNT REMITTANCE DIFFERENCE
Collection: For collection 2-Jan P 122,100.00 P 122,100.00 -

03-01-0012 (Jan 2-31): 3-Jan 914,114.00 914,114.00 -
CBCA / BSPLR 6-Jan 30,007,800.00 30,007,800.00 -
(P1,815,276,031.36) 7-Jan - 6,492,854.28 P(6,492,854.28)
Remittance: For remittance: 8-Jan - 48,816,077.02 (48,816,077.02)
03-01-0017 (Jan 2-9): 9-Jan 84,671,138.37 29,362,207.07 55,308,931.30
BTrJEV 03-01-0181 10-Jan 98,555,409.67 98,555,409.67 -
(P 115,715,152.37) 13-Jan 23,904,662.34 23,904,662.34 -
14-Jan - 28,977,137.62 (28,977,137.62)
(Jan 10-14) 15-Jan - 295,348,510.68 (295,348,510.68)
BTrJEV 03-01-0302 16-Jan 366,087,323.21 41,761,674.91 324,325,648.30
(P 151,437,209.63) 17-Jan 171,904,215.28 171,904,215.28 -
20-Jan 318,932,455.38 318,932,455.38 -
(Jan 15-22) 21-Jan - 7,120,081.23 (7,120,081.23)
BTrJEV 03-01-0549 22-Jan - 23,759,342.11 (23,759,342.11)
(P 858,826,279.59) 23-Jan 79,292,524.67 - 79,292,524.67
24-Jan 57,964,108.37 57,964,108.37 -
(Jan 24-31) 27-Jan 328,339,968.81 328,339,968.81 -
BTrJEV 03-01-0824 28-Jan - 48,104,197.57 (48,104,197.57)
(P 640,884,288.44) 29-Jan - 26,876,371.83 (26,876,371.83)
30-Jan 103,333,027.04 28,352,457.64 74,980,569.40
31-Jan 151,247,184.22 151,247,184.22 -
Total P1,815,276,031.36 P1,766,862,930.03 P48,413,101.33
As discussed above, the BIR records remittances based on BTr JEVs and not
on BSP records. Since this amount was not recorded in the BTr books, the
same also remain unrecorded in the BIR books.
d) Under recording of the LBP collection and remittance for December

2002 by P 929,683.68.
T JEV BASIS OF DATE

NO. RECORDING COLLECTED AMOUNT REMARKS
BTr
02-12-10329 DDASI
- MHA 20-Dec P 39,734,563.96
73,444,121.30
Overstated by
- SHA
P73,444,121.30
- MHA 23-Dec 73,444,121.30
193,636,192.90
Overstated by
- SHA
P193,636,192.90
- MHA 26-Dec 193,636,192.90
- SHA 90,426,112.54 Overstated by

- MHA 27-Dec 90,426,112.54 P90,426,112.54
- SHA 929,683.68
Total P 755,677,101.12
BIR
Overstated by
02-12-022 Total 755,677,101.12 P357,506,426.74
BIR Adj. BTr JEV
02-12-0233 02-12-10600 358,436,110.42
DIFFERENCE P 929,683.68
46
The BTr’s recorded collection and remittance under JEV No. 02-12-10329
was overstated by P357,506,426.74. This error was adjusted under BTr JEV
No. 02-12-10600 in the amount of P358,436,110.42. This adjustment then
resulted in understatement of P929,683.68. Since the BIR records these
transactions based on BTr JEVs, its records were also understated by the same
amount.
e) Adjustments made by the LBP on January 2003 collections

amounting to P4,791,762.81.
Based on LBP record, the previously reported collections to BTr was reduced
by P4,791,762.81 due to double payment by various taxpayers. Since there is
no coordination between the LBP and the BIR and that the BIR was not
analyzing the CRDEC furnished by the bank, the BIR was not able to detect
that the total collection was already adjusted and the corresponding amount
pertaining to the following adjustments were not remitted.
COLLECTION DOUBLE
DATE CRDEC BTr/BIR JEV VARIANCE PAYMENT BY
01/13/03 P 56,137,053.37 P 56,164,582.78 P ( 27,529.41) Atlas Copco.

01/14/03 95,784,510.25 95,811,861.86 ( 27,351.61) Intra Strata
01/15/03 375,359,343.28 380,079,689.50 ( 4,720,346.22)
428,012.18 Abenson Sales
139,315.13 Insular Life
4,153,018.91 Alcatel Phils.
01/20/03 530,737,819.89 530,754,355.46 ( 16,535.57) Pilipinas
Transport
TOTAL P (4,791,762.81)
Both BIR and BTr recorded collections and remittances were overstated by
the said amount.
f) Over recording of remittance of the Union Bank by P110,000,000.00

due to erroneous pick up of amount.
Instead of recording collections of P52,057,245.30 and P55,987,431.13 for

December 5 and 18, 2002, respectively, the BTr recorded P152,057,245.30
and P65,987,431.13, respectively, resulting in overstatement of remittances by
P110,000,000.00. Since the BIR recorded the same amount based on BTr
JEVs, its record was also overstated by the same amount.
BASIS OF DATE
RECORDING COLLECTED AMOUNT TOTAL
COLLECTION
BSP List of Remittances 5-Dec. P 52,057,245.30
18-Dec. 55,987,431.13 P 108,044,676.43
REMITTANCE
BTr JEV 5-Dec. P 152,057,245.30
18-Dec. 65,987,431.13 218,044,676.43
DIFFERENCE P 110,000,000.00
47
g) Over recording of remittance for December 2002 by P116,739,769.32
BIR records remittance based on BTr JEVs for collections. The amount
actually remitted, however, is not exactly the same as the amount reportedly
collected. Thus, for December 2002 alone, the BIR’s recorded remittance was
over by P116,739,769.32.
RECORDED
ACTUAL EMITTANCE
REMITTANCE (Based on BTr
(CRDC) collection data)
BANK AMOUNT AMOUNT VARIANCE
BA P 3,549,647.00 P 3,369,728.85 P 179,918.15
BDO 147,050,370.55 147,045,710.55 4,660.00
BPI 998,659,259.51 1,015,934,633.58 (17,275,374.07)
China Bank 357,070,487.17 372,109,147.41 (15,038,660.24)
Commerce 71,028,737.22 70,397,511.25 631,225.97
DBP 854,166,281.57 854,228,810.63 (62,529.06)
EBC * 786,827,144.95 784,411,087.25 2,416,057.70
IEBank 29,036,115.75 28,622,184.29 413,931.46
LBP * 2,378,437,635.06 2,401,606,197.70 (23,168,562.64)
Metrobank 717,105,976.24 716,808,386.90 297,589.34
PB Com 17,469,999.74 17,470,799.74 (800.00)
RCBC 571,122,003.69 571,632,343.87 (510,340.18)
Security * 370,189,276.20 370,247,201.87 (57,925.67)
Standard 9,803,724.83 9,993,580.94 (189,856.11)
UCPB * 1,107,480,141.94 1,151,988,247.22 (44,508,105.28)
UOB 27,033,390.93 27,034,050.93 (660.00)
Veterans 973,601,343.49 993,471,682.18 (19,870,338.69)
TOTAL P 9,419,631,535.84 P 9,536,371,305.16 P(116,739,769.32)
* Net of Dishonored Checks
h) Unrecorded manual remittances of P2,097,823,28.
As discussed earlier, the BTr records remittances only on the basis of the BSP
List of Remittances. This is not complete since manual remittances are
covered by Departmental Ticket Register. For December 2002 alone, manual
remittances that were not recorded amounted to P2,097,823.28.
RECORDED
DATE REMITTANCE REMITTANCE VARIANCE REMARKS
12/10/02 P 1,905,000.00 P - P 1,905,000.00 Remittance of East West

Bank
12/11/02 731,648.28 640,000.00 1,648.28 Remittance of China Bank
12/02/02 301,175.00 200,000.00 101,175.00 Equitable Banking Corp.
Unrecorded remittance of
P100,650 and error in
recording remittance of
P525.00 (BTr JEV No.
02-12-10497)
TOTAL P 2,937,823.28 P 840,000.00 P2,097,823.28
48
Management’s Response Team’s Rejoinder
Response provided by the Assistant

Commissioner, Collection Service
During 2001 and prior years, BTR JV As discussed in the report, it is

now BTR JEV was not used as basis of very clear under Sec. 24 of the
recording collection and remittances NGAS Manual, Vol. I that
but BSP’s Central Bank Credit Advice collections should be recorded
(CBCA)/BSPLR was used instead. by the accounting unit based on
With the implementation of New collection documents received
Government Accounting System from the AABs. Under this set
(NGAS) effective January 2002, BTR up, the BIR could counter check
JEV was used as recommended by the amounts recorded by the BTr
COA. The Chart of Accounts and the and recommend necessary
entries prescribed by COA were adjustments in case of
subjected then to changes and there are discrepancy.
issues yet to be resolved. It was in the
4th quarter of 2002 that Account Cash Besides, the existing abnormal
in Bank-LCCA has an overstated balance of the account was not
balance by more than P2B. Analysis due to the changes on the
show that the bulk of account used but on the
overstatement/errors started only on erroneous basis of recording
August 2002. This is attributed to the collections and remittances. As
start of the EFPS last July 2002 discussed in the report, the BIR
wherein hinged account was used by records collection based on BSP
BTr for collections not immediately List of Remittances and
classified as to source. (ex. LT thru remittances based on BTr
AGDB and LT thru Commercial collection data.
Banks). Hence this resulted to
erroneous take up of collections and Likewise, analysis of the BTr
remittances, more on twice taken records showed that indeed,
remittances based on BTr JEV and there were a number of
CBCA/BSPLR. collections and remittances that
were recorded twice. Since the
BIR used the BTr JEV without
further analysis, the BIR records
were likewise not accurate.
On the basis of recording, we had The team appreciates BIR’s

agreed upon on a meeting held between efforts of coordinating with
representatives of COA-GAFMIS, concerned government agencies
BTr/BIR Auditors, and BIR headed by to improve its recording system .
Ms. Norma Lipana, ACIR Financial However, as discussed in the
and Administrative Service and report, the BIR should also
concurrently OIC-RMG that effective consider the BSP Departmental
49
January 2004, CBCA/BSPLR will be Ticket Register representing

used as basis in recording remittances collections manually remitted.
while CRDC/CRDEC is for collections The CRDC/CRDEC could also
subject to validation/change with other not be considered as the
reports/message submitted by appropriate basis for recording
AABs/BSP. collections. This document
represents the amount intended
to be remitted by the AABs and
not the actual collection.
Overstatement of more than P2B. Most The team appreciates the actions
of these errors were already adjusted taken by BIR to adjust the errors
per JEV Nos. 03-12-0245 and 03-12- resulting in abnormal balance of
0256 both dated December 2003. the collection account. But the
Schedule of discrepancies between presence of negative balance
CBCA/BSPLR against BTr- JEV could not be totally addressed
prepared by RAD-NO was forwarded unless the BIR would be able
to BTr-NCAD last 6/25/04 per attached to properly identify the
letter on the same date for their appropriate basis for recording
adjustment copy furnished BIR-RAD.” collections and remittances
Issuances/guidelines pertaining to The team agrees that the existing

collection schemes particularly EFPS guidelines should be revisited to
should be revisited. address any deficiency in the
existing system.
BCS has never been used as basis of The BIR should resolve their
recording collection due to the problem on uploading of data.
following constraints: various The BCS is a very important
occurrence of unuploaded BCS data; document since this represents
double E-payment and errors detected the summary of collections by
under EFPS. It would be hard for RAD the AABs. For this reason, this
to use BCS as basis of recording report could be considered as the
collections at this time. The same is most appropriate basis for
true with ARDC since based on recording collections. These
experience it is always subject to could even be used to monitor
adjustment. unremitted collections of the
AABs. Any errors detected after
recording should be accordingly
adjusted.
BCS-CRDC reconciliation screen has While this function has already

been rolled out to the RDO for it to been delegated to the RDO, the
have a tool to call up banks and RDC BIR NO should also monitor the
50
on correction of unuploaded BCS. For actions taken by the RDO to

double payment by taxpayers, RMO ensure that this function is being
No. 27-2004 has been issued to undertaken.
facilitated corrections/adjustments of
records of BIR banks and BTr.
2. The government’s interest is not protected under the BIR’s policy

of accepting personal checks as payment for internal revenue
taxes. Of the 720 dishonored checks from January 2002 to June
2003 amounting to P18.119M, only 121 checks amounting to
P3.695M were redeemed leaving 599 checks amounting to
P14,423,786.86 unredeemed by the concerned taxpayers. Despite
this condition, the BIR has not imposed available sanction under
existing regulation.
The BIR had issued the policies and procedures relative to the acceptable
modes of payment of internal revenue taxes as shown below:
REGULATIONS DESCRIPTION/CONTENTS
RR No. 4-97 Prescribing the acceptable modes of payment of

dated 1/31/97 internal revenue taxes through AABs and their
subsidiaries and the enrollment of taxpayers:
Sec. 2 - xxx Payment of internal revenue
taxes to the BIR by check shall not be allowed.
Prescribing policies and procedures

implementing RR 4-97:
1. Acceptable modes of payment:
RMO No. 19-97 • Bank debit system;
• Over-the-counter cash transactions;
dated 4/18/97
• Credit facility;
• TDM.
2. Checks payable to BIR in payment of taxes shall
no longer be acceptable beginning May 1, 1997,
except in remote areas where there are no AABs.
51
Clarifications on the implementation of RR

4-97 & RMO 19-97:
II.4 Taxpayers whose requests for payment

thru checks are granted should,
however be encouraged to enroll with
their chosen AAB, the soonest possible
time, and to give their check payment
RMO No. 40-97 directly to said AAB.xxx
dated 6/30/97 Check payments must not be received by
any official or employee of any
Regional or District Office with the
exception of manager’s checks or
cashier’s checks issued by non-AABs.
Said manager’s or cashier’s check may
be accepted only by the RCO assigned
thereat.
Amending Section 2 of RR No. 4-97:

“Sec. 2 MODES OF PAYMENT – To
ensure that tax payments are made only
to AABs of the BIR, properly credited
to the accounts of the taxpayer
concerned, and duly remitted to the
government, any person liable to pay
RR No. 6-98 internal revenue taxes shall pay only
dated 7/13/98 through any of the following modes:
• over-the-counter cash transaction;

• bank debit system;
• credit facility with a bank, a credit
company or similar institution; or
• personal or company check or cashier’s or
manager’s check.
52
Provides the revised procedures on receipt,

processing, control and transmittal of
dishonored checks:
• Penalties shall be imposed on the AABs for

receiving checks which were dishonored due to
the following:
Accommodation check;
Stale check;
Post-dated check;
Unsigned check;
RMO No. Out-of-town check.
25-2001 • Checks which were dishonored due to
dated 10/16/01 “Account Closed” shall be forwarded to the
Legal Division of the Regional Office or to the
Legal Service of the National Office (for Large
and Excise Taxpayers) for filing of court cases
against the taxpayer for violation of Batas
Pambansa (B.P.) Blg. 22 (Anti-Bouncing Check
Law).
It is very clear from the above provisions that while the BIR had earlier
ruled out the acceptance of personal checks as payment for internal
revenue taxes, this policy was later reconsidered in favor of accepting
personal checks. This policy would affect the government’s finances as
dishonored checks are not immediately redeemed.
Records showed that of the 720 checks dishonored amounting to

P18.119M, only 121 checks representing 16.81% amounting to P3.695M
were redeemed as of December 2003. This leaves 599 checks amounting
to P14.423M unredeemed as tabulated below:
DISHONORED UNREDEEMED
YEAR CHECKS REDEEMED CHECKS CHECKS
NO. AMOUNT NO. PRINCIPAL PENALTY TOTAL NO. AMOUNT
2002 445 P 9,134,558.15 65 P 1,550,972.75 P 421,612.76 P 1,972,585.51 380 P 7,583,585.40
Jan -
June
2003 275 8,984,987.84 56 2,144,786.38 195,318.96 2,340,105.34 219 6,840,201.46
Total 720 P18,119,545.99 121 P 3,695,759.13 P 616,931.72 P4,312,690.85 599 P14,423,786.86
Redeeming dishonored checks is a perennial problem in government’s

53
operations. It entails the use of time, manpower and other resources to

perform said function. For this reason, the BIR should revisit this policy.
The team further noted that despite available sanctions under existing
regulations, the BIR had not taken any action to enforce collection of the
unredeemed checks. Under this condition, the interest of the government
is not totally protected.
Response provided by the

Assistant Commissioner,
Collection Service
Report of Dishonored Checks

(DC’s) together with the original
copy of dishonored checks are
submitted by banks to the Revenue
District Offices (RDOs) concerned
for collection. The RDOs in
return submit to RAD-NO on a
monthly basis, Report of
Dishonored Checks Redeemed for
booking purposes after validation
from other reports submitted by
AABs to RAD-NO. RAD is
monitoring the compliance of
RDOs/AABs on the submission of
these reports, thru letters,
meetings/call-ups.
The amount of DC’s reflected in The RAD should strictly monitor the
the books is not all outstanding but submission of reports by the RDOs
not taken up as redeemed DC’s in order to update their records and take
due to non-submission of List of appropriate action against the
Redeemed DC’s by RDOs. concerned taxpayer.
Based on the RDOs reply to our The collection of about P 3 million out
letters the unredeemed DC’s for of the P 14 million unredeemed checks
2002 and first semester of 2003 was from July to December 2003 can not
reduced from P14.4M to P11.08M. be considered substantial considering
Referred also by RDOs to Legal that most of these checks were issued
Division are 10 taxpayers with DC’s in year 2002. This only manifests
54
amounting to P143,230.25.Your the difficulty encountered by the BIR in

recommendation for the BIR to redeeming dishonored checks. For this
restudy the BIR’s policy of reason, the BIR should revisit the
accepting personal checks as policy of accepting personal checks as
payment of taxes will be forwarded payment for internal revenue taxes.
to MANCOM for their decision.
The RAD-NO is dependent upon The RAD-NO should not only wait for
the submission by RDOs of the reports to be submitted but rather
Reports of Received DCs and List monitor the actions of the RDOs in
of DCs Redeemed under Revenue ensuring the redemption of these
Regulations No. 25-2001. checks.
55
Chapter 2
Sound Monitoring and

Control Mechanisms
56
SOUND MONITORING AND CONTROL MECHANISMS
INTRODUCTION
To measure performance and the effectiveness of controls in place, agencies

need to monitor and review operations, activities and the existing control
mechanism. Monitoring and review is considered as the final component of
an effective control framework and is closely linked to information and
communication. For this element to be effective, this should be undertaken
regularly as an on-going activity in the ordinary course of business.
Realizing the importance of collection function and its contribution in

nation building, the DOF, the BTr and other primary revenue-generating
agencies of the government specifically the BIR, had established specific
control measures to ensure that remittance of collections are duly
monitored. These control measures are intended to mitigate risks, prevent
and detect irregularities, safeguard collected revenues and ensure
completeness, accuracy and reliability of data which include the following,
among others:
• Requiring the NCOs to deposit their collections intact on the day of

collection or the following day for collections received after the
deposit had already been made;
• Requiring the NCOs to submit Monthly Report of Collections and

Deposits on the 10th day of the following month;
• Setting out the functions and specific responsibilities of the

services/divisions/offices of the BIR primarily involved in the
collection and remittance of internal revenue taxes;
• The Collection Service (CS) at the BIR National Office, is mandated

among others to:
maintain subsidiary ledger for each AAB;

monitor the collection of internal revenue taxes through
AABs, RCOs, Withholding Agents, direct crediting by BSP
and payment of Banks’ own tax liabilities;
process, monitor and analyze collection reports submitted by
AABs , LTS/ETS, RDOs and Revenue Data Centers (RDCs);
reconcile the BIR’s accounts with BTr records;
analyze timely reporting and remittance of AAB collections
based on BSP List of Remittances and computes for the
corresponding penalties and surcharges and sends demand
letters;
57
• The BIR Revenue Regions (RRs) are required to monitor payments

thru AABs and RCOs to ensure compliance with regulations and
prepare regional collection reports;
• RCOs are required to submit monthly Report of Collections and

Deposits, while AABs submit collection reports required for each tax
collection scheme;
• RCOs provide a copy of validated deposit slips and List of

Collections to their respective Treasury Fiscal Examiner (TFE) for
validation and encoding in their data base; and
• The BTr generates Abstract of National Collections (ANC) by

Agency and by collecting officers. This serves as subsidiary ledger of
the NCOs/RCOs where agencies could confirm and compare the
NCOs/RCOs reports.
The audit disclosed that while control measures have already been
prescribed, compliance by the RCO of RDO No. 45 was not properly
monitored by the BTr and the BIR. In several instances, the RCO was
depositing his collections way beyond the prescribed period and in tranches
while some others were submitting reports 3 to 146 days after the deadline.
The inaccuracies in records of both agencies were also manifested in
unreconciled differences in RCO’s collections of P2,345,217,523.33 for CY
2002 alone.
Similarly, there were no control measures in place to ensure that

remittances of AABs’ collections were properly controlled and monitored.
The basis for recording collections and remittances were defective. On the
same manner, the BTr was not monitoring remittances of AABs’ collections
due to its failure to maintain subsidiary ledgers of AABs. As it is, any
unremitted collections could not be determined from the books of either the
BIR or the BTr. Under this condition, the interest of the government is not
totally protected.
OBSERVATIONS
COLLECTIONS AND DEPOSITS THRU RCOs
1. Submission of Monthly Report of Collections and Deposits was

not properly monitored by the BIR. In a number of instances,
reports were submitted by the NCOs 3 to 146 days after the
58
deadline. This contributed in the discrepancy between the BIR

and the BTr records on deposited collections for CY 2002 which
amounted to P2,345,217,523.33. Despite this difference, the
BIR did not initiate any action to reconcile the BTr and BIR
records when data on deposited collections could be secured
from the BTr District Offices anytime upon request.
Under the existing system, the Revenue Collecting Officers (RCO) of

the BIR are directly depositing their collections to interest bearing
account of the Treasurer of the Philippines (TOP) maintained in the
following AGDBs:
• Land Bank of the Philippines;

• Development Bank of the Philippines; and
• Philippine National Bank.
At the end of the month, the NCOs are required to prepare the Monthly
Report of Collections and Deposits (MRCD). This report is used for
recording the monthly collections and deposits in the books of the BIR.
The audit, however, disclosed that the submission of the MRCD by the
RCOs was not being monitored by the BIR. Records showed that in
several instances, a number of RCOs submitted their reports 3 to 146
days after the deadline as illustrated below:
NO. OF
PERIOD DATE DAYS
RCO COVERED SUBMITTED DELAYED
Ramses Bagtas November 2002 1/24/03 45

December 2002 -do- 14
January 2003 3/14/03 32
February 2003 5/29/03 80
March 2003 -do- 49
April 2003 -do- 35
May 2003 7/15/03 35
June 2003 -do- 5
Barrameda, Adelaida June 2002 7/22/02 12
July 2002 7/15/02 3
November 2002 12/19/02 9
March 2003 4/15/03 5
May 2003 6/18/03 8
June 2003 7/24/03 14
De la Cruz, Joselda April 2002 6/06/02 27
July 2002 10/24/02 73
59
NO. OF
PERIOD DATE DAYS
RCO COVERED SUBMITTED DELAYED
October 2002 3/05/03 146
November 2002 -do- 114
December 2002 -do- 54
January 2003 6/17/03 127
February 2003 -do- 99
March 2003 7/17/03 98
April 2003 -do- 66
May 2003 8/20/03 71
June 2003 8/25/03 46
Teope, Josephine May 2002 7/11/02 60
July 2002 8/16/02 4
August 2002 9/23/02 13
October 2002 11/22/02 11
November 2002 12/16/02 6
December 2002 2/10/03 29
February 2003 3/18/03 8
March 2003 5/21/03 41
April 2003 -do- 10
The delayed submission of the reports affected the accuracy of the

