Standard Operating Policy and Procedures 1

Finance and Accounting Department

NOVEMBER 30, 2021

Del Rio Realty & Development of Bacolod, Inc.

 TABLE OF CONTENTS
Section 1 Overview 1
1.1 Purpose of this Manual 1
Section 2 Finance Department Organizational Chart 2
Section 3 Area of Responsibility 3
Section 4 General Ledger and Chart of Accounts 4
Section 5 Internal Control 6
Section 6 Financial Statement Audit 6
Section 7 Accounting Procedures 7
7.1 Cash 7
A. Cash/Check Receipts 7
B. Cash Disbursements and Expense Allocation 11
C. Petty Cash Fund 14
D. Bank Reconciliations 15
E. Reimbursement of Accounts from one Building to Another 16
F. Cash Advanced for Liquidation (TBL) 17
7.2 Accounts Payable 19
7.3 Accounts Receivable Collection and Billing 21
7.4 Purchasing 24
7.5 Inventory Management 28
7.6 Payroll 32
7.7 Fixed Assets 38
Section 8 Documents Retention and Destruction Policy 44
Section 9 Insurance 46
Section 10 Financial Reports and Records 46

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SOP 1- ACCOUNTING & FINANCE DEPARTMENT
(Standard Operation Policy & Procedure)

Section 1 OVERVIEW
1.1 Purpose of this Manual:
The policies and procedures discussed herein address diverse accounting and financial policies.
These policies are designed to enhance financial accountability and transparency, eliminate
misunderstandings, and protect the assets and growth of the DRRDBI. It is the responsibility of
DRRDBI Finance and Accounting Department and DRRDBI Management Team to ensure
sound accounting practices and internal controls.

The major purpose of this policy and/or procedures manual is to document an organization's
system of internal controls and enforce control procedures. This Standard Operating Procedures
also seeks to a) aid in the preparation and processing of accounting transactions and reports; b)
provide training and direction to staff, especially to those new to their positions; c) increase
efficiency by promoting standardization; d) facilitate backup staffing, when necessary; e) offer a
repository of reference information; and f) provide documentation of current systems that
facilitate technological change and conversions.

This manual is subject to modification, amendment and deletion to ensure an up-to-date

reference. The Finance Department shall review this manual as often as needed to make
recommendations for amendments, addition or deletion.

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Section 2 FINANCE DEPARTMENT ORGANIZATIONAL
STRUCTURE

1. DRRDBI FINANCE DEPARTMENT

POSITIONS:
a. FINANCE MANAGER
b. ACCOUNTANT
c. BOOKKEEPER
d. AUDITOR
e. FINANCE OFFICER: PROPERTY MANAGEMENT DIVISION
f. FINANCE OFFICER: PROPERTY DEVELOPMENT DIVISION
g. COLLECTIONS OFFICER
h. PAYROLL OFFICER
i. MSS: FINANCE ASSISTANT LV2
j. MSS: FINANCE ASSISTANT LV1

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Section 3 AREA OF RESPONSIBILITY
It is the policy of the DRRDBI to ensure an adequate segregation of responsibilities with regard
to all aspects of the financial operations of the DRRDBI to include but not limited to cash
receipts, bank deposits, bank statement reconciliations, invoice approval, check preparation,
check signing, and expense reimbursement approvals.  Additionally, the DRRDBI shall consult
with an independent CPA firm to study internal controls and recommend improvements in
segregation of duties.

Finance and Accounting Responsibilities:

1. General Ledger
2. Budgeting
3. Asset Management
4. Contract Administration
5. Purchasing
6. Account Receivable and Billing
7. Cash Receipt
8. Account Payable
9. Cash Disbursement
10. Payroll & Benefits
11. Financial Statement
12. External Reporting
13. Bank Reconciliation
14. Compliance with Government Reporting Requirements
15. Annual Audit
16. Lease & Tenant Account
17. Property Insurance

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Section 4 GENERAL LEDGER AND CHART OF
ACCOUNTS
The general ledger is the collection of:

1. Asset Account
2. Liability Accounts
3. Net Assets or Equity Accounts
4. Revenue and Expense Accounts.
It is used to accumulate all financial transactions and is supported by subsidiary ledgers that
provide details for certain accounts. The general ledger is the foundation for the accumulation of
data and production of reports.

Chart of Accounts

The chart of accounts is the framework for the general ledger system and the basis for the
accounting system. The chart of accounts consists of account titles and account numbers
assigned to the titles. General ledger accounts are used to accumulate transactions and the impact
of these transactions on each asset, liability, net asset, revenue and expense account.

All DRRDBI employees involved with account coding or budgetary responsibilities will be
issued a current chart of accounts. As the chart of accounts is revised, an updated copy of the
chart of accounts shall be promptly distributed to these individuals.

The Accountant monitors and controls the chart of accounts, including all account maintenance,
such as additions and deletions. Any additions or deletions of accounts should be approved by
the Accountant, who ensures that the chart of accounts is consistent with the Organizational
structure of DRRDBI and meets the needs of each division and department.

DRRDBI operate on a calendar year basis.

DRRDBI utilizes numerous estimates in the preparation of its interim and annual financial
statements such as:

A. Useful lives of property and equipment

B. Fair market values of investments

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 C. Values of contributed services
D. Allocations of certain indirect costs
E. Allocations of time/salaries, etc.
The Accountant will reassess, review, and approve all estimates yearly. All key conclusions,
bases, and other elements associated with each accounting estimate shall be documented in
writing. All material estimates, and changes in estimates from one year to the next, shall be
disclosed to the Finance Committee, the Audit Committee, and the external audit firm.

All general ledger entries that do not originate from a subsidiary ledger shall be supported by
journal vouchers or other documentation, including an explanation of each such entry.

Examples of such journal entries are:

a. Recording of noncash transaction

b. Corrections of posting errors
c. Nonrecurring accruals of income and expenses.
Recurring journal entries may include, but are not limited to:

a. Depreciation of fixed assets,

b. Amortization of prepaid expenses,
c. Accruals of recurring expenses,
d. Amortization of deferred revenue, etc.
Recurring journal entries shall be supported by a schedule associated with the underlying asset or
liability account or, in the case of short-term recurring journal entries or immaterial items, a
journal voucher.

Section 5 INTERNAL CONTROL

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Del Rio Realty and Development of Bacolod, Inc. will maintain an adequate system of internal
accounting controls to provide management with reasonable assurance as to the safeguarding of
assets against losses from unauthorized use or disposition and the reliability of financial records
for preparing financial statements and maintaining accountability of assets.

The characteristics of an adequate system of internal control will include:

A. Segregation of duties within the organization based on functional responsibilities

B. A system of authorization and record retention;
C. A degree of personnel competence commensurate with responsibilities.
To achieve these objectives, controls will be in place in ways that no one person shall have
complete control over all phases of any significant transaction and whenever possible, the flow
of work will be from one employee to another so that the work of the second, without duplicating
that of the first, provides a check upon it. Record keeping will be separated from operations or
the handling and custody of assets.

Additionally, the location and safekeeping of valuable assets must be carefully controlled so that
unauthorized individuals cannot have access to them.

To protect DRRDBI against fraudulent acts and other actions taken by an employee that are not
in line with the company’s goals, the following internal control procedures shall be adopted:

 Claims of Expenses
A Cash Disbursement Voucher (CDV) from must be filled out and signed by the
employee confirming that all of the claims represent expenses purposely incurred
while pursuing company business;
It will be then reviewed by the next management level authorized or by the
manager as a check before being processed. This practice, the double signatory, is
the most common form of internal control.

 Purchasing
Employee wishing to procure an item in behalf of the company must complete a
Requisition Slip (RS) form explaining the requirement together with other details.

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 A second signature must be obtained from the manager or immediate supervisor
before the form will be sent to the purchaser.
Purchaser is responsible for ensuring that the correct form of procurement is
adhered to which requires at least two or three quotes from competing suppliers
before business is placed. This is to avoid the possibility of collusion between an
employee and an outside company.

Section 6 FINANCIAL STATEMENT AUDIT

DRRDBI will have its financial statements audited by an Independent Certified Public
Accounting firm on an annual basis. It will have its financial statements audited annually in
accordance with generally accepted auditing standards. In preparing for the audit, the company
should complete a self-check audit program. Copies of the audited financial statements will be
distributed to the Managing Director, Finance Manager and/or Accountant and others at the
discretion of DRRDBI’s Heads. Additional copies will also be distributed to the Board of
Directors.

Section 7 ACCOUNTING PROCEDURES

7.1 : CASH
A.     Cash/Check Receipts

Cash Receipts generally arises from:

1. Rental
2. Maintenance fee
3. BACIWA Bill
4. CENECO Bill

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 5. Other Fees stated in the contract
Purpose
1. Ensure that funds accepted follow the same process each time so that funds can be
deposited in a timely manner and easily tracked while keeping both the funds and
personnel handling the funds secure.
2. To establish proper controls and cash handling procedures throughout the company.
3. Controls are required to safeguard against loss and to define responsibilities in the
handling of cash.
4. “Cash” may consist of currency, checks, money orders, credit card transactions, and
electronic fund transfers.

Policy
1. All funds/checks collected by the company must be deposited into an authorized or
designated bank account as soon as practical, generally on the date of collection or on the
date the check due in case of PDC’s.
2. Where this is impractical and where the total deposit is less than ten thousand pesos
(₱10,000), the deposit may be made within one business day from the collection.
3. Cash Handling Policy
The company must follow proper procedures and exercise of internal controls when
handling the collection and deposits of cash and checks. The system is designated to
provide reasonable assurance that errors will be detected and corrected in the normal
course of activities.
a. Segregation of Duties
i. Collection/Receiving and custody of funds is the responsibility of Finance
Manager
ii. Custody of Funds is the Finance Officer responsibility
iii. Depositing the funds will be taken care of by the Finance Assistant
iv. Reconciling account balance is the work of the Bookkeeper.
b. Collection/Receiving of Funds
i. An Official Receipt is given only to Rental Payments received from
Tenants.

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 ii. Acknowledgement Receipt is given to every payment made by tenants with
Official Receipt in case of Rental.
iii. As a general rule, the receipt(s) must be written or entry made in a cash
register for each remittance received from the tenant.
iv. Each receipt(s) is pre-numbered with three (3) copies: the original copy will
be given to the payee, the third copy shall be retained in the receipt book,
while the second copy shall be attached on the Tenant’s folder.
v. Each Official Receipt must be itemized to show the date it is made, the
name of the payer/tenant, the unit it occupies, the total amount paid in
figures, the date check was deposited in case of PDC and signature of the
receiving officer.
c. Custody of Funds
i. Named individuals shall be responsible for cash and checks at each stage
before they are banked.
ii. The Finance Officer must be responsible for cash held within the
department and must retain custody and control over the cash fund for
which he/she is responsible at all times.
iii. The Finance Department must pre-assign secondary responsibility to
another designated individual in the department when the regular custodian
is absent.
iv. Custody of keys must be maintained by limited personnel only. The
Finance Manager and one designated person are the ones who should have
a copy of the keys and authorized to open the cash storage.
d. Depositing of Funds
i. The Finance Manager will determine to which bank accounts of the
company the funds will be deposited to.
ii. The Finance Officer shall then check and re-count the amount endorsed. In
case of check/PDC, he/she will check the date, the amount in figures and
in words, check for any alteration and double check the account number
where it will be deposited to.

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 iii. In case of cash of more than Fifty Thousand Pesos (₱ 50,000.00), the
Finance Officer shall be accompanied by one of the company’s appointed
personnel or shall be delivered directly to the bank using the company’s
vehicle.
e. Reconciling Funds/Accounts
i. The Bookkeeper is responsible for data entry into the accounting system
for reconciliation of amounts.
Procedures

 The Steps in The Payment of Bills and Fees by The Tenants Are:

1. The TENANT shall deposit directly to the company’s bank account the dues on Billing
Notices for Rentals, Electric and Water Bill for the month;
2. Tenant shall then send a scanned copy of the deposits slip through company email, or submit
a photocopy of the deposit slip to the Administrative Office, no later than 2 business days
after date of deposit or before the deadline of said payment, for verification and updating the
tenants account.
3. No proof of deposit, the TENANT will be charged with the corresponding penalty fees for
delinquent payment. (See the Contract of Lease, Section P. Delinquent Payments)
4. Official Receipt and Acknowledge Receipt will be given to the TENANT after verification
of their payment with the bank or after three days of clearing.

 For actual receipts of cash or check the following should be practiced:

1. Cash/Currency (For special Case only as all payments are either PDC or bank deposits)
i. The Finance Assistant or Officer receives the payment of client/tenant
ii. Then the amount received should be counted and verified
iii. The Finance Assistant will issue an Official Receipt or Acknowledgement Receipt
in triplicate copy for the payment
iv. Upon the receipt of payment/s, Cash Receipts Log book should be filled in
v. The Finance Officer will then endorse the cash and payment summary to the
Finance Manager
vi. Receipt(s) are distributed to the Tenants through the Maintenance personnel
assigned in the particular building.

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2. Check
i. Upon the commencement of the lease, Tenants are required to provide their Post-
dated Check (PDC) for the term indicated in the contract. Checks accepted are
Business and Personal Bank Checks only.
ii. When accepting PDC’s, the following information should be verified:
a. Signature (as shown in their recipient file attached in their tenant folder)
b. Issued for Del Rio Realty and Development of Bacolod, Inc.
c. The amount in words and in figures must match.
d. The check is not stale dated.
e. The check has no alteration.
f. Check must be dated and amount should reflect as it is stated in their signed
contract.
iii. The Finance Manager receives the PDCs from the client and forward it to the Finance
Assistant.
iv. The Finance Assistant will scan the PDC, so that file can be easily access for future
reference, print a copy and attached it to the original checks.
v. The Finance Assistant will generate PDC’s Transmittal Document that contains the
list of the PDC’s bank name and account number, check number and amount along
with the description of the payment in three (3) copies, one copy to be given to the
client, one copy to the Finance Assistant and one copy attached in the tenant folder.
vi. The Finance Manager take responsibility of the custody of the checks to be endorsed
to the Finance Officer on the date of the checks, generally every first (1 st) day of the
month or within the first five (5) days of the month.
vii. Aside from the Transmittal document endorsed to the Manager, the Finance Assistant
will also have to email a file to the Finance Manager and Officer and the Managing
Director, containing the scanned and summary list of the PDCs.
viii. Checks Endorsement shall be done through the following:
a. ‘Endorsement’ means to type, write or stamp the back of the check with the
required information and instruction

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 b. It is the responsibility of the custodian of PDC’s to endorse the checks
immediately upon the due date of the checks.
c. This is to ensure that the funds received by check are protected from
fraudulent endorsement and theft of funds.

FOR DEPOSITS ONLY

Del Rio Realty and Development of Bacolod, Inc.
Name of the Building
Bank Account # xxxxxx

ix. The Finance Assistant will fill up deposit slip and deposits the checks and issue
Official Receipt and Acknowledgement Receipt to the client/tenant after three days of
clearing. Receipt(s) are distributed to the Tenants through the Maintenance Personnel.

B. Cash Disbursement and Expense Allocation

Cash disbursements are generally made for:
1. Payments to suppliers for goods and services
2. Taxes/license fees
3. Staff training and development.
4. Meeting expenses
5. Employee reimbursements
6. Various Purchases under Petty Cash Fund
Purpose
1. The cash disbursements process is designed to ensure that the company appropriately
processes payments to satisfy its accounts payable when they are due.
2. Cash disbursements may include payments made by check or with cash. 

Policy
1. Documentation / Supporting documents: All Cash payments (to employees / vendors)
should be supported by:
i. An Original invoice/receipt for each expense item that matches the purchase
order.

