SOP Library

SOP NO: FS-CS07

Mission: Corporate Administration

Area: Financial Services (FS)

Activity: Cashiering (FS-CS)

Title: Revised SOP on Cash Collections and Deposits

Date Approved/Issued: 07/30/96

Date Effective: 08/01/96

Digest:

This revised SOP is designed to serve as a guide for NFA officials and employees who are
vested with the responsibility of safeguarding the agency's most liquid asset, cash, in the
efficient and effective performance of their duties and responsibilities.

New policies on cash receipts transactions are incorporated with existing and still relevant ones
for the purpose of increasing operational efficiency relative to cashiering, giving more service to
 the various NFA payors, extending additional benefit to NFA personnel, and improving
internal control for cash. The appropriate accounting treatment for cash transactions such as
collections, deposits and their remittances from PNB, LBP and other Commercial Bank
provincial offices to Head Office is also included in order to achieve a timely recording and
effective reporting of the transactions.

SOP No. FS-CS01 entitled SOP on Cash Collections and Deposits issued on May 6, 1984 and
made effective August 1, 1984.

A. Collection

1. Sources of Cash Collections

Cash collections refer to cash and other cash items received by the NFA from various
sources through its Collecting Officers.

Sources of NFA's cash collections are categorized into two, namely :

1.1 Sales - includes proceeds from sales of local and imported grains.

1.2 Others - includes collections from business registrants such as registration and
licensing fees, surcharges, income derived by NFA from services offered as a
service corporation, refunds of NFA personnel and outside parties, refundable
deposits like bidder's bonds, collections, representing the NFA's trust liabilities
to other parties, collections arising from previous obligations to the NFA and
other miscellaneous collections.

Before the acceptance of these collections, the Collecting Officer shall

consider the documents authorizing such payments like Authority to
Accept Payment, processed business application forms, and other
letters/advises issued to this effect.

2. Scheme of Cash Collections

2.1 Collections by Regular Collecting Officers of the Central Office and Field Offices

2.2 Collections by Bonded Special Collecting Officers

 3. Acceptable Forms of Cash Collections

The following are the forms of cash collections which can be honored by the
Collecting Officers.

3.1 Cash
3.2 Treasury Checks
3.3 Treasury Warrants
3.4 Manager's Checks
3.5 Cashier's Checks
3.6 Postal Money Orders
3.7 Bank Drafts

For check collections, the corresponding official receipt number and date shall be
indicated at the back of the check for reference purposes. The check should be
payable to the National Food Authority and should not be post-dated or
stale. For NFA purposes, stale checks are those that have been outstanding for more
than six (6) months except treasury warrants and checks which become stale
only if they remain outstanding after 2 years from date of issuance.

4. Other Acceptable Forms Subject to Conditions

Generally, only the aforementioned forms can be accepted by the NFA as

collections. However, the NFA opt to accept other forms mainly for the benefit of its
clientele but subject to certain conditions are designed to safeguard the
NFA's interest, and therefore, the payors should agree to these conditions if they want
to avail of this particular policy. This policy is applicable only for NFA office with
Regular Collecting Officers.

4.1 Personal or Company checks

In addition to the regular conditions covering check collections, the following

should also be complied with :

a) They should be paid by NFA regular clientele like retailers, hog and
poultry raisers, flourmillers, feedmillers, business
registrants and other NFA registered/licensed clients or NFA
personnel (regular, casual, contractual employees and
employees of other government agencies who are officially
assigned/detailed at the NFA like NFA based COA personnel.

b) Out-of-town checks maybe accepted provided that the collection

shall be charged with a standard bank charge rate of 1/4 of
1% of the amount of
check but not lower than P50.00.
 c) They are subject to bank clearing before the release of the original of
the official receipt issued thereof. Pending release of the original
official receipt,
a temporary receipt (Exhibit 1) shall be issued to the payor to
acknowledge the receipt of check. In case of payments for cash
sales transactions, no actual stock withdrawal shall be authorized until
clearance of the check/release of original O.R.

4.2 Indorsed Checks and Warrants

A Collecting Officer may accept payments in the form of checks and warrants
issued in payment of government obligations upon proper indorsement and
identification of the payee subject to the conditions set herein :

a) The payee of the check/warrant should be the same person who

has to pay NFA.

b) The payee is limited to NFA registered/licensed clients, NFA personnel

(regular, casual or contractual employees), and employees of other
government agencies who are officially assigned/detailed at the NFA like
NFA based COA personnel upon recommendation of the head of office to
which they are assigned.
c) In case the checks/warrants shall be dishonored, the NFA payor shall still
be liable for the sum due to NFA.

