CH.

6 Accounting for Income, Collections, and Related Transactions

Sec. 44, Book VI of 1987 Administrative (1) Estate tax

Code Unless otherwise specifically (2) Donors tax
provided by law, all income accruing to the (3) Capital Gains Tax
departments, offices, and agencies, by virtue c. Tax on Goods and Services
of the provisions of existing laws, orders and (1) Import duties
regulations shall be deposited in the National (2) Excise tax
Treasury or in the duly authorized depository (3) Business tax
bank of the government. (4) Tax on sand, gravel and other
Provides for the accrual revenue collected quarry products
by NG to the unappropriated surplus of (5) Tax on delivery vans and trucks
the general fund. d. Others
(1) Documentary Stamps tax
Receipts/Income Collections and (2) Motor vehicles users charge
Deposits System (3) Other taxes
System covers processes of e. Fines and Penalties
acknowledging and reporting (1) Taxes on individual and
income/collections, deposits of collections corporation
with Authorized Government Depository (2) Property taxes
Banks (AGDB) or through account of (3) Taxes on Goods and services
Treasurer of the Philippines, and recording (4) Other taxes
of collections and deposits in the books of 2. General Income encompasses
accounts (Cash Receipts book) of the revenue or income by government
agency. agencies in the exercise of their
Collecting officers to deposit intact all administrative and regulatory
their collections not later than next function, income from public
banking day. enterprises/investments, and from
Collecting officers accomplishes Report of grants and donations including
Collections and Deposits (RCD) each subsidies.
business day. a. Service and Business Income
(1) Permit fees
Income (2) Registration fees
System covers processes of (3) Registration plates, tags and
acknowledging and reporting sticker fees
income/collections, deposits of collections (4) Clearance and certification fees
with Authorized Government Depository (5) Franchising fees
Banks (AGDB) or through account of (6) Licensing fees
Treasurer of the Philippines, and recording (7) Supervision and regulation
of collections and deposits in the books of enforcement fees
accounts (Cash Receipts book) of the (8) Spectrum usage fees
agency. (9) Legal fees
Government income: represents all (10) Inspection fees
funds received by the government from (11) Verification and
taxes, grants, aids, and borrowings. authentication fees
Government revenue: represents funds (12) Passport and visa fees
(13) Processing fees
received, which do not increase any
(14) Fines and penalties
liabilities or reserves of the government.
service income
Income encompasses revenue
(15) Other service income
Taxes is both income and revenue
b. Business income
Income classifications: (1) School fees
1. Tax Revenue encompasses taxes, (2) Affiliation fees
and revenue from LGUs, schools, and (3) Examination fees
hospital operations (4) Seminar/training fees
a. Revenue for Individuals and Corp. (5) Rent/lease income
(1) Income tax (6) Communication network fees
(2) Professional tax (7) Transportation system fees
(3) Travel Tax (8) Road network fees
(4) Immigration tax (9) Waterworks system fees
b. Revenue on Property (10) Power supply system fees

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 CH. 6 Accounting for Income, Collections, and Related Transactions

(11) Seaport system fees acknowledged by OR and recorded

(12) Landing and parking fees in JEV. For surety bonds
(13) Income from Acknowledgement Receipt is issued
hostels/dormitories and other 3. Refund from Overpayment of
like facilities Expenses if paid within year
(14) Slaughterhouse operation credited to appropriate expense
(15) Income from printing and account; succeeding years is
publication credited as Prior Years adjustment
(16) Sales revenue 4. Collections Made on Behalf of
(17) Sales discounts Another Agency or Private
(18) Hospital fees Companies remitted to those
(19) Guarantee income agencies and recorded as (ex. Due
(20) Fidelity insurance income to BIR, Due to GSIS, Due to LGUs
(21) Dividend income 5. Intra-Agency Transfer Funds cash
(22) Interest income received from another agency for
(23) Share in profit of JV the purpose of implementing
(24) Fines and penalties projects of the agency. Recorded as
business income (ex. Due to Central Office, Due to
(25) Other business income Bureaus)
c. Assistance and Subsidy
(1) Subsidy from NG General Procedures for Cash
(2) Subsidy from other NGAs Collections
(3) Assistance from LGUs a. From domestic sources
(4) Assistance from GOCCs 1. NGA collects revenue from
(5) Subsidy from other funds whatever source
d. Shares, Grants, and Donations 2. Agency remits to Bureau of
(1) Shares from national wealth Treasury (BuTr) or AGDB
(2) Share from PAGCOR/PCSO 3. AGDB advises BuTr
(3) Share from earnings of GOCCs 4. BuTr records the collection in its
(4) Income from grants and books
donations in cash 5. BuTr replenishes its MDS account/s
(5) Income from grants and with the bank for checks
donations in kind negotiated
e. Other Non-operating income b. From foreign sources
(1) Sale of garnished /confiscated/ 1. Foreign Funding Institution remits
abandoned/ seized goods and amount in foreign currency to BSP
properties 2. BSP advices BuTr of receipt of
Methods of Accounting for Income remittance
1. Accrual Method used when income is 3. BuTr records remittance in books in
realized during the accounting period PhP equivalent
regardless of cash receipt; recorded as 4. Upon receipt of NCA from DBM,
A/R BuTr advises the bank to transfer
2. Modified Accrual recorded as credit cash to the agency
to Deferred Credits to Income. Upon 5. Government agency records NCA in
receipt of collection, this is then its books.
adjusted.
3. Cash Basis impractical; credited Types of Collections
upon collection of cash or its Responsibility rests upon head of office to
equivalent minimize risk of losses, defalcations, and
Fines and penalties (tax or other other types of irregularities; makes sure
specific income) are recognized in the that internal controls are in place and
year it was collected. implemented; and proper supervision is
Treatment for Other revenues: exercised particularly over accountable
1. Refund of Cash Advances debited officers.
to Payroll Fund. Policies for the following types of
2. Receipts of collections as to authority to use:
Performance/Bidders/Bail Bonds - 1. Without authority to use collection is
Performance bonds are credited to income of collecting

