ACCOUNTING FOR INCOME, COLLECTIONS AND RELATED TRANSACTIONS

Members: Castro, April Doreen Chiweran, Alpine Sunshine Espejo, Kristal Joy Quizora, Pauline May Tacadena, Kristofer Edward

ACCOUNTING FOR INCOME, COLLECTIONS AND RELATED TRANSACTIONS Section 44 of Book VI of the 1987 Administrative Code provides for the accrual of revenue collected by the National Government to the unappropriated surplus of the general fund such that unless otherwise specifically provided by law, all income accruing t o the departments, offices and agencies, by virtue of the provisions of existing laws, orders and regulations shall be deposited in the National Treasury or in the duly authorized depository bank of the government. RECEIPTS/INCOME COLLECTIONS AND DEPOSIT SYSTEM Covers processes of: 1) acknowledging and reporting income/collections; 2) deposits of collections with Authorized Government Depository Bank (AGDB) or through the AGDB for the account of Treasurer of the Philippines; and 3) recording of collections and deposits in the books of accounts of the agency. INCOME vs. REVENUE In government accounting, government income represents all funds received by the government from taxes, grants, aids and borrowings; while government revenue represents funds received which do not increase any liabilities or reserves of the government. CLASSIFICATIONS OF INCOME 1. Tax Revenue encompasses all taxes imposed on taxable income, properties, and use or sale of goods and services, taxes on international trade and transactions and other taxes including fines and penalties. Also included are revenue generated from local government, schools and hospital operations. 2. General Income encompasses all types of revenue/income generated by government agencies in the exercise of their administrative and regulatory function, income from public enterprises/investments, and income from grants and donations including subsidies. METHODS OF ACCOUNTING FOR INCOME 1. Accrual Method shall be used by national government agencies when income is realized during the accounting period regardless of cash receipt. Accounts receivable is the corresponding general or specific income accounts depending on the nature and classification of transactions recorded. 2. Modified Accrual income of the agency is recorded as Deferred Credits to Income and the appropriate receivable account is debited. The income account is recognized

upon receipt of collection and the Deferred Credits to Income account is adjusted accordingly. 3. Cash Basis used for all other taxes, fees, charges and other revenue where accrual method is impractical. GENERAL PROCEDURES FOR CASH COLLECTIONS For collection of revenue from domestic sources: 1. The national government agency collects the revenue of the government from whatever source. 2. The agency remits the collections to the Bureau of Treasury through the Authorized Government Depository Bank. 3. The AGDB advises the Bureau of Treasury. 4. The Bureau of Treasury records the collections in its books. 5. The Bureau of Treasury replenishes its MDS account/s with the bank for checks negotiated. For cash collections from foreign sources: 1. Foreign Funding Institution remits the amounts in foreign currency to the Bangko Sentral ng Pilipinas (BSP). 2. The BSP advises Bureau of Treasury of the receipt of the foreign currency remittance. 3. The Bureau of Treasury records the receipts in its books in peso value equivalent. 4. Upon receipt of Notice of Cash Allocation (NCA) from the Department of Budget and Management, the Bureau of Treasury advises the bank to transfer cash to the agency. 5. The government agency records the NCA in its books.

TYPES OF COLLECTIONS 1. 2. 3. 4. WITHOUT AUTHORITY TO USE WITH AUTHORITY TO USE AUTHORITY WITH LIMITATIONS INCOME FROM SALE OF EQUIPMENT GRANTS AND DONATIONS INTENDED FOR AGENCY USE 5. MISCELLANEOUS COLLECTIONS

RECEIPT AND COLLECTION PROCESS 1. 2. 3. 4. 5. The Collecting Officer (CO) receives payment from creditors and issues official receipt. The CO records collections in Cash Receipt Record. The CO deposits collections. The CO records deposits in Cash Receipt Record. The CO prepares the Report of Collections and Deposits and forwards to accounting unit with copies of official receipts and validated Deposit Slips. 6. The accounting unit prepares Journal Entry Voucher and records in Cash Receipt Journal.