COMMISSION ON AUDIT

OFFICE OF BUDGET AND MANAGEMENT

MINISTRY OF FINANCE

JOINT CIRCULAR NO. 4-86

June 19, 1986

TO : Heads of the Ministry of Health and Ministry of Local Government, Bureaus,

Offices and Agencies Under these Ministries; Regional/Field Offices and Special
Hospitals and Research Institutes, Regional Hospitals, Medical Centers,
Sanitaria, Provincial Health Offices and District Hospitals; Chief
Accountants/Heads of Accounting Units; Budget Officers; Disbursing Officers;
COA Unit Auditors and All Others Concerned.

SUBJECT : Implementation of a New Disbursement Scheme Pursuant to Memorandum

Order No. 12 dated June 10, 1986 Directing the Improvement of the Cash
Disbursement Operations of the Government Thru the Agency Treasury Warrant
Funding Scheme

1.0 Purpose

1.1 To streamline the accounting systems and disbursement operations of the

government by instituting a simplified disbursement scheme through the
issuance of funding treasury warrants;

1.2 To prescribe applicable budgetary and accounting systems and procedures in

the implementation of the New Disbursement Scheme;

1.3 To minimize/eliminate irregular cash disbursement; and

1.4 To facilitate the timely preparation of treasury/bank reconciliation statements.

2.0 Coverage

This Circular shall cover the General Fund (s) appropriated in the General
Appropriations Act (GAA) and Special Accounts in the General Fund of the Ministries
of Health and Local Government including their bureaus, offices and agencies/hospitals.

3.0 General Guidelines

3.1 Effective July 1, 1986, all comprehensive releases shall follow the New
Disbursement Scheme.
3.2 The Cash Disbursement Ceiling shall now serve as a budget control mechanism
of the Office of Budget and Management (OBM).

3.3 Treasury warrants shall, henceforth be used to fund the operations of the pilot
agencies instead of cash disbursement ceiling.

3.4 The funding warrant shall be deposited by OBM in an authorized government

depository bank preferably the Philippine National Bank (PNB)/Land Bank
of the Philippines (LBP) for the account of the respective Central Offices,
Special Hospitals, Regional and the Provincial Health Offices in the case of the
MOH.

3.5 The funding warrant shall be the basis of the pilot ministries/agencies to establish
a Combo Account.

Combo Account is a combination of savings and current accounts. All

deposits shall be credited by the Bank to the savings account while all
disbursements shall be made by checks from the current accounts. Transfers
from the savings to the current account shall be made periodically or as
necessary to fund the requirements of the current account.

3.6 The operation of the Treasury Checking Account for Agencies (TCAA) System
and the related treasury disbursement accounts shall be closed as of June
30, 1986.

3.7 The decentralized/sub-allotment accounting procedures established between the

Agency Central Offices (ACO) and Agency Regional Offices (ARO)/Provincial
Health Offices (PHO) shall be modified in accordance with the procedures
prescribed herein.

3.8 The Transfer of funds from a source agency to an implementing agency thru
issuance of journal voucher shall be discontinued.

3.9 Withdrawals against the Combo Account shall be made the issuance of
commercial checks which shall not exceed the minimum cash balance
requirement of the Bank.

3.10 Subsequent issuance of funding warrants shall be made by OBM after evaluation
of the Monthly Status of Funds submitted by agencies.

3.11 Any balance of the Combo Account at the end of each month may be used in
the ensuing month(s). However, balances at the end of the year shall be
withdrawn from the Combo Account and deposited to the Bureau of Treasury
(BTR) in accordance with the procedures herein prescribed.

3.12 The depository/servicing banks shall furnish the pilot ministries/agencies bank
statements within ten (10) days after the end of each month which shall be
the basis in preparing the monthly reconciliation statements.
 3.13 Pilot agencies shall no longer request for the issuance/revalidation of
CDC for accounts payable. Instead, agencies shall request for the issuance
of funding warrants to cover payment of accounts payable.

4.0 Procedural Guidelines

4.1 Pilot ministries/agencies shall request the BTR copies of the agency/treasury
account current as of June 30, 1986 for the treasury disbursement accounts
80-70-702, 8-70-703 and 8-70-709 as basis for the preparation of the
treasury/agency reconciliation statement(s).

4.2 All balances of the above-mentioned treasury disbursements accounts of pilot

ministries/agencies as of June 30, 1986 shall be closed to the National Clearing
Account - CDC (accounts 0-99-200) which shall be responded to by the BTR.
The closing entries shall be made both in the old and new sets of books
prescribed under Joint Circular No. 1-86 dated March 30, 1986 as amended.

4.3 The use of the following reciprocal accounts shall be discontinued:

8-71-199-1 8-81-1991
8-71-199-2 8-81-199-2
8-71-199-3 8-81-199-3
8-71-190 8-81-190
8-71-191 8-81-191
8-71-192 8-81-192

The balances of these accounts shall be closed/converted accordingly as

shown in the attached accounting entries (Annex "A").

4.4 All unused TCAA checks/warrants as of June 30, 1986 shall be inventoried
by the disbursing officers, certified correct by them, verified by the auditor
concerned and disposed of in accordance with the procedures prescribed
under Joint COA-MOF-OBM Circular No. 7-81 dated August 31, 1981 and
Treasury Memorandum Circular No. 8-73 dated June 27, 1973. Banks shall no
longer honor TCAA checks and treasury warrants issued by the pilot
ministries/agencies after June 30, 1986.

4.5 The use of account Cash Disbursement Authority (CDA) and Cash Earmarked
for CDA represented by 8-99-300 and 8-99-703 presently being adopted by the
BTR to control agency disbursements shall be discontinued. Hence, the
balances of these accounts after charging all treasury disbursements made
before June 30, 1986 by the pilot ministries/agencies shall be closed as of
the same date.

4.6 Bank accounts presently being maintained for the operational and other
requirements of ministries/agencies/Special Hospitals/regional offices and PHOs
shall be discontinued and the book balances as of June 30, 1986 shall be closed
and remitted to the BTR covered by remittance advice. If the allotments have
been obligated in prior years when such bank accounts were opened, the
 corresponding accounts payable may be liquidated upon receipt of the funding
warrant duly requested from the OBM. If the allotment is obligated within the
current year, agencies shall also close the bank account but payment of unpaid
obligations shall be made against the Combo Account. Refer to Annex "A" for
the accounting entries.

Operating units presently receiving funding checks pursuant to BC No.

249 for current operations shall continue to maintain their bank accounts.

4.7 Pilot ministries/agencies/special hospitals/ROs/PHOs shall request OBM for

the issuance of funding warrants to cover their monthly operations. However,
the amount of the funding warrant to be issued at any one time shall not
exceed an eight (8)-digit figure, i.e., a warrant shall not be more than
P999.999M. The request shall be submitted by the head of office not later than
June 20, 1986 covering the period July 1 to December 31, 1986, indicating
the monthly breakdown by agency, special hospitals, RO, RHO, PHO and
operating unit (OU); by fund, allotment and object class of expense as bases
for OBM to prepare the funding treasury warrant using the attached format
(Annex "B"). The request shall be supported by a list showing the details of
allotment class by PPA. It shall also include the amount needed to pay prior
years' accounts payable and unpaid obligations of the 1st semester of CY 1986.

OBM shall forward to PNB, Escolta the funding treasury warrants

including the list of pilot ministries/ROs concerned (Annex "C").

4.8 Based on agency requests, the funding treasury warrants shall be issued
monthly by OBM for deposit to the Combo/Current Accounts of the pilot
ministries/agencies/hospitals to finance their operations including the payment of
prior years' accounts payable in accordance with the Memo of Agreement
Between OBM and PNB.

4.9 OBM shall furnish the BTR with a daily list of all treasury warrants issued
showing the Ministry/agency/office and the respective agency and fund codes as
well as the details the object class of expenditures.

4.10 BTR shall open an account current for the OBM covering funding warrants issued
for the pilot ministries.

4.11 The ACOs shall establish Combo Account for their operational expenses with
the PNB/LBP effective July 1, 1986. The AROs/RHOs/PHOs on the other
hand, upon receipt of the credit advice from the PNB shall, likewise, open
Cash and current accounts. The Combo Account shall be used for the
operations of the AROs/RHOs/PHOs while the current account shall be for
transmission /distribution to OUs thru bank transfers to Regional Hospitals,
Medical Centers, Sanitaria and District Hospitals in the case of MOH. In the
case of MLG, the current account shall be distributed to the provincial/City
Offices thru the issuance of a funding commercial check as cash advance.
 4.12 OBM shall directly notify the ACOs, AROs, RHOs and PHOs of the monthly
funding warrant deposited in favor of their respective Combo/Current
Accounts using the format shown in Annex "D" - Notice of Funding Warrant
Issued (NFWI).

4.13 AROs, RHOs, and PHOs shall request their respective depository banks to
make the necessary bank transfers from the agencies' Current Account to the
respective bank accounts of OUs. The distribution shall be based on the list
furnished the banks. Where there are no PNB Branches, funding commercial
checks shall be issued by the AROs, RHOs, and PHOs to the OUs.

4.14 Initial deposit for July, 1986 shall cover one(1) month requirement of the pilot
ministries/agencies/offices. The funding requirement for the month of August,
1986 shall be issued automatically by OBM, ten (10) days before the start of
the month. Thereafter, the issuance of the monthly funding warrant shall
depend on the submission of the Monthly Status of Fund (Format shown in
Annex "E") by the agencies as follows:

Date Funding Month Covered Date OBM

Period Covered by
Warrant Should be By the Monthly Should Received
Funding Warrant
forwarded to PNB Status Report Report

June 20, 1986 July, 1986 - -

June 20, 1986 August, 1986 - -

on or before Aug. 15,
August 20,1986 September, 1986 July, 1986
1986
on or before Sept.
September 20, 1986 October, 1986 August,1986 Report
15, 1986

4.15 ACOs, AROs, RHOs and PHOs shall issue commercial checks in numerical
sequence to cover their operational requirements chargeable against the Combo
Account. Separate series of commercial checks shall be used for the old set of
books and the new set of books pursuant to Joint Circular No. 1-86 dated March
30, 1986 as mended.

4.16 The Combo Accounts shall have such minimum cash balances as may be
required in accordance with the Memorandum of Agreement executed between
the OBM, PNB/LBP.

4.17 All Collections including refund of cash advance shall be deposited with BTR.

5.0 Responsibilities

5.1 The Pilot Ministries/Offices shall:

a. Accomplish the signature cards required by the servicing/depository

banks.
b. Close all treasury disbursement account balances as of June 30, 1986 in
coordination with the BTR and COA.

c. Comply with the requirements of the servicing banks regarding the

maintenance and operation of the Combo Account.

d. Record the deposits made by OBM in their Combo Accounts based on

the bank's credit advice as confirmed by the OBM's Notice of Funding
Warrant Issued (NFWI).

e. Issue commercial checks to pay current year obligations and prior years'
accounts payable within the limits of the balance available in their
respective Combo/Current Accounts.

f. Maintain Journal of Checks Issued for commercial checks drawn against

the Combo/Current Accounts.

g. Request OBM for the issuance of funding warrant supported by the

Monthly Status of Funds.

h. Prepare inventory re port of unused blank TCAA checks and Treasury

Warrants Type 'B' as of June 30, 1986 by listing therein the inclusive
serial numbers of the unused blank TCAA checks and TW Type 'B' to be
certified by the custodian and verified by the COA Unit Auditor. This
report shall be prepared in four (4) copies to be distributed as follows:

Original - COA Unit Auditor

Duplicate - Special Clearing Division (SCD) BTR
Triplicate - Administrative Service (AS) BTR
Quadruplicate - Pilot Ministries/Offices File

i. Dispose of the unused blank TCAA checks and Treasury Warrant Type
'B' in accordance with the procedure prescribed under Joint COA-
MOF-OBM Circular No. 7-81 and Treasury Memorandum Circular No. 8-
73. A certificate attesting to the disposition of the aforesaid TCAA
checks and TW shall be prepared in four (4) copies to be distributed as
follows:

Original - COA Unit Auditor

Duplicate - Special Clearing Division, BTR
Triplicate - Administrative Service, BTR
Quadruplicate - Pilot Ministry/Office File

j. Furnish BTR (Fiscal Management Division) a copy of the Monthly Status

of Funds.
 k. Require all Deputized Disbursing Officers (DDO) to surrender
deputation appointments to Treasury Provincial Fiscal Examiners
(TPFE) concerned and request cancellation of deputation of signing
and countersigning officials.

l. Furnish a copy of the Certificate of Last TCAA check and TW issued as of

June 30, 1986, to the TPFE concerned and Special Clearing Division,
BTR as well as COA Unit Auditor.

m. Submit the monthly bank reconciliation statement and other required

accountability reports and related financial statements.

n. Furnish the Bank daily or as often as necessary as "Agency Advice of

Commercial Checks Released and Checks Cancelled" in two (2) copies,
and in accordance with the format hereto attached as Annex "F".

5.2 The Central Office Chief Accountant/Budget Officer shall:

a. Record the usual release of allotment without CDC of agency central

office only upon receipt of the AA.

b. Inform the cashier of all deposits made to the ACO Combo Account upon
receipt of the NFWI. The PNB credit advice shall be the basis for taking
up the deposit in the Combo Account.

c. Maintain control records for ARO allocations on allotments and funding

warrants received.

d. Record the expenditures in the JAO.

e. Record the issuance of commercial checks for payments of expenditures

upon receipt of the Reports of Checks Issued from the Disbursing
Officer. For complete accounting entries, refer to Annex "A".

f. Prepare the ACO Monthly Status of Fund (Annex "E") as basis in the
issuance of funding warrant for deposit to the Combo Account.

g. Prepare the Consolidated Monthly Status of Fund for submission

to OBM.

h. Submit within fifteen (15) days before the end of the month the request
for issuance of Funding warrant supported with the Monthly Status of
Fund.

i. Deposit and require, at year-end, all regional offices to deposit direct to

the BTR the cash in bank pertaining to the unobligated allotment as of
December 31 of each year as shown in the illustrative accounting
entries (Annex "A"). The deposit shall be covered by remittance advice.
 j. Notify OBM of the year-end deposits made in item 5.2(i) by furnishing a
copy of the covering disbursement voucher.

k. Prepare consolidated year-end trial balance for submission to fiscal

agencies.

5.3 The AROs/RHOs/PHOs Chief Accountant/Head of Accounting Unit/ Budget

Officer shall:

a. Record only the Allotment Advice received without CDC.

b. Record in the proper Journals the AROs/RHOs/PHOs allocations

including those for the OUs under coverage immediately upon receipt of
the NFWI. He shall likewise record, in the subsidiary ledgers the
allocation for each OU as well as disbursements made against said
allocation.

c. Open 2 Bank Accounts upon receipt of the credit advice from the PNB
branch as follows:

c.1 Combo Account for the AROs operations thru the use of account
8-70-307.

c.2 Another Current Account for OU's operations using account 8-70-
308 to be supported by sub-sheets/subsidiary ledgers
representing the different OU's under coverage.

d. Record funding check as cash advance if recipient OUs do not maintain

complete sets of books. For OUs with complete sets of accounting books,
the obligate/liquidate procedure prescribed under B.C. No. 249 dated
September 5, 1975 shall apply. The usual reports in the liquidation of
cash advance shall be required. The applicable accounting entries for
these transactions are shown in Annex "A".

e. Submit to the ACO a copy of the Monthly Status of Funds for

consolidation.

f. Request fifteen (15) days before the end of the month the issuance of
monthly funding warrant from OBM duly supported with the original
copy of the Monthly Status of Funds.

g. Deposit to the BTR balances of cash in bank pertaining to the unobligated

allotments as of December 31 of each year including those balances
returned by the OUs in accordance with the illustrative accounting entries
prescribed in Annex "A".

