Lecture Notes – 7

REVENUE AND OTHER RECEIPTS

Learning Objectives:
1.
2.

Scope. This Chapter provides the standards, policies, guidelines and procedures in accounting for revenue and
other receipts including those collections through authorized agent banks, remittance of collections to the NT
through AGDB and deposits with the AGDB in accordance with PPSAS 9-Revenue from Exchange
Transactions and PPSAS 23-Revenue from Non-exchange Transactions.

Definition of Terms. For the purpose of this Manual, the following terms shall be construed to mean as
follows:

a. Bequest – is a transfer made according to the provisions of a deceased person’s will. The past event
giving rise to the control of resources embodying future economic benefits or service potential for a
bequest occurs when the entity has an enforceable claim, for example on the death of the testator, or the
granting of probate, depending on the laws of the jurisdiction. (Par. 90, PPSAS 23)

b. Concessionary loans – are loans received by an entity at below market terms.

c. Exchange transactions – are transactions in which one entity receives assets or services, or has liabilities
extinguished, and directly gives approximately equal value (primarily in the form of cash, goods,
services, or use of assets) to another entity in exchange. (Par. 11, PPSAS 9)

d. Fair value – is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction

e. Fines – are economic benefits or service potential received or receivable by NGAs, from an individual
or other entity, as determined by a court or other law enforcement body, as a consequence of the
individual or other entity breaching the requirements of laws or regulations. (Par. 88, PPSAS 23)

f. Gifts, Donations and Goods In-kind – are voluntary transfers of assets, including cash or other monetary
assets, goods in-kind and services in-kind that one entity makes to another, normally free from
stipulations. The transferor may be an entity or an individual. For gifts and donations of cash or other
monetary assets and goods in-kind, the past event giving rise to the control of resources embodying
future economic benefits or service potential is normally the receipt of the gift or donation. ( Par. 93,
PPSAS 23)

g. Non-exchange transactions – are transactions in which an entity either receives value from another
entity without directly giving approximately equal value in exchange, or gives value to another entity
without directly receiving approximately equal value in exchange. (Par. 11, PPSAS 9)

h. Pledges – are unenforceable undertakings to transfer assets to the recipient entity.

i. Revenue – is the gross inflow of economic benefits or service potential during the reporting period when
those inflows result in an increase in net assets/equity, other than increases relating to contributions from
owners.

j. Services in-kind – are services provided by individuals to public sector agencies in a non-exchange
transaction.

Accrual of Revenue to the General Fund. Unless otherwise specifically provided by law, all revenue
(income) accruing to the departments, offices and agencies by virtue of the provisions of existing laws, orders
and regulations shall be deposited in the NT or in the duly authorized depository of the Government and shall
accrue to the xxx General Fund of the Government: Provided, that amounts received in trust and from business-
type activities of government may be separately recorded and disbursed in accordance with such rules and
regulations as may be determined by the Permanent Committee. (Sec. 44, Chapter V, Book VI, E.O. No. 292)

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Special, Fiduciary and Trust Funds. Receipts shall be recorded as revenue of Special, Fiduciary or Trust
Funds (TF) or Funds other than the GF, only when authorized by law and following such rules and regulations
as may be issued by the Permanent Committee consisting of the Secretary of Finance as Chairman, and the
Secretary of the Budget and the Chairman, Commission on Audit, as members. The same Committee shall
likewise monitor and evaluate the activities and balances of all Funds of the NG other than the GF and may
recommend for the consideration and approval of the President, the reversion to the GF of such amounts as are:
(1) no longer necessary for the attainment of the purposes for which said Funds were established, (2) needed by
the GF in times of emergency, or (3) violative of the rules and regulations adopted by the Committee: provided,
that the conditions originally agreed upon at the time the funds were received shall be observed in case of gifts
or donations or other payments made by private parties for specific purposes. (Sec. 45, Chapter V, Book VI, EO
292).

Sources of Revenue and Other Receipts. Revenues received by NGAs may arise from exchange and non-
exchange transactions. In a transaction where the entity may provide some consideration directly in return for
the resources received, but that consideration does not approximate the fair value of the resources received, the
entity determines whether there is a combination of exchange and non-exchange transactions. Each component
of which is recognized separately. (Par. 10, PPSAS 23)

There are transactions where it is not immediately clear whether they are an exchange or a non-exchange
transaction. In these cases, an examination of the substance of the transaction will determine if they are on
exchange or non-exchange transactions. For example, the sale of goods is normally classified as an exchange
transaction. If, however, the transaction is conducted at a subsidized price, that is, a price that is not
approximately equal to the fair value of the goods sold, that transaction falls within the definition of a non-
exchange transaction.
Agencies may receive trade discounts, quantity discounts, or other reductions in the quoted price of assets for a
variety of reasons. These reductions in price do not necessarily mean that the transaction is a non-exchange
transaction. (Par. 11, PPSAS 23)

Revenue from Exchange Transactions. Revenues received by the NGAs from exchange transactions are
derived from the following:

a. Sale of goods or provisions of services to third parties or to other NGAs. Examples are:

1. Service Income – Permit Fees, Registration Fees, Registration Plates, Tags and Stickers Fee,
Clearance and Certification Fees, Franchising Fees, Licensing Fees, Supervision and Regulation
Enforcement Fees, Spectrum Usage Fees, Legal Fees, Inspection Fees, Verification and
Authentication Fees, Passport and Visa Fees, Processing Fees and Other Service Income; and

2. Business Income – School Fees, Affiliation Fees, Examination Fees, Seminar/Training Fees,
Rent/Lease Income, Communication Network Fees, Transportation System Fees, Road Network
Fees, Waterworks System Fees, Power Supply System Fees, Seaport System Fees, Landing and
Parking Fees, Income from Hostels/Dormitories and Other Like Facilities, Slaughterhouse
Operation, Income from Printing and Publication, Sales Revenue, Hospital Fees, Share in the Profit
of Joint Venture and Other Business Income.

b. Use by other entity of assets yielding interest, royalties and dividends or similar distributions. Examples
are:

1. Interest income – charges for the use of cash or cash equivalents, or amounts due to the entity;

2. Royalties – fees paid for the use of entity’s assets such as trademarks, patents, software, and
copyrights; and

3. Dividends – share of the National Government from the earnings of its capital/equity investments in
Government-Owned or Controlled Corporations (GOCCs) and other entities.

Recognition and Measurement of Revenue from Exchange Transactions. Revenue from exchange
transaction shall be measured at fair value of the consideration received or receivable.

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a. Revenue shall be recognized when it is probable that future economic benefits or service potential will
flow to the entity and these benefits can be measured reliably.

1. Revenue from the sale of goods shall be recognized when all the following conditions have been
satisfied:

i. The entity has transferred to the purchaser the significant risks and rewards of ownership of the
goods; (Par. 28, PPSAS 9)

ii. The entity retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;

iii. The amount of revenue can be measured reliably;

iv. It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity; and

v. The costs incurred or to be incurred in respect of the transaction can be measured reliably.

2. Revenue from the supply of services shall be recognized on a straight line basis over the specified
period of the services unless an alternative method better represents the stage of completion of the
transaction.

