Disbursements

Based on Milan’s book

Disbursements

 Constitutes all payments in cash, in whatever manner (i.e., through cash, check, or other means).
Disbursements shall be supported by Disbursement Vouchers (including Petty Cash Vouchers) or
Payroll.

Fundamental Principles:

a. All government resources shall be used only in accordance with the law and only for public
purposes
b. Trust funds shall be used only for their specific purpose.
c. Fiscal responsibility shall be strictly shared by all those exercising authority over a government
agency.
d. The use of government resources shall be approved by proper officials.
e. Claims against government funds shall be supported with complete documentation
f. All laws and regulations applicable to financial transactions shall be faithfully adhered to,
including generally accepted principles and practices of accounting, management and fiscal
administration, provided they do not contravene with existing laws and regulations.

(P.D. No. 1445)

 Expenditures funded by borrowings are included in the expenditure program of the entity. The
loan proceeds shall not be used without the corresponding release of funds through a Special
Budget.

***a General Budget covers all the government's core revenue and expenditure, while a Special
Budget addresses specific, often large-scale, initiatives or program.

Authority to Disburse/Pay

An entity can make disbursements only after it has received a disbursement authority, based on the
following:

a. Notice of Cash Allocation (NCA) – GENERAL EXPENSES

b. Notice of Transfer of Allocation (NTA) – INTRA-AGENCY; CO TO AGENCY
c. Tax Remittance Advice (TRA) – CONSTRUCTIVE RECEIPT AND REMITTANCES

(Items ‘a’ to ‘c’ above are discussed in Chapters 2 and 3)

d. Non-Cash Availment Authority (NCAA) – Direct Payment Method

e. Cash Disbursement Ceiling (CDC)/Working Fund– authority issued by the DBM to agencies with
foreign operations (i.e., Department of Foreign Affairs ‘DFA” and Department of Labor and
Employment ‘DOLE’) allowing them to use the income collected by their Foreign Service Posts
(FSPs) to cover their operating requirements.
Basic Requirements and Certifications for Disbursements

The following are required when disbursing funds:

a. The Budget Officer (or Head of Budget Unit) shall certify the availability of allotment
b. The Chief Accountant (or Head of Accounting Unit) shall charge obligations against available
allotment
 The foregoing is to ensure that no overdraft shall be incurred. An overdraft is incurred if
obligations exceed the allotment. The incurrence of overdraft is prohibited.
c. The Chief Accountant (or Head of the Accounting Unit) shall certify the availability of
funds/cash and 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 are also liable. Others who
are involved in the fictitious transactions are liable.
d. The requesting and approving officials shall ensure that the disbursements are legal and
conform to applicable rules and regulations
e. The Head of the Requesting Unit shall certify the necessity and legality of disbursements.
Payments shall be made through Disbursement Vouchers (DVs) or Payroll and supported by the
original copies of supporting documents.
f. The Head of Agency (or his authorized representative shall approve all DVs or Payrolls)
g. Existence of lawful and sufficient allotment duly obligated as certified by authorized officials
[except for government-owned or controlled corporations (GOCCs)/government financing
institutions (GFIs)]

Modes of Disbursements
The different modes of disbursements are as follows:

a. Check (MDS or commercial checks) – for regular expenses. Reported and recorded whether
released or unreleased.
b. Cash (out of cash advance granted to authorized Disbursing Officer) - constitute payment out of
cash advances granted to the regular and special disbursing officers for personal services, petty
expenses and MOOE for field operating requirements
- covered by duly approved disbursement vouchers/payrolls/petty cash vouchers
c. Working fund/CDC
d. Cashless payments
i. Advice to Debit Account (ADA)
ii. Electronic Modified Disbursement System (eMDS)
iii. Cashless Purchase Card System (Credit Card)
iv. Non-Cash Availment Authority (NCAA)
v. Tax Remittance Advice (TRA) or eTRA (online) - certified correct by the Chief
Accountant/Head of Accounting Division/Unit and approved by the Head of
Agency/Authorized Official
vi. Disbursements through Direct Payment Method – made through the JE voucher issued
by the BoT to the availing/implementing agency to record payment of goods and
services made directly by the lending institution to the supplier or contractor.

