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REPÚBLICA DEMOCRÁTICA DE TIMOR-LESTE

TREASURY MANUAL
May 2017

Ministry of Finance

Version 1.0 - 2017


Treasury Manual – Version 1.0 2017

LIST OF ACRONYMS
AA Autonomous Agencies ADN Agencia Desenvolvimento Nacional
AFO Agency Finance Officer AFS Annual Financial Statements
BCTL Banco Central Timor-Leste (Central BFMA Budget and Financial Management
Bank) Act
BO Back Office
BEx Budget Execution BS Balance Sheet
CBs Commercial Banks – ANZ BNCTL C&DM Cash & Debt Management
CGD-BNU Mandiri Bank
CFS Cash Flow Statements CAFI Conselho Administrativo do Fundo de
Infra-estrutura
CFET Consolidated Fund of Timor Leste COAs Chart of Accounts
COFOG Classifications of the Functions of CPV Commitment Payment Voucher
Government
DFO District Finance Officer DG Directorate General
DGSF Directorate General of State Finances
EAN Expenditure Authorization Notice
ESI Estimated Sustainable Income of
Petroleum Fund
EV Expense Voucher EVPO Expense Voucher (PO)
FA Financial Accountability (module in FDCH Human Capital Development Fund
FreeBalance)

FMIS Financial Management Information FO Front Office


System
FMISU Financial Management Information
System
GFS Government Financial Statistics G/L General Ledger

GRN Goods Received Note GRtN Goods Returned Note


GRP Government Resource Planning –
Freebalance System comprising
various modules
HATAC High Administrative, Tax, and Audit I&A Inspection & Audit
Court
I&R Inspection & Receipting IFRS International Financial Reporting
Standards
I&E S Income & Expenditure Statement
IF Infrastructure Fund
IPSAS International Public Sector Accounting
Standards
LC Letter of Credit LMs Line Ministries, Departments, and
Agencies
MO Middle Office MoF Ministry of Finance

MoFSP Ministry of Finance Strategic Plan ND National Directorate

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PB Performance Budgeting (module in PFM Public Financial Management


FreeBalance)
PF Petroleum Fund PO Purchase Order
POSA Payment of Salary and Allowance PR Purchase Requisition
RP Request for Payment SOE State Owned Enterprise
SA Sub Account TFET Trust Fund of Timor Leste
TLS Timor-Leste TPO Treasury Payment Order
QR Quarterly Budget Execution Reports
TSA Treasury Single Account PRT Payment Request Tracking
TdC Tribunal das Contas

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INDEX
LIST OF ACRONYMS ..................................................................................................................................... 2
INDEX ................................................................................................................................................................ 4
CHAPTER 1 ...................................................................................................................................................... 9
ABOUT THE TREASURY MANUAL ........................................................................................................... 9
1.1 PURPOSE OF TREASURY MANUAL ................................................................................................ 9
1.2 STRUCTURE OF TREASURY MANUAL........................................................................................... 9
1.3 AUTHORITY, DISTRIBUTION AND MAINTENANCE OF MANUAL ........................................... 9
CHAPTER 2 .................................................................................................................................................... 10
OVERVIEW OF TREASURY SYSTEM...................................................................................................... 10
2.1 LEGISLATIVE FRAMEWORK ......................................................................................................... 10
2.2 ROLE AND FUNCTIONS OF TREASURY ....................................................................................... 11
2.3. RESPONSIBILITIES OF TREASURY ............................................................................................... 11
2.4 STRUCTURE OF THE DIRECTORATE GENERAL OF TREASURY............................................. 12
CHAPTER 3 .................................................................................................................................................... 18
CHART OF ACCOUNTS ............................................................................................................................... 18
3.1 CHART OF ACCOUNTS .................................................................................................................... 18
3.2 APPROPRIATIONS ............................................................................................................................ 22
3.3 DUO DECIMO REGIME ..................................................................................................................... 22
3.4 VIREMENTS ....................................................................................................................................... 23
3.5 ALLOTMENTS AND FINANCIAL BUDGET CONTROL ............................................................... 23
3.6 UN-UTILIZED APPROPRIATIONS .................................................................................................. 24
CHAPTER 4 .................................................................................................................................................... 25
CONSOLIDATED AND OTHER PUBLIC FUNDS ................................................................................... 25
4.1 THE CONSOLIDATED FUND OF TIMOR-LESTE (CFET) ............................................................ 25
4.2 OTHER PUBLIC FUNDS ................................................................................................................... 26
4.3 THE INFRASTRUCTURE FUND ...................................................................................................... 26
4.4 THE HUMAN CAPITAL DEVELOPMENT FUND ........................................................................... 27
4.5 PETROLEUM FUND .......................................................................................................................... 28
CHAPTER 5 .................................................................................................................................................... 29
BANKING ARRANGEMENTS..................................................................................................................... 29
5.1 OVERVIEW ......................................................................................................................................... 29
5.2 THE TREASURY SINGLE ACCOUNT (TSA) ................................................................................. 29
5.3 OFFICIAL BANK ACCOUNTS.......................................................................................................... 29
5.4 INVENTORY OF BANK ACCOUNTS .............................................................................................. 30
5.5 ACCESS AND CONTROL OVER BANK ACCOUNTS .................................................................... 30
5.6 ROLE OF CENTRAL BANK .............................................................................................................. 30
CHAPTER 6 .................................................................................................................................................... 31
BUDGET EXECUTION ................................................................................................................................. 31

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6.1 GENERAL RULES RELATED TO BUDGET EXECUTION ............................................................ 31
6.2 RELEASE OF FUNDS TO MEET EXPENDITURE........................................................................... 31
6.3 COMMITMENT AUTHORIZATION ................................................................................................. 32
6.4 PROCUREMENT ................................................................................................................................ 32
6.5 EXPENDITURES ................................................................................................................................ 33
6.6 PROCESS OF EXPENDITURES NOT REQUIRING PROCUREMENT PROCESS ........................ 34
6.7 PROCESS OF EXPENDITURES REQUIRING PROCUREMENT PROCESS ................................. 35
6.8 PAYMENTS ........................................................................................................................................ 37
6.9 PROCESSING OF PAYMENT INSTRUMENTS .............................................................................. 43
6.10 OVERALL PROCESS FLOW OF BUDGET EXECUTION ............................................................. 47
6.11 INTERNAL CONTROLS IN BUDGET EXECUTION PROCESS ................................................... 51
CHAPTER 7 .................................................................................................................................................... 57
PAYROLL PROCESSING............................................................................................................................. 57
7.1 PAYROLL PROCESSING FOR PERMANENT EMPLOYEES ........................................................ 57
7.2 PAYROLL PROCESSING FOR TEMPORARY EMPLOYEES ........................................................ 58
7.3 PROCEDURE FOR PAYMENT OF SALARIES AND ALLOWANCES IN CASH OUTSIDE DILI 58
7.4 PAYROLL PROCESSING .................................................................................................................. 59
7.5 PAYMENTS TO CASUAL EMPLOYEES .......................................................................................... 60
7.6 REMUNERATION FOR CONSULTANTS AND ADVISERS .......................................................... 60
7.7 PAYROLL REPORTING ..................................................................................................................... 61
CHAPTER 8 .................................................................................................................................................... 62
ADVANCES – PETTY CASH, IMPREST, EMBASSY AND OTHERS ................................................... 62
8.1 GENERAL PRINCIPLES FOR IMPREST AND PETTY CASH ADVANCES .................................. 62
8.2 TYPES OF ADVANCES ..................................................................................................................... 63
8.3 PETTY CASH ADVANCES................................................................................................................ 63
8.4 GENERAL IMPREST ADVANCES ................................................................................................... 66
8.5 MUNICIPALITY OPERATIONS AND ROLE OF MUNICIPALITY FINANCE ............................. 68
8.6 TREASURY OPERATIONS AND ADVANCES FOR TIMOR-LESTE EMBASSIES AND
MISSIONS ........................................................................................................................................... 68
8.7 OTHER ADVANCES .......................................................................................................................... 70
CHAPTER 9 .................................................................................................................................................... 72
REVENUE COLLECTION AND ACCOUNTING ..................................................................................... 72
9.1 OVERVIEW OF REVENUE COLLECTION SYSTEM ..................................................................... 72
9.2 GENERAL PRINCIPLES FOR REVENUE COLLECTION .............................................................. 72
9.3 RESPONSIBILITY OF AGENCIES FOR COLLECTION OF REVENUES...................................... 72
9.4 TAX REVENUE COLLECTION PROCEDURES .............................................................................. 74
9.5 COLLECTION OF CUSTOMS REVENUES AT DILI PORT ............................................................ 74
9.6 COLLECTION OF REVENUES AT BORDER CONTROL STATIONS OUTSIDE DILI ................ 75
9.7 COLLECTION OF PERSONAL INCOME, CORPORATE, SERVICE, VAT AND WITHHOLDING
TAXES ................................................................................................................................................. 76
9.8 TIMOR SEA REVENUES ................................................................................................................... 77
9.9 NON-TAX REVENUE COLLECTION PROCEDURES .................................................................... 78
9.10 SPECIAL PROCEDURE FOR COLLECTION OF PASSPORT FEE REVENUES ........................... 80

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9.11 SPECIAL PROCEDURE FOR REVENUES COLLECTED BY TIMOR-LESTE DIPLOMATIC
MISSIONS AND EMBASSIES ........................................................................................................... 80
9.12 PROCEDURE FOR RECEIPT OF MONEY THROUGH AUCTION OF UNSERVICEABLE /
OBSOLETE INVENTORIES / SEIZED GOODS ............................................................................... 81
9.13 ELECTRONIC PROCESSING OF RECEIPTS THROUGH DIRECT PAYMENT OF REVENUES
BY CLIENTS ....................................................................................................................................... 82
9.14 REVENUE RECONCILIATION BY REVENUE COLLECTING AGENCIES ................................. 82
9.15 REVENUE RECONCILIATION BY TREASURY AND BANKS ..................................................... 82
CHAPTER 10 .................................................................................................................................................. 84
ACCOUNTING AND BANK RECONCILIATION .................................................................................... 84
10.1 OVERVIEW OF ACCOUNTING SYSTEM IN TIMOR-LESTE ....................................................... 84
10.2 FULL CASH BASIS OF ACCOUNTING ........................................................................................... 85
10.3 ACCOUNTING FOR PETROLEUM FUND....................................................................................... 85
10.4 RESPONSIBILITY FOR RECORDING AND ACCOUNTING ......................................................... 85
10.5 QUARTERLY ACCOUNT OF FUNDS .............................................................................................. 86
10.6 ANNUAL CONSOLIDATED & INDIVIDUAL FUND STATEMENTS ........................................... 87
10.7 ACCOUNTING PRINCIPLES AND SYSTEM .................................................................................. 88
11.8 SETTING UP OF ACCOUNTING SYSTEM AND OPERATION ..................................................... 89
10.9 ACCOUNTING SYSTEM OPERATION ............................................................................................ 89
10.10 PROCESS FOR MONTHLY ACCOUNTS CLOSURE ..................................................................... 90
10.11 MONTHLY ACCOUNTS AND REPORTS ....................................................................................... 91
10.12 BANK RECONCILIATION PROCESS ............................................................................................. 91
10.13 END-OF- YEAR (EOY) OPERATIONS AND PROCESS FOR ANNUAL CLOSURE OF
ACCOUNTS ........................................................................................................................................ 95
CHAPTER 11 .................................................................................................................................................. 98
CASH AND DEBT MANAGEMENT ........................................................................................................... 98
11.1 OVERVIEW OF CASH MANAGEMENT ........................................................................................... 98
11.2 CASH MANAGEMENT SYSTEM ...................................................................................................... 98
11.3 O VERVIEW OF DEBT MANAGEMENT SYSTEM....................................................................... 100
11.4 LOANS BY THE GOVERNMENT .................................................................................................... 103
CHAPTER 12 ................................................................................................................................................ 105
AUTONOMOUS AGENCIES & MUNICIPALITIES BUDGET EXECUTION ................................... 105
12.2 REVENUE ......................................................................................................................................... 106
12.3 AMENDMENT TO AUTHORIZED BANK ACCOUNT SIGNATURES........................................ 107
12.4 MONTH END CLOSING OF ACCOUNTS ...................................................................................... 107
12.5 ACCOUNTING AND REPORTING ................................................................................................. 108
ANNEXURES & FORMS ............................................................................................................................ 109
EXPENDITURE AUTHORIZATION NOTICE ....................................................................................... 110
COMMITMENT PAYMENT VOUCHER ................................................................................................. 111
PURCHASE REQUISITION ....................................................................................................................... 112
PURCHASE ORDER.................................................................................................................................... 113

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RECEIPT AND INSPECTION REPORT .................................................................................................. 114
ADN REPORT ............................................................................................................................................... 115
REQUEST FOR PAYMENT ....................................................................................................................... 116
TREASURY PAYMENT ORDER .............................................................................................................. 117
DECLARATION OF LOST CHEQUE....................................................................................................... 118
A. TPO ADVISE.................................................................................................................................... 119
B. CHEQUE........................................................................................................................................... 119
FORMULARIU REJISTU DIVIDAS NAUN-FINANSEIRA ...................................................... 120
CHANGES IN PAY ADJUSTMENTS ........................................................................................................ 121
SALARY FORM ........................................................................................................................................... 122
UNDISBURSED/UNCLAIMED SALARIES ............................................................................................. 123
MEMORANDUM PAYROLL RETURNS ................................................................................................ 124
OVERPAYMENT CLAIM AUTHORIZATION ....................................................................................... 125
UNPAID SALARY CLAIM AUTHORIZATION...................................................................................... 126
PAYMENT VOUCHER FOR PETTY CASH............................................................................................ 127
MINISTRY PETTY CASH LEDGER ........................................................................................................ 128
PETTY CASH SUMMARY SHEET ........................................................................................................... 129
IMPREST FUND LEDGER ......................................................................................................................... 132
IMPREST FUND SUMMARY .................................................................................................................... 133
IMPREST FUND ACQUITANCE OF ADVANCE ................................................................................... 134
PAYMENT VOUCHER FOR EMBASSIES .............................................................................................. 135
ACCOUNT OF EMBASSY ADVANCES ................................................................................................... 136
FORMULÁRIO DE AUTORIZAÇÃO DE COMPRA FUNDO DE MANEIO E ADIANTAMENTO 137
STATEMENT OF ACCOUNTS FOR DISTRICT FINANCE OFFICERS ............................................ 138
PAYMENT VOUCHER FOR EMBASSIES .............................................................................................. 139
ACCOUNT OF EMBASSY ADVANCES ................................................................................................... 140
REVENUE COLLECTOR’S CASH ANALYSIS BOOK ......................................................................... 141
DAILY CASH RECONCILIATION ........................................................................................................... 142
SALEABLE DOCUMENT STOCK REGISTER ...................................................................................... 143
PASSPORT BOOK STOCK REGISTER................................................................................................... 144
EMBASSY REVENUE DAY BOOK........................................................................................................... 145
EMBASSY DAILY REVENUE SUMMARY STATEMENT ................................................................... 146
EMBASSY REVENUE RECONCILIATION STATEMENT- CASH ..................................................... 147
EMBASSY REVENUE RECONCILIATION STATEMENT- BANK .................................................... 148

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BANK RECONCILIATION ........................................................................................................................ 149
FORMATS OF REPORTING STATEMENTS ......................................................................................... 150
FORMATS FOR MONTHLY ACCOUNTS STATEMENTS .................................................................. 153
REVENUE REPORT FOR THE <MONTH> ....................................................................................................... 154
CATEGORY-WISE EXPENDITURE REPORT FOR THE <MONTH> .................................................................... 154
SUMMARY STATEMENT OF OVERALL FISCAL PERFORMANCE FOR <MONTH> ......................................... 155
STATEMENT OF EXPENDITURE BY FUNCTIONS ............................................................................................ 156
STATEMENT FOR SPECIAL FUNDS ................................................................................................................ 157
INFRASTRUCTURE FUND STATEMENT ......................................................................................................... 157
HUMAN CAPITAL DEVELOPMENT FUND STATEMENT ................................................................................. 157
STATEMENT OF DISTRICT-WISE EXPENDITURES ......................................................................................... 158
FORMATS FOR QUARTERLY BUDGET EXECUTION REPORTS .................................................. 159
1. BUDGET COMPARISON.......................................................................................................................... 160
2. BUDGET TO ACTUAL RECEIPTS / EXPENDITURES ................................................................................ 161
3. SUMMARY REVENUES ......................................................................................................................... 162
4. ITEM-WISE EXPENDITURE – WHOLE OF GOVERNMENT ..................................................................... 163
5. FUNCTION BASED EXPENDITURE ....................................................................................................... 164
6. DIVISION-WISE BUDGET EXECUTION STATEMENTS ........................................................................... 165
7. INFRASTRUCTURE FUND BUDGET EXECUTION STATEMENT .............................................................. 166
8. HUMAN CAPITAL DEVELOPMENT FUND BUDGET EXECUTION STATEMENT ..................................... 167
FORMATS FOR ANNUAL FINANCIAL STATEMENTS ...................................................................... 168
1. CONSOLIDATED RECEIPT AND PAYMENT (CASH BASIS) ...................................................................... 169
2. ORIGINAL AND FINAL APPROVED BUDGET AND COMPARISON OF ACTUAL AND BUDGET AMOUNTS170
3. EXTERNAL ASSISTANCE BALANCES RECORDED ON THE AID EFFECTIVENESS PORTAL BY PROVIDERS OF
EXTERNAL ASSISTANCE ...................................................................................................................... 171
4. SUMMARY RECEIPTS .......................................................................................................................... 172
5. ITEM-WISE EXPENDITURE – WHOLE OF GOVERNMENT ..................................................................... 173
7. CONTINGENCY EXPENDITURES .......................................................................................................... 175
8. STAFFING PROFILE THROUGH PAYROLL ............................................................................................ 176
9. DIVISION-WISE BUDGET EXECUTION STATEMENTS ........................................................................... 178
10. INFRASTRUCTURE FUND BUDGET EXECUTION STATEMENT ($’000) ................................................. 179
11. HUMAN CAPITAL DEVELOPMENT FUND BUDGET EXECUTION STATEMENT ..................................... 180
CHECKLISTS ............................................................................................................................................... 181
CHECKLIST FOR PAYROLL PROCESSING ........................................................................................ 182
SUPPLEMENTS............................................................................................................................................ 189
SUPPLEMENT A .......................................................................................................................................... 190
CHART OF ACCOUNTS (INCLUDING LINE ITEM CODES)............................................................. 190

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CHAPTER 1
ABOUT THE TREASURY MANUAL

1.1 PURPOSE OF TREASURY MANUAL


This manual is aimed at meeting requirements of various stakeholders engaged in the PFM
environment in Timor-Leste, specifically the Treasury operations. It therefore caters to needs of a
wide range of users, some of which are:
 Staff of Treasury
 Finance Staff of Autonomous Agencies (AA)
 Ministry of Finance staff
 Finance Staff in Line Ministries (LMs) at the National and Municipality levels
 Timor-Leste diplomatic offices’ staff
 Commercial banks engaged in government revenue collection and expenditures in
Timor Leste
 Central Bank of Timor Leste
 Various bilateral, multilateral partners and donor agencies
 International agencies like IMF, World Bank, ADB etc.

The manual is intended to be used as a guidance tool for actual users as it documents all treasury
processes as accurately as possible.

1.2 STRUCTURE OF TREASURY MANUAL


This manual has twelve chapters covering entire Treasury structure, operations and guidelines. All
relevant forms are provided in the Supplements.

1.3 AUTHORITY, DISTRIBUTION AND MAINTENANCE OF MANUAL


The authority to issue and maintain this manual lies with the Director General of Treasury.
Directorates and Finance Offices in LMs, AAs and Municipalities have the right and duty to suggest
amendments to the manual but not exercise them until they are formally approved by the appropriate
organizational authority i.e. the Director General of Treasury.
The Treasury Manual will be available in soft copy (not editable) and hard copy. Soft copy of the
manual is available at the website of the Ministry of Finance. Users are encouraged to check for the
latest version of the manual at the above mentioned website. Furthermore, it is advisable to print a
hard copy of the manual to be available for the users in their departments.
Any changes to the Treasury Manual must be tracked and recorded accordingly for future reference.
(e.g. by version control on the first page). Upon approval by the appropriate approving authority,
updated versions will be posted on the MoF website.

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CHAPTER 2
OVERVIEW OF TREASURY SYSTEM

2.1 LEGISLATIVE FRAMEWORK


2.1.1 Management of State General Budget of Timor-Leste is an important and crucial function.
This function is being performed by the Ministry of Finance, established under the Budget and
Financial Management Act (BFMA) No 13/2009 altered by Law no 9/2011, of 17 August, and
Law no. 3/2013, of 11 September. The BFMA superseded the UNTAET Regulation
No.2000/1 under which this function was performed by Central Fiscal Authority (CFA) now
the BCTL. The Transitional Administrator, on the recommendation of Head of CFA, had
established the Consolidated Fund of East Timor (CFET) with effect from 1st July 2000. This
fund is presently called the Consolidated Fund of Timor-Leste (CFTL). All expenditures and
collection of revenues and accounting thereof are governed by the Budget and Financial
Management Act, Budget Execution Decree Law and Appropriations Regulation for a Fiscal
Year. Requirements under these laws supersede any contradictory requirements in this Manual
2.1.2 The mandate of the Ministry of Finance set out in Article 21 of the Organic Law of the sixth
Constitutional Government Decree-Law No.6/2015, states that the Ministry of Finance is the
Government’s main body responsible for the design, execution, coordination and assessment
of the policies defined and approved by the Council of Ministers for the areas of budget and
finance annual planning, and monitoring.
2.1.3 Through the Ministerial Diploma n.º 35 /2014 de 19 November, the Organic Statutes of the
Directorate General of Treasury has been established. Based on the organic law of the
Ministry of Finance under sixth constitutional government, new organic statutes of the
Directorate General Treasury have been drafted for approval.
2.1.4 In addition to these regulations and decrees, several other decrees in the Treasury’s scope of
operations have been promulgated. Some of the major ones are:
 The decree law No. 8/2011 for creation of the Infrastructure Fund (FI) intended to
fund strategic programs and projects aimed at acquisitions, construction and
development of road infrastructure, power generators and distribution lines,
telecommunications, etc. In 2016 MPS (Major Project Secretariat) has become an
autonomous agency, and therefore the responsibility of execution the fund in the
infrastructure account at the Central Bank will no longer be done through Treasury.
 The decree law No. 12/2011 provides for establishing a Human Capital Development
Fund (FDCH) and is intended to finance programs and multi-annual projects for
training and human resource development.
 The decree law No. 9/2005 establishes a Petroleum Fund which seeks to meet with
the constitutional requirement laid down in Article 139 in the Constitution of the
Republic of petroleum resources being owned by the State, being used in a fair and
equitable manner in accordance with national interests, and establishing mandatory
financial reserves from the income generated by the resource.

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2.2 ROLE AND FUNCTIONS OF TREASURY


2.2.1 The Treasury became operational on 1 July 2000 upon the promulgation of UNTAET
Regulation 2000/20 as amended by Regulation 2001/13 and further amended by the Budget
and Financial Management Act 2009/13.
2.2.2 While the Budget Directorate under Directorate General of State Finances (DGSF) the
Ministry of Finance is responsible for developing the State General Budget of Timor-Leste, it
is the responsibility of the Treasury to execute the budget, account for all the public revenues
it receives and make all payments and help develop a comprehensive and reliable Financial
Management Information System on behalf of the Ministry. From 2016 32 Autonomous
agencies are allowed to execute their own budget. Sub accounts for the 32 Autonomous
agencies have been opened at the Central Bank and they will have full access to their own sub
accounts for execution except payroll which will continue to be processed through Treasury.
2.2.3 The mandate of the Directorate General of Treasury is provided in the Organic Law of Ministry
of Finance No.38/2015 of 7 October. Vide Article 27 of this decree, the Directorate General
of Treasury abbreviated as DGT, whose mission is to ensure the guidance and co-ordination of
MF integrated services in the areas of accounting, payments, autonomous fund services and
Municipalities, has the following responsibilities:
(a) Develop policy and procedures to ensure transparent budget execution, responsible and
quality through an effective management of payments and treasury account balance,
including the management of the public debt
(b) Ensures a responsible and transparent financial decentralization of public expenditures
(c) Ensure that public revenues are properly recorded and manage liquidity
(d) Monitor the efficiency and effectiveness of the financial management of autonomous
services and funds
(e) Any other duties assigned by law or determined by the superior

2.3. RESPONSIBILITIES OF TREASURY


2.3.1 The Directorate General of Treasury is one of the 6 Directorates General under the Ministry of
Finance, which reports directly to the Minister and Vice Minister of Finance.
2.3.2 Without prejudice to the generality of the provisions specified in the various relevant laws and
decrees on this subject, the Director General of Treasury shall:
a) Receive all public monies other than those attributable to AAs. These are payable into
the CFET Account. In addition, provide secure custody for these monies, and make
disbursements on behalf of the Government in accordance with the Budget and Public
Financial Management Act no. 13/2009 or any other enactment and under the
authority of the Minister or designee. Treasury shall ensure the safety and integrity of
the Consolidated Fund and all other public funds of the Government of Timor-Leste.
b) Serve as the Head of the Treasury for the Government of the Timor-Leste and shall
advise the Minister and the Government on financial accounting and reporting matters
and on PFM issues under the Budget and Public Financial Management Act
no.13/2009 and any other enactments.
c) May with the approval of the Minister designate officers to discharge duties, and
such officers shall be accountable to the Director General of Treasury for the proper
discharge of such duties in accordance with any enactment or instructions issued by
the Treasury.

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d) Establish offices with the approval of the Minister staffed by officers of Treasury, for
the receipt, custody and disbursement of public monies as may be required by
circumstances of public financial business.
e) Serve as Chief Accountant of the Government responsible to the Minister of Finance
for keeping, rendering and publishing statements of the public accounts as required
under the act or any other enactment.

2.4 STRUCTURE OF THE DIRECTORATE GENERAL OF TREASURY


2.4.1 The Ministerial Diploma No.38/2015 of 7 October, on the Organic Statutes of the Directorate
General of the Treasury in MOF, provides the basis for organizational structure of the
Directorate General of Treasury. Essentially the structure of Directorate General of Treasury
includes the following National Directorates:
a) National Directorate of Accounting and Financial Regulations;
b) National Directorate of Payments;
c) National Directorate of Financial De-Concentration.

DGT

National Directorate of
National Directorate of National Directorate of Financial
Accounting and Financial
Payments De-Concentration
Regulations

2.4.2 National Directorate of Accounting and Financial Regulations


2.4.2.1 The National Directorate of Accounting and Financial Regulations (NDAFR) is the agency
of the General Directorate of Treasury responsible for the issues related with the State
revenue and expenditure accounting and its reconciliation with CFET and public funds
under the responsibility of the Ministry of Finance. The accounting security and
reconciliation of the funds of the AAs and Municipalities are the responsibility of the
respective Autonomous Agency. NDAFR is only responsible for incorporating the results of
operations of the AAs and Municipalities into the CFET reporting of Whole of Government
Activities.

2.4.2.2 It is the responsibility of the Directorate to:


a) Coordinate and supervise the accounting and reconciliation of revenue and
expenditure, transfers of funds, and the organization of the current accounts necessary
to control these operations;
b) Support the Public contracts and procurement policy;
Centralize and coordinate the bookkeeping and accounting of public revenue and
expenditure;
c) Update the master file of vendor registration independent of the National Payments
Directorate;

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d) Process financial transactions of the Special Funds under the responsibility and
supervision of Ministry of Finance;
e) Exercise the action of supervision of Autonomous Public Authorities in the provision
of financial statements, in accordance with law;
f) Produce regular reports to the Government on revenue and expenditure of public
administration, including Autonomous Public Entities;
g) Confirm the alteration to any account details in the Chart of Accounts in GRP
h) Develop the State Whole of Government Accounts in collaboration with other
services;
i) Coordinate, update and standardize the classification system of public expenditure
and publicize the criteria that should govern this classification;
j) Issue and report financial administrative instructions on the financial management of
public money promoting, with educational efforts, its constant improvement;
k) Coordinate with the Central Bank the liquidity and funding requirements of the
Government ;
l) Carry out activities related to the management and issuance of public debt;
m) Any other tasks and responsibilities assigned to it by law or Directive of the Minister
.

2.4.2.3 The NDAFR includes the following departments and units:

NATIONAL
DIRECTOR

AUTONOMOUS AGENCIES
DEPARTMENT OF ACCOUNTING CASH AND PUBLIC DEBT
MONITORING & ADVISORY
AND REPORTING MANAGEMENT UNIT
UNIT

A. The Department of Accounting and Reporting;


The Department of Accounting and Reporting, abbreviated to DCR, perform the following tasks:

i. Supervise the government account ing of all tax and non tax revenues and carry out
reconciliations with revenues of collection agencies and banks records;
ii. Supervise the Whole of Government records and accounting of revenue and public
expenditure in accordance with accounting policy approved by the Government;
iii. Prepare and implement procedures for month , quarter and year end account closing p;
iv. Ensure financial reporting systems of Treasury are adequate to generate
consolidated financial statements, including autonomous funds, public debt and
information on external assistance;
v. Preparing and issuing Financial Reports on revenue and expenditure of the Whole of
Government, including those relating to autonomous funds. The reporting of revenue
and expenditure of individual Autonomous Agencies is the responsibility of the
respective Agency;
vi. Establish and implement procedures for the reconciliation of required accounts to
ensure the production of accurate financial reports;
vii. Prepare the State General Account of all funds under the law;
viii. Prepare budget execution reports;

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ix. Manage the Vendor Master Database for Whole of Government
x. Facilitate the annual audit of the accounts and reviews conducted by any audit body ,
addressing issues and implementing recommendations;
xi. Supervise the maintenance of the Petroleum Fund accounts, according to the policy
approved by the Government.

B. The Cash and Public Debt Management Unit.


The Cash Flow and Public Debt Management Unit, abbreviated as UFDGDP, perform the following
tasks:

i. Monitor the liquidity of Government Finances and ensure the adequacy of e funds
required for budget execution;
ii. Perform Government cash flow forecasts to optimize withdrawals from the
Petroleum Fund ;
iii. Coordinate with the Central Bank on issues related to money management;
iv. Perform functions related to the issuance, receiving, servicing, repayment and
accounting of public debt;
v. Any other tasks assigned to it by law or order.

C. The Autonomous Entities Monitoring and Advisory Unit.


The Autonomous Entities Unit, hereinafter referred to as AAMAU, perform the following tasks:

i. Exercise financial monitoring of autonomous entities and prepare regular report on


issues and challenges faced by AA;
ii. Provide advise to Autonomous Agencies on Accounting and Reporting Issues;
iii. Establish and disseminate the framework of the policy, laws and regulations applicable to autonomous
entities;
iv. Any other tasks assigned to it by law or order.

