Chapter 6

Disbursements

Sec.1 Scope
This Chapter covers the rules and regulations to be followed in the disbursement of
public funds,
● 1. the monitoring of receipt and utilization of NCA/NTA,​ 1-6
● Disbursements Sec.12
● 2. preparation and processing of DV/Payroll; in Sec.8
● 3. preparation and issue of checks; 8-13
● 4. payment by cash;​ section 14
● 5. granting, utilization and liquidation/replenishment of cash advances; ​15-41
● Shortage, overage 42-43
● Cancelled Checks 44-45
● Disallowances 46-47
● Overpayment 48
● 6. payment through ADA;​ 50- 57
● 7. remittance of taxes withheld through TRA; ​60- 62
● 8. availment of foreign loans through suppliers credit/constructive cash; ​64
● 9. and payment of operating requirements on FSPs through CDC​.

Sec.2 Definition if Terms

● Accounts Payable – valid and legal obligations of NGAs/OUs
● Advice to Debit Account – authorization issued
● - It serves as instruction to the Modified Disbursement System, Government
Servicing Banks (MDS-GSBs) to debit a specified amount from its available
NCA balance under regular MDS sub-account for payment of creditors/payees
● Agency
● Authorized Card Holder – responsible official to whom a Purchase Card is
issued for purposes of making official purchases
● Billing Entity – accounting unit of the concerned participating agency responsible
in the consolidation of the billing statement from the Credit Card Company
(CCC) and payment of the said billing agency.
● Credit Card Company – refers to Citibank as the authorized credit card
service provider for the Cashless Purchase Card (CPC) System.
● Commercial Check – check issued by government agencies chargeable against
the agency’s checking account with AGDBs.
● Direct Payment System – payment procedure whereby the MDS-GSB shall,
upon receipt of NCA an LDDAP-ADA from DBM pay the CCC within 24-48
hours, through direct credit to the CCC current account.
● Disbursements – constitute all cash paid out during a given period in currency
(cash) or by check/ADA
- may also mean the settlement of government payables/obligations by cash,
check or ADA
- shall be covered by DV/Petty Cash Voucher (PCV)/Payroll.
● Expanded Modified Direct Payment Scheme – the payment procedures
whereby the MDS-GSB shall pay the creditors/payees listed in the
LDDAP-ADA within 24-48 hours
● Implementing Agency – agency to which the funds are transferred for the
purpose of prosecuting/implementing the project.
● Inter-Agency Transferred Fund – cash or money transferred to an Implementing
Agency (IA) for the undertaking of a project by a Source Agency (SA) in
which the allotment was released.
● Letter of Introduction – addressed to the MDS-GSB, issued by the NGA/OU to
its creditors/payees for the purpose of opening an account or validation of an
existing account.
● List of Due and Demandable Accounts Payable-Advice to Debit Account – list
reflecting the names of creditors/payees to be paid by the NGA/OU and the
corresponding amounts of the unpaid claims.
● Merchants – refers to those authorized by the CCC to be the sellers/suppliers
under the CPC System.
● Modified Disbursement System, Government Servicing Banks - government
servicing banks, such as Land Bank of the Philippines (LBP), Development
Bank of the Philippines (DBP), and Philippine Veterans Bank (PVB),
- to which DBM issues the NCAs for crediting to the MDS sub-accounts of
NGAs.
● Petty Cash Fund - for payment of authorized petty or miscellaneous expenses
which cannot be conveniently paid through checks/LDDAP-ADA.
● Program Administrator – designated by the head of the agency who are tasked
to implement and administer the Cashless Purchase Card System.
● Project
● Purchase Limit: 1. Cardholder Monthly Purchase Limit; 2. Cardholder Single
Purchase Limit; 3. Maximum Purchase Card Limit – refers to the maximum
amount that the unit/office is authorized to utilize
● Regular Cash Advance – refers to the amount granted to cashiers, disbursing
officers, paymasters, and/or other accountable officers for the payment of
expenses such as salaries and wages, commutable allowances, honoraria and
other similar payments to officials and employees.
● Steering Committee – advisory committee composed of representatives from
DND and the DBM which shall provide the guidance.
● Special Cash Advance – amount granted on the explicit authority of the Head
of the Agency only to duly designated disbursing officers or employees for
other legally authorized purposes
- payment of current operating expenditures, including salaries, wages and
allowances, travel expenditures, and maintenance and other operating
expenses, of the agency field office or for special purpose/time-bound
undertaking of the agency when it is impractical to pay the same by check.
● Source Agency – agency to which the allotment has been originally released
and in whose behalf or benefit the project will be prosecuted/implemented.
● Tax Remittance Advice - should be used by the NGAs in the remittance of
withheld taxes on funds coming from DBM.
● Withdrawal Application – is a written request from the borrower to the
development partner to pay funds against to borrower’s loan account.
Sec. 3. Notice of Cash Allocation
● No MDS check/ADA shall be issued without the covering NCA
● NCA issued and credited to the Special MDS Accounts of agencies for
payment of retirement gratuity/terminal leave benefits as well as prior years’
accounts payable shall be valid within the period prescribed under existing
rules and regulations
● NCA issued and credited to the Special MDS Accounts for Trust to cover
payments of authorized claims shall be valid within the period prescribed under
existing regulations.

