LOCAL TREASURY OPERATIONS

MANUAL

EXPENDITURES
AND
DISBURSEMENTS

BOOK THREE
Chapter 1. CONCEPT OF FUNDS89

Section 70. Definition of Fund. - "Fund" is a sum of money or other resources set aside
for the purpose of carrying out specific activities or attaining certain objectives in
accordance with special regulations, restrictions or limitations, and constitutes an
independent fiscal and accounting entity. (Sec. 306 (h), LGC)

"Government Funds" include public moneys of every sort and other resources pertaining
to any agency of the government. (Sec. 3 (2), P.D. No. 1445)

Section 71. General Classification of Funds. - Government funds are generally classified
into General Fund, Special Fund and Trust Fund. In the Local Government Units, the
classifications of funds are as follows:

A. Local Funds - Every local government unit shall maintain a General Fund which shall be
used to account for each 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 f rom, any other
fund. (Sec. 308, LGC)

Special Accounts shall be maintained in the General Fund for the following:

i. Public utilities and other economic enterprises;

ii. ii. Loans, interests, bond issues, and other contributions for specific purposes;
and
iii. Development projects funded from the share of the local government unit
concerned in the internal revenue allotment and such other special accounts
which may be created by law or ordinance.

Receipts, transfers, and expenditures involving the foregoing special accounts shall be
properly taken up in the accounts of the respective Special Accounts.

Profits or income derived from the operation of public utilities and other economic
enterprises, after deduction for the cost of improvement, repair and other related
expenses of the public utility or economic enterprise concerned, shall first be applied for
the return of the advances or loans made therefor. Any excess shall form part of the
General Fund of the local government unit concerned. (Sec. 313, LGC)

8 The discussion under expenditures and disbursements includes a brief but concise discussion of the concept of funds which are
9

the very subject of expenses and disbursements, the concept of appropriations, al/ot111ents, and obligations whic/1 constitute the
budgetary stages before expenditures and disbursements take place, as well as the related internal control guidelines to ensure
good governance and accountability. On the other hand, the revised complete budget process for LG Us is already thoroughly
discussed in the Updated Budget Operations Manual (UBOM) for LG Us promulgated by the Department of Budget and
Management.
No separate books of accounts shall be maintained fr these special accounts. Transactions
pertaining thereto shall be recorded in the General Fund books. (Sec. 353, NGASfor LGUs)

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

1) Special Education Fund90 - (a) Special Education Fund shall consist of the respective
shares of provinces, cities, municipalities and barangays in the proceeds of the additional
one percent (1 %) tax on real property (Sec. 309 (a), LGC), which shall be automatically
released to the local school boards. Provided, that, in case of provinces, the proceeds
shall be divided equally between the provincial and municipal school boards. Provided,
however, That the proceeds shall be allocated for the following purposes as determined
and approved by the Local School Board:

a) operation and maintenance of public schools;

b) construction and repair of school buildings, facilities and equipment;
c) educational research;
d) purchase of books and periodicals; and
e) sports development. (Sec. 272, LGC)

The corresponding budget shall be prepared by the Local School Board, which shall
authorize the Local Treasurers concerned to disburse the funds from the Special
Education Fund.

2) Trust Funds - Trust Funds 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 guaranty for the
fulfillment of some obligation. A Trust Fund shall only be used for the specific purpose
fr which it was created or fr which it came into the possession of the local government
unit. (Sec. 309 (b), LGC)

Section 72. Fundamental Principles Governing Utilization of Local Funds.

- The utilization of local funds shall be governed by the following fundamental principles:

a) No money shall be paid out of the local treasury except in pursuance of an

appropriations
ordinance or law; (Sec. 305 (a), LGC)

b) Local government funds and monies shall be spent solely for public purposes; (Sec. 305
(b), LGC)

c) Trust Funds in the local treasury shall not be paid out except in fulfillment of the
purpose for which the trust was created or the funds received; (Sec. 305, (e), LGC)

d) Fiscal responsibility shall be shared by all those exercising authority over the
financial
affairs, transactions, and operations of the local government units; (Sec. 305 (/), LGC)
90
SEF
e) Claims against government funds shall be supported with complete documentation; (Sec. 138
(, Book Ill, Vol. I, GAAM)

f) No contract involving the expenditure of public funds shall be entered into unless there is an
appropriation therefor, the unexpended balance of which, free of other obligations, shall be
sufficient to cover the proposed expenditure; (Sec. 85 (]), P. D. No. 1445)

g) Expenditures of government funds or uses of government property in violation of law

or regulations shall be the personal liability of the official or employee found to be
directly responsible therefor; (Sec. 103, P. D. No. 1445)

h) Disbursements or disposition of government funds or property shall invariably bear

the approval of the proper officials; (Sec. 138 (e), Book 111, Vol. I, GAAM) and

i) All laws and regulations applicable to financial transactions shall be faithfully adhered
to.(Sec. 138 (g), Book Ill, Vol. I, GAAM

Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT AND

OBLIGATIONS/EXPENDITURES

Section 73. Definition and Types of Appropriation. - (a) "Appropriation" refers to an

authorization made by ordinance, directing the payment of goods and services from local
government funds under specified conditions or for specific purposes. (Sec. 306 (b), LGC)

(b) Generally, there are appropriations for a general purpose requiring expenditures to be made
for a number of incidental purposes without specifying an exact amount for any one of
the incidental purposes. There are those which go into considerable detail and limit the
expenditure to certain amounts for certain very specific purposes. Specifically,
appropriations may be classified, as follows: (Sec. 140, Book 111, Vol. I, GAAM)

1) Annual Appropriation. - An Annual Appropriation is an appropriation consisting of

specified amounts for salaries, wages, and sundry expenses, etc., authorized by the
sanggunian as necessary for the regular operations of the local government unit during any
given year (Sec. 141 , Book 111, Vol. I, GAAM). This is also the "Annual Budget" of a local
government unit which refers to a financial plan embodying the estimates of income and
expenditures for one (1) fiscal year. (Sec. 306 (a), LGC)

2) Continuing Appropriation. - A Continuing Appropriation refers to an appropriation

available to support obligations for a specified purpose or project, such as those for the
construction of physical structures or for the acquisition of real property or equipment, even
when these obligations are incurred beyond the budget year. (Sec. 306 (e), LGC)

3) Supplemental Appropriation - A Supplemental Appropriation is one prepared to adjust the

equilibrium of the first approved budget which has been disturbed by current economic,
political or social conditions, or to provide an additional amount to the original appropriation
which proved to be inadequate or insufficient for the particular purpose intended. (Sec. I 44,
Book III, Vol. I, GAAM

No local ordinance providing for a Supplemental Budget shall be enacted, except when
supported by funds actually available as certified by the Local Treasurer or by new revenue
sources.

A Supplemental Budget may also be enacted in times of public calamity by way of budgetary
realignment. Such ordinance shall clearly indicate the sources of funds available fr
appropriations, as certified under oath by the Local Treasurer and Local Accountant and
attested by the Local Chief Executive, and the various items of appropriations affected and
the reasons for the change. (Sec. 321, LGC)

Section 74. Use of Appropriated Funds and Savings. - Funds shall be available exclusively

fr the specific purposes for which they have been appropriated. No ordinance shall be
passed
authorizing any transfer of appropriation from one item to another. However, the Local
Chief Executive or the presiding officer of the sanggunian concerned may, by ordinance, be
authorized to augment any item in the approved annual budget for their respective offices 91
from savings in other items within the same expense class of their respective appropriations.
(Sec. 336, LGC).

Section 75. The Allotment System in Local Government Units. -

A. The Local Budget - The local budget is based on estimated income and program of
expenditures for a given year. It specifies annual expenditure ceilings. However,
actual releases of funds and disbursements depend on the collection and receipt of
funds by the local government unit.

Since funds will have to be committed and disbursed even as revenues are being collected,
there is a need for a system to ensure that obligations and payments will not exceed the
approved budget and the amount that will ultimately be collected is available.

Hence, we use one system of budget control which is the Allotment System to ensure that
obligations incurred will not exceed appropriations or authorizations made by appropriation
ordinance, directing the payment of goods and services from local government funds under
specified conditions or purposes.

Under the Allotment System, obligations may be incurred as long as it is within the allotment
ceiling even if the total amount of the obligation is not supported by cash in the bank at the
time it is incurred. This provides flexibility in the implementation of programs and projects.
(. 87, UBOM.for LGU/2)

B. Definition of Allotment - An allotment is an authorization issued by the Local Chief

Executive to a department/office of the local government unit, which allows it to incur

91
For the purpose of this provision," respective offices" refer to the various departments/offices/units under either the LCE or
the Local Sanggunian.
2
9 Updated Budget Operations Manual for Local Goverment Units
 obligations for specified amounts within its appropriations (p. 87, UBOM for LGUs). The

authorization is called the Allotment Release Order93, which is a specific authority to incur
obligations not exceeding the amount for the specific purpose indicated. (. 88, UBOMfor

LG Us)

C. Control Devices Used in the Allotment System:94

I) Local Budget Matrix95 - The Local Budget Matrix is the yearly overall financial plan of
the local government unit equivalent to its approved appropriation disaggregated into
components or categories. The category of the expense item as reflected in the Local
Budget Matrix determines the timing and magnitude of the release of allotment.

Through the Local Budget Matrix, a comprehensive authority is issued to each

department/office to incur obligations not exceeding a certain amount for a specified
period usually for regular/current operating expenditures. This device allows the
imposition of reserves, non-release of any unprogrammed portion of the appropriation,
earmarking of funds for clearance and withholding of funds for later release to provide for
any shortfll in the collection of anticipated revenues.

The Local Budget Matrix classifies budgetary items under Not-Needing Clearance 96,
Needing Clearance97, Reserve, Later Release, and Unprogrammed Appropriation. (p. 88,
UBOMfor LGUs)

2) Cash Program - The Cash Program must be able to facilitate the management of cash
such that it is available when it is needed fr payment of obligations and at the same time
optimizes its utilization; ensures that released allotment are adequately covered by
available cash and/or future collections; and provides information fr control of
expenditures and future planning of activities.98 The tools99 used in cash programming
are the Cash Flow Forecast and the Cash Flow Analysis.