2.4.3 National Directorate of Payments

2.4.3.1 The National Directorate of Payments is the agency of the General Directorate of Treasury
responsible for the issues related with the disbursement of the State General Budget
allocation for the lower tiers and other Government agencies beneficiaries of budget
transfers. In addition it is also responsible for the payment and accounts of agency advances
and petty cash and imprests.

2.4.3.2 The National Directorate of Payments, abbreviated as DNP, performs the following tasks:

a) Coordinate and supervise the payment of public expenditure and the movement of
Treasury operations;
b) Make payment of all state employees, according to information provided by the
Public Service Commission, and to ensure the withholding of taxes due and perform
other deductions;
c) Pay the support grants and public subsidies, under the law;
d) Process financial transactions of the Special Funds under the tutelage of MoF;
e) Any other tasks assigned to it by law or order.

2.4.3.3 The DNP includes the following departments:

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NATIONAL DIRECTOR

DEPARTMENT OF PERSONNEL DEPARTMENT OF PAYMENT DEPARTMENT OF ADVANCE


AND PENSION PAYMENTS PROCESSING PAYMENTS MANAGEMENT

A. The Department of Payroll and Pensions;


The Department of Payroll and Pensions, abbreviated to DPPP, perform the following tasks:

i. Preparation and update the list of personal payment of officials and agents of public
administration as well as the holders and members of state bodies, according to the
law;
ii. Process payment of salary and wages;
iii. Pay benefits under the law;
iv. Coordinate with commercial banks payments by bank transfer;
v. Allow pension payments, according to the law;
vi. Making payments for retired employees of the Public Administration;
vii. Allow reconciliation of personal payments and pension payments to the basic
payment data;
viii. Working in coordination with the Public Service Commission to update the changes
on the basis of personal data and payment information received from ministries;
ix. Any other assigned to it by law or order.

B. The Department of Payment Processing;


The Department of Payment Processing, abbreviated as DPP, perform the following tasks:

i. Coordinate and supervise the payment of all public expenditure from the CFET and
FDCH accounts and other Funds for which Treasury is responsible
ii. Process requests for payment received from the various departments of the
Government and ensure they are correct and the budgetary availability for this;
iii. Pay subsidies and public grants, according to the law;
iv. Approve and authorize all payments and issue warnings and payment instruments;
v. Keep a list of payment instruments holders and persons authorized in Payment
Commitment Forms and applications for payment;
vi. Prepare the issuing and disseminating budget implementation circular;
vii. Authorize and approve payments for accounts where the Treasury is designated as the
holder;
viii. Implement a payment system that improves the transparency, efficiency and control;
ix. Any other assigned to it by law or order.

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C. The Department of Payments Monitoring and Advances Management.
The Department of Payments Monitoring and Advances Management, abbreviated to DGA, perform
the following tasks:
i. Release and manage working capital allocated to institutions;
ii. Release advances to the ministries;
iii. Manage accounting of all advances;
iv. Reconcile accounts received from the ministries at the end of every quarter and year
end;
v. Free advances for all of Timor-Leste embassies;
vi. Managing records of the embassies;
vii. Reconcile accounts received from all embassies to close the annual accounts;
viii. Any other assigned to it by law or order.

2.4.4 National Directorate of Financial De-Concentration.

2.4.4.1 The National Directorate of Financial De-Concentration is the agency of the General
Directorate of Treasury responsible for the decentralization of Ministry of Finance services
responsible for accounting and payments to the Municipalities

2.4.4.2 The National Directorate of Financial De-Concentration, abbreviated as DNDF, performs


the following tasks:
a) Support the De-concentration of Ministry of Finance services responsible for
accounting and payments to Municipalities;
b) Ensure appropriate budgetary transfers to the Community authorities and local
authorities, within their respective competences and budgeting;
c) Monitor the proper use of budgetary transfers to Municipalities;
d) Collaborate in the inclusion of budget transfers in the state budget appropriations to
Municipalities;
e) Any other assigned to it by law or order.

2.4.4.3 The DNP includes the following departments:

NATIONAL DIRECTOR

UNIT HEAD FOR THE DE-CONCENTRATION OF UNIT HEAD FOR THE DE-CONCENTRATION OF
ACCOUNTING OPERATIONS

A. The Unit of Systems and Coordination of Financial De-concentration;


The Department of Systems and Coordination of Financial De-concentration, abbreviated to DSCDF,
perform the following tasks:
i. Develop and articulate the policy of financial De-concentration of Treasury
operations, in coordination with the DNCRF;
ii. Designing and implementing a De-concentration model for financial transactions,
including a mechanism for flow of funds;

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iii. Develop an appropriate chart of accounts, to allow the De-concentration of Treasury
operations for expenses and revenues;
iv. Develop an effective consolidation framework of accounts for De-concentration at the
Municipal level including operational procedures for Municipal Treasury accounts;
v. Develop controls and procedures for financial accounts and associated reports to
public subsidies of low value;
vi. Collaborate in the budgeting process of transfers within the State Budget;
vii. Develop plans for development of the financial system and to use the same in
ministries and Municipalities;
viii. Any other assigned to it by law or order.

B. The Unit of De-concentration of Operations.


The Department of De-concentration of Operations, abbreviated as DDO, the following tasks:
i. Coordinate and oversee the establishment and operation of Municipal Treasury
offices, their operations and their budgets and other activities that are necessary for its
operation;
ii. Identify and define the specifications of the financial system and operational
requirements for De-concentration of operations;
iii. Support the use and configuration of the IT System of Financial Management
operations;
iv. Ensure the preparation, availability and connectivity of the IT Financial Management
System in Municipal offices where the Treasury modules are used;
v. Act to allow access to the modules of the computer system related to the Treasury, for
their users in the Municipalities;
vi. Assist in the functionality testing phase of the Financial Management Information
System to allow its De-concentration, before final approval;
vii. Coordinate with the structure organic responsible for IT infrastructure, to ensure an
appropriate infrastructure for use of computer-related modules with Treasury;
viii. Support all the utilities of computer modules related to Treasury operations;
ix. Any other assigned to it by law or order.

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CHAPTER 3
CHART OF ACCOUNTS

3.1 CHART OF ACCOUNTS


3.1.1 The Chart of Accounts or Budget Code is a set of attributes associated with financial
transactions that are recorded for a meaningful analysis of financial data. It essentially
comprises a set of possible values, organised in a structured manner so as to maintain
uniformity and easy retrieval/presentation of data. The Budget Codes or Chart of Accounts
classifies expenditure and revenue so as to facilitate economic analysis and accountability of
Government transactions. It also provides consistency in classifying the Government
expenditure and revenues. Classification of expenditure is also necessary for budget
execution process so as to ensure that commitments to be made and payments to be executed
are within the limit of the appropriations approved by the Law and there is no overspending.
These classifications also serve as input for preparing the annual budget. The summary
Chart of Account is available at Supplement I.
3.1.2 The Chart of Account structure used by the Government of Timor-Leste contains the
following variables/attributes that are used to classify transactions, enforce budgetary
controls, and manage the affairs:
i. Source of funding / revenue is received
ii. Authority – Line Ministry , Govt Entity or Autonomous Agency which incurs
expenditure/receives revenue
iii. Purpose – Project / Program of expenditure
iv. Type of expenditure incurred or revenue received referred to as Item and Line Item
v. Geographical location of where the expenditure is incurred
3.1.3 Chart of Account Groups and the attributes represented in the COA used by the Government of
Timor-Leste are shown in table below.

No COA Group Corresponding Attribute


1 Fund Group Source
2 Organization Group Authority /agency
3 Program Group Purpose
4 Object Group Type
5 Location Group Geographical

3.1.4 Each COA Group contains related tables, which in turn have Element codes that are
applicable to the way the government operates and manages its resources. For example in
IFMS the Organization group contains tables for the Ministry; Directorate and Division
Levels of Government.

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3.1.5 The five COA Groups above together make up the Financial Coding Block, which is used in
every financial transaction to capture the various attributes of a transaction.
3.1.6 Chart of Account Elements- Each of the above groups contains COA elements (codes),
which represent individual items within each COA table.

3.1.6.1 Fund Code


Fund Source (4) Fund (1) Sub Accounts (2)

These are the first two digits of Chart of Accounts or Budget Codes, which indicate the account that
the revenue or expenditure is to be coded.
The current funds that have been given Budget Codes are as follows:

Fund Source
Fund Sub-Accounts
Description Code Description
Consolidated Fund of Timor- 01 Treasury Account
Leste 02 Aviation Account
03 Aportil Account
04 EDTL Account
05 PIEM Account
TFET 21 PFMCBP Account
Bilateral Funds 31 Bilateral Country
32 Bilateral agency
Multilateral Funds 41 Agency Multilateral
42 Multi-donor Multilateral
Special Funds 51 Infrastructure Fund
52 Human Capital
Development Fund
Petroleum Fund 81 Petroleum Fund

3.1.6.2 Organisation Code

Ministry (6) Directorate (4) Ministry (2)

The following diagram illustrates the COA elements (codes) in the COA Tables of the Organization
Group, along with their relationships.
Ministry Directorate Division
Code Desc. Code Desc. Code Desc.
16 Ministério da 1604 Servicos Educação 160401 Director Geral
Educação
17 Ministério da 1711 Direcção Nacional da 171103 Direcção de Administração
Administração Administração Local do Território Municipio
Estatal Baucau
In the above example, the Director General is a division under the Servicos Educação Directorate
which in turn is under the Education Ministry.

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3.1.6.3 Program Code

Priority (1) MDG (2)

SIP Activity (7) SIP Objectives (5) SIP Thematics (3) SIP Pillars (2)

Activity (7) Sub Program (5) Program (3) Program Sectors (2)

Sector (1)

Function Class (5) Function Group (4) Function Division (3)

The program code has three digits, which is detailed to sub-program level (with two additional
digits) and finally broken down to Activity level with further two additional digits. A sample of the
Program codes is shown below.

Program
Program Sub Program Activity
Code Description Code Description Code Description
168 Direcção Nacional 16801 Direcção Nacional da 1680101 Direcção Nacional da Juventude
da Juventude Juventude
677 Grupo de Acção 67701 Grupo de Acção para 6770101 Grupo de Acção para
para Coordenação Coordenação das Coordenação das Actividades de
das Actividades de Actividades de Energia Energia Renovável
Energia Renovável Renovável

3.1.6.4 Object Code

Line Item Appropriation Sub Category Main Account


Item (3) Category (2) Category (1) Category Type (1)
(4) (2) (1)

Grant
Category
(2)

GPS I.4 GPS I.3 GPS I.2 GPS I.1


(4) (3) (2) (1)

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This code contains four digits. This code identifies the type of receipt or payment and also identifies
Balance sheet accounts. Examples of the code structure are listed below.

CFET OBJECT CLASSIFICATION


Code Item Code Line Item
Balance Sheet Examples
100 Cash Balance with BCTL 1000 CFET Cash Balance with BCTL
(CENTRAL BANK)
129 CFET Interfund Settlement account 1290 Settlement Account with Treasury
1291 Settlement Account with Ports
1292 Settlement Account with Aviation
1293 Settlement Account with Power
Revenue Examples
300 Consolidated Fund of Timor-Leste 3000 Consolidated Fund of Timor-Leste
500 Taxes on Commodities 5000 Sales tax
5001 Excise tax
5002 Import duties
5003 Export Duties
Expenditure Examples
600 Salary 6000 Salary - Permanent Employees
6001 Salary - Temporary Employees (Local)
6002 Salary - Temporary Employees (Overseas)
6003 Consultant Fees – Overseas
6004 Consultant Fees – Local
610 Overtime 6100 Overtime
620 Travel and Subsistence Allowance 6200 Local travel

3.1.6.5 Location Code

Suco (3) Posto Administrativo (3) Municipio (2)

The location code has the Suco (3 digit) at the lowest level and this rolls up to Posto Administrativo
level (3 digits) which finally rolls up to Municipio/ Embassy country (2 digits). Sample coding table
is shown below.
Municipalities Posto Administrativo Suco/Station
Code Description Code Description Code Description
01 Dili 101 Dili 001 Dili
02 Baucau 208 Laga 543 Atelari
51 New York 151 New York 051 New York
71 Brasilia 171 Brasilia 071 Brasilia

3.1.7 Changes to the Chart of Accounts or Budget Codes

The Chart of Accounts is a dynamic document that evolves as new or changed information
requirements emerge. The Director General of Treasury must approve any additions or
modifications to the Chart of Accounts. After approval and finalization at DGT level, the overall

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CoA should be approved by the Minister of Finance at least six monthly and when there are changes
to Ministry Details such as when a new Government is installed.

3.2 APPROPRIATIONS
3.2.1 The Budget is the financial plan of the country to allocate resources to Government
programmes in accordance with the Government’s policy priorities. The Budget provides
funding to all Central Government Ministries, Autonomous Agencies and Statutory bodies.
It also includes a detail plan of revenue collection.

3.2.2 The Annual Budget process results in an approved annual budget available to Ministries,
Autonomous Agencies and Statutory Bodies for expenditure during the Fiscal Year. Each
year the budgetary spending for the government are approved by the Parliament through an
annual appropriation act.

3.2.3 The appropriations are budgetary allocations or spending limits for each division in a
ministry of the government detailing up to the item level under each category of
expenditures Appropriation Category or App Cat. These are – App Cat 1 – Salaries &
Wages, App Cat 2 – Goods & Services, App Cat 3 – Minor Capital, App Cat 4 – Capital
Development and App Cat 5 – Public Transfers
.

3.3.3.1 The appropriations therefore have the following coding block for all categories of
expenditures –

Fund Division Item


3.2.4 For special funds viz. Infrastructure Fund and Human Capital Development Fund
expenditures the following coding block is adopted –

Fund Ministry Sub Program

3.3 DUO DECIMO REGIME


3.3.1 In the event of the budget not being promulgated before the beginning of a new financial
year, the Ministry of Finance will issue instructions based on Article 31 of the Budget and
Financial Management Act, 13/2009 by which each ministry would be able to spend 1/12 th
of the budget of the preceding financial year in every month until the budget for the new
financial year is promulgated. The Treasury will ensure that all expenditures incurred by
each ministry or institution do not exceed these limits until the budget is promulgated.
Where Ministries are re-structured or activities existing in the previous financial year do not
continue to the new year on promulgation, expenditures charged to ministries or activities
under Duo Decimo that no longer exist under the New Budget, must be transferred to the
appropriate expenditure under the Virement Process detailed below

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3.4 VIREMENTS
3.4.1 Sometimes changes to the allocation of funds are required during the year to either allocate
additional funds or shift funds from one coding block to another. This requires a formalized
process and are made through –
i. A change in the Budget Appropriation approved by Parliament Regulation; or
ii. Through an Appropriation transfer to or from the Budget item through a virement
process.

3.4.2 The appropriation transfer to or from a budget item i.e. virements, is governed by the
relevant provisions of the Budget and Financial Management Act. Full powers have been
delegated to Ministries to effect transfers within items in a Appropriation Category.
Transfers between categories are restricted to a limit of 20% of the amount budgeted in the
appropriation category from which funds are proposed to be moved out. All virements will
have to be communicated to the Budget Directorate which will check for its correctness
before noting the changes in the Performance Budget (PB) module of FreeBalance. The
Budget Directorate thereafter will inform the Treasury of changes in the appropriations as a
result of the virement. The Treasury will note the changes in the Financial Applications
module of FreeBalance in the budget details of the concerned ministry. This can be
achieved by issuing a further “Funds Allocation” or by issuing a “Funds Withdrawal”.
These processes are no different to the basic Funds Allocation process.
3.4.3 In case a total appropriation against an expenditure allocation has been exhausted, and
further expenditure is required in the interest of the Government, a request for
Supplementary Additional Provision (SAP) has to be made to the Minister of Finance.
3.4.4 Virements cannot be made in the following cases:
 No virements can be made from capital budget to any other budget heads;
 No virements can be made from salaries, wages and allowances to any other budget
heads;
 The savings proposed do not serve to re-allocate between recurrent and capital budget
appropriations; this may be waived for special reasons by the Minister of Finance but
only to a cumulative overall limit of 10 percent of the allocated total;
 Savings of one Ministry shall not be transferable to another Ministry without a change
in the Appropriation Regulation.
 In respect of re-allocations within the appropriation the maximum virement allowed is
20 per cent of the amount budgeted in the appropriation category from which funds
are proposed to be re allocated and moved out;

3.4.5 The standard Form for application for virement to incur supplementary additional provisions
are provided by the Budget Directorate and virement requests justifying the adjustments is to
be sent to the Budget Directorate, Ministry of Finance.

3.5 ALLOTMENTS AND FINANCIAL BUDGET CONTROL


3.5.1 The Government of Timor-Leste has chosen to utilize three levels of control to oversee the
yearly appropriations authorized by Parliament. These are categorized as:

Allotment 1 Allotment 2 Financial Budgets

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3.5.1.1 The Allotment 1 level sets the annual ceiling for spending by government. Presently it
enables control at following levels / block:

Fund Ministry Category


3.5.1.2 The Allotment 2 level is aimed to enable the recording of Expenditure Authorization Notices
- EANs , based on periodic, mostly quarterly releases. This is achieved through setting up
system with annual appropriations at following levels:

Fund Division Category


The EANs / releases are controlled using the “check control level” field in the FreeBalance which is
updated as and when EANs are released.
3.5.1.3 Financial Budgets are used for recording the actual appropriation levels as approved by the
Parliament. It therefore has the same coding levels as the annual appropriations viz.

Fund Division Item


3.6 UN-UTILIZED APPROPRIATIONS
All appropriations for a fiscal year are to lapse after 31st December of that fiscal year.

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CHAPTER 4
CONSOLIDATED AND OTHER PUBLIC FUNDS

4.1 THE CONSOLIDATED FUND OF TIMOR-LESTE (CFET)


4.1.1 The Budget and Financial Management Act no. 13/2009 provides for the public funds for
government of Timor-Leste which comprise the Consolidated Fund of Timor-Leste and
other special funds as may be authorized by law.
4.1.2 CFET records all expenditures and collection of revenues and accounting thereof are
governed by the Budget and Financial Management Act and Appropriations Regulation for a
Fiscal Year. This fund constitutes the Treasury Single Account (TSA) for the government of
Timor-Leste and is held in the BCTL (Central Bank of Timor-Leste).
4.1.3 Amounts appropriated to AAs are transferred on a quarterly basis to the respective CFET
sub account established for that AA. Where funds are needed more frequently these will be
transferred to the AA sub account on submission of a Cash Flow Statement CFS validating
the revised request.
Any monies collected by the AA is retained in their respective sub-account. The following
year the appropriation transferred is calculated after adjusting for any revenues collected and
unspent monies from appropriations of the previous year
Where revenues received by an AA is deposited in another AA sub account or CFET
account, this will be corrected by using the Settlement Account Process. Details of this are
included in the Appendix under XXX provide Cross Reference.
Expenditures and Revenues recorded in the sub account are automatically consolidated into
the CFET account when the Whole of Government Accounts are prepared at Quarterly and
Annual intervals.
4.1.4 The receipts into the Consolidated Fund CFET or other public funds are classified as
follows:
i. Tax Revenue, including income taxes, goods and services, customs duty and other
transactions;
ii. Non-Tax Revenues including fines, penalties, forfeitures, fees and charges, lease or
rent on government natural resources, lands and buildings, interest on government
investments, dividends and all other revenue generated from the activities of
departments;
iii. Repayment of loans to Government on maturity or retirement ;
iv. Where revenues are deposited in CFET for which no reference and other details can
be provided by BCTL after two requests, then these are included in Non Tax
Revenues – Other Income
v. Domestic and external grants, other revenues received under an enactment; other
receipts including the product of borrowing unless, received by an AA or Special
Fund repayment of government loans and advances, sale of government securities,

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sale of government equity investments, sale of other government assets, proceeds
received by the State from licensing or selling any rights controlled by the State,
including radio spectrum rights, natural resource exploration or exploitation rights,
and intellectual property rights; and
vi. Trust Moneys which are Deposits, Special and Trust Funds.

4.1.5 No amount shall be withdrawn from CFET except where the issue of those monies has been
authorized by:
i. An Appropriation Act with a corresponding expenditure authorization notice issued
by Ministry of Finance;
ii. The amount does not exceed the amount authorized by the appropriation or
iii. A supplementary estimate approved by resolution of the Legislature passed for the
purpose; or
iv. An Act of the Legislature; or
v. Rules or regulations made under an Act of the legislature in respect of any trust
moneys paid into the Consolidated Fund.
vi. An Expense Voucher created and supported by CPV, PR PO IRN and contract where
applicable . These are detailed in Chapter VI

4.2 OTHER PUBLIC FUNDS


4.2.1 The Article 32 of Budget and Financial Management Act provides for creation of special
funds. It stipulates that whenever authorized by law, the Minister of Finance may establish
special funds that are not part of the Consolidated Fund.
4.2.2 The revenues, incomes and profits from these funds are not transferred to the Consolidated
Fund at the end of the year, being instead retained by the funds to serve the purposes for
which they were established.
4.2.3 The Minister of Finance is responsible for managing and controlling the funds.
4.2.4 Except the Infrastructure Fund, all expenses done through the funds require an authorization
by the Minister of Finance addressed to the responsible entity. Salary and wages payment
out of the IF, FDCH and AAs will still be made through the Payroll Department of Treasury.
4.2.5 No monies shall be withdrawn from any of these special public funds unless the issue of
those moneys has been authorized.

4.3 THE INFRASTRUCTURE FUND


4.3.1 The Infrastructure Fund is one such other public fund which has been created through the
Decree-Law No. 8 / 2011. On Promulgation and signing of the 2016 Annual Budget by His
Excellency, the President of the Republic of Timor Leste, the IF was converted to an AA.
However the bank account of the IF is classified as a Special Fund and not a Sub Account.
4.3.2 This fund is intended to fund strategic programs and projects aimed at acquisitions,
construction and development of:
a) Road infrastructure, including roads, bridges, ports and airports;
b) Power generators and distribution lines;
c) Telecommunications;
d) Infrastructure that promote flood protection:
e) Treatment facilities for water and sanitation;
f) The logistics facilities, including storage infrastructure;

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g) Government buildings, including facilities for health and education;
h) Other infrastructure that promote the strategic development.

4.3.3 Article 2 of the decree law provides the objectives of establishing the fund which are to -
a) Ensure the financing of public investment in infrastructure;
b) Guarantee security in the negotiation and contracting of multi-annual projects;
c) Allow the retention of funds at the end of the Fund’s financial year, with the aim of ensuring
the continuity of implementing multi-year infrastructure projects under Article 32.2 of Law
No 13/2009 of 21 October; However the carry forward of unspent amounts to the following
year to be spent in the new year on existing infrastructure projects or to be funded by loans
must be approved during the State General Budget approval process by National Parliament.

d)
e) Promote transparency and accountability for implementing programs and projects of
infrastructure financed by the Fund.

4.3.5 The implementation of expenditure and payment processing can occur only after
authorization by CAFI to realize expenses through the Fund, in its fiscal year. The payment
to be made by the Fund are processed through Major Secretariat Projects (MPS), through the
Infrastructure account at the Central Bank

4.4 THE HUMAN CAPITAL DEVELOPMENT FUND


4.4.1 The Human Capital Development Fund is Special Fund created through the decree law No.
12/ 2011 with the intention to finance programs and multi-annual projects for training and
human resource development, including programs to increase the training of Timorese
professionals in key sectors of development such as justice, health, education, infrastructure,
agriculture, tourism, petroleum management and financial management, among others,
which include activities and actions undertaken in Timor-Leste and Timorese participation
in training abroad, including scholarships for undergraduate and postgraduate university
courses.
4.4.2 Article 2 of the same decree states the objectives of the Fund, which are to -
a) Ensure the financing of public investment in training and development of national
human resources:
b) Ensure security in the negotiation and signing of agreements, programs and
multiannual projects;
c) Allow the retention of funds at the end of the Fund’s financial year, with the objective
of ensuring the continuity of programs and projects; However the carry forward of
unspent amounts to the following year to be spent in the new year must be approved
during the State General Budget approval process by National Parliament.
d) Promote transparency and accountability through an improved reporting system and
accountability for program implementation and training projects for human capital
development.
4.4.3 The Fund has an official account at the Central Bank, in which all revenues are credited and
all Fund expenses charged. The opening of the FDCH bank account at BCTL has been
authorized by the Minister of Finance.

4.4.4 The implementation of expenditure and payment processing can occur only after
authorization by the Board of Directors for the completion of the project through the Fund,

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in its fiscal year. The payments to be made by the Fund are processed by the Ministry of
Finance, through the FDCH official account.

4.5 PETROLEUM FUND


4.5.1 Law No. 9 /2005 provides for creating a Sovereign Wealth Fund of Timor Leste called The
Petroleum Fund ( PF ) which is in accordance with the constitutional requirement laid down
in Article 139 in the Constitution of the Republic. Pursuant to this provision, petroleum
resources are owned by the State, are to be used in a fair and equitable manner in accordance
with national interests, and the income derived from it should lead to the establishment of
mandatory financial reserves.
4.5.2 The Petroleum Fund is intended to contribute to wise management of the petroleum
resources of Timor Leste for the benefit of both current and future generations. The
Petroleum Fund is to be a tool that contributes to sound fiscal policy, where appropriate
consideration and weight is given to the long-term interests of Timor-Leste’s citizens.

4.5.3 The accounting and reporting of the PF falls under the Jurisdiction of the Director General
of Treasury under Law No 9/2005 establishing the PF. Under a formal Management
Agreement with BCTL, this function is currently being managed by BCTL.

4.5.4 Where there is a revenue deficit in the Annual State General Budget not covered by
Government Revenues and Loans, National Parliament approves that deficit to be funded
from the PF. This funding is divided into two components – the ESI and excess of ESI.
ESI represents the amount that can be withdrawn from the PF in any year without negatively
affecting the level of future withdrawals.

4.5.5 Withdrawals from the PF below ESI can be made based on a request to the Governor of
BCTL signed jointly by the Minister of Finance and the Director General of Treasury or
their delegate. Withdrawals above ESI up to the deficit limit approved in the State General
Budget can only be made when the Whole of Government cash balances comprising CFET,
including sub accounts, and Special Funds are below US$ 200 million and the Prime
Minister has notified National Parliament of the situation.

4.5.6 At the beginning of the fiscal year and at regular intervals as determined by the National
Director of Accounting and Financial Regulation, the Cash & Debt Management Unit
prepares a Cash Flow Forecast of CFET and the Special Funds. This determines when
withdrawals will be required from the PF based on current estimates and is notified to BCTL
to enable sufficient but not excessive funds are available for Treasury to meet Budget
Execution Requirements. A sample of the Cash Flow Forecast template is attached at
XXXX in the Appendix

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CHAPTER 5
BANKING ARRANGEMENTS

5.1 OVERVIEW
Government banking arrangements are an important factor for efficient management and control of
government’s cash and other liquid financial resources. Such banking arrangements are designed to
minimize the cost of government borrowing and withdrawals from the PF and maximize the
opportunity cost of cash resources. This requires ensuring that all cash received is available for
carrying out government’s expenditure programs and making payments in a timely fashion.

5.2 THE TREASURY SINGLE ACCOUNT (TSA)


5.2.1 A TSA is a unified structure of government bank accounts that gives a consolidated view of
government cash resources. Based on the principle of unity of cash and the unity of
Treasury, a TSA is a bank account or a set of linked accounts through which the government
transacts all its receipts and payments. A full-fledged TSA shares three essential features viz
(i) unified government banking arrangement to enable Ministry of Finance (or Treasury)
oversight of government cash flows in and out of these bank accounts, (ii) sole oversight of
the Treasury over the government banking operations and (iii) comprehensive consolidation
of government cash resources to encompass all government cash resources, both budgetary
and extra-budgetary.
5.2.2 CFET is the Treasury Single Account for the government. All revenues are deposited and
payments made out of the CFTL including to the AA sub accounts and the Special Funds.
The Central Bank of Timor-Leste is the custodian of CFET In addition to the main account
at Central Bank, accounts at CBs within national territory of Timor-Leste and overseas for
Timor Leste embassies are operational for facilitating revenue collection with daily sweep
into CFET and meeting the operation requirements of embassies. Special fund accounts for
FDCH and any other Special Funds to be opened in future as well as all sub accounts at
Central Bank, combine to constitute as the TSA for the government. The foreign donor-
related project and Trust Fund bank accounts are not part of the TSA.

5.3 OFFICIAL BANK ACCOUNTS


5.3.1 The Article 15 of the Budget and Financial Management Law provides the procedure for
opening of official bank account. This article stipulates that -
i. The Minister of Finance is responsible for authorizing the opening of one or more
official bank accounts in order to deposit and pay public monies, having the
possibility to delegate this competence to the Treasurer.
ii. In cases where public monies are kept in custody, they shall be treated as being in an
official bank account until such a time as when they are effectively received by the
State.
iii. Any official bank account opened under paragraph 1 shall include the word “official”
in its denomination.

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iv. The opening of accounts to receive, keep, pay or transfer public monies shall respect
the regime set in the present article.
v. No Ministry, Secretariat of State, AA or local Government body may open a bank
account without the respective approval being communicated to the bank and to the
requesting entity.

5.3.2 Where authorisation has been granted by the Minister to open such accounts of transitory
nature, heads of government agencies or their controllers shall ensure that completion of
purpose cash balances in those accounts are immediately deposited to the CFET main
Treasury account in the Central Bank. Notwithstanding the foregoing generality all public
moneys deposited in such official transitory accounts shall be swept to the main Treasury
account on a daily basis. In exceptional circumstances, such as for diplomatic missions, as
determined by relevant instruction, deposit shall be made accordingly.

5.3.3 No private money shall be deposited into an official bank account, except in accordance with
the provisions of an enactment relating to money held in trust for other persons or bodies;

5.4 INVENTORY OF BANK ACCOUNTS


5.4.1 The Ministry of Finance/Treasury / NDAFR should maintain a register of all bank accounts
opened by it and any government agency or public body, including extra-budgetary funds
and donor-funded projects.
5.4.2 All transitory bank accounts authorized to collect revenues by Central Bank shall be
controlled by NDAFR which shall maintain a list of all such account and monitor the service
level agreements.

5.5 ACCESS AND CONTROL OVER BANK ACCOUNTS


5.5.1 The Treasury shall have full authority to have access to government bank accounts.
5.5.2 For revenue accounts, the Central Bank shall advise the commercial banks that the Minister
or designee are authorized to demand or receive and obtain detailed bank statements for their
respective bank accounts, as per desired frequency.
5.5.3 In case of any infringements of these regulations, the Treasury may impose sanctions to
block, and, in extreme cases, in consultation with the Minister, to close bank accounts.

5.6 ROLE OF CENTRAL BANK


5.6.1 The Central Bank of Timor-Leste is the banker to the government of Timor-Leste and
accordingly the custodian of CFET. It authorizes other commercial banks to manage
revenue collection on its behalf and remit collections into CFET account as per agreement.

