xCOMMISSION ON AUDIT CIRCULAR NO.

97002
February 10, 1997

TO

: All Heads of Departments, Bureaus, Offices, Agencies and Instrumentalities of the National Government, Heads of Local Government Units, Managing Heads of Government O!ned Or "ontrolled "orporations, including their #u$sidiaries, "OA Directors, "OA Auditors, and All Others "oncerned%

SUBJECT : &estatement !ith amendments of the rules and regulations on the granting, utili'ation and li(uidation of cash advances provided for under "OA "ircular No% )* ++, dated Ma- +, ,))*%

1. RATIONALE .he resort to the cash advance s-stem despite certain pro$lems has $een recogni'ed as a facilitative tool in the financial operations of the government% .here is therefore a need to continuall- update the pertinent regulations in order to provide for a more efficient and effective control over the granting, utili'ation and li(uidation of cash advances% 2. GENERAL PRINCIPLES Ideall-, cash should $e handled under the general principles of the imprest s-stem, to !it/ ,% Dail- receipts on collections must $e deposited intact !ith the proper $an0% 1% All pa-ments must $e made $- chec0% +% Onl- pa-ments in small amounts ma- $e made through the pett- cash fund% &eplenishment of the pett- cash fund shall $e e(ual to the total amount of e2penditures made there from%

In practice, ho!ever, there are certain instances !hen it ma$e ver- difficult, impractical or impossi$le to ma0e pa-ments $- chec0% In such a case, pa-ments ma- $e made $- the dis$ursing officer in the form of cash through his cash advance% 3. DEFINITIONS AND SCOPE "ash Advance shall $e of t!o t-pes, namel-, the regular cash advances, and the special cash advances% +%, &egular cash advances are those granted to cashiers, dis$ursing officers, pa-masters, and3or propert-3supplofficers for an- of the follo!ing purposes/ +%,%, #alaries and 4ages +%,%1 "ommuta$le allo!ances +%,%+ Honoraria and other similar pa-ments to officials and emplo-ees +%,%5 6ett- operating e2penses consisting of small pa-ments for maintenance and operating e2penses !hich cannot $e paid convenientl- $chec0 or are re(uired to $e paid immediatel-% +%1 #pecial cash advances are those granted on the e2plicit authorit- of the Head of the Agenc- onl- to duldesignated dis$ursing officers or emplo-ees for other legall- authori'ed purposes, as follo!s/ +%1%, "urrent operating e2penditures of the agencfield office or of the activit- of the agencunderta0en in the field !hen it is impractical to pa- the same $- chec0, such as #alaries, 4ages and Allo!ances Maintenance and other operating e2penses +%1%1 .ravel e2penditures, including transportation fare, travel allo!ance, hotel room3lodging e2penses and other e2penses incurred $- officials and emplo-ees in connection !ith official travel% 4. GRANTING AND UTILIZATION OF CASH ADVANCES 5%, General Guidelines

5%,%, No "ash advance shall $e given unless for a legall- specific purpose% 5%,%1 No additional cash advances shall $e allo!ed to an- official or emplo-ee unless the previous cash advance given to him is first settled or a proper accounting thereof is made% 5%,% A cash advance shall $e reported on as soon as the purpose for !hich it !as given has $een served% 5%,%5 Onl- permanentl- appointed officials shall $e designated as dis$ursing officers% 7lected officials ma- $e granted a cash advance onl- for their official traveling e2penses% 5%,%8 Onl- dul- appointed or designated dis$ursing officers ma- perform dis$ursing functions% Officers and emplo-ees !ho are given cash advances for official travel need not $e designated as Dis$ursing Officers% 5%,%9 .ransfer of cash advance from one Accounta$le Officer :AO; to another shall not $e allo!ed% 5%,%< .he cash advance shall $e used solel- for the specific legal purpose for !hich it !as granted% Under no circumstance shall it $e used for encashment of chec0s or for li(uidation of a previous cash advance% 5%,%= .he Accountant shall o$ligate all cash advances granted% He shall see that cash advances for a particular -ear are not used to pa- e2penses of other -ears% 5%1 #alaries, 4ages, Allo!ances, Honoraria and Other #imilar 6a-ments 5%1%, .he cash advance shall $e e(ual to the net amount of the pa-roll for a pa- period% 5%1%1 .he cash advance shall $e supported $- the follo!ing documents/ "op- of designation $- the Agenc- Head in case the AO is not a dis$ursing officer $- appointment :attachment to initial cash advance; "op- of approved application for $ond :attachment to initial cash advance;

6a-roll or list of pa-ees !ith their net pa-ments 5%+ 6ett- Operating 72penses 5%+%, .he cash advance shall $e sufficient for the recurring e2penses of the agenc- for one month% .he AO ma- re(uest replenishment of the cash advance !hen the dis$ursements reach at least <8>, or as the need re(uires, $- su$mitting a replenishment voucher !ith all supporting documents dul- summari'ed in a report of dis$ursements% 5%+%1 .he cash advance shall not $e used for pa-ment or regular e2penses, such as rentals, su$scriptions, light and !ater and the li0e% 6a-ments out of the cash advance shall $e allo!ed onl- for amounts not e2ceeding 6,8,***%** for each transaction, e2cept !hen a higher amount is allo!ed $- la! and3or specific authorit- $- the "ommission on Audit% #plitting of transactions to avoid e2ceeding the ceiling shall not $e allo!ed% 5%+%+ .he cash advance shall $e supported $- the follo!ing documents/ "op- of authorit- $- the Agenc- Head :attachment to initial cash advance; "op- of approved application for $ond :attachment to initial cash advance; 7stimate of e2penses 5%5 ?ield3Activit- "urrent Operating 72penses :"O7; 5%5%, .he special cash advance shall $e used to pa- the salaries and !ages of the emplo-ees and the miscellaneous operating e2penses of the activit-% 6a-ment for each transaction shall not $e su$@ect to amount limitation% Ho!ever, all pa-ments shall $e approved $- the Director3Head of ?ield Office% 5%5%1 .he amount of the cash advance shall $e limited to the re(uirements for t!o months% 4ithin 8 da-s after the end of each month, the AO shall su$mit a &eport of Dis$ursements% Additional cash advances shall $e granted on the $asis of the activit- $udget or the re(uirements for t!o

months, !hichever is lo!er% 5%5%+ .he cash advance shall $e supported $- the follo!ing documents/ "op- of authorit- $- the Agenc- Head :attachment to initial cash advance; "op- of approved application for $ond :attachment to initial cash advance; Budget for "O7 of the Agenc- field office or agenc- activit- in the field% 5%8 Official .ravel 5%8%, .he grant of cash advance for $oth official local and foreign travel shall $e governed $- the provisions of "OA "ircular No% )9 **5 dated April ,), ,))9% 5. LIQUIDATION OF CASH ADVANCES 8%, .he AO shall li(uidate his cash advance as follo!s/ 8%,%, #alaries, 4ages, etc% !ithin five :8; da-s after each fifteen :,8; da-3end of the month paperiod% 8%,%1 6ett- Operating 72penses and ?ield Operating 72penses !ithin t!ent- :1*; da-s after the end of the -earA su$@ect to replenishment as fre(uentlas necessar- during the -ear% 8%,%+ Official .ravel !ithin si2t- :9*; da-s after return to the 6hilippines in the case of foreign travel or !ithin thirt- :+*; da-s after return to his permanent official station in the case of local travel, as provided for in 7O 15= and "OA "ircular No% )9 **5% ?ailure of the AO to li(uidate his cash advance !ithin the prescri$ed period shall constitute a valid cause for the !ithholding of his salar- and the instruction of other sanctions as provided for under paragraphs )%1 and )%+ hereof% 8%1 .he AO shall prepare the &eport of Dis$ursements :using Gen% ?orm No% BBBBB; in three :+; copies and su$mit the same !ith dul- accomplished vouchers3pa-rolls and supporting documents to the

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Accountant% ?or pa-ments $ased on receipts and invoices onl-, he shall also prepare a li(uidation voucher !hich shall $e su$mitted !ith the report and supporting documents to the Accountant% He shall ensure that receipt of the report is properlac0no!ledged $- the Accountant% .he AO shall $e deemed to have complied !ith the re(uirement of proper accounting for the cash advance upon the receipt $- the Accountant of the li(uidation documents referred to a$ove% 4ithin ten :,*; da-s after receipt of the report and supporting documents from the AO, the Accountant shall verif- the report, record it in the $oo0s and su$mit the same !ith all the vouchers3pa-rolls and supporting documents to the Auditor% .he cash advance shall $e considered li(uidated upon the recording thereof $- the Accountant in the $oo0s of accounts although not -et audited $- the "OA auditor% 4ithin thirt- :+*; da-s from receipt of the report and supporting documents from the Accountant, the Auditor shall complete the audit% He shall issue the corresponding "redit Notice to the AO to inform the latter of the amount allo!ed in audit and ansuspensions and3or disallo!ances made% In case of disallo!ance, a cop- of the "redit Notice shall $e furnished the Accountant !ho shall record the restoration of the cash advance for the amount disallo!ed% .he amount allo!ed in audit $- the Auditor as contained in the "redit Notice shall $e deemed to have $een settled% .he AO shall su$mit to the Auditor the documents to settle his suspensions3disallo!ances% 4hen the documents are found in order, the Auditor shall lift the suspension and3or issue another "redit Notice for the settled disallo!ance, cop- furnished the Accountant !ho shall dra! a Cournal Doucher to record the credit to the cash advance% In case of cash settlement, the AO shall present the necessar- Official &eceipt to the Auditor for notation% .he "redit Notice issued $- the Auditor to the AO shall $e deemed sufficient compliance !ith the re(uirements of "OA "ircular No% )5 **, dated Canuar- 1*, ,))5

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:6rescri$ing the Manual on "ertificate of #ettlement and Balances, &evised ,))+;% 4hen a cash advance is no longer needed or has not $een used for a period of t!o :1; months, it must $e returned to or refunded immediatel- to the collecting officer% All cash advances shall $e full- li(uidated at the end of each -ear% 72cept for pett- cash fund, the AO shall refund an- une2pended $alance to the "ashier3"ollecting Officer !ho !ill issue the necessarofficial receipt% At the start of an ensuing -ear, a ne! cash advance ma$e granted, provided that a list of e2penses against the previous cash advance is su$mitted% Ho!ever, !hen no li(uidation of the previous cash advance is received on or $efore Canuar- 1*, the Accountant shall cause the !ithholding of the AOEs salar-% .he follo!ing reports and documents are re(uired to support the li(uidation/ 8%,*% #alaries, 4ages, etc% &eport of Dis$ursements , !ith all dul- signed pa-rolls and3or vouchers and all pertinent supporting documents, such as dailtime records, approved leaves of a$sence, etc% 8%,*% 6ett- Operating 72penses 1 &eport of Dis$ursements !ith supporting documents Approved &e(uisition and Issue Doucher !ith the "ertificate of 7mergenc- 6urchase, if necessar&eceipts, sales invoices "ertificate of Acceptance3Inspection Dul- approved trip tic0et, if for gasoline #uch other supporting documents as are re(uired $- the nature of the e2pense 8%,*% "urrent Operating 72penditure + #ame re(uirements as those for salaries, !ages, etc% and pettoperating e2penses, supra% "anvass of at least three suppliers :Not re(uired

if purchase is made !hile on official travel; 8%,*% Official .ravel 5 documents re(uired to support the li(uidation of cash advance for official travel, $oth foreign and local, shall $e as specified under "OA "ircular No% )9 **5% 6. HANDLING, CUSTOD AND DISPOSITION OF THE CASHBOO! 9% A ne!l- appointed or designated AO shall start !ith a , ne! cash$oo0% Before discharging his duties, the ne! AO shall $e $riefed $- the Accountant and the Auditor on the proper recording of the transactions and other matters related to his !or0% 9% .he AO shall maintain separate cash$oo0s for salaries, 1 !ages, allo!ances, etc% and for pett- operating e2penses% .he AO shall record the transactions in the prescri$ed cash$oo0 dail-% He ma- record each invoice3 receipt3voucher individuall- or the total dis$ursements for the da- depending on the volume of the transactions% 9% .he AO shall reconcile the $oo0 $alance !ith the cash on + hand dail-% He shall foot and close the $oo0s at the end of each month% .he AO and the Accountant shall reconcile their $oo0s of accounts at least (uarterl-% 9% .he cash$oo0s shall $e 0ept at the Office of the AO and 5 then placed inside the safe or ca$inet !hen not in use% It ma- $e ta0en from his custod- onl- $- the Auditor or an official dul- authori'ed $- the Agenc- Head, !ho shall issue the necessar- receipt% 9% 4hen the AO ceases to $e one, the cash$oo0 shall $e 8 su$mitted to the Accountant or the .reasurer :for local government units; and shall form part of the accounting records% No clearance shall $e issued to an AO if he fails to su$mit the cash$oo0 as re(uired% ". BONDING OF ACCOUNTABLE OFFICERS <% 7ach accounta$le officer !ith a total cash accounta$ilit, of 61,***%** or more shall $e $onded% .he amount of

$ond shall depend on the total accounta$ilit- of the officer as fi2ed $- the Head of the Agenc-% An official or emplo-ee !ho has $oth mone- and propertaccounta$ilit-, shall $e $onded onl- once to cover $oth accounta$ilities, $ut the amount of the $ond shall $e in accordance !ith the #chedule% <% .he $onding re(uirements are as follo!s/ 1 <%1% Appointment and3or designation as accounta$le , officerA <%1% 4ritten character references $- at least three 1 officials of the Agenc- one of !hom is the Administrative and3or Legal Officer, other than the official !ho appointed3 designated him% <%1% #tatement of assets and lia$ilities as of the end of + the preceding -earA .he foregoing documents shall $e su$mitted, together !ith the application for $ond, to the ?idelit- Bond Division of the Bureau of the .reasur-% 4hen the accounta$ilit- is increased, the Accountant shall ensure that additional $ond is applied for% 4hen the AO ceases to $e one, the Accountant shall immediatel- inform the ?idelit- Bond Division of such cessation% <% .he amount of $ond necessar- for the cash accounta$ilit8 of the AO shall $e in accordance !ith the schedule of cash accounta$ilit- and $ond issued $- the Bureau of the .reasur-% #. RESPONSIBILIT OF THE AGENC HEAD In shall $e the responsi$ilit- of the Head of the Agenc- to ensure the proper granting, utili'ation and utili'ation of all cash advances in accordance !ith these rules and regulations% $. DUTIES AND RESPONSIBILITIES OF THE COA AUDITOR )% .he Auditor shall periodicall- evaluate the accounta$ilit, of the AO and recommend reduction of the cash advance <% + <% 5

