Updates on Accounting and Auditing Rules and Regulations GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT RESOURCES SEMINAR/WORKSHOP Updates on Accounting and Auditing Rules and Regulations Lourdes M. Castillo Assistant Commissioner Government Accountancy Sector Commission on Audit Delivered during the GACPA Seminar at Prince Plaza Hotel, Baguio City February 6-8, 2013

COA Circular No. 2012-001 dated June 14, 2012 “Prescribing the Revised Documentary Requirements for Common Government Transactions”

COA Circular No. 2012-004, dated November 28, 2012 “Demand for the Immediate Liquidation and Settlement of All Cash Advances Outstanding as of December 31, 2011”

COA Circular No. 2013-002, dated January 30, 2013 “Adoption of the Revised Chart of Accounts for National Government Agencies”

COA Resolution No. 2013-007, dated January 29, 2013 “Adoption of the Philippine Public Sector Standards of Auditing”

Permanent Committee (COA-DBM-DOF) Joint Circular No. 4-2012, dated Sept. 11, 2012 “Rules and Regulations Implementing Executive Order No. 431 dated August 30, 2005, Directing the Reversion of All Dormant Accounts, Unnecessary Special Trust Funds to the General Fund and For Other Purposes”

National Budget Circular No. 546, dated January 17, 2013 “Rules and Regulations on the Grant of Representation and Transportation Allowances”

COA Circular No. 2012-001, dated June 14, 2012 Prescribing the Revised Documentary Requirements for Common Government Transactions

OUTLINE Fundamental Principles – PD 1445 General Requirements for all Types of Disbursements Specific Requirements for Each Type of Disbursement Cash Advances Fund Transfers to NGOs/Pos Fund Transfers to Implementing Agencies/From Trust Fund to Gen Fund for Unspent Balance Salary

OUTLINE Allowances, Honoraria and Other Forms of Compensations Other Expenditures Extraordinary and Miscellaneous Expenses Prisoner’s Subsistence Allowance Procurement Cultural and Athletic Activities Human Resource Development and Training Program Financial Expenses Road Right-of-Way (ROW)/Real Property

Fundamental Principles, Sec. 4, P.D. 1445 No money shall be paid except in pursuance of an appropriation law or other specific statutory authority Use solely for public purpose Trust funds only for the specific intended purpose Fiscal responsibility shared by all those exercising authority over finance, transactions and operations Disbursements or dispositions should bear approval of proper officials Claims should be supported with complete documentation Faithful adherence to all pertinent laws and regulations Observance of GAAP and practices as well as sound management and fiscal administration, provided they do not contravene with existing laws and regulations

General Requirements for All Types of Disbursements Certification of Availability of Fund by Chief Accountant Lawful and sufficient allotment duly obligated as certified, except for GOCCs and GFIs Legality of transaction and conformity with laws, rules and regulations Approval of expenditure by Head of Office or authorized representative Sufficient and relevant documents to establish validity of claim

1.0 Cash Advances General Guidelines –COA Circs. 97-002, 2009-002, Sec. 89 of PD 1445, pertinent GAA provisions Specific Guidelines and Documents Required Types of Cash Advances (Payroll Fund, PCF, Field/Activity COE, TA (local and foreign) Granting of Cash Advance General Guidelines Documents Required Common to All CAs except for travel Additional Documents per type of Cash Advance Liquidation of Cash Advances

2.0 Fund Transfers to NGOs/POs General Guidelines – pertinent provision of the GAA for the year, Sec. 4.5.6 COA Circular 2007-001 and GPPB Res. 12-2007 Specific Guidelines and Documentary Requirements Release of Funds Implementation and Liquidation of Funds Released Staggered Release of Funds to NGO/PO

3.0 Fund Transfers General Guidelines – COA Cirular 94-013, COA Memo 2010-014 Specific Guidelines and Documents Required Transfer to Implementing Agencies Transfer Implementation and Liquidation by Implementing Agency Liquidation by Source Agency From Trust Fund to General Fund for Unspent/Excess Amount