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CHAPTER 6
BUDGET EXECUTION

6.1 GENERAL RULES RELATED TO BUDGET EXECUTION


6.1.1 The rules related to budget execution will be detailed out further in Budget Execution
Decree Law approved by the Council of Ministers, accounting instructions and guidelines
issued from time to time by the Minister of Finance.
6.1.2 Overall control of national budget execution will be exercised through strict application of
the general rules regarding the annual appropriations, supplementary appropriations and
virement rules as detailed in preceding sections and prevailing during the relevant year.
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6.1.3 The special rules related to the payments of Municipalities are detailed out further in
Chapter IV of 2017 budget Execution Decree Law.

6.2 RELEASE OF FUNDS TO MEET EXPENDITURE


6.2.1 After annual appropriations have been approved by the legislature, the authority to withdraw
funds from the Consolidated Fund to meet expenditures approved in the Budget or by the
Appropriation Act is done through issuance of an Expenditure Authorisation Notice (EAN)
by the Treasury. This release of funds is entered in the FMIS as allotment 2 which enables
funds being released in aggregate, by department and according to appropriation category
type (i.e. Capital, Goods and Services, and Salaries and Wages). Release of these funds
notified through Expenditure Authorization Notices (Annexure 6-1) is subject to availability
of funds, and that the total Expenditure Authorisation Notices for any appropriation category
can never exceed the appropriation amounts for that category.
6.2.2 The General or Special Expenditure Authorisation Notices are issued to the Ministry Head
receiving an appropriation consistent with the Appropriation Regulation. The Funds
allocation can cover the time period considered most applicable to the type of Appropriation
being released. The General Expenditure Authorisation Notice could therefore release the
total appropriation at the beginning of the fiscal year, or the release could be in monthly,
quarterly or half-yearly stages.
6.2.3 The selection of time period for EANs validity period depends on:
 The type of appropriation;
 The projected expenditure flow requirement estimated against the appropriation item;
and
 The expected revenue profile, flow and timing for the State General Budget of Timor-
Leste as derived from the cash management process.

The Treasury determines the quantum of funds and timing of release to each Ministry based on the
above set criteria considered together.

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6.2.4 No money is to be released from the Consolidated Fund of Timor-Leste for expenditure that
is not authorized by an expenditure authorization notice.
6.2.5 The Director General of the Treasury may at any time revoke or amend an expenditure
authorization notice with the approval of the Minister of Finance in case it is considered that
the revocation or amendment:
a) Is desirable in the interests of prudent fiscal management; or
b) Is appropriate to ensure the continuation of expenditures throughout the fiscal year.

6.2.6 Where the Appropriation Bill is not approved before the first working day of the fiscal year,
the Minister of Finance shall pursuant to article 31 of the BFMA approve monthly releases
to cover expenditures capped at one-twelfth (1/12) of the budget of the previous year.
Monies withdrawn under this provision shall be for the purpose of meeting expenditure on
Government programmes and activities in respect of the period expiring
a) One month from the beginning of the financial year; or
b) Immediately before the approval of the National Budget, whichever is earlier.

6.3 COMMITMENT AUTHORIZATION


6.3.1 The first step in the expenditure process occurs when a decision is taken that will lead to the
expenditure of public moneys. This process is called Commitment Authorisation. Only
person who has the authority to authorize proposals to spend public moneys can take such a
decision. Heads of spending Departments or Ministries have been designated as Authorizing
Officers consistent with Treasury Administrative guidelines. The Administrative guidelines
allow Ministry Heads to delegate this authority in an appropriate manner.
6.3.2 The Commitment Authorization must be documented using a Commitment and Payment
Voucher (Annexure 6-2) which is required to be entered into the FreeBalance system. Refer
to “How to create and approve CPV” documents for detailed CPV procedures of GRP
system.
6.3.3 When a Ministry Authorizing Officer signs the Commitment Authorization, he/she is
confirming that the following conditions have been satisfied:
i. The proposal should be authorized by a properly appointed Authorizing Officer;
ii. The proposed commitment represents best value for money;
iii. There are sufficient funds available in the relevant appropriation item to meet the
proposed expenditure
iv. The relevant budget codes are entered in the CPV and
v. The commitment is recorded in the FreeBalance/GRP system

6.4 PROCUREMENT
6.4.1 Most administration activities, either directly or indirectly, will involve the purchasing of a
diverse range of goods and services. Procedures for committing funds and purchasing are
aimed at promoting open and effective competition and making efficient and effective use of
public moneys. The procurement process involves choosing the method of procurement,
tendering and entering into negotiations with a supplier.
6.4.2 All proposals to purchase goods and services must in accordance with Government
Procurement Guidelines, Regulations and Policies. The requirements of Regulations on
Public Procurement for Civil Administration in Timor-Leste are to be followed.

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6.4.3 Operationally, the first phase of the procurement process is that of making a requisition of
the goods or services required for which a Purchase Requisition (Annexure 6-3) is prepared.
This stage is also the commitment stage when funds are reserved for the procurement
function and a CPV (similar to one mentioned above) is prepared. Next, the appropriate
procurement process is followed and contract is awarded along with signing of a formal
contract. Ministry Heads are required to identify and document which officers should have
the power to enter into commitments that will require expenditure from the State General
Budget of Timor-Leste. Refer to “How to create and approve Purchase Requisition”
documents” for detailed CPV procedures of GRP system.

6.4.4 Upon signing of the contract, a Purchase Order (Annexure 6-4) is raised in order to procure
the goods or services. At this stage the commitment becomes an obligation and accounted
for accordingly through the FreeBalance system. Refer to “How to create and approve
Purchase Order” documents” for detailed CPV procedures of GRP system.

6.5 EXPENDITURES
6.5.1 Classification of expenditure is done as per Budget Chart of Account Codes. Expenditures
can be incurred either for recurrent purposes (salary and wages and goods and services) or
capital purposes. Recurrent expenditure will include payments other than for capital assets.
Capital expenditures include spending on all items which augment capital assets.
6.5.2 Salary and Wages include the payment of the salary and wages and extra pay for overtime if
admissible under the service rules. It does not include non-cash items such as cost of food,
clothing and lodging provided to the employees free of charge. General Service contracts are
not to be paid out of salary and wages appropriation. All part time staff and the people
appointed to Commissions or similar office and paid honorarium are also to be paid from the
salary and wages appropriation as long as the staffing table provides for vacant positions.
6.5.3 Goods and Services include all goods and services, other than for capital expenditure
purchased from the market. Examples are purchase of materials, office supplies, rent, fuel,
and equipment of small value, both expendable and durable goods, goods and services
distributed to employees free or at reduced prices. These also include payments under social
security schemes, if any, to non-employees and to institutions outside government e.g.
doctors, and hospitals for goods and services rendered.
6.5.4 Any deductions from salary, fees and charges collected for goods and services should not be
deducted from government expenditure but should be recorded under distinct relevant
revenue code for tax or non-tax revenue for administrative fees and charges, as appropriate.
6.5.6 Capital Expenditure is incurred when goods of a durable value are purchased such as:
 Immovable fixed capital goods, including residential buildings;
 Movable fixed capital goods such as transport equipment, machinery, and other
equipment; and
 Also indicate value for capitalizing fixed assets.

This category will also covers payments for those goods and services incorporated into
existing fixed capital assets for the purposes of improving them, prolonging their working
life, increasing their production, improving their performance, rebuilding, or reconstructing
them, but not payments for normal maintenance or wear and tear.

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6.5.7 Transfers are expenditure items which are either of recurrent or capital nature. Recurrent
transfers pertain to transfers for personal benefits (e.g. war veterans, elderly etc) and public
transfers which are monies transferred for communities / NGOs etc. Capital transfers are
transfer expenditures for autonomous agencies, etc. and are made by the Treasury to finance
capitalizations of state entities when approved by Regulation. These can only be made by
authorisation from the Treasurer and are identified within the coding structure of the chart of
accounts.
6.5.8 Withdrawals from the Contingency Fund are made to make payments of an urgent and
emergent nature which has not been catered for in the Appropriations for the year. Payments
from the Contingency Fund will be made by the Treasury only after such requests have been
recommended by the Minister of Finance and approved by the Prime Minister. Payments
will be made by the Treasury only if sufficient budget exists within the Contingency Fund to
make such payments.

In the case of any changes, the rules and regulations related to the above-mentioned
Expenditure Categories will be detailed out further in Budget Execution Decree Law approved
by the Council of Ministers, Accounting Instructions and Guidelines issued from time to time
by the Minister of Finance.

6.6 PROCESS OF EXPENDITURES NOT REQUIRING PROCUREMENT


PROCESS
6.6.1 These cover cases of expenditure where the procurement of desired goods or services does
not require the usual contracting process and are generally referred to as “direct” payments.
All processing for the expenditures pertaining to the Human Capital Development Fund
(recurrent nature) are done through the dedicated office within Human Capital Development
secretariat.
6.6.2 Line Ministries are delegated to commit funds on their own after due diligence. Based on
their internal approvals for entering into a commitment, they are required to complete the
Payment Request (PRT) and CPV form along with the required authorizations for the
commitment portion. The mandatory fields include the complete coding block including the
location code and line item details, the description of the item/service. The supporting
documents for enabling the commitment to be processed are to be attached to the PRT/CPV.
6.6.3 Once the PRT/CPV has been duly authorized by the signatories for the commitment portion,
it is to be entered in the FreeBalance system. The system checks the commitment against
available balances for Allotment 1 and 2 and Financial Budget and accepts those which have
balances. Direct procurements, like this, also imply that obligations are simultaneously
created from the commitments. For operational guidelines on using this functionality refer to
the FMIS “How to Set Up a Direct Payment Commitment” manual.
6.6.4 Once the goods or services are received, the line ministry creates Obligation and Expense
voucher, and makes a payment request to the Treasury. For this purpose, the payment
request portion of the CPV, Obligation and Expense Voucher are completed by the
authorized signatory from the line ministry. The payment request and Expense Voucher
must also include the vendor/payee details. All required documents are to be attached with
the CPV, Obligation and Expense Voucher while processing payments with Cheques or
Treasury Payment Orders.

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6.6.5 The Checklist for completing these stages in detailed in the Section 6.7.9 for making a
payments with Cheques or Treasury Payment Orders.

6.7 PROCESS OF EXPENDITURES REQUIRING PROCUREMENT


PROCESS
6.7.1 This procedure is adopted for procurement of specified goods and services, minor or major
capital works which requires formal contractual procurement process. All procurements for
Infrastructure Fund (capital nature) are done through the designated office for this purpose
which is the Major Projects.
6.7.2 The line ministry makes an assessment of the requirements of the goods (recurrent or
capital) and services which have to be procured through the tendering mode.
6.7.3 The actual process is dependent upon the type of fund and the estimated contract amount of
procurement.
Refer to Procurement Guidelines, Rules, regulations and Policies for the actual procurement
process.
6.7.3.1 For all procurements, the line ministry, Autonomous Agency and Municipalities prepares a
Purchase Requisition (PR) and CPV gets it approved/signed by the authorized signatories.
The PR includes estimates of the quantity of items/services, approximate cost of
procurement, and expected requirement date of items. The PR is entered into the Free
Balance FMIS in the Purchasing Module and a commitment is made in the system after
checking for the funds availability.

Line Ministries are not permitted to split procurement values to reduce individual orders to
reduce procurement amount.
6.7.4 Once the commitment has been made in the system based on the PR posted in the system,
the tendering and other procurement related activities are undertaken by the various entities
depending on the quantum of contract and nature of fund. For enabling the contract process
the Procurement Module in Free Balance is utilized and a vendor/supplier is identified
through the procurement process. The details of the Procurement Module’s operation are
available in the Free Balance manual on “How to Create Purchase Requisition” and can be
referred to for further information.
6.7.5 After the finalization for the vendor and its entry in the system (for details refer to FMIS
“How to add Vendor” manual), the Free Balance Purchasing Module is used for creating a
Purchase Order (PO) for the vendor. For operational guidelines refer to FMIS “How to add
and change a PO” manual. At this stage of PO generation, the commitment gets converted
into an obligation as funds are formally obligated for the procurement. After the finalization
of the PO, Contract Management module is used for creating a contract for the vendor. For
operational guidelines refer to FMIS “How to create a contract” manual.
6.7.6 Upon delivery of the items/services being procured, for which the PO was raised, the good
received note (GRN) needs to be issued and recorded. The designated units (Asset Units in
line ministries or the ADN as applicable) are responsible for certifying the goods receipt
note using the Receiving and Inspection Report (Annexure 6-5) for line ministry assets’ unit
and Inspection Report and Recommendation (Annexure 6-6) from ADN and getting the
GRN completed by entering in the FreeBalance.

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The persons acknowledging receipt of goods or services and authorizing payment should not
have been involved in approving the CPV or Purchase Requisition. Under the principle of
Segregation of Duties these activities must be handled by separate individuals
6.7.7 The vendor/supplier submits the invoice for items/services delivered to the requesting
agency. The invoice is utilized for preparing the Payment Request for effecting payments, as
detailed in sections below.
6.7.8 Once the receipt of goods has been certified the Payment Request (Annexure 6-7) is to be
prepared and processed by the designated entity for this purpose viz. the line ministries or
MPS for Infrastructure Fund.
6.7.9 Checklist for agencies and Treasury for payment for procurement of capital items for
ensuring the completeness of documents is provided as follows:
S.N Nature of Payment Documents Required
1 Procurement of Minor Capital  CPV/PR
 PO
 Request for Payment
 R&I Report
 Asset Register
 Contract
 Invoice
 Bank details as per contract
 Procurement Plan with validation from UPMA
 Court (Tribunal)

2 Procurement of Capital  CPV/PR


Development  PO
 Request for Payment
 Contract
 Invoice
 Bank details as per contract
 Payment Certificate
 Inspection report and recommendation from AND
 Procurement Plan with validation from UPMA
 Court (Tribunal)

In the case of any changes, a new checklist will be detailed out in Budget Execution Decree Law approved
by the Council of Ministers, accounting instructions and guidelines issued from time to time by the
Minister of Finance.

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6.8 PAYMENTS
6.8.1 All payment requests are processed after ensuring that:
a) Adequate appropriation exists in the budget head from which expenditure is proposed;
b) Transaction is lawful and valid in accordance with existing laws, regulations as
certified by the head of the implementing unit in the concerned ministry/institution
which has control of the appropriation;
c) The funds for the purpose have been committed by the ministry/institution before the
payment request is sent to the Treasury;
d) The Payment Request is approved by the authorized official head of the requesting
ministry/institution supported by all the documents prescribed from time to time by
the Treasury;
e) Tax required under the law is deducted from the payment request;

6.8.2 The processing of payments is done by authorized institutions/Autonomous Agencies/


Municipalities depending on the prescribed requirements for various categories of
expenditure viz. salary and wages, goods and services, capital and transfers.
6.8.3 Broadly the salary and wages expenditure comprise the processing of payroll for permanent
employees, salaries for temporary staff and consultants and are discussed in details in
subsequent chapter. However the broad features are elaborated in following sections.
6.8.3.1 Payroll processing of permanent staff involves the following process:
i. Utilizing the approved payroll variations received from the Public Service
Commission for processing salaries;
ii. Comparing the current month’s payroll with the payroll of the previous month and
analyzing the variations;
iii. Updating payroll for any deletions of names from the payroll immediately on receipt
of the notification of official’s death or termination of service;
iv. Checking for availability of adequate budget appropriation for payment of salary for
the month for each ministry;
v. Ensuring that the staff is paid in accordance with the organic law approved for the
Ministry;
vi. How about additions and changes to salary levels from promotions etc and also
consider including confirmation of attendance and days worked that have to be
submitted by Ministries before salaries are paid
6.8.3.2 Salaries and allowances of all employees are to be credited into their personal bank
accounts. Thus each employee is required to provide the name of the bank and branch and
account number to which salaries will be credited.
6.8.3.3 Cash payments are made only to those employees who work in areas where banking
facilities do not exist.
6.8.3.4 Treasury effects the salary payments through the Central Bank by advising bank accounts to
be credited for each pay period of each employee.
6.8.3.5 Checklist for ensuring document completeness for processing payment for Salary and Wages
is as follows:

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S.N Nature of Payment Required Documents

1 Salary & Wages  Contract or Term of Office


 Bank Details
 ID Card (Electoral Card)
 Attendance
 Coding Block (Budget Code for employee)
 For over payment required Over Payment Claim Authorization
Letter
 For retroactive payment required Unpaid Claim Authorization
Letter
2 Overtime  Overtime Sheet
 Bank Details

In the case of any changes, a new checklist will be detailed out in Budget Execution Decree Law
approved by the Council of Ministers, accounting instructions and guidelines issued from time to time
by the Minister of Finance.

6.8.4 The process for payment processing for Goods and services commences after the receipt of
goods or services. The authorized certifying official (line ministry or ADN) must certify that
the service has been performed or goods delivered in accordance with the CPV and
Obligation or original Requisition and Purchase Order. Such official must not have been
solely involved in the procurement decision.
6.8.4.1 The Certifying Officer must be satisfied that the claimant has completed his part of the
contract and that an invoice has been lodged which spells out the nature of the claim in
sufficient detail to avoid, for example, the possibility of a double payment.
6.8.4.2 The invoice must also clearly identify the name of the vendor or claimant. This requirement
ensures that payments are only made to the person or organization rendering the service or
delivering the goods. Details must also match the approved Purchase Order, where
applicable, as to quantity and rate per unit of goods/services rendered.
6.8.4.3 All Payment Requests (PRT) are required to be done with payment supporting documents
such as CPV, Obligation, PR, PO, Contract, R&I, GRN, Assets Register, Invoices, AND
Recommendation, Approval Court for amount more than 5M, etc. The agency certifying
officers are required to complete the Payment Request form.
6.8.4.4 The Treasury/Autonomous Agencies/Municipalities shall be provided specimen signatures
of commitment authorizing and payment certifying officers by spending departments and
ministries approved by Director or Director General as appropriate.. These would be verified
by the Treasury/Autonomous Agencies/Municipalities at time of receipt of payment request
from ministries. Any changes to signatories at institutions must be promptly notified to
Treasury/Autonomous Agencies/Municipalities.

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6.8.4.5 General Checks for Payments for Goods and Services by Treasury/Autonomous
Agencies/Municipalities:
i. The PRT and CPV should be first verified to see whether the signature of the
authorized signatories matches with that on the records of the Treasury. If the
signatures do not match the PRT and CPV should be returned to the concerned
Agency.
ii. Verification should be made to see that the PRT and CPV have been entered correctly
in the system and that adequate budget exists for payment. The CPV/Request for
Payment (PRT) should be returned to the concerned agency if the coding block used
for commitment/obligation is not correct or PRT/CPV is incomplete in any field.
iii. A PRT should always be accompanied by the following documents:
a. An invoice (s) showing the amount payable;
b. Approved Purchase Order or contract
c. A certificate of inspection from the procurement division (if applicable) that the
goods or supplies received are in accordance with the provisions of the contract;
d. A certificate stating that goods/supplies received are in a good condition and have
been taken on stock;
iv. Verify that the CPV amount covers the total amount shown in the invoice;
v. In case of more than one invoice, the verification that the CPV amount covers the
totals of the invoices.
vi. Verify that the totals in the invoice are correct and with no arithmetical mistake.
vii. Verify from the contract or PO attached with the PRT/CPV that the goods and
supplies delivered are in accordance with that indicated in the contract.
viii. Verify that no LC has been opened in a commercial bank as a part of the contract. If
required a certificate to this effect should be obtained and attached to the PRT/CPV.
ix. Verify that the name of the bank and account number of the payee are as mentioned in
the contract/records attached with the PRT/CPV;
x. For partial payment requests, verify that adequate balances exist for the commitments
made in the FreeBalance.

6.8.4.5 Travel Claim payments need to be processed as follows -


i. All travel claims should be accompanied by the following documents:
a. Itinerary approved by the Minister of the Ministry concerned;
b. Original airline ticket (and supporting boarding passes?)
c. Original invoice issued by the airline or travel agency
d. Hotel bills in original
e. Taxi bills in original

ii. The claims should be checked to see whether the travel dates on the CPV match with
those on the airline tickets and the hotel bills;

6.8.4.6 A general checklist for direct payment for Goods and Services has been prescribed, as below
This Checklist must be completed and initialed by Line Ministry officer prior to submission to
Treasury. Such officer should also ensure that all third party documentation attached are originals.

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SN Nature of Payment Required Documents
1 Local Travel  PRT (Payment Request Tracking)
 CPV
 Work Order (Authorisation Letter) from competent authority of
the ministry/organs of state
 MOP which approved by Local Destination Authority
 List of Cash Receipt Payment for Perdiem
2 Overseas Travel  PRT
 CPV
 PO (Ticket)
 Official Invitation Letter
 Authorised Travel Proposal
 Travel Itinerary
 Invoice for Ticket and fees
 List of Cash Receipt Payment for Perdiem
3 Seminar & Workshop  PRT
 CPV
 PO
 Authorised proposal of local seminar & workshop
 List of participants seminar & workshop local
 Invitation Letter for Overseas seminar & workshop
 Schedule of Seminar and Workshop
 Authorised Travel Proposal
 Travel itinerary
 Invoice for Ticket and fees
 List of Cash Receipt Payment for Perdiem for overseas

4 Utilities  PRT
 CPV/PR
 Admission Letter
 Clarification Letter
 Bill/Invoice
5 Rent of Property  Agreement/contract
 Invoice/Payment Request
 Deduct 10 % tax
6 Fuel for Generators &  PRT
Vehicles  CPV/PR
 PO
 Contract
 Delivery & Acceptance Report
 Invoice
7 Maintenance of Vehicles  PRT
 CPV/PR
 PO
 Contract
 Service & Inspection Report
 Invoice
8 Insurance for motor vehicles  PRT
 CPV/PR
 PO
 Contract
 Motor Vehicle Identification Document
 Invoice

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9 Office Stationary, other  PRT
supplies and other expenses  CPV/PR
 PO
 Contract
 R & I Report
 Invoice
10 Salary for Temporary Staff,  PRT
Advisors and Consultants  CPV/PR
(Professional Services)  PO
 Contract
 Time Sheets
 Invoice
 Deduct 10 % tax Gross from Non-Residents
 Deduct 10 % tax Gross after USD$500 for Residents
11 Security Services  PRT
 CPV/PR
 PO
 Contract
 Invoice
 Admission Letter
12 Translation Services  CPV/PR
 PO
 Contract
 Delivery and Acceptance Report
 Invoice
 10% Tax
13 Other Miscellaneous  Contract
Services  R&I Report
 Invoice
14 Repair & Maintenance  CPV/PR
Building  PO
 Contract
 R&I Report
 Invoice/Progress Claim
 Certificate of Payment
 Recommendation from ADN

In the case of any changes, a new checklist will be detailed out in Budget Execution Decree Law
approved by the Council of Ministers, accounting instructions and guidelines issued from time to time
by the Minister of Finance.

6.8.4.7 Payments for meeting expenditures of contingent nature are met through system of petty
cash to agencies. The detailed procedure is provided in Chapter 8.
6.8.4.8 Payments meant for districts and embassies are processed and facilitated through an imprest
system for agencies district operations and advances for embassies. The detailed procedure
is provided in Chapter 8.
6.8.4.9 An Expense Voucher is posted by the Treasury/Autonomous Agencies/Municipalities and
approved for recording all payment requests. For operational details refer to FMIS “How to
Add an Expense Voucher” manual.

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6.8.4.10 The posted EVs are required to be examined before approvals. For operational guidelines
refer to FMIS “How to Examine EVs and EVPOs” manual.
6.8.5 For capital expenditures the basic procedure prescribed in section 6.8.4 will be applicable.
However the detailed process depending upon the appropriation category follows in
sections below.
6.8.5.1 For minor capital comprising expenditures on purchase of vehicles, EDP equipment,
furniture and office equipment, the procurement process using the purchasing module is to
be adopted. Depending upon the quantum of contract, the goods receipt certification is done
either by the receiving entity in line ministry or the ADN. The goods received notes and
goods returned notes are required to be entered in the system. For operational guidelines
refer to FMIS “How to Process GRNs and GTRNs” manual. The request for payments are
prepared by the line ministries and submitted to the Treasury. The prescribed checklist at
section 6.7.9 is to be followed along with the general checks detailed in section 6.8.4.
6.8.5.2 For major capital (capital development) works comprising the expenditures on assets
including land and buildings, bridges, roads etc., the procurement process using the
procurement module, contract management module and purchasing module of FreeBalance
is to be adopted. The process for CFET payments is same as described in section above.
6.8.5.3 For capital development works from infrastructure fund appropriations (which is the bulk
of such works), the request for payment is prepared by the MPS after receipt of the required
certification from the ADN and submitted to Treasury. The prescribed checklist at section
6.7.9 is to be followed along with the general checks detailed in section 6.8.4.
6.8.5.4 An Expense Voucher linked to the Purchase Order is posted by the Treasury/Autonomous
Agencies/Municipalities and approved for recording all such payment requests. For
operational details refer to FMIS “How to Add an Expense Voucher (PO)” manual.
6.8.5.5 The posted EVs are required to be examined before approvals by the designated official in
the Treasury/Autonomous Agencies/Municipalities. For operational guidelines refer to
FMIS “How to Examine EVs and EVPOs” manual.
6.8.5.6 In respect of all items of capital nature, the requisitioning ministry shall record the item in
the asset register and provide a certificate of the same to the Treasury. These acquisitions
are recorded in the ‘Asset module’ of FreeBalance Applications Software.
6.8.6 Transfers - The request for payment for transfers essentially cover two types of items viz (i)
personal transfers for payments to war veterans and elderly and (ii) public transfers for
payments to various communities / NGOs and autonomous agencies. The prescribed checks
for processing detailed in section 6.8.4 are adopted for processing using the following
checklist for direct payment of Transfers:

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S.N Nature of Payment Required Documents

1 Payment for Transfers  CPV/PR


for Personal Benefit  PO
 Bank details
2 Payment for Transfers  CPV/PR
for Public Transfers  Proposal from community group approved by
authority of ministry/organs of state
 Approval Letter from evaluation committee of the
proposal
 Memorandum of Understanding
 Bank details from Community Group
 Payment for second installment of big construction,
inspection report and recommendation from ADN is
required

In the case of any changes, a new checklist will be detailed out in Budget Execution Decree Law
approved by the Council of Ministers, accounting instructions and guidelines issued from time
to time by the Minister of Finance.
6.8.7 Once the Expense Vouchers are entered and have been examined these are required to be
approved in the system. This is followed by the step of approving the payments by the
assigned official who has been given the appropriate rights in the FreeBalance system. For
operational guidelines refer to FMIS “How to Select, Approve, Release EVs & EVPOs for
Payment and Print Cheques and TPOs” manual.

6.9 PROCESSING OF PAYMENT INSTRUMENTS


6.9.1 Currently the Treasury/Autonomous Agencies/Municipalities offer following mode of payments
-
 Treasury Payment Order
 Cheque
 Letter of Credit

6.9.2 Treasury Payment Order (TPO) – Most payments are effected through this mode. The
Treasury/Autonomous Agencies/Municipalities prepares TPOs directly from the FMIS
indicating full bank details of beneficiaries. The TPO (Annexure 6-8) is issued electronically
to the Central Bank which advises the beneficiary bank for effecting the payments into the
designated beneficiary accounts as detailed in the TPO. The TPOs are signed/approved by two
signatories as per the list of authorized staff serving as signatories depending on the value of
TPO. For operational guidelines refer to FMIS “How to Select, Approve, Release EVs &
EVPOs for Payment and Print Cheques and TPOs” manual.
6.9.3 Cheque – These are prepared as an exception in cases where the beneficiary desires payment
by means of a cheque only. The Treasury/Autonomous Agencies/Municipalities adopts the
same system as TPO signing for the cheque signatories. Accordingly, the cheques are also to
be signed by two signatories as per the list of authorized staff serving as signatories depending
on the value of cheque. For operational guidelines refer to FMIS “How to Select, Approve,
Release EVs & EVPOs for Payment and Print Cheques and TPOs” manual.

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6.9.5 The Treasury/Autonomous Agencies/Municipalities advises opening of Letters of Credit by
the Central Bank with designated commercial banks in Timor-Leste if the terms and
conditions of a contract so demand. A request for the opening of a Letter of Credit should be
addressed to the Director General of Treasury giving all the details required to do so and
attaching a copy of the contract with the request. The Treasury extends the validity of Letters
of Credit based on the requests to do so from the concerned Ministry or institutions after
examination of the original or amended contract. Presently the letters of credit are recorded in
the system as “pre-paid expenditures”. For operational guidelines refer to FMIS “How to
Process a Pre Paid Expenditure” manual.
6.9.6 Payment Instrument Issuance and Crediting Procedures – these are procedures prescribed for
issuance of TPOs and cheques by the Treasury/Autonomous Agencies/Municipalities and
payment by the Central Bank.
6.9.6.1 The Central Bank shall be provided specimen signatures of Treasury/Autonomous
Agencies/Municipalities authorising Officers on the Treasury Payment Orders or cheques.
Any two such authorised persons at the Treasury shall together order payments to be effected
by the Central Bank. The Treasurer will be responsible to advise the Central Bank of any
change in signatories.
6.9.6.2 Treasury/Autonomous Agencies/Municipalities will request Central Bank to make payments
by sending a TPO advice in Excel file (electronically as well as signed hard copy)
(Annexure 6-10a). On receipt of the advices, the Central Bank will advise the bank where
beneficiary account is held to effect the payments and transfer funds. The current electronic
TPO procedure to the Central Bank with the Excel File (electronically as well as signed hard
copy) will be replaced with the fully automated electronic TPO to the R-Timor system of the
Central Bank when the system interface is ready and operational.
6.9.6.3 For cheque payments, the Treasury/Autonomous Agencies/Municipalities will also send an
advice for cheques issued (Annexure 6-10b) to the Central Bank so that all payments
presented using this mode to the bank are verified to have been genuinely issued by the
Treasury.
In the case of overseas payments, the Central Bank will transfer funds through banking channels to
the concerned banks overseas with instructions to pay based on electronic/signed TPO advices.
6.9.6.4 The Treasury/Autonomous Agencies/Municipalities will supply a copy of the Treasury
Payment Orders or cheque to the concerned Ministry/Division/Unit. Departments or
Ministries are responsible for informing claimants that the payment is available for collection
from the Central Bank.
6.9.6.5 The Central Bank will inform the Treasury/Autonomous Agencies/Municipalities when the
payment has been effected through supply of electronic daily bank statements.
6.9.6.6 In some circumstances where a payment instruction (cheque or TPO) is required to be
stopped after it has been processed and issued from the system but before it has been
effected by the bank. A request for Stop Payment usually occurs when a Vendor or
Employee has either lost or not received a cheque or the TPO has gone missing. After
receiving the request from a particular Ministry, the Treasury/Autonomous
Agencies/Municipalities should contact the Central Bank to determine if the cheque/TPO
has cleared. If the cheque/TPO has been cleared through the bank, the stop payment cannot
be enforced. In this case, ministry should inform the vendor and if the vendor confirms that

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he has not deposited the cheque or received the payment, then Treasury/Autonomous
Agencies/Municipalities must locate the cleared cheque and determine who endorsed the
cheque. If it has not cleared, for a cheque, the vendor is required to make a legal declaration
that he has lost / misplaced the cheque and has not received payment for the cheque in
question. This is a pre-prepared form that can be obtained from Treasury/Autonomous
Agencies/Municipalities (Annexure 6-9). The particular Ministry that issued the cheque to
the vendor would give the form to the vendor and receive the completed form for forwarding
to Treasury/Autonomous Agencies/Municipalities. When the declaration is received by
Treasury/Autonomous Agencies/Municipalities, they process the Stop Payment request by
notifying the bank to Stop Payment. For TPOs, no declaration is required as vendors will
never be in possession of a TPO. In this case, the Treasury/Autonomous
Agencies/Municipalities notifies the Central Bank to stop payment on TPO. When
Treasury/Autonomous Agencies/Municipalities receives the stop payment confirmation
from the BCTL (Banco Central Timor Leste), it is processed in FreeBalance by following
the procedures outlined for Voiding cheques/TPOs. The documentation from bank is kept
with Declaration form. For procedure of re-issue a cheque /TPO with a different number
refer to FMIS “How to Void a Cheque or TPO” manual. For operational guidelines for this
entire process refer to FMIS “How to Process a Stop Payment Order” manual.

