Guidelines and Procedures in the Reconciliation of Collections and Remittances of Authorized Agent Banks (AABs) at the Revenue District Office (RDO) Level

October 22, 2001 REVENUE MEMORANDUM ORDER NO. 28-01 SUBJECT : Guidelines and Procedures in the Reconciliation of Collections and Remittances of Authorized Agent Banks (AABs) at the Revenue District Office (RDO) Level TO : All Revenue Officers and Employees Concerned I. BACKGROUND: The BCS-CRDC Reconciliation Inquiry is a new facility in the Collection and Bank Reconciliation (CBR) System. It allows the user to monitor tax/revenue collections and remittances and discrepancies that may exist between them. This inquiry screen serves as a reconciliation tool, primarily for the computerized RDOs and the Revenue Accounting Division (RAD) in the National Office. It assists them in identifying those banks with discrepancies between their Batch Control Sheet (BCS) and Consolidated Report of Daily Collections (CRDC) for a particular collection period. It is also used by the Regional Office and RAD to monitor the BCS-CRDC reconciliation activities of the computerized RDOs as well as to gauge collection and remittance performance of the banks. II. OBJECTIVES: This Order is issued to: 1) Prescribe the guidelines and procedures in the reconciliation of Authorized Agent Banks' (AABs) collections and remittances at the RDO level. 2) Prescribe the guidelines and procedures in the monitoring by the Regional Office and National Office of reconciliation done at the RDO level. III. DEFINITION OF TERMS: 1) Batch Control Sheet (BCS) payment information transmitted by the Bank Branches via electronic data transmission. 2) Consolidated Report of Daily Collections (CRDC) remittance information submitted by the Bank Head Office to the National Office-Revenue Accounting Division. 3) Computerized for purposes of this order, the term "computerized" will mean any Revenue Office whether Regional or District Office capable of on-line access to the CBR System specifically the BCS-CRDC Reconciliation Screen, the Payment Information Screen and the CRDC Detail Screen. 4) Non-computerized for purposes of this order, the term "non-computerized" will mean any Revenue Office whether Regional or District Office not capable of on-line access to the CBR System of the Integrated Tax System (ITS). 5) RDO Key Performance Indicators (KFIs) the uniform basis of reporting and evaluating the performance/accomplishment of a particular office. For purposes of this order, the RDO KPIs are the same as those indicated in Annex G-1. IV. GUIDELINES: 1) For computerized RDOs, the following rules shall be observe d; a) The BCS-CRDC Reconciliation facility shall be installed as part of the Collection and Bank Reconciliation System and utilized as the BIR's reconciliation tool to identify discrepancies between the BCS-A and CRDC as well as to gauge collection and remittance performance by banks b) Reconciliation shall be done by the Collection Section of the RDO on a daily basis with the end result of achieving reconciled collections (BCS-A) and remittance (CRDC) data. c) Reconciliation shall be done nine (9) working days after date of collection. Day 1 Collection Date Days 2-3 Transmission/uploading time for collection (BCS-A) Day 6 Remittance Date and submission date for remittance report (CRDC) Day 7 RAD's pick-up date for CRDC at the Bangko Sentral ng Pilipinas Days 8-9 Processing and encoding time for CRDC Day 10 Start of reconciliation. d) Discrepancies noted in the reconciliation process shall be communicated within 24 hours to the concerned AABs and BIR offices. e) Reconciliation related queries are imperative and concerned BIR offices (RDC/RAD) must respond on matters under their jurisdiction within three (3) working days f) The Revenue Accounting Division (RAD) at the National Office (NO) shall be responsible for ensuring that the CRDC is captured accurately and on a timely basis (refer to specified timetable in Guideline No. 1.c). g) The Regional Office (RO) shall be responsible for ensuring that their RDOs' bank reconciliation activities are conducted in a timely manner. 