5. Accommodation of Government Checks/Warrants

As an additional benefit to the NFA employees the Regular Collecting Officer may
accommodate government checks and warrants drawn in favor of the NFA employees
upon approval of the Chief of the Cash Division, Department of Treasury, Budget and
Fund Management (DTBFM) for Central Office or Regional Manager/Provincial
Manager for field offices subject to certain conditions.

The policies to cover check accomodation are the following :

a) Only government checks/warrants as herein defined shall be honored for

accommodation.

b) The accommodation should be approved by the designated official, Chief, Cash

Division, DTBFM (C.O.) or Regional Manager/Provincial Manager (F.O.).

c) Only cash collections of Regular Collecting Officers shall be used for

authorized accomodation. Therefore accomodation out of cash advances of
Disbursing Officers and collections of Special Collecting Officers is strictly
prohibited.
 d) Those checks encashable from banks within the vicinity of the NFA office shall
only be accomodated in cases wherein it is no longer possible for the payee to
encash it from the bank within the day since it was made available for release
to the employee only after 3:00 p.m., the closing time of the bank. This shall be
considered by the approving official in authorizing the accomodation.

e) In case the accomodated check is dishonored by the bank, the payee shall be
liable to the NFA for the sum due. Furthermore, if fraud was committed in the
encashment, officials or employees who are directly responsible for such illegal
transactions are personally liable.

A logbook of accomodated checks (Exhibit II) shall be maintained.

B. Deposit of Collections

Daily collections from various sources shall be deposited intact not later than the
following working day using the proper depository accounts as identified below :

Nature of Collection Bank Accounts

Local Rice LCC (Local Rice Collection)

Imported Rice Collection IRC

Collection from Registration MSC - Miscellaneous Collection

& Licensing Activities
Penalties, Performance Bonds,
Staff House, Shuttle Bus, Insurance
Proceeds, NFA Collections and
others Income derived by NFA from
services offered as a service
corporation (Warehouse rentals,
trucking fees, drying fees, Milling
threshing and other Post harvest
facilities)

Sale of Imported Yellow Corn ICC - Imported Corn Collection

Collections from PSMS PSMS

Receivable

Collections from JICA 1 & 2 JICA 1 & 2

Government release and GF

availment of loans
 In places where there are no authorized depository banks located in the vicinity, the
provincial management (PM/Accountant III) shall be responsible for setting-up the
frequency of deposits of collections with the nearest bank or remittance to the Cashier
III with the concurrence of the COA field auditor.

C. Remittance of Deposits Out of Collections

1. Per bank agreement, deposits made out of NFA collections shall be remitted by
the banks provincial offices to the banks' NFA branch. The bank branch shall
credit the usual remittance from provinces to the new accounts based on the
aforementioned grouping.

2. Remittances by the banks provincial offices shall be thru telegraphic

transfers/bank draft/automatic on-line remittance/transfer.

3. The accumulated balances of deposits for accounts maintained at the provincial

office shall be equivalent to the banks minimum balance requirement.
Therefore, the balance in excess of P1,000.00 shall be remitted to the banks
NFA branch office once a week or preferably every Thursday or as often as
necessary. In the event that unremitted collections during any day of the week
be more than P500,000.00, said amount shall be immediately remitted without
waiting for Thursday of the week.

4. For deposits made to other authorized commercial banks (allowed only in those
areas where there are no government banks located), remittance of the
provincial offices of said commercial banks are made to the head office of the
said bank. Subsequently, such funds shall be transferred from the head office of
the commercial bank to the NFA Central Office through the issuance of the
Managers' check in favor of NFA.

D. Collecting Officer

1. Designation of Collecting Officers

The Administrator, as head of the NFA, may designate such number of collecting
officers as may be deemed necessary.

The Collecting Officers may or may not be directly designated by the Administrator.
Those that are directly designated are those by virtue of their appointments as Cashiers
and Special Orders. Others may be designated thru Office Orders signed by the head
of office.

No official or employee shall accept NFA collections unless designated. The NFA shall
not be responsible for any losses due to payments given to unauthorized NFA official
or employee.
 Therefore, such shall be a personal transaction between the NFA official or employee
and the paying party.