In the case of any changes, a new procedure will be detailed out in the latest Standard
Operation Procedure (SOP) for Stopped Payment and Returned TPO.

6.9.7 Rectification of Payment Instruments


There are times when a payment instrument is required to be amended or cancelled for various
reasons.

6.9.7.1 At times the TPOs are returned by Central Bank due to errors in the vendor name or account
number. Normally, the Central Bank waits for 15 days for Treasury/Autonomous
Agencies/Municipalities to provide the correct bank details to them, failing which the
amounts are re-deposited in the concerned fund’s account, Such re-deposits may either be
for the exact amount as the issued TPO or of less amount (as beneficiaries accounts with
correct bank account details are paid while balance amount for the wrong bank details are
deposited). The earlier process of Treasury/Autonomous Agencies/Municipalities issuing a
“Correction Payment Order” to Central Bank for making such payments is no longer used
and has been replaced with a new system, as detailed below-

6.9.7.1.1 The concerned fund accounts are re-credited by posting the manual Journal Voucher to
account for the re-deposit advice.

6.9.7.1.2 The Treasury/Autonomous Agencies/Municipalities advises the concerned line ministry of


the rejection of payment by Central Bank and re-deposit to government account. The
Treasury also requests the line ministry to advice the correct bank details of the payee.

6.9.7.1.3 The line ministry submits the correct payment account details of the vendor on the basis of
which the Treasury/Autonomous Agencies/Municipalities also updates the vendor master
for bank account /name details. However new vendor code for an existing vendor should
not be created.

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Please ensure there is a section for detailing the process and controls around making changes to the
Vendor Master Data.

6.9.7.1.4 The Treasury/Autonomous Agencies/Municipalities will complete internal documentation


on prescribed form and post an Expense Voucher without a commitment. The usual
system of EV and payment approval, TPO issuance will be adopted.

6.9.7.2 At times, a need arises to cancel a cheque or TPO which has been finalized and issued by the
Treasury/Autonomous Agencies/Municipalities, but has not been handed to the vendor or
sent to the Central Bank. This is done by the process of “Voiding a Cheque or TPO” for
which justification must be provided to Treasury/Autonomous Agencies/Municipalities and
the reasons noted on the EV or EVPO via a note. In addition, the Ministry or
Treasury/Autonomous Agencies/Municipalities must be in possession of the cheque. The
process of voiding a cheque or TPO that was paid by an EVPO is different than that for EV.
Broadly the process is as followed -

6.9.7.2.1 For the EV without a PO, the first step in the process is to find the related EV and record on
it that the cheque/TPO associated with it is has been voided by changing the cheque No to
“Void” in the EV. The second step is to find the related expense voucher in FreeBalance
and reverse it while ensuring that “Void” has been added to the cheque number field in the
Payment Details.

6.9.7.2.2 For reversing an Expense Voucher PO (EVPO), the first step in the process is the same as
EV which is to find the related EVPO and amend the payment details to save with “Void”
instead of the cheque/TPO number. The second step in the process is different from that of
an EV described above as EVPOs cannot be reversed as these are attached to the POs and
GRNs. In this case, the EVPO entry must be reversed by processing a manual journal
voucher rather than performing an “Action/Reverse” function as done for EV’s. The
manual entry required to be passed is –
(Dr) - Bank Account
Cr - Expense Line Item.

This process must be repeated for each EVPO in case there is more than one EVPO attached to the
cheque or TPO that needs to be voided.

6.9.7.2.3 For voiding a cheque or TPO, manually write VOID or CANCELLED across the cheque to
ensure it cannot be presented for payment and record in the Void Cheque Register and file.

6.9.7.2.4 Next the Cheque Register (also for TPOs) is required to be updated to indicate that the
cheque has been voided. However since FreeBalance currently does not have a “void
cheque” functionality to perform this function, therefore, manual intervention is required in
the Cheque Register in order to indicate that the cheque has been voided. Accordingly only
a note in the “Pay To” field on the cheque register that the cheque has been voided is
possible.
6.9.7.2.5 If cheque or TPO needs to be reissued to same vendor with same cheque or TPO number,
the process for re-releasing a cheque or TPO is required to be followed. For operational
guidelines refer to FMIS “How to Re-release a Cheque or TPO” document.

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6.9.7.2.6 In those cases where the cheque has to be reissued (amount is valid but the cheque needs to
be reissued due to the various reasons, eg. vendor being incorrect), the following should be
performed:
(i) If it was paid via an EV, create a duplicate voucher and process as a new EV as per usual
procedure for EV creation. If obligation was not closed when it was reversed, the obligation
will need to be attached to the new EV. If it was closed and EV had to be de-linked before it
could be saved, the obligation will not be attached and it should be processed against the
coding block directly as there will be sufficient balance due to the reversal that was
performed earlier.
(ii) If it was paid via an EVPO, the “Action/Duplicate” cannot be performed due to the
FreeBalance functionalities and limitations. Therefore, if a re-issue is required, then it will
be processed similar to a issuance of a new EV and processed accordingly. This ensures that
there are no additional GRN records required or POs or attaching to an Obligation as it is
accomplished by entering the same coding block(s) as the original EVPO.
In the case of any changes, a new procedure will be detailed out in the latest Standard Operation
Procedure (SOP) for Stopped Payment and Returned TPO.

6.10 OVERALL PROCESS FLOW OF BUDGET EXECUTION


6.10.1 The Treasury/Autonomous Agencies/Municipalities adopt a sequential process flow for processing
the request for payments received from the line ministries. The process-wise description is shown in
next page.
6.10.2 Process 1: Line Ministries/Agencies Agencies/Municipalities Finance units carry out the
following:

6.10.2.1 Verify invoices with relevant documents such as POs, contracts, R&I reports, GRN, etc.

6.10.2.2 Prepare/certify/approve Payment Requests (PRT), and submit the PRT to PRT Receiving
Officers of the Line Ministries /Autonomous Agencies/Municipalities along with
completed CPV, Obligation, PR, PO, Payment document checklist and relevant payment
documents.

6.10.3 Process 2: The Treasury/Autonomous Agencies/Municipalities PRT Receiving Officers


carry out the following:
6.10.3.1 Verify the PRTs against documents and checklist.
6.10.3.2 If documents are missing, incomplete or incorrect, return the PRTs to line ministry.
6.10.3.3 If documents are correct and complete, provide an acknowledgement with due date for
payment collection to the Finance Units. Stamp the PRT with date of receipt and initial on
it.
6.10.3.4 Create EVs based on the PRTs.
6.10.3.5 Submit the PRTs and EVs to the senior payment officers
6.10.4 Process 3: PRTs and EVs received by the designated senior payment officers in the Line
Ministries/Autonomous Agencies/Municipalities Offices for processing
6.10.4.1 Tasks of the designated senior payment officers:

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 Receive PRTs and EVs bundle from the PRT Receiving Officers, verify the list with
documents.
 Acknowledge the PRTs and EVs list by signing and returning to PRT Receiving Officers.
 Check the documents and PRTs and EVs for completeness and accuracy as per the
prescribed checklist.
 Check the EVs posted in the system for accuracy.
 Approve the EVs in the system if found satisfactory.
 Sign on the CPVs in the Payment Authorisation field for all approved EVs.
 Return any PRTs and EVs if not found in order along with the observations to the PRT
Receiving Officers.
 Forward all PRTs for which the EVs have been approved to the Officer designated to
approve the payments and release Cheques/Treasury Payment Orders (TPO).
6.10.5 Process 4: Extract Payments and Release Cheques in the FreeBalance system
6.10.5.1 Tasks for the Cheques/TPOs printing officers (Treasury/Autonomous
Agencies/Municipalities Payment Approving Officers)
 Receive PRTs for which the EVs have been approved in the system.
 Check the payment details in the system with the document using the prescribed checklist.
 Extract Cheques/TPOs depending on the payment instrument types of the EVs in
FreeBalance if all details are correct.
 Return PRTs / EVs with incorrect details in system to the senior payment officers and get
them rectified.
 Print the cheques or electronically create TPOs in GRP/FMIS system.
 Forward the Cheques and payment documents to two the first Cheque signing officers.
 Forward the electronic TPOs and payment documents to the first TPO approving officers.

 Ensure that the printer is regularly maintained and spare printer cartridges are always in
stock. Ensure that printing stationary is adequately stocked.
6.10.6 Process 5: Signing Cheques
6.10.6.1 Task for First Cheque signing officers (Treasury/Autonomous Agencies/Municipalities)
 Upon receipt of communication from the Cheque printing officers, the First Cheque
signing officer verify the Cheques information in the system with the bank account
information of the vendors.
 Sign the Cheques if Cheque information are correct, and forward the Cheques to the
Second Cheque signing officers.

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 Return the Cheques to the Cheque printing officers if Cheques information are incorrect.
6.10.6.1 Task for Second Cheque signing officers (Treasury/Autonomous Agencies/Municipalities)

 Upon receipt of communication from the First Cheque signing officers, the Second
Cheque signing officer verify the Cheques information in the system with the bank
account information of the vendors.

 Sign the Cheques if Cheque information are correct, and forward the Cheques to the
Cheque printing officers for preparing Cheque Advices and distribution of Cheques to the
vendors.

 Return the Cheques to the Cheque printing officers if Cheques information are incorrect.

6.10.7 Process 6: TPO signing by First Signatory


6.10.7.1 Tasks for Staff designated to serve as First TPO approving officers (Treasury/Autonomous
Agencies/Municipalities)
 Receive the electronically created TPOs and payment documents.
 Verify the TPO particulars and payment documents as per the prescribed checklist and
from the FreeBalance system. Verification at this stage is to ensure that the payment
instrument is for the correct EVs and the bank accounts of the vendors.
 Return unapproved TPO if any errors are detected to TPO printing officers with
notes/observations.
 Approve the TPOs electronically which are correct and acceptable.
 Forward the TPO to the Second TPO approving officers for correction.
6.10.8 Process 7: TPO signing by the Second Signatory
6.10.11.1 Tasks for Staff designated to serve as Second TPO approving officers
(Treasury/Autonomous Agencies/Municipalities)
 Receive the electronically approved TPO and payment documents from the First TPO
approving officers.
 Verify the TPOs and payment documents as per prescribed checklist.
 Return any TPOs and payment documents if not acceptable to first TPO approving
officers with reasons for return.
 Electronically approve the TPOs which are acceptable.
 Return the approved TPOs to the TPO printing officers.
6.10.9 Process 8: Cheque advice preparation and distribution of the cheques
6.10.9.1 Tasks for Cheques printing officers (Treasury/Autonomous Agencies/Municipalities)

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 Receive the electronically approved TPOs / signed cheques after signed by the second
signatory.
 Prepare Cheque Advices for the signed cheques.
 Obtained the approval and signatures on the Cheque Advices from the Head of Payment
Department and one of the designated senior payment officers.
 In case of any rejections/ returns by any signatory, take up with the Head of Payment
Department for further action.
6.10.10 Process 9: Releasing TPOs, preparing electronic TPO advices, and delivering TPO advices
electronically/signed hard copy to BCTL
6.10.10.1 Tasks for the TPO printing officers to release TPOs, prepare electronic TPO advices and
deliver TPO advices to BCTL (Treasury/Autonomous Agencies/Municipalities TPO Advice
Issue Officer)
 Receive the electronically approved TPOs from the Second TPO approving officers.
 Check the completeness of TPOs as per prescribed checklist.
 Electronically release TPOs and prepare electronic TPO advices for BCTL.
 Print dummy TPOs for archive.
 Deliver the electronic TPO advices to BCTL.
 Print the electronic TPO advices, and obtain approval/signatures on the TPO Advices
from the Head of Payment Department and one of the designated senior payment officers.
 Deliver the hard copy signed TPO advices to BCTL.

 The above steps of preparing TPO advice, delivering electronic TPO advice and
signed paper TPO advice will be replaced with the planned STP/R-Timor electronic
payment order system when it is ready and operational.
 Forward the paid EVs with documents and copy of TPOs to the staff designated to
undertake the payment document archive for audit purpose.
 Monitor and analyze the status of PRTs daily for reducing payment delays.
 The list of PRTs delayed for payment more than 10 working days is to be provided to the
Head of Payment Department for review and actions.
 All unpaid cheques /TPOs returned from BCTL are required to be dealt with, reprocessed
as per defined process.
 Cancelled cheques are required to be dealt with as per defined process.
6.10.12 Process 10: Distribution of Cheques
6.10.12.1 Tasks of Cheque Distribution Staff (Treasury/Autonomous Agencies/Municipalities)
 Receive the cheques for distribution to line ministries/Agencies and vendors.

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 Distribute the cheques after verification of receipts and take acknowledgement.
 Enter cheque distribution details in system at Treasury/Autonomous
Agencies/Municipalities.
6.10.13 Process 11: Archiving of PRTs and payment instruments
6.10.15.1 Task of Staff assigned to complete the archiving of documents (Treasury/Autonomous
Agencies/Municipalities Archiving Staff)
 Receive the paid EVs with payment documents and copy of payment instruments from
the Treasury/Autonomous Agencies/Municipalities Cheque/TPO printing Officer.
 Archive the documents as per prescribed policy and procedure.

6.11 INTERNAL CONTROLS IN BUDGET EXECUTION PROCESS


Internal control is the process effected by an organization's structure, work flows and management
information systems which is designed to help the organization accomplish specific goals or
objectives. The objective of this document is to identify such internal controls so as to ensure that
adequate internal controls exist in the budget execution process in the Treasury/Autonomous
Agencies/Municipalities.
6.11.1 The Internal Control System for the Budget Execution in the Treasury/Autonomous
Agencies/Municipalities of the Government of Timor-Leste is based on a risk-assessed
framework.
6.11.2 The general control points in the Treasury budget execution system are those features which
provide the overarching control in the system. These are:
6.11.2.1Availability of well documented process and written procedures - Overall the Budget and
Financial Management Act 2009 and respective Budget Execution Decree Law provide the
legal mandate to the process and lays down broad principles for operations. Subsequent
instructions by the Treasury in this regard are also relevant. The procedures established
include those regarding the initiation (commitment), review (authorization) and payment
approval of all expenditures. These are sufficiently detailed and include “who, what, when,
where and why” of the initiation, review and approval phases. These clearly written
procedures enable better understanding by the employees.
6.11.2.2 Appropriately Segregated Duties - Segregation of duties enables division of key duties and
responsibilities among different people. This helps reduce the opportunities for any
individual to be in a position to commit and conceal errors (intentional or unintentional), or
perpetrate fraud in the normal course of his /her duties. The internal control’s fundamental
principle of segregated duties is that different personnel should perform the functions of
payment initiation, payment authorization, record keeping and its custody. Thus no one
individual should control or perform all key aspects of a transaction or event. Accordingly
in the Treasury/Autonomous Agencies/Municipalities and line ministries, the responsibility
for posting Expense Vouchers (EVs), approving EVs and approving payments, record
keeping and thereafter review of General ledger (including posting of any journal vouchers)
and accounting is segregated and assigned to different persons. This mitigates the risk of
erroneous or fraudulent invoices approved for payment and unauthorized payments made to
non-existent vendors.

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6.11.2.3 Clear Description of Staff Roles and Functions - Each staff member assigned to a task is
provided with a detailed description of assigned tasks and duties. The tasks assigned
description is comprehensive and clearly stated to ensure satisfactory comprehension of the
roles and functions.
6.11.2.4 Maintaining a Complete List of Authorized Approvers and Signatories - The Treasury/Line
Ministries/Autonomous Agencies/Municipalities maintains a list of all authorized staff that
will perform the various processes and tasks in the budget execution and approval functions
(EV and payment). In addition the line ministries have also been instructed to maintain a
list of all authorized staff that shall function as commitment certifying and authorizing
officials and payment requesting officials. This list and its updates are provided to
Treasury/Autonomous Agencies/Municipalities for use in verifying approvals on
documents. Treasury/Autonomous Agencies/Municipalities also maintain a list of all
authorized signatories for the TPOs and Cheques. Documented Delegation of Authority
authorizing staff to serve as designated officials in case the designated official is un-
available is also maintained by Treasury
6.11.2.5 Controlled FMIS User Management and System Access - The management of user access
to the FreeBalance is fully synergized with the authorized officials for a defined process and
function. Differentiation in access rights for staff authorized to post EVs, approve EVs,
approve payments and release cheques are implemented. The user access is also managed
for any changes required due to staff absence or leave. Complete audit trails are available in
the system for ensuring appropriate system usage.
6.11.2.6 Centrality of Processing and Accounts Payable Management - Receiving and processing of
all government payments for invoices and PRTs is done centrally by Treasury/Autonomous
Agencies/Municipalities. This implies that the entire accounts payables of the government
are controlled by the Treasury/Autonomous Agencies/Municipalities at least from the time
the PRTs are brought to the Treasury/Autonomous Agencies/Municipalities. With
mandatory use of procurement module and contract management module, the complete
management of the obligations of the government is achieved. Treasury Single Account
(CFET, sub-accounts and special funds), is also simple and with reduced risk of payment
frauds and bank reconciliation problems.
6.11.2.7 Efficient Archiving and Record Keeping - The original and supporting documents are
properly archived and maintained at the Treasury/Line Ministries/Autonomous
Agencies/Municipalities for the current year. Records for previous years (after completion
of audit) are maintained in the records facility assigned to the Treasury/Autonomous
Agencies/Municipalities. The assigned staff responsible for maintaining the documents is
familiar with the retention and storage requirements and to retrieve and produce the
documents for review by the requesting Treasury/Autonomous Agencies/Municipalities
officer or the auditors.
6.11.3 Operational Control Points
6.11.3.1 Payment Request (PRT) Stage - Submission of Request for Payment (PRT) and Expense
Voucher- In the present delegated commitment process responsibilities for creating
commitments, entering into obligations, creating and approving Expense vouchers have
been passed on to the line ministries themselves. In order to help in better management of
risks associated with the payment process and reduce chances of fraud and errors in
payments, following controls have been stipulated.

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1. Process for creating commitments / purchase requisitions and entering into contracts
for obligating the commitments, including the procurement process, have been
codified and documented for all line ministries / agencies. All line ministries are
required to strictly adopt the stipulated ex-ante controls.
2. Guidelines for completion of CPV and Expense Voucher form including correct
coding, nature of transaction/payments, amount, purpose, and system generated CPV
number have been prescribed. For commitment authorization, three different
designated officials functioning as agency finance officer, agency authorizing officer
and agency (earlier “Treasury/Autonomous Agencies/Municipalities”) certifying
officer have been prescribed and all three are required to sign at the commitment
creation stage. For the payment authorization all payment requests (on the CPV form)
are also required to be signed by the agency certifying officer. These ex-ante controls
are also crucial in ensuring compliance with rules and procedures. The line ministries
are responsible for the commitments and contractual obligations arising out of their
actions in the delegated system.
3. To ensure completeness of submissions, a checklist for submission of documents has
been prescribed for line ministries. This checklist is to be initialed and submitted to the
Treasury/Autonomous Agencies/Municipalities along with the request for payments by
the line ministries seeking payments.
6.11.3.2 Stage 1 - Receipt of Request for Payment (PRT) and Expense Voucher (EV) - This the first
point where CPVs, EVs and payment request are received at the Treasury/Autonomous
Agencies/Municipalities. The following internal controls are in place –
1. The prescribed checklist for PRT submission is utilized and completeness of
documentation is ensured for the RP submission.
2. All PRTs are recorded and entered in the system ensuring the completeness of receipt of
PRTs by the Treasury/Autonomous Agencies/Municipalities.
3. An acknowledgement with date of receipt of PRTs and due date is provided to the line
ministries/agencies.
6.11.3.3 Stage 2 - Vendor File / Master Management and Allocation
1. New Vendors are created only after confirming that they do not exist in the system so
that their uniqueness is ensured in the database.
2. New vendors can only be created if requested on prescribed forms supported by hard
copy evidence of company name, Taxpayer Identification Number, bank details etc and
approved by Authorizing Officer. Similar controls exist for changes to vendor details
such as when vendor opens a new bank account for receiving payments.
3. Bank account details of vendors are captured correctly so that there are no rejections by
bank for incorrect account details at time of payment.
4. The Taxpayer Identification Numbers (TIN) of vendors are captured so that tax
departments’ requirements can be complied with.
5. Vendors with pending garnishee orders are identified in the system for enabling the
required action as required by the legal framework and process.

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6.11.3.4 Stage 3 - Scrutiny of Request for Payments
1. Prescribed Checklist for scrutiny of PRTs is strictly followed.
2. Expense Vouchers are posted/approved only on the basis of original invoices being
attached to the Treasury/Autonomous Agencies/Municipalities. This ensures that
duplicate payments are not made using non-original or duplicate invoices.
3. Indicate process when vendor invoice is lost and vendor supplies a new document to be
used for processing
4. A one to one relationship between invoices and expense vouchers is ensured. This
implies that for every invoice received by the Treasury, only one expense voucher is
entered in the FreeBalance. This control of non-splitting of invoices into multiple
vouchers mitigates the risk of paying a vendor invoice more than once for the same
goods or service. ( The real risk is partial invoices where vendor splits order into
number of deliveries – need to explain how this is controlled )
6.11.3.5 Stage 4 - Posting and Approval of Expense Vouchers
1. Separate officials have been assigned to approve the EVs. This ensures the required
check and balance in the system and reduces opportunities for fraud and errors. For
Government staff expense claims it is a requirement that no individual can approve a
claim for their own expenses. Approval must be at least one level above that of the
person claiming the expense e.g. a Director General must always approve a Directors
expense.
2. The prescribed checklist for verification of documents and posting in FreeBalance
system is adopted and this assists in better scrutiny of the Request for Payments.
3. The approval of EVs in the FreeBalance system and the signing on the Payment
Authorisation as the Line Ministries/Autonomous Agencies/Municipalities Authorizing
Officer is performed by the same official. This ensures that there is clear link between
the FreeBalance system (EV approval) and the physical document approval process
(CPV/Payment Request) and the document being signed / authorized is the same which
is approved in the FreeBalance system.
6.11.3.6 Stage 5 - Payment Extract Approval and Release of Cheque Numbers
1. Clear segregation of functions while ensuring appropriate check and balance is ensured
by designating different officials for posting the EV, approving the EV and approving
the payment extract.
2. Cheques are released by the same official as the one approving the payment extract
thereby ensuring that cheques are released for only the payment extracts which have
been approved by the official.
6.11.3.7 Stage 6 - Cheque Generation and Printing
1. Cheque printing is centralized in Treasury/Autonomous Agencies/Municipalities for
better control over the process and increased security.

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2. An authorized official for operating the utility for cheques printing is assigned. Adequate
access and security rights are built in the system.
3. Only specified stationery is used for the printing of cheques.
4. Quality of cheques printed is monitored to ensure minimum standards of acceptability by
bank.
6.11.3.8 Stage 7 - Cheque Signing/ TPO Approving
1. Two signatories have been prescribed for each payment so that each payment instrument
is verified and checked by two officials and chances of fraud are minimized.
2. Checklist for the function for both signatories has been prescribed to enable efficient
signing/approving of cheques / TPOs.
3. Separate signatories of senior level have been designated for higher value payments.
4. An official has been designated for coordinating the cheque /TPO signing/approving
process and ensuring that no cheques / TPOs are missing or lost in transit.
6.11.3.9 Stage 8 - Payment Instrument Issuance and Delivery
1. The generation and signing of all payment advices to banks is centralized and controlled.
2. The date the cheques are ready for delivery is recorded in the list of receipt of PRTs by
budget execution so that payment against a PRT is tracked and full cycle is diarized.
3. The TPO is electronically signed and released by designated official to prevent any
errors or frauds in TPOs being sent to the bank.
4. A copy of cheque is sent to the supplier /vendor for information indicating the invoice
against which payment has been made.
5. A copy of TPO / cheque is retained along with the original EVs and documents for
future reference and audit purposes.
6. All receipts for supporting expenditures are stamped “paid” so that these cannot be used
subsequently or produced later for duplicate payments.
6.11.3.10 Final Stage – Control Points for Ensuring Payments on Due Date and Monitoring the
Request for Payments
1. Payments which are delayed for more than a specified period and likely to miss the
due date for payment are identified early and processed to ensure timeliness.
2. Principle of first-in first-out is followed for all PRTs, unless there are exceptional
reasons for an urgent payment. Payment requests received on a date are all processed
and paid out together on a date thereby implementing the FIFO principle. Thus PRTs
received on say 1st August are all processed in a batch such that their payment
instruments are all ready by 8th August and available for dispatch on due date.
3. Payments not made for a Request for Payment by a specified / due date are monitored
and the reasons for non-payment by due date are provided to line ministries on due
date / date they come to Treasury to collect the cheques or TPO information.

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4. All Line Ministries, Autonomous Agencies and Municipalities shall submit a list of
all outstanding payments with the form (Annexure 6-10) to the General Director of
Treasury after the Year-End Accounts closing.

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CHAPTER 7
PAYROLL PROCESSING

7.1 PAYROLL PROCESSING FOR PERMANENT EMPLOYEES


7.1.1 The Treasury is responsible for making payments of salaries and other benefits in respect of all
employees of all ministries and institutions of the Government in accordance with the
appropriations approved by Parliament for this purpose. All permanent employees are paid
monthly by the Treasury provided their appointment is confirmed by the Public Service
Commission and the Ministry they are employed includes their names in the monthly payroll.
7.1.2 The payroll system is setup at the Treasury in the Payroll Department based on the
notifications/payroll variations issued and sent by the Civil Services Commission. This
notification is prepared by the Civil Service Commission upon receiving the information by
various ministries about the employee recruited by them. All new employees are appended to
the payroll list when their appointment letter, contracts and the salary form duly filled are
received along with the cover letter authorized by Public Service.
7.1.2 Institutions whose employees are not recruited by the Civil Service Commission (presently
includes Defence & Security, Council of Ministers, Tribunals, UNTL, SAMES) also send their
payroll information directly to the Treasury every month. Need to indicate who has to approve
this data (since it is not Civil Service Commission) before being accepted by Payroll
7.1.3 Based on the master list and any changes intimated by the ministries / institutions in 7.1.5 the
Treasury verifies and inputs the data in the Treasury database (FMIS) viz. FreeBalance payroll
system. Only designated officers in Payroll can amend the Master Data and this has to be
reviewed and approved by a Senior Payroll Officer before being accepted by FreeBalance.
7.1.4 The FMIS makes calculations for payroll and allowances while making appropriate deductions
for taxation, leave taken (based on attendance sheet provided by the Ministry as signed by the
supervisor and Head of the Department) and benefits.
7.1.5 Each month ministries and institutions are required to provide Treasury any changes necessary
to pay adjustments (Annexure 7-1) authorized by the concerned authority according to the
Personnel Rules and Regulations. These changes arise due to promotions, transfer, resignation,
terminations or other operations and are required to be submitted to the Treasury by the 12th
day of each month. All documents received in payroll after this date are processed in the
following month’s payroll run.
7.1.6 The payroll data is frozen after necessary analysis and verification by the 20 th of each month
for that month’s salary.
7.1.7 The payroll unit prepares salary expense voucher and sends it to Payments department in
Treasury through the FreeBalance GRP system.
7.1.8 For the salaries of the members of Parliament and officials, the information is sent directly by
the Parliament to Treasury. For these salaries a standard Payment Order for Salaries and
Allowances (POSA) is prepared by the unit every month (Annexure 7-2). The POSA is also
based on calculations for payroll and allowances along with appropriate deductions for taxation
etc.

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7.1.9 The Treasury issues the payment instruction in form of Treasury Payment Order to Central
Bank for those employees taking their salaries through direct credit of their bank accounts.
7.1.10 Very few employees who do not have bank accounts, are paid with through the District
Finance Offices. In this case, the Treasury prepares for the District Finance Officers who in
turn collect cash from the bank and distribute it to employees in the districts. This process is
controlled through the Undisbursed / Unclaimed Salaries Summary that has to be completed
by the District Finance Officer and returned to Payroll at the next payroll cycle.
7.1.12 Upon receipt of the TPO from Treasury, the Central Bank validates and issues payment
instructions to banks for crediting salary to employee bank accounts in those banks.
7.1.13The Treasury also sends out detailed payroll to all ministries and Civil Service Commission.
7.1.14 On receipt of the notification of the death of a government official, the salary of the deceased
person is stopped immediately. Similarly, salaries of person(s) transferred out of the Ministry
or who have resigned or retired are removed from the payroll of that ministry immediately on
receipt of such a notification. Such notification is only received from the Civil Service
Commission.

In the case of any changes in Payroll, new rules and regulations will be detailed out in Budget
Execution Decree Law approved by the Council of Ministers, accounting instructions and
guidelines issued from time to time by the Minister of Finance.

7.2 PAYROLL PROCESSING FOR TEMPORARY EMPLOYEES


7.2.1 Temporary employees are added to the payroll upon receipt of their details from the Civil
Service Commission.
7.2.2 All temporary employees paid from the Salary & Wages budget are included in the payroll list
for the ministry. The payroll database is input with the contract details including contract start
and end date and salary levels.
7.2.3 Any changes in the salary for the temporary employees are also to be communicated by the
ministries and institutions similar to permanent employee system and processed by Payroll unit
likewise.
7.2.4 All other processes including payment system, disbursements etc are same as for permanent
employees.
Ministries are required to notify Payroll when there are changes in positions and types of
appointment of any employee in the Ministry. This is done via the Advise of Changes document
Annexure 7-1 which has to be reviewed and signed by an Authorizing Officer before it is accepted
by Payroll.

