SURIGAONON RURAL BANKING CORPORATION Surigao City

ACCOUNTING DEPARTMENT ACCOUNTING CONTROLS

BRIEF DESCRIPTION Internal Controls are established within the department to facilitate and monitor accounting transactions and ensure compliance with company policies. These internal controls serve as founding guidelines and basis for implementing accounting processes which in turn affect financial records as well as financial reports of the department. Lastly, its implementation is purposely to strengthen controls within the department and of the company in general. OBJECTIVES 1. 2. 3. 4. To establish internal control on accounting processes To strengthen existing controls affecting accounting transactions To institute guidelines affecting financial records To ascertain policies on recording of accounting transactions CONTROL ACTIVITIES Control activities are those specific policies and procedures that help ensure management directives are implemented, including a wide range of activities that occur throughout the organization, by supervisory and front-line personnel. Segregation of duties

Duties are divided or segregated among different people to reduce risk of error or inappropriate actions. For instance, responsibilities for authorizing transactions, recording them and handling the related asset are divided.

Physical Controls

Equipment, inventories, securities, cash and other assets are secured physically, and periodically counted and compared with amounts shown on control records. Access is restricted to those with authority to handle them.

Reconciliations

Comparisons are made between similar records maintained by different persons to verify transaction details.

Policies and Procedures

Established policies, procedures and even job descriptions provide guidance and training to ensure consistent performance at a required level of quality.

Transaction and Activity Reviews

Managers running functions or activities review performance reports. They may relate to different sets of data - operating or financial to one another, together with analyses of the relationships.

Information Processing Controls

A variety of controls are performed to check accuracy, completeness and authorization of transactions. Data entered are subject to edit checks or matching to approved control files. Numerical sequences of transactions are accounted for, and file totals are controlled and reconciled with prior balances and control accounts. SPECIFIC ACCOUNTING CONTROLS 1. ACCESS TO CHART OF ACCOUNTS Access to Chart of Accounts shall be allowed only to the following: Manager Accountant Cashier Bookkeeper Note: MIS personnel may have access on the Chart of Accounts on special circumstances upon proper authorization from the Manager or Accountant for checking purposes. 2. PETTY CASH FUND

Petty Cash Fund shall be available strictly for petty disbursements related to daily banking operations. These disbursements shall be properly approved by the concern department with counterchecking from petty cash custodian.

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The following shall be the process for petty cash disbursements: Secure a petty cash voucher and fill in the data required therein. Head of the concern department shall signify his approval on the request for petty cash disbursement. Petty cash voucher shall be verified by the petty cash custodian and reflect her signature in the voucher. Supporting documents will then be given to the Petty cash custodian for recording and posting of expense. Any excess from cash received by the requesting department shall be turnover back to the petty cash custodian.

In cases of expenses already incurred but subject for refund, request for refund from the Head of the department shall be required. Disbursement covered under the petty cash shall be limited to expenses not more than Three Hundred Pesos (P300.00) per transaction. 3. ADVANCES FOR LIQUIDATION Cash advances for liquidation shall be granted only upon approval of the Manager or Cashier, in case the former is not available. Transactions subject to advances for liquidation shall be, but not limited to, the following: 1. Traveling Expenses, in connection and related to banking operations; 2. Filing Fees for Items in Litigations; and 3. Other expenses not covered under petty cash disbursements duly approved by concern department heads. Liquidation for the cash advances made shall be done Three (3) days upon completion of the subject of the advance. The following shall be the process for petty cash disbursements: 1. Cash advance slip shall be prepared by the concern employee, specifying therein the name of the employee, the amount to be advanced and purpose with signature of the concern employee. 2. The Head of the department shall approve the cash advance before approval from the Manager or Cashier, as the case may be. 3. Manager or Cashier, as the case may be, shall signify its approval by indicating her signature in the cash advance slip. Upon liquidation, the following documents shall be attached together with Liquidation Form: 1. Travel Order, in case the advance is related to official travel 2. Official Receipts, for necessary expenses 3. Other Documents to support expenses made. Note: Access to Accounts Receivable shall be limited to Accountant, Manager, MIS and Audit

