GROUP 1 Government for Accounting  What is a Disbursement?

revenues, it can be an early warning of

insolvency.
BPA121-Yy A “disbursement” is a payment to an individual or  Retirement Account Withdrawal: When
entity from a private or public fund. A disbursement money is disbursed, it is recorded on the
ACCOUNTING FOR DISBURSEMENT may also be a payment made on behalf of a client to a account as a balance drawdown.
Disbursement Accounting refers to the systematic third party. It may be money paid into a business'  Controlled disbursement: A cash flow
recording and reporting of all outgoing payments operating budget, the delivery of a loan amount to a management service for a bank's corporate
made by an entity. It encompasses the entire cycle of borrower, or a dividend to shareholders. clients. Controlled disbursement allows
disbursing funds, from the initiation of a payment A “disbursement” refers to a payment made by an customers to review and reschedule
request to the final settlement. The primary purpose entity, recorded as a debit by the payer and a credit disbursements on a day-to-day basis. Clients
of disbursement accounting is to maintain by the payee. It encompasses various forms of maximize the interest they earn on the cash
transparency, accountability, and control over an payments, including operating expenses, loan in their accounts by delaying when money is
organization's financial transactions. By accurately repayments, and dividends to shareholders. debited from the account.
recording disbursements, businesses can track their Disbursements can occur in multiple contexts, such  Third-Party Payments: When paying for
expenses, identify trends, and make informed as corporate finance, legal payments, and educational services such as from an attorney, the lawyer
decisions regarding budgeting and resource funding. A “disbursement” could also refer to any will commonly complete and record
allocation. payment made by an organization, which can include disbursements made on behalf of a client.
cash or cash equivalents. Common examples include: This may include payments to various third
 Most of the transactions in the government
parties for costs like court fees, private
involve the receipt and disbursement of  Loans: A loan is disbursed when the agreed- investigator services, courier services, and
cash. The cash transactions affect every upon amount is paid into the borrower's expert reports.
classification within the financial statements account and is available for use. The cash
- assets, liabilities, and residual equity, has been debited from the lender's account Basic Requirements for Disbursement:
income and expenses by checks. Thus it is and credited to the borrower's account.
essential that cash transactions are recorded 1. Existence of a lawful and sufficient
 Tuition: A student loan disbursement is the allotment certified as available by the budget
correctly for reliability in the financial payout of loan proceeds on behalf of a
statements. officer.
student. Schools and loan servicers notify 2. Existence of a valid obligation certified by
 Disbursements constitute all cash paid out students of the expected receipt of the
during a given period either in currency the Chief Accountant/Head of Accig. Unit;
disbursements in writing, including the 3. Legality of transactions and conformity with
(cash) or by check. It may also mean the amount of the loan and its effective date. A
settlement of government laws, rules and regulation.
university or college may also directly give 4. Approval of the expense by the Chief of
payables/obligation by cash or by check. It students grant money in payments called
shall be covered by Disbursement Voucher Officer or by his duly authorize
disbursements. representative: and
(DV), Petty Cash Voucher, or Payroll.  Insurance Claim: After an insurance
 How to Distinguish Disbursement from 5. Submission of proper evidence to establish
adjuster inspects damage to a home or the claim.
Expenditures? property, an insurance company will
Expenditures are the obligations incurred by the disburse money for repairs, based on the Types of disbursements
Agency. It includes both the amount actually paid terms and limits of policies such as a
homeowner's or automobile policy. Disbursements can be defined as the act of paying out
and those incurred and recorded as liabilities to be money or transferring assets to fulfill obligations or
paid in the future. While Disbursement are payments  Business Operations: Disbursement is part
of cash flow and a record of day-to-day settle debts. They can take various forms depending
made for such government obligations by cash or on the nature of the transaction. Some common types
payments. expenses. If disbursements are higher than
of disbursements include:
o Supplier Payments: Businesses often make
disbursements to pay for goods or services
received from suppliers. These payments