When the outcome of a transaction involving the rendering of services can be estimated reliably,
revenue associated with the transaction shall be recognized by reference to the stage of completion
of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when
all the following conditions are satisfied:

i. The amount of revenue can be measured reliably;

ii. It is probable that the economic benefits or service potential associated with the transaction will
flow to the entity;

iii. The stage of completion of the transaction at the reporting date can be measured reliably; and

iv. The costs incurred for the transaction and the costs to complete the transaction can be measured
reliably. (Par. 19, PPSAS 9)

For practical purposes, when services are performed by an indeterminate number of acts over a
specified time frame, revenue is recognized on a straight line basis over the specified time frame
unless there is evidence that some other method better represents the stage of completion. (Par. 24,
PPSAS 9)

When the outcome of the transaction involving the rendering of services cannot be estimated
reliably, revenue should be recognized only to the extent of the expenses recognized that are
recoverable. (Par. 25, PPSAS 9).

3. Revenue arising from the use by others of entity assets yielding interest, royalties and dividends or
similar distributions shall be recognized when it is probable that the economic benefits or service
potential associated with the transaction will flow to the entity; and the amount of the revenue can be
measured reliably. (Pars. 33 and 34, PPSAS 9)

i. Interest shall be recognized on a time proportion basis that takes into account the effective yield
on the asset;

ii. Royalties shall be recognized as they are earned in accordance with the substance of the relevant
agreement; and

iii. Dividends or similar distributions shall be recognized when the shareholder’s or the entity’s right
to receive payment is established.
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Examples:

Revenue Revenue Recognition Point

Service Income
Permit Fees, Registration Fees, When services are rendered or if not
Registration Plates, Tags and practicable, when fees are collected upon
Stickers Fee, Clearance and issuance of the respective permits,
Certification Fees, Franchising certificates of registration, plates, stickers,
Fees and Licensing Fees, clearance, certification, franchises and
licenses
Supervision and Regulation Enforcement Fees When services are rendered or when
tickets or relevant document representing
violation are issued
or if not practicable,
when fees are collected
Spectrum Usage Fees When bills are rendered for the use,
allocation and assignment of radio
frequency wave lengths or if not
practicable, when fees are collected
Inspection Fees When bills are rendered for the conduct of
inspection by authorized government
official or if not practicable, when fees are
collected
Legal Fees, Verification and When filing fees are billed or if not
Authentication Fees, practicable, when fees are collected
Passport and Visa Fees, When fees are billed upon issuance of the
passport and visa or if not practicable,
when fees are collected
Processing Fees When fees are billed or collected for the
processing of documents for securing
permits/ applications.
Other Service Income When fees are billed or if not practicable,
when fees are collected
Business Income

School Fees, Affiliation Fees, When fees are billed or if not practicable,
Examination Fees, Seminar/ when fees are collected
Training Fees
Rent/Lease Income, When fees are billed for earned revenue
Communication Network Fees, from use of government property/facilities
Transportation System Fees, or if not practicable, when fees are
Road Network Fees, Waterworks collected
System Fees, Power Supply
System Fees, Seaport System
Fees, Landing and Parking Fees,
Income from Hostels/
Dormitories and Other Like
Facilities, Slaughterhouse, and
Other Service Income
Sales Revenue When the significant risks and rewards of
ownership have been transferred to the
buyer as indicated in the sales invoice
Hospital Fees When fees are billed for hospital and
related services rendered, or if not
practicable, when fees are collected
Share in the Profit of Joint When share in the profit is earned
Venture
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 Other Business Income When earned or if not practicable, when
fees are collected

b. Revenue shall be measured at the fair value of the consideration received or receivable. Any amount of
trade discounts and volume rebates allowed by the entity shall be taken into account. (Par. 14-15, IPSAS
9)

Example: Entity A is authorized to print accounting manuals for sale to other NGAs. Assume that on
July 16, 2014, Entity A sold accounting manuals on account with a list price of P100,000 less trade
discounts of 10%, 10% and 5%. The invoice price of the merchandise is computed as follows:

List price P 100,000

Less: 10% x 100,000 10,000
90,000
Less: 10% x 90,000 9,000
81,000
Less: 5% x 81,000 4,050
Total P 76,950

The journal entry shall be as follows:

Account Title Account Code Debit Credit

Accounts Receivable 10301010 P 76,950

Sales Revenue 40202160 P 76,950
To recognize the sale of the accounting manuals

When the inflow of cash or cash equivalents received or receivable is deferred, the fair value of the
consideration may be less than the nominal amount of cash received o receivable. The fair value of the
consideration is determined by discounting all future receipts using an imputed rate of interest. The
difference between the fair value and the nominal amount of the consideration is recognized as interest
revenue. (Par. 16, IPSAS 9)

Example: Assume that on August 5, 2015, Entity A received a 60-day, 9%, P12,000 promissory note
from X entity for accounting manuals sold. On October 4, 2015, Entity X paid cash in settlement of its
note.

The accounting entries shall be as follows:

Account Title Account Code Debit Credit

August 5
Notes Receivable 10301020 P12,000
Sales Revenue 40202160 P12,000
To recognize the sale

October 4
Cash-Collecting Officers 10101010 P12,180
Notes Receivable 10301020 P12,000
Interest Income 40202210 180
To recognize the collection of notes receivable Interest = P12,000 x 9% x 60/360 = P180

Exchanges of Goods or Services for Similar/Dissimilar Good or Services. When goods or services are
exchanged or swapped for goods or services which are of a similar nature and value, the exchange is not
regarded as a transaction which generates revenue. However, when goods are sold or services are rendered in
exchange for dissimilar goods or services, the exchange is regarded as a transaction which generates revenue.
The revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash
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or cash equivalents transferred. When the fair value of the goods or services received cannot be measured
reliably, the revenue is measured at the fair value of the goods given up, adjusted by the amount of any cash or
cash equivalents transferred. (Par. 17, PPSAS 9)

Impairment Losses and Allowance for Impairment Losses. When an uncertainty arises about the
collectibility of an amount already included in revenue, the uncollectible amount, or the amount in respect of
which recovery has ceased to be probable, is recognized as an expense (impairment losses), rather than as an
adjustment of the amount of revenue originally recognized.

Entities shall evaluate the collectibility of accounts receivable on an ongoing basis based on historical bad
debts, customer/recipient credit-worthiness, current economic trends and changes in payment activity. An
allowance is provided for known and estimated bad debts.
Disclosure. An entity shall disclose:

a. The accounting policies adopted for the recognition of revenue, including the methods adopted to
determine the stage of completion of transactions involving the rendering of services;

b. The amount of each significant category of revenue recognized during the period, including revenue
arising from:
1. Rendering of services;
2. Sale of goods;
3. Interest;
4. Royalties;
5. Dividends or similar distributions; and
6. Amount of revenue arising from exchanges of goods or services included in each significant
category of revenue.

Revenue from Non-Exchange Transactions. Revenue of the NGAs from non-exchange transactions are
derived mostly from taxes, gifts and donations, goods in kind and fines and penalties. Most NGAs derive
revenues from transactions where they receive resources and provide no or nominal consideration directly in
return. These are as follows:

a. Tax Revenue
1. Tax Revenue-Individual and Corporation
2. Tax Revenue-Property
3. Tax Revenue-Goods and Services
4. Tax Revenue-Others

b. Fines and Penalties

1. Tax Revenue
2. Service Income
3. Business Income

c. Shares, Grants and Donations

1. Share from National Wealth
2. Share from Philippine Amusement and Gaming Corporation (PAGCOR)/Philippine Charity
Sweepstakes Office (PCSO)
3. Share from Earnings of GOCCs
4. Income from Grants and Donations in Cash
5. Income from Grants and Donations in Kind

d. Revenue from non-exchange transactions may also arise when, in respect of an inflow of resources
from a non-exchange transaction, the entity satisfies a present obligation recognized as a liability
which may be as follows:

1. Trust Liabilities – Customers’ Deposits Payable and Guaranty/Security Deposits Payable

2. Deferred Credits – Deferred Finance Lease Revenue and Other Deferred Credits

3. Unearned Revenue – Investment Property and Other Unearned Revenue

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Recognition of Revenue from Non-Exchange Transactions. The cash basis of accounting shall be applied by
all government agencies in the recognition of revenue from non-exchange transaction until a reliable model of
measurement of this revenue is developed. Therefore, asset and the corresponding revenue or liability that arises
from non-exchange transaction shall be recognized when collected or when these are measurable and legally
collectible.

a. Taxation revenue shall be determined at a gross amount. It shall not be reduced for expenses paid
through the tax system.

b. Gifts and donations, other than services in kind shall be recognized as assets and revenue when it is
probable that the future economic benefits or service potential will flow to the entity and shall be
measured at fair value.

c. Goods in-kind received without conditions shall be recognized as revenue immediately.

d. Donation in cash or in kind shall be recognized as revenue.

Measurement of Revenue from Non-Exchange Transactions. Revenue from non-exchange transactions shall
be measured at the amount of the increase in net assets recognized by the entity, unless it is also required to
recognize a liability. Where a liability is recognized and subsequently reduced, because the taxable event
occurs, or a condition is satisfied, the amount of the reduction in the liability will be recognized as revenue.
(Pars. 48 and 49, PPSAS 23)

Measurement of Assets on Initial Recognition from Non-Exchange Transactions. An asset acquired

through a non-exchange transaction shall initially be measured at its fair value as at the date of acquisition.
(Par. 42, PPSAS 33)

Measurement of Liabilities on Initial Recognition. Where the time value of money is material, the liability
will be measured at the present value of the amount expected to be required to settle the obligation. (Par. 58,
PPSAS 23)

Tax Revenue. Taxes are economic benefits or service potential compulsory paid or payable to public sector
agencies, in accordance with laws and or regulations, established to provide revenue to the government. Taxes
do not include fines or other penalties imposed for breaches of the law. Unless otherwise specified in laws and
regulations, the taxable event for:

a. Income tax is the earning of assessable income during the taxation period by the taxpayer;
b. Value added tax is the undertaking of taxable activity during the taxation period by the taxpayer;
c. Goods and services tax is the purchase or sale of taxable goods and services during the taxation
period;
d. Customs duty is the movement of dutiable goods or services across the customs boundary;
e. Death duty is the death of a person owning taxable property; and
f. Property tax is the passing of the date on which the tax is levied, or the period for which the tax is
levied, if the tax is levied on a periodic basis.

Illustrative Accounting Entries. Refer to Annexes H to N for illustrative accounting entries.

Transfer of Internal Revenue Allotment. Where an NG imposes a tax, the entire proceeds of which is
collected by NGAs and transferred to LGUs through an appropriation, the NGAs recognize assets and revenue
for the tax, and a decrease in assets and an expense for the transfer to LGUs. The LGUs will recognize the
assets and revenue for the transfer. The following is the accounting entry at the books of accounts of the DBM:

Account Title Account Code Debit Credit

Financial Assistance to LGUs 50214030 P10,000

Cash-Modified Disbursement
System (MDS), Regular 10104040 P10,000
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 To recognize transfer of IRA to LGUs

Expenses Paid Through the Tax System and Tax Expenditures. Taxation revenue shall be determined at
gross amount. It shall not be reduced for expenses paid through the tax system. Expenses of the government
paid through the tax system or as reduction from tax revenue received should not be offset or deducted from
that tax revenue. Therefore, taxation revenue shall be recognized at the gross amount and the expenses deducted
shall be recognized and shall form part of the statement of financial performance. Expenses paid through the tax
system are those expenses which should be paid irrespective of whether the taxpayer pay taxes, or use a
particular mechanism to pay taxes. (Par. 71, PPSAS 23)

Taxation Revenue Shall Not Be Grossed Up For the Amount of Tax Expenditures. Tax expenditures are
preferential provisions of the tax law that provide certain taxpayers with concessions that are not available to
others. Tax expenditures are foregone revenue, not expenses, and do not give rise to inflows or outflows of
resources that is, they do not give rise to assets, liabilities, revenue, or expenses of the government. (Pars. 73
and 74, IPSAS 23)

Examples are the tax expenditure fund, which is a subsidy released by the DBM to government-owned or
controlled corporations and government financial institutions to settle customs duties and other taxes arising
from the importation of goods; and benefits granted to taxpayers like the tax credits.

Recognition of Asset through Transfers. An entity shall recognize an asset in respect of transfers when the
transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset. (Par. 76,
PPSAS 23)

a. Transfers meet the definition of an asset when the entity controls the resources as a result of a past
event (the transfer), and expects to receive future economic benefits or service potential from those
resources. Transfers satisfy the criteria for recognition as an asset when it is probable that the inflow
of resources will occur, and their fair value can be reliably measured. In certain circumstances, such
as when a creditor forgives a liability, a decrease in the carrying amount of a previously recognized
liability may arise. In these cases, instead of recognizing an asset as a result of the transfer, the entity
decreases the carrying amount of the liability. (Par. 78, PPSAS 23)

b. Transfers include grants, debt forgiveness, fines, bequests, gifts, donations and goods and services
in-kind. All of these transactions transfer resources without approximate equal value in exchange
and are not taxes but some are with conditions.

c. Transfers are established by a binding arrangement that includes conditions, such as inter-entity and
intra-entity fund transfers:

1. From an NGA to another NGA;

2. From the NGA’s Central Office to its Regional/Bureau Offices and Operating/Field Units;
3. From an NGA to an LGU and vice-versa;
4. From an NGA to a GOCC and vice-versa;
5. From an entity that is created by law or regulation to perform specific functions with operational
autonomy; and
6. From donor entity to NGAs.

d. An entity shall recognize an asset in respect of transfers when the transferred resources meet the
definition of an asset and satisfy the criteria for recognition as an asset.

