 Petty

Reviewer: Chapter 6 Disbursement expenses

and MOOE
Notice of Cash Allocation
 Authority of an agency to pay:
 Pay their operating expenses  All are covered by DVs/payrolls/Petty Cash
 Purchases of supplies and materials Vouchers
 Acquisition of PPE  Advance to employees may cover:
 Accounts payable  Salaries and wages
 Other authorized disbursements through  Travels
the issue of MDS checks, ADA or other  Special time-bound undertakings
modes of disbursements.  Petty operating expenses
 MDS or ADA shall not exceed NCA  Granting shall be governed by:
 Monitored through RANCA 1. No cash adv unless legally
 Credit to Special MDS is for payment of authorized for specific purpose
retirement gratuity/terminal leave 2. Shall be reported on and liquidated
as soon a purpose has been served
3. No additional cash adv unless
Notice of Transfer of Allocation previous cash advance given is
 Authority of the regional and operating settled/liquidated
units to: 4. No officer or employee shall be
granted cash advance. XPN: Cash
 Pay their operating expenses advance for official travel
 Purchases of supplies and materials 5. Disbursing officers shall be
 Acquisition of PPE permanently appointed officials
 Accounts payable 6. Only duly appointed disbursing
 Other authorized disbursements through officers may perform disbursing
the issue of MDS checks, ADA or other functions
modes of disbursements. 7. Transfer of cash from one officer to
 MDS shall not exceed NTA received another is not allowed
 Adoption of Common Fund System where 8. Cash adv shall be used solely for
cash allocation balances of agencies under specific legal purpose for which it
the Regular MDS Account may be used to was granted.
cover payment of current year’s accounts
payable after satisfying regular operating  CASH ADVANCE FOR PAYROLL
requirements in Monthly Cash Program o Granted by Regular Disbursing
Officer
-MODES OF DISBURSEMENT- o Shall not be used for encashment of
1. Disbursement by check checks or for liquidation of previous
 Drawn only upon approval of DV or other cash adv
 Payment of regular expenses which cannot o Liquidation shall be made 5 days
be paid through ADA or PCF or advances after the end of pay period
for operating expenses
 Check issued shall be reported and  CASH ADVANCES FOR OPERATING
recorded whether released or unreleased. EXPENSES OF GOVERNMENT UNITS
o Two types of checks WITHOUT COMPLETE SET OF BOOKS
 MDS- chargeable against the OF ACCOUNTS
account of Treasurer of Philippines o Field/extension/satellite offices are
 Commercial checks- issued by some without complete set of books
NGAs chargeable against Checking o May be granted with cash advances
account in GSBs covering two months
2. Disbursement by cash o They shall maintain a Cash
Disbursement Register
 Payment out of cash advances granted to o Disbursing officer shall submit within
the regular and disbursing officer for:
5 days after month-end the certified
 Personal services
copies of CDReg
 o Imprest system
 CASH AVANCES FOR TRAVEL o All replenishment are charged to expense
o travels that are urgent and extremely o Replenish as soon as it reach at least 75%
or as needed
needed
o Allowed amounts not exceeding 15,000
