ACCOUNTING FOR

DISBURSEMENTS AND
RELATED
TRANSACTIONS
INTRODUCTION
The disbursement activities of the National
Government Agencies start from the receipt of
Notice of Cash Allocation (NCA) from the
Department of Budget and Management.

The NCA received by the agency may be net of

the amount of the taxes to be withheld by the
agency, because of the Tax Remittance Advice
(TRA) System.

Disbursements constitute all cash paid out during

a given period either in cash or by check.
FUNDAMENTAL PRINCIPLES FOR
DISBURSEMENTS OF PUBLIC FUNDS
No 1445, the Government Auditing Code of the Philippines
provides that:
1. No money shall be paid out of any public treasury or
depository except in pursuance of an appropriation law or
other specific statutory authority.
2. Government funds or property shall be spent or used
solely for public services.
3. Trust funds shall be available and may be spent only for
the specific purpose for which the trust was created or the
funds received.
4. Fiscal responsibility shall, to the greatest extent, be
shared by all those exercising authority over the financial
affairs, transactions, and operations of the government
agencies.
5. Disbursement or disposition of government
funds or property shall bear the approval of proper
officials.
6. Claims against government funds shall be
supported with complete documentation.
7. All laws and regulations applicable to financial
transactions shall be faithfully adhered to.
8. Generally accepted principles and practices of
accounting as well as of sound management and
fiscal administration shall be observed, provided
that they do not contravene existing laws and
regulations.
BASIC REQUIREMENTS FOR
DISBURSEMENTS AND THE REQUIRED
CERTIFICATIONS
a.Availability of allotment/budget for
obligation/utilization certified by the Budget
Officer/Head of Budget Unit.
b.Obligations/Utilizations properly charged against
available allotment/budget by the Chief
Accountant/Head of Accounting Unit.
c.Availability of funds certified by the Chief
Accountant.
d.Availability of cash certified by the Chief
Accountant.
e. Legality of the transactions and conformity with
existing rules and regulations.
f. Submission of proper evidence to establish
validity of claim.
g. Approval of the disbursement by the Head of
Agency or by his duly authorized representative.
AVAILABILITY OF FUNDS
No funds shall be disbursed, and no expenditures or
obligations chargeable against any authorized allotment
shall be incurred or authorized without first securing the
certification of its Chief Accountant/Head of the Accounting
Unit as to the availability of funds.
No obligation shall be certified to A/P unless the obligation
is founded on a valid claim that is properly supported by
sufficient evidence and unless there is proper authority for
its incurrence.
Any certification or a fictitious obligation and/or creditor
shall be considered void, certifying official shall be
dismissed from service.
Any payment made under such certification shall be
illegal; officials involved shall be jointly and severally
liable.
"No expenditure or obligation shall be incurred in excess of
allotments released by the DBM Secretary."
- Book IV, Chapter 5, Section 41 of E.O. No. 292

Parties responsible for the incurrence of overdrafs shall be

personally liable therefore.
NOTICE OF CASH ALLOCATION (NCA)
Notice of Cash Allocation shall be the authoity, issued by DBM to
central, regional and operating units of an agency, to pay
operating expenses, purchases of supplies and materials,
acquisition of PPE, A/P, and other disbursements through the
issue of Modified Disbursement System (MDS) checks, Authority
to Debit Account (ADA) or other modes of disbursements. NCA
shall be monitored through maintenance of RANCA by Accounting
Division/Unit.

NCA issued and credited to the Special MDS Accounts of

agencies for payment of retirement gratuity/terminal leave
benefits.
NCA issued and credited to the Special MDS Accounts of Trust
to cover payments of authorized claims
NCA issued for foreign assisted projects with a separate MDS
account maintained by the spending agency with GSBs.
ILLUSTRATION:
Agency X of national government received the following
NCA from DBM for the first quarter of the current year:

Regular Agency Fund P500,000

Special account in the General Fund P300,000
Trust Receipt Fund P200,000
NOTICE OF TRANSFER OF ALLOCATION
(NTA)
Notice of Transfer of Allocation shall be the
authority of the regional and operating units to pay
their operating expenses, purchases of supplies
and materials, acquisition of PPE, A/P and other
authorized disbursements through the issue of MDS
checks, ADA or other modes of disbursements. NTA
shall be monitored through the maintenance of
RANTA by ROs/OUs.

