COA - M2013-004 Revised Cash Examination Manual

;\ Republic of the Philippines JUL 0 9 2013
\.] COMMISSION ON AUDIT

yjy Commonwealth Avenue, Quezon City
W
COMMISSION ON AUDIT MEMORANDUM NO. 2013-004
TO : All Assistant Commissioners, Directors, Supervising Auditors, Audit Team

Leaders and AH Others Concerned
SUBJECT : Prescribing the use of the Revised Cash Examination Manual
A. RATIONALE
Over the past two decades, significant changes have emerged in accounting and
auditing arena that saw the adoption of new international standards and best practices, and
the introduction of new audit approaches. These developments necessitated the updating of
the Commission's policies, standards and rules to keep abreast with the current norm. An
activity that continues to be so vital in ensuring that cash is adequately protected and controls
are in place is the examination of the cash and accounts of all accountable officers of the
government. With almost three decades going after its last revision, the old manual on cash
examination deserves a fresh refinement to keep it relevant and more responsive to the
changing times. The Revised Cash Examination Manual embodies the much needed
enliancement to effectively carry out the cash examination across all sectors of the
government.
B. COVERAGE
The manual shall be used by all audit teams in the national, local and corporate
government agencies. It shall also be used by special audit teams from, other offices of the
Commission duly constituted to conduct cash examinations or are required to perform the
same in relation to the conduct of a special audit. Cognizant of the peculiarity of operations
among government agencies, the audit teams are encouraged to devise and supplement the
manual with other appropriate procedures and techniques designed to fully achieve the
objectives of cash examination.
C. AUTHORITY TO CONDUCT CASH EXAMINATION
1
The authority to conduct regular cash examination shall be inherent to the audit team
having jurisdiction over the audited agencies. The audit team leader shall be responsible in
identifying the audit team member(s) who will conduct or assist him in conducting the cash
examination.
Special audit teams may also be constituted by the Chairperson or the Cluster/Regional
Director to conduct cash examinations. Further, special audit teams may undertake cash
examinations as an incident to, or when deemed necessary to complete the special audit.
D. FREQUENCY AND EXTENT OF EXAMINATION
In addition to the instances where cash examination is mandatory, the examination of

the cash and accounts of all accountable officers shall be conducted at least once a year.
The auditor shall verily the transactions from the date of last cash examination to the
date of current examination. The verification shall be limited to determining and establishing
that all cash receipts, remittances/deposits, cash advances/disbursements and adjusting entries
are properly and correctly recorded in the Cashbook/Cash Receipts Record/Cash Receipts
Register (CRR)/Cash Disbursements Record/Cash Disbursements Register (CDR)/Check
Disbursements Record (CkDR)/Petty Cash Register (PCR), or its equivalent; that
disbursement vouchers, as entered in the CDR/CkDR are properly approved and payments
duly acknowledged; and that all cash balances as of the date of examination are reconciled
with accounting and related records.
For purposes of implementation of the revised manual, the balance of accountabilities

of accountable officers determined in cash examinations conducted in 2012 and 2013,
whichever is the latest, shall constitute the beginning balance of the succeeding examination.
Where the last cash examination was conducted prior to
2012 and the transactions are voluminous, or there is no record or information of the last
examination so conducted, the beginning balance per books as of 01 January
2013 may be used as the beginning balance of accountability and the transactions on that
date onward to the date of current examination shall be the coverage of examination. Nothing
in this provision shall be construed as limiting the authority of the auditor to extend his
verification of balances and transactions prior to 2012 if the circumstances so require.
E. CASH EXAMINATION REPORT
The result of the examination shall be embodied in a narrative report consisting of

three parts; namely, the introduction, the findings and recommendations, and the appendices.
Copies of the report shall be submitted to the Supervising Auditor for review and transmittal.
However, Cash Examination Report showing a cash shortage which requires the filing of
administrative and/or criminal case against the accountable officer shall be submitted to the
Cluster/Regional Director for final disposition. The accountable officers and the Head of
Agency shall be furnished copies of the report. The Auditor/Cash Examiner and the
Supervising Auditor should likewise each have copy of the CER.
2
F. RESPONSIBILITY FOR FILING CASES
It shall be the responsibility of the Director having supervision and control over the
team that conducted the cash examination to initiate the filing of administrative and/or
criminal cases before the Office of the Ombudsman or any other appropriate court or
tribunal. Where such action is initiated, copies of the report as well as information of the
action taken shall be given to the Head and the Chief Accountant of the agency concerned,
the COA Legal Services Sector, the Auditor of the agency concerned, and if the defaulting
accountable officer is a treasurer of a local government unit, the Bureau of Local
Government Finance.
G. REPEALING CLAUSE
All •issuances inconsistent with this memorandum or the Revised Cash

Examination Manual are hereby superseded, amended or modified accordingly.
H. EFFECTIVITY
This memorandum shall take effect immediately.
3
MA. GRACI ULIDO-TAN
4
Revised
CASH EXAMINATION
Ttojo-MJuaJL Page
Chapter I INTRODUCTION
Rationale 1
Legal Bases 1
Scope 2
Definition and Objectives of Cash Examination 2
Chapter II
LAWS AND RULES RELEVANT IN CASH EXAMINATION
Responsibility 4
Accountability 5
Liability 6
Collections 7
Remittances/Deposits 9
Dishonored Checks 10
Disbursements 11
Cash Advances 12
Seizure of Office by Auditor 13
Retention of Money for Satisfaction of Indebtedness to Government 13
Constructive Distraint of Property of Accountable Officer 13
Chapter III
GUIDELINES
Authority 15
Planning 15
Preparation 15
Auditor's Conduct and Behaviour 16
Timing the Examination 16
Frequency of Cash Examination 16
Simultaneous Cash Count 17
Accountable Officer's Presence During the Count 17
Sealing of Vault, Safe or Other Cash Receptacles 17
Accountable Officer's Cashbook/CRR/CDRCkDR or its equivalent 18
Auditor's Review of Transactions 19
Auditor's Certificate on the Cashbook/CRR/CDR or its equivalent 19
Prohibition of Incomplete Examination 20
Audit Work Papers 20
Cash Examination Report 20
Page
Chapter IV PROCEDURES AND TECHNIQUES

22
Common Procedures and Techniques
Specific Procedures and Techniques 24
A. Collecting Officer 24
B. Bank Cashier/Teller/ATM Teller 26
C. Disbursing Officer 27
Reconciliation Statement of Depository Accounts 28
Cash Shortage 29
Seizure of Office by Auditor 29
Constructive Distraint 30
Prosecution of the AO 32
Cash Overage 33
Indemnity From Fidelity Fund 33
Appendix
1. Illustrative Accounting Entries Annexes
A. Treasury Circular No. 02-2009 - Revised Omnibus Regulations Governing the

Fidelity Bonding of Accountable Public Officers
B. Notice of Dishonor
C. COA Circular No. 97-002 dated February 10, 1997 - Restatement with
amendments of the rules and regulations on the granting, utilization and
liquidation of cash advances provided for under COA Circular No. 90-331 dated
May 3, 1990
D. COA Circular No. 2006-005 dated July 13, 2006 - Amendment to Item 7.1 of
COA Circular No. 72-002 dated February 10, 1997 on the granting, utilization
and liquidation of cash advances.
E. Report of Cash Examination [General Form No. 74(A)]
F. Internal Control Questionnaire
G. Reconciliation Statement of Accountability
H. Statement of Accountability for Accountable Forms With Money Value
I. Statement of Accountability for Accountable Forms Without Money Value
J. ATM Cash Count Sheet
K. Bank Reconciliation Statement L. Letter of Demand M. Withholding Order
N. Warrant of Constructive Distraint of Personal Property
O. Receipt for Goods, Articles and Things Seized under Authority of Section 47, P.D. 1445, otherwise known as the Government Auditing Code of the Philippines
P. Request for Issuance of Hold Departure Order Q. Joint Affidavit
Chapter I INTRODUCTION
RATIONALE
Cash is the most liquid asset of an agency. Because of its liquidity, it is so attractive, that it is most susceptible to theft and misappropriation. 1 To guard
against the loss of cash through theft or fraud, adequate cash management mechanisms and controls must be in place.
1 Intermediate Accounting, Vol. 1, 2007 Edition; Robles andEmpleo

Equally important in ensuring effective cash management and protection is the timely exercise of oversight functions through periodic cash examination.
Indispensable in carrying out an efficient and methodical examination of the cash accounts of an agency is a handy reference or guide that charts in simple and
sufficient detail the procedures required therefor.
This revised Cash Examination Manual provides an updated guide that steers the auditors through a sequential and step-by-step cash examination process
commencing from planning stage, leading to execution, reporting, and monitoring. It also defines the scope and objectives of the examination.
As in its precursor manual, the revised procedures and techniques outlined herein are designed to sufficiently cover each area or activity to be cash examined.
Nonetheless, the auditor is not precluded from employing such other procedures and techniques as the circumstances may dictate. In such a case, the auditor is
cautioned to exercise sound professional judgment in adopting any additional or alternative cash examination procedures or techniques.
LEGAL BASES
The Commission on Audit (COA) is constitutionally mandated with the power, authority, and duty to examine, audit, and settle all accounts pertaining to the
revenues and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions,
agencies, or instrumentalities, including government-owned or controlled corporations (GOCCs) with original charters, and on a post-audit basis: (a) constitutional
bodies, commissions and offices that have been granted fiscal autonomy under the Constitution; (b) autonomous state colleges and universities; (c) other GOCCs
and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required
by law or the granting institution to submit to such audit as a condition of subsidy or equity. It shall also keep the general accounts of the Government and, for such
period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.
The Constitution further vests on the Commission the exclusive authority to define the scope of its audit and examination, establish the techniques and
methods required therefor, and promulgate accounting and auditing rules and regulations.
SCOPE
2
Section 2(1), Article IX-D, 1987 Constitution
This revised manual shall be followed and applied in the examination of the cash and accounts of all accountable officers (AOs) of all government agencies.
DEFINITION AND OBJECTIVES OF CASH EXAMINATION
Cash Examination Defined
Cash examination is an audit technique whereby an authorized examiner of cash and accounts inquires into the correctness and physical existence of the
balance of cash in the custody of an AO, the validity of his/her cash transactions, the reliability of the cash records and his/her conformance with prescribed
procedures.2
Objectives of Cash Examination
The entire cash examination process involves a comprehensive review that aims to provide an overall determination of whether -
1. all government funds in the hands of an AO are actually existing and properly accounted for;
2. the agency and its AOs are adhering strictly to prescribed rules and regulations on cash transactions; and
3. the agency's practices and procedures provide adequate safeguards against fraud and losses of government funds.
2 Handbook on Cash Examination, November 2002, Professional Development Center, Commission on Audit
Moreover, cash examination seeks to establish what the AO has and what he should have at the time of the examination. It specifically aims to -
1. establish the actual existence of cash in the custody of the AO as well as the validity of the cash items presented;
2. determine whether all monies received had been correctly recorded and fully accounted for in accordance with laws, rules and regulations;
3. ascertain whether disbursements are valid, duly authorized, actually paid and properly recorded;
3
Section 2(2), Ibid
4. prove the accuracy of the cash balance reflected in the ledger, cashbook 3, cash receipts record (CRR)4,
check disbursements record (CkDR)5, cash disbursements record (CDR) , or their equivalents, such as cash receipts
register (CRR) , petty cash register (PCR)6, cash disbursements register (CDR)7, and individual daily proof sheet and
transaction sheet, daily cash in vault summary report, cash flow report for cash on hand-in vault and automated teller
machine (ATM) and detail transaction request report for banks; and
5. verify if accountable forms are duly accounted for.
3 Cashbook for Cash in Treasury shall be used to record collections (Debit column) and deposits to the bank (Credit column)
based on the RCD. The cashbook shall be maintained by the Treasurer by fund and shall be updated and balanced daily. The
accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the
cashbook (Section 26, MNGAS for LGUs, Vol. II).
4Cashbook for Cash in Bank shall be used to record deposits of collections (Debit column) and withdrawals from the bank thru
the issuance of checks (Credit column). The cashbook shall be maintained by bank account and by fund and shall be updated and
balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority,
rule and foot the cashbook (Section 27, Ibid).
The accountable officer shall maintain a cashbook for cash advances to record the cash advances received (Debit column) and
payments, refunds and adjustments (Credit column) and the balance (balance column). The accountable officer shall, at the end
of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 28, Ibid).
5The Cash Receipts Record (CRR) shall be used by the designated collecting officer to record his/her collections and deposits
(Section 38, MNGAS for NGAs, Vol. II).
6 The Petty Cash Register (PCR) shall be used to record cash advances/replenishments/disbursements for authorized petty and
other miscellaneous expenses (COA Circular No. 2003-006, Ibid).
7 The Cash Disbursements Register(CDR) shall be used to record, monitor and report transactions involving the grant of cash
advances/payments charged thereto, and liquidation thereof by disbursing accountable officer (COA Circular No. 2004-003,
June 24, 2004; Supplemental Form Prescribed Under COA Circular No. 2003-006 dated December 2, 2003 Re: Use of
Simplified Accounting Forms for Financial Transactions of Government Units Without Complete Set ofBooks ofAccounts).
10
6
7
The Check Disbursements Record (CkDR) shall be used by the disbursing officer to record checks released charged against
NCAs/funding checks received/deposits in a bank current account of government agencies. A separate record shall be
maintained for each source of fund (Section 39, Ibid).
The Cash Disbursements Record (CDR) shall be used by the disbursing officer to record the cash advance received and
8
disbursements made out of the cash advance (Section 40, Ibid).
The Cash Receipts Register (CRR) shall be used to record as well as monitor collections and deposits of government units
9
(COA Circular No. 2003-006, December 2, 2003; Use of Simplified Accounting Forms for Financial Transactions of
Government Units Without Complete Set of Books of Accounts).
Chapter II
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LAWS AND RULES RELEVANT IN CASH EXAMINATIONS Responsibility
1. It is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with laws and regulations, and safeguarded
against loss or wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy and effectiveness in the operations of government. The
responsibility to take care that such policy is faithfully adhered to rests directly with the
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chief or head of the government agency concerned.
2. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the
financial affairs, transactions, and operations of the government agency. 8
3. The head of any agency of the government is immediately and primarily responsible for all government
funds and property pertaining to his agency. Persons entrusted with the possession or custody of the funds or
property under the agency head shall be immediately responsible to him, without prejudice to the liability of either
party to the government.9
4. The head of an agency may designate such number of collecting officers (COs) or agents as may be deemed
necessary. They shall render reports of their collections, under the regulations of the Commission, to be submitted
promptly to the auditor concerned who shall conduct the necessary examination and audit within 30 days from
receipt thereof.10
5. When an officer accountable for government funds or property absconds with them, dies, or becomes
incapacitated in the performance of his duties, the proper agency head shall designate a custodian to take charge of
the funds or property until a successor shall have been appointed and qualified. The agency head may appoint a
committee to count the cash and take an inventory of the property for which the officer was accountable and to
determine the responsibility for any shortage therein. One copy of the inventory and of the report of the committee
duly certified shall be filed with the Commission but the findings of the committee shall not be conclusive until
approved by the Commission or its duly authorized representative 11.
When a local treasurer or officer accountable for government funds or property absconds with them, dies, or
becomes incapacitated in the performance of his duties, the Secretary of Finance, in the case of funds and
property of the province, city and municipality, shall
12
Section 2, Presidential Decree No. 1445
Section 78(1), Ibid

8 Section 4(4), Ibid
9 Section 102, Ibid
10 Section 64, Ibid
11 (
12
designate a custodian to take charge of the funds or property until a successor shall have been appointed
and qualified. In the case of barangays, the barangay chairman shall designate the custodian. The local
chief executive may appoint a committee to count the cash and take an inventory of the property for which
the officer was accountable and to determine the responsibility for any shortage therein. One copy of the
inventory duly certified shall be filed with the COA or its duly authorized representative but the findings
17
of the committee shall not be conclusive until approved by the latter.
If the absconding, deceased, incapacitated, or superseded officer is responsible to another who is

accountable, the latter may himself designate the committee or take other lawful measures for the protection
of his interest.
6. At the close of each month, depositories shall report to the agency head, in such form as
he may direct, the condition of the agency account standing on their books. The head of
the agency shall see to it that reconciliation is made between the balance shown in the
reports and the balance found in the books of the agency.12
20
7. An AO shall maintain his cashbook/CRR/CDR/CkDR13 and such other records or their equivalents as may
be prescribed by the agency's operating procedures, and reconcile with the accounting records at least quarterly 14,
unless the agency requires a more frequent reconciliation.
8. An AO, upon ceasing to act in his official capacity as such, shall submit to the auditor of the agency
concerned a report of his accountability. Any remaining balance of such accountability shall be deposited in the
proper treasury without unnecessary delay.15
9. Government cashiers are prohibited from holding positions as cashiers or treasurers of

23
savings and loan associations or any other association or organization.
Accountability
10. Every officer of any government agency whose duties permit or require the possession or
custody of government funds or property shall be accountable therefor and for the
safekeeping thereof in conformity with law. Every AO shall be properly bonded in
accordance with law.16
The fidelity bonds covering government accountability and responsibility of AOs shall be in accordance
with the regulations issued by the Bureau of the Treasury (BTr) (Annex
12 ,
13 Sections 38-40, MNGAS for NGAs, Vol. II; Sections 26-28, MNGAS for LGUs, Vol. II; COA Circular No. 2003-006
14 Section 181, Government Accounting and Auditing Manual (GAAM), Vol. I
15 Section 80, Presidential Decree No. 1445
16 Section 101, Presidential Decree No. 1445; Section 305(f) R.A. No. 7160; Section 50, Chapter 9, Subtitle B, Book V, EO No.
292
13
17
Section 122, Local Treasury Operations Manual
18i
Section 78(3), Presidential Decree No.
1445 ? Section 74, Ibid
23
2 4 Section 67, GAAM, Vol. I
292
14
25
A) . Copies of the approved fidelity bonds as well as documents subsequently issued for their cancellation
shall be furnished to the Auditor.
11. Transfer of government funds from one officer to another shall, except as allowed by law or regulation, be
made only upon prior direction or authorization of the Commission or its representative. 17
12. When government funds or property are transferred from one AO to another, or from an outgoing officer to
his successor, it shall be done upon properly itemized invoice and receipt which shall invariably support the
clearance to be issued to the relieved or out-
27
going officer, subject to regulations of the Commission. Liability
13. Expenditures of government funds or uses of government property in violation of law or

regulations shall be a personal liability of the official or employee found to be directly
28
responsible therefor.18
14. Every officer accountable for government funds shall be liable for all losses resulting from the unlawful
deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds. 9
15. No AO shall be relieved from liability by reason of his having acted under the direction of a superior
officer in paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that
act, he notified the superior officer in writing of the illegality of the payment, application, or disposition. The officer
directing any illegal payment or disposition of the funds or property shall be primarily liable for the
30
loss, while the AO who fails to serve the required notice shall be secondarily liable.
16. Unless he registers his objection in writing, the local treasurer, accountant, budget officer,
or other AO shall not be relieved of liability for illegal or improper use or application or
deposit of government funds or property by reason of his having acted upon the direction
of a superior officer, elective or appointive, or upon participation of other department
heads or officers of equivalent rank. The superior officer directing, or the department
head participating in such illegal or improper use or application or deposit of government
funds or property, shall be jointly and severally liable with the local treasurer, accountant,
budget officer, or other AO for the sum or property so illegally or improperly used,
applied or deposited.
Treasury Circular 02-2009 dated 06 August 2009
Section 77, Ibid
Section 105(2), Ibid

