Revised CASH EXAMINATION
Manual
TABLE OF CONTENTS Page
Chapter I INTRODUCTION
Rationale Legal Bases Scope Definition and Objectives of Cash Examination
1 1 2 2
Chapter II LAWS AND RULES RELEVANT IN C ASH EXAMINATION Responsibility Accountability Liability Collections Remittances/Deposits Dishonored Checks Disbursements Cash Advances Seizure of Office by Auditor Retention of Money for Satisfaction of Indebtedness to Government Constructive Distraint of Property of Accountable Officer
4 5 6 7 9 10 11 12 13 13 13
Chapter III GUIDELINES
Authority Planning Preparation Auditor’s Conduct and Behaviour Timing the Examination Frequency of Cash Examination Simultaneous Cash Count Accountable Officer’s Presence During the Count Sealing of Vault, Safe or Other Cash Receptacles Accountable Officer’s Cashbook/CRR/CDRCkDR or its equivalent Auditor’s Review of Transactions Auditor’s Certificate on the Cashbook/CRR/CDR or its equivalent Prohibition of Incomplete Examination
15 15 15 16 16 16 17 17 17 18 19 19 20
Audit Work Papers Cash Examination Report
20 20
TABLE OF CONTENTS Page
Chapter IV PROCEDURES AND TECHNIQUES Common Procedures and Techniques Specific Procedures and Techniques A. Collecting Officer B. Bank Cashier/Teller/ATM Teller C. Disbursing Officer Reconciliation Statement of Depository Accounts Cash Shortage Seizure of Office by Auditor Constructive Distraint Prosecution of the AO Cash Overage Indemnity From Fidelity Fund
22 24 24 26 27 28 29 29 30 32 33 33
Appendix
1. Illustrative Accounting Entries Annexes
A. Treasury Circular No. 02-2009 – Revised Omnibus Regulations Governing the Fidelity Bonding of Accountable Public Officers B. Notice of Dishonor C. COA Circular No. 97-002 dated February 10, 1997 – Restatement with
D.
E. F. G. H. I. J. K. L. M. N.
amendmentsof of rules and regulations onCOA the Circular granting,No. utilization and liquidation cashthe advances provided for under 90-331 dated May 3, 1990 COA Circular No. 2006-005 dated July 13, 2006 – Amendment to Item 7.1 of COA Circular No. 72-002 dated February 10, 1997 on the granting, utilization and liquidation of cash advances. Report of Cash Examination [General Form No. 74(A)] Internal Control Questionnaire Reconciliation Statement of Accountability Statement of Accountability for Accountable Forms With Money Value Statement of Accountability for Accountable Forms Without Money Value ATM Cash Count Sheet Bank Reconciliation Statement Letter of Demand Withholding Order Warrant of Constructive Distraint of Personal Property
O. Receipt forotherwise Goods, Articles and SeizedAuditing under Authority of Philippines Section 47, P.D. 1445, known as theThings Government Code of the P. Request for Issuance of Hold Departure Order Q. Joint Affidavit
Chapter I
INTRODUCTION RATIONALE Cash is the most liquid asset of an agency. Because of its liquidity, it is so attractive, that it is most susceptible to theft and misappropriation. 1 To guard against the loss of cash through theft or fraud, adequate cash management mechanisms and controls must be in place. Equally important in ensuring effective cash management and protection is the timely exercise of oversight functions through periodic cash examination. Indispensable in carrying out an efficient and methodical examination of the cash accounts of an agency is a handy reference or guide that charts in simple and sufficient detail the procedures required therefor. This revised Cash Examination Manual provides an updated guide that steers the auditors through a sequential and step-by-step cash examination process commencing from planning stage, leading to execution, reporting, and monitoring. It also defines the scope and objectives of the examination. As in its precursor manual, the revised procedures and techniques outlined herein are designed to sufficiently cover each area or activity to be cash examined. Nonetheless, the auditor is not precluded from employing such other procedures and techniques as the circumstances may dictate. In such a case, the auditor is cautioned to exercise sound professional judgment in adopting any additional or alternative cash examination procedures or techniques. LEGAL BASES The Commission on Audit (COA) is constitutionally mandated with the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenues and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including governmentowned or controlled corporations (GOCCs) with srcinal charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under the Constitution; (b) autonomous state colleges and universities; (c) other GOCCs and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. It shall also keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto. 2
1 2
Intermediate Accounting, Vol. 1, 2007 Edition; Robles and Empleo Section 2(1), Article IX-D, 1987 Constitution
The Constitution further vests on the Commission the exclusive authority to define the scope of its audit and examination, establish the techniques and methods required therefor, and 3 promulgate accounting and auditing rules and regulations. SCOPE This revised manual shall be followed and applied in the examination of the cash and accounts of all accountable officers (AOs) of all government agencies. DEFINITION AND OBJECTIVES OF CASH EXAMINATION Cash Examination Defined
Cash examination is an audit technique whereby an authorized examiner of cash and accounts inquires into the correctness and physical existence of the balance of cash in the custody of an AO, the validity of his/her cash tr ansactions, the reliability of the cash records and his/her conformance with prescribed procedures. 4 Objectives of Cash Examination
The entire cash examination process involves a comprehensive review that aims to provide an overall determination of whether 1. all government funds in the hands of an AO are actually existing and properly accounted for; 2. transactions; the agency and its AOs are adhering strictly to prescribed rules and regulations on cash and 3. the agency’s practices and procedures provide adequate safeguards against fraud and losses of government funds. Moreover, cash examination seeks to establish what the AO has and what he should have at the time of the examination. It specifically aims to 1. establish the actual existence of cash in the custody of the AO as well as the validity of the cash items presented; 2. determine whether all monies received had been correctly recorded and fully accounted for in accordance with laws, rules and regulations; 3. ascertain whether disbursements are valid, duly authorized, actually paid and properly recorded;
3 4
Section 2(2), Ibid Handbook on Cash Examination, November2002, ProfessionalDevelopment Center, Commission onAudit
2
4. prove the accuracy of the cash balance reflected in the ledger, cashbook 5, cash receipts record (CRR) 6, check disbursements record (CkDR) 7, cash disbursements record 8 9 (CDR) , or their equivalents, such as cash receipts register (CRR) , petty cash register 10 11 (PCR) , cash disbursements register (CDR) , and individual daily proof sheet and transaction sheet, daily cash in vault summary report, cash flow report for cash on hand-in vault and automated teller machine (ATM) and detail transaction request report for banks; and 5. verify if accountable forms are duly accounted for.
5
Cashbook for Cash in Treasury shall be used to record collections (Debit column) and deposits to the bank (Credit column) based on the RCD. The cashbook shall be maintained by the Treasurer by fund and shall be updated and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 26, MNGAS for LGUs, Vol. II). Cashbook for Cash in Bank shall be used to record deposits of collections (Debit column) and withdrawals from the bank thru the issuance of checks (Credit column). The cashbook shall be maintained by bank account and by fund and shall be updated and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 27, Ibid). The accountable officer shall maintain a cashbook for cash advances to record the cash advances received (Debit column) and payments, refunds and adjustments (Credit column) and the balance (balance column). The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 28, Ibid).
6
The Cash Receipts Record (CRR) shall be used by thedesignated collecting officer to record his/her collecti ons and deposits (Section 38, MNGAS for NGAs, Vol. II).
7
The Check Disbursements Record (CkDR) shall be used by the disbursing officer to record checks released charged against NCAs/funding checks received/deposits in a bank current account of government agencies. A separate record shall be maintained for each source of fund (Section 39, Ibid).
8
The Cash Disbursements Record (CDR) shall be used by thedisbursing officer to record the cash advance received and disbursements made out of the cash advance (Section 40, Ibid).
9
The Cash Receipts Register (CRR) shall be used to record as well as monitor collections and deposits of government units (COA Circular No. 2003-006, December 2, 2003; Use of Simplified Accounting Forms for Financial Transactions of Government Units Without Complete Set of Books of Accounts).
10
The Petty Cash Register (PCR) shall be used to record cash advances/replenishments/disbursements for authorized petty and other miscellaneous expenses (COA Circular No. 2003-006, Ibid).
11
The Cash Disbursements Register(CDR) be used to record, monitor and report transactions involving theNo. grant of cash advances/payments charged thereto, and shall liquidation thereof by disbursing accountable officer (COA Circular 2004-003, June 24, 2004; Supplemental Form Prescribed Under COA Circular No. 2003-006 dated December 2, 2003 Re: Use of Simplified Accounting Forms for Financial Transactions of Government Units Without Complete Set of Books of Accounts).
3
Chapter II
LAWS AND RULES RELEVANT IN CASH EXAMINATIONS Responsibility
1. It is the declared policy of the State that all resources of the government shall be managed, expended or utilized in accordance with laws and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the 12 chief or head of the government agency concerned. 2. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of the government 13 agency. 3. The head of any agency of the government is immediately and primarily responsible for all government funds and property pertaining to his agency. Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the 14 government. 4. The head of an agency may designate such number of collecting officers (COs) or agents as may be deemed necessary. They shall render reports of their collections, under the regulations of the Commission, to be submitted promptly to the auditor concerned who 15
shall conduct the necessary examination and audit within 30 days from receipt thereof. 5. When an officer accountable for government funds or property absconds with them, dies, or becomes incapacitated in the performance of his duties, the proper agency head shall designate a custodian to take charge of the funds or property until a successor shall have been appointed and qualified. The agency head may appoint a committee to count the cash and take an inventory of the property for which the officer was accountable and to determine the responsibility for any shortage therein. One copy of the inventory and of the report of the committee duly certified shall be filed with the Commission but the findings of the committee shall not be conclusive until approved by the Commission or its duly authorized representative 16. When a local treasurer or officer accountable for government funds or property absconds with them, dies, or becomes incapacitated in the performance of his duties, the Secretary of Finance, in the case of funds and property of the province, city and municipality, shall 12
Section 4(4), 2, Presidential Decree No. 1445 Section Ibid Section 102, Ibid 15 Section 64, Ibid 16 Section 78(1), Ibid 13
14
4
designate a custodian to take charge of the funds or property until a successor shall have been appointed and qualified. In the case of barangays, the barangay chairman shall designate the custodian. The local chief executive may appoint a committee to count the cash and take an inventory of the property for which the officer was accountable and to determine the responsibility for any shortage therein. One copy of the inventory duly certified shall be filed with the COA or its duly authorized representative but the findings of the committee shall not be conclusive until approved by the latter. 17 If the absconding, deceased, incapacitated, or superseded officer is responsible to another who is accountable, the latter may himself designate the committee or take other lawful 18
measures for the protection of his interest. 6. At the close of each month, depositories shall report to the agency head, in such form as he may direct, the condition of the agency account standing on their books. The head of the agency shall see to it that reconciliation is made between the balance shown in the 19 reports and the balance found in the books of the agency. 7. An AO shall maintain his cashbook/CRR/CDR/CkDR 20 and such other records or their equivalents as may be prescribed by the agency’s operating procedures, and reconcile 21 with the accounting records at least quarterly , unless the agency requires a more frequent reconciliation. 8. An AO, upon ceasing to act in his official capacity as such, shall submit to the auditor of the agency concerned a report of his accountability. Any remaining balance of such accountability shall be deposited in the proper treasury without unnecessary delay. 22 23 s or treasurers of 9. savings Government cashiers are prohibited from association holding positions as cashier and loan associations or any other or organization.