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 ii. In exceptional circumstances, in the absence of invoice/receipt, the settlement
form should include an itemized list of missing receipts, including explanation
for their unavailability and should approved by the respective approvers as per
the policy.
iii. Vendor Invoices for cash payments should have Service / Goods received
acknowledgement, delivery note from the employee
iv. Purchase request (submitted on approved form) Employee expense report or
reimbursement request.

2. Disburse cash only for valid business purpose upon proper authorization.
3. Check Voucher authorization and signatories required:
a. Prepared by Finance Officer
b. Posted by Finance Assistant
c. Recorded by the Bookkeeper
d. Verified by Finance Manager
e. Certified by Managing Director
f. Approved by the CFO
g. Check Signatories
4. Checks Signatories are as assigned by the Board of Directors of Del Rio Realty and
Development, Inc.
5. Check and Check Voucher Signing schedule
i. Managing Director – sign check vouchers every Tuesday and Thursday
ii. Check Signatories – sign check every Monday, Wednesday, and Friday
iii. Special signing schedule is done sometimes depending on the availability of the
assigned check signatories.
6. Prior to the signing of check by the Managing Director, all check voucher attachments
must be stamped “DRRDBI Paid” indicating the CV number to ensure that it is not
inadvertently processed again. This includes stamping all accounting and supporting
documents that indicate the cash/check disbursement voucher and check number.
7. Checks management are as follows:
a. BLANK checks are prohibited under any circumstances.

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 b. TBL checks are the responsibility and accountability of the Finance Manager and
will generate checks for approved invoices and should be signed by the Managing
Director and the CFO, or other authorized signatories in case one of them will not
be able to do so.
c. CANCELLED/VOIDED checks should be stamped “cancelled” and will be kept
in file. Cancelled Checks due to errors or mistake of employees shall be subject to
equivalent to the price of the check per piece.
d. OUTSTANDING CHECKS over 90 days should be taken action by the Finance
Manager.

In no case
a. Invoices will be paid unless approved by authorize signatories
b. TBL checks be signed in advance
c. Checks be made out to cash, petty cash, etc.,
d. Checks be made or prepared through verbal authorization unless approved by the
Managing Director or the CFO.

C. Petty Cash Fund

Purpose

1. Petty cash funds are maintained by the organization to provide fund for minor
expenditures.
2. The funds are to be used for unanticipated business expenses, where the use of alternative
means is neither feasible nor cost effective
3. The intent is to simplify the reimbursement of staff members and visitors for small
expenses such as taxi fares, postage, office supplies, meals and drinks, etc.
Policy

1. A request for Petty Cash Fund is to be made by the Finance Officer to be approve by the
Finance Manager, or by the Managing Director in the absence of the former.
2. The Finance Assistant is the Petty Cash custodian (for special project, the petty cash
custodian is the Finance Officer) and is the only one who has access to the fund.

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3. In the event of requesting the increase, decrease of the amount, change of custodian or
close the account of Petty Cash Fund, the Officer in-charge should pass Petty Cash
Request/Change Form.
4. All Original Receipts must be obtained for each petty cash expenditure.
5. For each disbursement, the following information must be documented:
i. Payee
ii. Date
iii. Amount
iv. Business Purpose
v. Description of purchase
6. The Petty Cash Fund amount for the building are combined.
7. Petty cash funds in no case be deposited into personal bank accounts or commingled with
other funds, except the company assigned accounts.
8. The Finance Department should not establish bank accounts for petty cash funds unless
approved by the Managing Director
9. Purchases of goods and services for more than two thousand pesos (₱2,000.00) should not
be made with petty cash.
10. In NO case Petty Cash funds may be expended for:
i. Salaries, wages, or similar payments to employees, or individuals unless
previously approved by the Finance Manager or Managing Director.
ii. Purchases of goods and services for the personal use of the Employees.
iii. Payroll advances, travel advances, and loans to employees unless otherwise
approved by the Finance Manager or Managing Director
iv. Cashing Checks for employees or other individual.
v. Gifts
vi. Interest Charged\s
vii. Recurring Expense (e.g. Electric and water Bill, Cellphone expenses, etc.)
11. Cash on hand and receipts for disbursements made should always equal the assigned
amount of the petty cash fund and should be counted daily if applicable.
12. Reimbursement for petty cash must be for the exact amount of the expense. Requesting
reimbursement of less than the full amount of the expense is specifically not allowed.

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Procedure

Setting up Petty Cash Fund

1. The finance officer draw check equal to the approve amount of Petty cash
fund/expense.
2. Cashed the check and endorsed to the custodian.
3. Make a list of expenditures from the petty cash account as you make them. Attached to
that list should be receipts for each expenditure. 
Petty Cash Fund Replenishment

1. The Finance Assistant will gather and file the receipts if half of the monthly limit is
expensed, next prepare the Petty Cash Replenishment Summary and then submit to
Finance Manager for Approval.
2. Once approved, the person in charge will prepare the check and check voucher upon
receiving the approved Petty Cash Replenishment Summary from the Finance
Manager.
3. In case of online transfer, the Finance Officer or the Maker, will prepare the transfer of
funds to be authorized or approved by the Managing Director online. Then printout the
check voucher for online transfer.
4. The Finance Assistant must ensure that the check voucher is signed by herself/himself,
Finance Officer, Finance Manager, Managing Director and check signatory.
5. Check Signatories required are delegated only by the Board of Director of Del Rio
Realty and Development of Bacolod, Inc.
6. The check and the check voucher will be sent to Finance Manager for safekeeping,
approval and update the cash flow which is reviewed by the Managing Director every
now and then.
7. The Finance Manager will be the only one authorized to release the check.
Recording of Petty Cash Fund

i. Petty Cash Fund account is debited and Cash in bank is credited upon setting up
the fund.
ii. Expenses are recognized only upon replenishment.

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 iii. Shortage of receipts compare to the total expenses are charged against the petty
cash custodian.

D. Bank Reconciliations
Purpose
1. Outlines monthly bank statement reconciliation practices to ensure the accuracy of the
company bank account records.
2. To ensure that:
i. all receipts and disbursements are recorded (an essential process in ensuring
complete and accurate monthly financial statements);
ii. Checks are clearing the bank in a reasonable time;
iii. Reconciling items are appropriate and are being recorded; and
iv. The reconciled cash balance agrees to the general ledger cash balance.
Policy
1. These procedures apply to all Corporate Bank Accounts under the company.
2. Each bank account will be reconciled on a monthly basis every 20th business day of the
month.
3. Bank account reconciliations will be prepared by the Bookkeeper and approved by the
Finance Manager and affix their signatures on the bank account reconciliation summary
that will confirm that current procedures were followed and that the reconciliation
accurately presents the status of the account at the bank

Procedure
1. The Bank will issue the Bank Statement in a monthly basis.
2. The bookkeeper will reconcile the bank statements/passbook from the record of check
issuance, deposits slip, and other proofs that the tenants has deposited its payments (e.g.
screen shots in case of bank transfers) and prepares Bank reconciliations Report.
3. The Finance Manager will check the report and approved it through signing.
4. The Managing Director receives the said report at least quarterly or as necessary.

E. Reimbursement of Accounts from One Building to Another

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 The need for reimbursement of accounts from one building to another arise from the
following:

1. Administrative Salary, Wages and Allowances

2. Office Furniture and Equipment
3. Other Administrative Expenses
Purpose

1. To allocate the share of each building to the administrative expenses.

2. To have an accurate accounting of computing expenses that each building should
recognize.

Policy

1. The Finance Officer computes the total expenses incurred.

2. Reimbursement of accounts from one building to another is done when the Finance
Manager authorizes the transfer hence approved by the Managing Director.
3. Expenses subject for allocation is totaled by the end of the month or by the time that all
receipts for expenses is already at the possession of the finance department.
4. The Finance Assistant will prepare a summary list of the expenses to be reimbursed to be
attached to the Check Voucher along with other necessary supporting documents.
5. Check Voucher of other buildings should note the CV No. of payer account to serve as
reference such as receipts, purchase order, delivery receipts, etc.
Procedures

1. The Finance Officer computes the total expenses and post to individual ledger of the
buildings.
2. The Finance Officer prepares the check and check voucher corresponds to the amount
approved.
3. The Finance Assistant submits complete documentation for signing of the Check and
Check Voucher.
4. The Finance Officer must ensure that the check voucher is signed by herself/himself, the
Finance Manager, the Managing Director and the CFO.
5. Check Signatories required is the Managing Director/CFO.

