Commission on Audit

Regional Office No. V

Local Government Sector

AUDIT PROGRAM FOR CASH ADVANCES

Calendar Year 2016

Criteria: 1. Section 89 of PD 1445 Section 9.3.3.2

No cash advance shall be given unless for a legally State in the affidavit the violation of the provisions of Section 89 of PD
authorized specific purpose. A cash advance shall be 1445 and the penal provisions under Section 128 of the same law,
reported on and liquidated as soon as the purpose for both of which are herein quoted in full to wit:
which it was given has been served. No additional cash
advance shall be allowed to any official or employee unless "Section 128. Penal Provision. - Any violation of the provisions of
the previous cash advance given to him is first settled or a Sections xx 89, xx of this code or any regulation issued by the
proper accounting thereof is made. Commission implementing these sections, shall be punished by a fine
not exceeding one thousand pesos or by imprisonment not exceeding
2.COA Circular No. 97-002 date Feb. 10, 1997 six (6) months, or both such fine and imprisonment in the discretion of
Section 4.1.7- the court." (Underscoring ours).
The cash advance shall be used solely for the specific legal
purpose for which it was granted. Under no circumstance 3. Applicable Policies on Cash Management
shall it be used for encashment of checks or for liquidation ●The highest standards of honesty, objectivity and consistency shall
of a previous cash advance. be observed in the keeping of accounts to safeguard against
Section 5.1.3 inaccurate or misleading information
Failure of the AO to liquidate his cash advance within the
prescribed period shall constitute a valid cause for the ● In relation to the keeping of cashbook, the AO shall reconcile
withholding of his salary and the instruction of other her/his cashbook entries with the accounting records at least
sanctions as provided for under paragraphs 9.2 and 9.3 quarterly.
hereof.
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 Section 5.3 4. Crime of Malversation of funds or property includes the ff.
Within ten (10) days after receipt of the report and offenses under the Revised Penal Code:
supporting documents from the AO, the Accountant shall
verify the report, record it in the books and submit the same 4.1 Malversation by appropriating, misappropriating or permitting
with all the vouchers/payrolls and supporting documents to any other person to take public funds or property (Art. 217);
the Auditor. The cash advance shall be considered
liquidated upon the recording thereof by the Accountant in 4.2 Failure of accountable officer to render accounts (Art. 218);
the books of accounts although not yet audited by the COA
auditor. 4.3 Illegal use of public funds or property (Art.220); and
Section 8.
In shall be the responsibility of the Head of the Agency to 4.4 Failure to make delivery of public funds or property (Art. 221)
ensure the proper granting, utilization and utilization of all
cash advances in accordance with these rules and 4.5 COA/DBM/DILG/GCG-DND Joint Circular No. 2015-001
regulations.

AWP Estimated Actual

Audit Risk Audit Objectives Audit Procedures Ref. Staff Assigned Mandays Mandays
1. The risk that the 1.1 To establish the 1.1 Secure copy of the following
balances of the accuracy of balances documents:
cash advance of the cash advance
accounts are not accounts in the 1. DVs for Cash Advances
accurate in the GL general ledger 2. Check Disbursement
and SL accounts. account and the Journal (CkDJ), Report of
subsidiary ledger Disbursement (RD), Cash
accounts. Disbursement Journal
(CDJ)

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 3. GL and SL of Cash-
Disbursing Officer and
Due from Officers and
employees accounts.

1.2 Trace the cash advances

from the DVs to the CkDJ
and to the general and WP-CA#1
subsidiary ledger accounts.

1.3 Compare the balance of the

general ledger accounts with
the balances of the
subsidiary ledger accounts.
Investigate differences, if
any.

1.4 Prepare AOM for the

differences/deficiencies
noted.

2. The risk that the 2.1 To establish the 2.1 Conduct post audit of the
granting of cash regularity and DVs/JEVs for cash
advances is propriety of the grant advances.
WP-CA#2
improper/irregular of cash advances.
and accounting is 2.2 Determine/Evaluate whether
inappropriate. 2.2 To determine the the granting of cash advance
appropriateness of the is in accordance with the
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 accounting entries.. existing laws, rules and
regulations. Prepare an
Analysis WP for this with
Attributes/Criteria.

2.3 Look into the appropriateness WP-CA#3

of the items accounted for as
cash advances per
DVs/JEVs. Take note of
those items that are not to be
accounted as cash
advances, if any. Reclassify
to the appropriate accounts.

2.5 Prepare AOM/corresponding

Notices of Suspensions & WP-CA#4
Disallowances for the
deficiencies noted.

3. The risk that the 3. To establish the 3.1 Conduct post audit of the
disbursement by regularity of DVs for cash
cash of cash disbursements by payments/payrolls and Cash
advance is irregular cash of cash advance. Disbursement Journal (CDJ).

3.2 Trace the cash payments

from the DVs to the CDJ and
to the general and subsidiary
ledger accounts.
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 WP-CA#5
3.3 Compare the balance of the
general ledger accounts with
the balances of the
subsidiary ledger accounts.
Investigate differences, if
any. WP-CA#6

3.4 Determine/Evaluate whether

the disbursement by cash of
cash advance is in
accordance with the existing
laws, rules and regulations.
Prepare an Analysis WP for
this with Attributes/Criteria.

3.5 Prepare AOM/ Credit

Notice/corresponding Notices
of Suspensions &
Disallowances for the
deficiencies noted.

4. The risk that the 4. To establish the 4.1 Secure and review the copy
cash balance existence and amount of the following documents:
appearing in the of unexpended
cashbook and the balance of the Cash 1. Schedule of Unliquidated
ledger are not Advances of Cash Advances
accurate and Disbursing Officer and 2. SL of Cash Advances
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reconciled Official/Employee and 3. Cashbook
its agreement with the
cashbook and 4.2 Based on the Schedule
subsidiary account. prepare a confirmation and
demand letter to Accountable
Officers, particularly those
with large balance of
unliquidated cash advances.
WP-CA#7

4.3 Compare the confirmed

balance of cash advances
with the balance per
Schedule and its agreement
with the cashbook and SL.
In case of discrepancy,
investigate the cause/s.
WP-CA#8
4.4 Prepare an Aging Schedule of
Cash Advances classified by
account and by Accountable
Officer, with the indicated
purpose.
WP-CA#9
4.5 Verify causes of the
accumulation of outstanding
cash advances and for non-
liquidation of the same.

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 4.6 Prepare AOM/ Credit
Notice/corresponding Notices of
Suspensions & Disallowances for
the discrepancy/deficiencies
noted.

5. The risk that To determine whether 5.1 Secure cash advance

additional cash additional cash advances vouchers for Confidential
advances were were granted in and Intelligence Fund;
granted not in accordance with the RCI.
accordance with the guidelines.
guidelines 5.2 Secure Transmittal Letters
prescribed in of the Liquidation Report
COA/DBM/DILG/G of the previous cash
CG-DND Joint advances duly stamped
Circular No. 2015- “received” by the ICFAU.
001.
5.3 Determine that additional
cash advances were
supported with
certification of the
Accountant that the
Special Disbursing Officer
(SDO) has no unliquidated
CF/IF cash advances.

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 5.4 Determine whether the
recorded liquidation was
based from the Credit
Notice issued by the
ICFAU

5.5 Prepare AOM for the

deficiencies noted.

Prepared by: Reviewed by:

Date: Date:

REMINDER FOR AUDITORS:

COA Circular No. 97-002 date Feb. 10, 1997
Section 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 the AO to inform the latter
of the amount allowed in audit and any suspensions and/or
disallowances made. In case of disallowance, a copy of the Credit
Notice shall be furnished the Accountant who shall record the restoration
of the cash advance for the amount disallowed. The amount allowed in
audit by the Auditor as contained in the Credit Notice shall be deemed to
have been settled.

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