REPUBLIC OF THE PHILIPPINES COMMISSION ON AUDIT Commonwealt Avenue, Quezon City, Phil CIRCULAR No. :____ 2015-001 Date: 205 TO = All Heads of Departments, Bureaus, Offices, Agencies and Instrumentalities of the National Government; COA Assistant Commissioners, Directors, and Auditors; and All Others Concerned. SUBJECT : Prescribing the guidelines and procedures in the Reversion to the General Fund of all Dormant Cash, Unauthorized Accounts, Unnecessary Special and Trust Funds and Related Accounts, in conformity with Permanent Committee Joint Circular No. 4-2012, dated September 11, 2012, implementing Executive Order No. 431, dated May 30, 2005 1.0 RATIONALE Permanent Committee Joint Citcutar No. 4-2012 dated September 11, 2012, (Annex A) provides the rules and regulations implementing Executive Order No. 431 dated May 30, 2005, directing the reversion of all dormant accounts, unnecessary special and trust funds to the General Fund and for other purposes. Section 5.6 thereof provides that the Commission on Audit (COA) shall prescribe the necessary accounting entries and supporting documents for the transfer of the cash balances of unauthorized accounts to the National Treasury. 2.0 PURPOSE i This Circular prescribes the accounting guidelines and procedures in the reversion to the General Fund of all dormant cash balances, unauthorized accounts and unnecessary special and trust funds maintained by national government agencies (NGAs) with depository banks. AW3.0 PROCEDURAL GUIDELINES NGA WITH DORMANT CASH/UNAUTHORIZED ACCOUNTS AND UNNECESSARY PECIAL AND TRUST FUNDS INCLUDIN IPIENTS OF INTER-AGENCY FUND TRANSFERS 3.1, The Head of the Accounting Unit of the NGA shall conduct thorough analysis of the cash accounts, provide cash account mapping and/or group the cash accounts into the following: a) accounts pertaining to collections deposited/maintained with an Authorized Government Depository Bank (AGDB) which have remained inactive or those accounts with no transactions other than periodic bank charges based on the existing regulation of the Bangko Sentral ng Pitipinas; b) accounts or cash account balances maintained by agencies without specific authority or legal basis or specific purpose; <) accounts or cash account balances maintained by agencies with specific authority but deposited with non-AGDBs; d) cash accounts, special and trust funds maintained by government agencies with AGDBs but without valid claimants, or are no longer necessary for the attainment of the purpases for which said funds were established/received and/or the project implementation has been completed, terminated, cancelied or abandoned; e} cash balances intended to fund liabilities with valid claimants but Payments are held in abeyance pending completion of certain requirements; and fall other accounts similar to those cash balances enumerated in (a) to (e) 3.2. Alter the analysis, the concerned agency officials/personnel shall undertake the following. / a) Evaluate all valid claims, /[ b) Prepare Disbursement Voucher (DV), and the corresponding check for the settlement of valid claims; €) Determine the remaining balances of the cash in bank accounts enumerated in 3.1 as recorded in the books of accounts;d) in case of inter-agency fund transfer, confirm from the Source Agency (SA) the existing balance per books; e} Obtain the latest bank statements of the dormant accounts, prepare the bank reconciliation of all existing cash in bank balances and reconcile the balances per bank with the book balances ; f)Evatuate the legal bases to determine if their continuing existence is still necessary; and 8) Upon completion of steps (c} to (f), determine the proper disposition of all cash balances, based on the instruction from the Permanent Committee, as follow: 1) prepare the DV and check for the withdrawal of the AGDB or non AGDB cash account balances, and deposit to the NT; 2) prepare the necessary Journal Entry Vouchers (IEVs) to record the reversion to the NT of the balances of the dormant accounts and unnecessary unused balances of special and/or trust funds; and 3) return the unutilized balances to the SA/donors/financing entities in the case of grants or foreign-funded programs/projects wherein the attendant agreements require the return of unused balances. 3.3. In the books of the NGA, the entry for the remittance to NT shall be a credit to the Cash in Bank account and a debit to the related accounts/s. 3.4. The NGA shall submit, through their Audit Team Leader (ATL), the audited/verified copies of the JEVs on the remittance of dormant balances to the NT to the following: / a) SA, if any, within 30 days after remittance; ‘A b) BTr, within 30 days after remittance, together with copies of validated remittance advices or deposit slips; and ©) COA’s Government Accountancy Sector (GAS), together with year-end financial reports of the agency. 