4. SAVINGS ACCOUNT Transactions affecting savings account shall be process through the Tellers with supervision of the Cashier and Manager, if needed. Savings deposits and withdrawals shall be in compliance with existing rules and regulations laid down by the bank. All savings accounts in the name of Accounting and Cash personnel shall be closed upon approval of this policy. DEPOSITS Deposits shall be accompanied by a deposit slip duly filled in by the clients as to the details needed therein. Savings account number should coincide with savings account name. In case the name does not match with the savings number, savings account name shall prevail. Procedures in Deposits 1. Deposit slip shall be accomplished by the depositor. 2. Passbook shall be presented upon depositing the amount to the Teller. 3. Teller shall check and verify the data indicated in the deposit slip, confirming the account name and number of the depositor and the amount in words and in figure with the amount actually deposited. 4. After verification, Teller shall mark the deposit slip with Received to signify receipt of the amount. 5. Teller shall record the deposit received to the subsidiary account of the depositor. 6. Teller shall print in the passbook of the depositor the amount deposited. 7. Passbook shall be returned to the depositor, with exception to those deposited after the cut-off date. 8. Unreturned passbooks shall be logged in the new accounts to facilitate the returning of the said passbook. Issuance of passbook shall be done by the New Accounts Clerk. No passbook shall be issued without presenting the fully utilized passbook and it should be logged for control purposes. Passbooks should, likewise, be pre-numbered. In cases of New Accounts, Customer Information Sheet should be duly accomplished in addition to the usual requirements needed.

Note: Access to Savings Accounts either Deposits or Withdrawals shall be limited to the following: 1. Tellers 2. Cashiers 3. Manager and in special cases, Accountant, MIS, and Audit. WITHDRAWALS Withdrawals from deposits shall be accompanied by duly accomplished withdrawal slip. Account name and number should coincide and the amount in words and figures should, likewise, match. Strict compliance with banking policy on withdrawals should be observed. No withdrawals shall be granted, unless proper approval from the manger and cashier is indicated in the withdrawal slip. Withdrawal slip shall be filled in by the depositor, not by any SRBC employee. Authorization to withdraw shall, at same time, monitored in case withdrawal is done through an agent. Erasures in the withdrawal slip shall be countersigned by full signature of the depositor, not a mere initial. Procedures in Withdrawals 1. Duly accomplished withdrawal slip together with the passbook shall be presented to the Receiving Clerk. 2. Receiving clerk shall check the data indicated in the withdrawal slip as to its completeness. 3. Receiving clerk shall, then get the specimen card to check and verify the signature of the withdrawals. 4. Withdrawal slip, passbook, and the specimen card shall be presented to the manager for approval of the withdrawal slip. 5. Approved withdrawal slip shall be given to the Teller for processing of withdrawal. 6. Teller shall verify the withdrawal slip to check approval from the Manager and Cashier together with the passbook of the depositor. 7. Teller shall record the withdrawal in the subsidiary account of the depositor reflecting the amount withdrawn from his/her account. 8. Passbook shall be returned to the depositor, with exception to those whose withdrawals are done after the cut-off date. 9. Unreturned passbooks shall be logged in the new accounts to facilitate the returning of the said passbook.