BIR’s records as these collections were recorded only in the books of
the BIR upon receipt of the reports. On the other hand, the BTr
encodes collections daily on the basis of LDC and deposit slips received
from the AGDBs. This condition contributed in the discrepancy
between the BIR and the BTr records on deposited collections which
amounted to P2,345,217,523.33 for CY 2002 alone.
AGENCY DEPOSITS
BIR P 8,285,012,792.85
BTr 5,939,795,269.52
Difference P 2,345,217,523.33
The timely reconciliation of the BTr and BIR records was adversely
affected by the existing system wherein the depository account is being
maintained by the BTr. The BIR then does not have any direct
relationship with these banks which report directly to the BTr. Under
this condition, the BIR has to validate the NCOs/RCOs deposits from
the respective BTr District Office and BTr Central Office, particularly
the National Cash Accounting Division (NCAD).
To ensure that the BTr records are complete and updated, the NCOs are
required to submit to the BTr District Offices, List of Deposited
Collections (LDC) and duly validated deposit slips. These documents
60
are submitted to the bank for turnover to the BTr District Offices. With
these documents, the respective Treasury Fiscal Examiner (TFE) of the
BTr District Offices are required to validate the correctness of bank
clearing account used, agency, fund and revenue account codes, and the
amount indicated in the LDC. In case of discrepancy, the TFE is
required to confirm the data with the RCO and the bank and effect
corresponding corrections. The validated data are then transmitted to
the Regional Offices and then to the BTr Central office. The Fund
Validation Division (FVD) of the BTr reconciles the deposited
collection reports submitted by the BTr-Regional Offices thru the
National Collection System(NCS) with that of the credited amount of
deposited collection reports submitted by the AGDBs.
Under the recently issued Treasury Circular No. 5-2003 dated October
8, 2003, once the consolidated reports are validated against the deposit
slips, DOs transmit the data to the BTr ROs and to BTr Central
Database.. The NCAD shall print Daily/Monthly Report of Abstract of
Deposits for release to the concerned agencies. The agencies shall then
reconcile the Abstract against their records and submit their findings to
NCAD. Should the findings require adjustment, the NCAD draws the
necessary JEV.
In addition to the reports generated by NCAD, the District Offices can

also generate a summary report of collections deposited by each NCOs
by agency and by month. This report could also be used by the agency
to assess the accuracy of their records.
Apparently, however, the BIR did not initiate any action to validate the
reported collections and deposits of the NCOs/RCOs from the BTr
records, hence, the unreconciled difference.
The timely reconciliation of the BTr and BIR records was also affected
by the failure of the BTr to generate on time the Abstract of National
Collections (ANC). The BIR’s ANCs for all RCOs nationwide covering
January to December 2002 were forwarded by the BTr to BIR only on
July 7, 2003 and September 10, 2003. As of December 2003, the BIR
has yet to analyze these ANCs. Thus, the BIR was not able to detect
yet the reasons for the discrepancies.
In order to assess the possible causes of discrepancies between the BTr

and BIR books, besides the manner of recording, the team analyzed the
records of Ms. Myrna Mula, the only SCO assigned at the National
Office. The team then compared the reported deposits of Ms. Mula as
reflected in the BIR records with that of the BTr. The team noted that
61
the discrepancies were due to erroneous encoding of agency code by the

TFE. This resulted in deposits of Ms. Myrna Mula amounting to
P188,487.06 being accounted for as deposits of other government
agencies:
BIR BOOKS
Date of Deposit Amount BTR BOOKS
11/18/02 P 1,174.00 Accounted for as deposits of

11/18/02 2,244.62 BTr due to erroneous encoding
of agency code.
01/07/03 35,242.75 Accounted for as deposits of
01/07/03 1,758.99 AFP Medical Center due to
01/07/03 8,162.50 erroneous encoding of agency
code.
01/17/03 2,549.20 Accounted for as deposits of
01/07/03 137,355.00 the Bureau of Customs due to
erroneous encoding of agency
code.
TOTAL P 188,487.06

The accounting, monitoring and Under either the centralized or

records keeping of collection thru decentralized accounting system,
RCOs thru the issuance of BIR the BIR management should be
Official Receipts (OR) to taxpayers able to monitor whether or not the
upon payment of taxes were NCOs/RCOs are complying with
decentralized to Finance Division existing rules and regulations. The
(FDs) of each of the 19 Regional decentralization of the accounting
Offices (ROs) effective 1990 system should not be used as an
pursuant to RMO 52-89. Finance excuse for failure to detect and
Division started sending their ensure that the NCOs/RCOs
Monthly Trial Balance (MTB) for perform in strict compliance with
RCO collection to RAD effective the existing rules and regulations.
1990 to date. RAD is in-charge in
preparing the National Office MTB
for collection thru AABs and other
sources of collection and the
consolidation of the RO and NO
Trial Balances and Financial
Statements.
62
In the process of reconciling BIR and As discussed in the report, the

BTr collection data, it was noted Regional Offices could request for a
that one of the reconciling items is copy of a statement of deposited
collection thru RCOs as BTr’s collections by RCOs/NCOs from
booked up deposited collection is their respective BTr Regional/
more by P2.3B than what was Provincial/District Offices. This
recorded in the BIR books of way, reconciliation could be
accounts. The reconciliation could facilitated and errors immediately
have been easier if the BTr resumed addressed and adjusted.
immediately in 2002 the preparation
of Treasury Statement with attached
Treasury Abstract of Deposit (TAD)
which is a detailed information of
deposits of Accountable Officers but
was resumed only on July 2003,
containing TAD for January to
December 2002 in reply to our call-
ups/ meetings.
Starting the year 2001, RAD required The purpose for requesting a copy
the FDs of ROs to submit Monthly of the Monthly List is to reconcile
List of Deposited Collections for the BTr and BIR records. If the
comparison with the MTB, however, records are not reconciled, then the
they usually do not tally. RAD should analyze both records
to determine the reasons for the
discrepancy and to prepare
appropriate adjusting entries.
RAD requested the BTr to resume Under the recently issued Treasury
the submission of Treasury Statement Circular No. 5-2003 dated October
with TAD thru call-ups/meetings as 8, 2003, the RCOs/NCOs are now
early as 2001 which was positively required to secure ANCs/TAD
replied on 2003 thru submission of from the concerned BTr Regional/
TAD. Provincial/District Office to
facilitate reconciliation. The BIR
then should not merely wait for
their copy to be sent by the BTr but
regularly request for a copy of
ANC/TAD to perform
reconciliation activities on a timely
manner.
RAD-NO required the FDs of ROs to The mere issuance of a

reconcile RCO collection with the memorandum would not
63
BTr ROs per attached memo of automatically result to action. The

DCIR Lilian B. Hefti dated Nov. 21, RAD-NO should monitor
2002. compliance with the memorandum
issued. Apparently, this
memorandum was set aside as
discrepancies still exist as of audit
date.
RAD-NO forwarded the 2002 TAD The RAD-NO should consider

to FDs of ROs per attached letter requiring the ROs to regularly
dated February 3, 2004 instructing submit a report on their
them to reconcile the TAD against reconciliation activities to ensure
their booked up deposits for 2002 that this activity is being
and with attached follow-up letter undertaken.
dated April 21, 2004.
On a meeting held last May 5, 2004, The team appreciates the action
it was agreed upon between taken by management to strengthen
representatives of BIR-CS/RAD and the monitoring and reconciliation
Accounting Service-NCAD of BTr of RCOs deposits with the BTr
that TAD will be forwarded by BTr records. This activity, however,
directly to concerned FDs of ROs should be closely monitored to
instead of RAD-NO for immediate ensure that errors would be
monitoring and reconciliation of minimized if not totally eliminated.
collections thru RCOs. Any
adjustments made by FDs will be
reflected in the succeeding MTBs to
be submitted to RAD-NO.
The MTBs submitted to RAD-NO by The RO-FD then should strictly

FDs-ROs differ with the BTr data enforce the submission of the
due to delay in the submission of the required reports by RCOs and
required reports to them by the impose sanctions available under
RCOs. Financial constraints existing laws, rules and regulations
particularly of RCOs assigned in on RCOs who failed to comply
remote places is one of the causes. with these regulations
2. The BIR was not able to strictly monitor the timely deposit of
collections by the RCO of Revenue District Office No. 45. The
RCO accumulates his collections for three to seven days before
these were deposited in tranches with amounts retained ranging
from P85,240.76 to P4,418,408.40. This practice exposes
64
collections to risks of loss and misappropriation and deprives

the government on the immediate use of the fund.
The BIR has designated and distributed 2,071 Revenue Collecting

Officers (RCOs) in 115 Revenue District Offices to collect internal
revenue and miscellaneous taxes.
As required under DOF Order No. 52-96, NCOs shall deposit daily
their collections for the day in the interest Savings Account of the TOP
with the designated AGDBs.
In order to assess whether the BIR was able to strictly monitor the
RCOs’ compliance with the above provisions, the team examined the
Report of Collections and Deposits, Official Receipts, List of Deposited
Collections and Deposit slips of two RCOs.
Analysis showed that Ms. Myrna Mula, RCO for BIR-National Office
deposits her collections on time as required. On the other hand, the
designated RCO for RDO No. 45 (Marikina City), Mr. Ramses Bagtas,
was not depositing his collections daily as required. Rather, he
accumulates his collections for 3 to 7 days before these were deposited
in tranches at the designated depository bank with amounts retained
ranging from P85,240.76 to P4,418,408.40 as shown below:
NUMBER OF DAYS
DATE COLLECTION DEPOSIT BALANCE ACCUMULATED DELAYED
11/08/02 P 552,247.13 11
11/11/02 2,600,802.81 8-14
11/12/02 200.00 4 13
11/15/02 409,431.12 4 10-13
11/19/02 P 2,908,766.36 P653,914.70 6
11/20/02 436,730.86 - 1,090,645.56 8
11/21/02 138,672.11 951,973.45 7

11/22/02 3,381.30 - 6
11/25/02 30,409.48 505,770.35 479,993.88 3

11/26/02 4,506.00 - 2
11/27/02 26,825.20 - 1-7
11/28/02 365,988.38 499,629.06 377,684.40 6

11/29/02 103,269.44 - 5-10
12/03/02 21,327.70 - 5 4 6
12/04/02 33,664.75 404,408.08 131,538.21 5
12/09/02 91,724.63 138,022.08 85,240.76 7

12/10/02 2,809,027.21 - 3 6-13
4
12/16/02 1,798,710.04 274,569.61 4,418,408.40 7-10
12/18/02 21,279.58 - 8
65
NUMBER OF DAYS
DATE COLLECTION DEPOSIT BALANCE ACCUMULATED DELAYED
12/19/02 P 1,630.36 P 897,169.72 P3,544,148.62 5 7
12/20/02 812,431.87 - 4,356,580.49 4 6-29
12/23/02 1,779,838.97 2,576,741.52

01/08/03 440,390.69 332,262.33
01/09/03 55,260.87 277,001.46
01/16/03 56,398.61 220,602.85
01/18/03 220,602.85 -
It maybe noted that collections on December 20, 2002 were completely

deposited only on January 18, 2003.
The practice of accumulating collections manifests the failure of the

BIR to monitor the activities of this RCO. Moreover, this deprives the
government on the immediate use of the funds and exposes collections
to risk of loss and misappropriation. Despite this condition, there were
no documents to show that the RCO was reprimanded by the BIR for
failure to comply with existing regulations.
Response provided by the Finance

Division, Revenue Region No. 7,
Quezon City
First, the distance of the AGDBs to As discussed in the report,

the office of the RCOs. Some RCOs collections were accumulated from
are having a hard time in going to the 4 to 7 days before these were
AGDBs to deposit their collections deposited in tranches with balance
because the said banks are very far ranging from P 85,240.76 to
from their post. P 4,418,408.40. The distance is
therefore not a problem since
partial deposits were made.
Moreover, the RDO is only in
Marikina City and the AGDBs are
very accessible.
Second, the risk of bringing a large The BIR could also make
amount of cash collections for representations with the LBP on
deposits to AGDBs. RCOs were the possibility of regularly picking
afraid that they might encounter up their deposits at agreed time and
some bad elements/ robbers and take day/s. This would avoid the risk of
the money in their possession while loss or misappropriation for
on their way to the bank. That made failure to deposit. Further, it is
66
them inconsistent on the date of their more risky to accumulate

deposits collections reaching to millions
before depositing the same.
Response provided by the Revenue

District No. 45 at Marikina
Collection officers are servicing As discussed in the report, the

taxpayers in paying taxes up to 5:00 collections were not only
pm. accumulated for several days but
also deposited in tranches. It shows
then that the RCO was able to find
time to deposit his collections.
However, the amount deposited is
only partial.
All transactions for the day must be
reported in Batch Control Sheet.
Total collections in Batch Control Considering the manner by which

Sheet for the day must tally with the collections were deposited by the
total deposited collection for the RCOs, the collections for the day
same day. (Encoding of transactions would definitely not tally with the
in the ITS which do not tally with deposits.
deposited collection for the day is
rejected by the system.)
For the period from 2002 to June, While management claimed that
2004, there are sixty-one (61) RCOs there were 61 RCOs charged
with formal charges per attached formally, the concerned RCOs
letter of the Chief, Internal Security were not specified and specific
Division. charges were not indicated. Hence,
the team cannot evaluate if such
charges are due to violations
related to collections and deposit
functions of said RCOs.
COLLECTION THRU AABs
3. Both the BIR and BTr were not able to strictly monitor
unremitted collections due to their failure to maintain
subsidiary ledgers per AABs. As a result, any unremitted AAB
collections could not be determined from the two books. The
67
presence of huge outstanding balance of P3,087,839,353.91 as

of January 2003 under the BTr account “Other Receivables-
Due from AABs” implies unremitted collections, while the BIR
records showed a negative balance. The AABs’ failure to remit
on time was also manifested on the penalties imposed by the
BIR for delayed remittance of collections amounting to
P19,099,411.16 and delayed submission of reports amounting to
P2,213,686.86 for CYs 1998 to 2002 which remained
uncollected as of December 2003. Several errors in recording
were also noted on both books. Under this condition, the
interest of the government is not totally protected.
At present, the BIR had existing MOA with 22 AABs for the collection
and remittance of internal revenue taxes from taxpayers. It was
perceived that the terms and conditions set forth under the MOA and a
number of BIR and other existing regulations, would enable the BIR
and the BTr to effectively monitor remittances of AABs’ collections,
ensure timely and regular generation and submission of accurate tax
collection information and management reports.
The audit disclosed that both BTr and BIR were not able to strictly
control and monitor remittance of collection. This is primarily due to
their failure to maintain subsidiary ledgers of AABs where collections
and remittances to the BSP shall be posted to ascertain at any given
time any unremitted collections. Both agencies were required under the
COA, DBM, and DOF Joint Circular No. 5-85 to maintain such ledgers.
The importance of SL was also emphasized under Revenue
Administrative Order No. 8-2000 that requires the Revenue Accounting
Division to maintain accurate and updated SLs of all AABs’ head
offices and branches and to process, monitor and analyze collection
reports submitted by AABs.
The team also noted that even if the BIR maintains the same, the
unremitted collections could still not be ascertained due to erroneous
basis of recording. As discussed earlier, the manner of accounting
collections and remittance was defective resulting in abnormal balances
of the tax revenue account.
It was also noted that under Revenue Administrative Order No. 4-2000,
the Collection Reporting and Reconciliation Section of the Large
Taxpayers Collection and Enforcement Division was also required to
reconcile collection reports of AABs with the reported remittance to the
68
BTr. This function was also apparently not being undertaken as the
team could not be provided with a list of AABs with unremitted
collections despite repeated requests.
As discussed earlier, the BIR records show that as of December 31,

2002, remittances exceeded collections by P2.204B for CY 2002 alone.
The presence of abnormal balances manifested the failure of the BIR to
properly control and monitor collection and remittance.
The possibility of cases of unremitted collections, however, was evident

discounted under existing conditions where the BTr’s recorded daily
collections do not tally with the corresponding remittances. The
remittances were either over or under the reported collections as
illustrated in the recorded transactions for the month of January 2003:
DATE OF PER E-MAIL PER CRDC OVER UNDER

COLLECTION (A) (B) (A-B) (B-A)
2-Jan P 24,114,584.86 P 24,040,593.39 P 73,991.47 P -

3-Jan 29,757,391.25 29,873,808.59 116,417.34
6-Jan 84,577,457.74 84,695,521.57 118,063.83
7-Jan 217,329,579.50 217,351,944.96 22,365.46
8-Jan 56,763,005.19 56,848,030.37 85,025.18
9-Jan 123,912,357.57 124,210,414.45 298,056.88
10-Jan 462,380,543.37 462,310,389.96 70,153.41
13-Jan 148,456,444.60 147,976,470.81 479,973.79
14-Jan 82,387,346.93 82,132,893.45 254,453.48
15-Jan 327,235,581.26 327,083,870.13 151,711.13
16-Jan 101,473,689.45 100,277,912.56 1,195,776.89
17-Jan 37,381,958.61 36,921,064.36 460,894.25
20-Jan 152,540,411.06 152,401,248.75 139,162.31
21-Jan 42,079,327.89 41,884,791.51 194,536.38
22-Jan 50,157,913.56 49,918,143.16 239,770.40
23-Jan 50,545,733.84 50,504,480.99 41,252.85
24-Jan 160,695,502.32 160,678,007.89 17,494.43
27-Jan 140,036,191.78 140,055,276.01 19,084.23
28-Jan 60,138,160.43 60,148,417.63 10,257.20
29-Jan 31,808,946.69 31,169,964.01 638,982.68
30-Jan 108,510,676.27 108,509,230.19 1,446.08
31-Jan 34,202,901.04 35,502,530.56 1,299,629.52
TOTAL P 2,526,485,705.21 P 2,524,495,005.30 P 3,959,599.55 P1,968,899.64
In view of these discrepancies, the BTr account “Other Receivables-

Due from AABs” reflects outstanding balance of P3,087,839,353.91 as
of January 2003. This account represents collections from August to
December 2002 only as the BTr used other account before and after that
period. The team, however, noted a number of errors and deficiencies
in recording transactions.
The AABs’ failure to remit collection on time was also manifested in

419 instances during CYs 1998 to 2002. The BIR-RAD was able to
monitor the delayed remittances only upon remittance as the dates of
69
collections and remittances were reflected in the BSP List of

Remittances. These collections were remitted only 1 to 1,274 days after
the due dates as tabulated below:
NO. OF
INSTANCES
NO. OF REMITTANC
TOTAL AMOUNT DATE DATE DAYS ES WERE
BANK COLLECTED COLLECTED REMITTED DELAYED DELAYED
Land Bank P 334,825.18 12/28/00 10/08/02 644 1

10,389,460.66 1/16/01 - 12/18/01 10/31/01-10/10/02 1 to 547 22
1,099,842,414.23 3/07/02– 12/04/02 4/01/02- 1 to 205 77
12/18/02
Sub-total 1,110,566,700.07 100
Equitable-PCI 2,045,390.06 4/25/00- 10/26/00 7/01/02 608 to 790 10
625,270,426.37 1/03/01 – 12/13/01 10/08/01– 1 to 682 173
11/21/02
326,558,269.87 2002 various 1 to 46 35
Sub-total 953,874,086.30 218
PNB 202,000.00 7 & 14/04/99 2/19/02 & 1,044 to 2
3/25/02 1,070
22,981.75 11/13/01-12/10/01 1/09/02-4/17/02 27 to 150 5
12,304,039.69 10/15/01-7/09/02 1/31/02-9/11/02 1 to 210 17
Sub-total 12,529,021.44 24
United 14,568.47 2001 3/19/02–8/26/02 1 1
Overseas
Bank 6,690,430.01 1/25/02 – 7/08/02 1 to 48 7
Sub-total 7,004,998.48 8
Standard 869,891.76 2002 81 2
Chartered
BPI 19,197,091.36 2001 1
53,742.82 6/11/02 – 11/12/02 6/27/02–11/21/02 3 to 10 2
Sub-total 19,250,834.18 2
Union Bank 212,601.49 7/15/98 6/14/02 1274 1
38,962,988.25
Sub-total 39,175,589.74 1
Philtrust Bank 14,648,732.14 2002 1 4
Security Bank 15,528,628.02 11/22/02 12/02/02 1 to 5 2
Sub-total 30,389,961.65 6
Veterans Bank 113,628,577.46 10/15/01 1/31/02 1 to 101 8
282,346,418.28 6/11/01 10/16/02 1 to 121 9
Sub-total 395,974,995.74 17
RCBC 1,105,741.13 7/13/01 10/12/01 1 to 85 11
180,845,419.23 2002 1 to 8 17
Sub-total 181,951,160.36 28
MetroBank 709,068.04 2001 1 to 45 5
11.064,410.61 2002 1 to 17 6
Sub-total 11,773,478.65 11
Grand Total P 2,724,194,928.63 419
Records further showed that these banks were notified by the BIR only
22 to 1,322 days after the collection date and the corresponding demand
letters for payment of corresponding penalties and surcharges were
issued only from 182 to 596 days after the issuance of the notice as
illustrated on the next page:
70
DAYS
DAYS DATE OF LAPSED
DATE OF LAPSED ISSUING BEFORE
RAD PENALTY BEFORE DEMAND ISSUING
LETTER/ YR. OF AMOUNT OF COL'N ISSUING LETTER DEMAND
NOTICE COL'N COLLECTION REPORTING REMITTANCE DATE NOTICE LETTER
Land Bank of the Philippines
12/12/01 2001 P 63,181.81 P 12,800.00 P 12,324.77 08/23/01 111 07/31/03 596
12/12/01 710.00 177.50 2.15 10/18/01 55 07/31/03 596
01/22/02 2001 905.57 226.39 626.55 04/10/01 287 07/31/03 555
01/22/02 417,775.20 200.00 1,273.36 10/29/01 85 07/31/03 555
01/22/02 2001 7,905,896.37 2,200.00 98,691.20 10/30/01 84 07/31/03 555
01/22/02 106,379.50 200.00 324.24 10/31/01 83 07/31/03 555
01/22/02 2001 13,056.08 400.00 79.59 11/13/01 70 07/31/03 555
01/22/02 64,706.47 200.00 197.22 11/23/01 60 07/31/03 555
01/22/02 452.19 113.05 1.38 11/26/01 57 07/31/03 555
01/24/02 2001 49,080.61 1,600.00 1,196.76 12/06/01 49 07/31/03 553
01/24/02 2001 708.00 177.00 12.95 12/07/01 48 07/31/03 553
01/24/02 21,521.67 200.00 65.60 12/11/01 44 07/31/03 553
01/24/02 1,317,798.23 200.00 4,016.58 12/14/01 41 07/31/03 553
01/24/02 4,259.85 1,064.96 90.89 12/18/01 37 07/31/03 553
01/24/02 1,000.00 250.00 6.10 12/20/01 35 07/31/03 553
01/24/02 399,332.16 726.73 1,238.81 12/21/01 34 07/31/03 553
02/26/02 2001 10,161.79 200.00 30.97 12/28/01 60 07/31/03 520
02/26/02 2002 84,530.31 400.00 515.29 01/04/02 53 07/31/03 520
02/26/02 3,580.82 600.00 32.74 01/17/02 40 07/31/03 520
03/21/02 2002 30,860.66 400.00 188.12 02/08/02 41 07/31/03 497
03/21/02 4,041.29 600.00 36.95 02/14/02 35 07/31/03 497
03/21/02 6,026.66 200.00 18.37 02/15/02 34 07/31/03 497
03/21/02 9,179.22 400.00 55.96 02/20/02 29 07/31/03 497
03/21/02 138,520.53 200.00 422.20 02/21/02 28 07/31/03 497
03/21/02 324.00 81.00 0.99 02/27/02 22 07/31/03 497
04/16/02 2002 385,361.32 200.00 1,174.56 03/08/02 39 07/31/03 471
04/16/02 50,594.18 1,400.00 1,079.46 03/19/02 28 07/31/03 471
04/16/02 62,603.42 200.00 190.81 03/21/02 26 07/31/03 471
05/21/02 2002 264,247.85 200.00 805.41 03/25/02 57 07/31/03 436
05/21/02 6,398.00 400.00 39.00 03/26/02 56 07/31/03 436
05/21/02 1,464,860.10 600.00 8,148.62 04/05/02 46 07/31/03 436
05/21/02 98,114.40 1,400.00 2,093.33 04/09/02 42 07/31/03 436
05/21/02 4,842,602.68 200.00 14,759.99 04/10/02 41 07/31/03 436
05/21/02 4,496.75 200.00 13.70 04/12/02 39 07/31/03 436
05/21/02 200.00 50.00 2.44 04/15/02 36 07/31/03 436
05/21/02 24,500.00 400.00 149.35 04/16/02 35 07/31/03 436
06/19/02 2002 297,239.26 1,140.00 4,523.02 05/08/02 42 07/31/03 407
06/19/02 3,234,050.27 1,600.00 28,263.32 05/10/02 40 07/31/03 407
06/19/02 1,860.32 200.00 5.67 05/17/02 33 07/31/03 407
06/19/02 2,137.84 200.00 6.52 05/23/02 27 07/31/03 407
07/23/02 2002 97,115.76 6,800.00 10,064.12 05/09/02 75 07/31/03 373
07/23/02 2,167,555.80 6,600.00 218,017.51 05/10/02 74 07/31/03 373
07/23/02 147,280.12 5,600.00 12,569.25 05/13/02 71 07/31/03 373
07/23/02 126,149.72 1,600.00 3,075.98 06/06/02 47 07/31/03 373
07/23/02 8,152.66 200.00 24.85 06/10/02 43 07/31/03 373
07/23/02 179,531.08 309.50 548.53 06/11/02 42 07/31/03 373
07/23/02 480.00 120.00 4.39 06/20/02 33 07/31/03 373
08/23/02 2001 1,000.00 250.00 1,667.23 01/16/01 584 07/31/03 342
08/23/02 2002 12,750.00 2,200.00 427.48 06/18/02 66 07/31/03 342
08/23/02 10,176.30 800.00 124.06 06/25/02 59 07/31/03 342
08/23/02 70,480,972.06 600.00 1,161.96 07/04/02 50 07/31/03 342
08/23/02 34,664.66 1,200.00 633.94 07/05/02 49 07/31/03 342
09/25/02 2002 651.82 162.96 5.96 08/07/02 49 07/31/03 309
09/25/02 434.10 108.53 1.33 08/08/02 48 07/31/03 309
09/25/02 67,297.92 200.00 205.12 08/09/02 47 07/31/03 309
11/04/02 2002 13,231.15 3,307.79 8,267.20 03/07/02 242 07/31/03 269
71
DAYS
DAYS DATE OF LAPSED
11/04/02 P 1,332,528.27 P 2,000.00 P 40,614.73 08/20/02 76 07/31/03 269

