Coa M2013-004

JUL 0 9 2013
COMMISSION ON AUDIT MEMORANDUM NO. 2013-004
TO
All Assistant Commissioner~ Directors, Supervising Auditors,

Audit Team Leaders and All Others Concerned
SUBJECT :
Prescribing the use of the Revised Cash Examination Manual
A. RATIONALE
Over the past two decades, significant changes have emerged in accounting and
auditing arena that saw the adoption of new international standards and best practices,
and the introduction of new audit approaches. These developments necessitated the
updating of the Commission's policies, standards and rules to keep abreast with the
current norm. An activity that continues to be so vital in ensuring that cash is
adequately protected and controls are in place is the examination of the cash and
accounts of all accountable officers of the government. With almost three decades
going after its last revisio~ the old manual on cash examination deserves a fresh
refinem!nt to keep it relevant and more responsive to the changing times. The
Revised Cash Examination Manual embodies the much needed enhancement to
effectiv1!ly carry out the
examination across all sectors of the government.
eash
B.
COVERAGE
The manual shall be used by all audit teams in the national, local and corporate
government agencies. It shall also be used by special audit teams from other offices
of the Commission duly constituted to conduct cash examinations or are required to
perform the same in relation to the conduct of a special audit. Cognizant of the
peculiarity of operations 'a mong government agencies, the audit teams are encOuraged
to devise and supplement the manual with other appropriate p~ocedures and
techniques designed to fully achieve the objectives of cash examination.
C . AUTHORITY TO CONDUCT CASH EXAMINATION

The authority to conduct regular cash examination shall be inherent to the audit
team having jurisdiction over the audited agencies. The audit team leader shall be
responsible in identifying the audit team member(s) who will conduct or assist him in
conducti ng the cash examination.
Special audit teams may also be constituted by the Chairperson or the

Cluster/Regional Director to conduct cash examinations. Further, special audit teams
may undertake cash examinations as an incident to, or when deemed necessary to
complete the special audit.
D. FREQUENCY AND EXTENT OF EXAMINATION
In addition to the instances where cash examination is mandatory, the
exa.r:nination of the cash and accounts of all accountable officers shall be conducted at
least once a year.
The auditor shall verify the transactions from the date of last cash examination
to the date of current examination. The verification shall be limited to determining
and establishing
that all cash receipts, remittances/deposits,
cash
advances/disbursements and adjusting entries are properly and correctly recorded in
the Cashbook/Cash Receipts Record/Cash Receipts Register (CRR)/Cash
Disbursements Record/Cash Disbursements Register (CDR)/Check Disbursements
Record (CkDR)/Petty Cash Register (PCR), or its equivalent; that disbursement
vouchers, as entered in the CDR/Ck.DR are properly approved and payments duly
acknowledged; and that all cash balances as of the date of examination are reconciled
with accounting and related records.
For purposes of implementation of the revised manual, the balance of
accountabilities of accountable officers determined in cash examinations conducted in
2012 and 2013, whichever is the latest, shall constitute the beginning balance of the
succeeding examination. Where the last cash examination was conducted prior to
2012 and the transactions are volwninous, or there is no record or information of the
last examination so conducted, the beginning balance per books as of 01 January
2013 may be used as the beginning balance of accountability and the transactions on
that date onward to the date of current examination shall be the coverage of
examination. Nothing in this provision shall be construed as limiting the authority of
the auditor to extend his verification of balances and transactions prior to 2012 if the
circumstances so require.
E. CASH EXAMINATlON REPORT
The result of the examination shall be embodied in a narrative report consisting
of three parts; namely, the introduction, the findings and recommendations, and the
appendices. Copies of the report shall be submitted to the Supervising Auditor for
review and transmittal. However, Cash Examination Report showing a cash shortage
which requires the filing of administrative and/or criminal case against the
accountable officer shall be submitted to the Cluster/Regional Director for fmal
disposition. The accountable officers and the Head of Agency shall be fumished
copies of the report. The Auditor/Cash Examiner and the Supervising Auditor should
likewise each have copy of the CER.
F. RESPONSffiiLITY FOR FILING CASES
It shall be the responsibility of the Director having supervision and control over
the team that conducted the cash examination to initiate the filing of administrative
and/or c:riminal cases be:fi>re the Office of the Ombudsman or any other appropriate
court or tribunal. Where such action is initiated, copies of the report as well as
infonnation of the action taken shall be given to the Head and the Chief Accountant
of the agency concerned, the COA Legal Services Sector, the Auditor of the agency
concemed, and if the defaulting accountable officer is a treasurer of a local
government unit, the Bureau of Local Government Finance.
G. REPEALING CLAUSE
All issuances .inconsistent with this memorandum or the Revised Cash
Examination Manual are hereby superseded, amended or modified accordingly.
H. EFFECTIVITY
This memorandum shall take effect immediately.
~IDO-TAN
~;~~n
MA. GRAC-
- Dart
Revised
CASH EXAMINATION
Manual
TABLE OF CONTENTS
Page
Chapter I
INTRODUCTION
Rationale
Legal Bases
Scope
Definition and Objectives of Cash Examination
1
1
2
2
Chapter II
LAWS AND RULES RELEVANT IN CASH EXAMINATION
Responsibility
Accountability
Liability
Collections
Remittances/Deposits
Dishonored Checks
Disbursements
Cash Advances
Seizure of Office by Auditor
Retention of Money for Satisfaction of Indebtedness to Government
Constructive Distraint of Property of Accountable Officer
4
5
6
7
9
10
11
12
13
13
13
Chapter III
GUIDELINES
Authority
Planning
Preparation
Auditors Conduct and Behaviour
Timing the Examination
Frequency of Cash Examination
Simultaneous Cash Count
Accountable Officers Presence During the Count
Sealing of Vault, Safe or Other Cash Receptacles
Accountable Officers Cashbook/CRR/CDRCkDR or its equivalent
Auditors Review of Transactions
Auditors Certificate on the Cashbook/CRR/CDR or its equivalent
Prohibition of Incomplete Examination
Audit Work Papers
Cash Examination Report
15
15
15
16
16
16
17
17
17
18
19
19
20
20
20
TABLE OF CONTENTS
Page
Chapter IV
PROCEDURES AND TECHNIQUES
Common Procedures and Techniques
Specific Procedures and Techniques
A. Collecting Officer
B. Bank Cashier/Teller/ATM Teller
C. Disbursing Officer
Reconciliation Statement of Depository Accounts
Cash Shortage
Constructive Distraint
Prosecution of the AO
Cash Overage
Indemnity From Fidelity Fund
22
24
24
26
27
28
29
29
30
32
33
33
Appendix
1. Illustrative Accounting Entries
Annexes
A. Treasury Circular No. 02-2009 Revised Omnibus Regulations Governing the
Fidelity Bonding of Accountable Public Officers
B. Notice of Dishonor
C. COA Circular No. 97-002 dated February 10, 1997 Restatement with
amendments of the rules and regulations on the granting, utilization and
liquidation of cash advances provided for under COA Circular No. 90-331 dated
May 3, 1990
D. COA Circular No. 2006-005 dated July 13, 2006 Amendment to Item 7.1 of
COA Circular No. 72-002 dated February 10, 1997 on the granting, utilization
and liquidation of cash advances.
E. Report of Cash Examination [General Form No. 74(A)]
F. Internal Control Questionnaire
G. Reconciliation Statement of Accountability
H. Statement of Accountability for Accountable Forms With Money Value
I. Statement of Accountability for Accountable Forms Without Money Value
J. ATM Cash Count Sheet
K. Bank Reconciliation Statement
L. Letter of Demand
M. Withholding Order
N. Warrant of Constructive Distraint of Personal Property
O. Receipt for Goods, Articles and Things Seized under Authority of Section 47,
P.D. 1445, otherwise known as the Government Auditing Code of the Philippines
P. Request for Issuance of Hold Departure Order
Q. Joint Affidavit
Chapter I
INTRODUCTION
RATIONALE
Cash is the most liquid asset of an agency. Because of its liquidity, it is so attractive, that it
is most susceptible to theft and misappropriation. 1 To guard against the loss of cash through theft
or fraud, adequate cash management mechanisms and controls must be in place.
Equally important in ensuring effective cash management and protection is the timely
exercise of oversight functions through periodic cash examination. Indispensable in carrying out
an efficient and methodical examination of the cash accounts of an agency is a handy reference
or guide that charts in simple and sufficient detail the procedures required therefor.
This revised Cash Examination Manual provides an updated guide that steers the auditors
through a sequential and step-by-step cash examination process commencing from planning
stage, leading to execution, reporting, and monitoring. It also defines the scope and objectives of
the examination.
As in its precursor manual, the revised procedures and techniques outlined herein are
designed to sufficiently cover each area or activity to be cash examined. Nonetheless, the auditor
is not precluded from employing such other procedures and techniques as the circumstances may
dictate. In such a case, the auditor is cautioned to exercise sound professional judgment in
adopting any additional or alternative cash examination procedures or techniques.
LEGAL BASES
The Commission on Audit (COA) is constitutionally mandated with the power, authority,
and duty to examine, audit, and settle all accounts pertaining to the revenues and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the
Government, or any of its subdivisions, agencies, or instrumentalities, including governmentowned or controlled corporations (GOCCs) with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and offices that have been granted fiscal autonomy under the
Constitution; (b) autonomous state colleges and universities; (c) other GOCCs and their
subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or
indirectly, from or through the Government, which are required by law or the granting institution
to submit to such audit as a condition of subsidy or equity. It shall also keep the general accounts
of the Government and, for such period as may be provided by law, preserve the vouchers and
other supporting papers pertaining thereto. 2
1
2
Intermediate Accounting, Vol. 1, 2007 Edition; Robles and Empleo

Section 2(1), Article IX-D, 1987 Constitution
The Constitution further vests on the Commission the exclusive authority to define the
scope of its audit and examination, establish the techniques and methods required therefor, and
promulgate accounting and auditing rules and regulations. 3
SCOPE
This revised manual shall be followed and applied in the examination of the cash and
accounts of all accountable officers (AOs) of all government agencies.
DEFINITION AND OBJECTIVES OF CASH EXAMINATION
Cash Examination Defined
Cash examination is an audit technique whereby an authorized examiner of cash and
accounts inquires into the correctness and physical existence of the balance of cash in the
custody of an AO, the validity of his/her cash transactions, the reliability of the cash records and
his/her conformance with prescribed procedures. 4
Objectives of Cash Examination
The entire cash examination process involves a comprehensive review that aims to provide
an overall determination of whether 1. all government funds in the hands of an AO are actually existing and properly
accounted for;
2. the agency and its AOs are adhering strictly to prescribed rules and regulations on cash
transactions; and
3. the agencys practices and procedures provide adequate safeguards against fraud and
losses of government funds.
Moreover, cash examination seeks to establish what the AO has and what he should have
at the time of the examination. It specifically aims to 1. establish the actual existence of cash in the custody of the AO as well as the validity of
the cash items presented;
2. determine whether all monies received had been correctly recorded and fully
accounted for in accordance with laws, rules and regulations;
3. ascertain whether disbursements are valid, duly authorized, actually paid and properly
recorded;
3
4
Section 2(2), Ibid

Handbook on Cash Examination, November 2002, Professional Development Center, Commission on Audit
4. prove the accuracy of the cash balance reflected in the ledger, cashbook 5, cash receipts
record (CRR) 6, check disbursements record (CkDR) 7, cash disbursements record
(CDR) 8, or their equivalents, such as cash receipts register (CRR) 9, petty cash register
(PCR) 10, cash disbursements register (CDR) 11, and individual daily proof sheet and
transaction sheet, daily cash in vault summary report, cash flow report for cash on
hand-in vault and automated teller machine (ATM) and detail transaction request
report for banks; and
5. verify if accountable forms are duly accounted for.
Cashbook for Cash in Treasury shall be used to record collections (Debit column) and deposits to the bank (Credit column)
based on the RCD. The cashbook shall be maintained by the Treasurer by fund and shall be updated and balanced daily. The
accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the
cashbook (Section 26, MNGAS for LGUs, Vol. II).
Cashbook for Cash in Bank shall be used to record deposits of collections (Debit column) and withdrawals from the bank thru
the issuance of checks (Credit column). The cashbook shall be maintained by bank account and by fund and shall be updated
and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent
authority, rule and foot the cashbook (Section 27, Ibid).
The accountable officer shall maintain a cashbook for cash advances to record the cash advances received (Debit column) and
payments, refunds and adjustments (Credit column) and the balance (balance column). The accountable officer shall, at the
end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 28, Ibid).
The Cash Receipts Record (CRR) shall be used by the designated collecting officer to record his/her collections and deposits
(Section 38, MNGAS for NGAs, Vol. II).
The Check Disbursements Record (CkDR) shall be used by the disbursing officer to record checks released charged against
NCAs/funding checks received/deposits in a bank current account of government agencies. A separate record shall be
maintained for each source of fund (Section 39, Ibid).
The Cash Disbursements Record (CDR) shall be used by the disbursing officer to record the cash advance received and
disbursements made out of the cash advance (Section 40, Ibid).
The Cash Receipts Register (CRR) shall be used to record as well as monitor collections and deposits of government units
(COA Circular No. 2003-006, December 2, 2003; Use of Simplified Accounting Forms for Financial Transactions of
Government Units Without Complete Set of Books of Accounts).
10
The Petty Cash Register (PCR) shall be used to record cash advances/replenishments/disbursements for authorized petty and
other miscellaneous expenses (COA Circular No. 2003-006, Ibid).
11
The Cash Disbursements Register(CDR) shall be used to record, monitor and report transactions involving the grant of cash
advances/payments charged thereto, and liquidation thereof by disbursing accountable officer (COA Circular No. 2004-003,
June 24, 2004; Supplemental Form Prescribed Under COA Circular No. 2003-006 dated December 2, 2003 Re: Use of
Simplified Accounting Forms for Financial Transactions of Government Units Without Complete Set of Books of Accounts).
Chapter II
LAWS AND RULES RELEVANT IN CASH EXAMINATIONS

Responsibility
1. It is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with laws and regulations, and safeguarded
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of government. The
responsibility to take care that such policy is faithfully adhered to rests directly with the
chief or head of the government agency concerned. 12
2. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency. 13
3. The head of any agency of the government is immediately and primarily responsible for
all government funds and property pertaining to his agency. Persons entrusted with the
possession or custody of the funds or property under the agency head shall be
immediately responsible to him, without prejudice to the liability of either party to the
government. 14
4. The head of an agency may designate such number of collecting officers (COs) or agents
as may be deemed necessary. They shall render reports of their collections, under the
regulations of the Commission, to be submitted promptly to the auditor concerned who
shall conduct the necessary examination and audit within 30 days from receipt thereof. 15
5. When an officer accountable for government funds or property absconds with them, dies,
or becomes incapacitated in the performance of his duties, the proper agency head shall
designate a custodian to take charge of the funds or property until a successor shall have
been appointed and qualified. The agency head may appoint a committee to count the
cash and take an inventory of the property for which the officer was accountable and to
determine the responsibility for any shortage therein. One copy of the inventory and of
the report of the committee duly certified shall be filed with the Commission but the
findings of the committee shall not be conclusive until approved by the Commission or
its duly authorized representative 16.
When a local treasurer or officer accountable for government funds or property absconds
with them, dies, or becomes incapacitated in the performance of his duties, the Secretary
of Finance, in the case of funds and property of the province, city and municipality, shall
12
Section 2, Presidential Decree No. 1445

Section 4(4), Ibid
14
Section 102, Ibid
15
Section 64, Ibid
16
Section 78(1), Ibid
13
designate a custodian to take charge of the funds or property until a successor shall have
been appointed and qualified. In the case of barangays, the barangay chairman shall
designate the custodian. The local chief executive may appoint a committee to count the
cash and take an inventory of the property for which the officer was accountable and to
determine the responsibility for any shortage therein. One copy of the inventory duly
certified shall be filed with the COA or its duly authorized representative but the findings
of the committee shall not be conclusive until approved by the latter. 17
If the absconding, deceased, incapacitated, or superseded officer is responsible to another
who is accountable, the latter may himself designate the committee or take other lawful
measures for the protection of his interest. 18
6. At the close of each month, depositories shall report to the agency head, in such form as
he may direct, the condition of the agency account standing on their books. The head of
the agency shall see to it that reconciliation is made between the balance shown in the
reports and the balance found in the books of the agency. 19
7. An AO shall maintain his cashbook/CRR/CDR/CkDR 20 and such other records or their
equivalents as may be prescribed by the agencys operating procedures, and reconcile
with the accounting records at least quarterly 21, unless the agency requires a more
frequent reconciliation.
8. An AO, upon ceasing to act in his official capacity as such, shall submit to the auditor of
the agency concerned a report of his accountability. Any remaining balance of such
accountability shall be deposited in the proper treasury without unnecessary delay. 22
9. Government cashiers are prohibited from holding positions as cashiers or treasurers of
savings and loan associations or any other association or organization. 23
Accountability
10. Every officer of any government agency whose duties permit or require the possession or
custody of government funds or property shall be accountable therefor and for the
safekeeping thereof in conformity with law. Every AO shall be properly bonded in
accordance with law. 24
The fidelity bonds covering government accountability and responsibility of AOs shall be
in accordance with the regulations issued by the Bureau of the Treasury (BTr) (Annex
17
Section 122, Local Treasury Operations Manual

Section 78(3), Presidential Decree No. 1445
19
Section 74, Ibid
20
Sections 38-40, MNGAS for NGAs, Vol. II; Sections 26-28, MNGAS for LGUs, Vol. II; COA Circular No. 2003-006
21
Section 181, Government Accounting and Auditing Manual (GAAM), Vol. I
22
23
Section 67, GAAM, Vol. I
24
Section 101, Presidential Decree No. 1445; Section 305(f) R.A. No. 7160; Section 50, Chapter 9, Subtitle B, Book V, EO No.
292
18
A) 25. Copies of the approved fidelity bonds as well as documents subsequently issued for
their cancellation shall be furnished to the Auditor.
11. Transfer of government funds from one officer to another shall, except as allowed by law
or regulation, be made only upon prior direction or authorization of the Commission or
its representative. 26
12. When government funds or property are transferred from one AO to another, or from an
outgoing officer to his successor, it shall be done upon properly itemized invoice and
receipt which shall invariably support the clearance to be issued to the relieved or outgoing officer, subject to regulations of the Commission. 27
Liability
13. Expenditures of government funds or uses of government property in violation of law or
regulations shall be a personal liability of the official or employee found to be directly
responsible therefor. 28
14. Every officer accountable for government funds shall be liable for all losses resulting
from the unlawful deposit, use, or application thereof and for all losses attributable to
negligence in the keeping of the funds. 29
15. No AO shall be relieved from liability by reason of his having acted under the direction
of a superior officer in paying out, applying, or disposing of the funds or property with
which he is chargeable, unless prior to that act, he notified the superior officer in writing
of the illegality of the payment, application, or disposition. The officer directing any
illegal payment or disposition of the funds or property shall be primarily liable for the
loss, while the AO who fails to serve the required notice shall be secondarily liable. 30
16. Unless he registers his objection in writing, the local treasurer, accountant, budget officer,
or other AO shall not be relieved of liability for illegal or improper use or application or
deposit of government funds or property by reason of his having acted upon the direction
of a superior officer, elective or appointive, or upon participation of other department
heads or officers of equivalent rank. The superior officer directing, or the department
head participating in such illegal or improper use or application or deposit of government
funds or property, shall be jointly and severally liable with the local treasurer, accountant,
budget officer, or other AO for the sum or property so illegally or improperly used,
applied or deposited. 31
25
Treasury Circular 02-2009 dated 06 August 2009