● For NCA issued for foreign assisted projects, a separate MDS account
maintained, MDS check/ADA shall be issued only for specific purpose until full
implementation of the project.
● monitored through the maintenance of the Registry of Allotments and Notice of
Cash Allocation (RANCA)

Sec. 4. Notice of Transfer of Allocation.

● Authority to pay through the issue of MDS checks, ADA or other modes of
disbursements.
● No MDS check/ADA shall be issued by the ROs/OUs (regional office/ operating
unit) without the covering NTA.
● NTA issued by the Central Office and credited to the Special MDS Accounts
of ROs/OUs for payment of retirement gratuity/terminal leave benefits as well
as prior years’ accounts payable shall be valid within the period prescribed
under existing rules and regulations.
● monitored through the maintenance of the Registry of Allotment and Notice of
Transfer of Allocation (RANTA) (Appendix 31) by the ROs/OUs.

Sec. 5. Recording of the Receipt of NCA/NTA.

The CO/ROs/OUs shall record in the RANCA/RANTA all NCAs/NTAs received and
the amount disbursed

Sec. 6. Procedures for Recording of Receipt and Utilization of NCAs/NTAs

● receive SARO, GARO and GAARD, record allotment.
● Then receive NTA/NCA from DBM, record receipt.
● Records the amount disbursed/utilized in the RANCA/ RANTA based on processed
DVs/Payroll.
● Indicates the balance of the Unutilized NCA/NTA and Unfunded Allotment.

Sec. 7. Modes of Disbursements.

(a) checks (MDS or commercial checks),
(b) cash (out of cash advance granted to authorized Disbursing Officer),
(c) advice to debit the account, ADA
(d) tax remittance advice, TRA
(e) working Fund/CDC, and
(f) direct payment method.
Sec. 8. Disbursements by Check

● drawn only on duly approved Disbursement Voucher (DV)

● Modified Disbursement System Checks – issued by government agencies
chargeable against the account of the Treasurer of the Philippines, which are
maintained with different MDS-GSBs.
● Commercial Checks – are checks issued by NGAs chargeable against the Agency
Checking Account with GSBs.

Sec. 9. Documentary Requirements

depending on the nature of expenses to be paid by checks shall be complied with as
prescribed in COA Circular No. 2012-001

​Sec. 10. Accounting Books, Records, Forms and Reports to be Prepared and Maintained.
● checks shall be recorded chronologically in the Checks and ADA Disbursements
Record (CkADADRec)
● All checks/ADA drawn whether released or unreleased shall be included in the
Report of Checks Issued (RCI) (Appendix 35) or Report of ADA Issued (RADAI)
(Appendix 13), which shall be prepared daily by the Cashier. The RCI/RADAI
together with the original copies of the supporting documents (SDs) shall be
submitted to the Accounting Division/Unit for the preparation of JEV (Appendix 36)