4.0 Salary General Guidelines- 35 FY2012 GAA or pertinent provision of the GAA for the year, RA 6758 as amended (Pres. Veto message, 020810,p. 1236, RA 9970) Specific Guidelines and Documents Required -Sec.325, RA 7160 LGU Code, EO 292, CSC MC 14 s. 1999, CSC Res. 02-1490, COA Cir 2000-006, DBM Local Budget Circular 2009-91, DBM National Compensation Circular 67, s. 1992, CSC Circular 06, s.2005, etc. Individual Claims First Salary Salary (if deleted from the payroll) Salary of Casual/Contractual Personnel Salary Differential due to Promotion and/or Step Increment Last Salary Salary due to heirs of deceased employee Maternity Leave General Claims through the ATM

5.0 Allowances, Honoraria and other Forms of Compensation General Guidelines Specific Guidelines and Documents Required Personnel Economic Relief Allowance Representation and Transportation Allowance (for individual and general claims) Clothing/Uniform Allowance (Individual and General claims Subsistence, Laundry and Quarters Allowances Productivity Incentive Allowance (individual and general claims) Special Counsel Allowance Honoraria Personnel Involved in Government Procurement Teaching Personnel (DepED, TESDA, SUCs and other educational institutions) Governing Boards of Collegial Bodies Lecturer/Coordinator Special Projects Science and Technological Activities

Other Expenditures General Guidelines – Sec. 57, 2012 GAA or pertinent provision of the GAA for the year, Sec 43, Chapter 5 and 80, Chapter7, Book V1 EO 292, Sec 58, 2012 GAA, etc. Specific Guidelines and Documents Required Utility Expense Telephone/Communication Services

Extraordinary and Miscellaneous Expenses General Guidelines – Sec. 57, 2012 GAA or pertinent provision of the GAA for the year, Sec 43, Chapter 5 and 80, Chapter7, Book V1 EO 292, Sec 58, 2012 GAA, etc. Specific Guidelines and Documents Required Utility Expense Telephone/Communication Services

Prisoner’s Subsistence Allowance General Guidelines –Item 1 and 2, Special Provision for BJMP and Bu Cor, 2012 GAA or pertinent provisions for the year Specific Guidelines and Documents Required By administration thru cash advance By catering contract

Procurement General Guidelines ( RA 9184, Sec 85 2012 GAA or pertinent provisions of GAA for the year), Sec 85 2012 GAA or pertinent GAA provision for the year, Sec. 7 IRR of RA 9184, Sec 7, RA 9184, Rule XVI Revised IRR RA 1984, Sec. 13.1, RA 1984; Specific Guidelin, es and Documents Required Procurement thru Public Bidding – GAA for the year, Sec. 2-7, 9-10 and 12 of EO 182 s. 1997 and Sec. 87 of GAA 2012, COA Circular 2009-001, 2005-0087 Infrastructure Advance Payment Variation Order/Change Order/Extra Work Order Progress Payment Final Payment Release of Retention Money Consulting Services – Annex E Revised IRR RA 9184, Annex D. COA Memo 2005-027 Goods- RA 9184, Sec 5r Revised IRR, 2012 GAA Provisions, Sec. 20 Supplies, Materials, Equipment and Motor Vehicles General Support Services (janitorial, security, maintenance, garbage collection and disposal and similar services) Rental Contracts Repair and Maintenance of Aircraft, Equipment and Motor Vehicles Advertising Expenses Procurement thru Alternative Modes – COA Cir. 2009-001, RA 9184 pertinent provisions Requirements Common to all alternative modes Specific requirements Limited Source Bidding Direct Contracting Repeat Order Shopping Negotiated Procurement Procurement thru Automatic Debit Arrangement or direct payment

Cultural and Athletic Activities General Guidelines – Sec 25 of GAA 2012 or pertinent provision of GAA for the year Documents Required Budget estimates approved by the Head of Agency Same requirements under procurement depending on the nature of expense and the mode of procurement adopted

Human Resource Development and Training Program General Guidelines – CSC Guidelines Sec. 27 2012 GAA and pertinent provisions of the GAA for the year Documents Required Budget estimates approved by the Head of Agency Schedule of the training approved by the Head of the Agency Same requirements under procurement depending on the nature of expense and the mode of procurement adopted

Financial Expenses General Guideline – appropriate provision of the New Government Accounting System and other pertinent laws, rules and regulations Documents Required Loan Agreements/Memoranda of Agreement together with supporting documents Statement of Accounts Bank Debit Memos Others necessary depending on the nature of the transactions

