BSP Circular No. 249-00

June 26, 2000 BSP CIRCULAR NO. 249-00 The Monetary Board in its Resolution No. 562 dated April 7, 2000, approved for adoption the data transmission by participating rural/cooperative banks in electronic media or in diskette of the existing Weekly Report on Required and Available Reserves (WRRAR) in accordance with the diskette reporting guidelines in Schedule 1. IATSHE The Board also approved the adoption of the Updated Manual of Accounts and the revised reportorial requirements of rural/cooperative banks, attached as Annexes A and B, respectively, and the timetable for the adoption by rural/cooperative banks of the updated manual and the revised report forms, as follows: a) Updated Manual of Accounts not later than the reporting (Annex A) period ending July 31, 2000 (initial reporting period) b) Revised report forms as follows: i. basic financial reports for head office and branches (Annex B) to be prepared in accordance with the data formulation in Annex B-1: Initial Reporting Schedule Date of No. Report Title Period Covered Transmission 1. Consolidated Statement of Condition Month ended October 21, 2000 (CSOC) Main Report (Form 2A) and September 30, 2000 Schedules I 6 2. Consolidated Statement of Income and Quarter ended October 21, 2000 Expenses (CSIE) (Form 3A) September 30, 2000 3. Statement of Condition (SOC) By Quarter ended October 21, 2000 Banking Unit - Main Report (Form 2B) September 30, 2000 and Schedule I 4. Statement of Income and Expenses (SIE) Quarter ended October 21, 2000 By Banking Unit (Form 3B) September 30, 2000 Notes : Above-mentioned reports shall thereafter be submitted in accordance with the schedule indicated in Appendix 6-C of the Manual of Regulations for Banks. For banks opting to implement diskette reporting, parallel-run for two reporting periods shall be allowed for each type of report, i.e., submission in both hard copy and diskette, after which submission in hard copy shall be dropped. Otherwise, submission shall be in the prescribed revised forms above mentioned. ii. adoption of the Consolidated Daily Report of Condition (Annex B) in lieu of the Weekly Report of Required and Available Reserves (WRRAR): Initial Reporting Schedule Date of No. Report Title Period Covered Transmission 5 Consolidated Daily Report of Week from October 6, 2000 October 18, 2000 Condition (CDRC) Main Report to October 12, 2000 (Form 1) and Proof List Notes : CDRC report shall thereafter be submitted in accordance with the WRRAR schedule indicated in Appendix 6-C of the Manual of Regulations for Banks. To implement the scheme, a two-week parallel run shall also be allowed each rural/cooperative bank wherein they shall be required to submit the CDRC and the existing WRRAR, after which they shall drop the submission of the WRRAR. Those who would prefer diskette reporting of the CDRC shall initially be required to submit, for two reporting periods, in hard copy and in diskette, after which they shall drop the submission in hard copy. iii. adoption of the new format of other periodic reports being required from rural/cooperative banks (Annex C) within 60 days from date of the implementing circular. c) Other related reports (listed below) as contained in the Manual of Unified Reports (Annex D) as defined in the Usage and Frequency Matrices (Annex E): No. Title of Documents (Manual of Unified Reports) 1. Unified General Ledger (Account Coding Scheme) 2. General Ledger Template 3. General Ledger File Structure 4. Subsidiary Ledger Structures (for selected accounts) This Circular supersedes all previous BSP issuances which are inconsistent herewith and shall take effect immediately. FOR THE MONETARY BOARD: (SGD.) AMANDO M. TETANGCO, JR. Officer-in-Charge RURAL/COOPERATIVE BANKS Schedule 1 DISKETTE REPORTING Implementing Guidelines for Weekly Report on Required and Available Reserves (WRRAR) 1. PROCEDURES IN REPORTING WRRAR IN DISKETTE FORM a. Reports submitted in diskette shall be accompanied by a control prooflist (Annex A) for better control of the contents of the diskette. This shall also serve as the transmittal form for the diskette. As the diskette and the control prooflist take the place of the usual WRRAR reports, the control prooflist shall be subject to the usual requirement of the certification and signature of the authorized bank officer. b. For diskettes that are not infected and/or not accessible, and for reports with noted exceptions, the banks shall be required to submit a new diskette accompanied by the report as in the required format of the WRRAR (Annex B) which shall be considered as the bank's official report. 2. DEADLINE FOR SUBMISSION The diskette and its accompanying control prooflist shall be submitted to the Supervisory Reports and Studies Office (SRSO) on the fourth (4th) banking day of following reference week. A copy of the control prooflist shall also be submitted to the Department of Rural Banks on the same day. 3. DISKETTE FILE File Type - DBASE file (DBF) File Name - ) See data structure (Annex C) Data Structure - ) 4. TESTING PERIOD A four week parallel run shall be allowed each bank wherein banks shall submit the WRRAR both in the required format (Annex B) and in the diskette form. After evaluation of the parallel runs, the banks shall be informed of errors found or of its implementation wherein they shall drop submission of the required hard copy. (SGD.) CRISANTA F. REYES Manager I Administrative Services Department ANNEX A Weekly Report of Required and Available Reserves Against Deposit Liabilities ANNEX B ANNEX C ANNEX A MANUAL OF ACCOUNTS For Rural/Cooperative Banks ASSET ACCOUNTS 1. CASH ON HAND [1-1-02-00] This represents the total amount of cash in the bank's vault in the form of Philippine currency notes and coins under the custody of the cashier/cash custodian or treasurer, including those in the possession of tellers and those kept in automated teller machines (ATMs) and the like. 2. CHECKS AND OTHER CASH ITEMS (COCI) [1-1-04-00] This represents the aggregate amount of checks and other cash items received after the selected clearing cut-off time until the close of the regular banking hours, allowed under existing regulations. This account may consist of the following: a. Checks drawn on other banks b. Manager's/Cashier's/Treasurer's Checks and Demand Drafts drawn against the depository bank's other branches/offices c. Philippine Treasury Warrants d. Philippine Postal Money Orders All checks and other cash items shall be presented for clearance/acceptance/settlement on the following banking day. Items excluded herein are the following: a. Foreign Currency Checks b. Postdated Checks c. COCIs received on collection basis d. Out-of-town Checks not collectible through established clearing channels e. Items returned from clearing f. All other cash items not in process of collection Sub-control accounts shall be maintained for: (a) Bangko Sentral COCIs [1-1-04-02]; (b) National Government COCIs [1-1-04-04]; and Others [1-1-04-06]. 3. DUE FROM BANGKO SENTRAL NG PILIPINAS (BSP) [1-1-06-00] This represents the balance of the deposit account in local currency maintained with the Bangko Sentral to meet reserve requirements and to serve as clearing account for interbank claims, subject to existing rules and regulations. Sub-control accounts shall be maintained for items outstanding and unresponded for three (3) months or more from date of entry. 4. DUE FROM OTHER BANKS [1-1-08-00] a. Due from Other Banks Local Banks [1-1-08-02] This represents balances of funds on deposit with other local banks excluding loans and advances to other banks and balances in banks which have been closed or banks under receivership/liquidation. The following sub-control shall be maintained: Due from local banks Demand Deposits This represents balances of demand deposits with other local banks. Due from local banks Savings Deposits This represents balances of savings deposits with other local banks. Due from local banks Time Certificates of Deposits This represents balances of time certificates of deposits with other local banks. b. Due from Other Banks Local Banks Clearing Account [1-1-08-04] This represents debit balances maintained with conduit local banks through which the bank made arrangement for check clearing. 5. LOANS AND DISCOUNTS [1-2-04-00] a. Demand Loans [1-2-04-02] This represents loans granted with no fixed maturity dates but which become due and payable upon call or demand by the lending bank. b. Bills Discounted [1-2-04-04] This represents loans which are payable on a fixed date (usually within a period of one year), the interest of which is collected in advance or discounted from the face value of the covering promissory note. c. Time Loans [1-2-04-06] This represents loans which are payable on a fixed period of time. This also includes short- and long-term amortized loans. d. Mortgage Contract Receivable [1-2-04-08] This represents the balance of the price of assets acquired which are sold under a plan of settlement, whereby the title to said asset is transferred to the buyer who executes a real estate mortgage contract in favor of the bank. e. Past Due Loans and Discounts [1-2-04-18] This represents loans and discounts past due under existing rules and regulations. The loan shall remain in this account until fully paid; arrangements are formalized for loan renewal/extension/restructuring or collection/foreclosure case has been filed in the court/sheriff's office, as the case may be. f. Items in Litigation Loans and Discounts [1-2-04-20] This represents loans and discounts for which collection/foreclosure cases have been filed in court or sheriff's office, as the case may be. The loan shall remain in this account during the pendency of the proceedings, until full payment, restructuring of the obligation, foreclosure of the collateral, or such other disposition is made as would cause such proceedings to cease. All expenses incurred incidental to the litigation shall be charged to operations and lodged under "Litigation/Assets Acquired Expenses" account. Corresponding memorandum entries for the expenses shall be made on the individual subsidiary ledger of the account concerned. g. Allowance for Probable Losses Loans and Discounts [2-7-04-00] This represents the amount set up against current operations to provide for losses which may arise from the non-collection of loans and discounts. Under existing regulations, this account is also known as 'valuation reserve'. 6. AGRARIAN REFORM AND OTHER AGRICULTURAL CREDIT LOANS PD 717 [1-2-06-00] This represents loans to finance agricultural production and related activities, purchase of farm machinery, equipment and implements and work animals, including but not limited to the establishment and operation of poultry, piggery, livestock and fishery products whether granted to agrarian or non-agrarian reform beneficiaries. Sub-categories shall include: a. Agrarian Reform Loans PD 717 [1-2-06-02] This represents production and other types of loans granted to beneficiaries of agrarian reform, namely: tillers, tenant farmers, settlers, agricultural lessees, amortizing owners, owner-cultivators, farmers, cooperative and compact farms, as provided for in P.D. 717, for the following purposes: 1) Acquisition of work animals, farm equipment and machinery, seeds, fertilizers, poultry, livestock, feeds and other similar items; 2) Acquisition of land authorized under the Agrarian Reform Code of the Philippines and its amendments; 3) Construction and/or acquisition of facilities for production, processing, storage and marketing; and 4) Efficient and effective merchandising of agricultural commodities stored and/or processed by the facilities aforecited. b. Other Agricultural Credit Loans [1-2-06-04] This represents loans granted to borrowers who are not beneficiaries of agrarian reform to finance activities relating to agriculture and processing, marketing, storage and distribution of products resulting from these activities. c. Past Due Agrarian Reform/Other Agricultural Credit Loans [1-2-06-06] This represents agrarian reform/other agricultural credit loans which are considered past due under existing rules and regulations. The loan shall remain in this account until fully paid; arrangements are formalized for its renewal/extension/restructuring or collection/foreclosure case has been filed in court/sheriff's office, as the case may be. Sub-control accounts shall be maintained for (a) Agrarian Reform Loans; and (b) Other Agricultural Credit Loans. d. Items in Litigation Agrarian Reform/Other Agricultural Credit Loans [1-2-06-08] This represents agrarian reform/other agricultural credit loans for which collection/foreclosure cases have been filed in court or sheriff's office, as the case may be. The loan shall remain in this account during the pendency of the proceedings or until full payment, restructuring of the obligation, foreclosure of the collateral or such other disposition is made that would cause such proceedings to cease. All expenses incurred incidental to the litigation shall be charged to operations and lodged under "Litigation/Assets Acquired Expenses" account. Corresponding memorandum entries for expenses shall be made on individual subsidiary ledger of the account concerned. Sub-control accounts shall be maintained for (1) Agrarian Reform Loans [1-2-06-08-02]; and (2) Other Agricultural Credit Loans [1-2-06-08-04]. e. Allowance for Probable Losses Agrarian Reform/Other Agricultural Credit Loans [2-7-06-00] This represents the amount set up against current operations to provide for losses which may arise from the non-collection of agrarian reform/other agricultural credit loans. Under existing regulations, this account is also known as "valuation reserve". 7. DEVELOPMENT INCENTIVE LOANS PD 717 [1-2-08-00] a. Development Incentive Loans PD 717 [1-2-08-02] This represents loans extended by banks incorporated under the laws of the Philippines, whether Philippine or foreign-owned, to finance educational institutions, cooperatives, hospitals and other medical services, socialized or low-cost housing and to local government units, without national government guarantee which shall be included for purposes of determining compliance with the provisions of PD No. 717, as amended. Sub-control accounts shall be maintained for: (1) educational institution loans; (2) cooperative loans; (3) hospitals and other medical services loans; (4) socialized or low-cost housing loans and (5) local government unit loans. This account shall not apply to local branches of foreign banks. b. Past Due Development Incentive Loans [1-2-08-04] This represents development incentive loans which are considered past due under existing rules and regulations. The loan shall remain in this account until fully paid or collection/foreclosure case has been filed in court/sheriff's office, as the case may be. c. Items in Litigation Development Incentive Loans [1-2-08-06] This represents all development incentive loans for which collection/foreclosure cases have been filed in court or sheriff's office, as the case may be. The loan shall remain in this account during the pendency of the proceedings or until full payment/restructuring of the obligation, foreclosure of the collateral or such other disposition is made that would cause such proceedings to cease. All expenses incurred incidental to the litigation shall be charged to operations and debited to "Litigation/Assets Acquired Expenses" account. Corresponding memorandum entries for the expenses shall be made on the individual subsidiary ledgers of the account concerned. d. Allowance for Probable Losses Development Incentive Loans [2-7-08-00] This represents the amount set up against current operations to provide for losses which may arise from non-collection of the development incentive loans. Under existing regulations, this account shall also be known as "valuation reserve". 8. RESTRUCTURED LOANS [1-2-16-00] a. Restructured Loans [1-2-16-02] This represents loans, the principal terms and conditions of which have been modified in accordance with a restructuring agreement setting forth a new plan of payment or a schedule of payment on a periodic basis. 1. Restructured Loans Fully Secured [1-2-16-02-02] This represents restructured loans including capitalized interest thereon, which are in current status and are either unsecured or are not fully secured by real estate with loan value of up to 60% of the appraised value of the real estate security and insured improvements, and by other first class collaterals as may be deemed appropriate by the Monetary Board. Restructured loans lodged to this account shall be treated as performing loans where interest income can be accrued. 2. Restructured Loans Unsecured of Partially Secured [1-2-16-02-04] This represents restructured loans including capitalized interest thereon, which are in current status and are either unsecured or are not fully secured by real estate with loan value of up to 60% of the appraised value of the real estate security and insured improvements, and by other first class collaterals as may be deemed appropriate by the Monetary Board. Restructured loans lodged to this account shall be treated as non-performing loans where no interest income can be accrued. b. Past Due Restructured Loans [1-2-16-04] This represents restructured loans which are considered past due under existing rules and regulations. The loan shall remain in this account until fully paid or collection/foreclosure case has been filed in court/sheriff's office, as the case may be. c. Items in Litigation Restructured Loans [1-2-16-06] This represents all restructured loans for which collection/foreclosure cases have been filed in court or sheriff's office, as the case may be. The loan shall remain in this account during the pendency of the proceedings or until full payment or such other disposition is made as would cause such proceedings to cease. All expenses incurred incidental to the litigation shall be charged to operations and debited to "Litigation/Assets Acquired Expenses" account. Corresponding memorandum entries for the expenses shall be made on the individual subsidiary ledgers of the account concerned. d. Allowance for Probable Losses Restructured Loans [2-7-16-00] This represents the amount set up against current operations to provide for losses which may arise from non-collection of the restructured loans. Under existing regulation, this account is also known as "valuation reserve". 9. GENERAL LOAN LOSS PROVISION [2-7-80-00] This represents the amount of general provision for loan losses not linked to individually identified uncollectible accounts required to be set up under existing regulations equivalent to 2% of gross loan portfolio, less loans guaranteed by the Small Business Guarantee and Finance Corporation, Philippine Export Guarantee, Guarantee Fund for Small and Medium Enterprises and other government guarantee corporations, provided these loans are not past due, and loans which are considered non-risk under existing laws, rules and regulations. From the loan portfolio net of the foregoing exclusions, loans subject to specific loan loss provisioning (at least equal to the BSP recommended classification as of latest examination) shall be deducted to arrive at the net loan portfolio, which shall be the basis of the computation of the prescribed percentage for General Loan Loss Provisioning. 10. INVESTMENT IN BONDS AND OTHER DEBT INSTRUMENTS (IBODI) [1-3-50-00] This represents readily marketable bonds and debt securities where the financial institution has the intention and ability to hold to maturity. These investments shall be of such use or demand as to make them the subject of constant dealings in securities market, with such frequent quotations of price as to make the price easily and definitely ascertainable, and the security easy to realize upon sale at anytime. Such investments shall be measured at amortized cost where any realized gains or losses shall be included in reported current income. However, if a decline in fair market value below the amortized cost is other than temporary, i.e., full collection of principal and interest is not expected on a debt security, the amortized cost basis of the particular debt security shall be adequately provided with allowance for probable losses. The amount of investment loss provision shall be accounted for as a realized loss and charged to reported current income. The ability to hold to maturity is evidenced by the funding structure of such bonds/securities wherein IBODI shall not exceed 50% of adjusted net worth plus 40% of total deposit liabilities. Bonds/debt securities under IBODI are to be redeemed at maturity. Sale of debt securities that meet either of the following two conditions may, however, be considered as maturities for purposes of the classification of securities under IBODI: 1) The sale of debt security occurs near enough to its maturity date (or call date if exercise of the call is probable) that interest rate risk is substantially eliminated as a pricing factor. That is, the date of sale is so near the maturity or call date (for example, within three months) that changes in market interest rates would not have a significant effect on the security's fare market value. 2. The sale of debt security occurs after the bank has already collected at least eighty-five per cent (85%) of the principal outstanding at acquisition due either to prepayments on the debt security or to scheduled payments on a debt security payable in installments (both principal and interest) over its term. a. Investment in Bonds & Other Debt Instruments Government [1-3-50-02] This represents the cost of investments in securities, generally consisting of bond, treasury bills/notes and certificates of indebtedness issued by the Philippine Government, its political subdivisions and instrumentalities and/or corporations owned and/or controlled by the government. 1) Investment in Bonds and Other Debt Instruments Reserve Purposes [1-3-50-02-02] This represents the cost of investments in government securities held by banks for reserve purposes as required under existing rules and regulations. 2) Investments in Bonds and Debt Instruments Others [1-3-50-02-06] This represents the cost of investments in government securities that cannot be appropriately classified under "IBODI Reserve" accounts. Accumulated Bond Discount IBODI Government Issue [1-8-50-02] Accumulated Premium Amortization IBODI Government Issue [2-8-50-02] This represents the earned portion of the discount and/or the amortized portion of the premium on investment in government securities which shall be debited/credited, respectively, monthly to this account with the corresponding debit/credit to "Interest Income Investment in Bonds and Other Debt Instruments" account. Upon the disposition of the securities, the account corresponding to the redeemed, transferred or sold securities shall be reversed. b. Investments in Bonds and Other Debt Instruments Private [1-3-50-04] This represents the cost of investments in securities issued by private entities (e.g. commercial banks, other local banks, other financial intermediaries and by the Small Business Guarantee and Finance Corporation). Accumulated Bond Discount IBODI Private Issue [1-8-50-04] Accumulated Premium Amortization IBODI Private Issue [2-8-50-04] This represents the earned portion of the discount and/or the amortized portion of the premium on investment in private securities which shall be debited/credited, respectively, monthly to this account with the corresponding debit/credit to "Interest Income Investments" account. c. Allowance for Probable Losses IBODI [2-8-50-00] This represents the amount set up against current operations to provide for losses on IBODI. Under existing regulations, this account is also known as "valuation reserve". 11. EQUITY INVESTMENTS [1-3-60-00] This represents the cost of investments in shares of stock including any unpaid subscriptions, of companies/institutions, as allowed under existing laws, rules and regulations. Equity investments shall be booked at cost or book value, whichever is lower, on the date of acquisition. If cost is greater than cost value, the excess shall be charged in full to operations or booked as deferred charges and amortized as expense over a period not exceeding five (5) years. Subsequent to acquisition, equity investments should still be carried at recorded value on date of acquisition; except for investments representing more than 50% of the voting stock of the investee company in which case the equity method of accounting shall be used. The use of the equity method, however, does not preclude the bank from setting up valuation reserves if warranted. a. Equity Investments in Allied Undertakings [1-3-60-02] Equity Investments in Financial Allied Undertakings This represents the cost of investments in shares of stock including any unpaid subscriptions, of domestic financial allied undertakings, e.g., banks, financial institutions and non-bank financial intermediaries, as allowed under existing laws, rules and regulations. Equity Investments in Non-Financial Allied Undertakings This represents the cost of investments in shares of stock including any unpaid subscriptions of non-financial allied undertakings, engaged in warehousing and other post-harvest facilities, fertilizer and agricultural chemical and pesticides distribution, farm equipment distribution, trucking, marketing of agricultural products, leasing and other undertakings as may be determined by the Monetary Board. b. Allowance for Probable Losses Equity Investments [2-8-60-00] This represents the amount set up against current operations to provide for losses such as decline in market or book value which may arise on equity investments. Under existing regulations, this account is also known as "valuation reserve". 12. DUE FROM HEAD OFFICE/BRANCHES/AGENCIES (DFHO/B/A) [1-4-02-00] The accounts "Due From Branches/Agencies" and "Due to Branches/Agencies" are general ledger Head Office control accounts. The counterpart of these accounts in the books of the Branches consists of the general ledger control accounts "Due from Head Office" and "Due to Head Office". If the balance of the Head Office account with its Branch is a debit, the account is carried as a "Due From", an asset account in the books of the Head Office. Conversely, if the balance of the Head Office account with its Branch is a credit, the account is carried as a "Due To", a liability account in the Books of the Head Office. The same rule applies to balance of the Branches accounts ("Due From" or "Due To" Head Office) with the Head Office. These accounts are essentially clearing accounts through which Head Office/Branches/Agencies and inter-branches/agencies transactions are cleared. Inter-Head Office-Branch transactions originating from Head Office are debited or credited to the account of the Branch concerned. The same applies to direct transactions of the Branch with the Head Office. Inter-Branch/Agency transactions, on the other hand, shall be cleared thru the Head Office. The latter responds to the advice of the Branch/Agency where the transactions originated by debiting or crediting, as the case may be, the account of the office to which the transaction pertains. Likewise, Branch transaction with the bank's local correspondents shall be coursed through the Head Office account. Head Office and Branches' accounts aforementioned are reciprocal accounts which are eliminated upon consolidation. The transactions, which pass through these accounts are: Investments of Head Office (HO) in Branches/Agencies Advances of Head Office (HO) to its Branches/Agencies Check and cash remittances Transfers of loan and other asset accounts Responses to other debit/credit advices of Branches/Agencies Other receipts/payments made for account of Branches/Agencies Advances made by Branches/Agencies for the account of HO or vice versa Remittances of Branches/Agencies to Head Office (HO) Other inter-head office-branch(es) transactions not specified above The head office shall maintain individual subsidiary ledger accounts for each Branch/Agency. Sub-control ledger accounts shall be maintained for items, which are unresponded and outstanding for sixty calendar days or more. 13. BANK PREMISES, FURNITURE, FIXTURES AND EQUIPMENT [1-4-04-00] a. Bank Premises Land [1-4-04-02] This represents the acquisition cost of the land or lots by the bank as existing or future sites of its offices, including residential and parking lots used by the bank's officers/employees and clients. Acquisition cost shall consist of the purchase price and all expenditures incurred incident to acquisition, such as cost of surveying, registration and issuance of title. This account shall also include the cost of filling and other expenditures which enhance the value of the land. b. Bank Premises Building Under Construction [1-4-04-04] This represents the total cost of materials, labor and other capitalizable expenditures incurred in connection with the building(s) under construction. Upon completion of the building its cost shall be transferred/closed to "Bank Premises Buildings" account. c. Bank Premises Buildings [1-4-04-06] This represents the cost of buildings owned and used or to be used by the bank for its business, including residential houses provided for its officers and employees. The buildings/residential houses shall be recorded at acquisition or construction/improvement costs, including architect's fees, building permits, inspection fees, cost of vaults, elevators, tellers' cages and other capitalizable expenditures incurred in making the premises ready for use. d. Accumulated Depreciation Bank Premises Buildings [2-9-04-06] This represents the accumulated depreciation of buildings owned by the bank, which shall be set up monthly against current operations. This is also known as "Reserve for Depreciation". e. Bank Premises Appraisal Increment Buildings [1-4-04-08] This represents appreciation in book value of bank premises (land and buildings), allowed under existing rules and regulations, in cases where the market value of the property had materially increased since its acquisition. The corresponding credit account is "Appraisal Increment Reserve". f. Accumulated Depreciation Bank Premises Appraisal Increment Buildings [2-9-04-08] This represents the accumulated depreciation on the appraisal increment of bank premises buildings which results from the setting up of a monthly depreciation chargeable against current operations. The portion of the Appraisal Increment Reserve (capital account) corresponding to the monthly depreciation on the Appraisal Increment (asset account) shall be adjusted to undivided profits. g. Leasehold Rights and Improvement [1-4-04-10] This represents the cost of building and/or improvements introduced on premises leased by the bank, including the cost of leasehold rights and other expenditures incurred in making the premises ready for use. The cost of leasehold rights and improvements shall be amortized monthly by crediting this account for amortization based on the term of the lease contract or estimated useful life of the improvements, whichever is shorter. h. Furniture, Fixtures and Equipment [1-4-04-12] This represents the cost of furniture, such as desks, tables and chairs; fixtures on buildings, which do not form part of "Bank Premises Buildings" account; and equipment such as computers, business machines, typewriters, motor vehicles, etc., including expenditures incurred for major repairs and maintenance which prolong the life of these assets beyond their original estimated useful life. This account also includes the cost of firearms owned and licensed in the name of the bank. i. Accumulated Depreciation Furniture, Fixtures & Equipment [2-9-04-12] This represents the accumulated depreciation of furniture, fixtures and equipment which shall be set up monthly against current operations. This is also known as "Reserve for Depreciation". 14. REAL AND OTHER PROPERTIES OWNED OR ACQUIRED (ROPOA) [1-4-06-00] a. Real and Other Properties Owned or Acquired [1-4-06-02] This represents the real and other properties, other than those used for banking purposes or held in the investment portfolio, acquired by the bank in settlement of loans and/or for other reasons. The property acquired in settlement of loans shall be recorded at the principal balance of the loan plus (a) booked accrued interest receivable, after considering allowance for uncollected interest on loans less unamortized income, and (b) non-refundable capital gains tax and documentary stamp tax incurred in connection with the foreclosure; or bid price, whichever is lower, provided that, in either case, the total value does not exceed the appraised value of the foreclosed asset, as determined by an independent external appraiser acceptable to Bangko Sentral ng Pilipinas. However, the property acquired for other reasons shall be recorded at cost or appraised value when cost is not involved/determinable in the acquisition of the property. Any excess of loan balance over the bid price shall be debited to "Miscellaneous Income/Loss" account. Claims arising from deficiency judgments rendered in connection with the foreclosure of mortgaged properties shall be lodged under the real account "Deficiency Judgment Receivable". While probable claims against the borrower-debtor arising from the foreclosure of mortgaged properties shall be lodged under the contingent account "Deficiency Claims Receivable". All expenses incurred in the preservation/maintenance of these properties shall be debited to "Litigation/Assets Acquired Expenses" account: All income realized therefrom shall be credited to "Income from Assets Acquired" account. Corresponding memorandum entries shall be made on the individual subsidiary ledgers of the accounts concerned. b. Allowance for Probable Losses ROPOA [2-9-06-02] This represents the amount set up against current operations to provide for losses which may arise from the excess of book value over the appraised value of the property and/or from, its sale/disposition, and/or for valuation allowance as may be required under existing rules and regulations. This account is also known as "valuation reserve" under existing rules and regulations. Sub-control account shall be maintained for: (a) domestic. c. Sales Contract Receivable [1-4-06-04] This represents the balance of the selling price of assets owned and/or acquired under a plan of settlement, whereby the title to the said assets is transferred only to the buyer upon full payment of the agreed selling price. 15. OTHER ASSETS a. Foreign Currency Notes and Coins on Hand [1-4-12-00] This represents the total amount of foreign currency notes and coins on hand which comes into possession of the bank as an authorized foreign exchange dealer. Foreign currency transactions are recorded at their respective foreign currency amounts and at their local currency equivalent at the applicable rate of exchange on transaction dates. b. Foreign Currency Checks and Other Cash Items [1-4-14-00] This represents the total amount of foreign currency checks and other cash items which comes into possession of the bank as an authorized foreign exchange dealer. They shall be recorded at their respective foreign currency values. For statement/report purposes, the local currency equivalent thereof shall be computed at the forex guiding rate prevailing on statement/report date. c. Returned Checks and Other Cash Items [1-4-16-00] This represents the aggregate amount of checks and other cash items, other than those lodged under "Checks and Other Cash Items", and "Miscellaneous Checks and Other Cash Items" accounts returned to/by the bank or dishonored/found to be defective for certain reasons such as insufficiency of funds and alterations in the documents. d. Miscellaneous Checks and Other Cash Items [1-4-18-00] This represents the aggregate amount of checks and cash items other than those lodged under "Checks and Other Cash Items", and "Returned Checks and Cash Items" accounts such as miscleared and missorted checks. e. Petty Cash Fund [1-4-20-00] This represents a fund maintained on an imprest system to defray minimal disbursements. All payments shall be evidenced/supported by duly accomplished and approved petty cash vouchers. f. Deficiency Judgment Receivable [1-4-22-00] This represents claims against borrower-debtor(s) arising from deficiency judgments rendered by the court. g. Documentary Stamps [1-4-24-00] This represents the cost of documentary stamps, loose and/or loaded in the meter machine. h. Postage Stamps [1-4-26-00] This represents the cost of postage stamps, loose and/or loaded in the postage meter machine. i. Stationery and Supplies on Hand [1-4-28-00] This represents the cost of unissued stationery, printed forms and supplies. j. Shortages [1-4-30-00] This represents the amount of shortages found in the tellers' daily transactions and/or accountability of officers and/or other employees. This account shall be closed when the shortage is: (a) duly accounted; or (b) paid in full; or (c) charged as receivable from the officer/employee concerned; or (d) charged to expense or written-off in accordance with existing rules and regulations. k. Dividends Receivable [1-4-32-00] This represents cash dividends earned but not yet received on shares of stocks owned by the bank such as equity investments in allied undertakings/affiliates and shares acquired in settlement of loans. l. Accounts Receivable [1-4-34-00] This represents the following: 1) Amounts due from customers including miscellaneous advances made, such as cable expenses, out-of-pocket collection charges, documentary stamps, commissions and insurance premiums 2) Claims such as tax refund and insurance proceeds 3) Staff salary advances payable in thirty (30) days or less (those payable in more than 30 days shall be considered as loans) 4) Advances for official travel of officers/employees 5) Temporary overdrafts allowed under existing rules and regulations m. Allowance for Probable Losses Accounts Receivable [2-9-34-04] This represents the amount set up against current operations to provide for losses which may arise from non-collection of accounts receivable. Under existing rules and regulations, this account is also known as "valuation reserve". n. Accrued Interest Receivable [1-4-36-00] This represents interest income already earned but not yet collected/received on investments in government securities and on loans considered under existing rules and regulations. o. Allowance for Uncollected Interest on Loans [2-9-36-00] This represents the amount required to be set up for uncollected interest accrued on current loans which have become past due under existing rules and regulations. Sub-control accounts shall be maintained for domestic. p. Prepaid Expenses [1-4-38-00] This represents expense prepayments expected to benefit the Bank for a future period not exceeding one (1) year (i.e. insurance premiums, rent and interest on time certificates of deposits, etc.) paid in advance, which shall be amortized monthly. q. Deferred Charges [1-4-40-00] This represents expense prepayments expected to benefit the bank for a future period exceeding one (1) year such as organizational expense, goodwill, rent paid in advance and others. Organizational expense shall be amortized monthly over a period not exceeding five (5) years. Rent paid in advance and the like shall be amortized monthly or in accordance with the covering agreement, if any. r. Deferred Income Tax [1-4-42-00] This represents the income tax expense deferred in view of certain expenses or provisions for losses not currently deductible for income tax purposes. The income tax expense shall be recognized only when the expenses/losses provided for are actually sustained and/or written-off and considered deductible for income tax purposes. s. Deposits with Closed Banks/Banks in Liquidation [1-4-44-00] This represents demand, savings and/or time deposits maintained with a bank and/or private securities/commercial papers purchased from financial intermediaries (banks and non-banks) which have been closed or placed under liquidation. t. Allowance for Probable Losses Deposits with Closed Banks/Banks in Liquidation [2-9-44-00] This represents the amount set up against current operations to provide for losses which may arise from non-recovery of deposits with banks and/or private securities purchased from financial intermediaries (banks and non-banks) which have been closed or placed under liquidation. Under existing rules and regulations, this account is also known as "valuation reserve". u. Sundry Debits [1-4-46-00] This represents items/transactions which at the time of recording cannot be classified immediately under any debit account. Entries to this account shall be cleared within one (1) month from the date of entry. v. Other Investments [1-4-48-00] This represents the cost of investments made for public relations purposes and/or to qualify as member/subscriber of clubs/other non-profit organization, public utilities including deposits made therein. w. Inter-office Float Items (Debit Balances) [1-4-50-00] This represents inter-office clearing accounts between Head Office and branches which cannot appropriately be classified under the "Due From Head Office/Branches/Agencies" account. This account shall be used only for consolidated statements. x. Miscellaneous Assets [1-4-52-00] This represents items/transactions which cannot be appropriately classified under any of the foregoing asset accounts. y. Allowance for Probable Losses Others [2-9-90-00] This represents the amount set up against operations to provide for losses which may arise from non-recovery of other risk assets for which no specific "Allowance for Probable Losses" account has been provided herein. This account is also known as "valuation reserve" under existing rules and regulations. LIABILITY ACCOUNTS 16. DEPOSIT LIABILITIES [2-1-02-00] (Refer to Appendix B for further details) a. Demand Deposits [2-1-02-02] This represents deposits, subject to withdrawal either by check or thru the automated tellering machines which are otherwise known as current or checking accounts. The Bank may or may not pay interest on these accounts. Sub-control accounts shall be maintained for the following: Demand Deposits Private [2-1-02-02-02-02] This represents current accounts of individuals and private firms. Demand Deposits Banks [2-1-02-02-02-04] This represents current accounts of banking institutions. Sub-control accounts should be maintained for private and government banks. Demand Deposits Non-Bank Financial Intermediaries [2-1-02-02-02-06] This represents current accounts of non-bank financial intermediaries. Demand Deposits Government [2-1-02-02-02-08] This represents current accounts of the Philippine Government, its political subdivisions and/or government-owned or -controlled corporations. b. Savings Deposits [2-1-02-04] This represents interest-bearing deposits which are withdrawable either upon presentation of a properly accomplished withdrawal slip together with the corresponding passbook or thru the automated tellering machines. Sub-control accounts shall be maintained for the following: Savings Deposits Private [2-1-04-04-02-02] This represents savings accounts of individuals and private firms. Savings Deposits Banks [2-1-02-04-02-04] This represents savings accounts of banking institutions. Sub-control accounts should be maintained for private and government banks. Savings Deposits Non-Bank Financial Intermediaries [2-1-02-04-02-06] This represents savings accounts of non-bank financial intermediaries. Savings Deposits Government [2-1-02-04-02-08] This represents savings accounts of the Philippine Government, its political subdivisions and/or government-owned or -controlled corporations. c. "NOW" Accounts [2-1-02-06] This represents interest-bearing savings deposit which are withdrawable by means of Negotiable Orders of Withdrawal. d. Time Certificates of Deposits [2-1-02-08] This represents interest-bearing deposits with specific maturity dates and evidenced by certificates issued by the bank. Sub-control accounts shall be maintained for the following: Time Certificates of Deposits Private [2-1-02-08-02-02] This represents time certificates of deposits of individuals and private firms. Time Certificates of Deposits Banks [2-1-02-08-02-04] This represents time certificates of deposits of banking institutions. Sub-control accounts should be maintained for private and government banks. Time Certificates of Deposits Non-Bank Financial Intermediaries [2-1-02-08-02-06] This represents time certificates of deposits of non-bank financial intermediaries. Time Certificates of Deposits Government [2-1-02-08-02-08] This represents time certificates of deposits of the Philippine Government, its political subdivisions and/or government-owned or -controlled corporations. 17. TIME CERTIFICATES OF DEPOSITS SPECIAL FINANCING [2-1-04-00] This represents time certificates of deposits received for projects under the special financing program of the Philippine Government and/or foreign government and/or international financing institutions. 18. BILLS PAYABLE [2-2-02-00] a. Bills Payable Bangko Sentral ng Pilipinas [2-2-02-02] This represents obligations of the bank arising from availments of rediscounting facilities and other borrowings from the Bangko Sentral. Excluded from this account are borrowings incurred from the sale of CBCIs (Central Bank Certificate of Indebtedness) and other government securities covered by repurchase agreements with the Bangko Sentral. b. Bills Payable Local Banks [2-2-02-04] This represents all types of direct/negotiated borrowings obtained by the bank from local banks not engaged in quasi-banking functions for the limited purpose of financing its needs and those of its agents/dealers. c. Bills Payable Others [2-2-02-08] Bills Payable Non-Banks This represents all types of direct/negotiated borrowings obtained by the bank from non-bank financial intermediaries not engaged in quasi-banking functions for the limited purpose of financing its needs and those of its agents/dealers. Bills Payable Private Firms and Individuals This represents all types of direct/negotiated borrowings obtained by the bank from private firms (other than banks and non-bank financial intermediaries) and individuals for the limited purpose of financing its needs and those of its agents/dealers. Bills Payable Others This represents all types of direct/negotiated borrowings obtained by the bank for the limited purpose of financing its needs and those of its agents/dealers which cannot be appropriately classified under any of the foregoing "Bills Payable" accounts. 19. DUE TO THE TREASURER OF THE PHILIPPINES [2-3-02-00] a. Due to Treasurer of the Philippines Bureau of Internal Revenue [2-3-02-00] This represents all payments of taxes received by the bank for the account of the Bureau of Internal Revenue. b. Due to Treasurer of the Philippines Unclaimed Balances [2-3-02-06] This represents all credits and deposits, including interest thereon, held by the bank in favor of persons known to be dead or who have not made further deposits or withdrawals during the preceding ten (10) years or more, which have been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended). These credits and deposits, including interest thereon, shall remain in this account up to the time the proceeds thereof have been remitted under court order to the Treasurer of the Philippines or other parties. 20. DUE TO LOCAL BANKS [2-3-04-00] a. Due to Local Banks Private [2-3-04-02] This represents credit balances of private local banks arising from bank claims in places where there are no Bangko Sentral clearing facilities. b. Due to Local Banks Government [2-3-04-04] This represents credit balances of government local banks arising from bank claims in places where there are no Bangko Sentral clearing facilities. 21. DUE TO HEAD OFFICE/BRANCHES/AGENCIES [2-3-08-00] This account controls the clearing of items/transactions between the bank's Head Office and its local branches/agencies. This is the reciprocal account of DFHO/B/A in the Philippines. 22. TREASURER'S/CASHIER'S/MANAGER'S CHECKS [2-3-10-00] This represents the aggregate amount of checks drawn by the bank upon itself payable to the payees named in the check. 23. PAYMENT ORDERS PAYABLE [2-3-12-00] This represents inward and outward remittances of local funds by telegraphic transfers, demand drafts or mail transfer orders received by the bank pending payment/disposition to designated beneficiaries or application/disposition to appropriate accounts. 24. SPECIAL TIME DEPOSITS [2-3-18-00] This represents non-interest bearing deposits used as security for IGLF purposes. 25. ACCRUED INTEREST, FRINGE BENEFITS, TAXES AND OTHER EXPENSES PAYABLE [2-3-20-00] a. Accrued Interest Payable [2-3-20-02] This represents the estimated liability for interest incurred/due but not yet paid on demand, savings and time deposits and on domestic borrowings which shall be set up monthly against current operations. b. Accrued Fringe Benefits Payable [2-3-20-03] This represents the estimated liability for allowances and other fringe benefits granted to officers and employees in accordance with management policy such as bonuses, profits shared, including those for special studies/seminars, but excluding medical, dental and hospitalization benefits. c. Accrued Fringe Benefits Tax Payable [2-3-20-04] This represents the estimated liability for final withholding tax imposed on the gross monetary value of the fringe benefits granted by the bank to its officers and employees, in cash or in kind, in addition to the basic salaries, which were accrued but not yet paid. d. Accrued Income Tax Payable [2-3-20-05] This represents the estimated liability for income tax which shall be set up monthly against current operations. e. Accrued Other Taxes and Licenses Payable [2-3-20-06] This represents the estimated liability for taxes and licenses, other than income tax, which shall be set up against current operations. f. Accrued Other Expenses Payable [2-3-20-08] This represents the estimated liability for unpaid expenses, other than those for taxes and interest, which shall be set up against current operations. 26. DUE TO BANGKO SENTRAL NG PILIPINAS (BSP) [2-3-22-00] a. Due to Bangko Sentral ng Pilipinas Banking Fees [2-3-22-02] This represents the estimated liability for the bank's share in the cost of maintaining the appropriate supervision and examination department of the Bangko Sentral which shall be set up monthly against current operations. b. Due to Bangko Sentral ng Pilipinas Others [2-3-22-04] This represents items/transactions which cannot be appropriately classified under any of the foregoing "Due to Bangko Sentral ng Pilipinas" account. 27. DUE TO PHILIPPINE CROP INSURANCE CORP. (PCIC) [2-3-24-00] This represents the amount payable to the Phil. Crop Insurance Corp. (PCIC) as premium on insurance covering production loans for palay under the supervised credit program which premium shall include the share of the borrower-farmer and the bank. 28. UNEARNED INCOME AND OTHER DEFERRED CREDITS [2-3-26-00] a. Unearned Interest and Discount [2-3-26-02] This represents the unearned portion of interest/discount collected in advance which shall be amortized monthly to income for the earned portion. b. Unrealized Profits on Assets Sold/Exchanged [2-3-26-06] This represents unrealized profits from the sale/exchange under plans of settlement of assets owned and/or acquired. Upon receipt of payment, the proportionate amount of profits realized shall be credited to income. c. Capitalized Interest and Other Charges Restructured Loans [2-3-26-08] This represents interest due and accumulated charges which have been capitalized or made part of the principal of the restructured loans. d. Advance Rentals on Bank Premises and/or Equipment [2-3-26-10] This represents the unearned portion of rentals received in advance on bank premises and/or equipment which shall be amortized monthly to income for the earned portion. e. Advance Rentals on Safe Deposit Boxes [2-3-26-12] This represents the unearned portion of rentals received in advance on safe deposit boxes, the earned portion of which shall be transferred to income at the end of the accounting period. f. Other Deferred Credits [2-3-26-16] This represents other deferred credits which cannot be appropriately classified under any of the foregoing "Unearned Income and Other Deferred Credits" account. 29. OTHER LIABILITIES a. Accounts Payable [2-3-30-00] This represents other obligations of the bank under open-account arrangement such as (a): deposits made by loan applicants for various expenses in connection with pending loan applications; (b) payments on loans pending liquidation; (c) interest rebates on loan accounts which have not been claimed by clients; (d) deposits in connection with the purchase/redemption of property acquired; (e) proceeds of collections pending remittance to clients/payees; (f) balances of current accounts closed due to improper handling; and (g) indebtedness for purchases of office supplies, printed forms, furniture, fixtures and equipment. b. Dividends Payable [2-3-32-00] This represents the amount of unpaid cash dividends declared by the Board of Directors to stockholders of record and duly approved by BSP. c. Other Credits Dormant [2-3-34-00] This represents other credits held by the bank which have been outstanding for more than one (1) year but less than ten (10) years. d. Other Credits Unclaimed Balances [2-3-36-00] This represents other credits held by the bank in favor of persons known to be dead or unheard from during the preceding ten (10) years or more which have not been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended). e. Withholding Tax Payable [2-3-38-00] This represents the taxes deducted/withheld by the bank from the (a) salaries/wages of its officers and employees and those hired on a contractual basis; (b) interest on demand savings, NOW and time deposit liabilities; (c) money market transactions; and (d) interest income of non-resident foreign individuals/corporations, for remittance to the Bureau of Internal Revenue, in accordance with existing rules and regulations. f. SSS, Medicare, Employees' Compensation Premiums and PAG-IBIG Contributions Payable [2-3-40-00] This represents the amount due to the Social Security System for employer's and employees' SSS, Medicare, Employees' Compensation premiums and PAG-IBIG contributions and payments on loans to these institutions such as salary/housing loans. g. Overages [2-3-42-00] This represents the amount of overages found in the tellers' daily transactions and/or accountability of officers and/or other employees. Overages arising from loose change shall be closed to an appropriate income account at the end of the accounting period while overages of substantial amounts shall be transferred to "Accounts Payable" account pending proper disposition. h. Subscriptions Payable [2-3-44-00] Subscriptions Payable Equity Investments in Financial Allied Undertakings This represents the bank's liability on the unpaid portion of its total subscriptions to shares of stocks of domestic financial allied undertakings. Subscriptions Payable Equity Investments in Non-Financial Allied Undertakings This represents the bank's liability on the unpaid portion of its total subscriptions to shares of stocks of domestic non-financial allied undertakings. i. Deposits for Keys of Safe Deposit Boxes [2-3-46-00] This represents the deposits made by lessees of safe deposit boxes for the keys thereof. j. Sundry Credits [2-3-48-00] This represents items/transactions which cannot be classified immediately under any credit account. Entries to this account shall be cleared within one (1) month from date of entry. k. Deposit for Stock Subscription [2-3-54-00] This represents payments made by stockholders of the bank on subscription to the increase in the authorized capital which cannot be directly credited to "Common Capital Stock Paid-in" account pending approval by the Bangko Sentral and registration with the Securities and Exchange Commission of the amendment to the Articles of Incorporation increasing capital stock. This account will be used only when existing authorized capital is already fully subscribed. l. Inter-office Float Items (Credit Balances) [2-3-56-00] This represents inter-office clearing accounts between Head Office and branches which cannot appropriately be classified under the "Due To Head Office/Branches/Agencies" account. m. Miscellaneous Liabilities [2-3-58-00] This represents items/transactions which cannot be appropriately classified under any of the foregoing liability accounts. CAPITAL ACCOUNTS 30. CAPITAL STOCK [3-1-02-00] (A memorandum entry shall be made for the total amount of the bank's authorized capital stock showing the total number of shares and the par value per share.) a. Preferred Capital Stock Subscribed [3-1-02-02] This represents the amount of subscribed preferred capital stock which has not been fully paid and/or fully paid, the corresponding certificate has not yet been issued. This account is credited upon subscription of preferred stock and debited upon issuance of the corresponding certificate for fully paid subscriptions. b. Preferred Capital Stock Subscriptions Receivable [3-1-02-04] This represents the unpaid portion of the subscribed preferred stock of the bank. c. Preferred Capital Stock Paid-in [3-1-02-06] This represents the aggregate amount of fully paid preferred stock, including stock dividends, for which the corresponding certificates have been issued. Preferred Capital Stock Paid in Private This represents the aggregate amount of fully paid preferred stock by a private individual, including stock dividends, for which the corresponding certificates have been issued. Preferred Capital Stock Paid in Government This represents the aggregate amount of fully paid preferred stock held by the government including those arising from equity conversion and including stock dividends, for which the corresponding certificates have been issued. d. Common Capital Stock Subscribed [3-1-02-08] This represents the amount of subscribed common stock which has not been fully paid and/or if fully paid, the corresponding certificate has not yet been issued. This account is credited upon subscription of common stock and debited upon issuance of the corresponding certificate for fully paid subscriptions. e. Common Capital Stock Subscriptions Receivable [3-1-02-10] This represents the unpaid portion of the subscribed common stock of the bank. f. Common Capital Stock Paid-in [3-1-02-12] This represents the aggregate amount of fully paid common stock, including stock dividends, for which the corresponding certificates have been issued. Common Capital Stock Paid in Private This represents the aggregate amount of fully paid common stock by a private individual, including stock dividends, for which the corresponding certificates have been issued. Common Capital Stock Paid in Government This represents the aggregate amount of common stock held by the government including those arising from equity conversion and including stock dividends, for which the corresponding certificates have been issued. g. Stock Dividends Distributable [3-1-02-14] This represents the amount of stock dividends declared by the Board of Directors, the corresponding certificates for which have not yet been issued. 31. SURPLUS [3-2-02-00] a. Paid-in Surplus [3-2-02-02] This represents premium on the sale of capital stock and other capital contributions. b. Surplus Free [3-2-02-04] This represents the unappropriated or free portion of the accumulated profits of the bank. 32. SURPLUS RESERVES [3-2-04-00] a. Reserve for Self-Insurance [3-2-04-04] This represents the accumulated amount set aside to cover losses due to fire, defalcation by and other unlawful acts of the bank's officers/employees and/or third parties. b. Reserve for Contingencies [3-2-04-06] This represents the accumulated amount set aside for possible or unforeseen losses, decrease or shrinkage in the book value of the bank's assets, or for undeterminable liabilities not otherwise recorded, such as those arising from lawsuits, defaults on obligations and unexpected expenditures. c. Other Surplus Reserves [3-2-04-08] This represents the accumulated amount set aside for purposes other than those stated in the aforementioned "Surplus Reserves" accounts. 33. UNDIVIDED PROFITS [3-3-02-00] This represents the clearing account for all income and expenses, the balance of which shall be transferred to "Surplus Free" account at the end of the accounting period after taking up all other charges and/or credits that may be appropriately cleared thru this account. 34. APPRAISAL INCREMENT RESERVE [3-3-04-00] This is the contra-account of "Bank Premises Appraisal Increment" account. This is also known as "Revaluation Reserve" under existing rules and regulations which shall not form part of the combined capital accounts of the bank. 35. INWARD BILLS FOR COLLECTION [4-0-10-00] This represents the amount of domestic bills, drafts or checks received for collection locally. 36. OUTWARD BILLS FOR COLLECTION [4-0-12-00] This represents the amount of local bills received for collection from out-of-town drawee banks. 37. LATE DEPOSITS/PAYMENTS RECEIVED [4-0-44-00] This represents non-cash deposits received after the selected clearing cut-off time which are not booked as deposits for the day as allowed under existing rules and regulations and non-cash payments received after the selected clearing cut-off time for purposes other than as deposits which shall be validated/reversed the following banking day or shall be lodged in their appropriate asset/liability accounts. 38. ITEMS HELD AS COLLATERAL [4-0-46-00] This represents the aggregate of the nominal value (P1.00 per item) of the items held as collateral for loans and other credits granted such as certificates of deposits, passbooks, certificates of title, bank acceptances, stock certificates and sugar quedans. A register shall be maintained for this account. 39. DEFICIENCY CLAIMS RECEIVABLE [4-0-50-00] This represents the amount of probable claims against borrowers/debtors arising from the foreclosure of mortgaged properties. 40. OTHER CONTINGENT ACCOUNTS [4-0-52-00] This represents items which cannot be appropriately classified under any of the foregoing contingent accounts. INCOME ACCOUNTS 41. INTEREST INCOME [5-0-02-00] a. Interest Income Loans and Discounts [5-0-02-04] This represents interest earned and/or actually collected on loans and discounts. The following subsidiary ledger accounts shall be maintained: Discounts Earned This represents the earned portion of interest collected in advance on bills discounted. Interest Income Demand Loans This represents interest earned and/or actually collected on demand loans. Interest Income Time Loans This represents interest earned and/or actually collected on time loans, including earned portion of interest collected in advance. Interest Income Mortgage Contract Receivables This represents interest earned and/or actually collected on mortgage contract receivables. Interest Income Loans and Discounts DOSRI This represents interest earned and/or actually collected on loans to DOSRI, including earned portion of interest collected in advance. Interest Income Loans and Discounts Officers (Other than DOSRI) and Employees This represents interest earned and/or actually collected on loans to officers and employees under the BSP approved officer/employee benefit plan, including earned portion of interest collected in advance. b. Interest Income Agrarian Reform/Other Agricultural Credit [5-0-02-06] This represents interest earned and/or actually collected on agrarian reform/other agricultural credit. c. Interest Income Development Incentive Loans [5-0-02-08] This represents interest earned and/or actually collected on development incentive loans. d. Interest Income Restructured Loans [5-0-02-14] This represents interest earned and/or actually collected on restructured loans. This account shall be credited for: (a) interest which has been capitalized or made part of the principal of the restructured loans when such interest has been collected; and (b) interest earned and/or collected on restructured loans. e. Interest Income Past Due Items/Items in Litigation [5-0-02-16] This represents interest earned and/or actually collected on past due items and items in litigation. f. Interest Income Deposit in Banks [5-0-02-20] This represents interest earned and credited to the bank's demand and savings deposits and interest earned and actually collected on time deposits in other banks. g. Interest Income Due from Bangko Sentral ng Pilipinas [5-0-02-22] This represents interest earned on and credited to deposit with BSP. h. Interest Income Investments in Bonds and Other Debt Instruments [5-0-02-26] This represents interest earned and/or actually collected on investments in bonds and other debt instruments issued by the government and/or private entities. The following sub-control accounts shall be maintained: Interest Income Tax-Exempt Investments This represents interest earned and/or actually collected on all tax-exempt government securities and other investments. Interest Income Taxable Investments This represents interest earned and/or actually collected on all taxable government securities and other investments. i. Interest Income Others [5-0-02-40] This represents interest earned and/or actually collected on all receivable accounts other than loans such as accounts receivable, sales contract receivables and others. 42. BANK COMMISSIONS [5-0-04-00] This represents commission collected for services rendered as in handling of collection items, telegraphic transfers, demand drafts, etc. 43. SERVICE CHARGES/FEES [5-0-06-00] This represents charges/fees, including commitment fees, collected for services rendered as in (a) handling of loans transactions and returned checks; (b) sale of Manager's checks. 44. FOREIGN EXCHANGE PROFIT/(LOSS) [5-0-12-00] This represents realized profit or actual loss incurred on foreign exchange transactions, including profit or loss arising from the adjustment of the peso equivalent of foreign monetary accounts consisting of foreign currencies on hand, due from foreign banks and short-term (collectible/payable within one year) receivables/payables. Sub-controls should be maintained from actual profit/(loss) and profit/(loss) arising from revaluation. 45. PROFIT/(LOSS) ON SALE OR REDEMPTION OF INVESTMENTS [5-0-16-00] This represents profits earned or loss incurred on the sale or redemption of investments. a. Profit (Loss) on Sale or Redemption of Investments Government Bonds and Other Debt Instruments [5-0-16-02] This represents profits earned or loss incurred on the sale or redemption of investments in government bonds and other debt instruments. b. Profit (Loss) on Sale or Redemption of Investments Private Bonds and Other Debt Instruments [5-0-16-02] This represents profits earned or loss incurred on the sale or redemption of investments in private bonds and other debt instruments. c. Profit (Loss) on Sale or Redemption of Investments Equity Securities [5-0-16-04] This represents profits earned or loss incurred on the sale of equity securities. 46. OTHER INCOME a. Rental Income [5-0-20-00] 1) Rental Income Safe Deposit Box [5-0-20-02] This represents the earned portion of rental collected in advance from lessees of safe deposit boxes. 2) Rental Income Bank Premises & Equipment [5-0-20-04] This represents rental earned and actually collected from lessees on bank premises and equipment. b. Miscellaneous Income/(Loss) [5-0-22-00] This represents income or loss which cannot be appropriately classified under any of the foregoing income/loss accounts. EXPENSE ACCOUNTS 47. INTEREST EXPENSE [6-0-02-00] a. Interest Expense on Deposits [6-0-02-00] Interest Expense Demand Deposits This represents payments and/or monthly accruals of interest on demand deposit accounts. Interest Expense Savings Deposits This represents payments and/or monthly accruals of interest on savings deposits. Interest Expense "NOW" Accounts This represents payments and/or monthly accruals of interest on "NOW" accounts. Interest Expense Time Certificates of Deposits This represents payments and/or monthly accruals of interest on time certificates of deposits. b. Interest Expense on Borrowed Funds [6-0-02-04] Interest Expense Bills Payable Bangko Sentral ng Pilipinas This represents payments and/or monthly accruals of interest on the outstanding obligations of the bank with the Bangko Sentral ng Pilipinas. Interest Expense Bills Payable Local Banks This represents payments and/or monthly accruals of interest on outstanding bills payable to local banks. Interest Expense Bills Payable Others Interest Expense Bills Payable Non-Banks This represents payments and/or monthly accruals of interest on outstanding bills payable to non-bank financial intermediaries. Interest Expense Bills Payable Private Firms and Individuals This represents payments and/or monthly accruals of interest on outstanding bills payable to individuals and other private firms (other than banks and non-bank financial intermediaries). Interest Expense Bills Payable Others This represents payments and/or monthly accruals of interest on outstanding local bills payable which cannot be appropriately classified under any of the foregoing "Interest Expense Bills Payable" accounts. c. Interest Expense Others This represents payments and/or monthly accruals of interest other than on deposits and borrowed funds, such as the interest portion of amortization payments on the purchase of fixed assets on installment basis. 48. FINANCE CHARGES [6-0-04-00] This represents payments of finance and other charges on loans obtained, placements, promissory notes issued and other forms of obligations. 49. COMPENSATION/FRINGE BENEFITS [6-0-06-00] a. Salaries and Wages [6-0-06-00] This represents the gross remuneration of officers and employees for regular and overtime services rendered. b. Fringe Benefits Director [6-0-06-04] This represents fringe benefits granted to directors, in cash or in kind, in accordance with management policy and BIR regulations. c. Fringe Benefits Officers and Employees [6-0-06-06] This represents expenses for allowances and other fringe benefits granted to officers and employees in accordance with management policy such as bonuses, profits shared, including those for special studies/seminars, but excluding medical, dental and hospitalization benefits. d. Director's Fees [6-0-06-08] This represents per diems and fees granted to directors in accordance with management policy. e. SSS, Medicare and Employees' Compensation Premiums and Pag-IBIG Fund Contributions [6-0-06-10] This represents the bank's share in the Social Security System, Medicare, Employees Compensation premiums and Pag-IBIG Fund contributions of its officers and employees. f. Medical, Dental and Hospitalization [6-0-06-12] This represents expenses for medical and dental services including cost of medicines, hospital bills and other related expenses incurred by the bank, in accordance with management policy for and in behalf of its officers and employees and their dependents. g. Contributions to Retirement/Provident Fund [6-0-06-14] This represents the bank's contributions to the retirement/provident fund or any similar fund for its personnel. 50. MANAGEMENT AND OTHER PROFESSIONAL FEES [6-0-08-00] This represents expenses for services rendered by individuals/firms on a retainer/contractual basis such as the managing company, legal counsel, external auditors and consultants. 51. BANKING FEES [6-0-10-00] This represents the bank's share in the cost of maintaining the appropriate supervising and examining department of the Bangko Sentral. 52. FINES, PENALTIES AND OTHER CHARGES [6-0-12-00] This represents fines, penalties and other charges imposed on the bank under existing rules and regulations such as fines/penalties for reserve deficiencies and late submission of reports. 53. TAXES AND LICENSES [6-0-14-00] This represents expenses for taxes and licenses other than income tax such as corporate residence tax, motor vehicles registration fee, privilege tax, firearms tax, gross receipts tax and other taxes. 54. FRINGE BENEFITS TAXES [6-0-15-00] This represents expenses for the final withholding tax imposed on the grossed-up monetary value of fringe benefits furnished or granted by the bank, in cash or in kind, in addition to the basic salaries, to its directors and officers, in accordance with BIR regulations. 55. INSURANCE [6-0-16-00] Insurance Philippine Deposit Insurance Corporation (PDIC) This represents expenses for insurance premiums to the Philippine Deposit Insurance Corporation (PDIC) pursuant to Republic Act No. 3591, as amended. Insurance Philippine Crop Insurance Corporation (PCIC) This represents the bank's share in the premium on insurance covering production loans for palay under the supervised credit program which shall be remitted to the Philippine Crop Insurance Corporation (PCIC). Insurance Others This represents payments and monthly amortizations of premiums on insurance such as banker's blanket and fidelity bond, fire insurance and workmen's compensation coverage. 56. DEPRECIATION/AMORTIZATION [6-0-18-00] a. Depreciation Bank Premises Buildings [6-0-18-02] This represents the monthly depreciation of the bank's buildings. b. Depreciation Bank Premises Appraisal Increment Buildings [6-0-18-04] This represents the monthly depreciation of the bank's buildings appraisal increment. c. Depreciation Furniture, Fixtures and Equipment [6-0-18-06] This represents the monthly depreciation of the bank's furniture, fixtures and equipment. d. Amortization Leasehold Rights and Improvements [6-0-18-08] This represents the monthly amortization of leasehold rights and improvements. e. Amortization Deferred Charges [6-0-18-10] This represents the monthly amortization of deferred charges, except rent and insurance, for which specific accounts have been provided. 57. LITIGATION/ASSETS ACQUIRED EXPENSES [6-0-20-00] This represents expenses in connection with the litigation proceedings and the registration/consolidation of ownership of acquired assets in the name of the bank, as well as those incurred in their preservation/maintenance. 58. BAD DEBTS WRITTEN-OFF [6-0-22-00] This represents loans, advances and other accounts which management has finally determined to be worthless/uncollectible and written-off from the books in accordance with generally accepted procedures and existing rules and regulations. 59. PROVISIONS [6-0-24-00] a. Provision for Probable Losses [6-0-24-02] This represents monthly provisions for bad and doubtful domestic accounts. b. Provision for Year-End Expenses [6-0-24-04] This represents monthly provisions for year-end expenses such as bonuses and Christmas party and the like. This is a temporary account which shall be classified under/closed to the appropriate expense account(s) on or before the end of the accounting period. c. Provision for Income Tax [6-0-24-06] This represents monthly provisions for income tax. 60. OTHER EXPENSES a. Rent [6-0-26-00] This represents payments and monthly amortizations of rent for buildings, spaces and/or equipment leased by the bank for its business. b. Power, Light and Water [6-0-28-00] This represents expenses for power, light and water consumption. c. Information Technology Expenses [6-0-30-00] This represents expenses for the operation, maintenance and development of computer hardware and software. d. Fuel and Lubricants [6-0-32-00] This represents expenses for fuel and lubricants used for bank-owned/leased vehicles and other equipment. e. Travelling Expenses [3-0-34-00] This represents expenses for the official travel of directors, officers and employees such as fares, hotel bills, subsistence, porterage and tips. This account shall also include expenses of directors, officers and employees incurred for fuel and minor repairs in using their own vehicles for official travel. f. Repairs and Maintenance [6-0-36-00] This represents expenses for repairs and maintenance incurred to put the bank premises, furniture, fixtures and equipment in working condition but which do not prolong the estimated useful life of the asset or enhance the value thereof. g. Security, Clerical, Messengerial and Janitorial Services [6-0-38-00] This represents expenses for the services of security guards, clerks/tellers, messengers and janitors who are not employees of the bank and/or are hired on a contractual basis. h. Postage, Telephone, Cables and Telegram [6-0-40-00] This represents expenses for postage, telephone services, cables and telegrams. i. Documentary Stamps Used [6-0-42-00] This represents expenses for documentary stamps used by the bank excluding those chargeable to customers. j. Stationery and Supplies Used [6-0-44-00] This represents expenses for printed forms, stationery and other office supplies used by the bank or issued from the stockroom to the different departments and branches of the bank excluding those chargeable to customers. k. Periodicals and Magazines [6-0-46-00] This represents expenses for periodicals, magazines and other publications. l. Advertising and Publicity [6-0-48-00] This represents expenses for advertising and publicity such as handbills, pamphlets, billboards, brochures and giveaways. m. Representation and Entertainment [6-0-50-00] This represents the fixed allowances and/or actual expenses for public relations activities and business development of the bank. n. Membership Fees and Dues [6-0-52-00] This represents expenses for membership and dues to civic/bank associations or professional organizations of which the bank's officers and/or employees are members. o. Donations and Charitable Organizations [6-0-54-00] This represents donations and contributions to charitable organizations and other non-profit associations including contributions to victims of fire, typhoon and other natural calamities. p. Freight Expenses [6-0-56-00] This represents expenses incurred in the shipment or relocation of the bank's equipment, supplies and other properties. q. Miscellaneous Expenses [6-0-60-00] This represents items which cannot be appropriately classified under any of the foregoing expense accounts. 61. EXTRAORDINARY CREDITS/CHARGES a. Recovery on Charged-off Assets [7-0-02-00] This represents collections of accounts or items previously written-off. b. Income on Assets Acquired [7-0-04-00] This represents income earned and actually collected on acquired assets. Memorandum entries of income collected shall be made on the individual subsidiary ledgers of the acquired assets. c. Profit/(Loss) from Assets Sold/Exchanged [7-0-06-00] This represents profit or loss arising from the sale and/or exchange of assets. d. Dividends Equity Investments [7-0-08-00] This represents cash dividends earned and received on equity investments. e. Other Extraordinary Credits/Charges [7-0-10-00] This represents other credits/charges that cannot appropriately be classified under any of the foregoing extraordinary items. APPENDIX A-1 DEPOSIT LIABILITIES Sub-control accounts should be maintained for the following: a. Demand Deposits [2-1-02-02] Demand Deposits Private Demand Deposits Private Active This represents current accounts which are not dormant. Demand Deposits Private Dormant This represents current accounts which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank but which in no case shall be less than one (1) year. Demand Deposits Private Garnished This represents current accounts which are attached under court orders pending final disposition of the court cases involving the accountee-depositor. Demand Deposits Private Guaranty This represents current accounts assigned/pledged to secure credit accommodations granted by the bank. Demand Deposits Private Unclaimed Balances This represents current accounts held by the bank in favor of persons known to be dead or who have not made further deposits or withdrawals during the preceding ten (10) years or more which have not been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended by Presidential Decree No. 679 dated April 2, 1975). Demand Deposits Banks Demand Deposits Banks Active This represents current accounts of banking institutions which are not dormant. Demand Deposits Banks Dormant This represents current accounts of banking institutions which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank but which in no case shall be less than one (1) year. Demand Deposits Government Demand Deposits Government Active This represents current accounts government which are not dormant. Demand Deposits Government Dormant This represents current account government which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank which in no case shall be less than one (1) year. APPENDIX A-2 b. Savings Deposits [2-1-02-04] Savings Deposits Private Savings Deposits Private Active This represents savings deposit account which are not dormant. Savings Deposits Private Dormant This represents savings deposit account which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. Savings Deposits Private Garnished This represents savings deposit accounts which are attached under court orders pending final disposition of the court cases involving the accountee-depositor. Savings Deposits Private Guaranty This represents savings deposits assigned/pledged to secure credit accommodations granted by the bank. Savings Deposits Private Unclaimed Balances This represents savings deposit accounts held by the bank in favor of persons known to be dead or who have not made further deposits or withdrawals during the preceding ten (10) years or more which have not been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended by Presidential Decree No. 679 dated April 2, 1975). Savings Deposits Banks Savings Deposits Banks Active This represents savings deposits accounts of banking institutions which are not dormant. Savings Deposits Banks Dormant This represents savings deposit accounts of banking institutions which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. Savings Deposits Government Savings Deposits Government Active This represents savings deposits government which are not dormant. Savings Deposits Government Dormant This represents savings deposits - government which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank which in no case shall be less than two (2) years. APPENDIX A-3 c. Time Certificates of Deposits (TCDs) [2-1-02-08] Time Certificates of Deposits (TCD) Private TCD Private Unmatured This represents the time certificates of deposits which have not matured. TCD Private Matured This represents matured time certificates of deposits which have not been renewed and/or withdrawn by the depositor. TCD Private Dormant This represents time certificates of deposits which have no activity for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. TCD Private Garnished This represents time certificates of deposits which are under court orders pending final disposition of the court cases involving the accountee-depositor. TCD Private Guaranty This represents time certificates of deposits assigned/pledged to secure credit accommodations granted by the bank. TCD Private Unclaimed Balances This represents time certificates of deposits held by the bank in favor of persons known to be dead or who have not made any deposits or withdrawals during the preceding ten (10) years or more which have not been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended by Presidential Decree No. 679 dated April 2, 1975). Time Certificates of Deposits Banks TCD Banks Unmatured This represents the time certificates of deposits of banking institutions which have not matured. TCD Banks Matured This represents matured time certificates of deposits of banking institutions which have not been renewed and/or withdrawn by the depositor. TCD Banks Dormant This represents time certificates of deposit of banking institutions which have no activity for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. Time Certificates of Deposits Government These represents time certificates of deposits of the Philippine Government, its political subdivisions and/or government owned or controlled corporations. APPENDIX A-4 TCD Government Unmatured This represents the time certificates of deposits government which have not matured. TCD Government Matured This represents matured time certificates of deposits government which have not been renewed and/or withdrawn by the depositor. TCD Government Dormant This represents time certificates of deposit government which have no activity for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. TCD - Government - Unmatured This represents the time certificates of deposits - government which have not matured. TCD - Government - Matured This represents matured time certificates of deposits-government which have not been renewed and/or withdrawn by the depositor. TCD - Government - Dormant This represents time certificates of deposit-government which have no activity for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. d. NOW Accounts [2-1-02-06] NOW Accounts - Active This represents NOW accounts which are not dormant. NOW Accounts - Dormant This represents NOW accounts which have no activity (deposits or withdrawals) for a period specified by the Board of Directors of the bank but which in no case shall be less than two (2) years. NOW Accounts - Garnished This represents NOW accounts which are attached under court orders pending final disposition of the court cases involving the accountee-depositor. NOW Account - Guaranty This represents NOW accounts assigned/pledged to secure credit accommodations granted by the bank. NOW Accounts - Unclaimed Balances This represents savings deposit accounts held by the bank in favor of persons known to be dead or who have not made further deposits or withdrawals during the preceding ten (10) years or more which have not been reported to the Treasurer of the Philippines pursuant to the provisions of the Unclaimed Balances Act (Act No. 3936, as amended by Presidential Decree No. 679 dated April 2, 1975). ANNEX B FINANCIAL STATEMENTS (MAIN/BRANCH) Consolidated Daily Report of Condition Consolidated Statement of Condition ANNEX B-1 DATA FORMULATION Consolidated Statement of Condition Consolidated Statement of Income and Expenses Consolidated Daily Report of Condition ANNEX C REPORTS REQUIRED From Rural/Cooperative Banks ANNEX D MANUAL OF UNIFIED REPORTS For Rural/Cooperative Banks Unified General Ledger Account Coding Scheme General Ledger Template GL File Structure Subsidiary Ledger Structure ANNEX E DATA FOR RURAL/COOPERATIVE BANKS USAGE and FREQUENCY MATRIX USAGE LEGEND IR - International Reserve MS/BS - Monetary Survey/Banking Survey LOAN PORT. MGMT. - Loan Portfolio Management IFI STAT. CENTER - International Financial Institutions Statistics Center SUP FEES - Supervisory Fees FS - Financial Statistics CARE MGMT - Capital and Reserve Management BANK RATING - Bank Rating FS RATIOS - Financial Statement and Ratios FX LIAB/DEBT MGMT. - Foreign Exchange Liabilities and Debt Management USAGE MATRIX FREQUENCY MATRIX