Section 106, Ibid
Section 342, Republic Act No. 7160
17Section 75, Presidential Decree No. 1445
18Section 103, Ibid
15
25
17. Any public officer who commits any of the acts defined and penalized under Articles 213, 217, 218, 219
and 220 of the Revised Penal Code shall suffer the penalty provided therefor.
18. In any criminal or civil proceeding against an officer for the embezzlement or misappropriation of
government funds or property, or to recover an amount due the government from an AO, it shall be sufficient, for
the purpose of showing a balance against him, to produce the working papers of the auditor concerned. A showing in
this manner of any balance against the officer shall be prima facie evidence of the misappropriation of the funds or
property unaccounted for or of civil liability of the officer as the case may be. The existence or contents of bonds,
contracts, or other papers relating to or connected with the settlement of any account may be proved by the
production of certified copies thereof but the court may require the 3p2roduction of the original when this appears to
be necessary for the attainment of justice.3
19. When a loss of government funds or property occurs while they are in transit or the loss is caused by fire,
theft, or other casualty or force majeure, the officer accountable therefor or having custody thereof shall
immediately notify the Commission or the auditor concerned and, within 30 days or such longer period as the
Commission or auditor may in the particular case allow, shall present his application for relief, with the available
supporting evidence. Whenever warranted by the evidence, credit for the loss shall be allowed. An officer who fails
to comply with this requirement shall not be relieved of
33
liability or allowed credit for any loss in the settlement of his accounts. Collections
20. Except as may otherwise be specifically provided by law or competent authority, all moneys and property
officially received by a public officer in any capacity or upon any occasion must be accounted for as government
funds and government property.34
21. No payment of any nature shall be received by a CO without immediately issuing an official receipt (OR)
in acknowledgment thereof. The receipt may be in the form of postage, internal revenue or documentary stamps and
the like, or officially numbered receipts 35, or electronically generated document acknowledging receipt of payment 36,
subject to proper custody, accountability, and audit.
22. Where mechanical or electronic devices are used to acknowledge cash receipts, the Commission may
approve, upon request, exemption from the use of accountable forms.37
23. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds.19
32
33
Section 73, Ibid
34
Section 42, Chapter 7, Title I(B), Book V, Executive Order No. 292
35
Section 68(1), Presidential Decree No. 1445
36
Section 27(c), Part IV, Republic Act 8792 otherwise known as the "Electronic Commerce Act"
37
24. Pre-numbered ORs shall be issued in strict numerical sequence. All copies of each receipt
19 Section 72, GAAM, Vol. I
16
25
39
shall be exact copies or carbon reproduction in all respects of the original.
25. An officer charged with the collection of revenue or the receiving of moneys payable to
the government shall accept payment for taxes, dues or other indebtedness to the
government in the form of checks and warrants issued in payment of government
obligations, upon proper indorsement and identification of the payee or indorsee. Checks
drawn in favor of the government in payment of any such indebtedness shall likewise be
accepted by the officer concerned.
At no instance should money in the hands of the CO be utilized for the purpose of cashing private checks. 20
26. Checks presented for payment must be drawn by the payor himself and made payable to
the agency or head of agency. In the latter case, only the official title or designation of the
agency head concerned shall be stated as the payee. 21
Under no circumstance shall the following checks be accepted as payment:
- checks drawn payable to the name of the agency head or any of its officers
- indorsed private checks
- post-dated checks
- stale checks.
27. 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
42
insufficiency of funds, the drawer shall be criminally liable therefor.
28. Whenever a payor has a record of a previously dishonored private check drawn by him in
payment of taxes and dues, even if such check has already been settled, any private check
presented by him shall no longer be accepted. In such case, the payor shall be required to
pay only in cash or by certified check.22
Each agency head, or treasurer, in the case of local government units, shall make a list of payors whose checks
have been dishonored and shall circularize the list to all COs under his jurisdiction.
39
Section 73, Ibid
2
4
20 Section 67(1) and (3), Presidential Decree No. 1445

21 Section 77, GAAM, Vol. II
22
Section 80, GAAM, Vol. I
17
25
29. No change shall be given to the payor in the event that the amount of the taxes or dues is less than the face
of the check in payment therefor. The difference shall be accounted for simultaneously with the collection as other
liabilities.
30. When payment for goods or services is made by private check, no such service shall be rendered or goods
delivered by the government agency concerned unless the check in payment thereof has been honored by the drawee
bank.23
31. Private checks drawn for purposes other than payment of taxes or dues in favor of the government shall not
be accepted for encashment or exchange. 24 The auditor who finds any such check in the possession of the CO shall
immediately disallow it and shall declare the CO short to the extent of the amount of the check. 25
Remittances/Deposits
32. All COs shall deposit intact all their collections, as well as collections turned over to them by sub-
collectors/tellers, with authorized government depository bank (AGDB) daily or not later than the next banking
day.26 Where collections are minimal and daily deposit thereof becomes costly and impractical, the COs shall
deposit their collections at least once a week, or as soon as the collections reach P10,000.00. They shall record all
deposits made in the CRR.
33. Officers of the local government authorized to receive and collect monies arising from taxes, revenues, or
receipts of any kind shall remit the full amount received and collected to the treasury of such local government unit
which shall be credited to the particular
48
account or accounts to which the monies properly belong.
a. The Local Treasurer/Cashier shall deposit intact all his collections turned over to him
by the Collectors/Tellers with the authorized depository bank daily or not later than
the next banking day. He shall record all deposits made in the Cashbook-Cash in
Treasury and in the case of municipalities where travel time to the depository bank is
more than one (1) day, deposit of collections shall be made at least once a week, or as
soon as the collections reach P10,000.00.27
b. The Barangay Treasurer shall deposit all collections with the city or municipal
treasury or in the depository account maintained in the name of the barangay within
five (5) days after receipt thereof. 28 He shall likewise record all deposits in the
Cashbooks maintained for Cash in Treasury and Cash in Bank.
23 i
24 Section 105, Ibid

25 GAO General Circular No. 110
26Section
48 Section307,
21, Republic
MNGAS forActNGAs, Vol. I
No. 7160
27
28' Section 82, GAAM, Vol. 1
Section 28, COA Circular No. 92-382 Section 334(a), Republic Act No. 7160
18
25
c. Collections of field collectors shall be remitted to the Cashier/designated Liquidating Officer of the field
office of the local government unit. When travel distance from the field office to the local treasury may
expose government funds to risk such as loss in transit, the Cashier/designated Liquidating Officer,
upon authorization by the Local Treasurer, may deposit the collections in the authorized depository
bank near the field office of the local government unit.51
34. Under such rules and regulations as the Commission and the Department of Finance
(DOF) may prescribe, the Treasurer of the Philippines and all authorized depository
banks shall acknowledge receipt of all funds received by them, the acknowledgment
bearing the date of actual remittance or deposit and indicating from whom and on what
account it was received.52 For purposes of reporting deposits of national collections, the
National Collecting Officers/Local Treasurers shall report deposits of national collections
following the guidelines provided for in Treasury Circular No. 5-2003 dated 08 October
2003 or any subsequent revision or amendment thereto.
Dishonored Checks
35. A check is dishonored either by non-payment or non-acceptance. Dishonor by nonpayment 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. 53 Dishonor by non-acceptance 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.54
36. In the case of dishonored government checks received purely for accommodation or encashment, the same
shall be disallowed and the amount thereof shall be made good by the AO who allowed their encashment.
37. When a check is dishonored by non-payment or non-acceptance, notice of dishonor (Annex B) must be
given to the drawer and to each endorser, and any drawer or endorser to whom such notice is not given is discharged
from liability.55 The notice of dishonor shall be furnished to the Agency Head, Accountant, Auditor and a copy
thereof retained by the CO. The CO 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.
38. The CO neglecting or failing to give the required notice of dishonor 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.
Section 83, Negotiable Instruments Law Section 149, Ibid Section 89, Negotiable Instruments Law; Section 85, GAAM, Vol. I
19
Section 62(D), Local Treasury Operations
Manual Section 70, Presidential Decree No. 1445
52
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39. 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. 56
40. A dishonored check shall be settled by tendering payment in cash or by certified check to the CO
concerned. No other mode of payment shall be accepted.
41. Upon settlement of the dishonored check in the manner herein prescribed, the CO 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.
42. Dishonored checks shall remain in the custody of the CO, 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
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CO shall immediately advise the transfer of custody of the check.
Disbursements
43. Financial transactions and operations of any government agency shall be governed by the
fundamental principles set forth hereunder, to wit:
43.1 No money shall be paid out of any public treasury of depository except in pursuance of an
appropriation law or other specific statutory authority.
43.2 Government funds or property shall be spent or used solely for public purposes.
43.3 Trust funds shall be available and may be spent only for the specific purpose for which the trust
was created or the funds received.
43.4 Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over
the financial affairs, transactions, and operations of the government agency.
43.5 Disbursements or disposition of government funds or property shall invariably bear the approval
of the proper officials.
43.6 Claims against government funds shall be supported with complete documentation.
Section 2, Batas Pambansa Blg. 22, amending Article 315 of the Revised Penal Code
Section 90, GAAM, Vol. I
43.7 All laws and regulations applicable to financial transactions shall be faithfully adhered to.
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43.8 Generally accepted principles and practices of accounting as well as of sound management and
fiscal administration shall be observed, provided that they do not
58
contravene existing laws and regulations.29
44. Except with the prior approval of the President, and for procurement transactions where advance payment
is allowed pursuant to Sections 4.330, 4.431 and 4.532 of Annex D, Section 4.1 33 of Annex E and Section 134 of Annex
F of the Revised Implementing Rules and Regulations of Republic Act (RA) No. 9184, the government shall not be
obliged to make an advance payment for services not yet rendered or for supplies and materials not yet delivered
under any contract therefor. No payment, partial or final, shall be made on any such contract except upon a
certification by the head of the agency concerned to the effect that the services or supplies and materials have been
rendered or delivered in accordance with the terms of the contract and have been duly inspected and accepted. 35
45. Payments to creditors shall be made only upon the specific approval of the head of the agency concerned or
his duly authorized representative, or if there be no such officer, upon the approval of the department head endorsed
upon the warrant or check or voucher effecting the payment.36
Cash Advances
46. No cash advance shall be given unless for a legally authorized specific purpose. A cash
advance shall be reported on and liquidated as soon as the purpose for which it was givenhas been served.
No additional cash advance shall be allowed to any official or employee unless the previous cash advance
given to him is first settled or a proper accounting thereof is made. 37
29Section 4, Presidential Decree No. 1445

30 A single advance payment not to exceed fifty percent (50%) of the contract amount shall be allowed for contracts entered into
by a procuring entity for the following services where requirement of down payment is a standard industry practice:
a. Hotel and restaurant service;
b. Use of conference/seminar and exhibit areas; and
c. Lease of office space.
31 Advance payment not to exceed fifteen percent (15%) of the contract amount, unless otherwise directed by the President, shall
also be allowed for procurement of goods required to address contingencies arising from natural or man-made calamities in
areas where a "State of Calamity" has been declared by appropriate authorities.
32Upon submission of an irrevocable letter of credit or bank guarantee issued by a Universal or Commercial Bank, advance
payment not to exceed fifteen percent (15%) of the contract amount shall be allowed and paid within sixty (60) calendar days
from signing of the contract. The irrevocable letter of credit or bank guarantee must be for an equivalent amount, shall remain
valid until the goods are delivered, and accompanied by a claim for advance payment.
33 The procuring entity shall, upon a written request of the contractor which shall be submitted as a contract document, make an
advance payment to the contractor in an amount not exceeding fifteen percent (15%) of the total contract price, to be made in
lump sum or, at the most, two instalments according to a schedule specified in the instructions to bidders and other relevant
Tender Documents.
34 The Government, as it considers fair and reasonable, may allow advance payment to the Consultant in the amount which shall
not exceed fifteen percent (15%) of the contract amount to cover the cost of mobilization, subject to the posting of an irrevocable
standby letter of credit issued by an entity acceptable to the agency and of an amount equal to the advance payment. The
advance payment shall be repaid by the Consultant deducting from his progress payments such sum as agreed upon during the
contract negotiations until fully liquidated within the duration of the contract.
35 Section 88(1), Presidential Decree No. 1445
36 Section 91, Ibid
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47. The specific rules and regulations on the granting, utilization and liquidation of cash
advances are provided for under COA Circular No. 97-002 dated February 10, 1997
(Annex C), as amended by COA Circular No. 2006-005 dated July 13, 2006 (Annex D).
Seizure of Office by Auditor
48. The books, accounts, papers and cash of any local treasurer or other AO shall at all times
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be open to the inspection of the Commission or its duly authorized representative.
49. In case an examination of the accounts of a local treasurer discloses a shortage in cash
which should be on hand, it shall be the duty of the examining officer to seize the office
and its contents, notify the Commission, the local chief executive concerned, and the
local accountant. Thereupon, the examining officer shall immediately turnover to the AO
next-in-rank in the local treasury service, unless the said officer is likewise under
investigation, the office of the treasurer and its contents, close and render his account on
the date of the turnover. In case the AO next-in-rank is under investigation, the auditor
shall take full possession of the office and its contents, close and render his accounts on
the date of taking possession, and temporarily continue the public business of such office
until such time that the local treasurer is restored or a successor has been duly designated.
The local treasurer or AO found with such shortage shall be automatically suspended
from office. 38
Retention of Money for Satisfaction of Indebtedness to Government
50. When any person is indebted to any government agency, the Commission may direct the
proper officer to withhold the payment of any money due such person or his estate to be
applied in satisfaction of the indebtedness.39
Constructive Distraint of Property of Accountable Officers
51. Upon the discovery in audit of a shortage in the accounts of any AO and upon a finding
of a prima facie case of malversation of public funds or property against him, in order to
safeguard the interest of the Government, the Commission may place under constructive
distraint the personal property of the AO concerned where there is reasonable ground to
believe that the said officer is retiring from the government service or intends to leave the
Philippines or remove his property therefrom or hide or conceal his property.
67
Section 46, Ibid
386689 Section 348, Republic Act No. 7160

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The constructive distraint shall be effected by requiring the AO concerned or any other person having
possession or control of the property to accomplish a receipt in the form prescribed by the Commission,
covering the property distrained and to obligate himself to preserve the same intact and unaltered and not to
dispose of it in any manner whatever without the express authority of the Commission.
In case the said AO or other person having the possession and control of the property sought to be placed
under constructive distraint refuses or fails to accomplish the receipt herein referred to, the representative of
the Commission effecting the constructive distraint shall proceed to prepare a list of such property and in the
presence of two witnesses leave a copy thereof in the premises where the property distrained is located after
which the said property shall be deemed to have been placed under constructive
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distraint.

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Chapter III
GUIDELINES
A. Authority
1. The authority to conduct regular cash examination shall be inherent to the audit team having jurisdiction
over the audited agencies. The audit team leader shall be responsible in identifying the audit team member/s who
will conduct or assist him in the cash examination.
2. Whenever the circumstances warrant, the Chairperson or the Cluster/Regional Director may constitute
special audit teams to conduct cash examination.
B. Planning
1. Develop an overall plan/audit program, taking into consideration the objectives to be accomplished, the
scope, the manpower requirement and estimated man-hours.
2. Schedule the examination properly to avoid inconvenience to the agency's clientele and the AOs and
disruption of operations.
3. Brief the audit team of the work to be done, how it will be done, the distribution of tasks and timetable for
the examination, proper conduct and behaviour, among others.
C. Preparation
1. Understand the procedures and techniques on cash examination and be familiar with the cash examination
form [General Form No. 74(A), Annex E], and Section 181, Government Accounting and Auditing Manual
(GAAM), Vol. 1 on the handling, custody and disposition of the cashbook.
2. Evaluate/validate the agency's internal control structure on cash management whenever deemed necessary,
using the Internal Control Questionnaire marked as Annex F to this manual.
3. Know the agency's functions, organizational units, funds, official depositories, volume of business and
names of all cash AOs, including the location of their offices, vaults, safes, ATMs and other receptacles.
4. Secure copies of Report of Accountability for Accountable Forms with and without money value, if any.
5. Secure copies of invoice receipts for accountable forms from the AO.
6. Refer to the latest cash examination and other audit reports including those of the internal audit unit to be
acquainted with significant findings, if any, and to follow up the agency's compliance with the corresponding
recommendations.
7. Review the latest Statement of Audit Suspensions, Disallowances and Charges (SASDC), Audit
Observation Memorandum (AOM) and Credit Notice issued to the AOs to be examined for guidance in audit.
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8. Gather all the necessary data and prepare audit work papers regarding the officer's accountability from last
cash examination to facilitate the preparation of the Statement of Accountability under Section D of General Form
No. 74(A).
9. Bring copies of the authority to conduct the cash examination, whenever applicable, COA identification
card, office equipment and the necessary supplies.
10. See to it that Section A (Cash Production Notice) of General Form No. 74(A) is duly accomplished before
the cash count.
D. Auditor's Conduct and Behaviour
1. The auditor shall conduct himself in such a manner as to earn the respect of the AO and other agency
officials.
2. Although a friendly relationship shall be maintained, a relationship bordering on too much familiarity and
intimacy shall be avoided.
3. In no case, shall he solicit or accept personal favors in order to preserve his impartiality and independence.
4. Limit to the minimum his presence in the AO's booth/office.
E. Timing the Examination
1. Maintain the element of surprise in every examination.
2. Schedule the cash examination to enable the completion of at least the count of cash and cash equivalents at
the close of office hours. As far as practicable, start the examination in the morning. For banks, however, conduct
the count before or after banking hours so as not to disrupt the operations.
F. Frequency of Cash Examination
1. Conduct the examination of the cash and accounts of all AOs at least once a year.
2. Perform mandatory cash examination under the following circumstances:
a. Before the AO retires or is separated from the service;

b. Before he is transferred to another station or office;
c. When he goes on extended leave of absence and another AO is designated in his
place; and
d. When loss of government fund by an AO is reported.
G. Simultaneous Cash Count
1. Examine simultaneously all funds in the custody of the AO.
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2. Conduct cash count of all cash AOs in the office and its immediate vicinity. If this is not practicable, adopt
such measures to control the movement of cash between or among
AOs.
H. Accountable Officer's Presence During the Count
1. Ensure the presence of the AO at all times during the cash count. If, at any time during the cash count, the
AO has to leave the premises, stop the count immediately, segregate the cash counted and cause the return
of all cash to the safe, have it properly secured and resume the count only upon his return.
I. Sealing of Vault, Safe or Other Cash Receptacles
1. Seal the vault, safe or other cash receptacles only in exceptional cases, such as:
a. Absence or non-appearance of the AO on the date of the count specially when the
intention of the auditor to examine the former has become obvious or made known to
other employees;
b. Refusal of the AO to submit himself to cash examination;
c. Interruption or non-completion of the count during the day or the necessity of

controlling cash, cash items and records; and
d. Death, incapacity, or absconding of the AO.
2. Require at least two agency personnel to witness the sealing and sign the sealing paper or its equivalent.
3. Seal by pasting a sheet(s) of paper or equivalent on the appropriate place(s) of the vault, safe or receptacle.
Make sure that the vault, safe or receptacle could not be opened without breaking the seal.
4. Use the properly worded sealing paper form as shown below:
DO NOT BREAK THE SEAL

UNDER PENALTY OF LA W
(Signature over printed name)
(Position/Designation)
Witnesses to the sealing:
(Name and Signature/Position)
(Name and Signature/Position)
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5. Retain a duplicate copy of each properly accomplished sealing paper.
6. The public officer charged with the custody of the vault, safe or receptacle, who, shall break the seals
placed by the auditor or permit them to be broken, shall be liable for the
71
penalties prescribed under Article 227 of the Revised Penal Code.
J. Accountable Officer's Cashbook/CRR/CDR/CkDR or its equivalent
1. Require the AO to enter in his Cashbook/CRR/CDR/CkDR or its equivalent all valid transactions and
adjustments up to the time of the count. He shall then foot, balance and rule it. For banks or agencies with
computerized systems, print the certification on the cut-off reports generated and duly signed by the AO.
2. Cause the AO to certify immediately below the last entry in his Cashbook/CRR/CDR or its equivalent, as
follows:
I hereby certify on my official oath that all cash and depository transactions
had by me in my capacity as (Designation) of (Name o f Agency) at the
time of examination, showing
a balance of______________________________________(P____________)
have been correctly and completely recorded in the
Cashbook/CRR/CDR (or its equivalent).
(Date) (Signature over printed name)
Art. 227. Officer breaking seal.- Any public officer charged with the custody ofpapers or property sealed by proper authority,
who shall break the seals or permit them to be broken, shall suffer the penalties of prision correccional in its minimum and
medium periods, temporary special disqualification and a fine not exceeding 2,000 pesos.
3. Direct the AO to effect adjusting entries in the Cashbook/CRR/CDR/CkDR or its equivalent when errors or
omissions are found after verification of the entries, and to execute the certification in No. 2 above after the
last entry.
K. Auditor's Review of Transactions
1. Verify the transactions from the date of last cash examination to the date of current examination. Limit the
verification to the determination and establishment that all cash receipts, remittances/deposits, cash
advances/disbursements and adjusting entries are properly and correctly recorded in the Cashbook/CRR/CDR/CkDR
or equivalent; that disbursement vouchers, as entered in the CDR/CkDR are properly approved and payments duly
acknowledged; and that all cash balances as of the date of examination are reconciled with accounting and related
records.
2. Recheck all figures and computations if the examination discloses a discrepancy and perform other audit
procedures necessary under the circumstances before declaring a cash shortage or overage.
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3. Require in writing from the AO a written explanation of how the discrepancy occurred within seventy-two
(72) hours from his receipt of the letter requiring the same.
L. Auditor's Certificate on the Cashbook/CRR/CDR or equivalent
1. Accomplish the auditor's certification after the completion of the cash examination
immediately below the certification of the AO, as follows:
Examined and verified the cash accountability of (Accountable Officer),

(Designation), covering the period_________________ to _________ and arrived at a
balance of P___________, of which the amount of P______________was actually found
on hand, consisting of P______________in currency and P_____________in cash items,
thereby showing (no difference/cash shortage/overage of P______________________).
(Signature over printed name)
(Designation)
(Date)
2. At no instance shall the auditor's certification be qualified.
3. Ensure that all prescribed cash examination procedures in Chapter IV of this manual have been completed
and the accountability of the officer has been duly established before accomplishing the said certificate.
M. Prohibition of Incomplete Examinations
1. Conduct examinations thoroughly and completely in every case to the last detail, including
verification/reconciliation of accountable forms received and issued and the various records of collections
and disbursements, as well as entries in the Cashbook/CRR/CDR/CkDR or its equivalent. Just as
government treasurers are held to strict accountability as regards funds entrusted to them in a fiduciary
capacity, so should examining auditors act with greater care and caution in the audit of the accounts of such
AOs to avoid the perpetration of any injustice. Accounts should be examined carefully
and thoroughly to the last detail, with absolute certainty.72
2. Where an examination fails to disclose an existing shortage and there is proof that said examination was
incomplete or the steps prescribed herein were not followed, the same shall be considered a prima facie
ground for the initiation of administrative or criminal action against the auditor(s).
N. Audit Work Papers
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1. Systematically gather and accumulate sufficient evidence necessary for drawing logical and verifiable
conclusions. This is accomplished through the audit work papers, which record the evidence gathered to support the
conclusions reached by the auditor.
2. Prepare complete, accurate, clear, neat and relevant work papers. O. Cash
Examination Report
1. Issue an AOM to communicate the deficiencies noted during the cash examination.
2. Conduct an exit conference to discuss with management the results of the examination.
3. Prepare a final narrative report on the results of examination consisting of three parts, namely: the
introduction, the findings and recommendations, and the annexes. Present the findings with the corresponding
recommendations in the order of their significance. Incorporate in the report the management comments and audit
team's rejoinder, if any.
4. Submit the report to the Supervising Auditor (SA) or Cluster/Regional Director within twenty (20) days
from completion of field work.
5. Distribute final copies of the report as follows:
a. AO
b. Head of the Agency
c. SA
d. Auditor's file
6. Auditors before conducting cash examinations in the regions/field with no books of accounts should coordinate
with the SAs/Audit Team Leaders (ATLs) of Head Office/Regional Office auditees, where books of accounts are
kept, to obtain data on the accountabilities of the AO such as accountable forms issued/latest Monthly Statement of
Accountability on Accountable Forms submitted, audited or booked remittances, cash advances granted and
liquidated from the latest cash examination or outstanding unliquidated cash advances, among others. They should
furnish a copy of their Cash Examination Reports (CERs) to the SAs/ATLs of Head Office/Regional Office auditees
where the cash advances and liquidations/collections and remittances being cash examined are booked. The CER
furnished shall be utilized by these SAs/ATLs to reconcile the Statement of Accountability of the AO in the CER
against the ledgers/books of accounts of their auditees where the transactions of the AO are booked.
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7. When a significant shortage is discovered after the cash count, inform the Cluster/Regional Director thru the
SA, within three (3) working days from discovery, for any further appropriate action. This shall be without prejudice
to the continuation and completion of the examination and submission of the final narrative report.
8. Where the shortage necessitates the filing of an administrative and/or criminal action, submit the final report
together with the letter-complaint, sworn statements of witnesses and other supporting documents to the
Cluster/Regional Director thru the SA for review and evaluation.
9. The Cluster/Regional Director shall transmit the report together with the documents mentioned in paragraph 7
above to the Office of the Ombudsman for the filing of administrative and/or criminal action against the defaulting
AO, furnishing the auditor concerned a copy of the transmittal letter. A copy of the report as well as information of
its referral to the Office of the Ombudsman shall be furnished the head and the chief accountant of the agency
concerned, the COA Legal Services Sector, and if the defaulting officer is a treasurer of a local government unit, to
the Bureau of Local Government Finance. If the shortage is material, the Cluster/Regional Director concerned shall
recommend to the Chairperson, thru the Assistant Commissioner concerned to request the issuance of a hold
departure order against the erring AO by the appropriate government agency.
10. In case of cash examination conducted by a special audit team coming from other offices of the Commission,
the team shall submit the report on the examination to the Director having supervision of the special audit team, with
final copies thereof duly furnished to the AO, the Head of the Agency, the Auditor, and the SA of the agency
concerned. Where the report indicates a shortage which necessitates the initiation of appropriate action against the
AO, the Director shall transmit a copy of the report together with the supporting documents to the Office of the
Ombudsman following the procedures outlined in the preceding paragraph.
Chapter IV
PROCEDURES AND TECHNIQUES A. Common
Procedures and Techniques
1. Introduce yourself properly to the AO to be examined. In the case of special audit teams, present the Office
Order authorizing the conduct of cash examination.
2. Require the AO to temporarily suspend all transactions. In the case of cashiers of the Bangko Sentral ng
Pilipinas (BSP) and other government banks, the count may be suspended every time there is a need to render
service to their clients or bank tellers. If the cash count cannot be finished at the close of office hours, seal or double
lock their safe, vault or other cash receptacles at the end of the day and continue the count on the succeeding
business day(s) until completed.
3. Cause the production of all cash, cash items, etc., by signing and serving the cash production notice in
General Form No. 74(A). Require the AO to acknowledge the notice by signing the "Noted and Complied With"
box. For ATMs, the ATM Teller as well as the other personnel exercising dual control over the ATM shall jointly
sign the said box.
4. Require the AO to post all the transactions (such as collections, remittances, deposits, cash advances and
disbursements) in his cashbook/CRR/CDR or equivalent up to the time of examination, foot balance, rule in ink and
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write the certification shown on page 18 of this manual. If the unrecorded transactions are voluminous, consider
them as cash items during the count.
5. Establish proper cut-off by taking note of the last number of OR/check issued, control paid voucher/payroll
and, determine last entry or terminal readings of validating/metered postage machines/cash registers/ATMs, if any.
Affix full signature and indicate cut-off date at the back of the 2nd copy of the OR.
6. See to it that all cash, checks, money orders, paid vouchers, other cash items, and unused accountable forms
are presented. Inspect the safe, vault or other cash receptacles where the cash and cash items are usually kept.
7. Require the AO to segregate private and/or personal funds, if any, count them and have them placed in an
envelope properly labelled as 'private/personal funds'.
8. Require the AO to segregate by currency and denomination, the notes and coins presented. Have the notes
arranged in bundles and the loose coins in groups.
9. Segregate the cash items by group, such as: cash in pay envelopes, checks, money orders, paid vouchers,
partially paid payrolls, etc. Proceed with the listing of the cash items using the space provided in the form. In the
case of checks, and money orders, indicate the serial number, date, drawer, drawee and amount. In the case of
paid vouchers/partially paid payrolls, indicate voucher number, date, payee/payroll head and amount.
10. Proceed with the piece-by-piece count in the presence of the AO, starting from the highest to the lowest
denomination, listing them in the appropriate space in General Form No. 74(A). Use additional sheet if necessary.
11. See to it that no note or coin presented has been demonetized. Mutilated notes must be examined for
acceptability. It is the common practice of banks not to accept mutilated notes unless the serial numbers at both ends
are intact.
12. After the count of cash, cash items and accountable forms, require the AO to accomplish and sign the
certification in General Form No. 74(A) in the presence of two responsible persons, whose signatures shall likewise
be affixed on the appropriate spaces therein. For the ATM, the bank personnel present under the joint custody/dual
control shall affix their signatures in the space provided for with the ATM Teller as main AO.
13. Check the footings of the cashbook/CRR/CDR or equivalent to ascertain the correctness of its total and
balances. Take note of errors and require the AO to adjust/correct the cashbook/CRR/CDR or equivalent. Disclose
in the cashbook/CRR/CDR or equivalent that the adjustment, if any, was made at the instance of the examining
auditor with the AO and the former affixing their initials and indicating the date of adjustment.
14. Accomplish the Statement of Accountability in General Form No. 74(A) starting from the date of last
examination to current on the basis of verified amounts of debits and credits to accountability of the AO. Ensure that
the beginning balance of the statement shall reflect the amount of accountability determined during the last
examination.
15. Prepare the Reconciliation Statement of Accountability using the format shown in Annex G to reconcile the
established accountability with the accounting records.
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16. In case of cash shortage or overage, follow the procedures on pages 29 to 34 of this manual.
17. Prepare the Statement of Accountability for Accountable Forms in the format shown in Annexes H and I.
17.1 Obtain the balance of accountability for accountable forms per last examination to be considered as
beginning balance of the current examination. Add all accountable forms received during the period under
examination to the inventory of accountable forms as of date of last examination. Ascertain that all accountable
forms requisitioned or procured from all sources are included.
17.2 Determine the total number of accountable forms issued and/or transferred as shown in the
cashbook/CDR/CRR or equivalent, Report of Accountability for Accountable Forms and other records.
17.3 Deduct total issues/transfers determined in 17.2 from total inventories established in 17.1 to establish
the balance of accountability as of the date of count.
18. Compare the balance of accountability arrived at with the inventory of unused accountable forms. Require
the AO to explain discrepancies in writing, if any. Shortages of accountable forms with money value shall, like a
cash shortage, be covered by a letter of demand.
19. Require the AO to accomplish and sign the certificate of accountability provided in General Form No.
74(A).
20. Accomplish the required auditor's certification provided in General Form No. 74(A).
21. Determine the adequacy of the bond using the BTr guidelines on bonds.
22. Determine the adequacy of the precautionary measures adopted by the agency to safeguard cash and
whether the existing facilities of the AO provide adequate protection against loss.
23. Review all necessary work papers and the supporting documents. Prepare the narrative report.
B. Specific Procedures and Techniques
In addition to the above-mentioned procedures and techniques, the auditor shall perform the following:
1. Collecting Officer
1.1 Check all entries in the cashbook/CRR or equivalent from the date of last examination up to the date of
current examination. Use tick marks to indicate review made.
1.1.1 Check individually the entries in the cashbook/CRR or equivalent during the period under
review against source documents, such as: ORs, Daily Statements, Cash Transfer Slips (CTS), Deposit Slips,
Remittance Advice, etc. In case the entries are based on daily statements or abstracts of collection, check all
statements/abstracts against the source documents.
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1.1.2 Pay particular attention to the nature of collection/transaction made, erasures, alterations,
etc., to ascertain that the amount actually collected/transacted is the amount recorded. If necessary, confirm
collections/transactions with selected payors.
1.1.3 Check the numerical sequence of ORs and other accountable forms received and issued.
Ascertain that the original and duplicate copies of cancelled ORs or accountable forms are submitted with the
corresponding Report/Abstract of Collections or equivalent. Take note of frequent cancellations of ORs which may
be an indication of irregularity.
1.1.4 Scrutinize the remittance advices or deposit slips or CTS for signs of tampering. Confirm with the
BTr or depository banks all remittances/deposits made during the period under examination. Obtain copies of debit
advices issued by the depository banks during the period under examination. Ensure that these are taken up in the
cashbook/CRR or its equivalent.
1.1.5 Examine adjustments made by accounting office/unit during the period under examination.
Determine propriety and correctness of all adjusting entries.
1.1.6 Consider all discrepancies affecting the AO's accountability in the preparation of the Statement of
Accountability.
1.2 Examine all checks and money orders for regularity. Verify if private checks were received in payment of
taxes, dues, fees and other government obligations by tracing them to the corresponding ORs.
1.3 Ascertain that private checks are made payable to the agency or the official title or designation of the agency
head. Disallow accommodated private checks, including post-dated checks, stale checks/money orders, chits and
promissory notes.
1.4 Require the AO to explain the existence of obsolete checks and other accountable forms, if any.
1.5 Count and list all unused accountable forms on hand, using the appropriate space in General Form No. 74(A).
Inspect unused booklets to make sure that each set of serial number is complete. In case of missing copies, require
the AO to explain the loss in writing. See to it that the notice of loss is immediately disseminated. Recommend the
immediate destruction of obsolete checks and other accountable forms.
1.6 Prepare the Statement of Accountability starting from the balance of the last examination to the date of the
current cash examination, on the basis of verified amounts of collections and remittances/deposits, using the
appropriate spaces in General Form No. 74(A).
1.7 Analyze collections and remittances/deposits to determine if amounts collected are remitted/deposited in the
manner and frequency prescribed on pages 9 and 10 of this manual.
1.8 Inquire into major steps, obtain flow chart, if any, or narrative procedures on the receiving, keeping,
disposing and accounting for collections. Identify deviations from prescribed regulations and sound
internal control structures. On the basis of the duties of the CO and his staff, ascertain whether the daily
collections of the staff are turned over to the CO at the end of the day.
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2. Bank Cashier/Teller/ATM Teller
2.1 Count currency notes of Cashiers/Tellers/ATM Tellers of BSP and government

banks as follows:
2.1.1 per box for unopened original boxes with BSP seal;
2.1.2 by bundle for opened original boxes with plastic seal intact;
2.1.3 by bundle for original shrink-wrapped bundles (original shrink-wrapped bundles are from the
original boxes of notes which are machine counted, bundled and shrink-wrapped). Select bundles for 100% wrapper
count using COA sampling methodology.
2.1.4 by piece for not originally shrink-wrapped bundles. Using COA sampling methodology, select
wrappers from bundles not originally shrink-wrapped for piece count.
2.2 Count unfit notes for retirement which are verified/counted and perforated by money counters of BSP by
bundle. Select sample bundles for 100% wrapper count. Then select sample wrappers for piece-by-piece count.
2.3 Count coins in original bags by bag; repacked coins by pack, then select sample repacked coins for piece
count. Count loose coins piece by piece.
2.4 Count by piece all commemorative notes and coins especially printed and minted to commemorate
special occasions which are booked at face value but may be sold at a premium approved by the BSP Monetary
Board, except those in unopened original boxes and bags which shall be counted by box and by bag,
2.5 Disclose on General Form No. 74(A) and on the cash examination report whenever a sampling prescribed
by the Commission was used in the cash count.
2.6 Conduct a complete piece count in case of discrepancy noted in the cash count especially with the
comparison between the denominations per count and per AO's breakdown of his accountability. Document the
subsequent 100% cash count in a separate General Form No. 74(A) and prepare the corresponding cash examination
report bearing the actual date when the new or subsequent cash count was conducted.
2.7 In the case of ATMs, count the notes by piece by cassette. Use the ATM Cash Count Sheet (Annex J) or
similar form to list the money retrieved. Ensure that these forms and Section A of General Form No. 74(A) are
signed by the AO and all those designated under the joint custody/dual control.
2.8 For cash in receptacles which are marked "Subject to Verification" (SV), reflect in the count sheet the
amount indicated in the tag.
2.9 Determine whether the cash identified as SV are verified in the manner and frequency prescribed. Age
the cash SV and obtain explanation from the AO for the existence of long staying cash SV. Request the BSP Cashier
to make representation with banks which made the deposit to schedule the opening of long staying cash SV in the
presence of the bank representatives and the auditor.
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3. Disbursing Officer (DO)
3.1 Examine all cash items for regularity. Ascertain that they are all current and duly approved.
3.1.1 Unposted paid vouchers/payrolls
3.1.1.1 Determine why the paid vouchers/payrolls are not posted in the cashbook/CDR. If they
are duly approved and acknowledged in all respects, consider them as valid cash
items.
3.1.2 Partially paid payrolls
3.1.2.1 Verify contents of pay envelopes, if any. Treat cash in pay envelopes as cash items. Add
payments already made in the payroll. Consider the total of cash found inside the pay
envelopes and total payments already made as cash items. Disallow chits and
promissory notes inside the pay envelopes.
3.1.3 Checks and money orders
3.1.3.1 Disallow checks and money orders paid by the DO out of his cash advance. Allow
checks drawn as cash advances in favor of the DO as cash items.
3.1.4 Paid invoices, reimbursement expense receipts (RER), promissory notes,

etc.
3.1.4.1 If the fund being examined is a cash advance for petty expenses, consider paid
invoices/receipts covering authorized petty expenses for goods and services, like
telegram, tolls, freight, cartage, etc., as valid cash items. Allow sales invoices and/or
charge invoices as cash items only when supported with ORs. Disallow chits and
promissory notes under any circumstance.
3.2 Count and list all unused checks on hand using the appropriate space in General Form No. 74(A).
Inspect unused booklets for missing checks. In case of missing checks, require the DO to explain the loss in writing.
See to it that the DO immediately disseminated the notice of loss and notified the bank for stoppage of payment.
3.3 Check all entries in the cashbook/CDR/CkDR or equivalent from the date of last examination to the
date of current examination. Use tick marks to indicate review made.
3.3.1 Based on accounting records, determine whether all cash advances/withdrawals have been
entered in the cashbook/CDR/CkDR or equivalent on the dates they were received. List all unposted cash
advances/withdrawals.
3.3.2 Check all cash disbursements against the corresponding vouchers. Determine whether the
vouchers were duly approved and payments acknowledged. Pay particular attention to erasures/alterations on the
voucher and the cashbook. Make sure that the amount entered in the cashbook/CDR or equivalent was the approved
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amount of the voucher. Where the vouchers could no longer be made available to the auditor, such as in the case of
agencies with centralized accounting systems, secure confirmation of the aforesaid disbursements from the auditor
of the agency where the books are kept.
3.3.3 Trace refunds of cash advances to the original receipts issued therefor.
3.3.4 Determine propriety and correctness of adjusting entries.
3.3.5 Consider all discrepancies affecting the DO's accountability in the preparation of the
Statement of Accountability.
3.4 Prepare the Statement of Accountability starting from the last date of examination
to the date of current examination, on the basis of verified cash advances,
disbursements and refunds using the appropriate spaces in General Form No. 74(A).
Require the DO to accomplish and sign the certificate of accountability provided
therein.
C. Reconciliation Statement of Depository Accounts
1. Require the Chief Accountant/head of the accounting unit to prepare and submit bank reconciliation
statements for the latest bank statements received covering all bank depository accounts.
2. Obtain directly from the bank a cut-off statement for all bank depository accounts as of the date of the
examination and prepare the corresponding bank reconciliation statements as of cut-off date (Annex K).
D. Cash Shortage
1. Recheck all figures and computations if the examination discloses a cash shortage, before declaring the AO
short of his funds.
2. Demand at once from the AO the immediate production of the missing fund(s) the moment the amount of
shortage is definitely established. Execute the demand in writing and have the AO acknowledge receipt thereof on
the duplicate copy. A sample of the letter of demand is shown in Annex L. Obtain from the AO a written
explanation of how the shortage occurred within seventy-two (72) hours from his receipt of the letter of demand.
3. Recommend to the agency head the immediate relief of the defaulting officer from his duties as AO. The
recommendation shall be in writing, duly acknowledged by the agency head or his duly authorized representative on
the duplicate copy which is to form part of the auditor's work papers. Institute such measures necessary to safeguard
adequately the cash and records.
Seizure of Office by Auditor
4. If a shortage is discovered on the accounts of a local treasurer, seize the office and its contents and notify
the COA Director concerned, the local chief executive, and the local accountant.
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5. Turnover immediately to the AO next-in-rank in the local treasury service the office of the treasurer and its
contents, close, and render his account on the date of the turnover.
6. In case the AO next-in-rank is likewise under investigation, take full possession of the office and its
contents, close and render his accounts on the date of taking possession, and temporarily continue the public
business of such office until such time that the local treasurer is restored or a successor has been duly designated.
7. Direct the proper officer to withhold the payment of salary and other emoluments except retirement pay,
terminal leave benefits or gratuities, due the defaulting AO once his cash shortage is ascertained. Sign the
withholding order in the following manner:
By Authority of the Chairperson,
Commission on Audit
(Audit Team Leader)

A sample of such withholding order is shown as Annex M of this manual. Report such withholding order
promptly to the COA Chairperson.
The salaries and emoluments to be withheld shall correspond to the amount of the alleged shortage. Said
amount shall be considered merely withheld and shall not be applied to the shortage until final resolution by a
competent court of the AO's indebtedness, if such is initiated. In the event that the AO is found liable for the
cash shortage, the withheld salary and other emoluments shall be applied in payment of the indebtedness;
otherwise,
73
it shall be released to the AO. Constructive
Distraint
8. The constructive distraint contemplated under Section 47 of Presidential Decree No.

1445, may be effected under the following circumstances:
a. A shortage in the accounts of an AO is discovered in audit;
b. The amount of the shortage has not been restituted despite demand;
c. A prima facie case of malversation of public funds or property is found against him;
d. There is reasonable ground to believe that he is retiring from the government service;
or intends to leave the Philippines; or intends to remove his personal property from
the Philippines; or intends to hide or conceal such property; and
e. The interest of the government has to be safeguarded.
9. The following are the procedures in effecting constructive distraint:
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a. The auditor who discovered the shortage shall immediately submit a report to the
Chairperson, thru the SA and the Cluster/Regional Director concerned, embodying
his findings and recommendation to place the personal property of the defalcating AO
under constructive distraint.
b. Upon evaluation of such report and finding a need for the constructive distraint as
recommended therein, the Commission shall forthwith prepare a warrant directing the
auditor to place under constructive distraint (sample form attached as Annex N), the
goods, chattels or effects and other personal property of whatever character of the
AO. The warrant shall be signed by the Chairperson and shall show clearly the name
and address of the defalcating AO, the amount of shortage incurred, and the fact of
prior demand made for the restitution thereof.
See Santiago v. Commission on Audit, G.R. No. 146824, June 15, 2006 and Supreme Court Resolution dated November 21, 2007
c. The auditor directed to serve the warrant of constructive distraint shall serve the same
personally on the defalcating AO himself. In case, however, where the said AO
refuses to receive the warrant or is absent from his given address, the warrant shall be
served upon someone of suitable age and discretion in the premises or upon the
person in possession or occupancy of the personal property of the AO, who shall
acknowledge all the copies of the warrant. In case actual service of the warrant upon
the AO or upon either of the two other persons just mentioned cannot be made, a
copy thereof shall be left in the premises or in the office of the AO or in the place of
the person in possession or occupancy of the said property of the AO which fact shall
be attested to in said copy and in all the other copies of the warrant by the distraining
officer in the presence of at least two credible witnesses, whereupon the warrant is
deemed properly served. A copy of the warrant thus served shall be furnished to the
AO with a notation that a copy of the same was left with the person who is in
possession or occupancy of his personal property.
d. Upon service of the warrant, the distraining officer shall require the defalcating AO or
any other person having possession or control of the personal property in question to
accomplish a receipt (sample form attached as Annex O) covering the property
distrained and to obligate himself to preserve the same intact and unaltered and not to
dispose of it in any manner whatsoever without the express authority of the COA.
e. In case the said AO or other person having the possession and/or control of the
property sought to be placed under constructive distraint refuses or fails to
accomplish the receipt herein referred to or lists only a number of such personal
property not sufficient to cover the amount of the shortage, the distraining officer
shall proceed to prepare a list of the property choosing such quantity as is sufficient to
satisfy the shortage, and in the presence of two witnesses leave a copy thereof in the
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premises where the property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
f. Where some of the property distrained consists of stocks and other securities, a copy
each of the warrant of constructive distraint and the receipt or list mentioned above
shall be served upon the president, manager, treasurer, or other responsible officer of
the corporation, company, or association which issued the said stocks or securities. In
case of debts and credits, copies of such documents shall be left with the person
owing the debts, or having in his possession or under his control such credits, or with
his agent. The warrant of constructive distraint and the receipt or list shall be
sufficient authority to the person owing the debts, or having in his possession or
under his control any credits belonging to the AO, to desist from the settlement
thereof without the written authority of the COA. In case of bank accounts, the copies
of the warrant and receipt or list shall be served upon the president, manager,
treasurer, or other responsible officer of the bank concerned, whereupon the bank
shall desist from allowing withdrawals therefrom or so much thereof, as may be
sufficient to satisfy the shortage of the AO without the written authority of the COA.
g. If the property distrained are registered with any government office, the distraining
officer shall notify in writing the government official concerned of the fact of the
constructive distraint, furnishing him with a copy each of the warrant and the receipt
or list mentioned above. The notification shall contain the following data:
i. nature and description of the property distrained;

ii. date of the distraint;
iii.name of the owner and/or actual possessor thereof; and
iv. nature and amount of shortage for which the distraint was effected.
h. A copy of such notice shall be sent to the last known address of the AO through
registered mail with return card or served upon the AO or his agent or to the occupant
or possessor of the property in question. Receiving copies of the return card or the
notice shall be kept secured together with the audit work papers of the examining
auditor.
10. The summary remedy by constructive distraint of personal property may be repeated until the full amount of the
shortage of the defaulting AO, including the expenses of the distraint, is satisfied.
11. A report on any constructive distraint effected pursuant to Section 47 of P.D. No. 1445, shall be submitted by
the distraining officer to the COA Chairperson, thru the SA and the Cluster/Regional Director concerned, furnishing
a copy thereof to the Legal Services Sector of the Commission. Such report shall form part of the supporting
documents of the complaint for malversation to be initiated against the defalcating AO. It shall provide the
Ombudsman or other government prosecutors with basis to apply with the proper court for the attachment of the
property distrained in accordance with the Rules of Court.
12. If at any time after the constructive distraint has been effected the AO restitutes the full amount of the shortage,
his personal property placed under such distraint, shall be released therefrom.
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Prosecution of the AO
13. Where a cash shortage is firmed up, submit the final narrative report together with the affidavits, sworn
statements and other supporting documents to the Cluster/Regional Director thru the SA for review and evaluation.
14. If the facts and circumstances of the case warrant the filing of a criminal action, the Cluster/Regional Director
shall initiate such action by forwarding the report accompanied by a letter-complaint (Annex P) to the Deputy
Ombudsman (for Luzon, Visayas, Mindanao or Military) concerned, recommending the initiation of criminal
proceedings against the defaulting AO. Where the shortage is discovered by special audit teams of other offices of
the Commission, the responsibility to initiate the criminal action shall fall upon the director or head of such office.
15. For the purpose of prosecuting the defaulting AO, make the following documents available to the
prosecuting officials:
a. Certified true copies of AO's appointment, oath of office, official designation and
approved application for bond;
b. A copy of the Report of Cash Examination [General Form No. 74(A)], narrative
report and its supporting exhibits and schedules, letter of demand, and the written
explanation of the AO on how the shortage occurred, if any; and
c. Affidavit or sworn statements of the auditors and other witnesses (Annex Q).
17. If the shortage is material and a case has already been filed, request, thru the COA Chairperson, the
Department of Foreign Affairs (DFA), the National Bureau of Investigation (NBI), and the Bureau of
Immigration and Deportation (BID) to deny the AO any clearance for purposes of travel abroad unless
cleared by the COA.
E. Cash Overage
1. In case a cash overage is determined, extend the examination as may be necessary to establish the cause of
the overage and uncover any attendant irregularity, if any.
2. Obtain explanation from the AO. If the overage cannot be satisfactorily explained by the AO, forfeit the
amount in favor of the government and request the CO to issue an OR therefor.
3. Record the overage as 'Miscellaneous Income'.
F. Indemnity From Fidelity Fund
1. The Fidelity Fund shall be available for the purpose of replacing defalcations, shortages, unrelieved losses in
the accounts of bonded public officers, for the payment of fees and costs incident to civil proceedings
brought against them to recover sums paid on their account from said Fund.40
40 Paragraph 4.8, Treasury Circular No. 02-2009, August 6, 2009; Section 326, Philippine Bonding Law
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2. The relief from accountability of the accountable public officer granted by the COA shall relieve the
agency from responsibility for the loss or damage to public funds or property. 41
3. When no relief of accountability is granted by the COA, the agency concerned may file claim for
reimbursement from the Fidelity Fund to the extent of the approved bond covered or amount of loss whichever is
lower.42
4. Any and all claims against the Fidelity Fund shall be filed as a money claim with the COA, with a copy to the
BTr together with the evidence relating thereto. Claims
77
approved by the COA shall constitute a legal claim against the Fidelity Fund.
5. The agency shall file claim for payment from the Fidelity Fund with the BTr, attaching therewith the
favourable findings of COA. The BTr shall process the claim in accordance
78
with existing budgeting, accounting and auditing rules and regulations.
6. In case of defalcation, shortages and unrelieved losses in the account of bonded public
79
officer, the claim shall be supported by the following documents:
6.1 Agency and COA findings and recommendation on the defalcation, shortages and unrelieved
accountability;
6.2 Latest Statement of Assets and Liabilities of the bonded official/employee;
6.3 Proof of current and subsisting bond and payment of bond premium; and,
6.4 Other document/s which may be required by the BTr.
7. Receipt of refund from Fidelity Fund shall be accounted for in the same manner as cash settlement or
restitution.
77
Paragraph 8.4, 78
Paragraph 8.5, Ibid
Paragraph 8.5.1, Ibid
Appendix 1
ILLUSTRATIVE ACCOUNTING ENTRIES
A. ACCOUNT TITLES, CODES USED
41 Paragraph 8.2, Ibid

42 Paragraph 8.3, Treasury Circular No. 02-2009, August 6, 2009
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The account titles and account codes used in the illustrative accounting entries to record cash
shortages, their subsequent restitution or relief, and to recognize cash overages discovered during the cash
examination are patterned on the Revised New Government Accounting System Chart of Accounts. Other or
equivalent account titles and additional entries, if any, may be used by agencies (e.g. GOCCs) permitted to
adopt accounting systems and chart of accounts other than the NGAS and the Revised NGAS Chart of
Accounts.
B. ACCOUNTING FOR SHORTAGES
As soon as a cash shortage has been definitely established, the auditor concerned shall accomplish the
following certificate:
Date
I hereby certify that in the examination of the cash and accounts of (Name and designation o f
Accountable Officer) made by (Name o f Auditor)
on_________________, a shortage was reported which remains unaccounted for
and unrestituted.
I further certify that I have verified the shortage to be in the total

amount of P________________(Indicate the shortage by funds).
Auditor
Four copies of the foregoing certificate shall be accomplished and distributed as follows:
Original - Agency Head

Duplicate - The defaulting accountable officer
Triplicate - The Chief/Regional Accountant concerned and
Quadruplicate - File copy of the Auditor.
Based on the certificate, the Chief/Regional Accountant shall draw a journal entry voucher to take up
the cash shortage as follows:
Case I - Local Government Sector - General or Trust Fund
To take up the cash shortage and establish the receivable account of the defaulting accountable officer
Account Title Acct. Code Debit Credit

Due from Officers and Employees 123 xxx
Cash, In Vault (for the Local Treasurer), or 101 xxx
Cash, Collecting Officer (for Collecting Officer), or 102 xxx
Petty Cash, or 104 xxx
Payroll Fund 106 xxx
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Case II - National Government Sector - General Fund and Special Account in the General Fund
To take up the cash shortage and establish the receivable account of the defaulting accountable officer

Cash, Collecting Officer (for Collecting Officer) or 102 xxx
Cash, Disbursing Officer (for Disbursing Officer) 103 xxx
C. ACCOUNTING FOR RESTITUTION
Cash restitution is made by the defaulting accountable officer during or after the year when the
shortage was discovered.
To take up the cash restitution of the defaulting accountable officer

Cash, Collecting Officer 102 xxx
The above journal entry also applies if the defaulting accountable officer is from the National Government
Sector - General Fund and Special Account in the General Fund
D. ACCOUNTING FOR RELIEF
1. Request for relief from cash accountability was not granted
The entry to establish the liability of the defaulting accountable officer when his request for relief was
denied is similar with Item B, Cases I and II on the preceding page. When the defaulting accountable
officer settles his/her accountability, the accounting entry shall be similar with Item C on Accounting for
Restitution.
2. Request for relief from cash accountability was granted
a. To take up the relief from cash accountability

Loss of Assets (current year) or 961 xxx
Prior Year Adjustments 684 xxx
b. If the lost fund was from Trust Fund, the shortage shall be transferred to the General Fund
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• The entry to take up the cash shortage in the Trust Fund books of account is the same with Item
B, Case I on the preceding page.
• To take up the transfer of the lost fund to the General Fund since the defaulting employee
cannot restitute the shortage.
Trust Fund books of accounts

Due from Other Funds 144 xxx
General Fund books of accounts
Loss of Assets (current year) or 961 xxx
Prior Year Adjustments 684 xxx
Due to Other Funds 424 xxx
• To take up the settlement of the loss fund in the Trust Fund
Trust Fund Books of Accounts
Due from Other Funds 144 xxx
General Fund Books of Accounts
E. ACCOUNTING FOR OVERAGES
a. To take up the cash overage after it has been receipted and to recognize the income account.