27
Section 77, Ibid
28
Section 103, Ibid
29
Section 105(2), Ibid
30
Section 106, Ibid
31
Section 342, Republic Act No. 7160
26
17. Any public officer who commits any of the acts defined and penalized under Articles
213, 217, 218, 219 and 220 of the Revised Penal Code shall suffer the penalty provided
therefor.
18. In any criminal or civil proceeding against an officer for the embezzlement or
misappropriation of government funds or property, or to recover an amount due the
government from an AO, it shall be sufficient, for the purpose of showing a balance
against him, to produce the working papers of the auditor concerned. A showing in this
manner of any balance against the officer shall be prima facie evidence of the
misappropriation of the funds or property unaccounted for or of civil liability of the
officer as the case may be. The existence or contents of bonds, contracts, or other papers
relating to or connected with the settlement of any account may be proved by the
production of certified copies thereof but the court may require the production of the
original when this appears to be necessary for the attainment of justice. 32
19. When a loss of government funds or property occurs while they are in transit or the loss
is caused by fire, theft, or other casualty or force majeure, the officer accountable therefor
or having custody thereof shall immediately notify the Commission or the auditor
concerned and, within 30 days or such longer period as the Commission or auditor may in
the particular case allow, shall present his application for relief, with the available
supporting evidence. Whenever warranted by the evidence, credit for the loss shall be
allowed. An officer who fails to comply with this requirement shall not be relieved of
liability or allowed credit for any loss in the settlement of his accounts. 33
Collections
20. Except as may otherwise be specifically provided by law or competent authority, all
moneys and property officially received by a public officer in any capacity or upon any
occasion must be accounted for as government funds and government property. 34
21. No payment of any nature shall be received by a CO without immediately issuing an
official receipt (OR) in acknowledgment thereof. The receipt may be in the form of
postage, internal revenue or documentary stamps and the like, or officially numbered
receipts 35, or electronically generated document acknowledging receipt of payment 36,
subject to proper custody, accountability, and audit.
22. Where mechanical or electronic devices are used to acknowledge cash receipts, the
Commission may approve, upon request, exemption from the use of accountable forms. 37
32

Section 73, Ibid
34
Section 42, Chapter 7, Title I(B), Book V, Executive Order No. 292
35
36
Section 27(c), Part IV, Republic Act 8792 otherwise known as the Electronic Commerce Act
37
33
23. At no instance shall temporary receipts be issued to acknowledge the receipt of public
funds. 38
24. Pre-numbered ORs shall be issued in strict numerical sequence. All copies of each receipt
shall be exact copies or carbon reproduction in all respects of the original. 39
25. An officer charged with the collection of revenue or the receiving of moneys payable to
the government shall accept payment for taxes, dues or other indebtedness to the
government in the form of checks and warrants issued in payment of government
obligations, upon proper indorsement and identification of the payee or indorsee. Checks
drawn in favor of the government in payment of any such indebtedness shall likewise be
accepted by the officer concerned.
At no instance should money in the hands of the CO be utilized for the purpose of
cashing private checks. 40
26. Checks presented for payment must be drawn by the payor himself and made payable to
the agency or head of agency. In the latter case, only the official title or designation of the
agency head concerned shall be stated as the payee. 41
Under no circumstance shall the following checks be accepted as payment:
-
checks drawn payable to the name of the agency head or any of its officers
indorsed private checks
post-dated checks
stale checks.
27. When a check drawn in favor of the government is not accepted by the drawee for any
reason, the drawer shall continue to be liable for the sum due and all penalties resulting
from delayed payments. Where the reason for non-acceptance by the drawee bank is
insufficiency of funds, the drawer shall be criminally liable therefor. 42
28. Whenever a payor has a record of a previously dishonored private check drawn by him in
payment of taxes and dues, even if such check has already been settled, any private check
presented by him shall no longer be accepted. In such case, the payor shall be required to
pay only in cash or by certified check. 43
Each agency head, or treasurer, in the case of local government units, shall make a list of
payors whose checks have been dishonored and shall circularize the list to all COs under
his jurisdiction.
38

Section 73, Ibid
40
Section 67(1) and (3), Presidential Decree No. 1445
41
Section 77, GAAM, Vol. II
42
43
39
29. No change shall be given to the payor in the event that the amount of the taxes or dues is
less than the face of the check in payment therefor. The difference shall be accounted for
simultaneously with the collection as other liabilities.
30. When payment for goods or services is made by private check, no such service shall be
rendered or goods delivered by the government agency concerned unless the check in
payment thereof has been honored by the drawee bank. 44
31. Private checks drawn for purposes other than payment of taxes or dues in favor of the
government shall not be accepted for encashment or exchange. 45 The auditor who finds
any such check in the possession of the CO shall immediately disallow it and shall
declare the CO short to the extent of the amount of the check. 46
Remittances/Deposits
32. All COs shall deposit intact all their collections, as well as collections turned over to
them by sub-collectors/tellers, with authorized government depository bank (AGDB)
daily or not later than the next banking day. 47 Where collections are minimal and daily
deposit thereof becomes costly and impractical, the COs shall deposit their collections at
least once a week, or as soon as the collections reach P10,000.00. They shall record all
deposits made in the CRR.
33. Officers of the local government authorized to receive and collect monies arising from
taxes, revenues, or receipts of any kind shall remit the full amount received and collected
to the treasury of such local government unit which shall be credited to the particular
account or accounts to which the monies properly belong. 48
a. The Local Treasurer/Cashier shall deposit intact all his collections turned over to him
by the Collectors/Tellers with the authorized depository bank daily or not later than
the next banking day. He shall record all deposits made in the Cashbook-Cash in
Treasury and in the case of municipalities where travel time to the depository bank is
more than one (1) day, deposit of collections shall be made at least once a week, or as
soon as the collections reach P10,000.00. 49
b. The Barangay Treasurer shall deposit all collections with the city or municipal
treasury or in the depository account maintained in the name of the barangay within
five (5) days after receipt thereof. 50 He shall likewise record all deposits in the
Cashbooks maintained for Cash in Treasury and Cash in Bank.
44
Section 82, GAAM, Vol. 1

Section 105, Ibid
46
GAO General Circular No. 110
47
Section 21, MNGAS for NGAs, Vol. I
48
49
Section 28, COA Circular No. 92-382
50
Section 334(a), Republic Act No. 7160
45
c. Collections of field collectors shall be remitted to the Cashier/designated Liquidating

Officer of the field office of the local government unit. When travel distance from the
field office to the local treasury may expose government funds to risk such as loss in
transit, the Cashier/designated Liquidating Officer, upon authorization by the Local
Treasurer, may deposit the collections in the authorized depository bank near the field
office of the local government unit. 51
34. Under such rules and regulations as the Commission and the Department of Finance
(DOF) may prescribe, the Treasurer of the Philippines and all authorized depository
banks shall acknowledge receipt of all funds received by them, the acknowledgment
bearing the date of actual remittance or deposit and indicating from whom and on what
account it was received. 52 For purposes of reporting deposits of national collections, the
National Collecting Officers/Local Treasurers shall report deposits of national collections
following the guidelines provided for in Treasury Circular No. 5-2003 dated 08 October
2003 or any subsequent revision or amendment thereto.
Dishonored Checks
35. A check is dishonored either by non-payment or non-acceptance. Dishonor by nonpayment occurs when (a) the check is duly presented for payment and payment is refused
or cannot be obtained; or (b) presentment is excused and the check is overdue and
unpaid. 53 Dishonor by non-acceptance happens when (a) the check is duly presented for
acceptance, and such an acceptance as is prescribed by law is refused or cannot be
obtained; or (b) presentment for acceptance is excused and the check is not accepted. 54
36. In the case of dishonored government checks received purely for accommodation or
encashment, the same shall be disallowed and the amount thereof shall be made good by
the AO who allowed their encashment.
37. When a check is dishonored by non-payment or non-acceptance, notice of dishonor
(Annex B) must be given to the drawer and to each endorser, and any drawer or endorser
to whom such notice is not given is discharged from liability. 55 The notice of dishonor
shall be furnished to the Agency Head, Accountant, Auditor and a copy thereof retained
by the CO. The CO shall cancel the OR covering the dishonored check. If necessary, the
head of the agency shall promptly institute the corresponding action for the collection of
the amount involved.
38. The CO neglecting or failing to give the required notice of dishonor to the drawer (or to
the endorser-payor of the government check), who, as a result thereof, is discharged from
liability, shall be personally answerable for the resulting loss suffered by the government.
51
Section 62(D), Local Treasury Operations Manual

53
Section 83, Negotiable Instruments Law
54
Section 149, Ibid
55
Section 89, Negotiable Instruments Law; Section 85, GAAM, Vol. I
52
10
39. The making, drawing and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank, when presented within ninety
(90) days from the date of the check, shall be prima facie evidence of knowledge of such
insufficiency of funds or credit unless such maker or drawer pays the holder thereof the
amount due thereon, or makes arrangements for payment in full by the drawee of such
check within five (5) banking days after receiving notice that such check has not been
paid by the drawee. 56
40. A dishonored check shall be settled by tendering payment in cash or by certified check to
the CO concerned. No other mode of payment shall be accepted.
41. Upon settlement of the dishonored check in the manner herein prescribed, the CO shall
not return the check to the payor concerned unless the latter first surrenders the previous
OR therefor. If the previous receipt is no longer available, sworn statement to the effect
that it has been lost or misplaced should be submitted by the payor.
42. Dishonored checks shall remain in the custody of the CO, pending their redemption,
unless the agency head or the court shall direct otherwise, in which case appropriate
receipts should be secured from the officer authorized to take custody of the checks. The
CO shall immediately advise the transfer of custody of the check. 57
Disbursements
43. Financial transactions and operations of any government agency shall be governed by the
fundamental principles set forth hereunder, to wit:
56
57
43.1
No money shall be paid out of any public treasury of depository except in

pursuance of an appropriation law or other specific statutory authority.
43.2
Government funds or property shall be spent or used solely for public purposes.
43.3
Trust funds shall be available and may be spent only for the specific purpose for
which the trust was created or the funds received.
43.4
Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency.
43.5
Disbursements or disposition of government funds or property shall invariably

bear the approval of the proper officials.
43.6
Claims against
documentation.
government
funds
shall
be
Section 2, Batas Pambansa Blg. 22, amending Article 315 of the Revised Penal Code
11
supported
with
complete
43.7
All laws and regulations applicable to financial transactions shall be faithfully

adhered to.
43.8
Generally accepted principles and practices of accounting as well as of sound

management and fiscal administration shall be observed, provided that they do not
contravene existing laws and regulations. 58
44. Except with the prior approval of the President, and for procurement transactions where
advance payment is allowed pursuant to Sections 4.3 59, 4.4 60 and 4.5 61 of Annex D,
Section 4.1 62 of Annex E and Section 1 63 of Annex F of the Revised Implementing Rules
and Regulations of Republic Act (RA) No. 9184, the government shall not be obliged to
make an advance payment for services not yet rendered or for supplies and materials not
yet delivered under any contract therefor. No payment, partial or final, shall be made on
any such contract except upon a certification by the head of the agency concerned to the
effect that the services or supplies and materials have been rendered or delivered in
accordance with the terms of the contract and have been duly inspected and accepted. 64
45. Payments to creditors shall be made only upon the specific approval of the head of the
agency concerned or his duly authorized representative, or if there be no such officer,
upon the approval of the department head endorsed upon the warrant or check or voucher
effecting the payment. 65
Cash Advances
46. No cash advance shall be given unless for a legally authorized specific purpose. A cash
advance shall be reported on and liquidated as soon as the purpose for which it was given
58

A single advance payment not to exceed fifty percent (50%) of the contract amount shall be allowed for contracts entered into
by a procuring entity for the following services where requirement of down payment is a standard industry practice:
a. Hotel and restaurant service;
b. Use of conference/seminar and exhibit areas; and
c. Lease of office space.
60
Advance payment not to exceed fifteen percent (15%) of the contract amount, unless otherwise directed by the President, shall
also be allowed for procurement of goods required to address contingencies arising from natural or man-made calamities in
areas where a State of Calamity has been declared by appropriate authorities.
61
Upon submission of an irrevocable letter of credit or bank guarantee issued by a Universal or Commercial Bank, advance
payment not to exceed fifteen percent (15%) of the contract amount shall be allowed and paid within sixty (60) calendar days
from signing of the contract. The irrevocable letter of credit or bank guarantee must be for an equivalent amount, shall remain
valid until the goods are delivered, and accompanied by a claim for advance payment.
62
The procuring entity shall, upon a written request of the contractor which shall be submitted as a contract document, make an
advance payment to the contractor in an amount not exceeding fifteen percent (15%) of the total contract price, to be made in
lump sum or, at the most, two instalments according to a schedule specified in the instructions to bidders and other relevant
Tender Documents.
63
The Government, as it considers fair and reasonable, may allow advance payment to the Consultant in the amount which shall
not exceed fifteen percent (15%) of the contract amount to cover the cost of mobilization, subject to the posting of an
irrevocable standby letter of credit issued by an entity acceptable to the agency and of an amount equal to the advance
payment. The advance payment shall be repaid by the Consultant deducting from his progress payments such sum as agreed
upon during the contract negotiations until fully liquidated within the duration of the contract.
64
65
Section 91, Ibid
59
12
has been served. 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. 66
47. The specific rules and regulations on the granting, utilization and liquidation of cash
advances are provided for under COA Circular No. 97-002 dated February 10, 1997
(Annex C), as amended by COA Circular No. 2006-005 dated July 13, 2006 (Annex D).
48. The books, accounts, papers and cash of any local treasurer or other AO shall at all times
be open to the inspection of the Commission or its duly authorized representative. 67
49. In case an examination of the accounts of a local treasurer discloses a shortage in cash
which should be on hand, it shall be the duty of the examining officer to seize the office
and its contents, notify the Commission, the local chief executive concerned, and the
local accountant. Thereupon, the examining officer shall immediately turnover to the AO
next-in-rank in the local treasury service, unless the said officer is likewise under
investigation, the office of the treasurer and its contents, close and render his account on
the date of the turnover. In case the AO next-in-rank is under investigation, the auditor
shall take full possession of the office and its contents, close and render his accounts on
the date of taking possession, and temporarily continue the public business of such office
until such time that the local treasurer is restored or a successor has been duly designated.
The local treasurer or AO found with such shortage shall be automatically suspended
from office. 68
Retention of Money for Satisfaction of Indebtedness to Government
50. When any person is indebted to any government agency, the Commission may direct the
proper officer to withhold the payment of any money due such person or his estate to be
applied in satisfaction of the indebtedness. 69
Constructive Distraint of Property of Accountable Officers
51. Upon the discovery in audit of a shortage in the accounts of any AO and upon a finding
of a prima facie case of malversation of public funds or property against him, in order to
safeguard the interest of the Government, the Commission may place under constructive
distraint the personal property of the AO concerned where there is reasonable ground to
believe that the said officer is retiring from the government service or intends to leave the
Philippines or remove his property therefrom or hide or conceal his property.
66

Section 46, Ibid
68
69
67
13
The constructive distraint shall be effected by requiring the AO concerned or any other
person having possession or control of the property to accomplish a receipt in the form
prescribed by the Commission, covering the property distrained and to obligate himself to
preserve the same intact and unaltered and not to dispose of it in any manner whatever
without the express authority of the Commission.
In case the said AO or other person having the possession and control of the property
sought to be placed under constructive distraint refuses or fails to accomplish the receipt
herein referred to, the representative of the Commission effecting the constructive
distraint shall proceed to prepare a list of such property and in the presence of two
witnesses leave a copy thereof in the premises where the property distrained is located
after which the said property shall be deemed to have been placed under constructive
distraint. 70
70
14
Chapter III
GUIDELINES
A. Authority
1. The authority to conduct regular cash examination shall be inherent to the audit team
having jurisdiction over the audited agencies. The audit team leader shall be responsible
in identifying the audit team member/s who will conduct or assist him in the cash
examination.
2. Whenever the circumstances warrant, the Chairperson or the Cluster/Regional Director
may constitute special audit teams to conduct cash examination.
B. Planning
1. Develop an overall plan/audit program, taking into consideration the objectives to be
accomplished, the scope, the manpower requirement and estimated man-hours.
2. Schedule the examination properly to avoid inconvenience to the agencys clientele and
the AOs and disruption of operations.
3. Brief the audit team of the work to be done, how it will be done, the distribution of tasks
and timetable for the examination, proper conduct and behaviour, among others.
C. Preparation
1. Understand the procedures and techniques on cash examination and be familiar with the
cash examination form [General Form No. 74(A), Annex E], and Section 181,
Government Accounting and Auditing Manual (GAAM), Vol. 1 on the handling, custody
and disposition of the cashbook.
2. Evaluate/validate the agencys internal control structure on cash management whenever
deemed necessary, using the Internal Control Questionnaire marked as Annex F to this
manual.
3. Know the agencys functions, organizational units, funds, official depositories, volume of
business and names of all cash AOs, including the location of their offices, vaults, safes,
ATMs and other receptacles.
4. Secure copies of Report of Accountability for Accountable Forms with and without
money value, if any.
5. Secure copies of invoice receipts for accountable forms from the AO.
15
6. Refer to the latest cash examination and other audit reports including those of the internal
audit unit to be acquainted with significant findings, if any, and to follow up the agencys
compliance with the corresponding recommendations.
7. Review the latest Statement of Audit Suspensions, Disallowances and Charges (SASDC),
Audit Observation Memorandum (AOM) and Credit Notice issued to the AOs to be
examined for guidance in audit.
8. Gather all the necessary data and prepare audit work papers regarding the officers
accountability from last cash examination to facilitate the preparation of the Statement of
Accountability under Section D of General Form No. 74(A).
9. Bring copies of the authority to conduct the cash examination, whenever applicable, COA
identification card, office equipment and the necessary supplies.
10. See to it that Section A (Cash Production Notice) of General Form No. 74(A) is duly
accomplished before the cash count.
D. Auditors Conduct and Behaviour
1. The auditor shall conduct himself in such a manner as to earn the respect of the AO and
other agency officials.
2. Although a friendly relationship shall be maintained, a relationship bordering on too
much familiarity and intimacy shall be avoided.
3. In no case, shall he solicit or accept personal favors in order to preserve his impartiality
and independence.
4. Limit to the minimum his presence in the AOs booth/office.
E. Timing the Examination
1. Maintain the element of surprise in every examination.
2. Schedule the cash examination to enable the completion of at least the count of cash and
cash equivalents at the close of office hours. As far as practicable, start the examination
in the morning. For banks, however, conduct the count before or after banking hours so
as not to disrupt the operations.
F. Frequency of Cash Examination
1. Conduct the examination of the cash and accounts of all AOs at least once a year.
16
2. Perform mandatory cash examination under the following circumstances:

a. Before the AO retires or is separated from the service;
b. Before he is transferred to another station or office;
c. When he goes on extended leave of absence and another AO is designated in his
place; and
d. When loss of government fund by an AO is reported.
G. Simultaneous Cash Count
1. Examine simultaneously all funds in the custody of the AO.
2. Conduct cash count of all cash AOs in the office and its immediate vicinity. If this is not
practicable, adopt such measures to control the movement of cash between or among
AOs.
H. Accountable Officers Presence During the Count
1. Ensure the presence of the AO at all times during the cash count. If, at any time during
the cash count, the AO has to leave the premises, stop the count immediately, segregate
the cash counted and cause the return of all cash to the safe, have it properly secured and
resume the count only upon his return.
I. Sealing of Vault, Safe or Other Cash Receptacles
1. Seal the vault, safe or other cash receptacles only in exceptional cases, such as:
a. Absence or non-appearance of the AO on the date of the count specially when the
intention of the auditor to examine the former has become obvious or made known to
other employees;
b. Refusal of the AO to submit himself to cash examination;
c. Interruption or non-completion of the count during the day or the necessity of
controlling cash, cash items and records; and
d. Death, incapacity, or absconding of the AO.
2. Require at least two agency personnel to witness the sealing and sign the sealing paper or
its equivalent.
3. Seal by pasting a sheet(s) of paper or equivalent on the appropriate place(s) of the vault,
safe or receptacle. Make sure that the vault, safe or receptacle could not be opened
without breaking the seal.
17
4. Use the properly worded sealing paper form as shown below:

___________ 20__
DO NOT BREAK THE SEAL
UNDER PENALTY OF LAW
__________________________
(Signature over printed name)
__________________________
(Position/Designation)
Witnesses to the sealing:

_________________________
(Name and Signature/Position)
_________________________
(Name and Signature/Position)
5. Retain a duplicate copy of each properly accomplished sealing paper.