11/04/02 57,420.03 400.00 350.03 08/30/02 66 07/31/03 269
11/04/02 667.34 166.84 2.04 09/12/02 53 07/31/03 269
11/21/02 2000 334,825.18 83,706.30 657,220.53 12/28/00 693 07/31/03 252
11/21/02 2001 11,535.16 2,883.79 17,016.72 06/08/01 531 07/31/03 252
11/21/02 2002 27,943.00 600.00 255.50 10/02/02 50 07/31/03 252
11/21/02 600.90 150.23 10.98 10/10/02 42 07/31/03 252
11/21/02 2002 202,346.27 400.00 1,233.47 10/14/02 38 07/31/03 252
11/21/02 22,866.97 400.00 139.38 10/23/02 29 07/31/03 252
01/10/03 2002 80,631.33 4,800.00 5,898.24 10/10/02 92 07/31/03 202
01/10/03 80,673.33 200.00 245.88 11/07/02 64 07/31/03 202
01/10/03 2002 89,785.48 200.00 273.66 11/08/02 63 07/31/03 202
01/10/03 155,724.19 1,600.00 2,342.65 11/15/02 56 07/31/03 202
01/10/03 6,281.25 200.00 9.14 11/26/02 45 07/31/03 202
01/10/03 725.84 181.46 2.21 11/28/02 43 07/31/03 202
01/30/03 2002 5,000.00 200.00 15.23 11/29/02 62 07/31/03 182
01/30/03 500.00 125.00 13.71 12/04/02 57 07/31/03 182
01/30/03 81,580.67 745.17 753.03 12/05/02 56 07/31/03 182
01/30/03 104,488,674.99 400.00 12/09/02 52 07/31/03 182
01/30/03 685,598,851.73 5,259.64 28,801.71 12/10/02 51 07/31/03 182
01/30/03 223,238,978.91 600.00 48.53 12/11/02 50 07/31/03 182
01/30/03 7,860.70 692.61 47.96 12/13/02 48 07/31/03 182
Total P 1,110,566,700.07 P 168,176.45 P1,194,809.18
Equitable PCI Bank
12/12/01 2001 P 237,753.04 P 12,400.00 P 44,928.80 08/09/01 125 07/31/03 596
12/12/01 16,277.88 4,069.47 3,026.45 08/10/01 124 07/31/03 596
12/12/01 581.61 145.40 99.26 08/14/01 120 07/31/03 596
12/12/01 7,785.00 1,946.25 1,328.78 08/15/01 119 07/31/03 596
12/12/01 598.00 149.50 89.30 08/21/01 113 07/31/03 596
12/12/01 10,220.80 2,555.20 1,557.62 08/29/01 105 07/31/03 596
12/12/01 1,053.60 263.40 41.74 09/20/01 83 07/31/03 596
12/12/01 1,651.60 412.90 60.39 09/21/01 82 07/31/03 596
12/12/01 16,044.89 1,400.00 342.32 09/24/01 79 07/31/03 596
12/12/01 206,301.57 1,400.00 4,401.56 09/25/01 78 07/31/03 596
12/12/01 685,547.11 200.00 2,089.50 09/28/01 75 07/31/03 596
12/12/01 2,888,472.46 1,200.00 52,823.42 10/04/01 69 07/31/03 596
12/12/01 471,925.57 1,000.00 7,192.00 10/05/01 68 07/31/03 596
12/12/01 8,608.24 1,600.00 209.89 10/08/01 65 07/31/03 596
12/12/01 15,075,018.87 200.00 45,947.82 10/10/01 63 07/31/03 596
12/12/01 2,747,958.96 1,000.00 41,878.13 10/12/01 61 07/31/03 596
12/12/01 1,455.71 200.00 4.42 10/16/01 57 07/31/03 596
12/12/01 458,523.03 200.00 1,397.54 10/17/01 56 07/31/03 596
12/12/01 171,030.84 400.00 1,042.58 10/18/01 55 07/31/03 596
12/12/01 1,184,337.37 200.00 3,609.79 10/19/01 54 07/31/03 596
12/12/01 3,369,500.86 200.00 10,270.05 10/24/01 49 07/31/03 596
12/12/01 7,427,145.37 1,200.00 22,637.52 10/25/01 48 07/31/03 596
12/12/01 32,021,922.57 3,000.00 40,453.75 10/26/01 47 07/31/03 596
01/22/02 2001 6,468.33 1,617.08 1,399.77 09/13/01 131 07/31/03 555
01/22/02 555,737.52 200.00 1,693.85 10/29/01 85 07/31/03 555
01/22/02 9,943,440.67 400.00 60,614.12 10/30/01 84 07/31/03 555
01/22/02 3,670,997.51 200.00 11,189.00 10/31/01 83 07/31/03 555
01/22/02 342,092.62 600.00 3,128.03 10/31/01 83 07/31/03 555
01/22/02 649,706.89 200.00 1,980.27 11/06/01 77 07/31/03 555
01/22/02 1,505,248.47 1,600.00 30,359.17 11/07/01 76 07/31/03 555
01/22/02 12,000,177.36 1,800.00 121,190.44 11/08/01 75 07/31/03 555
01/22/02 17,559,460.76 1,200.00 321,121.64 11/09/01 74 07/31/03 555
72
DAYS
DAYS DATE OF LAPSED
01/22/02 P 12,469,132.47 P 2,200.00 P 76,492.76 11/13/01 70 07/31/03 555

01/22/02 6,293,306.58 400.00 38,363.30 11/14/01 69 07/31/03 555
01/22/02 1,725,307.65 200.00 5,258.64 11/15/01 68 07/31/03 555
01/22/02 258,507.26 400.00 1,575.83 11/21/01 62 07/31/03 555
01/22/02 53,136.56 200.00 161.96 11/22/01 61 07/31/03 555
01/22/02 209,721.39 1,000.00 3,196.10 11/23/01 60 07/31/03 555
01/22/02 2001 2,448,270.42 200.00 7,462.19 11/28/01 55 07/31/03 555
01/24/02 2001 16,416.05 4,104.01 6,754.75 08/06/01 171 07/31/03 553
01/24/02 2,192.56 548.14 193.80 11/05/01 80 07/31/03 553
01/24/02 26,858.84 5,800.00 2,374.06 11/06/01 79 07/31/03 553
01/24/02 6,961.12 1,740.28 318.25 11/20/01 65 07/31/03 553
01/24/02 63,769.78 800.00 777.47 11/26/01 59 07/31/03 553
01/24/02 2001 3,731,237.45 800.00 45,490.42 11/27/01 58 07/31/03 553
01/24/02 610,477.38 800.00 7,442.80 11/28/01 57 07/31/03 553
01/24/02 3,226,468.86 600.00 29,502.30 11/29/01 56 07/31/03 553
01/24/02 338,811,570.99 800.00 - 12/10/01 45 07/31/03 553
01/24/02 3,226,468.86 600.00 29,502.30 11/29/01 56 07/31/03 553
01/24/02 338,811,570.99 800.00 - 12/10/01 45 07/31/03 553
01/24/02 43,095,695.50 600.00 - 12/11/01 44 07/31/03 553
01/24/02 25,214,718.03 600.00 - 12/12/01 43 07/31/03 553
01/24/02 17,303,015.39 1,200.00 8,598.83 12/13/01 42 07/31/03 553
01/24/02 44,553,124.14 2,200.00 258,239.01 12/14/01 41 07/31/03 553
01/24/02 1,350.00 337.50 4.11 12/20/01 35 07/31/03 553
01/24/02 2,540,736.48 800.00 7,744.03 12/21/01 34 07/31/03 553
02/26/02 2001 4,667.89 1,166.97 810.96 11/28/01 90 07/31/03 520
02/26/02 3,041.97 760.49 463.59 12/04/01 84 07/31/03 520
02/26/02 1,080.00 270.00 52.67 12/13/01 75 07/31/03 520
02/26/02 1,079,290.14 200.00 3,289.62 12/28/01 60 07/31/03 520
02/26/02 2002 89,919.21 600.00 822.22 01/09/02 48 07/31/03 520
02/26/02 30,000.00 400.00 182.88 01/10/02 47 07/31/03 520
02/26/02 270.00 67.50 6.58 01/11/02 46 07/31/03 520
02/26/02 20,803,668.34 600.00 - 01/14/02 43 07/31/03 520
02/26/02 189,561,523.01 925.00 1.53 01/15/02 42 07/31/03 520
02/26/02 30,172,199.88 600.00 - 01/16/02 41 07/31/03 520
02/26/02 528.42 132.11 4.83 01/07/02 50 07/31/03 520
02/26/02 9,587,844.14 400.00 - 01/17/02 40 07/31/03 520
03/21/02 2002 17,598,294.98 200.00 - 02/22/02 27 07/31/03 497
03/21/02 4,684.23 200.00 14.28 02/27/02 22 07/31/03 497
04/16/02 2002 11,310,464.72 400.00 - 03/04/02 43 07/31/03 471
04/16/02 25,312,267.76 400.00 - 03/05/02 42 07/31/03 471
04/16/02 20,721,280.72 400.00 - 03/06/02 41 07/31/03 471
04/16/02 99,458.40 - 3,637.72 03/08/02 39 07/31/03 471
04/16/02 9,904.72 200.00 30.19 03/15/02 32 07/31/03 471
05/21/02 2002 1,049,482.93 9,400.00 140,745.72 03/15/02 67 07/31/03 436
05/21/02 10,000.00 600.00 91.44 03/26/02 56 07/31/03 436
05/21/02 30,739.64 600.00 281.08 03/27/02 55 07/31/03 436
07/31/02 2000 180.00 45.00 433.42 04/25/00 827 07/31/03 365
07/31/02 443,246.82 110,811.71 983,522.19 06/26/00 765 07/31/03 365
07/31/02 565,175.66 137,200.00 1,181,720.37 08/07/00 723 07/31/03 365
07/31/02 886,365.00 133,000.00 1,796,558.65 08/30/00 700 07/31/03 365
07/31/02 1,550.75 387.69 3,138.47 08/31/00 699 07/31/03 365
07/31/02 4,076.08 1,019.02 7,826.92 10/03/00 666 07/31/03 365
07/31/02 63.00 15.75 119.63 10/09/00 660 07/31/03 365
07/31/02 19,363.01 4,840.75 36,767.84 10/10/00 659 07/31/03 365
07/31/02 116,578.95 29,144.74 216,393.69 10/25/00 644 07/31/03 365
07/31/02 8,790.79 2,197.70 16,290.66 10/26/00 643 07/31/03 365
07/31/02 2001 34,514.73 8,628.68 55,965.87 01/03/01 574 07/31/03 365
73
DAYS
DAYS DATE OF LAPSED
07/31/02 P 2,357.88 P 589.47 P 3,816.14 01/04/01 573 07/31/03 365

07/31/02 2001 73,051.64 18,262.91 118,008.42 01/05/01 572 07/31/03 365
07/31/02 44,107.50 11,026.88 70,579.55 01/09/01 568 07/31/03 365
07/31/02 10,227.76 2,556.94 16,366.17 01/10/01 567 07/31/03 365
07/31/02 2,565.18 641.30 4,096.91 01/11/01 566 07/31/03 365
07/31/02 2,500.00 625.00 3,947.09 01/16/01 561 07/31/03 365
07/31/02 404,739.24 101,184.81 637,783.11 01/18/01 559 07/31/03 365
07/31/02 32,398.08 8,099.52 50,460.01 01/22/01 555 07/31/03 365
07/31/02 2001 665,247.69 102,400.00 1,036,123.27 01/24/01 553 07/31/03 365
07/31/02 32,776.62 8,194.16 50,949.68 01/25/01 552 07/31/03 365
07/31/02 2001 410,504.95 102,000.00 636,859.07 01/26/01 551 07/31/03 365
07/31/02 1,000.23 250.06 1,533.47 02/01/01 545 07/31/03 365
07/31/02 569.70 142.43 863.00 02/07/01 539 07/31/03 365
07/31/02 1,850.65 462.66 2,792.14 02/09/01 537 07/31/03 365
07/31/02 2001 57,800.01 14,450.00 86,323.92 02/12/01 534 07/31/03 365
07/31/02 10,982.70 2,745.68 16,335.63 02/16/01 530 07/31/03 365
07/31/02 27,582.25 6,895.56 40,605.42 02/19/01 527 07/31/03 365
07/31/02 16,462.40 4,115.60 24,185.07 02/22/01 524 07/31/03 365
07/31/02 4,757.18 1,189.30 6,901.82 02/26/01 520 07/31/03 365
07/31/02 94,619.83 23,654.96 137,276.53 02/27/01 519 07/31/03 365
07/31/02 7,639.45 1,909.86 11,060.20 03/01/01 517 07/31/03 365
07/31/02 156,386.59 39,096.65 223,552.49 03/05/01 513 07/31/03 365
07/31/02 1,093,843.34 93,800.00 1,560,300.10 03/08/01 510 07/31/03 365
07/31/02 75,228.83 18,807.21 107,080.00 03/09/01 509 07/31/03 365
07/31/02 50.00 12.50 70.41 03/12/01 506 07/31/03 365
07/31/02 29,634.86 7,408.72 41,730.35 03/13/01 505 07/31/03 365
07/31/02 543.03 135.76 764.67 03/14/01 504 07/31/03 365
07/31/02 2,000.00 500.00 2,810.21 03/15/01 503 07/31/03 365
07/31/02 5,658.56 1,414.64 7,933.61 03/16/01 502 07/31/03 365
07/31/02 700.00 175.00 970.77 03/21/01 497 07/31/03 365
07/31/02 32,508.50 8,127.13 44,389.69 03/26/01 492 07/31/03 365
07/31/02 3,756.76 939.19 5,129.78 03/27/01 491 07/31/03 365
07/31/02 14,227.94 3,556.99 19,427.96 03/28/01 490 07/31/03 365
07/31/02 84,396.69 21,099.17 114,984.71 03/29/01 489 07/31/03 365
07/31/02 11,973.20 2,993.30 16,057.21 04/02/01 485 07/31/03 365
07/31/02 20,734.36 5,183.59 27,806.77 04/03/01 484 07/31/03 365
07/31/02 4,819.20 1,204.80 6,463.01 04/04/01 483 07/31/03 365
07/31/02 169,598.64 42,399.66 227,448.04 04/05/01 482 07/31/03 365
07/31/02 72,520.37 18,130.09 97,035.74 04/06/01 481 07/31/03 365
07/31/02 1,292,093.70 87,000.00 1,709,192.16 04/10/01 477 07/31/03 365
07/31/02 77,793.20 19,448.30 102,905.48 04/11/01 476 07/31/03 365
07/31/02 1,375.00 343.75 1,789.52 04/17/01 470 07/31/03 365
07/31/02 31,858.16 7,964.54 41,365.42 04/19/01 468 07/31/03 365
07/31/02 9,858.40 2,464.60 12,770.34 04/20/01 467 07/31/03 365
07/31/02 3,427.78 856.95 4,429.82 04/21/01 466 07/31/03 365
07/31/02 27,912.85 6,978.21 35,732.27 04/25/01 462 07/31/03 365
07/31/02 2,593.40 648.35 3,256.67 05/03/01 454 07/31/03 365
07/31/02 32,928.81 8,232.20 41,250.10 05/04/01 453 07/31/03 365
07/31/02 2,500.00 625.00 3,078.42 05/11/01 446 07/31/03 365
07/31/02 429,276.10 77,200.00 503,737.87 05/30/01 427 07/31/03 365
07/31/02 101,264.46 25,316.12 118,212.38 06/01/01 425 07/31/03 365
07/31/02 22,919.14 5,729.79 26,405.68 06/06/01 420 07/31/03 365
07/31/02 193,193.34 48,298.34 218,460.64 06/11/01 415 07/31/03 365
07/31/02 7,401.73 1,850.43 8,211.86 06/18/01 408 07/31/03 365
07/31/02 1,246.59 311.65 1,352.64 06/28/01 398 07/31/03 365
07/31/02 5,991.00 1,497.75 6,482.38 06/26/01 400 07/31/03 365
07/31/02 11,275.88 2,818.97 12,028.90 07/04/01 392 07/31/03 365
74
DAYS
DAYS DATE OF LAPSED
07/31/02 P 18,440.76 P 4,610.19 P 19,559.84 07/06/01 390 07/31/03 365

07/31/02 534,953.36 68,800.00 559,264.43 07/09/01 387 07/31/03 365
07/31/02 3,261.46 815.37 3,340.10 07/17/01 379 07/31/03 365
07/31/02 2,209.20 552.30 2,255.73 07/19/01 377 07/31/03 365
07/31/02 16,416.05 4,104.01 16,011.27 08/03/01 362 07/31/03 365
07/31/02 25,601.05 6,400.26 24,579.64 08/08/01 357 07/31/03 365
07/31/02 1,547.96 386.99 1,476.77 08/10/01 355 07/31/03 365
07/31/02 1,559.73 389.93 1,464.22 08/13/01 352 07/31/03 365
07/31/02 6,834.79 1,708.70 6,270.45 08/21/01 344 07/31/03 365
07/31/02 15,242.11 3,810.53 13,983.59 08/22/01 343 07/31/03 365
07/31/02 400.03 100.01 358.46 08/29/01 336 07/31/03 365
07/31/02 2,574.79 643.70 2,291.57 08/31/01 334 07/31/03 365
07/31/02 156,476.99 39,119.25 136,879.85 09/05/01 329 07/31/03 365
07/31/02 17,036.52 4,259.13 14,850.94 09/06/01 328 07/31/03 365
07/31/02 2001 5,652.83 1,413.21 4,807.04 09/13/01 321 07/31/03 365
07/31/02 19,088.81 4,772.20 14,952.68 10/05/01 299 07/31/03 365
07/31/02 5,000.04 1,250.01 3,840.45 10/10/01 294 07/31/03 365
07/31/02 3,669.75 917.44 2,740.37 10/16/01 288 07/31/03 365
07/31/02 33,107.85 8,276.96 23,310.42 10/31/01 273 07/31/03 365
07/31/02 120,946.27 30,236.57 82,206.19 11/08/01 265 07/31/03 365
07/31/02 232,943.52 43,600.00 154,069.80 11/20/01 253 07/31/03 365
07/31/02 768,108.64 41,800.00 486,959.83 11/23/01 250 07/31/03 365
07/31/02 60,303.61 15,075.90 34,554.80 12/13/01 230 07/31/03 365
07/31/02 97,897.54 24,474.39 127,410.96 04/16/01 471 07/31/03 365
07/31/02 2002 200.00 50.00 3.66 06/21/02 40 07/31/03 365
09/25/02 2002 3,000.00 750.00 201.16 07/31/02 56 07/31/03 309
11/04/02 2002 40,176.74 8,400.00 5,143.18 08/06/02 90 07/31/03 269
01/10/03 2001 5,838.10 1,459.53 12,135.64 01/13/01 727 07/31/03 202
01/10/03 6,090.00 1,522.50 12,399.40 01/16/01 724 07/31/03 202
01/10/03 500.00 125.00 1,007.35 01/23/01 717 07/31/03 202
01/10/03 5,974.61 1,493.65 12,000.57 01/26/01 714 07/31/03 202
01/10/03 290.55 72.64 572.96 02/07/01 702 07/31/03 202
01/10/03 875.72 218.93 1,724.26 02/08/01 701 07/31/03 202
01/10/03 38,962.67 9,740.67 71,728.67 03/22/01 659 07/31/03 202
01/10/03 1,416.73 354.18 2,491.54 04/16/01 634 07/31/03 202
01/10/03 640.00 160.00 1,098.23 05/02/01 618 07/31/03 202
01/10/03 1,000.00 250.00 1,670.27 05/17/01 603 07/31/03 202
01/10/03 88,306.25 22,076.56 123,271.90 08/15/01 513 07/31/03 202
01/10/03 6,412.02 1,603.01 7,270.18 11/09/01 427 07/31/03 202
01/10/03 2002 119,362.03 400.00 727.62 10/30/02 72 07/31/03 202
01/10/03 3,000.00 400.00 18.29 11/12/02 59 07/31/03 202
Total P 953,874,086.30 P1,845,862.41 P16,089,621.52
Philippine National Bank
02/27/02 2001 P 4,200.00 P 1,050.00 P 652.87 11/13/01 106 07/31/03 519
02/27/02 333.28 83.32 27.43 12/06/01 83 07/31/03 519
02/27/02 2,680.45 670.11 70.35 01/11/02 47 07/31/03 519
02/27/02 12,097,624.95 200.00 - 01/24/02 34 07/31/03 519
03/21/02 1999 200,000.00 50,000.00 636,410.96 04/07/99 1079 07/31/03 497
04/16/02 1999 2,000.00 500.00 6,528.70 04/14/99 1098 07/31/03 471
04/16/02 2001 9,042.50 2,260.63 4,134.16 10/03/01 195 07/31/03 471
04/16/02 336.78 84.20 146.79 10/10/01 188 07/31/03 471
04/16/02 2002 3,826.57 200.00 11.67 03/15/02 32 07/31/03 471
05/21/02 2001 9,069.19 2,267.30 3,344.73 12/10/01 162 07/31/03 436
05/21/02 2002 67,500.00 14,000.00 14,195.80 03/01/02 81 07/31/03 436
05/21/02 1,305.00 326.25 83.53 05/10/02 11 07/31/03 436
07/23/02 2002 96.00 24.00 29.26 03/05/02 140 07/31/03 373
75
DAYS
DAYS DATE OF LAPSED
08/23/02 2002 P 107,125.00 P 21,000.00 P 34,283.67 04/10/02 135 07/31/03 342