3) Physical Performance Targets - The Physical Performance Targets reflect the targeted
units of work under each program/activity/project (P/A/P) for each department/office
based on the historical data of peaks and slumps of activities/tasks and the peculiar
requirements of certain P/A/Ps. The plan is prepared for the entire calendar year with
quarterly/semi-annual targets for the departments/offices to achieve. (. 95, UBOM for
LGUs)

Section 76. Obligation of Local Funds. -

9
3ARO
94
The detailed guidelines in the preparation of the local Budget Matrix, Cash Program and Performance Targets
are contained in the UBOM for LGUs.
95
LBM
96NNC
97 NC
9s p. 91, UBOM for LG Us
99
The detailed discussion of these tools is found in Book V of this Manual.
A. Definition of Obligation - Obligation refers to the amount committed to be paid by the
local goverment unit for any lawfl act made by an accountable officer for and in behalf of
the local goverment unit concered. (p. 97, UBOMfor LGUs)

Obligation shall be limited to the available allotment for the purpose. Consistent with the
New Government Accounting System, obligations shall be taken up in the registries 100 as
they are incurred. Accordingly, expenditures and obligations incurred during a fiscal year
shall be taken up in the accounts of that year. (p. 98, UBOMfor LGUs)

B. Steps in the Obligation Process: 101

I) The Head of the requesting office in the local government unit shall prepare the
Obligation Request10 and the Disbursement Voucher 103 and certify on the necessity
and legality of changes to appropriation and allotment under his direct supervision.
He shall also certify to the validity, propriety and legality of the supporting
documents (Box A of ObR);

2) The Local Budget Officer shall certify as to the existence of available appropriation
that has been legally made for the purpose (Box B of ObR) and shall maintain the
appropriate Registries of Appropriation, Allotments and Obligations as prescribed
under the New Government Accounting System for Local Government Units; and

3) The Local Accountant shall certify the obligation of allotment and completeness of
supporting documents (Box A of DV).

C. Adjustment/Corrections of Obligations - Any corrections/adjustments made after the

processing of the claims but before payment is made shall be effected either through
a positive entry or negative entry in the Obligations Incurred column of the Registries
of Appropriations, Allotments and Obligations.

Section 77. Government Expenditures. –

A. Definition of Government Expenditures - Government Expenditures include all charges

against the fund of the local government unit for current operating expenditures, capital
outlays and provisions for retirement of long term obligations. The charges are both the
amounts actually paid and those incurred and recorded as liabilities to be paid in the future.

(Sec. 154, Book III, Vol. I, GAAM)

B. Classification of Government Expenditures - Government expenditures are classified as

follows:
100
Registries ofAppropriations, Allotments and Obligations (RAAOs) 101 COA Circular No. 2006-002, dated Januan; 31,
2006
102
ObR, LTO Form 40
103DV
1) Current Operating Expenditures - "Current Operating Expenditures" refer to
appropriations for the purchase of goods and services for current consumption or fr
benefits expected to terminate within the fiscal year, including goods and services
that will be used or consumed during the budget year. (Sec. 306 (, LGC)

Current Operating Expenditures are classified into:

1. Personal Services104; and

11. Maintenance and Other Operating Expenses 105 (Sec. 155 (a), Book Ill, Vol. I,
GAAM

2) Capital Outlays - Capital Outlays refer to appropriations for the purchase of goods
and services, the benefits of which extend beyond the fiscal year and which add to the
assets of local government unit concerned, including investments in public utilities
such as markets and slaughterhouses. (Sec. 306 (d), LGC)

C. Liability for Unlawful Expenditures. - Expenditures of funds or use of property in

violation of Title V (Local Fiscal Administration) of the Local Government Code of 1987
and other laws shall be a personal liability of the official or employee responsible therefor.
(Sec. 351, LGC)

Any official or employee of the local government unit knowingly incurring any obligation, or
authorizing any expenditure in violation of the provisions of the Administrative Code of
1987 (E. 0. No. 292) or taking part therein, shall be dismissed from the service, after due
notice and hearing by the duly authorized appointing official. If the appointing official is
other than the President and should he fail to remove such official or employee, the President
may exercise the power of removal. (Sec. 43, Book VJ, E. 0. No. 292)

D. Prevention of Irregular, Unnecessary, Excessive, Extravagant or Unconscionable

Expenditures.106 - The following types of local expenditures shall not be allowed:

1) Irregular Expenditures - (a) The term "Irregular Expenditure" signifies that the
expenditure incurred does not adhere to established rules, regulations, procedural
guidelines, policies, principles or practices that have gained recognition in law. Irregular
expenditures are incurred without conforming to prescribed usages and rules of
discipline. There is no observance of an established pattern, course, mode of action,
behavior, or conduct in the incurrence of an irregular expenditure. A transaction
conducted in a manner that deviates or departs from, or which does not comply with
standards set, is deemed irregular. An anomalous transaction which fails to follow or
which violates appropriate rules of procedure is likewise irregular. Irregular expenditures
are different from illegal expenditures as the latter would pertain to expenses incurred in

104
PS
105
MOOE
106 IUEEU, COA Handbook on Goverment Expenditures, 2002
violation of the law, while the former would pertain to violation of applicable rules and
regulations other than the law. (Sec. 162, Book III, Vol. I, GAAM

(b) The following are considered irregular expenditures:

1) Payment of claims under a contract awarded not strictly in accordance with

the prescribed modes of procurement of supplies, materials and equipment.

2) Purchase of items from jobbers or middlemen in violation of a government

policy to acquire the same directly from reputable manufacturers or their
licensed distributors.

3) Payment of allowances and other forms of additional compensation without

proper authority.

4) Payment of repair of government property or equipment undertaken by shops,

mechanics or contractors not duly accredited in accordance with an existing
government policy, except in places where there is no accredited shop in the
locality, or where the accredited shop does not have sufficient facilities, or
where the cost of services of the accredited shop is relatively high, or
completion of repairs will suffer delay as certified to by the Local Chief
Executive or his duly authorized representative.

5) Payment for emergency purchase, where there is no emergency. As defined

under the General Appropriations Act, emergency involves the loss of, or
danger to, life and/or property or that which will cause detriment to the public
service.

6) Reimbursement of expenses incurred by persons other than authorized

representatives of the LOU for attending conferences, meetings and other
official functions.

7) Payment of salaries or wages of laborers under a labor payroll to persons other

than the payees unless properly authorized by the payees.

8) Payments made on the basis of split requisitions, purchase orders, vouchers or

checks, unless approved by proper authority of the LGU.

9) The use of government motor vehicles with an improperly accomplished trip

ticket, or without the marking: "For Official Use Only" and the name of the
office, except when appropriate exemption is secured in accordance with
existing regulations.

10) Bringing home government motor vehicles after office hours by officials to
whom these are assigned, except when the LOU does not have a garage that
 could ensure the safety of the vehicle, or when in terms of mileage/time it is more economical
fr the official to park the vehicle at his residence.

11) Office equipment and property without the proper identification or inventory
markings.

2) Unnecessary Expenditures - (a) The term "Unnecessary Expenditures" pertain to

expenditures which could not pass the test of prudence or the obligation of a good fther
of a family, thereby not responsive to the exigencies of the service. Unnecessary
expenditures are those not supportive of the implementation of the objectives and
missions of the agency or local government unit relative to the nature of its operation.
This could also include incurrence of expenditure not dictated by the demands of good
government, and those the utility of which cannot be ascertained at a specific time. The
mission and thrusts of the agency or local goverment unit incurring the expenditure
must be considered in determining whether or not the expenditure is necessary. An
expenditure that is not essential or that which can be dispensed with without loss or
damage to property is considered unnecessary. (Sec. 163, Book Ill, Vol. I, GAAM

(b) The following expenditures are considered unnecessary:

1) Grant of overtime pay for work that is not urgent in nature as to require completion
within a specified time or that can be undertaken during regular office hours.

2) Expenses for advertisement of anniversaries, etc., in newspapers, television or

radio merely for publicity or propaganda purposes except when the nature of
the LGU's mission would require such expenses as in the case of promotion
of trade and business.

3) Use of air conditioners when not needed, or even during the absence of the
official in whose room the air conditioner is installed.

4) Use of table lamps while working in the office where the room is adequately
illuminated from the ceiling lights.

3) Excessive Expenditures - (a) The term "Excessive Expenditures" signify unreasonable

expense or expenses incurred at an immoderate quantity or exorbitant price. It also
include expenses which exceed what is usual or proper as well as expenses which are
unreasonably high, and beyond just measure or amount. They also include expenses in
excess of reasonable limits. (Sec. 164, Book III, Vol. 1, GAAM

(b) The term "Excessive Expenditures" pertains to the variables of Price and Quantity:

1. Price - The price is excessive if it is more than ten ( I 0%) allowable price variance between
the price for the item bought and the price of the same item per canvass of the auditor.
 11. Volume Discounts - The price is deemed excessive if the discounts
allowed in bulk purchases is not reflected in the price offered or in the
award or in the purchase/payment document.

(c) In determining whether or not the price is excessive, the following factors may be
considered:

1. Supply and Demand Forces in the Market -Where there is a shortage

of supply of a particular product, such as cement or GI sheets, prices
of these products may vary within a given day.

11. Government Price Quotations.

n1. Warranty of Products or Special Features -The price is not

necessarily excessive when the service/item is offered with warranty
or special features which are relevant to the needs of the LGU and are
reflected in the offer or award.

1v. Brand of Products - Products of recognized brand coming from

countries known for producing such quality products are relatively
expensive. An example are Solingen scissors which are made in
Germany which are more expensive than scissors which do not carry
such brand are not made in Germany.

(d) The following expenditures are considered excessive:

1. Overpricing of purchases characterized by grossly exaggerated or

inflated quotations, in excess of the current and prevailing market
price by a ten percent (10%) variance from the purchased item.

11. Payment fr repair of government equipment at a cost exceeding thirty

percent (30%) of the current market price of the same or similar
equipment.

iii. Expenditures fr supplies and materials in quantities beyond that

required and needed by the LGU fr a determinable period, resulting
in overstocking.

4) Extravagant Expenditures - (a) The term "Extravagant Expenditures" signifies those

incurred without restraint, judiciousness and economy. Extravagant expenditures exceed
the bounds of propriety. These expenditures are immoderate, prodigal, lavish, luxurious,
wasteful, grossly excessive, and injudicious. (Sec. 165, Book Ill, Vol. I, GAAM

(b) Factors such as the nature of the LGU's operations, missions, profitability of past
operational performance, and availability of financial resources derived from income or
retained earnings, must be taken into account in the matter of determining whether or not
expenditure is extravagant. The term "Extravagant Expenditure" pertains to the variables
of quantity relative to the level or rank of the user and the purpose fr such expenditure.

c) The following expenditures may be considered extravagant:

A. Purchase of luxurious and expensive office furnishings fr office buildings (e.g.

rugs, carpets, draperies, wall decors, utensils, desks, chairs, lamps), except fr the
Offices of the President of the Philippines; the Justices of the Supreme Court,
Intermediate Appellate Court and other courts of equivalent rank; the Speaker of
the House of Representatives; and the Heads and Members of the Constitutional
Commissions; the Department Secretaries; Governors; Mayors; the Bureau
Directors and their equivalent ranks in government corporations and other
agencies, as warranted by their resources.