6. The public officer charged with the custody of the vault, safe or receptacle, who, shall
break the seals placed by the auditor or permit them to be broken, shall be liable for the
penalties prescribed under Article 227 of the Revised Penal Code. 71
J.
Accountable Officers Cashbook/CRR/CDR/CkDR or its equivalent

1. Require the AO to enter in his Cashbook/CRR/CDR/CkDR or its equivalent all valid
transactions and adjustments up to the time of the count. He shall then foot, balance and
rule it. For banks or agencies with computerized systems, print the certification on the
cut-off reports generated and duly signed by the AO.
2. Cause the AO to certify immediately below the last entry in his Cashbook/CRR/CDR or
its equivalent, as follows:
I hereby certify on my official oath that all cash and depository
transactions had by me in my capacity as (Designation)
of
(Name of Agency)
at the time of examination, showing
a balance of _____________________________ (P_________)
have been correctly and completely recorded in the
Cashbook/CRR/CDR (or its equivalent).
71
________________
_________________________
(Date)
Art. 227. Officer breaking seal.- Any public officer charged with the custody of papers or property sealed by proper authority,
who shall break the seals or permit them to be broken, shall suffer the penalties of prision correccional in its minimum and
medium periods, temporary special disqualification and a fine not exceeding 2,000 pesos.
18
3. Direct the AO to effect adjusting entries in the Cashbook/CRR/CDR/CkDR or its

equivalent when errors or omissions are found after verification of the entries, and to
execute the certification in No. 2 above after the last entry.
K. Auditors Review of Transactions
1. Verify the transactions from the date of last cash examination to the date of current
examination. Limit the verification to the determination and establishment that all cash
receipts, remittances/deposits, cash advances/disbursements and adjusting entries are
properly and correctly recorded in the Cashbook/CRR/CDR/CkDR or equivalent; that
disbursement vouchers, as entered in the CDR/CkDR are properly approved and
payments duly acknowledged; and that all cash balances as of the date of examination are
reconciled with accounting and related records.
2. Recheck all figures and computations if the examination discloses a discrepancy and
perform other audit procedures necessary under the circumstances before declaring a cash
shortage or overage.
3. Require in writing from the AO a written explanation of how the discrepancy occurred
within seventy-two (72) hours from his receipt of the letter requiring the same.
L. Auditors Certificate on the Cashbook/CRR/CDR or equivalent
1. Accomplish the auditors certification after the completion of the cash examination
immediately below the certification of the AO, as follows:
Examined and verified the cash accountability of (Accountable Officer),
(Designation), covering the period _______ to ______ and arrived at a
balance of P_______, of which the amount of P_______ was actually found
on hand, consisting of P_______ in currency and P_______ in cash items,
thereby showing (no difference/cash shortage/overage of P
).
________________________
________________________
(Designation)
_________________________
(Date)
2. At no instance shall the auditors certification be qualified.
3. Ensure that all prescribed cash examination procedures in Chapter IV of this manual have
been completed and the accountability of the officer has been duly established before
accomplishing the said certificate.
19
M. Prohibition of Incomplete Examinations

1. Conduct examinations thoroughly and completely in every case to the last detail,
including verification/reconciliation of accountable forms received and issued and the
various records of collections and disbursements, as well as entries in the
Cashbook/CRR/CDR/CkDR or its equivalent. Just as government treasurers are held to
strict accountability as regards funds entrusted to them in a fiduciary capacity, so should
examining auditors act with greater care and caution in the audit of the accounts of such
AOs to avoid the perpetration of any injustice. Accounts should be examined carefully
and thoroughly to the last detail, with absolute certainty. 72
2. Where an examination fails to disclose an existing shortage and there is proof that said
examination was incomplete or the steps prescribed herein were not followed, the same
shall be considered a prima facie ground for the initiation of administrative or criminal
action against the auditor(s).
N. Audit Work Papers
1. Systematically gather and accumulate sufficient evidence necessary for drawing logical
and verifiable conclusions. This is accomplished through the audit work papers, which
record the evidence gathered to support the conclusions reached by the auditor.
2. Prepare complete, accurate, clear, neat and relevant work papers.
O. Cash Examination Report
1. Issue an AOM to communicate the deficiencies noted during the cash examination.
2. Conduct an exit conference to discuss with management the results of the examination.
3. Prepare a final narrative report on the results of examination consisting of three parts,
namely: the introduction, the findings and recommendations, and the annexes. Present
the findings with the corresponding recommendations in the order of their significance.
Incorporate in the report the management comments and audit teams rejoinder, if any.
4. Submit the report to the Supervising Auditor (SA) or Cluster/Regional Director within
twenty (20) days from completion of field work.
5. Distribute final copies of the report as follows:
a.
b.
c.
d.
72
AO
Head of the Agency
SA
Auditors file
Office of the Ombudsman v. Rodolfo Zaldarriaga, G.R. No. 175349, June 22, 2010 citing Tinga v. People, L-57650, April 15,
1988, 160 SCRA 483, 491
20
6. Auditors before conducting cash examinations in the regions/field with no books of

accounts should coordinate with the SAs/Audit Team Leaders (ATLs) of Head
Office/Regional Office auditees, where books of accounts are kept, to obtain data on the
accountabilities of the AO such as accountable forms issued/latest Monthly Statement of
Accountability on Accountable Forms submitted, audited or booked remittances, cash
advances granted and liquidated from the latest cash examination or outstanding
unliquidated cash advances, among others. They should furnish a copy of their Cash
Examination Reports (CERs) to the SAs/ATLs of Head Office/Regional Office auditees
where the cash advances and liquidations/collections and remittances being cash
examined are booked. The CER furnished shall be utilized by these SAs/ATLs to
reconcile the Statement of Accountability of the AO in the CER against the
ledgers/books of accounts of their auditees where the transactions of the AO are booked.
7. When a significant shortage is discovered after the cash count, inform the
Cluster/Regional Director thru the SA, within three (3) working days from discovery, for
any further appropriate action. This shall be without prejudice to the continuation and
completion of the examination and submission of the final narrative report.
8. Where the shortage necessitates the filing of an administrative and/or criminal action,
submit the final report together with the letter-complaint, sworn statements of witnesses
and other supporting documents to the Cluster/Regional Director thru the SA for review
and evaluation.
9. The Cluster/Regional Director shall transmit the report together with the documents
mentioned in paragraph 7 above to the Office of the Ombudsman for the filing of
administrative and/or criminal action against the defaulting AO, furnishing the auditor
concerned a copy of the transmittal letter. A copy of the report as well as information of
its referral to the Office of the Ombudsman shall be furnished the head and the chief
accountant of the agency concerned, the COA Legal Services Sector, and if the
defaulting officer is a treasurer of a local government unit, to the Bureau of Local
Government Finance. If the shortage is material, the Cluster/Regional Director
concerned shall recommend to the Chairperson, thru the Assistant Commissioner
concerned to request the issuance of a hold departure order against the erring AO by the
appropriate government agency.
10. In case of cash examination conducted by a special audit team coming from other offices
of the Commission, the team shall submit the report on the examination to the Director
having supervision of the special audit team, with final copies thereof duly furnished to
the AO, the Head of the Agency, the Auditor, and the SA of the agency concerned.
Where the report indicates a shortage which necessitates the initiation of appropriate
action against the AO, the Director shall transmit a copy of the report together with the
supporting documents to the Office of the Ombudsman following the procedures
outlined in the preceding paragraph.
21
Chapter IV
PROCEDURES AND TECHNIQUES

A. Common Procedures and Techniques
1. Introduce yourself properly to the AO to be examined. In the case of special audit teams,
present the Office Order authorizing the conduct of cash examination.
2. Require the AO to temporarily suspend all transactions. In the case of cashiers of the
Bangko Sentral ng Pilipinas (BSP) and other government banks, the count may be
suspended every time there is a need to render service to their clients or bank tellers. If
the cash count cannot be finished at the close of office hours, seal or double lock their
safe, vault or other cash receptacles at the end of the day and continue the count on the
succeeding business day(s) until completed.
3. Cause the production of all cash, cash items, etc., by signing and serving the cash
production notice in General Form No. 74(A). Require the AO to acknowledge the notice
by signing the Noted and Complied With box. For ATMs, the ATM Teller as well as
the other personnel exercising dual control over the ATM shall jointly sign the said box.
4. Require the AO to post all the transactions (such as collections, remittances, deposits,
cash advances and disbursements) in his cashbook/CRR/CDR or equivalent up to the
time of examination, foot balance, rule in ink and write the certification shown on page
18 of this manual. If the unrecorded transactions are voluminous, consider them as cash
items during the count.
5. Establish proper cut-off by taking note of the last number of OR/check issued, control
paid voucher/payroll and, determine last entry or terminal readings of validating/metered
postage machines/cash registers/ATMs, if any. Affix full signature and indicate cut-off
date at the back of the 2nd copy of the OR.
6. See to it that all cash, checks, money orders, paid vouchers, other cash items, and unused
accountable forms are presented. Inspect the safe, vault or other cash receptacles where
the cash and cash items are usually kept.
7. Require the AO to segregate private and/or personal funds, if any, count them and have
them placed in an envelope properly labelled as private/personal funds.
8. Require the AO to segregate by currency and denomination, the notes and coins
presented. Have the notes arranged in bundles and the loose coins in groups.
9. Segregate the cash items by group, such as: cash in pay envelopes, checks, money orders,
paid vouchers, partially paid payrolls, etc. Proceed with the listing of the cash items
using the space provided in the form. In the case of checks, and money orders, indicate
the serial number, date, drawer, drawee and amount.
In the case of paid
22
vouchers/partially paid payrolls, indicate voucher number, date, payee/payroll head and
amount.
10. Proceed with the piece-by-piece count in the presence of the AO, starting from the
highest to the lowest denomination, listing them in the appropriate space in General Form
No. 74(A). Use additional sheet if necessary.
11. See to it that no note or coin presented has been demonetized. Mutilated notes must be
examined for acceptability. It is the common practice of banks not to accept mutilated
notes unless the serial numbers at both ends are intact.
12. After the count of cash, cash items and accountable forms, require the AO to accomplish
and sign the certification in General Form No. 74(A) in the presence of two responsible
persons, whose signatures shall likewise be affixed on the appropriate spaces therein. For
the ATM, the bank personnel present under the joint custody/dual control shall affix their
signatures in the space provided for with the ATM Teller as main AO.
13. Check the footings of the cashbook/CRR/CDR or equivalent to ascertain the correctness
of its total and balances. Take note of errors and require the AO to adjust/correct the
cashbook/CRR/CDR or equivalent. Disclose in the cashbook/CRR/CDR or equivalent
that the adjustment, if any, was made at the instance of the examining auditor with the
AO and the former affixing their initials and indicating the date of adjustment.
14. Accomplish the Statement of Accountability in General Form No. 74(A) starting from the
date of last examination to current on the basis of verified amounts of debits and credits
to accountability of the AO. Ensure that the beginning balance of the statement shall
reflect the amount of accountability determined during the last examination.
15. Prepare the Reconciliation Statement of Accountability using the format shown in Annex
G to reconcile the established accountability with the accounting records.
16. In case of cash shortage or overage, follow the procedures on pages 29 to 34 of this
manual.
17. Prepare the Statement of Accountability for Accountable Forms in the format shown in
Annexes H and I.
17.1
Obtain the balance of accountability for accountable forms per last examination to
be considered as beginning balance of the current examination. Add all
accountable forms received during the period under examination to the inventory
of accountable forms as of date of last examination. Ascertain that all accountable
forms requisitioned or procured from all sources are included.
17.2
Determine the total number of accountable forms issued and/or transferred as

shown in the cashbook/CDR/CRR or equivalent, Report of Accountability for
Accountable Forms and other records.
23
17.3
Deduct total issues/transfers determined in 17.2 from total inventories established

in 17.1 to establish the balance of accountability as of the date of count.
18. Compare the balance of accountability arrived at with the inventory of unused
accountable forms. Require the AO to explain discrepancies in writing, if any. Shortages
of accountable forms with money value shall, like a cash shortage, be covered by a letter
of demand.
19. Require the AO to accomplish and sign the certificate of accountability provided in
General Form No. 74(A).
20. Accomplish the required auditors certification provided in General Form No. 74(A).
21. Determine the adequacy of the bond using the BTr guidelines on bonds.
22. Determine the adequacy of the precautionary measures adopted by the agency to
safeguard cash and whether the existing facilities of the AO provide adequate protection
against loss.
23. Review all necessary work papers and the supporting documents. Prepare the narrative
report.
B. Specific Procedures and Techniques
In addition to the above-mentioned procedures and techniques, the auditor shall perform the
following:
1. Collecting Officer
1.1
Check all entries in the cashbook/CRR or equivalent from the date of last
examination up to the date of current examination. Use tick marks to indicate
review made.
1.1.1
Check individually the entries in the cashbook/CRR or equivalent during the

period under review against source documents, such as: ORs, Daily
Statements, Cash Transfer Slips (CTS), Deposit Slips, Remittance Advice,
etc. In case the entries are based on daily statements or abstracts of
collection, check all statements/abstracts against the source documents.
1.1.2
Pay particular attention to the nature of collection/transaction made,

erasures, alterations, etc., to ascertain that the amount actually
collected/transacted is the amount recorded.
If necessary, confirm
collections/transactions with selected payors.
1.1.3
Check the numerical sequence of ORs and other accountable forms received
and issued. Ascertain that the original and duplicate copies of cancelled ORs
24
or accountable forms are submitted with the corresponding Report/Abstract

of Collections or equivalent. Take note of frequent cancellations of ORs
which may be an indication of irregularity.
1.1.4
Scrutinize the remittance advices or deposit slips or CTS for signs of

tampering.
Confirm with the BTr or depository banks all
remittances/deposits made during the period under examination. Obtain
copies of debit advices issued by the depository banks during the period
under examination. Ensure that these are taken up in the cashbook/CRR or
its equivalent.
1.1.5
Examine adjustments made by accounting office/unit during the period

under examination. Determine propriety and correctness of all adjusting
entries.
1.1.6
Consider all discrepancies affecting the AOs accountability in the

preparation of the Statement of Accountability.
1.2
Examine all checks and money orders for regularity. Verify if private checks were
received in payment of taxes, dues, fees and other government obligations by
tracing them to the corresponding ORs.
1.3
Ascertain that private checks are made payable to the agency or the official title or
designation of the agency head. Disallow accommodated private checks, including
post-dated checks, stale checks/money orders, chits and promissory notes.
1.4
Require the AO to explain the existence of obsolete checks and other accountable
forms, if any.
1.5
Count and list all unused accountable forms on hand, using the appropriate space in
General Form No. 74(A). Inspect unused booklets to make sure that each set of
serial number is complete. In case of missing copies, require the AO to explain the
loss in writing. See to it that the notice of loss is immediately disseminated.
Recommend the immediate destruction of obsolete checks and other accountable
forms.
1.6
Prepare the Statement of Accountability starting from the balance of the last
examination to the date of the current cash examination, on the basis of verified
amounts of collections and remittances/deposits, using the appropriate spaces in
General Form No. 74(A).
1.7
Analyze collections and remittances/deposits to determine if amounts collected are

remitted/deposited in the manner and frequency prescribed on pages 9 and 10 of
this manual.
25
1.8
Inquire into major steps, obtain flow chart, if any, or narrative procedures on the
receiving, keeping, disposing and accounting for collections. Identify deviations
from prescribed regulations and sound internal control structures. On the basis of
the duties of the CO and his staff, ascertain whether the daily collections of the staff
are turned over to the CO at the end of the day.
2. Bank Cashier/Teller/ATM Teller

2.1
Count currency notes of Cashiers/Tellers/ATM Tellers of BSP and government

banks as follows:
2.1.1
per box for unopened original boxes with BSP seal;
2.1.2
by bundle for opened original boxes with plastic seal intact;
2.1.3
by bundle for original shrink-wrapped bundles (original shrink-wrapped

bundles are from the original boxes of notes which are machine counted,
bundled and shrink-wrapped). Select bundles for 100% wrapper count using
COA sampling methodology.
2.1.4
by piece for not originally shrink-wrapped bundles. Using COA sampling

methodology, select wrappers from bundles not originally shrink-wrapped
for piece count.
2.2
Count unfit notes for retirement which are verified/counted and perforated by
money counters of BSP by bundle. Select sample bundles for 100% wrapper count.
Then select sample wrappers for piece-by-piece count.
2.3
Count coins in original bags by bag; repacked coins by pack, then select sample
repacked coins for piece count. Count loose coins piece by piece.
2.4
Count by piece all commemorative notes and coins especially printed and minted to
commemorate special occasions which are booked at face value but may be sold at
a premium approved by the BSP Monetary Board, except those in unopened
original boxes and bags which shall be counted by box and by bag,
2.5
Disclose on General Form No. 74(A) and on the cash examination report whenever
a sampling prescribed by the Commission was used in the cash count.
2.6
Conduct a complete piece count in case of discrepancy noted in the cash count
especially with the comparison between the denominations per count and per AOs
breakdown of his accountability. Document the subsequent 100% cash count in a
separate General Form No. 74(A) and prepare the corresponding cash examination
report bearing the actual date when the new or subsequent cash count was
conducted.
26
2.7
In the case of ATMs, count the notes by piece by cassette. Use the ATM Cash
Count Sheet (Annex J) or similar form to list the money retrieved. Ensure that these
forms and Section A of General Form No. 74(A) are signed by the AO and all those
designated under the joint custody/dual control.
2.8
For cash in receptacles which are marked Subject to Verification (SV), reflect in
the count sheet the amount indicated in the tag.
2.9
Determine whether the cash identified as SV are verified in the manner and
frequency prescribed. Age the cash SV and obtain explanation from the AO for the
existence of long staying cash SV. Request the BSP Cashier to make representation
with banks which made the deposit to schedule the opening of long staying cash SV
in the presence of the bank representatives and the auditor.
3. Disbursing Officer (DO)

3.1
Examine all cash items for regularity. Ascertain that they are all current and duly
approved.
3.1.1
Unposted paid vouchers/payrolls

3.1.1.1
3.1.2
Partially paid payrolls

3.1.2.1
3.1.3
Verify contents of pay envelopes, if any. Treat cash in pay

envelopes as cash items. Add payments already made in the
payroll. Consider the total of cash found inside the pay envelopes
and total payments already made as cash items. Disallow chits and
promissory notes inside the pay envelopes.
Checks and money orders

3.1.3.1
3.1.4
Determine why the paid vouchers/payrolls are not posted in the

cashbook/CDR. If they are duly approved and acknowledged in all
respects, consider them as valid cash items.
Disallow checks and money orders paid by the DO out of his cash
advance. Allow checks drawn as cash advances in favor of the DO
as cash items.
Paid invoices, reimbursement expense receipts (RER), promissory notes,

etc.
3.1.4.1
If the fund being examined is a cash advance for petty expenses,

consider paid invoices/receipts covering authorized petty expenses
for goods and services, like telegram, tolls, freight, cartage, etc., as
valid cash items. Allow sales invoices and/or charge invoices as
27
cash items only when supported with ORs. Disallow chits and
promissory notes under any circumstance.
3.2
Count and list all unused checks on hand using the appropriate space in General
Form No. 74(A). Inspect unused booklets for missing checks. In case of missing
checks, require the DO to explain the loss in writing. See to it that the DO
immediately disseminated the notice of loss and notified the bank for stoppage of
payment.
3.3
Check all entries in the cashbook/CDR/CkDR or equivalent from the date of last
examination to the date of current examination. Use tick marks to indicate review
made.
3.4
3.3.1
Based on accounting records, determine whether all cash

advances/withdrawals have been entered in the cashbook/CDR/CkDR or
equivalent on the dates they were received. List all unposted cash
advances/withdrawals.
3.3.2
Check all cash disbursements against the corresponding vouchers.

