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Acgn Chapter 5

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428 views12 pages

Acgn Chapter 5

lecture

Uploaded by

edrick Louise
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Chapter 5 Disbursements Tearning Objectives ||. state the main concepts in the disbursement of government funds. > Account for the different modes of disbursements, Introduction Disbursements constitute all payments in cash, in whatever manner (ie, through cash, check, or other means). Disbursements shall be supported by Disbursement Vouchers (including Petty Cash Vouchers) or Payroll. Fundamental Principles for Disbursement of Public Funds a. All government resources shall be used only in accordance with the law and only for public purposes. .. Trust funds shall be used only for their specific purpose. . Fiscal responsibility shall be strictly shared by all those exercising authority over a government agency. |. The use of government resources shall be approved by proper officials. . Claims against government funds shall be supported with complete documentation. All laws and regulations applicable to financial transactions shall be faithfully adhered to, including generally accepted Principles and practices of accounting, management and fiscal administratison, provided that they do not contravene existing la a egulations. '.D. No, 1445) Expenditures funded by borrowings are included in expenditure program of the entity. The loan proceeds shalt gt sed without the corresponding release of funds through a pq Budget. (GAM for NGAs, Chapter 2, Sec.38) a ‘Authority to Disburse/Pay ‘An entity can make disbursements only after it has received disbursement authority, based onthe following a. Notice of Cash Allocation (NCA) Notice of Transfer af Allocation (NTA) Tax Remittance Advice (TRA) Trae ede! Chips 203) Non-Cash Availment Authority (NCAA) ~sdscusin ite Cth Disbursement Ceiling (CDC) ~ authority issued by te DBM to agencies with foreign operations (.e, Departmen Foreign Affirs ‘DFA’ and Department of Labor an Employment DOLE’) allowing them 0 use the incone callcted by their Foreign Service Posts (FSPS) to cover ther operating requirements. (tons “Theentries related to CDC are as follows: ‘Books of DFA or DOLE Cash-Collecting Officer 100 Psspoct and Visa Fees 100 "To esgic of event of 30s —— Cashin Bank Foreign [- Crreney, Current Account 100 Cash-Collecting Officer 100 Torii dp of allen to thoi song baka he ESPs Cash-Constructive Income Subsidy to NGAS Remittance ® ‘Cash-Constructive Income Subsidy from NG 80 | Remittance To rece receipt of COC fom | To recgnie comtractoe rh & emited collections by FSP Airset charged othe issu COO" Books ofBTr____) baw = poe aot! avert Basi Feng are requ 6 [Cah ie eent Account 80 | ca arn emt sirements &: Certifications for Disbursements red when disbursing funds: are Budget oficer (or Head of Budget Unit) shall ei he % eilablity ofatotment Chief Accountant (or Head of Accounting Unit) shall se oigations against availabe allotment; urge ‘The foregoing are to ensure that no overdraft shall be red. An overdraft is incurred if obligations exceed the currence of overdraft is prohibited. allotment. The ‘The Chief Accountant (or Head of the Accounting Unit) shall certify the availabilty of fundsicash and the completeness of the supporting documents before the Head of Agency (or his authorized representative) can enter. into any contract involving the expenditure of public funds; > All disbursements require the certification of the Chief ‘Accountant (or Head of Accounting Unit). Certifications must be based on valid and properly authorized claims Any certification for fictitious obligation is void. The certifying official shall be dismissed from service and shall be held criminally liable. Others who are involved in the fictitious transaction are also liable, (GAM fer NGAs, Copter 2 Se.37) 142 ? tr 4 The requesting and approving officials shall ensure thy disbursements are legal and conform to applicable ruleg regulations; The Head of the Requesting Unit shall certify the necessity legality of disbursements. Payments shall be made throw Disbursement Vouchers (DVs) or Payroll and supported by fe original copies of supporting documents; and f. The Head of Agency (or his authorized representative) shy Approve all DVs or Payrols (GAM for NGAs Chapter2, S36) ‘Modes of Disbursements ‘The different modes of disbursements are as follows: a. Check b. Cash Cashless payments: i. Advice to Debit Account (ADA) ji, Electronic Modified Disbursement System (eMDS) fii, Cashless Purchase Card System (Credit Card) iv. Non-Cash Availment Authority (NCAA) v. Tax Remittance Advice (TRA) (GAM for NGAs, Chaper2, See. 29 and Chapter 6, See.7) Disbursements through Check Checks are used whenever payments cannot conveniently, or at not authorized to, be