Disbursements through Check

Checks are used whenever payments cannot conveniently, or are not authorized to, be made through
cash or ADA. The following are two types of checks issued by government entities:

a. Modified Disbursement System Check – checks chargeable against the account of the Treasurer
of the Philippines maintained with different Modified Disbursement System – Government
Servicing Banks (MDS-GSBs)

*** Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), and Philippine
Veterans Bank (PVB), to which DBM issues the NCAs for crediting to the MDS sub-accounts of NGAs.

b. Commercial Checks – checks chargeable against the Agency Checking Account with GSBs. These
are covered by income/receipts authorized to be deposited with Authorized Government
Depository Banks (AGDBs).

***Authorized Government Depository Bank (AGDB) shall refer to a financial institution/bank

authorized by the Bangko Sentral ng Pilipinas and the Department of Finance to accept deposit from
government agencies.

According to the DOF Department Circular No. 01-2017, the following banks are authorized to accept
government deposits:

1. Land Bank of the Philippines (LandBank)

2. Development Bank of the Philippines (DBP)

3. Philippine Postal Savings Bank (PPSB)

 4. Al Amanah Islamic Investment Bank of the Philippines

5. United Coconut Planters Bank (UCPB)

6. Philippine Veterans Bank

All checks drawn, whether released or unreleased to payees, including cancelled checks, are recorded
chronologically in the Checks/ADA Disbursement Record maintained by the Cash/Treasury Unit.

Disbursements through Cash

Cash Disbursements constitute payments through cash advances, including payments out of the petty
cash funds. Cash advances are governed by the following rules:

a. Cash advances shall be made only for a legally authorized specific purpose (i.e., payments for
personnel services, petty expenses, and MOOE for field operating requirements).
b. Cash advances, other than advances for travel, shall be given only to duly appointed Disbursing
Officers who must be properly bonded. The amount of cash advance shall not exceed maximum
cash accountability under the bond.
c. Only designated Disbursing Officers are allowed to perform disbursing functions and only
permanently appointed officials shall be designated as disbursing officers.
d. A cash advance must be liquidated as soon as the purpose for which it was given has been
served.
 Cash advances for payroll shall be liquidated within 5 days after the end of the pay period.
Unclaimed salaries shall be refunded and issued official receipt to close the account.
 Cash advances for travel shall be liquidated as follows:
i. Local Travel – within 30 days upon return to the personnel’s workstation.
ii. Foreign Travel – within 60 days upon return to the Philippines. No official or
employee is allowed to go on an official foreign travel if he is due to retire within 1
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 is 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 or to liquidated a previous cash advance.

Disbursements through ADA

 The ADA, or more specifically the List of Due and Demandable Accounts Payable – Advice to
Debit Account (LDDAP – 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.
LDDAP – a list reflecting the names of creditors/payees to be paid by the NGA/OU and the
corresponding amounts of their unpaid claims, duly certified and approved by the Accounting
Head and the agency or authorized officials.
**Why is it called ADA? Kasi diba if idedebit yung account mo sa isang bank, it means may
disbursement ka (tulad ng sa bank reconciliation, kapag may debit memo), ganun rin dito pero
ang disbursement mo dito is Accounts Payable.
The ADA works like a check, except that one ADA can be drawn to pay various payees, as long as
they all maintain accounts in the same bank where the ADA is drawn. Separate ADAs shall be
prepared for payees using other MDS-GSBs. ADA payments are directly credited to the payees’
accounts.

Signatories:
BOX 1
 Certified correct by the Chief Accountant/Head of Accounting Division/Unit
 Approved by the Head of Agency/Authorized Official
BOX 2
 The ADA (Box II) shall be signed by the Cash/Treasury Unit Authorized Signatory and
countersigned by the Head of Agency/Authorized Signatory.

Simply stated, an ADA is an authorization for a fund transfer (between accounts in the same
bank) or a bank transfer (between accounts with different banks) from the issuing agency’s NCA
bank account to the bank accounts of specified payees.

The following expenditures shall not be paid through ADA:

a. Payment of Terminal Leave and Dir Gratuity Benefits
b. Remittance of GSIS, PhilHealth, and PAG-IBIG contributions
c. Payments to utility companies (e.g., electricity, water, telephone, internet, petroleum, and
the like).
d. Other payables which cannot be conveniently nor practicably paid using the ADA
Disbursements through electronic Modified Disbursement System
- 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.