Road Right-of-Way/ Real Property General Guidelines – RA 8974 and its IRR Documents Required Land – Sec.8 RA 8974 on Environment Clearance Certificate Negotiated Purchase If Registered land If Unregistered land –EO 1035 on Claimant’s Surety/Indemnity Bond For Payment by Court Decision Structure/House Improvements (trees, plants, growing fruits, etc.) – DENR rules and regulations

COA Circular No. 2012-004, dated November 28, 2012 “Demand for the Immediate Liquidation and Settlement of All Cash Advances Outstanding as of December 31, 2011”

Addressed to the following: All Heads of National Government Departments, Bureaus and Agencies; Provincial Governors, City/Municipal Mayors; Managing Heads of Government-owned and/or Controlled Corporations; All Treasurers, Finance Officers, Regular and Special Disbursing Officers, and Other Accountable Officials of the aforesaid Government Agencies; COA Directors, Regional Directors, and Heads of Auditing Units, and All Others Concerned

Rationale As a general rule, cash advances must be liquidated within the prescribed periods depending on the nature and purpose of the cash advance: Salaries and wages Petty and field operating expenses Local travel and foreign travel Honoraria and similar payments to officials and employees Expenses for special projects/activities such as anniversary celebration Cultural and athletic activities The above cash advances must be liquidated within twenty (20) days from the accomplishment of the purpose.

Settlement and Liquidation of Cash Advance A cash advance is settled and liquidated either by: Returning the money advanced if unspent, Or by the presentation of regularly accomplished vouchers, giving satisfactorily detail of the items thereon paid which must be in accordance with the purpose for which the cash advance was granted, and further supported by proper receipts and other evidence of payment, subject to the result of the post-audit thereof by the auditor concerned.

Primary responsibility of Heads of Agencies Section 2 of Presidential Decree (P.D.) No. 1445, the Government Accounting Code of the Philippines, places the responsibility to faithfully take care that government funds and property be safeguarded from wastage directly with and primarily on the chief or head of the government agency concerned

Legal presumption against non-liquidation of cash advance Article 217 of the Revised Penal Code states in unequivocal terms that: “The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use.”

Final demand to settle unliquidated cash advance Final notice and demand is hereby made to all concerned to settle and liquidate all outstanding cash advances as of December 31, 2011, on or before January 31, 2013. Provided, however, that those who have been issued by the Commission on Audit notice and demand, prior to the issuance of this Circular, to settle and liquidate their cash advances within a specified period, shall do so within the period specified in the said notice.

An accountable officer refers to: A public officer or employee who, in the discharge of his office, receives money from the government which he is bound to later account for. Transfer, separation or retirement from the government does not operate to discharge the said person from coverage of the definition and corresponding duty to account for the unliquidated advances.

This Circular shall serve as the demand required under appropriate law, rules and regulations to settle the accountable officer’s unliquidated cash advance as well as all those who are already separated from the service or have transferred to other agency.

Duties of Agency officials: On or before December 15, 2012, all heads of government agencies shall disseminate in writing this Circular to all Accountable officials and employees within their respective agencies and serve a written notice to and demand settlement of the outstanding cash advances as of December 31, 2011. The Chief Accountant shall, within the same period, furnish the head of agency and the head of the auditing unit thereat a list of accountable officers with unliquidated and outstanding cash advances.

Duties of the Commission on Audit: Ensure that the outstanding cash advances are liquidated within the specified periods Shall Evaluate the cash advances of Accountable Officers to determine compliance with pertinent COA Rules and Regulations and to report violations thereof Shall report on or before February 28, 2013 to the agency head and to the Director, FAIO, compliance with this Circular including the ageing of the cash advances showing the purpose and other information Submit to the respective COA Directors the vouchers and all supporting documents relative to the grant of the cash advance, copy furnished the COA Chairperson

Consequences of failure to liquidate Failure of an accountable officer to liquidate his outstanding cash advance on or before January 31, 2013 shall constitute cause for the filing of malversation charge under Article 217, failure to liquidate cash advance under Article 218, both of the Revised Penal Code or criminal prosecution under Section 128 of P.D. 1445. The suspension of salaries of the accountable officers shall be ordered by the auditor concerned to the propers agency official through the head of the Agency. Appropriate administrative proceedings shall likewise be instituted.