made through cash or ADA. The following are the two types of checks issued by government entities: a. Modified Disbursement System Checks - checks chargeable against the account of the Treasurer of the Philippines maintained with different Modified Disbursement Syste Goverment Servicing Banks (MDS-GSBs), b. Commercial Checks ~ checks chargeable against the Agen Checking Account with GSBs. These are covered bY ws im ee 8 pcomefreceipts authorized to be deposited with Avthorized venment Depository Banks (AGDBs), Gov ‘all checks drawn, whether released or unreleased to including cancelled checks, are recorded chronologically Pye Checks/ADA Disbursement Record maintained ty the in Mreasry Unit astation: sry A disburses P10,000 for electicty expense. The entries are ssfllows: ‘MDS Check ‘Commercial Check -ectcy Expense 10K | Hectricty Expense 10K Cash’ Modified Disbursement (Cash in BankeLocal System (MDS),Regular 10K | __ Currency, Current Account _10K| Disbursements through Cash Cash disbursements constitute payments through cash advances, including payments out of the petty cash fund. Cash advances are govemed by the following rules: ® Cash advances shall be made only for a legally authorized Specific purpose (ie., payments for personnel services, petty ‘xpenses, and MOOE for field operating requirements). Cosh advances, other than advances for travel, shall be given nly © duly appointed Disbursing Offers who must be Pioperly bonded. The amount of cash advance shall not “scred the maximum cash accountability under the bond. GRY designated Disbursing Oficers are allowed to perform Aisbursin Shall ga n8 fURctions and only permanently appointed officals be designated as disbursing officers. . ie EO ale _ M4 y a Advice to Debit Account (ADA) 4d. A cash advance must be liquidated as soon a5 the Purpose j, ‘Which it was given has been served. > Cash advances for payroll shall be liquidated within 5 qa, after the end of the pay period. Unclaimed salaries shai, refunded and issued official receipt 10 close the accouny > Cash advances for travel shal be liquidated follows: Local travel ~ within 30 days upon return to personnel’s workstation. Foreign travel ~ within 60 days upon return to th Philippines. No official or employee is allowed to con an official foreign travel if he is due to retire within ‘year after the foreign travel. ‘e. No additional cash advance shall be given to any official or ‘employee unless the previous cash advance given to him i first liquidated. f. Transfer of cash advance from one officer to another is prohibited. g A cash advance shall not be used to encash checks of & liquidate a previous cash advance, Mlustration: Entity A disburses 10,000 for certain expenses through as advance. The entries are as follows ts through psbursere, more specifically the List of Due and Demandable wre ADA. 1p - Advice 10 Debit Account (LDDAP-ADA), is an ott BeMioem used as an authorization issued by a sna! age to the MDS-GSB instructing the bank to debit goremmeny “amount from its available NCA to pay the P spect’ et risted in the LDDAP-ADA. estore works ke a check, except that one ADA canbe to pay various payees, as long as they all maintain drawn adhe same bank where the ADA is drawn. Separate account be prepared for payees using other MDS-GSBs. ADA vas shall Be P ia irectly credited to the payees’ accounts. vents are directlY Py emply stated, an ADA is an authorization for a fund waster accounts in same bank) or a bank transfer transi accounts with different banks) from the issuing agency's pe bank account to the bank accounts of specified payees “The following expenditures shall not be paid through ADA: 2 Payment of Terminal Leave and Retirement Gratuity benefits; 1b. Remittance of GSIS, PhilHealth, and Pag-IBIG contributions; Payments to utility companies (eg, electricity, water, ” ‘telephone, internet, petroleum, and the like). 4. Other payables which cannot be conveniently nor practcably paid using the ADA. Iustration: Enfity A pays ®100,000 accounts payable through ADA. ‘Accounts payable ‘Cash-Modified Disbursement | a Advances ForR.. Approprisic Account) | 10,000 Cas-Modifed Disbursement ‘System (MDS), Regular | ene ne ce MSs Be | Toad the rat of es edoares contractors through ADA ! Te | Expenses (Appropriate Accor) 70,000 "Advances fr/to.(Appoprite Accum!) a To rcord the liquidation of cash aoances through electronic Modified Disbursermeny The meee is like the ADA except that disbursements are made trey fom the accounts of the Be hat ae manned wh LBP’ of the Philippines (LBP). Agencies subscribed under ‘Ss eMDS can make online disbursements for selectey transactions. Disbursements through Cashless Purchase Card (CPC) System Disbursements under the CPC System are made through the us cf an electronic card (ie, eredit card), The authorized credit cag company isthe Citibank. Guidelines inthe use of CPC Syste a as follows: a. CPC purchases shall be only for specific eligible items arg only with specific merchants. 