Determine whether the vouchers were duly approved and payments
acknowledged. Pay particular attention to erasures/alterations on the
voucher and the cashbook. Make sure that the amount entered in the
cashbook/CDR or equivalent was the approved amount of the voucher.
Where the vouchers could no longer be made available to the auditor, such
as in the case of agencies with centralized accounting systems, secure
confirmation of the aforesaid disbursements from the auditor of the agency
where the books are kept.
3.3.3
Trace refunds of cash advances to the original receipts issued therefor.
3.3.4
Determine propriety and correctness of adjusting entries.
3.3.5
Consider all discrepancies affecting the DOs accountability in the

preparation of the Statement of Accountability.
Prepare the Statement of Accountability starting from the last date of examination
to the date of current examination, on the basis of verified cash advances,
disbursements and refunds using the appropriate spaces in General Form No. 74(A).
Require the DO to accomplish and sign the certificate of accountability provided
therein.
C. Reconciliation Statement of Depository Accounts

1. Require the Chief Accountant/head of the accounting unit to prepare and submit bank
reconciliation statements for the latest bank statements received covering all bank
depository accounts.
28
2. Obtain directly from the bank a cut-off statement for all bank depository accounts as of
the date of the examination and prepare the corresponding bank reconciliation statements
as of cut-off date (Annex K).
D. Cash Shortage
1. Recheck all figures and computations if the examination discloses a cash shortage, before
declaring the AO short of his funds.
2. Demand at once from the AO the immediate production of the missing fund(s) the
moment the amount of shortage is definitely established. Execute the demand in writing
and have the AO acknowledge receipt thereof on the duplicate copy. A sample of the
letter of demand is shown in Annex L. Obtain from the AO a written explanation of how
the shortage occurred within seventy-two (72) hours from his receipt of the letter of
demand.
3. Recommend to the agency head the immediate relief of the defaulting officer from his
duties as AO. The recommendation shall be in writing, duly acknowledged by the agency
head or his duly authorized representative on the duplicate copy which is to form part of
the auditors work papers. Institute such measures necessary to safeguard adequately the
cash and records.
4. If a shortage is discovered on the accounts of a local treasurer, seize the office and its
contents and notify the COA Director concerned, the local chief executive, and the local
accountant.
5. Turnover immediately to the AO next-in-rank in the local treasury service the office of
the treasurer and its contents, close, and render his account on the date of the turnover.
6. In case the AO next-in-rank is likewise under investigation, take full possession of the
office and its contents, close and render his accounts on the date of taking possession, and
temporarily continue the public business of such office until such time that the local
treasurer is restored or a successor has been duly designated.
7. Direct the proper officer to withhold the payment of salary and other emoluments except
retirement pay, terminal leave benefits or gratuities, due the defaulting AO once his cash
shortage is ascertained. Sign the withholding order in the following manner:
By Authority of the Chairperson,
Commission on Audit
___________________________
(Audit Team Leader)
29
A sample of such withholding order is shown as Annex M of this manual. Report such
withholding order promptly to the COA Chairperson.
The salaries and emoluments to be withheld shall correspond to the amount of the alleged
shortage. Said amount shall be considered merely withheld and shall not be applied to the
shortage until final resolution by a competent court of the AOs indebtedness, if such is
initiated. In the event that the AO is found liable for the cash shortage, the withheld
salary and other emoluments shall be applied in payment of the indebtedness; otherwise,
it shall be released to the AO. 73
Constructive Distraint
8. The constructive distraint contemplated under Section 47 of Presidential Decree No.
1445, may be effected under the following circumstances:
a. A shortage in the accounts of an AO is discovered in audit;
b. The amount of the shortage has not been restituted despite demand;
c. A prima facie case of malversation of public funds or property is found against him;
d. There is reasonable ground to believe that he is retiring from the government service;
or intends to leave the Philippines; or intends to remove his personal property from
the Philippines; or intends to hide or conceal such property; and
e. The interest of the government has to be safeguarded.
9.
The following are the procedures in effecting constructive distraint:

a. The auditor who discovered the shortage shall immediately submit a report to the
Chairperson, thru the SA and the Cluster/Regional Director concerned, embodying
his findings and recommendation to place the personal property of the defalcating AO
under constructive distraint.
b. Upon evaluation of such report and finding a need for the constructive distraint as
recommended therein, the Commission shall forthwith prepare a warrant directing the
auditor to place under constructive distraint (sample form attached as Annex N), the
goods, chattels or effects and other personal property of whatever character of the
AO. The warrant shall be signed by the Chairperson and shall show clearly the name
and address of the defalcating AO, the amount of shortage incurred, and the fact of
prior demand made for the restitution thereof.
73
See Santiago v. Commission on Audit, G.R. No. 146824, June 15, 2006 and Supreme Court Resolution dated November 21,
2007
30
c. The auditor directed to serve the warrant of constructive distraint shall serve the same
personally on the defalcating AO himself. In case, however, where the said AO
refuses to receive the warrant or is absent from his given address, the warrant shall be
served upon someone of suitable age and discretion in the premises or upon the
person in possession or occupancy of the personal property of the AO, who shall
acknowledge all the copies of the warrant. In case actual service of the warrant upon
the AO or upon either of the two other persons just mentioned cannot be made, a
copy thereof shall be left in the premises or in the office of the AO or in the place of
the person in possession or occupancy of the said property of the AO which fact shall
be attested to in said copy and in all the other copies of the warrant by the distraining
officer in the presence of at least two credible witnesses, whereupon the warrant is
deemed properly served. A copy of the warrant thus served shall be furnished to the
AO with a notation that a copy of the same was left with the person who is in
possession or occupancy of his personal property.
d. Upon service of the warrant, the distraining officer shall require the defalcating AO or
any other person having possession or control of the personal property in question to
accomplish a receipt (sample form attached as Annex O) covering the property
distrained and to obligate himself to preserve the same intact and unaltered and not to
dispose of it in any manner whatsoever without the express authority of the COA.
e. In case the said AO or other person having the possession and/or control of the
property sought to be placed under constructive distraint refuses or fails to
accomplish the receipt herein referred to or lists only a number of such personal
property not sufficient to cover the amount of the shortage, the distraining officer
shall proceed to prepare a list of the property choosing such quantity as is sufficient to
satisfy the shortage, and in the presence of two witnesses leave a copy thereof in the
premises where the property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
f. Where some of the property distrained consists of stocks and other securities, a copy
each of the warrant of constructive distraint and the receipt or list mentioned above
shall be served upon the president, manager, treasurer, or other responsible officer of
the corporation, company, or association which issued the said stocks or securities. In
case of debts and credits, copies of such documents shall be left with the person
owing the debts, or having in his possession or under his control such credits, or with
his agent. The warrant of constructive distraint and the receipt or list shall be
sufficient authority to the person owing the debts, or having in his possession or
under his control any credits belonging to the AO, to desist from the settlement
thereof without the written authority of the COA. In case of bank accounts, the copies
of the warrant and receipt or list shall be served upon the president, manager,
treasurer, or other responsible officer of the bank concerned, whereupon the bank
shall desist from allowing withdrawals therefrom or so much thereof, as may be
sufficient to satisfy the shortage of the AO without the written authority of the COA.
31
g. If the property distrained are registered with any government office, the distraining
officer shall notify in writing the government official concerned of the fact of the
constructive distraint, furnishing him with a copy each of the warrant and the receipt
or list mentioned above. The notification shall contain the following data:
i. nature and description of the property distrained;
ii. date of the distraint;
iii.name of the owner and/or actual possessor thereof; and
iv. nature and amount of shortage for which the distraint was effected.
h. A copy of such notice shall be sent to the last known address of the AO through
registered mail with return card or served upon the AO or his agent or to the occupant
or possessor of the property in question. Receiving copies of the return card or the
notice shall be kept secured together with the audit work papers of the examining
auditor.
10. The summary remedy by constructive distraint of personal property may be repeated until
the full amount of the shortage of the defaulting AO, including the expenses of the
distraint, is satisfied.
11. A report on any constructive distraint effected pursuant to Section 47 of P.D. No. 1445,
shall be submitted by the distraining officer to the COA Chairperson, thru the SA and the
Cluster/Regional Director concerned, furnishing a copy thereof to the Legal Services
Sector of the Commission. Such report shall form part of the supporting documents of the
complaint for malversation to be initiated against the defalcating AO. It shall provide the
Ombudsman or other government prosecutors with basis to apply with the proper court
for the attachment of the property distrained in accordance with the Rules of Court.
12. If at any time after the constructive distraint has been effected the AO restitutes the full
amount of the shortage, his personal property placed under such distraint, shall be
released therefrom.
Prosecution of the AO
13. Where a cash shortage is firmed up, submit the final narrative report together with the
affidavits, sworn statements and other supporting documents to the Cluster/Regional
Director thru the SA for review and evaluation.
14. If the facts and circumstances of the case warrant the filing of a criminal action, the
Cluster/Regional Director shall initiate such action by forwarding the report accompanied
by a letter-complaint (Annex P) to the Deputy Ombudsman (for Luzon, Visayas,
Mindanao or Military) concerned, recommending the initiation of criminal proceedings
against the defaulting AO. Where the shortage is discovered by special audit teams of
other offices of the Commission, the responsibility to initiate the criminal action shall fall
upon the director or head of such office.
32
15. For the purpose of prosecuting the defaulting AO, make the following documents
available to the prosecuting officials:
a. Certified true copies of AOs appointment, oath of office, official designation and
approved application for bond;
b. A copy of the Report of Cash Examination [General Form No. 74(A)], narrative
report and its supporting exhibits and schedules, letter of demand, and the written
explanation of the AO on how the shortage occurred, if any; and
c. Affidavit or sworn statements of the auditors and other witnesses (Annex Q).
17. If the shortage is material and a case has already been filed, request, thru the COA
Chairperson, the Department of Foreign Affairs (DFA), the National Bureau of
Investigation (NBI), and the Bureau of Immigration and Deportation (BID) to deny the
AO any clearance for purposes of travel abroad unless cleared by the COA.
E. Cash Overage
1. In case a cash overage is determined, extend the examination as may be necessary to
establish the cause of the overage and uncover any attendant irregularity, if any.
2. Obtain explanation from the AO. If the overage cannot be satisfactorily explained by the
AO, forfeit the amount in favor of the government and request the CO to issue an OR
therefor.
3. Record the overage as Miscellaneous Income.
F. Indemnity From Fidelity Fund
1. The Fidelity Fund shall be available for the purpose of replacing defalcations, shortages,
unrelieved losses in the accounts of bonded public officers, for the payment of fees and
costs incident to civil proceedings brought against them to recover sums paid on their
account from said Fund. 74
2. The relief from accountability of the accountable public officer granted by the COA shall
relieve the agency from responsibility for the loss or damage to public funds or
property. 75
3. When no relief of accountability is granted by the COA, the agency concerned may file
claim for reimbursement from the Fidelity Fund to the extent of the approved bond
covered or amount of loss whichever is lower. 76
74
Paragraph 4.8, Treasury Circular No. 02-2009, August 6, 2009; Section 326, Philippine Bonding Law
Paragraph 8.2, Ibid
76
Paragraph 8.3, Treasury Circular No. 02-2009, August 6, 2009
75
33
4. Any and all claims against the Fidelity Fund shall be filed as a money claim with the
COA, with a copy to the BTr together with the evidence relating thereto. Claims
approved by the COA shall constitute a legal claim against the Fidelity Fund. 77
5. The agency shall file claim for payment from the Fidelity Fund with the BTr, attaching
therewith the favourable findings of COA. The BTr shall process the claim in accordance
with existing budgeting, accounting and auditing rules and regulations. 78
6. In case of defalcation, shortages and unrelieved losses in the account of bonded public
officer, the claim shall be supported by the following documents: 79
6.1 Agency and COA findings and recommendation on the defalcation, shortages and
unrelieved accountability;
6.2 Latest Statement of Assets and Liabilities of the bonded official/employee;
6.3 Proof of current and subsisting bond and payment of bond premium; and,
6.4 Other document/s which may be required by the BTr.
7. Receipt of refund from Fidelity Fund shall be accounted for in the same manner as cash
settlement or restitution.
77
Paragraph 8.4,
Paragraph 8.5, Ibid
79
Paragraph 8.5.1, Ibid
78
34
Appendix 1
ILLUSTRATIVE ACCOUNTING ENTRIES

A.
ACCOUNT TITLES, CODES USED

The account titles and account codes used in the illustrative accounting entries to
record cash shortages, their subsequent restitution or relief, and to recognize cash overages
discovered during the cash examination are patterned on the Revised New Government
Accounting System Chart of Accounts. Other or equivalent account titles and additional
entries, if any, may be used by agencies (e.g. GOCCs) permitted to adopt accounting
systems and chart of accounts other than the NGAS and the Revised NGAS Chart of
Accounts.
B.
ACCOUNTING FOR SHORTAGES

As soon as a cash shortage has been definitely established, the auditor concerned
shall accomplish the following certificate:
____________________
Date
I hereby certify that in the examination of the cash and accounts of

made by (Name of Auditor)
on _____________, a shortage was reported which remains unaccounted for
and unrestituted.
(Name and designation of Accountable Officer)
I further certify that I have verified the shortage to be in the total

amount of P___________ (Indicate the shortage by funds).
____________________
Auditor
Four copies of the foregoing certificate shall be accomplished and distributed as follows:
Original - Agency Head
Duplicate - The defaulting accountable officer
Triplicate - The Chief/Regional Accountant concerned and
Quadruplicate - File copy of the Auditor.
Based on the certificate, the Chief/Regional Accountant shall draw a journal entry
voucher to take up the cash shortage as follows:
Case I - Local Government Sector - General or Trust Fund
To take up the cash shortage and establish the receivable account of the defaulting
accountable officer
Account Title
Due from Officers and Employees
Cash, In Vault (for the Local Treasurer), or
Cash, Collecting Officer (for Collecting
Officer), or
Petty Cash, or
Payroll Fund
Acct. Code
123
101
Debit
xxx
Credit
xxx
102
104
106
xxx
xxx
xxx
Case II - National Government Sector - General Fund and Special Account in the General
Fund
To take up the cash shortage and establish the receivable account of the defaulting
accountable officer
Account Title
Cash, Collecting Officer (for Collecting
Officer) or
Cash, Disbursing Officer (for Disbursing
Officer)
C.
Acct. Code
123
Debit
xxx
102
103
Credit
xxx
xxx
ACCOUNTING FOR RESTITUTION

Cash restitution is made by the defaulting accountable officer during or after the year
when the shortage was discovered.
To take up the cash restitution of the defaulting accountable officer
Account Title
Cash, Collecting Officer
Acct. Code
102
123
Debit
xxx
Credit
xxx
The above journal entry also applies if the defaulting accountable officer is from the
National Government Sector - General Fund and Special Account in the General Fund
D.
ACCOUNTING FOR RELIEF

1. Request for relief from cash accountability was not granted
The entry to establish the liability of the defaulting accountable officer when his request
for relief was denied is similar with Item B, Cases I and II on the preceding page.
When the defaulting accountable officer settles his/her accountability, the accounting
entry shall be similar with Item C on Accounting for Restitution.
2. Request for relief from cash accountability was granted
a. To take up the relief from cash accountability
Account Title
Loss of Assets (current year) or
Prior Year Adjustments
Acct. Code
961
684
123
Debit
xxx
xxx
Credit
xxx
b. If the lost fund was from Trust Fund, the shortage shall be transferred to the
General Fund
The entry to take up the cash shortage in the Trust Fund books of account is the
same with Item B, Case I on the preceding page.
To take up the transfer of the lost fund to the General Fund since the defaulting
employee cannot restitute the shortage.
Trust Fund books of accounts

Account Title
Due from Other Funds
General Fund books of accounts
Account Title
Loss of Assets (current year) or
Prior Year Adjustments
Due to Other Funds
Acct. Code
144
123
Debit
xxx
Acct. Code
961
684
424
Debit
xxx
xxx
Credit
xxx
Credit
xxx
To take up the settlement of the loss fund in the Trust Fund
Trust Fund Books of Accounts

Account Title
Due from Other Funds
Acct. Code
102
144
Debit
xxx
Credit
xxx
General Fund Books of Accounts

Account Title
Due to Other Funds
Cash in Bank - Local Currency, Current
Accounts
E.
Acct. Code
424
Debit
xxx
111
xxx
Credit
ACCOUNTING FOR OVERAGES

a. To take up the cash overage after it has been receipted and to recognize the income
account.
Account Title
Miscellaneous Income
Acct. Code
102
678
Debit
xxx
Acct. Code
111
Debit
xxx
Credit
xxx
b. To take up the remittance of the amount receipted

Account Title
Cash in Bank, Local Currency Current
Account
102
Credit
xxx
Case II - National Government Sector - General Fund

a. To take up the cash overage after it has been receipted and to recognize the income
account.
Account Title
Due to National Treasury
Acct. Code
102
411
Debit
xxx
Credit
xxx
The above journal entry shall be recorded in the National Government books under the
National Government Fund.
b. To take up the remittance of the amount receipted
Account Title
Due to National Treasury
Acct. Code
411
102
Debit
xxx
Credit
xxx
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TREASURY CIRCULAR NO. 02 - 2009
AUGUST 6 , 2009
ALL HEADS OF DEPARTMENTS, BUREAUS AND

OFFICES OF NATIONAL GOVERNMENT AGENCIES
AND LOCAL GOVERNMENT UNITS, GOVERNMENTOWNED OR CONTROLLED CORPORATIONS , STATE
UNIVERSITIES AND COLLEGES, STATE AUDITORS,
AND ALL OTHERS C ONCERNED
TO
SUBJECT:
1.0
REVISED OMNIBUS REGULATIONS GOVERNING THE

FIDELITY BONDiNG OF ACCOUNTABLE PUBLIC
OFFICERS PURSUANT TO THE PUBLIC BONDING
LAW (SECTIONS 313 - 33 5 CHAPTER 15, REVISED
ADMINISTRATIVE CODE OF 1917)
BASIS
This Treasury Circular is issued pursuant to Sections 313-335,
Chapter 15, otherwise known as Public Bonding Law, under th e
Revised Administratjve Code of 1917, Executive Order No. 449 s .
1997 (Realigning the Organization of the Bureau of the Treasury) in
relation to Government Auditing Code of the Philippines (P .O . 1445),
Chapter IX Book V of the Administrative Code of 1987 (E .O. 292),
and the Local Government Code of 1991 (RA 7160).
2 .0
PURPOSE
This Treasury C ircular revises Treasury Order Nos. 01-95 and 01-99
pertaining to regulations promulgated for the effective bonding of
accountable public officers pursuant to the provisions of the Public
Bonding Law.
3 .0
DEFINITION OF TERMS
The following terms , whenever used in th1s Circula r , shall have the
following mean ing:
a) Authorized Government Depository Bank (AGDB) -refers to . a
government bank duly auth orized by the Bangko Sentral ng
Pilipinas to maintain deposits and cash balances of National
Government Agencies (NGAs ), Local Government Units (LGUs),
P age
12
Government-Owned or Controlled Corporations (GOCCs) and State