B. Luxurious furnishings for government buildings except those intended for

showcase, trade and commerce, promotions of arts and culture, and use of
dignitaries.

C. Purchase of expensive cars, except for the use of the following officials:

1) The President and the Vice-President of the Philippines; the Senate

President; the Speaker of the House of Representatives; the Justices of
the Supreme Court; and the Heads of Constitutional Commissions -
Mercedes Benz or its equivalent brand

2) The Members of Congress; the Members of the Constitutional

Commissions; the Department Secretaries; the Heads of Agencies;
Governors of Class A provinces; Mayors of Class A cities and
municipalities, the Justices and the Judges of lower Courts - Heavy
and Medium cars.

D. Installation of highly sophisticated outdoor signs, billboards and neon signs

advertising the office, except fr banks, trading corporations, hotels, or buildings
used for culture and arts.

E. Purchase of wines, liquors, cigars and cigarettes, except when served to foreign
dignitaries during state functions and government-sponsored international
conferences and conventions.

F. Payment for rental of expensive halls or rooms in luxury hotels or restaurants

used for meetings and other official functions except when such hotels or
restaurants are used for government-sponsored international conventions,
meetings and the like

5) Unconscionable Expenditures - The term "Unconscionable Expenditures" signify

expenses without knowledge or sense of what is right, reasonable and just and not guided
or restrained by conscience. These are unreasonable and immoderate expenses incurred in
violation of ethics and morality by one who does not have any feeling of guilt for the violation.
(Sec. 166, Book Ill, Vol. I, GAAM107

Chapter 3. DISBURSEMENTS OF LOCAL FUNDS

Section 78. Definition of Disbursement. - Disbursements constitute all payments
made during a given period either in currency, by check, through bank and electronic
transfrs, telegraphic transfers, letters of credit, credit/debit cards and other non-conventional
modes of payment.

Disbursement of local fnds or the settlement of goverment payables/obligations must be made in

accordance with the appropriation ordinance authorizing the annual or supplemental
appropriations without the prior approval of the sanggunian concerned.

Section 79. General Principles Governing Fund Disbursements:

The Official Fiscal Year. - The official fiscal year of local government units is the
period beginning with the first ( 1 51) day of January of a given year and ending with the
thirty-first (3151) day of December of the same year.

B. Disbursements in Accordance with Annual or Supplemental Appropriations.

Disbursements of local funds shall be made in accordance with the ordinance authorizing
the annual or supplemental appropriations without the prior approval of the
sanggunian concerned. (Sec. 346, LGC)

The approved budget and/or appropriation and corresponding release of allotments in

the local government units shall be the basis for the disbursements of its funds for the
fiscal year. The appropriations insofar as practicable, shall be in a lump sum amount
set aside by programs and further subdivided into Current Operating Expenditures
composed of Personal Services and Maintenance and Other Operating Expenses and
Capital Outlays. Further, the object of expenditures for each allotment class should be
specified to be able to properly monitor expenditures.

C. Use of Appropriated Funds and Savings. 108 - Funds are available exclusively for
the specific purpose for which they have been appropriated.

D. Restriction Upon Limit of Disbursements. - Disbursements in accordance with

appropriations in the approved annual budget may be made from any local fund in
the custody of the Local Treasurer, but the disbursement from any local fnd shall in no
case exceed fifty percent (50%) of the uncollected estimated revenue accruing to such
local fund in addition to the actual collections. Provided, however, That no cash
overdraft in any local fund shall be incurred at the end of the fiscal year.

107
As a guide to the proper handling of' expenditures, the list of minimum documentary requirements for
specific
expense item is presented in LTO Annex 41. this Manual.
1s See Sec. 74, this Manual
 In case of emergency from typhoon, earthquake, or any other calamity, the
sanggunian concerted may authorize the Local Treasurer to continue making disbursements
from any local fund in his possession in excess of the limitations herein provided, but only
for such purposes and amounts included in the approved annual budgets.

Any overdraft which may be incurred at the end of the year in any local fund by virtue of the
provisions hereof, shall be covered with the first collections of the immediately succeeding
fiscal year accruing to such local fund. (Sec. 337, LGC)

E. Prohibitions on Disbursements. - Disbursements of public funds shall be guided by the

following prohibitions:

l) Advance Payments. - No money shall be paid on account of any contract under

which no services have been rendered or goods delivered. (Sec. 338, LGC)

2) Expenditures for Religious or Private Purposes. - No public money or property

shall be appropriated or applied fr religious or private purposes. (Sec. 335, LGC)

3) Expenses for Reception and Entertainment. - No money shall be appropriated,

used, or paid for entertainment or reception except to the extent of the representation
allowances authorized by law or for the reception of visiting dignitaries of foreign
goverments or foreign missions, or when expressly authorized by the President in
specific cases. (Sec. 343, LGC)

4) Cash Overdrafts in the Treasury. - An overdraf existing in the accounts of a

Provincial, City, Municipal or Barangay Treasurer signifies that funds belonging to
other branches of Government or to private entities which have been deposited with
the Local Treasurer for safekeeping or for disbursement fr certain specified purposes
have been used by him and diverted to purposes other than those for which they are
intended, in violation of the statutory provision that trust funds shall not be paid out
of any treasury except in fulfillment of the purpose for which the trust was created or
fund 1eceived. (Sec. 612, RMIT)

Local Treasurers as financial officers are duty-bound to make an analysis of the

financial status of their respective local government units, which shall, from time to
time, be brought to the attention of the Local Chief Executive concerned, with the end
in view of apprising him of the actual financial condition of the local goverment
unit. This is important especially when there is imminence of overdraf in any or all
of the funds of the local goverment unit, in order that the budgets may be readjusted
or an amended program of expenditures be adopted for the remaining months of the
fiscal year. (Sec. 6 I5, RMIT)

Any public officer who shall apply any public fnds or property under his
administration to any public use other than that for which such fnds or property was
appropriated by law or ordinance shall suffer the penalty of prision correccional in its
minimum period or a fine ranging from one-half to the total value of the sum misapplied,
if by reason of such misapplication, any damage or embarrassment shall have resulted to the
public service. In either case, the offender shall also suffer the penalty of temporary special
disqualification.

If no damage or embarrassment to the service has resulted, the penalty shall be a fine from5 to
50 percent of the same misapplied. (Article 220, Revised Penal Code)

Section 80. Basic Requirements on Disbursements fom General Fund and Special
Education Fund. - Disbursements fom the General Fund and Special Education Fund shall
require the following:

l) Certification as to existence of appropriation that has been legally made for the purpose by
the Local Budget Officer (Box "B" ofObR);

2) Certification as to necessity, legality, as well as to the validity, propriety and legality of

supporting documents (Box "A " of ObR) by the head of the requesting department or office
who has administrative control of the local fnd concered. In case of temporary absence or
incapacity of the department head or chief of office, the officer next-in-rank shall
automatically perform his function and shall be fully responsible therefor. For the Special
Education Fund, the Division/City School Superintendent or the District Supervisor
concerned, as the case may be, shall make the certification.

3) Certification in the Disbursement Voucher (Box "A") by the Local Accountant that allotment
has been obligated fr the purpose and the supporting documents are completed;

4) Certification in the Disbursement Voucher (Box "B") by the Local Treasurer that funds are
available fr the purpose;

5) Approval by the Local Chief Executive, except for regularly recurring administrative
expenses such as: payrolls fr regular or permanent employees, expenses for light, water,
telephone and telegraph services, remittances to government creditor agencies such as GSIS,
BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM and others, where the authority to
approve may be delegated.

The Disbursement Voucher for expenditures appropriated for the operation of the
sanggunian shall be approved by the provincial Vice-Governor, the city Vice-Mayor or the
municipal Vice-Mayor, as the case may be. The disbursements for Special Education Fund
shall be approved by the Local Chief Executive concered as co-chairman of the Local
School Board.

6) Necessary documents supporting the disbursement vouchers and payrolls are reviewed by the
Local Accountant/Head of Accounting Unit.

Section 81. Basic Requirements on Disbursements from Trust Funds. - (a) Disbursement from
the Trust Fund shall require the fllowing:
I) Certification by the Local Treasurer that Trust Funds are available for disbursements
(Box "B" ofDisbursement Voucher);

2) Certification by the Local Accountant that supporting documents are complete (Box "A"
ofDisbursement Voucher);

3) Approval by the Local Chief Executive/authorized representative or the administrator of

the Fund (Box "C" ofDisbursement Voucher); and

4) Necessary documents are attached to the disbursement vouchers/payrolls.

(b) Trust Funds maintained fr projects implemented by the local goverment unit sourced from
domestic or foreign grants/loans (local/freign-assisted projects) should be utilized strictly in
compliance with the provisions of any Memorandum of Agreement (MOA), Memorandum of
Undertaking (MOU) or other agreements signed by the local goverment unit with other
government agencies or private entities. In no case shall these trust fnds be used for purposes
other than what is provided in the MOA/MOU, or temporarily transferred to other funds of
the
local government unit, since this constitutes violation of the grant/Joan agreements of the
government with the local/freign donors. Funds received from these sources shall be
maintained
in separate bank accounts and shall never be commingled with other funds of the local
goverment unit.

Section 82. Preparation of Disbursement Vouchers and Payrolls. - Disbursements in local

government units shall be covered by Disbursement Vouchers or Payrolls supported with
duly approved Obligation Request and adequate supporting documents. Disbursements made
without the required Disbursement Voucher/Payroll shall not constitute a credit to the
accountability of the accountable officer concerned.

A. Disbursement Voucher'09 The Disbursement Voucher shall be used fr all money claims.
The following guidelines in the preparation of the Disbursement Voucher shall be
observed:

I) The Disbursement Voucher shall be printed in one whole sheet of legal size bond paper.
This shall be prepared in three (3) copies to be distributed as fllows:

Original Accounting Unit

Duplicate Cash Unit
Triplicate Payee

2) The Accounting Unit shall stamp the date of receipt on the fce of the Disbursement
Voucher and shall assign a number to the Disbursement Voucher. The Disbursement
Voucher Number shall also be stamped in all pages of the supporting documents attached
thereto;

3) The Number of the Obligation Request shall be indicated in the Disbursement Voucher;

109 DV, LTO Form 42

4) The Responsibility Center (Department/Office/Unit/Project and Code) where the
disbursement shall be charged should be indicated;

5) The Local Accountant or his authorized representative shall certify in Box "B" of the
Disbursement Voucher, as to the obligation of allotment for the purpose as indicated, and
completeness of supporting documents. The certifying officer shall affix his signature,
print his name, and indicate his position and the date signed;

6) The Local Treasurer or his authorized representative shall certify in Box "C" of the
Disbursement Voucher on the availability of funds. The certifying officer shall affix his
signature, print his name, and indicate his position and the date signed;

7) The Local Chief Executive or his authorized representative shall approve the payment
in Box "D" of the Disbursement Voucher. The approving officer shall affix his
signature, print his name, and indicate his position and the date signed;

8) The claimant or his duly authorized representative shall acknowledge the payment in
check/cash and indicate the date of receipt thereof in Box "E" of the Disbursement
Voucher. The claimant/payee shall affix his signature on the spaces provided in the
Disbursement Voucher and shall indicate the number and the date of the check, the bank
where the check is drawn, and the number and the date of the Official Receipt or other
relevant document issued to acknowledge the payment; and

10
9) The number and the date of the Journal Entry Voucher' shall likewise be indicated in
the Disbursement Voucher.

