Implementation of a Modified Disbursement System in the BIR Pursuant to Memorandum Order No. 276 of the Office of the President Dated January 12, 1990 Prescribing the Modification of the Government's Disbursement System

February 26, 1990 REVENUE MEMORANDUM ORDER NO. 16-A-90 SUBJECT : Implementation of a Modified Disbursement System in the BIR Pursuant to Memorandum Order No. 276 of the Office of the President Dated January 12, 1990 Prescribing the Modification of the Government's Disbursement System TO : The Assistant Commissioner (Financial Service); Assistant Commissioner (Administrative Service); All Regional Directors; Chief, Disbursement Accounting Division, Chief, Budget Division; Chief, General Services Division, Chief, International Tax Affairs Division; Chiefs, Fiscal Operations Branch; Chiefs, Administrative Branch and All Others Concerned 1.0. PURPOSES 1.1. To provide the guidelines, rules and procedures in the implementation of a Modified Disbursement System (MDS) in the Bureau of Internal Revenue as prescribed under Joint Circular No. 1-90 of the Department of Finance and the Department of Budget and Management (DBM) dated February 27, 1990. 1.2. To delineate the responsibilities of the different offices and units in the BIR involved in the implementation of the MDS. 1.3. To facilitate the reconciliation of disbursements of the BIR and the accounts of the Land Bank of the Philippines (LBP) or its conduit bank. 2.0. OPERATING PROCEDURE 2.1. The Bureau of the Treasury (BTR) shall: 2.1.1. Open and maintain MDS deposit account with the Head Office of the LBP. 2.1.2. Deposit with the LBP the amount needed to enable the said bank to operate the MDS. 2.1.3. Replenish the MDS account daily corresponding to the amount of negotiated checks submitted by the Head Office of the LBP. 2.2. The DBM shall: 2.2.1. Issue monthly the Notice of Cash Allocation (NCA) directly to the BIR Central Office (CO)/ Regional Offices (ROs) covering the funding requirements of the BIR for each fund, copy furnished the Treasury Accounts Reconciliation Division (TARD), BTR and the LBP or its conduit bank. However, the salary requirement of ROs shall be covered by the MDS check to be sent by the BIR CO thru LBP. The initial issuance of the NCA effective March, 1990 shall be based on the approved Work and Financial Plan (WFP) for 1990. Thereafter, the release of the NCA shall be depended on the BIR's submission of the required Statement of Monthly Allocation and Utilization (SMAU) and supporting schedules, aside from the required financial reports. All NCAs issued by DBM during the year shall be valid up to the end of the calendar year only. Unutilized balances of NCAs at the end of the year shall be treated in accordance with procedures prescribed by the COA. Unpaid obligations at the end of the year shall be charged against the NCAs of the subsequent year. 2.3. The LBP or its conduit bank shall: 2.3.1. Open and maintain MDS sub-accounts for the BIR CO and ROs (for Maintenance and Other Operating Expenses only, in case of ROs). 2.3.2. Maintain checking account (for Personal Services) for regional offices receiving funding checks (MDS checks) from BIR CO thru LBP. 2.3.3. Debit the MDS account in the Head Office for the amount of negotiated MDS checks listed in the Statement of Accounts prepared for the BIR. 2.3.4. Submit, for reconciliation purposes, the Monthly Statement of Account together with the negotiated checks for each fund to the Chief, Disbursement Accounting Division/Chief of Fiscal Operations Branch within five (5) days after the end of each month. 2.4. The BIR CO and ROs shall: 2.4.1. Withdraw from the servicing bank the balance per books as of February 28, 1990 all deposit accounts under the New Disbursement System (NDS), except those deposits authorized by law creating trust receipts, for remittance to the account of the Treasurer of the Philippines (TOP) through authorized government depository bank or directly to the Cash Division, BTR, covered by a remittance advice in accordance with existing procedures. 2.4.2. Instruct the servicing bank to close all deposit accounts under the NDS with balances as soon as all outstanding checks are negotiated and the bank balance reconciled with the books of the BIR, or six (6) months after the implementation of the MDS, whichever comes first, and to issue manager's/cashier's check corresponding to such bank balances in favor of the BIR CO or RO. Such manager's/cashier's check issued by the servicing bank shall be deposited to the account of the TOP through a remittance advice. 2.4.3. Open MDS Bank-accounts for each fund with the LBP or its conduit bank against which they shall withdraw funds through the use of MDS checks. 2.4.4. Establish a deposit account with the LBP or its conduit bank for Personal Services (in case of ROs) and issue another form of commercial check to pay obligations for Personal Services, chargeable against the deposit account. Any unutilized balance of this deposit account pertaining to the unobligated allotment at the end of the year shall be withdrawn for remittance to the TOP covered by a remittance advice. 2.4.5. Prepare and submit to the DBM the Statement of Monthly Allocation and Utilization (SMAU) and a copy of the Bank Reconciliation Statement, within ten (10) days and fifteen (15) days, respectively, after the end of the month. 3.0. DUTIES AND RESPONSIBILITIES 3.1. The Chief, Budget Division shall: 3.1.1. Prepare and submit to the DBM the consolidated WFP for the issuance of Advice of Allotment and NCA. 3.1.2. Prepare and issue Sub-allotment Advice (SAA) to regional offices to cover the expenditures of the region, copy furnished the Chief, Disbursement Accounting Division (DAD). 3.1.3. Furnish the Chief, GSD; Chief, DAD; and COA Resident Auditor a copy each of the NCA pertaining to the BIR CO. 3.2. The Chief, Disbursement Accounting Division shall: 3.2.1. Record the NCAs received from DBM in accordance with the accounting procedures prescribed by the COA. 3.2.2. Record the release of the funding check to BIR ROs for their salary requirements in accordance with the prescribed accounting entries issued by the COA. 3.2.3. Charge unpaid obligations at the end of the year against the NCA of the subsequent year. 3.2.4. Prepare the disbursement vouchers corresponding to the funding requirements for Personal Services and prior year's accounts payable of ROs. 3.2.5. Transmit to LBP Quezon City Branch the funding checks for the monthly payroll of BIR ROs as well as other Personal Services requirements and prior year's accounts payable, with advice to credit them for the account of the regional offices concerned. 3.2.6. Notify the RO concerned of the remittance thru LBP of MDS checks covering their funding requirements for Personal Services and prior year's accounts payable. 3.2.7. Notify the concerned DBM-AFB' of the names and addresses of the accredited government servicing bank (GSB) of the BIR CO and ROs and the account numbers of MDS sub-accounts and deposit accounts (for Personal Services of ROs) opened with the GSB. 3.2.8. Remit to BTR refund for overpayment of salaries and allowances, travelling expenses, etc. pursuant to subparagraph 3.3.1. 3.2.9. Reconcile the disbursement accounts per books with the corresponding Statement of Accounts furnished by the LBP Quezon City Branch. 3.2.10. Prepare and submit to the COA Resident Auditor the Bank Reconciliation Statement, on or before the 15th day of the following month, copy furnished the LBP Quezon City Branch, the BTR and the concerned Accounting and Finance Bureau of the DBM (DBM-AFB). 3.2.11. Prepare and submit to the concerned DBM-AFB the SMAU within ten (10) days after the end of the month. 3.2.12. Evaluate the SMAU submitted by BIR ROs for additional funding requirements for Personal Services. 3.3. The Chief, General Services Division shall: 3.3.1. Withdraw from the servicing bank the balance per books as of February 28, 1990 all deposit accounts of the BIR CO under the NDS for deposit to the account of the TOP through authorized government depository banks or directly to the Cash Division, BTR, covered by a remittance advice in accordance with DOF Circular No. 20-73 dated June 14, 1973. 3.3.2. Close all deposit accounts under the NDS with remaining balances in the books of the servicing banks as soon as all outstanding checks are negotiated and the bank balance reconciled with the books of the BIR, or six (6) months after the implementation of the MDS, whichever comes first, and withdraw the balance for remittance to the account of the BIR as indicated in subparagraph 3.3.1. 3.3.3. Make an inventory of unused blank commercial checks under NDS and dispose same in accordance with COA-MOF-MOB Joint Circular No. 7-81 dated August 31, 1981 and Treasury Memorandum Circular No. 8-73 dated June 27, 1973. 