Government Accounting

&
Accounting for non-profit
organizations

by: ZEUS VERNON B. MILLAN

 Chapter 5
Disbursements
 
Learning Objectives
1. State the main concept(s) in the
disbursement of government funds.
2. Account for the different modes of
disbursements.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Disbursements 
- constitute all payments in cash, in
whatever manner, i.e., cash, check or
cashless payment.
- shall be supported by Disbursement
Vouchers (including Petty Cash
Vouchers) or Payroll.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Disbursement Authority
a. Notice of Cash Allocation (NCA)
b. Notice of Transfer of Allocation (NTA)
c. Tax Remittance Advice (TRA)
d. Non-Cash Availment Authority (NCAA)
e. Cash Disbursement Ceiling (CDC)

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Notice of Cash Allocation (NCA)
• The NCA is an authority issued by the DBM
to central, regional and provincial offices
and operating units to cover their cash
requirements. The NCA specifies the
maximum amount of cash that can be
withdrawn from a government servicing
bank in a certain period.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Notice of Transfer of Allocation (NTA)

• The NTA is an authority issued by an

agency’s Central Office to its regional and
operating units to cover the latter’s cash
requirements.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Tax Remittance Advice (TRA)
• The TRA is used to recognize: (1) in the
books of national government agencies, the
constructive remittance to BIR and BOC of
taxes and customs’ duties withheld, and the
constructive receipt of NCA for those taxes
and customs duties; (2) in the books of the
BIR and BOC, the constructive receipt of tax
revenue and customs duties; and (3) in the
books of the BTr, the constructive receipt of
the taxes and customs duties remitted.
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
Non-Cash Availment Authority (NCAA)

• The NCAA is the authority issued by the

DBM to 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.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Cash Disbursement Ceiling (CDC)
• The CDC is the disbursement authority
issued by the DBM to agencies with foreign
operations allowing them to use the
income collected by their Foreign Service
Posts to cover their operating
requirements.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Basic Requirements & Certifications for
Disbursements
• Budget Officer - certifies the availability of
allotment.
• Chief Accountant - certifies the availability
of funds and the completeness of the
supporting documents.
• Head of the Requesting Unit - certifies the
necessity and legality of disbursements.
• Head of Agency - approves all Disbursement
Vouchers (DVs) and Payroll.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Modes of Disbursements
• Check
• Cash
• Cashless payments:
– Advice to Debit Account (ADA)
– Electronic Modified Disbursement
System (eMDS)
– Cashless Purchase Card System (Credit
Card)
– Non-Cash Availment Authority (NCAA)
– Tax Remittance Advice (TRA)
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
 Disbursements through Check

MDS Check
Asset/Expense/Liability account xxx
Cash-Modified Disbursement
System (MDS), Regular
xxx

Commercial Check
Asset/Expense/Liability account xxx

Cash in Bank-Local
Currency, Current Account
xxx

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Disbursements through Cash

Advances for/to… (Appropriate Account) xxx

Cash-Modified Disbursement
System (MDS), Regular
xxx
To record the grant of cash advances
Expenses (Appropriate Account) xxx
Advances for/to… (Appropriate Account)
xxx
To record the liquidation of cash
advances
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
Disbursements through Advice to Debit Account
(ADA)
• The ADA is an accountable form used as an
authorization issued by a government agency to
the MDS-GSB instructing the bank to debit a
specified amount from its available NCA to pay
the creditors/payees listed in the LDDAP-ADA.
Accounts Payable xxx
Cash-Modified Disbursement
System (MDS), Regular xxx
To recognize payment of payables to
suppliers/contractors through ADA

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Disbursements through electronic Modified
Disbursement System (eMDS)
• The eMDS is like the ADA except that
disbursements are made directly from the
accounts of the BTr that are maintained with the
Land Bank of the Philippines (LBP). Agencies
subscribed under LBP’s eMDS can make online
disbursements for selected transactions.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
Disbursements through Cashless Purchase Card
(CPC) System
• Disbursements under the CPC System are made
through the use of an electronic card (i.e., credit
card).
Office Supplies Inventory xxx
Accounts Payable
xxx
To recognize purchase of office supplies
through CPC
Accounts Payable xxx
Cash – Modified Disbursement
System (MDS), Regular
xxx
To recognize settlement
GOVT ACCTG of CPC billing
& ACCTG FOR NPOs by:
statement Z.B.Millan
 Disbursements through Non-Cash Availment
Authority (NCAA)
Books of Entity A Books of BTr
Communication Equipment 1M  
Accounts Payable 1M
To recognize receipt of PPE
procured through the direct
payment scheme

Accounts Payable 1M Subsidy to NGAs 1M

Subsidy from National
Gov’t. 1M
To recognize receipt of
NCAA and payment of payable
Loans Payable – Foreign
1M
To recognize the
replenishments made to AGSB
negotiated MDS-checks and
payments on account of the NGA

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 Disbursements through Tax Remittance Advice
(TRA)
Books of Entity A
Cash-Tax Remittance Advice 10,000
Subsidy from National Government 10,000
To recognize the constructive receipt of NCA for TRA

Due to BIR 10,000

Cash-Tax Remittance Advice 10,000
To recognize constructive remittance of taxes withheld to the BIR through TRA

Books of BIR Books of BTr

Cash-TRA ………...10,000 Subsidy to NGAs….10,000
Income Tax……………10,000 Cash-
To recognize constructive TRA……………...10,000
receipt of taxes remitted by National To recognize constructive
Government Agencies (NGAs) through receipt of remittance of taxes by NGAs
TRA through TRA
GOVT ACCTG & ACCTG FOR NPOs by:
Z.B.Millan
 Disallowances
• Disallowances refer to expenditures
made by an agency that are
subsequently invalidated or disallowed
by the COA because they are found to
be irregular, unnecessary, excessive,
extravagant or unconscionable.
Disallowances are recorded in the books
of accounts only when they become
final and executory.

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 APPLICATION OF
CONCEPTS
 
PROBLEM 5-4: FOR CLASSROOM DISCUSSION

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
OPEN FORUM
�QUESTIONS????
�REACTIONS!!!!!

GOVT ACCTG & ACCTG FOR NPOs by:

Z.B.Millan
 END

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan