Rules and Regulations on the Granting, Utilization and Liquidation of Cash Advances

May 3, 1990

COA CIRCULAR NO. 331-90

 

1. Rationale

With the proliferation of unliquidated cash advances, and the indiscriminate designation and lack of proper supervision by some agency heads of accountable officers (AOs), there is a felt need to provide a more effective control in the granting, utilization and liquidation of cash advances. EcTCAD

2. General Principles

Ideally, cash should be handled under the general principles of the imprest system, to wit:

1. Daily receipts on collections must be deposited intact with the proper bank.

2. All payments must be made by check.

3. Only payments in small amounts may be made through the petty cash fund. Replenishment of the petty cash fund shall be equal to the total amount of expenditures made therefrom.

In practice, however, there are certain instances when it may be very difficult, impractical or impossible to make payments by check. In such a case, payments may be made by the disbursing officer in the form of cash through his cash advance.

3. Definitions and Scope

Cash Advances shall be of two types, namely, the regular cash advances and the special cash advances.

3.1 Regular cash advances are those granted to cashiers, disbursing officers, paymasters, and/or property/supply officers separately for any of the following purposes:

3.1.1 Salaries and Wages

3.1.2 Commutable allowances

3.1.3 Honoraria and other similar payments to officials and employees

3.1.4 Petty operating expenses consisting of small payments for maintenance and operating expenses which cannot be paid conveniently by check or are required to be paid immediately.

3.2 Special cash advances are those granted on the explicit authority of the Head of the Agency only to duly designated disbursing officers or employees for other legally authorized purposes, as follows:

3.2.1 Current operating expenditures of the agency field office or of the activity of the agency undertaken in the field when it is impractical to pay the same by check, such as —

- Salaries, Wages and Allowances

- Maintenance and other operating expenses

3.2.2 Foreign travel expenditures, including transportation fare, per diems, allowances, and other expenses incurred by officials and employees in connection with official travel abroad.

4. Granting and Utilization of Cash Advances

4.1 General guidelines

4.1.1 Only permanently appointed officials and employees shall be granted cash advances.

4.1.2 Only duly appointed or designated disbursing officers may perform disbursing functions. Officers and employees who are given cash advances for foreign travel need not be designated as Disbursing Officers.

4.1.3 Only one disbursing officer shall be assigned/designated for a specific legal purpose. Additional disbursing officers may be assigned/designated for the same purpose only when fully justified by the Agency Head.

4.1.4 Transfer of cash advance from one AO to another shall not be allowed.

4.1.5 The cash advance shall be used solely for the specific legal purpose for which it was granted. Under no circumstance shall it be used for encashment of checks or for liquidation of a previous cash advance.

4.1.6 The Accountant shall obligate all cash advances granted. He shall see that cash advances for a particular year are not used to pay expenses of other years.

4.2 Salaries, Wages, Allowances, Honoraria and Other Similar Payments

4.2.1 The cash advance shall be equal to the net amount of the payroll for a pay period.

4.2.2 The cash advance shall be supported by the following documents:

- Copy of designation by the Agency Head in case the AO is not a disbursing officer by appointment (Attachment to initial cash advance)

- Copy of approved application for bond (attachment to initial cash advance)

- Payroll or list of payees with their net payments

4.3 Petty Operating Expenses

4.3.1 The cash advance shall be sufficient for the recurring expenses of the agency for one month. The AO may request replenishment of the cash advance when the disbursements reach at least 75% or as the need requires, by submitting a replenishment voucher with all supporting documents duly summarized in a report of disbursements.

4.3.2 The cash advance shall not be used for payments of regular expenses, such as rentals, subscriptions, light and water and the like. Payments out of the cash advance shall be allowed only for amounts not exceeding P5,000.00 for each transaction, except when a higher amount is allowed by law and/or specific authority by the Commission on Audit. Splitting the transactions to avoid exceeding the ceiling shall not be allowed.

4.3.3 The cash advance shall be supported by the following documents:

- Copy of authority by the Agency Head (attachment to initial cash advance)

- Copy of approved application for bond (attachment to initial cash advance) HSAcaE

- Estimate of expenses

4.4 Field/Activity Current Operating Expenses (COE)

4.4.1 The special cash advance shall be used to pay the salaries and wages of the employees and the miscellaneous operating expenses of the activity. Payment for each transaction shall not be subject to amount limitation. However, all payments shall be approved by the Director/Head of field Office.

4.4.2 The amount of the cash advance shall be limited to the requirements for two months. Within 5 days after the end of each month, the AO shall submit a Report of Disbursements. Additional cash advances shall be granted on the basis of the activity budget or the requirements for two months, whichever is lower.

4.4.3 The cash advance shall be supported by following documents:

- Copy of authority by the Agency Head (attachment to initial cash advance)

- Copy of approved application for bond (attachment to initial cash advance)

- Budget for COE of the Agency field office or agency activity in the field.

4.5 Foreign Travel

4.5.1 The cash advance shall be supported by the following documents:

- Authority to travel

- Itinerary of travel

- Authority from the Office of the President for representation allowance

5. Liquidation of Cash Advances

5.1 The AO shall liquidate his cash advance as follows:

5.1.1 Salaries, Wages, etc. — within 5 days after each 15 day/end of the month pay period.

5.1.2 Petty Operating Expenses and Field Operating Expenses — within 20 days after the end of the year; subject to replenishment during the year.

5.1.3 Foreign Travel — within 60 days after return to the Philippines.

 Failure of the AO to liquidate his cash advance within the prescribed period shall constitute a valid cause for the withholding of his salary.

5.2 The AO shall prepare the Report of Disbursements (using Gen. Form No. ______) in three (3) copies and submit the same with the vouchers/payrolls and supporting documents to the Accountant. For payments based on receipts and invoices only, he shall also prepare a liquidation voucher which shall be submitted with the report and the supporting documents to the Accountant. He shall ensure that receipt of the report is properly acknowledged by the Accountant.

5.3 Within 10 days after receipt of the report and supporting documents for the AO, the Accountant shall verify the report, record it in the books and submit the same with all the vouchers/payrolls and supporting documents to the Auditor.

5.4 Within 30 days from receipt of the report and supporting documents from the Accountant, the Auditor shall complete the audit. He shall issue the corresponding Credit Notice to the AO to inform the latter of the amount allowed in audit and any suspensions and/or disallowances made. In case of disallowance, a copy of the Credit Notice shall be furnished the Accountant who shall record the restoration of the cash advance for the amount disallowed.

5.5 The AO shall submit to the Auditor the documents to settle his suspensions/disallowances. When the documents are found in order, the Auditor shall lift the suspension and/or issue another Credit Notice for the settled disallowance, copy furnished the Accountant who shall draw a Journal Voucher to record the credit to the cash advance. In case of cash settlement, the AO shall present the necessary Official Receipt to the Auditor for notation.

5.6 The Credit Notice issued by the Auditor to the AO shall be deemed sufficient compliance with the requirements of COA Circular No. 81-156 dated January 19, 1981 (Restating the Requirements for the Use of the Certificate of Settlement and Balances and Providing Guidelines on its Issuance, Including the Accounting Treatment Thereof).

5.7 When a cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned to or deposited immediately with the collecting officer.

5.8 All cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the AO shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary official receipt. HESIcT

5.9 At the start of an ensuing year, a new cash advance may be granted, provided that a list of expenses against the previous cash advance is submitted. However, when no liquidation of the previous cash advance is received on or before January 20, the Accountant shall cause the withholding of the AO's salary.

5.10 The following reports and documents are required to support the liquidation:

5.10.1 Salaries, Wages, etc. — Report of disbursements with all duly signed payrolls and/or vouchers and all pertinent supporting documents, such as daily time records, approved leaves of absence, etc.

5.10.2 Petty Operating Expenses

- Report of Disbursements with supporting documents

- Approved Requisition and Issue Voucher with the Certificate of Emergency Purchase, if necessary 

- Receipts, sales invoices

- Certificate of Acceptance/Inspection

- Duly approved trip ticket, if for gasoline

- such other supporting documents as are required by the nature of the expense

5.10.3 Current Operating Expenditures

- Same requirements as those for salaries, wages, etc. and petty operating expenses, supra

- Canvass of at least three suppliers (Not required if purchase is made while on official travel)

5.10.4 Foreign Travel

- Itinerary of travel

- Certificate of travel completed

- Report on trip undertaken

- Plane, boat or bus ticket (if included in the cash advance)

- Receipts for hotel bills and incidental expenses

6. Handling, Custody and Disposition of the Cashbook

6.1 A newly appointed or designated AO shall start with a new cashbook, Before discharging his duties, the new AO shall be briefed by the Accountant and the Auditor on the proper recording of the transactions and other matters related to his work.

6.2 The AO shall maintain separate cashbooks for salaries, wages, allowances, etc. and for petty operating expenses. The AO shall record the transactions in the prescribed cashbook daily. He may record each invoice/receipt/voucher individually or the total disbursements for the day depending on the volume of the transactions.

6.3 The AO shall reconcile the book balance with the cash on hand daily. He shall foot and close the books at the end of each month. The AO and the Accountant shall reconcile their books of accounts at least quarterly.