7.3 PROCEDURE FOR PAYMENT OF SALARIES AND ALLOWANCES IN


CASH OUTSIDE DILI
7.3.1 Where salary has to be paid at relatively remote districts or regions where banking facilities do
not exist, the salaries are paid through designated Finance officers of institutions. With growing
banking services in districts, payroll is planning to phase out these cash payments.
7.3.2 The designated Finance officers distribute payments to the individual payees identified on the
Payroll Schedule for the district and returns, to the Treasury, the signed payrolls and

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allowances schedules ( acknowledgement of receipt of salaries by employees ), during the
following cash delivery cycle.
7.3.3 The unpaid cash are paid back into the Treasury Account held with the Central Bank and a
detailed deposit receipt supplied by the Central Bank.
7.3.4 The names of the employees who were not paid salaries are recorded in Forms designed for this
purpose viz. Undisbursed/Unclaimed Salaries and Allowances’ (Annexure 7-3) and
‘Memorandum Payroll Returns’ (Annexure 7-4).
7.3.5 A signed copy of the ‘Undisbursed/Unclaimed’ Form, together with the cash deposit receipt
from the Central Bank is to be surrendered by the designated Finance Officer to the Treasury
within two weeks from the start date of payment of salaries or latest at the next salary
collection date. No salaries for a subsequent month will be delivered to the designated Finance
Officer unless the returns for the prior month’s salaries and allowances are delivered to the
Treasury.
7.3.6 The Central Bank is required to provide a detailed credit advice to the Treasury at the time the
statements of account are rendered. The statement of account (Bank Statement) shall include
all cash surrendered to the Central Bank as amounts paid back into the Consolidated Fund held
with it.
7.3.7 The copy supplied by the Central Bank to the Treasury main office will be provided to the
Payroll Unit.
7.3.8 The ‘Undisbursed or Unclaimed salaries/allowances’ Forms well as the redeposit slip issued by
the BCTL, will be used to enter data into the Treasury accounting records.
7.3.9 These Forms will also be the basis for raising fresh payroll data / Payment Order for Salaries
and Allowances when the undisbursed salaries and allowances have to be reactivated for
subsequent payment.

7.4 PAYROLL PROCESSING


7.4.1 All data for payroll processing is entered into the FreeBalance payroll system by the payroll
officers in the department. The officers are each allocated line ministries to which they are
responsible.
7.4.2 All data entered into the payroll system is approved by the Payroll Head of Department. The
approval and authorization is automated through the payroll system.
7.4.3 Upon completion of the monthly data entry process, the payroll is calculated in the FreeBalance
system. The detailed checklist for payroll processing is provided at Appendix II A.
7.4.4 Processing errors that are encountered in generating the payroll are all recorded and entered in
the payroll enquiry log. This is an excel worksheet that registers all the errors that have been
identified and reported as well as how they have been rectified. This error log is also used to
record all the payroll enquiries that are raised by the line ministries, and monitored by the Head
of Payroll Department. Instances of overpayment or underpayment of salaries upon being
recorded in the register are rectified through the use of the Overpayment form (Annexure 7-5)
and the Unpaid Salary Claim (Annexure 7-6).

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7.5 PAYMENTS TO CASUAL EMPLOYEES


7.5.1 Casual employees are appointed for a defined period only and for conducting specific work
only. Casual employees should not, by definition, be appointed for long periods of time. Casual
employees are paid directly using Goods and Services appropriations category of the concerned
agency.
7.5.2 Casual employees are added to the payroll upon receipt of their details from the line ministries.
The payroll database is input with the contract details including contract start and end date and
salary levels.
7.5.3 Any changes in the salary for the casual employees are also to be communicated by the
ministries and institutions similar to permanent employee system and processed by Payroll unit
likewise.
7.5.4 All other processes including payment system, disbursements etc are same as for permanent
employees. Ministries are required to notify Payroll when there are changes in positions and
types of appointment of any employee in the Ministry. This is done via the Advise of Changes
document Annexure 7-1 11 which has to be reviewed and signed by an Authorizing Officer
before it is accepted by Payroll.
7.6 REMUNERATION FOR CONSULTANTS AND ADVISERS
7.6.1 A certificate from the Director of Administration should be attached with the payment voucher
for the remuneration for a given period certifying that it is in accordance with the contract
between the Government and Consultants/ Advisers.
7.6.2 Attendance sheet should also be attached with the Payment Voucher.
7.6.3 Remuneration of Consultants and Advisers should be from the budget head ‘Professional
Services’ only under Goods and Services. These are not processed through the regular payroll
system.
7.6.4 The salaries of consultants should be processed along following lines-
i) A copy of the contract should be attached to the CPV;
ii) Pay should be in accordance with the contract;
iii) Tax should be deducted from the pay and only the net amount paid;
iv) The number of days the consultant is being paid for should be verified from the
attendance sheet attached with the CPV;
v) The signature of the consultant and the Administrative Officer of the Ministry should be
appended on the attendance sheet;
vi) The month(s) for which the pay is being drawn should be checked and should match that
shown in the CPV;
vii) If the consultant has been on leave and is being paid for that period check, a certificate
from the Ministry should be attached stating that the leave is due to the Consultant;
viii) The bank and account number to which the salary will be credited should be checked
from the documents attached with the CPV;

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ix) Adequate funds should exist in the appropriation under ‘goods and services’ to enable
making the payment.

7.7 PAYROLL REPORTING


7.7.1 In order to have complete and accurate oversight over the payroll activities of the department, a
number of reports are required to be prepared by the Payroll department on a monthly basis.

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CHAPTER 8
ADVANCES – PETTY CASH, IMPREST, EMBASSY AND
OTHERS

8.1 GENERAL PRINCIPLES FOR IMPREST AND PETTY CASH


ADVANCES
8.1.1 The dispersed demographic structure of Timor-Leste and the specific environment and
circumstances in which the government operates requires some measure of liquidity available
in the hands of spending units to achieve increased efficiency and expediency. The imprest and
petty cash advance system are ways to supplement the normal expenditure arrangements and
procedures. These systems enable public officials to have limited sums of money at their
disposal for disbursement on the specified public services for which the usual pre-authorisation
procedures are not required.
8.1.2 The applications for imprest or petty cash payments are required to be authorised by the
Minister of Finance in respect of holdings of Ministers, Vice Ministers and Secretaries of State.
8.1.3 In respect of other government ministries and functions, the Treasury authorizes the
distribution and quantum of resources to individual Ministries. In conjunction with the Budget
Execution Decree Law of the current year of operations, the guiding principles and procedures
are as follows:
 These are advances meant for meeting immediate requirements of cash payments, or
cases where exact quantum of expenditure is not known.
 The Treasury must certify that adequate budgetary funds are available with the Ministry
for the eventual expenditure;
 Petty Cash can be used only for purchases of goods or services of value not exceeding $
500, such as meals, office urgent material, equipment and operation to maintenance of
basic infrastructure and other urgent expenses and unpredictable nature that are related to
the provision of public services to the public. Where expenditure values shall exceed $
500, the normal CPV procedures (commitment validation process through the Treasury)
should be followed for making procurements through normal Government procurement
services. Amounts in excess of $ 500 shall not, ordinarily, be financed from petty cash
 Petty Cash cannot be used to buy smaller capital goods, alcoholic drinks, fuel, vehicle
maintenance and cars, foreign travel, overtime payments for the provision of cleaning
services to public buildings, and professional services.
 At the level of the spending Ministry, all such advances must be properly documented
and accounted for, in the books meant for such purposes, by the spending units;
 All advances of imprests or Petty Cash payments are required to be retired on
replenishment, or at the end of each financial year, whichever comes first;

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 Replenishment of Imprests or Petty Cash requires the completion of a Commitment and
Payment Voucher with attachments in the form of receipted documentary evidence of
disbursements and receipts;
 Imprests or Petty Cash floats must be repaid when no longer required, or reduced when
found to be excessive;
 Retirement of Imprests and Petty Cash require Journal Voucher action by the line
ministries/autonomous agencies/municipalities with supporting retirement acquittals as
well as banking redeposit slips for any cash balances on retirement;
 Imprest and Petty Cash holders are considered personally and financially liable for any
losses or thefts due to negligence. Authorising officers are to take due care to facilitate the
security and safety of the cash;

In the case of any changes in Petty Cash and Imprest Advance, new rules and regulations will
be detailed out in Budget Execution Decree Law approved by the Council of Ministers,
accounting instructions and guidelines issued from time to time by the Minister of Finance.

8.2 TYPES OF ADVANCES


8.2.1 The government advances monies for the following items:

Code Description
1400 District Imprest Advance
6253 Oversea Travel - Member Gov.Advance.
6256 Overseas Travel - Officials-Advance
6259 Overseas Travel-Others-Advance
7215 Adiantamento Trf. Pagament Pess.
7225 Adiantamento Tranf. Conc. Public
7400 Petty Cash
7600 G&S General Embassy Advance
8050 Advance Minor Capital Embassy
4038 Contingence Advance
6201 Advance Local travel
6303 Advance Training & workshops

8.2.2 Any other advance as required may also be extended after required line item in the Chart of
Account is created and configured in the FMIS.

8.3 PETTY CASH ADVANCES


8.3.1 The purpose of a Petty cash fund is to allow for small purchases or reimbursements, in cash. It
is used for items such as stamps, office supplies, parking, etc. The fund should be enough to

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cover petty cash expenditures for about a month. The petty cash fund should be kept in a
locked box or drawer. It is recommended that only one person, called the custodian, have
access to this cash, and that person be responsible for all petty cash activity. To disburse petty
cash funds, the units are required to develop petty cash vouchers for documenting each
transaction, and determine who in the organization can approve petty cash payments. In some
cases, this will be the director; in others, petty cash may also be approved by department heads
or the petty cash custodian, within guidelines established by the Ministry. Petty Cash vouchers
in the name of a government employee must be approved by an officer at least one level above
that of the payee.
8.3.2 Establishing a Petty Cash Fund – At the beginning of each year, once a line ministry
management has determined the need for establishing a petty cash fund, a written request is
made by the concerned Minister to the Minister of Finance.
8.3.3 Only one petty cash fund for a ministry is permitted. All directorates and divisions under the
ministry are required to utilize the established fund within the permitted ceiling.
8.3.4 The request for establishing petty cash for line ministries is processed by the MoF and
Treasury.
8.3.5 Petty Cash is allowed up to the amount as described in the Budget Execution Decree Law for each Line
Ministry and Autonomous Agencies

8.3.6 A cheque in name of the Petty Cash Holder is prepared by the Treasury for the amount
requested and approved petty cash fund.
8.3.7 The Petty Cash Holder encashes the cheque from the Central Bank and collects the petty cash
fund money for further use.
8.3.8 The petty cash advance is utilized for the daily and routine expenses of minor nature.
Reimbursement to a person or items of petty nature or services requires a proof of purchase
which is usually a receipt. The ministries are required to prepare and maintain accounts of all
receipts and utilization of the petty cash funds. This can be done through a simple Excel sheet
and maintained by the Agency Finance Officer. Refer to the Budget Execution Decree Law of
the current year of operations for detailed procedures.
8.3.9 A petty cash voucher (Annexure 8-1), detailing the nature and reason for the purchase is then
prepared, proof of purchase attached, approved by the petty cash custodian with the form
(Annexure 8-11) and the original purchaser reimbursed.
8.3.11 Once the fund is substantially depleted, the petty cash holder adds up the vouchers and
assigns them into appropriate coding block categories (e.g., postage, printing and copying,
office supplies, etc., depending on the government policy). The total of receipts plus cash
available must equal the original advance in order to prove that all money has been accounted
for.
8.3.12 When the account has been balanced, a request for replenishment of the petty cash advance is
required to be made to the Treasury. A CPV is prepared for the exact amount of money for
which the acquittal has been provided of the expenditures.
8.3.13 The Treasury processes the request for replenishment of petty cash while adopting the
following checklist

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i) CPV has the correct coding for petty cash and amount of replenishment requested
matches the amount being retired.
ii) Ledger for retirement details (Annexure 8-2) is attached.
iii) Summary sheet (Annexure 8-3 20) for ledger with COA line items to be finally booked is
attached.
iv) An Acquittance of Advance (Annexure 8-4).
v) Supporting documents / receipts for all retirements made are attached.
8.3.14 The line ministries/autonomous agencies/municipalities prepare the Journal Voucher for
retirement of funds using the summary sheet of ledger and posts the retirement using
following sample JV:

Account Dr Cr
Ministry against Goods and Services – line XX
items with expenses
Retirement of Petty Cash for Ministry – line XX
item 7400
8.3.15 Upon posting of the JV, funds are released in the system and balance available under the
petty cash line item. After verifying that CPV amount for replenishment is not greater than
the difference of petty cash limit and debit balance of the line item, line
ministries/autonomous agencies/municipalities approve the CPV for payment.
8.3.16 A cheque is written (in accordance with the cheque authorization procedure established for
all disbursements,) again payable to the petty cash holder, for the CPV amount or retirement
amount thereby bringing the fund back to its original balance.
8.3.17 At the end of each financial year, the ministries should retire all advances through utilization
documents and bank the balances in the petty cash fund. The redeposit advice from the
Central Bank should be obtained and furnished to the Treasury along with the last retirement
submitted to Treasury. The prevailing instructions require the ministries to complete the petty
fund operations and submit final acquittal report to Treasury as described in the Budget
Execution Decree Law approved by the Council of Ministers.
8.3.18 The line ministries/autonomous agencies/municipalities prepare and posts the following
Journal Voucher upon receipt of the final retirement documents:

Account Dr Cr
Ministry against Goods and Services – line items XX
with expenses
Unspent Petty Cash redeposited in Bank – line XX
item 1000 or other defined bank account code

Retirement of Petty Cash for Ministry – line item XX


7400

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In the case of any changes in Petty Cash, new rules and regulations will be detailed out in Budget
Execution Decree Law approved by the Council of Ministers, accounting instructions and guidelines
issued from time to time by the Minister of Finance.

8.4 GENERAL IMPREST ADVANCES


8.4.1 This advance is permissible for all directorates under a ministry, starting each financial year.
8.4.2 The advance is requested by the directorates through the concerned line ministry Agency
Finance Officer, which maintains the contact with the line ministries/autonomous
agencies/municipalities.
8.4.3 The imprest funds are to be utilized for a specific and defined line item, i.e. the purpose of
seeking imprest fund is to be defined at the time of seeking this advance. It has to be only for
one line item.
8.4.4 The imprest funds are processed for both national and district level expenditures, as per the
COA coding.
8.4.5 Request for subsequent imp rest fund advances are contingent upon the retirement of earlier
advance granted. No advance is to be granted unless the previous advance has been fully retired
as described in the Budget Execution Decree Law approved by the Council of Ministers..
8.4.6 For payment of any in-year imprest funds advances, the Treasury is to be approached with CPV
and the retirement of earlier imprest fund advance with the following documents –
i) Supporting documents / receipts for all retirements made including the payment vouchers
(Annexure 8-5) detailing the nature and reason for the purchase is then prepared, proof of
purchase attached, approved by the imprest advance custodian with the form (Annexure 8-
11)
ii) Ledger for retirement details (Annexure 8-6);
iii) Summary sheet (Annexure 8-7) for ledger with COA line items to be finally booked;
iv) Completed form for Acquittal of Advance (Annexure 8-8).
8.4.7 The line ministries/autonomous agencies/municipalities process the payment requests and first
prepares the Journal Voucher for retirement of funds using the summary sheet of ledger and
posts the retirement using following sample JV:

Account Dr Cr
Ministry against Goods and Services – line items XX
with expenses
Retirement of General Imprest for Ministry – line XX
item 1400

8.4.8 Upon posting of the JV, the imprest fund account is credited and is expected to have zero debit
balance. The line ministries/autonomous agencies/municipalities thereafter approve the CPV
for payment.

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8.4.9 A cheque/TPO is written (in accordance with the cheque authorization procedure established
for all disbursements,) payable to the Agency Finance Officer for all national level payments.
8.4.10 For all district level expenditures, the line ministries/autonomous agencies/municipalities
prepares cheque/TPO in favour of the designated Agency Finance Officer whose signatures
are also maintained with the line ministries/autonomous agencies/municipalities.
8.4.11 At the end of each financial year, the ministries, Autonomous Agency should retire all
advances through utilization documents and bank the balances in the petty cash fund. The
redeposit advice from the Central Bank should be obtained and furnished to the Treasury
along with the last retirement submitted to line ministries/autonomous
agencies/municipalities. The prevailing instructions require the ministries to complete the
imprest funds operations and submit final acquittal report to line ministries/autonomous
agencies/municipalities as described in the Budget Execution Decree Law approved by the
Council of Ministers.
8.4.12 All unutilized advances should be deposited in the Government account with BCTL as
described in the Budget Execution Decree Law approved by the Council of Ministers.

8.4.13 Advances will not be given in the 4th quarter unless advances relating to the previous quarters
are fully acquitted as described in the Budget Execution Decree Law approved by the Council
of Ministers.

8.4.14 The line ministries/autonomous agencies/municipalities prepare and posts the following
Journal Voucher upon receipt of the final retirement documents –

Account Dr Cr
Directorate / Ministry against Goods and Services XX
– line items with expenses
Unspent Imprest Fund advance redeposited in XX
Bank – line item 1000 or other defined bank
account code
Retirement of General Imprest Fund advance of XX
Directorate – line item 1400
8.4.15 In case of advances which remain unacquitted as described in the Budget Execution Decree
Law approved by the Council of Ministers and where unutilized balances have not been
deposited in the Government account with BCTL, further advances in the new financial year
should not be made pending full settlement of advances taken in the previous financial year.
In the case of any changes in Imprest Advance, new rules and regulations will be detailed out
in Budget Execution Decree Law approved by the Council of Ministers, accounting
instructions and guidelines issued from time to time by the Minister of Finance.

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8.5 MUNICIPALITY OPERATIONS AND ROLE OF MUNICIPALITY


FINANCE

8.5.1 The special rules of payments, payroll and advance payment procedures in Municipalities are
mentioned in Chapter 4 of 2017 budget Execution Decree Law.
In the case of any changes in payments, payroll and advance payment procedures of
Municipalities, new rules and regulations will be detailed out in Budget Execution Decree Law
approved by the Council of Ministers, accounting instructions and guidelines issued from time
to time by the Minister of Finance.

8.6 TREASURY OPERATIONS AND ADVANCES FOR TIMOR LESTE


EMBASSIES AND MISSIONS
8.6.1 The procedures apply to diplomatic staff deployed in Embassies of Timor-Leste abroad and not
to staff hired locally at these stations, nor to the Home Civil Service.
8.6.2 All funds transmitted to embassies shall be treated as advances using the Commitment and
Payment Voucher for Embassies, which the Ministry of Foreign Affairs (MNEC) will prepare.
8.6.3 Line item codes - 7600 (Goods and Services), / 8050, 9501 (Capital), and / 6151 (Salaries and
Wages) are required to be utilized for making request for processing the CPV.
8.6.4 Each embassy shall, in consultation with the Office of the Treasury, open THREE bank
accounts in a reputable bank in the city where the embassy is located such that one of the
accounts is denominated in the local currency to be operated as a transaction account for day-
to-day expenditures of the mission, the other to be denominated in US Dollar currency for the
purposes of receiving remittances from the Treasury in Dili, and the third to be denominated in
the local currency for the purpose of receiving revenues accruing from issuance of passports,
visas and for other revenues.
8.6.5 In countries where the US Dollar is the local currency, the embassy shall operate only TWO
such accounts. One of the accounts shall be denominated in US Dollar currency for the
purpose of receiving remittances from the Treasury in Dili, and the other to be used for
receiving revenues from the issuance of passports, visas and for other revenues. In this
instance, the transaction account for the day-to-day expenditures of the Mission shall be the
former US Dollar account.
8.6.6 The accounts shall be opened in the name of the Embassy of the Government of Timor-Leste
and not in the names of individuals manning the Mission.
8.6.7 Where consulates support embassies, the same required number of bank accounts will also be
opened by each consulate office.
8.6.8 Two officials will operate each account, one of who must be the Head of Chancery and the
other an officer nominated by the Ambassador. A staff hired locally must not be made a
signatory to the account. If only one person mans the Mission then she/he may operate the
account singly with the expressed authorisation of the Director of Treasury

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8.6.9 Remittances shall be made in US Dollars and normally on a quarterly basis in advance after the
CPV submitted by the Ministry of Foreign Affairs and Cooperation has been processed by the
Treasury. The Treasury shall ensure that remittance / payment request includes the following –

 Commitment and Payment Voucher raised details the various line item amounts required
to be funded for the period;
 Payment vouchers (Annexure 8-10) with all supporting receipts for payments made;
 Monthly reports of utilization from the embassies / mission in the specified format
(Annexure 8-11);
 Appropriated funds are available against a specified expenditure category of the Ministry.

8.6.10 Upon receipt of the remittance, the amount required to fund a month’s expenditure may be
transferred to the local currency account to fund day-to-day expenses of the Mission.
8.6.11 Transactions within the local economy should be conducted in the local currency to the extent
possible and always in compliance with local rules governing foreign currency transactions.
8.6.12 The Mission’s monthly report shall follow the principles outlined for Imprest Remittances
since all remittances to Missions, apart from specific direct payments, will be charged in the
first instance against the line item “Embassy Advances”.
8.6.13 Upon the receipt of the monthly expenditure report of the Mission, the MNEC will pass the
Journal Vouchers to reverse the transactions by debiting the actual expenditure line items and
crediting the Mission’s Embassy Advance account.
8.6.14 Ambassadors/Charge d’Affaires are entitled to residential accommodation, the rent of which
is borne by the Government of Timor-Leste. Renting or Leasing of residential
accommodation or Chancery Offices must always be through a formal agreement and a copy
of the lease agreement should be provided to the Ministry and the Treasury within one month
of entering into such an agreement.
8.6.15 The Treasury shall also pay the one-time installation allowance to each staff being posted to
an embassy of the Timor-Leste. The amount shall be decided on a case-by-case basis
depending upon the rank of the official and location of the mission. The allowance shall not
be taxable. It is paid by the Treasury to the bank account of the official in the foreign country.
8.6.16 Diplomatic staff posted in missions abroad are eligible to receive a living allowance. The
Ministry of Foreign Affairs & Cooperation determines the rules and scale for grant of this
allowance, taking into account the level of the diplomatic staff and the place of her/ his
posting as well as the budgetary limitations. The allowance is not taxable and is paid by the
Treasury directly into the bank account of the staff member in the foreign country.
8.6.17 For official journeys, undertaken outside the place of posting, mission staff is eligible to
receive a daily subsistence allowance at rates determined by the Decree Law approved by the
Council of Ministers, provided boarding and/ or lodging costs are borne entirely by the staff.
Where prescribed, funding support from any other Ministry will reduce the daily subsistence
allowance dollar for dollar. Prevalent rules for air travel and daily subsistence as notified by
the government are required to be followed.
8.6.18 The Ministry of Foreign Affairs & Cooperation may determine that some diplomatic staff
(e.g. Ambassador/ Consul General/Charge d’Affaires) may need to entertain dignitaries in the
normal discharge of their duties. Such staff may be permitted reimbursement of such

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expenditures, the monthly ceiling of which will be prescribed by the Ministry of Foreign
Affairs & Cooperation. These are paid from the embassy advance and retired as prescribed by
the rules. All expenditures incurred on official entertainment can be claimed only if they are
fully vouched for. The unspent budgeted amount, where remitted, shall not be available for
future spending without prior permission of the Ministry of Foreign Affairs & Cooperation.
8.6.19 The diplomatic staff working for the Mission are eligible for reimbursement of the insurance
premium paid upon production of receipts.
8.6.20 For Operational Expenses, each mission is permitted to incur necessary expenses related to
the day-to-day operation of the Embassy. Such expenditures include those on utilities, vehicle
operation, maintenance of equipment & building, office stationery and hiring of local staff.
The level of expenditure on each of these items must be such as can be considered reasonable
and should, in no case, exceed the monthly ceiling prescribed by the Ministry for each budget
line.
8.6.21 For Capital Expenditures, missions are provided a lump sum amount at the beginning of each
year based upon their capital expenditure plans as agreed upon in the Budget. This maybe to
cover expenditures for initial set-up of each new Embassy for purchase of capital items as
may be necessary for smooth functioning of the embassy, and other ongoing items like desks
and chairs, computers, printers, fax machines, safes, filing cabinets etc.
8.6.22 Each embassy shall, at the end of each calendar month, prepare a set of accounts for each
bank account being operated by the Embassy. The accounts shall be prepared in the format
prescribed by the Treasury and must be sent to the office of the Treasury so as to reach them
by the 5th of the following month.
8.6.23 At the end of a quarter, all original receipts pertaining to the expenditures incurred during the
previous three months approved by the imprest advance custodian with the form (Annexure
8-11) should be sent to the MNEC. The receipts should be arranged in a chronological
manner and serially numbered. Monthly totals should be struck and shown in the cover note
addressed to the Director General of Treasury.
8.6.24 Any VAT refunds receive by the Embassy must be deposited to the official bank account as
part of the revenue.
No indication who is responsible for preparing and reviewing these bank reconciliations and
when these are to be sent to Director General of Treasury.
In the case of any changes in Embassy Advance, new rules and regulations will be detailed
out in Budget Execution Decree Law approved by the Council of Ministers, accounting
instructions and guidelines issued from time to time by the Minister of Finance.
8.7 OTHER ADVANCES
8.7.1 The line ministries/autonomous agencies/municipalities also processes and advances monies
for other purposes. These are meant for covering expenses where either exact amount are not
known or payment is to be made upfront for obtaining the services or goods and thus require
cash.
8.7.2 Such advances are recorded at the same item level of the Chart of Account but as an advance
line item created specifically for the purpose.

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8.7.3 The advances are extended for specific purposes only at directorate level under a ministry
adopting the usual CPV process through the Agency Finance Officers.
8.7.4 All previous advances for that line item should be retired before a subsequent advance can be
extended by the directorates.
8.7.5 The line ministries/autonomous agencies/municipalities prepare and post the Journal Voucher
upon receiving the retirement details from the ministries. The JVs credit the advance line item
and debit the final expenditure line item. Some sample advance line items and final heads are
shown below –

Advance Initial advance Line Final Line Items of


Item actual use
Local Travel 6201 6200
Overseas Travel 6253 6252, 6251
Current Transfers 7215 7211
7225 7221
Minor Capital Works 8050 8000, 8001, 8002 etc
(only for embassies)
Capital Development Fund 9501 9099
(for Infrastructure Ministry)

8.7.6 All unspent amounts should be deposited in the Central Bank and redeposit advice provided to
the Treasury.
In the case of any changes in other Advances, new rules and regulations will be detailed out in
Budget Execution Decree Law approved by the Council of Ministers, accounting instructions
and guidelines issued from time to time by the Minister of Finance.

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CHAPTER 9
REVENUE COLLECTION AND ACCOUNTING

9.1 OVERVIEW OF REVENUE COLLECTION SYSTEM


9.1.1 To ensure that the revenue collection process is consistent and transparent throughout
Timor-Leste and conforms to the relevant requirements of Annual Budget Appropriation
Regulation and the Budget and Financial Management Act, and to prevent abuse and fraud,
it is necessary to set down explicit administrative instructions and procedures which must
be followed in the receipting and accounting for public revenues.
9.1.2 The revenues deriving from either fiscal or other levies in Timor-Leste shall serve as the
principal source of the Consolidated Revenue (CRF) of Timor-Leste.
9.1.3 The Treasury has issued Financial Administration Instructions - Revenue Collection
Procedures. These instructions prescribe the procedures to be followed by the Ministries
and also the records to be maintained and where responsibilities lie.

9.2 GENERAL PRINCIPLES FOR REVENUE COLLECTION


9.2.1 All tax revenues including income and corporate taxes and customs and excise duties are
deposited in designated commercial bank accounts established specifically for that purpose.
At the end of each business day the commercial bank transfers the full balance in these
designated accounts coded according to the nature of the revenue to the CFET account at
the Central Bank. Treasury accounts for the revenues based on the coding in the CFET
bank statement and the Revenue Officer counterchecks to the Commercial Bank Statement
to ensure that the full amount of the receipts have been transferred to the CFET account.
Up-to-date Revenue Codes for the various Government Revenues are on the Q3 Revenue
V1 Crystal Report.
9.2.2 For non-tax revenues, Treasury Authorized bank accounts are established to receive the
revenues and directions are issued that must be adhered to by all Ministries and institutions
entrusted with the responsibility of collecting non tax revenues.
9.2.3 The standard General Triplicate Receipt (GTR) book (Annexure 29) or Treasury approved
variations thereof are to be used in every receipting transaction The detailed process for
receipting of public funds are provided in Financial Administration Instruction No. 01/2003
Revenue Collection Procedures.

9.3 RESPONSIBILITY OF AGENCIES FOR COLLECTION OF REVENUES


9.3.1 The following Ministries/Units are responsible for the collection of revenues and also
crediting these revenues into the Consolidated Fund by arranging its deposit in the Central
Bank or in the designated banks:

 Customs Directorate - Import and Export taxes (import duty, export duty, sales tax and
excises as well as penalties and guarantees).
 Post Office of Timor-Leste - postal fees and charges.

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 Registry Notary and Land & Property Office (Ministry of Justice) – all fees related to
land and property registration etc.
 Timor-Leste Revenue Service – Income and other direct tax revenue
 Ministry of Transport and Communication – Transportation related fees, services and
charges
 Water and Sanitation – Water and Sanitation fees
 Ministry of Justice - Passport, ID and other consular fees
 Overseas Missions – Passport, Visa and other consular fees
 Interior Ministry - Visa and Immigration
 EDTL - Electricity fees and charges
 Ministry of Petroleum and Natural Resources - Mining operation royalties
 ASSETS- Auctions
 SEPFOPE - Fines and forfeits
 MCI - Sales of local products
 Ministry of Agriculture – Agriculture Products and Fishing Licenses
 Ministry of Tourism – Social Games

9.3.2 The revenues collected by the following Autonomous Agencies will be credited in the sub
account of the respective agency at the Central Bank. The revenue deposited in this account
can not be used to cover any expenses of the Agency during the fiscal year. This means that
the balance in the sub account of each Agency represents the total revenue collected during
the year PLUS unspent Budget Appropriations transferred by Treasury during the year. All
revenue credited into the sub account must be posted into FreeBalance when received and
match the amount credited in the sub account. Regular bank reconciliations to the balance
of the cash account in FreeBalance must be performed on monthly basis.
 Administration of Ports of Timor-Leste
 Institute for Equipment Management
 SAMES
 Archive and Museum Resistência Timorense
 Press Council
 Institute of Support for Enterprise Development
 Specialized Agency for Investment
 Registry and Business Verification Services
 Bambu
 Training Center SENAI
 Forensic Police of Criminal Investigation
 National Hospital Guido Valadares
 National Laboratory
 National Center for Rehabilitation
 National Authority of Communication
 National Defense Institute
 National University Timor Lorosa’e
 Courts – Revenue is reported as Revenue of Govt.

9.3.3 In the field, the revenue collectors shall maintain a Cash Analysis book in the form
prescribed by the Treasury (Annexure 30) along with a cash book and the cash or cheque
collected are to be submitted along with accounts to the assigned Treasury officer.

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9.4 TAX REVENUE COLLECTION PROCEDURES


A number of Ministries have specific Revenue collection Procedures. These procedures are included
in detail in the Financial Administration Instruction - Revenue Collection Procedures, and summary
provided in following sections.

9.5 COLLECTION OF CUSTOMS REVENUES AT DILI PORT


9.5.1 The customs revenues namely Import Duty, Export Duty, Sales Tax and Excise are largely
collected at Dili Port and deposited in the account of the Consolidated Revenue Fund
maintained at the Designated Bank on behalf of the Central Bank.
When any new taxes are introduced e.g. Value Added Taxes (VAT) similar procedures will
be followed.
In addition the collection arrangements may be modified when improved revenue
collections are available with banks other than the nominated bank
9.5.2 The Customs Broker on behalf of the importer or exporter completes a Customs
Declaration (Declaração de Alfândegas e Importação – DAI), directly into the Customs
Database portal (ASYCUDA) available at the main Customs Office, on the basis of self-
assessment, in accordance with the tax/customs regulations, directives and administrative
instructions.
9.5.3 The Customs Broker submits the Customs Declaration to the Customs Revenue Entry
Processing (CREP) unit for assessment.
9.5.4 If CREP finds a problem with the Customs Declaration, the importer or exporter must
return to the Customs Database to make necessary adjustments.
9.5.5 Once the Customs Declaration is successfully assessed CREP approves and stamps the
Customs Declaration form.
9.5.6 The Customs Broker takes three copies of the approved and stamped Customs Declaration
to the Designated Bank outlet, situated within the Customs Office for payment.
9.5.7 The Designated Bank receives from the Customs Broker the amount(s) indicated as
‘amount(s) due” on the Customs Declaration, and inputs the amount paid into the Customs
database (ASYCUDA). A receipt is printed off the Customs Database by the Designated
Bank and issued to the importer or exporter along with a copy of the Customs Declaration,
certifying that the deposit has been received by the Bank and credited to the relevant sub-
account.
9.5.8 The Customs Broker submits the receipt and Customs Declaration to CREP thus evidencing
the payment of taxes and duties, who subsequently authorize release of goods from the Port
or inspection depending on a system of random selection or risk management.
9.5.9 If irregularities are found during inspection a penalty is charged which is paid by the
importer or exporter at the Designated Bank where payment once again is inputted into the
Customs Database (ASYCUDA) directly by the Designated Bank.
9.5.10 At the end of each day the Designated Bank Teller prints a summary of payments from the
Customs Database and deposits the payments received into the Consolidated Revenue Fund
at the Designated Bank according to Tax type.

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9.5.11 Every day the Designated Bank clears the Consolidated Revenue Fund, transferring the
balance to the Treasury Bank Account.
9.5.12 Every month the Designated Bank provides the Customs Administration with a statement
listing daily balances by tax type and origin (either at Dili Port, airport or Municipal office).
9.5.13 The Treasury is required to collect a receipted copy of the completed Warrant Form from
the CGD, BNU or designated bank, daily, to complete its accounting entries for the
receipted revenues.
9.5.14 The Treasury collects the statements and deposit information from the bank, processes them
to reconcile its collections with the bank statements. If necessary the Treasury makes
adjustments where the bank has miss-posted items to incorrect sub account headings. In
addition the Treasury receives statements from the Central Bank about the collections made
by the designated bank including ones outstation.
9.5.15 The Treasury consolidates the revenues and provides a monthly statement to the Customs
Department for reconciliation.
9.5.16 The Customs Department and the receiving bank (CGD presently) are required to provide
all the related documents for final audit.

9.6 COLLECTION OF REVENUES AT BORDER CONTROL STATIONS


OUTSIDE DILI
9.6.1 Customs revenues are also collected at border control stations located outside Dili. The
Border Post at Batugade is the only border Post where duty and tax revenue is collected by
the Designated Bank’s own teller. Duty and Tax Revenue in Suai, Maliana, Oecussi and
Baucau are collected by the Customs officers and deposited on a daily basis at the local
Designated Bank Branch.
9.6.2 In all Municipal Border Posts Customs Declarations are entered by the Customs officers to
the Customs Database (ASYCUDA) and issues a receipt to the Importer.
9.6.3 In the case of Batugade the Importer submits the stamped Customs Declaration to the
Designated Bank teller and pays the amount(s) indicated as ‘amount(s) due” on the
Customs Declaration.
9.6.4 The Designated Bank retains payments until a certain amount is collected, at which point
the Designated Bank informs both the Treasury and the Customs office of the taxes and
duties collected requesting the transfer from Batugade to Dili to be deposited in the
Consolidated Revenue Fund.
9.6.5 The Designated Bank does not receive information regarding the tax type and retains this
money until notification is received from Customs regarding which accounts the revenue
should be paid into.
9.6.5 In the case of Suai, Maliana, and Baucau the Importer pays the amount(s) indicated as
‘amount(s) due” on the Customs Declaration to the Customs Officer.
9.6.6 The Customs Officer from the Border Post is responsible for depositing the revenues
collected at the local Designated Bank branch, which are connected to the Dili Designated
Bank online and in real time. Prescribed set of records for the customs officer at Border

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post are provided in the Financial Administration Instruction No. 01/2003 Revenue
Collection Procedures. Of specific importance is the daily cash reconciliation form
(Annexure 31).
9.6.7 The Designated Bank transfers the funds in full to the Consolidated Fund of Timor Leste at
the Central Bank on a daily basis using revenue code as appropriate, provided by Treasury.
Banco Central includes this code in its statements to enable the revenue to be posted by the
Treasury Revenue Officer. The Revenue Officer first ensures that the revenue collected and
transferred by the designated bank matches the amount recorded in the CFET account. If
there are differences these should be noted and followed up to ensure all revenue
collections at the designated bank(s) are transferred in full and completely to the
appropriate revenue code in the CFET bank account.
9.6.8 The Designated Bank provides daily statements of the payments made from each collection
post by tax type to Treasury and the Customs Department. The Revenue Officer in Treasury
identifies the transfer from the designated bank account and revenue code and creates the
journal entries required to record the revenues.
Checking of the accuracy of the revenues received in the designated bank account is the
responsibility of the Revenue Agency. This is achieved by the Treasury Revenue Officer
submitting the monthly revenue summary report as recorded in the GRP system to the
Director and Finance Officer of the Revenue Agency in order that the Revenue Agency
may compare the revenue recorded in GRP to the Agency’s own revenue records . Any
discrepancies should be notified to Treasury for joint investigation.
9.6.9 Due to the Special Economic Zone designation for Oececussi, collection of income taxes
and customs duties must conform to the Laws of Timor Leste and Special Arrangements for
the Special Economic Zone (ZEESM).These are collected on behalf of the Govt. by
ZEESM and will be transferred to the Commercial Bank designated account at regular
intervals for onward remittance to Central Bank. ZEESM will also notify Treasury of each
remittance to enable taxes collected by ZEESM on behalf of the Govt. and remitted to
BCTL will be reported separately in financial reporting.

9.7 COLLECTION OF PERSONAL INCOME, CORPORATE, SERVICE,


VAT AND WITHHOLDING TAXES
9.7.1 The Directorate General of Revenue (DGR) is responsible for the design of all forms for the
taxes under their jurisdiction
9.7.2 Taxpayers are responsible to file and pay taxes by law
9.7.3 Taxpayers pay their tax obligations as outlined on the Ministry of Finance NDDR website.
9.7.4 The Taxpayer shall deliver three copies of the self-assessment form to the designated bank
and pay the amount as assessed on the Form.
9.7.5 The Designated Bank shall ‘stamp and sign’ the three copies of the completed Self-
assessment Form, confirming that the tax has been received and paid into the account held
at the Designated Bank.

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9.7.6 DGR collects on a daily basis all copies of receipted Self-assessment Forms as well as a
statement of payments received by the Designated Bank by Tax Payer Identification
Number from the Designated Bank.
9.7.7 DGR inputs the information from the receipted Self-assessment Forms into the tax database
(ITAS). Treasury submits details of taxes collected based on Tax Revenue Code on a
monthly basis. This is reconciled by DGR to tax revenue collected according to ITAS.
9.7.8 The Central Bank supplies the Treasury with a daily bank statement showing the receipts in
the Designated Bank of revenue collected by Revenue Code. Current codes in use are:
Individual Income Tax 5100 For Govt. Employees and Contractors
Individual Income Tax Others 5101 For all other employee income taxes
Withholding Tax 5102 Tax withheld from payments by Govt. and
others
Corporate Taxes 5103
Service Tax 5200
Other Tax Revenues 5300
9.7.9 Treasury monthly submits details of taxes collected based on Revenue Code. This is
reconciled by DGR to ITAS.
9.7.10 Revenue Officer in Treasury posts these revenues into FMIS based on Revenue Code
9.7.11 In addition taxes deducted from Govt. employees are journalized and posted to Revenue
Code 5100 on each payroll run. The Charge is to the respective division of the employee
and credit to the Revenue Code. No physical cash transfer is involved in this posting. The
same procedure applies to consultants, contractors and casual staff employed by Govt. for
whom contractual service payments and tax deductions are required to be made.
9.7.12 The deductions indicated in 9.7.11 are to be included in the monthly summary statement of
receipts of Individual Income Tax supplied by Treasury to the DGR.

9.8 TIMOR SEA REVENUES


9.8.1 Tax revenues generated from the Timor Sea agreements are Value Added Taxes,
Withholding Taxes, Income Taxes, Additional Petroleum Tax and Wages Income Taxes.
The accounting for these are handled by the Petroleum Fund Section at the Central Bank as
the tax payer must transfer all tax payments directly to the Petroleum fund held at the US
Federal Reserve Bank.
9.8.2 The Tax payer submits a monthly tax return for value added, withholding and wage income
tax, estimated income tax, estimated additional petroleum tax, and annual return forms for
income tax and APT to the National Directorate of Petroleum Revenue.
9.8.3 The US Federal Reserve advises the Timor-Leste Central Bank of such tax payments and
the TL Central bank issues Credit Advices as confirmation of the tax payments to the
National Directorate of Petroleum Revenue.

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As Treasury is not engaged in any accounting or verification activity in relation to
Petroleum Revenue this section is included here for general information on Revenues only.
Up-to-date information on revenue procedures and controls should be directed to DGR –
National Directorate of Petroleum Revenue.

9.9 NON-TAX REVENUE COLLECTION PROCEDURES


9.9.1 The procedure relating to the collection and accounting of all non-tax revenues are
described and detailed in subsequent sections.
9.9.2 Control and Issue of Receipt Books - Receipt books, licenses, tickets etc must be strictly
controlled at a central location and issued out to revenue collectors only on proper
authorization. Of particular relevance are these procedures:
 Only those receipt books or other official forms of receipt which are approved, by
Treasury are to be used for acknowledgement of receipt of government monies.
 Agencies serving as revenue generating sources are responsible for preventing the use
of temporary, locally produced or unofficial receipt books.
 Treasury, based on instruction from the Minister of Finance, and when requested by
Revenue Agencies will liaise with the printing agencies in the design and production of
receipt books, all of which will be serially numbered. Due to the different nature of
revenue collections by revenue agencies the format of the receipts will vary. Advise on
the optimal receipt format will be provided by Treasury.
 Officers entrusted with the collection of revenue will submit their requisitions for
receipt and other books to the Treasurer.
 The Treasurer will issue receipt and license books only against correctly completed
requisitions.
 All used and unused receipt and license books must be safeguarded. Books will be used
in serial number order.
 Obsolete receipt books must be returned to the Treasurer which will be destroyed only
under the authority of and under the direction and sign off of Treasury staff with details
of destroyed receipt books being maintained by the Revenue Agency.

The Instructions also prescribes the form of receipt book and the General Triplicate Receipt
(GTR) form, also called TR#01 (Annexure 29).
The receipt/invoice books are printed after approval by Treasury for revenue collecting entities. The
receipt/invoice books should incorporate security features which would make the copying of such
receipts difficult.

9.9.3 Procedures for Collecting, Recording and Banking of Revenues - The detailed procedure
are provided in the Sections 9.2 above. This includes the complete life cycle of revenue
collection process till remitted into CFET account at the Central Bank.

Treasury Forms have been prescribed for adequate recording and maintenance of records. These
include TR#02, TR#03, TR#04, TR#06, TR#07, TR#08 and TR#09.
9.9.4 The names of officials responsible for collection of non tax revenues have to be sent to the
DG Treasury on appointment of each officer by the Director of Finance or equivalent
position of each agency. Treasury will follow up with head of finance at the agency for all
issues related to non-tax collections.

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9.9.5 For each new revenue source, a special bank account is to be opened with the approval of
the Minister of Finance in accordance with the provisions of Article 15 of the Budget and
Financial Management Act 2009,. This account will receive deposit of only revenues in that
account. If bank accounts for this purpose have already been opened details of the same
have to be communicated to DG Treasury for the account(s) to be recorded as an authorized
bank account in the Register of Authorized Bank Accounts maintained by Treasury.
Revenue accounts unless they are sub accounts of revenue agencies at the Central bank are
only to be used for collection of revenues and have to be transferred in total at the end of
each business day or on a regular basis as approved by Treasury.
9.9.6 A cash book will be maintained by all those responsible for collecting non-tax revenues and
details of daily collections entered in the cash book with date, amounts collected, from
whom received and receipt # issued. This should be reconciled to the banking details in
9.9.7 to ensure all revenues collected are banked.
9.9.7 All revenues collected will be deposited the same day or by next morning in the bank
account opened for this purpose, irrespective of the amounts collected. Less frequent
banking is only permitted after approval of the Agency Head of Finance and notification to
Treasury.
9.9.8 The commercial bank will sweep the balances in the account to the Government account
with the Central Bank on a daily basis and code the transfer according to the Revenue code
provided by Treasury.
9.9.9 On a weekly basis or as agreed by Treasury, a statement containing details of daily
revenues collected has to be submitted to Treasury of total revenues collected and
reconciled to deposits to the designated bank account.
9.9.10 The officials must provide explanations for reconciling items and how these have been
resolved in the next reporting cycle.
9.9.11 Revenue collected cannot be used to fund expenditures of the collecting agency. Each
agency’s expenditure is limited to the amount appropriated by National Parliament.
Decision on the use and transfer of revenues will be based on legislation approved by
Council of Ministers or National Parliament.
9.9.12 Treasury will provide support to revenue agencies to assist in ensuring that the prescribed
procedure for collection and accounting of non tax revenues are being carried out as
outlined in the manual and agree on revision of procedures where needed to make the
collection process more effective and efficient.
9.9.13 In addition the records and documents shall also be subject to audit by the Câmara de
Contas as determined by them. By law the Agency must answer all questions concerning
their operations that are asked by Câmara de Contas.

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9.10 SPECIAL PROCEDURE FOR COLLECTION OF PASSPORT FEE


REVENUES
9.10.1 The Passport Office, shall provide Passport Application Forms and issue passports to the
applicants in accordance with the governing rules and regulations in force from time to
time.
9.10.2 Upon approval of the application, the applicant shall deposit the prescribed fees for
issuance of the passport to the designated account of the government with CGD BNU, Dili
Branch using the Passport Fees Deposit Form.
9.10.3 The Bank shall affix its seal stamp on the Passport Fees Deposit Forms and return one copy
to the person depositing the amount and send another copy to the Office of the Treasury on
the next business day, retaining the third copy for the Bank’s file.
9.10.4 The Passport Office shall maintain a Passport Stock Register (Annexure 32) and record in it
the issuance of the passports to the applicants on a daily basis. This Register should be
established in consultation with the Treasury.
9.10.5 The Passport Office shall maintain a Passport Fees Revenues Day Book (Annexure 33), in a
format approved by the Treasury; and enter therein the amounts of the revenue receipts as
per the Passport Fees Deposit Form submitted by the applicants on each day.
9.10.6 The Passport Office shall reconcile the amounts recorded in the Passport Fees Revenues
Day Book with the Statement of Revenues (Annexure 34) that would be furnished by the
Treasury at the beginning of the following month. The reconciliation statement for cash and
bank should be prepared in the form shown at Annexure 35 and Annexure 36.

9.11 SPECIAL PROCEDURE FOR REVENUES COLLECTED BY TIMOR-


LESTE DIPLOMATIC MISSIONS AND EMBASSIES
9.11.1 All bank accounts opened by Timor Leste Diplomatic Missions and Embassies overseas
should be notified to Treasury so that these may be recorded in the Bank Accounts
Register. The bank must be an internationally reputed bank. In addition all bank balances of
overseas missions should be reconciled at fiscal year end 31st December to the bank
statement and notified to Treasury for reporting in the annual financial statements.
9.11.2 The receipting, recording and reporting of passport, visa and other fees collected by the
Consular Sections of the Overseas Missions of the Government of the Democratic Republic
of Timor-Leste follows the prescribed process.
9.11.3 The Ministry of Justice shall provide, out of its stock, Passport Books and also standard
Application Forms to the Overseas Missions of Timor-Leste through the Ministry of
Foreign Affairs and Cooperation along with the rules, regulations and guidelines for
issuance of new passports and the renewal of passports of Timor-Leste nationals.
9.11.4 The Ministry of Interior shall provide the prescribed Visa Application Forms to Overseas
Missions of Timor-Leste through the Ministry of Foreign Affairs and Cooperation along
with the rules, regulations and guidelines for issuance of visas to the foreign national
applicants at the Overseas Missions.

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9.11.5 Upon receipt of completed application forms along with the fees, the designated Consular
Officer at the Overseas Mission shall complete one set of General Triplicate Receipt (GTR)
Form (Annexure 29) with the relevant information and shall sign it acknowledging receipt
of the applicable fees from the passport or visa applicant, as the case may be.
9.11.6 The Consular Officer shall hand over the original copy of the GTR set to the passport or
visa applicant, as the case may be. The duplicate shall be retained for files at the Mission,
while the triplicate shall remain in the GTR Book.
9.11.7 The Consular Officer shall process the application and issue passport or visa, as the case
may be, on the basis of eligibility and other criteria in accordance with the relevant
Government rules, regulations and guidelines.
9.11.8 The new/renewal passport of Timor-Leste nationals and the passports of foreign nationals’
visa applicants shall be delivered to the concerned applicants upon production of the
original copy of the GTR. A Letter of Authority from the applicant would be required for
delivery of passports to a third party.
9.11.9 The Consular Office at the Overseas Missions shall maintain a Passport Book Stock
Register (Annexure 32) and record the necessary details at the time of receipt of blank
passport books and write down from the stock the ones which are issued to the passport
applicants on an ongoing basis.
9.11.10 The Consular Office shall maintain a Revenue Day Book (Annexure 33) and Daily
Revenue Summary Statement (Annexure 34) and enter therein all receipts of passport, visa
and other fees in chronological order and in the sequence of the serial number of the GTR
Book. The total of the amounts entered during each day has to be reconciled with the total
receipts of the day as per the GTR Book.
9.11.11 The Consular Office shall deposit the total amount received as fees during each day at least
once in a week to the Overseas Mission’s Revenue Account, to be established under
authorization from the Treasurer, with an internationally reputed Bank in the city where the
Mission is located.
9.11.12 The collected fees shall be held in the above Overseas Mission Revenue Account as funds
belonging to the Consolidated Fund of Timor-Leste. These funds including any interest
must be transferred to the Consolidated of Timor Leste once a month or as agreed with
Treasury as part of overseas Diplomatic Missions and Embassies revenue.
9.11.13 The reconciliation statement for cash and bank should be prepared in the form shown at
Annexure 35 and Annexure 36.

9.12 PROCEDURE FOR RECEIPT OF MONEY THROUGH AUCTION OF


UNSERVICEABLE / OBSOLETE INVENTORIES / SEIZED GOODS
9.12.1 Due procedures prescribed from time to time for competitive bidding or public auctioning
will have to be followed. For any lack of regulations and instruction in this regard, the
matter shall be referred to the Treasury for establishment of a short-term but transparent
and accountable arrangement, on a case-by-case basis.
9.12.2 All Ministries are required to deposit proceeds of such auctions / bidding immediately into
the Consolidated Fund account of the Government at Central Bank of Timor-Leste in the
bank account associated with Revenue Line Item - 5506

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9.12.3 Immediately upon deposit of such monies into CFTL, a copy of the deposit
acknowledgement from the bank must be provided to Treasury.

9.13 ELECTRONIC PROCESSING OF RECEIPTS THROUGH DIRECT


PAYMENT OF REVENUES BY CLIENTS
9.13.1 Where revenues are receipted by electronic means at the designated banks through an
offshore banking system, such revenues will be credited directly by the designated banks to
the Consolidated Fund of Timor-Leste indicating the appropriate revenue code which is
available from Treasury.
9.13.2 In such cases, the designated banks shall inform the Treasury, immediately, giving full
details of the receipting transaction.
9.13.3 The designated banks are also required to furnish confirmation of receipted funds to the
Payer so as to enable him to secure release of his goods from Border Services or to supply
evidence to the tax authorities that a tax liability or obligation has been discharged.

9.14 REVENUE RECONCILIATION BY REVENUE COLLECTING


AGENCIES
9.14.1 All ministries that collect non tax revenues are required to open a special bank account with
the approval of the Head of Treasury in accordance with the provisions of Article 15 of the
Budget and Financial Management Act 2009, for deposit of these revenues in that account
the day the revenue is collected, irrespective of the amount collected. Withdrawals from
this account will are not permitted.
9.14.2 The officials collecting non tax revenues are required to send a statement to the Treasury
each week containing details of revenue collected and certifying that these amounts have
been deposited in the designated bank account. This will have to be supported by a
statement from the commercial bank which would indicate the amounts deposited in the
account in the week and the amounts transferred to the BCTL.
9.14.3 The officials from the Ministries are required to reconcile the total revenues collected
during a month with the accounts of non tax revenue deposited in the respective bank
account which is used to record revenue in the books of account of the Treasury. This
reconciliation should be forwarded monthly to Revenue Officer Treasury. If there are
invoices that have not been settled, these should be summarized and notified to Treasury at
the end of each Quarter to be included in the summary of outstanding account receivables

9.15 REVENUE RECONCILIATION BY TREASURY AND BANKS


9.15.1 Under the existing procedure, all the revenues, whether collected at Dili or outside, are
being deposited by Importers, Exporters and other Taxpayers in designated banks. Each
revenue category has a specific account in the designated bank to receive only that revenue
. It is essential that deposits by taxpayers and others are deposited in the appropriate bank
account so that revenues can be correctly accounted for and reported.
9.15.2 The designated banks accept such revenues and credits them to relevant accounts
maintained by them.
9.15.3 The banks prepare daily statements indicating amounts credited to various accounts and
provides to the Treasury along with the supporting primary documents, on a daily basis.

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There is a standing instruction to the commercial banks to transfer all balances at the end of
each day in their various revenue accounts to the CFET account at the Central Bank.
9.15.4 The Treasury verifies the accuracy of the statements with the primary documents to
ascertain that amounts have been correctly credited to relevant bank accounts.
9.15.5 The Central Bank also prepares statements everyday indicating amounts credited to the
CFTL account by the collecting banks. Treasury checks the amount transferred from the
commercial banks and ensures it matches the credits in CFET.
9.15.6 Discrepancies found, if any, are brought to the notice of the banks for investigation and
rectification.
9.15.7 Monthly or other regular reconciliation statements as agreed with Treasury are to be
documented in a formal manner and will be used for audits. Head of Department must
notify by end of month after reconciliation of the status of the reconciliations.
9.1.5.8 Thus the reconciliation is provided for daily and monthly based on the revenue receipts
issued by the banks collecting it which are required to furnish copies of these to the
Treasury and revenue payer. The Treasury is required to furnish monthly statements to
revenue agencies for them to reconcile with the revenues paid by the payees and collected
by them. Treasury Forms have been prescribed for ensuring adequate reconciliation system
and includes forms TR#05, TR#05a and TR#05b.

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CHAPTER 10
ACCOUNTING AND BANK RECONCILIATION

10.1 OVERVIEW OF ACCOUNTING SYSTEM IN TIMOR-LESTE


10.1.1 The Budget and Financial Management Act, Title VI, Chapter II Records, Accounting and
Audit, Section 43 (Budget and accounting records) stipulates that the Minister of Finance
shall establish classification systems in order to record budget and accounting information
that facilitates the control of spending by the Government and that enables an expenditure
review according to organization, function and economic category, in accordance with the
cash basis classification requirements by the Government Financial Statistics (GFS), as
prescribed by the International Monetary Fund.
10.1.2 Accordingly the Government of Timor-Leste has adopted the Full Cash Basis of
International Public Sector Accounting Standards ( IPSAS) since 2012 financial year
accounts. Further, the Ministry of Finance shall specify the accounting policies, standards,
bases, and the classification system to be applied in public accounting and ensure
compliance with generally accepted international accounting principles in each case.
10.1.3 The Full Cash Basis of accounting recognizes transactions and events only when cash
(including cash equivalents) is received or paid by the entity. For receipts it has to be
credited in the respective account at the Central Bank by 31st December while for payments
it has to be processed in the GRP system and TPOs / Cheques / Ttransfers issued prior to
31st December of each year. Payments may be processed by the Central Bank at any time
including after the fiscal year end.
10.1.4 Financial statements prepared under the full cash basis provide the information about the
sources of cash raised during the period, the purposes for which cash was used and the cash
balances at the reporting date. The measurement focus in the financial statements are
receipts of cash, charges according to appropriation categories as well as the opening and
closing cash balances.
10.1.5 The annual general purpose financial statements comprise the statement of cash receipts
and payments as well as other commentaries, explanations and statements in the Notes to
Accounts that are cross referenced to the Statement of Receipts and Payments. These
disclose additional information about the cash receipts, payments and balances controlled
by the entity and accounting policies and notes, restrictions. It should also include a
comparison of budget to actual amounts in the statement of cash receipts and payments or
as a separate note.
10.1.6 Notes to the financial statements should also provide additional information about
liabilities, such as payables and borrowings, receivables, investments of Government,
property, plant & equipment as well as contingent liabilities. However in order to gather
this information, full co-operation from, Line Ministries, Autonomous Agencies and
entities that the Government has a controlling interest, is required. These bodies should
provide a full listing of these financial statement components, bases on which they have
been collated to ensure consistent accounting treatment among agencies and any additional

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information required to provide sufficient clarity to financial statement users. Greater
clarity in disclosure is the primary purpose of Notes to the financial statements. .
10.1.7 The accounting period is as dictated by the PFM Law. Currently it is from 1st January to
31st December of each year.

10.2 FULL CASH BASIS OF ACCOUNTING


10.2.1 The Government adopted full cash basis of accounting (Full IPSAS Cash Basis) for the
2012 Financial year. This basis which requires that all cash processed in the cash account of
the various Government entities during the financial year is detailed in 10.1.3 above.

10.3 ACCOUNTING FOR PETROLEUM FUND


10.3.1 Pursuant to Article 139 of the Constitution a fund has been established under the Petroleum
Fund Act to pool income from the exploitation of non-renewable petroleum resources for
the needs of both current and future generations.
10.3.2 Article 21 of Petroleum Fund Act provides for maintenance of Petroleum Fund Accounts
and Records by Director General of Treasury in accordance with International Financial
Reporting Standards (IFRS), to reflect the operations and financial condition of the
Petroleum Fund.
10.3.3 Under a Management Agreement between the MoF and Central Bank, responsibility for
maintaining the accounts and preparing financial statements has been delegated to the
Central Bank. However DG Treasury and staff still participate in reviews of financial
statements and contributes to changes in reporting format to conform to current IFRS
requirements. Under Article 24.1 (a) of the Petroleum Fund Act, DG Treasury is also
required to sign a Declaration covering the performance of the fund, significant changes, if
any, in its operations and approval of the Annual Financial Statements.
10.3.4 In addition, Article 13 of the Act stipulates quarterly reports on the Petroleum Fund to be
published to present the performance and activities of the Petroleum Fund no later than
twenty (20) days after the end of each quarter. All reports of the fund are prepared in
accordance with IFRS prescribed by the International Accounting Standards Board (IASB)

10.4 RESPONSIBILITY FOR RECORDING AND ACCOUNTING


10.4.1 The Director General of Treasury has been delegated responsibility by the Minister of
Finance for Government Accounting Reporting and Treasury functions and executes these
functions in accordance with the Public Finance Management Act, Budget and Financial
Management Act and secondary and tertiary Laws , Decree Laws, Pronouncements and
Circulars.
10.4.2 The Records classified as “accounts” include manual and electronic documents as follows:
(a) Accounting records in the form of prescribed ledger records in the Government
Resource Planning (GRP) module comprising various accounts in accordance with
the Chart of Accounts. and
(b) Source documents for the accounting records in the form of vouchers, contracts
schedules, returns, bank and other statements , invoices , approvals , circulars ,
Minutes of Meetings, Ministerial Decisions, and other documents that provide an
adequate audit trail for accounting entries.

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10.4.3 Working Papers are documents created during the accounting process but which do not
form part of the financial records system but which are used to support figures and
explanations in the Financial Statements and include:
(a) Copies of forms not used as vouchers such as office copies of requisitions, cheque
order forms and cheque stubs;
(b) Record or registers used in controlling the flow of documents during accounting
processes such as messenger’s receipt books, registers of returns;
(c) Circulars, notices and instructions received;
(d) Local files ; and
(e) Other documents such as drafts, calculations, note books and diaries.

10.4.4 Archival Records are records in either manual or electronic form, required to control the
location and disposal of records and include:
(a) Details of records transferred to record warehouse maintained by the Treasury or
other government agency repositories;
(b) Schedules of records destroyed;
(c) Any register showing use of records after transfer to the government agency
repository; and
(d) Schedules of records transferred to a designated National Archives

10.4.5 The retention, transfer, access, destruction and disposal of archival records shall be in
accordance with the provisions of the relevant decree / law on this subject matter and
comply with the Statute of Limitations of Timor-Leste.
10.4.6 The documents and records pertaining to the collection of revenue, the control of
expenditure, the administration of trust funds, the management of government movable and
immovable assets, stores and inventories, and such other financial business as may be made
the responsibility of government agencies shall be termed other government accounts and
shall be kept by designated government agencies.
10.4.7 Article 43 of Budget and Financial Management Law 2009, stipulates that the Treasury
shall maintain accounting records on:
a) Government Revenues;
b) Appropriations;
c) Adjustments to budget appropriations in conformity with the present diploma;
d) Budget appropriations made available to Ministries in relation to expenses through
Expenditure Authorization Notices;
e) Actual expenses made;
f) Liabilities in arrears.

10.4.8 Accounting records for all funds including Consolidated Fund, Infrastructure Fund, Human
Capital Development Fund and any other funds established through a legislative process,
are to be maintained.

10.5 QUARTERLY ACCOUNT OF FUNDS


10.5.1 Article 44 of BFML 2009, on reports on the evolution of the budget, requires that -

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1. The Government shall present to the National Parliament reports on the evolution of
the budget during the first three, six and nine months of every financial year.
2. The time limit for delivering the reports indicated in the previous paragraph is two
months after the end of the period covered by the reports.
3. A caveat is included in the quarterly reports that these are before reconciliation and
audit and so are subject to change.

10.5.2 Only reports for each of the first three quarters are submitted. Treasury has received Legal
Advice from Legal Unit that the 4th Quarter report need not be submitted to National
Parliament due to the submission of the annual financial statements which covers all 4
quarters and which is submitted after all reconciliations are complete.
10.5.3 The detailed reporting requirements and formats are provided in Chapter 11.

10.6 ANNUAL CONSOLIDATED & INDIVIDUAL FUND STATEMENTS


10.6.1 The Article 45 of BFMA 2009 provides the provisions of the final report on the budget.
10.6.2 The audit of the financial statements is the responsibility of the Câmara de Contas.
Responsibility of the Treasury is to submit reconciled financial statements to the National
Parliament and the Câmara de Contas by the 31st of July following the fiscal year end. The
statements shall include the following information:
a) An overall view of the main actual revenues and expenses;
b) Details on the manner in which the budget deficit was funded or on how the budget
surplus was invested;
c) Other information considered to be necessary for compliance with IPSAS and where
requested by Parliament and included in notes to the accounts or as supplementary
statements
d) The CFET financial statements should also include a consolidated statement that
combines the operations of CFET, Special Funds, Autonomous Agencies and any
other entity that are included in the State Budget. However results of entities that
receiving funding via transfers e.g. Timor Gap, Autoridade Nacional do Petroleo e
Minerais and Central Bank report directly to National Parliament and are not included
in the consolidated statements other than the transfers approved by National
Parliament to support their operations and any dividends / return of surplus funds that
may be paid to the Government of Timor Leste.

10.6.3 The information on assets and liabilities shall include:


a) Details of cash balances at beginning and end of financial year ;
b) Details on any changes made under article 21.2 concerning borrowings and loans
during the financial year;
c) Details on any loans and borrowings by the Government during the financial year;
d) Details of guarantees and borrowings by the Government during the financial year as
per budget and actual guarantees and borrowings;
e) Details of Government contingent liabilities ;
f) Summary of liabilities in existence at end of financial year which have been carried
forward ( “ rolled over “ ) to be paid from the next year’s budget.
g) Other information considered to necessary to provide clarity to users of the financial
statements.
10.6.4 The detailed reporting requirements and formats are provided in Chapter 12.

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10.7 ACCOUNTING PRINCIPLES AND SYSTEM


10.7.1 The accounts are to be maintained on double entry book-keeping principle on a system that
enables preparation of the financial statements, and capable of maintaining retrievable
documentation for each individual transaction.
10.7.2 The government of Timor-Leste has implemented an automated accounting system that
contains the basic processing tools: accounts, debits and credits, journals, and the general
ledger.
10.7.3 The Accounts shall comprise the records that are kept for the individual cash, advances,
revenue and expense components. For transactions that are carried forward from year to
year but the accounts only record current year transactions a Memorandum Account is
maintained that provide details of balances brought forward, transactions in the year to
arrive at balances at the end of the year .
10.7.4 All accounts, collectively, shall comprise the government’s General Ledger (G/L). The G/L
thus is a complete and detailed account of all transactions for all ledgers /accounts.
All Cash accounts of Government collectively shall comprise the Treasury Single Account
(TSA)
10.7.5 The accounting transactions shall be posted using the standard accounting tools of debits
and credits which describe the change in a particular account that is necessitated by a
transaction, such that every transaction can be described in debit/credit form and for every
transaction, debits are equal to credits. The following rules shall be followed:
i) Assets/Expenses - Debits increase these accounts and credits decrease these accounts.
These accounts usually carry debit balance.
ii) Liabilities/Revenues - Credits increase liabilities, revenues, and equity
(Surplus/Deficit for government), while debits result in decreases. These accounts
normally carry a credit balance.
iii) At the end of fiscal year under double entry concept – total of debits equal total of
credits

10.7.6 Accounting journals are to be posted to log the transactions in a chronological listing. Each
recorded event called a “Journal Entry” (JE) in the Timor Leste’s automated accounting
system uses journals to log all transactions in the financial management system. Journals
conform to normal accounting transaction reporting principles where debits equal credits.
All manual journal entries in the General Ledger must be approved for posting by someone
other than the preparer and validated by a third person.
10.7.7 Each recordable transaction will be evidenced by a "source document" that supports the
underlying transaction. Each of such source document eg. a cheque or TPO, a revenue
receipt, journal vouchers etc. need to be retained as per specified policy in the form and
period for which stipulated, as an important part of the records supporting the various debits
and credits that are entered into the accounting records. The source documents are
supported by other documents that substantiate the expense or income. For example a
cheque or CPV will have the relevant contract, Purchase Order, Goods Receiving Note etc
to validate the expense. Similarly a Revenue Receipt will have a taxpayer return or import
bill of lading to validate the import duty. In the case of Revenue Receipts the relevant

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source documents are retained in the National Directorates responsible for collecting the
revenue such as NDDR and Alfandegas
10.7.8 Adequate controls need to be built into the accounting system to make sure that all
transactions are fully and correctly captured in respect of amount and accounting period of
the transaction, have been posted to the correct expense / revenue code and entered in the
correct Debit / Credit section of the General Ledger.

11.8 SETTING UP OF ACCOUNTING SYSTEM AND OPERATION


10.8.1 The Chart of Accounts for the financial year is finalized and updated in the accounting
system.
10.8.2 The bank accounts are setup and opening balances are entered in the system only after
completion of the bank reconciliation. The G/L offset codes are entered in the system for
bank accounts.
10.8.3 The budget appropriations are entered in the system.
10.8.4 The Allotments are entered in the system.
10.8.5 The control levels within the allotments are entered and updated in the system as per
changes.
10.8.6 Virements have been properly approved and have been entered in the system

10.9 ACCOUNTING SYSTEM OPERATION


10.9.1 The automatic Journal Vouchers are posted in the system. These include JVs for -
(i) All expense vouchers (EVs) for payments for salary & wages, goods & services,
transfers etc.
(ii) All expense vouchers for purchase orders (EVPO) for goods and services and capital
items going through the purchasing system.
(iii) Payment extract related JVs
(iv) Receipts posted in the system using information from bank deposits of Govt.
Revenues

10.9.2 The manual JVs posted in the system for correction of mis-classifications, reversals of
invalid transactions, retirement of advances, return TPOs, errors in posting etc.
10.9.3 The Trial Balance is prepared after all transactions have been posted in the system (in
manual system posted from the journal to the ledger). The trial balance is simply a listing of
the ledger accounts along with their respective debit or credit balances and is a self-check
mechanism to determine that debits equal credits. In the Government GRP system, there is
an automatic check that the Debits equal the Credits. Therefore there should be an
automatic check of balance. Due to this check feature the balancing errors in the General
Ledger are unlikely and errors arise primarily due to incorrect postings to coding blocks
including fund sources and postings in incorrect periods. However as part of any accounts
close, whenever a trial balance is drawn the accounting staff should check as part of quality
control that the total Debits match the Credits.

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10.9.4 Correcting journal entries from errors in original posting are posted when errors are
identified during reconciliation or routine investigations if an entry has been posted twice in
error then a reversing entry is posted to reverse one of the entries, leaving only the original
entry on the books of account. When an Asset or Expense which should be a debit entry
has been posted as a Credit entry or Liab / Revenue posted as Debit entry that two further
entries are requied. One to reverse the error and a second to make the correct posting.

10.10 PROCESS FOR MONTHLY ACCOUNTS CLOSURE


10.10.1 The monthly accounts closure process is required to be performed on the last working day
of the month, or at latest by last calendar day of the month.
10.10.2 The revenue data for a month is posted for the last day data which has been received from
the bank by the Treasury. Eventually, the revenue collecting agencies would be accessing
and posting the revenue data into the system. The complete revenue data should have been
posted in the system by the prescribed date but never later than the subsequent month end
after close of accounting month e.g. revenue collection data for month of February
mandatorily posted into system by March closing.
10.10.3 All Expense Vouchers ( EVs )posted in the system have been approved in the system (within
normal approval time possibly for last 2 days). In the case of December closing, all EVs
must be approved. There should be no outstanding EVs any non approved EVs should be
cancelled and all postings in GRP relating thereto should be reversed. However when
reversing check should be made if the services / goods have been delivered. If they have
ensure that the “ non financial debt “ is recorded in the register of non financial debt and
reported in the year end financials so these can be processed and paid from the following
year’s Budget.
10.10.4 TPOs /cheques for all EVs approved in the system have been prepared (except for last 2
days). In December all TPOs / Cheques must be prepared i.e. recorded in system as
payment in cash account even if not delivered to BCTL.
10.10.5 TPOs / cheques for all EVs approved in the system in the previous month (eg. June approved
EVs) have been either issued in the reporting month (July) or reversed. For December any
EVs not approved must be reversed and posted in Period 13.
10.10.6 All approved EV reversals have been posted in the system during the month.
10.10.7 All JVs for corrections, advance retirements received during a month have been finalized
and posted in the system.
10.10.8 All “temp” saved EVs and JVs have been finalized and either posted or deleted from the
system.
10.10.9 All Letter of Credits issued have been posted in the system.
10.10.10 Bank Reconciliation for all bank accounts / funds has been completed for the previous
month (eg. for July account report, Bank reconciliation statement for June account) and
consolidated BR statement prepared and approved by Director DNCRF or Head of
Accounting & Reporting Unit.
10.10.11 Reconciliation between the payroll data and G/L in the FA module has been completed for
the previous month and approved by Payroll Unit Head and DN Payments

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10.10.12Time barred cheques (un-cashed cheques older than 6 months ) must be notified to Central
Bank and BCTL instructed that that there is to be no payment of that cheque in future ,
BCTL must confirm that the cheque has not been processed and will be returned unpaid if
presented in future. Once this confirmation is received the amount in the cheque must be
written back in the accounts.
If the writeback of the cheque is within the same financial year, then the credit can be given
to the coding block it was originally charged by cancelling and reversing the original EV
and clearing the related Accounts Payable. When doing so the Reversal EV must not only
be created but also approved for cancellation. This will enable the money to be spent for
any expense within the same budget appropriation category as the obligation will become
available for use.
If the writeback is in the different financial year, then the credit must be made to Other Non
Tax Revenue by JV. No EV Reversal is necessary.
10.10.13 System integrity check must be done and database must be confirmed to be in balance.
Database reconstruct to be done if it was out of balance.
10.10.14 Once in balance the Trial balance is prepared for any errors identified steps taken to rectify
discrepancies by preparing and posting Journal Vouchers.
10.10.15The Month end closure and New month opening in the FMIS has to follow the procedures in
the system documentation. These essentially involve setting system to single-user access at
time of the operation, all period-end data imports and exports, production of required
reports for current month, including bank reconciliation, backing up of database. This
notification is made by the Head of the Accounting & Reporting Unit or higher and the
system in the new month should only be opened after IS Unit has confirmed that the data
back up has been successfully completed.
10.10.16 A complete checklist of Month End Closing process is provided at Appendix II B.

10.11 MONTHLY ACCOUNTS AND REPORTS


Based on the daily operations and adoption of the month-end closing process, the monthly
accounts are prepared and reports generated. The content and formats of these reports are
provided in Chapter 11.
The format and content of the reports are to be reviewed at least annually to determine if any
additional information is necessary for greater clarity and transparency for end users. These
can also be modified when changes in reporting are requested by Executive Office or
Tribunal das Contas or where Budget Law requires modifications to how Budget Execution
is presented.

10.12 BANK RECONCILIATION PROCESS


10.12.1 Bank reconciliation enables comparison between the Treasury’s cash book with the bank
statements to identify transactions omitted in either document or different between the two
documents. This includes checking that all payments and receipts in the cash account of
General Ledger have been entered exactly in the bank statement and that all bank charges,
interest and direct debits as well as direct credits have been recorded in the cash book.

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10.12.2. The variations arise due to posting/entry differences in either cash book or bank statement
and timing differences between recording GL entries and posting in the bank statement.
10.12.3 Bank reconciliations are required for each bank account maintained by Treasury. At
present there are three funds for which separate accounts are maintained in the Central
Bank.
1. CFET (Consolidated Fund of East Timor)
2. Infrastructure Fund
3. Human Capital Development Fund (FDCH)
In addition to the above three, Treasury has opened sub accounts for various Autonomous
Agencies and Municipalities. More accounts and sub accounts may be opened in future
based on Council of Ministers’ decisions and for operational needs. All bank accounts
opened need Treasury approval.

It is the responsibility of the entity for whom the sub account has been opened to prepare
bank reconciliations and ensure there are no outstanding reconciling items that require
correction in the General Ledger

10.12.4 Should the GRP system have a bank reconciliation feature, this should be used. If not the
reconciliation should be completed manually using the Excel matching feature.. If the bank
reconciliation utility is available in the GRP system the bank statements should be uploaded
and matched to the GL Transactions to identify and investigate unmatched items. Any
errors identified should be corrected via Manual Journals which must be reviewed and
approved in accordance with Treasury procedures. However it is essential that financial
statements are only prepared after the reconciliation is completed. It is essential that
financial statements especially annual and preferably quarterly financial statements are only
prepared after the relevant reconciliation is completed
10.12.5 The reconciliation matching process takes into account the following:
10.12.5.1The reconciliation module of FreeBalance will match the payments and receipts
incorporated in FreeBalance from the bank statement of BCTL with the FMIS recorded
transactions for revenues and expenditures Expense Vouchers.
(i) For Debits in the bank statement, the matching is to be done against the following items
1. TPO/ cheque No.
2. TPO / cheque date
3. TPO / cheque amount

(ii) For Credits in the Bank Statement i.e. receipts, the matching is to be done for the
following criteria:
1. BCTL Code / Job Number
2. Transaction amount
3. Transaction date

10.12.5.2 In addition to the above routine matching items, non reconciling transactions can also
appear in the bank statements. For all these situations, SOPs have been prepared to enable
staff to process the reconciliation correction. These SOPs including the SOP for
reconciliation should be referred to

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1. Non-reconciling items arise primarily due to the following causes -
i. Non-posting of cancelled cheques in FreeBalance which therefore continue to show
as cheques in the system but will never appear in the BCTL statement.
ii. Redeposit of unspent balances in the bank and not accurately posted in FB or not
posted at all or posted in the incorrect period.
iii. Returned or rejected payment instruments which bank has credited without adequate
information due to wrong bank account or beneficiary name details
iv. Lapsed or time-barred cheques still appearing in the FreeBalance.
v. Bank charges, Interest etc as reflected in the bank statements but not yet reflected in
FreeBalance. In addition returned cheques or TPOs may have charges deducted at
source and so preventing a direct match.
vi. Variations in the cheque details (number and amount) as recorded in the
FreeBalance and shown in bank statement.
vii. Receipts coming directly into BCTL from different agencies for tax or other items.
viii. Transactions relating to other Govt. of Timor-Leste bank accounts posted by bank
to the wrong account
ix. Error by bank posting non Govt. of Timor-Leste transactions to the bank account
being reconciled

If there are transactions not covered by existing SOPs this should be brought to the attention of the
Director or Subject Matter Expert so that instructions can be provided on how the reconciliation
should be completed and SOPs prepared for the specific circumstances for future reference.

10.12.6.3 Variations due to timing difference between the bank statement and the cash book balances
arise due to absence of cheque payments not cleared by the bank in the bank statement,
known as “unpresented cheques / TPOs”
10.12.6.4 Amounts paid into the bank that have not cleared, known as “uncleared deposits” may also
be part of the difference. In these situations the bank balance is not current and must be
adjusted to take these items into account.
10.12.6.5 The detailed process and actions required to be taken to clear these various un-reconciling
categories / items are provided in the Bank Reconciliation SOP
The format for the Bank Reconciliation Statement for a month (July 2012 here) is as follows:

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Bank Reconciliation Statement for the Month of July 20XX

Account US$ US$


Cash Book balance as at 31st July 20XX XXX
Add cheques TPOs issued but not presented to the Bank XXX
Add Receipts in Bank not in Cash Book / GL XXX
Less Payments in bank not in Cash Book / GL XXX
Less Receipts in Cash Book not in bank XXX
Bank balance as at 31st July 20XX XXX

While there could be situations where Receipts in bank are not in the GL or payments in bank are not
in GL for the monthly reconciliations, this should not be the case for the year end reconciliation.
The only outstanding items in year end reconciliation should be Cheques / TPOs not presented to
bank and Cash deposits recorded in Cash Book / GL ( e.g. transfers from Petroleum Fund to CFET
on 31st December already posted in GL but which the bank may only post in the Bank Statement on
January 3rd of next year ) not yet posted in Bank Statement at year end – i.e. timing differences
where the bank will record certain payments or receipts in the new year should be the only
reconciling items at the year end bank reconciliation as follows :

Bank Reconciliation Statement at 31st December 20XX

Account US$ US$


Cash Book balance as at 31st December 20XX XXX
Add cheques TPOs issued but not presented to the Bank XXX
Less Receipts in Cash Book not in bank XXX
Bank balance as at 31st December 20XX XXX

The reconciliation could also be prepared showing the bank balance at the top. In that situation the
reconciling items would be reversed - i.e. Less Cheques / TPOs not cleared by bank and Add
Deposits not yet credited by Bank to arrive at Balance per Cash Book.
Both formats are acceptable so long as the Bank and GL balances are reconciled and reconciliation
only contains timing differences applicable to the bank.
10.12.7 Following the period end, the outstanding item representing timing differences should be
checked off in the bank statement to ensure they are subsequently cleared . Uncleared
deposits should be followed up with BCTL on the cause of non recording and rectified.
TPOs being electronic transfers should not be uncleared as it should have been processed to
the commercial bank However should TPOs (if any) and cheques are uncleared for longer
than six months they will not / should not be processed by BCTL and so a formal
notification should be sent to DNP and BCTL that because of the long period these
outstanding items should be reversed and if they are presented to the BCTL after the date of
notification such submissions should be rejected. On receiving confirmation from BCTL

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and acknowledgement from DNP the cancelled outstanding cheques / TPOs should be
credited to other non tax revenue in the year in which write back takes place.

10.13END-OF- YEAR (EOY) OPERATIONS AND PROCESS FOR ANNUAL


CLOSURE OF ACCOUNTS
10.13.1 End of year operations are a systematic process for closure of a financial year and
completing the related activities leading to the year end reconciliation of the cash and
accounts payable accounts, as well as preparation of the financial statements for the period.
It involves the process of reviewing and adjusting all accounts to ensure that they
accurately reflect the activities for the fiscal year and is the final step in the accounting
cycle before preparing a financial statement.
Effective Fiscal Year 2015, the responsibility for review of the financial statements was
returned to the Tribunal das Contas. Consequently, the financial statements are prepared by
Treasury based on cover letter from Her Excellency Minister, submitted to Office of Prime
Minister which Office shall formally submit the statements to National Parliament,
Tribunal das Contas and Members of Government.
10.13.2 The EOY process basically involves activities leading to two distinct stages:
a) Close of period 12 which signifies December closure in the FreeBalance and requires all
usual completion of activities as an accounting month.
b) Close of period 13 which signifies the period for posting residual transactions, corrections
arising from reconciliation of bank and accounts payables, re-deposits of unspent
advances, posting of retirements. The Financial Statements are prepared on this basis
prior to submission to Office of Prime Minister.
c) Due to decentralization of operations to Autonomous Agencies and Municipalities,
Treasury also has responsibility to consolidate the statements for CFET, Special Fund,
Autonomous Agencies and Municipalities and other entities that operate via the sub
account facility of BCTL Statement of Receipts and Payments for Whole of Government
are included in the CFET Financial Statements.

10.13.3 Activities to be completed for End-Of-Year Accounts Close are -


1. DNP and DNCRF to jointly prepare a End of Year Accounts Close - Calendar of
Activities and Dateline of Events. It is the responsibility of the Xefe of Accounting and
Reporting to monitor these activities via checklist and ensure all required activities are
completed.
2. All agencies to be advised of Document submission and Deposit of unspent advances and
Petty Cash via Finance Circular. It indicates date by which payment requests for goods /
services delivered during the year are accepted should be submitted to Treasury. Once
established any changes in this date up to by 31st December can only be made by Office
of Prime Minister.
3. If Payment Requests of Line Ministries or Agencies are not processed in GRP by 31 st
Dec. and therefore not paid / TPO issued, then the budget allocation will lapse and the
payment will have to be in the following year to be paid out of the next year’s budget.
4. All open POs to be closed subsequently.
5. All Line Ministries, Autonomous Agencies Municipalities and other entities included in
Whole of Govt. Reporting are required under Budget Execution Decree Law and Finance
Circular to submit to Treasury – DNCRF a summary of goods and services received by

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Govt. before 31st Dec. 20XX but which have not been paid on that date. These have to be
disclosed as non financial debt in the financial statements.
6. Complete the posting for all transactions for revenue received in bank statements up to
31st December into GRP revenue accounts.
7. Ensure that no Goods Received Notes are pending for invoices in the system.
8. Complete the approval process for all Expense Vouchers posted in the system till 31st
December or last working date of financial year if earlier.
9. Ensure that TPOs /cheques for all EVs approved in the system have been prepared even if
they have not been delivered to Banco Central.
10. Complete posting of all approved reversals for EVs.
11. Finalize and post all JVs for corrections, advance retirements received during the year.
12. Finalize all “temp” saved EVs and JVs and either post or delete from the system.
13. Complete posting of all Letters of Credit that have been issued. .
14. Ensure that the reconciliation between the payroll data and G/L in the FA module has
been completed at least till November account.
15. Review that the detailed description for the contingency funds utilization are available in
the system, else approach concerned agencies for details.
16. Perform the System integrity check to confirm that the database is in balance. Perform
Database reconstruct procedure if it was found to be out of balance.
17. Close Period 12 and notify IS Unit to take back up
18. Open New Year
19. Open Period 13. This signifies the period for posting residual transactions and journals
for rectification, adjustments arising due to complete bank reconciliation being done and
trial balances prepared.
20. Review system access rights and assign Period 13 posting rights only to key designated
staff.
21. Complete posting of any revenue transactions banked till 31st December if not posted in
period 12.
22. Obtain confirmation of revenue per account analysis report of all revenue line items with
collection agency. Retain confirmation as statement preparation work papers.
23. Ensure bank reconciliation completed and required adjusting entries are posted.
24. Complete cycle for all commitments posted in the system by acting upon them to either
convert them into EVs or to close them and drop the commitment amounts held in them.
25. Ensure all Expense Vouchers are approved in the system and cheques / TPOs prepared for
them. If not to be approved, then reversal EVs are to be prepared and posted in the
system.
26. Complete posting of all petty cash and advance retirements through the JVs.
27. Complete posting for details of acquittal of all embassy advances received.
28. Ensure that no Purchase Requisition and Purchase Orders are pending in the system. All
outstanding POs to be closed.
29. Complete reconciliation between the payroll data and G/L accounts for salary & wages in
the GRP module.
30. Notify BCTL after acknowledgement from DNP that Cheques and TPOs ( if any) that are
outstanding for more than six months are to be cancelled . Once acknowledgement is
received from BCTL the write back to Other non tax revenues should be journalized . The
write back credit to the original cost coding block can be made only if this write back is
being made in the same fiscal year i.e. a Cheque issued in March 20XX can only be
written back to original cost coding block if done so in Oct , Nov or Dec. of 20XX
31. Investigate and clear all unmatched / uncleared Accounts Payables entries by posting
appropriate JVs.

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32. Identify all controlled entities forming part of the accounts. Identify all flows within such
entities and net out these transactions to consolidate the accounts for Whole of
Government reporting so as to conform to the IPSAS cash basis.
33. Validate tax deduction from payroll captured in system with the gross payments made
and tax deductions in the G/L.
34. Obtain final list of all virements from the Budget Directorate and validate with the
FreeBalance appropriations.
35. Validate Infrastructure Fund projects expenditures (which are below appropriation
category controls) for no negatives as controls at Treasury exist only at program level. In
case of negatives, take up with Budget Directorate to confirm the position as this shall
affect the rollover of funds for next year.
36. Identify transactions from reconciliation where payments in a BCTL account has been
paid from another account. These are required to be posted as receipts / payments
between funds through the Settlement Account.
37. Ensure that the withholding tax deducted for Infrastructure Fund, HCDF and other Govt.
entities have been transferred to the CFET account and recorded as revenues.
38. After all discrepancies have been rectified run the Trial Balance
39. Undertake physical cash / assets verification in conjunction with GAI and Tribunal das
Contas
40. Review the contingency fund utilization matches the Trial Balance ensure the
descriptions are approved by Executive Office prior to inclusion in the financial
statements.
41. Update the investments schedule of investments made by Govt. during the year and add
to list of investments of Govt.
42. Send for confirmation of Loans from Debtors and update work papers
43. Obtain staffing profile from Payroll Office
44. Obtain confirmation of balances from commercial Banks and BCTL including details of
Letters of Credit of all bank accounts
45. Prepare supplementary statements of Budget Execution of Line Ministries , Autonomous
Agencies and Municipalities
46. Complete IPSAS Disclosure Checklist to ensure all disclosures are included
47. Request DPMU to request all donors to confirm level of support provided to Timor Leste
48. Obtain from Whole of Govt. details of external support provided to overseas countries by
Timor Leste
49. Adopt the period closing operations in the FMIS by following the procedure available in
the system documentation. These essentially involve setting system to single-user access
at time of the operation, all period-end data imports and exports, production of required
reports for current month, backing up of database.
50. Prepare draft financial statements conforming to IPSAS and submit to DG Treasury and
DN – DNCRF for approval
51. Review the Treasury year-end closing checklist to ensure that all areas have been
addressed.
52. Close Period 13 take back up and freeze database to prevent changes through user
access control

10.13.4 A master checklist of EOY process is provided at Appendix II C.

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CHAPTER 11
CASH AND DEBT MANAGEMENT

11.1 OVERVIEW OF CASH MANAGEMENT


11.1.1 The features of the Government Cash Management System (CMS) include:
• Centralization of government cash balances at the Central Bank and establishment of a
TSA structure comprising CFTL,sub accounts for Autonomous Agencies and
Municipalities and Special Fund accounts.
• Clear understanding of the coverage of the cash planning framework
• Regular communication with Budget Execution entities on their cash needs and their
ability to accurately forecast the same
• A robust transaction processing and accounting framework established through
implementation of the FreeBalance FMIS.
• System of timely information sharing between the Treasury, revenue-collecting agencies,
Budget Execution Entities and the Central Bank.

11.1.2 The system is further strengthened through (i) establishing appropriate institutional
arrangements and responsibilities, (ii) utilization of modern banking, payment, and
settlement systems; (iii) use of short-term financial market instruments by the Petroleum
Fund for cash liquidity; (iv) developing linkages between cash management,
commitment/obligation control and (v) integration of debt and cash management .

11.2 CASH MANAGEMENT SYSTEM


11.2.1 In government of Timor Leste, the cash management system involves several agencies viz –
(i) Treasury and Other branches of MoF
(ii) Revenue Collecting agencies, as detailed in the section on revenue collection
procedures.
(iii) Line ministries Autonomous Agencies and Municipalities and Independent
Authorities such as ZEESM
(iv) Central Bank
(v) Petroleum Fund

11.2.2 The Minister shall establish a Treasury Single Account through which sub-accounts of
government agencies are managed as one from cash flow perspective.
11.2.3 In order to maximize Petroleum Fund revenues by keeping as much funds invested in Fund
Assets operating cash balances shall be kept to a minimum through consolidation into a
Treasury Single Account and managing these balances efficiently. .
11.2.4 While the Minister of Finance has the overall responsibility for the Cash Management
function, the Director of Treasury is responsible for operational cash management. This has
been facilitated by the creation of a Cash and Debt Management Unit. In order to ensure
efficient management of government cash resources the unit is mandated to perform the
following basic functions:

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(i) Using the State Budget Law in Jornal Republika, prepare an annual consolidated cash
flow plan after seeking input on timing of payments during the year especially from
the larger spending agencies such as Infrastructure Fund and ZEESM and social
benefit / public transfers. Use also the experience of prior years to prepare cash
inflows and cash outflows on a monthly basis to derive monthly shortfalls or
surpluses.;
(ii) After internal discussions, consolidate the revenue and expenditure of government for
accurate forecasts and basis for Treasury cash flow decision making processes;
(iii) Using the annual forecast as baseline and monthly inputs from key Line Ministries,
Autonomous Agencies and Public Entities develop monthly cash requirement
forecasts.
(iv) Annual and monthly cash requirement forecasts should be submitted for review and
approval to DN of DNCRF and DG Treasury after which they should be forwarded to
PFAU and Central Bank to ensure Petroleum Fund liquidity can be efficiently
managed.
(v) Include in the Monthly Management Report to be submitted to Executive Office the
actual outturn compared to the planned cash flows, showing variances and remedial
measures if there are negative variances;
(vi) At least monthly the Cash and Debt Management Unit should provide a verbal update
on the financing implications of the actual to planned annual cash plan and cash
forecasts to the National Director DNCRF and Director General of Treasury.
(vii) This update to Senior Treasury Officers will determine if bank balances and cash
movements are in accordance with plan and if they are being managed in an efficient
manner;
(viii) In addition to the above, the Cash and Debt Management Unit should monitor the
daily cash position at BCTL for CFET and Special Funds if any to ensure these are in
line with projections and if there have been unplanned cash outflows, then
documentation to transfer funds from Petroleum Fund to CFET or from CFET to
Special Funds should be provided for approval and dispatch by DN – DNCRF and
DG Treasury.
(ix) As part of regular Unit assessment and improvement, reasons for unplanned cash
flows should be investigated and used to improve the cash forecasting process.

11.2.5 Responsibilities For Cash Flow Planning


a) The Overarching Rule in Whole of Govt. Cash Flow Planning is – Keep as much
funds as possible in the Petroleum Fund – withdraw only on an as required basis to
achieve an optimal Cash Float of US$20-US$30 million in Q 1 – Q3 and US$60
million in Q 4, leaving a year end balance sufficient for transfers to Autonomous
Agencies, Municipalities and other Agencies as well as January payments.
b) Each government Line Ministry, Autonomous Agency and Municipio is responsible
for establishing systems, procedures, processes and training and awareness
programmes to ensure calculating accurate funding requirement based on CPVs in the
pipeline and timing the needs for effective cash management.
c) It is the responsibility of the person in charge of finance and accounts at the Line
Ministries and Infrastructure Fund to submit Treasury Cash and Debt Management
Unit an indicative cash flow requirement updated by month and quarter) showing
payment forecasts by January 31 of each year. This should be updated quarterly and
then updated weekly in November and December of each year.;

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d) Revenue-generating government agencies shall submit to the Minister annual revenue
projections broken down by month and by quarter to match the budget forecasts by
January 31 of each financial year;

11.2.6 In-year Cash Flows and Changes in Plans


1) Heads of Finance Functions in Line Ministries and Autonomous Agencies of
Government shall, within seven days of the preceding month, submit after approval
of their Minister any changes to their monthly and quarterly cash flow plans;
2) Treasury shall use the updates to modify the monthly and quarterly cash management
plans.
11.2.7 Treasury will ensure that amount of funds withdrawn from the Petroleum Fund does not
exceed the limits approved by Parliament for the financial year.
11.2.8 Treasury is required to notify to National Parliament through the office of the Prime
Minister when each withdrawal above ESI is made from the Petroleum Fund
11.2.9 The annual cash requirements forecast and monthly updates as they are also copied to
PFAU and BCTL will assist the Petroleum Fund to ensure there is adequate but not
excessive liquidity and unplanned withdrawals of investments are not required. .