COA Revised Chart of Accounts for National Agencies Legal Basis: COA Circular No. 2013-002 Dated January 30, 2013 Effectivity: January 01, 2014

Objectives: To provide new accounts for the adoption of the Philippine Public Sector Accounting Standards (harmonized with IPSAS) To provide uniform accounts for national government accounting and budget systems to facilitate the preparation of harmonized financial and budgetary accountability reports To expand the account code from three (3) digits in the NGAS Chart of Accounts to eight (8) digits, to allow expansion or creation of new accounts as may be necessary to implement new standards or policies.

The COA Revised Chart of Accounts is integrated in the Unified Account Code Structure (UACS) under the Philippine Public Financial Management (PFM) Reform Program jointly undertaken by DBM, DOF and COA.

Major Changes Coverage is limited only to all national government agencies Expanded account code structure - from three (3) digits to eight (8) digits

Account Code Structure

Account Groups: Codes are assigned to account groups to facilitate location of accounts in the general and subsidiary ledgers, to provide systematic arrangement and classification of accounts and facilitate preparation of the consolidated financial reports as follows: Code Account Groups 1 Assets 2 Liabilities 3 Equity 4 Income 5 Expenses

Asset Without Contra Account Ex. Cash, Collecting Officer

Asset Without Contra Account Ex. Accounts Receivable

Major Changes New Accounts were provided for the implementation of the Philippine Public Sector Accounting Standards

New Accounts Example

Major Changes Some accounts were deleted since these accounts are for use by local government units or government-owned and/or controlled corporations while other accounts are no longer applicable to national government agencies.

Deleted Accounts Example

Major Changes Some accounts were either expanded or compressed. For instance, expense accounts for repairs and maintenance and depreciation of property, plant and equipment which were previously presented per asset account were compressed based on the major account classification.

Compressed Accounts Example

Expanded Account Example

UNIFIED ACCOUNTS CODE STRUCTURE (UACS) DRAFT UNIFIED ACCOUNTS CODE STRUCTURE (UACS) FUNDING SOURCE 6 Digits ORGANIZATION 12 digits LOCATION 9 digits MFO/ PROGRAM, ACTIVITY and PROJECT OBJECT CODE 10 digits Financing Source 1 digit Authorization 2 digits Fund Category 3 digits Department Agency Operating Unit 7 digits Region Province City, Municipality Barangay MFO/PAP Code COA CoA* Object 8 digits Sub-Object 2 digits Required Optional Unique for each Department/Agency Uniform across Government * Chart of Accounts

The Unified Account Code Structure (UACS) Jointly developed by DBM, DOF and COA It is a government-wide coding framework to provide a harmonized budgetary and accounting code classification that will facilitate reporting of actual revenues and collections and expenditures compared with programmed revenues and expenditures, starting fiscal year 2014

The UACS is to be adopted in identifying, aggregating, budgeting, accounting, auditing and reporting the financial transactions of the government. Enhance the quality and timeliness of financial data for the generation of the required reports and analysis of the same. Strengthen financial controls and accountability.

Key Elements of the UACS Funding Source Codes: Six (6) digit code to reflect the Financing Source, Authorization and Funding Category Organization Codes: Twelve (12) digit code to reflect the Department, Agency and Sub-Agency or Operating Unit/Revenue Collecting Unit

Location Codes: Nine (9) digit code to reflect the Region/Province/Municipality/Barangay following the Philippine Standard Geographic Code prescribed by the National Statistical Coordination Board Major Final Output (MFO)/Program, Activity and Project (PAP) codes: Nine (9) digit code to reflect the MFO/PAP codes Object codes: Assets, Liabilities, Equity, Revenues, and Expenses following the COA Chart of Accounts by object and sub-objects provided by BTr, BIR, DOF, BOC and DBM

Executive Order No. 55 dated September 6, 2011 GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT RESOURCES SEMINAR/WORKSHOP Executive Order No. 55 dated September 6, 2011 (Subject of COA Memorandum 2011-020 dated September 6, 2011) Directing the Integration and Automation of Government Financial Management System

Rationale It is the policy of the State to adopt and implement full public disclosure of all its transactions involving public interest and recognize the right of the people to information on matter of public concern as embodied under Section 28, Article II and Section 7, Article III of the 1987 Constitution

“The present administration subscribes to emerging global thrust towards open government and greater budget transparency and accords the highest priority to public sector initiatives that promote transparency, accountability and good governance as contained in the President’s Social Contract with the Filipino people.”