B. Payroll - The Payroll is used for the payment of salaries and other emoluments of
goverment employees. It may be in the form of the General Payroll 111 or the DaiIy Wage
Payroll112. It shows the names of the employees, their monthly salary/emolument, the amount
earned for the period, salary deductions and the net amount paid. The signatures of the
employees on the payroll are the evidence of payment. All unclaimed wages within a period
of fifteen ( 15) days shall be refnded to the collecting officer who shall issue an official
receipt in acknowledgment thereof. Subsequent payment for the unclaimed wages must be
made through individual Disbursement Vouchers and checks.

The payroll shall be prepared in four (4) copies. The original and another copy of the paid
payroll shall support the Report of Disbursements to be submitted to the Chief Accountant
for entry in the Journal of Disbursements. The other two (2) copies of the payroll shall be
submitted to the Local Administrative Officer, one copy fr his file and the other copy fr the
recording of payroll changes to serve as guide in the preparation of the payroll for the
subsequent periods.

10
]EV
111GP, LTD Form 43
1 DW, LTD Form 44
 Section 83. Modes of Disbursements. - (a) Disbursements covered by Disbursement Vouchers
and/or Payrolls are usually paid either by check or in cash. Other modes of disbursements
include direct payments and/or bank transfers.

Ideally, cash should be handled under the general principles of the Imprest System where all
payments must be made by check and only payments in small amounts may be made in cash
through the petty cash fund. (Sec. 172, Book III, Vol. I, GAAM

(b) Modes of disbursements:

I. Disbursements by Checks.113 - Upon receipt of the Disbursement Voucher for payment,

the Local Treasurer shall verify the propriety of the certifications and approvals required
therein. If complete, the Local Treasurer shall then draw a check in payment therefor.

l) Preparation and Signing of Checks. - Checks shall be drawn by the Local

Treasurer and countersigned by the Local Administrator.

In case of temporary absence or incapacity of the aforesaid officials these duties shall
devolve upon their immediate assistants. (Sec. 345, LGC)

In the case of municipalities where no Administrator has been appointed, checks shall
be countersigned by the Municipal Mayor. In case, however, of expenditures for the
operation of the sanggunian, checks drawn thereon shall be countersigned by the
provincial Vice Governor, the city Vice Mayor, or the municipal Vice Mayor, as the
case may be. (Sec.43, COA Circular No. 92-382)

Checks shall always be made payable to a specific person or entity and never to
"Cash" or "Bearer". All checks shall be crossed fr deposit to the payee's account, except
checks which are payable to government employees. Unused checks shall be kept in the
vault, which shall be accessible only to the Local Treasurer. The signing or
countersigning of blank checks shall not be allowed.

2) Release of Checks. - The Local Treasurer shall release the check only to the
payee or his duly authorized representative. It shall be released only when the
Accountant's Advice of Local Check Disbursements 114 has been prepared and
submitted to the bank. All checks issued shall be recorded chronologically in the
Control Book of Checks Issued/Check Register 115. Upon release of the check, the payee
shall be required to issue an Official Receipt for the payment received and/or affix his
signature and the date of receipt of the check on the Disbursement Voucher and the
Control Book of Checks Issued. The Disbursement Voucher and the supporting
documents shall be stamped "PAID" by the Local Treasurer immediately after claim
is paid to prevent their possible re-use.

The process flow on the disbursements by checks is in Annex 4 7and the process .flow on payroll
disbursement though banks is presented in Annex 52, both ofthis Manual
.
AALCD, LTO Form 48
114

m CReg., LTO Form 45

3) Preparation of Report of Checks Issued.116 - The checks issued including
cancelled or voided checks shall be recorded chronologically in the Report of
Checks Issued which shall be prepared for each fund weekly in three (3) copies by
the Local Treasurer. The original and duplicate copies of the Report of Checks
Issued together with the claimed vouchers/payrolls and other supporting
documents shall be submitted to the Accounting Department. Unclaimed vouchers
and all supporting documents shall remain with the Local Treasurer until paid and
duly noted as "Unclaimed" in the Report of Checks Issued.

4) Spoiled and Stale Checks. - Checks may be cancelled when they become
spoiled or stale. A check is considered spoiled when it is torn, mutilated, defaced,
or contains erasures/errors affecting the genuineness of material information. On
the other hand, a check is considered stale when it is outstanding for over six
months from date of issue, or as prescribed by the government authorized
depository bank. A spoiled or stale check shall be marked "CANCELLED" on its
fce and reported, as follows:

a) For checks immediately cancelled and fr which the Report of Checks

Issued has not yet been prepared, the cancelled check shall be attached to
the said Report of Checks Issued and reported chronologically with the
other checks issued and the word "Cancelled" shall be indicated on the
report.

b) For stale checks which have been unclaimed and thus, the original
Disbursement Voucher and supporting documents are still with the Local
Treasurer, the Disbursement Voucher shall also be marked "Cancelled."
The cancelled check shall be reported and attached to the Report of
Checks Issued prepared at the period of cancellation. The cancelled check
shall be presented in the Report of Checks Issued afer the last check
issued for the period indicated in the report. The original Disbursement
Voucher and supporting documents shall be returned to the Accountant
who shall prepare a Journal of Entry Voucher to record the transaction as
Accounts Payable.

c) For checks which became spoiled or stale in the hands of the payee and
which require replacement, a new check may be issued after the stale
check has been submitted by the payee to the Local Treasurer, marked
"CANCELLED" and the authenticity of the claim established. A
certification fom the Local Accountant that the check has been
outstanding as of date shall also be obtained. A certified copy of the
Disbursement Voucher shall be requested fom the Auditor fr
presentation to the Local Chief Executive or the Administrator who shall
countersign the check. The replacement check shall be reported
chronologically in the Report of Checks Issued and the words, "Issued in replacement of
Check No. dated which has become stale"
116 RCI, LTO Form 46
shall be indicated in the report. The cancelled stale check shall be reported
and attached to the Report of Checks Issued prepared at the period of
cancellation.

5) Lost Checks. - A check is considered lost under the following circumstances:

1) When it is misplaced, waylaid or left behind inadvertently or negligently
by the payee or holder in due course, or by the custodian or carrier thereof,
and after diligent search cannot be found or located.

2) When it is lost due to fortuitous event such as fire, perils of travel, flood or
typhoon or other causes due to force majeure and after diligent search,
cannot be fund or recovered.

3) When it is lost by theft or robbery. (Sec. 187 (a), Book ill, Vol. I, GAAM

Upon submission of a swor statement fom the payee that a check issued by the local
government unit is lost, the Local Treasurer shall immediately notify the bank concerned for
the stoppage of payment. The Local Treasurer shall frward the swor statement to the Local
Accountant who shall prepare the Journal of Entry Voucher to cancel the payment made.
A copy of the Journal of Entry Voucher shall be furnished the Local Treasurer as basis
fr him to debit the amount in the Cashbook - Cash in Bank.

II. Disbursements Through Cash Advances. - (a) Cash payments shall be made only on
duly approved Payrolls/Disbursement Vouchers/Liquidation Vouchers out of regular cash
advances or special cash advances (Sec.45, COA Circular No. 92-382).

(b) Cash advances are of two types, as follows:

1) Regular Cash Advances. - Regular Cash Advances are those granted to Cashiers,
Disbursing Officers, Paymasters and/or Property/Supply Officers separately for any of the
following purposes:

i. Salaries and Wages;

ii. Commutable Allowances;

iii. Honoraria and other similar payments to officials and employees;
and

iv. Petty operating expenses (Sec. 46, COA Circular No. 92-
382) consisting of small payments for maintenance and operating
expenses which cannot be paid conveniently by check or are
required to be paid immediatelty. (Sec. 173 (a) (4), Book Ill, Vol. I,
GAAM)
2) Special Cash Advances. - Special Cash Advances are those granted on the
explicit authority of the Local Chief Executive only to duly designated disbursing
officers or employees for other legally authorized purposes such as;

1. Confidential expenses; and/or

11. Expenditures for activities of the agency undertaken in the

field when it is impractical to pay by check. (Sec. 47, COA
Circular No. 92-382)

III. General Guidelines in the Grant and Utilization of Cash Advance. - (a) No cash
advance shall be granted to any local official or employee, elective or appointive, unless
made in accordance with the rules and regulations as the Commission on Audit may
prescribe. (Sec. 339, LGC)

(b) In the grant and utilization of cash advance, the following rules shall be observed:

1) Only permanently appointed officials and employees shall be granted cash advance
(Sec. 48 (a), COA Circular No. 92-382). Elective officials may be granted cash
advance only fr their official traveling expenses. Local Chief Executives may be
granted cash advances for intelligence and confidential expenses

2) Only duly appointed or designated disbursing officers may perform disbursing

functions. Officers and employees who are given cash advances for foreign travel
need not be designated as disbursing officers. (Sec. 48 (b), COA Circular No. 92-382)

3) Only one (1) disbursing officer shall be assigned or designated for a specific legal
purpose. Additional disbursing officers may be assigned or designated for the same
purpose only when fully justified by the local chief executive. (Sec. 48 (c), COA
Circular No. 92-382)

4) Transfer of cash advance from one accountable officer to another shall not be
allowed. (Sec. 48 (d), COA Circular No. 92-382)

5) The cash advance shall be used solely or the specific legal purpose for which it was
granted (Sec. 89, P. D. No. 1445). Under no circumstance shall it be used for
encashment of checks or for liquidation of a previous cash advance. (Sec. 48 (e), COA
Circular No. 92-382)

6) The accountant shall obligate all cash advances granted. Cash advances for a
particular year shall not be used to pay expenses of other years. (Sec. 48 (, COA
Circular No. 92-382)
7) The cash advance for petty operating expenses shall not be used for payment of
regular expenses, such as rentals, subscriptions, light and water and the like. (Sec. 48 (i), COA
Circular No. 92-382)

8) Payments out of the cash advance shall be allowed only for amounts not exceeding
Fifteen Thousand Pesos (Pl 5,000.00) for each transaction, except when a higher
amount is allowed by law and/or specific authority by the Commission on Audit.
Splitting of transactions to avoid exceeding the ceiling shall not be allowed. (Sec. 48 0), COA
Circular No. 92-382)

9) No additional cash advance shall be allowed to any official or employee unless the
previous cash advance given to him is first settled or a proper accounting thereof is
made. (Sec. 89, P. D. No. 1445

10) When a cash advance is no longer needed or has not been used for a period of two (2)
months, it must be returned or deposited immediately with the collecting officer. (Sec. 48 (n),
COA Circular No. 92-382)

11) All cash advances shall be fully reported on as soon as the purpose for which it was
given has been served.