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 CH. 6 Accounting for Income, Collections, and Related Transactions
agency and debited upon remittance
to the National Treasury
2. With authority to use records
collections as income in regular
agency books per fund and is not
remitted to BuTr. The authority to use
is from GAA or special laws, as such
the ff fees and income may be used:
a. Seminar, trainings and
conferences, can be used for
related expenses of said activities
b. Proceeds from sale of publications
c. Service fees collected from GSIS,
HDMF, PHIC, Mutual Funds, etc
shall be used exclusively for the
operation of Provident Fund
d. Excess income (actual collections
vs targets) realized and deposited
with BuTr pursuant to Special
Provision No. 5 of Unprogrammed
Fund can be used to augment
operating requirements except
Personnel Services (PS)
3. Authority with limitations Ex.
collections from seminar and
convention fees and the same shall be
recorded in Regular Agency Books
(RA) per fund. The expenses are
journalized and excess remitted to
National Treasury and transferred to a
separate set of books maintained by
appropriate fund.
4. Income from sale of equipment
Proceeds of sale is remitted to
National Treasury; may be
appropriated for purchase of new ones
or repair or maintenance of existing
vital equipment released through
SARO and NCA.
5. Grants and donations intended for
agency use recorded in a separate
set of books and shall be remitted to
National Treasury. The agency
prepares special budget for its use.
Upon approval, SARO and NCA is
released. The SARO is agencys
additional allotment and recorded in
appropriate registry while NCA is
agencys additional subsidy income
from NG.
6. Miscellaneous collections (Use of
Excess Income)
Per National Budget Circular No,
556, Operating units may submit
a request for use of excess
income to DBM once its targeted
revenue level for the year has been
realized and exceeded.
Reason for the excess is
highlighted in request
Agencies already authorized by law
to retain a portion of their income
collections for their operating
requirements are no longer
qualified to avail use of excess
income.
DBM considers the ff. in
determining excess income:
o Collections from existing fees
and charges > revenue
estimates in BESF due to
improved efficiency in operation
or upgraded service delivery
o Collections came from new fees
and charges from new
activity/program for year
o If estimated level of FY revenue
per FY BESF is consistent with
normal trend increases in actual
collections for the past years.
If original revenue per FY BESF was
reduced as a result of their
representation during finalization of
BESF that they will be unable to
maintain the normal trend of
increases in their revenue or
target remains constant for 3
yrs, the request of use of
income shall be re-evaluated:
o DBM to establish trend of actual
revenue collections generated
from regular fees and
charges/recurring income by the
agency during the immediate
preceding years
o DBM to re-estimate appropriate
revenue level by applying
established average growth
rate of actual revenue
collections in said preceding
years.
o In cases where, re-estimated
revenue level of FY < actual
collections of immediately
preceding years, DBM to use
higher level for purposes of
computing the amount of
excess income that can be
availed by the OU concerned.
Receipt and Collection Process
1. The Collecting Officer (CO) receives
payment from creditors and issues OR
2. CO records collections in Cash Receipt
Record
3. CO deposits collections
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 CH. 6 Accounting for Income, Collections, and Related Transactions

4. CO records deposit in Cash Receipt units with copies of OR and validated

Record Deposit Slips
5. CO prepares Report of Collections and 6. Accounting unit prepares JEV and
Deposits and forwards to accounting records in Cash Receipts Journal.

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