2) For non-computerize d Revenue District Offices under computerized Regional Offices the following shall apply: a) The Collection Division of the Regional Office (RO-CD) shall perform the Reconciliation functions following the procedures prescribed in this RMO from "V.A.1" to "V.A.4", except communication with AABs which shall still be done by the non-computerized RDOs. b) For discrepancies that need to be communicated with the AAB's, the RO-CD shall endorse the matter to the RDO. The RDO shall then function as an intermediary between the RO-CD and the concerned AAB towards the resolution of the discrepancy. 3) For non-computerized Revenue District Offices under non-computerized Regional Offices, the RAD shall be in charge of the reconciliation using the BCS-CRDC Reconciliation Screen or the CBR BCS-CRDC Reconciliation Worksheet following the existing procedures prior to the issuance of this Revenue Memorandum Order. 4) Unless stated otherwise, weekly reports prescribed in this Order shall be submitted to the offices concerned on the third (3rd) working day of the succeeding week and monthly reports on or before the fifteenth (15th) day of the succeeding month. V. PROCEDURES: A. Collection Section, RDO 1) Access the CBR BCS-CRDC Reconciliation Inquiry Screen and check for discrepancies in the bank branch's collections and remittances; Note: For procedures on how to access the CBR BCS-CRDC Reconciliation Inquiry Screen, refer to CBR BCS-CRDC Reconciliation Quick Reference Guide . 2) Determine the cause of the discrepancy, if any; (Access the CBR Payment Inquiry Screen for the BCS details, access the CBR CRDC Inquiry Screen for the CRDC details) Note: For procedures on how to access the Payment Inquiry Screen and CRDC Inquiry Screen, refer to the CBR NO OM. 3) Follow up with RDC if there is CRDC but no BCS or with RAD if there is BCS but no CRDC; or 4) Verify information with both RDC and RAD if both BCS and CRDC exist but they are not equal. Possible causes of discrepancy and recommended courses of action are: a) CRDC was not encoded accurately request RAD to correct encoded data b) BCS was incorrectly encoded by the banks if the returns have not yet been transmitted to the BIR, request the bank branch to correct the error and re-transmit the data through EDT. If the returns have already been transmitted to the BIR, inform the bank branch of the error and perform the following upon confirmation from the bank branch: i. For computerized RDOs, request CBR Error Handlers to correct uploaded data using the CBR Payment Modify Screen. ii. For non-computerized RDOs: prepare a letter-request for RDC to correct uploaded data using the Payment Modify Screen Issue a certification as to the correct amount of collection indicating details such as AAB Code, AAB Name, BCS No., Collection Date, Taxpayer Name, Amount to be Corrected and the Correct Amount. transmit/forward request and certification together with certified photocopy of the BCS and tax return to be corrected to the concerned RDO. inform the bank branch of the correction to be made. DAaIEc Note: For procedures on how to access the CBR Payment Modify Screen, refer to the CBR RDC OM. c) One or more BCS were not reported by the bank branch as part of its collections for a particular collection date follow up missing BCS with bank branch. If the returns have not yet been transmitted to the BIR, request the bank branch to submit the hard copy of the BCS together with the returns and transmit the data through EDT. If the returns have already been transmitted to the BIR, inform the bank branch of the error and perform the following upon confirmation from the bank branch: i. For computerized RDOs, request CBR Error Handlers to encode the missing BCS data using the Payment Add Screen. ii. For non-computerized RDOs: prepare letter-request for RDC to encode the missing BCS data using the Payment Add Screen. transmit/forward letter-request together with certified correct copy of BCS to be encoded. Note: For procedures on how to access the Payment Add Screen, refer to the CBR RDC OM. d) One or more BCS were not included by the bank head office as part of its remittances for a particular collection date request RAD to follow up missing remittance with bank head office. e) RDO's collection was reported as the remittance to a different RDO/bank branch request RAD to update encoded data. f) Collection was reported as the remittance for a different collection date request RAD to inform bank head office of the error and correct encoded data