Overriding of withdrawals shall be done by the Cashier or the Manager for withdrawals exceeding P50,000.00. However, in extreme cases where both are unavailable, the Accountant may do the overriding. In compliance with banking rules and policies, no officer of the same department shall be allowed to have their break at the same time. Note: Access to the subsidiary accounts of Savings Accounts shall be limited to the following: 1. Tellers 2. Cashier 3. Manager and in special cases, Accountant, MIS and Audit. 5. SPECIAL SAVINGS ACCOUNTS Special savings accounts should be maintained for every loan release and supported with sufficient amount due and demandable for deposit to the specific account. Records for special savings accounts for the day should be supported with sufficient amount as reflected in the daily schedule of loan deductions. No withdrawals from the special savings accounts shall be allowed except for deposits to the specific account. Procedure for Deposits to Special Savings Accounts 1. Deposit slips shall be prepared by the loan processor indicating therein the amount to be deposited to the Special Savings Accounts. 2. Procedures from Ordinary deposits shall likewise apply in the deposit to the special accounts. Withdrawals from Special Savings Accounts shall be done only by Managers on time specifically scheduled by Management Committee. Special Savings Accounts shall be strictly for internal purposes only. Limited access shall be given to the Manager, Cashier and Tellers. 6. PURCHASES OF OFFICE SUPPLIES Asset method shall be used in recording supplies purchase to facilitate proper charging of supplies. The method is also more appropriate for offices with decentralized recording of expenses. Purchases on supplies shall be done only when supplies are needed and with proper coordination with the concern department.

Procedures in Purchasing Office Supplies 1. Request for Purchase Form shall be filled in by concern department listing therein the supplies needed and the purpose of the request. 2. Signature of the Requisitioning Officer shall reflect in the form and the approval of the Department Head to certify the authenticity of the purpose and necessity of the materials and supplies requested. 3. Upon delivery of supplies, Purchase In-charge shall notify the requisitioning officer of such delivery for checking and inspection purposes. 4. Supplies shall be then given to the requisitioning officer, otherwise, supplies which do not meet the requirement shall be returned to the supplier. 5. Disbursement Voucher shall be prepared reflecting the amount payable to the supplier. 6. Proper approval of the Management shall be required for the payment and double checking of the amount of supplies paid basing on the delivery receipt is mandated. Recording of Supplies purchased shall be done by Accounting Department to avoid unrecorded supplies used and for proper charging of expenses. 7. FIXED ASSETS A list of purchased fixed assets shall be submitted to the PMD and Accounting Department by the procurer to record the purchase in the book of accounts. Records of the PMD should coincide with that of the Accounting Department for proper accumulation of depreciation expenses and for inventory purposes, thereby ascertaining proper accountability. Transfer of fixed assets should also be coordinated with the PMD and Accounting Department to monitor the movement and to facilitate proper charging of expenses. Actual inventory shall be conducted at least twice a year to update the records in the book of accounts and reconcile the records of PMD and Accounting Department. Note: Purchase of Fixed Assets shall also conform to the procedure laid down for purchase of supplies in cases where purchases are done by Department

8. ACCOUNTING RECORDS Access to accounting records shall be limited to Accounting personnel. Request for viewing or checking of accounting records shall be logged with permission from Accounting In charge. Submission of LCDP transactions should be done weekly. This is to facilitate checking of accounting transaction processed in the LCDP offices. However, daily proof sheet shall be submitted daily before the close of the day. Accounting Records are strictly off limits to Non-Accounting Personnel, except on those special cases as may be determined on a case to case basis. 9. ACCESS TO SUBSIDIARY LEDGER Access to the following account titles shall be limited to the following personnel for checking and control purposes: 1. Accounts Payable Manager Cashier Accountant Bookkeeper 2. Accounts Receivable Manager Cashier Accountant Bookkeeper 3. Loans Receivable Manager Loans Officer Accountant Loan Supervisor Loan Officer 4. Loans Information Sheet Loan Processor Loan Officer 5. Savings Account Manager Cashier Teller Accountant

Scope: These policy and procedures shall be applicable to all SRBC offices, including LCDP offices. Effectivity These policies and procedures shall take effect upon approval from the Chief Operating Officers. For your information and approval.

Prepared By:

JEFFREY P. GALIDO Accounting Head

Noted By:

MA. LUCILLE E. PIODO Corporate Accountant