Miscellaneous Income 678 xxx
To take up the remittance of the amount receipted
Cash in Bank, Local Currency - Current Account 111 xxx
Case II - National Government Sector - General Fund
a. To take up the cash overage after it has been receipted and to recognize the income account.
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Due to National Treasury 411 xxx
The above journal entry shall be recorded in the National Government books under the National Government
Fund.
Kl- i't III IK V NC; IMI.II'IWS k \l. \\V\U \N N<. I'\N VVVl.
b. To take up the remittance of the amount receipted
KAVVANIIIAN NG INGATANG-YAMAN
1111 HI AT Of IMI I Kl- AM W I IN t KAMI It US, MAY Nil \
TREASURY CIRCULAR NO. 02 - 2009 AUGUST

6, 2009
TO ALL HEADS OF DEPARTMENTS, BUREAUS AND

OFFICES OF NATIONAL GOVERNMENT AGENCIES AND LOCAL
GOVERNMENT UNITS, GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS, STATE UNIVERSITIES AND COLLEGES, STATE
AUDITORS, AND ALL OTHERS CONCERNED
SUBJECT: REVISED OMNIBUS REGULATIONS GOVERNING THE

FIDELITY BONDING OF ACCOUNTABLE PUBLIC OFFICERS
PURSUANT TO THE PUBLIC BONDING LAW (SECTIONS 313 - 335
CHAPTER 15, REVISED ADMINISTRATIVE CODE OF 1917)
1.0 BASIS
This Treasury Circular is issued pursuant to Sections 313-335, Chapter 15, otherwise known as
Public Bonding Law, under the Revised Administrative Code of 1917, Executive Order No 449 s.
1997 (Realigning the Organization of the Bureau of the Treasury) in relation to Government
Auditing Code of the Philippines (P.D. 1445), Chapter IX Book V of the Administrative Code of
1987 (E.O. 292), and the Local Government Code of 1991 (RA 7160).
2.0 PURPOSE
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This Treasury Circular revises Treasury Order Nos. 01-95 and 01-99 pertaining to regulations
promulgated for the effective bonding of accountable public officers pursuant to the provisions of
the Public Bonding Law
3.0 DEFINITION OF TERMS
The following terms, whenever used in this Circular, shall have the following meaning:
a) Authorized Government Depository Bank (AGDB) - refers to. a government bank

duly authorized by the Bangko Sentral ng Pilipinas to maintain deposits and cash balances of
National Government Agencies (NGAs), Local Government Units (LGUs),
Palacia del Gobernador, General I ■ana enr. \ Soriano Vrcnu*. Intromuros, IU0I Manila
Government-Owned or Controlled Corporations (GOCCs) and State Universities and Colleges
(SUCs).
b) Authority to Accept Payment (ATAP) - refers to the form issued by the Bureau of the
Treasury to the fidelity bond applicant for presentation to the AGDB authorizing the receipt of payment
of bond premium (Annex A).
c) Bureau of the Treasury (BTr) - refers to the agency under the Department Finance authorized
under E.O 449 s. 1997 in relation to the Public Bonding Law, PD No. 1445 and E.O. 292, s. 1987 to
provide fidelity bond to all accountable public officers.
d) Chief Treasury Operations Officer II (CTOO II) - refers to the unit head of the BTr
District/Provincial Office.
e) Commission on Audit (COA) - refers to the constitutional agency which implements

Government Auditing Code of the Philippines (PD. No. 1445).
f) District Office (DO) - refers to a division/unit of the BTr Regional Office in the National Capital
Region.
g) Government Agency or Agency — refers to any of the various units of the government
including departments, bureaus, offices, agencies and instrumentalities, GOCCs, LGUs, and SUCs or a
distinct unit therein.
h) Head of Agency — refers to the head of departments, bureaus,

agencies and instrumentalities of the government, including
GOCCs, LGUs and SUCs.
i) Confirmation Letter - refers to the letter issued by the BTr DO/PO

to the Head of Agency, stating the name of bonded public officer,
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amount of bond, risk number and the period of effectivity of bond
(Annex B).
j) Public Bonding Law (PBL) - refers to the Public Bonding Law Sections 313 - 338, Chapter 15,
Revised Administrative Code of 1917.
k) Provincial Office (PO) - refers to a division/unit of the BTr Regional Office outside the National
Capital Region.
I) Public Funds — refers to funds under the possession, custody or control of a public officer by
virtue of his official position/designation which include public moneys of every sort and other
resources pertaining to the Government Agency.
m) Public Property — refers to any real or personal property in the possession, custody or
control of a public officer by virtue of his position/designation.
n) Public Officer — refers to any person who, by direct provision of the law, popular election
or appointment by competent authority, shall take part in the performance of public functions in
the Government of the Republic of the Philippines or shall perform in said Government or in
any of its branches public duties as an employee, agent or subordinate official of any rank or
class (Art. 203, Revised Penal Code).
o) Regional Director (RD) - refers to the unit head of the BTr Regional Office.
p) Treasurer of the Philippines (TOP) - refers to head of the BTr and the officer
authorized to issue the implementing rules and regulations on the Public Bonding Law.
4.0 GENERAL PROVISIONS
4.1 Public Officers Covered - Every officer, agent, and employee of the Government of
the Philippines or of the companies or corporations of which the majority of the stock is held by the
National Government (NG), regardless of the status of their appointment shall, whenever the nature of the
duties performed by such officer, agent or employee permits or requires the possession, custody or control
of funds or properties for which he is accountable, be deemed a bondable officer and shall be bonded or
bondable and his fidelity insured (Section 314 & 318, PBL).
4.2 Coverage in LGUs - Every officer, agent, and employee of an LGU whose duties
permit or require possession, custody or control of local government funds and properties, including but
not limited to provincial governors, city and municipal mayors, provincial, city, municipal and barangay
treasurers, and punong barangays, shall be accountable and responsible for said funds and properties for
the safekeeping thereof and shall be or his fidelity insured/bonded (Section 305(f) R.A. 7160, DILG M.C.
No. 99-186, 11 Oct. 1999).
4.2.7 A Barangay Treasurer shall be bonded in an amount of accountability to be

determined by the Sangguniang Barangay but the amount of maximum bond shall
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not exceed P10,000.00 as authorized by R.A. 7160 or at an amount which may or
hereinafter be prescribed by any
Page|4
other law, premium for which shall be paid by the Barangay (Section 395(d), R.A.
7160).
4.3 Others Covered
4.3.1 Accountable public officers discharging their duties in a foreign country.
4.3.2 Public officers accountable to others who are primarily accountable.

4.3.3 Public officers designated as authorized signatories and counter signatories in the
issuance of checks and approval of disbursement vouchers.
4.3.4 Heads of departments, bureaus, agencies and instrumentalities of the Government.
4.4 Accountability for Public Property - Every officer, agent and employee, accountable for
public property shall be liable for its money value in case of improper or unauthorized use or
misapplication thereof, by himself or any person for whose acts he may be responsible He shall likewise
be liable for all losses, damages or deterioration due to negligence in the keeping or use of the property,
whether or not it be, at the time of such loss, damage or deterioration, in his actual custody.
4.5 Accountability for Public Funds - Every officer, agent and employee accountable for
public funds shall be liable for all losses resulting from the unlawful deposit, use, or application thereof,
and for all losses attributable to negligence in the keeping of such funds.
4.6 Money & Property Accountability - An accountable public officer who has both money
and property accountability shall be bonded only once to cover both accountabilities in accordance with
the Schedule of Premium Rates.
4.7 Accountability of Public Officers Acting on Orders of Superiors - No accountable

public officer shall be relieved from accountability by reason of his having acted under the direction of a
superior officer in paying out, applying or disposing of public funds or property which he is accountable,
unless prior to that act, he notified the superior officer in writing of the illegality of the payment,
application or disposition. The officer directing any illegal payment, application or disposition of public
funds or property shall be primarily liable for the loss, damage or deterioration while the accountable
officer, who fails to serve the required notice, shall be secondarily liable.
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4.8 Extent of Liability and Condition of Bond - A public officer whose fidelity is insured
in the Fidelity Fund shall, from the moment he assumes the duties of the office, is considered bonded to
the government for the faithful performance of all duties imposed upon him by law, and for the faithful
accounting of all funds and public properties coming into his possession, custody or control by
appropriation, collection, transfer or otherwise, as well as for the lawful payment, disbursement and
expenditure or transfer of all such funds or public properties in his custody, possession or under his
control as accountable or responsible officer. (Sec. 318, PBL). The Fidelity Fund shall be available for the
purpose of replacing defalcations, shortages, unrelieved losses in the accounts of bonded public officers,
for the payment of fees and costs incident to civil proceedings brought against them to recover sums paid
on their account from said Fund (Sec. 326, PBL).
4.9 When Considered Bonded - An accountable public officer shall be considered

bonded/insured with the Fidelity Fund upon payment of the bond premium. The Fidelity bond shall be
valid and effective at the time of payment and receipt of bond premium by the AGDB. The accountable
public officer shall submit to the BTr DO/PO a copy of the AGDB validated deposit slip and ATAP as
proof of payment of bond premium, after which the Confirmation Letter shall be issued.
4.10 Effect of Approved Bond — An approved fidelity bond shall be non-transferable and
personal to the accountable public officer and shall remain valid and effective for one (1) year from the
time of payment and receipt of the bond premium. The fidelity bond shall be subject to renewal yearly
before the expiration of the present bond coverage while the accountable public officer is holding such
position for which he was bonded. Failure to renew shall consider such bond as automatically cancelled
and shall have no legal effect.
4.11 Entry of Registered Bonded Public Officers — The BTr

DO/PO shall enter into the Registry of Bonded Public Officers the particulars of the approved
fidelity bond.
4.12 Effect of Cancellation - The cancellation of the bond for any

cause allowed under this Circular before expiration date, has
the effect of limiting the liability of the Fidelity Fund to the
transactions within the period covered up to the tirne_of its
cancellation. The bond premium paid for the accountable public
officer whose bond is cancelled shall not be transferrable and
not refundable.
4.13 Effect of Separation from Office or Removal from Accountability - When
the bondable public officer is separated from the service or relieved of accountability by
reason of his transfer to another position or government agency, the Head of Agency
concerned shall immediately request the BTr DO/PO CTOO II for the cancellation of the
fidelity bond. The cancellation of the bond shall take effect on the date of separation,
relief or transfer.
5.0 AMOUNT OF BOND AND DETERMINA TION OF PREMIUM
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5.1 Amount of Bond - The amount of bond shall be based on the total accountability
(cash, property and accountable forms) of the accountable public officer as determined by the Head of
Agency. Provided, the individual maximum accountability of each accountable public officer shall not
exceed One Hundred Million Pesos (P100M). However, the Head of Agency may assign to other public
officers the excess accountability for which a separate Fidelity Bond shall be secured.
5.2 Authority to Fix Schedule of Premium - The Treasurer of the

Philippines with the approval of the Secretary of Finance shall fix and, from time to time,
review the uniform rate of the bond premium chargeable for insurance under the Public
Bonding Law and this Circular.
5.3 Rate of Premium - The rate of premium of the fidelity bond is

equal to One and One Half Percent (1.5%) of the amount of
bond but shall not be less than One Hundred Fifty Pesos
(P150.00). The Revised Schedule of Premium Rates (Annex C)
shall form an integral part of this Circular until amended or
revised.
6.0 DUTIES AND RESPONSIBILITIES OF THE HEADS OF AGENCIES/OFFICES

OR PERSONS PRIMARILY ACCOUNTABLE
6.1 Primary Liability - The head of any government agency at all levels, whether
national, corporate or local is primarily responsible and accountable for all government funds and
property pertaining to his agency.
6.2 Duty to Notify - All Heads of Agencies shall, upon appointment or lawful accession
by any accountable public officer to a bondable position or office pertaining to their respective
jurisdiction, or separation therefrom of any such public officer, notify in writing the TOP through the
BTr DO/PO having jurisdiction over the agency/office/GOCC/LGU/SUC within five (5) days from such
appointment, lawful accession or separation and to submit the required application for bond or
cancellation thereof, as applicable.
6.3 Preferential Attention - The immediate performance of the above duty shall receive
preferential attention of such heads of departments, bureaus and offices of the NG including GOCCs,
SUCs, heads of LGUs, provincial and local treasurers and other officials concerned.
6.4 Effect of Failure to Notify - Failure on the part of the Head of Agency to make the
required notification to the TOP through the concerned DO/PO shall render them primarily liable to any
such loss or damage to public funds or properties their respective agency, province, city or municipality,
barangay, as the case may be, may incur on account of such failure.
7.0 PROCEDURE FOR APPLICATION, RENEWAL AND CANCELLATION OF

BOND
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7.1 Procedure for Application
7.1.1 The applicant shall accomplish in duplicate General Form

Nos. 57A (Request Form) and 58A (Application Form),
copies of which can be secured from BTr DOs/POs.
General Form No. 58A shall be subscribed and sworn to
before any officer authorized to administer oath, attaching
therewith two (2) passport size identification pictures
taken within the last three (3) months prior to the date of
application. The Request and Application Forms shall be
accompanied by the following:
7.1.1.1 Latest Sworn Statement of Assets, Liabilities and Net Worth (SALN);
7.1.1.2 List of bondable public officers certified by the agency officer in

charge of Administrative and/or Finance Department, Service, Division or unit (Form Annex D).
7.1.2 The Request and Application Forms, together with

required supporting documents, shall be filed with the
CTOO II assigned at the BTr DOs/POs having jurisdiction
over the agency. The CTOO II shall verify, ascertain and
determine the following:
7.1.2.1 If General Form Nos. 57A and 58A have been properly accomplished and in order;
7.1.2.2 If the required supporting documents are complete and in order;
7.1.2.3 If the name of the applicant appears on the list of bondable public officers submitted
by the agency;
7.1.2.4 If the applicant is a safe and conservative risk in accordance with Sec. 320 of the
PBL.
7.1.3 In case of non-compliance with Sec. 7.1.2 (Sec. 7.1.2.1 -7.1.2.4), the CTOO II shall return to the
applicant the Request and Application Forms and its supporting documents for necessary corrections
and/or compliance. In case the applicant is determined to be an unsafe risk, the CTOO II shall follow the
procedure under Sec. 7.1.8.
7.1.4 The CTOO II shall assess the applicable bond premium and issue the ATAP when General Forms
57A and 58A and supporting documents are found to be complete and in order.
7.1.5 The applicant shall upon receipt of the ATAP, proceed to the nearest AGDB where the TOP has a
deposit account for payment of the assessed bond premium. Any check payment for bond premium shall
be for the account of the TOP. The CTOO II or his representative shall not, for any reason, receive
payment of the bond premium. Violation hereof shall subject the CTOO II or his representative to
appropriate sanctions as for grave misconduct defined and penalized under the Revised Uniform Rules in
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Administrative Cases in the Civil Service in relation to Rule XIV, Omnibus Rule of Implementing Book
V of E.O. 292, s. 1987.
7.1.6 The applicant accountable public officer shall submit and present to the concerned CTOO II a
copy of the validated deposit slip and ATAP as proof of payment of the bond premium.
7.1.7 The CTOO II shall transmit all bond application to RD for approval of bond application only
upon proof of compliance under Sec. 7.1.6.
7.1.8 Unsafe Risk - The concerned CTOO II shall evaluate the bond application to determine if the
applicant is a safe and conservative risk in accordance with Sec. 320 of the PBL. When the CTOO II have
basis to prove that the applicant public officer is an unsafe risk owing to character, association, or habits,
the following procedures shall be followed:
7.1.8.1 The CTOO II shall transmit the bond application to the RD with his
recommendation for disapproval stating the basis therefor. When the recommendation of the CTOO II is
affirmed by the RD, the latter shall communicate the disapproval in writing to the Head of Agency of the
applicant public officer stating therein the factual and legal basis for such disapproval;
7.1.8.2 The disapproval/decision of the RD maybe appealed by the concerned Head

of Agency by filing a letter of appeal with the TOP within fifteen (15) days from the receipt of such
disapproval/ decision. The letter of appeal shall state clearly and distinctively the grounds and arguments
of the appeal. A copy of the assailed written action/decision and disapproved bond application and its
supporting documents shall be attached to the letter of appeal. The letter of appeal shall likewise be
accompanied by a postal money order or MDS check in the amount of Five Hundred Pesos (P500.00) as
appeal fee payable to the TOP,
7.1.8.3 Within five (5) days from receipt of the letter of

appeal and the appeal fee, the TOP shall require the RD to elevate the entire
records relating the disapproved bond application. The TOP shall have
fifteen (15) days from receipt of the records from the RD to resolve the
appeal;
7.1.8.4 The decision of the TOP shall be final and

executory and not appealable.
7.2 Renewal - The fidelity bond of an accountable public officer shall be renewed before the expiration
of the bond. The application for renewal of bond shall be accomplished by using General Form
57A and accompanied by the following:
7.2.1 List of bonded public officers subject for renewal certified by the agency official in charge
of Administrative and/or Finance department, service, division or unit; Agency
certification that the bond applicant has no pending administrative and/or criminal case
(Annex E). For a bond applicant with pending administrative and/or criminal case, copies
of pertinent pleadings, orders and resolutions filed or issued by the disputing parties,
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prosecutory or investigatory offices and judicial bodies shall be attached to the bond
application;
7.2.2 Copy of the latest BTr approved bond or copy of the Confirmation Letter;
7.2.3 Latest Sworn SALN.
7.3 Increase in Accountability — Any increase in the amount of

accountability, resulting to an increase in the amount of bond
shall be subject to increase in premium.
7.3.1 The applicant shall accomplish and submit General Form

57A to the concerned DO/PO together with the following:
7.3.1.1 Special Order increasing the amount of accountability; and
7.3.1.2 List of bonded public officers certified by the agency official in charge of:
Administrative and/or Finance department, service, division or unit.
7.3.2 The amount of bond premium shall be computed based on the increased amount of bond.
The bond shall take effect upon the time of payment of premium on the new bond application.
7.3.3 The CTOO II concerned shall cancel the previously assigned risk number to the
applicant and issue a new risk number to the new bond application.
7.4 Cancellation - The Head of Agency or authorized

representative shall immediately submit a written request for
bond cancellation to the concerned BTr DO/PO CTOO II
involving accountable public officers who are no longer
accountable by reason of retirement, separation from the
service, promotion, transfer, suspension from office or for any
other cause rendering them not bondable to their present
position. The Head of Agency or authorized representative
requesting for cancellation of the bond shall accomplish and
submit General Form No. 57(A), items 10-16.
ADJUDICATION AND PAYMENT OF CLAIM AGAINST THE FIDELITY FUND
8.1 Application for Relief from Accountability - When loss of public funds or property
occurs while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the
public officer accountable therefore or having possession, custody or control thereof shall immediately
notify the Commission on Audit or the agency auditor concerned, and within thirty (30) days or such
longer period as the Commission or auditor may in the particular case allow, shall present his application
for relief with the available supporting evidence.
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8.2 Effect of Relief from Accountability by COA - The relief from accountability of the
accountable public officer granted by the COA shall relieve the agency from responsibility for the loss or
damage to public funds or property.
8.3 Fidelity Fund; When Liable - When no relief of accountability is granted by COA, the
agency concerned may file claim for reimbursement from the Fidelity Fund to the extent of the approved
bond covered or amount of loss whichever is lower.
8.4 Claims - Any and all claims against the Fidelity Fund shall be filed as a money claim with COA,
with copy to BTr together with the evidence relating thereto. Claims approved by the COA shall
constitute a legal claim against the Fidelity Fund.
8.5 Requirements for Payment of Adjudicated Claim - The

agency shall file a claim for payment from the Fidelity Fund with the BTr, attaching therewith the
favorable findings of COA. The BTr shall process the claim in accordance with existing
budgeting, accounting & auditing rules and regulations.
8.5.7 In case of defalcation, shortages and unrelieved losses in the account of bonded public
officer, the claim shall be supported by the following documents:
8.5.1.1 Agency and COA findings and recommendation on the defalcation, shortages
and unrelieved accountability;
8.5.1.2 Latest Statement of Assets and Liabilities of the bonded official/employee;
8.5.1.3 Proof of current and subsisting bond and payment of bond premium; and,
54
P a g e | 55
8.5.1.4 Other document/s which may be required by the
BTr.
8.5.2 In case of proven shortages and defalcation, the public officer responsible thereto
should be removed or relieved of his duties without prejudice to civil, criminal or administrative cases to
be instilled.
8.5.3 Only approved claims shall be paid from the Fidelity Fund.
9.0 PENAL CLAUSE
Unjustified failure of an accountable public officer to comply with the requirements to apply the
Fidelity Bond pursuant to this Circular and the PBL shall subject the responsible
official/employee to applicable criminal, and/or administrative liability under the Revised Penal
Code and PD No. 1445.
10.0 REPEALING CLAUSE
All circulars, orders and/or memoranda inconsistent herewith are hereby repealed and/or modified
accordingly.
11.0 EFFECTIVITY
This Circular shall take effect fifteen (15) days after publication in two (2) newspapers of general
circulation.
P a g e | 56
Approved:
MARGARITO B. TEVES
Secretary of Finance
00^ 3 56
Republic of the Philippines Annex A

Department of Finance BUREAU OF THE TREASURY - Ar.f . i 4 Office of the District/Chief Treasury Operntions Officer II
National Capital Region - District I Address

A
n
d Rank of the PhilippinesATAP NO.. n
e
Branch x
B
P a g e | 57
kiauiui n 01- mi I»I111 IITINI s
1)1 TAK I Ml N I Ol I IMAM I
BUREAU OF THE TREASURY
l i t m l i n z t l i f Ht-iMhlic INIRAMUROS.MANILA 1002

Regional Office No. Transmittal No.
Da
te
CONFIRMATION LETTER
AGENCY CODE:
<--------------------------------\
'it i :
This is lo inform you that the request/s foi bonding and/or cancellation of bonds of the following officials and employees of your Office/Agency has
been approved and duly entered in the Regissry of Bonded Public Officers maintained by (District/Provincial Office) of this Bureau
Risk No. Name and Position of Bonded Public Station Approved Amount of Bond Effective Date
Bonding Cancellation
Officers
Coverage of approved bond is one year from date o f issue to be renewed on or before the anniversary date, otherwise bond is automatically
cancelled.
Please notify this Office if there are changes within the effective period.
Very truly,
ROBERTO B.
TAN, CEO II
Treasurer of the
Philippines
By:
Regional Directoi
ANNEX C
P a g e | 58
REVISED SCHEDULE OF PREMIUM RATES
I. CASH ACCOUNTABILITY
MINIMUM CASH MAXIMUM CASH AMOUNT OF BOND BOND PREMIUM

ACCOUNTABILITY ACCOUNTABILITY
5.001.00 9.000.00 75% of their Total Cash Bond Premium shall not be less than
Accountability P150
9,001 .00 1 2,000.00 9,000.00 150.00
12,001.00 1 5,000.00 1 1,250.00 168.75
1 5 ,001.00 1 8,000.00 13.500.00 202.50
1 8 ,001.00 2 1.000.00 16.750.00 251.25
21,001.00 25,000.00 18.900.00 283.50
25,001.00 30,000.00 22.500.00 337.50
30,001.00 35.000,00 26.250.00 393.75
35,001 .00 40,000.00 30.000.00 450.00
40,001.00 50.000.00 37,500.00 562.50
50.001.00 60,000.00 45,000.00 675.00
60.001.00 80.000.00 60,000,00 900.00
80.001.00 1 00,000.00 75,000.00 1,125.00
100,00 1 .00 250,000.00 100.000.00 1.500.00
250.001.00 500.000.00 225,000.00 3.375.00
500,001.00 750,000.00 350,250.00 5,253.75
750,001.00 1,000,000.00 500.000.00 7.500.00
1,000,001.00 2,500,000.00 750.000.00 11,250.00
2.500,001.00 5,000.000.00 1,500.000.00 22,500.00
5.000.001.00 25,000,000.00 3.500,000.00 52.500.00
25,000,00 1.00 75,000,000.00 4,000.000.00 60,000.00
75,000,001.00 100,000.000.00 5,000,000.00 75.000.00
II. PROPERTY ACCOUNTABILITY
1. GovernmenI Securities 30% of their Total Value 30% of x 1.5% = Premium x

2. Equipment their Total Value 50% of their Total 1.5% - Premium x 1.5% =
3. Supplies and Materials Value Premium
III. FOR ACCOUNTABLE FORMS
a) Internal Revenue Stamp i) Motor Vehicle License

b) Documentary Stamp j) Other Accountable Forms 10% of their Total Value
c) Customs Documentary Stamp having face value rounded off to the
d) Cash Tickets nearest hundred
e) Postage and othei Stamp Stocks
f) Cattle Registration Certificates
g) Marriage Certificates
h) Auto Driver Certificates
x 1.5% = Premium
P a g e | 59
Annex D
AGENCY LETTERHEAD
LIST OF
ACCOUNTABL
E PUBLIC
OFFICERS
(FOR NEW
APPLICANTS)
NAME OF PUBLIC OFFICER DESIGNATION AMOUNT OF (wn REMARKS

ACCOUNTABILITY CASE, STAT
Prepared by: Certified and Approved by:
Signature over Name & Designation of Authorized Officieal

printed name
Annex F
AGENCY LFTTERHEAD
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L
I
S
T
O
F
B
O
N
D
E
D
P
U
B
L
I
C
O
F
F
I
C
E
R
S
(
P a g e | 61
F
O
R
R
E
N
E
W
A
L
)
NAME OF PUBLIC OFFICER DESIGNATION EFFECTIVE DATE RISK AMOUNT PREMIUM REMARK
From To
NO. OFBOND CASE, ST
Prepared Certified and Approved by:

by:
Signature Name & Designation of

overprinted Authorized Officica)
name
NOTICE OF DISHONOR
Sir/Madam:
P a g e | 62
You are hereby notified that your (name of bank) Check No.________________________dated
_____________, 20____, in the amount of P_________________paid to us and acknowledged by our
Official Receipt No._________________dated________________, 20____has been deposited but was
dishonored and returned to us due to______________________________________.
In view thereof, we have, today, reversed the payment recorded and reinstated your liability in the same
manner as if you had never tendered any payment.
Please settle your account in cash or by certified check to the undersigned within five days from receipt of
this notice. Otherwise, we will be constrained to institute criminal action against you as may be warranted under
Article 315 of the Revised Penal Code and Batas Pambansa Blg. 22.
Very truly yours,
(Head of Agency)
By:
(Collecting Officer)
Note: The last paragraph applies only to cases where the cause of the dishonor of the check is lack or insufficiency of
funds. Where the check is dishonored by reason of defect in form, such as incomplete signature or the like,
the following paragraph should be used in lieu of the aforementioned last paragraph.
Please settle your account in cash or by certified check to the undersigned within three days from receipt of
this notice. Otherwise, we will be constrained to initiate appropriate action to enforce our claim.
P a g e | 63
COMMISSION ON AUDIT CIRCULAR NO. Ql'H'l
TO : AH Heads of Departments, Bureaus, Offices,

Agencies and Instrumentalities of the National Government, Heads of
Local Government Units, Managing Heads of Government-Owned or Controlled
Corporations, including their Subsidiaries, COA Directors, COA Auditors,
and All Others Concerned.
SUBJECT : RESTATEMENT WITH AMENDMENTS OF THE RULES AND REGULATIONS ON THE GRANTING,
UTILIZATION AND LIQUIDATION OF CASH ADVANCES PROVIDED FOR UNDER COA
CIRCULAR NO. 90-331 DATED MAY 3, 1990.
1. RATIONALB
The resort to the cash advance system despite certain problems has been
recognized as a facilitative tool in the financial operations of the government.
There is therefore a need to continually update the pertinent regulations in order
to provide for a more efficient and effective control over the granting,
utilization and liquidation of cash advances.
2. GENERAL PRINCIPLES
Ideally, cash should be handled under the general principles of

the imprest system, to wit:
1. Daily receipts on collections must be deposited intact with

the proper bank.
2. All payments must bo made by check.
3. Only payments in 3mall amounts may be made through the petty cash fund.
Replenishment of the petty cash fund shall be equal to the total amount of expenditures
made therefrom.
In practice, however, ther<? are certain instances when it may be very

difficult, impractical or impossible to make payments by check. In such a case,
payments may be made by the disbursing officer in the form of cash through his
cash
advance.
P a g e | 64
3. DEFINITIONS AND SCOPE
Cash Advances shall be of two types, namely, the regular cash advances, and the
special cash advances.
3.1 Regular cash advances are those granted to cashiers,

disbursing officers, paymasters, and/or property/supply
officers for any of the following purposes:
3.1.1 Salaries and Wages

3.1.2 Commutable allowances
3.1.3 Honoraria and other similar payments to officials and employees
3.1.4 Petty operating expenses consisting of small payments for maintenance

and operating expenses which cannot be paid conveniently by check or are required to be
paid immediately.
3.2 Special cash advances are those granted on the explicit

authority of the Head of the Agency only to duly
designated disbursing officers or employees for other
legally authorized purposes, as follows:
3.2.1 Current operating expenditures of the agency field office or of the activity
of the agency undertaken in the field when it is impractical to pay the
same by check, such as -
Salaries, Wages and Allowances
Maintenance and other operating expenses
Travel expenditures, including transportation fare, travel allowance,

hotel room/lodging expenses and other expenses incurred by officials
and employees in connection with official travel.
4. GRANTING AND UTILIZATION OF CASH ADVANCES 4.1 General
Guidelines
4.1.1 No Cash advance shall be given unless for a legally specific

purpose.
4.1.2 No additional cash advances shall be allowed to any official

or employee unless the
previous cash advance given to him is first settled or a proper

accounting thereof is made.
4.1.3 A cash advance shall be reported on as soon as the purpose for which it
was given has been served.
P a g e | 65
4.1.4 Only permanently appointed officials shall be designated as disbursing
officers. Elected officials may be granted a cash advance only for their official
traveling expenses.
4.1.5 Only duly appointed or designated disbursing officers may perform

disbursing functions. Officers and employees who are given cash advances for official
travel need not be designated as Disbursing Officers.
4.1.6 Transfer of cash advance from one Accountable Officer (AO) to another
shall not be allowed.
4.1.7 The cash advance shall be used solely for the specific legal purpose
for which it was granted. Under no circumstance shall it be used for encashment of
checks or for liquidation of a previous cash advance.
4.1.8 The Accountant shall obligate all cash advances granted. He shall see that
cash advances for a particular year are not used to pay expenses of
other years.
4.2 Salaries, Wages, Allowances, Honoraria and Other Similar Payments
4.2.1 The cash advance shall be equal to the net amount of the payroll
for a pay period.
4.2.2 The cash advance shall be supported by the following documents:
Copy of designation by the Agency Head in case the AO is not a

disbursing officer by appointment (attachment to initial cash
advance)
Copy of approved application for bond (attachment to initial cash

advance)
Payroll or list of payees with their net payments
4.3 Petty Operating Expenses
4.3.1 The cash advance shall be sufficient for the recurring expenses of the
agency for one month. The AO may request replenishment of the cash advance when the
disbursements reach at least 75%, or as the need requires, by submitting a
replenishment voucher with all supporting documents duly summarized in a report of
disbursements.
4.3.2 The cash advance shall not be used for payment of regular expenses,
such as rentals, subscriptions, light and water and the like. Payments out of the cash
advance shall be allowed only for amounts not exceeding P-15,000.00 for each
transaction, except when a higher amount is allowed by law and/or specific authority by
P a g e | 66
the Commission on Audit. Splitting of transactions to avoid exceeding the ceiling shall
not be allowed.
4.3.3 The cash advance shall be supported by the following documents:
Copy of authority by the Agency Head (attachmant to initial cash

advance)
Copy of approved application for bond (attachment to initial cash

advance)
- Estimate of expenses
4.4 Field/Activity Current Operating Expenses (COE)
4.4.1 The special cash advance shall be used to pay the salaries and wages
of the employees and the miscellaneous operating expenses of the activity. Payment for
each transaction shall not be subject to amount limitation. However, all payments shall
be approved by the Director/Head of Field Office.
4.4.2 The amount of the cash advance shall be limited to the requirements
for two months. Within 5 days after the end of each month, the AO shall submit a Report
of Disbursements. Additional cash advances shall be granted on the basis of the
activity budget or the requirements for two months, whichever is lower.
• r
4.4.3 The cash advance shall be supported by the
following documents:
Copy of authority by the Agency Head

(attachment to initial cash advance)
Copy of approved application for bond

(attachment to initial cash advance)
Budget for COE of the Agency field office or

agency activity in the field.
4.5 Official Travel
4.5.1 The grant of cash advance for both official local and
foreign travel shall bo governed by the provisions
of COA Circular No. 96-004 dated April 19, 1996.
5. LIQUIDATION OF CASH ADVANCES
5.1 The AO shall liquidate his cash advance as follows:
Salaries, Wages, etc. - within five ( 5 ) days after each

fifteen (15) day/end of the month pay period.
5.1.1
Petty Operating Expenses and Field Operating Expenses
- within twenty (20) days after the end of the year;
subject to replenishment as frequently as necessary
during the year.
5.1.2
Official Travel - within sixty (60) days after return
to the Philippines in the case of foreign travel or
within thirty (30) days after return to his permanent
official station in the case of local travel, as
5.1.3
provided for in EO 248 and COA Circular No. 96-004.
Failure of the AO to liquidate his cash advance

within the prescribed period shall constitute a valid
cause for the withholding of his salary and the
institution of other sanctions as provided for under
paragraphs 9.2 and 9.3 hereof.
5.2 The AO shall prepare the Report of Disbursements (using

Gen. Form No. ________) in three (3) copies and submit the
same with duly accomplished vouchers/payrolls and supporting
documents to the Accountant. For payments based on receipts
and invoices only, he shall also
prepare a liquidation voucher which shall be submitted with the
report and supporting documents to the Accountant. He shall ensure
that receipt of the report is properly acknowledged by the
Accountant. The AO shall be deemed to have complied with the
requirement of proper accounting for the cash advance upon the
receipt by the Accountant of the liquidation documents referred to
above.
5.3 Within ten (10) days after receipt of the report and supporting
documents from the AO, the Accountant shall verify the report, record it
in the books and submit the same with all the vouchers/payrolls and
supporting documents to the Auditor. The cash advance shall be
considered liquidated upon the recording thereof by the Accountant in
the books of accounts although not yet audited by the COA auditor.
5.4 Within thirty (30) days from receipt of the report and supporting
documents from the Accountant, the Auditor shall complete the audit. He
shall issue the corresponding Credit Notice to the AO to inform the
latter of the amount allowed in audit and any suspensions and/or
disallowances made. In case of disallowance, a copy of the Credit Notice
shall be furnished the Accountant who shall record the restoration of
the cash advance for the amount disallowed. The amount allowed in audit
by the Auditor as contained in the Credit Notice shall be deemed to have
been settled.
5.5 The AO shall submit to the Auditor the documents to settle his
suspensions/disallowances. When the documents are found in order, the
Auditor shall lift the suspension and/or issue another Credit Notice for
the settled disallowance, copy furnished the Accountant who shall draw a
Journal Voucher to record the credit to the cash advance. In case of
cash settlement, the AO shall present the necessary Official Receipt to
the Auditor for notation.
5.6 The Credit Notice issued by the Auditor to the AO shall be deemed
sufficient compliance with the requirements of COA Circular No. 94-001
dated January 20, 1994 (Prescribing the Manual on Certificate of
Settlement and Balances, Revised 1993).
5.7 When a cash advance is no longer needed or has not been used for a
period of two (2) months, it must be returned to or refunded immediately
to the collecting officer.
5.8 All cash advances shall be fully liquidated at the end of each
year. Except for petty cash fund, the AO shall
refund any unexpended balance to the Cashier/Collecting Officer
who will issue the necessary official receipt.
5.9 At the start of an ensuing year, a new cash advance may be granted,
provided that a list of expenses against the previous cash advance
is submitted. However, when no liquidation of the previous cash
advance is received on or before January 20, the Accountant shall
cause the withholding of the AO's salary.
5.10 The following reports and documents are required to

support the liquidation:
5.10.1 Salaries, Wages, etc. - Report of Disbursements with

all duly signed payrolls and/or vouchers and all pertinent supporting
documents, such as daily time records, approved leaves of absence, etc.
5.10.2 Petty Operating Expenses
Report of Disbursements with supporting

documents
Approved Requisition and Issue Voucher with the

Certificate of Emergency Purchase, if necessary
Receipts, sales invoices
Certificate of Acceptance/Inspection
Duly approved trip ticket, if for gasoline
Such other supporting documents as are required

by the nature of the expense
5.10.3 Current Operating Expenditures
Same requirements as those for salaries, wages,

etc. and petty operating expenses,
supra.
- Canvass of at least three suppliers (Not

required if purchase is made while on
______ official travel)
r! 5 . 1 0 .4 J Official Travel
---- - documents required to support the
liquidation of cash advance for official
travel, both foreign and local, shall be as
specified under COA Circular Mo. 96-004.
6. HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK
6.1 A newly-appointed or designated AO shall start with a new

cashbook. Before discharging his duties, the new AO shall be briefed by
the Accountant and the Auditor on the proper recording of the
transactions and other matters related to his work.
6.2 The AO shall maintain separate cashbooks for salaries, wages,

allowances, etc. and for petty operating expenses. The AO shall record
the transactions in the prescribed cashbook daily. He may record each
invoice/receipt/ voucher individually or the total disbursements for the
day depending on the volume of the transactions.
6.3 The AO shall reconcile the book balance with the cash on hand
daily. He shall foot and close the books at the end of each month. The
AO and the Accountant shall reconcile their books of accounts at least
quarterly.
6.4 The cashbooks shall be kept at the Office of the AO and then
placed inside the safe or cabinet when not in use. It may be taken from
his custody only by the Auditor or an official duly authorized by the
Agency Head, who shall issue the necessary receipt.
(5.5 When the AO ceases to be one, the cashbook shall be submitted

to the Accountant or the Treasurer (for local government
units) and shall form part of the accounting records. No
clearance shall be issued to an AO if he fails to submit the
cashbook as required.
7. BONDING OF ACCOUNTABLE OFFICERS
7.1 Each accountable officer with a total cash accountability of