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 6. Finance Manager receives check and check voucher for safekeeping and for updating of
cash flow.
7. Finance Manager will instruct the Finance Assistant to which company bank account the
check must be deposited.

F. Cash Advanced for Liquidation (TBL Requests)

Purpose

1. To prepare for expected expenses to be incurred in the next month such as salaries and
wages, light and water, petty cash fund, accounts payable, etc.
2. This is done for the signatories are not always in town to approve and signed the
documents.
Policy

1. The checks are Post-dated Checks dated on the day it should be cashed or be given to the
payee.
2. The Finance Officer should prepare TBL Log where all TBL checks are listed to monitor
its movement and replenishment.
3. Custody of checks should be under the Finance Manager and access should be restricted
to him/her only.
4. Releasing of checks should be the date upon its face.
5. Upon replenishment, the Finance Officer should update the TBL Log.
Procedure

TBL Preparation

1. The Finance Officer prepares the list of accounts for TBL.

2. The Finance Manager verified accounts for TBL.
3. The Managing Director and CFO will approve TBL Amount.
4. The Finance Officer prepares check and check voucher upon approval.
5. The Finance Manager keeps the check and check voucher and updates cash flow.
6. The Finance Manager release the check to the payee when due.

TBL Replenishment

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 1. Finance Assistant gathers and file the receipts for the preparation of TBL Replenishment
Summary.
2. Finance Officer prepares check and check voucher for TBL replenishment of each Bldg.
3. The Finance Officer must ensure that the check voucher is signed by herself/himself, the
Finance Manager, the Managing Director and the President/CFO.
4. Check Signatories required are delegated only by the Board of Director of Del Rio Realty
and Development of Bacolod, Inc.
5. The check and the check voucher will be sent to Finance Manager for safekeeping,
approval and update the cash.
6. Finance Manager will deposit the check to the bank under ‘On-us Check deposit’.
TBL Recording

1. TBL is an asset account prior to disbursement of funds.

2. Amount is transferred through debiting Cash in Bank-Current Account and then credit
Cash Advanced for Liquidation account.
3. Expense should be recognized upon Replenishment

7.2 : ACCOUNTS PAYABLE

Purpose

i. Establishes the procedures for the payment of purchase order and non-purchase
order procured goods and services on accounts otherwise known as accounts
payable.
Policy

1. All invoices must be verified to ensure payments are appropriately made to the correct
vendor for the correct amount for goods and services delivered.
2. For purchase order-based payments, discrepancies between the vendor invoice and the
purchase order greater than 5 percent must be resolved before the payment can be
processed.
3. Accounts payable officer should verify that the items invoiced match the items ordered
on the purchase order and consider the following:

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 a. invoice match the vendor information on the purchase order
b. invoice issued prior to the purchase order being approved
c. all purchase orders should be issued prior to invoices being received.
d. items invoiced the same as the items ordered
e. if paying on an open purchase order, do the items match the general category of
items authorized
f. amounts invoiced (by total or by item) match the purchase order
g. invoice have enough detail to verify that the services were performed as
contracted
h. an invoice for services (e.g. Construction in Progress) especially a progress
invoice, should include details such as dates of service, description of services,
and hours of service.
i. All required documents been received (i.e., signed contracts, public works
requirements, etc.)
4. For direct payments, the accounts payable officer will match a vendor invoice to an
authorization to pay. Direct payments are payments made without a formal purchase
order being issued. One common use of direct payments is utility services which are
invoiced regardless of a purchase order being authorized.
Procedures

1. The Administrative/Finance Assistant received the invoice mailed or delivered by the

vendor.
2. This is forwarded to Finance Assistant if received by the Admin Assistant.
3. The Operations Manager check the invoice received and approved by the Managing
Director and send to Finance Department for payment.
4. Processing invoices for payment by the Finance Officer
a. Receive the purchase order copy from the purchasing department. Check if
appropriate approval is present.

21
 b. Obtain the receiving report (delivery receipt, signed purchase order copy) and
compare quantities ordered in purchase order. Attach to purchase requisition slip
and purchase order copy.
c. Receive the vendor invoice, and check price and quantity against purchase order
and receiving report.
d. Check the Bank Balance to ensure funds are available for disbursements
e. Verify that the expenditures were received by the Maintenance Manager
f. File the Purchase order copy, purchase requisition, receiving report and invoice
by due date in the unpaid invoice file
g. After obtaining approvals for disbursements (check and check voucher
approvals), re-file the receiving report with the corresponding invoice and support
in the unpaid invoice file.
h. Finance Officer prepares the check & check voucher to the vendor indicating on
the stub the account number and description of purchase.
i. The Finance Officer must ensure that the check voucher is signed by
herself/himself, the Finance Manager, the Managing Director and the CFO.
j. Check Signatories required are delegated only by the Board of Director of Del
Rio Realty and Development of Bacolod, Inc.
k. The check and the check voucher will be sent to Finance Manager for
safekeeping, approval and update the cash.
l. The Finance Manager will be the only one authorized to release the check to the
custodian, vendor, etc.
5. Recording of the said payments in the books is done after the checks has been released
and the check was cashed by the payee.

7.3 : ACCOUNTS RECEIVABLE COLLECTION AND BILLING

Accounts Receivable arises from the following:
a. Rental
b. Maintenance fee
c. Water Bill
d. Electric Bill
e. Other Fees/Charge stated in the contract

22
Purpose
1. To outline procedure to be used in billing charges to tenants for the rental fee,
maintenance fee and other charges.
2. To outline administrative and collection responsibilities of amount billed.
3. To discuss option for delinquent payments and tenants accounts.
4. To keep track of Tenants security deposits
5. Analyzing and processing monthly rents, invoices and customer statements or payments.
6. To consolidate cash receipts against relevant invoices or customer checks.

Policy
1. The Finance Officer is responsible for the follow-up and collection of unpaid items and
shall maintain customer accounts receivable records for all charges prepared in
accordance with this regulation.
2. Access to customer/tenant charges payment history and balances will be made available
to the originating department.

Procedure
1. Finance Officer
i. Computation of the total amount of Rent, Water and Electric bill for the month
and the preparation of Billing Notice in three (3) copies.

2. Property Manager/Operations Manager

i. Checking of Billing Notice prepared by Finance Officer

3. Finance Manager
i. Approved the Billing Notice prepared by the Finance Officer

4. Administrative Assistant
i. Releasing of Billing Notice through Maintenance Personnel

5. Maintenance Personnel
i. Delivering the Notice to tenants and retains two (2) signed copies to be returned
to the Administrative Office

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 6. Administrative Assistant
i. Filing of the two (2) copies to tenants’ folder

7. Rental Fee is deposited by the tenants on the first (1st) day of the month the payment
pertains plus the Maintenance Fee stated in the contract.

8. BACIWA Bill, CENECO Bill and other charges are paid within five (5) days after the
Billing Notices are sent to the tenants.
9. See Cash Receipts above.

A. Delinquent Accounts
Collection of Penalty Payments for Delinquent Accounts (Rent, Ceneco, Baciwa and other
fees)
Accounts are considered delinquent if payment is not made until the 6th day of the month.
1. Finance Officer
i. Computation of the total amount of Rent, Baciwa and Ceneco plus penalty
ii. Preparation of Notice of Delinquent Payments in three (3) copies
2. Property Manager
i. Checking of Notice of Delinquent Payments.
ii. Notifies tenants
3. Administrative Assistant
i. Releasing of Notice of Delinquent Payments through Maintenance
Personnel
4. Maintenance
i. Delivering the Notice to tenants and retains two (2) signed copies to be
returned to the Administrative Office
5. Administrative Assistant
i. Filing of the two (2) copies to tenants’ folder
6. If tenants pay, see Cash Receipts Procedures.

In case TENANTS failed to pay in the lapse of the period given:

1. Finance Officer
i. Increases penalty of tenant for each day of non-payment
ii. Informed the Property Manager of the delinquency.

2. * Property Manager
i. Issuance of the 2nd Notice of Delinquency on the 12th day of delinquency
ii. Issuance of door notice on the 15th day of delinquency.
iii. Issuance of Notice for cutting off utilities on the 20th day of delinquency.

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 iv. On the 60th day of non-payment, tenant’s premise will be padlock and security
deposit shall be forfeited.
v. On the 61st day of default damages of tenant contract.
vi. Demand Letter under retained Counsel’s

* Or as instructed according to negotiated terms.

7.4 : PURCHASING
The purchasing cycle involves ordering, receiving and paying for goods and services required by
the organization.

Purpose
1. To establish and document uniform procedures for procurement of supplies and services.
2. To manage the purchasing and contracting process equitably, efficiently and effectively.
3. To provide basic orientation information for the operational activities of the Purchasing
Unit/Department.
Policy
1. Examining past purchasing records to determine which items are needed in large enough
numbers.
2. Prepare a description of the types and estimated quantities of items needed over a specified time
frame.
3. Solicit bids from qualified local suppliers if there is more than one accessible supplier.
4. Evaluate bids for price and conformance to quality standards set forth in the invitation to bid.
5. Select the most advantageous qualified bid considering both price and conformance.
6. Place the order with the selected vendor by issuing a pre-numbered purchase order.

Procedure
Office/Cleaning Supplies, Minimal Construction Supplies

Preparation and Approval of Requisition Slip

1. The Maintenance/Administrative Staff will fill up Requisition Slip for materials to be
purchase by completing the requisition form through entering the following data:

25
 a. Department/Building
b. Requisition number
c. Date wanted
d. Current date
e. Quantity
f. Description
g. Unit price (if known)
h. Total price
i. Purpose of the order
j. Delivery point (if possible)
k. Approvals:  Operations Manager

2. Send the requisition slip to the Administrative Assistant/ Purchasing Officer for the
canvass of the prices and for the preparation of purchase order.
3. The Operations Manager approves the Purchase Order after considering the following:
a. Review the purchase requisition:
i. Ensure that the requisition number is unique.
ii. Double check the mathematics for accuracy.
iii. Verify that the signature(s) of approval are authorized officials of the department
iv. Review that the other boxes of the form are complete.
b. If the purchase requisition is not accurate or complete, return the Requisition
Slip to the responsible staff
c. If the purchase requisition is accurate and complete, forward the second copy
of the requisition to accounting
4. The Finance Manager will determine the if the items needed are to be purchased
immediately or not
5. Once approved, it will be forwarded to the petty cash custodian for the amount to be
released to the Admin Assistant.
6. The Administrative Assistant order the items requested.

Construction Supplies

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 1. The Managing Director approves the list of materials to be purchased based on Bill of
Materials provided by the in-House Architect/Interior Designer.
2. The list will be forwarded to the Purchasing Officer for canvass. But prior to canvassing,
the Admin Assistant in charge of the warehouse items inventory will first check the
availability of the items needed.
3. If the items needed are available, the Admin Assistant will fill out the Pull-out form for
the items to be pulled from the warehouse.
4. If the items requested are not available in the warehouse, the Purchaser will then proceed
to look for at least two or three suppliers and asked for quotation.
5. Supplier’s quotation should include all Terms and Condition such as price, discount, etc.
6. Upon receiving the quotation, the Purchasing Officer will check if the quotation is in
accordance with the list of materials asked to be quote and send to Managing Director for
Approval.
7. If the Managing Director approves whether through stamp or signature or both, the
Purchasing Officer will go on ordering by preparing Purchase Order and send scanned
copy of signed Quotation and scanned Purchased Order or either to the suppliers.
8. If the company made a payment either partial or full through bank transfers
9. The Finance Officer will prepare the check and check voucher indicating the account
number and description of purchase.
10. The Finance Officer must ensure that the check voucher is signed by herself/himself,
Finance officer, Finance Manager, Managing Director and check signatory
11. Check Signatories required are delegated only by the Board of Director of Del Rio Realty
and Development of Bacolod, Inc.
12. The check and the check voucher will be sent to Finance Manager for safekeeping,
approval and update the cash.
13. The Finance Manager will be the only one to release the check and deposit it through
bank transfers.
14. The Purchasing Officers shall send the scanned copy of deposits slips to the suppliers.

Receiving of Purchased Items

Office/Cleaning Supplies, Minimal Construction Supplies

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 1. The Admin Assistant compare purchase order and delivery receipt from the goods
delivered to verify that items received is in accordance to what has been ordered.
2. Upon receiving the items, he/she will fill up Delivery Receipt Form in three (3) copies
completing the following:

a. Date
b. Delivery receipt number
c. Kind of Packaging (boxes, cartoons, crates, etc.)
d. Address
e. Quantity
f. Part number
g. Description of Items
h. Unit cost
i. Amount
j. Signatories required should be complete.

Construction Supplies

1. The Purchasing Officer proceeds to designated warehouse where the goods should be
delivered upon receiving notice that delivery is ready to be shipped.
2. Upon receiving the items, He/She will check the delivered items (quantity, kind, etc)
by comparing purchased order, approved suppliers’ quotation, sales Invoice, gate pass,
and delivery receipt to the actual items or materials received.
3. If the items are inadequate, the Purchasing Officer inform the supplier and the supplier
deliver the remaining items.
4. If the supplier is unable to deliver, a credit memo from them is received to be used in
the next purchased.

A. Job Order Preparation

Purpose
1. Job/Work Order is prepared for works to be done by contractor or a service provider
entity for the company such as construction, repair and maintenance and related jobs.

28
Policy
1. Job Order must contain the following Information:
i. Project Title
ii. Property/Location
iii. Contractor
iv. Scope of Work
v. Materials to be used
vi. Total contract price
2. Job Order supporting documents are:
i. Itemized Quote
ii. Voucher
iii. Pictures of Project
iv. Others
Procedure
1. Operations Manager/Project Manager requests for quotation from supplier based on
project per building/unit or other area where property located.
2. Administrative Assistant receives the quotation from the supplier.
3. The Operations Manager verified and the Managing Director approved the quotation.
4. Admin Assistant prepares and fill ups the Job Order form in two (2) copies.
5. The Admin Assistant must ensure that the Job/Work Order is signed by herself, Property
Manager, Operations Manager.

7.4 : INVENTORY MANAGEMENT

Purpose
1. To ensures that the company always has the needed materials and products on hand while
keeping the cost as low as possible.
2. To avoid delay of construction, renovation and repairs in the buildings due to lack of
materials.
3. The Inventory management enable Staff to be aware of the following:
a. What supplies are being used by the company in the maintenance/renovation of
the buildings;

29
 b. What supplies are on hand compared to the usual amounts used in the interval
between orders;
c. What office supplies have become surplus or shelf-worn stock; and
d. What will be required to replenish the stock of the company supplies.

A. Office/Cleaning Supplies

Policy

“Stocked office supplies” are items of which a quantity is kept at the field office because they are
continuously expended and need frequent replacement. Examples include pens, stationery, toner
cartridges, and cleaning supplies.

“Non-stocked office supplies” are items of which a quantity is not kept at the field office because
they do not often need to be replaced. Examples include small bulletin boards, wastebaskets, and
first aid kits.