Sec. 11. Recording of Check Disbursements by Field Offices without Complete Set of
Books.
● chronologically in the Cash in Bank Register (CBReg)

Sec. 12. Procedures for Disbursements by Checks

Preparation of DV
● 4 copies of DV
● Concern parties: Forwards the DVs, SDs and ORS to the Budget Division/Unit for
processing.
Processing of DV
● Accounting: receive the copies, checks completeness, return if not
● Stamp Received chu chu
● DV number and into logbook, date, creditor/ payee, particulars, and amoun
● 00 - 0000 - 00 - 000000 Fund Cluster Code, year of issue, month, serial number
● designated staff: review supporting documents, if DV and ORS differs, prepare
NORSA (Obligation Requests Status, Notice of Obligation Requests and Status)
● Accounting: signs" Approved by" portion in NORSA
● Releasing Staff: logbook, forward 4 kinds of SDs
● Budget Division: Posts the NORSA in the ‘Obligation’ column of Section C of the
ORS.
● Adjustments of amount vs actual obligation adjusted to RAOD
● return to Accounting Division
● initials in box B by staff,
● accounting head: Retrieves the RANCA/RANTA from file and determines availability
of NCA, safekeeping if not available
 ● Checks Cash Available in Box B of DV
● Reviews DV and supporting documentsSD, sign box B, return to concern
office("Office of the Agency Head??")
● Requesting Office: approving officer: review and signs Box C
● forward to Cash/ Treasury Unit

Preparation and Approval of Checks

● Cash/ Treasury Unit: review, prepares checks in 3 copies, Retrieves from file the
CkADADRec maintained per bank account and records the chu chu,
● the head will review documents and sign the checks.
● forward to office of the agency head/ requesting office
● requesting office:authorized personnel: review, countersign the check
● forward to Cash Unit
● Cash Unit: review SDs, Retrieves the CkADADRec and notes the return of the signed
and countersigned check.
● Releases the original of check and Copy 4 of DV to the payee.
● attach invoice chu chu, Posts in the ‘Date Released’ column of the CkADADRec the
date of release of the check to the claimant.

Preparation of Reports
Daily
● Cashier: Prepares Advice of Checks Issued and Cancelled (ACIC)
● retrieves some SDs and prepare RCI(Record of Chequss Issued)

😍 😍)
● certification chu chu in RCI
● distribute RCI to: COA (ako taga receive nito lagi sa kay ateng Cashier
and other SDs, accounting, budget unit and cash unit

Preparation of JEV
Daily
● Accounting: Receives Copies 1-2 of RCI with Copy 2 of the Check, Copies 1 and 3 of
DVs, Copies 2-3 of ORS and other SDs from Cash/Treasury Unit
● staff: prepare JEV, signs "prepared by"
● head: review and signs "Certified Correct By"
● staff: record in CkDJ, give to budget unit and COA

Sec. 13. Illustrative Accounting Entries for Disbursements By Check

● most of the entries are credito to Cash-Modified Disbursement System (MDS),

Regular 10104040

Sec. 14. Disbursements by Cash

● All cash payments shall be covered by duly approved DVs/payrolls/petty cash
vouchers (PCVs).
● A cash advance shall be reported on and liquidated as soon as the purpose
for which it was given has been served;
● Except for cash advance for official travel, no officer or employee shall be
granted cash advance unless he/she is properly bonded
● Only permanently appointed officials shall be designated as disbursing officers;
 ● Transfer of cash advance from one accountable officer to another shall not be
allowed;
● The cash advance shall be used solely for specific legal purpose for which it
was granted.

Sec. 15. Cash Advance for Payroll​.

Advances for Payroll shall be granted to Regular Disbursing Officers for payment of
salaries, wages, honoraria, allowances and other personnel benefits of officials and
employees

Sec. 16. Documentary Requirements​.