P2,000.00 or more shall be bonded. The amount of bond shall depend on
the total accountability of the officer as fixed by the Head of the
Agency. An official or employee who has both money and property
accountability, shall be bonded only once to cover both
accountabilities, but the amount of the bond shall be in accordance with
the Schedule.
7.2 The bonding requirements are as follows:
7.2.1 Appointment and/or designation as accountable

officer;
7.2.2 Written character references by at least three officials of
the Agency one of whom is the Administrative and/or Legal
Officer, other than the official who appointed/designated
him.
7.2.3 Statement of assets and liabilities as of the end of the

preceding year;
The foregoing documents shall be submitted, together with the

application for bond, to the Fidelity Bond Division of the
Bureau of the Treasury.
7.3 When the accountability is increased, the Accountant shall

ensure that additional bond is applied for.
7.4 When the AO ceases to be one, the Accountant shall immediately

inform the Fidelity Bond Division of such cessation.
7.5 The amount of bond necessary for the cash accountability of

the AO shall be in accordance with the schedule of cash accountability
and bond issued by the Bureau of the Treasury.
8. RESPONSIBILITY OF THE AGENCY HEAD
It shall be responsibility of the Head of the Agency to ensure

the proper granting, utilization and liquidation of all cash
advances in accordance with these rules and regulations.
9. DUTIES AND RESPONSIBILITIES OF THE COA AUDITOR
9.1 The Auditor shall periodically evaluate the accountability of

the AO and recommend reduction of the cash advance if found excessive.
9.2 Cash Examination
9.2.1 The Auditor shall conduct an examination of the

accountability of each AO at least once every semester or
as existing regulations of the COA require.
9.2.2 The Auditor shall demand the presentation by the AO of his

cashbook, cash and cash items for examination. Failure by
the AO duly forthcoming any public funds with which he is
to have chargeable, upon demand by the Auditor
shall be prima facie evidence of misappropriation.
9.2.3 The Auditor shall exclude from among the cash items
presented any accommodation checks, "vales", IOUs,
chits or other forms of promissory notes and should not
accept them as credit to the account.
9.2.4 The Auditor shall at once demand in writing the

production of the missing funds at the moment the shortage or loss is
discovered and established. The granting of a grace period for the
restitution is not allowed by law.
9.2.5 The Auditor shall submit the cash examination report,

together with all the working papers/evidences disclosing the shortage,
to the Provincial/City Auditor (if the offense is committed in an LGU)
or to the COA Director concerned for the filing of criminal proceedings
in accordance with COA Memorandum No. 83-81B, COA Memorandum No. 90-660
and paragraphs 3.1 and 3.2 of COA Memorandum No. 95-112 dated December
26, 1995.
9.3 During periods where no cash examination is conducted.
9.3.1 Upon failure of the AO to liquidate his cash advance

within two (2) months for AOs holding office within the station and
three (3) months for AOs outside the station from date of grant of the
cash advance, the Auditor shall issue a letter demanding liquidation or
explanation for non-liquidation.
9.3.2 If thirty (30) days have elapsed after the demand

letter is served and no liquidation or explanation is received, or the
explanation received is not satisfactory, the Auditor shall advise the
head of the agency to cause or order the withholding of the payment of
any money due the AO.
9.3.3 The AO shall likewise be held criminally liable for

failure to settle his accounts. For this purpose the Auditor shall:
9.3.3.1 Execute an affidavit stating the nature/
purpose of the cash advance; the amount not
liquidated/accounted for; the fact that
no liquidation
or explanation has been submitted despite demand or if
explanation has been submitted, the same is not
satisfactory; the date the letter of demand was served on or
received by AO; and other information which may be pertinent
to the case.
9.3.3.2 State in the affidavit the violation

of the provisions of Section 89 of
PD 1445 and the penal provisions
under Section 128 of the same law,
both of which are herein quoted in
full to wit:
"Section 89. Limitations on Cash Advance. - No cash

advance shall be given unless for a legally authorized
specific purpose. A cash advance shall be reported on and
liquidated as soon as the purpose for which it was given has
been served. No additional cash advance shall be allowed to
any official or employee unless the previous cash advance
given to him is first settled or a proper accounting thereof
is made.".
"Section 128. Penal Provision. - Any violation of the

provisions of Sections xx 89., xx of this Code or any
regulation issued by the
Commission_______implementing_______these
sections, shall be punished by a fine not exceeding one
thousand pesos or by imprisonment not exceeding six (6)
months, or both such fine and imprisonment in the discretion
of the court." (Underscoring ours).
9.3.3.3 The affidavit shall be submitted to

the COA Director concerned who shall
refer the case to. the appropriate
Office of the Deputy Ombudsman, if
the. offense is committed in the
regions or to the COA Legal Office
for the filing of criminal
proceedings, if the offense is
committed within the Metropolitan
Manila Area, in accordance with
paragraphs 3.1.1 and 3.2, respectively,
of COA Memorandum No. 95-112 dated
December 26, 1995.
10. COVERAGE
This Circular shall cover only cash advances granted to

officials and employees of an agency and shall not apply to funds
transferred from a Source Agency to an Implementing Agency. The
rules and regulations on the granting, utilization and liquidation
of funds transferred from a Source Agency to an Implementing
Agency are stated in COA Circular No. 94-013 dated December 13,
1994.
11. REPEALING CLAUSE
All Circulars, Memoranda, rules, regulations and other

issuances inconsistent herewith are hereby repealed, amended or
modified accordingly.
This Circular shall take effect five (5) days after its
publication in the Official Gazette or newspaper of general
circulation.
ROGELIO B. ESPIRITU
Commissioner SOIRONIO 0 . USSAL

Commissioner
Mfi
fBE /cgc
a:[wp6Ja-90-331
CH No.
Date
CREDIT NOTICE
TO:
Sir/Madam:
Please be advised that the Report of Disbursements/Settlement of

Suspensions/Disallowances submitted to this Office to liquidate
your cash advance in the amount of P-________________ granted per check
no. ____________ dated ■____ has been audited. Credit to the
cash advance is allowed for P-_________ with suspensions of
P___________and disallowances of P________________.
The details of the suspension and disallowances are:
Particulars Suspension Disallowances Reasons
Immediate settlement disallowances

is requested.
of the foregoing
suspensions/
Received by/Date
Very truly yours,

Accountable Officer
General Form No.
Date: _________
REPORT OF DISBURSEMENTS BY DISBURSING OFFICER

(Replenishment/liquidation of cash advance
for _______________________________)
Date ! Payee [ Reference | Expense Item !

Amount
TOTALS
CERTIFICATION
I certify that this Report of Disbursements in ___________ copies

is a full, true and correct statement of the disbursements made by me
and that this is in liquidation of the cash advance granted last
_______________, 199___ in the amount of P.__________________ per check
no. _____________ .
Accountable Officer
Accounting Entry:
P E T T Y E X P E N S E
O P E R A T I N G S
A Acco
c unt
Code
Debi
t
Cred
it
1 enishmen
. t
G
r
a
n
t
i
n
g
2
.
R
e
p
l
77
Appr Cash-Disbursing b
opri Officer . Obligation
atio s
5,000
ns Cash-Treasury S Liquidated
Allo u 0-83-000
Account
tted Current, Check c 4,800
/ Disburse- c Cash
Ex ments e Disbursing
pe e Officer 8-
5,000
nd d 70-500
it i 4,800
Obligations
ur n
es Liquidated g Cash
2,600
Cash-Disbursing Collecting
90 Y Officer 8-
- Officer e 70-400
2,600 200
00 a Cash
0 r Disbursing
Appropriations
Allotted/ Officer 8-
5, Expenditures 70-500 200
00
000
0 Appropriat
Obli Obligations
Incurred ions
gati Allotted/
ons 2,600
Expendit
Incu ures 0-
rred Cash Disbursing
Officer 90-000
2,600 (200)
82- Obligation
000 Cash-Treasury
Account s
Current-Check Incurred
5,00 Dis- 0-82-
0 bursements (200)
707
Payables-
3. ation a. Current Unliquidat
ed
Full Year Obligat
ions 8-
Liquid 81-400
4,800
Cash-
Disbursing
Officer 8-
70-500
4,800
78
Cash- j LI
Collec u QU
ting s ID
Office t AT
r m ED
400 e IN
Cash- n FU
Disbur t LL
sing s
Office -
r E
500 x
c
Payabl e D
es- s i
allo
Unliqu s i e
1 wanc
idated es
Obli C .
gati e q f
r 4a
ons G
t ll
r u u ow
81- i
a an
400 f
i n ce
c t i n Be
Su
r a i co
p t n me
l i g d d s
u o Fi
s n na
to Accounts a l
A Payable an
d d
t Ex
3 ec
. ut
i or
2
y
C
S Title
. o
B
A
n w C
i O
t C
OTHER CASH L R h A
ADVANCE WHICH E
SHOULD BE x
79 O
Cont
inge 0- Cred oouoofc
nt it 5,000
Asse 82-
ts
-Cla 000
ims 5,00
for 8-70- 4,800
Disa 500 8-
llow 70-707 0
ed 200
Paym
ents 5,00
, 0-83- (200)
Disa 000
llow 8- 0
ance 70-
500
Cont (300)
inge 8-70-
nt 400 4,80
Surp 8-
lus 70-
500 300
0
Acco
0-90-
unt 000 20
Code 0- 3
82- 0
Debi 0
000 0
t 0-83-
000 (200
0- 8-
70-
90- 500
)
000
8-74- (300
5,00
700 8-
)
0
96-000
80
Annex D
^Republic of ilje JllitUpp
COMMISSION ON AUDIT
(ttommimfaealfl| JVbeiute, (Quezon (tttty, |3lftltpptne
CIRCULAR
No.
J UL 1 3- 2006
TO: All Heads of Departments, Bureaus, Offices, Agencies and Instrumentalities of the National
Government, Heads of Local Government Units, Managing i Heads of Government-Owned
Or Controlled' Corporations, including their Subsidiaries, COA Directors, COA Auditors,
and All Others Concerned.
AMENDMENT TO ITEM 7.1 OF COA CIRCULAR NO. 97-002 DATED FEBRUARY

SUBJECT: 10, 1997 ON THE GRANTING, UTILIZATION AND LIQUIDATION OF CASH
ADVANCES.
In order to be attuned with | the times and to rationalize the requirement on the posting of fidelity bond
by accountable officers to realistic levels, Item 7.1 of COA Circular No. 97-002 dated February 10, 1997 is
hereby amended to read as:
.1. Each accountable officer whose total cash accountability is

"7
not less than P'5,000 shall be bonded. The amount of bond shall
depend on the total accountability of the officer 1 as fixed By the
Head of the Agency. An official or employee who' has both
money and property accountability shall 1 be bonded only once to
cover both accountabilities, but the amount of bond shall be in
accordance with the Schedule issued by the Bureau of Treasury."
Any circular or directive in conflict herewith is hereby amended/modified accordingly.
This Circular shall take effect upon its publication.

General Form No.
74(A)
Republic of the Philippines Anne
COMMISSION ON xE
AUDIT
REPORT OF CASH EXAMINATION

Name of Accountable Officer: Position/Designation:
Agency: Station:
Maximum Cash Amount of Risk No. jEffective Date:
Accountability: Bond: |
Auditor/Exam iner: Official Designation:
A. CASH PRODUCTION NOTICE

TO: Accountable Officer: Position/Designation: Date:
DEMAND, is hereby made that you produce all your cash, checks, money orders, cash items, paid vouchers, and/or unused accountable
forms, etc.,
for which you are officially accountable as______________________of the_______________________and any fund, checks, and/or cash
items in your possession held
by you for deposit and safekeeping.
NOTED AND Accountable Officer's Signature: Date: Auditor/Examiner's Signature:

COMPLIED I
WITH
B. CASH
COUNT
TOTAL INVENTORY OF CASH AND/OR ALLOWED CASH ITEMS
(TO D) C. INVENTORY OF UNUSED ACCOUNTABLE FORMS
With Money Value Without Money Value

Name of Qty Inclusive Serial Denominati Amount Name of Qty. Inc. Serial
Form No. on Form No.
Total
BY CbKlib'Y on.my ollicial oath: (1) that upon demand by the AuditorAbxaminer 1 produced all my cash, checks,
orders, cash items, paid vouchers, unused accountable forms, etc., for which I am officially accountable; (2) That the
ry of such cash items and unused accountable
n my possession and produced to the Audi tor/Exam iner at the time of cash count today, 20is correctly stated above
roken!
s follows: Cash and/or cash items
Unused accountable forms with
money value Unused accountable
forms without money value
C E R T I F I C A T I O N
of was disallowed by the Auditor/Examiner and (3) That said cash, checks, money orders, cash items, paid vouchers,
which unused accountable
P
forms, etc., were returned to me intact after the cash count.
Accountable Officer's Signature: Position/Designation: Agency/Station:
SIGNED IN THE PRESENCE OF:

Witness' name and signature: Witness' name and signature:
D. STATEMENT OF ACCOUNTABILITY
Nature of Funds 0) (2) (3) (4) (5) (6)
Balance, Last Examination (Date)
ADD: Debits to Accountability
Total Debits to Accountability
LESS: Credits to Accountability
Total Credits to Accountability
Balance of Accountablity as of
Inventory of Cash and/or Allowed Cash Items
Shortage or (Overage)
CERTIFICATION f
I HEREBY CERTIFY that my accountability for the above funds of
at the time of examination on 20 is correctly stated above totalling P
Accountable Officer's Signature: Position/Designation: Agency/Station:

I HEREBY CERTIFY that the preceding is a true and correct report of the examination of the cash and accounts of:
Name of Accountable Officer: Position/Designation: Agency/Station:
Remarks:
Signature of Auditor/Examiner: Date:
1. This form will be used for the examination of all cash accountable officers in the corporate, national and local government office
2. Before proceeding to conduct an examination, the examiner should thoroughly familiarize himself with the revised manual on ca
3. The six (6) columns on the face hereof are left blank to meet all fund requirements.
4. If space provided for is not enough, use it as summary only and support it with schedules.
5. Only reports showing a discrepancy in the accountability of the AO should be forwarded to respective Cluster/Regional Directors
In the event of shortage, the procedures for reporting and initiation of action outlined under the Revised CEM should be strictly fo
6. Checks, treasury warrants, money orders, and other cash items shall be listed on the space for Inventory of Cash Items.
Name of Agency___________________________________
Address __________________________________
Audit Period ____________________________________
INTERNAL CONTROL QUESTIONNAIRE
This questionnaire is so worded that an affirmative answer will indicate soundness of the situation
covered by the question. The answers should indicate how things are done and not how they are supposed to be
done.
No. Control Activities YES NO REMARKS
SCW CC
A. General Information
1 Is the accountable officer appointed or designated as such?
2 Is the accountable officer given instructions regarding his/her
duties and responsibilities?
3 Is the employee handling cash adequately bonded? If so, how
much?
4 Does he have a signature and handwriting specimen card?
5 Has he submitted his photographs to COA?
6 Does the accountable officer keep a file of COA regulations and
other existing rules pertaining to his/her work?
7 Are the office properly enclosed and the Cashier amply protected
against intrusion by unauthorized persons?
8 Is the accountable officer or other employee handling cash
provided with safe?
9 Is the combination of the safe changed whenever there is a change
of custodian?
10 Are duplicate combinations of the accountable officer's safe on
file with an authorized officer?
11 Does the AO refrain from acting as Cashier or Treasurer of
savings and loan association, etc. at the same time?

SCW CC
12 Are the employees of the Cashier's Office denied access to, or
responsibility over accounting records, especially those related to
cash?
13 Is access to and responsibility for the fund vested in one person?
14 Does the organization structure provide a clear-cut separation of
cashiering function from accounting function?
15 Does the custodian of the fund have no access to-
a. Cash receipts?
b. General accounting records?
16 Does he avoid access to or responsibility over the accounting
records, related to cash (such as subsidiary ledger of accounts
receivables)?
17 If custodian of other funds, are they segregated and accounted for
separately?
18 Are surprise cash examinations conducted frequently by internal
and external auditors?
19 Does he keep a cashbook?
20 Are transactions recorded daily?
21 Is the cashbook balance reconciled with his cash on hand at the
close of each day?
22 Are cashbook balances reconciled with the subsidiary ledgers at
least once every quarter?
23 Are accounting records up-to-date?
24 Are subsidiary records maintained for each accountable officer?
25 Are both the totals and details of bank authenticated duplicate
deposit slips matched by the accounting department against the
corresponding official receipts?
26 Are monthly reports of accountability for accountable forms
prepared and submitted?
SCW CC
27 Are unused official receipts and other accountable forms properly
controlled as to ordering, storing and issuing, and are adequate
records kept of them?
B. Collection
1 Are official receipt booklets used?
2 Are the booklets issued in numerical sequence?
3 Are the official receipts pre-numbered?
4 Are official receipts issued for every receipt of payment?
5 Are official receipts issued in numerical sequence?
6 Are official receipts promptly issued for collections received?
7 Is the form of payment indicated in the receipts?
8 Is the numerical sequence of issued officials receipts and booklets
checked by the accounting department?
9 Is a register of forms maintained? If so, is it kept up-to-date?
10 Are unused booklets physically safeguarded? State how?
11 Is it the practice of the collecting officer not to accept post-dated
checks in payment of charges or fees?
12 Is the cashing of checks from collections prohibited? If not:
a. Is the prior approval of authorized person required
before a check is cashed?
b. Are such checks deposited promptly?
13 Does the collecting officer refrain from using the collections for
paying obligations of whatsoever?
14 Are reports of collections submitted at the end of the month?
15 Is the cashbook balance compared daily with the cash on hand?
SCW CC
16 Are collections deposited intact and as frequently as required by
regulations?
17 Is the person making deposit escorted by armed guards and
provided with transportation equipment?
18 Are all checks endorsed for deposit and deposited in appropriate
banks?
19 Are such checks deposited promptly?
20 Are items of deposit subsequently dishonored by the depository
bank promptly adjusted in the collecting officer's records?
21 Are totals of bank-authenticated deposit slips compared with the
debit to respective bank accounts in the book of original entry?
22 Are acknowledged deposits or deposits in transit invariably
cleared the following months?
23 Are collections and deposits recorded daily in the cash book?
24 Is reconciliation made quarterly of the collecting officer's book
balance and the accounting subsidiary ledger balance?
25 Is the collecting officer closely supervised by a responsible officer
of the agency?
By mail
26 Is the mail opened by an employee who is independent of either
the Cashier's Office or the Accounting Office?
27 Are mail remittances recorded or listed by the person opening the
mails? If so, is the record or list given to someone other than the
collecting officer for follow up to see that all mail remittances
have been receipted for and deposited?
SCW CC
28 Is the foregoing information considered adequate as basis for our
evaluation of internal auditing procedures, accounting controls or
other circumstances that mitigate any weaknesses indicated
above, or in that there are no other circumstances that impair any
controls?
29 List down any additional controls and/or weaknesses not covered
by the foregoing questions and/or answers?
Foreign currency
30 Are receipts of foreign currencies and checks authorized?
31 Are only authorized foreign currencies and checks accepted for
payment?
32 Are the kind, quantity, serial numbers and amount of foreign
currencies and checks indicated in the receipts and deposit slips?
33 Are control mechanisms in place to prevent receipt of counterfeit
foreign currencies and checks?
C. Disbursement
By Checks
1 Are all payments except petty fund disbursements and payroll
made by checks?
2 Are checks pre-numbered?
3 Are checks issued in numerical sequence?
4 Is the stock of unused checks accessible only to the custodian and
to those who prepare and sign checks?
5 Are all checks drawn countersigned by another
responsible official?
6 Is the bank furnished of the name and specimen signatures of
officials authorized to sign checks?
SCW CC
7 Is the signing of checks limited to officers or employees who have
no access to accounting records or to cash?
8 Are all checks for signature and countersigning always
accompanied by approved vouchers and supporting papers?
9 Are disbursement vouchers (DVs), supporting documents and
account distribution reviewed by an authorized accounting staff?
If so, is the covering voucher signed by the person who made the
review?
10 Are DVs and other supporting documents reviewed by at least
one signatory preparatory to the signing of the check?
11 Is the signing and countersigning of checks in advance or in blank
prohibited?
12 Is the drawing of checks to "Cash" or "bearer" (except for
revolving funds replenishments and payroll) prohibited?
13 Are voided or spoiled checks properly cancelled and held
available for subsequent inspection?
14 Are the supporting documents stamped "Paid" or marked with
similar indications immediately after the check is signed to
prevent their possible reuse?
15 Are checks drawn recorded promptly?
16 Is the payee's signature or receipt secured before check is
delivered?
17 Are bank accounts reconciled at least once each month?
18 Are bank statements and paid checks all sealed by the bank and
delivered directly to the person preparing the reconciliation?
19 Is the reconciliation done by an employee whose duties do not
involve:
a. Signing the checks?
b. Recording cash transactions?
c. Handling cash?
SCW CC
20 Does the person who reconciles bank accounts, accounts for all
check numbers, examines signatures, endorsements, payee's name
and date, compare these with the records?
21 Are checks bearing improper endorsements returned to the bank
for corrections?
22 Are long outstanding checks properly followed up and controlled?
23 Are "stop payments" on outstanding checks properly controlled?
24 Are reconciling items systematically followed up and promptly
cleared?
By Cash Advance
25 Are all advances properly authorized and not excessive in
amount?
26 Are all previous advances liquidated before a new cash advance is
given?
27 Are advances liquidated by the officials within a reasonable time
after the purposes of such advances have been accomplished?
28 Are cash advances always supported by approved vouchers and
supporting documents?
39 Are expense vouchers and supporting documents stamped "Paid"
to prevent their possible reuse?
30 Are entries in the cash book up-to-date?
31 Are reports of disbursements regularly submitted?
32 Are subsidiary records for cash advance kept and reconciled with
the control account periodically?
33 Is there confirmation of outstanding balances at least once a year?
34 Is the foregoing information considered adequate as basis for our
evaluation of internal auditing procedures, accounting controls or
other circumstances that mitigate any weaknesses indicated
above, or in that there are no other circumstances that impair any
controls?
SCW CC
35 Are cash advances granted only to authorized
officials/employees?
by the foregoing questions and/or answers.
Petty Cash Fund
1 Are there no cash on hand except for Petty Cash Funds and
remittances received after daily deposit is made?
2 Is the Imprest Fund system used?
3 Is access to and responsibility for the fund vested in one person?
4 If custodian of other funds, are these segregated and accounted for
separately?
5 Does the custodian of the funds have no access to-
a. Cash receipts?
b. General accounting records?
6 Are changes made in the stated amount of the fund authorized?
7 Are funds reimbursement check made payable to the order of the
custodian?
8 Does proper internal audit exists for petty cash vouchers and
supporting documents at the time of reimbursing the fund?
9 Is the fund reasonable in amount?
10 Is there a "Ceiling" for individual payments from the fund/funds?
If so, indicate limits.
11 Are all significant petty cash funds counted periodically on a
surprise basis? Indicate who counts.
12 Is the foregoing information considered adequate as basis for
evaluation on internal control - in that there are no other
additional internal auditing procedures, accounting controls or
other circumstances that impair any controls?
SCW CC
by the foregoing questions and/or answers.
Name of Agency
Name of Accountable officer Reconciliation Statement of