Accountability
10. Every officer of any government agency whose duties permit or require the possession or custody of government funds or property shall be accountable therefor and for the safekeeping thereof in conformity with law. Every AO shall be properly bonded in 24 accordance with law. The fidelity bonds covering government accountability and responsibility of AOs shall be in accordance with the regulations issued by the Bureau of the Treasury (BTr) (Annex
17 18 19
Section 122, Local Treasury Operations Manual Section 78(3), Presidential Decree No. 1445 Section 74, Ibid
20
Sections 38-40, MNGAS for NGAs, Vol. II; Sections 26-28, MNGAS for LGUs, Vol. II; COA Circular No. 2003-006 Section 181, Government Accounting and Auditing Manual (GAAM), Vol. I Section 80, Presidential Decree No. 1445 23 Section 67, GAAM, Vol. I 24 Section 101, Presidential Decree No. 1445; Section 305(f) R.A. No. 7160; Section 50, Chapter 9, Subtitle B, Book V, EO No. 292
21 22
5
A) 25. Copies of the approved fidelity bonds as well as documents subsequently issued for their cancellation shall be furnished to the Auditor. 11. Transfer of government funds from one officer to another shall, except as allowed by law or regulation, be made only upon prior direction or authorization of the Commission or 26 its representative. 12. When government funds or property are transferred from one AO to another, or from an outgoing officer to his successor, it shall be done upon properly itemized invoice and receipt which shall invariably support the clearance to be issued to the relieved or out27
going officer, subject to regulations of the Commission. Liability
13. Expenditures of government funds or uses of government property in violation of law or regulations shall be a personal liability of the official or employee found to be directly 28 responsible therefor. 14. Every officer accountable for government funds shall be liable for all losses resulting from the unlawful deposit, use, or ap plication thereof and for all losses attributable to 29 negligence in the keeping of the funds. 15. No AO shall be relieved from liability by reason of his having acted under the direction of a superior officer in paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the superior officer in writing of the illegality of the payment, application, or disposition. The officer directing any illegalwhile payment or who disposition of thethe funds or property shall be besecondarily primarily liable or the loss, the AO fails to serve required notice shall liable.f30 16. Unless he registers his objection in writing, the local treasurer, accountant, budget officer, or other AO shall not be relieved of liability for illegal or improper use or application or deposit of government funds or property by reason of his having acted upon the direction of a superior officer, elective or appointive, or upon participation of other department heads or officers of equivalent rank. The superior officer directing, or the department head participating in such illegal or improper use or application or deposit of government funds or property, shall be jointly and severally liable with the local treasurer, accountant, budget officer, or other AO for the sum or property so illegally or improperly used, applied or deposited. 31
25 26 27 28 29 30 31
Treasury Circular 02-2009 dated 06 August 2009 Section 75, Presidential Decree No. 1445 Section 77, Ibid Section 103, Ibid Section 105(2), Ibid Section 106, Ibid Section 342, Republic Act No. 7160
6
17. Any public officer who commits any of the acts defined and penalized under Articles 213, 217, 218, 219 and 220 of the Revised Penal Code shall suffer the penalty provided therefor. 18. In any criminal or civil proceeding against an officer for the embezzlement or misappropriation of government funds or property, or to recover an amount due the government from an AO, it shall be sufficient, for the purpose of showing a balance against him, to produce the working papers of the auditor concerned. A showing in this manner of any balance against the officer shall be prima facie evidence of the misappropriation of the funds or property unaccounted for or of civil liability of the officer may be.with The existence or contents of account bonds, contracts, other by papers relatingastotheorcase connected the settlement of any may be or proved the production of certified copies thereof but the court may require the production of the srcinal when this appears to be necessary for the attainment of justice. 32 19. When a loss of government funds or property occurs while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the officer accountable therefor or having custody thereof shall immediately notify the Commission or the auditor concerned and, within 30 days or such longer period as the Commission or auditor may in the particular case allow, shall present his application for relief, with the available supporting evidence. Whenever warranted by the evidence, credit for the loss shall be allowed. An officer who fails to comply with this requirement shall not be relieved of 33 liability or allowed credit for any loss in the settlement of his accounts. Collections
20. moneys Except as otherwise be specifically law in orany competent all andmay property officially received byprovided a public by officer capacityauthority, or upon any occasion must be accounted for as government funds and government property.
34
21. No payment of any nature shall be received by a CO without immediately issuing an official receipt (OR) in acknowledgment thereof. The receipt may be in the form of postage, internal revenue or documentary stamps and the like, or officially number ed receipts 35, or electronically generated document acknowledging receipt of payment 36, subject to proper custody, accountability, and audit. 22. Where mechanical or electronic devices are used to acknowledge cash receipts, the Commission may approve, upon request, exemption from the use of accountable forms.37
32 33 34 35 36 37
Section 83, Presidential Decree No. 1445 Section 73, Ibid Section 42, Chapter 7, Title I(B), Book V, Executive Order No. 292 Section 68(1), Presidential Decree No. 1445 Section 27(c), Part IV, Republic Act 8792 otherwise known as the “Electronic Commerce Act” Section 68(2), Presidential Decree No. 1445
7
23. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds. 38 24. Pre-numbered ORs shall be issued in strict numerical sequence. All copies of each receipt shall be exact copies or carbon reproduction in all respects of the srcinal. 39 25. An officer charged with the collection of revenue or the receiving of moneys payable to the government shall accept payment for taxes, dues or other indebtedness to the government in the form of checks and warrants issued in payment of government obligations, upon proper indorsement and identification of the payee or indorsee. Checks drawn in by favor the government accepted the of officer concerned. in payment of any such indebtedness shall likewise be At no instance should money in the hands of the CO be utilized for the purpose of cashing private checks. 40 26. Checks presented for payment must be drawn by the payor himself and made payable to the agency or head of agency. In the latter case, only the official title or designation of the 41 agency head concerned shall be stated as the payee. Under no circumstance shall the following checks be accepted as payment: -
checks drawn payable to the name of the agency head or any of its officers indorsed private checks post-dated checks stale checks.
27. When a check drawn in favor of the government is not accepted by the drawee for any reason, the drawer shall continue to be liable for the sum due and all penalties resulting from delayed payments. Where the reason for non-acceptance by the drawee bank is insufficiency of funds, the drawer shall be criminally liable therefor. 42 28. Whenever a payor has a record of a previously dishonored private check drawn by him in payment of taxes and dues, even if such check has already been settled, any private check presented by him shall no longer be accepted. In such case, the payor shall be required to 43 pay only in cash or by certified check. Each agency head, or treasurer, in the case of local government units, shall make a list of payors whose checks have been dishonored and shall circularize the list to all COs under his jurisdiction.
38
Section 72, GAAM, Vol. I Section 73, Ibid Section 67(1) and (3), Presidential Decree No. 1445 41 Section 77, GAAM, Vol. II 42 Section 67(2), Presidential Decree No. 1445 43 Section 80, GAAM, Vol. I
39 40
8
29. No change shall be given to the payor in the event that the amount of the taxes or dues is less than the face of the check in payment therefor. The difference shall be accounted for simultaneously with the collection as other liabilities. 30. When payment for goods or services is made by private check, no such service shall be rendered or goods delivered by the government agency concerned unless the check in payment thereof has been honored by the drawee bank. 44 31. Private checks drawn for purposes other than payment of taxes or dues in favor of the 45 government shall not be accepted for encashment or exchange. The auditor who finds 46 any such in the possession CO shall disallow it and shall declare thecheck CO short to the extent of of thethe amount of theimmed check.iately
Remittances/Deposits
32. All COs shall deposit intact all their collections, as well as collections turned over to them by sub-collectors/tellers, with authorized government depository bank (AGDB) daily or not later than the next banking day. 47 Where collections are minimal and daily deposit thereof becomes costly and impractical, the COs shall deposit their collections at least once a week, or as soon as the collections reach P10,000.00. They shall record all deposits made in the CRR. 33. Officers of the local government authorized to receive and collect monies arising from taxes, revenues, or receipts of any kind shall remit the full amount received and collected to the treasury of such local government unit which shall be credited to the particular 48 account or accounts to which the monies properly belong. a. The Local Treasurer/Cashier shall deposit intact all his collections turned over to him by the Collectors/Tellers with the authorized depository bank daily or not later than the next banking day. He shall record all deposits made in the Cashbook-Cash in Treasury and in the case of municipalities where travel time to the depository bank is more than one (1) day, deposit of collections shall be made at least once a week, or as 49 soon as the collections reach P10,000.00. b. The Barangay Treasurer shall deposit all collections with the city or municipal treasury or in the depository account maintained in the name of the barangay within 50 five (5) days after receipt thereof. He shall likewise record all deposits in the Cashbooks maintained for Cash in Treasury and Cash in Bank.
44
Section 82, GAAM, Vol. 1
45
Section 105, Ibid GAO General Circular No. 110 Section 21, MNGAS for NGAs, Vol. I 48 Section 307, Republic Act No. 7160 49 Section 28, COA Circular No. 92-382 50 Section 334(a), Republic Act No. 7160
46 47
9
c. Collections of field collectors shall be remitted to the Cashier/designated Liquidating Officer of the field office of the local government unit. When travel distance from the field office to the local treasury may expose government funds to risk such as loss in transit, the Cashier/designated Liquidating Officer, upon authorization by the Local Treasurer, may deposit the collections in the authorized depository bank near the field 51 office of the local government unit. 34. Under such rules and regulations as the Commission and the Department of Finance (DOF) may prescribe, the Treasurer of the Philippines and all authorized depository banks shall acknowledge receipt of all funds received by them, the acknowledgment 52 remittance or deposit and indicating from whom and on what bearing datereceived. of actual account the it was For purposes of reporting deposits of national collections, the National Collecting Officers/Local Treasurers shall report deposits of national collections following the guidelines provided for in Treasury Circular No. 5-2003 dated 08 October 2003 or any subsequent revision or amendment thereto.
Dishonored Checks
35. A check is dishonored either by non-payment or non-acceptance. Dishonor by nonpayment occurs when (a) the check is duly presented for payment and payment is refused or cannot be obtained; or (b) presentment is excused and the check is overdue and 53 unpaid. Dishonor by non-acceptance happens when (a) the check is duly presented for acceptance, and such an acceptance as is prescribed by law is refused or cann ot be obtained; or (b) presentment for acceptance is excused and the check is not accepted. 54 36. In the case of dishonored government checks received purely for accommodation or encashment, the sametheir shallencashment. be disallowed and the amount thereof shall be made good by the AO who allowed 37. When a check is dishonored by non-payment or non-acceptance, notice of dishonor (Annex B) must be given to the drawer and to each endorser, and any drawer or endorser to whom such notice is not given is discharged from liability. 55 The notice of dishonor shall be furnished to the Agency Head, Accountant, Auditor and a copy thereof retained by the CO. The CO shall cancel the OR covering the dishonored check. If necessary, the head of the agency shall promptly institute the corresponding action for the collection of the amount involved. 38. The CO neglecting or failing to give the required notice of dishonor to the drawer (or to the endorser-payor of the government check), who, as a result thereof, is discharged from liability, shall be personally answerable for the resulting loss suffered by the government.
51 52 53 54 55
Section 62(D), Local Treasury Operations Manual Section 70, Presidential Decree No. 1445 Section 83, Negotiable Instruments Law Section 149, Ibid Section 89, Negotiable Instruments Law; Section 85, GAAM, Vol. I
10
39. The making, drawing and issuance of a check payment of which is refused by the drawee because of insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for payment in full by the drawee of such check within five (5) banking days after receiving notice that such check has not been paid by the drawee. 56 40. A dishonored check shall be settled by tendering payment in cash or by certified check to the CO concerned. No other mode of payment shall be accepted. 41. Upon settlement of the dishonored check in the manner herein prescribed, the CO shall not return the check to the payor concerned unless the latter first surrenders the previous OR therefor. If the previous receipt is no longer available, sworn statement to the effect that it has been lost or misplaced should be submitted by the payor. 42. Dishonored checks shall remain in the custody of the CO, pending their redemption, unless the agency head or the court shall direct otherwise, in which case appropriate receipts should be secured from the officer authorized to take custody of the checks. The 57 CO shall immediately advise the transfer of custody of the check. Disbursements
43. Financial transactions and operations of any government agency shall be governed by the fundamental principles set forth hereunder, to wit:
56 57
43.1
No money shall be paid out of any public treasury of depository except in pursuance of an appropriation law or other specific statutory authority.