08/23/02 290.00 72.50 68.94 04/15/02 130 07/31/03 342
09/25/02 2002 449.14 112.29 136.90 05/10/02 138 07/31/03 309
11/04/02 2002 3,796.96 949.24 2,430.31 02/06/02 271 07/31/03 269
11/04/02 1,106.62 276.66 192.25 07/09/02 118 07/31/03 269
11/21/02 2002 2,310.00 200.00 - 10/02/02 50 07/31/03 252
11/21/02 10,000.00 200.00 274.31 10/10/02 42 07/31/03 252
01/10/03 2002 3,619.00 200.00 11.03 11/13/02 58 07/31/03 202
01/30/03 2002 2,310.00 - 309.79 10/02/02 120 07/31/03 182
Total P 12,529,021.44 P 94,676.50 P 703,343.45
United Overseas Bank
01/24/02 2001 P 14,568.47 P 200.00 P 44.40 12/21/01 34 07/31/03 553
05/21/02 2002 5,797,521.13 200.00 - 04/12/02 39 07/31/03 436
07/31/02 2002 850,862.63 - 2,593.38 06/14/02 47 07/31/03 365
09/25/02 2002 3,961.25 990.31 495.02 07/08/02 79 07/31/03 309
09/25/02 115,379.79 - 351.67 07/29/02 58 07/31/03 309
09/25/02 20,246.26 - 61.71 07/30/02 57 07/31/03 309
09/25/02 202,458.95 - 617.09 07/31/02 56 07/31/03 309
Total P 7,004,998.48 P 1,390.31 P 4,163.27
Standard Chartered Bank
04/16/02 2002 P 869,891.76 P 9,600.00 P 127,266.35 01/25/02 81 07/31/03 471
Bank of the Philippine Islands
12/12/01 2001 P 19,196,591.36 P - P 58,510.16 10/31/01 42 07/31/03 596
01/24/02 2001 500.00 125.00 1.52 12/14/01 41 07/31/03 553
07/23/02 2002 25,329.83 2,000.00 772.04 06/11/02 42 07/31/03 373
01/10/03 2002 28,412.99 600.00 259.81 11/12/02 59 07/31/03 202
Total P 19,250,834.18 P 2,725.00 P 59,543.53
Union Bank of the Philippines
02/26/02 1998 P 212,601.49 P 53,150.37 P 825,549.06 07/15/98 1322 07/31/03 520
05/21/02 2002 34,436,267.48 200.00 - 04/11/02 40 07/31/03 436
08/26/02 2002 4,526,720.77 1,200.00 - 07/05/02 52 07/31/03 339
Total P 39,175,589.74 P 54,550.37 P 825,549.06
Philippine Trust Company
03/21/02 2002 P 2,195,432.61 P 200.00 P 6,691.56 02/07/02 42 07/31/03 497
03/21/02 285.00 71.25 - 02/14/02 35 07/31/03 497
04/16/02 2002 11,428,360.54 - 34,833.02 03/08/02 39 07/31/03 471
05/21/02 2002 1,024,653.99 200.00 - 03/27/02 55 07/31/03 436
Total P 14,648,732.14 P 471.25 P 41,524.58
Security Bank & Trust Company
08/23/02 2002 P 6,924,253.68 P - P 21,104.74 07/05/02 49 07/31/03 342
01/10/02 2002 8,604,374.34 1,000.00 - 11/22/01 49 07/31/03 567
Total P 15,528,628.02 P 1,000.00 P 21,104.74
Philippine Veterans Bank
12/12/01 2001 P 3,350,394.62 P 200.00 P - 10/08/01 65 07/31/03 596
12/12/01 12,812,351.82 200.00 - 10/09/01 64 07/31/03 596
12/12/01 85,819,967.52 200.00 - 10/10/01 63 07/31/03 596
12/12/01 6,247,546.05 200.00 - 10/15/01 58 07/31/03 596
12/12/01 396,266.16 200.00 - 10/16/01 57 07/31/03 596
12/12/01 1,440,003.29 200.00 - 10/17/01 56 07/31/03 596
01/22/02 2001 3,559,221.32 200.00 - 11/23/01 60 07/31/03 555
02/26/02 2001 706.67 870.18 10/15/01 134 07/31/03 520
02/26/02 2002 22,819,679.29 400.00 - 10/10/02 -226 07/31/03 520
02/26/02 8,735,091.29 412.50 2.60 01/14/02 43 07/31/03 520
02/26/02 244,306,225.31 200.00 - 01/15/02 42 07/31/03 520
02/26/02 6,457,775.15 200.00 - 01/16/02 41 07/31/03 520
07/23/02 2002 7,000.00 400.00 42.67 06/18/02 35 07/31/03 373
76
DAYS
DAYS DATE OF LAPSED
07/23/02 2002 P 7,000.00 P 400.00 P 42.67 06/18/02 35 07/31/03 373

11/21/02 2002 13,500.00 3,375.00 4,978.81 06/11/02 163 07/31/03 252
11/21/02 988.60 247.15 21.09 10/04/02 48 07/31/03 252
11/21/02 6,158.64 ` 168.93 10/10/02 42 07/31/03 252
Total P 395,974,995.74 P 8,880.98 P 6,084.28
Rizal Commercial Banking Corp
12/12/01 2001 P 100.00 P 25.00 P 26.21 07/13/01 152 07/31/03 596
12/12/01 47,643.28 400.00 290.42 10/18/01 55 07/31/03 596
01/22/02 2001 754,130.80 445.56 4,597.09 11/07/01 76 07/31/03 555
01/22/02 119,485.73 400.00 364.18 11/08/01 75 07/31/03 555
01/24/02 2001 9,613.13 400.00 58.60 11/26/01 59 07/31/03 553
01/24/02 1,080.00 270.00 6.58 12/13/01 42 07/31/03 553
01/24/02 2001 55,569.63 1,450.00 260.81 12/14/01 41 07/31/03 553
02/26/02 2001 118,118.56 200.00 360.02 12/28/01 60 07/31/03 520
03/21/02 2002 69,669.95 200.00 212.35 01/31/02 49 07/31/03 497
03/21/02 2002 5,294.66 685.81 46.33 02/07/02 42 07/31/03 497
05/21/02 2002 75,674.04 200.00 230.66 04/24/02 27 07/31/03 436
06/19/02 2002 6,180.52 600.00 56.51 05/21/02 29 07/31/03 407
06/19/02 76,080.87 400.00 463.78 05/23/02 27 07/31/03 407
09/25/02 2002 3,737.63 934.41 91.13 07/22/02 65 07/31/03 309
09/25/02 35,732.29 1,400.00 762.38 07/25/02 62 07/31/03 309
09/25/02 771.25 192.81 4.71 08/01/02 55 07/31/03 309
09/25/02 162,463,863.94 200.00 - 08/12/02 44 07/31/03 309
09/25/02 7,466,210.74 200.00 - 08/13/02 43 07/31/03 309
09/25/02 10,377,430.54 200.00 - 08/14/02 42 07/31/03 309
11/04/02 2002 49,357.23 1,000.00 752.20 09/20/02 45 07/31/03 269
01/01/03 2002 44,048.91 400.00 268.51 11/05/02 57 07/31/03 211
01/01/03 2,379.48 200.00 7.25 11/07/02 55 07/31/03 211
01/01/03 166,787.18 200.00 508.36 11/08/02 54 07/31/03 211
01/01/03 2,200.00 550.00 53.64 11/11/02 51 07/31/03 211
Total P 181,951,160.36 P 11,153.59 P 9,421.72
Metrobank
01/24/02 2001 P 600.00 P 150.00 P 12.80 12/14/01 41 07/31/03 553
04/09/02 628,536.00 200.00 1,915.74 12/20/01 110 07/31/03 478
01/24/02 19,932.04 250.00 60.75 12/21/01 34 07/31/03 553
02/26/02 2001 60,000.00 9,600.00 8,229.45 12/26/01 62 07/31/03 520
04/17/02 12/06/01 132 07/31/03 470
04/16/02 02/11/02 64 07/31/03 471
05/08/02 2002 108,158.96 3,400.00 5,604.27 02/11/02 86 07/31/03 449
06/19/02 2002 10,719,451.98 200.00 - 05/03/02 47 07/31/03 407
09/25/02 2002 2,610.00 400.00 15.91 08/01/02 55 07/31/03 309
09/25/02 1,000.00 200.00 3.05 08/08/02 48 07/31/03 309
11/04/02 2002 70,009.01 600.00 640.15 09/10/02 55 07/31/03 269
01/10/03 2002 163,180.66 200.00 497.36 11/20/02 51 07/31/03 202
Total P 11,773,478.65 P 15,200.00 P 16,979.48
GRAND TOTAL P 2,763,148,116.88 P2,213,686.86 P19,099,411.16
The status of the penalties and surcharges imposed follow:
PENALTY IMPOSED
BANK REPORTING REMITTANCE STATUS AS OF 12/31/03
Land Bank P 168,176,.45 P1,194,809.18 Still outstanding. No response to

RAD’s demand letter.
Equitable-PCI 1,845,862.41 16,089,621.52 Still outstanding. No response to
77
PENALTY IMPOSED
BANK REPORTING REMITTANCE STATUS AS OF 12/31/03
PNB P 94,676.50 P 703,343.45 Still outstanding. No response to
United 1,390.31 4,163.27 Still outstanding. No response to
Overseas RAD’s demand letter.
Standard 9,600.00 127,266.35 Data not provided.
BPI 2,725.00 59,543.53 For final demand, awaiting copy
of the signed BAC resolution to
Bank’s request for waiver of
penalties for late remittance
amounting to P58,510.16
approved per BAC’s meeting
dated October 2, 2003.
Union Bank 54,550.37 825,549.06 For final demand, awaiting copy
penalties for late reporting and
remittance amounting to
P702,959.55 approved per BAC’s
meeting dated October 2, 2003.
Philtrust 471.25 41,524.58 For final demand, awaiting copy
penalties for late remittance
dated October 2, 2003.
Security Bank 1,000.00 21,104.74 For final demand, awaiting copy
penalties for late reporting
dated May 8, 2003.
PVB 8,880.98 6,084.28 For final demand.
RCBC 11,153.59 9,421.72 For final demand, awaiting copy
penalties for late reporting
amounting to P600.00 approved
per BAC’s meeting dated May 8,
2003.
Metrobank 15,200.00 16,979.48 For final demand, awaiting copy
penalties for late reporting and
remittance amounting to
P15,045.92 approved per BAC’s
meeting dated May 8, 2003.
Under RMO No. 30-2001, the AAB was mandated to respond to the
BIR’s preliminary notice of violations committed within fifteen (15)
working days from receipt thereof and pay the penalties demanded by
the BIR or submit to the Bank’s Accreditation Committee (BAC), thru
its Secretariat, its formal offer of compromise for penalties, surcharges
78
and/or interests within 30 days upon receipt of demand letter. The BIR
may also request from BSP, as provided under Revenue Regulation
Nos. 5-84 and 15-94, to debit the demand deposit account of the AAB
for the amount of unremitted collections and accumulated penalties,
surcharges and interest, net of penalties waived by the BIR after four
months from the date of final demand.
It can also be noted that the penalties could even be waived by the BIR
upon the discretion of the BAC as provided under Revenue
Memorandum Order No. 30-2001 dated November 26, 2001. The team
also noted that the four months grace period had already lapsed and yet
the BIR did not request the BSP to debit the demand deposit account of
the AABs. The accreditation of the AABs could also be cancelled on
account of delayed remittance as provided under the same
Memorandum.
Under these conditions, the interest of the government is not totally

protected as there is no assurance that taxes already collected are all
remitted to the national treasury. The delayed remittances also affected
the government’s cash position and deprived an opportunity to earn
additional income from investment.

Maintaining subsidiary ledgers per The AABs are submitting

AABs-HO would not reflect an different reports under each
accurate balance for each AAB since it scheme. Hence, the total
would include all the different collections per AABs should be
collection schemes. It would be very accounted per scheme. While it
difficult to pinpoint which collection may entail additional load on the
scheme incurred the discrepancy. On part of the BIR, the absence of
the other hand, if the subsidiary ledgers subsidiary ledgers would not
would be per AAB branch, it would be provide an assurance that all
tedious since the AABs have numerous collections are remitted. It may
branches. be mentioned that under the
existing set-up, the unremitted
collections could not be tracked
down due to the absence of
reliable data source.
Due to various reconciliation being
done at RAD-NO, the SL keeping for
AABs was stopped. There are various
79
stages of reconciliation being done to

monitor any unremitted collections
such as:
The reconciliation of BCS and
A. Daily reconciliation of BCS CRDC could be a good vehicle
(collection) and Consolidated for assessing the AABs
Report of Daily Collection compliance with existing
(CRDC) (remittance) per bank regulations. The team then
branch wherein any analyzed the daily reconciliation
discrepancies noted are activity being undertaken by
communicated to the concerned RAD using the BCS. It was
offices. noted that the reconciliation
process was not at all complete.
1. For unremitted collections/ A number of BCS remained
untransmitted BCS reports, unuploaded and there are a
notice is given to the number of double uploading.
concerned banks for the The discrepancies between the
remittance/ transmission of BCS and CRDC then remained
said collections; unreconciled and remained
2. For twice uploading of BCS- unacted upon. While notices
A reports and untransmitted have been given to concerned
BCS-A reports, notice is banks, such notices were
given to concerned Revenue however, not monitored and not
Data Center for the reflected on the reconciliation
necessary adjustment/ statements leaving the records
coordination with the bank covering such transactions open
branches for the and unsettled. These documents
transmission of the said then will not be used as basis for
reports. assessing AABs’ performance.
B. Monthly Reconciliation of CRDC The team was not provided with

and CBCA wherein discrepancies a copy of this reconciliation
noted is communicated to the statement or any document
AABs/BSP. communicating the results of
this activity with the AABs or
the BSP. However, considering
that the BIR is recording
remittances based on BTr
collection data and not based on
CRDC or CBCA, any noted
discrepancy would not in
anyway afect the BIR books.
80
C. Monthly Reconciliation of CRDC Again, the team was not

and BTr JEV wherein discrepancies provided with a copy of this
noted is communicated to the reconciliation statement. If
AABs/BTr. indeed this is being undertaken,
the discrepancies noted by the
team would have been detected
by the BIR and the records
correspondingly adjusted.
As discussed in the report, the

BIR was booking collections and
remittances based on BTr reports
without conducting further
analysis. Hence, errors
committed by the BTr were
replicated in the BIR books.
The bulk of the collections that were Under the existing accounting
penalized were the result of the system of the BIR wherein a
reconciliation between BCS-A and subsidiary ledger is not being
CRDC. Seldom does the total maintained, it would be difficult
collection for a particular collection is for the BIR to determine non/late
subjected to penalty. If it does, it is remittance. As noticed by the
only for late submission of reports team, the delayed remittance was
wherein the days delayed is for 1 to 2 actually computed only after the
days. The rest of the collections that collections have been remitted as
were penalized were for the the collection and remittance
supplemental/adjustment reports. dates were both reflected in the
BSP List of Remittance.
The team also noted that the

penalties computed were on
account of late reporting and
remittance of collections.
The reconciliation process becomes
difficult with the implementation of
EFPS due to system errors in addition
to double E-Payment as follows:
• The system recognized erroneous This system deficiency should be
collection date resulting to numerous properly addressed by the BIR to
reconciling items from the initial stage enable them to generate accurate
(July 2002) to July 2003, which was collection report. Unless this
data fixed on a later date by BIR ISDS. problem is addressed, the BIR
However, said problems recurred on would not be able to monitor
January 2004 to date. remittance of collections.
81

• RDO No. where the collection is This should be addressed by the
uploaded thru EFPS differs from the BIR-RDO concerned as data on
RDO No. per CRDC submitted by RDO No. is provided by the BIR to
AABs. the AABs.
We are planning to assign SL keeping The team appreciates the BIR’s

of AABs to personnel of the CBR- concern to improve their existing
Reconciliation Unit assigned to do this monitoring system. Unless the
job. However, additional personnel, BIR keep track of AABs’
computers and supplies are needed so collections and remittances, they
that our plans will materialize. With would not be able to detect any
the implementation of various schemes unremitted amount.
of tax payments, additional loads are
thrown to RAD.
Considering that there are 22 The BIR need not assign one
AABs(HO) with various branches, personnel per bank to monitor
hereunder is the ideal number of collections and remittances.
personnel and computers needed for the Meantime, one personnel could
realization of COA’s recommendation be assigned to monitor
which shows one is to one for banks collections and remittances of all
with sufficient number of branches and banks using the consolidated
two is to one for banks with numerous Daily Report of Collections and
branches. Remittances per scheme. These
documents/reports should be
Number of No. of Banks with
Numerous Sufficient
collated and posted in the
Personnel Computer Branches Branches collections and remittance
6 6 AGDB- 3
ledgers.
Com.
10 10 Bank- 5
14 14 14 The person in-charge should also
Total 30 30 8 14 prepare daily analysis of the
Existing No.
of AABs without or with short
Personnel/ remittance. In case of
Computer 9 12
Lacking 21 19 discrepancy, the BIR should
readily inform the concerned
AABs for clarification and
validation These activities
would likewise not require a
number of computers.
Meantime, we understand that

the reconciliation of BCS and
CRDC is already an on going
activity thru BIR’s CBR
facility and need not be
82
duplicated by RAD.The person

-in-charge of this activity
should, however, be required
to post in the SL the total daily
BCS amount as against the
CRDC so that any unremitted
amount could readily be
demanded.
The lack of computers could also

be addressed by utilizing the
penalties collected from AABs
for late reporting and remittance
of collections.
Out of the ninety-nine (99) filled-up If the RAD indeed feels that they
positions allocated to RAD, fourteen could not effectively perform
(14) personnel are assigned to other their duties due to lack of
BIR units. manpower, they could make
representations for the recall of
14 personnel assigned
elsewhere.
Computation of penalty is dependent As discussed in the report, the

upon the remittance date. The number BIR was provided by the BSP
of days delayed could not be with the program “Lotus Notes –
ascertained unless any discrepancies cc: mail”, a facility being used
noted in the reconciliation have been by the BSP to transmit to BIR
remitted. data on daily remittances by
AABs. On the other hand, thru
For instance, the discrepancy noted in the CBR facility of the BIR-
the BCS-A – CRDC Reconciliation of integrated tax system, daily
Equitable PCI-TM Kalaw Branch collection data of AABs per
(006-185) for 8/30/2000 is as follows: BCS and CRDC could be
ascertained and discrepancy
Per BCS-A 984,849.67 uncovered.
Per CRDC 94,484.67
-------------- Daily collection data per BCS
Discrepancy 886,365.00 could be compared with the
remittance data generated thru
Said discrepancy was communicated to the Lotus Note facility. This
the concerned AABs on 9/26/00 with way, any unremitted data could
several follow-ups and exchange of readily be ascertained and
communication between RAD and the communicated to the bank which
bank. And since said bank had also to could verify at once the validity
verify said amount against their of unremitted amount.
83
records, it took some time before it The team agrees that the
was finally remitted on 7/1/02, 665 computation on delayed
days after its due date of 9/4/00. remittances is dependent upon
the remittance date. However,
Also, verification and preparation of instead of waiting for the
notice of penalty to the concerned CBCA/BSP-LR to be provided
AABs is done when final copy of the by the BSP to RAD and ISOS-
Monthly Reconciliation Analysis of DC, the RAD and ISOS-DC
CRDC and CBCA is generated. should maximize the use of the
“Lotus Note” facility to facilitate
Monthly Reconciliation of CRDC and reconciliation which could be
CBCA is done five (5) days from the done on a daily basis as BCS
last collection date for the month (due and remittance data are also
date of the said collection date which provided to the BIR on a daily
happens to be the first week of the basis. The BIR should therefore
succeeding month). consider the possibility of
conducting daily reconciliation
Those collections whose number of to determine any unremitted
days delayed were more than ten (10) collection for the day. This can
days were the supplemental/adjustment be readily communicated to the
report of the AABs and those noted as concerned AABs and
unremitted in the BCS-CRDC verification facilitated as the
Reconciliation. And as stated before, it records to be verified are
takes longer since these are subject for current.
verification by the concerned AABs.
It takes awhile for the preparation of Considering all constraints, the
the demand letters, since the banks are issuance of notices after 105 to
given time to explain/justify the reason 1,322 days is still not justified.
of their late submission of reports and
late remittance. This is after several
follow-ups to the notice of penalty
Although, under RR Nos. 5-84 and 15- The approval from the
94, BIR may request BSP to debit the concerned AABs is not a
demand deposit account of the AABs requirement under existing rules
for the amount of unremitted and regulations.
collections and accumulated penalties,
surcharges and interest, this is not
enforced because of some constraint.
Bangko Sentral ng Pilipinas (BSP)
will not acknowledge the advice from
BIR unless there is an approval from
the concerned AABs.
84
With regards to the disaccreditation as The BIR should not tolerate the
provided under RMO No. 30-2201, the failure of the AABs to remit
AABs are more than willing to be collection and submit reports on
disaccredited since as alleged by them, time for this reason. If indeed
instead of earning, they are losing they are found violating rules
because of administrative cost. and regulations, their
accreditation should be cancelled
as they are not serving the
government.
RAD cannot immediately demand While it is true that notices are

payment of penalties for violations required to be sent, the AABs
committed by AABs due to certain are mandated to reply with the
provisions cited under No. 3 of MOA said notice within 15 working
between BIR and banks. Hence, days. Hence, non receipt of reply
preliminary notices are sent to them for within the specified period
their reasons which will then be already authorized the BIR to
evaluated by Bank Accreditation issue demand for payment.
Committee which will explain the lapse However, as discussed in the
of time noted by COA, in addition to report, the demand letters
circumstances mentioned under our were issued only from 182 to
comments. 596 days after the lapse of the 15
day period. As of December
2003, five AABs with demand
letters sent as early as July 31,
2003 did not even respond to the
said notice and no further action
was taken by the BIR. The
penalty imposed upon these
banks amounted to
P 21,751,909.44.
85
Chapter 3
Accurate and Reliable Accounting

and Recording System
86
ACCURATE AND RELIABLE ACCOUNTING AND RECORDING SYSTEM
INTRODUCTION
To ensure accurate recording and reporting of transactions, the agencies

should utilize an efficient and organized accounting system with the
following elements, among others:
• organized and efficient method of accumulating, recording and

reporting transactions;
• effective assignment of authority and responsibility; and
• efficient method of detecting errors and irregularities.
This is intended to produce accounting records that should:
• ensure that all transactions are properly and accurately recorded;