o Minimum expenditure and beneficial o Unused balance of PCF shall not be
to the agency/country closed/refunded at the end of the year.
o No gov’t fund shall be utilized to o PCFC shall be submitted to accounting
defray foreign travel expenses of any division/unit
gov’t official or employee. XPN:
 CASH ADVANCES FOR PETTY CASH FUND
training seminar or conference
OF GOVERNMENT UNITS WITHOUT
o Officials and employees authorized COMPLETE SET OF BOOKS OF ACCCOUNT
to travel shall be granted adv to o Needs two months operating requirements
cover travel expenses. for authorized petty and other
 DOCUMENTATION: miscellaneous expenses to finance their
o Local Travel operations
i. Office Order/Travel Order -ACCOUNTING FOR CANCELLED
ii. Duly approved Itinerary of Travel (IoT) CHECKS-
iii. Certification from the accountant that the  Cancelled when stale, voided or spoiled
previous cash advance has been liquidated
and accounted for in the books. -ACCOUNTING FOR DISALLOWANCE-
 Accounted only when they become final and
o Foreign travel executory
i. Office Order/Travel Order
-ACCOUNTING FO OVERPAYMENT-
ii. Duly approved IT;  Example: payment of payroll
 Refunds shall be demanded of the employees
iii. Letter of invitation of host/sponsoring concerned
country/agency/organization;
3. Disbursement through LDDAP-ADA
iv. For plane fare, quotations of three travel Account
agencies or its equivalent;  Settlement of accounts payable due the
creditors/payees of all NGAs and their OUs
v. Flight itinerary issued by the airline/ticketing
 Excluded in the implementation:
office/travel agency;
o Payment of terminal leave and retirement
vi. Copy of the United Nations Development grant
Programme (UNDP) rate for the daily subsistence o Remittance of social insurance premium
allowance (DSA) for the country of destination for contributions
the computation of DSA to be claimed; o Payment of accounts payable to utility
companies
vii. Document to show the dollar to peso exchange o Other payables which cannot be
rate at the date of grant of cash advance; conveniently paid through ADA
viii. Where applicable, authority from the OP to -DISBURSEMENT THROUGH ELECTRONIC
claim representation expenses; and MODIFIED DISBURSEMENT SYSTEM AS PART
OF MODIFIED DISBURSEMENT SCHEME-
ix. In case of seminars/trainings:
 Upon implementation of Treasury Single
-Invitation addressed to the agency inviting Account
participants (issued by the foreign country)  Covers spending of agencies, offices, and
-Acceptance of the nominee as participants (issued instrumentalities under the Executive Branch,
by the foreign country) inc SUC, together with other Executive Offices
-Programme Agenda and Logistics Information using GSB (kahit judiciary, exec, etc. basta
nagmamaintain MDS sub accounts sa LBP)
x. Certification from the accountant that the
previous cash advance has been liquidated and -DISBURSEMENTS THROUGH CASHLESS
accounted for in the books. PURCHASE CARD SYSTEM-
 Alternative mode of payment for goods and
 CASH ADVANCE FOR SPECIFIC services
PURPOSE/TIME BOUNDING UNDERTAKING  Like a credit card and shall only be used for
o Accounted as Advances to Special pre-identified items within the body limit
Disbursing Officer  Read more