h. Notify OBM of the year-end deposits made in item 5.3 (g) by furnishing a
copy of the covering disbursement voucher.
5.4 The Philippine National Bank (PNB)/Servicing Banks shall:

a. Effect the opening of the Combo/Current Accounts for the

offices/operating units of the pilot ministries consistent with the terms of
the Memorandum of Agreement with OBM using as basis the attached
format (Annex "G").

b. Notify thru credit advices the agencies, bureaus, or offices concerned

of the deposits made by OBM in favor of their Combo/Current Accounts.

c. Acknowledge receipt of all deposits made by OBM for the Combo/Current

Accounts.

d. Service the Combo/Current Account transactions of the pilot ministries.

e. Render 10 days of the following month the bank statements to the pilot
agencies, copy furnished the BTR, SCD.

5.5 The Office of Budget and Management shall:

a. Accomplish the specimen signature cards required by the BTR and the
PNB/Servicing banks.

b. Determine the monthly funding requirements of the pilot

ministries/agencies in undertaking their programs/projects/activities
including the payment of accounts payable using the Request for
Funding Requirements (Annex "B") as basis in the preparation of the
initial funding treasury warrants.

c. Requisition blank treasury warrants from the BTR and issue monthly
funding warrants for deposit to the Combo/Current Accounts using the
prescribed agency and fund codes.

d. Issue within ten (10) days before the start of each month the funding
warrants to the credit of the Combo/Current Accounts of pilot
ministries/agencies based on actual needs.

e. Submit reports as may be required by the BTR.

f. Issue the necessary agency and fund codes to the MLG AROs.

g. Post the appropriate bonds for OBM officials authorized to sign and
countersign treasury warrants.

h. Maintain appropriate books and records.

i. Prepare treasury reconciliation statements and other related reports

on the status of the treasury disbursements for the pilot ministries.
 j. Submit copy of Monthly Report of Accountability of TWs - General Form
16 A to the COA Auditor copy furnished the SCD-BTR.

5.6 The Bureau of the Treasury shall:

a. Provide fund for all treasury warrants issued by OBM for the operation of
pilot agencies.

b. Check the paid funding warrants against the Monthly Bank Statements
submitted by the bank branches.

c. Reflect as a footnote in the National Treasury Daily Cash Statement,

the bank balances of the accounts of pilot ministries/offices.

d. Consolidate the agency balances shown in the Monthly Status of Fund

by object of expenditures for the purpose of reflecting the actual
payments made by the pilot ministries against the funding warrants.

e. Report to OBM any discrepancy found between the original funding

warrant and its duplicate furnished the BTR.

f. Notify OBM whenever free cash balances of the treasury with the Central
Bank of the Philippines are relatively low.

g. Dishonor TWs not reported by OBM.

h. Submit monthly to NAO the statement of Account Current for funding TW

issued to pilot ministries/agencies/offices.

5.7 The Commission on Audit shall:

a. Confirm fund releases made to the agencies, special hospitals, ROs,

RHOs, and PHOs.

b. Ensure the expenditures charged against the Combo Account are in

accordance with the program/project/activity authorized under the
General Appropriations Act.

c. Assure the prompt preparation, submission and verification of the

treasury/bank reconciliation statements.

6.0 Penal Clause

The signing and countersigning officials of the ministries/agencies shall

be jointly and severally liable for all checks issued in excess of the authorized minimum
balance of the Combo Account.
7.0 Repealing Clause

Provisions of circulars, memoranda and/or regulations inconsistent herewith are

hereby revoked on modified accordingly.

8.0 Effectivity

This Circular shall take effect on July 1, 1986.

(SGD.) JAIME V. ONGPIN (SGD.) ALBERTO G. ROMULO

Minister of Finance Minister of the Budget

(SGD.) TEOFISTO T. GUINGONA, JR.

Chairman
Commission on Audit

CONCURRED IN:

(SGD.) VICENTE R. JAYME

President
Philippine National Bank