Heads of Departments, Agencies, Bureaus/Offices, Regional Offices and Operating Units of the National Government; Heads of Financial Management Services, Accountants/Heads of Accounting Units, Property and Supply Officers; COA Assistant Commissioners, COA Directors, Heads of Auditing Units, and All Others Concerned

Accounting Guidelines and Procedures on the Discontinuance of the Practice of Releasing Funding Checks to Operating Units and Other Agencies within the same Department/Agency, the Transfer of the Cash Balance to the National Treasury and the Fund Transfer to Operating Units

PURPOSE/SCOPE

This Circular Letter is issued to provide accounting guidelines, procedures and journal entries for the discontinuance of the practice of releasing funding checks to operating units or other agencies within the same department/agency, the transfer of the cash balance to the National Treasury on or before June 30, 2003 and the fund transfer to Operating Units pursuant to National Budget Circular (NBC) No. 488 dated May 22, 2003 of the Department of Budget and Management.

Pursuant to NBC No. 488, all Regional Offices(ROs)/Staff Bureaus(SBs) and Operating Units (OUs) of the National Government receiving funding checks from their Central Office (CO) and ROs/SBs, respectively, shall:

Prepare a schedule showing the balances of funding checks received in prior and current years for operating requirements of the agency and non-income collections which are required to be deposited with the National Treasury pursuant to Executive Order No. 338 dated May 6, l996.

Remit to the National Treasury the cash balances per Check Disbursement Record maintained by the Cashier as of June 30, 2003 by issuing a check payable to the Bureau of the Treasury.

Upon receipt of the Bank Statements, prepare immediately the Bank Reconciliation Statement for the period ending June 30, 2003 to establish the correctness of the amount remitted to the National Treasury. In case of understatement, the agency shall cause the issuance of a check corresponding to the unremitted amount payable to the Bureau of the Treasury.

Record the remittance to the National Treasury of the cash balance pertaining to funding checks received in the current year and prior years from CO and ROs/SBs as shown in Annex A.

Furnish the respective CO and ROs/SBs copies of Journal Entry Vouchers (JEVs) covering the remittance of the cash balance to the National Treasury supported by certified photo copies of the validated deposit slips.

Coordinate with the CO and ROs/SBs for the reconciliation of the following reciprocal accounts to ensure that these accounts are reconciled and consequently eliminated in the consolidation process:

• Due from Central Office
• Due from Regional Offices/Staff Bureaus
• Due from Operating Units
• Due to Central Office
• Due to Regional Offices/Staff Bureaus
• Due to Operating Units
• Subsidy to Regional Offices/Staff Bureaus
• Subsidy to Operating Units
• Subsidy from Central Office
• Subsidy from Regional Offices/Staff Bureaus

The Central and Regional Offices/Staff Bureaus which issued funding checks to the RO/SB and OU, respectively, shall:

Coordinate with their respective ROs/SBs/OUs for the conduct of the reconciliation of the reciprocal accounts.

Based on the copy of the JEV mentioned in Item No. 3.1.6, prepare a JEV to respond to the accounting entries made by the ROs/SBs and OUs in accordance with Annex A.

Henceforth, and in lieu of the funding checks, the NCA to be received by ROs/SBs and OUs direct from DBM as well as the Notice of Transfer of Allocation (NTA) from the CO and ROs/SBs, as the case may be, shall be debited to account "Cash-National Treasury, Modified Disbursement System (MDS)" and credited to account "Subsidy Income from National Government".

An illustration of the flow of transactions for the release of allotment and NCA/NTA is shown in Annex C hereof.

ACCOUNTING ENTRIES

The illustrative accounting entries for the transfer of the balances of funding checks, the receipt, transfer and utilization of allotment; and recording of NCA and NTA are shown in Annexes A and B hereof.

SAVING CLAUSE

Cases not covered in this Circular shall be referred to the Government Accounting and FMIS (GAFMIS), COA for resolution.

REPEALING CLAUSE

All circulars, memoranda and other issuances or parts thereof which are inconsistent with the provisions of this Circular Letter are hereby rescinded/repealed/ modified accordingly.

EFFECTIVITY

This circular shall take effect immediately.