Sec. 17. Accounting Books, Records, Forms and Reports to be Prepared and Maintained

● Disbursing Officer shall maintain the Cash Disbursements Record (CDRec) to

monitor the cash advances/payroll, current operating expenses, and special
purpose/time-bound undertakings and
● prepare the Report of Cash Disbursements (RCDisb) to report its utilization

Sec. 18. Procedures for Disbursements out of Advances for Payroll

Granting of Advances for Payroll through ADA

● Cashier: Receives the validated LDDAP-ADA from the authorized Accountable
Officer. Records in the CDRec details of ADA
● Disbursing officer: Withdraws the amount of cash advance from the GSB and keeps
cash in a safety vault.
Utilization of Advances for Payroll
● Pays officials and employees/other payees.
● Records the refund for unclaimed salary im CDRec
Liquidation of Advances for Payroll
● Prepare RCDisb, signs the certification portion on it, then forward to accounting.
Recording of Liquidation
● Accounting: receives RCDisb, prepare JEV, prepared by and certified correct by
● Records JEV in CDJ
● Records in the individual IP of officials and employees the date of payment based on
paid payroll.

Sec. 19. Illustrative Accounting Entries for Granting and Liquidation of Advances for Payroll
and the Set-up of Salary Deductions and Due to Officers and Employee
● granting- debiting Advances to chu chu, and crediting Cash- MDS, Regular
● liquidating- debiting the expense amd crediting Advances to chu chu

Sec. 20. Cash Advances for Operating Expenses of Government Units without Complete Set
of Books of Accounts.

Sec. 21. Documentary Requirements

Sec. 22. Accounting Books, Records, Forms and Reports to be Prepared and Maintained.
 ● Cash Disbursements Register (CDReg) (Appendix 43) shall be maintained to record,
monitor and report transactions involving the grant, utilization and liquidation of the
cash advance.

Sec. 23. Procedures for Disbursements of Cash Advance for Operating Expenses of
Government Units without Complete Set of Books of Accounts

Granting of Cash Advance for Operating Expenses of Field/Extension/Satellite

Offices/Operating Units
● Cashier: Receives the approved check from the Cashier of the
Central/Regional/Division Office or Operating Unit.
● Accomplishes the CDReg
Utilization of Cash Advances for Operating Expenses
● Pay, (refer to the instructions at the back of DV on how to prepare the DV and Seq.
No. 1-16, Sec. 12 of this Chapter for the procedures in processing and approval of
DV.)
● Records in the CDReg the details
Liquidation of Cash Advances for Operating Expenses
● submit CDReg with SDs to accounting unit everytime there is liquidation

Sec. 24. Illustrative Accounting Entries to be recorded in the Central/ Regional/Division

Office or OU Books for Advances for MOOE/Authorized Expenses Granted to Government
Units without Complete Set of Books of Account
● granting- debit Advances for Operating Expenses and credit to Cash-MDS, regular
● liquidation- debiting specific expenses, crediting Advances for OE

Sec. 25. Cash Advances for Travel

● cover only those that are urgent and extremely necessary
● "Advances to Officers and Employees"

Sec. 26. Documentary Requirements.

a. Granting Cash Advance
Local Travel
● Office Order/ Travel Order
● Itinerary of Travel
● Certification from accountant about previous cash advance
Foreign Travel
● Office Order/ Travel Order (approved by OP and agency head)
● approved IT
● Letter of invitation
● For plane fare, quotations of three travel agencies or its equivalent
● Flight itinerary issued by the travel agency
● Copy of the United Nations Development Programme (UNDP) rate for the daily
subsistence allowance (DSA) for the country of destination
● dollar to peso exchange rate
● Where applicable, authority from the OP to claim representation expenses;
● In case if seminars/ meetings for foreign- invitation, acceptance as nominee and
Programme Agenda and Logistics Information
 ● Certification from accountant

b. Liquidation of Cash Advance

Sec. 27. Accounting Books, Records, Forms and Reports to be Prepared and
Maintained.
● The officers/employees who made the travel shall prepare the Liquidation report
which shall be the basis for the preparation of the JEV.
● Accounting Division/Unit shall record the JEV in the GJ and maintain SL/IP for
officers and employees

Sec. 28. Procedures for Disbursements of Advances to Officers and Employees

● unit concerned: receive approved check and DV from cashier
● prepare LR, signs Box A in Certification portion, attach SDs
● Supervisor of concerned employee: signs Box B
● unit concerned: submit LR and SDs to accounting office
● accounting head: review and signs Box C
Recording of Liquidation of Advances to Officers and Employees

💕
● JEV, prepared by, certified correct by, and record to GJ
● submit to COA

Sec. 29. Illustrative Accounting Entries for the Granting and Liquidation of Advances to
Officers and Employees covering Official Travel
● granting: debit Advances to OE, credit Cash-MDS, regular (debit training expense if
there is)
● Liquidating: debit Travelling Expenses- Local(or foreign), credit Advances to OE

Sec. 30. Cash Advance for Specific Purpose/Time-Bound Undertaking.

