Updates on Accounting and Auditing Rules and Regulations

1
GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING
ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT
RESOURCES SEMINAR/WORKSHOP
Updates on Accounting and Auditing Rules and
Regulations
Lourdes M. Castillo Assistant Commissioner Governm
ent Accountancy Sector Commission on Audit
Delivered during the GACPA Seminar at Prince
Plaza Hotel, Baguio City February 6-8, 2013
2
COA Circular No. 2012-001
dated June 14, 2012
Prescribing the Revised Documentary Requirements
for Common Government Transactions
3
COA Circular No. 2012-004,
dated November 28, 2012
Demand for the Immediate Liquidation and
Settlement of All Cash Advances Outstanding as of
December 31, 2011
4
COA Circular No. 2013-002,
dated January 30, 2013
Adoption of the Revised Chart of Accounts for
National Government Agencies
5
COA Resolution No. 2013-007,
dated January 29, 2013
Adoption of the Philippine Public Sector
Standards of Auditing
6
Permanent Committee (COA-DBM-DOF) Joint Circular
No. 4-2012, dated Sept. 11, 2012
Rules and Regulations Implementing Executive
Order No. 431 dated August 30, 2005, Directing
the Reversion of All Dormant Accounts,
Unnecessary Special Trust Funds to the General
Fund and For Other Purposes
7
National Budget Circular No. 546, dated January
17, 2013
Rules and Regulations on the Grant of
Representation and Transportation Allowances
8
COA Circular No. 2012-001,
dated June 14, 2012
Prescribing the Revised Documentary Requirements
for Common Government Transactions
9
OUTLINE

• Fundamental Principles PD 1445
• General Requirements for all Types of
  Disbursements
• Specific Requirements for Each Type of
  Disbursement
• Cash Advances
• Fund Transfers to NGOs/Pos
• Fund Transfers to Implementing Agencies/From
  Trust Fund to Gen Fund for Unspent Balance
• Salary

10
OUTLINE

• Allowances, Honoraria and Other Forms of
  Compensations
• Other Expenditures
• Extraordinary and Miscellaneous Expenses
• Prisoners Subsistence Allowance
• Procurement
• Cultural and Athletic Activities
• Human Resource Development and Training Program
• Financial Expenses
• Road Right-of-Way (ROW)/Real Property

11
Fundamental Principles,
Sec. 4, P.D. 1445

• No money shall be paid except in pursuance of an
  appropriation law or other specific statutory
  authority
• Use solely for public purpose
• Trust funds only for the specific intended
  purpose
• Fiscal responsibility shared by all those
  exercising authority over finance, transactions
  and operations
• Disbursements or dispositions should bear
  approval of proper officials
• Claims should be supported with complete
  documentation
• Faithful adherence to all pertinent laws and
  regulations
• Observance of GAAP and practices as well as sound
  management and fiscal administration, provided
  they do not contravene with existing laws and
  regulations

12
General Requirements for All Types of
Disbursements

• Certification of Availability of Fund by Chief
  Accountant
• Lawful and sufficient allotment duly obligated as
  certified, except for GOCCs and GFIs
• Legality of transaction and conformity with laws,
  rules and regulations
• Approval of expenditure by Head of Office or
  authorized representative
• Sufficient and relevant documents to establish
  validity of claim

13
1.0 Cash Advances

• General Guidelines COA Circs. 97-002, 2009-002,
  Sec. 89 of PD 1445, pertinent GAA provisions
• Specific Guidelines and Documents Required
• Types of Cash Advances (Payroll Fund, PCF,
  Field/Activity COE, TA (local and foreign)
• Granting of Cash Advance
• General Guidelines
• Documents Required Common to All CAs except for
  travel
• Additional Documents per type of Cash Advance
• Liquidation of Cash Advances

14
2.0 Fund Transfers to NGOs/POs

• General Guidelines pertinent provision of the
  GAA for the year, Sec. 4.5.6 COA Circular
  2007-001 and GPPB Res. 12-2007
• Specific Guidelines and Documentary Requirements
• Release of Funds
• Implementation and Liquidation of Funds Released
• Staggered Release of Funds to NGO/PO