e. An entity obtains control of transferred resources either when the resources have been transferred to
the entity, or the entity has an enforceable claim against the transferor. Many arrangements to
transfer resources become binding on all parties before the transfer of resources takes place. (Par.
79, PPSAS 23)

f. Transfers of resources that satisfy the definition of contributions from owners will not give rise to
revenue. Agreements that specify that the entity providing resources (a) is entitled to distributions of
future economic benefits or service potential during the recipient entity’s life, or distribution of any
excess of assets over liabilities in the event that the recipient entity is wound up, or (b) acquires a
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 financial interest in the recipient entity that can be sold, exchanged, transferred or redeemed, are, in
substance, agreements to make a contribution from owners. (Par. 80, PPSAS 23)

Measurement of Transferred Assets. Transferred assets are measured at their fair value as at the date of
acquisition. (Par. 83, PPSAS 23)

Debt Forgiveness and Assumption of Liabilities

a. Lenders will sometimes waive their right to collect a debt owed by a public sector entity, effectively
cancelling the debt. For example, an NGA may cancel a loan owed by an LGU. In such
circumstance, the LGU concerned recognizes an increase in net assets because a liability it
previously recognized is extinguished. (Par. 84, PPSAS 23)

b. Entities recognize revenue in respect of debt forgiveness when the former debt no longer meets the
definition of a liability or satisfies the criteria for recognition as a liability, provided that the debt
forgiveness does not satisfy the definition of a contribution from owners. (Par. 85, PPSAS 23)

c. Where a controlling entity forgives debt owed by a wholly owned controlled entity, or assumes its
liabilities, the transaction may be a contribution from owners. (Par. 86, PPSAS 23)

d. Revenue arising from debt forgiveness is measured at the carrying amount of the debt forgiven.
(Par. 87, PPSAS 23)

Recognition and Measurement of Fines

a. Fines are recognized as revenue when the receivable meets the definition of an asset and satisfies the
criteria for recognition as an asset. (Par. 89, PPSAS 23)

b. Where an entity collects fines in the capacity of an agent, the fine will not be recognized as revenue
of the collecting entity. (Par. 89, PPSAS 23)

c. Assets arising from fines are measured at the best estimate of the inflow of resources to the entity.
(Par. 89, PPSAS 23)

Recognition and Measurement of Bequests

a. Bequests which satisfy the definition of an asset are recognized as assets and revenue when it is
probable that the future economic benefits or service potential will flow to the entity and the fair
value of the assets can be measured reliably. Determining the probability of an inflow of future
economic benefits or service potential may be problematic if a period of time elapses between the
death of the testator and the entity receiving any asset. The entity will need to determine if the
deceased person’s estate is sufficient to meet all claims on it, and satisfy all bequests. If the will is
disputed, this will also affect the probability of assets flowing to the entity. (Par. 91, PPSAS 23)

b. The fair value of bequeathed assets is determined in the same manner as for gifts and donations.
Where deceased estates are subject to taxation, the tax authority may already have determined the
fair value of the asset bequeathed to the entity, and this amount may be available to the entity.
Bequests are measured at the fair value of the resources received or receivable. (Par. 92, PPSAS 23)

Recognition and Measurement of Gifts, Donations and Goods In-kind

a. Gifts and donations (other than services in-kind) are recognized as assets and revenue when it is
probable that the future economic benefits or service potential will flow to the entity and the fair
value of the assets can be measured reliably. With gifts and donations, the making of the gift or
donation and the transfer of legal title are often simultaneous, in such circumstances, there is no
doubt as to the future economic benefits flowing to the entity. (Par. 95, PPSAS 23)

b. Goods in-kind are tangible assets transferred to an entity in a non-exchange transaction, without
charge, but may be subject to stipulations. External assistance provided by multilateral or bilateral
development organizations often includes a component of goods in-kind. (Par. 94, PPSAS 23)
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 c. Goods in-kind are recognized as assets when the goods are received, or there is a binding
arrangement to receive the goods. If goods in-kind are received without conditions attached, revenue
is recognized immediately. If conditions are attached, a liability is recognized, which is reduced and
revenue recognized as the conditions are satisfied. (Par. 96, PPSAS 23)

d. On initial recognition, gifts and donations including goods in-kind are measured at their fair value as
at the date of acquisition, which may be ascertained by reference to an active market, or by appraisal.
An appraisal of the value of an asset is normally undertaken by a member of the valuation profession
who holds a recognized and relevant professional qualification. For many assets, the fair value will
be readily ascertainable by reference to quoted prices in an active and liquid market. For example,
current market prices can usually be obtained for land, non-specialized buildings, motor vehicles and
many types of plant and equipment. (Par. 97, PPSAS 23)

Grant with Condition. If conditions are attached to a grant, a liability is recognized, which is reduced and
revenue recognized as the conditions are satisfied. If the government is required to recognize a liability in
respect of any conditions relating to assets recognized as a consequence of specific purposes, it does not
recognize revenue until the condition is satisfied and the liability is reduced. As an entity satisfies a present
obligation recognized as a liability in respect of an inflow of resources from a non-exchange transaction
recognized as an asset, it shall reduce the carrying amount of the liability recognized and recognize an amount
of revenue equal to that reduction.

Example: The NG received a foreign grant amounting to P10 million for the construction of a railroad
system. Under the terms of the grant, the construction project shall be completed within a period of two
years from the receipt of the grant, otherwise, the money shall be returned to the grantor. The money can
only be used as stipulated and the NG is required to include a note in the financial statement detailing
how the money was spent. The Department of Public Works and Highways (DPWH) will be the
implementing entity. The transactions shall be recognized as follows:

a. Receipt of the Grant

Account Title Account Code Debit Credit

Books of the NG – BTr

Cash in Bank-Local Currency,
Bangko Sentral ng Pilipinas 10102010 P10,000,000
Other Deferred Credits 20501990 P10,000,000
To recognize receipt of grant directly credited to the account of the NG maintained by the BSP

Books of the Implementing NGA – DPWH

Cash-Modified Disbursement
System (MDS), Special Account 10104050 P10,000,000
Subsidy from National Government 40301010 P10,000,000
To recognize receipt of the NCA for the construction of a railroad system

b. Purchase of construction materials and payment for labor for the construction of a railroad system
amounting to P10,000,000.

Account Title Account Code Debit Credit

Books of the Implementing NGA-DPWH

Construction in Progress- Infrastructure Assets 10699020 P10,000,000
Cash-Modified Disbursement
System (MDS), Special Account 10104050 P10,000,000
To recognize payment for the materials and labor for the construction of a railroad system

Books of the NG-BTr

Subsidy from National Government 40301010 P10,000,000
Cash in Bank-Local Currency,
Bangko Sentral ng Pilipinas 10102010 P10,000,000
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 To recognize replenishment of MDS checks issued for payment of the materials and labor for the
construction of a railroad system

c. Receipt of the report from DPWH for the completion of the construction of a railroad system amounting
to P10,000,000.