Universities and Colleges (SUCs).
b) Authority to Accept Payment (ATAP) - refers to the form issued
by the Bureau of the Treasury to the fidelity bond applicant for
presentation to the AGDB authorizing the receipt of payment of
bond premium (Annex A).
c) Bureau of the Treasury (BTr) - refers to the agency under the
Department Finance authorized under E.O 449 s . 1997 in relation to
the Public Bonding Law, PO No. 1445 and E .O . 292, s. 1987 to
provide fidelity bond to all accountable public officers.
d) Chief Treasury Operations Officer II (CTOO II) - refers to the unit

head of the BTr District/Provincial Office.
e) Commission on Audit (COA) - refers to the constitutional agency
wh ich implements Government Auditing Code of the Philippines
(P.O . No. 1445).
f)
District Office (DO) - refers to a d ivision/unit of the BTr Regional

Office in the National Capital Region.
g) Government Agency or Agency - refers to any of the various

units of the government including departments, bureaus, offices ,
agencies and instrumentalities, GOCCs , LGUs. and SUCs or a
distinct unit therein.
h) Head of Agency - refers to the head of departments, bureaus,
agencies and instrumentalities of the government, including
GOCCs, LGUs and SUCs.
i) Confirmation Letter - refers to the letter issued by the BTr DO/PO
to the Head of Agency, stating the name of bonded public officer,
amount of bond , risk number and the period of effectivity of bond
(Annex B).
j) Public Bonding Law (PBL) - refers to the Public Bonding Law

Sections 313 - 338, Chapter 15, Revised Administrative Code of
1917.
k) Provincial Office (PO) - refers to a d ivision/unit of the BTr Regional
Office outside the National Capital Region .
I)
Public Funds - refers to funds under the possession , custody or

control of a public officer by virtue of his official position/designation
which include public moneys of every sort and other resources
pertaining to the Government Agency.
Pag e
13
m) Public Property - refers to any real or personal property in the

possession , custody or control of a public officer by virtue of his
position/designation.
n) Public Officer - refers to any person who, by direct provision of the
law, popular election or appointment by competent authority, shall
take part in the performance of public functions in the Government
of the Republic of the Philippines or shall perform in said
Government or in any of its branches public duties as an employee,
agent or subordinate official of any rank or class (Art. 203, Revised
Penal Code).
o) Regional Director (RD) - refers to the unit head of the BTr

Regional Office.
p) Treasurer of the Philippines (TOP) - refers to head of the BTr and
the officer authorized to issue the implementing rules and
regulations on the Public Bonding Law.
4.0
GENERAL PROVISIONS
4 .1
Public Officers Covered - Every officer, agent, and employee

of the Government of the Philippines or of the companies or
corporations of which the majority of the stock is held by the
National Government (NG), regardless of the status of their
appointment shall , whenever
the nature of the duties
performed by such officer, agent or employee permits or
requires the possession , custody or control of funds or
properties for which he is accountable, be deemed a bondable
officer and shall be bonded or bondable and his fidelity insured
(Section 314 & 318, PBL).
4.2
Coverage in LGUs - Every officer, agent, and employee of an

LGU whose duties permit or require possession, custody or
control of local government fund s and properties. including but
not limited to provincial governors, city and municipal mayors,
provincial , city, municipal and barangay treasurers, and punong
barangays, shall be accountable and responsible for said funds
and properties for the safekeeping thereof and shall be or his
fidelity insured/bonded (Section 305(f) R .A . 7160, DILG M . C .
No. 99-186, 11 Oct. 1999).
4.2.1 A Barangay T reasurer shall be bonded in an amount of
accountability to be determined by the Sangguniang
Barangay but the amount of maximum bond shall not
exceed P1 0 ,000.00 as authorized by R .A . 7160 or at an
amount wh ich may or hereinafter be prescribed by any
Pag e
other law, premium for which shall

Barangay (Section 395(d), R .A. 7160).
4 .3
14
be paid by the
Others Co vere d
4.3.1 Accountable public officers discharging their duties in a
foreign cou ntry.
4.3.2 Public officers accountable to others who are primarily
accountable.
4 .3.3 Public officers designated as authorized signatories and
counter signatories in the issuance of checks and
approval of disbursement vo u chers.
4.3.4 Heads
of
departments,
bureaus,
instrumentalities of the Government.
agencies
and
4.4
A c counta bility for Public Prope rty - Every officer, agent and
employee, accountable for public property s h a ll be liable for its
money value in case of improper or u nauthorized us e or
misapplication the reof, by himself or any person for whose acts
he may be responsible . He shall likewise be liable for a ll losses,
damages or deterioration due to negligence in the keeping or
use of the property, whether or not it be, at the time of such
loss, damage or d e terioration, in h is actual c u stody.
4 .5
Accounta bility for Public Funds - Every officer, agent and

employee accountable for public funds shall be liable for all
losses resu lting from the unlawful deposit, use, or application
thereof, and for all losses attributable to negligence in the
keepi ng of such funds.
4. 6
Money & Property A cco untability - An accountable public

officer who has both money and property accountability shall be
bonded only once to cover both accountabilities in accordance
with the Schedule of Premium Rates.
4. 7
A ccountability of Public Officers A cting on Orders o f

Superiors - No accountable public officer shall be relieved from
accountability by reason of his having acted under the direction
of a superior officer in paying out, applying or disposing of
public funds or property which he is accountable, unless prior to
that act, he notified the superior officer in writing of the illegality
of th e payment, application o r disposition . T h e officer direct ing
any illegal payment, application or disposition of public fund s or
property shall be primarily liable for the loss, damage o r
deterioration while the accountable officer, who fails to serve
the required notice , shall be secondarily liable.
Page 15
4.8
Extent o f Liability and Condition of Bond - A public officer

whose fidelity is insured in the Fidelity Fund shall, from the
moment he assumes the duties of the office, is considered
bonded to the government for the faithful p erformance of all
duties imposed upon him by law, and for the faithful accounting
of all funds and public properties coming into his possession,
custody or control by appropriation, collection, transfer or
otherwise, as well as for the lawful payment, disbursement and
expenditure or transfer of all such funds or public properties in
his custody, possession o r under his control as accountable or
responsible officer. (Sec. 318 , PBL). The Fidelity Fund shall be
available for the purpose of replacing defalcations, shortages ,
unrelieved losses in the accounts of bonded public officers, for
the payment of fees and costs incident to civi l proceedings
brought against them to recover sums pa id on their account
from said Fund (S ec. 326, PBL).
4.9
When Considered Bonded - An accountable public officer

shall be considered bonded/insured with the Fidelity Fund upon
payment of the bond premium. The Fidelity bond shall be valid
and effective at the time of payment and receipt of bond
premium by the AGDB. The accountable public officer shall
submit to the BTr DO/PO a copy of the AGDB va lidated deposit
s lip and ATAP as proof of payment of bond premium, after
which the Confirmation Letter shall be issued.
4 . 10 Effect of Approved Bond- An approved fidelity bond shall be

non-transferable and personal to the accountable p ublic officer
and shall remain valid and effective for one ( 1 ) year from the
time of payment and receipt of the bond premium. The fidelity
bond shall be subject to ren ewal yearly before the expiration of
the present bond coverag e while the accountable public officer
is h o lding such position for which he was bonded. Failure to
renew shall consider such bond as automatically cancel led and
sha ll have no legal effect.
4 . 11 Entry of Registered Bonded Public Officers - The BTr
DO/PO shall enter into the Registry of Bonded Public Officers
the particulars of the approved fidelity bond.
4 . 12 Effect of Cancellation - The cancellation of th e bond for any
cause al lowed under thi s Circular before expiration date, has
the effect of limiting the liability of the Fidelity F und to the
transactions within the period cove red up to the time_ of its
cancellation. The bond premium paid for the accountable public
officer whose bond is cancelled shall not be tra nsferrable and
not refundable.
P age
16
4.13 Effect of Separation from Office or Removal from

Accountability- When the bondable public officer is separated
from the service or relieved of accountabil ity by reason of his
transfer to another position or government agency, the Head of
Agency concerned shall immediately request the BTr DO/PO
CTOO II for the cancellation of the fidelity bond. The
cancellation of the bond shall take effect on the date of
separation , relief or transfer.
5 .0
6.0
AMOUNT OF BOND AND DETERMINA TJON OF PREMIUM
5.1
Amount of Bond - The amount of bond shall be based on the

total accountability (cash. property and accountable forms) of
the accountable public officer as determined by the Head of
Agency. Provided , the individual maximum accountability of
each accountable public officer shall not exceed One Hundred
Million Pesos (P 1 OOM). However , the Head of Agency may
assign to other public officers the excess accountability for
which a separate Fidelity Bond shall be secured .
5 .2
Authority to Fix Schedule of Premium - The Treasurer of the

Philippines with the approval of the Secretary of Finance shall
fix and, from time to time, review the uniform rate of the bond
premium chargeable for insurance u nder the Public Bonding
Law and this Circular.
5 .3
Rate of Premium - The rate of premium of the fidelity bond is

equal to One and One Half Percent (1 .5 % ) of the amount of
bond but shall not be less than One Hundred Fifty Pesos
(P150.00). The Revised Sched ule of Premium Rates (Annex C)
shall form an integral part of this Circular until amended or
revised.
DUTIES
AND
RESPONSIBILITIES
OF
THE
HEADS
OF
AGENCIES/OFFICES OR PERSONS PRIMARILY ACCOUNTABLE
6.1
Primary Liability - T he head of any government agency at all

levels, whether national, corporate or local is primarily
respons ible and accountable for all government funds and
property pertaining to his agency .
6.2
Duty to Notify- All Heads of Agencies shall, upon appointment

or lawfu l accession by any accountable public office r to a
bondable position or office pertaining to their respective
jurisdiction , or separation therefrom of any such public officer,
notify in writing the TOP through the BTr DO/PO having
Page
17
jurisdiction over the agency/office/GOCC/LGU/SUC within five

(5) days from such appointment, lawful accession or separation
and to submit the required application for bond or cancellation
thereof, as applicable.
7.0
6.3
Preferential Attention - The immediate performance of the

above duty shall receive preferential attention of such heads of
departments, bureaus and offices of the NG including GOCCs,
S UCs, heads of LGU s, provincial and local treasurers and other
officia ls concerned.
6.4
Effect of Failure to Notify - Failure on the part of the Head of

Agency to make the required notification to the TOP through
the concerned DO/PO shall render them primarily liable to any
such loss or damage to public funds or properties their
respective agency, province , city or municipality, barangay, as
the case may be, may incu r on account of such fai lure.
PROCEDURE
FOR
APPLICATION,
CANCELLATION OF BOND
7 .1
RENEWAL
AND
Procedure for Application

7.1.1 The applicant shall accomplish in duplicate General Form
Nos. 57 A (Request Form) and 58A (Application Form),
copies of which can be secured from BTr DOs/POs.
General Form No. 58A shall be subscribed and sworn to
before any officer authorized to administer oath, attaching
therewith two (2) passport size identification pictures
taken within the last three (3) months prior to the date of
application . The Request and Application Forms shall be
accompanied by the following :
7 .1 .1 .1
Latest Sworn Statement of Assets, Liabil ities and

Net Worth (SALN);
7.1 .1 .2 List of bondable public officers certified by the

agency officer in charg e of Administrative and/or
Finance Department, Service, Division or unit
(Form Annex D ).
7 .1 .2 The Request and Application Forms, together with
required supporting documents, sha ll be filed with the
CTOO II assigned at the BTr DOs/POs having jurisdiction
over the agency. The C TOO II shall verify, ascertain and
determine the following :
Pag e
18
7.1.2.1
If General Form Nos. 57A and 58A have been

properly accomplished and in order;
7.1.2.2
If the required supporting

complete and in order;
7.1.2.3
If the name of the applicant appears on the list of

bondable public officers submitted by the
agency;
7.1.2.4
If the applicant is a safe and conservative risk in

accordance with Sec. 320 of the PBL.
documents
are
7.1.3 In case of non-compliance with Sec. 7 .1.2 (Sec. 7 . 1.2. 1 7.1 .2.4), the CTOO II shall return to the applicant the
Request and Application Forms and its supporting
documents for necessary corrections and/or compliance. In
case the applicant is determined to be an unsafe risk , the
CTOO II shall follow the procedure under Sec. 7 .1.8 .
7 .1.4 The CTOO II shall assess the applicable bond premium
and issue the ATAP when General Forms 57A and 58A
and supporting documents are found to be complete and
in order.
7.1.5 The applicant shall upon receipt of the ATAP, proceed to
the nearest AGDB where the TOP has a deposit account
for payment of the assessed bond premium. Any check
payment for bond premium shall be for the account of the
TOP. The CTOO II or his representative shall not, for any
reason, receive payment of the bond premium. Violation
hereof shall subject the CTOO II or his representative to
appropriate sanctions as for grave misconduct defined
and penalized under the Revised Uniform Rules in
Administrative Cases in the Civil Service in relation to
Rule XIV, Omnibus Rule of Implementing Book V of E.O.
292 , s . 1987.
7.1.6 The applicant accountable public officer shall submit and
present to the concerned CTOO II a copy of the validated
deposit slip and ATAP as proof of payment of the bond
premium.
7 .1.7 The CTOO II shall transmit all bond application to RD for
approval of
bond application only upon proof of
compliance under Sec. 7 .1 .6 .
7.1.8 Unsafe Risk- The concerned CTOO II shall evaluate the
bond application to determine if the applicant is a safe
P age
19
and conservative risk in accordance with Sec. 320 of the

PBL. When the CTOO II have basis to prove that the
applicant public officer is an unsafe risk owing to
character, association, or habits, the followin g procedures
shall be followed :
7 .1.8.1 The CTOO II shall transmit the bond application to
the RD with his recommendation for disapproval
stating
the
basis
therefor.
When
the
recommendation of the CTOO II is affirmed by the
RD . the latter shall communicate the disapproval
in writing to the Head of Agency of the applicant
public officer stating therein the factual and legal
basis for such disapproval ;
7 .1.8.2
The disapproval/decision of the RD maybe

appealed by the concerned Head of Agency by
filing a letter of appeal with the TOP within fifteen
( 15) days from the receipt of such disapproval/
decision . The letter of appeal shall state clearly
and distinctively the grounds and arguments of
the appeal. A copy of the assailed written
action/decision and disapproved bond application
and its supporting documents shall be attached
to the letter of appeal. The letter of appeal shall
likewise be accompanied by a postal money
order or MDS check in the amount of Five
Hundred Pesos (PSOO.OO) as appeal fee payable
to the TOP;
7.1.8.3 Within five (5) days from receipt of the letter of

appeal and the appeal fee, the TOP shall require
the RD to e levate the entire records relating the
disapproved bond application .
The TOP shall
have fifteen ( 15) days from receipt of the records
from the RD to resolve the appeal;
7 .1.8.4 The decision of the TOP shall be final and
executory and not appealable.
7.2
Renewal - The fidelity bond of an accountable public officer

shall be renewed before the expiration of the bond. The
application for renewal of bond shall be accomplished by using
General Form 57 A and accompanied by the following:
7.2.1 List of bonded public officers subject for renewal certified
by the agency official in charge of Administrative and/or
Finance department, service, division or unit; Agency
certification that the bond applicant has no pending
Page 110
administrative and/or criminal case (Annex E). For a bond

applicant with pending administrative and/or criminal
c ase, copies of pertinent pleadings, orders and
resolutions filed or issued by the disputing parties,
prosecutory or investigatory offices and judicial bodies
shall be attached to the bond application ;
7.2.2 Copy of the latest BTr approved bond or copy of the
C o nfirmation Letter;
7.2.3 Latest Sworn SALN .
7.3
Increase in Accountability - Any increase in the amount of

accountability, resulting to an increase in the amount of bond
shall be subject to increase in premium.
7.3.1 The applicant shall accomplish and submit General Form
5 7 A to the concerned DO/ PO together with the following :
7 .3.1 .1
Special Order increasing

accountability: and
the
amount
of
7 .3.1.2
List of bonded public officers certified by the

agency official in charge of: Administrative and/or
Finance department, service, division or unit.
7.3.2 The amount of bond premium shall be computed based

on the increased amount of bond. The bond shall take
effect upon the time of payment of premium on the new
bond application .
7.3.3 The CTOO II concerned shall cancel the previously
assigned risk number to the applicant and issue a new
risk number to the new bond application .
7.4
Cancellation
The Head of Agency or authorized
representativ e shall immediately submit a written request for
bond cancellation to the concerned BTr DO/PO CTOO II
involving accountable public officers
who are no longer
accountable by reason of retirement, separation from the
service, promotion, transfer, suspension from office or for any
other cause rendering them not bondable to their present
position . The Head of Agen cy or authorized representative
requesting for cancellation of the bond shall accomplish and
submit General Form No. 57(A ), items 10-16 .
Page 111
8.0
ADJUDICATION
FIDELITY FUND
AND
PAYMENT
OF
CLAIM
AGAINST
THE
8.1
Application for Relief from Accountability - When loss of

public funds or property occurs wh ile they are in transit or the
loss is caused by fire , theft, or other casualty or force majeure,
the public officer accountable therefore or having possession ,
custody or control thereof shall immediately notify the
Commission on Audit or the agency auditor concerned , and
within thirty (30) days or such longer period as the Commission
or auditor may in the particular case allow, shall present his
application for relief with the available supporting evidence.
8.2
Effect of Relief from Accountability by COA - The relief from

accountability of the accountable public officer granted by the
COA shall relieve the agency from responsibility for the loss or
damage to public funds or property.
8.3
Fidelity Fund; When Liable - When no re lief of accountability

is granted by COA, the agency concerned may file claim for
reimbursement from the Fidelity Funq to the extent of the
approved bond cove red or amount of loss w hichever is lower.
8.4
Claims - Any and all claims against the Fidelity Fund shall be
filed as a money claim with COA, with copy to BTr together with
the evidence relating thereto. Claims approved by the COA
shall constitute a legal claim against the Fidelity Fund .
8.5
Requirements for Payment of Adjudicated Claim - The

agency shall file a claim for payment from the Fidelity Fund with
the BTr, attaching therewith the favorable findings of COA. The
BTr shall process the claim in accordance with existing
budgeting, accounting & auditing rules and regulations.
8.5.1 In case of defalcation , shortages and unrelieved losses in
the account of bonded public officer, the claim shall be
supported by the following doc uments:
8.5.1.1
Agency and COA findings and recommendation

on the defalcation, shortages and unrelieved
accountability;
8.5.1.2 Latest Statement of Assets and Liabilities of the

bonded official/employee;
8.5.1.3 Proof of current and subsisting
payment of bond premium; and,
bond
and
Page [12
8.5.1.4 Other docume nt/s which may be required by the

BTr.
8.5.2 In case of proven shortages and defalcation, the public
officer responsible thereto should be removed or relieved
of his duties without prejudice to civil, criminal or
administrative cases to be instilled.
8 .5.3 Only approved claims shall be paid from the Fidelity
Fund.
9.0
PENAL CLAUSE
Unjustified failure of an accountable public officer to comply with the

requirements to apply the Fidelity Bond pursuant to this Circular and
the PBL shall subject the responsible official/employee to applicable
criminal . and/or administrative liability under the Revised Penal Code
and PO N o. 1445.
10.0 REPEALING CLAUSE
All circulars, orders and/or memoranda inconsistent herewith are

hereby repealed and/or modified accordingly.
11.0 EFFECTIVITY
This Circular shall take effect fifteen (15) days after publication in two
(2) newspapers of general circulation.
1-6{
Ri~_E_~TO
B. TAN
Treasurer of the Philippines
0 0 0 59
Approved:
MARG~B.TEVES
Secretary of F inance
;"
I r.r::
\ .1 1) :::, ~$ v ti
21
Anne x A
Republic of the Phil!ppines