The Common Fund System policy shall be adopted

whereby cash allocation balances of agencies
under Regular MDS Accounts may be used to cover
payment of current year's A/P.
Non-cash Availment Authority (NCAA) - authority
issued-by DBMto agencies to cover the liquidation of
their actual obligations incurred against available
allotments for availment of proceeds from loans/grants
through supplier's credit/constructive cash.

Cash Disbursement Ceiling (CDC) - authority issued

by DBM to DFA and DOLE to utilize their income
collected/retained by their Foreign Service Posts
(FSPs) to cover their operating requirements but not to
exceed the released allotment to the said post.
MODES OF DISBURSEMENTS
Payments/Disbursements by NGAs may be effected through
the Treasury Single Account (TSA).

NGAs are authorized to disburse on the NCA, NTA, CDC, or

other authority that may be provided by law.

Different modes of disbursements are as follows: checks,

cash, ADA, tax remittance advice, working fund/CDC, and
direct payment method.
Disbursements by Checks
There are 2 types of checks being issued by
government agencies as follows:

a. Modified Disbusement System Checks -

issued by government agencies chargeable
against the account of the Treasurer of the
Philippines, maintained with diff. MDS-GSBs.
b. Commercial Checks - issued by NGAs
chargeable against the Agency Checking Account
with Government Servicing Banks (GSBs).
Covered by income/receipts authorized to be
Entries for Disbursement by Check
Payment of utility bills
Dr. Expenses
Cr. Cash-MDS regular
Disbursement by Cash
The granting, utilization and liquidation of cash advances shall
be governed by the following existing rules and regulations, per
COA Circular N. 97-002 dated Feb. 10, 1997, as amended by
COA Circular No. 2006-005 dated July 13, 2006.

a.No cash advance shall be given unless for a legally authorized

specific purpose.
b.A cash advance shall be reported on and liquidated as soon as
the purpose for which it was given has been served.
c.No additional cash advance shall be allowed to any official or
employee unless previous cashadvance given to him is first
settled or a proper accounting is made thereof.
d. Except for cash advance for official travel, no officer or
employee shall be granted cash advance unless he/she is
properly bonded in accordance with existing rules and
regulations.
e. Only permanent appointed officials shall be designated
as disbursing officers.
f. Only duly appointed disbursing officer may perform
disbursing functions.
g. Transfer of cash advance from one accountable officer to
another shall not be allowed.
h. Cash advance shall be used solely for specific legal
purpose for which it was granted.
Cash Advance for Payroll
Accounted as Advances for Payroll

Shall be granted to Regular Disbursing Officers for

payment of:
Salaries
Wages
Honoraria
Allowances
Other personal benefits of officials and employees

Shall not be used for encashment of checks or

liquidation of previous or other types of cash
advances.
Cash Advance Payroll
Shall be equal to net amount of the processed
payroll corresponding to the pay period.

Liquidation made within 5 days after the end of

the pay period.

Unclaimed Salaries shall be refunded and issue

official receipt to close account
Cash Advance for Payroll: Illustration
Cash Advance for Payroll: Illustration
Cash Advance for Payroll: Illustration
Accounting for Overpayments
Payrolls are prepared in advance

Pays are done before reports of attendance

are submitted

Recording:
Overpayment taken up as a receivable
Refund of Overpayment not taken as a
receivable
Accounting for Overpayments: Illustration
Same data from previous.
There is overpayment of P5,000
Accounting for Overpayments: Illustration
Cash Advance for Operating Expenses of Government
Units without Complete set of Books of Accounts
Offices without complete set of books
may be granted two months requirements
for MOOE to finance their transactions
Cash advance is granted to appointed
Disbursing Officer
Record, monitor, and report transactions
Submit within 5 days after month-end certified
copies of CDReg
Illustration
Illustration
Cash Advances for Travel
Travels shall cover only those that are:
Urgent
Extremely necessary
Will involve minimum expenditure
Beneficial to the agency concerned and/or the country

No government fund shall be utilized to pay

foreign travel expenses, except:
Training, seminar or conference abroad*
Travels necessitated by international commitments*
Cash Advances for Travel
Accounted as Advances to Officers and Employees

No additional cash advance - unless previous cash

advance given is first liquidated and accounted for in
the books

Local Travel must be done liquidating w/in 30 days

upon return to personnels workstation

Foreign Travel shall be liquidated w/in 60 days

upon return of the Philippines
Cash Advances for Travel
Liquidation Report (LR) prepared by the
concern officers/employees; submitted to
Accounting Division/Unit