upon confirmation from the bank head office; Note: When verifying information with RDC and/or RAD, accomplish the form as specified in Annex A. 5) Monitor response to reconciliation queries as part of daily reconciliation activities but in the following exceptional cases, take the corresponding course of action: a) If no response from RDC and/or RAD to reconciliation queries within 3 working days immediately inform Collection Division of the Regional Office. Refer to Annex B for the format of this report . b) If no response from the bank branch to reconciliation queries within 5 working days from contact date immediately inform Collection Division of the Regional Office. Refer to Annex C for the format of this report. c) If after verification from RDC and RAD that BCS and CRDC data are correctly uploaded/encoded and discrepancies still exist inform AAB branch concerned of the discrepancies and: i. If BCS>CRDC ask them to remit any unremitted collections; or ii. If BCS<CRDC ask them either to transmit an amended BCS (if the documents have not been transmitted) or request for refund of over-remittance; 6) Prepare report on RDO Weekly Status of Verification and Report on Frequently Erring Banks on a weekly basis, and submit to the Office of the Regional Director; Refer to Annex D for the format of this report . B. Revenue Data Center 1. Determine status of BCS information upon the RDO's request and take the corresponding action: a) If BCS was not yet uploaded upload corresponding BCS if the BCS has been transmitted or remind bank branch to transmit the BCS if the BCS has not yet been transmitted. b) If BCS was incorrectly encoded by the bank branch and concerned RDO is non-computerized correct the BCS using as basis, the request of the RDO together with the certification and/or certified photocopy of the BCS and tax return. 2) Provide the Regional Office with RDO Key Performance Indicators (KPIs) every first working day of the week copy furnished the concerned RDOs. C. Revenue Accounting Division 1) Determine status of CRDC information upon the RDO's request and take the corresponding action: a) If CRDC was not yet transmitted follow up CRDC with the bank head office immediately. If no response is received from the bank head office within 3 working days, immediately inform the ACIR, Collection Service. b) If CRDC was not yet encoded encode CRDC using the CRDC Add/Modify Screen. c) If CRDC was already encoded verify correctness of encoded data against the hard copy of the CRDC and: i. If correctly encoded, immediately inform RDO. ii. If incorrectly encoded, correct erroneous data using the CRDC Modify Screen and immediately inform the RDO once the corrections are completed. 2) Create a case against the bank concerned for non/unsatisfactory response to reconciliation issues per instructions of ACIR, Collection Service. Use the Case Tracking Module (CTM) of the Case Monitoring System (CMS). Note: To access CMS, refer to the CMS NO OM for procedures on how to create and maintain a case. D. Collection Division, Regional Office 1) Receive and consolidate summary of collection reconciliation issues and recommended courses of action (per Annexes B and C) from the RDOs; 2) Submit consolidated report of the RDOs' reconciliation issues to the ACIR, Collection Service on a weekly basis; Refer to Annex E for the format of this report. 3) Receive and consolidate RDO Weekly Status of Verification and Report on Frequently Erring Banks (per Annex D); 4 Submit consolidated report of frequently erring banks to the ACIR, Collection Service on a monthly basis; Refer to Annex F for the format of this report. 5) Receive and consolidate RDO system generated KPIs submitted by the RDC every first working day of the week until such time that the RDC can generate the consolidated KPI report after system enhancement. 6) Submit consolidated report on the status of KPIs to the ACIR, Collection Service on a monthly basis. Refer to Annex G and G-1 for the format of this report. E. Collection Service 1) Receive consolidated report of RDOs reconciliation issues (Annex E); 2) Receive consolidated report of frequently erring banks from the RO (Annex F); 3) Undertake any of the following applicable courses of action relative to the received reports; a) Inform ACIR, IPQS and recommend course of action for reports on RDC; b) Call the attention of the Chief, RAD for reports on RAD and give instruction for possible course of action; c) Instruct Chief, RAD to create a case against the bank branch/s using the Case Monitoring System (CMS) for reports received on AABs; 4) Receive report from RAD re: non-response of unsatisfactory response from the bank head office. Instruct Chief, RAD to create a case against the bank using the Case Monitoring System (CMS); 5) Instruct Collection Programs Division to monitor cases created against the banks. This shall be used as input for bank performance evaluation. 6) Receive monthly report from the RO on the status of KPIs for evaluation purposes. VI. REPEALING CLAUSE: Other issuances or portions thereof not consistent with the provisions of this Order are hereby repealed or amended accordingly. VII. EFFECTIVITY: This Order shall take effect immediately. (SGD.) RENE G. BAEZ Commissioner of Internal Revenue ANNEX A Verification Form ANNEX B MEMORANDUM DATE: <Date> FOR: <Name> Chief, Collection Division, <Region No. and Station Town> FOR: <Name> Chief, Collection Section, <RDO No. and Station Town> NOTED BY: RDO <Name> <RDO No. and Station Town> RE: ISSUES ON COLLECTION RECONCILIATION FOR RDO <NO.> CC: <Regional Director> Listed below is a summary of collection reconciliation issues for our office and our recommended course/s of action. For your action. Thank you. ANNEX C MEMORANDUM DATE: <Date> FOR: <Name> Chief, Collection Division, <Region No. and Station Town> FROM: <Name> Chief, Collection Section, <RDO No. and Station Town> NOTED BY: RDO <Name> <RDO No. and Station Town> RE: AAB ISSUES ON COLLECTION RECONCILIATION FOR RDO <NO.> CC: <Regional Director> Listed below are bank branches with outstanding collection/remittance discrepancies who have either not responded to our queries or have given an unsatisfactory response. These bank branches were contacted by our office five (5) working days ago. For your appropriate action. DATE: <Date> FOR: <Name> Regional Director <Region No. and Station Town> FROM: <Name> Revenue District Officer <RDO No. and Station No. Town RE: RDO WEEKLY STATUS OF VERIFICATION AND REPORT ON FREQUENTLY ERRING BANKS CC: <Chief, Collection Division> Enclosed are the summary of the verification conducted for <RDO> by RAD and/or RDC for the week ending <Reconciliation Date> (Table 1) and the list of bank branches who have frequent occurrences of non-compliance with the agreed policies and procedures in relation to collections and remittances for the same period (Table 2). For the aforesaid period, the following are the highlights of verification activities: < Include top 2-3 causes of discrepancies, recurring/major issues, action plan for outstanding issues/discrepancies.> For your information and appropriate action. ANNEX D Attachment 1 MEMORANDUM DATE: <Date> FOR: <Name> ACIR, Collection Service FROM: <Name> Chief, Collection Section, <RR No. and Station No. Town> NOTED BY: Dir <Name> Regional Director, <RR No. and Station Town> RE: ISSUES ON COLLECTION RECONCILIATION FOR RR <No.> CC: <Chief, CPD> Attached is a summarized listing of the collection reconciliation issues and the recommended action plan. For your appropriate action. ANNEX E Attachment 1 ANNEX F MEMORANDUM DATE: <Date> FOR: <Name> ACIR, Collection Service FROM: <Name> Chief, Collection Section, <RR No. and Station No. Town> NOTED BY: Dir <Name> Regional Director, <RR No. and Station Town> RE: MONTHLY STATUS REPORT ON BANK-BR PERFORMANCE FOR RR <No.> CC: <Chief, CPD> Attached is a list of bank branches who have frequent occurrences of non-compliance with the agreed policies and procedures in relation to collections and remittances. For your information and appropriate action. Thank you. aHECST ANNEX G MEMORANDUM DATE: <Date> FOR: <Name> ACIR, Collection Service FROM: <Name> Chief, Collection Division, <RR No. and Station Town> NOTED BY: Dir <Name> Regional Director, <RR No. and Station Town> RE: CONSOLIDATED REPORT ON THE STATUS OF KEY PERFORMANCE INDICATORS CC: <DCIR, Operations Group> <DCIR, ISG Group> This memo consolidates the weekly Key Performance Indicators (KPIs) submitted by the RDC regarding Bank Reconciliation by the RDOs under our jurisdiction, for <one month period>. Please refer to Table I (Attachment 1) for the status of the identified indicators. Thank you.