 CASH ADVANCES FOR PETTY OPERATING 4. Disbursement through TRA

EXPENSES
o For one month
 Serially-
numbered Reviewer: Chapter 5 Revenue and other Receipts Revenue
document recognition for:
prescribed by DBM used by NGAs in remittance 1. Interest- time proportion
of withheld taxes 2. Royalties- as they are earned
3. Dividends- when shareholder’s right to receive
(read last two pages) payment is established.

 All revenues shall be deposited in the NT or in

duly authorized depository of the Government
 Receipts shall be recorded only as Special, Exchange of similar goods- not revenue
Fiduciary and Trust Funds only when generating
authorized by law and in accordance with the Exchange of dissimilar goods- revenue
Permanent Committee generating
 Permanent Committee: recommend the
reversion to the general fund of amounts which NON-EXCHANGE TRANSACTION
are:
o No longer necessary for the attainment  Derived mostly from taxes, gifts and donations,
of the purpose goods in kind and fines and penalties.
o Needed by the GF for emergency  Recognition or revenue
o Violative of the rules and regulations o Tax- at gross amount (not reduced for
adopted by Committee expenses paid through tax system)
 SOURCES OF REVENUE AND OTHER o Gifts and donations, other than services
RECEIPTS in kind- at FV
1. Exchange transaction o Goods in kind received without
2. Non-exchange conditions- recognized as revenue
immediately
EXCHANGE TRANSACTION o Donation in kind- revenue
Sales of goods or services to a third party or other  Measurement of revenue- at the amount of
NGAs increase in net assets recognized by the entity
1. Service income unless liab is also required to be recognized
2. Business Income  Initial measurement- @FV as at the date of
Use by other entity of assets yielding interest, acquisition
royalties, and dividends, or similar types  Taxes do not include fines and penalties
1. Interest income imposed for breaches of law
2. Royalties  Tax Expenditures are foregone revenue not
3. Dividends expenses, do not rise inflow of ALRE of gov’t.
Shall not be grossed up
Revenue from sale of goods shall be  Fines recognized as revenue when it meets the
recognized when ALL of the following are definition of an asset
satisfied: (RACEE)  when an entity collects fines in capacity of an
1. Risk and rewards of ownership is transferred agent, fine is not recognized as revenue of
3. Amount of revenue can be measured reliably collecting entity
5. Cost incurred or to be incurred can be measured  Measure @ best est of inflow of resources
reliably  Bequests- @ FV of asset received or is
2. Entity retains neither continuing managerial receivable
involvement nor effective control  Gifts and donations- when it meets def of A
4. Economic benefit or service will flow  Goods in-kind tangible assets transferred
without charge but may be subject to
Revenue from sale: straight line basis stipulations.
Rendering services: stage of completion  Services in kind- not required to be measured
XPN: if services is done only with intermediate as an asset but is encouraged to be
stages, use straight line disclosed in the notes
 Pledges- not an asset or revenue. Upon
Outcome of transaction can be estimated transfer to the recipient, it is a gift or donation
reliably when: (RPSC)  Dishonored checks-
1. Revenue can be measured reliably 1. dishonor by nonpayment occurs when:
2. Probable econ benefit or service will flow o Check is presented for payment and
3. Stage of completion can be measured reliably payment is refused or cannot be obtained
4. Cost incurred or to be incurred can be measured o Presentment is excused and checks is
reliably overdue and unpaid
Note: when the outcome of the transaction only 2. Dishonor by nonacceptance
involves rendering of services cannot be measured o Acceptance is refused by law or cannot be
reliably, record only the revenue up to the extent of obtained
expense that is recoverable
 o Presentment o Purchase price+ import
got acceptance Reviewer: Chapter 10 PPE duties+ non-refundable
in excused and purchase taxes (after
check is not accepted deducting trade discounts and rebates
o Net method lagi. Price minus discount whether
taken or not

Property, Plant and equipment are:

1. Tangible asset
2. Not intended for resale in the ordinary course of
the business
3. Expected to be used for more than one RP
3. On Installment Basis
Recognition o If installment, difference between cash price
1. Probable that future economic benefit or service equivalent and total payment is equal to the
potential will flow interest over the credit d
2. FV of item can be measured reliably 4. Purchase with promotional items
3. Government has the beneficial ownership and o Allocate the price
control o If promotional item is the same as the PPE,
4. Used to achieve government objectives purchase cost shall be allocated to total
5. Meets threshold of 15,000 quantity plus promotional item
5. Promotional item is different form the PPE
Initial recognition o It shall be deducted from the total cost and the
GEN: @cost balance shall be allocated to the total quantity
XPN: FV at acquisition purchased
6. Lump sum
Cost comprises: o Cost shall be apportioned to assets in
1. Purchase Price
determining the depreciation
2. DACS
o Cost of employee benefit
Construction of PPE
o Cost of site preparation  All will be under construction in progress
o Initial delivery and handling cost  Expenses will be capitalized like interest,
o Installation and assembly cost license fee, etc
o Cost of testing (after deducting net proceeds  For loans acquired for construction of
from selling any items produced while infrastructure contracted by NG, borrowing
bringing the asset to location and condition cost shall not be capitalized. Interest on such
like samples produced while testing) shall be expensed
o Professional fees
3. PV of decommissioning and restoration cost EXCHANGE TRANSACTIONS
NOTE: PV of dismantling cost shall not be included  Measured at FV unless:
in the computation of RV (a) lacks substance
(b) FV of neither the assets received nor asset
Cost not qualified for recog of PPE given up can be reliably measured
1. Opening new facility  Asset given up prevails
2. Introducing new product or service  NOT INCLUDED AS COST
3. New location 1. Cost incurred while an item is not yet
4. Administration and other general overhead costs operating
2. Initial operating losses
Different modes of acquisition 3. Cost of relocating or reorganizing
 Purchase
 Construction Types of exchange transaction:
 Exchange Transaction a. Exchange with Commercial Substance
 Non-exchange transaction  Risk, timing and amount of CF is expected to
 Transfer change due to the transaction
 Finance lease  Entity-specific value of the portion the entity’s
operations affected by transaction changes as
Purchase of PPE the result of exchange
1. On Cash Basis  Diff between the first two
o Recognize at cost b. Exchange without Commercial Substance
o Includes cash paid on bringing the asset to the  CA of asset given up
location for intended use
NON-EXCHANGE TRANSACTION
2. On Account  @FV on the date of acquisition
o Subject to cash discount  Does not constitute revaluation
 Expenses incurred in connection with donated
asset (delivery and installation cost) are included in
the amount of asset
 “Income from Grants and Donations in Kind
a. Donation with condition
 Liability is recognized until the conditions or
restrictions are fulfilled
 INTRA-AGENCY TRANSFER OF PPE  Reduce the operating cost
 @CA of the asset received  Minor repairs charged directly to Repairs and
 Source agency provide the receiving Maintenance
department the necessary docu/info  Major repairs added to the carrying amount of
PPE and shall be depreciated over the
INTER-AGERNCY TRANSFER OF PPE remaining life of PPE
 @net CV  Spare parts and servicing eqt- as inventory
and recog as surplus or deficit when consumed.
GRANTS  Major spare parts recog as PPE if used more
 Assistance in the form of transfer of resources than one period
 Income over the periods necessary to match  Repairs and maintenance are necessary to be
them with the related costs which they intend to obtain the expected service of Capital asset for
compensate on systematic basis its EUL ARE NOT BETTERMENTS. Recognize
 FV @ date of acquisition it as an expense (repairs to restore damaged
 Recognized when: by floods, fires, accidents, or similar event,
o The entity will comply with condi attached routine maintenance like repainting)
o Grants will be received -BETTERMENTS-
a. inc in the previously assessed physical output or
ACQUISITION OF PPE THROUGH FUND service capacity
TRANSFER TO THE GOVERNMENT b. reduction in assoc operating cost
AGENCY c. extension of the estimated useful life
 Require the acquisition of necessary PPE d. an improvement in the quality of output
A. Acquisition by source agency/entity  Meet the threshold of the applicable capital asset
1. Source agency- record and monitor PPER are capitalized
purchased out of transferred funds to CSOs  If the betterment does not exceed the EUL,
when PPE meets recognition criteria and the useful life remain the same. Otherwise, change
MOA/U it
2. Monitor PPE Purchased out of transferred  Revised depreciation shall not exceed the EUL
funds to other gov agency but shall not record of the Capital asset