Excess cash advance shall be refunded and

OR is issued to acknowledge the receipt

Cash advance < traveling expense LR will be

submitted and DV will prepare a claim
reimbursement of the deficiency in amount
Cash Advance for Travel: Illustration
Local Travel
Cash Advance
Foreign Travel
for Travel: Illustration
Cash Advance for Specific Purpose/Time-
Bound Undertaking
Accounted as Advances to Special Disbursing
Officer

Liquidated within a specified period by accountable

officer

Unutilized cash be refunded and OR shall be

issued

Accountable Officer/Disbursing Officer prepare

Report of Cash Disbursement and maintain CDRec
RCDisb JEV CDJ
Cash Advance for Specific Purpose/Time-
Bound Undertaking - Illustration
Cash Advance for Petty Operating
Expenses
Petty Cash Fund
Shall be sufficient for one month
Maintained using imprest system
Replenishment directly charged to expense account
PCF = total cash on hand + unreplenished expenses
Be replenished as soon as disbursement reached at
least 75% or as needed
Cash Advance for Petty Operating
Expenses
Accounting policies of cash advance for PCF
A. Kept separately from regular cash
advances/collections
Shall not be used for payment of regular expenses
Payments out of PCF shall be made through Petty Cash
Voucher, not exceeding P15,000 each transactions,
except when higher amounts is allowed by law or COA
Splitting transaction to avoid exceed the ceiling is not
allowed.
Disbursements shall be covered by duly accomplished
and approved PCV and supported by Cash invoices/OR
Cash Advance for Petty Operating
Expenses
B. Unused balance of PCF shall not be
closed/refunded at the end of year.
Closed only upon termination, separation, retirement or
dismissal of the PCF Custodian

C. At year end, PCFC submits to Accounting

Division/Unit all unreplenised PCVs

PCFC shall prepare Report on Paid PCV(RPPCV)

and maintain PCF Record*
RPPCV basis in the preparation of the DV to replenish
PCF
Cash Advance for Petty Operating
Expenses: Illustration
Cash Advance for Petty Operating
Expenses: Illustration
Cash Advance for Petty Operating
Expenses: Illustration
Cash Advance for Petty Operating
Expenses
Government Units without complete set of
books
Granted cash advance covering 2 months
operating requirements
for authorized petty and other miscellaneous
expenses
Disbursement through List of Due and
Demandable Accounts Payable-Advice to
Debit Account (LDDPAP-ADA)
The use of LDDAP-ADA as a mode of
settlement of accounts payable due to
creditors/payees of all NGAs and their
OUs was prescribed under DBM
Circular Letter No. 2013-16 which
implemented the Expanded Modified
Direct Payment Scheme (ExMDPS)
Excluded from the implementation of
ExMDPS
1. Payment of Terminal Leave and Retirement
Gratuity (TL/RG);
2. Remittance of social insurance premium
contributions to government corporations,
such as GSIS, Philhealth and HDMF;
3. Payment of accounts payable to utility
companies;
4. Other payables which cannot be
conveniently or practicably paid using the
ADA.
 Cash/Treasury Units shall maintain and
monitor the receipt of validated LDDAP-
ADA from the MDS-Government Servicing
Bank and also issued official receipt or
other acceptable evidence of receipt of
payments by the creditors/payees.
The MDS-GSB shall effect payments
through the MDPS not earlier than 24hrs
but not later than 48hrs after receipt of the
said document.
Disbursement through Electronic Modified
Disbursement System as part of the
Modified Disbursement Scheme
One of the modes of disbursement under
Joint Administrative Order (JAO) of DBM and
DOF.
To facilitate an efficient and prompt
reconciliation of spending agencies
disbursements as compared with the
accounts of BTr maintained at Land Bank of
the Philippines as AGSB.
Enrollment is free of charge.
Disbursement through Cashless
Purchase Card (CPC) System

CPC System was prescribed as an

alternative mode of payment for
goods and services.
Disbursement by Foreign-based
Government Agencies
Cash Disbursement Ceiling (CDC) is an
authorization issued by DBM to DFA and
other agencies with Foreign Service Posts
(FSPs) to cover operating requirements.
Accounting policies regarding disbursement by FBGAs
a. Working Fund shall be established to
cover payment of PS and MOOE.
b. All disbursements from the working fund
shall be covered by duly approved
DV/Payroll with the required supporting
document.
Disbursement through Direct Payment
Method
Covered by a Non-Cash Availment
Authority (NCAA)
Made through the JEV issued by the
BTr to availing/implementing agency
to record payment of goods and
services made directly by lending
institution to the supplier or
contractor.