COA - M2013-004 Cash Exam Manual

F
Revised
CASH EXAMINATION
Manual
TABLE OF CONTENTS
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
TABLE OF CONTENTS
Page
Chapter IV
PROCEDURES AND TECHNIQUES
Common Procedures and Techniques 22
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.
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.2
1
Intermediate Accounting, Vol. 1, 2007 Edition; Robles and Empleo
2
Section 2(1), Article IX-D, 1987 Constitution
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.3
SCOPE
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.4
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.
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
Handbook on Cash Examination, November 2002, Professional Development Center, Commission on Audit
2
4. prove the accuracy of the cash balance reflected in the ledger, cashbook 5, cash receipts
record (CRR)6, check disbursements record (CkDR)7, cash disbursements record
(CDR)8, or their equivalents, such as cash receipts register (CRR) 9, petty cash register
(PCR)10, cash disbursements register (CDR)11, 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.
5
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).
Cashbook 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).
6
The 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).
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).
8
The Cash Disbursements Record (CDR) shall be used by the disbursing officer to record the cash advance received and
disbursements made out of the cash advance (Section 40, Ibid).
9
The Cash Receipts Register (CRR) shall be used to record as well as monitor collections and deposits of government units
(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).
10
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).
11
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 of Books of Accounts).
3
Chapter II
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
chief or head of the government agency concerned.12
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.13
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.14
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.15
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 representative16.
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
13
Section 4(4), Ibid
14
Section 102, Ibid
15
Section 64, Ibid
16
Section 78(1), Ibid
4
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
of the committee shall not be conclusive until approved by the latter.17
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.18
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.19
7. An AO shall maintain his cashbook/CRR/CDR/CkDR 20 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 quarterly21, 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.22
9. Government cashiers are prohibited from holding positions as cashiers or treasurers of

savings and loan associations or any other association or organization.23
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.24
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
17
Section 122, Local Treasury Operations Manual
18
Section 78(3), Presidential Decree No. 1445
19
Section 74, Ibid
20
Sections 38-40, MNGAS for NGAs, Vol. II; Sections 26-28, MNGAS for LGUs, Vol. II; COA Circular No. 2003-006
21
Section 181, Government Accounting and Auditing Manual (GAAM), Vol. I
22
23
Section 67, GAAM, Vol. I
24
Section 101, Presidential Decree No. 1445; Section 305(f) R.A. No. 7160; Section 50, Chapter 9, Subtitle B, Book V, EO No.
292
5
A) 25. 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.26
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-
going officer, subject to regulations of the Commission.27
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
responsible therefor.28
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.29
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
loss, while the AO who fails to serve the required notice shall be secondarily liable.30
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.31
25
Treasury Circular 02-2009 dated 06 August 2009
26
27
Section 77, Ibid
28
Section 103, Ibid
29
Section 105(2), Ibid
30
Section 106, Ibid
31
Section 342, Republic Act No. 7160
6
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 production of the
original when this appears to be necessary for the attainment of justice.32
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
liability or allowed credit for any loss in the settlement of his accounts.33
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
receipts35, or electronically generated document acknowledging receipt of payment36,
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
32
33
Section 73, Ibid
34
Section 42, Chapter 7, Title I(B), Book V, Executive Order No. 292
35
36
Section 27(c), Part IV, Republic Act 8792 otherwise known as the “Electronic Commerce Act”
37
7
23. At no instance shall temporary receipts be issued to acknowledge the receipt of public
funds.38
24. Pre-numbered ORs shall be issued in strict numerical sequence. All copies of each receipt
shall be exact copies or carbon reproduction in all respects of the original.39
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.40
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.41
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
insufficiency of funds, the drawer shall be criminally liable therefor.42
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.43
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.
38
39
Section 73, Ibid
40
Section 67(1) and (3), Presidential Decree No. 1445
41
Section 77, GAAM, Vol. II
42
43
8
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.44
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. 45 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.46
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. 47 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
account or accounts to which the monies properly belong.48
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 P10,000.00.49
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.50 He shall likewise record all deposits in the
Cashbooks maintained for Cash in Treasury and Cash in Bank.
44
Section 82, GAAM, Vol. 1
45
Section 105, Ibid
46
GAO General Circular No. 110
47
Section 21, MNGAS for NGAs, Vol. I
48
49
Section 28, COA Circular No. 92-382
50
Section 334(a), Republic Act No. 7160
9
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 non-