43.2
Government funds or property shall be spent or used solely for public purposes.
43.3
Trust funds shall be available and may be spent only for the specific purpose for which the trust was created or the funds received.
43.4
Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of the government agency.
43.5
Disbursements or disposition of government funds or property shall invariably bear the approval of the proper officials.
43.6
Claims against documentation.
government
funds
shall
be
Section 2, Batas Pambansa Blg. 22, amending Article 315 of theRevised Penal Code Section 90, GAAM, Vol. I
11
supported
with
complete
43.7
All laws and regulations applicable to financial transactions shall be faithfully adhered to.
43.8
Generally accepted principles and practices of accounting as well as of sound management and fiscal administration shall be observed, provided that they do not 58 contravene existing laws and regulations.
44. Except with the prior approval of the President, and for procurement transactions where 59 60 61 advance payment is allowed pursuant to Sections 4.3 , 4.4 and 4.5 of Annex D, 62 63 Section 4.1 of Annex E and Section 1 of Annex F of the Revised Implementing Rules and Republic (RA) not No. yet 9184, the government shall and not be obligednot to makeRegulations an advanceofpayment forAct services rendered or for supplies materials yet delivered under any contract therefor. No payment, partial or final, shall be made on any such contract except upon a certification by the head of the agency concerned to the effect that the services or supplies and materials have been rendered or delivered in 64 accordance with the terms of the contract and have been duly inspected and accepted. 45. Payments to creditors shall be made only upon the specific approval of the head of the agency concerned or his duly authorized representative, or if there be no such officer, upon the approval of the department head endorsed upon the warrant or check or voucher effecting the payment. 65 Cash Advances
46. No cash advance shall be given unless for a legally authorized specific purpose. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given 58
Section 4, Presidential Decree No. 1445 A single advance payment not to exceed fifty percent (50%) of the contract amount shall be allowed for contracts entered into by a procuring entity for the following services where requirement of down payment is a standard industry practice: a. Hotel and restaurant service; b. Use of conference/seminar and exhibit areas; and c. Lease of office space. 60 Advance payment not to exceed fifteen percent (15%) of the contract amount, unless otherwise directed by the President, shall also be allowed for procurement of goods required to address contingencies arising from natural or man-made calamities in areas where a “State of Calamity” has been declared by appropriate authorities. 61 Upon submission of an irrevocable letter of credit or bank guarantee issued by a Universal or Commercial Bank, advance payment not to exceed fifteen percent (15%) of the contract amount shall be allowed and paid within sixty (60) calendar days from signing of the contract. The irrevocable letter of credit or bank guarantee must be for an equivalent amount, shall remain valid until the goods are delivered, and accompanied by a claim for advance payment. 62 The procuring entity shall, upon a written request of the contractor which shall be submitted as a contract document, make an advance payment to the contractor in an amount not exceeding fifteen percent (15%) of the total contract price, to be made in lump sum or, at the most, two instalments according to a schedule specified in the instructions to bidders and other relevant Tender Documents. 63 The Government, as it considers fair and reasonable, may allow advance payment to the Consultant in the amount which shall not exceed fifteen percent (15%) of the contract amount to cover the cost of mobilization, subject to the posting of an irrevocable standby letter of credit issued by an entity acceptable to the agency and of an amount equal to the advance payment. The advance payment shall be repaid by the Consultant deducting from his progress payments such sum as agreed upon during the contract negotiations until fully liquidated within the duration of the contract. 64 Section 88(1), Presidential Decree No. 1445 65 Section 91, Ibid 59
12
has been served. No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting 66 thereof is made. 47. The specific rules and regulations on the granting, utilization and liquidation of cash advances are provided for under COA Circular No. 97-002 dated February 10, 1997 (Annex C), as amended by COA Circular No. 2006-005 dated July 13, 2006 (Annex D). Seizure of Office by Auditor 67 times 48. The books, accounts, papers andCommission cash of any or local or otherrepresentative. AO shall at all be open to the inspection of the its treasurer duly authorized
49. In case an examination of the accounts of a local treasurer discloses a shortage in cash which should be on hand, it shall be the duty of the examining officer to seize the office and its contents, notify the Commission, the local chief executive concerned, and the local accountant. Thereupon, the examining officer shall immediately turnover to the AO next-in-rank in the local treasury service, unless the said officer is likewise under investigation, the office of the treasurer and its contents, close and render his account on the date of the turnover. In case the AO next-in-rank is under investigation, the auditor shall take full possession of the office and its contents, close and render his accounts on the date of taking possession, and temporarily continue the public business of such office until such time that the local treasurer is restored or a successor has been duly designated. The local treasurer or AO found with such shortage shall be automatically suspended from office. 68 Retention of Money for Satisfaction of Indebtedness to Gove rnment
50. When any person is indebted to any government agency, the Commission may direct the proper officer to withhold the payment of any money due such person or his estate to be applied in satisfaction of the indebtedness. 69 Constructive Distraint of Property of Accountable Officers
51. Upon the discovery in audit of a shortage in the accounts of any AO and upon a finding of a prima facie case of malversation of public funds or property against him, in order to safeguard the interest of the Government, the Commission may place under constructive distraint the personal property of the AO concerned where there is reasonable ground to believe that the said officer is retiring from the government service or intends to leave the Philippines or remove his property therefrom or hide or conceal his property.
66 67 68 69
Section Section Section Section
89, Presidential Decree No. 1445 46, Ibid 348, Republic Act No. 7160 37, Presidential Decree No. 1445
13
The constructive distraint shall be effected by requiring the AO concerned or any other person having possession or control of the property to accomplish a receipt in the form prescribed by the Commission, covering the property distrained and to obligate himself to preserve the same intact and unaltered and not to dispose of it in any manner whatever without the express authority of the Commission. In case the said AO or other person having the possession and control of the property sought to be placed under constructive distraint refuses or fails to accomplish the receipt herein referred to, the representative of the Commission effecting the constructive distraint shall proceed to prepare a list of such property and in the presence of two witnesses leave copy thereofshall in the property is located after which the asaid property bepremises deemed where to havethe been placeddistrained under constructive 70 distraint.
70
Section 47, Presidential Decree No. 1445
14
Chapter III GUIDELINES A. Authority
1. The authority to conduct regular cash examination shall be inherent to the audit team having jurisdiction over the audited agencies. The audit team leader shall be responsible in identifying the audit team member/s who will conduct or assist him in the cash examination. 2. Whenever the circumstances warrant, the Chairperson or the Cluster/Regional Director may constitute special audit teams to conduct cash examination. B. Planning
1. Develop an overall plan/audit program, taking into consideration the objectives to be accomplished, the scope, the manpower requirement and estimated man-hours. 2. Schedule the examination properly to avoid inconvenience to the agency’s clientele and the AOs and disruption of operations. 3. Brief the audit team of the work to be done, how it will be done, the distribution of tasks and timetable for the examination, proper conduct and behaviour, among others. C. Preparation
1. Understand the procedures and techniques on cash examination and be familiar with the cash examination form [General Form No. 74(A), Annex E], and Section 181, Government Accounting and Auditing Manual (GAAM), Vol. 1 on the handling, custody and disposition of the cashbook. 2. Evaluate/validate the agency’s internal control structure on cash management whenever deemed necessary, using the Internal Control Questionnaire marked as Annex F to this manual. 3. Know the agency’s functions, organizational units, funds, official depositories, volume of business and names of all cash AOs, including the location of their offices, vaults, safes, ATMs and other receptacles. 4. Secure copies of Report of Accountability for Accountable Forms with and without money value, if any. 5. Secure copies of invoice receipts for accountable forms from the AO.
15
6. Refer to the latest cash examination and other audit reports including those of the internal audit unit to be acquainted with significant findings, if any, and to follow up the agency’s compliance with the corresponding recommendations. 7. Review the latest Statement of Audit Suspensions, Disallowances and Charges (SASDC), Audit Observation Memorandum (AOM) and Credit Notice issued to the AOs to be examined for guidance in audit. 8. Gather all the necessary data and prepare audit work papers regarding the officer’s accountability from last cash examination to facilitate the preparation of the Statement of Accountability under Section D of General Form No. 74(A). 9. Bring copies of the authority to conduct the cash examination, whenever applicable, COA identification card, office equipment and the necessary supplies. 10. See to it that Section A (Cash Production Notice) of General Form No. 74(A) is duly accomplished before the cash count. D. Auditor’s Conduct and Behaviour
1. The auditor shall conduct himself in such a manner as to earn the respect of the AO and other agency officials. 2. Although a friendly relationship shall be maintained, a relationship bordering on too much familiarity and intimacy shall be avoided. 3. and In noindependence. case, shall he solicit or accept personal favors in order to preserve his impartiality 4. Limit to the minimum his presence in the AO’s booth/office. E. Timing the Examination
1. Maintain the element of surprise in every examination. 2. Schedule the cash examination to enable the completion of at least the count of cash and cash equivalents at the close of office hours. As far as practicable, start the examination in the morning. For banks, however, conduct the count before or after banking hours so as not to disrupt the operations. F. Frequency of Cash Examination
1. Conduct the examination of the cash and accounts of all AOs at least once a year.
16
2. Perform mandatory cash examination under the following circumstances: a. Before the AO retires or is separated from the service; b. Before he is transferred to another station or office; c. When he goes on extended leave of absence and another AO is designated in his place; and d. When loss of government fund by an AO is reported. G. Simultaneous Cash Count 1. Examine simultaneously all funds in the custody of the AO. 2. Conduct cash count of all cash AOs in the office and its immediate vicinity. If this is not practicable, adopt such measures to control the movement of cash between or among AOs. H. Accountable Officer’s Presence During the Count
1. Ensure the presence of the AO at all times during the cash count. If, at any time during the cash count, the AO has to leave the premises, stop the count immediately, segregate the cash counted and cause the return of all cash to the safe, have it properly secured and resume the count only upon his return. I. Sealing of Vault, Safe or Other Cash Receptacles
1. Seal the vault, safe or other cash receptacles only in exceptional cases, such as: a. Absence or non-appearance of the AO on the date of the count specially when the intention of the auditor to examine the former has become obvious or made known to other employees; b. Refusal of the AO to submit himself to cash examination; c. Interruption or non-completion of the count during the day or the necessity of controlling cash, cash items and records; and d. Death, incapacity, or absconding of the AO. 2. Require at least two agency personnel to witness the sealing and sign the sealing paper or its equivalent. 3. Seal by pasting a sheet(s) of paper or equivalent on the appropriate place(s) of the vault, safe or receptacle. Make sure that the vault, safe or receptacle could not be opened without breaking the seal.
17
4. Use the properly worded sealing paper form as shown below:
___________ 20__ DO NOT BREAK THE SEAL UNDER PENALTY OF LAW __________________________ (Signature over printed name)
__________________________ (Position/Designation)
Witnesses to the sealing: _________________________ (Name and Signature/Position)
_________________________ (Name and Signature/Position)
5. Retain a duplicate copy of each properly accomplished sealing paper. 6. The public officer charged with the custody of the vault, safe or receptacle, who, shall break the seals placed by the auditor or permit them to be broken, shall be liable for the penalties prescribed under Article 227 of the Revised Penal Code. 71 J.
Accountable Officer’s Cashbook/CRR/CDR/CkDR or its equivalent
1. Require the AO to enter in his Cashbook/CRR/CDR/CkDR or its equivalent all valid transactions and adjustments up to the time of the count. He shall then foot, balance and rule it. For banks or agencies with computerized systems, print the certification on the cut-off reports generated and duly signed by the AO. 2. Cause the AO to certify immediately below the last entry in his Cashbook/CRR/CDR or its equivalent, as follows:
I hereby certify on my official oath that all cash and depository transactions had by me in my capacity as (Designation) of (Name of Agency) at the time of examination, showing a balance of _____________________________ (P_________) have been correctly and completely recorded in the Cashbook/CRR/CDR (or its equivalent). ________________ (Date)
71
_________________________ (Signature over printed name)
Art. 227. Officer breaking seal.- Any public officer charged with the custody of papers or property sealed by proper authority, who shall break the seals or permit them to be broken, shall suffer the penalties of prision correccional in its minimum and medium periods, temporary special disqualification and a fine not exceeding 2,000 pesos.