● granted only to duly authorized accountable officer/special disbursing officer
● “Advances to Special Disbursing Office.”

Sec. 31. Documentary Requirements.

● Sec. 32. Accounting Books, Records, Forms and Reports to be Prepared and
Maintained.

Sec. 32. Accounting Books, Records, Forms and Reports to be Prepared and Maintained.
● accountable officer/special disbursing officer shall prepare the RCDisb and maintain
the CDRec

Sec. 33. Procedures for Disbursements of Advances to Special Disbursing Officers

Granting of Cash Advance for Specific Purpose/Time-Bound Undertaking

● Cashier: approves check and record CDRec
● encashes check kn GSB
Utilization of Cash Advance for Specific Purpose/Time-Bound Undertaking
● pay
● record payment in CDRec
Liquidation of Cash Advance for Special Purpose/Time-Bound Undertaking
● prepare RCDisb, signs certification box
● forward to accounting office
Recording of Liquidation of Cash Advance for Special Purpose/Time-Bound Undertaking
● accounting: review, prepare JEV
● JEV prepared by, certified correct by, rexord to CDJ

Sec. 34. Illustrative Accounting Entries for Advances to Special Disbursing Officers
● granting- debit Advances to SDO, credit Cash- MDS, Regular
● liquidation- debit specific expenses, credit Advances to SDO

Sec. 35. Cash Advance for Petty Operating Expenses

● for one month
● maintained using the Imprest System
● replenished as soon as disbursements reach at least 75% or as needed
● only for amounts not exceeding P15,000 for each transaction, except when allowed
by law or COA
● unused balance of the PCF shall not be closed/refunded at the end of the
year
● fund shall be closed only upon termination, separation, retirement or dismissal
of the Petty Cash Fund Custodian
● At the end of the year, the PCFC shall submit to the Accounting Division/Unit
all unreplenished Petty Cash Vouchers

Sec. 36. Documentary Requirements.

Sec. 37. Accounting Books, Records, Forms and Reports to be Prepared and Maintained.

Sec. 38. Procedures for Disbursements through Petty Cash

Establishment of PCF
● custodian: receives approved check from cashier, record in PCFR
● encash check in GSB and keep to safety vault
Utilization of Cash Advance from PCF
Liquidation of Cash Advance from PCF

Sec. 39. Illustrative Accounting Entries for Disbursements Out of Petty Cas
● establishment of PCF- debit Petty Cash, credit Cash, MDS, regular
● replenishment- debit specific expenses, credit Cash- MDS, regular
● return of unused PCF(upon custodian retirement chu chu)- debit Cash- collecting
officer, credit Petty Cash
● End of the Year, unreplenished petty cash- debit specific expenses, credit Petty
Cash, then establish again

Sec. 40. Cash Advances for Petty Cash Fund of Government Units without Complete Set of
Books of Accounts
● granted cash advance covering two months operating requirements for authorized
petty and other miscellaneous expenses to finance their operations
Sec. 41. Accounting Records, Forms and Reports to be Prepared and Maintained.
● The PCFC shall maintain the Petty Cash Fund Register (PCFReg)
● photocopy of this Register together with original PCV and its SDs shall be submitted
to the Accounting Division/Unit of agency CO/RO/DO

Sec. 42. Accounting for Cash Shortage/Overage of Disbursing Officer

● miscellaneous(overage) income or receivable from custodian(shortage)

Sec. 43. Illustrative Accounting Entries for Cash Overage/Shortage of Disbursing Officer
Cash Overage
● Recognize: debit Cash-CO, credit Miscellaneous Income
● Remittance: debit Cash-Treasury/Agency Deposit, Regular, credit Cash-CO

Cash Shortage
● recognize: debit Due from OE, credit advances accounts
● restitution: debit Cash-CO, credit Due from OE
● remittance: debit Cash-Treasury/Agency Deposit, Regular, credit Cash-CO

Sec. 44. Accounting for Cancelled Checks.

● Checks may be cancelled when they become stale, voided or spoiled.
● depository bank considers a check stale, if it has been outstanding for over six
months from date of issue or as prescribed
● shall be reported as cancelled in the List of Unreleased Checks that will be attached
to the RCI.
● New checks may be issued for the replacement, replacement check shall be reported
in the RCI.

Sec. 45. Illustrative Accounting Entries for Cancelled Checks in current year
● cancellation of MDS check- debit Cash-MDS, regular, credit AP
● replacement- debit AP, credit Cash-MDS,Regular
● cancellation without replacement- debit Cash-MDS, Regular, credit appropriate
account*
For prior year
Commercial check cancelled for current and prior year
● recognize cancellation- debit Cash in Bank- Local Currency, Current Account,
credit AP
● replacement- debit AP,
credit CIB-LC, current
● cancellation without replacement- dr. accumulated surplus, cr. appropriate account

Sec. 46. Accounting for Disallowances

● taken up in the books of accounts only when they become final and executory
● record in JEV and RCD
● Receivable-Disallowances/Charges and credit the appropriate account(accumulated
surplus if prior year)

Sec. 47. Illustrative Accounting Entries for Disallowances

Sec. 48. Accounting for Overpayments
● In case of overpayments, refunds shall be demanded of the employees concerned
a. Overpayment taken up as receivable
● debit Due from OE, credit appropriate account, record when cash is received then
deposit (debit to Cash-Treasury/Agency Deposit, Regular)
b. Refund of overpayment not taken up as receivable
● debit Cash-CO, credit Salaries and Wages, Regular, accumulated surplus if from
prior year
● deposit

Sec. 49. Illustrative Accounting Entries for Overpayments

Sec. 50. Disbursements through List of Due and Demandable Accounts Payable-Advice to
Debit Account.

Sec. 51. Signatories in the List of Due and Demandable Accounts Payable-Advice to Debit
Account

Sec. 52. Accounting Books, Records, Forms and Reports to be Prepared and Maintained
● cashier: All LDDAP-ADA prepared/issued during the day shall be recorded
chronologically in the CkADADRec
● The RADAI shall be prepared by the Cash/Treasury Unit daily

Sec. 53. Monitoring of Receipt of Validated LDDAP-ADA and Official Receipt or other
Acceptable Evidence of Receipt of Payment.

Sec. 54. Recording of LDDAP-ADA Issued/Invalidated

Sec. 55. Documentary Requirements

Sec. 56. Procedures for Disbursements through LDDAP-ADA

Sec. 57. Illustrative Accounting Entries for Disbursements through LDDAP-ADA

Sec. 58. Disbursements Through electronic Modified Disbursement System as part of the
Modified Disbursement Scheme

Sec. 59. Disbursements through Cashless Purchase Card System

Sec. 60. Disbursements through Tax Remittance Advice

● serially-numbered document prescribed by the DBM that should be used by
the NGAs in the remittance of withheld taxes on funds coming from DBM

Sec. 61. Procedures for Disbursements through TRA

Sec. 62. Illustrative Accounting Entries for Remittance of Taxes Withheld through TRA
Sec. 63. Disbursement for Inter-Agency Transferred Funds (IATF)

Sec. 64. Disbursements by Foreign-based Government Agencies

Sec. 65. Illustrative Accounting Entries for Disbursements of FBGAs

Sec. 66. Disbursements through Direct Payment Method

Sec. 67. Procedures for Disbursements through Direct Payment Scheme of Foreign Loans
Availment

Sec. 68. Illustrative Accounting Entries for Disbursements through Direct Payment Scheme
of Loan Availment

Sec. 69. Financial Statements Presentation