1. When planning an order, the Administrative Assistant needs to take the following
considerations into account:
a. The current quantities of stocked items in the field office;
b. The rates at which the supply of stocked items is expended;
c. The amount of storage space available;
d. The various sources from which each needed item can be ordered, so that orders may be
efficiently coordinated; and
e. Any other staff needs or requests.
2. For any ordering schedule to be effective, this policy ensures that the items and quantities
ordered match the needs of the office. Information from staff members is critical in order to
avoid emergency procurement orders, as well as personal stockpiling, stock shortages, and
surplus stock of unnecessary items.

30
 a. Each department determines which office supplies are most frequently needed by the
staff members in that office, and must therefore be kept in stock for ready access.
b. The need for non-stocked office supplies is determined on a more general basis (per
building, per floor, or per individual). Each staff member is responsible for adequate
notice and informing the Administrative Assistant when such items need to be
obtained or replaced.
3. Recording of Office Supplies and Cleaning Supplies in the books of accounts is expensed
immediately upon purchasing.

Procedure

Receiving:

1. Administrative Assistant
i. Receive the items ordered
ii. Compare Purchase Order from the items receives
iii. Fill up Delivery Receipt form.
iv. Record the items received
Releasing:
i. A log book is maintained in the Office Supplies Area where staff are required to
record/log the items they obtain subject to the supervision of Administrative
Assistant.

B. Warehouse Supplies
Warehouse Supplies and Inventory include all items related to the construction, repairs and
maintenance, etc. of the buildings operated by DRRDBI. These inventory Items should be stored
in a warehouse with proper supervision of Purchasing Officer.

Receiving:
1. Warehouse Staff
i. Receives the supplies from the supplier.

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 2. Administrative Assistant
i. Compare Purchase Order to the actual inventory receives
ii. Fill up Delivery Receipt in three (3) copies.

3. Purchasing Officer
i. Conducts physical count/inventory and inspection for damages or defects of the
supplies delivered.
ii. Prepares Inventory Master List
Releasing:
1. Head Maintenance
i. Fill up withdrawal slip for the supplies needed.
2. Purchasing Officer
i. Approves the withdrawal slip
Inventory Count:
1. Purchasing Officer
i. Conduct physical count in the warehouse weekly with Warehouse Staff.
ii. Check the withdrawal slip if it coincides with the actual physical count.
iii. Prepare updated/final Master List of Inventory for filing.
2. Managing Director
i. Approve the Inventory Master List.

C. Office Equipment, Furnitures and other Movable Assets

Policy
1. All items of equipment to be brought under control shall be identified by a serial number
affixed to each item.
2. Equipment control records shall be maintained for each item of equipment identified by a
serial number.
3. Periodic physical inventories, at least once annually, shall be taken of all items of
equipment placed under serial number control.

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4. Equipment utilization controls shall be maintained for significant items, whether they are
in the form of daily usage records or simple periodic observations to provide a safeguard
against loss and to facilitate effective utilization.
5. No item of equipment should be permitted to leave the premises without a pass signed by
the Operation Manager.
6. Items not included in the inventory are items permanently attached to buildings.
Examples of items would be light fixtures, built-in cabinets, permanently installed
carpeting.
7. Equipment Records Maintained by the Operation Manager/Administrative Assistant.
a. The tag number assigned to a piece of equipment serves as the central mechanism
for establishing a unit record in the inventory control system. The Operation
Manager/Administrative Assistant will be responsible to ensure that each record
contains information on the item including:
i. Asset No.
ii. Description
iii. Serial or manufacturer identification number
iv. Original cost
v. Purchase order number (if applicable)
vi. Acquisition date
vii. Disposition date
viii. Category
ix. Person responsible for equipment assigned
x. Location: Building and Department
8. Reporting Changes in Status of Equipment
a. Status changes are to be reported by the accountable person as they occur. The
Operation Manager/Administrative Assistant will update the inventory to reflect
the change.
b. Whenever an equipment item is temporarily (less than 6 months) transferred
between locations, the unit initiating the transfer must keep a record of its new
location.

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 c. Whenever an item of equipment is found missing or believed to be stolen, this
must be reported immediately to the Security Officers and the Operation
Manager.

7.6 : PAYROLL
Purpose
The purpose of the Payroll Procedure is to establish criteria for the proper control and handling
of payments to employees.

Policy
i. Employees are paid bi-monthly with cut-off date every 10th and 25th of the month
ii. The company uses Payroll System that provide ATM cards for the employee for their
salary and wages.
iii. The company set up account in the bank for payroll purposes.
iv. The partner bank will be responsible for the distribution of salary in each employee
accounts.
Procedure
A. Administrative Employees

The DRRDBI operates a Biometrics System for its Administrative Staff and Maintenance
Personnel. Employees are paid bi-monthly.

1. Human Resource Personnel

i. Accesses the Biometrics System records.
ii. Records and summarizes the time records of employees.
iii. Prepares Summary Sheet of employee’s attendance.
iv. Computes gross pay and deduction such as SSS, Philhealth, Pag-ibig contribution,
payroll taxes, etc.
v. Prepares pay slips in three (2) copies, one copy for employee, one copy for employee
file.
vi. Create the list of amounts/salary per employee to be credited to employees’ atm payroll
account

34
2. Finance Manager
vii. Check the accuracy of the payroll sheet and verified if it is in consistent with their
computations.
viii. Once payroll is approved by the Finance Manager, the payroll summary will then
be forwarded to the Finance Officer in charge of making the payroll’s online transfer
for the approval of the Managing Director thru online.
3. Finance Officer
ix. Afterwards, the Finance Officer will print out the check voucher for that specific online
transaction.
x. The Finance Officer must ensure that the check voucher is signed by herself, the
Finance Manager, the Managing Director and the CFO.
xi. Check Signatories required are delegated only by the Board of Director of Del Rio
Realty and Development of Bacolod, Inc.
4. Finance Assistant
xii. Record salary and wages expense in the Book of Accounts.

Overtime
Overtime pay refers to the additional compensation for work performed beyond eight (8) hours a
day.
1. The COLA shall not be included in the computation of overtime pay
2. The minimum overtime pay rates vary according to the day the overtime work is
performed.
3. Employee who work overtime should fill up the overtime sheet in the HR Department
the day after for it to be valid.
4. For work in excess of eight (8) hours performed on ordinary working days plus twenty
five percent (25%) of the hourly date = Hourly Rate x 125% x Number hours of OT
work
(e.g. 350/8 = 43.75* 1.25 = 54.69 * 3OT/hr).
= 164.06

35
 5. For work in excess of eight (8) hours performed on a scheduled rest day or a special day
plus thirty percent (30%) of the hourly rate on the said days.
= Hourly Rate x 130% 130% x Number hours of OT work
(e.g. 350/8 = 43.75* 1.30 *1.30= 77.11 * 3OT/hr)
= 221.81
6. For work in excess of eight (8) hours performed on a special day which falls on as
scheduled rest day plus 30% of the hourly rate on said days.
= Hourly Rate x 150% 130% x Number hours of OT work
(e.g. 350/8 = 43.75*1.50% *1.30% * 3hours)
= 255.94
7. For work in excess of eight (8) hours performed on a regular holiday plus 30% of the
hourly rate on said days.
= Hourly Rate x 200% 130% x Number hours of OT work
(e.g 350/8 = 43.75 *2.00% * 1.30% * 3hours)
= 341.25
8. For work in excess of eight (8) hours performed on a regular holiday which falls on a
scheduled rest day plus 30% of the hourly rate on said days
= Hourly Rate x 260% 130% x Number hours of OT work
(e.g 350/8) = 43.75 *2.60% *1.30% * 3hours)
= 443.63

Night shift Differential

Night shift differential refers to the additional compensation of ten percent (10%) of an
employee’s regular wage for each of work performed between 10 p. m and 6 a.m.
1. The COLA shall not be included in the computation of night shift pay.
2. The minimum night shift pay rates vary accordingly to the day the night shift work is
performed. = hourly Rate x 110 x 110 x Number of Hours
(e.g. 350/8 = 43.75 * 1.10 *1.10= 55.21 * 3hours)
= 158.81
Undertime /Late

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Undertime refers to a working time is less than full time or a required minimum.
1. Undertime a time less than time allotted for the performance of some task.
= Daily Rate / 8 hours / 60 minutes x number of minutes UT
(e.g 350/8 = 43.75 / 60min.* 12 min/UT)
= 8.75
Payroll Taxes

1. The Finance Officer shall secure BIR Form 2316. It is a Certificate of Compensation
Payment/Tax Withheld for Compensation Payment with or without Tax Withheld.
2. This is a certificate accomplished and issued to all employees by the employers reflecting
compensation received and taxes withheld and paid based on the compensation received
during the calendar year.
3. This certificate is used as an attachment to Annual ITR of employees either purely
compensation income or mixed income.
4. This certificate must be issued to the employee on or before January 31 of the following
year.
5. In case when employment is terminated within the calendar year, this certificate must be
issued on the same day last wages are paid.