18
3. Direct the AO to effect adjusting entries in the Cashbook/CRR/CDR/CkDR or its equivalent when errors or omissions are found after verification of the entries, and to execute the certification in No. 2 above after the last entry. K. Auditor’s Review of Transactions
1. Verify the transactions from the date of last cash examination to the date of current examination. Limit the verification to the determination and establishment that all cash receipts, remittances/deposits, cash advances/disbursements and adjusting entries are properly and correctly recorded in the Cashbook/CRR/CDR/CkDR or equivalent; that disbursement as entered are approved and payments duly vouchers, acknowledged; and thatinall the cashCDR/CkDR balances as of theproperly date of examination are reconciled with accounting and related records. 2. Recheck all figures and computations if the examination discloses a discrepancy and perform other audit procedures necessary under the circumstances before declaring a cash shortage or overage. 3. Require in writing from the AO a written explanation of how the discrepancy occurred within seventy-two (72) hours from his receipt of the letter requiring the same. L. Auditor’s Certificate on the Cashbook/CRR/CDR or equivalent
1. Accomplish the auditor’s certification after the completion of the cash examination immediately below the certification of the AO, as follows:
Examined and verified the cash accountability of (Accountable Officer), (Designation), covering the period _______ to ______ and arrived at a balance of P_______, of which the amount of P_______ was actually found on hand, consisting of P_______ in currency and P_______ in cash items, thereby showing (no difference/cash shortage/overage of P ). ________________________ (Signature over printed name) ________________________ (Designation) _________________________ (Date) 2. At no instance shall the auditor’s certification be qualified. 3. Ensure that all prescribed cash examination procedures in Chapter IV of this manual have been completed and the accountability of the officer has been duly established before accomplishing the said certificate. 19
M. Prohibition of Incomplete Examinations
1. Conduct examinations thoroughly and completely in every case to the last detail, including verification/reconciliation of accountable forms received and issued and the various records of collections and disbursements, as well as entries in the Cashbook/CRR/CDR/CkDR or its equivalent. Just as government treasurers are held to strict accountability as regards funds entrusted to them in a fiduciary capacity, so should examining auditors act with greater care and caution in the audit of the accounts of such AOs to avoid the perpetration of any injustice. Accounts should be examined carefully and thoroughly to the last detail, with absolute certainty. 72 2. Where an examination fails to disclose an existing shortage and there is proof that said examination was incomplete or the steps prescribed herein were not followed, the same shall be considered a prima facie ground for the initiation of administrative or criminal action against the auditor(s). N. Audit Work Papers
1. Systematically gather and accumulate sufficient evidence necessary for drawing logical and verifiable conclusions. This is accomplished through the audit work papers, which record the evidence gathered to support the conclusions reached by the auditor. 2. Prepare complete, accurate, clear, neat and relevant work papers. O. Cash Examination Report
1. Issue an AOM to communicate the deficiencies noted during the cash examination. 2. Conduct an exit conference to discuss with management the results of the examination. 3. Prepare a final narrative report on the results of examination consisting of three parts, namely: the introduction, the findings and recommendations, and the annexes. Present the findings with the corresponding recommendations in the order of their significance. Incorporate in the report the management comments and audit team’s rejoinder, if any. 4. Submit the report to the Supervising Auditor (SA) or Cluster/Regional Director within twenty (20) days from completion of field work. 5. Distribute final copies of the report as follows: a. b. c. d.
72
AO Head of the Agency SA Auditor’s file
Office of the Ombudsman v. Rodolfo Zaldarriaga, G.R. No. 175349, June 22, 2010 citing Tinga v. People, L-57650, April 15, 1988, 160 SCRA 483, 491
20
6. Auditors before conducting cash examinations in the regions/field with no books of accounts should coordinate with the SAs/Audit Team Leaders (ATLs) of Head Office/Regional Office auditees, where books of accounts are kept, to obtain data on the accountabilities of the AO such as accountable forms issued/latest Monthly Statement of Accountability on Accountable Forms submitted, audited or booked remittances, cash advances granted and liquidated from the latest cash examination or outstanding unliquidated cash advances, among others. They should furnish a copy of their Cash Examination Reports (CERs) to the SAs/ATLs of Head Office/Regional Office auditees where the cash advances and liquidations/collections and remittances being cash examined are booked. The CER furnished shall be utilized by these SAs/ATLs to reconcile the ofStatement Accountability ofthe thetransactions AO in the CER against the ledgers/books accounts ofoftheir auditees where of the AO are booked. 7. When a significant shortage is discovered after the cash count, inform the Cluster/Regional Director thru the SA, within three (3) working days from discovery, for any further appropriate action. This shall be without prejudice to the continuation and completion of the examination and submission of the final narrative report. 8. Where the shortage necessitates the filing of an administrative and/or criminal action, submit the final report together with the letter-complaint, sworn statements of witnesses and other supporting documents to the Cluster/Regional Director thru the SA for review and evaluation. 9. The Cluster/Regional Director shall transmit the report together with the documents mentioned in paragraph 7 above to the Office of the Ombudsman for the filing of administrative and/or criminal action against the defaulting AO, furnishing the auditor concerned the transmittal letter. A copy thefurnished report as the wellhead as information of its referral atocopy the of Office of the Ombudsman shallofbe and the chief accountant of the agency concerned, the COA Legal Services Sector, and if the defaulting officer is a treasurer of a local government unit, to the Bureau of Local Government Finance. If the shortage is material, the Cluster/Regional Director concerned shall recommend to the Chairperson, thru the Assistant Commissioner concerned to request the issuance of a hold departure order against the erring AO by the appropriate government agency. 10. In case of cash examination conducted by a special audit team coming from other offices of the Commission, the team shall submit the report on the examination to the Director having supervision of the special audit team, with final copies thereof duly furnished to the AO, the Head of the Agency, the Auditor, and the SA of the agency concerned. Where the report indicates a shortage which necessitates the initiation of appropriate action against the AO, the Director shall transmit a copy of the report together with the supporting documents to the Office of the Ombudsman following the procedures outlined in the preceding paragraph.
21
Chapter IV
PROCEDURES AND TECHNIQUES A. Common Procedures and Techniques
1. Introduce yourself properly to the AO to be examined. In the case of special audit teams, present the Office Order authorizing the conduct of cash examination. 2. Require the AO to temporarily suspend all transactions. In the case of cashiers of the Bangko Sentral ng Pilipinas (BSP) and other government banks, the count may be suspended every time there is a need to render service to their clients or bank tellers. If the cash count cannot be finished at the close of office hours, seal or double lock their safe, vault or other cash receptacles at the end of the day and continue the count on the succeeding business day(s) until completed. 3. Cause the production of all cash, cash items, etc., by signing and serving the cash production notice in General Form No. 74(A). Require the AO to acknowledge the notice by signing the “Noted and Complied With” box. For ATMs, the ATM Teller as well as the other personnel exercising dual control over the ATM shall jointly sign the said box. 4. Require the AO to post all the transactions (such as collections, remittances, deposits, cash advances and disbursements) in his cashbook/CRR/CDR or equivalent up to the time of examination, foot balance, rule in ink and write the certification shown on page 18 of this manual. If the unrecorded transactions are voluminous, consider them as cash items during the count. 5. Establish proper cut-off by taking note of the last number of OR/check issued, control paid voucher/payroll and, determine last entry or terminal readings of validating/metered postage machines/cash registers/ATMs, if any. Affix full signature and indicate cut-off date at the back of the 2nd copy of the OR. 6. See to it that all cash, checks, money orders, paid vouchers, other cash items, and unused accountable forms are presented. Inspect the safe, vault or other cash receptacles where the cash and cash items are usually kept. 7. Require the AO to segregate private and/or personal funds, if any, count them and have them placed in an envelope properly labelled as ‘private/personal funds’. 8. Require the AO to segregate by currency and denomination, the notes and coins presented. Have the notes arranged in bundles and the loose coins in groups. 9. Segregate the cash items by group, such etc. as: cash in paywith envelopes, checks, money paid vouchers, partially paid payrolls, Proceed the listing of the cashorders, items using the space provided in the form. In the case of checks, and money orders, indicate the serial number, date, drawer, drawee and amount. In the case of paid 22
vouchers/partially paid payrolls, indicate voucher number, date, payee/payroll head and amount. 10. Proceed with the piece-by-piece count in the presence of the AO, starting from the highest to the lowest denomination, listing them in the appropriate space in General Form No. 74(A). Use additional sheet if necessary. 11. See to it that no note or coin presented has been demonetized. Mutilated notes must be examined for acceptability. It is the common practice of banks not to accept mutilated notes unless the serial numbers at both ends are intact. 12. After the count of cash, cash items and accountable forms, require the AO to accomplish and sign the certification in General Form No. 74(A) in the presence of two responsible persons, whose signatures shall likewise be affixed on the appropriate spaces therein. For the ATM, the bank personnel present under the joint custody/dual control shall affix their signatures in the space provided for with the ATM Teller as main AO. 13. Check the footings of the cashbook/CRR/CDR or equivalent to ascertain the correctness of its total and balances. Take note of errors and require the AO to adjust/correct the cashbook/CRR/CDR or equivalent. Disclose in the cashbook/CRR/CDR or equivalent that the adjustment, if any, was made at the instance of the examining auditor with the AO and the former affixing their initials and indicating the date of adjustment. 14. Accomplish the Statement of Accountability in General Form No. 74(A) starting from the date of last examination to current on the basis of verified amounts of debits and credits to accountability of the AO. Ensure that the beginning balance of the statement shall reflect the amount of accountability determined during the last examination. 15. Prepare the Reconciliation Statement of Accountability using the format shown in Annex G to reconcile the established accountability with the accounting records. 16. In case of cash shortage or overage, follow the procedures on pages 29 to 34 of this manual. 17. Prepare the Statement of Accountability for Accountable Forms in the format shown in Annexes H and I. 17.1
Obtain the balance of accountability for accountable forms per last examination to be considered as beginning balance of the current examination. Add all accountable forms received during the period under examination to the inventory of accountable forms as of date of last examination. Ascertain that all accountable forms requisitioned or procured from all sources are included.
17.2
Determine the total number of accountable forms issued and/or transferred as shown in the cashbook/CDR/CRR or equivalent, Report of Accountability for Accountable Forms and other records. 23
17.3
Deduct total issues/transfers determined in 17.2 from total inventories established in 17.1 to establish the balance of accountability as of the date of count.
18. Compare the balance of accountability arrived at with the inventory of unused accountable forms. Require the AO to explain discrepancies in writing, if any. Shortages of accountable forms with money value shall, like a cash shortage, be covered by a letter of demand. 19. Require the AO to accomplish and sign the certificate of accountability provided in General Form No. 74(A). 20. Accomplish the required auditor’s certification provided in General Form No. 74(A). 21. Determine the adequacy of the bond using the BTr guidelines on bonds. 22. Determine the adequacy of the precautionary measures adopted by the agency to safeguard cash and whether the existing facilities of the AO provide adequate protection against loss. 23. Review all necessary work papers and the supporting documents. Prepare the narrative report. B. Specific Procedures and Techniques
In addition to the above-mentioned procedures and techniques, the auditor shall perform the following: 1. Collecting Officer 1.1
Check all entries in the cashbook/CRR or equivalent from the date of last examination up to the date of current examination. Use tick marks to indicate review made. 1.1.1
Check individually the entries in the cashbook/CRR or equivalent during the period under review against source documents, such as: ORs, Daily Statements, Cash Transfer Slips (CTS), Deposit Slips, Remittance Advice, etc. In case the entries are based on daily statements or abstracts of collection, check all statements/abstracts against the source documents.