IV. Specific Guidelines on the Grant of Cash Advance for Payroll, Petty Operating
Expenses, Field Operating Expenses and Travel.

1) Salaries, wages, allowances, honoraria and other similar payments -

a) The cash advance for payment of salaries shall be equal to the net amount of
the payroll fr a pay period. (Sec. 48 (g), COA Circular No. 92-382)

b) The cash advance shall be supported by the following documents:

1. Designation by the Local Chief Executive in case the Accountable Officer is

not a disbursing officer by appointment (attachment to initial cash advance).
11.
Approved application for bond (attachment to initial cash advance).

111. Payroll or list of payees with their net payments

2) Petty Operating Expenses -

a) The cash advance for petty operating expenses shall be sufficient for the
recurring expenses of the agency for one (1) month. The Accountable Officer
may request replenishment of the cash advance when the disbursements reach
at least seventy-five (75%), or as needed, by submitting a replenishment
voucher with all supporting documents duly summarized m a report of disbursements.
(Sec. 48 (h), COA Circular No. 92-382)

b) The cash advance shall be supported by the following documents:

1. Written authority by the Local Chief Executive fr the cash

advance (attachment to initial cash advance).

11. Approved application for bond (attachment to initial cash

advance).

111. Estimate of expenses.

3) Field/Activity Current Operating Expenses 117• -

a) The special cash advance shall be used to pay the salaries and wages of the
employees and the miscellaneous operating expenses of the activity. Payment for
each transaction shall not be subject to amount limitation. However, all payments
shall be approved by the Head of Office.

b) The amount of the cash advance shall be limited to the requirements for two (2)
months. Within five (5) days after the end of each month, the Accountable Officer
shall submit a Report of Disbursements. Additional cash advance shall be granted
on the basis of the activity budget or the requirements for two (2) months,
whichever is lower.

c) The cash advance shall be supported by the following documents:

i. Written authority by the Local Chief Executive (attachment to initial

cash advance)

ii. .Approved application for bond (attachment to initial cash advance)

iii. Budget for Current Operating Expenses of the agency field office or agency
activity in the field.(Sec.177,Book Ill, Vol. I, GAAM

4) Official Travel. - Both official local and freign travels shall be treated and accounted
for as cash advances (2.1, COA Circular No. 96-004). No cash advance
shall be granted to any local official or employee unless a proper accounting of the
previous cash advance for travel given to him is first made or the same is first
liquidated and/or settled (2.2, COA Circular No. 96-004).C ash advances granted for
purposes of official travel, both local and foreign, shall not require bonding of the
traveling local official or employee (2.3, COA Circular No. 96-004). The grant of

,17COE
cash advance for both official local and freign travels shall be guided by the
following:

A. Official Local Travel of Local Goverment Officials and Personnel:

1) The cash advance voucher for official local travel shall be supported
by the following:

1. Travel Order -

Travels of officials and employees of National Government

Agencies for less than thirty (30) days and payment of travel
expenses therefor shall be approved by the head of
office/bureau or equivalent. Travels that will last thirty (30)
days or more and payment of travel expenses therefor shall be
approved by the Department Secretary or his equivalent. The
approval of the Department Secretary concerned shall be
construed as equivalent to the approval of the Secretary of
Budget and Management

For purposes of the Travel Order, approval of travel of officials and employees of local
goverment units that will last for not more than one (1) calendar month shall be subject to
the
policies, rules and regulations that will be adopted by the Secretary of the Interior and Local
Goverments. (Sec. 5, 2"d par., E. 0. No. 248)

1. Itinerary of Travel, detailing the transportation expenses and travel expenses to be

incurred as basis for determining the amount of cash advance. (3.1.1.1, COA Circular No.
96-004)

2) In cases where goverment vehicles are used in the travel, the officials
and employees concerned are not entitled to the transportation
expenses. (3.1.1. 7, COA Circular No. 96-004)

3) To ensure that goverment funds and property are used only for
official purposes, no reimbursement of the cost or gasoline and oil
shall be allowed when a private vehicle is used. However, the local
officials and employees concered shall be entitled to the
reimbursement of the equivalent cost of the customary mode of
transportation. Under no circumstances should fuel be issued to
privately owned motor vehicles. (3.1.1.8, COA Circular No. 96-004)

11s Amendingfrther Sec. 5 of E. 0. No. 248, dated May 29, 1995, as amended by E. 0. No. 248-A, dated August 14, 1995,
which prescribes rules and regulations and new rates of allowances for official local and foreign travels of government personnel.
4) The travel expenses of government personnel regardless of rank and
destination shall be in the amount of Eight Hundred Pesos (P800.00)
per day which shall be apportioned as follows:

1. Fify percent (50%)- for hotel/lodging Thirty percent (30%)

11. - for meals Twenty percent (20%)- for incidental expenses

(Sec. 6, E. 0. No. 248, as amended by E. 0. No. 298)

B. Official Foreign Travel of Local Government Officials and Personnel:

l) The cash advance voucher fr official freign travel shall be supported by

the fllowing:

1. Travel Order119

11. Itinerary of Travel detailing the transportation expenses and travel expenses including
clothing and pre-departure expenses to be incurred as basis for determining the
amount of cash advance. The commutable pre-departure expenses shall cover
miscellaneous/incidental expenses such as passport, photographs,
immunization, visa fees, taxi fare, tips, porterage and terminal fes as provided for
under Section 9, E. 0. No. 248, as amended.

iii. Where applicable, the authority from the office of the President to claim Representation
Expenses.

1v. Certification of the local official or employee concered duly verified by the Local
Accountant to the effect that no clothing allowance had been received during the next
preceding twenty fur (24) months, if clothing allowance is being claimed. (3.2.1.1,
COA Circular No. 96-004)

2) Government personnel who travel abroad shall be entitled to the Daily Subsistence
Allowance120 as provided under the United Nations Development Program 121
Index, which can be secured from the Department of Foreign Affairs. The DSA shall
be apportioned as follows unless otherwise stated in the UNDP Index:

119 Same requirements on official local travel for local goverment officials and perso1111el.
i20
DSA
121
UNDP
 Fify percent (50%)- for hotel/lodging
1. Thirty percent (30%) - fr meals

11.

ii. Twenty percent (20%)- for incidental expenses

When the country of destination is not listed in the said Index, the DSA for the nearest
country shall be adopted. (Sec. 12, E. 0. No. 248, as amended by Sec. 8, E. 0. No. 298)

3) Reimbursement of the payment of the airport terminal fee at the point of embarkation
to go back to the Philippines upon completion of the official trip abroad is likewise
authorized. (Sec. 9, E. 0. No. 248, as amended by sec. 6, E. 0. No. 298)

V. Liquidation of Cash Advance for Payroll, Petty Operating Expenses, Field

Operating Expenses and Official Travel. - Cash advances for payroll, petty operating
expenses, field operating expenses and official travel shall be liquidated in accordance
with the following guidelines:

I) The cash advance shall be liquidated within the prescribed period, as follows:

a) Salaries, Wages, etc. - within five (5) days after each 15 day/end of the
month pay period.

b) Petty Operating Expenses and Field Operating Expenses - within twenty

(20) days after the end of the year; subject to replenishment as frequently as necessary
during the year. (Sec. 48 (k), COA Circular No. 92-382)

c) Official Travel - within sixty (60) days afer return to the Philippines in
the case of official travel abroad, or within thirty (30) days of his return to
his permanent official statior in the case of official local travel, every
local official or employee shall render an account of or liquidate the cash
advance received by him (Sec. 16, E. 0. No. 248, as amended by sec. 14,

E. 0. No. 298), otherwise, payment of his salary shall be suspended until

he complies therewith 3.1.2. I and 3.2.2. I, COA Circular No. 96-004).

2) The Accountable Officer shall prepare the Report of Disbursements 122 in three (3)
copies and submit the same with duly accomplished vouchers/payrolls and
supporting documents to the Local Accountant. For payments based on receipts
and invoices only, he shall also prepare a Liquidation Voucher 123 which shall be
submitted with the report and supporting documents to the Local Accountant. He
shall ensure that receipt of the report is properly acknowledged by the Local
Accountant. The Accountable Officer shall be deemed to have complied with the

122
LTO Form 49
m LTO Form 50
 requirement of proper accounting for the cash advance upon the receipt by the Local
Accountant of the liquidation documents refrred to above. (5.2, COA Circular No. 97-002)

3) When a cash advance is no longer needed or has not been used for a period of two (2)
months, it must be returned to or refunded immediately to the Collecting
Officer, who shall issue the necessary official receipt. (5. 7, COA Circular No. 97-002)

4) All cash advances shall be fully liquidated at the end of each year. Except for
petty cash fund, the Accountable Officer shall refund any unexpended balance to
the Cashier/Collecting Officer who will issue the necessary official receipt. (5. 8,
COA Circular No. 97002)

5) At the start of the ensuing year, a new cash advance may be granted, provided that
a list of expenses against the previous cash advance is submitted. However, when
no liquidation of the previous cash advance is received on or before January 20,
the Local Accountant shall cause the withholding of the Accountable Officer's
salary. (5.9, COA Circular No. 97-002)

6) The following reports and documents are required to support the liquidation:

a) Salaries, Wages, etc. -

.  Report of Disbursements;

 Duly signed Payrolls and/or Vouchers; and

 Pertinent supporting documents, such as Daily Time

Records, approved Leaves of Absence, etc. (5.10.1, COA
Circular No. 97-002)

b) Petty Operating Expenses -

1. Report of Disbursements with supporting documents;

11. Approved Requisition and Issue Voucher with the Certificate of Emergency
Purchase, if necessary;

iii. Receipts, Sales Invoices;

1v. Certificate of Acceptance/Inspection;

v. Duly approved Trip Ticket, if for gasoline; and

 v1. Such other supporting documents as are required by the
nature of the expense. (5.10.2, COA Circular No. 97-002)

c) Current Operating Expenses -

1. Same requirements as those for salaries, wages, etc., and petty

operating expenses (supra); and

11. Canvass of at least three suppliers (not required if purchase is

made while on official travel). (5.10.3, COA Circular No. 97-
002)

d) Official Travel124 -

VI. Guidelines on Cash Advance for Intelligence and Confidential Expenses. -

I) Intelligence and/or confidential expenses represent the amount of goods and

services used or consumed in connection with defnse, security, peace and order,
internal security or counter insurgency, usually involving cove1i or classified
operations, psychological warfare and surveillance operation and other specified
intelligence and confidential operations of the local goverment units, including
Civil Security Units of local government agencies in Metro Manila. These may be
in the following form:

a) Purchase of information relevant to security and peace and order.

b) Payments of rewards.

c) Rentals and other incidental expenses related to the maintenance of safe

houses.

d) Purchase of supplies, materials and equipment necessary for intelligence

and confidential operations and/or projects.

e) Other incidental expenses related to intelligence and confidential operation

and/or projects.

f Special projects as approved by the program director involving covert or

semi-covert psychological, counter-insurgency, and peace and order
activities.