Objectives of Government Integrated Financial Information System (GIFMIS) To facilitate the generation of vital information on any and all aspects of government financial transactions that can be made accessible to the public through I.T., subject to existing laws, Greater participation of civil society organization in fiscal governance, Effective and efficient delivery of public services.

Allow greater financial management and control at oversight and agency levels, Ensure stricter compliance of the budget to appropriation laws and corresponding rules and regulations, Significantly improve Treasury cash management, and Facilitate keeping of general accounts of government and management reporting at various levels of government

The following agencies of the government signed a Memorandum of Agreement (MOA): Commission on Audit (COA), Department of Budget and Management (DBM), Bureau of Treasury (BTr)/Department of Finance (DOF) which created the Steering Committee on Cooperation to Foster the Development of a GIFMIs and implement a Public Financial Management (PFM) Reforms Roadmap and operationalize a Treasury Single Account (TSA)

Philippine Public Financial Management Accounting and Auditing Reforms (AAR) PIU Philippine Public Financial Management Status Report

Philippine Public Financial Management KEY ACCOMPLISHMENTS Priority Area #1 - ACCOUNTING Harmonize PGAS with IFRS and IPSAS 23 Philippine Public Sector Accounting Standards (PPSAS) which are intended for implementation in 2013 are being exposed to various COA sectors and concerned organizations like PICPA, GACPA, AGAP, PAGBA, EUC and PHALGA On-going evaluation of eight comments received from agencies/organizations Five of the 23 PPSASs, PPSAS 5, 13, 17, 29 and 31 were revised as result of the issuance of the 2012 IPSAS Handbook which contains the newly-issued IPSAS 32, Service Concession Arrangements: Grantor dated October 2011

Priority Area #2 - AUDITING Develop Philippine Public Sector Standards on Auditing (PPSSA) COA resolutions to adopt/implement the following were signed by the COA Commission Proper (CP): 24 PPSSAs COA’s Framework of Professional Standards 11 PPSSAs are being finalized and for submission to the CP for approval 18 ISAs/ISSAIs are on-going evaluation for adoption as PPSSAs

National Budget Circular No. 546 dated January 17, 2013 GOVERNMENT ASSOCIATION OF CPAs (GACPA) SUSTAINING ETHICS AND EXCELLENCE IN MANAGING GOVERNMENT RESOURCES SEMINAR/WORKSHOP National Budget Circular No. 546 dated January 17, 2013 “Rules and Regulations on the Grant of Representation and Transportation Allowances”

Salient Features Purpose: Coverage: Issued to prescribe rationalized and updated rules and regulations on the grant of Representation Allowance (RA) and Transportation Allowances (TA) Coverage: Generally, those holding regular and contractual positions entitled to RATA under the pertinent general provisions of the annual GAA Others as authorized and enumerated in the NBC

of Actual Work Performance Authorized Monthly RATA Rates: Highest rate is P14, 000.00 for RA and P14,000.00 for TA Lowest rate is P5,000.00 for RA and P5,000.00 for TA Officials who are assigned or who use government vehicles are not entitled to TA The grant of RATA shall be based on the actual work performance in a month on a pro-rata basis, exclusive of leaves of absence with pay as follows: No. of Workdays of Actual Work Performance Actual RATA for a Month 1 to 6 workdays 25% of the monthly RATA 7 to 12 workdays 50% of the monthly RATA 13 to 18 workdays 75% of the monthly RATA 19 workdays or more 100% of the monthly RATA

For the issued government vehicle, but in some eventful cases were prevented to use it such as when the vehicle undergoes repair and no replacement is provided, the grant of TA maybe allowed on pro-rata bases. RATA for OICs of positions entitled to those allowances maybe allowed but not to OICs of positions internally created organizational units whose staffing are not authorized by DBM Monthly RATA while on concurrent capacity Monthly RATA while on full-time detail or reassignment Monthly RATA while on scholarship/study/training grant

Fund Sources: Effectivity: January 01, 2013 Charged against the agency budgets/appropriations for the purpose for NGAs For GOCCs and GFIs, charged against the corporate operating budgets The reimbursible RATA for those in detail to other government agencies shall be charged against the budgets of the parent agencies Effectivity: January 01, 2013

Thank you!