De~:trtment
o( Finance
BUREAU OF THE TREASURY- As514

Office of the District/ChiefTrensury Operations Orncer
National Canital Hcgion - District I

Address
To:
ATAP NO._ _ __ _
Land Bank of the Philippines

ln tr.unuros Bt-anch
AUTHORITY TO ACCEPT PAYMENT

'FOR DEPOSIT TO SAVINGS ACCOUNT OF THE TREASURER OF THE PHILIPPINES
PAYING AGENCY
AREA CODE
PAYING AGENCY CODE

ADDRESS
DATE PREPARED
BILL NO. (YEAR-MONTH-NUMBER)
FUND
CODE
COMPUTATION OF FIDELITY BOND PREMIUM DUE

TRANSACTION
CODE
AMOUNT OF BOND
AMOUNT
(at 1.5% per ;:annum/PlSO.OO)

p
- -- - TOTA L AMOUNT PAYABLE

. PREPARED BY:
APPROVED BY:
..
Signature over Printed Name
and Position
PARTI CULARS
CASH
Signature over Printed Name

and Position
FOR BANK'S USE ONLY
DETAILS OF PAYMENT
DRAWEE BANK/NUMBER
p
CHECK
p
TOTAL PAYMENT RECEIVED
BANK MACHINE VALIDATION OF AMOUNT AND DATE
Annex B
Rl:l'lq3 l lt Ul 1"111 1'1 111 11'1'1' 1 ._,
1>1 1'-\R I"MI N I ( II I I"' \ :"."( I
Bl 'REALI OF TH E TRL\Slll(Y
f"tnulin.:: tit H'JIIthlic
INTRAMUROS.MANILA 1002
Regional Office No . _ _
Trw 1smitto 1No.
[.
Date
CONFIRMATION LETTER
AGENCY CODE:
(- - )
$i
J :
rhis is lo inform you that the request/s fo1 bondin-J ond/or cancellation o f bonds of the fo ll owiJ;g
o ffic ials and employees of your Office/ Agency has been approved and duly entered in the Registry
of Bonded Public Officers maintained b y (District/Provincial Office) of this Bureau
Ris k No .
Nome and Position of

Bonded Public Officers
Station
Approved
Amount of Bond
Effective Date
Bonding
Cancellation
Coverage of approved bond is one year from da te o f issue to be renewed on or be fore th e

anniversary dote. otherwise bond is automatically cancelled.
Please notify this Office if the re are changes within th e e ffec tive period .
Very tru ly,
ROBERTO B. TAN, CEO II

Treasurer of the Phil ippines
By:
l<egionol Direc to 1
ANNEX C
REVISED SCHEDULE OF PREMIUM RATES
I. CASH ACCOUNTABILITY
MINIMUM CASH
ACCOUNTABILITY
MAXIM UM CASH
ACCOUNTABILITY
5.001.00
9.000.00
9 .00 1.00
12.00 1.00
15,00 1.00
18,00 1.00
2 1.00 1.00
25,00 1.00
30.001.00
35.00 1.00
40.001.00
50.00 1.00
60.001.00
80.00 1.00
100.00 1.00
250.00 1.00
500.00 1.00
750.001.00
1.000.00 I .00
2.500.001 .00
5.000.00 1.00
25,000,00 I .00
75.000.00 1.00
12.000.00
15,000.00
18.000.00
21 ,000.00
25,000.00
30,000.00
35,000.00
40.000.00
50.000.00
60.000.00
80,000.00
100.000.00
250,000.00
500.000.00
750.0 00.00
1 .000,000.00
2,500 ,000.00
5.000.000.00
25,000.000.00
75.000.000.00
100.000.000.00
AMOUNT O F BOND
75% of their Total Cosh

Accountability
9 ,000.00
1 1,250.00
13.500.00
16.750.00
18.900.00
22.500.00
26.250.00
30.000.00
37,500 .00
45.000 .00
60,000.00
75,000.00
100.000.00
225.000.00
350.250.00
500.000.00
750.000.00
I .500,000.00
3.500.000.00
4.000.000.00
5.000,000.00
BOND PREMIUM
Bond Pre mium shall not be

less tha n P 150
150.00
168.75
202.50
25 1.25
283.50
337 .50
393.75
450.00
562.50
.
675.00
900.00
1.125.00
1,500.00
3 .3 75.00
5 .253.75
7.500.00
1 1,250.00
22,500.00
52.500.00
60.000.00
75.000.00
II. PRO PERTY ACCOUNTABILITY

1. Government Securities
2. Equipment
3. Su p plies and M a te ria ls
30% o f t heir To ta l Value

30 % o f the ir Total Value
50% o f their To ta l Value
x 1.5% = Prem ium

x 1.5% = Premium
x 1.5% Premium
10% of their Total Value

rounded o ff to l h e
nearest hundre d
x 1.5%
Ill. FOR ACCOUNTABLE FORMS

a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
Inte rna l Revenu e Sto mp

Documentary Stomp
Customs DocL'mentory Stomp
Cosh n c ke ts
Posta ge and other Sto mp Stocks
Cottle Registra tion Certificates
Marriage Certifico l es
A uto Driver Cert ifi c a tes
Motor Vehicle License
Other Accountable Forms
having face value
= Pre mium
Anne;( C
AGENCY LETTERHEAD
LIST OF ACCOUNTABLE PUBLIC OFFICERS

(FOR NEW APPLICANTS)
NAME OF PUBU(:OFFICE.R
Prepared by:
Signature over printed name
DESIGNATION .
t.\~CmNT 9,F ..
.ACCOtJNTABitl'rY
,:Jt~MA~KS
(WIT~ITffOpt VNl)f.NG CASE,
STATE'NATURE:QF CASE)
Certified cmd Approved by:
Nc~me
& Designation of Authorized Officical
AnnexF
AGENCY LFTTERHEAD
LIST OF BONDED PUBLIC OFFICERS

(FOR RENEWAL)
EFFECTIVE DATE
NAME OF PUBLIC OFFICER
DESJGNATION
--
Prepared by:
Signature over printed name
From
~-~-
RISK
NO.
AMOUNT
OF BOND
PREMIUM
To
REMARKS
(WITH/WITHOUT PENDING CASE,

STATE NATURE OF CASE)
Certified and Approved by:
Nclme & Designation of Authorized Officical
Annex B
NOTICE OF DISHONOR
_______________________
_______________________
_______________________
Sir/Madam:
You are hereby notified that your (name of bank) Check No. _________ dated
__________, 20__, in the amount of P__________ paid to us and acknowledged by our
Official Receipt No. __________ dated ___________, 20__ has been deposited but was
dishonored and returned to us due to __________________________.
In view thereof, we have, today, reversed the payment recorded and reinstated your
liability in the same manner as if you had never tendered any payment.
Please settle your account in cash or by certified check to the undersigned within
five days from receipt of this notice. Otherwise, we will be constrained to institute
criminal action against you as may be warranted under Article 315 of the Revised Penal
Code and Batas Pambansa Blg. 22.
Very truly yours,
_______________________
(Head of Agency)
By:
_______________________
(Collecting Officer)
Note:
The last paragraph applies only to cases where the cause of the dishonor of the check is
lack or insufficiency of funds. Where the check is dishonored by reason of defect in form,
such as incomplete signature or the like, the following paragraph should be used in lieu of
the aforementioned last paragraph.
Please settle your account in cash or by certified check to the undersigned within
three days from receipt of this notice. Otherwise, we will be constrained to initiate
appropriate action to enforce our claim.
REPUBll::: OF TIJE PHIL1PPINES
COMMISSION ON AUDIT
Commonwealth .&.venue, Quezon City, Philippines
FEB 1 0 \997
COMMISSION OH AUDIT CIRCULAR NO. q7 (~2
TO
All Heads o:f Departments , Bureaus, Offices,

Agencies and Instrumentalities of the National
Government, Heads of Local Government Units,
Managing Heads of Government-Owned or Contr(i!lled
Corporations, including their Subsidiaries, COA
Directors, COA Auditors, and All Others Concerned.
SUBJECT
1.
RESTATEMENT WITH AMENDMENTS OF THE RULES AND

REGULATIONS ON THE GRANTING, UTILIZATION AND
LIQUIDATION OF CASH ADVANCES PROVIDED FOR UNDER COA
CIRCULAR NO: 90-331 DATED MAY 3, 1990 .
RATIONALB
The resort to the cash advance system despit e certain

proble ms has been recognized as a facilitative tool in the
financial operations of the government. Ther e is therefore a
need to continually update the pertinent regulations in order
to provide for a more efficient and effective control over the
granting, utilization and liqu.idation of cash advances.
2.
GENERAL PRINCIPLES
Ideally, cash should be handled under
principles of the imprest syst;\m, to wit :
the
1.
Daily receipts
on collections must
deposited i ntact with the proper .bank.
2.
All payments must
3.
Only payments in small amounts may be made

through the petty cash fund. Replenishment of
the petty cash fund shall be equal to the
total amount of expHndituJ:es made therefrom.
b~
general
be
made by check.
In practice, however, ther<;l are certain instances when it

may he very difficult, impra<;tical or impossible to make
payments by check, In :~uch a case, payments may be made by
the disbursing officer i.n the form of cash through his cash
advance.
3.
DEFINITIONS AND SCOPE
Cash Advances shall be of two types, namely, the regular

cash advances, and the special cash advances.
3 .1
3.2
Regular cash advances are those granted to cashiers,

disbursing officers, paymasters, and/or property/supply
officers for any of the following purposes:
3.1.1
Salaries and Wages
3.1.2
Commutable allowances
3.1.3
Honoraria and other similar

officials and employees
3.1.4
Petty operating expenses consisting of small

payments
for
maintenance
and operating
expenses which cannot be paid convenientlY by
check or are required to be paid immediately.
payments
to
Special cash advances are those granted on the explicit

authority of the Head of the Agency only to d~ly
designated disbursing officers or employees for other
legally authorized purposes, as follows:
3.2.1
Current operating expenditures of the agency

field office or of the activity of the agency
undertaken in the field when it is impractical
to pay the same by check, such as Salaries, Wages and Allowances
Maintenance and other operating expenses
Travel expenditures, including transportation
fare, travel allowance, hotel room/lodging
expenses and other expenses incurred by
officials and employees in connection with
official travel.
4.
GRANTING AND UTILIZATION OF CASH ADVAHCRS

4.1
General Guidelines
4.1.1
No Cash advance shall be given unless for a

legally specific purpose.
4.1.2
No additional cash advances 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.
4.2
4.1.3
A cash advance sha ll be reported on as soon as

the purpose for which it was given has been
served.
4.1.4
Only permanent ly appointed offi cia ls shall be

designated as disbursing office rs.
Elected
officials may be granted a c ash advance only
for their officia l traveling expenses.
4.1. 5
Only duly appointed or designated disbursing

officers may perform disbursing functions .
Officers and employees who are given cash
advances for official travel need not be
designated as Disbursing Officers.
4 .1. 6
Transfer of cash advance from one Ac countable

Officer (AO) to another shall not be allowed.
4 .1. 7
The cash advance shall be used solely for the

specific l egal purpose for which it was
granted.
Under no circumstance shall it be
used for encashment of checks
or
for
l iquidation of a previous cash a dvance .
4.1.8
The Accountant shall obl igate all c ash

advances granted.
He shal l see that cash
advances for a particular year are not used to
pay expenses of other years.
Salaries, Wages, Allowances, Honoraria and Other Similar

Payments
4 .2. 1
The cash advance shall be equal to t he net

amount of the payr oll for a pay period .
4 .2.2
The cash a dvance shall be support ed by the

following documents :
Copy of designation by the Agency Head in
case the AO is not a disbursing officer
by appointment (at tachment to i nitial
cash advance)
Copy of approved application for bond
(attachment to initial cash advance)
Payroll or list of payees with the ir net
payments
4.3
Petty Operating Expenses

4.3.1
The cash advance shall be sufficient for the

recurring expenses of the agency for one
month.
The AO may request replenishment of
the cash advance when the disbursements reach
at least 75%, or as the need requires, by
submitting a replenishment voucher with all
supporting documents duly summarized in a
report of disbursements.
4.3.2
The cash advance shall not be used for payment

of
regular
expenses,
such as rentals,
subscriptions, light and water and the like.
Payments out of the cash advance shall be
allowed only for amounts not exceeding
P15,000.00 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.
4.3.3
The cash advance shall be supported by the

following documents:
Copy of authority by the Agency Head
(attachment to initi~l cash advance)
Copy of approved application for bond
{attachment to initial cash advance}
Estimate of expenses
4.4
Field/Activity Current Operating Expenses (COE)

4.4.1
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 ~hall
not be subject to amount limitation. However,
all payments shall be approved by the
Director/Head of Field Office.
4.4.2
The amount of the cash advance shall be

limited to the requirements for two months.
Within 5 days after the end of each month, the
AO shall submit a Report of Disbursements.
Additional cash advances shall be granted on
the basis of the activity budget or the
requirements for two months, whichever is
lower.
4
4.4.3
The cash advance shall be supported by the

following documents:
Copy of authority by the Agency Head
copy of approved application for bond
Budget for COE of the Agency field office
or agency activity in the field.
4.5
Official Travel
4.5.1
5.
The grant of cash advance for both official

local and foreign travel shall be governed by
the provisions of COA Circular No. 96-004
dated April 19, 1996.
LIQUIDATION OF CASH ADVARCBS

5.1
The AO shall liquidate his cash advance as follows~

5 . 1.1
Salaries, Wages, etc. - within five (5) days

after each fifteen (15) day/end of the month
pay period.
5.1.2
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.
5.1.3
Official Travel -within sixty (60) days after

return to the Philippines in the case of
foreign travel or within thirty ( 30) days
after return to his permanent official station
in the case of local travel, as provided for
in EO 248 and COA Circular No. 96-004.
Failure of the AO to liquidate his cash
advance within the prescribed period shall
constitute a valid cause for the withholding
of his salary and the insti t ution of other
sanctions as provided for under paragraphs 9.2
and 9.3 her~of.
5.2
The AO shall prepare the Report of Disbursements (using

Gen. Form No.
} in three (3} copies and submit the
same with duly accomplished vouchers/payrolls and
supporting documents to the Accountant.
For payments
based on receipts and invoices only, he shall also
5
prepare a liquidation voucher which shall be submitted

with the report and supporting documents to the
Accountant . He shall ens ure that rece ipt of the report
is properly acknowledged by the Accountant. The AO shall
be deemed to have complied with the requirement of proper
accounting for the cash advance upon the receipt by the
Accountant of the liquidation document~: referred to
above.
5. 3
Within ten ( 10} days after r eceipt of the report and

supporting documents from t he AO, the Accountant shall
verify the report, record it in the books and submit the
same with a ll- the vouchers/payrolls and supporting
documents to the Auditor.
The cash advance shall be
considered liquidated upon t he recording thereof by the
Accountant in the books of accounts although not yet
audited by the COA auditor.
5.4
Within thirty (30) days from receipt of the report and

supporting documents from the Accountant, the Auditor
shall complete the audit.
He shall issue the
corresponding Credit Notice to t he AO to inform the
latter of the amount allowed in audit and any suspensions
and/or disallowances made . In cas e of disallowance, a
copy of the Credit Notice shall be furnished the
Accountant who shall record th~ restoration of the cash
advance f or the amount disa l lowed. -The amount allowed in
audit by the Auditor as contained i n the Credit Notice
shall be deemed to have been settled.
5. 5
The AO shall submit to the Auditor the documents to

settle his suspensions/disallowances. When the documents
are found in order, the Auditor shall li f t the suspension
and/or issue another Credit Notice for the settled
disallowance, copy furnished the Accountant who shall
draw a Journal Voucher to record the credit to the cash
advance.
In case of cash settlement, the 1\0 shall
present the necessary Official Rece ip t to tl1e Auditor for
notation.
5.6
The Credit Notice i ssued by the Auditor to the AO shall

be deemed sufficient compliance with the requirements of
COA Circular No . 94-001 dated January 20, 1994
(Prescribing the Manual on Certif i cate of Settlement and
Balances, Revised 1993).
5.7
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.
5.8
All cash advances shall be fully liquidated at the end of

each year.
Except fo r petty cash fund, t he AO shall
6
refund any unexpended balance to the Cashier/Collecting

Officer who will issue the necessary official receipt.
5.9
At the start of an 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 Accountant shall cause the
withholding of the AO's salary.
5 .10
The following reports and documents are required to

support t he liquidation:
5.10.1
Salaries,
Wages,
etc.
Report
of
Disbursements with all duly signed payrolls
and/or vouchers and all pertinent supporting
documents, such as daily time records,
approved leaves of absence, etc.
5.10.2
Petty Operating Expense s

Report of Disbursements with supporting
documents
Approved Requisition and Issue Voucher
with
the
Certificate of
Emergency
Purchase, if neces sary
Receipts, sales invoices
Certificate of Acceptance/Inspection
Duly approved
gasoline
,
5.10.3
trip
ticket,
if
for
Such other support ing documents as are

required by the nat ure of the e xpense
Current Operating Expenditures
Same requirements as those for salaries,
wages, etc. and petty operating expenses,
supra.
Canvass of at least three suppliers (Not
requ~ red i f purchase is made while on
official travel)
Official Travel
documents
requi red
to
support
the
liquidation of cash advance for off i cial
7
travel, both foreign and local, shall be

as specified under COA Circular No. 96004.
6.
1.
~LING ,
CUSTODY AND DISPOSITIOfi OP THB CASHBOOK
6.1
A newly-appointed or des ignated AO shall start with a new

cashbook.
Before discharging his duties, the new AO
shall be briefed by the Accountant and the Auditor on the
proper recording of the transactions and other matters
related to his work.
6. 2
The AO shall maintain separate cashbooks for salaries,

wages, allowances, etc. and for petty operating expenses.
The AO shall record the transactions in the prescribed
cashbook da ily .
He may record each invoice/receipt/
voucher individually or the total disbursements for the
day depending on the volume of the transactions.
6.3
The AO 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 AO and the Accountant shall reconcile
their books of accounts at least quarterly .
6 .4
The cashbooks shall be kept at the Office of the AO and

then placed inside the safe or cabinet when not in use.
It may be taken from his custody only by the Auditor or
an official duly authorized by the Agency Head, who shall
issue the necessary receipt.
6. 5
When the AO ceases to be one, the cashbook shall be

submitted to the Accountant or the Treasurer (for local
government units) and shall form part of the accounting
records. No clearance shall be issued to an AO if he
fails to submit the cashbook as required.
BOfiDING OF ACCOUNTABLE OFFICRRS
7.1
Bach accountable officer with a total cash accountability

of F-2, 000. 00 or more shall be bonded. The amount of bond
shall . depend on the total accountability of the officer
as fixed by the Head of the Agency.
An official or
employee who has both money and property accountability,
shall be bonded only once to cover both accountabilities,
but the amount of the bond shall be in accordance with
the Schedule.
7.2
The bonding requirements are as follows :

7 .2. 1
Appointment and/or designation as accountable

officer;
8
7.2 . 2
Written character references by at least three

officials of the Agency one of whom is the
Administrative and/or Legal Officer, other
than the official who appointed/designated
him.
7.2.3
Statement of assets and liabilities as of the

end of the preceding year;
The foregoing documents shall be submitted, together with

the application for bond, to the Fidelity Bond Division
of the Bureau of the Treasury.
8.
7. 3
When the accountability is increased, the Accountant

shall ensure that additional bond is applied for .
7. 4
When the AO ceases to be one, the Accountant shall

immediately inform the Fidelity Bond Division of such
cessation .
7.5
The amount of bond necessary for the cash accountability

of the AO shall be in accordance with the schedule of
cash accountability and bond issued by the Bureau of the
Treasury.
RESPONSIBILITY OF THE AGENCY HEAD

It shall be responsibility of the Head of the Agency to
ensure the proper granting, utilization and liquidation of all
cash advances in accordance with these rules and regulations.
9.
DUTIES AND RESPONSIBILITIES OF THE COA AUDITOR

9.1
The
Auditor
shall
periodically
evaluate
the
accountability of the AO and recommend reduction of the
cash advance if found excessive.
9.2
Cash Examination
9.2.1
The Auditor shall conduct an examination of

the accountability of each AO at least once
every semester or as existing regulations of
the COA require.
9.2.2
The Auditor shall demand the presentation by

the AO of his cashbook, cash a nd cash items
for examination .
Failure by the AO to have
duly forthcoming any public funds with which
he is chargeable, upon demand by the Auditor
9
shall
be
P~~r:im~a~--~f~a~c~i~e
misappropriation.
9.3
evidence
of
9.2.3
The Auditor shall exclude from among the cash

items presented any accommodation checks,
"vales", IOUs, chits or other forms of
promissory notes and should not accept them as
credit to the account.
9.2.4
The Auditor shall at once demand in writing

the production of the missing funds at the
moment the shortage or loss is discovered and
established. The granting of a grace period
for the restitution is not allowed by law.
9.2.5
The Auditor shall submit the cash examination

report,
together with all the working
papers/evidences disclosing the shortage, to
the Provincial/City Auditor (if the offense is
committed in an LGU) or to the COA Director
concerned
for
the
filing
of
criminal
proceedings in accordance with COA Memorandum
No. 83-81B, COA Memorandum No. 90- 660 and
paragraphs 3.1 and 3.2 of COA Memorandum No.
95-112 dated December 26, 1995.
During periods where no cash examination is conducted.

9.3.1
Upon failure of the AO to liquidate his cash

advance within two (2) months for AOs holding
office within the station and three (3) months
for AOs outside the station from date of grant
of the cash advance, t .h e Auditor shall issue a
letter demanding liquidation or explanation
for non-liquidation.
9.3.2
I f thirty (30) days have elapsed after the

demand letter is served and no liquidation or
explanation is received, or the explanation
received is not satisfactory, the Auditor
shall advise the head of the agency to cause
or order the withholding of the payment of any
money due the AO .
9.3.3
The AO shall likewise be. held criminally

liable for failure to settle his accounts .
For this purpose the Auditor shall:
9.3 . 3.1
Execute an affidavit stating the

nature/ purpose of the cash advance;
the amount not liquidated/accounted
for; the fact that no liquidation
10
or explanation has been submitted

despite demand or if explanation has
been submitted, the same is not
satisfactory;
the date the letter
of demand was served on or received
by AO; and other information which
may be pertinent to the case .
9.3.3.2
State in the affidavit the violation

of the provisions of Section 89 of
PD 1445 and the penal provisions
under Section 128 of the same law,
both of which are herein quoted in
full to wit :
11
Section 89.
Limitations on
Cash Advance.
No eash advance
shall be given unless for a legally
authorized specific purpose. A pash
advance shall be reported on and
liq_u idated as soon as the purpose
for which it was given has been
served. 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. 11
"Section 128. Penal Provision.

- Any violation of the provisions of
Sections xx 89, xx of this Code or
any
regulation
issued
by
the
Commission
implementing
these
sections, shall be punished by a
fine not exceeding one thousand
pesos
or
by
imprisonment
not
exceeding six ( 6} months, or both
such fine and imprisonment in the
discretion of
the
court."
(UndeFscoririg ours).
9.3.3.3
The affidavit shall be submitted to

the COA Director concerned who shall
refer the case to . the appropriate
Office of the Deputy Ombudsman, if
the . offense is committed in the
regions or to the COA Legal Office
for
the
filing
of
criminal
proceedings, . i f the offense is
committed within the Metropolitan
Manila Area, in accordance with
11
paragraphs
3.1.1
and
3.2,
respectively, of COA Memorandum No .
95-112 dated December 26, 1995.
10.
COVERAGE
This Circular shall cover only cash advances granted to
officials and employees of an agency and shall not apply to
:funds transferred from a Source Agency to an Implementing
Agency.
The rules and regulations on the granting,
utilization and liquidation of funds transferred from a Source
Agency to an Implementing Agency are stated in COA Circular
No. 94-013 dated December 13, 1994.
11 .
REPEALING CLAUSE
All Circulars, Memoranda, rules, regulations and other
issuances inconsistent herewith are hereby repealed, amended
or modified accordingly .
This Circular shall take effect five (5) days after its
publication in the Official Gazette or newspaper of general
circulation.
ROGELIO B. ESPIRITU
Commissioner
PSG
FU/cgc
a: (wp6}a-90-331
12
CN No.
Date
CREDIT lfOTICE
.TO:
Sir/Madam:
Please be advised that the Report of Disbursements/Settlement
of' Suspensions/Disallowances submitted to this Office to liquidate
yo~r cash advance in the amount of P
granted per check
no.
dated
has been audited. Credit to the
cash advance is allowed for P
with suspensions of
P
and disallowances of P__________
The details of the suspension and disallowances are:

Particulars
suspension
Immediate
settlement
disallowances is requested.
Disall.o wances
of
the
foregoing
Very truly yours,
Rec;eived by/Date
Accountable Officer
13
Reasons
suspensions/
General form No.

Date:
RBPORT OF DISBURSBMitrl'S BY DISBURSIRG OPFICBR

(Replenishment/liquidation of cash advance
for
}
---------------------------------------------------------------Date
Payee
Expense Item
Reference
Amount
------------------------~-----------------------------------~---
TOTALS
CBRTIFICATIOK
I certify that this Re port of Disbursements in
copies
a full , true and correct statement of the disburse~ents made by
me and that this is i-n liquidation of the cash advance granted last
i~
~----------'
no.
199__ in the amount of
Account.a ble Officer
Apcounting Entry:
per check
PETTY
OPERATING
ACQQUDt Title
1. Granting
2. Replenishment
EXPENSES
Account COde
Appropriations Allotted/
Expenditures
Obligations Incurred
Q-9Q-OOO
0-82-000
nru2it
5,000
5,000
ca&h-Disrurs.in} Officer
8-?Q-500
Cash-Treasury Account
CUrrent, Check Disbursements
8-7Q-707
5,000
Obligations Liquidated
cash-Disbursing Officer
0-83-000
8-?Q-500
2,600
Expendi t\.U"E!S
Obli9(ltions Incurred
Q-90-000
0-82-QOO
2,600
8-70-500
2,600
cash Disbursing Officer

cash-Treasury Account
CUrrent-check Disbursements
5,000
2,600
2,600
8-70-707
2,600
3. FUll Liquidation
a. Current Year
Obligations Liquidated
cash Disbursing Officer
o-s3-ooo
cash COllecting Officer
8-70-400
8-70-500
Cash
Disbursing Officer
4,800
8-7Q-500
4,800
200
200
0-90-000
Expenditures
b. Succee<iing
Year
o.:..S2-ooo
(200)
(200)
Payables-UnliQQidated
Obligatians
Cash-Disbursing Officer
8-81-400
8-70-500
4; 800
cash-Collecting Officer
Cash-Disbursing Officer
8-?Q-400
8-70-500
200
8-81-400
200
Payables-Unliquidated
Obligations
Surplus AdjustmentsExcess Certification
to Accourits Payable
15
7-92-410
4,800
200
200
O'l'HBR CASH ADVANCE WHICH SHOULD BE LIQUIDA'1'lm IN FULL
ACCO\Dlt Title
1. Granting
ApPropriations Allotted/Expenditures
Obligatio~
Incurred
cash-Disbursing Officer
~h-Ti:e~ Account
CUrrerit - Check
Acco\Dlt Code
Debit
o-go-ooo
o-a2-ooo
5,000
8-7Q-500
6- 70- 707
5,000
o-83-000
4,800
credit
5,000
5,000
Disbursements
2. Liquidation
ObligationS Liquidated
caSh-nish.iising Officer
Refum
8-7Q-500
CaSh-ColleCting Offi cer

CaSh-Disbuising Officiet
8-7o-400
8-70-500
Appropriations Allotted/.
0- 90-000
4,800
200
200
(200)
RxpemitW:'es
3 . CSB with Dis-
allowances
4. When the Disallowance

Becomes Final
and Executoty
0-62-000
Obligations Liqui~ted
Cash - Other Officers
o-83-000
8-70...500
Contingent Assets Cl~ ' for Disallowed

Payments, Disallowanr.AA
8-74-700
Contingent SUrplus
8-96-000
(200)
(300)
(300)
300
300
16
IJtJUOOh
Annex D
CffiCULAR
TO:
All Heads of. Departments, Bu.reaus, Offices, Agencies and

ItistrumentaJities of the National Government, Heads of Local
Government Units, Managing ' :Heads of Government-Owned Or
Controlled: Corporati.ons, includh~g their Subsidiaries, COA Directors,
COA Auditors, and All Others Co~cemed.
SUBJECT:
AMENDMENT :TO . ITEM i7.1 OF COA CffiCULAR NO. 97~002

DATED ' FEBRUr,\.RY 10, . tp97 ON THE GRANTING,
UTILIZATION AND LIQUIDATION OF CASH ADVANCES.
In order to be attlu:led with 1the times and ~o rationalize the requirement on the
posting of fidelity bond :by accountable officers to realistic levels, Item 7.1 of COA
Circular No. 97-002 dated Februar:Y: lO, 1997:is hereby amended to read as:
"7.1. E~ch .dccotintabte ~ffic~r whose total cash
accountab!lity is'not ltess thanP5;lJOO shall be bonded. The
amount oj bond shall depend on the :total accountability of
the office~ as fzxed 8( the Hepd of t'he Agency. An official
or employee who has both 1noney and property
accountab.ility shall!be bonded only once to cover both
accountab,ilities, bu~ the amount 'of b01~d shall be in
accordance with th~ Schedule issued by the Bureau of
Treasury. "
Any circular or directive m conflict herewith is hereby amended/modified

accordingly.
This Circular shall take effect upon its publication.
General Form No. 74(A)
Annex E
Republic of the P hilippines
COMlv!ISSION ON AUDIT
REPORT OF CASH E.t'V\MINATION
Position/Designation:
Station:
Amount of Bond:
Risk No.:
Official Designation:
Name of Accountable Officer :

Agency:
Maximum Cash Accountability:
Auditor/Examiner:
Effective Date:
A. CASH PRODUCTION NOTICE
TO: Accountable Officer :
Date:
DEMAND, is hereby made that you produce all your cash, checks, money orders, cash items, paid vouchers, and/or unused accountable forms, etc.,
for which you are officially accountable as
and any fund, checks, and/or cash items in your possession held
of the
by you for deposit and safekeeping.
NOTED AND Accountable Officer's Signature :

COMPLIED
WITH
INVENTORY OF CASH ON HAND

Paper and Coins:
No. of
Denomination
Pes.
Amount
Total, As Presented
Date:
Auditor/Exam iner's Signature:
B. CASH COUNT
INVENTORY OF CASH ITEMS (Include checks, money orders, etc.)
Amount
Par ti cu l ar s
Presented
Allowed
Disallowed
Total
TOTAL INVENTORY OF CASH AND/OR ALLOWED CASH ITEMS (TO D)
C. INVENTORY OF UNUSED ACCOUNTABLE FORMS
With Mo n ey Va I u e
Qty.
Inclusive Serial No.
Denomination
Name of Form
Wit h o ut Money
Qty.
Name of Form
Amount
Va 1u e
Inc. Serial No.
Total
C E R T I F I C A T I ON
1
r \..A:'...Kl ll' r on my orncmt oam: ~IJ 1nm upon aemana oy me AUOlWril:'..xammer 1 proaucea au my casn, cnecKs, money oraers, casn nems,
paid vouchers, unused accountable forms, etc., for which I am officially accountable; (2) That the inventory of such cash items and unused accountable
, 20_ is correctly stated above and is broken
forms in my possession and produced to the Auditor/Examiner at the time of cash count today
down as follows:
==tl
Cash and/or cash items . .. ....... . .. . .. . .. . . .. . . . . . . .. . .. . ..

Unused accountable forms with money value .
Unused accountable form s without money value .. .... ..
ofwhichP
was disallowed by the Auditor/Exam iner and (3) That said cash, checks, money orders, cash items, paid vouchers, unused accountable
form s. etc. were returned to me intact after the cash count.
Accountable Officer's Signature:
Agency/Station:
W itness' name and signature:
SIGNED IN THE PRESENCE OF:

Witness' nan1e and signature:
Nature of Funds
Balance, Last Examination
(Date)
ADD: Debits to Accountability
D. STATEMENT OF ACCOUNTABILITY
(1)
(2)
(3)
(4)
(5)
(6)
TOTAL
Total Debits to Accountability

LESS: Credits to Accountability
Total Credits to Accountability

Balance of Accountablity as of
Inventory of Cash and/or Allowed Cash Items
Shortage or (Overage)
CERTIFICATION
I HEREBY CERTIFY that my accmmtability for the above funds of
at the time of examination on
20_ is correctly stated above totalling P
Accountable Officer's Signature:
Agency /Station:
I HEREBY CERTIFY that the preceding is a true and correct report of the examination ofthe cash and accounts of :
Name of Accountable Officer:
Agency/Station:
Date:
Remarks :
Date:
Signature of Auditor/Examiner:
1. This form will be used for the examination of all cash accountable officers in the corporate, national and local government offices.
2. Before proceeding to conduct an examination, the examiner should thoroughly familiarize himself with the revised manual on cash examination.
3. The six (6) columns on the face hereof are left blank to meet all fund requirements.
4. If space provided for is not enough, use it as summary only and support it with schedules.
5. Only reports showing a discrepancy in the accountability of the AO should be forwarded to respective Cluster/Regional Directors in duplicate.
In the event of shortage, the procedures for reporting and initiation of action outlined under the Revised CEM should be strictly followed.
6. Checks, treasury warrants, money orders, and other cash items shall be listed on the space for Inventory of Cash Items.
Annex F
Name of Agency ______________________________
Address
______________________________
Audit Period
______________________________
INTERNAL CONTROL QUESTIONNAIRE

This questionnaire is so worded that an affirmative answer will indicate soundness of the situation
covered by the question. The answers should indicate how things are done and not how they are
supposed to be done.
No.
Control Activities
A. General Information
Is the accountable officer appointed or designated as such?
Is the accountable officer given instructions regarding

his/her duties and responsibilities?
Is the employee handling cash adequately bonded? If so,

how much? ______________
Does he have a signature and handwriting specimen card?
Has he submitted his photographs to COA?
Does the accountable officer keep a file of COA

regulations and other existing rules pertaining to his/her
work?
Are the office properly enclosed and the Cashier amply

protected against intrusion by unauthorized persons?
Is the accountable officer or other employee handling cash

provided with safe?
Is the combination of the safe changed whenever there is a

change of custodian?
10
Are duplicate combinations of the accountable officers

safe on file with an authorized officer?
11
Does the AO refrain from acting as Cashier or Treasurer

of savings and loan association, etc. at the same time?
YES
NO
SCW CC
REMARKS
No.
Control Activities
12
Are the employees of the Cashier's Office denied access

to, or responsibility over accounting records, especially
those related to cash?
13
Is access to and responsibility for the fund vested in one

person?
14
Does the organization structure provide a clear-cut

separation of cashiering function from accounting
function?
15
Does the custodian of the fund have no access toa. Cash receipts?
b. General accounting records?
16
Does he avoid access to or responsibility over the

accounting records, related to cash (such as subsidiary
ledger of accounts receivables)?
17
If custodian of other funds, are they segregated and

accounted for separately?
18
Are surprise cash examinations conducted frequently by

internal and external auditors?
19
Does he keep a cashbook?
20
Are transactions recorded daily?
21
Is the cashbook balance reconciled with his cash on hand

at the close of each day?
22
Are cashbook balances reconciled with the subsidiary

ledgers at least once every quarter?
23
Are accounting records up-to-date?
24
Are subsidiary records maintained for each accountable

officer?
25
Are both the totals and details of bank authenticated

duplicate deposit slips matched by the accounting
department against the corresponding official receipts?
26
Are monthly reports of accountability for accountable

forms prepared and submitted?
YES
NO
SCW CC
REMARKS
No.
Control Activities
27
Are unused official receipts and other accountable forms

properly controlled as to ordering, storing and issuing, and
are adequate records kept of them?
B. Collection
Are official receipt booklets used?
Are the booklets issued in numerical sequence?
Are the official receipts pre-numbered?
Are official receipts issued for every receipt of payment?
Are official receipts issued in numerical sequence?
Are official receipts promptly issued for collections

received?
Is the form of payment indicated in the receipts?
Is the numerical sequence of issued officials receipts and

booklets checked by the accounting department?
Is a register of forms maintained? If so, is it kept up-todate?
10
Are unused booklets physically safeguarded? State how?
11
Is it the practice of the collecting officer not to accept

post-dated checks in payment of charges or fees?
12
Is the cashing of checks from collections prohibited? If

not:
a. Is the prior approval of authorized person required
before a check is cashed?
b. Are such checks deposited promptly?
13
Does the collecting officer refrain from using the

collections for paying obligations of whatsoever?
14
Are reports of collections submitted at the end of the

month?
15
Is the cashbook balance compared daily with the cash on

hand?
YES
NO
SCW CC
REMARKS
No.
Control Activities
16
Are collections deposited intact and as frequently as

required by regulations?
17
Is the person making deposit escorted by armed guards

and provided with transportation equipment?
18
Are all checks endorsed for deposit and deposited in

appropriate banks?
19
Are such checks deposited promptly?