SSS, Pag-ibig and Philhealth Contributions

1. The Payroll Officer compute all contributions.

2. The Payroll Officer process the fund for payment

Maternity Leave
1. Coverage
a. This Benefits applies to all employees, whether married or unmarried.
2. Entitlement
b. Every pregnant employee in the private sector, whether married or unmarried, is
entitled to maternity leave benefits of sixty (60) days in case of normal delivery or
miscarriage, or seventy-eight (78) days in case of Caesarian section delivery.

37
 c. The benefits equivalent to one hundred percent (100%) of the average daily salary
credit of the employee as defined under the law.
d. To be entitled to the maternity leave benefits, a female employee should be an SSS
member employed at the time of her delivery.
Paternity Leave
Paternity Leave is granted to all married male employees in the private sector, regardless of their
employment status. (e.g. probationary, regular, contractual, project basis)
1. The purpose of this benefit is to allow the husband to lend support to his wife during her
period of recovery and/or in nursing her newborn child.
2. Paternity leave shall apply to the first four (4) deliveries of the employee’s lawful wife
with whom he is cohabiting. For purpose of “cohabiting” means the obligation of the
husband and wife to live together.
3. Paternity leave shall be for seven (7) calendars days, with full pay, consisting of basic
salary and mandatory allowances fixed by the Regional Wage Board, if any, that his pay
shall not be less than the mandated minimum wage.

Service Incentive Leave

Every employee who has rendered at least one (1) year of service is entitled to Service Incentive
Leave (SIL) of five (5) days with pay.
1. One Year of Service of the employee means service with in twelve (12) months,
2. The service incentive leave may be used for sick and vacation leave purposes
3. Usage / Conversion to cash
4. The unused service incentive leave is convertible to monetary value.

Thirteenth – Month Pay

All employers are required to pay their rank and file employees thirteenth - month pay,
regardless of the nature of their employment and irrespective of the methods by which their
wages are paid, provided they worked for at least one (1) month during a calendar year.
1. The thirteenth-month pay should be given to the employees in every half year June &
December.

38
 2. The thirteenth- month pay shall not be less than one twelfth (1/12) of the total basic
salary earned by an employee in a calendar year.
3. The basic salary of an employee for the purpose of computing the thirteenth-month pay
shall include all remunerations or earnings paid by his her employer for services
rendered.
4. It does not include allowances and monetary which are not considered or integrated as
part of the regular or basic salary, such as the cash equivalent of unused vacation leave
and sick leave credits, overtime, premium, night shift differential and holidays pay, and
cost living allowance (COLA).
Formula and Computation of 13th Month Pay
= Total basic salary earned during the year = proportionate
12 Months 13th month pay

(e.g. 122,977.72 = P10, 248.14 is the proportionate)

12monhts 13th month pay

Separation Pay

The Company follow the labor code of the Philippines, articles 283 and 284 state that an employee can
claim separation pay if his employment ended under authorized causes.
1. The following authorized causes
a. Retrenchment of person for loss prevention.
b. Cessation of operation of a branch not due to serious losses or financial difficulties.
c. If the employee has contracted a disease not curable within 6 months and that his
presence at work can be harmful to himself or his co-workers.
d. Installation of labor-saving devices
e. Redundancy • Retrenchment to prevent losses
2. The company has the right to terminate the contract of an employee following any of the
above authorized causes through a written notice to both the employee and the
Department of Labor and Employment of the Philippines at least one month before the
contract cessation date.

39
 3. According to article 282 an employee terminated for just cause is generally not entitled to
separation pay.
a. Serious misconduct
b. Wilful disobedience
c. Gross and Habitual neglect of duty
d. Fraud or breach of trust
e. Commission of a crime or offense against the company, his family or representative

7.7 : FIXED ASSETS

Fixed Assets includes items such as:

1. Land
2. Office Equipment - Functional or mechanical items such as computer, flat screen
TV, projectors, aircons, water sprinkler, fire distinguisher, CCTV’s , camera,
cellphones and telephones, printer/scanners/copier, water dispenser, interactive
whiteboards, screens, Audio / visual equipment such as multimedia, televisions,
DVD players, CD players & recorders and overhead projectors etc.
3. Building
4. Building Improvements
5. Office furniture and Fixtures- Larger items of movable equipment that are used to
furnish an office and includes bookcases, chairs, desks, Wooden and Steel Cabinets,
white boards and fans etc.
6. Construction Tools & Equipment – includes welding Machine, tools for
construction, etc.
7. Generator Set
8. Construction in Progress
Purpose
1. Due to the high cost of fixed assets, this procedure aims to maintain accurate records and
inventory controls to avoid hidden costs due to mismanagement or lack of precise
information.

40
 2. To set out policy and procedure in relation to the appropriate management, recording and
monitoring of all the company fixed assets.
3. To provide an organized and accountable method monitoring and controlling the
acquisition, custody and disposal of the company fixed assets
4. To ensure value for money in acquiring fixed assets and to maximize residual value in the
disposal of same, where applicable.
5. To protect the company from any conflict of interest, either potential or real, which may
arise between company departments in the acquisition or disposal of fixed assets and any
persons or groups purchasing such fixed assets from the company.

Policy

5. All acquisitions of fixed assets require approval.

6. The company must maintain Fixed Asset Register (FAR) to provide a record of the
physical assets held by the company, which will:
2. Facilitate the physical control and security of these assets.
3. Assist the department in planning for future investment in fixed assets
7. All significant details required for recording and reporting monetary amount associated
with fixed asset transaction to be included in Fixed Asset Register are the following:
i. Name of Asset
ii. Asset Code/Model Number
iii. Asset Account Code
iv. Description/Class of the Asset
v. Quantity
vi. Cost
vii. Date Purchased
viii. Suppliers Name
ix. Invoice No.
x. Location/Department (where kept)
xi. Balance Quantity
xii. Useful Life of Asset
xiii. Depreciation (Accumulated Depreciation)

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 xiv. Details of transfer and Disposal
4. It is the organization’s policy to capitalize all items which have a unit cost greater
₱5,000.00. Items purchased with a value or cost less than ₱5,000.00 will be expensed in
the period purchased.
5. The company uses straight line method of recognizing Depreciation. Estimated useful
lives are the following:

A. Land Not Depreciated

B. Land Improvements 5 years
C. Building 50 years
D. Building Improvements 5 years
E. Office Furniture and Fixtures 5 years
F. Office Equipment 5 years
G. Construction Tools & Equipment 5 years
H. Generator Set 5 years
I. Capitalizable Repair and Maintenance
(e.g. Bldg. Imp, etc.) 5 years
* Useful life may be reviewed periodically after taking into consideration the expected
physical wear and tear, obsolescence and legal or other limits on the use of the asset. In case of
change in useful life, depreciation should be provided taking into consideration the revised useful
life over the remaining no. of years.