1.1.2
Pay particular attention to the nature of collection/transaction made, erasures, alterations, etc., to ascertain that the amount actually collected/transacted is the amount recorded. If necessary, confirm collections/transactions with selected payors.
1.1.3
Check the numerical sequence of ORs and other accountable forms received and issued. Ascertain that the srcinal and duplicate copies of cancelled ORs 24
or accountable forms are submitted with the corresponding Report/Abstract of Collections or equivalent. Take note of frequent cancellations of ORs which may be an indication of irregularity. 1.1.4
Scrutinize the remittance advices or deposit slips or CTS for signs of tampering. Confirm with the BTr or depository banks all remittances/deposits made during the period under examination. Obtain copies of debit advices issued by the depository banks during the period under examination. Ensure that these are taken up in the cashbook/CRR or its equivalent.
1.1.5
Examine adjustments made by accounting office/unit during the period under examination. Determine propriety and correctness of all adjusting entries.
1.1.6
Consider all discrepancies affecting the AO’s accountability in the preparation of the Statement of Accountability.
1.2
Examine all checks and money orders for regularity. Verify if private checks were received in payment of taxes, dues, fees and other government obligations by tracing them to the corresponding ORs.
1.3
Ascertain that private checks are made payable to the agency or the official title or designation of the agency head. Disallow accommodated private checks, including post-dated checks, stale checks/money orders, chits and promissory notes.
1.4
Requireif the forms, any.AO to explain the existence of obsolete checks and other accountable
1.5
Count and list all unused accountable forms on hand, using the appropriate space in General Form No. 74(A). Inspect unused booklets to make sure that each set of serial number is complete. In case of missing copies, require the AO to explain the loss in writing. See to it that the notice of loss is immediately disseminated. Recommend the immediate destruction of obsolete checks and other accountable forms.
1.6
Prepare the Statement of Accountability starting from the balance of the last examination to the date of the current cash examination, on the basis of verified amounts of collections and remittances/deposits, using the appropriate spaces in General Form No. 74(A).
1.7
Analyze collections and remittances/deposits to determine if amounts collected are remitted/deposited in the manner and frequency prescribed on pages 9 and 10 of this manual.
25
1.8
Inquire into major steps, obtain flow chart, if any, or narrative procedures on the receiving, keeping, disposing and accounting for collections. Identify deviations from prescribed regulations and sound internal control structures. On the basis of the duties of the CO and his staff, ascertain whether the daily collections of the staff are turned over to the CO at the end of the day.
2. Bank Cashier/Teller/ATM Teller 2.1
2.2
Count currency notes of Cashiers/Tellers/ATM Tellers of BSP and government banks as follows: 2.1.1
per box for unopened srcinal boxes with BSP seal;
2.1.2
by bundle for opened srcinal boxes with plastic seal intact;
2.1.3
by bundle for srcinal shrink-wrapped bundles (srcinal shrink-wrapped bundles are from the srcinal boxes of notes which are machine counted, bundled and shrink-wrapped). Select bundles for 100% wrapper count using COA sampling methodology.
2.1.4
by piece for not srcinally shrink-wrapped bundles. Using COA sampling methodology, select wrappers from bundles not srcinally shrink-wrapped for piece count.
Count unfit notes for retirement which are verified/counted and perforated by money counters of BSP by bundle. Select sample bundles for 100% wrapper count. Then select sample wrappers for piece-by-piece count.
2.3
Count coins in srcinal bags by bag; repacked coins by pack, then select sample repacked coins for piece count. Count loose coins piece by piece.
2.4
Count by piece all commemorative notes and coins especially printed and minted to commemorate special occasions which are booked at face value but may be sold at a premium approved by the BSP Monetary Board, except those in unopened srcinal boxes and bags which shall be counted by box and by bag,
2.5
Disclose on General Form No. 74(A) and on the cash examination report whenever a sampling prescribed by the Commission was used in the cash count.
2.6
Conduct a complete piece count in case of discrepancy noted in the cash count especially with the comparison between the denominations per count and per AO’s breakdown of his accountability. Document the subsequent 100% cash count in a separate General Form No. 74(A) and prepare the corresponding cash examination report bearing the actual date when the new or subsequent cash count was conducted.
26
2.7
In the case of ATMs, count the notes by piece by cassette. Use the ATM Cash Count Sheet (Annex J) or similar form to list the money retrieved. Ensure that these forms and Section A of General Form No. 74(A) are signed by the AO and all those designated under the joint custody/dual control.
2.8
For cash in receptacles which are marked “Subject to Verification” (SV), reflect in the count sheet the amount indicated in the tag.
2.9
Determine whether the cash identified as SV are verified in the manner and frequency prescribed. Age the cash SV and obtain explanation from the AO for the existence long staying cash SV. Request the BSP Cashieroftolong make representation with banksofwhich made the deposit to schedule the opening staying cash SV in the presence of the bank representatives and the auditor.
3. Disbursing Officer (DO) 3.1
Examine all cash items for regularity. Ascertain that they are all current and duly approved. 3.1.1
Unposted paid vouchers/payrolls 3.1.1.1
3.1.2
Partially paid payrolls 3.1.2.1
3.1.3
Verify contents of pay envelopes, if any. Treat cash in pay envelopes as cash items. Add payments already made in the payroll. Consider the total of cash found inside the pay envelopes and total payments already made as cash items. Disallow chits and promissory notes inside the pay envelopes.
Checks and money orders 3.1.3.1
3.1.4
Determine why the paid vouchers/payrolls are not posted in the cashbook/CDR. If they are duly approved and acknowledged in all respects, consider them as valid cash items.
Disallow checks and money orders paid by the DO out of his cash advance. Allow checks drawn as cash advances in favor of the DO as cash items.
Paid invoices, reimbursement expense receipts (RER), promissory notes, etc. 3.1.4.1
If the fund being examined is a cash advance for petty expenses, consider paid invoices/receipts covering authorized petty expenses for goods and services, like telegram, tolls, freight, cartage, etc., as valid cash items. Allow sales invoices and/or charge invoices as 27
cash items only when supported with ORs. Disallow chits and promissory notes under any circumstance. 3.2
Count and list all unused checks on hand using the appropriate space in General Form No. 74(A). Inspect unused booklets for missing checks. In case of missing checks, require the DO to explain the loss in writing. See to it that the DO immediately disseminated the notice of loss and notified the bank for stoppage of payment.
3.3
Check all entries in the cashbook/CDR/CkDR or equivalent from the date of last examination to the date of current examination. Use tick marks to indicate review made. 3.3.1
Based on accounting records, determine whether all cash advances/withdrawals have been entered in the cashbook/CDR/CkDR or equivalent on the dates they were received. List all unposted cash advances/withdrawals.
3.3.2
Check all cash disbursements against the corresponding vouchers. Determine whether the vouchers were duly approved and payments acknowledged. Pay particular attention to erasures/alterations on the voucher and the cashbook. Make sure that the amount entered in the cashbook/CDR or equivalent was the approved amount of the voucher. Where the vouchers could no longer be made available to the auditor, such as in the case of agencies with centralized accounting systems, secure confirmation of the aforesaid disbursements from the auditor of the agency where the books are kept.
3.4
3.3.3
Trace refunds of cash advances to the srcinal receipts issued therefor.
3.3.4
Determine propriety and correctness of adjusting entries.
3.3.5
Consider all discrepancies affecting the DO’s accountability in the preparation of the Statement of Accountability.
Prepare the Statement of Accountability starting from the last date of examination to the date of current examination, on the basis of verified cash advances, disbursements and refunds using the appropriate spaces in General Form No. 74(A). Require the DO to accomplish and sign the certificate of accountability provided therein.
C. Reconciliation Statement of Depository Accounts
1. Require the Chief Accountant/head of the accounting unit to prepare and submit bank reconciliation statements for the latest bank statements received covering all bank depository accounts. 28
2. Obtain directly from the bank a cut-off statement for all bank depository accounts as of the date of the examination and prepare the corresponding bank reconciliation statements as of cut-off date (Annex K). D. Cash Shortage
1. Recheck all figures and computations if the examination discloses a cash shortage, before declaring the AO short of his funds. 2. Demand at once from the AO the immediate production of the missing fund(s) the moment of shortage receipt is definitely established. Executecopy. the demand in writing and havethe theamount AO acknowledge thereof on the duplicate A sample of the letter of demand is shown in Annex L. Obtain from the AO a written explanation of how the shortage occurred within seventy-two (72) hours from his receipt of the letter of demand. 3. Recommend to the agency head the immediate relief of the defaulting officer from his duties as AO. The recommendation shall be in writing, duly acknowledged by the agency head or his duly authorized representative on the duplicate copy which is to form part of the auditor’s work papers. Institute such measures necessary to safeguard adequately the cash and records.
Seizure of Office by Auditor 4. If a shortage is discovered on the accounts of a local treasurer, seize the office and its contents and notify the COA Director concerned, the local chief executive, and the local accountant. 5. Turnover immediately to the AO next-in-rank in the local treasury service the office of the treasurer and its contents, close, and render his account on the date of the turnover. 6. In case the AO next-in-rank is likewise under investigation, take full possession of the office and its contents, close and render his accounts on the date of taking possession, and temporarily continue the public business of such office until such time that the local treasurer is restored or a successor has been duly designated. 7. Direct the proper officer to withhold the payment of salary and other emoluments except retirement pay, terminal leave benefits or gratuities, due the defaulting AO once his cash shortage is ascertained. Sign the withholding order in the following manner:
By Authority of the Chairperson, Commission on Audit ___________________________
(Audit Team Leader)
29
A sample of such withholding order is shown as Annex M of this manual. Report such withholding order promptly to the COA Chairperson. The salaries and emoluments to be withheld shall correspond to the amount of the alleged shortage. Said amount shall be considered merely withheld and shall not be applied to the shortage until final resolution by a competent court of the AO’s indebtedness, if such is initiated. In the event that the AO is found liable for the cash shortage, the withheld salary and other emoluments shall be applied in payment of the indebtedness; otherwise, 73 it shall be released to the AO.
Constructive Distraint 8. The constructive distraint contemplated under Section 47 of Presidential Decree No. 1445, may be effected under the following circumstances: a. A shortage in the accounts of an AO is discovered in audit; b. The amount of the shortage has not been restituted despite demand; c. A prima facie case of malversation of public funds or property is found against him; d. There is reasonable ground to believe that he is retiring from the government service; or intends to leave the Philippines; or intends to remove his personal property from the Philippines; or intends to hide or conceal such property; and e. The interest of the government has to be safeguarded. 9.
The following are the procedures in effecting constructive distraint: a. The auditor who discovered the shortage shall immediately submit a report to the Chairperson, thru the SA and the Cluster/Regional Director concerned, embodying his findings and recommendation to place the personal property of the defalcating AO under constructive distraint. b. Upon evaluation of such report and finding a need for the constructive distraint as recommended therein, the Commission shall forthwith prepare a warrant directing the auditor to place under constructive distraint (sample form attached as Annex N), the goods, chattels or effects and other personal property of whatever character of the AO. The warrant shall be signed by the Chairperson and shall show clearly the name and address of the defalcating AO, the amount of shortage incurred, and the fact of prior demand made for the restitution thereof.
73
See Santiago v. Commission on Audit, G.R. No. 146824, June 15, 2006 and Supreme Court Resolution dated November 21, 2007
30
c. The auditor directed to serve the warrant of constructive distraint shall serve the same personally on the defalcating AO himself. In case, however, where the said AO refuses to receive the warrant or is absent from his given address, the warrant shall be served upon someone of suitable age and discretion in the premises or upon the person in possession or occupancy of the personal property of the AO, who shall acknowledge all the copies of the warrant. In case actual service of the warrant upon the AO or upon either of the two other persons just mentioned cannot be made, a copy thereof shall be left in the premises or in the office of the AO or in the place of the person in possession or occupancy of the said property of the AO which fact shall be attested to in said copy and in all the other copies of the warrant by the distraining officer the presence leastoftwo the warrant is deemedinproperly served.ofAatcopy thecredible warrant witnesses, thus servedwhereupon shall be furnished to the AO with a notation that a copy of the same was left with the person who is in possession or occupancy of his personal property. d. Upon service of the warrant, the distraining officer shall require the defalcating AO or any other person having possession or control of the personal property in question to accomplish a receipt (sample form attached as Annex O) covering the property distrained and to obligate himself to preserve the same intact and unaltered and not to dispose of it in any manner whatsoever without the express authority of the COA. e. In case the said AO or other person having the possession and/or control of the property sought to be placed under constructive distraint refuses or fails to accomplish the receipt herein referred to or lists only a number of such personal property not sufficient to cover the amount of the shortage, the distraining officer shall proceed to prepare a list of the property choosing such quantity as is sufficient to satisfy thewhere shortage, and in the presenceisoflocated, two witnesses leavethe a copy thereof inshall the premises the property distrained after which said property be deemed to have been placed under constructive distraint. f. Where some of the property distrained consists of stocks and other securities, a copy each of the warrant of constructive distraint and the receipt or list mentioned above shall be served upon the president, manager, treasurer, or other responsible officer of the corporation, company, or association which issued the said stocks or securities. In case of debts and credits, copies of such documents shall be left with the person owing the debts, or having in his possession or under his control such credits, or with his agent. The warrant of constructive distraint and the receipt or list shall be sufficient authority to the person owing the debts, or having in his possession or under his control any credits belonging to the AO, to desist from the settlement thereof without the written authority of the COA. In case of bank accounts, the copies of the warrant and receipt or list shall be served upon the president, manager, treasurer, or other responsible officer of the bank concerned, whereupon the bank shall desist from allowing withdrawals therefrom or so much thereof, as may be sufficient to satisfy the shortage of the AO without the written authority of the COA.
31
g. If the property distrained are registered with any government office, the distraining officer shall notify in writing the government official concerned of the fact of the constructive distraint, furnishing him with a copy each of the warrant and the receipt or list mentioned above. The notification shall contain the following data: i. nature and description of the property distrained; ii. date of the distraint; iii.name of the owner and/or actual possessor thereof; and iv. nature and amount of shortage for which the distraint was effected. h. A copy ofmail suchwith notice shall beorsent to the last AOoccupant through registered return card served upon theknown AO or address his agentoforthe to the or possessor of the property in question. Receiving copies of the return card or the notice shall be kept secured together with the audit work papers of the examining auditor. 10. The summary remedy by constructive distraint of personal property may be repeated until the full amount of the shortage of the defaulting AO, including the expenses of the distraint, is satisfied. 11. A report on any constructive distraint effected pursuant to Section 47 of P.D. No. 1445, shall be submitted by the distraining officer to the COA Chairperson, thru the SA and the Cluster/Regional Director concerned, furnishing a copy thereof to the Legal Services Sector of the Commission. Such report shall form part of the supporting documents of the complaint for malversation to be initiated against the defalcating AO. It shall provide the Ombudsman or other government prosecutors with basis to apply with the proper court for the attachment of the property distrained in accordance with the Rules of Court. 12. If at any time after the constructive distraint has been effected the AO restitutes the full amount of the shortage, his personal property placed under such distraint, shall be released therefrom.
Prosecution of the AO 13. Where a cash shortage is firmed up, submit the final narrative report together with the affidavits, sworn statements and other supporting documents to the Cluster/Regional Director thru the SA for review and evaluation. 14. If the facts and circumstances of the case warrant the filing of a criminal action, the Cluster/Regional Director shall initiate such action by forwarding the report accompanied by a letter-complaint (Annex P) to the Deputy Ombudsman (for Luzon, Visayas, Mindanao or Military) concerned, recommending the initiation of criminal proceedings against the defaulting AO. Where the shortage is discovered by special audit teams of other offices of the Commission, the responsibility to initiate the criminal action shall fall upon the director or head of such office.
32
15. For the purpose of prosecuting the defaulting AO, make the following documents available to the prosecuting officials: a. Certified true copies of AO’s appointment, oath of office, official designation and approved application for bond; b. A copy of the Report of Cash Examination [General Form No. 74(A)], narrative report and its supporting exhibits and schedules, letter of demand, and the written explanation of the AO on how the shortage occurred, if any; and c. Affidavit or sworn statements of the auditors and other witnesses (Annex Q). 17. If the shortage is material and a case has already been filed, request, thru the COA Chairperson, the Department of Foreign Affairs (DFA), the National Bureau of Investigation (NBI), and the Bureau of Immigration and Deportation (BID) to deny the AO any clearance for purposes of travel abroad unless cleared by the COA. E. Cash Overage
1. In case a cash overage is determined, extend the examination as may be necessary to establish the cause of the overage and uncover any attendant irregularity, if any. 2. Obtain explanation from the AO. If the overage cannot be satisfactorily explained by the AO, forfeit the amount in favor of the government and request the CO to issue an OR therefor. 3. Record the overage as ‘Miscellaneous Income’. F. Indemnity From Fidelity Fund
1. The Fidelity Fund shall be available for the purpose of replacing defalcations, shortages, unrelieved losses in the accounts of bonded public officers, for the payment of fees and costs incident to civil proceedings brought against them to recover sums paid on their account from said Fund. 74 2. The relief from accountability of the accountable public officer granted by the COA shall relieve the agency from responsibility for the loss or damage to public funds or property. 75 3. When no relief of accountability is granted by the COA, the agency concerned may file claim for reimbursement from the Fidelity Fund to the extent of the approved bond covered or amount of loss whichever is lower. 76
74 75 76
Paragraph 4.8, Treasury Circular No. 02-2009, August 6, 2009; Section 326, Philippine Bonding Law Paragraph 8.2, Ibid Paragraph 8.3, Treasury Circular No. 02-2009, August 6, 2009
33
4. Any and all claims against the Fidelity Fund shall be filed as a money claim with the COA, with a copy to the BTr together with the evidence relating thereto. Claims 77 approved by the COA shall constitute a legal claim against the Fidelity Fund. 5. The agency shall file claim for payment from the Fidelity Fund with the BTr, attaching therewith the favourable findings of COA. The BTr shall process the claim in accordance with existing budgeting, accounting and auditing rules and regulations. 78 6. In case of defalcation, shortages and unrelieved losses in the account of bonded public 79 officer, the claim shall be supported by the following documents: 6.1 Agency and COA findings and recommendation on the defalcation, shortages and unrelieved accountability; 6.2 Latest Statement of Assets and Liabilities of the bonded official/employee; 6.3 Proof of current and subsisting bond and payment of bond premium; and, 6.4 Other document/s which may be required by the BTr. 7. Receipt of refund from Fidelity Fund shall be accounted for in the same manner as cash settlement or restitution.
77 78 79
Paragraph 8.4, Paragraph 8.5, Ibid Paragraph 8.5.1, Ibid
34
Appendix 1
ILLUSTRATIVE ACCOUNTING ENTRIES A.
ACCOUNT TITLES, CODES USED The account titles and account codes used in the illustrative accounting entries to record cash shortages, their subsequent restitution or relief, and to recognize cash overages discovered cashofexamination are patterned on theaccount Revised Newand Government Accounting during Systemthe Chart Accounts. Other or equivalent titles additional entries, if any, may be used by agencies (e.g. GOCCs) permitted to adopt accounting systems and chart of accounts other than the NGAS and the Revised NGAS Chart of Accounts.
B.
ACCOUNTING FOR SHORTAGES As soon as a cash shortage has been definitely established, the auditor concerned shall accomplish the following certificate: ____________________ Date
I hereby certify that in the examination of the cash and accounts of (Name of Auditor) on _____________, a shortage was reported which remains unaccounted for and unrestituted. (Name and designation of Accountable Officer) made by
I further certify that I have verified the shortage to be in the total amount of P___________ (Indicate the shortage by funds). ____________________ Auditor
Four copies of the foregoing certificate shall be accomplished and distributed as follows: Original - Agency Head Duplicate - The defaulting accountable officer Triplicate - The Chief/Regional Accountant concerned and Quadruplicate - File copy of the Auditor.
Based on the certificate, the Chief/Regional Accountant shall draw a journal entry voucher to take up the cash shortage as follows: Case I - Local Government Sector - General or Trust Fund
To take up the cash shortage and establish the receivable account of the defaulting accountable officer Account Title Due from Officers and Employees
Acct. Code 123
Cash, In Vault (for the Local Treasurer), or Cash, Collecting Officer (for Collecting Officer), or Petty Cash, or Payroll Fund
Debit xxx
Credit
101
xxx
102 104 106
xxx xxx xxx
Case II - National Government Sector - General Fund and Special Account in the General Fund
To take up the cash shortage and establish the receivable account of the defaulting accountable officer Account Title Due from Officers and Employees Cash, Collecting Officer (for Collecting Officer) or Cash, Disbursing Officer (for Disbursing Officer)
C.
Acct. Code 123
Debit xxx
102 103
Credit
xxx xxx
ACCOUNTING FOR RESTITUTION Cash restitution is made by the defaulting accountable officer during or after the year when the shortage was discovered. Case I - Local Government Sector - General or Trust Fund
To take up the cash restitution of the defaulting accountable officer Account Title Cash, Collecting Officer Due from Officers and Employees
Acct. Code 102 123
Debit xxx
Credit
xxx
The above journal entry also applies if the defaulting accountable officer is from the National Government Sector - General Fund and Special Account in the General Fund
D.
ACCOUNTING FOR RELIEF 1. Request for relief from cash accountability was not granted
The entry to establish the liability of the defaulting accountable officer when his request for relief was denied is similar with Item B, Cases I and II on the preceding page. When the defaulting accountable officer settles his/her accountability, the accounting entry shall be similar with Item C on Accounting for Restitution. 2. Request for relief from cash accountability was granted
a. To take up the relief from cash accountability Account Title Loss of Assets (current year) or Prior Year Adjustments Due from Officers and Employees
Acct. Code 961 684 123
Debit xxx xxx
Credit
xxx
b. If the lost fund was from Trust Fund, the shortage shall be transferred to the General Fund •
•
The entry to take up the cash shortage in the Trust Fund books of account is the same with Item B, Case I on the preceding page. To take up the transfer of the lost fund to the General Fund since the defaulting employee cannot restitute the shortage.
Trust Fund books of accounts Account Title Due from Other Funds Due from Officers and Employees
General Fund books of accounts Account Title Loss of Assets (current year) or Prior Year Adjustments Due to Other Funds •
Acct. Code 144 123
Debit xxx
Acct. Code 961 684 424
Debit xxx xxx
Credit
xxx
Credit
xxx
To take up the settlement of the loss fund in the Trust Fund
Trust Fund Books of Accounts Account Title Cash, Collecting Officer Due from Other Funds
Acct. Code 102 144
Debit xxx
Credit
xxx
General Fund Books of Accounts Account Title Due to Other Funds Cash in Bank - Local Currency, Current Accounts
E.