Are items of deposit subsequently dishonored by the
depository bank promptly adjusted in the collecting
officer's records?
20
21
Are totals of bank-authenticated deposit slips compared

with the debit to respective bank accounts in the book of
original entry?
22
Are acknowledged deposits or deposits in transit

invariably cleared the following months?
23
Are collections and deposits recorded daily in the cash

book?
24
Is reconciliation made quarterly of the collecting officer's

book balance and the accounting subsidiary ledger
balance?
25
Is the collecting officer closely supervised by a

responsible officer of the agency?
By mail
26
Is the mail opened by an employee who is independent of

either the Cashier's Office or the Accounting Office?
27
Are mail remittances recorded or listed by the person

opening the mails? If so, is the record or list given to
someone other than the collecting officer for follow up to
see that all mail remittances have been receipted for and
deposited?
YES
NO
SCW CC
REMARKS
No.
Control Activities
YES
28
Is the foregoing information considered adequate as basis

for our evaluation of internal auditing procedures,
accounting controls or other circumstances that mitigate
any weaknesses indicated above, or in that there are no
other circumstances that impair any controls?
29
List down any additional controls and/or weaknesses not

covered by the foregoing questions and/or answers?
Foreign currency
30
Are receipts of foreign currencies and checks authorized?
31
Are only authorized foreign currencies and checks

accepted for payment?
32
Are the kind, quantity, serial numbers and amount of

foreign currencies and checks indicated in the receipts and
deposit slips?
33
Are control mechanisms in place to prevent receipt of

counterfeit foreign currencies and checks?
C. Disbursement
By Checks
Are all payments except petty fund disbursements and

payroll made by checks?
Are checks pre-numbered?
Are checks issued in numerical sequence?
Is the stock of unused checks accessible only to the

custodian and to those who prepare and sign checks?
Are all checks drawn

responsible official?
Is the bank furnished of the name and specimen signatures

of officials authorized to sign checks?
countersigned
by
another
NO
SCW CC
REMARKS
No.
Control Activities
Is the signing of checks limited to officers or employees

who have no access to accounting records or to cash?
Are all checks for signature and countersigning always

accompanied by approved vouchers and supporting
papers?
Are disbursement vouchers (DVs), supporting documents

and account distribution reviewed by an authorized
accounting staff? If so, is the covering voucher signed by
the person who made the review?
10
Are DVs and other supporting documents reviewed by at

least one signatory preparatory to the signing of the
check?
11
Is the signing and countersigning of checks in advance or

in blank prohibited?
12
Is the drawing of checks to "Cash" or "bearer" (except for

revolving funds replenishments and payroll) prohibited?
13
Are voided or spoiled checks properly cancelled and held

available for subsequent inspection?
14
Are the supporting documents stamped "Paid" or marked

with similar indications immediately after the check is
signed to prevent their possible reuse?
15
Are checks drawn recorded promptly?
16
Is the payee's signature or receipt secured before check is

delivered?
17
Are bank accounts reconciled at least once each month?
18
Are bank statements and paid checks all sealed by the

bank and delivered directly to the person preparing the
reconciliation?
19
Is the reconciliation done by an employee whose duties do

not involve:
a. Signing the checks?
b. Recording cash transactions?
c. Handling cash?
YES
NO
SCW CC
REMARKS
No.
Control Activities
20
Does the person who reconciles bank accounts, accounts

for all check numbers, examines signatures, endorsements,
payee's name and date, compare these with the records?
21
Are checks bearing improper endorsements returned to the

bank for corrections?
22
Are long outstanding checks properly followed up and

controlled?
23
Are "stop payments" on outstanding checks properly

controlled?
Are reconciling items systematically followed up and
promptly cleared?
24
By Cash Advance
25
Are all advances properly authorized and not excessive in

amount?
26
Are all previous advances liquidated before a new cash

advance is given?
27
Are advances liquidated by the officials within a

reasonable time after the purposes of such advances have
been accomplished?
28
Are cash advances always supported by approved

vouchers and supporting documents?
39
Are expense vouchers and supporting documents stamped

Paid to prevent their possible reuse?
30
Are entries in the cash book up-to-date?
31
Are reports of disbursements regularly submitted?
32
Are subsidiary records for cash advance kept and

reconciled with the control account periodically?
33
Is there confirmation of outstanding balances at least once

a year?
34

for our evaluation of internal auditing procedures,
accounting controls or other circumstances that mitigate
any weaknesses indicated above, or in that there are no
other circumstances that impair any controls?
YES
NO
SCW CC
REMARKS
No.
Control Activities
granted
only
YES
35
Are cash advances

officials/employees?
to
authorized
36

covered by the foregoing questions and/or answers.
Petty Cash Fund
Are there no cash on hand except for Petty Cash Funds

and remittances received after daily deposit is made?
Is the Imprest Fund system used?
Is access to and responsibility for the fund vested in one

person?
If custodian of other funds, are these segregated and

accounted for separately?
Does the custodian of the funds have no access toa. Cash receipts?
b. General accounting records?
Are changes made in the stated amount of the fund

authorized?
Are funds reimbursement check made payable to the order

of the custodian?
Does proper internal audit exists for petty cash vouchers

and supporting documents at the time of reimbursing the
fund?
Is the fund reasonable in amount?
10
Is there a Ceiling for individual payments from the

fund/funds? If so, indicate limits.
11
Are all significant petty cash funds counted periodically

on
a
surprise
basis?
Indicate
who
counts.________________________________
12

for evaluation on internal control - in that there are no
other additional internal auditing procedures, accounting
controls or other circumstances that impair any controls?
NO
SCW CC
REMARKS
No.
Control Activities
13

covered by the foregoing questions and/or answers.
_______________________________________________
_______________________________________________
_______________________________________________
YES
NO
SCW CC
REMARKS
Annex G
Name of Agency
Name of Accountable officer

Reconciliation Statement of Accountability
Name of Fund
Date of Cash Count
Balance per statement of accountability, date of cash count
Balance per subsidiary ledger, date per certification

(Please refer to the certification by Accountant)
Add(Less): Reconciling Items
Adjusted balance per ledger, date of count
Balance per Cash Receipt Record/Cashbook, date of count
Add(Less): Reconciling Items

P
Adjusted balance per Cash Receipt Record/Cashbook, date of count
Prepared by:
Name of Examiner/Auditor
Reviewed by:
Audit Team Leader
Annex " H"

STATE MENT OF ACCOUNTABILITY OF ACCOUNTABLE FORMS WITH MONEY VALUE
As of date of cash count

Accountable Officer :
Designation :
Agency:
Balance on hand
Name of Forms
Balance of Accountability
Date of last CE
Qty
Serial Number
Received Since
Qty
Serial Number
Issued Since
Qty
On Hand per
Date of this CE
Serial Number
Qty
Serial Number
Actual Count
Qty
Serial Number
Difference
Qty
I HEREBY CERTIFY that the above Statement of Accountability for

Prepared by:
Accountable Forms With Money Value is true and correct.
Auditor
Date
Name of Accountable Officer
Date
Serial Number
Qty
Balance on hand
Date of last CE
Serial Number
Amount
_____________________________________
Auditor
Date
Prepared by:
Name of Forms
Designation:
Agency:
Accountable Officer :
Qty
Received Since
Serial Number Amount
Qty
Qty
On Hand per
Actual Count
_____________________________
Name of Accountable Officer
I HEREBY CERTIFY that the above Statement of Accountability for

Accountable Forms Without Money Value is true and correct.
Issued Since
Balance of Accountability
Date of this CE
Qty
STATEMENT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS WITHOUT MONEY VALUE

________
Date
Qty
Difference
Serial Number
Annex I
Amount
Annex J
Commission On Audit
(Name of Bank)
Name of Branch
ATM CASH COUNT SHEET
Denomination
Amount Loaded (FULL)
Pieces
Amount
TOTAL
P
Less: Bills Dispensed

Cartridge A
Cartridge B
Cartridge C
Cartridge D
Expected Cash in ATM
Actual Cash Retrieved/Counted

Cash from Reject Bin
Cash from Cartridges

Cartridge A
Cartridge B
Cartridge C
Cartridge D
Total Actual Cash Retrieved/Counted
Difference (Overage / Shortage)
I hereby certify that the above listed cash on hand consisting of bills was counted
in my presence and the same was returned to me intact immediately after examination.
Accountable Officer's Signature

Date: ______________________
Auditor/Examiner
Position: _____________________________
Annex K
Name of Agency
Bank Reconciliation Statement
Name of Fund
Account Number
Name of accountable officer
Balance per bank, date per bank statement
Add: Deposit in Transit
P
P
Total
Less: Outstanding Checks
Adjusted balance per bank, date of count
Balance per Check Disbursement Record (CDR)

as of date of cash count
Add (Less): Reconciling Items
Adjusted balance per CDR, date of count
Balance per ledger, as certified by the Accountant

Add (Less): Reconciling Items
Adjusted balance per Ledger, date of count
Prepared by:
Name
Position
Reviewed by:
Audit Team Leader
Annex L
Republic of the Philippines
COMMISSION ON AUDIT
(COA Office)
_
LETTER OF DEMAND
________________, 20___
Mr./Ms. (Name of Accountable Officer)
Designation ______________________
Agency _________________________
Address_________________________
Sir/Madam:
This is to inform you that in the examination of your cash and accounts as
(designation)
of
on
, 20__, it was found that your cash was short by P________. This
shortage was arrived at as follows:
(agency name and address)
Particulars
Collections
Cash Advances
Total
Balance of accountability as shown by your

cashbook on ________________, 20__ certified
correct by you and duly verified by us
xxx
xxx
xxx
Cash and valid cash items produced by you and

counted by us
xxx
xxx
xxx
xxx
xxx
xxx
Shortage
In view of this, demand is hereby made of you to produce immediately the missing funds stated above.
Also, please submit to us within seventy-two (72) hours a written explanation why this shortage occurred.
Very truly yours,
______________________________
Audit Team Leader
_______________________, 20_____
_______________________________
(Accountable Officer)
Copy furnished:
Agency Head _____________________
Position/Designation ________________
Address __________________________
Annex M

COMMISSION ON AUDIT
COA Office)
_
WITHHOLDING ORDER
____________________
Date
Agency Head_____________
Position/Designation _______
Agency__________________
Address _________________
Attention: Cashier
Sir/Madam:
This is to inform you that upon examination of the cash and accounts of
_
(Name of Accountable Officer)
,_
(Position/Designation)
of that office,
conducted on ______________, a shortage in his accountabilities in the amount of
P______ has been definitely established.
In view thereof and pursuant to Section 37 of P.D. 1445, you are hereby directed
to immediately withhold payment of the salary and other emoluments due (Name of
Accountable Officer) or so much thereof as may be necessary, and to apply the withheld
amounts in full satisfaction of his afore-specified shortage.
Very truly yours,

By Authority of the Chairman,
Commission on Audit:
________________________
Audit Team Leader
Annex N

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
WARRANT OF CONSTRUCTIVE DISTRAINT

OF PERSONAL PROPERTY
TO: Mr./Ms. _________________

Audit Team Leader
Team __, Audit Group _____
Address_________________
Thru: The Cluster/Regional Director
WHEREAS upon evaluation of the report dated _____________________ on

the shortage discovered
in the audit
of
the cash and
accounts
of (Name of Accountable Officer/Position/Designation) of
(Agency/Address)
__
in the amount of P_________, and despite prior demand for the restitution thereof, no
restitution has been made, and as recommended in said report, there is a need for the
constructive distraint of personal property of the said accountable officer.
NOW, THEREFORE, pursuant to Section 47 of P.D. 1445, you are hereby
directed to place under constructive distraint the goods, chattels or effects and other
personal property of whatever character of the afore-named accountable officer
conformably with the procedural guidelines prescribed under the Revised Manual on Cash
Examination. And for so doing, this shall be your warrant of which make due service and
make return of your proceedings to me at the Commission.
WITNESS MY HAND and official seal at ________________, this ___ day of
_________, 20__.
__________________________
Chairman
Copy of this Warrant of Contructive Distraint

received this ___ day of ____________, 20__.
_____________________________________
(Name and Signature of Accountable Officer)
______________________________
(Name and Signature of Witness)
_____________________________
(Name and Signature of Witness)
I HEREBY CERTIFY that on _____________, 20__, at ____ oclock A.M. or

P.M., I served a copy of this Warrant of Constructive Distraint upon the accountable
officer.
__________________________
Audit Team Leader
RETURN OF WARRANT
1.0 Nature of property distrained--------------------------- ( See attached list)

2.0 Estimated, assessed, or inventoried value ------------ P________________
3.0 Date of constructive distraint -------------------------- _________________
_____________________
Date
________________________
Audit Team Leader
Annex O

COMMISSION ON AUDIT
COA Office)
_
RECEIPT FOR GOODS, ARTICLES, AND THINGS SEIZED

UNDER AUTHORITY OF SECTION 47, P.D. 1445, OTHERWISE KNOWN
AS THE GOVERNMENT AUDITING CODE OF THE PHILIPPINES
_______________________, Philippines _______________, 20___, I/WE, the undersigned, hereby

acknowledge to have received from (Name of Examining Auditor, Audit Team/Audit Group/Address) , the
following described goods, articles, and things:
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
the same having been this day constructively distrained and left in my/our possession pending the institution of a
criminal complaint for malversation with the Office of the Ombudsman and the preliminary investigation
thereat. I/We further pledge and undertake to faithfully keep, preserve, and to the best of my/our ability, protect
said goods, articles, and things distrained from defacement, leakage, loss, or destruction in any manner; that I/We
will neither alter nor remove, nor permit others to alter or remove, or dispose of the same in any manner
whatever without the express authority of the Chairman, Commission on Audit and that I/We will produce and
deliver all of said goods, articles, and things upon the order or demand of the Chairman or any authorized official
of the Commission on Audit.
____________________________________
Signature of Accountable Officer or person
in possession of properties for Accountable Officer
____________________________________
Address of Accountable Officer or person
in possession of properties for Accountable Officer
WITNESSES (That a complete list of properties has been
left in the premises in case accountable officer or possessor
refuses to accomplish receipt.)
Note: To be accomplished in sextuplicate
Annex P
COMMISSION ON AUDIT
(COA Office)
_
__________________
Date
Hon. ____________________
Deputy Ombudsman for ____
Office of the Ombudsman
Ombudsman Building
Agham Road, Quezon City
Sir:
In
the
course
of
the
examination of the cash and accounts of

(Name of Accountable Officer), (Designation) , (Name and Address of Agency) , covering
the period __________ to _________, it was discovered that the said accountable officer
had incurred a shortage in his/her accountabilities in the amount of P_________.
On the basis of the documents submitted herewith, we believe that the crime of
malversation of public funds under Article 217 of the Revised Penal Code has been
committed and that (Name of Accountable Officer) is probably guilty thereof.
In view thereof, we are forwarding to your Office the sworn statement/affidavit,
with annexes, as well as the certificate of non-forum shopping of the auditor/audit team
who/that conducted the examination and discovered the defalcation.
Accordingly, we recommend that necessary criminal proceedings be instituted by
that Office. The witnesses and the documentary evidences under our control shall be
made available to that Office upon the issuance of the proper subpoena. Should you find
probable cause in filing criminal charge(s) against (Accountable Officer), we request your
good office to please secure the issuance of a hold-departure order from appropriate
government agencies.
Please inform us on the action taken hereon and on whether or not the necessary
request for a hold-departure order against (Accountable Officer) has been facilitated by
your end.
We will appreciate your usual preferential attention hereto.
Very truly yours,
FOR THE COMMISSION ON AUDIT
_______________________________
Cluster/Regional Director
Annex Q
REPUBLIC OF THE PHILIPPINES )

(Place of Examination) ___________) S.S.
JOINT AFFIDAVIT
We, (Name of Examining Auditors) , all of legal age, Filipinos, and residents of
______________________________________________ respectively, after having been
duly sworn to in accordance with law, depose and say:
1. That we are presently employed as
(Position)
and
(Position) ,
respectively, of the Commission on Audit (COA) and assigned as
(Designation) and __(Designation) of Team ___, Audit Group ___, Province
of ________ (or Cluster ___, National/Local/Corporate Government Sector);
2. That we joined COA on ______________ and ____________, respectively,
and have, since then, performed various audit engagements including the
examination and post-audit of the cash and accounts of accountable officers in
the government;
3. That we know
(Name of Accountable Officer)
and
_________________ of
(Name and Address of Agency)
Designation) ;
designated as
on (Date of
4. That on (Date of Examination) , we conducted an examination of the cash and

accounts of (Name of Accountable Officer) ;
5. That in the process of our examination of his/her cash and accounts, we found
(Name of Accountable Officer) short of his/her cash accountability by (Amount
of Shortage) arrived at as follows:
(Show the computation of the shortage)
6. That a letter of demand dated ___________, 20__, copy of which is hereto
attached as Annex __, was served to (Name of Accountable Officer) on
__________, 20__, detailing how the shortage was arrived at, and directing
him/her to immediately produce the missing funds and to explain in writing
how this shortage came about;
7. That despite said demand, the shortage remains unaccounted for or unrestituted
up to the present time;
8. That the Report of Cash Examination showing the shortage, its annexes,
appendices and attachments, was submitted to the Cluster/Regional Director,
(Cluster and Sector/Region and Address) , a copy of which is hereto attached
as Annex __ and made integral part of this Joint Affidavit.
IN WITNESS WHEREOF, we have hereunto affixed our signatures below this
____ day of __________, 20__, at___________________.
________________________
(Affiant)
Com. Tax Cert. No. ___________

Issued at ____________________
On ________________________
_______________________
(Affiant)
Com. Tax Cert. No. ___________

Issued at ____________________
On _________________________
SUBSCRIBED AND SWORN to before me this ___ day of ___________, 20__,

at ___________________, affiants showing to me their respective Community Tax
Certificates as appearing opposite their signatures.
I HEREBY CERTIFY that I have personally examined the affiants and I am
satisfied that they voluntarily executed and understood the foregoing Joint Affidavit.
________________________
Notary Public
Doc No. ____

Page No.____
Book No. ___
Series of ____
Note: Additional facts may be alleged or pleaded in the narration of facts as may be
required or warranted by the attendant circumstances.

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JUL 0 9 2013

COMMISSION ON AUDIT MEMORANDUM NO. 2013-004

All Assistant Commissioner~ Directors, Supervising Auditors,

Prescribing the use of the Revised Cash Examination Manual

C . AUTHORITY TO CONDUCT CASH EXAMINATION

Special audit teams may also be constituted by the Chairperson or the

F. RESPONSffiiLITY FOR FILING CASES

This memorandum shall take effect immediately.

Intermediate Accounting, Vol. 1, 2007 Edition; Robles and Empleo

Section 2(2), Ibid

LAWS AND RULES RELEVANT IN CASH EXAMINATIONS

Section 2, Presidential Decree No. 1445

Section 122, Local Treasury Operations Manual

Treasury Circular 02-2009 dated 06 August 2009

Section 83, Presidential Decree No. 1445

Section 72, GAAM, Vol. I

Section 82, GAAM, Vol. 1

c. Collections of field collectors shall be remitted to the Cashier/designated Liquidating

Section 62(D), Local Treasury Operations Manual

No money shall be paid out of any public treasury of depository except in

Disbursements or disposition of government funds or property shall invariably

All laws and regulations applicable to financial transactions shall be faithfully

Generally accepted principles and practices of accounting as well as of sound

Section 4, Presidential Decree No. 1445

Section 89, Presidential Decree No. 1445

Section 47, Presidential Decree No. 1445

2. Perform mandatory cash examination under the following circumstances:

4. Use the properly worded sealing paper form as shown below:

Witnesses to the sealing:

5. Retain a duplicate copy of each properly accomplished sealing paper.

Accountable Officers Cashbook/CRR/CDR/CkDR or its equivalent

(Signature over printed name)

3. Direct the AO to effect adjusting entries in the Cashbook/CRR/CDR/CkDR or its

M. Prohibition of Incomplete Examinations

6. Auditors before conducting cash examinations in the regions/field with no books of

PROCEDURES AND TECHNIQUES

Determine the total number of accountable forms issued and/or transferred as

Deduct total issues/transfers determined in 17.2 from total inventories established

Check individually the entries in the cashbook/CRR or equivalent during the

Pay particular attention to the nature of collection/transaction made,

or accountable forms are submitted with the corresponding Report/Abstract

Scrutinize the remittance advices or deposit slips or CTS for signs of

Examine adjustments made by accounting office/unit during the period

Consider all discrepancies affecting the AOs accountability in the

Analyze collections and remittances/deposits to determine if amounts collected are

2. Bank Cashier/Teller/ATM Teller

Count currency notes of Cashiers/Tellers/ATM Tellers of BSP and government

per box for unopened original boxes with BSP seal;

by bundle for opened original boxes with plastic seal intact;

by bundle for original shrink-wrapped bundles (original shrink-wrapped

by piece for not originally shrink-wrapped bundles. Using COA sampling

3. Disbursing Officer (DO)

Unposted paid vouchers/payrolls

Partially paid payrolls

Verify contents of pay envelopes, if any. Treat cash in pay

Checks and money orders

Determine why the paid vouchers/payrolls are not posted in the

Paid invoices, reimbursement expense receipts (RER), promissory notes,

If the fund being examined is a cash advance for petty expenses,

Based on accounting records, determine whether all cash

Check all cash disbursements against the corresponding vouchers.

Trace refunds of cash advances to the original receipts issued therefor.

Determine propriety and correctness of adjusting entries.