• provide sufficient evidence and justifications for all transactions;
• maintain accountability for agencies’ resources;
• permit preparation of accurate, informative and reliable reports that
conform to established criteria; and
• support management during internal reviews and external audits.
The presence of well organized and efficient accounting system will ensure
the reliability of generated accounting records and facilitate validation by
both management officials and external auditors.
The BIR’s recording and reporting system of collections and deposits are
prescribed under DOF Order No. 52-96, as amended by DOF Order No. 33-
99, pertinent BIR Revenue Regulations and/or Revenue Memorandum
Orders, and Sections 22 and 23 of the New Government Accounting System
(NGAS) Manual, Volume I.
The audit disclosed that the current EFPS/ETPS has no validation control
that will enable the system to detect and reject processing of E-tax payment
transaction from the same taxpayer more than once. This resulted in double
payment of internal revenue taxes by some taxpayers as their deposit
accounts with their depository LBP branch were debited twice. While these
were eventually corrected by LBP and requests for adjustments were
forwarded to BIR-Large Taxpayer Document Processing and Quality
Assurance Division (LTDPQAD) as evidenced by copies of the requests
attached to the CRDEC on file at RAD, these were not yet adjusted in the
BIR books.
87
This condition affected the reliability and accuracy of ITS generated reports
as the SAETPT provided by LBP to DPQAD is being uploaded in the
Taxpayers Accounting System (TAS) of the ITS. This report is used in
assessing the efficiency of the BIR collection performance. Further, the
BIR’s practice of recording collection of prior years’ internal revenue taxes
and revaluation increment in the market value of acquired/forfeited assets as
current tax revenues increased the recorded tax revenue for the current year
without corresponding collection.
OBSERVATIONS
COLLECTION THRU AABs
1. The absence of validation control in the EFPS/ETPS to detect

and reject processing of e-tax payment transactions resulted in
over reporting of collection. For the sample months of
December 2002 and January 2003, four taxpayers were able to
send double payment instructions increasing the reported
collection by P4,346,592.61. This renders the ITS generated
collection report/data inaccurate as a basis for assessing BIR
collection performance.
As discussed earlier, taxpayers can access the EFPS thru the BIR web
site via the internet. This can be used by taxpayers who are enrolled in
the EFPS.
The return is deemed filed on the date appearing in, and after a Filing
Reference Number is generated and issued to the taxpayer via the
EFPS. The taxes due thereon are deemed paid after a Confirmation
Number is issued to the taxpayer and the BIR, by the AAB and the
taxpayer’s account has been successfully debited electronically. An
Acknowledgment Number shall be issued by the BIR to the taxpayer to
confirm that the tax payment has been credited to the account of the
government.
All transactions made thru the EFPS are included in the Summary of E-
Tax Payments (SETP), the Summary of Accepted E-Tax Payment
Transactions (SAETPT) and Summary of Rejected E-Tax Payment
88
Transactions (SRETPT) which are generated on a daily basis. These

reports are submitted to the LTDPQAD and the soft copies are sent
through e-mail to Information Systems Operation Service Data Center
(ISOS-DC). These reports are then uploaded into the ITS. In addition
to these reports, the LBP also prepares Consolidated Report of Daily
Electronic Collection (CRDEC), a copy of which is forwarded to CS-
RAD on a weekly basis.
Based on the uploaded SAETPT, the ISOS-DC and DPQAD generate

the report, “Daily Collection Update (DCU)” containing information on
the actual collection vis-à-vis target with comparative data analysis
against previous periods’ collections. This report is used by the BIR in
assessing its daily collection performance.
In order to ensure the accuracy and reliability of the DCU, the team
compared the same with CRDEC prepared by the LBP for the months
of December 2002 and January 2003. Analysis, however, showed
discrepancies amounting to P4,346,592.61 as tabulated below:
ITS COLLECTION
MONTH REPORT CRDEC VARIANCE
December 2002 P 1,450,296,867.27 P 1,450,267,228.55 P 29,638.72

January 2003 1,905,335,264.33 4,316,953.89
1,909,652,218.22
TOTAL P 3,359,949,085.49 P 3,355,602,492.88 P 4,346,592.61
Interviews with concerned LBP officials revealed that the difference

was due to the taxpayers’ error in clicking the “Submit” button twice
after accomplishing the required data fields on the e-tax payment
screen. The system accepts both payment instructions, includes the
same in the batch processing and debits the taxpayer’s account twice.
The number of times an account is debited depends on the number of
times the submit button is pressed. The LBP could not recognize the
double submission of entries due to the absence of validation control in
the system that will detect duplication and ascertain the balance of tax
due for payment. However, the team was informed that the bank’s
plans of enhancing the ETPS include this aspect.
The taxpayers whose accounts were double charged by the banks due to
this error are enumerated on the next page:
89
ITS
COLLECTION COLLECTION VARIANCE
DATE REPORT (a) CRDEC (b) (a-b) REMARKS
12/14 to 16/02 P 411,114,231.35 P 411,084,592.63 P 29,638.72 Double payment/charging of

Janice Minor Export’s
accounts. The amount was
already deducted from the
CRDEC by LBP on 12/16
01/14/03 P P P 27,351.61 Double payment/charging of

95,811,861.86 95,784,510.25 Intra Strata’s accounts. The
amount was already deducted
from CRDEC by LBP on
1/14/03
01/15/03 4,333,507.93 Double payment/charging

379,692,851.21 75,359,343.28 against the following
accounts and adjustment in
ITS collection report:
P 428,012.18 Abenson
Sales
139,315.13 Insular
Life
4,153,018.91 Alcatel
Phils.
( 386,838.29) ITS
adjustment
P4,333,507.93
01/16/03 24,271,217.35 4,315,123.00 ( 43,905.65) Understatement in ITS

collection report.
TOTAL P 910,890,161.77 P 906,543,569,16 P4,346,592.61
The LT-DPQAD confirmed to the team during interviews that upon

validation, using the CBR and Taxpayers’ Accounting System (TAS) of
the ITS, there were indeed double payments.
However, as of December 5, 2003, only the account of Abenson Sales

was adjusted. They claimed that they are still awaiting response on
taxpayers’ request for adjustments from the bank. The failure of the
BIR to adjust their records despite discovery of errors rendered the
collection information in the TAS inaccurate.
On the other hand, since the errors were detected by the LBP within the
five-day float period, the bank had already adjusted their records, hence
the difference between the BIR collection data and the CRDEC. The
CRDEC forwarded to BIR RAD was accompanied by requests for
adjustment from the LBP East Avenue Branch. Apparently, however,
the BIR failed to act on such requests.
The team was informed that, to address this risk, in a meeting attended
by the representatives from the BIR, the BTr and the LBP held on April
14, 2003, it was agreed that:
90
• Large Taxpayers’ request for adjustment shall be centralized at LBP-

East Avenue Branch which shall monitor and validate the claim. A
certification from the BIR Large Taxpayer Division (LTD) that a
double payment has been made shall be submitted to LBP before the
claim is acted upon;
• Upon Advise from East Avenue Branch, LBP-Intramuros Branch shall
debit the BIR-LT Account for the total amount of double payment;
• The LBP shall inform the BTr of such adjustment and shall immediately
furnish them with a copy of the debit advice;
• The East Avenue branch shall furnish the BIR with a copy of the debit
advice; and
• For LTs claim for adjustment within the five-day float period, the LBP
can immediately effect adjustment after validating the claim and
informing the BIR and the BTr of said adjustment.
The BIR and the BTr then could adjust their records based on the
taxpayers’ request, LBP’s notice of adjustment and debit advices.
2. The BIR recorded prior years’ collection and revaluation

increment of acquired/forfeited assets as collection of the
current year, thus, increasing the balance of the tax revenue
account without corresponding collection.
Prior to CY 2002, the Department of Foreign Affairs (DFA) was

authorized to collect internal revenue taxes from Filipinos working
overseas. These collections were recorded in the BIR’s books upon
receipt of the corresponding reports.
Records show that among the sources of tax revenue for CY 2002
recorded in the BIR books are internal revenue taxes for CY 2001 of
Filipinos working overseas amounting to P17,869,521.67. Likewise,
remittances amounting to P37,776,034.83 remitted during CYs 1997-
2000 were also recognized in CY 2002 as current year’s remittances.
These entries then increased the tax revenue account without
corresponding collections. The DFA collections and remittances are
shown on the next page:
91
T A X R E V E N U E
MONTH COLLECTION REMITTANCE
January '01 P 2,178,059.53

February 429,972.72
Mar-June, '01 2,200,470.82
July '01 133,428.35
Aug '01 5,573,741.68
Sept, Oct '01 5,631,805.05
Nov '01 128,058.23
1997-2000 P 37,776,034.83
Dec '01 1,593,985.29
Total P 17,869,521.67 P 37,776,034.83
In addition to prior year’s collections and remittances accounted for as

current year’s transactions, the team also noted that increments in the
market value of forfeited/acquired assets/properties amounting to
P257,791,383.60 was also accounted for as current year’s collections
and credited to tax revenue account.
PARTICULARS AMOUNT
Real Properties P 257,762,600.25

Personal Properties 28,783.35
TOTAL P 257,791,383.60
As the above amounts represent only increments in the market value of

acquired assets, crediting the same to tax revenue account also
increased the recorded tax revenue without corresponding collection.
These lapses in recording affected the accuracy and reliability of

reported collections and remittances of internal revenue taxes for the
period and the actual performance of the BIR in relation to its target
collection for the year.
92
Response provided by the

Assistant Commissioner,
Collection Service
Acquired/forfeited properties are The team is not questioning the

recorded based on the report recording of acquired/forfeited
submitted by the Collection properties per se, but the recording
Enforcement Division on a yearly of increments in the market value
basis. This is one among those of these assets which was
accounts with issues with the accounted for as current year’s
implementation of NGAS not yet collection and credited to the tax
resolved by the COA-GAFMIS. revenue account.
Acquired/Forfeited Properties-
Effective 2003, we have stopped
recording this account awaiting for
the reply of the COA-GAFMIS on
our letter dated 10/25/02. Follow-up
letter will be forwarded to them upon
signature of the CIR.
Collections from abroad. Effective We appreciate the action taken by

2004, prior year’s collections are the BIR to correct the account.
recorded as prior year’s adjustment
as per recommended by COA-
GAFMIS.
93
Part IV
Recommendations
94
RECOMMENDATIONS
RECOMMENDATIONS
To correct the deficiencies noted and improve the existing system of

collection and remittance of internal revenue taxes, the team recommends
the following courses of action:
1. The BIR, in coordination with the BTr, should issue guidelines

establishing the basis for recording collection and remittance in the books
of the BIR considering the different collection schemes and the reports
required to be submitted under each scheme. The BIR may consider the
team’s recommended documents discussed in the report.
2. Analyze the errors in recording collections and remittances discussed in

the report and prepare the necessary adjusting entries.
3. Restudy the BIR’s policy of accepting personal checks as payment for

taxes in the light of difficulty in redeeming dishonored checks. Initiate
actions against taxpayers who failed to redeem their dishonored checks.
4. Require the RCO to deposit collections daily as required under existing

regulations and impose the corresponding sanctions to RCOs who are not
depositing their collections on time. The BIR could also consider
negotiating with the LBP and other AGDBs to pick up daily collections of
RCOs with an average collection of about P500,000 daily. This scheme
would eliminate the possible loss in transit in depositing collections.
5. Require the RCOs to submit reports on or before the 10th day of the
following month as required under DOF Department Order No. 20-99. In
case of failure to comply with this requirement, impose the corresponding
sanctions provided under existing regulations.
6. Require the BIR-RAD and the Revenue Regional/District Offices to

request from the AGDBs and the BTr District Offices, monthly statement
of deposits made by the RCOs and SCO and reconcile each report with
their records on a monthly basis. Inform the BTr or the AGDB on the
discrepancies noted as a result of reconciliation and prepare necessary
adjusting entries.
7. Maintain Subsidiary Ledgers per AAB as required reflecting therein the

actual daily collections based on the appropriate document to be
identified and the actual remittance based on BSP records to monitor
unremitted collection at any point in time. Demand immediately from the
concerned AABs any unremitted collections noted as a result of
monitoring.
95
RECOMMENDATIONS
8. Reconsider the policy of waiving interests and surcharges from delayed

remittances as this would not encourage remittance of collections on time.
Demand immediately from the concerned AABs, payment of surcharges
already determined for delayed remittance of collection.
9. Enhance the EFPS to include the validation control and avoid double
recording of transactions. Meantime, adjust the BIR records upon
validation of the LBP report on double recorded transactions.
10. Stop the practice of recording prior year’s transactions and revaluation
increment as current tax revenue. This practice would not provide an
accurate assessment of BIR’s performance.
96
Submitted in compliance with MS Office Order No. 2003-008 dated
June 24, 2003.
ANALIZA S. CORTEZ TERESA T. SANTIAGO

Team Member Team Member
MARILYN H. BERNALDO NENITA J. JARABE

Team Member-ICTC Co-Team Leader
NORMITA N. NARVAEZ
Team Leader
EVELYN P. REYES
Team Supervisor
Reviewed by:
SUSAN P. GARCIA
Director III
Approved by:
ILUMINADA M.V. FABROA

Director IV
97
ANNEX 1
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National Collection through National Collecting Officer (NCO/AGDB)

Narrative Procedures
Collecting Officer
1. Upon receipt of Order of Payment (OP) with Cash/Check from the clients, Special Collecting
Officer prepares OR in three copies. Keeps the cash/check in the vault for temporary
safekeeping, issues original copy of OR to the client and files duplicate & triplicate copies of
OR.
1.a. Posts partial entries to Cash Receipt Books the OR details.
2. At the end of the day, Collecting Officer prepares List of Collections in three copies, Deposit
Slip in five copies and the cash/checks collections. Then forwards the documents together
with the cash/checks to Bank Branch.
Note:
Collections before cut-off time are deposited during the day and collections after cut-off time
are deposited on the next banking day. Deposits pertaining the current day’s collection are
summarized in LC-A while deposits pertaining to the previous day collection are summarized
in LC-B.
3. At the end of the month, retrieves ORs, Lists of Collections and Deposit Slips from file and
prepares Monthly Report of Collection & Deposit (MRCD)/Abstract of Collection & Deposit
(ACD) & Monthly Report of Accountability for Accountable Forms (MRAA). Forwards all
the documents to Revenue Accounting Division (for NG file), Disbursement Accounting
Division (for RA file) and ion. Submits a copy of MRCD to BTr, MRCD/ACD & MRAA to
Accountable Forms Division then files copy of LC A&B and DS.
Concerned Staff of Agency – Revenue Accounting Division
4. Examines/verifies OR, LC-A&B, DS, & RCD (Report of Collections & Deposits)/ACD
(Abstract of Collections & Deposits) received from Collecting Officer.
5. Based on these documents prepares Journal Entry Voucher (JEV)
6. Retrieves Cash Journal (CJ)/Cash Receipts Journal (CRJ) and posts JEV details.
Note:
Special Collecting Officer, Report of Collections & Deposits (RCD), and Cash Journal (CJ)
terminologies applies to Bureau of Internal Revenue while National Collecting Officer,
Abstract of National Collections (ANC), and Cash Receipts Journal terminologies applies to
other collecting agencies.
7. Posts CJ/CRJ details in the Subsidiary Ledger (SL) retrieved from file then forwards all the
documents to Commission on Audit (COA) for audit examination.
Land Bank of the Philippines – Concerned LBP Branch
8. Daily, the Bank Branch receives of List of Collections, Deposit slip & the
cash/checks from Collecting Officer. Validates Deposit Slip & List of Collections &
Page 1 of 7
ANNEX 1
7 of 14
counts/checks amount to be deposited. Keeps the cash/checks in the vault and forwards the
duplicate copy of Deposit slip and original copy of List of Collection to Agency/NCO. Files
temporarily the duplicate copy of List of Collections and the original copy of deposit slip.
Determines if bank branch is on-line.
For Non-on-Line Branches
9. a. If not on-line, prepares Inter Office Advice and credits directly TOP MOTHER
ACCOUNTS based on the triplicate copy of LC-A&B and DS.
Note:
The following are the TOP Mother Accounts & BTr Clearing Accounts:
Nature of Collection Mother Account Clearing Account

BIR 0011-2693-03 0012-2224-83
BOC 0011-2693-11 0012-2224-91
OTHER AGENCIES 0011-0001-77
NCR – A 0012-2222-03
NCR – B 0012-2222-11
NCR – C 0012-2222-20
NCR – D 0012-2222-38
NCR – E 0012-2222-46
REG. 2 0012-2222-54
CAR 0012-2222-62
REG. 3A 0012-2222-70
REG. 1 0012-2222-89
REG. 3B 0012-2222-97
REG. 3C 0012-2223-00
REG. 4A 0012-2223-19
REG. 4C 0012-2223-27
REG. 4B 0012-2223-35
REG. 4D 0012-2223-43
REG. 5 0012-2223-51
REG. 6A 0012-2223-60
REG. 8 0012-2223-78
REG. 6B 0012-2223-86
REG. 7 0012-2223-94
REG. 9 0012-2224-08
REG. 10 0012-2224-16
ARMM 0012-2224-24
REG. 11 0012-2224-32
SOCSARGEN 0012-2224-40
CARAGA 0012-2224-59
Page 2 of 7
ANNEX 1
8 of 14
10. a. Encodes IOA details in the Interbranch Transaction Reciprocal Account
Reconciliation System (IBTRARS).
11. a. Posts IOA details in the Journal and sends Lists of Collections & Deposit Slips to
Districts/Treasury Operations Officer. Sends IOA thru fax to LBP Intramuros.
12. a. At the end of the day, retrieves Lists of Collections & DSs and based on these
documents prepares Notice of Deposited National Collections for Non-On-Line.
After preparing NDNC-NOB files the Lists of Collections & DSs.
LBP Intramuros Branch
13. a. Prints the IOA sent by LBP Branch and files the same.
For On-on-Line Branches
Land Bank of the Philippines – Concerned LBP Branch
9. If On-line, credits BTr Clearing Accounts (see Note on Activity No. 9a).
10. At the end of the day, on-line transactions will be automatically debited to BTr
Clearing Account (see Note on Activity No. 9a).
11. Generates Summary of Interbranch Branch Transactions (SIBT).
12. Based on SIBT prepares Notice of Deposited National Collections for On-Line
Branch transactions (NDNC-OLB). Forwards 1 copy of NDNC-OLB to TOOs and
files SIBT & NDNC-OLB.
LBP-Head Office – Technology & Management Group
13. The system automatically consolidates on-line transactions of Current

Account/Savings Account (CA/SA).
14. i. Generates Summary of On-line Collections (SOLC).
14. ii. Downloads Summary of Treasury Collections for On-Line Branches files (STC-
OLB) in a diskette and forwards the same to LBP Intramuros Branch.
LBP Intramuros Branch
15. Generates a copy of Summary of Treasury Collections for On-line Branch

transactions (STC-OLB) thru Reports Management System (RMS).
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ANNEX 1
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16. Upon receipt of STC-OLB diskette, prepares in three copies the Credit Advice for
On-Line Branch transactions (CA-OLB) based on STC-OLB.
17. Retrieves from file the IOA & NDNC-NOB and based from these documents
prepares Credit Advice for Non-on-Line Branch transactions (CA-NOB). Distributes
the following documents:
¾ BTr-FVD - duplicate copy of CA-OLB

- duplicate copy of CA-NOB
- hard copy STC-OLB
- soft copy (diskette) of STC-OLB
¾ BTr-NCAD - original copy of CA-OLB

- Original copy of CA-NOB
¾ File Copy - IOA

- NDNC-NOB
- CA-NOB
- CA-OLB
Districts/TOOs
18. Checks if DSs, Lists of Collections & NDNCs have the same total amount.
19. If DSs, Lists of Collections & NDNCs bear the same total amount, encodes
consolidated data on deposited collections.
Note:
If any discrepancy is noted, notifies concerned Bank Branch. Some districts prepares
a draft of the Report of National Collections (RNC) based on the List of Collections,
DS & NDNC which will then be the basis for encoding deposited collection data.
20. Downloads deposited collection data to Regional Office File Server.
Note:
In case of provincial offices, deposited collection data are transmitted to Regional
Offices thru diskettes.
21. Generates RNC by bank and files the same together with DS, LC-A&B, NDNC-
NOB, NDNC-OLB.
NCR/MAIN
22. Consolidates data encoded by various Districts/TOOs.
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23. Views consolidated data & checks total amount against monthly total amount
transmitted by the Districts/TOOs before uploading to BTr NCAS File Server.
24. a. If total amounts are not reconciled, notifies concerned district of the discrepancy
noted.
24. If total amounts are reconciled, generates Consolidated Report of National
Collections (CRNC) and files the same.
Database Administration Division
25. Uploads data of CRNC to BTr NCAS file server that will be made available to FVD
for reconciliation purposes.
Fund Validation Division
26. Upon receipt of CA-OLB, CA-NOB, hard & soft copies of STC-OLB, prepares
Control Sheet.
27. Checks correctness of STC-OLB total amount against CA-OLB & checks
completeness of CA-NOB data.
28. Uploads data of STC-OLT in the BTr File Server thru Oracle uploading program.
29. Encodes treasury collections of non-on-line branches per CA-NOB.
30. NCAS generates batch totals and indicates said totals in the Control Sheet.
31. Checks total amount of on-line & non-on-line collections against the batch totals
generated by the system.
Note:
If batch totals do not tally with the total of on-line collections and non-on-line collections,
checks encoded data of non-on-line collections and effects necessary corrections.
32. Downloads deposited collection data from the regions and STC data from the banks.
33. Generates Reconciliation Statement and checks if total deposited collection by bank,
branch & value date received from the regions tallies with the totals of STC by bank,
branch and value date.
Note:
If not tallied, prepares a letter informing concerned Regional Director of the unmatched
national collections (Monitored National Collections). The concerned Regional Director
responds to the letter by sending supplemental reports, if any, to update/correct previously
submitted report. If the submitted report is confirmed/proved to be complete and correct by
the region, FVD prepares a letter to the concerned AGDB. FVD prepares memo to NCAD for
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national collections requiring adjustments/corrections. Reconciliation Statement is being
generated by FVD every end of the month.
NCAD-Accounting & Bookkeeping Section
34. Upon receipt of CA-NOB & CA-OLB from LBP Intramuros, prepares JEV and
assigns control number to take up collections.
Note:
BTr prepares JEV for BIR (SA#0011-2693-03), JEV for BOC (SA#0011-2693-11) and JEV
for collections of all Other Agencies (SA#0011-0001-77).
35. Encodes JEV details in the new Accounting System (NAS) and posts in the GL & SL.
Provides BOC or BIR and COA copy of JEV and retains 1 copy for file.
36. Monthly generates Abstract of National Collections (ANC) and Monthly National
Collections (MNC) thru NCAS.
37. Based on ANC prepares Letter of Confirmation (LC) and based on MNC prepares
Summary of Daily Collections. Forwards MNC & SDC to NCAD-Accounting &
Bookkeeping Section and LC & ANC to concerned agency.
Note:
The concerned agency should reconcile the Abstract of National Collections (ANC) against
their books of accounts and informs the BTr NCAD-Subsidiary Ledger Section (NCAD-SLS)
of any discrepancy between the ANC and their records. If the records of NCAD-SLS are
sufficient to warrant adjustment, NCAD-SLS prepares JEV and forwards to the Bookkeeping
Section for assignment of control number and for recording in the NAS. If not, NCAD-SLS
refers the Agency’s letter to FVD or to the Regional Office concerned. FVD or the Regional
Offices after verifying the discrepancies noted by the Agency will inform NCAD for the
result of their findings. NCAD will prepare the necessary JEV for adjustment, if warranted.
38. Upon receipt of MNC & SDC prepares JEV-Classification to classify the collections
from various Authorized Government Depository Banks (AGDBs).
39. Encodes JEV-Classification details in the New Accounting System and posts the
same in the GL & SL.
NCAD- Bank Reconciliation Section
40. Monthly, generates Subsidiary Ledger (SL) thru NAS.
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41. Reconciles amount of SL against Monthly Bank Statement (MBS) received from
banks.
42. Based on bank reconciliation conducted prepares Bank Reconciliation Statement