if found e2cessive% )% "ash 72amination 1 )%1% .he Auditor shall conduct an e2amination of the , accounta$ilit- of each AO at least once eversemester or as e2isting regulations of the "OA re(uire% )%1% .he Auditor shall demand the presentation $- the 1 AO of his cash$oo0, cash and cash items for e2amination% ?ailure $- the AO to have dulforthcoming an- pu$lic funds !ith !hich he is chargea$le, upon demand $- the Auditor shall $e prima facie evidence of misappropriation% )%1% .he Auditor shall e2clude from among the cash + items presented an- accommodation chec0s, FvalesF, IOUs, chits or other forms of promissornotes and should not accept them as credit to the account% )%1% .he Auditor shall at once demand in !riting the 5 production of the missing funds at the moment the shortage or loss is discovered and esta$lished% .he granting of a grace period for the restitution is not allo!ed $- la!% )%1% .he Auditor shall su$mit the cash e2amination 8 report, together !ith all the !or0ing papers3 evidences disclosing the shortage, to the 6rovincial3"it- Auditor :if the offense is committed in an LGU; or to the "OA Director concerned for the filing of criminal proceedings in accordance !ith "OA Memorandum No% =+ =,B, "OA Memorandum No% )* 99* and paragraphs +%, and +%1 of "OA Memorandum No% )8 ,,1 dated Decem$er 19, ,))8% )% During periods !here no cash e2amination is conducted% + )%+% Upon failure of the AO to li(uidate his cash advance , !ithin t!o :1; months for AOs holding office !ithin the station and three :+; months for AOs outside the station from date of grant of the cash advance, the Auditor shall issue a letter demanding li(uidation or e2planation for non li(uidation% )%+% If thirt- :+*; da-s have elapsed after the demand

letter is served and no li(uidation or e2planation is received, or the e2planation received is not satisfactor-, the Auditor shall advise the head of the agenc- to cause or order the !ithholding of the pa-ment of an- mone- due the AO% )%+% .he AO shall li0e!ise $e held criminall- lia$le, for + failure to settle his accounts% ?or this purpose the Auditor shall/ )%+%+% 72ecute an affidavit stating the , nature3purpose of the cash advanceA the amount not li(uidated3accounted forA the fact that no li(uidation or e2planation has $een su$mitted despite demand or if e2planation has $een su$mitted, the same is not satisfactor-A the date the letter of demand !as served on or received $- AOA and other information !hich ma- $e pertinent to the case% )%+%+% #tate in the affidavit the violation of the 1 provisions of #ection =) of 6D ,558 and the penal provisions under #ection ,1= of the same la!, $oth of !hich are herein (uoted in full to !it/ F#ection =)% Limitations on "ash Advance% No cash advance shall $e given unless for a legall- authori'ed specific purpose% A cash advance shall $e reported on and li(uidated as soon as the purpose for !hich it !as given has $een served% No additional cash advance shall $e allo!ed to an- official or emplo-ee unless the previous cash advance given to him is first settled or a proper accounting thereof is made%F F#ection ,1=% 6enal 6rovision% Anviolation of the provisions of #ections 22 =), 22 of this code or an- regulation issued $the "ommission implementing these sections, shall $e punished $- a fine not e2ceeding one thousand pesos or $- imprisonment not e2ceeding si2 :9; months, or $oth such fine and imprisonment in the discretion of the

court%F :Underscoring ours;% )%+%+% .he affidavit shall $e su$mitted to the "OA + Director concerned !ho shall refer the case to the appropriate Office of the DeputOm$udsman, if the offense is committed in the regions or to the "OA Legal Office for the filing of criminal proceedings, if the offense is committed !ithin the Metropolitan Manila Area, in accordance !ith paragraphs +%,%, and +%1, respectivel-, of "OA Memorandum No% )8 ,,1 dated Decem$er 19, ,))8% 1% COVERAGE . .his "ircular shall cover onl- cash advances granted to officials and emplo-ees of an agenc- and shall not appl- to funds transferred from a #ource Agenc- to an Implementing Agenc-% .he rules and regulations on the granting, utili'ation and li(uidation of funds transferred from a #ource Agenc- to an Implementing Agenc- are stated in "OA "ircular No% )5 *,+ dated Decem$er ,+, ,))5% 11 REPEALING CLAUSE . All "irculars, Memoranda, rules, regulations and other issuances inconsistent here!ith are here$- repealed, amended or modified accordingl-% .his "ircular shall ta0e effect five :8; da-s after its pu$lication in the Official Ga'ette or ne!spaper of general circulation% &S'(.) CELSO D. GA*GAN "hairman
(Sg .! RO"#LIO $. #S%IRITU Commissioner (Sg .! SOFRONIO $. URSAL Commissioner