Account Title Account Code Debit Credit

Books of the NG - BTr

Other Deferred Credits 20501990 P10,000,000
Income from Grants and Donations in Cash 40402010 P10,000,000
To recognize the income from grants and donations representing payment for expenses in
connection with the grant agreement.

d. Turnover and Acceptance of Completed Infrastructure Asset

Account Title Account Code Debit Credit

Books of the Implementing NGA - DPWH

Railway Systems 10603100 P10,000,000
Construction in Progress-Infrastructure Assets 10699020 P10,000,00
To recognize the turnover and acceptance of completed railway system

Recognition and Measurement of Services In-kind. These services meet the definition of an asset because the
entity controls a resource from which future economic benefits or service potential is expected to flow to the
entity. These assets are, however, immediately consumed and a transaction of equal value is also recognized to
reflect the consumption of these services in-kind. (Par. 98, PPSAS 23)

a. Public sector entities may be recipients of services in-kind under voluntary or involuntary schemes
operated in the public interest. For example:

1. Technical assistance from other governments or international organizations;

2. Persons convicted of offenses may be required to perform community service for public sector
entity;
3. Public hospitals may receive the services of volunteers; and
4. Public schools may receive voluntary services from parents as teachers’ aides or as board members.
(Par.100, PPSAS 23)

b. Due to the many uncertainties surrounding services in-kind, including the ability to exercise control over
the services, and measuring the fair value of the services, the entity is not required to recognize
services in-kind as revenue and as an asset but is encouraged to disclose the nature and type of
services in-kind received during the reporting period. (Par.102, PPSAS 23)

Recognition and Disclosure of Pledges. Pledges do not meet the definition of an asset because the recipient
entity is unable to control the access of the transferor to the future economic benefits or service potential
embodied in the item pledged. Agencies do not recognize pledged items as assets or revenue. If the pledged
item is subsequently transferred to the recipient entity, it is recognized as a gift or donation. Pledges may
warrant disclosure as contingent assets. (Par. 104, PPSAS 23)

Advance Receipts of Revenue. When an entity receives resources before a transfer arrangement becomes
binding, the resources are recognized as an asset when they meet the definition and satisfy the criteria for
recognition as an asset and recognized as a liability until the event that makes the transfer arrangement binding
occurs, and all other conditions under the agreement are fulfilled. When that event occurs and all other
conditions under the agreement are fulfilled, the liability is discharged and revenue is recognized. (Par.105,
PPSAS 23)

Recognition and Measurement of Concessionary Loans

Page 11 of 23
 a. The portion of the loan that is repayable, along with any interest payments, is an exchange transaction
and is accounted for in accordance with PPSAS 29, Financial Instruments: Recognition and
Measurement, Chapter 7 of this Manual.

b. An entity considers whether any difference between the transaction price (loan proceeds) and the fair
value of the loan on initial recognition is non-exchange transaction. When an entity determines that the
difference between the transaction price (loan proceeds) and the fair value of the loan on initial
recognition is nonexchange revenue, an entity recognizes the difference as revenue, except if a present
obligation exists, e.g., where specific conditions imposed on the transferred assets by the recipient result
in a present obligation. Where a present obligation exists, it is recognized as a liability. As the entity
satisfies the present obligation, the liability is reduced and an equal amount of revenue is recognized.
(Par. 105A and B, PPSAS 23)

Dishonored Checks. A check is dishonored either by non-payment or nonacceptance. Dishonor by non-

payment occurs when (a) the check is duly presented for payment and payment is refused or cannot be obtained;
or (b) presentment is excused and the check is overdue and unpaid (Sec. 83, RA No. 2031, Negotiable
Instruments Law). Dishonor by nonacceptance happens when (a) the check is duly presented for acceptance,
and such an acceptance as is prescribed by law is refused or cannot be obtained; or (b) presentment for
acceptance is excused and the check is not accepted (Sec. 149, RA No. 2031, Negotiable Instruments Law). A
dishonored check may also be defined as a check paid to the agency that was dishonored by the AGDB due to
“Drawn Against Insufficient Fund (DAIF)” or “Drawn Against Uncleared Deposits (DAUD).”

When a check drawn in favor of the government is not accepted by the drawee for any reason, the drawer shall
continue to be liable for the sum due and all penalties resulting from delayed payments. Where the reason for
non-acceptance by the drawee bank is insufficiency of funds, the drawer shall be criminally liable therefor.

Responsibility over dishonored checks:

a. When a check is dishonored by non-payment or non-acceptance, the Collecting Officer should issue a
Notice of Dishonored Checks (NDC) (Appendix 25) to the drawer and to each endorser, and any drawer
or endorser to whom such notice is not given is discharged from liability. The NDC shall be furnished to
the Agency Head, Accountant, Auditor and a copy thereof retained by the Collecting Officer. The
Collecting Officer shall cancel the OR covering the dishonored check. If necessary, the head of the
agency shall promptly institute the corresponding action for the collection of the amount involved.

b. The Collecting Officer neglecting or failing to give the required NDC to the drawer (or to the endorser-
payor of the government check), who, as a result thereof, is discharged from liability, shall be personally
answerable for the resulting loss suffered by the government.

c. The making, drawing and issuance of a check payment of which is refused by the drawee because of
insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of
the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit unless
such maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within five (5) banking days after receiving notice that such
check has not been paid by the drawee.

d. A dishonored check shall be settled by tendering payment in cash or by certified check to the Collecting
Officer concerned. No other mode of payment shall be accepted.

e. Upon settlement of the dishonored check in the manner herein prescribed, the Collecting Officer shall
not return the check to the payor concerned unless the latter first surrenders the previous OR therefor. If
the previous receipt is no longer available, sworn statement to the effect that it has been lost or
misplaced should be submitted by the payor.

f. Dishonored checks shall remain in the custody of the Collecting Officer, pending their redemption,
unless the agency head or the court shall direct otherwise, in which case appropriate receipts should be
secured from the officer authorized to take custody of the checks. The Collecting Officer shall
immediately advise the transfer of custody of the check.

Page 12 of 23
Procedures in Recording Dishonored Checks

Area of Responsibility Seq. No. Activity

Cash/Treasury
Division/Unit
Collecting Officer/
Designated Staff 1 Receives from AGDB the Debit Memo (DM) and copies of
dishonored checks.
2 Verifies the dishonored checks against previous months’
RCD/CRRec maintained on file to ascertain that the checks
were included in the previous months’ collections. If not
included, verifies from AGDB the details of the dishonored
checks.
3 If dishonored checks are included in the RCDs, prepares
NDC to inform the drawers/endorsers/payors that the
checks were dishonored by the AGDB.
Note 1 – The NDC shall be prepared in five copies and
distributed as follows:

Original – Drawer/Endorser (To be delivered personally or

thru registered mail)
Copy 2 – Accounting Division/Unit file
Copy 3 – Agency Head’s file
Copy 4 – COA Auditor’s file
Copy 5 – Cash/Treasury Unit file

4 Retrieves from file Copy 3 of the OR covering the

dishonored check and cancels the OR indicating the
following notation:

“Cancelled (date of Notice of Dishonored Checks) per

Bank
Debit Memo/Voucher No._____ dated _________”

5 Retrieves RCD/CRRec on file covering the dishonored

checks and stamps the following notation on the face of the
report/record:

“Cancelled OR No. ______ dated _______ amounting to P

____________ due to dishonored Check No. ______ per
Bank’s Debit Memo No. ________ dated ___________.”

Note 2 – In case of collections of OUs without complete

set of books, CRReg will be used instead of
RCD/CRRec.