the PPE until returned  Replacement of an identified component, original
B. Acquisition by Implementing cost and accum dep shall be derecognized
Agency/Entity  If cannot be easily differentiated, treat as an
expense
1. Recorded in Fund Cluster in fund cluster for  Items that needs to be replaced/betterment at
trust receipts as asset regular intervals, shall be capitalized
2. Recorded as  Betterment improve functionality
Case 1: MOA/U that it will be donated to the  Repairs and maintenance maintain
implementing Agency/Entity functionality
Case 2: MOA/U entity will be returned by
implementing agency to source Capitalize:
-result in effective increase in future benefit
-FINANCE LEASE- -there has been an effective inc in quality of
 Another mode of acquiring PPE services
 Transfers substantially all risks and rewards -effective extension to the EUL
 At start of lease term: record as asset and
liability -ADDITIONS AND REARRANGEMENTS-
 Depreciable amount is allocated to each  Additions- increase the physical size or function
accounting period of the PPE
 Depreciated using what is stated or shorter  Expenditures which shall be capitalized:
between lease term and EUL o Entirely new unit
o Expansion and enlargement or extension of
-MEASUREMENT- the old asset
 Cost model shall be applied  Rearrangement cost- cost incurred in moving
 Cost-AD-IL asset from one location to another. Capitalized
-SUBSEQUENT COST OF PPE OTHER THAN and amortized over the remaining life of the
REFORSTATION PROJECTS- asset for which it pertains
 Day-to-day servicing of an item of PPE which  Cost of addition- depreciated over its useful life
are recognized as an expense when incurred.  Rearrangement- depreciated over the useful life
 Cost of labor and consumable. May include cost or remaining life of PPE, whichever is shorter
of small parts -DEPRECIATION-
 Repair and maintenance  Expensed unless it is included in the CA of
 Replacement- recognized as part of PPE another asset (dep of manu plant is included in
whenever incurred. CA of the parts replaced the CA of another asset
shall be derecognized  (184)
-REPAIRS AND MAINTENANCE- Each part of the PPE with a cost that is significant
 Improve functionality of PPE as a whole in relation to the total cost of the item shall be
 Increase service life recorded and depreciated separately
 Improve quality of output
  Measured at cost
 If acquired through Nonexchange transactions
-IMPAIRMENT OF PPE OTHER THAN the cost is its FV
REFORESTATION PROJECTS-  NO depreciation but SUBJECT TO
IMPAIRMENT
 CA>RA
 Some Heritage assets may have future
 Computation: economic benefit- recog and measured like
o Impairment loss= CA-Recov Service other PPE
Amount
o CA=Cost-AD-IL -INFRASTRUCTURE ASSET-
o RA= Higher of FVLCTS and VIU  FIVE CRITERIA:
o VIU= PV of Asset’s remaining Service 1. Part of a system or network
Potential 2. Specialized in nature and do not have
alternative uses
-VALUE IN USE COMPUTATION- 3. Immovable
4. May be subj to constraints on disposal
1. Depreciable Replacement Cost Approach  Road works, sewer system, water and power
supply system, communication networks
Replacement cost= cost to replace the asset’s
gross service potential -REFORESTATION-
----Depreciated replacement cost measured  Land improvements
as the reproduction or replacement of asset,  Reforestation Projects
whichever is lower, less AD based of such cost  Books of DENR
 INCLUDED IN THE COST:
A. Surveying, Mapping and Planning
2. Restoration Cost Approach B. Nursery operation and seedling production or
procurement
 Cost of restoring service potential of an asset to C. Plantation Establishment
its pre-impairment level  Turn-over of Reforestation Projects
CURRENT COST OF REPLACING xxx -after duration of planting activities: 3yrs
LESS: EST COST OF REPLACING (xxx)  Subsequent cost:
VIU xxx a. Capitalize: costs for maintenance and
protection incurred within the duration of
3. Service Units Approach reforestation project
 Reducing the current cost of remaining service b. Repairs and Maintenance-Land
potential of the asset before impairment to Improvements: costs for maintenance and
conform to the reduced number of units protection incurred after the duration of turnover
expected from the asset c. Expensed: Cost of replacing small numbers
of trees in any one particular area
-HOW TO CHOOSE- (PAGE 198 entries)
 Replacement cost/ service unit cost: Changes
in technological, legal or gov’t policy
environment
 Replacement cost/ service unit cost: Change
in the extent or manner of use
 Restoration/ Replacement: physical damage

DepEx=Revised CA-RV
Rem Useful life

-REVERSAL OF IMPAIRMENT LOSS-

 If there is an indication of impairment, estimate
the recoverable service amount of that asset
o CA<CA had there been no impairment diff
is IL
o (194)

-HERITAGE ASSETS-
 Have historical, cultural and environmental
significance
 Intended to be preserved in trust
 Unlikely to be reflected in a financial value based
purely on market price
 Legal and/or statutory obligations may impose
prohibitions on disposal by sale
 Often irreplaceable
 Value increases over time
 Difficult to estimate their useful lives