Acct. Code 424
Debit xxx
111
xxx
Credit
ACCOUNTING FOR OVERAGES Case I - Local Government Sector - General or Trust Fund
a. To take up the cash overage after it has been receipted and to recognize the income account. Account Title Cash, Collecting Officer Miscellaneous Income
Acct. Code 102 678
Debit xxx
Acct. Code 111
Debit xxx
Credit
xxx
b. To take up the remittance of the amount receipted Account Title Cash in Bank, Local Currency – Current Account Cash, Collecting Officer
102
Credit
xxx
Case II - National Government Sector - General Fund
a. To take up the cash overage after it has been receipted and to recognize the income account. Account Title Cash, Collecting Officer Due to National Treasury
Acct. Code 102 411
Debit xxx
Credit
xxx
The above journal entry shall be recorded in the National Government books under the National Government Fund. b. To take up the remittance of the amount receipted Account Title Due to National Treasury Cash, Collecting Officer
Acct. Code 411 102
Debit xxx
Credit
xxx
Annex B
NOTICE OF DISHONOR
_______________________ _______________________ _______________________
Sir/Madam: You are hereby notified that your (name of bank) Check No. _________ dated __________, 20__, in the amount of P__________ paid to us and acknowledged by our Official Receipt No. __________ dated ___________, 20__ has been deposited but was dishonored and returned to us due to __________________________. In view thereof, we have, today, reversed the payment recorded and reinstated your liability in the same manner as if you had never tendered any payment. Please settle your account in cash or by certified check to the undersigned within five days from receipt of this notice. Otherwise, we will be constrained to institute criminal action against you as may be warranted under Article 315 of the Revised Penal Code and Batas Pambansa Blg. 22.
Very truly yours, _______________________ (Head of Agency) By: _______________________ (Collecting Officer)
Note:
The last paragraph applies only to cases where the cause of the dishonor of the check is lack or insufficiency of funds. Where the check is dishonored by reason of defect in form, such as incomplete signature or the like, the following paragraph should be used in lieu of the aforementioned last paragraph.
Please settle your account in cash or by certified check to the undersigned within three days from receipt of this notice. Otherwise, we will be constrained to initiate appropriate action to enforce our claim.
Annex F Name of Agency ______________________________ Address ______________________________ ______________________________ Audit Period
INTERNAL CONTROL QUESTIONNAIRE
This questionnaire is so worded that an affirmative answer will indicate soundness of the situation covered by the question. The answers should indicate how things are done and not how they are supposed to be done. No.
Control Activities A. General Information
1
Is the accountable officer appointed or designated as such?
2
Is the accountable officer given instructions regarding his/her duties and responsibilities?
3
Is the employee handling cash adequately bonded? If so, how much? ______________
4
Does he have a signature and handwriting specimen card?
5
Has he submitted his photographs to COA?
6
Does the accountable officer keep a file of COA regulations and other existing rules pertaining to his/her work?
7
Are the office properly enclosed and the Cashier amply protected against intrusion by unauthorized persons?
8
Is the accountable officer or other employee handling cash provided with safe?
9
Is the combination of the safe changed whenever there is a change of custodian?
10
Are duplicate combinations of the accountable officer’s safe on file with an authorized officer?
11
Does the AO refrain from acting as Cashier or Treasurer of savings and loan association, etc. at the same time?
YES
NO SCW CC
REMARKS
No.
Control Activities
12
Are the employees of the Cashier's Office denied access to, or responsibility over accounting records, especially those related to cash?
13
Is access to and responsibility for the fund vested in one person?
14
Does the organization structure provide a clear-cut separation function?
of
cashiering
function
YES
from
accounting
15
Does the custodian of the fund have no access toa. Cash receipts? b. General accounting records?
16
Does he avoid access to or responsibility over the accounting records, related to cash (such as subsidiary ledger of accounts receivables)?
17
If custodian of other funds, are they segregated and accounted for separately?
18
Are surprise cash examinations conducted frequently by internal and external auditors?
19
Does he keep a cashbook?
20
Are transactions recorded daily?
21
Is the cashbook balance reconciled with his cash on hand at the close of each day?
22
Are cashbook balances reconciled with the subsidiary ledgers at least once every quarter?
23
Are accounting records up-to-date?
24
Are subsidiary records maintained for each accountable officer?
25
Are both the totals and details of bank authenticated duplicate deposit slips matched by the accounting department against the corresponding official receipts?
26
Are monthly reports of accountability for accountable forms prepared and submitted?
NO SCW CC
REMARKS
No.
Control Activities
27
Are unused official receipts and other accountable forms properly controlled as to ordering, storing and issuing, and are adequate records kept of them? B. Collection
1
Are official receipt booklets used?
2
Are the booklets issued in numerical sequence?
3
Are the official receipts pre-numbered?
4
Are official receipts issued for every receipt of payment?
5
Are official receipts issued in numerical sequence?
6
Are official receipts promptly issued for collections received?
7
Is the form of payment indicated in the receipts?
8
Is the numerical sequence of issued officials receipts and booklets checked by the accounting department?
9
Is a register of forms maintained? If so, is it kept up-todate?
10
Are unused booklets physically safeguarded? State how?
11
Is it the practice of the collecting officer not to accept post-dated checks in payment of charges or fees?
12
Is the cashing of checks from collections prohibited? If not: a. Is the prior approval of authorized person required before a check is cashed? b. Are such checks deposited promptly?
13
Does the collecting officer refrain from using the collections for paying obligations of whatsoever?
14
Are reports of collections submitted at the end of the month?
15
Is the cashbook balance compared daily with the cash on hand?
YES
NO SCW CC
REMARKS
No.
Control Activities
YES
16
Are collections deposited intact and as frequently as required by regulations?
17
Is the person making deposit escorted by armed guards and provided with transportation equipment?
18
Are all checks endorsed for deposit and deposited in appropriate banks?
19 20
Are such checks deposited promptly? Are items of deposit subsequently dishonored by the depository bank promptly adjusted in the collecting officer's records?
21
Are totals of bank-authenticated deposit slips compared with the debit to respective bank accounts in the book of srcinal entry?
22
Are acknowledged deposits or deposits in invariably cleared the following months?
23
Are collections and deposits recorded daily in the cash book?
24
Is reconciliation madethe quarterly of the collecting book balance and accounting subsidiary officer's ledger balance?
25
Is the collecting officer closely responsible officer of the agency?
supervised
transit
by a
By mail
26
Is the mail opened by an employee who is independent of either the Cashier's Office or the Accounting Office?
27
Are mail remittances recorded or listed by the person opening the mails? If so, is the record or list given to someone other than the collecting officer for follow up to see that all mail remittances have been receipted for and deposited?
NO SCW CC
REMARKS
No.
Control Activities
YES
28
Is the foregoing information considered adequate as basis for our evaluation of internal auditing procedures, accounting controls or other circumstances that mitigate any weaknesses indicated above, or in that there are no other circumstances that impair any controls?
29
List down any additional controls and/or weaknesses not covered by the foregoing questions and/or answers? Foreign currency
30
Are receipts of foreign currencies and checks authorized?
31
Are only authorized foreign currencies and checks accepted for payment?
32
Are the kind, quantity, serial numbers and amount of foreign currencies and checks indicated in the receipts and deposit slips?
33
Are control mechanisms in place to prevent receipt of counterfeit foreign currencies and checks?
C. Disbursement By Checks
1
Are all payments except petty fund disbursements and payroll made by checks?
2
Are checks pre-numbered?
3
Are checks issued in numerical sequence?
4
Is the stock of unused checks accessible only to the custodian and to those who prepare and sign checks?
5
Are all checks drawn responsible official?
6
Is the bank furnished of the name and specimen signatures of officials authorized to sign checks?
countersigned
by
another
NO SCW CC
REMARKS
No.
Control Activities
7
Is the signing of checks limited to officers or employees who have no access to accounting records or to cash?
8
Are all checks for signature and countersigning always accompanied by approved vouchers and supporting papers?
9
Are disbursement vouchers (DVs), supporting documents and account distribution reviewed by an authorized accounting staff? If so, is the covering voucher signed by the person who made the review?
10
Are DVs and other supporting documents reviewed by at least one signatory preparatory to the signing of the check?
11
Is the signing and countersigning of checks in advance or in blank prohibited?
12
Is the drawing of checks to "Cash" or "bearer" (except for revolving funds replenishments and payroll) prohibited?
13
Are voided or spoiled checks properly cancelled and held available for subsequent inspection?
14
Are the supporting documents stamped "Paid" or marked with similar indications immediately after the check is signed to prevent their possible reuse?
15
Are checks drawn recorded promptly?
16
Is the payee's signature or receipt secured before check is delivered?
17
Are bank accounts reconciled at least once each month?
18
Are bank statements and paid checks all sealed by the bank and delivered directly to the person preparing the reconciliation?
19
Is the reconciliation done by an employee whose duties do not involve: a. Signing the checks? b. Recording cash transactions? c. Handling cash?
YES
NO SCW CC
REMARKS
No.
Control Activities
20
Does the person who reconciles bank accounts, accounts for all check numbers, examines signatures, endorsements, payee's name and date, compare these with the records?
21
Are checks bearing improper endorsements returned to the bank for corrections?
22
Are long outstanding checks properly followed up and controlled?
23
24
Are "stop payments" on outstanding checks properly controlled? Are reconciling items systematically followed up and promptly cleared? By Cash Advance
25
Are all advances properly authorized and not excessive in amount?
26
Are all previous advances liquidated before a new cash advance is given?
27
Are advances liquidated by the officials within a reasonable time after the purposes of such advances have been accomplished?
28
Are cash advances always supported by approved vouchers and supporting documents?
39
Are expense vouchers and supporting documents stamped “Paid” to prevent their possible reuse?
30
Are entries in the cash book up-to-date?
31
Are reports of disbursements regularly submitted?
32
Are subsidiary records for cash advance kept and reconciled with the control account periodically?
33
Is there confirmation of outstanding balances at least once a year?
34
Is the foregoing information considered adequate as basis for our evaluation of internal auditing procedures, accounting controls or other circumstances that mitigate any weaknesses indicated above, or in that there are no other circumstances that impair any controls?
YES
NO SCW CC
REMARKS
No.
Control Activities
granted
only
YES
35
Are cash advances officials/employees?
to
authorized
36
List down any additional controls and/or weaknesses not covered by the foregoing questions and/or answers. Petty Cash Fund
1
Are there no cash on hand except for Petty Cash Funds and remittances received after daily deposit is made?
2
Is the Imprest Fund system used?
3
Is access to and responsibility for the fund vested in one person?
4
If custodian of other funds, are these segregated and accounted for separately?
5
Does the custodian of the funds have no access toa. Cash receipts? b. General accounting records?
6
Are changes made in the stated amount of the fund authorized?
7
Are funds reimbursement check made payable to the order of the custodian?
8
Does proper internal audit exists for petty cash vouchers and supporting documents at the time of reimbursing the fund?
9
Is the fund reasonable in amount?
10
Is there a “Ceiling” for individual payments from the fund/funds? If so, indicate limits.
11
Are all significant petty cash funds counted periodically on a surprise basis? Indicate who counts.________________________________
12
Is the foregoing information considered adequate as basis for evaluation on internal control - in that there are no other additional internal auditing procedures, accounting controls or other circumstances that impair any controls?
NO SCW CC
REMARKS
No.