2. Classification of Collecting Officers

Collecting officers are classified into two: the Regular Collecting Officers (RCOs)
and the Special Collecting Officers (SCOs).

A Regular Collecting Officer is one whose appointment or designation as collecting

officer is permanent.

A Special Collecting Officer is one whose designation as collecting officer is

temporary. Designation is short-term or co-terminus with the duration of the
project or activity for
which purpose he/she is designated as a special collecting officer.

3. Accountability and Liability of Collecting Officers

Collecting officers are accountable officers and therefore are mandated to render
an account of the funds entrusted to them in a manner and within the time prescribed
by the NFA. They are responsible for the funds in their possession or custody and are
liable for all losses resulting from the unlawful deposit, use, or application of these
funds and also for those attributable to negligence in the keeping of funds.

No accountable collecting officer shall be relieved from liability by reason of his having
acted under the direction of a superior officer in applying or disposing of the funds with
which he/she is chargeable, unless prior to that act, he/she notified the superior officer
in writing of the illegality of the application or disposition. The officer directing any
illegal payment or disposition of the funds shall primarily be liable for the loss, while the
collecting officer who fails to serve the required notice shall be secondarily liable.

4. Bonding of Collecting Officers

Every accountable collecting officer shall be properly bonded in accordance with law
(bonded with the Fidelity Fund of the government) before assumption to duty.

5, Safekeeping of Funds by Collecting Officers

All cash accountabilities shall be kept in safe custody by the Collecting Officers. Cash
on hand shall be kept in safe boxes and the safe combination shall only be
known to the Cashier and Corporate Treasurer. Cash kept in banks shall be in a bank
account under the name of the NFA and shall be subjected to withdrawal by duly
authorized NFA personnel only. This safekeeping policy necessitates the enclosure
of the Cashier's Office and prohibition of entry to unauthorized personnel.

E. Documentation and Reporting

1. Acknowledgement Receipts

No payment of any nature shall be received by a Collecting Officer without

immediately issuing an acknowledgement receipt thereof. The forms issued by
the NFA Collecting Officer to acknowledge receipt of collections are the following :

1.1 OFFICIAL RECEIPT

The Official Receipt (OR) is an accountable form printed and pre-numbered

sequentially. This shall be issued in numerical sequence and accomplished in
ink or ballpen. Existing guide for filling-up the official receipt shall apply. This is
issued in four (4) copies : Copy 1 - Payor ; Copy 2 - COA ; Copy 3 - Accounting
and 4 - Collecting Officer. This is issued by the RCO and SCO for
various types of transactions. One OR booklet shall be maintained for each of
the following nature of collections :

a.1 Sales - represents proceeds from sales of local and imported grains
and by-products including handling and delivery charges and
collections of accounts arising from such transactions.

a.2 Others - representing all other types of collections not covered by sales.

The OR shall be summarized in chronological order in the RCD and

Official Cashbook of the Collecting Officer.

Cancelled OR shall be marked as such (all 4 copies) and shall be

attached to RCD. The original cancelled OR shall be submitted to the
COA together with the duplicate attached to the Report of Collections and
Deposits (RCD). The Collecting Officer shall secure the Accountant's
notation on cancelled ORs. Erasures in the OR should be initialed by the
Collecting Officer.

1.2 TEMPORARY RECEIPT - Exhibit I)

This is a pre-numbered form which shall be issued in two (2) copies : copy 1 -
Payor; Copy 2 - Collecting Officer. This shall be used to acknowledge
receipt of personal/company checks and postdated checks. This shall only be a
mimeographed form. The standard size of the temporary receipt shall be one-
fourth of a long bond paper. The Chief, Cash Division, DTBFM (Central Office) or
Regional Accountant (Field Office) shall be responsible for the control of the
issuance of Temporary Receipt (TR). He/she may designate another employee
to take charge of numbering the mimeographed forms. The serial numbers of the
TR shall be logged and subsequently noted by the official concerned. One batch
of TR (25 sets/batch) at a time shall be released to the Collecting Officer who
shall acknowledge its receipt on the same logbook. (Exhibit III) . Subsequent
releases shall depend upon
 the frequency of issuance as determined by the official. Before another batch
shall be released, the designated employee shall verify previous issuances.

The verification shall cover :

a.1 The issuance of a corresponding OR (which should be indicated on

the duplicate TR) for company/personal checks. The TR number shall
likewise be indicated in the corresponding OR issued.

a.2 The recording of the post-dated checks in the logbook of post-dated

checks.

a.3 Proper issuance of TR is sequence including determination of

missing/unaccounted TRS. Spot verification, even if no new batch
shall be released, can be done or authorized by the official concerned as
an internal control measure. Any adverse findings of the designated
employee shall be reported immediately to the concerned official for
appropriate action.

The TR shall not be included in the Monthly Report of Accountable

Forms prepared by the Collecting Officer.

2. Deposit Slips

Daily collections shall be deposited intact not later than the following banking
day and the evidence or receipt for such deposit is the deposit slip (DS).

This form is provided by the depository bank and filled-up by the Collecting
Officer making the deposit. This is usually accomplished in four (4)
copies with the same copy distribution as the OR.

The usual informations contained in the DS are the NFA as the depositor,
account number, date of deposit, and amount of deposit with breakdown
of total cash and total check deposits. For check deposits, the name of
the drawee bank, check number, and amount of check are also
indicated in the DS. At the back of the
checks for deposit is stamped "FOR DEPOSIT TO NFA ACCOUNT NO.
________
ONLY".

All copies shall be validated by the bank teller retaining the original for PNB
file and returning the other copies to the Collecting Officer. This shall be
attached to and summarized in the RCD and Cashbook based on the sequence
of dates when the deposits were made.

3. Collecting Officer's Official Cashbook

 This is in journal book form (Exhibit IV) maintained by the RCO or SCO to
record the collections and deposits made. Recording of entries in the Cash Book
(CB) shall be made daily.

The usual supporting documents for the CB are OR for collections and DS
for deposits.

The CB shall be written in ink. The cash on hand shall be balanced

with the Cashbook at the end of each day. At the end of each month, the
entries shall be ruled and closed. The ending balance shall be carried forward
as balance of the cash on hand at the beginning of the succeeding month.

A Monthly Reconciliation Statement of the Cashbook balance and subsidiary

ledger balance shall be prepared by the Accountant.

The Collecting Officer shall maintain one cashbook for each of the following :
(as in the case of one OR booklet and one RCD for each type of collections).

a. Sales
b. Others

The Cashbook is also one of the documents verified when COA/IAS conducts
cash examination of the Collecting Officer. The cash on hand balance as
of the date of cash examination shall be certified by the
Collecting Officer on the CB, and subsequently (after the cash examination)
this shall also be certified by the Auditors as to their audit findings.

4. Report of Collections and Deposits

This is a supplementary record prepared by the Field Office (F.O.)

Collecting Officers in 4 copies (Copy 1 - Journalkeeper ; Copy 2 -
Subsidiarykeeper ; Copy 3 - Auditor ; Copy 4- Collecting Officer) covering
transactions handled for the week
(1 - 7, 8 - 15, 16 - 22 and 23 to end of the month). In the Central Office (C.O.)
RCD is prepared in 3 copies (Copy 1 - COA ; Copy 2 - C.O. - Cash Division
and Copy 3 - Accounting).

One RCD shall be prepared for sales collections (Exhibit V) and another for
other types of collections (Exhibit VI).

Entries in the RCD shall be in chronological order based on ORs and DSs.
The RCD shall be recorded directly to the Journal of Collections and
Deposits (JCD).
 A report for the week shall also be prepared even if there are no
transactions handled for control purposes. The usual numbering and manner
of preparing the report shall apply, however, the Collecting Officer shall
certify that no transactions were handled for the period covered in the report.

Each type of report (RCD-Sales and RCD-Others) shall be numbered in

continuing series for the calendar year coded as follows :

RCD No. : Type of Report - Year - Month - nth report for the year - Page
No.
Sales (S)
Others (0)
Illustration : A one-page RCD - Sales for the 1st week of February 1984

RCD No. : S - 96 -02 -5 (f) *

*(f) - this shall always be indicated in the last page of the report.

5. Daily Cash Position Report

This is accomplished by the Regular Collecting Officer at the end of the day
to account for the total cash on hand and to be submitted to concerned official
(Chief, Cash Division, DTBFM for the C.O. or Regional
Manager/Provincial Manager/Accountant for F.O.).

F. Control of Accountable Forms

Accountable forms should be safeguarded and controlled as to ordering,

storing, and issuing. Adequate records thereof should be kept.

A Monthly Report of accountable forms (used and unused) shall be prepared

by each Collecting Officer for submission to COA, Accounting and Supply Officer.

Counting of unused booklets shall be done periodically/during cash examination. In

case of lost unused booklets, the same shall be reported immediately to the
General Services Department (GSD) for appropriate actions. Notice of Loss of
such booklets shall be posted/disseminated for information and control purposes.

G. Other Internal Control Measures

1. Disbursement and Collection Funds especially in field offices shall be

counted
and segregated as to denomination and should not be comingled with
personal
and other funds.
 2. Responsibility for control of cash shall be vested in one person.

3. No part of the cash shall be transferred to any accountable officer without the
prior approval of duly authorized officer.

4. No disbursement shall be made from collections.

5. Once every six months or at the end of June and December of each year or
more often, a complete liquidation of all cash accountabilities in the hands of
cashiers shall be made.

6. No accountable officer shall be transferred or permitted to resign/retire unless

he/she has cleared himself/herself of his/her present accountabilities.

7. File copies of existing rules and regulations affecting the Collecting Officer's
work should be maintained by the Collecting Officer, or at least the
officer who has supervision over the collecting officer.

8. Collecting Officers should have no access to or responsibility over

accounting records related to cash.

9. Accounting records should be up-to-date and Subsidiary Ledger should

be maintained for each accountable officer.

10. Conduct surprise cash examinations frequently either by the COA/IAS/Provincial

Accountant/C.O. (Chief, Cash Division).

11. Collecting Officers are prohibited from acting as Cashiers or Treasurers of

savings and loan associations and other organizations in his/her incumbency.
(GAO General Circular No. 25 dated April 20, 1953.

12. Verification of the deposits from the Monthly Bank Statement sent by the bank
and preparation of the Monthly Bank Reconciliation Statement including
prompt clearance of reconciling items should be done by the Accountant.
Confirmation of deposits may also be sent to the bank as another control
measures.

13. Items of deposit subsequently dishonored by the bank should be promptly

adjusted in the Collecting Officer's and Accounting's records. The Collecting
Officer shall inform Accounting of the dishonor of the check deposit based on
the banks' advice.

H. Overages or Shortages of Funds

Cash coverages which cannot be satisfactorily explained by the Collecting

Officer shall accrue to the NFA as Miscellaneous Income and a corresponding official
receipt shall be issued thereof.
 Cash shortages shall be set up for collections from the Collecting Officer
either thru immediate restitution or salary deductions depending upon the decision of
the authorized officials.

I. Accounting Treatment

Receipt of cash by the Collecting Officer is always a debit to his/her account and the
credit shall be the appropriate receipt account depending on the nature of collections
which can be recognized as income, capital revenue, grants, extraordinary
receipts, liabilities (trust,
depository, etc.), capital account/Field Office Account (FOA) chargeable to C.O.
account or asset account (Cash with Disbursing Officers or other officers, receivables,
etc.).

Deposit of the collection is a debit to Cash in Bank account, and a credit/deduction to

the Collecting Officer's account.

All collections and deposits are recorded in the Journal of Collections and Deposits.

The pro-forma entries to record the cash transactions are as follows :

1. To record receipt of collections by the Collecting Officer ;

DR : Cash with Collecting Officer

(Regular or Special) xxx
CR: Appropriate Account xxx
(Indicate Nature)

2. To record deposit of collections in the bank:

DR: Cash in Bank (Identify Fund Balance xxx

CR: Cash with Collecting Officer xxx
(Regular or Special)

3. To record remittances for F.O. (base on Bank Tickets):

Provincial/Regional Office:

DR: HOA - Cash xxx

Cr: Cash In Bank (Bank & Fund
Account xxx

Central Office:

Dr: Cash in Bank xxx

 Cr: FOA - Cash xxx

The usual advice to inform the other office that its account had been
debited/credited shall be prepared and sent by the sending office.

Policies and procedures on the Inter-branch Accounting System (SOP No. FS-
GP10 issued on February 9, 1995) regarding the preparation of the advice form
shall be strictly followed to provide for easier monthly monitoring and
reconciliation.

The foregoing SOP shall supersede SOP No. FS-CS01 issued on May 6, 1984.

All rulings and/or issuances inconsistent herewith are hereby superseded.