Accountability Name of Fund
Date of Cash Count
Balance per statement of accountability, date of cash count P
Balance per subsidiary ledger, date per certification P

(Please refer to the certification by Accountant) Add(Less):
Reconciling Items
Adjusted balance per ledger, date of count P
Balance per Cash Receipt Record/Cashbook, date of count P
Add(Less): Reconciling Items
Adjusted balance per Cash Receipt Record/Cashbook, date of count P
Prepared by:
Name of Examiner/Auditor
Reviewed by:
Audit Team Leader
Annex"H"
STATEMENT
OF
ACCOUNTABIL
ITY OF
ACCOUNTABL
E FORMS WITH
MONEY
VALUE As of
date of cash
count
Accountable Officer:
Designation:
Agency:
Balance on hand Balance of Accountability

Name of Forms Date of last CE Received Since Issued Since Date of this CE
Qty Serial Number Qty Serial Number Qty Serial Number Qty Serial Number
HEREBY CERTIFY
that the above
Statement of
Accountability for
Prepared by: Accountable Forms With Money
Value is true and correct.
Auditor Date Name of

Date
STATEMENT OF
ACCOUNTABILITY FOR
ACCOUNTABLE FORMS
WITHOUT MONEY VALUE
As of date of cash count
Accountable Officer:
Designation:
Agency:
Balance on hand
Name of Forms Date of last CE Received Since Issued
Qty Serial Number Amount Qty Serial Number Amount Qty Serial Nu
I HEREB
above
Account
Prepared by:
Auditor Date Name of Accountable Officer Date

Annex J
Commission On Audit
(Name of Bank)
Name of Branch ATM

CASH
COUNT SHEET
Denomination Pieces Amount TOTAL
Amount Loaded (FULL) P
Less: Bills Dispensed P
Cartridge A Cartridge
B Cartridge C
Cartridge D
Expected Cash in ATM
Actual Cash Retrieved/Counted
Cash from Reject Bin _________

Cash from Cartridges
Cartridge
A
Cartridge
B
Cartridge
C
Cartridge
D
Total Actual Cash Retrieved/Counted P
Difference (Overage / Shortage) P
I hereby certify that the above listed cash on hand consisting of bills was counted in my
presence and the same was returned to me intact immediately after examination.
Accountable Officer's Signature Auditor/Examiner
Date: Position:
Name of Agency
Bank Reconciliation Statement

Name of Fund Account
Number Name of
accountable officer As of
date of cash count
Balance per bank, date per bank statement Add: P P

Deposit in Transit
Total
Less: Outstanding Checks
Adjusted balance per bank, date of count
Balance per Check Disbursement Record (CDR)

as of date of cash count
Add (Less): Reconciling Items
Adjusted balance per CDR, date of count
Balance per ledger, as certified by the Accountant
Add (Less): Reconciling Items
Adjusted balance per Ledger, date of count P
Prepared by: Name Reviewed by: Audit Team Leader

Position
Annex; L
Republic of the Philippines

COMMISSION ON AUDIT
(COA Office)
LETTER OF DEMAND
Mr/Ms. (Name ofAccountable Officer)

Designation_______________________
Agency__________________________
Address__________________________
Sir/Madam:
This is to inform you that in the examination of your cash and accounts
as (designation) of
(agency name and address) on__________, 20__ it was found that
your cash was short by P_______________. This
shortage was arrived at as follows:
Particulars Cash Advances Total

Balance of accountability as shown by your xxx xxx xxx
cashbook on , 20 certified correct by you and
duly verified by us
Cash and valid cash items produced by you and xxx xxx xxx
counted by us
Shortage xxx xxx xxx
In view of this, demand is hereby made of you to produce

immediately the missing funds stated above. Also, please submit to us
within seventy-two (72) hours a written explanation why this shortage
occurred.
Very
truly
yours,
Audit Team Leader
_____________________, 20_____
Annex; L
(Accountable Officer)
Copy furnished:
Agency Head___________________
Position/Designation_____________
Address________________________
Republic of the Philippines COMMISSION ON AUDIT

________coAOffice)___________
WITHHOLDING ORDER
Date
Agency Head__________________
Position/Designation_____________
Agency_______________________
Address_______________________
Attention: cashier
Sir/Madam:
This is to inform you that upon examination of the cash and

accounts of
______(Name of Accountable Officer)_________,
______(Position/Designation)________________of that office,
conducted on _____________________ , a shortage in his
accountabilities in the amount of
P__________ has been definitely established.
In view thereof and pursuant to Section 37 of P.D. 1445, you

are hereby directed to immediately withhold payment of the salary and
other emoluments due (Name of Accountable Officer) or so much
Annex; L
thereof as may be necessary, and to apply the withheld amounts in full
satisfaction of his afore-specified shortage.
Very
truly
yours
,
By
Auth
ority
of the
Chair
man,
com
missi
on on
Audit
:
A
u
d
it
T
e
a
m
L
e
a
d
e
r
Annex; L
WARRANT OF
&\ Republic of the Philippines JjJ
CONSTRUCTIVE
COMMISSION ON AUDIT
DISTRAINT OF
ffl Commonwealth Avenue, Quezon City
PERSONAL
PROPERTY
TO: Mr./Ms._________________________
Audit Team Leader
Team____, Audit Group_________
Address______________________
Thru: The Cluster/Regional Director
WHEREAS upon evaluation of the report dated_____________________________________on

the shortage discovered in the audit of the cash and
accounts
of (Name of Accountable Officer/Position/Designation) of
_______________________________________________________________(Agency/Address)
in the amount of P________________, and despite prior demand for the
restitution thereof, no
restitution has been made, and as recommended in said report, there is a
need for the constructive distraint of personal property of the said
accountable officer.
NOW, THEREFORE, pursuant to Section 47 of P.D. 1445,

you are hereby directed to place under constructive distraint the goods,
chattels or effects and other personal property of whatever character of
the afore-named accountable officer conformably with the procedural
guidelines prescribed under the Revised Manual on Cash Examination.
And for so doing, this shall be your warrant of which make due service
and make return of your proceedings to me at the Commission.
WITNESS MY HAND and official seal at______________________________, this

________________________________________________________________day of
Annex; L
___________, 20_.
Chairm
an
Copy of this
Warrant of
Contructive
Distraint
received this_______day of
_________________, 20
_________________.
(Name and Signature of Accountable Officer)
(Name and Signature of Witness) (Name

and Signature of Witness)
I HEREBY CERTIFY that on_______________________, 20_, at

_________________________________________________o'clock
A.M. or
P.M., I served a copy of this Warrant of Constructive Distraint upon the
accountable officer.
A
u
d
Annex; L
i
t
T
e
a
m
L
e
a
d
e
r
RETURN OF WARRANT
1.0 Nature of property distrained-----------------------------------------( See

attached list)
2.0 Estimated, assessed, or inventoried value---------------------------P
3.0 Date of constructive distraint-----------------------------------------
Date Audit Team Leader

Annex O
Republic of the Philippines COMMISSION

ON AUDIT
COA Office)
RECEIPT FOR GOODS, ARTICLES, AND THINGS SEIZED UNDER AUTHORITY

OF SECTION 47, PD 1445, OTHERWISE KNOWN AS THE GOVERNMENT
AUDITING CODE OF THE PHILIPPINES
________________________, Philippines________________, 20___, I/WE, the undersigned, hereby

acknowledge to have received from (Name of Examining Auditor, Audit Team/Audit Group/Address), the
following described goods, articles, and tilings:
the same having been this day constructively distrained and left in my/our possession pending the
institution of a criminal complaint for malversation with the Office of the Ombudsman and the preliminary
investigation thereat. I/We further pledge and undertake to faithfully keep, preserve, and to the best of
my/our ability, protect said goods, articles, and things distrained from defacement, leakage, loss, or
destruction in any manner, that I/We will neither alter nor remove, nor permit others to alter or remove, or
dispose of the same in any manner whatever without the express authority of the Chairman, Commission on
Audit and that I/We will produce and deliver all of said goods, articles, and things upon the order or
demand ofthe Chairman or any authorized official ofthe Commission on Audit
Signature of Accountable Officer or person

in possession of properties for Accountable Officer
Address of Accountable Officer or person in

possession of properties for Accountable Officer
Annex O
WITNESSES (That a complete list ofproperties has
been left in the premises in case accountable officer or
possessor refuses to accomplish receipt.)
Note: To be accomplished in sextuplicate

Republic of the Philippines
COMMISSION ON AUDIT
(COA Office)
Date
Hon.__________________________
Deputy Ombudsman for __________
Office of the Ombudsman
Ombudsman Building Agham
Road, Quezon City
Sir:
In the course of the examination of the cash and accounts of (Name of Accountable Officer),
(Designation) , (Name and Address of Agency) , covering
the period_______________to_____________, it was discovered that the said accountable officer
had incurred a shortage in his/her accountabilities in the amount of P_________________________.
On the basis of the documents submitted herewith, we believe that the crime of malversation of
public funds under Article 217 of the Revised Penal Code has been committed and that (Name of
Accountable Officer) is probably guilty thereof.
In view thereof, we are forwarding to your Office the sworn statement/affidavit, with annexes, as
well as the certificate of non-forum shopping of the auditor/audit team who/that conducted the examination
and discovered the defalcation.
Accordingly, we recommend that necessary criminal proceedings be instituted by that Office. The
witnesses and the documentary evidences under our control shall be made available to that Office upon the
issuance of the proper subpoena. Should you find probable cause in filing criminal charge(s) against
(Accountable Officer), we request your good office to please secure the issuance of a hold-departure order
from appropriate government agencies.
Annex O
Please inform us on the action taken hereon and on whether or not the necessary request for a hold-
departure order against (Accountable Officer) has been facilitated by
your end.
We will appreciate your usual preferential attention hereto.
Very truly yours,
FOR THE COMMISSION ON AUDIT
Cluster/Regional Director
REPUBLIC OF THE PHILIPPINES )
(Place of Examination)__________________) S.S.
JOINT AFFIDAVIT
We, (Name of Examining Auditors) , all of legal age, Filipinos, and residents of
________________________________________________________respectively, after having been
duly sworn to in accordance with law, depose and say:
1. That we are presently employed as_______________(Position) and (Position) ,

respectively, of the Commission on Audit (COA) and assigned as
(Designation) and (Designation) of Team____________, Audit Group_______, Province
of___________(or Cluster_______, National/Local/Corporate Government Sector);
2. That we joined COA on________________________and_________________, respectively,

and have, since then, performed various audit engagements including the examination and
post-audit of the cash and accounts of accountable officers in the government;
3. That we know (Name of Accountable Officer) and designated as

_____________________ of (Name and Address of Agency) on (Date of
Designation) ;
4. That on (Date of Examination) , we conducted an examination of the cash and accounts of

(Name of Accountable Officer) ;
Annex O
5. That in the process of our examination of his/her cash and accounts, we found (Name of
Accountable Officer) short of his/her cash accountability by (Amount of Shortage) arrived at as follows:
(Show the computation of the shortage)
6. That a letter of demand dated______________________, 20____, copy of which is hereto

attached as Annex ________, was served to (Name of Accountable Officer) on
_____________ , 20__ , detailing how the shortage was arrived at, and directing
him/her to immediately produce the missing funds and to explain in writing how this shortage
came about;
7. That despite said demand, the shortage remains unaccounted for or unrestituted
up to the present time;
8. That the Report of Cash Examination showing the shortage, its annexes,
appendices and attachments, was submitted to the Cluster/Regional Director,
(Cluster and Sector/Region and Address) , a copy of which is hereto attached
as Annex_____and made integral part of this Joint Affidavit.
IN WITNESS WHEREOF, we have hereunto affixed our signatures below this

_____day of_______________, 20_, at__________________________.
Com. Tax Cert. No._________________

(Affiant) Issued at__________________________
On______________________________
Com. Tax Cert. No._________________

(Affiant) Issued at___________________________
On________________________________
SUBSCRIBED AND SWORN to before me this______________day of________________, 20_,
at ________________________, affiants showing to me their respective Community Tax
Certificates as appearing opposite their signatures.
I HEREBY CERTIFY that I have personally examined the affiants and I am satisfied that they
voluntarily executed and understood the foregoing Joint Affidavit.
Notary Public
Doc No.
Page No.
Book No.
Series of
Note: Additional facts may be alleged or pleaded in the narration of facts as may be required or warranted
by the attendant circumstances.

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;\ Republic of the Philippines JUL 0 9 2013

\.] COMMISSION ON AUDIT

COMMISSION ON AUDIT MEMORANDUM NO. 2013-004

TO : All Assistant Commissioners, Directors, Supervising Auditors, Audit Team

SUBJECT : Prescribing the use of the Revised Cash Examination Manual

C. AUTHORITY TO CONDUCT CASH EXAMINATION

D. FREQUENCY AND EXTENT OF EXAMINATION

In addition to the instances where cash examination is mandatory, the examination of

For purposes of implementation of the revised manual, the balance of accountabilities

E. CASH EXAMINATION REPORT

The result of the examination shall be embodied in a narrative report consisting of

All •issuances inconsistent with this memorandum or the Revised Cash

This memorandum shall take effect immediately.

LAWS AND RULES RELEVANT IN CASH EXAMINATION

Chapter IV PROCEDURES AND TECHNIQUES

1. Illustrative Accounting Entries Annexes

A. Treasury Circular No. 02-2009 - Revised Omnibus Regulations Governing the

1 Intermediate Accounting, Vol. 1, 2007 Edition; Robles andEmpleo

DEFINITION AND OBJECTIVES OF CASH EXAMINATION

Cash Examination Defined

Objectives of Cash Examination

5. verify if accountable forms are duly accounted for.

disbursements made out of the cash advance (Section 40, Ibid).

Section 78(1), Ibid

If the absconding, deceased, incapacitated, or superseded officer is responsible to another who is

9. Government cashiers are prohibited from holding positions as cashiers or treasurers of

savings and loan associations or any other association or organization.

going officer, subject to regulations of the Commission. Liability

13. Expenditures of government funds or uses of government property in violation of law or

Treasury Circular 02-2009 dated 06 August 2009

Section 77, Ibid

Section 105(2), Ibid

Under no circumstance shall the following checks be accepted as payment:

20 Section 67(1) and (3), Presidential Decree No. 1445

24 Section 105, Ibid

CO shall immediately advise the transfer of custody of the check.

29Section 4, Presidential Decree No. 1445

Seizure of Office by Auditor

Retention of Money for Satisfaction of Indebtedness to Government

Constructive Distraint of Property of Accountable Officers

386689 Section 348, Republic Act No. 7160

Section 47, Presidential Decree No. 1445

D. Auditor's Conduct and Behaviour

4. Limit to the minimum his presence in the AO's booth/office.

E. Timing the Examination

1. Maintain the element of surprise in every examination.

F. Frequency of Cash Examination

a. Before the AO retires or is separated from the service;

G. Simultaneous Cash Count

1. Examine simultaneously all funds in the custody of the AO.

H. Accountable Officer's Presence During the Count

I. Sealing of Vault, Safe or Other Cash Receptacles

b. Refusal of the AO to submit himself to cash examination;

c. Interruption or non-completion of the count during the day or the necessity of

d. Death, incapacity, or absconding of the AO.

DO NOT BREAK THE SEAL

(Signature over printed name)

Witnesses to the sealing: