Giving Publicity to Memorandum Circular No. 469, dated August 13, 1962, of the Honorable, the Auditor General, Manila

July 2, 1964 REVENUE MEMORANDUM CIRCULAR NO. 25-64 SUBJECT : Giving Publicity to Memorandum Circular No. 469, dated August 13, 1962, of the Honorable, the Auditor General, Manila TO : All Revenue Regional Directors, Chief Revenue Officers, Collections Agents, Cash Clerks and Others Concerned There are quoted hereunder the provisions of Memorandum Circular No. 469, dated August 13, 1962, of the Honorable, the Auditor General, Manila, to wit: "August 13, 1962 MEMORANDUM CIRCULAR NO. 469 TO : All Heads of Departments and Government-owned or Controlled Corporations, Chiefs of Bureaus and Offices, Collecting Officers, Corporation Bureau, Provincial and City Auditors, Chief Accountants, and Others Concerned. SUBJECT : Revised Procedure for Handling Dishonored Checks, Superseding Memorandum Circular No. 458 dated September 27, 1961. From time to time private checks received by collecting officers in payment of taxes, fees and other debts due the Government are dishonored by drawee banks. Until these checks are settled and redeposited, they represent potential losses to the Government and may even be sources of irregularities. In order, therefore, to provide better controls over dishonored checks, the following recording, accounting, auditing, and related procedures for handling them are hereby prescribed: I. Introduction of a new accountable form For the purpose of this Circular, a new pre-numbered accountable form to be identified as General Form No. 106(A) is hereby introduced. A sample of this Form is shown in Appendix A hereof. This form will serve three purposes: (a) as complete record of dishonored checks, (b) as notice to payer whose check was dishonored and at the same time request for settlement, and (c) as receipt of settlement. Its uses are discussed further in succeeding paragraphs. 2. Receipt of dishonored checks Normally a dishonored check is returned by the National Treasury to the collecting officer who had deposited it, together with the original Treasury debit voucher. When a collecting officer receives these documents from the Treasury, he shall, on the same day: (1) Record the return of the dishonored check by a negative credit entry in his cash book with the following explanation. "Debit Voucher No. _____ dated _________ for _____________, Check No. _____ deposited on ___________, returned by the Treasury". (2) Prepare the advice portion of General Form No. 106(A) in triplicate and distribute the copies as follows: (a) The original shall be sent to the drawer or payor for settlement. (b) The duplicate shall be sent to the Chief Accountant. (c) The triplicate shall remain in the booklet. (3) File the check and debit voucher in an open file of dishonored checks. In preparing the Report of Collections for the month, the collecting officer shall enter the sum total of all dishonored checks during the month as "Other Debits" in the Statement of Account Current". 3. Accounting entry for dishonored checks The National Treasury usually sends to chief accountants its duplicate debit vouchers together with the monthly Statements of Treasury Account Current. When a chief accountant receives a debit voucher for a dishonored check he shall: (1) Check the debit voucher against his copy of General Form No. 106(A) . If his copy of General Form No. 106(A) has not been forwarded to him, the chief accountant shall request it from the collecting officer. The chief accountant shall report to the agency head excessive delays in preparing and sending out General Form No. 106(A) . (2) Draw a journal voucher, supported by the debit voucher and General Form No. 106(A) , to record the dishonored check, as follows: Dr. Treasury Account Current (70-7) P(XXX) Cr. Cash Collecting Officer (70-4) P(XXX) In the case of field collecting officers it is possible that the duplicate copies of General Form No. 106(A) issued by them have not been received by the Chief accountants at the time the journal voucher is drawn. In such instances, the chief accountant shall, in the meantime, support the journal voucher with the Treasury debit voucher only. When the duplicate General Form No. 106(A) is received, he shall then attach it to the corresponding journal voucher. aisadc 4. Settlement and redeposit of dishonored checks A dishonored check may be settled by merely correcting an error or errors upon its face or by replacing it with a new check or with cash. In cases where a dishonored check is merely cured of its defects, the collecting officer shall redeposit the check itself. Where a dishonored check is replaced with a new check or with cash, the collecting officer shall deposit the new check or cash received and return the old check to the drawer or payor. When a dishonored check is settled, the collecting officer shall: (1) Accomplish the settlement portion of the triplicate of the corresponding General Form No. 106(A) in the stub. If the original advice of dishonored check is presented to him, the collecting officer shall also accomplish the receipt portion of the original and return it to the drawer or payor. (2) File the corresponding debit voucher in a closed file of dishonored checks. (3) Redeposit the settlement through a separate remittance advice with this notation: "Redeposit on account of _____ Check No. _____, returned dishonored on Debit Voucher No. _____, dated _________," The Remittance Advice number and date shall be indicated on the triplicate copy of General Form No. 106(A) . (4) Record the redeposit in the cash book and include it in the Statement of Account Current of the Report of Collections in the same manner as regular deposits. 5. Accounting entry for redeposit The chief accountant shall record redeposits on account of dishonored checks in the same manner as and together with the regular deposits of the collecting officer, as follows: Dr. Treasury Account Current (70-7) P(XXX) Cr. Cash Collecting Officer (70-4) P(XXX) 6. Reporting and follow-up At the end of each month the collection officer shall see that the unsettled triplicate advices of dishonored checks, General Form No. 106(A) in the stub agree with his open file of dishonored checks. He shall then prepare in triplicate a list of unsettled dishonored checks showing: (1) The check number and date (2) The amount of the check (3) The drawer or payer (4) The official receipt issued (5) The number and date of the advice (General Form No. 106(A) issued) The collecting officer shall, within five days after the end of each month, submit the original of the list to the agency head, the duplicate to the Bureau Auditor and retain the triplicate for his file. The agency head shall immediately cause the list to be examined and take positive action to enforce settlement of all unsettled items. 7. Audit Normally the Treasury Vault Auditor furnishes the bureau auditor concerned with copies of Treasury debit vouchers. The bureau auditor shall see to it that all debit vouchers for dishonored checks are covered by General Form No. 106(A). In addition, he shall perform the following: (1) See to it that the monthly list of unsettled dishonored checks as required in Paragraph 6 is submitted on time. (2) Check the monthly list against the booklet of General Form No. 106(A) (3) Inspect the dishonored checks on hand and trace them to the list. (4) Investigate dishonored checks on hand but not in the list or those listed but not on hand. (5) Write to drawers or payors of checks that remain unsettled for more than 30 days from the date of the advice (General Form No. 106(A), requesting them to confirm their dishonored checks. (6) Trace all settlements of dishonored checks to the collecting officers cash book and then to the Treasury abstract of deposit. (7) See to it that the agency is taking appropriate steps to enforce the settlement of dishonored checks. 8. Dishonored checks on hand prior to this circular Agencies presently having dishonored checks on hand shall accomplish the advice portion of General Form No. 106(A) with respect to such checks. The provisions of this circular shall then apply to them. 9. Applicability to government corporations The procedures and instructions given above are directed to National Government agencies. However, with some modifications they may be made to suit government corporations. Therefore, as far as practicable, government corporations shall adopt the basic principles stated in this circular. xxx xxx xxx This circular supersedes Memorandum Circular No. 458 dated September 27, 1961 of this Office. It shall take effect as soon as General Form No. 106(A) is available from the Bureau of Printing. cdt (SGD.) PEDRO M. GIMENEZ Auditor General APPENDIX A Prenumber here General Form No. 106(A) February, 1962 Republic of the Philippines ______________________ (Bureau or Office) Seal _______, 19___ ADVICE OF DISHONORED CHECK To M ___________________________________________________ _________________________________________________ Your Check No. _____ dated _____, 19___ for P_________, paid by you for _______, 19___, was dishonored and returned by the bank for the following reason: ________________________________________________________ ________________________________________________________ Please settle this account immediately. ______________________ (Collecting Officer) (Note: In settling this account, please present this slip with your remittance for receipting below.) cdtech RECEIPT OF SETTLEMENT Received in settlement of above dishonored checks Cash P__________ Check No. _____ __________ M. C. No. _____ __________ Others _____ __________ Total P========= Other form of settlement:________________________ ___________________________________________ __________________ _____________________ (date) (Collecting Officer) (Note: After receipting, the original copy should be returned to the drawer or payor.) INSTRUCTIONS (To be printed on the cover of the booklet.) 1. This booklet is an accountable form that is used in connection with private checks received as collections and later dishonored by drawee banks in accordance with GAO Memorandum Circular No. 469 dated August 13, 1962 . It consists of two sections, the "Advice of Dishonored Check" portion and the "Receipt of Settlement" portion. 2. When a collecting officer receives a dishonored check from the National Treasury, he shall on the same day fill up the "Advice" portion and distribute the copies as follows: Original to the drawer or payor Duplicate to the Chief Accountant Triplicate retained in the pad. 3. When a dishonored check is settled or cured of its defects, the collecting officer shall accomplish the "Receipt" portion of the triplicate copy and of the original copy it is presented. The original copy will be returned to the drawer or payor. 4. The open or unfilled "Receipt" portions in the booklet should at all times agree with the dishonored checks on hand. 5. The settlement of the dishonored checks should be vigorously pursued by the collecting officer. At the end of each month, he shall prepare in triplicate a list of unsettled dishonored checks showing: Check number and date Amount of the check Drawer or payor Official receipt number and date Date of the Advice of Dishonored Check The original of the list shall be submitted to the agency head, the duplicate to the bureau auditor, and the triplicate filed by the collecting officer. 6. The form shall be filled up in handwriting, using for the purpose a ball pen or indelible pencil. The duplicate and triplicate copies must always be legible. 7. The triplicate copies shall never be detached from the booklet. 8. This booklet shall be made available at all times to representatives of the General Auditing Office." Strict compliance with the provisions of this Memorandum Circular is hereby enjoined. cdta (SGD.) BENJAMIN N. TABIOS Acting Commissioner of Internal Revenue