3.5. The Implementing Agency shall coordinate with the SA of the reverted funds to close the related dormant accounts in the SA’s books of accounts. ek3.6. In case there are unreconciled differences/balances after performing the reconciliation procedures required by this Circular due to the absence or lack of underlying records and documents, the tlead of the Agency shell immediately submit @ request for write-off of these unreconcied differences/balances to the COA, consistent with Section A.10, COA Circular No. 97-001 dated February 5, 1997, supported by the following: a} List of available records and extent of validation made on the accounts; and b) Certification and reasons why the Agency's books of accounts/records, financial statements/schedules and supporting vouchers/documents cannot be located. AGENCY 3,7, For inter-agency fund transfer, the Head of the Accounting Unit of the SA shall a) Confirm and reconcile the unliquidated balance of the fund transfers with the recipient/implementing agency and effect adjustment, if warranted; b} Based on the copy of the JEV for the remittance of the unused funds to the NT furnished by the recipient/implementing agency, record the adjustment of the receivable account by debiting “Accumulated Surplus/(Deficit)” and crediting the appropriate receivable account; and cc) Furnish the recipient/implementing agency and the GAS, COA, through the ATL concerned, the audited/verified copies of the JEVs taking up the reversion of the account. BUREAU OF THE TREASURY | 3.8, Upon receipt of the verified/audited copies of the IEVs from the different agencies and/or the Abstract of Collections and Deposit from the bank, the BT shall a) Take up the amount of reverted cash balances with a corresponding credit to “Accumulated Surplus/(Deficit)"; and b) Submit audited/verified copies of the JEV taking up the remittance, through the ATL of the BTr, tothe GAS, COA. owi ! fl 4.0 5.0 6.0 7.0 ILLUSTRATIVE ACCOUNTING ENTRIES Ihe illustrative accounting entties to record the deposit to the BTR of the cash balances and the corresponding adjustments to be made by the NGAs and the BTr, and the required supporting documents are shown in Annexes B1 and B2 ADMINISTRATIVE SANCTION Failure of the officials/employees concerned, including the Head of the concemed Agency/Office, to comply with the requirements of this Circular shall subject them to administrative disciplinary action in accordance with the provisions of Section 122 (2), Chapter 3, litle lll, P.D, No.1445 and Section 55, Chapter 10, Sub-title |B, Book V of Executive Order No. 292, series of 1987, of the Revised Administrative Code of the Philippines. REPEALING CLAUSE All circulars, memoranda and other issuances or parts thereof which are inconsistent with the provisions of this Circular are hereby repeated/moditied accordingly. EFFECTIVE DATE This Circular shall take effect fifteen (15) days after publication in newspapers of general circulation " Y us WAIN) +fav f fpr. MANDOZA oA elas’ Commistioner CommissionerMoot rarest oe race EN © & Department of Finance Department of Budget and Management Commission on Audit PERMANENT COMMITTEE Joint Circular No, 4 September 11, 2012 RULES AND REGULATIONS IMPLEMENTING EXECUTIVE ORDER NO. 431 DATED MAY 30, 2005 DIRECTING THE REVERSION OF ALL DORMANT ACCOUNTS, UNNECESSARY SPECIAL AND TRUST FUNDS TO THE GENERAL FUND AND FOR OTHER PURPOSES Section 1.0 Purpose These Rules are promulgated to prescribe the procedures and guidelines for the implementation of Executive Order (EO) No, 431 in order to facilitate compliance therewith and achieve the objectives thereof, Section 2.0 Rationale 2.1 It ig hereby declared policy of the State that unless otherwise specifically provided for by law, all income collected by agencies of the government by ‘Virtue of the provisions of law, orders and regulations shall be deposited in the. National Treasury, and shall accttie lo the unappropriated surplus of the General Fund of the Government; 2.2 It is also the policy of the Stale that receipts of agencies authorized by law to be recorded as a Special Account in the General Fund, Fiduciary or Trust Fund or a fund other than the General Fund shall be separately recorded and disbursed in accordance with such rules and regulations as may be determined by a Permanent Commiltee composed of the Secretary of the Department of Finance (DOF) as Chairman, and the Secretary of the Department of Budget and Management (DBM) andl the Chairman of the Commission on Audit (COA), as members; 2.3 Reports of COA show that there are huge cash balances being maintained by government agencies deposited in authorized government depository hanks (AGDBs) and other institutions, which may include donnart accounis or unnecessary special and trust funds; and i24 EO No. 431 directed that the Permanent Committee shall promulgate the implementing rules and regulations for the transfer of such cash balances to the account of the National Treasury. Section 3.0 Definition of Terms For the purpose of these Rules, the following terms shall be construed to mean a’ follows: 3.1 Authorized Government Depository Banks (AGDBs) ~ refer to financial institutions/banks authorized by the Bangko Sentral ng Pilipinas to accept deposits from government agencies. 3.2 Dormant Accounts — refer to collections authorized by faw to be deposited with an AGDB but have remained inactive for more than five (5) years. 3.3 Unauthorized Accounts - refer to: + Cash account balances maintained by agencies without specific authority o legal basis; or + Cash account balances with a specific authority but maintained with non-AGDRS, 3.4. Unnecessary special and tryst funds ~ refer to authorized special and ust funds maintained by goverment agencies with AGDBs but which are no longer necessary for the attainment of the purposes for which said funds were established .e., specific profects/programs, the implementation of which have been completed or abandoned. Section 4.0 Responsibilities of the Permanent Committee in the Impiementation of EO No, 431 4.4 Prepare an inventory of the cash accounts and balances of each and every department, bureau and agency of the National Government; 4.2 Coordinate with the heads of agencies concemed to inform them that the Permanent Committee and its authorized representatives shall conduct inspection of their books of accounts in order to examine, look into ask! evaiuate all existing cash deposits of whatever nature, whether in foreign or local currency maintained with AGDBs and other institutions; 43 Review and determine the legal basis for the maintenance of sald cash account balances with AGDBs or other institutions where the funds are deposited; and 4.4 Recommend to the President the transfer thereof to the National Treasiny where no legal impediment exists pursuant to the provisions of Sections 44 and 45, Chapter 5, Book VI of the Administrative Code of 1987. 7 { aA h i iSection 5.0 Procedural Guidelines 5.1 COA shalt submit to the Permanent Committee the status of the cash accourit balances of each department/agency of the national government with AGDBs and other institutions (both local and foreign) as reflected in the Annual Financial Report as of December 31, 2010, 5.2 DOF, through BTr, shall provide the Department Secretaries a copy of the seport cited under Section 5.1 above covering agencies/bureaus/offices unde thelr jurisdiction. These cash account balances shall be the reference point in preparing the report required under Section 1 of the DBM-DOF-COA Joint Administrative Order (JAQ) No. 2012-03, 5.3 Agencies shall include any cash account balances not included in the COA report for the preparation of the report required under JAO No, 2012-01. 5.4 BTr shall submit a report to the Permanent Committee highlighting its findings relative to the following: 54.1 If the cash account balances are matntained in AGDBs, 5.4.2 The legal basis for the maintenance of the cash accounts balances: outside of the Bureau of Treasury. 5.5 Permanent Committee shall: 5.5.1. — Require the immediate transfer to the National Treasury of the cash balances of unauthorized accounts as defined in Ttem 3,3 maintained. with AGDBs and other banks. For those bank accounts whith are authorized under existing laws including dormant accounts as defined under Ttem 3.2, the Permanent Committee shall evaluate their legal bases to determine if thelr continuing existence is still necessary and make a recommendation to the President for the purpose, 5.5.2, Request the agency head for further inspection of its books of accounts, if found necessary. 5.6 COA shall prescribe the necessary accounting entries and supporting documents for the transfer of the cash balances of unauthorized accounts to the National Treasury. 5.7 Agencies, upon the directive/insiruction of the Permanent Committee, shal Immediately effect the closure of the cash balances of their unauthorized accounts and transfer the same to the National Treasury. They shall prepare the adjusting entries as maybe prescribed by COA under Item 5.6. If there are accounts which will affect the books of the National Treasury, they shall furnish the BTr with the Journal Voucher pertaining thereto, 8Section 6.0 Responsibilities of departments, bureaus and agencies of the National Government ‘The heads of departments, bureaus and agencles of the National Government shall have the following responsibilities: 6.1 Cooperate, open their books of account and assist the Permanent Committee and Its authorized representatives in the conduct of inspection and review of their cash balances; and 6.2 Provide the Permanent Committee with the required information and instruct their officials concerned to effect the smooth and efficient transfer to the National Treasury of the cash balances of unauthorized accounts. Section 7.0 Monitoring of Compliance ‘The COA shall monitor compliance of the guidelines stated above and shail report to the Permanent Committee. Section 8.0 Administrative Sanction Heads of the departments, bureaus and ali other agencies of the National Government along with the Permanent Committee shall ensure the strict implementation of EO No. 431 and these Rules. Any violation hereof shall be sternly dealt with in accordance with law. Section 9.0 Repealing Clause All Grculars, memoranda and other issuances or parts thereof which are inconsistent with the provisions of this issuance are hereby rescinded/ repealed] modified accordingly. Section 10.0 Effectivity ‘These Rules shall take effect immediately. a V. Tn Secretary of Finance Chairman Permanent Committee 005664 — peeiasraceieguastnnanaae i) FLORENCIO B. ABAD Ma. 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