(BRS) in five copies.
43. Prepares JEV-Adjustment to take up any adjustment identified in the bank

reconciliation. Assigns control number to JEV-Adjustment & forwards the same to
NCAD-Accounting & Bookkeeping Section for encoding in the NAS. Files the SL
and forwards copy 1-5 of BRS to COA for audit examination and provides also the
concerned AGDB a copy of BRS.
Note:
NCAD furnishes the concerned bank of the advance copy of the Bank Reconciliation
Statement on a case-to-case basis, for them to attend on the adjustments requiring bank’s
action.
Upon receipt of audited BRS from COA forwards the duplicate copy to COA of
concerned AGDB and the triplicate copy to concerned AGDB. Retains the original
copy for file.
44. Encodes JEV-Adjustments details in the NAS.
45. Generates Financial Statement (FS) and forwards the same together with JEV-
Adjustments & JEV-Classification to COA for audit examination. Retain a copy of
the said documents for file.
Revenue Accounting Division of Concerned Agency
46. Upon receipt of ANC from BTr reconciles total amount with RCD/ACD retrieved
from file.
47. If total amounts are not reconciled, prepares JEV for the discrepancies noted and copy
furnish BTr-NCAD.
If total amounts are reconciled files the RCD/ACD and ACD.
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National Collection through National Collecting Officer (NCO/AGDB)

NOTES:
1. At the end of the day, NCO deposits his collections to Bank Branch. Collections before
cut-off time are deposited during the day and collections after cut-off time are deposited
on the next banking day. Prepares Deposit Slip (DS) and List of Collections (LC),
labeled as A & B. Deposits pertaining the day’s collections are summarized in LC-A
while deposits pertaining to the previous day’s collections are summarized in LC-B.
1.a. Special Collecting Officer, Report of Collections & Deposits (RCD), and Cash Journal
(CJ) terminologies applies to Bureau of Internal Revenue while National Collecting
Officer, Abstract of National Collections (ANC), and Cash Receipts Journal
terminologies applies to other collecting agencies.
2. The following are the TOP Mother Accounts & Clearing Accounts:
Nature of Collection Mother Account Clearing Account

BIR 0011-2693-03 0012-2224-83
BOC 0011-2693-11 0012-2224-91
OTHER AGENCIES 0011-0001-77
NCR - A 0012-2222-03
NCR - B 0012-2222-11
NCR – C 0012-2222-20
NCR – D 0012-2222-38
NCR - E 0012-2222-46
REG. 2 0012-2222-54
CAR 0012-2222-62
REG. 3A 0012-2222-70
REG. 1 0012-2222-89
REG. 3B 0012-2222-97
REG. 3C 0012-2223-00
REG. 4A 0012-2223-19
REG. 4C 0012-2223-27
REG. 4B 0012-2223-35
REG. 4D 0012-2223-43
REG. 5 0012-2223-51
REG. 6A 0012-2223-60
REG. 8 0012-2223-78
REG. 6B 0012-2223-86
REG. 7 0012-2223-94
REG. 9 0012-2224-08
REG. 10 0012-2224-16
ARMM 0012-2224-24
REG. 11 0012-2224-32
SOCSARGEN 0012-2224-40
CARAGA 0012-2224-59
Page 1 of 2
ANNEX 1
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3. If any discrepancy is noted, notifies concerned Bank Branch. Some districts prepares a
draft of the RNC based on the List of Collections, Deposit Slips & NDNCs which will
then be the basis for encoding deposited collection data.
4. In case of provinces, deposited collection data are transmitted to Regional Offices thru
diskettes.
5. If batch totals do not tally with the total of on-line collections and non-on-line
collections, checks encoded data of non-on-line collections and effects necessary
corrections.
6. If not tallied, prepares a letter informing concerned Regional Director of the unmatched
national collections (Monitored National Collections). The concerned Regional Director
responds to the letter by sending supplemental reports, if any, to update/correct
previously submitted report. If the submitted report is confirmed/proved to be complete
and correct by the region, FVD prepares a letter to the concerned AGDB. FVD prepares
memo to NCAD for national collections requiring adjustments/corrections.
Reconciliation Statement is being generated by FVD every end of the month.
7. BTr prepares JEV for BIR (SA#0011-2693-03), JEV for BOC (SA#0011-2693-11) and
JEV for collections of all Other Agencies (SA#0011-0001-77).
8. The concerned agency should reconcile the Abstract of National Collections (ANC)
against their books of accounts and informs the BTr NCAD-Subsidiary Ledger Section
(NCAD-SLS) of any discrepancy between the ANC and their records. If the records of
NCAD-SLS are sufficient to warrant adjustment, NCAD-SLS prepares JEV and forwards
to the Bookkeeping Section for assignment of control number and for recording in the
NAS. If not, NCAD-SLS refers the Agency’s letter to FVD or to the Regional Office
concerned. FVD or the Regional Offices after verifying the discrepancies noted by the
Agency will inform NCAD for the result of their findings. NCAD will prepare the
necessary JEV for adjustment, if warranted.
9. NCAD furnishes the concerned bank of the advance copy of the Bank Reconciliation
Statement on a case-to-case basis, for them to attend on the adjustments requiring bank’s
action.
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ANNEX 2
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ANNEX 2
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ANNEX 2
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ANNEX 2
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BIR Collection System thru Electronic Filing and Payment System (EFPS)
Note:
As per Revenue Memorandum Order No. 19-2002, starting Aug. 1, 2002, E-Payment for
the covered tax types is mandatory for large taxpayers.
The Bureau of Internal Revenue - Electronic Filing & Payment System (BIR-EFPS)
is an alternative mode of filing returns and payment of taxes which deviates from the
conventional manual process of encoding paperbound tax returns filed which is highly
susceptible to human errors and intervention. The system allows the taxpayers to directly
encode, submit their tax returns and pay their taxes due online over the internet through
the BIR website.
The Land Bank of the Philippines - Electronic Tax Payment System (LBP-ETPS)
shall specifically handle the processing of Payment Instructions by debiting the tax
amount due from the authorized taxpayer’s deposit account and crediting the same to the
BTr/BIR account.
To avail of the EFPS facility:

a.) taxpayers should have an e-mail account & internet access
b.) taxpayer should be registered in the BIR Integrated Tax System (ITS)
c.) taxpayer should be enrolled with the EFPS which is linked to the BIR website
d.) taxpayer should be enrolled in EFPS AAB's bank debit system using their internet
banking facility
e.) In case of a corporation, submit to RDO, certification from the President or Vice
President or other principal officer authorized by law to sign and file the return.
Taxpayers are required to submit their audited FS, Cert. of W/tax, & Tax Debit Memo
(TDM) to the Revenue District Office (RDO) or Large Taxpayers Service (LTS) or Large
Taxpayers District Office (LTDO) where they are registered within 15 days from date of
filing of the applicable tax return.
E-FILING
Taxpayer
Day 1
1. Accesses BIR website EFPS homepage-e-filing. Enters TIN, branch code, username
and password then clicks the LOGIN button to pass the first level of security. Enters
the valid answer to challenge question to pass the second level of security. After
passing the two levels of security, the SUBMIT button is finally clicked.
2. BIR website is secured by SSL with certificate from Verisign.
3. The system authenticates the log in information entered by the taxpayer.
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ANNEX 2
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4. a. If inputted data for the first level of security are not valid, the system displays error
message and automatically redirects taxpayer to initial log-on data entry screen.
In the case of the second security level, the taxpayer is provided with only one
attempt and if not valid, the taxpayer is automatically redirected to the initial data
entry screen.
4. b. If log in data are valid, the system allows the taxpayer to access tax return form.
Note:
The taxpayer has the option to file tax return off-line or on-line. If the taxpayer opted to file
off-line, the taxpayer clicks the work off-line to download the TR form in MS Excel and fills
up the said form. After filling up the required data, the user reconnects to EFPS and clicks
the SUBMIT button.
5. Selects tax return form and fills up required data. Reviews data and if found correct,
clicks the “Validate” button.
Note:
Taxpayers can file a tax return earlier and pay at a later date but payment should be made on
or before the due date. The electronic return for the applicable tax must be filed on or before
11:00 p.m. of due date.
During the audit period, assessment of penalties (surcharge, interest & compromise) is not yet
fully integrated into the EFPS process. Taxpayers who file late tax returns still have to visit
their RDO in order to be able to acquire an assessment of the penalties incurred.
The above observation is based on the interview, the documentation of EFPS

provided by BIR and the presentation on how EFPS works.
However, during validation of the existing procedural flowchart on EFPS, BIR

informs the team for the recent enhancement of the system. For various withholding
tax returns, the system performs an automatic computation of penalties (compromise)
for late filing. Surcharge & interest are computed in ITS-TAS.
Other recent enhancement with EFPS included the ‘PRINT’ function found at the lower
portion of the BIR form page wherein the taxpayer can expect an acceptable printed copy of
his E-file return.
6. The system validates if all required fields in the return are filled up and computes for
computed fields.
7. a. If input data are not valid, the system displays error messages and the taxpayer
clicks the Edit button to edit the tax return. After filling up the correct data, the
taxpayer clicks the 'Validate' button.
7. b. If input data are valid, the taxpayer presses the “Submit” button. The system
automatically issues a Filing Reference Number (FRN).
Page 2 of 8
ANNEX 2
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8. The taxpayer has the option to view or print the FRN as proof of his successful filing
of the tax return.
Note:
Taxpayer has the option to proceed (if tax payable is greater than zero) or not to
proceed (if tax payable is equal to zero) to E-PAYMENT.
E-PAYMENT
Note:
Upon filing the tax return, a Large Taxpayer must pay thru any of the EFPS
Accredited Agent Banks (except when the system is down, in which case, they can
pay manually thru LBP, DBP or PNB); a Regular Taxpayer may opt to pay for the tax
return online or manually thru the bank.
For manual payment, taxpayer presents the EFPS-generated FRN form to the bank.
Taxpayer receives a validated FRN form and Official Receipt from the bank as proof
of payment. Submits attachments of returns with FRN to Large Taxpayers Assistance
Division/Large Taxpayers District Office (Taxpayers Service Section).
For Taxpayers intending to utilize Tax Credit Certificate (TCC) as payment for taxes,
their returns shall have to be e-filed much earlier than the due date to allow the BIR to
issue TCC on or before the due date of the applicable tax.
9. If the tax due is more than zero and the taxpayer opted to pay, taxpayer clicks
“Proceed to Payment” button.
BIR-EFPS
10. The system redirects the taxpayer to bank’s website.
Taxpayer
11. The taxpayer enters bank account number enrolled in the bank’s ETPS.
LBP - ELECTRONIC TAX PAYMENT SYSTEM (ETPS)
12. ETPS uses network security tools such as IBM firewall and Computer Associates
access control. It also uses a third party authorizer – Verisign, which ensures the
identification of the ETPS site and encrypts all information exchanged over the web.
13. The system (ETPS) validates bank account number entered if enrolled in the bank’s
ETPS application system.
14. a. If bank account number is not valid, the system displays error messages.
Page 3 of 8
ANNEX 2
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Note:
The taxpayer is allowed three attempts in entering the valid User ID & Password. If
input data entered on the third attempt is still invalid, the system automatically
redirects taxpayer to the ETPS initial log on data entry screen.
14. b. If bank account number is valid, the system allows Taxpayer to enter User ID and
Password.
Taxpayer
15. Taxpayer enters the required User ID and Password then submits payment instruction.
Note:
Upon enrollment, the bank delivers to the taxpayer the User ID and the system
generated Password. As an added security precaution, the taxpayer is required to
change immediately the PASSWORD on first access of the system.
ETPS
16. ETPS validates the User ID and Password.
17. a. If input data are not valid, displays error message and allows taxpayer up to three
attempts. If on the third attempt the input data are still invalid, redirects the taxpayer
to the ETPS log on screen.
17. b. If input data are valid, taxpayer clicks “Submit” button, then ETPS receives and
processes taxpayer’s payment instruction and acknowledges receipt online.
Note:
If the taxpayer chooses to have his account debited at once, the bank will issue an
Acknowledgment Receipt (AR) both to the taxpayer and to the EFPS simultaneously.
The bank then redirects him to the EFPS website. EFPS will then confirm the AR
received by the taxpayer from the bank. If he chooses to have his account debited at
another date, an AR will be issued to the taxpayer only. However, this is only true
for other banks that are ready for real-time transactions and not in the case of LBP-
ETPS.
Taxpayer
18. Taxpayer has the option to view or to print AR.
LBP – Head Office – Technology Management Group (TMG)
19. At the end of the day, LBP Head Office, Technology Management Group (TMG)
batch processes payment instruction to determine if e-payments are valid.
Page 4 of 8
ANNEX 2
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20. If not valid, informs taxpayer on the following day thru auto e-mail indicating reason
for rejection of payment.
Note:
Payment files are being processed by batch at the end of the day. As per interview
with the programmer of EFPS, Land Bank of the Philippines (LBP) ETPS is not yet
ready for real-time transactions, which is one of the requirements of BIR EFPS. BIR
gave consideration to LBP for not yet complying with this requirement since it is a
government bank, however, LBP should exert all its efforts to prepare itself for real-
time transactions.
21. If valid, the system automatically debits taxpayer’s account and credits sub-hinged
account by batch.
22. Sends to all ETPS LBP Branches the Summary of Accepted E-Tax Payment (SAETP)
and Summary of Rejected E-Tax Payment (SRETP) thru Reports Management
System (RMS).
23. Generates Consolidated Report of Daily Collection (CRDC) thru RMS. These
documents are submitted to the BIR thru LBP-East Ave.
Day 2
LBP - ETPS
24. On the following day ETPS issues Confirmation Advice No. (CN) to taxpayer thru e-
mail.
Taxpayer
25. Taxpayer generates CN, payment details and Tax Return.
26. Taxpayer also generates Tax Return (TR) and Payment Details (PD) thru EFPS
website for his file copy.
LBP - ETPS
27. LBP-ETPS transmits thru File Transfer Protocol to Ayala Port the ff:
a. Day 1's batch confirmation and batch acknowledgement files
b. SETP & corresponding tax returns of Day 1
LBP – East Avenue Branch
28. At Day 2, LBP East Avenue Branch manually debits Sub-Hinged Account and credits
Mother Hinged Account.
Page 5 of 8
ANNEX 2
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Ayala Port
29. Stores the batch confirmation and batch acknowledgement files sent by the bank, then
electronically transmits thru File Transfer Protocol (FTP) the following:
a. Confirmation and Acknowledgment files of Day 1 to Information Systems
Operation Service-Systems Operations Division (ISOS-SOD);
b. SETP & corresponding tax returns of Day 1 to ISOS-DC (Data Center);
BIR – ISOS-SOD
30. ISOS-SOD uploads to EFPS Payment Tables the confirmation and acknowledgment
files for Day 1’s transactions and performs the following:
a. Upload confirmation file (Uplconf)
b. Upload acknowledgement file (Uplack)
c. Generate RPS transaction file (GenRPS)
d. Generate CBR transaction file (GenCBR)
e. File transfer of RPS and CBR transaction file batch processing and uploads.
BIR – ISOS-DC/RDC
31. ISOS-DC/RDC executes the following modules that will eventually upload to ITS the
EFPS-generated CBR and RPS data of Day 1’s transactions:
a. Upload RPS transaction file (UplRPS)
b. Upload CBR transaction file (UplCBR) to ITS.
Taxpayer
32. Taxpayer generates the Confirmation Advice (CA) sent by BIR EFPS thru auto e-
mail.
LBP – Head Office
33. LBP grants viewing/printing access of daily collections to BIR and BTr.
BTr- Receipts, Investments & Disbursements Division (RIDD)
34. BTr-RIDD views daily the transactions credited to the BTr-BIR Mother-Hinged
Accounts thru the Corporate Terminal provided by LBP.
BIR
35. BIR also views daily the BTr-BIR Hinged Accounts thru the Corporate Terminal
provided by LBP.
Page 6 of 8
ANNEX 2
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LBP East Avenue Branch
Day 5
36. On the fifth day, LBP East Avenue debits Mother Hinged Accounts and credits BTr-
BIR LTSA#0011-2597-32.
Day 6
BTr-RIDD
37. Daily, BTr-RIDD views anytime the data on collections/remittances of internal

revenue taxes thru Corporate Terminal provided by LBP.
38. Generates Demand Deposit Account Statement Inquiry (DDASI) then forwards one
copy to Depository Bank Reconciliation Section (DBRS) and one copy to BTr-
NCAD Accounting and Bookkeeping Section (ABS).
BTr-NCAD-Accounting & Bookkeeping Section
39. Upon receipt of the requested advance copy of DDASIs, prepares Monthly Summary
of E-Tax Collection (MSEC).
40. Based on MSEC and DDASIs prepares Journal Entry Voucher (JEV).
41. Encodes JEV details in the New Accounting System (NAS)
42. Generates SL and forwards the same together with a copy of JEV to Commission on
Audit (COA) for audit examination. Submits a copy of JEV to BIR and files DDASIs
and MSEC.
BTr-NCAD-Depository Bank Reconciliation Section (DBRS)
43. At the end of the month, DBRS generates SL.
44. Reconciles amounts of SL against LTSA-B/S received from LBP and DDASIs
received from RIDD.
45. Prepares Bank Reconciliation Statement (BRS) and determines if there are
reconciling items identified in the reconciliation process.
If there are no reconciling items, NCAD-DBRS submits the original copy of BRS to
COA, duplicate copy to LBP and retains the triplicate copy for file.
46. If there are reconciling items identified in the reconciliation process, prepares JEV to
take up adjustment. Forwards a set of documents (LTSA-B/S, DDASIs, SL, & BRS)
Page 7 of 8
ANNEX 2
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to COA for audit examination, another set to LBP and retains another set for file.
Forwards JEV-Adj. to ABS for encoding.
BTr Accounting & Bookkeeping Section
47. Encodes JEV adjustment details in the New Accounting System (NAS).
48. Generates SL and forwards the same together with JEV-Adj to COA for audit
examination and submits a copy of JEV-Adj. to BIR
BIR – Revenue Accounting Division –Bookkeeping Section
49. At the end of the month, prepares BIR-JEV based on BTr-JEV and BTr-JEV
Adjustments received from BTr and advice for JEV from RAD-RMAS to take up E-
Tax collections and remittance. Debits Cash in Bank – LCSA(112) and credits Tax
Revenue (550) for collection. Debits Tax Revenue (550) and Credits Cash in Bank –
LCSA (112) for remittance.
50. Posts to GL the BIR JEV details. Forwards to COA BTr-JEV & BTr-JEV-Adj. for
audit examination.
BIR-RAD-RMAS
51. Reconciles CRDC submitted by the banks against BTr-JEV. If discrepancy exists,
call the attention of BTr.
Note:
If discrepancy exists, call the attention of BTr.
52. Reconciles BCS-A against CRDC submitted by the banks and BTr-JEV.
Note:
If discrepancy exists, call the attention of the banks through letter and copy furnished
LTCED, LTDPQAD and ISOS-DC.
Prepared by: Validated by:
Marilyn H. Bernaldo
ISA II
ICTC, Commission on Audit
C:\BIR\narra-efps-bircom.doc
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ANNEX 2
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BIR Collections of Tax Returns thru Electronic Filing & Payment System (EFPS)
LEGEND:
AR - Acknowledgement Receipt
BCS - Batch Control Sheet
BIR-EFPS - Bureau of Internal Revenue EFPS
BTr-ETPS - Bureau of the Treasury ETPS
BIR-JEV - BIR Journal Entry Voucher
BTr-JEV - BTr Journal Entry Voucher
BTr-JEV- Adj - BTr Journal Entry Voucher Adj.
CA - Confirmation Advice
CBR - Collection & Bank Reconciliation
CRDC - Consolidated Report of Daily Collections
DBRS - Depository Bank Reconciliation Section
DDASI - Demand Deposit Account Statement Inquiry
EFPS - Electronic Filing & Payment System
ETPS - Electronic Tax Payment System
FRN - Filing Reference Number
ISOS-SOD - Information Systems Operations Service - Systems
Operations Division
ISOS-DC/RDC - ISOS Data Center/Revenue Data Center Concerned
JEV - Journal Entry Voucher
JEV-Adj - Journal Entry Voucher Adjustment
LBP - Land Bank of the Philippines
LTSA-B/S - Large Taxpayers Savings Account-Bank Statement
MSEC - Monthly Summary of E-Tax Payment Collection
NAS - New Accounting System
PD - Payment Details
RIDD - Receipt Investment & Disbursement Division
RMS - Reports Management System
SETP - Summary of E-Tax Payment
SL - Subsidiary Ledger
TR - Tax Return
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ANNEX 2
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BIR Collections of Tax Returns thru Electronic Filing & Payment System (EFPS)
NOTES:
BIR
1. As per Revenue Memorandum Order No. 19-2002, starting Aug. 1, 2002, e-payment for
the covered tax types is mandatory for large taxpayers.
The Bureau of Internal Revenue - Electronic Filing & Payment System (BIR-
EFPS) is an alternative mode of filing returns and payment of taxes which deviates
from the conventional manual process of encoding paperbound tax returns filed which
is highly susceptible to human errors and intervention. The system allows the taxpayers
to directly encode, submit their tax returns and pay their taxes due online over the
internet through the BIR website.
The Land Bank of the Philippines - Electronic Tax Payment System (LBP-ETPS)
shall specifically handle the processing of Payment Instructions by debiting the tax
amount due from the authorized taxpayer’s deposit account and crediting the same to
the BTr/BIR account.
To avail of the EFPS facility:

a.) taxpayers should have an e-mail account & internet access
b.) taxpayer should be registered in the BIR Integrated Tax System (ITS)
c.) taxpayer should be enrolled with the EFPS which is linked to the BIR website
d.) taxpayer should be enrolled in EFPS AAB's bank debit system using their
internet banking facility
e.) In case of a corporation, submit to RDO, certification from the President or Vice
President or other principal officer authorized by law to sign and file the return.
Taxpayers are required to submit their audited FS, Cert. of W/tax, & Tax Debit Memo
(TDM) to the Revenue District Office (RDO) or Large Taxpayers Service (LTS) or
Large Taxpayers District Office (LTDO) where they are registered within 15 days from
date of filing of the applicable tax return.
2. The taxpayer has the option to file tax return off-line or on-line. If the taxpayer opted
to file off-line, the taxpayer clicks the work off-line to download the TR form in MS
Excel and fills up the said form. After filling up the required data, the user reconnects
to EFPS and clicks the SUBMIT button.
3. Taxpayers can file a tax return earlier and pay at a later date but payment should be
made on or before the due date. The electronic return for the applicable tax must be
filed on or before 11:00 p.m. of due date.
During the audit period, assessment of penalties (surcharge, interest & compromise) is
not yet fully integrated into the EFPS process. Taxpayers who file late tax returns still
have to visit their RDO in order to be able to acquire an assessment of the penalties
incurred.
The above observation is based on the interview, the documentation of EFPS provided
by BIR and the presentation on how EFPS works.
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ANNEX 2
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However, during validation of the existing procedural flowchart on EFPS, BIR informs
the team for the recent enhancement of the system. For various withholding tax returns,
the system performs an automatic computation of penalties (compromise) for late
filing. Surcharge & interest are computed in ITS-TAS.
Other recent enhancement with EFPS included the ‘PRINT’ function found at the lower
portion of the BIR form page wherein the taxpayer can expect an acceptable printed
copy of his E-file return.
4. Taxpayer has the option to proceed (if tax payable is greater than zero) or not to
proceed (if tax payable is equal to zero) to E-PAYMENT.
LBP
5. Upon filing the tax return, a Large Taxpayer must pay thru any of the EFPS Accredited
Agent Banks (except when the system is down, in which case, they can pay manually
thru LBP, DBP or PNB); a Regular Taxpayer may opt to pay for the tax return online
or manually thru the bank.
For manual payment, taxpayer presents the EFPS-generated FRN form to the bank.
Taxpayer receives a validated FRN form and Official Receipt from the bank as a proof
of payment. Submits attachments of returns with FRN to Large Taxpayers Assistance
Division/Large Taxpayers District Office (Taxpayers Service Section).
For Taxpayers intending to utilize Tax Credit Certificate (TCC) as payment for taxes,
their returns shall have to be e-filed much earlier than the due date to allow the BIR to
issue TCC on or before the due date of the applicable tax.
6. The taxpayer is allowed three attempts in entering the valid User ID & Password. If
input data entered on the third attempt is still invalid, the system automatically redirects
taxpayer to the ETPS initial log on data entry screen.
7. Upon enrollment, the bank delivers to the taxpayer the User ID and the system
generated Password. As an added security precaution, the taxpayer is required to
change immediately the PASSWORD on first access of the system.
8. If the taxpayer chooses to have his account debited at once, the bank will issue an
Acknowledgment Receipt (AR) both to the taxpayer and to the EFPS simultaneously.
The bank then redirects him to the EFPS website. EFPS will then confirm the AR
received by the taxpayer from the bank. If he chooses to have his account debited at
another date, an AR will be issued to the taxpayer only. However, this is only true for
other banks that are ready for real-time transactions and not in the case of LBP-ETPS.
9. Payment files are being processed by batch at the end of the day. As per interview with
the programmer of EFPS, Land Bank of the Philippines (LBP) ETPS is not yet ready
for real-time transactions, which is one of the requirements of BIR EFPS. BIR gave
consideration to LBP for not yet complying with this requirement since it is a
government bank, however, LBP should exert all its efforts to prepare itself for real-
time transactions.
10. If discrepancy exists, call the attention of BTr.
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ANNEX 2
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11. If discrepancy exists, call the attention of the banks through letter and copy furnished
Prepared by: Marilyn H. Bernaldo Validated by:

ISA II
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ANNEX 3
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ANNEX 3
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ANNEX 3
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ANNEX 3
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ANNEX 3
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BIR Over the Counter (OTC) Collection of Taxes from Large Taxpayers
Collection of taxes through Debit System
Servicing Bank Branch (LBP)
1. Upon receipt of Tax Return (TR), Deposit Payment Slip (DPS) & Supporting
Documents (SDs), concerned Bank Teller prepares Interoffice Advice (IOA) and
signs the same.
Forwards TR, DPS, SDs & IOA to the Bureau of Internal Revenue-Large Tax
Assistance Division (BIR-LTAD) and files AD.
Note:
Tax Debit Memo (TDM) may be one of the supporting documents submitted by the
taxpayer if he will apply said TDM for his tax payment. LBP Tellering Booth
stamps ‘Received’ this document upon receipt from the taxpayer.
Tax Debit Memo (TDM) evidences the taxpayer’s payment of his internal revenue tax
liability by means of a tax credit certificate (TCC). TDM is issued after approval of
taxpayer’s application for Tax Credit Utilization that is, the balance of the Tax Credit
is sufficient to pay the liability. Otherwise the TDM is issued for the balance of the
tax credit which shall be applied first to penalties and interest and instruct the
taxpayer to pay the remaining balance of tax liabilities.
2. Encodes IOA details in the Consumer Terminal.
BIR – Large Taxpayer Assistance Division (BIR-LTAD)
3. Screens TR and SDs for registry accuracy. Servicing Bank representative/roving

teller presents documents to LBP Tellering Booth for payment.
Servicing Bank Branch (LBP)
Note:
Before releasing the TR, DPS & IOA to BIR-LTAD, Servicing Bank sends advance
copy of IOA thru fax to Land Bank of the Phils. (LBP) Tellering Booth.
Page 1 of 6
ANNEX 3
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LBP – Tellering Booth
4. Upon receipt of TR, DPS, SDs & IOA, validates DPS and stamps “Received” the TR.
Returns the triplicate copy of SDs, triplicate copy of TR & the original copy of DPS
to Servicing Bank rep./roving teller for taxpayer’s copy. Forwards IOA and duplicate
copy of DPS to LBP East Avenue Branch. The original & duplicate copies of TR ,
SDs and triplicate copy of DPS will be used as basis for Batch Control Sheet (BCS)
preparation.
Collection of Taxes with Check Payments
5. Validates DPS & stamps ‘Received’ the TR (previously screened by BIR-LTAD)

once received from the taxpayer together with SDs & check payment.
After validating the DPS, forwards triplicate copy of TR, duplicate copy of SDs &
original copy of DPS to the Taxpayer. Keeps the checks payment inside the drawer
for temporary safekeeping and files the original & duplicate of TR, SDs, the duplicate
& triplicate copies of DPS.
6. Encodes payment details in the Consumer Terminal.
7. After Cut-off Time at 12:00 noon, retrieves checks from the drawer and TR, SDs,
DPS from file. Based on these documents prepares Delivery Statement of Outgoing
Clearing Items (DSOCI) in four copies and Half-day Teller’s Reading (HDTR) in two
copies and signs the same. Submits the checks, duplicate copy of HDTR & the
original copy of DSOCI to the Roving Teller (LBP East Ave).
Note:
Teller’s reading is being done on the following intervals:

1st reading – before bank teller transaction begins (before accepting first transaction
during the day);
2nd reading – at noontime for submission to the roving teller;
3rd reading – at the end of the day
Roving Teller (LBP East Ave.)
8. Roving Teller upon receipt of all documents mentioned in Activity No. 7, verifies the
documents as to correctness then concerned teller of Tellering Booth places the
following documents in a sealed envelope:
¾ Checks
¾ HDTR – duplicate copy
Page 2 of 6
ANNEX 3
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¾ DSOCI – original copy
9. Validates and transfers amount to zero out terminal reading.

The original & duplicate copies of TR, SDs and triplicate copy DPS will be used for
BCS preparation. Files triplicate & quadruplicate copies of DSOCI & original copy of
HDTR.
Collection of Taxes with Cash Payments
10. Upon receipt of DPS, SDs & cash payments from taxpayer, concerned Teller
validates the DPS & stamps ‘Received’ the TR (previously screened by BIR-LTAD)
Issues the triplicate copy of TR, validated original copy of DPS & SDs to the
Taxpayer. Temporarily keeps the cash payment inside the drawer and files the
original and duplicate copy of TR, SDs & duplicate and triplicate copies of DPS.
11. Encodes payment details in the Consumer Terminal.
12. At 3:00 PM, retrieves the TR, DPS, & SDs from file and the cash collections from the
drawer. Prepares Debit Cash Transfer Slip (DCTS) and Credit Cash Transfer Slip
(CCTS) and signs on the ‘Delivered by’ portion. Forwards CCTS (Yellow) & cash to
the Roving Teller (LBP East Ave.).
Roving Teller (LBP East Ave.)
13. Counts the cash received from LBP Tellering Booth and verifies the documents as to
correctness then signs on the “Received by” portion of DCTS & CCTS.
14. Validates & transfers amount to zero out terminal reading. Files DCTS, original &
duplicate copies of HDTR.
15. Retrieves original & duplicate copies of TR, SDs and triplicate copy DPS. Batches
TRs and encodes payment details in LBDES based on TR and SDs.
16. After encoding payment details, generates Batch Control Sheet (BCS).
17. Checks correctness of the generated BCS data against TR data.
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ANNEX 3
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Note:
If there are discrepancies, rechecks encoded data against the source documents (TR
data) and effects necessary corrections.
18. Once correctness of BCS was ascertained, sends Batch Control Sheet (BCS) data to
BIR-ISOS thru Electronic Data Transfer (EDT) for uploading to Integrated Tax
System – Collection & Bank Reconciliation (ITS-CBR) module.
Retrieves the triplicate copy of DPS & SDs from file and forwards the same together
with original & duplicate copies of TR & BCS to BIR - LTDPQAD.
19. Generates Teller’ Final Reading thru Corporate Terminal (CT).
20. Reconciles amount of daily collections per DPS & BCS and the Teller’s Final
Reading. Files Teller’s Final Reading after reconciliation.
LBP – East Avenue Branch
21. Credits the appropriate parking account

a.) East Avenue Excise Tax Payments - 0571-0737-81
b.) East Avenue Parking Acct 0012-2244-67
c.) Cebu LTDO 0141-4170-02
d.) Makati LTDO 0051-4664-20
e.) UN Ave. (Insurance) 1442-82-10
On the third day Parking Accounts are debited and credits (manual lifting) BTr
respective mother acct.
Bureau of the Treasury – Receipts, Investments & Disbursement Division (BTr-

RIDD)
22. From the viewing facility granted to BTr by LBP, BTr-RIDD views anytime the data
on collections/remittances of internal revenue taxes.
23. Generates Large Taxpayer Inquiry Account (LTIA) from the Corporate Terminal.
24. Based on the generated LTIA, prepares the Monthly Summary of Collections (SC).
Bureau of the Treasury – National Cash Accounting Division (BTr-NCAD)
25. Based on SC & LTIA, prepares BTr-Journal Entry Voucher (BTr-JEV) and assigns
control number to take up BIR collections then files SC & LTIA.
26. Encodes BTr-JEV details in the New Accounting System.
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ANNEX 3
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27. After encoding BTr-JEV details, generates the Subsidiary Ledger (SL). Submits BTr-
JEV to BIR with supporting documents (LTIA & SC) and retains a copy of BTr-JEV
for file together with SL.
BTr-Depository Bank Reconciliation Section (BTr-DBRS)
28. At the end of the month, generates a copy of SL thru NAS.
29. Receives monthly from LBP the Large Taxpayer Savings Account-Bank Statement
(LTSA-B/S) with supporting Credit & Debit Advices and from RIDD the LTIA.
Reconciles SL amount against LTSA-B/S amount.
Note:
If there are discrepancies, verifies in the Credit Advice/s (CA) or Debit Advice/s
(DA). If entries are not supported by CA or DA, calls up the bank to request for such
documents.
30. Based on the reconciliation conducted, prepares Bank Reconciliation Statement.
If SL and LTSA-B/S amounts are reconciled furnishes COA-BTr, LBP & COA-LBP
a copy of BRS and retains a file copy.
Note:
If entries are not supported by CA or DA, calls up the bank to request for such
documents.
31. If SL and LTSA-B/S amounts are not reconciled prepares BTr-JEV-Adj. and assigns
control number. Furnishes COA-BTr, LBP & COA-LBP a copy of BRS and retains a
file copy together with LTSA-B/S, CA, DA & SL. Forwards BTr-JEV-Adj to BTr
NCAD Accounting & Bookkeeping Section for data encoding.
BTr-NCAD Accounting & Bookkeeping Section
32. Encodes BTr-JEV-Adj. details in the New Accounting System.
33. After encoding JEV details, generates SL and files the same together with a copy of
BTr-JEV-Adj. Provides a copy of BTr-JEV-Adj. to BIR.
BIR-RAD Bookkeeping Section
34. At the end of the month, prepares BIR-JEV to take up collection and remittance based
on BTr-JEV and BTr-JEV Adjustments received from BTr. Debits Cash in Bank –
Page 5 of 6
ANNEX 3
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LCSA (112) and credits Tax Revenue (550) for collection. Debits Tax Revenue (550)
and credits Cash in Bank – LCSA (112) for remittance.
35. Reproduces BTr-JEV and files the same together with LTIA, SC and duplicate and
triplicate copies of BIR-JEV. Submits the original copy of BIR-JEV together with
the duplicate copy of BTr-JEV to COA for audit examination.
36. Posts to GL the details of BIR JEV.
BIR-RAD-RMAS
37. Reconciles CRDC submitted by the banks against BTr-JEV. If discrepancy exists,
call the attention of BTr.
38. Reconciles BCS-A against CRDC submitted by the banks and BTr-JEV.
Note:
If discrepancy exists, call the attention of BTr.
39. Prepares letter and sends to the banks and copy furnished LTCED, LTDPQAD and
ISOS-DC.
Note:
If discrepancy exists, call the attention of the banks through letter and copy furnished
C:\BIR\narra-large-bircom.doc
Page 6 of 6
ANNEX 3
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BIR Collection of Taxes from Large Tax Payers
LEGEND:
AD - Authority to Debit
BTr – JEV - Bureau of the Treasury – Journal Entry Voucher
BTr – JEV-Adj - Bureau of the Treasury – Journal Entry Voucher for
Adjustments
BTr-NCAD - BTr National Cash Accounting Division
CA - Credit Advice
CCTS - Credit Cash Transfer Slip
DA - Debit Advice
DBRS - Depository Bank Reconciliation Section
DPS - Deposit Payment Slip
DSOCI - Delivery Statement of Outgoing Clearing Items
DCTS - Debit Cash Transfer Slip
HDTR - Half-day Teller’s Reading
IBTRARS - Interbranch Transaction Recording System
IOA - Inter-Office Advice
ITS-CBR - Integrated Tax System – Collection & Bank Reconciliation
LBDES - Limited Bank Data Entry System
LTIA - Large Taxpayer Inquiry Account
LTSA-B/S - Large Taxpayer Savings Account Bank Statement
RIDD - Receipts, Investments and Disbursement Division
SC - Summary of Collections
SDs - Supporting Documents
TR - Tax Return
Page 1 of 2
ANNEX 3
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NOTES:
1. Tax Debit Memo (TDM) may be one of the supporting documents submitted by the
taxpayer if he will apply said TDM for his tax payment. LBP Tellering Booth
stamps ‘Received’ this document upon receipt from the taxpayer.
Tax Debit Memo (TDM) evidences the taxpayer’s payment of his internal revenue tax
liability by means of a tax credit certificate (TCC). TDM is issued after approval of
taxpayer’s application for Tax Credit Utilization that is, the balance of the Tax Credit
is sufficient to pay the liability. Otherwise the TDM is issued for the balance of the
tax credit which shall be applied first to penalties and interest and instruct the
taxpayer to pay the remaining balance of tax liabilities.
2. Before releasing the TR, DS & IOA, Servicing Bank sends advance copy of IOA thru
fax to the Tellering Booth.
3. Teller’s reading is being done on the following intervals:

1st reading – before bank teller transaction begins (before accepting first transaction
during the day);
nd
2 reading – at noontime for submission to the roving teller;
3rd reading – at the end of the day
4. If there are discrepancies, rechecks encoded data against the source documents (TR)
and effects necessary corrections.
5. If entries are not supported by CA or DA, calls up the bank to request for such
documents.
6. If discrepancy exists, call the attention of BTr.
7. If discrepancy exists, call the attention of the banks through letter and copy furnished
Page 2 of 2
ANNEX 4
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BIR Collection of Taxes from Regular Taxpayers
LBP Branch
1. Upon receipt of Tax Return (TR), Deposit Payment Slip (DPS) and Cash/Check
payment (P) from the taxpayer, concerned teller stamps “Received” the TR, indicates
date & bank branch and affixes his/her initial.
2. Counts/checks payment.
3. If found complete and correct, machine validates the DPS. Keeps the payment in the
vault and forwards original copy of DPS and triplicate copy of TR to the taxpayer.
4. Based on TR & DPS credits Clearing Account thru On-Line Collection System. Files
temporarily the original & duplicate copies of TR and duplicate & triplicate copies of
DPS.
LBP Head Office – Technology Management Group
5. After batch processing, all collections credited to clearing account are automatically
swept to mother clearing account 3401-0141-00. Generates Over-the-Counter Tax
Payment Schedule and submits to LBP-HO-RMD.
LBP Branch
6. At the end of the day, retrieves TR & DPS from file and encodes TR & DPS details
in the Limited Bank Data Entry System (LBDES).
7. After encoding TR & DPS details, downloads BCS to diskette (create extract file).
8. Uploads BCS data to LBP mainframe thru CA/SA ON LINE system.
Note:
LBP branch utilizes CA/SA ON LINE System to upload BCS extracted file to
FIASCICS LBDES and then transmits to BIR File Server thru EDT.
9. Downloads BCS data to another diskette (copy to diskette) & generates thru LBDES
the Batch Control Sheet (BCS). Submits TR, DPS & BCS to RDO Collection
Section.
10. Generates Bank Statement of Current Account from FIAS ON-LINE.
Page 1 of 7
ANNEX 4
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11. Compares total amount of BCS against total amount of Bank Statement Current
Account.
If total amount of BCS and Bank Statement Current Account are reconciled, submits
to LBP – HO – RMD the hard and soft copies of BCS then files the Bank Statement
of Current Account.
Note:
Soft and hard copies of BCS should be submitted to RMD within 3 banking days.
12. If total amounts are not reconciled, prepares IOA for adjustment or amended BCS.
Submits diskette and BCS to Remittance Monitoring Division of LBP Head Office
within 3 calendar days.
Note:
If errors noted affect ON-COL transactions, prepares Inter Office Advice (IOA). If
errors noted affect BCS only, prepares amended BCS & copy to diskette. If errors
affect both ON-COL transactions & BCS records, prepares IOA and amended BCS &
copy to diskette.
If errors affect BCS, bank branch notifies the RDO/NO thru letter of the adjustments.
The RDO/NO retrieves the affected BCS no. and makes the necessary corrections of
the BIR records.
13. If IOA is prepared for the adjustment noted, encodes IOA details in the IBTRARS.
14. If amended BCS is prepared for the adjustment noted, prepares Letter notifying the
BIR on the said adjustment.
LBP Head Office Remittance Monitoring Division (RMD)
15. Downloads LBDES data from LBP mainframe to diskette.
16. Uploads encrypted LBDES data from the diskette to LBDE and transmits to BIR
Revenue Data Center (RDC) ITS Server thru EDT.
BIR Revenue Data Center
17. Downloads LBDES data from LBP then uploads to BIR National Office (NO) ITS
Server to make LBDES data available to BIR - RDO thru Integrated Tax System –
Collection & Bank Reconciliation Module.
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ANNEX 4
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18. Upon receipt of OTC-TPS from TMG, records its total amount in the logsheet.
19. When of the hardcopy of BCS/Amended BCS & IOA (if any) is received from bank
branches, records the date of BCS receipt, BCS No. and the adjustment per IOA in
the Logsheet. Compares the total amount of BCS against the total amount of OTC-
TPS previously recorded in the logsheet. Files temporarily the BCS/Amended BCS
Note:
If RMD receives IOA (either over or under remittance) before or after remittance
date, RMD prepares supplemental ARDC reflecting such adjustments.
If IOA is a result of over remittance and such IOA was received by RMD after
remittance date, RMD prepares letter to BIR informing said over remittance. BIR
will then investigate and if found to be valid advises BSP to debit TOP Account.
If IOA is a result of under remittance and such IOA was received by RMD after
remittance date, RMD remits the amount of under remittance and pays the
corresponding penalty after receipt of demand letter from the Revenue Accounting
Division
20. Based on the Logsheet data, prepares Advance Report of Daily Collections (ARDC)
and sends to BIR-RAD thru fax. Files the ARDC, logsheet, OTC-TPS and IOA.
21. Uploads & consolidates LBDES data received from bank branches.
22. Generates CRDC thru LBDES in four copies.
Note:
CRDC may be system generated or manually prepared. If it is already time to make
the remittance and RMD has not yet received the soft copy of the BCS from a
particular bank branch, RMD manually prepares the corresponding CRDC for the
collection of such bank branch.
23. Checks if total amount of BCS/Amended BCS tallies with the total amount of CRDC
Note:
Uploading of BCS data is done to facilitate consolidation of bank branches’
collections and as well as generation of CRDC. BCS hard copy is compared with
CRDC to make sure that all corresponding soft copies of BCS are uploaded in the
LBDES.
24. Compares totals of CRDC against ARDC totals.
Page 3 of 7
ANNEX 4
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25. Based on CRDC, prepares Debit Advice (DA) and Authority to Debit (AD).
Forwards DA to Cash Department and files temporarily the AD, BCS, CRDC and
ARDC.
LBP - Cash Department
26. Debits BTr-BIR Savings Account.
27. Once Snapshot of BTr-BIR Account is received, prepares Daily Report on Account
Balances (DRAB) and sends the same to BTr-NCAD thru e-mail. Files the Snapshot
of BTr-BIR Account.
28. On the sixth day, retrieves CRDC & AD from file. Encodes CRDC (remittance)
details sends before 2:00 PM to the Bangko Sentral ng Pilipinas (BSP) thru Electronic
Fund Transfer Instruction System (EFTIS).
Note:
Temporarily files CRDC and ADs for one week and submits the same on the
following Monday. In the event of any problem affecting EFTIS or the
Communication facilities linking Authorized Agent Banks (AABs) to EFTIS, AABs
sends to BSP the ADs in hard copy form.
Bangko Sentral ng Pilipinas
29. Upon receipt of ADs from AABs thru EFTIS, tests the contents of ADs against
AAB’s available balance in the demand deposit account ledger. If there is sufficient
fund available, debits demand deposit account of LBP and credits TOP account then
sends BSP FTI Registry to LBP to confirm remittance.
Note:
In the event of any problem affecting EFTIS or the Communication facilities linking
AABs to EFTIS, BSP includes the data of ADs (sent by AABs in hard copy form) in
the Department Ticket Registry.
30. Generates List of Remittances thru EFTIS and provides a copy of said remittances to
BTr.
31. Uploads consolidated remittance data in the Lotus Note System.
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LBP – Remittance Monitoring Division
32. Generates the approved BSP FTI Registry and files the same together with CRDC
and AD. Forwards a hard copy of CRDC and AD to BTRr-RIDD then sends a copy
of the same to BIR-RAD thru fax.
BIR – RAD – Reports Monitoring & Analysis Section
33. Process and checks the mathematical accuracy of the daily total collection of AABs
per hard copy of CRDC.
34. Once mathematical accuracy has been ascertained, encodes the daily total collection
of AABs in the worksheet thru MS-EXCEL and generates the Daily Summary of
CRDC. Files the Daily Summary of CRDC.
35. Encodes CRDC data in CBR based on the processed hard copy of CRDC. Files
CRDC per AABs.
36. When CBCA is received from BSP, concerned personnel encodes the CBCA data in a
worksheet thru MS-EXCEL and generates the Daily Summary of CBCA. Files the
Daily Summary of CBCA and the hard copy of the CBCA.
37. At the end of the month, retrieves Summary of CRDC from file and based on this,
prepares Monthly Summary of CRDC (MS-CRDC).
38. Retrieves also the Summary of CBCA from file and based on this, prepares Monthly
Summary of CBCA (MS-CBCA).
39. Reconciles the amount of MS-CBCA against MS-CRDC if amounts tally.
Note:
If there are discrepancies, notifies bank’s head office.
40. Prepares Monthly Reconciliation Report of CRDC and CBCA.
41. Prepares Advice Drawing of JEV (AD-JEV) for collection and remittances based on
MS-CRDC and MS-CBCA respectively. Photocopies MS-CRDC and MS-CBCA and
files Daily Summary of CBCA & CRDC. Forwards the other copy of MS-CRDC,
MS-CBCA, MR-CDRC & CBCA and the AD-JEV to BIR-RAD Bookkeeping
Section.
42. Based on the MS-CRDC and MS-CBCA verifies the remittance date of each
collection for any late reporting and remittance and then manually computes penalty.
Page 5 of 7
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43. Prepares Summary of Penalties for late reporting and remittance.
44. Prepares Demand Letter for penalties computed and sends to concerned Banks.
45. Views BCS-CRDC Reconciliation and manually copies directly from CBR screen the
CRDC & BCS data with discrepancies, then encodes in the worksheet thru MS-
EXCEL.
46. Prepares and generates the Reconciliation Analysis of BCS vs. CRDC and then
generates the Schedule of Discrepancies. Sends to concerned banks for explanation
and proper action.
BTr – NCAD - Accounting & Bookkeeping Section
47. Based on DRAB received from LBP RMD, prepares Summary of Collections (SC).
48. Based on SC, prepares BTr JEV and assigns control number.
49. Encodes BTr JEV details in the New Accounting System (NAS).
50. Generates Subsidiary Ledger (SL) and files the same together with MSC and ARDC.
Submits BTr JEV to COA for audit examination. Submits a copy of audited BTr-JEV
to BIR.
BTr-NCAD-Depository Bank Reconciliation Section (DBRS)
51. At the end of the month, DBRS generates SL.
52. Reconciles amounts of SL against Monthly Bank Statement (MBS) received from
LBP.
Note:
If there are discrepancies, verifies in the Credit Advice/s (CA) or Debit Advice/s
documents.
53. Based on the reconciliation conducted, prepares Bank Reconciliation Statement.
If SL and MBS amounts are reconciled furnishes COA-BTr, LBP & COA-LBP a
copy of BRS and retains a file copy.
54. If SL and MBS amounts are not reconciled prepares BTr-JEV-Adj. and assigns
control number. Furnishes COA-BTr, LBP & COA-LBP a copy of BRS and retains a
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file copy together with MBS, CA, DA & SL. Forwards BTr-JEV-Adj to Accounting
& Bookkeeping Section for data encoding.
BTr – NCAD – Accounting & Bookkeeping Section
55. Encodes BTr-JEV adjustment details in the New Accounting System (NAS).
56. Generates SL and files the same together with BTr-JEV-Adj. Provides a copy of
BTr-JEV to COA for audit examination. Provides a copy of audited BTr-JEV-Adj. to
BIR.
BIR – Revenue Accounting Division – Bookkeeping Section
57. Reviews AD-JEV, MS-CRDC, MS-CBCA, MR-CRDC & CBCA received from
RMAS.
58. Prepares JEV in three copies to take up BIR collections. Debits Cash in Bank – Local
Currency Current Account and credits Tax Revenue 550.
59. Reproduces all the documents mentioned above and files the same together with copy
2 – 3 of BIR-JEV. Submits the original copy of BIR-JEV together with AD-JEV,
MS-CRDC, MS-CBCA, MR-CRDC & CBCA to COA for audit examination.
60. Posts BIR-JEV details to GL.
61. Upon receipt of BTr-JEV, compares it with MS-CBCA.
62. Prepares BIR-JEV in three copies to take up remittances and adjustments, if any.
Debits Tax Revenue 550 and credits Cash in Bank – Local Currency Current
Account.
63. Reproduces BTr-JEV and files the same together with BIR-JEV.
64. Posts the details to GL then submits a copy of BTr-JEV & BIR-JEV to COA for audit
examination.
C:\BIR\narra-regular-bircom.doc
Page 7 of 7
ANNEX 4
15 of 17
LEGEND:
AD-JEV - Advice Drawing of Journal Entry Voucher
ARDC - Advance Report of Daily Collections
BIR-RAD - Bureau of Internal Revenue-Revenue Accounting Division
BTr-JEV - Bureau of the Treasury – Journal Entry Voucher
BTr-NCAD - BTr National Cash & Accounting Division
BTr-RIDD - BTr Receipts, Investments, and Disbursements Division
CA - Credit Advice
CBCA - Central Bank Credit Advice (also known as List of
Remittance
CBR - Collection & Bank Reconciliation
CRDC - Consolidated Report of Daily Collections
DA - Debit Advice
DPS - Deposit Payment Slip
FIASCICS - Financial Information Access System -
GL - General Ledger
MS-CBCA - Monthly Summary of CBCAs
MS-CRDC - Monthly Summary of CRDCs
MR-CRDC & CBCA - Monthly Report of CRDCs & CBCAs
NCAD - National Collection & Accounting Division
ON-COL System - On Line Collection System
OTC-TPS - Over-the-Counter Tax Payment Schedule
P - Payment
RDO - Revenue District Office
SC - Summary of Collections
SDR - Summary of Daily Receipts
TR - Tax Return
Page 1 of 3
ANNEX 4
16 of 17
NOTES:
1. LBP branch utilizes CA/SA ON LINE System to upload BCS extracted file to
FIASCICS LBDES and then transmitted to BIR File Server thru EDT.
2. Soft copy & hard copy of BCS should be submitted to RMD within 3 calendar days.
3. If errors noted affect ON-COL transactions, prepares Inter Office Advice (IOA). If
errors noted affect BCS only prepares amended BCS & copy to diskette. If errors
affect both ON-COL transactions & BCS records, prepares IOA and amended BCS
& copy to diskette.
If errors affect BCS, bank branch notifies the RDO thru letter of the adjustments. The
RDO retrieves the affected BCS no. and makes the necessary corrections of the BIR
records.
4. If RMD receives IOA (either over or under remittance) before or after remittance
date, RMD prepares supplemental ARDC reflecting such adjustments.
If IOA is a result of over remittance and such IOA was received by RMD after
remittance date, RMD prepares letter to BIR informing said over remittance. BIR
will then investigate and if found to be valid advise BSP to debit TOP Account.
If IOA is a result of under remittance and such IOA was received by RMD after
remittance date, RMD remits the amount of under remittance and pays the
corresponding penalty after receipt of demand letter from the Revenue Accounting
Division.
5. Uploading of BCS data is done to facilitate consolidation of bank branches’

collections and as well as generation of CRDC. BCS hard copy is compared with
CRDC to make sure that all corresponding soft copies of BCS are uploaded in the
LBDES.
6. CRDC may be system generated or manually prepared. If it is already time to make

the remittance and RMD had not yet received the soft copy of the BCS from a
particular bank branch, RMD manually prepares the corresponding CRDC for the
collection of such bank branch.
7. Temporarily files CRDC and ADs for one week and submits the same on the
following Monday. In the event of any problem affecting EFTIS or the
Communication facilities linking Authorized Agent Banks (AABs) to EFTIS, AABs
sends to BSP the ADs in hard copy form.
Page 2 of 3
ANNEX 4
17 of 17
8. In the event of any problem affecting EFTIS or the Communication facilities linking
AABs to EFTIS, BSP includes the data of ADs (sent by AABs in hard copy form) in
the Departmental Ticket.
9. If there are discrepancies, notifies concerned Bank Branch.
10. If there are discrepancies, verifies in the Credit Advice/s (CA) or Debit Advice/s
documents.
Prepared by:
Marilyn H. Bernaldo
ISA II
Validated by:
For notes 1-8 only:
CAROLINA Q. BRIÑAS
DM III, RMD
Land Bank of the Phils.
For note 10 only:
SIMON AGUILON
Chief, National Cash Accounting Div.
Bureau of the Treasury
Page 3 of 3
ANNEX 5
1 of 14
ANNEX 5
2 of 14
ANNEX 5
3 of 14
ANNEX 5
4 of 14
ANNEX 5
5 of 14
BIR Collection of Banks’ Own Tax Liabilities
For manual filing of Bank’s Own Tax Liabilities & payment thru EFTIS
LBP Head Office
1. Prepares Tax Return (TR) in three copies and Authority to Debit (AD) and signs the
same.
Note:
Head Office of Bank Branches consolidates its tax liabilities together with that of
bank branches before preparing the Tax Return and Authority to Debit (AD).
There are tax return forms which are available in the EFPS and the banks are
required to pay such taxes using EFPS. For those tax return forms which are not
available in the EFPS, the banks pay such taxes thru EFTIS.
For filing & payment thru EFPS, Bank Head Office also prepares Tax Return and
keeps the same for Bank’s file copy after encoding the TR details in the EFPS.
2. Accesses EFTIS to record payment/remittance and encodes the following data

before 2:00 pm:
a.) Transaction code
b.) Bank Reference number
c.) Amount of Tax Liabilities
d.) Tax return form type
Note:
In the event of any problem affecting the System or the Communication facilities
linking Banks to the System, the Bank sends thru its representative the AD to BSP
in hardcopy form.
3. Electronically transmit payment/remittance data to BSP thru EFTIS
BSP Deposit Liability & Reconciliation Division
4. Processes payment/remittance and approves if found valid. Debits LBP Account and
credits the TOP account then sends confirmation to LBP thru EFTIS.
5. Generates CBCA or List of Remittances and submits the same to BTr & BIR –
RAD.
Page 1 of 7
ANNEX 5
6 of 14
Note:
Remittances received after the cut-off time at 2:00 pm shall be processed for value
on the following working day.
Banks to EFTIS, BSP includes the data of ADs (sent by Banks in hard copy form) in
6. Uploads consolidated remittance data to BTr and BIR-ISOS-DC thru Lotus Note
System cc: mail.
LBP Head Office
7. Upon receipt of BSP approval, generates BSP-FTI Registry and retrieves TR and
AD from file and submits the documents to the following:
Every Monday
a.) BIR-RAD - a copy of AD
Within the day

a.) BTr – a copy of AD & BSP-FTI Registry
b.) BIR-LTDPQAD - a copy TR together & BSP-FTI Registry
Note:
Once the payment & remittance has been confirmed by BSP, BIR can generate the
BSP FTI Registry with an ‘APPROVED’ BSP Status.
Prepared by:
Marilyn H. Bernaldo
ISA II
ICTC Commission on Audit
Validated by:
Page 2 of 7
ANNEX 5
7 of 14
Large Taxpayers Document Processing & Quality Assurance Div. (LTDPQAD)
8. Stamps ‘Received’ the TR and verifies completeness of TR data.
9. Upon receipt of TR & BSP-FTI Registry from Bank Branches, checks if total
amount of these two documents are tally.
Information Systems Operations Service - Data Center (ISOS-DC)
10. ISOS-DC receives Data on Banks Tax Payment from BSP thru Lotus Note System
cc:mail. Once this document was received, ISOS-DC used this as a basis for the
preparation of BSP Daily Transmittal with Fund Code 109 and submits the same to
LTDPQAD, RAD and LT-CED.
Note:
BSP Daily Transmittal w/ Fund Code 109 is composed of taxes paid thru EFTIS,
forwarded to LTDPQAD for processing.
Large Taxpayers Document Processing & Quality Assurance Div. (LTDPQAD)
11. Upon receipt of BSP Daily Transmittal with Fund Code 109 from ISOS-DC,
compares its data against BSP-FTI Registry received from Bank Branches.
Note:
Checks if payments for manually filed returns were included in the BSP Daily
Transmittal with Fund Code 109.
If there are discrepancies noted, LTDPQAD inquires from bank branch about tax
payment details and informs RAD of discrepancies.
12. Accesses Internal EFPS and verifies if returns filed thru EFPS are included in the
BSP Daily Transmittal w/Fund Code 109.
Note:
Checks if payments for e-filed returns were included in the BSP Daily Transmittal
with Fund Code 109.
payment details and informs RAD of discrepancies.
Page 3 of 7
ANNEX 5
8 of 14
13. Prepares Summary of BCS Collection as of Date and assigns BCS control number.
Note:
Summary of BCS Collection Data consists of BCS code, collection date, TIN,
Registered Name, Tax Form, Tax Type, Return period, Tax Type amount,
Collection amount (from BSP Transmittal), Total BCS (total collection for the day),
No. of documents (number of TRs per batch).
14. Checks total amount of BSP Daily Transmittal w/Fund Code 109 against total
amount of Summary of BCS Collection as of Date. Makes necessary corrections if
errors are found in the preparation of Summary of BCS Collection as of Date.
15. Encodes TR data in the Limited Bank Data Entry System based on the Summary of
BCS Collection as of Date. Doc Stamps records and transmits to DST data center.
16. Sorts TR per form type and segregates original and duplicate copies then stamps
Document Locator Number (DLN) on the original & duplicate copies of TR and on
the first page of SDs.
17. Encodes TR data in the Returns Processing System (RPS). After encoding files TR,
BSP-FTI Registry, Summary of BCS Collection as of Date, & BSP Daily
Transmittal with Fund Code 109 for archiving. Forwards the duplicate copy of TR
and a photocopy of BSP-FTI Registry to Large Tax Audit Investigation Division
(LTAID) and a copy of Summary of BCS Collection as of Date to Reports &
Correspondence Section (RCS).
Information Systems Operations Service - Data Center (ISOS-DC)
18. Uploads TR data encoded by LTDPQAD from LBDES file server to ITS file server.
Prepared by: Validated by:
LTDPQAD For activity nos. 8,9, 11-17 only:

Marilyn H. Bernaldo
ISA II ________________________________
SOS-DC For activity nos.10 & 18 only:
_________________________________
Page 4 of 7
ANNEX 5
9 of 14
Bureau Of The Treasury - National Cash Accounting Division (BTr-NCAD)
19. Prepares JEV to take up collections and remittances based on the Central Bank
Credit Advice (also known as ‘List of Remittances’) received from BSP then
assigns JEV a control number.
20. Encodes JEV details in the new Accounting System (NAS).
21. After encoding the JEV details generates Subsidiary Ledger (SL) for file.
22. Reproduces a copy of CBCA and files the same together with the copy 2 & 3 of the
JEV. Forwards the original copy of CBCA & JEV to COA for audit examination.
After audit examination submits the documents to Bureau of Internal Revenue
(BIR).
Prepared by:
Marilyn H. Bernaldo
ISA II
Validated by:
Page 5 of 7
ANNEX 5
10 of 14
BIR - Revenue Accounting Division Reports Monitoring & Analysis Section (BIR-
RAD-RMAS)
23. At the end of the month, reconciles CBCAs amount received from BSP and BSP-
FTI Registry amount received from banks thru fax.
24. a. If amounts are not reconciled, verifies daily total amount of CBCAs in the
Collection and Bank Reconciliation (CBR) of the Integrated Tax System (ITS).
Send copy of BSP FTI Registry to BSP thru fax then files the same together with
CBCAs.
Notes:
Reconciles total amount per BCS against total amount per CBCA. If there is a
discrepancy, verifies details of daily total amount in the CBR Payment Information
screen of ITS. If the collection per BCS is greater than the remittance per CBCA
and if there is BSP FTI Registry which is not included in the CBCA, BIR RAD
RMAS calls BSP and sends the BSP FTI Registry thru fax for appropriate action. If
the collection per BCS is less than the remittance per CBCA, BIR RAD RMAS
informs LTDPQAD of the discrepancies to check the correctness of the uploaded
collection data and apply appropriate actions/corrections. The basis for the
preparation of the JEV to record collection will be the CBCA.
As per interview with the Asst. Section Chief of RMAS, one of the reasons for
discrepancy that affects the total amount is the existence of duplicate records, which
according to her may be due to double uploading of data.
There are also reasons for discrepancy noted which do not affects the total amount.
One of which is the erroneous classification of RDO code.
24. If amounts are reconciled, prepares Advice Drawing of JEV (AD-JEV) and
Summary of CBCAs based on CBCAs and BSP-FTI Registry. Forwards AD-JEV
& CBCAs to Bookkeeping Section & files CBCAs & BSP-FTI Registry.
BIR - Revenue Accounting Division – Bookkeeping Section
25. Reviews AD-JEV & Summary of CBCAs received from BIR-RAD-RMAS.
26. Based on these documents prepares JEV to take up BIR collections and assigns the
same a control number. Debits Cash in Bank – Local Currency Current Account
and credits Tax Revenue 550.
27. Reproduces AD-JEV & Summary of CBCAs. Files the photocopy of AD-JEV,
Summary of CBCAs and duplicate & triplicate copies BIR-JEV and forwards the
original copies of these documents to COA for audit examination.
Page 6 of 7
ANNEX 5
11 of 14
28. Upon receipt of BTr-JEV from the Bureau of the Treasury, prepares three copies of
JEV to take up remittance and assigns the same a control number. Debits Tax
Revenue 550 and credits Cash in Bank – Local Currency Current Account.
29. Reproduces BTr-JEV and files the same together with the duplicate & triplicate
copies of BIR-JEV. Forwards duplicate copy of BTr-JEV together with the original
copy of BIR-JEV to COA for audit examination.
Prepared by:
Marilyn H. Bernaldo
ISA II
Validated by:
C:\bir\narra-bircom.doc
Page 7 of 7
ANNEX 5
12 of 14
LEGEND:
AD-JEV - Advice Drawing of Journal Entry Voucher
BIR-JEV - Bureau of Internal Revenue Journal Entry Voucher
BSP-FTI-Registry - Bangko Sentral ng Pilipinas – Fund Transfer Instruction
Registry
BSP-FTI-Registry x - Photocopy of BSP-FTI Registry
BTr-JEV - Bureau of the Treasury Journal Entry Voucher
CBCA - Central Bank Credit Advice (also known as the “List of
Remittances – BIR Own Tax Liabilities”)
CBCA x - Photocopy of CBCA
EFPS - Electronic Filing & Payment System
ISOS-DC - Information System Operation Service-Data Center
ITS - Integrated Tax System
ITS-CBR - ITS - Collection & Bank Reconciliation
ITS - RPS - ITS - Returns Processing System
JEV - Journal Entry Voucher
LTAID - Large Taxpayer Audit Investigation Division
LTDPQAD - Large Taxpayer Document Processing & Quality
Assurance Div.
NCAD - National Cash Accounting Division
RAD - Revenue Accounting Division
RCS - Reports & Correspondence Section
TR - Tax Return
Page 1 of 3
ANNEX 5
13 of 14
NOTES:
For manual filing of Bank’s Own Tax Liabilities & payment thru EFTIS
1. Head Office consolidates its tax liabilities together with that of bank branches before
preparing the Tax Return and Authority to Debit (AD).
There are tax return forms which are available in the EFPS and the banks are required
to pay such taxes using EFPS. For those tax return forms which are not available in
the EFPS, the banks pay such taxes thru EFTIS.
For filing & payment thru EFPS, Bank Head Office also prepares Tax Return and
keeps the same for Bank’s file copy after encoding the TR details in the EFPS.
2. In the event of any problem affecting the System or the Communication facilities
linking AABs to the System, the bank sends thru its representative the AD to BSP in
hardcopy form.
3. Remittances received after the cut-off time at 2:00 pm shall be processed for value on
the following working day.
Banks to EFTIS, BSP includes the data of ADs (sent by Banks in hard copy form) in
4. Once the payment & remittance has been confirmed by BSP, BIR can generate the
BSP FTI Registry with an ‘APPROVED’ BSP Status.
5. BSP Daily Transmittal w/ Fund Code 109 is composed of taxes paid thru EFTIS only.
Hard copies of SDs, TRs and BSP FTI Registry are forwarded to LTDPQAD for
processing.
6. Checks if payments for manually filed returns are included in the BSP Daily
Transmittal w/Fund Code 109.
payment details.
7. Summary of BCS collection data consists of BCS code, collection date, TIN,
Registered Name, Tax Form, Tax Type, Return period, Tax Type amount, Collection
amount (from BSP Transmittal), Total BCS (total collection for the day), No. of
documents (number of TRs per batch)
Page 2 of 3
ANNEX 5
14 of 14
8. Reconciles total amount per BCS against total amount per CBCA. If there is a
discrepancy, verifies details of daily total amount in the CBR Payment Information
screen of ITS. If the collection per BCS is greater than the remittance per CBCA and
if there is BSP FTI Registry which is not included in the CBCA, BIR RAD RMAS
calls BSP and sends the BSP FTI Registry thru fax for appropriate action. If the
collection per BCS is less than the remittance per CBCA, BIR RAD RMAS informs
LTDPQAD of the discrepancies to check the correctness of the uploaded collection
data and apply appropriate actions/corrections. The basis for the preparation of the
JEV to record collection will be the CBCA.
As per interview with the Asst. Section Chief of RMAS, one of the reasons for
discrepancy that affects the total amount is the existence of duplicate records, which
according to her may be due to double uploading of data.
There are also discrepancies noted which do not affect the total amount. One of
which is the erroneous classification of RDO code.
C:\bir\notes-bank-bircom.doc
Page 3 of 3

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Republic of the Philippines

September 24, 2004

Hon. Comm. Guillermo L. Parayno, Jr.

We are pleased to transmit the report on the sectoral performance audit

a. Adequate, clear and well-defined policies and procedures

We look forward to the proper implementation of the recommendations

Very truly yours,

By Authority of the Chairman:

ILUMINADA M.V. FABROA

National Collection System

Bureau of Internal Revenue

Part I Executive Summary 1

Part II The National Collection System 7

Part III Audit Observations 34

Chapter 1 Adequate, Clear and Well-Defined

Chapter 2 Sound Monitoring and Control

Chapter 3 Accurate and Reliable Accounting

Government’s funds are mainly sourced from collections by authorized

The efficiency of the collection system, therefore is crucial in the

The collection function is being performed by several government agencies

Collections are undertaken either by the National Collecting Officers

As required under existing guidelines, collections should be accounted for

• Over-the-counter collections by AABs of BIR are remitted to the

• Collections by the designated Revenue Collection Officers (RCOs)

Government Depository Banks (AGDBs) on the day of collection or

As of audit date, the BIR has 22 AABs and 5 AGDBs.

The BIR’s performance was perceived to have been greatly affected by

• Taxpayers’ satisfaction with BIR services;

One of the measures undertaken by BIR, in coordination with the Bankers

The audit was conducted to assess the adequacy of existing policies,

AUDIT SCOPE AND METHODOLOGY

The audit focused on the evaluation of existing systems and procedures in

• Adequate, clear and well-defined policies and procedures on

• Studied the system of national collection and existing

• Analyzed remittance of collections by AABs and

• The AABs’ failure to remit collections on time was also manifested in

These deficiencies not only exposed government collections to possible loss

As collection function is a vital component in ensuring economic

MANAGEMENT’S REACTIONS TO AUDIT OBSERVATIONS

NATIONAL COLLECTION THROUGH REVENUE/SPECIAL

AGDB - Authorized Government Depository Bank

The National Collection System

National Collection refers to all fees, charges, assessments, and revenues

• Collection by NCOs should be deposited intact on the day of

AGENCIES RESPONSIBLE IN THE COLLECTION FUNCTION

Department of  Formulates fiscal policy; and

 Maintains books of accounts of cash transactions of the

 Assesses and collects national internal revenue taxes, fees

 Receives remittances of the BIR and other collecting

 Maintains TOP account;

 Collect taxes and fees for the account of the BIR;

• Policy and Planning Sevice;

• Information Systems Operations

OFFICE OF THE • Taxpayers Assistance Service;

REVENUE REGION NO./LOCATION NO. OF RDOs

1 / Calasiao, Pangasinan 6(1-6)

2 / Cordillera Administrative Region 5(7-12)

3 / Tuguegarao, Cagayan 4(13-16)

4 / San Fernando, Pampanga 7(17-23)

REVENUE REGION NO./LOCATION NO. OF RDOs

7 / Quezon City 9(28,38-

8 / Makati City 8(44,47-53)

9 / San Pablo City 10(54-63)

Department of Formulates fiscal policy; and

Maintains books of accounts of cash transactions of the

Assesses and collects national internal revenue taxes, fees

Receives remittances of the BIR and other collecting

Maintains TOP account;

Collect taxes and fees for the account of the BIR;