2) Cash advances for intelligence and/or confidential activities shall be sourced from
the annual appropriations for discretionary purposes.

124
Documents required to support the liquidation ol cash advance for official travel. both foreign and focal,
are fisted under Annex 4 /, this Manual.
The annual appropriations for discretionary purposes of the local chief executive
shall not exceed two percent (2%) of the actual receipts derived fom basic real
property tax in the next preceding calendar year. Discretionary funds shall be
disbursed only fr public purposes to be supported by appropriate vouchers and
subject to such guidelines as may be prescribed by law. No amount shall be
appropriated for the same purpose except as authorized herein. (Sec. 325 (h),
LGC)
3) It shall be the responsibility of the Local Chief Executive to institute internal
control measures to discourage and prevent irregular, unnecessary, excessive,
extravagant and unconscionable expenditures 125 in intelligence and confidential
operations by their personnel involved.

VII. Liquidation of Cash Advance fr Confidential/Intelligence Expenses. -Cash advance

of the Local Chief Executive for confidential/intelligence expenses shall be liquidated, as
follows:

l) All cash advances shall be liquidated within one (1) month from the date the cash
advance is received.

2) Disbursements fom cash advances for confidential and/or intelligence expenses shall
be accounted for on the certification to be issued by the Local Chief Executive. He
may also submit receipts and other evidences in support of the expenses incurred.

3) The Liquidation Voucher together with the supporting papers shall be submitted in a
sealed envelope, directly to the Chairman, Commission on Audit fr transactions in
Metro Manila. For transactions outside Metro Manila, the Liquidation Voucher shall
be submitted to the Commission on Audit Regional Directors in their respective
jurisdiction.

4) The transmittal letter must be signed by the Local Chief Executive. He shall
enumerate therein the type or nature of the document being submitted.

5) A copy of the transmittal letter duly acknowledged as received by the Chairman or

the Regional Director of the Commission on Audit must be furished the Accountant
and the resident Auditor of the Local Government Unit concerned.

6) If the Liquidation Voucher and supporting papers are in order, the Chairman of the
Commission on Audit or his authorized representative or the Regional Director, as the
case may be, shall issue a Credit Advice, addressed to the Local Chief Executive,
attention to the Chief Accountant through the Auditor of the Local Goverment Unit
concerned, on the basis of which credits to the cash advance account of the
accountable officer concerned shall be recorded in the books of accounts of the Local
Government Unit.

125 Refer to Section 77 (D), this Mnnunl on these types of expenditures.

 7) All Liquidation Voucher and supporting papers shall be retained by the Chairman or
the Regional Director of the Commission on Audit for safekeeping in his confidential
file. However, duplicate copies of all these records and documents must be retained
and filed by the Local Chief Executive or the Local Government Unit concerned.
(COA Circular No. 92-385)

VIII. Handling, Custody and Disposition of Cash Book fr Cash Advances 126• - The
fllowing guidelines for the handling, custody, and disposition of the cashbook shall be
observed:

l) A newly appointed or designated Accountable Officer shall start with a new cash
book. Before discharging his duties, the new Accountable Officer shall be briefed by
the Local Accountant and the Auditor on the proper recording of the transactions and
other matters related to his work.

2) The Accountable Officer shall maintain separate cashbooks for salaries, wages,
allowances, etc., and for petty operating expenses. He shall record daily the
transactions in the prescribed cashbook. He may record each invoice/receipt/voucher
individually or the total disbursements for the day, depending upon the volume of the
transactions.

3) The Accountable Officer shall reconcile the book balance with the cash on hand
daily. He shall foot and close the books at the end of each month. The Accountable
Officer and the Local Accountant shall reconcile their books of accounts at least
quarterly.

4) The cashbooks shall be kept at the Office of the Accountable Officer and placed
inside the safe or cabinet when not in use. It may be taken f rom his custody only by
the Auditor or an official duly authorized by the agency head who shall issue the
necessary receipt.

5) When the Accountable Officer ceases to be one, the cashbook shall be submitted to
the Local Accountant and shall form part of the accounting records. No clearance
shall be issued to an Accountable Officer if he fails to submit the cashbook as
required. (Sec. 181, Book Ill, Vol. I, GAAM

IX. Disbursements out of Petty Cash Fund. 127 - Petty Cash Fund shall be maintained under
the Imprest System. The fund should be sufficient for the non-recurring, emergency and
petty expenses of the Local Goverment Unit for one ( 1) month. Disbursements f rom the
Petty Cash Fund shall be through the Petty Cash Vouchcr 128 which shall be signed by the
payee to acknowledge the amount received.

126
Form/or Cashbook.for Cash Advances. LTO Form 7
127
The process.flowfor disbursement. liquidation and replenishment 011/ of' the Petty Cash Fund is shown in Annex
55 ofthis Manual.
12s PCV, LTO Frm 53
Petty Cash Fund shall be set up at the beginning of the year. An Obligation Request shall be
prepared for the fund, recorded in the registers and obligated as Other Expenses.

Payments out of the Petty Cash Fund shall be made through the use of Petty Cash
Voucher duly supported by official receipts and other required documents. Each Petty Cash
Voucher shall not exceed I 1,000.00.

A Disbursement Voucher shall be prepared for the replenishment of the Petty Cash Fund
during the year, duly supported by the Petty Cash Replenishment Report129, the Petty
Cash Voucher and the supporting documents. An Obligation Request shall be prepared
for each replenishment and recorded in the register based on the actual expenses.

At the end of the year, all balances of the Petty Cash Fund shall be retured to the Local
Treasurer together with the liquidation thereof

X. Disbursement Through Direct Payment. - The direct payment scheme may be adopted
by the Local Goverment Unit whereby contract account/delivery of equipment is paid
directly to the bank account of the contractor/supplier from the proceeds of loan or bond
flotation deposited in the servicing bank of the Local Goverment Unit. The prior
requirements for obligation of the transaction in accordance with this Manual shall be
fllowed. A Disbursement Voucher shall be prepared fr direct payment supported by all
the required documents. The usual certifications by the requesting officer, the Local
Budget Officer and the Local Accountant, and the approval of the Local Chief Executive
on the Obligation Request and the Disbursement Voucher shall likewise be strictly
followed.

Under the Direct Payment System, the Local Treasurer shall prepare an Authority for
Direct Payment130, which shall be signed by him/her and countersigned by the Local
Administrator. The Local Treasurer shall forward the original copy of the Authority for
Direct Payment to the depository bank of the Local Government Unit which will duly
acknowledge receipt thereof The bank shall furnish the Local Goverment Unit the
Debit Memo/Advice or a snapshot of bank transactions showing the direct payment made
to the supplier/contractor. The Local Treasurer shall then submit the acknowledged copy
of the Authority for Direct Payment, Bank Debit Memo/Advice or bank snapshot and
supporting documents to the Local Accountant for recording in the Journal Entry
Voucher.

Chapter 4. BARANGA Y APPROPRIATIONS, COMMITMENTS AND

DISBURSEMENTS

Section 84. Policies and Procedures on Barangay Appropriations and Commitments. -

A. Appropriations:

129
PCRR,LTO Form 54
130
ADP
 1) The Barangay Kagawad who is designated as Chairman of the Committee on
Appropriation shall be responsible in monitoring the approved appropriations and the
charges against the following fnds:

a) General Fund
b) 20% Development Fund
c) Calamity Fund
d) Sanguniang Kabataan Fund
e) Gender and Development Fund

2) The Chairman of the Committee on Appropriations shall monitor the use of appropriated
funds through the Registry of Appropriations and Commitments which shall be
maintained by fund, class, i. e., Personal Services, Maintenance and Other Operating
Expenses, Financial Expenses and Capital Outlay, with breakdown as to account
classification. The Barangay Record Keeper 131 shall prepare the Registry of

Appropriations and Commitments may examine/check anytime, the balance of

appropriations and the recording in the registries.

B. Commitments: 132

I) Charges (deductions) against the appropriated funds shall be based on the commitments
made by the barangay as shown in the Disbursement Vouchers 133, Payrolls134 fr
personal services, Contracts or Purchase Orders135, and Purchase Requests.136

2) ln addition to the certification in the Disbursement Voucher/Payroll, the existence of

available appropriations as reflected in the Sangguniang Bayan Resolution shall also be

shown on the fce of the Contracts and Purchase Orders.

3) For all procurement including infrastructure projects, the Chairman of the Committee on
Appropriations shall certify the availability of funds by stamping "Funds Available" on
the face of the Purchase Request and affix his signature indicating the estimated required

amount on the available appropriation on the Purchase Request based on the

Sangguniang Bayan Resolution, authorizing the construction/procurement, and

4) Expenses for Personal Services, Maintenance and Other Operating Expenses and
Financial Expenses shall be charged against respective appropriations, while investments,

purchase of Property, Plant and Equipment and construction of Public Infrastructure and
Reforestation Projects shall be charged against appropriations for Capital Outlay.

131 BRK
132 "C
 omnutment s 10fibe use .ynonymous
d y w,t 1 "Obi1gat1011 "I
133 O V-Bnrngny, LTO Far111 56
134 Pnyrall-Bnrngny, LTO Fom1 57
13s PO-Bnrnngny, LTO Fam, 58
136 PR-Bnrnngny, LTO I 'arm 59
5) Certification of the Chairman of the Committee on Appropriations on the Purchase
Orders/Contracts, etc., on the "existence of available appropriations" means the

availability of appropriations to cover the commitment.

6) Commitments/Charges against the appropriations for the four maJor classes of

expenditures shall include, but are not limited to the following:

a) Personal Services137 -

1. Salaries and Wages (Regular)

11. Salaries and Wages (Contractual)
111. Honoraria
1v. Cash Gif

b) Maintenance and Other Operating Expenses 138 -

1) Travelling Expenses (Local)

2) Training Expenses
3) Supplies and Materials Expenses
4) Utility Expenses
5) Communication Expenses
6) Membership Dues and Contributions to Organizations
7) Rent Expenses
8) Repairs and Maintenance of Property Plant and Equipment
9) Repairs and Maintenance of Public Infrastructures
10) Taxes, Insurance Premiums and Other Fees
11) Capital Outlay:

1.
11.