15
3.0 Fund Transfers

• General Guidelines COA Cirular 94-013, COA Memo
  2010-014
• Specific Guidelines and Documents Required
• Transfer to Implementing Agencies
• Transfer
• Implementation and Liquidation by Implementing
  Agency
• Liquidation by Source Agency
• From Trust Fund to General Fund for
  Unspent/Excess Amount

16
4.0 Salary

• General Guidelines- 35 FY2012 GAA or pertinent
  provision of the GAA for the year, RA 6758 as
  amended (Pres. Veto message, 020810,p. 1236, RA
  9970)
• Specific Guidelines and Documents Required
  -Sec.325, RA 7160 LGU Code, EO 292, CSC MC 14 s.
  1999, CSC Res. 02-1490, COA Cir 2000-006, DBM
  Local Budget Circular 2009-91, DBM National
  Compensation Circular 67, s. 1992, CSC Circular
  06, s.2005, etc.
• Individual Claims
• First Salary
• Salary (if deleted from the payroll)
• Salary of Casual/Contractual Personnel
• Salary Differential due to Promotion and/or Step
  Increment
• Last Salary
• Salary due to heirs of deceased employee
• Maternity Leave
• General Claims through the ATM

17
5.0 Allowances, Honoraria and other Forms of
Compensation

• General Guidelines
• Specific Guidelines and Documents Required
• Personnel Economic Relief Allowance
• Representation and Transportation Allowance (for
  individual and general claims)
• Clothing/Uniform Allowance (Individual and
  General claims
• Subsistence, Laundry and Quarters Allowances
• Productivity Incentive Allowance (individual and
  general claims)
• Special Counsel Allowance
• Honoraria
• Personnel Involved in Government Procurement
• Teaching Personnel (DepED, TESDA, SUCs and other
  educational institutions)
• Governing Boards of Collegial Bodies
• Lecturer/Coordinator
• Special Projects
• Science and Technological Activities

18
Other Expenditures

• General Guidelines Sec. 57, 2012 GAA or
  pertinent provision of the GAA for the year, Sec
  43, Chapter 5 and 80, Chapter7, Book V1 EO 292,
  Sec 58, 2012 GAA, etc.
• Specific Guidelines and Documents Required
• Utility Expense
• Telephone/Communication Services

19
Extraordinary and Miscellaneous Expenses

• General Guidelines Sec. 57, 2012 GAA or
  pertinent provision of the GAA for the year, Sec
  43, Chapter 5 and 80, Chapter7, Book V1 EO 292,
  Sec 58, 2012 GAA, etc.
• Specific Guidelines and Documents Required
• Utility Expense
• Telephone/Communication Services

20
Prisoners Subsistence Allowance

• General Guidelines Item 1 and 2, Special
  Provision for BJMP and Bu Cor, 2012 GAA or
  pertinent provisions for the year
• Specific Guidelines and Documents Required
• By administration thru cash advance
• By catering contract

21
Procurement

• General Guidelines ( RA 9184, Sec 85 2012 GAA or
  pertinent provisions of GAA for the year), Sec 85
  2012 GAA or pertinent GAA provision for the year,
  Sec. 7 IRR of RA 9184, Sec 7, RA 9184, Rule XVI
  Revised IRR RA 1984, Sec. 13.1, RA 1984
• Specific Guidelin, es and Documents Required
• Procurement thru Public Bidding GAA for the
  year, Sec. 2-7, 9-10 and 12 of EO 182 s. 1997
  and Sec. 87 of GAA 2012, COA Circular 2009-001,
  2005-0087
• Infrastructure
• Advance Payment
• Variation Order/Change Order/Extra Work Order
• Progress Payment
• Final Payment
• Release of Retention Money
• Consulting Services Annex E Revised IRR RA
  9184, Annex D. COA Memo 2005-027
• Goods- RA 9184, Sec 5r Revised IRR, 2012 GAA
  Provisions, Sec. 20
• Supplies, Materials, Equipment and Motor Vehicles
• General Support Services (janitorial, security,
  maintenance, garbage collection and disposal and
  similar services)
• Rental Contracts
• Repair and Maintenance of Aircraft, Equipment and
  Motor Vehicles
• Advertising Expenses
• Procurement thru Alternative Modes COA Cir.
  2009-001, RA 9184 pertinent provisions
• Requirements Common to all alternative modes
• Specific requirements