6 Prepares list of dishonored checks in two copies. Forwards

Copy 2 of the list of dishonored checks together with
originals of dishonored checks, AGDB’s Debit Memo and
Copy 2 of NDC to the Accounting Division/Unit for
preparation of the JEV.
Accounting
Division/Unit
Page 13 of 23
Accounting Staff 7 Receives Copy 2 of the list of dishonored checks, originals
Of dishonored checks, AGDB’s Debit Memo and Copy 2
of NDC from the Cash/Treasury Unit and records the same
in the logbook maintained for the purpose.

8 Based on the list of dishonored checks, prepares the JEV in

two copies. Signs the “Prepared by” portion of the JEV and
forwards the same to the Head of Accounting Division/Unit
for review and signature.
Head of
Accounting
Division/Unit 9 Reviews and signs the “Certified Correct by” portion of the
JEV. Forwards the JEV supported by Copy 2 of the list of
dishonored checks, originals of dishonored checks,
AGDB’s Debit Memo and Copy 2 of NDC to the
Bookkeeper for recording in the CRJ.

Note 3 – For the succeeding activities, refer to Chapter 19

of this Manual for the Preparation and Submission
of Trial Balances, Financial Statements and Other
Reports.

Illustrative Accounting Entries for Dishonored Checks

a. Collections remitted to BTr

Account Title Account Code Debit Credit

1. Cancellation of OR due to Dishonored Checks

Other Receivables 10305990 xxx

Cash-Treasury/Agency Deposit,
Regular 10104010 xxx
To recognize the cancellation of current year’s deposited collections due to dishonored checks

Other Receivables 10305990 xxx

Accumulated Surplus/(Deficit) 30101010 xxx
To recognize the cancellation of prior year’s deposited collections due to dishonored checks

2. Redemption of Dishonored Check

Cash-Collecting Officers 10101010 xxx

Other Receivables 10305990 xxx
To recognize replacement of dishonored check

Cash-Treasury/Agency Deposit, Regular 10104010 xxx

Cash-Collecting Officers 10101010 xxx
To recognize the remittance of the replacement of dishonored check

b. Collections deposited to AGDB

Account Title Account Code Debit Credit

1. Cancellation of OR due to Dishonored Checks

Other Receivables 10305990 xxx

Cash in Bank-Local Currency, Current
Account 10102020 xxx
To recognize the cancellation of deposited collections due to dishonored checks

Page 14 of 23
 2. Redemption of Dishonored Check

Cash-Collecting Officers 10101010 xxx

Other Receivables 10305990 xxx
To recognize replacement of dishonored check

Cash in Bank-Local Currency, Current

Account 10102020 xxx
Cash-Collecting Officers 10101010 xxx
To recognize the deposit of the replacement of dishonored check

Accounting for Cash Overage/Shortage of Collecting Officer. Cash overage discovered by the Auditor that
cannot be satisfactorily explained by the Collecting Officer shall be forfeited in favor of the government and an
official receipt shall be issued by the Collecting Officer/Cashier. The cash overage shall be taken up as
Miscellaneous Income. Cash shortage which is not restituted by the Collecting Officer despite demand in
writing by the Auditor shall be taken up as receivable from the Collecting Officer.

Illustrative Accounting Entries for Cash Overage/Shortage of Collecting Officer

a. Cash Overage

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 xxx

Miscellaneous Income 40609990 xxx
To recognize forfeiture of cash overage of the Collecting Officer

Cash-Treasury/Agency Deposit, Regular 10104010 xxx

Cash-Collecting Officers 10101010 xxx
To recognize the remittance of forfeited cash overage to the BTr

b. Cash Shortage

Account Title Account Code Debit Credit

Due from Officers and Employees 10305020 xxx

Cash-Collecting Officers 10101010 xxx
To recognize cash shortage of Collecting Officer

Cash-Collecting Officers 10101010 xxx

Due from Officers and Employees 10305020 xxx
To recognize restitution of cash shortage

Cash-Treasury/Agency Deposit, Regular 10104010 xxx

Cash-Collecting Officers 10101010 xxx
To recognize the remittance of restituted cash shortage to the BTr

Disclosures. An entity shall disclose pertinent revenue transactions as follows: either on the face of, or in the
notes to, the GPFS:

a. Disclosure on the face of, or in the notes to, the GPFS (Par. 106, IPSAS 26)

1. The amount of revenue from non-exchange transactions recognized during the period:

i. Taxes, showing separately major classes of taxes; and

ii. Transfers, showing separately major classes of transfer revenue.

2. The amount of receivables recognized in respect of non-exchange revenue;

Page 15 of 23
 3. The amount of liabilities recognized in respect of transferred assets subject to conditions;
4. The amount of liabilities recognized in respect of concessionary loans that are subject to conditions on
transferred assets;
5. The amount of assets recognized that are subject to restrictions and the nature of those restrictions;
6. The existence and amounts of any advance receipts in respect of non-exchange transactions; and
7. The amount of any liabilities forgiven.

b. Disclosure in the notes to the GPFS (Par. 107, IPSAS 26)1.

1. The accounting policies adopted for the recognition of revenue from nonexchange transactions;

2. For major classes of revenue from non-exchange transactions, the basis on which the fair value of
inflowing resources was measured;

3. For major classes of taxation revenue that the entity cannot measure reliably during the period in which
the taxable event occurs, information about the nature of the tax; and

4. The nature and type of major classes of bequests, gifts, and donations, showin separately major classes
of goods in-kind received.

c. Entities are encouraged to disclose the nature and type of major classes of services inkind received,
including those not recognized. Such disclosures may assist users to make informed judgment about:

1. the contribution made by such services to the achievement of the entity’s objectives during the reporting
period; and

2. the entity’s dependence on such services for the achievement of its objectives in the future.

Other Receipts. Other receipts of NGAs shall be composed of, but not limited to, the following:

a. Receipt of NCA. The NCA specifies the maximum amount of withdrawal that an entity can make from a
government bank for the period indicated. The Collecting Officer shall not issue an OR for the receipt of
NCA. The accounting entries to recognize receipt of NCA are as follows:

Account Title Account Code Debit Credit

Regular
Cash-Modified Disbursement
System (MDS), Regular 10104040 P100,000
Subsidy from National Government 40301010 P100,000
To recognize receipt of NCA for Regular Agency Fund

Special Account
Cash-Modified Disbursement
System (MDS), Special Account 10104050 P100,000
Cash-Treasury/Agency Deposit, Special Account 10104020 P100,000
To recognize receipt of NCA for Special Account in the General Fund

Cash-Modified Disbursement
System (MDS), Trust 10104060 P100,000
Cash-Treasury/Agency Deposit, Trust 10104030 P100,000
To recognize the receipt of NCA for Trust Receipts Fund

b. Non-Cash Availment Authority. The accounting entry to recognize the receipt of NCAA is as follows:

Account Title Account Code Debit Credit

Accounts Payable 20101010 P950,000

Subsidy from National Government 40301010 P950,000
To recognize the receipt of NCAA
Page 16 of 23
c. Cash Disbursement Ceiling. The accounting entries for the collection of revenue of, and the constructive
receipt of disbursement authority to, Foreign Service Posts (FSPs) of DFA and DOLE are as follows:

1. DFA and DOLE’s Books

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P100,000

Passport and Visa Fees 40201120 P100,000
To recognize collection of revenue of FSPs

Cash in Bank-Foreign Currency,

Current Account 10103020 P100,000
Cash-Collecting Officers 10101010 P100,000
To recognize deposit of collections to authorized servicing bank of the FSPs

Cash-Constructive Income Remittance 10104080 P80,000

Subsidy from National Government 40301010 P80,000
To recognize receipt of CDC from DBM

Quarters Allowance-Civilian 50102070 P50,000

Rents-Buildings and Structures 50299050 30,000
Cash in Bank-Foreign Currency, Current Account 10103020 P80,000
To recognize payment of expenses charged to CDC

2. BTr Books:

Account Title Account Code Debit Credit

Subsidy to NGAs 50214010 P80,000

Cash-Constructive Income Remittance 10104080 P80,000
To recognize constructive receipt of remitted collections by FSPs and disbursements charged to
the issued CDCs to FSPs

d. Tax Remittance Advice. This shall be used to recognize: (1) in the books of national government agencies,
the constructive remittance to BIR and BOC of taxes and customs’ duties withheld, and the constructive receipt
of NCA for those taxes and customs duties; (2) in the books of the BIR and BOC, the constructive receipt of tax
revenue and customs duties; and (3) in the books of the BTr, the constructive receipt of the taxes and customs
duties remitted.

1. Tax Withheld by NGAs

Account Title Account Code Debit Credit

NGAs’ (withholding agency) Books

Cash-Tax Remittance Advice 10104070 P100,000

Subsidy from National Government 40301010 P100,000
To recognize constructive receipt of NCA for TRA

Account Title Account Code Debit Credit

Due to BIR 20201010 P100,000

Page 17 of 23
 Cash-Tax Remittance Advice 10104070 P100,000
To recognize constructive remittance to BIR of taxes withheld through TRA

Account Title Account Code Debit Credit

BIR Books

Cash-Tax Remittance Advice 10104070 P100,000

Income Tax 40101010 P100,000
To recognize constructive receipt of taxes remitted by NGAs through TRA

BTr Books

Subsidy to NGAs 50214010 P 100,000

Cash-Tax Remittance Advice 10104070 P100,000
To recognize constructive receipt of remittance of taxes by NGAs through TRA

2. BOC Customs Duties charged to TEF

Account Title Account Code Debit Credit

NGAs’ (withholding agency) Books

Military, Police and Security Equipment 10605100 P1,000,000
Cash-Modified Disbursement
System (MDS), Regular 10104040 P990,000
Due to NGAs 20201050 10,000
To recognize the purchase of patrol boat by Philippine Navy (Cost=P990,000; Customs Duties =
P10,000)

Cash-Tax Remittance Advice 1 0 1 04070 P10,000

Subsidy from National Government 40301010 P10,000
To recognize constructive receipt of NCA for customs duties charged against TEF

Due to NGAs 20201050 P10,000

Cash-Tax Remittance Advice 10104070 P10,000
To recognize constructive remittance to BOC of custom duties through TRA BOC Books

Cash-Tax Remittance Advice 1 0 1 04070 P10,000

Import Duties 40103010 P10,000
To recognize constructive receipt of import duties remitted by NGAs through TRA

BTr Books

Subsidy to NGAs 50214010 P10,000

Cash-Tax Remittance Advice 10104070 P10,000
To recognize constructive receipt of the remittance of import duties by NGAs through TRA

e. Receipt of Subsidy/Assistance from other NGAs, LGUs, GOCCs and Other Funds. The Collecting
Officer shall issue OR upon receipt of cash subsidy/assistance.

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 100,000

Subsidy from Other NGAs 40301020 P50,000
Assistance from LGUs 40301030 25,000
Assistance from GOCCs 4 0 301040 25,000
Page 18 of 23
 To recognize receipt of subsidy/assistance from other government agencies

Cash-Treasury/Agency Deposit, Trust 10104030 P100,000

Cash-Collecting Officers 10101010 P 100,000
To recognize remittance of collections to BTr

f. Refund of excess cash advances granted to officers and employees. Cash advances may be classified into:

1. Advances to Officers and Employees – for official travels;

2. Advances for Operating Expenses – granted to regular disbursing officer for operating expenses of
operating/field units and foreign post not maintaining complete set of books;
3. Advances for Payroll – for payment of salaries, wages and other personnel benefits; and
4. Advances to Special Disbursing Officer (SDO) – for special purpose/time-bound undertakings.

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P100,000

Advances for Operating Expenses 19901010 P50,000
Advances for Payroll 19901020 25,000
Advances to Special Disbursing Officer 19901030

or 25,000
Advances to Officers and Employees 19901040
To recognize collection of refund of excess cash advances

Cash-Treasury/Agency Deposit, Regular 10104010 P100,000

Or

Cash-Treasury/Agency Deposit, Special Account 10104020

Or

Cash-Treasury/Agency Deposit, Trust 10104030

Cash-Collecting Officers 10101010 P100,000
To recognize remittance of collections to BTr

g. Performance bond/security deposits. Receipts of performance bond posted by contractor or supplier to

guaranty full and faithful performance of their contract. It may be in the form of cash or certified checks.

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 10,000

Guaranty/Security Deposits Payable 1 9 9 0 1 0 10 P10,000
To recognize collection of performance bond/security deposits

Cash-Treasury/Agency Deposit, Trust 10104010 P 10,000

Cash-Collecting Officers 10101010 P 10,000
To recognize remittance of collections to BTr

h. Refund of overpayment of expenses. Receipts of refunds from officers, employees and suppliers/creditors
resulting from overpayment of expenses.

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 10,000

Specific Expense account P10,000
To recognize collection of refund of overpayment of expenses.

Cash-Treasury/Agency Deposit, Regular 10104010

Page 19 of 23
 Or

Cash-Treasury/Agency Deposit, Special Account 10104020 P10,000

Or

Cash-Treasury/Agency Deposit, Trust 10104030

Cash-Collecting Officers 10101010 P 10,000
To recognize remittance of collections of refund of overpayment of expenses to BTr

i. Collections made on behalf of another entity or non-government/private organizations. Receipts of income,

receivables or trust funds for the account of other NGAs, LGUs, GOCCs or non-government/private
organizations. These collections are later remitted to the government agencies or non-government/private
organizations concerned.