6. Immovable fixtures and fittings (i.e. those that are permanently or solidly fixed to the
physical structure of the building) are to be capitalized and depreciated as part of the
Freehold Buildings category.
7. All movable Fixed Assets required tagging & codification for physical verification and to
maintain identification system within the company. This is also to certify that all movable
and controlled Fixed Assets items have assigned asset numbers and properly tagged not
only for identification but also for inventory purpose. In addition, tagging and
codification

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 8. Annual control over assets is required, this is done through updating on a continuous
basis and annually the following:
i. Confirm that the list of Assets held is complete and can be physically accounted
for.
ii. Identify items not listed and provide all necessary details so that the asset can be
added to the Asset Register
iii. Supply details of any asset listed on the register that have scrapped, transferred to
other buildings or location, sold or lost.
iv. Check that all new items purchased have been added to the Asset Register.
9. Normal repair and maintenance will be charged to operating expenses as and when
incurred. However, major repairs and improvement will be capitalized as capital
expenditures.
10. The staff/employee to whose custody the asset is assigned will be responsible for the
security of the equipment under her/his use. This includes ensuring that equipment or
other assets is used only by the authorized persons for authorized purposes safeguards
against theft and damage, and only removed from the premises with proper authorization.
11.
Procedure
A. Acquisition of Movable Fixed Assets (Includes Office Furnitures and
Fixtures, Equipment, Construction Tools & Equipment. Etc.)
1. A Fixed Asset Log is maintained by the Administrative Assistant.
2. The Log will be reviewed by the:
i. Operations Manager if assets/ materials are inside the properties it manages.
ii. Managing Director for all company owned assets.
3. Annually, a physical inspection and inventory will be taken of all fixed assets and
reconciled to the general ledger balances.
4. The Operations Manager shall be informed in writing by the custodian of the specific
assets of any change in status or condition of any property or equipment.
5. Depreciation is recorded annually.
6. Depreciation is computed using the straight-line method over the estimated useful
lives of the related assets.

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7. Any impaired assets discovered during the inventory will be written down to their
actual value.
B. Depreciation Procedure
1.      Assign an asset class

a.        Match the fixed asset to the company’s standard asset class descriptions. If you

are uncertain of the correct class to use, examine the assets already assigned to the

various classes, or consult with the controller.

2.      Assign depreciation factors

a.       Assign to the fixed asset the useful life and depreciation method (straight line)

that are standardized for the asset class of which it is a part.

3.      Determine salvage value

a.        Consult with the purchasing or industrial engineering staffs to determine

whether the asset is expected to have a salvage value at the end of its useful life. If

this salvage value exceeds the company’s policy for minimum salvage values, make

note of it in the depreciation calculation.

4.      Create depreciation calculation

a.        Create the depreciation calculation based on the useful life and depreciation

mandated for the asset class using the asset cost less any salvage value

5.      Print depreciation report.

a.        Print the depreciation report, sorted by asset class.

6.      Create journal entry

a.        Create the monthly depreciation journal entry, using the standard depreciation

template. The standard entry is to record a debit for the depreciation expense (in

total or by department), and to record a credit to the accumulated depreciation

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 account for each asset class. This information comes from the totals on the

depreciation report.

7.      Enter the transaction.

a.       Record the journal entry in the accounting software (QuickBooks)

8.      File backup materials  

a.       Attach the depreciation report to the journal entry form and file it in the journal

entries binder.

CONSTRUCTION IN PROGRESS
Construction in Progress is the economic construction activity status of buildings and other
structures, infrastructure, additions, alterations, reconstruction, installation, and maintenance and
repairs that are substantially incomplete.
Purpose
2. The purpose of this Policy is to document a standard for accounting for Construction in
Progress.
Policy
1. Construction in Progress to be used if
a. The asset under construction meets the capitalization threshold for its asset
category;
b. The project is one year or more in length and/or spans two fiscal years.

3. Construction in Progress shall be accrued at the end of the fiscal year. However, when
certain criteria are met, Construction in Progress shall be capitalized to the appropriate
asset categories and depreciated.
4. The following expenditure should be capitalized in the Construction in Progress account:

a. Architect/Engineer Costs
b. Construction costs that include labor and materials
c. Interest accrued construction

5. For projects that have not been completed and previously transferred from Construction in
Progress, an evaluation shall be made to determine if additional costs need to be
capitalized as Construction in Progress as follows:
a. Perform a review of payment made to contracted vendors through the fiscal year
b. Determine if payment is capitalized as Construction in Progress or advance
payment to the constructor and record to the company Book of Accounts.

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 6. All construction costs associated with a project are accumulated and capitalized as
Construction in Progress. The Construction in Progress is closed out to the appropriate
asset classification when the project is substantially complete, occupied, or placed into
service.
7. Construction in Progress funding has separate control and under the Construction in
Progress Officer Supervision.
Section 8 DOCUMENTS RETENTION AND DESTRUCTION
POLICY
Terms of Retention
1. To be retained permanently:
a. Government Records - Charter and amendments, Bylaws, other organizational
documents, governing board and board committee minutes
b. Financial Statements and Audits Reports
c. Tax records – Filed tax returns/reports and supporting records, tax exemption
determination letter and related correspondence, files related to tax audits.
d. Intellectual property records – Copyright and trademark registrations and samples of
protected works.

2. To be retained for Ten years:

a. Financial records
i. Audited financial statements, books of accounts, including subsidiary books
and other accounting records.
ii. Books of Accounts refers to BIR-registered books of accounts (manual books
of accounts, loose-leaf books of accounts and computerized books of
accounts).
iii. Bank Statements and Reconciliations
iv. Cancelled Checks
v. Internal Reports
vi. Payroll-related Records
vii. Employee Time & Expense Reports
viii. Customer and Vendor Invoices

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 ix. Check Issuances
x. Other accounting records refers to corresponding invoices, receipts, vouchers
and returns and other source document supporting the entries in the book of
accounts.
3. To be retained for five years:
a. Lease, insurance, and contract/license records – Software license agreements;
vendor, hotel, and service agreements; independent contractor agreements;
employment agreements; consultant agreements; and all other agreements (retain
during the term of the agreement and for five years after the termination, expiration
or non-renewal of each agreement).
b. Correspondence files, past budgets, publications, and survey information.
c. Other records not mentioned.

Section 9 INSURANCE
1. Board Notice
The Operations Manager shall calendar when renewals are due for all insurance policies and
shall provide those dates to the Board of Directors. Three (3) months before renewal, the
Management Director shall inform the Board that the renewal is due and, unless otherwise
directed by the Board, ensure that the payment is timely made.

2. Employees Insurance
An employee benefit insurance plan typically includes the following basic coverage package:
medical health insurance, group term life insurance, prescription drug plan, and accidental death
and dismemberment policies. Might include dental and vision plans, short- and long-term
disability insurance, and retirement plans. The company shall maintain employee insurance

3. Annual Insurance Review

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 On an annual basis, the Management Company shall provide a review of the insurance
policies DRRDBI has, and make recommendations whether there should be any changes to
the policies. The Board shall make the determination as to which policies shall be
maintained.

Section 10 FINANCIAL REPORTS AND RECORDS

1. The Accountant/ Finance Officer will prepare the monthly and annual financial reports
for distribution to the Finance Manager.
2. The Financial reports includes but not limited to the following:
a. Balance sheet/ Financial Position Report
b. Statement of income and expenses
c. Actual given budget vs Actual expense report for building / project
d. Actual budget vs Actual report for the organization, accounts payable register and
aging, cash flow projection,
e. Monthly / Quarterly / Annual Income Statement per property
f. Monthly / Quarterly / Annual Income Statement of the company
g. A Statement of Activities showing monthly financial activity and reflecting
beginning account balances, a detailed list of all cleared checks and other debits, a
detailed list of all cleared deposits and other credits, ending account balances, a 7
detailed list of all outstanding but uncleared debit or credit transactions, and
ending book balances. Any other requested reports.
3. Periodic and annual financial reports will be submitted to the Finance Committee and
Board of Directors for review and approval.

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