137 PS
138 MOOE
139 PPE
Investment in Treasury struction of the following Property Plant and
Bills Equipment139:
P
u a) Land
r b) Land Improvements
c c) Buildings
h d) Leasehold Improvements
a e) Office Equipment
s f) Furniture and Fixtures
e g) Books
/ h) Motor Vehicles
C i) Other Equipment
o j) Public Infrastructures
n k) Reforestation Projects
12) Financial Expenses
13) Interest Expenses
14) Bank Charges (cost of checkbooks)
15) Other Financial Charges

Section 85. Registry of Appropriations and Commitments. - (a) The fllowing registries
shall be maintained by the Chairman of the Committee on Appropriations/Barangay
Record Keeper for the five (5) funds of the barangay by class and by object of expenditures:

I) Registry of Appropriations and Commitments - General Fund

2) Registry of Appropriations and Commitments - Calamity Fund
3) Registry of Appropriations and Commitments - 20% Development Fund
4) Registry of Appropriations and Commitments -Sangguniang Kabataan Fund
5) Registry of Appropriations and Commitments - Gender and Development Fund

(b) Postings in the appropriations columns of the Registry of Appropriations and

Commitments shalI be based on the General Appropriations Ordinance of the barangay.

(c) Posting of commitments in the Registry of Appropriations and Commitments shall be

based on the amount of commitments/charges as certified in the Disbursement Voucher,
Payroll, and Contract/Purchase Request.

(d) Commitments/Charges for Personnel Services, Maintenance and Other Operating

Expenses, Financial Expenses and Capital Outlay shall be recorded in their
respective Registry of Appropriations and Commitments for the General Fund.

(e) Commitments/Charges against the Calamity Fund, 20% Development Fund,

Sangguniang Kabataan Fund and Gender and Development Fund shall be recorded in their
respective Registry of Appropriations and Commitments with a detailed breakdown of
expenditures.

(f The balance of appropriations fr Personal Services, Maintenance and Other

Operating Expenses, Financial Expenses and Calamity Fund shall be reverted/closed at the
end of the year and shall not be made available for commitments/charges after the
calendar year, unless otherwise authorized to be retained as continuing appropriations, and

(g) Balance of appropriations for Capital Outlay, 20% Develoment Fund and
Sanggunian Kabataan Fund, however, shall be valid until fully spent or until the project is
completer. The balance, if any, shall be forwarded to the Registry of Appropriations and
Commitments of the following year.

Section 86. Basic Supporting Documents for Barangay Disbursements. -

a) For Payment of Salaries/Honoraria and Other Personal Services:

1) Approved Payroll supported by Daily Time Record140;

140
DTR
 Minutes of Meeting of the Sangguniang Barangay duly signed by the members of
the Sangguniang Bayan and the Barangay Secretary;

3) Approved Application for Leave141 ; and

4) Approved Appointment, Oath of Office, Certificate of Assumption of Office and
Statement of Assets and Liabilities for newly hired employees142

b) For Cash Advance for Payroll:

1) Net amount of approved Payroll for the period.

c) For Grant of Cash Advance fr Travel:

1) Travel Order; and

2) Itinerary of Travel

d) Liquidation of Cash Advance:

I) Payroll Fund - paid Disbursement Voucher/Payroll.

2) Travel - original of the Travel Order, Plane/Bus Ticket or its equivalent, Official
Receipts, if any, Boarding Pass, Certificate of Appearance and Liquidation
Report.

3) Training Expenses - Certificate of Appearance, Certificate of Training and

Invitation to attend the training.

e) For Payment of Maintenance and Other Operating Expenses:

1) Membership Dues - Statement of Account/Bill of the organization.

2) Utility and Communication Expenses - Bills.
3) Repairs and Maintenance Job Orders, Invoices, Certificate of
Warranty/Guarantee, Pre-repair Inspection Report and Post-Repair Inspection
Report, Inspection and Acceptance Report, Labor Payroll or Contract.

f For Purchase of Equipment, Supplies, Materials and Other Items:

1) Purchase Request;
2) Purchase Order;
143
3) B1ddmg Documents;
4) Supplier's Invoice;
5) Delivery Receipt or the Receipt portion of the Supplier's Invoice duly signed; and
6) Inspection and Acceptance Report.

g) For Infrastructure and Reforestation Projects:

141
For leave with pay
142 For first claim
143 If through bidding
 1) By Contract:

a) Bidding Documents;
b) Plans and Specifications;
c) Notice of Bidding;
d) Contract;
e) Notice to Proceed;
f Billings of Contractors;
g) Inspection and Acceptance Report;
Duly verified Contractor's Project Accomplishment/Completion Report;
and
i) Program of Work:

2) By Administration:

a) Supplies - Purchase Orders, Invoice, Bidding documents or equivalent, 144

Delivery Receipts and Inspection and Acceptance Report.

b) Wages - Labor Payroll, Daily Time Record and Contract fr Labor; and
c) Plans/Programs of Work.

For Repairs and Maintenance of Property Plant and Equipment:

1) Pre-Repair Inspection Report;

2) Job Order/Contract;
3) Supplier's Invoice;
4) Post-Repair Inspection Report; and
5) Inspection and Acceptance Report.

Section 87. Barangay Disbursement by Checks Drawn Against Barangay Funds

Maintained with Depository Bank. -

A. Policies and Procedures:

1) All disbursements shall be covered with duly processed and approved

Disbursement Vouchers/Payrolls.

2) The Disbursement Vouchers/Payrolls shall be prepared by the Barangay

Record Keeper.

3) The Barangay Treasurer shall be responsible fr paying claims against the

barangay.

4) All disbursements shall be in accordance with existing rules and regulations.

5) All claims shall be approved by the Punong Barangay and certified as to the
validity, propriety and legality of the claim. In case of claim chargeable against
Sangguniang

144 Depending on the mode of procure111e11 t used

Kabataan Fund, the Chairman of the Sangguniang Kabataan145 shall initial under the
name of the Punong Barangay.

6) Payments shall be drawn against the depository account maintained with depository bank
by the barangay.

7) The check shall be issued in the name of the payee as indicated in the Disbursement
Voucher/Payroll.

8) The check shall be signed by the Barangay Treasurer and countersigned by Punong
Barangay.

9) All disbursements by check shall be reported in the Summary of Checks Issued.

10) In case checks are waylaid, lost through theft or force majeure, etc., the Barangay
Treasurer shall immediately notify and issue a "Stoppage of Payment" notice to the bank.

11) Stale check shalI be replaced only when the original is submitted to the Barangay
Treasurer fr replacement

8. Recording:

l) All checks issued including cancelled ones shall be recorded by the Barangay Treasurer
in correct numerical sequence in the Summary of Checks Issued.· 146

2) Recordings shall be based on the original paid Disbursement Vouchers/Payrolls

supported with carbon copy of the checks issued and other supporting documents.

3) All the checks issued shall be recorded daily by the Barangay Treasurer in the Summary
of Checks issued.

4) The Summary of Checks Issued shall be sub-totaled and recorded in the Cash on Hand
and in Bank Registers daily.

5) The Summary of Checks Issued shall be submitted to the Barangay Record Keeper for
recording in the Check Disbursement Register weekly.

C. Reporting:

I) The Barangay Record Keeper shall record check disbursement based on the certified
Summary of Checks Issued in the Check Disbursement Register147 weekly.

145 SK
146
SCkI-Barangay, LTO Form 60
141 CDR-Barangay, LTO Form 61
2) At the end of the month, the Check Disbursement Register shall be totaled, balanced,
ruled recapitulated and certified; and

3) The Barangay Record Keeper shall submit the Check Disbursement Register together
with the Summary of Check Issued to the CittMunicipal Accountant fr recording of the checks
issued in the books on or before the 51 day of the following month.

Section 88. Barangay Disbursement by Checks Drawn Against Barangay Funds

Deposited with the City/Municipal Treasury. - (a) The Barangay Treasurer shall prepare
in four (4) copies the barangay Disbursement Voucher in the name of the payee. The
Disbursement Voucher shall be certified as follows:

l) The Barangay Treasurer certifies and approves the Disbursement Voucher or Payroll as

to validity, propriety, and legality of the claim involved;

2) The Punong Barangay approves the Disbursement Voucher or Payroll; and

3) The City/Municipal Accountant certifies on the Disbursement Voucher that

the disbursement is supported by documents evidencing completeness of requirements
as well as other certifications that may be required by auditing and acsounting rules
and regulations.

(b) A copy of the duly certified and approved barangay Disbursement Voucher shall
be frnished the City/Municipal Accountant who shall prepare a city/municipal
Disbursement Voucher in the name of the Barangay Treasurer for the withdrawal of the
amount.

(c) The city/municipal Disbursement Voucher fr the withdrawal of barangay fnds shall
be certified and approved in accordance with existing regulations. A check shall then be
drawn by the City/M nicipal Treasurer and countersigned by the proper city/municipal
official. The check shall be in the name of the payee as appearing in the barangay
Disbursement Voucher.

(d) The Barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt
portion of the city/municipal Disbursement Voucher. He shall deliver the check to the payee
who
shall acknowledge the receipt of the payment by signing the receipt portion of the
barangay Disbursement Voucher and/or issuing the official receipt therefor. The Bar,mgay
Treasurer shall record the transaction in his cash book as a credit to the Cash in
City/Municipal Treasury columns, and transmit to the City/Municipal Accountant, under
proper acknowledgement, the copies of the paid barangay Disbursement Voucher and its
supporting papers for recording in the barangay books.

(e) The barangay Disbursement Voucher shall be distributed as follows:

Original - to the Local Auditor concerned, through the

City/Municipal Accountant.
Duplicate - to the City/Municipal Accountant.
Triplicate - To be attached to the city/municipal
Disbursement Voucher for the withdrawal of
deposit.
Quadruplcate - To the Barangay Treasurer.

(f) Disbursements by check148 shall be recorded in the barangay books.

Section 89. Barangay Disbursement Out of Cash Advance fr Payroll Charged Against
Barangay Funds Maintained with Depository Bank.

A. Policies and Procedures:

l) Cash payments shall be made out of the cash advance given to the
Barangay
Treasurer/Accountable Officer.

2) The cash advance shall be used solely for payment of salaries, honoraria and
other allowances due the barangay officials and employees.

3) The cash advance shall not be used for the encashment of checks or for
liquidation of previous cash advance.

4) The cash advance shall be equal to the net amount of the payroll corresponding to the
pay
period.