payment occurs when (a) the check is duly presented for payment and payment is refused
or cannot be obtained; or (b) presentment is excused and the check is overdue and
unpaid.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.
51
Section 62(D), Local Treasury Operations Manual
52
53
Section 83, Negotiable Instruments Law
54
Section 149, Ibid
55
Section 89, Negotiable Instruments Law; Section 85, GAAM, Vol. I
10
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
CO shall immediately advise the transfer of custody of the check.57
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.
56
Section 2, Batas Pambansa Blg. 22, amending Article 315 of the Revised Penal Code
57
11
43.7 All laws and regulations applicable to financial transactions shall be faithfully
adhered to.
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
contravene existing laws and regulations.58
44. Except with the prior approval of the President, and for procurement transactions where
advance payment is allowed pursuant to Sections 4.3 59, 4.460 and 4.561 of Annex D,
Section 4.162 of Annex E and Section 163 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.64
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.65
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 given
58
59
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.
60
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.
61
Upon 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.
62
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.
63
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.
64
65
Section 91, Ibid
12
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.66
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
be open to the inspection of the Commission or its duly authorized representative.67
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.68
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.69
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.
66
67
Section 46, Ibid
68
69 Section 37, Presidential Decree No.
13
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
distraint.70
70
14
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.
15
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.
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.
16
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.
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.
17
4. Use the properly worded sealing paper form as shown below:
20
DO NOT BREAK THE

SEAL UNDER PENALTY
OF LAW
(Signature over printed name)
(Position/Designation)
Witnesses to the
sealing:
(Name and Signature/Position)
(Name and Signature/Position)
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
penalties prescribed under Article 227 of the Revised Penal Code.71
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 of 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)
18
71
Art. 227. Officer breaking seal.- Any public officer charged with the custody of papers 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.
19
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.
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.
20
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

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
72
Office of the Ombudsman v. Rodolfo Zaldarriaga, G.R. No. 175349, June 22, 2010 citing Tinga v. People, L-57650, April 15,
1988, 160 SCRA 483, 491
21
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.
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.
22
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 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
23
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.
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.
24
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.
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
25
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.
26
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.
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.
27
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.
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
28
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 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.
29
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.
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)

30
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,
it shall be released to the AO.73
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:
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.
73
See Santiago v. Commission on Audit, G.R. No. 146824, June 15, 2006 and Supreme Court Resolution dated November 21,
2007
31
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
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.
32
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.
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.
33
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.74
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.75
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.76
74
Paragraph 4.8, Treasury Circular No. 02-2009, August 6, 2009; Section 326, Philippine Bonding Law
75
Paragraph 8.2, Ibid
76
Paragraph 8.3, Treasury Circular No. 02-2009, August 6, 2009
34
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
approved by the COA shall constitute a legal claim against the Fidelity Fund.77
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
with existing budgeting, accounting and auditing rules and regulations.78
6. In case of defalcation, shortages and unrelieved losses in the account of bonded public
officer, the claim shall be supported by the following documents:79
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
79
Paragraph 8.5.1, Ibid
35
Appendix 1
ILLUSTRATIVE ACCOUNTING ENTRIES
A. ACCOUNT TITLES, CODES USED
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 of Accountable Officer) made by (Name of 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
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 103 xxx
Officer)
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
 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

Due to Other Funds 424 xxx
Cash in Bank - Local Currency, Current
Accounts 111 xxx
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
b. To take up the remittance of the amount receipted

Cash in Bank, Local Currency – Current 111 xxx
Account
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.

Due to National Treasury 411 xxx
The above journal entry shall be recorded in the National Government books under the
National Government Fund.
b. To take up the remittance of the amount receipted

Due to National Treasury 411 xxx
Annex B
NOTICE OF DISHONOR
Sir/Madam:
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.
Annex F
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
No. Control Activities YES SCW CC REMARKS
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?
NO
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?
NO
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?
NO
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?

Are items of deposit subsequently dishonored by the
20 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?
NO
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?
NO
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?
NO
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?
Are reconciling items systematically followed up and
24 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?