8 Merchants ~ refer to the sellers or suppliers authorized by Citibank. b. Only authorized individuals shall be allowed to use the CPC subject to monthly credit limits. Changes i credit limits cardholders require the prior approval of Committee. if the Steering c Agency officials who approved the CPC are jeinty accountable with the cardholders. d. The CPC System shall comply to, and shall not in any w2! change, the existing disbursement policies and procedure prescribed under the law. ‘The amount covered by the CPC shall form part of the ct advance levels ofthe participating, agencies, The CPC shall be used to justify the increase in cash advance levels @ participating agen 7 mech sal intally be ed rpc of sail vale. t mon use items which are not available with the oe eC chased thorized items Pl sing the CPC shall be the $ oso ‘haility of the cardholder: without prejudice to the fern ofthe cardholders privileges and other revi participating Agee AY impose, ary parciating agencies shall immediately inform the Ciba » Uitany discrepancy regarding items which they dispute as sang been procured using the CPC. «_aicpating agencies shall ensure the timely payment of CRC fulings. In case of delays, late payment charges shall be the personal liability of the employee diretiy responsible for the ‘The NCA shall never be used to pay late payment ‘The cardholder shall submit all receipts from use of the CPC to the accounting unit. These shall be used in inspecting actual goods purchased and in paying credit card billings. k. Theaccounting unit shall check if the procured items are those allowed by law to be purchased using the CPC and compare the charge slips with the amounts inthe billing statement. Ln case the CPC is lost or stolen, the cardholder shall immediately notify the Program Administrator and the Gitibank. The Program Administrator shall determine whether the cardholder was negligent and whether the cardholders Privileges shall be reinstated or permanently suspended. The cardholder shall be liable for any CPC charges during the Peviod the card was lost or stolen. — on, Shap Shee Illustration: Entity A purchases office supplies worth P10,000 through CP¢, ‘Date Office Supplies Inventory Accounts Payable Te recuse divery off sees use om te charge slp an Inco and | Acceptance Report (AR) Dele | Accounts Payable ‘Cash - Modified Disbursement Spee) Regular Se evn fcPC HS to simplify the illustration. * Withholding taxes are ignored nts through Non-Cash Availment Authority (NCAA) vat Authority (NCAA) is the authority issued by 1 the liquidation of their acl lable allotments for availmente pliers eredit/construtie Disbursemer Non-Cash Acailme the DBM to agencies to cove “obligations incurred against avai proceeds from loans/grants through suPI cash. Disbursements through NCAA (also called ‘Direct Payment Method’ or ‘Direct Payment Scheme of Loan Availment’) are maie through the Jounal Entry Voucher GEV) issued by the BT: ote gency to record payment of goods and services made direely' the lending institution to the supplier or contractor. The JEV + recorded in the General Journal Mlustration: Entity A acquires and subsequently settles the account throug scheme. communication equipment for PIM, on accous yh direct paymet > pe ions ofits —Feation Equipment 1M [cont Payable ie cc ie ei of PPE sage diet peyme i in | Bibi NG a | Aca om National Gov't, 1M Tene Payable—Foregn | Si eect oFNCAA and] Torco he penne. made to AGSB netted MDS ee rent of ie Notice that no cash is involved in the acquisition ofthe settlement of the accounts payable, and recognition of ‘equipment Ga yable. The lending institution directly pays the the loans Pa supplier. psbursements through Tax Remittance Advice (TRA) TRA is used for the constructive remittance of taxes or customs Jates withheld to the BIR oF BOC, respectively. (Se discussion in Chapter 3) ‘Accounting for 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 Mlustration: Entity A acquired office supplies for 100,000. It was found out thatthe correct amount should have been #90,000: ‘Amount paid (Entry made’) ‘Should be’ Overstatement 100,000 000 150 \ cr I a ee Se bee ge ya a The disallowance pertains to: ee Current year rior period Receivables Disallowances] ‘Receivables Disllowancesy ——~ Charges ox | Charges toe Office Supplies Expense 10K| Accumulated Surplus! To recognize the overpayment of | Defic purchased ofc supplies To cgi te open purchased ofce supplies in prin ‘Cash-Colleting Officers 10K ‘Receivables-Disallowances) Cash-Collecting Officers 10K Receivables Disallowances! Charges 10k] Charges . To recognize the setlement of To recognize the setlemen of disallowance slisallowance ‘Cash-Treasury/ABency ‘Cash-Treasury/Ageney Deposit, Regular 10K Deposit Regular 17%. (Cash-Colleting Officers yy Cash-Collecting Officers 10K To recognize the deposit of calletion Notice that the accounting for disallowances by 2 government entity is similar to the accounting for current ant prior period errors by a business entity. ‘a recognize the deposi of callection ‘Accounting for Overpayments “Sometimes overpayments or even double payment of expenditures do happen in agencies. These could be avoided wit the institution of proper controls but some could not be avoided because of built-in procedures. One example is the payment o payrolls. Payrolls are prepared in advance and some agencies} wugh the banking system. All these are dort their employees tho before reports of attendance are submitted, making it impossibe to know the exact amount to be paid in case there are absences without pay during the pay periods. In case of overpaymens refunds shall be demanded of the employees concerned.” (62¥ GAs Chapter 6, Sec 48) Comecting entries for overpayments are similar #0 accounting for disallowances. a eee capter suey: rimrseent thon [* 4. Notice of Cash Allocation (NCA); | Moxie of Transfer of Allocation (NTA); [reese ore |S NemCash Availment Authority (NCAA) and |b Gosh Disbursement Ceiling (CDQ) |. Si Gisbursements require the following certifications: AI ality of allotment ~ Budget Officer f aoaiabilty of ands and completeness of supporting documents |S chief Accountant | Necessity and legality of disbursements — Head of the | Requesting Unit | All disbursements. shall be made through Disbursement | Vouchers (DVS) or Payroll which are approved by the Head of | Agency: Modes of Disbursements: | a. Check; |b. Cash cc. Cashless payments: i. Advice to Debit Account (ADA), ii, Electronic Modified Disbursement System (eMDS), iii, Cashless Purchase Card System (Credit Card), | Gv. Non-Cash Availment Authority (NCAA), and v.__ Tax Remittance Advice (TRA) PROBLEMS PROBLEM 5-1: TRUE OR FALSE 1. No additional cash advance shall be given © any official 4, employee unless the previous cash advance BiVEN to him i, first liquidated, prior cetifications to establish th, sification for fictitious obligation, liability by the certifying offical, 2. All disbursements require validity and legality. A ce ‘void and results to criminal izes equipment from a supplier, On account 4 the account of Entity A by directly paying thy roceeds of a loan payable that is recorded in thy ‘This transaction i called Cash Disbursemeny 3. Entity A acqui lender settles supplier the pr BT's books. Ceiling (CDC): 4. All disbursements shall be made through Disbursemen, Vouchers (DVs) or Payroll which are approved by the Head o the Requisitioning Unit. 5, Government entities are not allowed by law to male purchases using credit card, Non-Cash Availment Authority (NCAA) is 2 6, The {issued to government agencies with disbursement auth foreign service posts. ‘According to the GAM for NGAs, the Advice to Debi ‘Account (ADA) mode of disbursement can be used only ifthe payee maintains an account in the same bank where the ‘government entity maintains its account. (C00 8. Disbursements through the Cash Disbursement Ceilin ks of results to the recognition of a loan payable in the b accounts of the BTr. a 153 dee tne Mavice to Debit Account (ADA) mode of Ursement payments from a government entity are ditaly credited 10 the bbank accounts of the payees through i on sly valid modes of disbursement fora government entity ‘The! 10. Te rough cash or check. oBLEM 5-2: MULTIPLE CHOICE PROP enification on the availability of allotment is required 7 disbursement of government funds is made. before 2 beording to the GAM for NGAS, who shall issue this certification? a. Budget OF Head of Agency b. Chief Accountant 4. Requisitioning Individual ‘the Chief Accountant shall charge obligations incurred against available allotment to ensure that | the NCA is sufficient to meet the disbursement needs. », there are no unreleased appropriations. nooverdraft is incurred. 4. noexcess allotment exists. 3. Acertification on the availability of funds and completeness of supporting documents is required before a disbursement of government funds is made. According to the GAM for NGAs, who shall issue this certification? a, Budget Officer Head of Agency b. Chief Accountant d. Requisitioning Individual 4. Which of the following results to the recognition, in the books of accounts, of expenses classified as Personnel Services? Granting of cash advance for payroll . Liquidation of payroll fund © Issuance of office supplies to end users 34 ay, ._ Set up of payable for payroll 5, According to the GAM for NGAs, disbursements for sa, and wages shall be supported by Mi a. Disbursement Vouchers. Petty Cash Voud b. Payroll 4. Official Receipts 6. Which ofthe following results to the recognition of expengs Granting of cash advance for travel Liquidation of cash advance for travel Refund of excess cash advance Remittance of the refund for excess cash advance tpg, BTr aoge 7. The entry in the books of a government agency with fore, service post to record the receipt of disbursement author, called the Cash Disbursement Ceiling (CDC) includes a ‘a. debit to Cash-Modified Disbursement System (MDs) credit to Subsidy from National Government ¢._ credit to Cash-Constructive Income Remittance d._ debit to Subsidy from National Government 8. This 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 construcine of tax revenue and customs duties; and (3) in the books of the BTr, the constructive receipt of the taxes and custors duties remitted a. Notice of Cash Allocation (NCA) , Tax Remittance Advice (TRA) ©. Cash Disbursement Ceiling (CDC) 4. Non-Cash Availment Authority (NCAA) All of the following are ‘considered valid castle disbursements, except chase of goods using an ¢ Erbark = aooed by payment of PAYABIES Using 4 Non ‘Authority. remittance of taxes withheld to the Remittance Advice. 4. online payment through LBP’s eps, e payment toa supplier through LBC padala MCaGh_Availment BIR through Tax sq. Which ofthe following government agencies will mast te able to obtain a disbursement authority inthe form of Ccg pisbursement Ceiling (CDC)? a. BIR © DEA b. DPWH NFA PROBLEM 5-3: MULTIPLE CHOICE 1. Entity A disburses a check chargeable against the Treasury Account. The journal entry to record the disbursement involves a credit to which ofthe following accounts? a. Cash-Treasury/Agency Deposit, Regular ». Cash-Modified Disbursement System (MDS), Regular Cash in Bank-Local Currency, Current Account 4d. Cash-Collecting Officers Entity A sends an employee to an offical travel and gives him «ash to cover his travelling expenses. Which ofthe following is most likey the entry to record the cash disbursement? Traveling Expenses vax Advances to Officers and Employees wo Traveling Expenses wx Cash - Modified Disbursement System (MDS), Regular xa Advances to Officers and Employees a Cash ~ Modified Disbursement ‘System (MDS), Regular oe a > 156 Gu ee mPania tae Cae Sets a 3. a b, « 4, b. a Advances to Officers and Employees woo Cash on Hand ~ Entity A purchases’ office supplies from an aut merchant using an electronic card. The entry 10, record gy settlement ofthe transaction is ‘Office Supplies Inventory ‘Accounts Payable Accounts Payable Cash - Modified Disbursement System (MDS) Regular Office Supplies Inventory ‘Cash ~ Modified Disbursement System (MDS), Regular No joumal entry vox x wx a vox Entity A wants to make disbursements online. Which ofthe following should Entity A do so that it can make vai disbursements online? a. Apply for a PayPal account. b. Obtain a debit card or credit card that is either Visa or ‘MasterCard from any bank. ‘c. Enrol with the eMDS of the Land Bank of the Philippines dd. Make a facebook account. Entity A acquires an equipment on account and settles the account through Non-Cash Availment Authority (NCAA) ‘The entry to settle the account is Accounts Payable Subsidy from National Government Accounts Payable ‘Cash - Modified Disbursement System (MDS), Regular Accounts Payable Cash-Constructive Income Remittance No journal entry. wa xxx ast v a sty Anas a foreign Service Post. Duin 6 Er ives authorization from the DBM alle Py collections of 1 foreign service post to rate it to use the caating expenses of the foreign serie put Th? ore he disbursement authority | The entry to rsh in Bank Foreign Currency, Current 4 pccount Cash-Collecting Officer wa 4. CasiConsrucve Income Remitane wx ‘Subsidy from NG oe <_ Aecounts Payable Pe ite ‘Cash-Constructive Income Remittance ‘4. Nojournal entry Which of the following modes of disbursements is similar to a check disbursement? eae a. eMDS ADA b NCAA 4.NBA & Agovernment entity makes payment through Advice to Debit ‘Account (ADA). The entry most likely to be used in recording the paymentiis a. Accounts payable Cash-Modified Disbursement i System (MDS), Regular x b. Accounts payable vox Subsidy from National Government wo © Accounts payable vox Cash-ADA, = 4. None. The transaction is recorded only in the Registries and ORS, 9. A government entity makes constructive remitance of tes Withheld to the BIR through Tax Remittance Advice (TRA) ‘The entry used in recording the transaction is & Cash-Tax Remittance Advice 158 10. 3 ________ a, ‘Subsidy from National Government Due to BIR vox Cash-Tax Remittance Advice aandb None. The transaction is recorded only in the Registrieg oa ORS. ty ay Which of the following modes of disbursements would to the recognition of a loan payable in books of the BT? a. CDC cADA b. NCAA 4, UFC eal, PROBLEM 5-4: FOR CLASSROOM DISCUSSION L Which of the following is not used in processing disbursements? a. DVs b. Payroll

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