5) The cash advance shall be liquidated within five (5) days after the end of the pay
period. Any unclaimed honoraria/salaries/allowances shall be refunded to close the account.

6) All paid Disbursement Vouchers/Payrolls shall be recorded in the Summary of

Cash Payments.

7) The Summary of Cash Payments supported by paid Disbursement Voucher/Payroll

shall be accomplished to support the liquidation of the cash advance for payroll. In
case the cash advance is more than the disbursements, the excess shall be refunded and
an official receipt shalI be issued therefor.

8) Succeeding cash advance shall be granted only after full liquidation of the previous
cash advance.

8. Recording:

l) Cash advance fr payroll shall be recorded by the Barangay Record Keeper in the
Cash Disbursement Registers based on the Summary of Check Issued submitted
by the Barangay Treasurer;

s The narrative flow ofproceduresfor barangay disbursements by check is shown in LTO Annex
14 62 of this
Manual.
2) All payments out of cash advances for payroll shall be recorded by the Barangay
Treasurer/Accountable Officer in the Summary of Cash Payments149 based on the paid
Disbursement Vouchers/Payrolls;

3) Submission of the Summary of Cash Payments to the Barangay Record Keeper shall be
supported with original paid Disbursement Vouchers/Payrolls;

4) Liquidation of cash advances shall be supported by Summary of Cash Payments and paid
Disbursement Vouchers/Payrolls; and

5) The Barangay Record Keeper shall be responsible in recording transactions in the Cash
Disbursement Registers.

C. Reporting:

1) The Barangay Record Keeper shall record the cash disbursement based on the certified
so
Summary of Cash Payments in the Cash Disbursement Register.'

2) At the end of the month, the Cash Disbursement Register shall be totaled, balanced, ruled
recapitulated and certified, and

3) The Barangay Record Keeper shall submit the certified Cash Disbursement Registers to
the City/Municipal Accountant for recording of the payments made in the books and
postings of the transactions to the Subsidiary Ledger maintained for the Barangay
Treasurer/Accountable Officer on or before the 5 day of the fllowing month.
th

Section 90. Barangay Disbursements Out of Cash Advance from Payroll Charged
Against Barangay Funds Deposited with the City/Municipal Treasury. 151 -

a) The City/Municipal Accountant shall prepare a Disbursement Voucher in the name of the
Barangay Treasurer for the withdrawal of the amount of the payroll based on duly
certified
and approved payrolls. At the same time, he shall prepare the corresponding Debit
Advice,
Barangay Form No. 1.

b) The Disbursement Voucher for the withdrawal of barangay funds shall be certified and
approved in accordance with existing regulations. A check in the name of the Barangay

Treasurer for the amount of the withdrawal shall then be drawn by the City/Municipal
Treasurer and countersigned by the proper city/municipal official.
149 SCP-Barangay, LTO Form 63
1so CDReg-Barangay, LTO Form 64
151
The narrative flow ofprocedures for barangay disbursements out of cash advances for payroll/travel is shown
in Annex 66 of this Manual.
c) The Barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt portion of the city/municipal Disbursement Voucher, and shall record the
transaction in the Barangay Cash Book as a debit in the Cash Advances columns.

d) When the payments on the payrolls have been made, the Barangay Treasurer shall
record in the Barangay Cash Book the total amount paid as a credit in the Cash Advances
columns, and transmit to the City/Municipal Accountant under proper
acknowledgment, the paid payrolls and their supporting papers, fr recording in the
barangay books.

e) The unexpended cash from the cash advance shall be re-deposited with the
City/Municipal Treasurer following the same procedures as in the full liquidation of the
petty cash fund for barangay funds deposited with the city/municipal treasury.

f) Copies of the paid payrolls shall be distributed as fllows:

Original To the Local Auditor concerned, through the

City/Municipal Accountant
Duplicate To the City/Municipal Accountant
Triplicate To be attached to city/municipal disbursement
voucher for withdrawal of deposit
Quadruplcate To the Barangay Treasurer

Section 91. Disbursement Out of Cash Advance for Travel and Special Purpose/Time-
Bound Undertaking.152

A. Policies and Procedures:

I) For local/foreign travel, liquidation shall be done within a period of thirty/sixty

((30/60) days upon return to the personnel's workstation.

2) Cash advance for special purpose/time-bound undertaking shall be liquidated

upon accomplishment of the purpose fr which it was granted.

3) Excess cash advance shall be refunded and an official receipt shall be issued by
the Barangay Treasurer.

4) The Liquidation Report 153 with appropriate supporting documents shall be

submitted to the Barangay Record Keeper, who in turn shall submit it to the
City/Municipal Accountant for recording in the books on or before the 5th day of the
following month.

B. Recording:

152
The narrative.flow ofprocedurefor barangay disbursements out of cash advance.for travel is shown in
Annex 66 of this Manual.
153 LR-Barangay, LTO Form 65
1) Liquidation of cash advances shall be supported by Liquidation Report and pertinent
documents, and

2) The Liquidation Report shall be submitted by the Accountable Officer to the

City/Municipal Accountant, through the Barangay Record Keeper, to serve as basis in

recording the liquidation in the books.

Section 92. Barangay Disbursement Out of the Petty Cash Fund. 154

A. Policies and Procedures:

1) The Petty Cash Fund shall be maintained using the Imprest System. The balance of the

Petty Cash Fund shall not be closed at the end of the year.

2) The fund shall be kept separately from the regular collections and advances granted for
a
particular purpose and shall not be used for payment of regular expenses.

3) The amount of the Petty Cash Fund shall be determined by the Sangguniang Bayan, but

the petty cash that the Barangay Treasurer may be authorized to hold shall not exceed
twenty percent (20%) of the funds available and to the credit of the barangay treasury.

(Sec. 334 (b), LGC)

4) All disbursements out of Petty Cash Fund shall be covered by duly accomplished and
approved Petty Cash Vouchers155 supported by cash invoice, official receipts or other
evidence of disbursements required under applicable accounting and auditing rules
and
regulations.

5) All paid Petty Cash Vouchers shall be reported in the Summary of Paid Petty Cash
Vouchers to be certified by the Petty Cash Fund Custodian.

6) The Petty Cash Fund shall be replenished as soon as disbursements reach seventy five
percent (75%) of as needed.
7) Replenishment of the Petty Cash Fund shall be made by submitting a Disbursement
Voucher fr the purpose, supported by duly certified Summary of Paid Petty Cash

Vouchers, paid Petty Cash Vouchers and supporting documents.

8) In case the Petty Cash Fund Custodian resigns or ceases as custodian of the fnd, full
accounting/liquidation thereof shall be made. Any remaining cash shall be refunded to
close the account.
9) In no case shall the remammg cash of the former Petty Cash Fund Custodian be
transfrred to the incoming Petty Cash Fund Custodian. For a complete accounting, the

154
The narrative .flow of procedures on the establishment. payment, replenishment and liquidation of
Barangay petty cashfund is shown in l TO Annex 70 of the Manual.
155 P C V Barm1gay, LTO Form 67
account of the frmer Petty Cash Fund Custodian shall be closed and a new account shall be
opened for the incoming Petty Cash Fund Custodian.

B. Recording:

1) Petty Cash Vouchers shall be recorded in the Summary ofPaid Pett Cash Vouchers156
which shall be prepared by the Petty Cash Fund Custodian to report all payments made
out of the Petty Cash Fund.

2) Replenishment of the Petty Cash Fund shall be supported with the Summary of Paid Petty
Cash Vouchers and all the paid Petty Cash Vouchers supporting the entries in the
Summary of Paid Petty Cash Vouchers.

3) The submission of the Summary of Paid Petty Cash Vouchers to the Barangay Record
Keeper shall be supported with original paid Petty Cash Vouchers and their supporting
documents.

4) The establishment and replenishment of the Petty Cash Fund shall be recorded in the
Petty Cash Fund Register.

5) The Petty Cash fund Register which shall serve as the petty cash book shall be
maintained by the Barangay Treasurer/Petty Cash Fund Custodian.

6) Recording of payments in the Petty Cash Fund Register shall be based from the Summary
of Paid Petty Cash Vouchers and shall be submitted to the Barangay Record Keeper for
submission to the City/Municipal Accountant for recording in the books.

C. Reporting:
1) The Petty Cash Fund Custodian shall record the disbursements out of Petty Cash Fund
based on the certified Summary of Paid Petty Cash Vouchers in the Petty Cash Fund
Register. 157

2) At the end of the month, the Petty Cash Fund Register shall be totaled, balanced, ruled,
recapitulated, certified and submitted to the Barangay Record Keeper.

3) The Barangay Record Keeper shall submit the certified Petty Cash Fund Registers to the
City/Municipal Accountant to serve as basis in posting the transaction to the subsidiary
ledger of the Petty Cash Fund Custodian on or befre the 5 day of the following month.
th

4) The Barangay Record Keeper shall submit the certified Summary of Paid Petty Cash
Vouchers for the unreplenished paid Petty Cash Vouchers to the City/Municipal
Accountant on or befre the 5 day of January of the following year to take up expenses
th

which remain unrecorded in the books.

156 SPPCV-Barangay, LTO Form 68

1s7 PCFReg-Barangay, LTO Form 69
Chapter 5. SANGGUN/ANG KBATAANBVDGET
Section 93. General guidelines in the preparation of the Sangguniang Kabataan158
Budget. - (a) Ten percent (10%) of the General Fund of the barangay shall be set aside for
the Sanggunian Kabataan.

(b) The proceeds of fund-raising activities shall be tax-exempt and shall accrue to the
General
Fund of the Sanggunian Kabataan: Provided, however, That in the appropriation thereof, the
specific purpose for which such activity has been held shall first be satisfied. (Sec. 426 (c),
LGC)

(c) The annual budget of the Sanggunian Kabataan shall consist of two (2) parts - the income
portion and the expenditure portion:

1) Income Portion. - The income portion consists of the beginning balances which are
the unappropriated and/or unexpended amounts of the revenues and receipts of
prior calendar years carried frward to the budget year, and estimates of income
certified collectible by the City/Municipal Treasurer.

2) Expenditure Portion. - The expenditure portion consists of estimated expenditures

which are the total appropriations covering Current Operating Expenditures and
Capital Outlays.

(d) Sanggunian Kabataan budgeting is the same as that of the other LGUs. The major phases
are:

I) Budget Preparation;

2) Budget Authorization;

3) Budget Review;

4) Budget Execution; and

5) Budget Accountability and Reporting.

Section 94. Sanggunian Kabataan Disbursements. - Sanggunian Kabataan disbursements

shall conform to the procedures fr barangay disbursements outlined in this Manual except
that in the preparation of the Obligation Request and Disbursement Voucher, the requesting
official and signatory in "Box A" of the Disbursement Voucher, respectively, shall be the
Sanggunian Kabataan Chairman.