Control Activities
13
List down any additional controls and/or weaknesses not covered by the foregoing questions and/or answers. _______________________________________________ _______________________________________________ _______________________________________________
YES
NO SCW CC
REMARKS
Annex G Name of Agency
Name of Accountable officer Reconciliation Statement of Accountability Name of Fund Date of Cash Count
Balance per statement of accountability, date of cash count
P
Balance per subsidiary ledger, date per certification (Please refer to the certification by Accountant) Add(Less): Reconciling Items
P
Adjustedbalanceperledger,dateofcount
P
Balance per Cash Receipt Record/Cashbook, date of count
P
Add(Less): Reconciling Items P
Adjusted balance per Cash Receipt Record/Cashbook, date of count
Prepared by: Name of Examiner/Auditor
Reviewed by:
Audit Team Leader
t n u o m A
I x e n
e c n e r e ffi D
n A
r e b m u N l a ir e S
_ _ _ e _ ta _ _ D _ _
ty Q t n u o m A r e p d n a H n O
t n u o C l a u t c A
r e b m u N l a ir e S ty Q
E LU A V Y E N O M T U O H T I W S M R O F E L B A T N U O C C A
y t lii b a t n u o c c A f o e c n a l a B
t n u o c h s ca f o e t a R fd O F o s Y A T LII B A T N U O C C A F O T N E M E T A T S
t n u o m A E C s i h t f o te a D
r e b m u N l a ri e S ty Q t n u o m A
e c n i S d e u s Is
r e b m u N l a ir e S
r fo ty i il b a t n u o cc A f o t n e m e t a t S e v o b a e h t t a h t Y F I T R E C Y B E R E H I
t.c e rr co d n a e u tr si e lu a V y e n o M t u o h ti W s rm o F e l b a t n u co c A
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
r ce if f O le b a t n u o cc A f o e m a N
ty Q
e c in S d e v i e c e R
t n u o m A r e b m u N l a ir e S ty Q
d n a h n o e c n a l a B
t n u o m A E C t s la f o e t a D
r e b m u N l a ri e S ty Q
: r e icf f O le b a t n u o cc A
: n io t a n ig s e D
: cy n e g A
s m r o F f o e m a N
: y b d re a p e r P
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
e t a D
r o it d u A
Annex J Commission On Audit (Name of Bank)
Name of Branch
ATM CASH COUNT SHEET
Denomination
Pieces
Amount
TOTAL
Amount Loaded (FULL)
P
Less: Bills Dispensed Cartridge A Cartridge B Cartridge C Cartridge D ExpectC eA d ain shM T
P
Actual Cash Retrieved/Counted
Cash from Reject Bin
Cash from Cartridges Cartridge A Cartridge B Cartridge C Cartridge D TotaA l ctuaC l ashRetrieved/Counted
Difference (Overage Shortage) /
P
P
I hereby certify that the above listed cash on hand consisting of bills was counted in my presence and the same was returned to me intact immediately after examination.
Accountable Officer's Signature Date: ______________________
Auditor/Examiner Position: _____________________________
Annex K
Name of Agency Bank Reconciliation Statement
Name of Fund Account Number Name of accountable officer As of date of cash count Balanceperbank,dateperbankstatement Add:Deposit in Transit
P P
Total Less: Outstanding Checks
Adjusted balance per bank, date of count
Balance per Check Disbursement Record (CDR) as of date of cash count Add (Less): Reconciling Items
Adjusted balance per CDR, date of count
Balance per ledger, as certified by the Accountant Add (Less): Reconciling Items
AdjustedbalanceperLedger,dateofcount
P
Prepared by: Name Position Reviewed by: Audit Team Leader
Annex L Republic of the Philippines COMMISSION ON AUDIT
(COA Office)
_
LETTER OF DEMAND
________________, 20___ Mr./Ms. (Name Accountable of Officer) Designation ______________________ Agency _________________________ Address_________________________ Sir/Madam: This is to inform you that in the examination of your cash and accounts (designation) as of , 20__,it was foundthatyourcashwas shortby P________. This shortage was arrived at as follows: (agency name and address) on
Particular s
Collections
CashAdvances
Total
Balance of accountability as shown by your cashbook on ________________, certified 20__ correct by you and duly verified by us xxx
xxx
xxx
Cash and valid cash items produced by you andxxx counted by us
xxx
xxx
xxx
xxx
Shortage
xxx
In view of this, demand is hereby made of you to produce immediately the missing funds stated above. Also, please submit to us within seventy-two (72) hours a written explanation why this shortage occurred. Very truly yours, ______________________________ Audit Team Leader _______________________, 20_____ _______________________________ (Accountable Officer) Copy furnished: Agency Hea d _____________________ Position/Designation ________________ Address __________________________
Annex M
Republic of the Philippines COMMISSION ON AUDIT
COA Office)
_
WITHHOLDING ORDER
____________________ Date Agency Head_____________ Position/Designation _______ Agency__________________ Address _________________
Attention: Cashier
Sir/Madam: This
is
to
inform
you that upon examination of the cash and accounts of
(Nameon of ______________, Accountable Officer)a shortage _ , _ in(Position/Designation) office,of conducted his accountabilities in of thethat amount P______ has been definitely established.
In view thereof and pursuant to Section 37 of P.D. 1445, you are hereby directed to immediately withhold payment of the salary and other emoluments due (Name of Accountable Officer) or so much thereof as may be necessary, and to apply the withheld amounts in full satisfaction of his afore-specified shortage.
Very truly yours, By Authority of the Chairman, Commission on Audit: ________________________ Audit Team Leader
Annex N
Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City
WARRANT OF CONSTRUCTIVE DISTRAINT OF PERSONAL PROPERTY
TO: Mr./Ms. _________________ Audit Team Leader Team __, Audit Group _____ Address_________________
Thru: The Cluster/Regional Director
WHEREAS upon evaluation of the report dated _____________________ on the shortage discovered in the audit of the cash and accounts of (Name of Accountable Officer/Position/Designation) of __ (Agency/Address) in the amount of P_________, and despite prior demand for the restitution thereof, no restitution has been made, and as recommended in said report, there is a need for the constructive distraint of personal property of the said accountable officer. NOW, THEREFORE, pursuant to Section 47 of P.D. 1445, you are hereby directed to place under constructive distraint the goods, chattels or effects and other personal property of whatever character of the afore-named accountable officer conformably with the procedural guidelines prescribed under the Revised Manual on Cash Examination. And for so doing, this shall be your warrant of which make due service and make return of your proceedings to me at the Commission. WITNESS MY HAND and official seal at ________________, this ___ day of _________, 20__.
__________________________ Chairman
Copy of this Warrant of Contructive Distraint received this ___ day of ____________, 20__.
_____________________________________ (Name and Signature of Accountable Officer)
______________________________ (Name and Signature of Witness)
_____________________________ (Name and Signature of Witness)
I HEREBY CERTIFY that on _____________, 20__, at ____ o’clock A.M. or P.M., I served a copy of this Warrant of Constructive Distraint upon the accountable officer.
__________________________ Audit Team Leader
RETURN OF WARRANT
1.0 Nature of property distrained--------------------------- ( See attached list) 2.0 Estimated, assessed, or inventoried value ------------ P________________ 3.0 Date of constructive distraint -------------------------- _________________
_____________________ Date
________________________ Audit Team Leader
Annex O
Republic of the Philippines COMMISSION ON AUDIT COA Office) _
RECEIPT FOR GOODS, ARTICLES, AND THINGS SEIZED UNDER AUTHORITY OF SECTION 47, CODE P.D. 1445, KNOWN AS THE GOVERNMENT AUDITING OF OTHERWISE THE PHILIPPINES
_______________________, Philippines _______________, 20___, I/WE, the undersigned, hereby acknowledge to have received from (Name of Examining Auditor, Audit Team/Audit Group/Address) , the following described goods, articles, and things: ______________________________________________________________________________________ ______________________________________________________________________________________ ______________________________________________________________________________________ ______________________________________________________________________________________ the same having been this day constructively distrained and left in my/our possession pending the institution of a criminal complaint for malversation with the Office of the Ombudsman and the preliminary investigation thereat. I/We further pledge and undertake to faithfully keep, preserve, and to the best of my/our ability, protect said goods, and things distrained defacement, leakage, loss, destruction any manner; that I/We will neitherarticles, alter nor remove, nor permitfrom others to alter or remove, or or dispose of theinsame in any manner whatever without the express authority of the Chairman, Commission on Audit and that I/We will produce and deliver all of said goods, articles, and things theupon order or demand of the Chairman or any authorized official of the Commission on Audit. ____________________________________ Signature of Accountable Officer or person in possession of properties for Accountable Officer ____________________________________ Address of Accountable Officer or person in possession of properties for Accountable Officer WITNESSES (That a complete list of properties has been left in the premises in case accountable officer or possessor refuses to accomplish receipt.) Note: To be accomplished in sextuplicate
Annex P Republic of the Philippines COMMISSION ON AUDIT
(COA Office)
_ __________________ Date
Hon. ____________________
Deputy Ombudsman for ____ Office of the Ombudsman Ombudsman Building Agham Road, Quezon City Sir: In
the
course
of
(Name of Accountable Officer),
the
examination
(Designation) ,
of
the
cash
and
accounts
of
(Name and Address of Agency) , covering
the period __________ to _________, it was discovered that the said accountable officer had incurred a shortage in his/her accountabilities in the amount of P_________. On the basis of the documents submitted herewith, we believe that the crime of malversation of public funds under Article 217 of the Revised Penal Code has been committed and that (Name of Accountable Officer) is probably guilty thereof. In view thereof, we are forwarding to your Office the sworn statement/affidavit, with annexes, as well as the certificate of non-forum shopping of the auditor/audit team who/that conducted the examination and discovered the defalcation. Accordingly, we recommend that necessary criminal proceedings be instituted by that Office. The witnesses and the documentary evidences under our control shall be made available to that Office upon the issuance of the proper subpoena. Should you find probable cause in filing criminal charge(s) against (Accountable Officer), we request your good office to please secure the issuance of a hold-departure order from appropriate government agencies. Please inform us on the action taken hereon and on whether or not the necessary request for a hold-departure order against (Accountable Officer) has been facilitated by your end. We will appreciate your usual preferential attention hereto. Very truly yours, FOR THE COMMISSION ON AUDIT _______________________________ Cluster/Regional Director
Annex Q
REPUBLIC OF THE PHILIPPINES ) (Place of Examination) ___________) S.S.
JOINT AFFIDAVIT
We, (Name of Examining Auditors) , all of legal age, Filipinos, and residents of ______________________________________________ respectively, after having been duly sworn to in accordance with law, depose and say:
1. That we are presently employed as (Position) and (Position) , respectively, of the Commission on Audit (COA) and assigned as (Designation) and __(Designation) of Team ___, Audit Group ___, Province of ________ (or Cluster ___, National/Local/Corporate Government Sector); 2. That we joined COA on ______________ and ____________, respectively, and have, since then, performed various audit engagements including the examination and post-audit of the cash and accounts of accountable officers in the government; 3.
That we know (Name of Accountable Officer) and _________________ of (Name and Address of Agency)
designated as on (Date of
Designation) ;
4. That on (Date of Examination) , we conducted an examination of the cash and accounts of (Name of Accountable Officer) ; 5. That in the process of our examination of his/her cash and accounts, we found (Name of Accountable Officer) short of his/her cash accountability by (Amount of Shortage) arrived at as follows: (Show the computation of the shortage) 6. That a letter of demand dated ___________, 20__, copy of which is hereto attached as Annex __, was served to (Name of Accountable Officer) on __________, 20__, detailing how the shortage was arrived at, and directing him/her to immediately produce the missing funds and to explain in writing how this shortage came about; 7. That despite said demand, the shortage remains unaccounted for or unrestituted up to the present time;
8. That the Report of Cash Examination showing the shortage, its annexes, appendices and attachments, was submitted to the Cluster/Regional Director, (Cluster and Sector/Region and Address) , a copy of which is hereto attached as Annex __ and made integral part of this Joint Affidavit. IN WITNESS WHEREOF, we have hereunto affixed our signatures below this ____ day of __________, 20__, at___________________.
________________________ (Affiant)
Com. Cert. No. ___________ IssuedTax at ____________________ On ________________________
_______________________ (Affiant)
Com. Tax Cert. No. ___________ Issued at ____________________ On _________________________
SUBSCRIBED AND SWORN to before me this ___ day of ___________, 20__, at ___________________, affiants showing to me their respective Community Tax Certificates as appearing opposite their signatures. I HEREBY CERTIFY that I have personally examined the affiants and I am satisfied that they voluntarily executed and understood the foregoing Joint Affidavit.
________________________ Notary Public
Doc No. ____ Page No.____ Book No. ___ Series of ____
Note:
Additional facts may by bethe alleged or pleaded in the narration of facts as may be required or warranted attendant circumstances.