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). The authorized credit card company is the Citibank. Guidelines in the use of CPC
system are as follows:
a. CPC purchases shall be only for specific eligible items and only with specific merchants.
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 in credit limits or cardholders require the prior approval of the Steering
Committee.
c. Agency officials who approved the CPC are jointly accountable with the cardholders.
d. The CPC System shall comply to, and shall not in any way change, the existing
disbursement policies and procedures prescribed under the law.
e. The amount covered by the CPC shall form part of the cash advance levels of the
participating agencies. The CPC shall not be used to justify the increase in cash advance
levels of participating agencies.
f. The CPC shall initially be used for purchases of small value, non-common use items
which are not available with Procurement Service.
g. Unauthorized items purchased using the CPC shall be the personal liability of the
cardholder; without prejudice to the revocation of the cardholder’s privileges and other
penalties that the participating agencies may impose.
h. Participating agencies shall immediately inform the Citibank of any discrepancy regarding
items which they dispute as having been procured using the CPC.
i. Participating agencies shall ensure the timely payment of CPC billings. In case of delays,
late payment charges shall be the personal liability of the employee directly responsible
for the delay. The NCA shall never be used to pay late payment charges.
j. 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. The accounting 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 in the billing
statement.
l. In case the CPC is lost or stolen, the cardholder shall immediately notify the Program
Administrator and the Citibank. The Program administrator shall determine whether the
cardholder was negligent and whether the cardholder’s privileges shall be reinstated or
permanently suspended. The cardholder shall be liable for any CPC charges during the
period card was lost or stolen.
Disbursements through Non-Cash Availment Authority (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.
- Disbursements through NCAA (also called ‘Direct Payment Method’ or ‘ of Loan Availment’)
are made through the Journal Entry Voucher (JEV) issued by the BTr to the agency to record
the payment of goods and services made directly by the lending institution to the supplier
or contractor. The JEV is recorded in the General Journal.

Illustration:

Entity A acquires communication equipment for P1M, on account, and subsequently settles the account
through direct payment scheme.

Disbursements Through Tax Remittance Advice (TRA)

TRA is used for the constructive remittance of taxes or custom duties withheld to the BIR or BOC,
respectively.

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. Disallowance are recorded in the books of accounts only when they become final and
executory.

Accounting for Overpayments

“Sometimes overpayments or even double payment of expenditures do happen in agencies. These could
be avoided with the institution of proper controls but some could not be avoided because of built-in
procedures. One example is the payment of payrolls. Payrolls are prepared in advance, and some
agencies pay their employees through the banking system. All these are done before reports of
attendance are submitted, making it impossible to know the exact amount to be paid in case there are
absences without pay during the pay periods. In case of overpayments, refunds shall be demanded of
the employees concerned.

Correcting entries for overpayments are similar to the account for disallowances.
• All checks drawn during the day, whether released or unreleased including cancelled checks shall
be recorded chronologically in the Checks and ADA Disbursements Record (CkADADRec)
maintained by the Cash/Treasury Unit.

• All checks/ADA drawn whether released or unreleased shall be included in the Report of Checks
Issued (RCI) or Report of ADA Issued (RADAI), which shall be prepared daily by the Cashier.
 • Field Offices (FOs) without complete set of books shall record chronologically in the Cash in Bank
Register (CBReg) all checks issued/charged to deposits with the AGDB.

• The certified copy of the CBReg together with the required SDs shall be submitted within five
days after the end of each month to the concerned mother unit by the FOs for review and
recording of the transactions in the books of accounts.

Procedures for Disbursement Vouchers:

1. Preparation of Disbursement Voucher

2. Processing of DV

3. Preparation and Approval of Checks

4. Preparation of Reports

5. Preparation JE Voucher

6. Recording in the Check Disbursements Journal

Disbursements By Cash – Cash Advances

All cash payments shall be covered by duly approved disbursements vouchers/payrolls/petty cash
vouchers.

Cash advances may be granted to the cashiers/disbursing officers/officials and employees to cover the
salaries and wages, travels, special time-bound undertakings and petty operating expenses.

The granting and liquidation of cash advances shall be governed by the following existing COA rules
and regulations and other pertinent issuances

a. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given
has been served

b. No additional cash advance shall be allowed unless the previous cash advance given is first
settled/liquidated or a proper accounting

c. Except for cash advance for official travel (need not be bonded in accordance with existing
laws), no officer or employee shall be granted cash advance unless he/she is properly bonded in
accordance with existing laws or regulations.

d. Only permanently appointed officials shall be designated as disbursing officers. Only duly
appointed disbursing officer may perform disbursing functions.

e. Transfer of cash advance from one accountable officer to another shall not be allowed

f. The cash advance shall be used solely for specific legal purpose for which it was granted and not
for encashment of checks or for liquidation of a previous cash advance.

