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July 3, 1992

TO :                           ALL PUBLIC OFFICERS CONCERNED. The General Manager, Metro Manila Authority; Provincial Governors, City and Municipal Mayors; the Deputy General Manager for Finance, Metro Manila Authority; Local Treasurers, Accountants, and Budget Officers; COA Directors; Heads of Provincial, City, Municipal and Circuit Municipal Audit Units; and All Others Concerned.

SUBJECT AND PURPOSE:This Circular on Accounting and Auditing Rules and Regulations designed to implement the provisions of Republic Act No. 7160, the Local Government Code of 1991, is issued pursuant to Section 2(2), Article IX-D, of the Constitution.


Sec. 1. Local Funds. - Provinces, cities and municipalities shall maintain a General Fund which shall be used to account for such monies and resources as may be received by and disbursed from the local treasury. The General Fund shall consist of monies and resources of the local government which are available for the payment of expenditures, obligations or purposes not specifically declared by law as accruing and chargeable to, or payable from, any other fund. (Sec. 308, RA 7160)

Sec. 2. Special Funds. - There shall also be maintained in every provincial, city or municipal treasury the following special funds:

a. Special Education Fund which shall consist of the respective shares of provinces, cities, and municipalities in the proceeds of the additional tax on real property to be appropriated for purposes prescribed in Section 272 of the Local Government Code; and

b. Trust Funds which shall consist of private and public monies which have officially come into the possession of the local government or of a local government official as trustee, agent or administrator, or which have been received as a guaranty for the fulfillment of some obligation. A trust fund shall only be used for the specific purpose for which it was created or for which it came into the possession of the local government unit. (Sec. 309, Ibid)