6.4 The cashbooks shall be kept at the Office of the AO and placed inside the safe or cabinet when not in use. It may be taken from his custody only by the Auditor or an official duly authorized by the Agency Head, who shall issue the necessary receipt.

6.5 When the AO ceases to be one, the cashbook shall submitted to the Accountant or the Treasurer (for local government units) and shall form part of the accounting records. No clearance shall be issued to an AO if he fails to submit the cashbook as required.

7. Bonding of Accountable Officers

7.1 Each accountable officer with a total cash accountability of more than P2,000.00 shall be bonded. The amount of the bond shall depend on the total accountability (cash and cash items) of the officer as fixed by the Head of the Agency. In no case shall cash advances be granted in amounts less than P2,000 each just to circumvent this requirement.

7.2 The bonding requirements are as follows:

7.2.1 Appointment and/or designation as accountable officer;

7.2.2 Written character references by at least three officials of the Agency one of whom is the Administrative and/or Legal Officer, other than the official who appointed/designated him;

7.2.3 Statement of assets and liabilities as of the end of the preceding year.

The foregoing documents shall be submitted, together with the application for bond, to the auditor who shall fix and approve the amount of the bond and shall transmit the same to the Fidelity Bond Division of the Bureau of the Treasury.

7.3 When the accountability is increased, the Accountant shall ensure that additional bond is applied for.

7.4 When the AO ceases to be one, the Accountant shall immediately inform the Fidelity Bond Division of such cessation.

7.5 The schedule of the bonds necessary for the cash accountability of the AO is as follows: caITAC

 

Minimum Cash	Maximum Cash
Accountability	Accountability	Amount of Bond
P2,000.00	P3,000.00	P1,000.00
3,001.00	5,000.00	3,000.00
5,001.00	7,000.00	5,000.00
7,001.00	9,000.00	7,000.00
9,001.00	12,000.00	9,000.00
12,001.00	15,000.00	10,000.00
15,001.00	18,000.00	13,500.00
18,001.00	21,000.00	16,000.00
21,001.00	25,000.00	18,900.00
25,001.00	30,000.00	20,000.00
30,001.00	35,000.00	24,000.00
35,001.00	40,000.00	28,000.00
40,001.00	50,000.00	32,000.00
50,001.00	60,000.00	35,000.00
60,001.00	80,000.00	42,000.00
80,001.00	100,000.00	56,000.00
100,001.00	250,000.00	60,000.00
250,001.00	500,000.00	150,000.00
500,001.00	750,000.00	250,000.00
750,001.00	1,000,000.00	375,000.00
1,000,001.00	5,000,000.00	500,000.00
5,000,001.00	25,000,000.00	1,250,000.00
25,000,001.00	75,000,000.00	2,150,000.00
75,000,001.00	100,000,000.00	3,750,000.00

 

 

8. Responsibility of the Agency Head

It shall be the responsibility of the Head of the Agency to ensure proper granting, utilization and liquidation of all cash advances in accordance with these rules and regulations.

9. Duties and Responsibilities of the COA Auditor

9.1 The Auditor shall periodically evaluate the accountability of the AO and recommend reduction of the cash advance if found excessive.

9.2 The Auditor shall conduct an examination of the accountability of each AO at least once every semester or as existing regulations of the COA require.

9.3 The Auditor shall demand the presentation by the AO of his cashbook, cash and cash items for examination. Failure by the AO to do so shall constitute prima facie evidence of misappropriation.

9.4 The Auditor shall exclude from among the cash items presented any accommodation check, "vale", IOU, chit or other forms of promissory note and should not accept them as a credit to the account.

9.5 The Auditor shall at once demand in writing the production of the missing funds at the moment the shortage or loss is discovered and established. The granting of a grace period for the restitution is not allowed by law.

9.6 Upon failure of the AO to liquidate his cash advance within one month for AOs within the station and three months of AOs outside the station from date of grant of the cash advance, the Auditor shall issue a letter demanding liquidation or explanation for non-liquidation.

9.7 If 30 days have elapsed after the demand letter is served and no liquidation or explanation is received, or the explanation received is not satisfactory, the Auditor shall advise the head of the agency to cause or order the withholding of the payment of any money due the AO. The amount withheld shall be applied to his (AO's) accountability. The AO shall likewise be held criminally liable for failure to settle his accounts.

10. Repealing Clause

All Circulars, Memoranda, rules regulations and other issuances inconsistent herewith are hereby repealed, amended or modified accordingly.

This Circular shall take effect on May 3, 1990.

(SGD.) ALBERTO P. CRUZCommissioner

(SGD.) BARTOLOME C. FERNANDEZ, JR.Commissioner

(SGD.) EUFEMIO C. DOMINGOChairman