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?
NO
35 Are cash advances granted only to authorized

officials/employees?

covered 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.

for evaluation on internal control - in that there are no
other additional internal auditing procedures, accounting
controls or other circumstances that impair any controls?
NO

covered by the foregoing questions and/or answers.
Annex G
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 I
STATEMENT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS WITHOUT MONEY VALUE
As of date of cash count
Accountable Officer :
Designation:
Agency:
Balance on hand Balance of Accountability On Hand per

Name of Forms Date of last CE Received Since Issued Since Date of this CE Actual Count Difference
Qty Serial Number Amount Qty Serial Number Amount Qty Serial Number Amount Qty Serial Number Amount Qty Serial Number Amount Qty Serial Number Amount
I HEREBY CERTIFY that the above Statement of Accountability for

Prepared by: Accountable Forms Without Money Value is true and correct.
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
Cartridge A
Cartridge B
Cartridge C
Cartridge D
Expected Cash in ATM P
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:
Annex K
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 P

Add: Deposit in Transit P
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
Position
Reviewed by:
Audit Team Leader

Annex L
Republic of the Philippines

COMMISSION ON AUDIT
(COA Office) _
LETTER OF DEMAND
, 20
Mr./Ms. (Nameof Accountable

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 Collections Cash Total

Advances
Balance of accountability as shown by your
cashbook on , 20 certified
correct by you and duly verified by us xxx xxx xxx
Cash and valid cash items produced by you
and counted by us xxx xxx xxx
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 tous within seventy-two (72) hours a written explanation why this shortage occurred.
Very truly yours,
Audit Team Leader
, 20
(Accountable Officer)
Copy furnished:
Agency Head
Position/Designation
Address
Annex M

COMMISSION ON AUDIT
COA Office) _
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 thereof as may be necessary, and to apply the withheld
amounts in full satisfaction of his afore-specified shortage.
Very truly yours,
By Authority of the Chairman,

Commission on Audit:
Audit Team Leader

Annex N

COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
WARRANT OF CONSTRUCTIVE DISTRAINT

OF 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

, 20 .
Chairman
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.
Audit Team Leader
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

COMMISSION ON AUDIT
COA Office) _
RECEIPT FORGOODS, ARTICLES, AND THINGS SEIZED

UNDER AUTHORITY OFSECTION 47, P.D. 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 things:
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 of the Chairman or any authorized official of the
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
WITNESSES (That a complete list of properties has

been left in the premises incase accountable officer
or possessor refuses to accomplish receipt.)
Note: To be accomplished in sextuplicate

Annex P

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 andaccounts of
(Name of Accountable Officer) , (Designation) , , covering
(Name and Address of Agency)
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.
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
Annex Q
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) ;
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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F

1. Illustrative Accounting Entries

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

DEFINITION AND OBJECTIVES OF CASH EXAMINATION

Cash Examination Defined

Cash examination is an audit technique whereby an authorized examiner of cash and

Objectives of Cash Examination

5. verify if accountable forms are duly accounted for.

LAWS AND RULES RELEVANT IN CASH EXAMINATIONS

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

7. An AO shall maintain his cashbook/CRR/CDR/CkDR 20 and such other records or their

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

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

21. No payment of any nature shall be received by a CO without immediately issuing an

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

35. A check is dishonored either by non-payment or non-acceptance. Dishonor by non-

37. When a check is dishonored by non-payment or non-acceptance, notice of dishonor

43.5 Disbursements or disposition of government funds or property shall invariably

43.6 Claims against government funds shall be supported with complete

43.8 Generally accepted principles and practices of accounting as well as of sound

Seizure of Office by Auditor

Retention of Money for Satisfaction of Indebtedness to Government

Constructive Distraint of Property of Accountable Officers

2. Whenever the circumstances warrant, the Chairperson or the Cluster/Regional Director

1. Develop an overall plan/audit program, taking into consideration the objectives to be

2. Evaluate/validate the agency’s internal control structure on cash management whenever

D. Auditor’s Conduct and Behaviour

2. Although a friendly relationship shall be maintained, a relationship bordering on too

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

(Signature over printed name)

(Name and Signature/Position)

(Name and Signature/Position)

5. Retain a duplicate copy of each properly accomplished sealing

J. Accountable Officer’s Cashbook/CRR/CDR/CkDR or its equivalent

I hereby certify on my official oath that all cash and depository

(Date) (Signature over printed name)

K. Auditor’s Review of Transactions

L. Auditor’s Certificate on the Cashbook/CRR/CDR or equivalent

Examined and verified the cash accountability of (Accountable Officer),

balance of P , of which the amount of P was actually found

(Signature over printed name)

2. At no instance shall the auditor’s certification be qualified.

N. Audit Work Papers

O. Cash Examination Report

5. Distribute final copies of the report as follows:

PROCEDURES AND TECHNIQUES

B. Specific Procedures and Techniques