22
Cultural and Athletic Activities

• General Guidelines Sec 25 of GAA 2012 or
  pertinent provision of GAA for the year
• Documents Required
• Budget estimates approved by the Head of Agency
• Same requirements under procurement depending on
  the nature of expense and the mode of procurement
  adopted

23
Human Resource Development and Training Program

• General Guidelines CSC Guidelines Sec. 27 2012
  GAA and pertinent provisions of the GAA for the
  year
• Documents Required
• Budget estimates approved by the Head of Agency
• Schedule of the training approved by the Head of
  the Agency
• Same requirements under procurement depending on
  the nature of expense and the mode of
  procurement adopted

24
Financial Expenses

• General Guideline appropriate provision of the
  New Government Accounting System and other
  pertinent laws, rules and regulations
• Documents Required
• Loan Agreements/Memoranda of Agreement together
  with supporting documents
• Statement of Accounts
• Bank Debit Memos
• Others necessary depending on the nature of the
  transactions

25
Road Right-of-Way/Real Property

• General Guidelines RA 8974 and its IRR
• Documents Required
• Land Sec.8 RA 8974 on Environment Clearance
  Certificate
• Negotiated Purchase
• If Registered land
• If Unregistered land EO 1035 on Claimants
  Surety/Indemnity Bond
• For Payment by Court Decision
• Structure/House
• Improvements (trees, plants, growing fruits,
  etc.) DENR rules and regulations

26
COA Circular No. 2012-004,
dated November 28, 2012
Demand for the Immediate Liquidation and
Settlement of All Cash Advances Outstanding as of
December 31, 2011
27
Addressed to the following

• All Heads of National Government Departments,
  Bureaus and Agencies

• Provincial Governors, City/Municipal Mayors

• Managing Heads of Government-owned and/or
  Controlled Corporations

• All Treasurers, Finance Officers, Regular and
  Special Disbursing Officers, and Other
  Accountable Officials of the aforesaid Government
  Agencies

• COA Directors, Regional Directors, and Heads of
  Auditing Units, and All Others Concerned

28
Rationale

• As a general rule, cash advances must be
  liquidated within the prescribed periods
  depending on the nature and purpose of the cash
  advance

• Salaries and wages
• Petty and field operating expenses
• Local travel and foreign travel
• Honoraria and similar payments to officials and
  employees
• Expenses for special projects/activities such as
  anniversary celebration
• Cultural and athletic activities

• The above cash advances must be liquidated within
  twenty (20) days from the accomplishment of the
  purpose.

29
Settlement and Liquidation of Cash
Advance
A cash advance is settled and liquidated either
by

1. Returning the money advanced if unspent,

1. Or by the presentation of regularly accomplished
   vouchers, giving satisfactorily detail of the
   items thereon paid which must be in accordance
   with the purpose for which the cash advance was
   granted, and further supported by proper receipts
   and other evidence of payment, subject to the
   result of the post-audit thereof by the auditor
   concerned.

30
Primary responsibility of Heads of Agencies
Section 2 of Presidential Decree (P.D.) No. 1445,
the Government Accounting Code of the
Philippines, places the responsibility to
faithfully take care that government funds and
property be safeguarded from wastage directly
with and primarily on the chief or head of the
government agency concerned
31
Legal presumption against non-liquidation of cash
advance
Article 217 of the Revised Penal Code states in
unequivocal terms that
The failure of a public officer to have duly
forthcoming any public funds or property with
which he is chargeable, upon demand by any duly
authorized officer, shall be prima facie evidence
that he has put such missing funds or property to
personal use.
32
Final demand to settle unliquidated cash advance
Final notice and demand is hereby made to all
concerned to settle and liquidate all outstanding
cash advances as of December 31, 2011, on or
before January 31, 2013. Provided, however, that
those who have been issued by the Commission on
Audit notice and demand, prior to the issuance of
this Circular, to settle and liquidate their cash
advances within a specified period, shall do so
within the period specified in the said notice.
33
An accountable officer refers to
A public officer or employee who, in the
discharge of his office, receives money from the
government which he is bound to later account
for. Transfer, separation or retirement from the
government does not operate to discharge the said
person from coverage of the definition and
corresponding duty to account for the
unliquidated advances.
34
This Circular shall serve as the demand required
under appropriate law, rules and regulations to
settle the accountable officers unliquidated
cash advance as well as all those who are already
separated from the service or have transferred to
other agency.
35
Duties of Agency officials

1. On or before December 15, 2012, all heads of
   government agencies shall disseminate in writing
   this Circular to all Accountable officials and
   employees within their respective agencies and
   serve a written notice to and demand settlement
   of the outstanding cash advances as of December
   31, 2011.

1. The Chief Accountant shall, within the same
   period, furnish the head of agency and the head
   of the auditing unit thereat a list of
   accountable officers with unliquidated and
   outstanding cash advances.

36
Duties of the Commission on Audit

• Ensure that the outstanding cash advances are
  liquidated within the specified periods

• Shall Evaluate the cash advances of Accountable
  Officers to determine compliance with pertinent
  COA Rules and Regulations and to report
  violations thereof

• Shall report on or before February 28, 2013 to
  the agency head and to the Director, FAIO,
  compliance with this Circular including the
  ageing of the cash advances showing the purpose
  and other information

• Submit to the respective COA Directors the
  vouchers and all supporting documents relative to
  the grant of the cash advance, copy furnished the
  COA Chairperson

37
Consequences of failure to liquidate

• Failure of an accountable officer to liquidate
  his outstanding cash advance on or before January
  31, 2013 shall constitute cause for the filing of
  malversation charge under Article 217, failure to
  liquidate cash advance under Article 218, both of
  the Revised Penal Code or criminal prosecution
  under Section 128 of P.D. 1445.

• The suspension of salaries of the accountable
  officers shall be ordered by the auditor
  concerned to the propers agency official through
  the head of the Agency.

• Appropriate administrative proceedings shall
  likewise be instituted.

38
COA Revised Chart of Accounts for National
Agencies
Legal Basis
COA Circular No. 2013-002 Dated January 30, 2013
Effectivity
January 01, 2014
39
Objectives

• To provide new accounts for the adoption of the
  Philippine Public Sector Accounting Standards
  (harmonized with IPSAS)
• To provide uniform accounts for national
  government accounting and budget systems to
  facilitate the preparation of harmonized
  financial and budgetary accountability reports
• To expand the account code from three (3) digits
  in the NGAS Chart of Accounts to eight (8)
  digits, to allow expansion or creation of new
  accounts as may be necessary to implement new
  standards or policies.

40
The COA Revised Chart of Accounts is integrated
in the Unified Account Code Structure (UACS)
under the Philippine Public Financial Management
(PFM) Reform Program jointly undertaken by DBM,
DOF and COA.
41
Major Changes

• Coverage is limited only to all national
  government agencies
• Expanded account code structure - from three (3)
  digits to eight (8) digits

42
Account Code Structure
43
Account Groups

• Codes are assigned to account groups to
  facilitate location of accounts in the general
  and subsidiary ledgers, to provide systematic
  arrangement and classification of accounts and
  facilitate preparation of the consolidated
  financial reports as follows
• Code Account Groups
• 1 Assets
• 2 Liabilities
• 3 Equity
• 4 Income
• 5 Expenses

44
Asset Without Contra Account
Ex. Cash, Collecting Officer
45
Asset Without Contra Account
Ex. Accounts Receivable
46
Major Changes

• New Accounts were provided for the implementation
  of the Philippine Public Sector Accounting
  Standards

47
New Accounts

• Example

48
Major Changes

• Some accounts were deleted since these accounts
  are for use by local government units or
  government-owned and/or controlled corporations
  while other accounts are no longer applicable to
  national government agencies.

49
Deleted Accounts

• Example

50
Major Changes

1. Some accounts were either expanded or compressed.
   For instance, expense accounts for repairs and
   maintenance and depreciation of property, plant
   and equipment which were previously presented per
   asset account were compressed based on the major
   account classification.

51
Compressed Accounts

• Example

52
Expanded Account

• Example

53
DRAFT

• UNIFIED ACCOUNTS CODE STRUCTURE (UACS)

FUNDING SOURCE 6 Digits FUNDING SOURCE 6 Digits FUNDING SOURCE 6 Digits ORGANIZATION 12 digits ORGANIZATION 12 digits ORGANIZATION 12 digits LOCATION 9 digits LOCATION 9 digits LOCATION 9 digits LOCATION 9 digits LOCATION 9 digits MFO/ PROGRAM, ACTIVITY and PROJECT 9 digits OBJECT CODE 10 digits OBJECT CODE 10 digits OBJECT CODE 10 digits
Financing Source 1 digit Authorization 2 digits Fund Category 3 digits Department 2 digits Agency 3 digits Operating Unit 7 digits Region 2 digits Province 2 digits City, Municipality 2 digits Barangay 3 digits Barangay 3 digits MFO/PAP Code 9 digits COA CoA Object 8 digits Sub-Object 2 digits Sub-Object 2 digits
Required Required Required Required Required Required Required Optional Optional Optional Optional Unique for each Department/Agency Uniform across Government Uniform across Government Uniform across Government

Chart of Accounts
54
The Unified Account Code Structure (UACS)

• Jointly developed by DBM, DOF and COA
• It is a government-wide coding framework to
  provide a harmonized budgetary and accounting
  code classification that will facilitate
  reporting of actual revenues and collections and
  expenditures compared with programmed revenues
  and expenditures, starting fiscal year 2014

55

• The UACS is to be adopted in identifying,
  aggregating, budgeting, accounting, auditing and
  reporting the financial transactions of the
  government.
• Enhance the quality and timeliness of financial
  data for the generation of the required reports
  and analysis of the same.
• Strengthen financial controls and accountability.

56
Key Elements of the UACS

• Funding Source Codes Six (6) digit code to
  reflect the Financing Source, Authorization and
  Funding Category
• Organization Codes Twelve (12) digit code to
  reflect the Department, Agency and Sub-Agency or
  Operating Unit/Revenue Collecting Unit

57

• Location Codes Nine (9) digit code to reflect
  the Region/Province/Municipality/Barangay
  following the Philippine Standard Geographic Code
  prescribed by the National Statistical
  Coordination Board
• Major Final Output (MFO)/Program, Activity and
  Project (PAP) codes Nine (9) digit code to
  reflect the MFO/PAP codes
• Object codes Assets, Liabilities, Equity,
  Revenues, and Expenses following the COA Chart of
  Accounts by object and sub-objects provided by
  BTr, BIR, DOF, BOC and DBM

58
GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING
ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT
RESOURCES SEMINAR/WORKSHOP
Executive Order No. 55
dated September 6, 2011

(Subject of COA
Memorandum 2011-020 dated September 6, 2011)
Directing the Integration and Automation of
Government Financial Management System
59
Rationale

• It is the policy of the State to adopt and
  implement full public disclosure of all its
  transactions involving public interest and
  recognize the right of the people to information
  on matter of public concern as embodied under
  Section 28, Article II and Section 7, Article III
  of the 1987 Constitution

60
The present administration subscribes to
emerging global thrust towards open government
and greater budget transparency and accords the
highest priority to public sector initiatives
that promote transparency, accountability and
good governance as contained in the Presidents
Social Contract with the Filipino people.
61
Objectives of Government Integrated Financial
Information System (GIFMIS)

1. To facilitate the generation of vital information
   on any and all aspects of government financial
   transactions that can be made accessible to the
   public through I.T., subject to existing laws,
2. Greater participation of civil society
   organization in fiscal governance,
3. Effective and efficient delivery of public
   services.

62

1. Allow greater financial management and control at
   oversight and agency levels,
2. Ensure stricter compliance of the budget to
   appropriation laws and corresponding rules and
   regulations,
3. Significantly improve Treasury cash management,
   and
4. Facilitate keeping of general accounts of
   government and management reporting at various
   levels of government

63
The following agencies of the government signed a
Memorandum of Agreement (MOA)

• Commission on Audit (COA),
• Department of Budget and Management (DBM),
• Bureau of Treasury (BTr)/Department of Finance
  (DOF) which created the Steering Committee on
  Cooperation to Foster the Development of a GIFMIs
  and implement a Public Financial Management (PFM)
  Reforms Roadmap and operationalize a Treasury
  Single Account (TSA)

64
Philippine Public Financial Management

• Accounting and Auditing Reforms (AAR) PIU
  Philippine Public Financial Management Status
  Report

65
Philippine Public Financial ManagementKEY
ACCOMPLISHMENTS

• Priority Area 1 - ACCOUNTING

1. Harmonize PGAS with IFRS and IPSAS

• 23 Philippine Public Sector Accounting Standards
  (PPSAS) which are intended for implementation in
  2013 are being exposed to various COA sectors and
  concerned organizations like PICPA, GACPA, AGAP,
  PAGBA, EUC and PHALGA

1. On-going evaluation of eight comments received
   from agencies/organizations

• Five of the 23 PPSASs, PPSAS 5, 13, 17, 29 and 31
  were revised as result of the issuance of the
  2012 IPSAS Handbook which contains the
  newly-issued IPSAS 32, Service Concession
  Arrangements Grantor dated October 2011

66

• Priority Area 2 - AUDITING

1. Develop Philippine Public Sector Standards on
   Auditing (PPSSA) COA resolutions to
   adopt/implement the following were signed by the
   COA Commission Proper (CP)

• 24 PPSSAs

• COAs Framework of Professional Standards

• 11 PPSSAs are being finalized and for submission
  to the CP for approval

• 18 ISAs/ISSAIs are on-going evaluation for
  adoption as PPSSAs

67
GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING
ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT
RESOURCES SEMINAR/WORKSHOP
National Budget Circular No. 546
dated January 17, 2013


Rules and Regulations on the Grant of
Representation and Transportation Allowances
68
Salient Features

• Purpose

Issued to prescribe rationalized and updated
rules and regulations on the grant of
Representation Allowance (RA) and Transportation
Allowances (TA)
Coverage

• Generally, those holding regular and contractual
  positions entitled to RATA under the pertinent
  general provisions of the annual GAA
• Others as authorized and enumerated in the NBC

69

• Authorized Monthly RATA Rates

• Highest rate is P14, 000.00 for RA and P14,000.00
  for TA
• Lowest rate is P5,000.00 for RA and P5,000.00 for
  TA
• Officials who are assigned or who use government
  vehicles are not entitled to TA
• The grant of RATA shall be based on the actual
  work performance in a month on a pro-rata basis,
  exclusive of leaves of absence with pay as
  follows

No. of Workdays of Actual Work Performance Actual RATA for a Month
1 to 6 workdays 25 of the monthly RATA
7 to 12 workdays 50 of the monthly RATA
13 to 18 workdays 75 of the monthly RATA
19 workdays or more 100 of the monthly RATA
70

• For the issued government vehicle, but in some
  eventful cases were prevented to use it such as
  when the vehicle undergoes repair and no
  replacement is provided, the grant of TA maybe
  allowed on pro-rata bases.
• RATA for OICs of positions entitled to those
  allowances maybe allowed but not to OICs of
  positions internally created organizational units
  whose staffing are not authorized by DBM
• Monthly RATA while on concurrent capacity
• Monthly RATA while on full-time detail or
  reassignment
• Monthly RATA while on scholarship/study/training
  grant

71

• Fund Sources

• Charged against the agency budgets/appropriations
  for the purpose for NGAs
• For GOCCs and GFIs, charged against the corporate
  operating budgets
• The reimbursible RATA for those in detail to
  other government agencies shall be charged
  against the budgets of the parent agencies

Effectivity
January 01, 2013
72
Thank you!