Cash Advance for payroll - to Regular Disbursing Officers for payment of salaries, wages, honoraria,
allowances and other personnel benefits of officials and employees and not to be used for encashment
of checks or for liquidation of previous or other types of cash advances.
Equal to the net amount of the processed payroll corresponding to the pay period.

Liquidation shall be made within five (5) days after the end of the pay period. Any unclaimed
salaries/allowances shall be refunded and issued official receipt to close the account.

Cash Advances for Operating Expenses of Gov’T Units without Complete Set of Books of Accounts

Field/Extension/Satellite Offices

 without complete set of books of accounts

 may be granted cash advances covering two months requirements for authorized expenses to
finance their operations.
 cash advances are granted to designated Disbursing Officers

Sample documents for DISBURSEMENTS OF ADVANCES TO OFFICERS AND EMPLOYEES

 Disbursement Vouchers
 Liquidation Report
 Supporting Documents
 Obligation Requests and Status
 Journal Entry Voucher

Cash Advance for Petty Operating Expenses

• PCF shall be sufficient for the recurring petty operating expenses of the agency for 1 month.

• Maintained using the Imprest System

• PCF shall be replenished as soon as disbursements reach at least 75% or as needed.

• funds should be kept separately from the regular cash advances/collections and shall not be
used for payment of regular expenses

• Payments out of PCF, which shall be made through a Petty Cash Voucher (PCV) (Appendix 48),
should be allowed only for amounts not exceeding P15,000 for each transaction

• The unused balance of the PCF shall not be closed/refunded at the end of the year

• At the end of the year, the PCFC shall submit to the Accounting Division/Unit all unreplenished
Petty Cash Vouchers (PCVs) for recording in the books of accounts
Cash overage –forfeited in favor of the government

- shall be taken up as Miscellaneous Income

Cash shortage - shall be taken up as receivable from the Disbursing Officer

Irregular Expenditures

– incurred without adhering to established rules, regulations, procedural guidelines,

policies, principles or practices that have gained recognition in laws

– incurred if funds are disbursed without conforming with prescribed usages and rules of
discipline

Unnecessary Expenditures

– those not supportive of the implementation of the objectives and mission of the agency
relative to the nature of its operation

– not essential or that which can be dispensed with without loss or damage to property

Excessive Expenditures

- unreasonable expenses incurred at an immoderate quantity and exorbitant price

- expenses which exceed what is usual and what is proper
- expenses which are unreasonably high and beyond just measure and amount

Extravagant Expenditures

- incurred without restraint, judiciousness and economy

 - exceed the bounds of propriety
- immoderate, prodigal, lavish, luxurious, grossly excessive, injudicious

Unconscionable Expenditures

- unreasonable and immoderate

- an expenditure in which no man in his right sense would make, nor a fair and honest man
would accept as reasonable
- incurred in violation of ethical and moral standards

LDDAP - ADA
All LDDAP-ADA prepared/issued during the day shall be recorded chronologically in the CkADADRec
maintained by the Cash/Treasury Unit
CHECKS AND ADVICES TO DEBIT ACCOUNT DISBURSEMENTS RECORD

The Cash/Treasury unit is responsible in checking and monitoring of the validated LDDAP-ADA from the
MDS-GSB.

The Head of the Accounting Division/unit is responsible in preparing the JEV. The JEV shall be recorded
in the ADA Disbursements journal.(ADADJ)

The journal entry to record the receipt will include a credit to the “Cash-Modified Disbursement System
(MDS),Regular”account.
LLDAP-ADA may be invalidated due to any inconsistency of information such as:

– Bank branch

– Account name

– Account number

An invalidated ADA shall be reported as follows:

– New LDDAP-ADA may be issued for the replacement of invalidated LDDAP-ADA upon
submission of the validated LDDAP-ADA indicating non-payment to creditors/payees due
to inconsistency of information.

– A JEV shall be prepared to take up the cancellation of the invalidated LDDAP-ADA.

Summary of LDDAP-ADAs issued and invalidated ADA entries

In JEV, Prepared by the Accounting personnel; Certified Correct by the Head of Accounting Unit

BIR Form No. 0605 or Payment Form

- accomplished every time a taxpayer pays taxes and fees which do not require the use of a
tax return.

BIR Form No. 0619-E or Monthly Remittance Form for Creditable Income Taxes Withheld
(Expanded)

- filed in triplicate by every withholding agent/payor required to deduct and withhold taxes on
income payments subject to Expanded/Creditable Withholding Taxes