1. NGAs (other than University of the Philippines-Legal Research Fund (UP-LRF)) Books

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 5,000

Due to NGAs 20201050 P5,000
To recognize collection of fees accruing to the UP-LRF

Due to NGAs 20201050 P5,000

Cash-Collecting Officers 10101010 P 5,000
To recognize remittance of collections to BTr for the account of UP-LRF

2. BTr Books

Account Title Account Code Debit Credit

Cash in Bank-Local Currency, Savings Account 10102030 P5,000

Cash-Treasury/Agency Deposit, Trust 10104030 P5,000
To recognize receipt of remitted collections for UP-LRF

3. UP-LRF Books

Account Title Account Code Debit Credit

Cash-Treasury/Agency Deposit, Trust 10104030 P5,000

Trust Liabilities 20401010 P5,000
To recognize remitted collections for UP-LRF by other NGAs

j. Intra-agency and inter-agency fund transfers. Cash received from central office/regional office/operating
units of an entity and from another entity for the purpose of implementing specific projects.

1. Intra-entity Fund Transfer

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 5,000

Due to Central Office 20301010 P5,000
Or
Due to Bureaus 20301020
Or
Due to Regional Offices 20301030
Or
Due to Operating Units 20301040
Or
Page 20 of 23
 Due to Other Funds 20301050
To recognize receipt of intra-entity fund transfer

Cash-Treasury/Agency Deposit, Trust 10104030 P5,000

Cash-Collecting Officers 10101010 P 5,000
To recognize remittance of collections to BTr

2. Inter-agency Fund Transfer

Account Title Account Code Debit Credit

Cash-Collecting Officers 10101010 P 5 ,000

Due to NGAs 20201050 P5,000
or
Due to LGUs 20201070
Or
Due to GOCCs 20201060
To recognize receipt of inter-entity fund transfer

Account Title Account Code Debit Credit

Cash-Treasury/Agency Deposit, Trust 10104030 P5,000

Cash-Collecting Officers 10101010 P 5,000
To recognize remittance of collections to BTr

Reporting of Collections and Deposits. Receipts and deposits shall be reported as follows:

a. At the close of the business day, the Collecting Officers shall prepare the Report of Collections and
Deposits (RCD) (Appendix 26) for submission to Accounting Office/Unit. The report lists all the ORs
issued in numerical sequence including cancelled ones.

b. The RCD shall be supported by documentary evidence such as duplicate copies of ORs and validated
deposit slips.

c. The Collecting government entity issuing electronic Official Receipt (eOR) should generate and submit
daily to the Auditor a copy of the RCD. In case the collection system is not integrated with the
accounting system, the Accounting Division/Unit shall recognize the collections and deposits based on
the generated reports duly certified by the Collecting Officer/Cashier/Head of Cash/Treasury Unit.

d. Field Offices (FOs)/Operating Units (OUs) without complete set of books shall record their collections
of income chronologically in the Cash Receipts Register (CRReg) (Appendix 27). The certified copy of
the CRReg together with the required supporting documents, duplicate copies of ORs and Deposit Slip
(DSs) shall be submitted within five (5) days after the end of each month to the concerned mother unit
(central/regional/division office) by the FOs (a unit under the central/regional/ division office) for
review and recording of the transactions in the CRJ by the Chief Accountant.

Detailed Procedures for Collections and Deposits through the Collecting Officer

Area of Responsibility Seq. No. Activity

Cash/Treasury Unit Daily Collecting

Officer 1 Receives cash/check from payor representing
collection based on the Order of Payment (OP)
(Appendix 28) prepared by the Accounting
Division/Unit.

2 Issues OR to acknowledge receipt of cash/check.

Note 1 – The OR shall be prepared in three copies
and distributed as follows:
Original – Payor
Page 21 of 23
 Copy 2 – To be attached to the RCD/CRReg
Copy 3 – Cash/Treasury Unit file

3 Records collections in the Cash Receipts Record

(CRRec) (Appendix 29).

4 Prepares DSs in three copies. Note 2 – The DSs

shall be distributed as follows:
Original – AGDB
Copy 2 – To be attached to RCD/CRRec
Copy 3 – Cash/Treasury Unit file

5 Deposits collections through AGDB for the account

of the National Treasurer.
Note 3 – As prescribed in Treasury Circular No. 03-
2014 dated June 16, 2014, amended by Treasury
Circular No. 05- 2014 dated September 26, 2014, a
List of Deposited Collections (LDC) shall
accompany the validated deposit slips upon deposit.
Refer to the aforesaid Treasury Circulars for the
format of LDC.

6 Based on the duplicate copies of ORs on file and

validated DSs from the AGDB, prepares the RCD
in four copies. Initials on the RCD and forwards the
same together with Copy 2 of the ORs and validated
DSs to the Head of the Cash/Treasury Unit for
review and signature.
Head of
Cash/Treasury
Unit 7 Reviews and signs the RCD. Forwards original of
RCD, Copy 2 of the ORs and validated DSs to the
Collecting Officer/Designated Staff for submission
to the Accounting Division/Unit.

Designated Staff 8 Records the RCD in the logbook maintained by the

Cash/Treasury Unit and forwards the same with the
copy 2 of the ORs and validated DSs to the
Accounting Division/Unit for recording in the
books of accounts.
Accounting
Division/Unit
Accounting Staff 9 Receives original of RCD with Copy 2 of the OR
and
validated DSs from the Cash/Treasury Unit.
Records
receipt in the logbook maintained for the purpose
and forwards the same to the Bookkeeper for review
and preparation of the JEV.
Bookkeeper 10 Based on the RCD, prepares JEV in two copies and
signs "Prepared by" portion of the JEV. Forwards
the JEV and documents to the Head of the
Accounting Unit for review and signature.
Head/Chief
Accountant 11 Reviews and signs “Certified Correct by” portion of
the JEV. Forwards the JEV and documents to the
Bookkeeper for recording in the CRJ. Note 4 – For
the succeeding activities, refer to the Chapter on
Financial Reporting for the preparation and
Page 22 of 23
 submission of Trial Balances, Financial Statements
and Other Reports.

Procedures for Collections through AAB/AGDB

Area of Responsibility Seq. No. Activity

Accounting
Division/Unit
Receiving/
Releasing
Staff 1 Receives the Consolidated Report of Daily Collections
(CRDC) from the AAB/AGDB. Records receipt in the
logbook maintained for the purpose. Forwards the same
to the Bookkeeper for preparation of the JEV.
Bookkeeper 2 Based on the CRDC, prepares JEV in
two copies to recognize the collections and deposits,
and signs "Prepared by" portion of the JEV. Forwards
the JEV and supporting documents to the Accounting
Division/Unit Head/Chief Accountant for review and
signature.
Head/Chief
Accountant 3 Reviews and signs "Certified Correct by" portion of the
JEV. Forwards the JEV and supporting documents to
the Bookkeeper for recording in the GJ. Note – For the
succeeding activities, refer to the Chapter on Financial
Reporting for the preparation and submission of Trial
Balances, Financial Statements and Other Reports.

Submission of the Quarterly Report of Revenue and Other Receipts. The Chief Accountant shall prepare
the Quarterly Report of Revenue and Other Receipts (QRROR) (Appendix 24) and submit the report to the
GAS, COA, the DBM and the BTr within 30 days after the end of each quarter. A separate report shall be
prepared and submitted for income of the GF and for income and receipts for Special Account and Trust Fu nd.

Page 23 of 23