3.3.4. Open MDS sub-account for each fund with the LBP Quezon City Branch where the BIR CO is authorized to maintain account. 3.3.5. Use a specially designed commercial check (MDS check) to withdraw funds from the MDS account established by the BIR CO. Separate series of MDS checks shall be used for each fund. 3.3.6. Keep and maintain cash control records to insure that disbursements shall not exceed the NCAs issued by DBM. 3.3.7. Notify the LBP Quezon City Branch of the names of officials authorized to sign and countersign MDS checks and those authorized to sign and deliver' the Advice of Checks Issued and Cancelled (ACIC) and submit the required specimen signature cards. 3.3.8. Purchase blank MDS checks which shall be limited to approximately one month's use, from the LBP Quezon City Branch. The Purchase Order (PO) shall be signed by two (2) BIR officials authorized by the Commissioner of Internal Revenue. The Cost of the blank checks shall be borne by the BIR CO. 3.3.9. Issue MDS check in favor of the LBP (to the credit of the deposit account of the Revenue Region concerned covering the monthly payrolls and the additional Personal Services requirements, as well as prior year's accounts payable of the BIR ROs. 3.3.10. Issue MDS check to cover the requirements for Fiscal Agency Service (FAS). 3.3.11. Prepare and submit ACIC at least daily to the LBP Quezon City Branch. The ACIC, certified correct by the Disbursing Officer (DO) and approved by the Chief, CSD, or authorized representative, shall be prepared in five (5) copies to be distributed as follows: Original and Duplicate to be submitted to LBP QC Branch Triplicate COA Resident Auditor Quadruplicate Chief, DAD Quintuplicate file 3.3.12. Ensure that the ACIC is promptly submitted to the LBP QC Branch to enable payees to encash/negotiate the issued checks. 3.3.13. See to it that the checks are properly accomplished by indicating appropriate allotment/object class codes as well as area codes. 3.3.14. Perforate the directly cancelled or spoiled checks and write the word CANCELLED in bold letters on the face of the check and forward the cancelled/spoiled checks to the COA Resident Auditor for custody. 3.4. The Chief, International Tax Affairs Division shall: 3.4.1. Prepare the Fiscal Agency requests and the corresponding disbursement voucher covering the funding requirements of the Office of the Revenue Attache in Saudi Arabia. 3.4.2. Forward the approved Fiscal Agency requests with the funding check directly to the Central Bank of the Philippines for evaluation/approval. 3.5. The Chief, Fiscal Operations Branch (in the Regional Offices) shall: 3.5.1. Prepare WFP for submission to the Chief, Budget Division. 3.5.2. Record the NCAs covering the funding requirements of the regional offices for Maintenance and Other Operating Expenses as well as the funding check for the salary requirements of the region in accordance with the prescribed accounting entries issued by the COA. 3.5.3. Charge unpaid obligations at the end of 1990 and thereafter against the NCA of the subsequent year. 3.5.4. Reconcile the disbursement account per books with the corresponding disbursement of Account furnished by LBP or its conduit bank. 3.5.5. Remit to BTR refund for overpayment of travelling expenses and other maintenance and other operating expenses pursuant to sub-paragraph 3.6.2. However, refunds for overpayment of salaries and allowances and other Personal Services items shall be deposited back to the checking account (for Personal Services). 3.5.6. Prepare and submit the Bank Reconciliation Statement to the COA Regional Auditor on or before the 15th day of the following month, copy furnished the LBP or its conduit bank, the concerned DBM-AFP and the Chief, DAD. 3.5.7. Submit direct to the DBM-AFB concerned a copy of the SMAU (for Maintenance and Other Operating Expenses) within ten (10) days after the end of the month, copy furnished the TARD, BTR and the Chief, DAD. 3.5.8. Submit a separate SMAU to the Chief, DAD, for funding requirements for Personal Services. 3.6. The Chief, Administrative Branch (in the Regional Offices) shall: 3.6.1. Make an inventory of unused commercial checks under NDS and dispose same in accordance with COA-MOF-MOB Joint Circular No. 7-81 dated August 31, 1981 and Treasury Memorandum Circular No. 8-73 dated June 27, 1973. 3.6.2. Withdraw from the servicing bank the balance per books as of February 28, 1990 under the NDS and remit the same to the TOP through the authorized government depository bank or directly to the Cash Division, BTR covered by remittance advice. 3.6.3. Instruct the bank to close any remaining balance of the NDS account as soon as all outstanding checks are negotiated and the bank balance reconciled with the books of the BIR RO, or six months after the implementation of the MDS, whichever comes first, and to issue manager's/cashier's check corresponding to the remaining bank balance in favor of the BIR CO concerned. 3.6.4. Deposit the manager's/cashier's check issued by the bank to the account of the TOP as indicated in 3.6.2. above. 3.6.5. Open and maintain MDS sub-account with the nearest LBP branch or its conduit bank - DBP or PNB to cover the funding requirements of the regional office for Maintenance and Other Operating Expenses (MOE). 3.6.6. Establish a deposit account with the nearest LBP branch or its conduit bank of DBP or PNB for the salary requirements of regional office personnel, and prior year's accounts payable and issue regular commercial check to pay these obligations, chargeable against this deposit account. 3.6.7. Notify the Chief, DAD of the MDS sub-account and current account numbers of the revenue region as well as the names and addresses of the accredited GSB. 3.6.8. Withdraw the unutilized balance of the deposit account pertaining to unobligated allotment at the end of the year and remit the amount to the account of the TOP pursuant to sub-paragraph 3.6.2. of this Revenue Memorandum Order. 3.6.9. Notify the GSB concerned of the names of officials authorized to sign and countersign checks and those authorized a sign and deliver the Advice of Checks Issued and Cancelled (ACIC) and submit required specimen signature cards. 3.6.10. Coordinate with accredited GSB on the mode of payment of salaries of revenue personnel. 3.6.11. Keep and maintain cash control records to avoid withdrawals over and above the balance of the MDS sub-account. 3.6.12. Purchase blank MDS checks which shall be limited to approximately one month's use from the GSB where the BIR regional office is authorized to maintain its account. The Purchase Order shall be signed by two (2) officials of the regional office. The cost of the blank checks shall be shouldered by the regional office. 3.6.13. Prepare and submit ACIC at least daily to the GSB concerned in five (5) copies, as follows: Original and Duplicate to be submitted to GSB where the regional office is authorized to open sub-account Triplicate COA Regional Auditor Quadruplicate Chief, FOB Quintuplicate file The ACIC shall be certified correct by the Disbursing Officer and approved by the Chief, Administrative Branch or authorized representative. 3.6.14. See to it that the checks are properly accomplished by indicating appropriate allotment/object codes as well as area codes. 3.6.15 Ensure that ACIC is promptly submitted to the GSB concerned to enable payees to encash/negotiate the issued checks. 3.6.16. Perforate the directly cancelled or spoiled checks and write the w ord CANCELLED in bold letters on the face of the checks and forward the said checks to the COA Resident Auditor for custody. 3.7. The Assistant Commissioner (Financial Service) shall: 3.7.1. Sing the advice notifying the RO concerned of the remittance thru LBP of MDS checks covering their funding requirements for Personal Services and prior years' accounts payable. 3.7.2. Require the accurate preparation and timely submission of financial reports called for under this Revenue Memorandum Order. 3.8. The Assistant Commissioner (Administrative Service) shall: 3.8.1. Approve processed disbursement vouchers (Box No. 5, GF 5A). 3.8.2. Countersign the MDS checks issued in payment of obligations. 3.9. The Regional Director shall: 3.9.1. Ensure compliance with this Revenue Memorandum Order from regional officials and employees concerned. 4.0. ACCOUNTING ENTRIES The corresponding accounting entries that will be followed by the BIR CO and ROs to implement the provisions of this Revenue Memorandum Order shall be those prescribed by the COA. 5.0. PENALTY CLAUSE Under no circumstances shall disbursements exceed the NCA. Any officer who directly allowed withdrawals in excess of the NCA shall be held personally liable therefor pursuant to Section 17 of PD 1177. cdt 6.0. EFFECTIVITY This Revenue Memorandum Order shall take effect March 1, 1990. (SGD.) JOSE U. ONG Commissioner of Internal Revenue