11.3 OVERVIEW OF DEBT MANAGEMENT SYSTEM


12.3.1.1 The outline of the debt system outlined in the Public Debt Regime Act No. 13/2011
provides for financing of State Expenditures through public debt and establishes the
respective referential regime.
11.3.1.2 It is incumbent upon the Finance Minister to negotiate the specific conditions for each loan
or other modality of public debt and to contract loans or issue debts on behalf of the State,
following authorization by the Council of Ministers.
11.3.1.3 The public debts may take on the following modalities:
a) Loan Contracts or Funding Agreements;
b) Treasury Bonds;
c) Savings Certificates.

11.3.1.4 Article 7 of the Public Debt regime makes it incumbent upon the Finance Minister, for
efficient management of public debt and optimal terms and conditions for loans to conduct
the following public debt management operations:
a) The issuance of various types of loans;
b) Increase in appropriations for repayment of capital;
c) Full or partial advance payment of contracted loans;
d) Conversion of existing loans, in the terms and conditions of the issuance or the
contract, or by agreement with the respective loan holders whenever current financial
market conditions so warrant;

11.3.1.5 The regime also gives authority to the Finance Minister to change interest rate regimes,
currency regimes, as well as other financial conditions, including forward transactions for
efficient public debt management.

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11.3.1.6 The Finance Minister is also responsible for ensuring the issuance of new public debt titles
in substitution of destroyed, deteriorated or lost titles, pursuant to applicable legislation.
11.3.2.1 All financial obligations undertaken on behalf and for the account of the Government of
Timor-Leste in full compliance with the Budget and Financial Management Act 2009,
shall be government debt, and shall be a liability of the government.
11.3.2.2 All government borrowing terms and conditions shall be consistent with Articles 20-21 of
the Budget and Financial Management Act 2009.
11.3.2.3 It is the responsibility of the Cash and Debt Management Unit of Treasury to monitor ,
record and report on Public Debt through the annual financial report
11.3.2.3 Where the government debt is to be revalued in US dollars, obligations denominated in
foreign exchange other than the United States dollar shall be translated at the exchange rate
on date of revaluation provided by the Central Bank of Timor-Leste.
11.3.3 For financing strategic infrastructures for national development, the Government is
authorized under the article 20 of Law no. 13/2009 and article 3 of Law no. 13/2011 to
negotiate concessional external borrowing up to a maximum amount of $160 million, with
a maximum maturity of 40 years. As provided in the public debt regime, the Annual State
Budget indicates the maximum borrowing threshold for funding strategic infrastructure of
the country.
11.3.4 The designated Debt Management Authority is the Cash and Debt Management Unit
11.3.4.1 The designated authority to monitory manage and report on Govt. Debt for a respective
year must disclose :
(a) The maximum amount of the new government debt and the government guarantees
which may be undertaken throughout the year;
(b) The maximum amount of government debt as at the end of the budget year.

11.3.4.2 All financial obligations for which the designated authority has issued guarantees on behalf
and for the account of the government, in full compliance with the Budget and Financial
Management Act 2009, shall be government guaranteed debt.
11.3.4.3 The Finance Minister shall have oversight of the negotiations on the extension of a
government guaranteed loan, and shall undersign on behalf of the government agreements
on the issuance of a government guarantee or guarantee letters pursuant to a designated
authority’s decision.
11.3.4.4 The designated Debt Management Authority shall participate in the negotiations of
government guaranteed loans and support the Minister such that any proposals for
amendments to the loan or guarantee agreement, in the cases of government guarantees
already issued, shall be made with the prior approval of the Minister in consultation with
the authority.
11.3.4.5 The terms and conditions that projects apply for government guaranteed financing should
meet, and the government guarantee issuance procedures shall be defined in the Loan
agreement and recorded for monitoring and compliance by the Debt Management authority.

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11.3.5 Information on the Public Debt should be included in the Monthly, Quarterly and Annual
Reporting Statements published by Accounting & Reporting Unit of DNCRF
11.3.5.1 The Government is required to provide the National Parliament with periodic information
on request and at least quarterly information relating to Govt. Public Debt and the specific
conditions of the contracted loans and other forms of public indebtedness ( if any ), as well
as on the debt management operations.
11.3.5.2 The reports are to be submitted pursuant to articles 44 and 45 of Law No. 13/2009 of 21
October as amended by Law No. 9/2011 – Organic Law of the Chamber of Accounts of the
High Administrative, Fiscal and Audit Court.
11.3.5.3 To facilitate this, the Treasury in the Ministry of Finance shall maintain an official register
of the government and government guaranteed debt. This register may be maintained via a
Debt Management Software, Excel Worksheets or Manual Records
11.3.6 Responsibility of Treasury for Borrowings by the Government – This responsibility is
shared between Treasury and PPPLU based on Directive of 2016 by Her Excellency,
Minister of Finance.
11.3.6.1 Treasury will account for all borrowings of the Government in accordance with the
agreement entered into between the Government and the lending agency.
Where after review and approval by MPS and ADN, payments to contractors and other
parties from loans are to be made, documents submitted will be reviewed for compliance
with Financial Regulations before being sent to Project Management Unit for onward
transmission to the Lending Agency.
The Lending Agency will pay the amounts due directly to the vendor. The funds are not
received in the BCTL bank account of Government. Consequently only the funds paid by
the Lending Agency during the fiscal year will be recorded both as receipts (as it was paid
on behalf of Govt. of Timor Leste and as payments ( due to payments made to vendors )
resulting in increase in Loans outstanding.
11.3.6.2 Treasury will coordinate with Directorate of Budget, Economic Policy Unit and PPPLU to
ensure that adequate funds are included in the budget and approved by National Parliament
to enable new loans to be negotiated and to make payments of principal and interest due in
each financial year.
11.3.6.3 Treasury will be responsible for ensuring the timely repayments on the loan as and when
due and for interest thereon to be made after calculations have been checked in accordance
with the provisions of the agreement with the lending agency.
11.3.6.4 Treasury will be responsible for accounting for the repayments made to the borrowing
agency and in ensuring that the correct amounts relating to principal and interest are paid to
the lending agency.
11.3.6.5 Treasury will reconcile accounts annually with the agencies from which borrowings have
been made by obtaining and agreeing details of amounts outstanding , charges paid and
capitalized and compliance with covenants from each lending agency.
11.3.6.6 The Legal Unit will maintain the original documents of all borrowing instruments while
Treasury shall maintain copies of those documents.

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Bank Guarantees
11.3.7 In all cases where an advance payment is demanded by a contractor as condition to
commence any kind of work relating to execution of the contract, an irrevocable bank
guarantee drawn in favor of the Government of Timor Leste, equivalent to the amount
being given as an advance would have to be provided to the Treasury by the contractor.
Where signing of a contract necessitates payment to a contractor and the goods / services
will be delivered after the end of the fiscal year, the contractor is also required to provide a
bank guarantee equal to payments made and goods have not been delivered.
For guarantees the roll over to the following fiscal year, the bank from which the guarantee
is obtained is determined by the dollar value of the bank guarantee. The higher the dollar
value the better the credit rating of the bank needs to be. This is detailed in the Budget
Execution Decree Law. The contract should dictate who should bear the cost of the
guarantee otherwise it should be borne by the contractor.
It is essential in these cases that the period of validity of the bank guarantee extends beyond
the date of delivery of the goods / services. Otherwise the guarantee will need to be
extended incurring additional costs
Guarantees can only be allowed to expire after Treasury has been notified and approved the
closure / cancellation of the guarantee. This must be included in the Terms & Conditions of
the Guarantee Agreement .

Letters of Credit
11.3.8 Treasury will open Letters of Credit with designated commercial banks in Timor-Leste if
the terms and conditions of a contract so demand. A request for the opening of a Letter of
Credit should be addressed to the Director of Treasury giving all the details required to do
so and attaching a copy of the contract with the request. The Treasury will extend the
validity of Letters of Credit based on the requests to do so from the concerned Ministry or
institutions after examination of the original or amended contract.
Details of the operations of and accounting for LCs are covered by the LC SOP.

11.4 LOANS BY THE GOVERNMENT


11.4.1 Article 21 of Budget Financial Management Act provides for Loans by the State and
stipulates that -
1 – The Government may loan money to legal persons provided that:
a) The details of the operation, reimbursement of interests, non-compliance and loan
redemption conditions are duly set in the law;
b) The law and the title of the debt contain provisions regulating noncompliance,
namely enabling the Government to demand the anticipated reimbursement of the
entire capital and interests in the event of noncompliance or delay to comply;
c) The Government credit, whether in terms of capital or interest, is fully insured in
case of noncompliance.
2 – The conditions of the loan may only be altered:
a) By law;

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b) By the Government, in accordance with an opinion by an independent auditor,
justifying the lack of existence of objective conditions for recovering the debt or
part of it.
3- Where legislation is passed permitting the Government to lend funds to Government
Employees and deducted from future salary payments to the employee, these loans must
be recorded in the GRP and shown as an asset of Govt. While the Govt. continues to adopt
IPSAS Cash Basis details of these assets can only be shown via Notes to Accounts other
than loans made during the year and loans collected from payroll deductions during the
year.

11.4.2 Responsibility of Treasury in Lending by the Government


12.4.2.1 The Treasury will ensure that all lending made by the Government will be accounted for in
accordance with agreements entered into by the Government with the borrowing agency.
11.4.2.2 The Treasury will responsible for accounting for the repayments made by the borrowing
agency and in ensuring that the correct amounts relating to principle and interest are paid by
the borrowing agency.
11.4.2.3 Treasury as part of accounts closing and reporting process will obtain confirmation for all
individual debts > 5% of total debts and a sample of smaller debts to enable reconciliation
of verification of balances with parties to whom loans have been made.
11.4.2.4 Payroll must maintain the original documents off all government staff lending agreements
while Legal Unite must retain originals of other Government Lending agreements, with
Treasury keeping electronic copies

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CHAPTER 12
AUTONOMOUS AGENCIES & MUNICIPALITIES BUDGET
EXECUTION
Pursuant to the decisions of the Council of Ministers and endorsed by National Parliament in State
Budget approvals, the Public Finance Management functions for all entities deemed Autonomous
Organs, Services and Funds (Autonomous Agencies) effective from 1 January 2016 have been
decentralized . Similarly operations of all Municipalities of Timor Leste have from 2017 been
decentralized and granted full autonomy.

However to comply with BFMA Law 13/2009 Article 19 paragraph 1 and for operational efficiency
payroll of public servants will still be processed through Treasury Payroll Unit

12.1.1 Autonomous Agencies and Municipalities when required to perform procedures outlined in
this Manual must comply with the procedures and controls detailed in this manual. If these
procedures cannot be complied with for any reason e.g. adequate segregation of duties due
to lack of staff numbers, then exemption must be obtained from the Accounting and
Reporting Unit of DNCRF.

12.1.2 Sub Accounts have now been opened at Central Bank for each Autonomous Agency at the
Central Bank for receiving budget appropriation and revenue for the revenue collecting
agencies. Should operational requirements warrant for Municipalities, Treasury will
authorize the opening of accounts at commercial banks in the localities of the
Municipalities.

12.1.3 The payment of salaries to Civil servants working in Autonomous Agencies and
Municipalities will be charged by Treasury directly from the sub account at BCTL of each
Autonomous Agency and Municipio.

12.1.4 Each of the Autonomous Agencies and Municipalities whose sub-accounts have already
been opened at the Central Bank can independently perform the following payment
processes:

 Use of Procurement and Contract Management Modules – in accordance with the


applicable Procurement and Contract Management laws and regulations.
 Create and approve CPV/PR
 Create and approve obligation and PO
 Create and approve R & I and GRN
 Submit PRT
 Verify PRT and payment documents
 Create and approve EV
 Create and Approve Electronic Payment orders

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 Issue Cheques and TPO Advise and send to Central bank – in accordance with BCTL
guidelines and procedures
 Access to R-Timor system to generate payment documents including electronic for
their respective agencies
 Receive all return TPOs from the Central Bank for rectification and recording in GRP
 Receive/Access daily and monthly bank statements
 Communicate with the Central Bank in regards to payments issues
 All autonomous agencies will be responsible to create and approve any virements

All these processes must be performed in accordance with the guidelines detailed in this Manual

In order to avoid any payment delays by the Central Bank, the Autonomous Agencies and
Municipalities are required to provide correct/complete information to the Central Bank in
accordance with relevant Finance and BCTL Circulars and guidelines.

12.2 REVENUE
 Revenue collection procedures and controls of Autonomous Agencies and Municipalities
must follow those outlined in this Treasury Manual.
 Revenue Receiving Agencies are permitted to receive any moneys due and these must be
deposited in their respective sub accounts. Non-Revenue receiving Agencies are
permitted to receive interest and other miscellaneous income such as from sale of motor
vehicles. These must be recorded and deposited, as and when they occur, in their
respective sub-accounts. The revenues collected by Autonomous Agencies and
Municipalities cannot be spent in the same fiscal year as received as this would mean
that their budget execution could exceed that approved by National Parliament. Instead
revenues received and recorded in one year are carried forward in the sub account to the
following (second) fiscal year. Fund transfers from Treasury for budget execution in that
second fiscal year are adjusted to take account of revenue collected and retained in the
sub account.
 Autonomous Agencies and Municipalities are required to withhold and account for tax
due in accordance with Timor Leste Tax Legislation.
 Revenue Receiving Agencies must maintain a cash account linked to GRP to record all
revenue collected. This must be reconciled to the cash deposited in the authorized bank
account at CGD BNU or BCTL.
 If there are new sources of revenue, the Autonomous Agency / Municipio must discuss
this with DNCRF to determine if it is preferable from a accounting and reporting
viewpoint to create a separate revenue line item for it to be reported separately. This
decision must also be notified to Budget Office and Economic Policy to ensure they are
considered in future Budget preparations before being notified to IS Unit for
implementation. Once agreed, a new revenue code will be created and then notified to
the Commercial Bank and BCTL to ensure that these revenues are coded correctly for
revenue reporting.

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12.3 AMENDMENT TO AUTHORIZED BANK ACCOUNT SIGNATURES


1323.1 Any amendments of the authorized signatories / specimen signatures to the Agency sub-
account must have authorization from Ministry of Finance.

12.4 MONTH END CLOSING OF ACCOUNTS


12.4.1 Month end account closing processes have been detailed in the Accounting and Reporting
section of this manual and Autonomous Agencies and Municipalities are required to
comply with these requirements. This is primarily to ensure that when Treasury prepares
the Whole of Government accounts, data from the Autonomous Agencies and
Municipalities are consistent with Line Ministries and can be consolidated with minimal
consolidation adjustments to arrive at accurate Whole of Government figures which meets
the International Public Sector Accounting Standards (IPSAS) for reporting of financial
activities to the National Parliament in accordance with PFM Law.

Therefore, all Autonomous Agencies and Municipalities are required practice month end
account closure in FreeBalance as follows:

 At the end of each month all transactions must be finalized, i.e: all TPOs and Cheques
must be approved and printed and all revenues recorded by 12 noon on the last working
day of the month. In order to meet these requirements it is advisable to complete all
accounting entries on the previous day to ensure TPOs and Cheques can be printed
 At 12 noon on the last working day of each month the system will be closed, no further
transactions for the month will be permitted and all users deactivated until after the
system reopens in the following month.
 If there are any unprinted cheques/ TPOs at 12 noon. These will be voided by the system
and the Autonomous Agency / Municipalities has to recommence the payment process.
It is for this reason that Autonomous Agencies are recommended to complete all their
system posting work on the previous working day.
 After back ups have been successfully taken for all government entities, on the first
working day of the following month, FMIS or Treasury will notify each Autonomous
Agency when the system is open and ready to be used.
 Any revenues not recorded or other transactions and journals not posted or payment not
effected needs to be processed in the next month
 A month end closing check list is included in the annexes that is used by Treasury which
must also be used by Autonomous Agencies and Municipalities.
 Each Autonomous Agency and Municipio must request for and establish a focal point at
the Central bank to address any issues in relation to payment issues and transactions
processed in the subaccount. Where a commercial bank is used for receipt of revenues,
Autonomous Agencies and Municipalities must also establish similar focal points at
those institutions.

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12.5 ACCOUNTING AND REPORTING


12.5.1 The Chart of Accounts will be managed and controlled by Treasury. Any requests for new
account codes will need to be sent to the Treasury who will liaise with Budget Office and
Economic Policy Unit before new code creation instructions are sent to IS Unit

12.5.2 Autonomous Agencies and Municipalities will be able to issue their own financial reports.
The standard suite of reports will be available in GRP/FreeBalance. Until otherwise notified
by National Parliament, reporting and audit of Autonomous Agencies will be part of the
overall Government reporting structure – so the financial results of Autonomous Agencies
will be consolidated to form part of Whole of Government reporting. Each agency will be
required to provide explanations for significant variances (as per Material Directive) in the
results of their budget execution when required to support consolidated reporting by the
Treasury.

12.5.3 Autonomous Agencies ( from 2016) and Municipalities ( from 2017 ) need to retain all
proof of transaction of both payments and revenues .These are required for inspection by
the Tribunal das Contas and other Government bodies authorized to do so.

12.6 BANK RECONCILIATION

12.6.1 Each Autonomous Agency is required to perform regular bank reconciliations. This can use
any system, i.e. using the reconciliation module when implemented or excel spreadsheet or
manual checking and summary preparation.. These are provided for in the accounting and
reporting section of this manual.

Apart from the Treasury Manual based requirements Autonomous Agencies and
Municipalities are required to follow Budget Execution Decree Law approved by the Council
of Ministers, Financial instructions and guidelines issued from time to time by the Minister of
Finance. They are also required to comply with Tribunal das Contas recommendations where
they apply to CFET. This is to ensure consistency of accounting treatment to minimize errors
during consolidation while complying with the reporting standards as set out by the
International Public Sector Accounting Standards (IPSAS)

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ANNEXURES & FORMS

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Annexure 6-1

EXPENDITURE AUTHORIZATION NOTICE

GENERAL EXPENDITURE AUTHORISATION NOTICE – FISCAL YEAR …………../…………

TO: (Agency/Head)

You are hereby authorized to enter into commitments, or allocate commitment limits to subordinate
spending units within tour Agency, in amounts not exceeding the total amount shown below. Note: This
Advice lapses at the financial year)

Head of the Treasury /MOF y

Identification of budget Data

Agency: Budget Code:

Expenditure Authorisation Notice No: /

Appropriation Category:

Amount: US$

AGENCY SUB-ALLOCATION:DEPARTEMENTAL EXPENDITURE AUTHORISATION NOTICE

TO: {Subordinate Spending Unit}

You are authorized to enter into commitments within your unit in amounts not exceeding the total amount
shown below.

{Note: This Advice lapses at the end of financial year

Agency Head

Identification of Budget Data

Sub Expenditure Authorisation Notice No:


/
Sub Agency Budget Code:

Sub Item :

Amount: US$

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COMMITMENT PAYMENT VOUCHER

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Annexure 6-3

PURCHASE REQUISITION

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PURCHASE ORDER

REPÚBLICA DEMOCRÁTICA DE TIMOR-LESTE


MINISTÉRIO DO _________________________
SERVIÇOS DE APROVISIONAMENTO

ORDEM DO COMPRA
Purchase Order
(Original/ Original) Page 1 do 1/Page 1 of 1
Morada / Address Enviar todas as questões Número de Ordem Data da Ordem Número
sobre esta ordem ao de Compra de Compra de
Gabinete de Purchase Order Purchase Order Emenda
< Address> Aprovisionamento dirigidas a: Number Date Amendmen
Buyer Address Send all queries about this order t Number
to the Procurement Office marked < PO Number> PODATE in this <……>
to: format if
BUYER possible
<Procurement Officer> <DD/MM/YYYY>
Entregar a Todos os documentos (incluindo facturas, nota de embalagem, conhecimento de
Deliver to: embarque, etc.) devem referir o número da Ordem de Compra indicado acima e ser
enviados à Unidade de Aprovisionamento pelo menos 72 horas antes da chegada dos
bens. É favor confirmar a aceitação desta Ordem de Compra de acordo com os
< Delivery Address> Termos e Condições em anexo.

All documents (including invoices, packing list, bill of lading etc.) must include reference to the
Purchase Order number identified above and mailed to the Procurement Unit at leat 72 hours
prior to arrival of goods. Please acknowledge acceptance of this Purchase Order subject to the
attached Terms & Conditions.

Vendedor:Vendor: Ponto e termos de entrega: Delivery point and terms: Data de Entrega:
Delivery Date:
< Vendor name & Address> < DDP Final Destination>/< CIF Dili>/< FOB PoL/ < As per
Vendor Name and Address only (all Contract Conditions> < DD/MM/YYYY>
lines) Standard Clauses name only (for now) Delivery dates
(From & to)

N.º Item Descrição Unid. Quantidade Preço Montante


Item No. Description Unit Quantity Unitário Amount
Unit Price
1
2
3
4
5
6
7
Moeda Currency Total Total <00,000,000,000.00>
CURRENCY DESCRIPTION

Requisitante: Requisitioner: Preparado por: Prepared By: Aprovado por: Approved By:
< Buyer ID>
NAME ONLY

Número de Requisição de Compra:


Purchase Requisition Number:
< Name Procument Officer>
<PR Number> Oficial da aprovisionamento
Requisition Number only, if multiple Procurement Officer
requisitions, please separate with comma BUYER NAME ONLY (buyer will sign REQUIRE ADDITIONAL INFO
Número de FCP CPV Number above )
< Comm./ Oblig. ID Number>
Number Only

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Annexure 6-5

RECEIPT AND INSPECTION REPORT

RIR NO. :

REPUBLICA DEMOCRATICA DE TIMOR – LESTE

RELATORIO RESEBIMENTU NO INSPESAUN (RECEIVING & INPECTION REPORT - RIR)

PRIENXE BAINHIRA SIMU KONSIGMENTU HOSI

OFISIAL AUTORIZADO GOVERNU RDTL NIAN IDA

VESSEL/AIRLINE NU. KONTENTOR: BL/AIRWAY BILL NO:

DATA SIMU IN R & I ORDEN KOMPRAS (PO) # SOLISITADOR

INVOICE #: FORNESEDOR NARAN:

Bin Card NO DESKRISAUN QUANTIDADE UNIDADE OBSERVASAUN

1. INSPESAUN

HALO HOSI

Naran Asinatura Pozisaun Data

3.APROVA HOSI:

Naran Asinatura Direitor Administrasaun Data

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Annexure 6-6

ADN REPORT

REPUBLICA DEMOCRATICA DE TIMOR LESTE

GABINETE DO PRIMEIRO MINISTRO

AGENCIA DESENVOLVIMENTO NACIONAL

No RELATORIO INSPECSAUN NO RECOMENDASAUN BA PAGAMENTO

1 Projecto nia Naran

2 Ministerio/Dono de Projecto

3 Fontes de Fundos : (PDD I, PDD II, PDL, FI,


Emergencia, MDG Suco, etc)

4 Contractor

5 Numero PO (Purchase Order)

6 a. Distrito :

b. Sub Distrito:

c. Suco/Aldeia:

a Valor Contrato a $

b Progreso fisico iha fulan kotuk b

C Progreso fisico ate agora c

d Valor pagamento foer ate agora (gross) (c-b)*a $

e Osan adiantamento nebe simu ona….% …….%*a $

f Deducsaun adiantado ba pag.ida ne….10% (c-b)*e $

g Deducsaun retensaun ba pag.ida ne…..10% 0.1*d $

h Net Pag. depois de deducsaun ba retensaun d—g $

i Net pag. nebe atu selu ba pag. ida ne’e h-f $

j Total Net pagamento ate agora $

k Balansu depois de pagamento ida ne’e (100%-c)*a $

7 Observasaun ou komentario seluk : Bazeia ba inspeksaun nebe teknik AND ba halo iha terreno obra refere atinji ona
100%. Ne’e duni bele selu tuir persentagen nebe tecnico AND Recomenda.

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Annexure 6-7
REQUEST FOR PAYMENT

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Annexure 6-8

TREASURY PAYMENT ORDER

Ministéiro das Finanças Serial No. 12345678


Direcção Nacional doTesouro
TREASURY PAYMENT ORDER
TO THE BANKING AND PAYMENTS AUTHORITY OF TIMOR LESTE
You are hereby authorized to remit as per the following instruction:

Beneficiary bank and branch name


CREDIT
TPO #

Beneficiary Name and Address Date

Beneficiary Account Number

SWIFT Code/ Intermediary Bank USD $


Name & SWIFT Code
Amount in words
Ordering customer account number

Authorised Signatures

CPV/PO/ POSA Reference

Recortar antes de utilizar/Please detach before banking Serial No. 12345678

Beneficiary bank and branch name


TREASURY COPY
TPO #
Vendor Code:
Beneficiary Name and Address
Date
Beneficiary Account Number
SWIFT Code/Intermediary Bank USD $
Name & SWIFT Code
The sum of:
INVOICE
CPV/PO/ POSA # EV/EVPO # REFERENCE AMOUNT
Date No.

Recortar antes de utilizar/Please detach before banking Serial No. 12345678

Beneficiary bank and branch name


SUPPLIER COPY
TPO #
Vendor Code:
Beneficiary Name and Address
Date
Beneficiary Account Number
SWIFT Code/Intermediary Bank USD $
Name & SWIFT Code
The sum of:
INVOICE
CPV/PO/ POSA # EV/EVPO # REFERENCE AMOUNT
Date No.

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Annexure 6-9

DECLARATION OF LOST CHEQUE

Declaration of Lost Cheque


I ___________________ of _______________________ hereby declare that cheque
number ______________ dated _________________ issued to vendor
______________________________________ for the amount of
$_______________________ is lost and is not in my possession. I am requesting
that the Government of Timor Leste issue a replacement cheque for the said sum to
said vendor. I hereby agree to refund (indemnify) said amount to the Government of
Timor Leste should lost cheque be presented and cashed
by the Banking Payments Authority.
Date:____________________________

Signature:_____________________________

Original copy to Treasury for filing with Payment Voucher 1 copy to Vendor

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Annexure 6-10

A. TPO ADVISE

Note: This form is replaced with FreeBalance generated electronic SEPA Excel
form.
B. CHEQUE ADVISE

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Annexure 6-11
Formulariu Rejistu Dividas Naun-Finanseira
Annexure 7-1

CHANGES IN PAY ADJUSTMENTS

ADVICE OF CHANGES

NO………………………………………………………

DEPARTMENT/AGENCY……………………………………….. Date…………………………………………………..

Name of Employee:……………………………………………..

Employee ID :……………………………………………..

Location :…………………………………………….

Designation :…………………………………………..

Salary Level :…………………………………………..

Please be advised of changes in above employee’s remuneration as follows:

Item Affected With Changes from Changes to Reasors for change


effect
from level Amount Level Amount

1.Salary

2.Allowances

(a)……………

(b)…………..

3.others(specify)

(a)…………..

(b)………….

(c)…………..

Authorising Officer

(Name):……………………………………………………..Signature:……………………………………………………
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Annexure 7-2

SALARY FORM

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Annexure 7-3

UNDISBURSED/UNCLAIMED SALARIES

PAYROLL RETURNS: UNDISBURSED/UNCLAIMED SALARIES


DISTRICT……………………………
PAY PERIOD……………………..…

NO. SPENDING MINISTRIES PAYROLL DISBURSED UNDISBURSED

PERS. AMOUNT PERS. AMOUNT PERS. AMOUNT

TOTAL

UNDISBURSED CASH BALANCE: (……………………….………………………………………..) (in


words)

:…………………………………………

(District Sub-Treasury Financial Officer)

DATE:……..…………….

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Annexure 7-4

MEMORANDUM PAYROLL RETURNS

MEMORANDUM PAYROLL RETURNS


(DETAILS OF UNDISBURSED/UNCLAIMED SALARIES)

DISTRICT:…………………….. PAY PERIOD:…………………

NO. NAME OF PAYEE MINISTRY ID.NO. AMOUNT

TOTAL

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Annexure 7-5

OVERPAYMENT CLAIM AUTHORIZATION

OVERPAYMENT CLAIM AUTHORIZATION

Date _____________ Employee ID ___________________

Employee Name: __________________________________________________

Department: _____________________________________________________

I hereby request Treasury to deduct an amount of $_________ from the above employee’s next
payment due to an overpayment of his salary that was done in error.

I have attached the payment report with the overpayment done and a calculation of the amount to be
repaid.

Signature: ___________________________________ Date: ____________

Human Resources Officer

Signature: ___________________________________ Date: ____________

Director

For Treasury use only;

Actioned By:__________________________________ Date:____________

Reviewed By: _________________________________ Date:____________

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Annexure 7-6

UNPAID SALARY CLAIM AUTHORIZATION

UNPAID SALARY CLAIM AUTHORIZATION

Date _____________ Employee ID ___________________

Employee Name: ________________________________________________

Department: _____________________________________________________

I hereby request Treasury to pay an amount of $_____________________to the above employee who was
underpaid/not paid their salary for the month of ____________ in error.

I have attached the payment report with the underpayment/missing salary and a calculation of the amount
due to the employee.

Signature: ___________________________________ Date: ____________

Human Resources Officer

Signature: ___________________________________ Date: ____________

Director

For Treasury use only;

Actioned By:__________________________________ Date:____________

Reviewed By: _________________________________ Date:____________

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Annexure 8-1

PAYMENT VOUCHER FOR PETTY CASH

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Annexure 8-2

MINISTRY PETTY CASH LEDGER

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Annexure 8-3

PETTY CASH SUMMARY SHEET

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Annexure 8-4

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Annexure 8-5
PAYMENT VOUCHER OF DISTRICT IMPRESTS

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Annexure 8-6

IMPREST FUND LEDGER

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Annexure 8-7

IMPREST FUND SUMMARY

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Annexure 8-8

IMPREST FUND ACQUITANCE OF ADVANCE

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Annexure 8-9

PAYMENT VOUCHER FOR EMBASSIES

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Annexure 8-10

ACCOUNT OF EMBASSY ADVANCES

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Annexure 8-11

FORMULÁRIO DE AUTORIZAÇÃO DE COMPRA FUNDO DE MANEIO E ADIANTAMENTO

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Annexure 8-9-26

STATEMENT OF ACCOUNTS FOR DISTRICT FINANCE OFFICERS

Month:___________________________ District: ___________________________________

Sectoral Ministry /Agency: _________________________________

Appropriation Category:______________________________________

Date Particulars Releases / Sub Payments Balance Remarks


allocation
$ $
$

Opening Balance: ______________________________

Receipts during the Month:________________________

Payments During the Month: _________________________

Closing Balance:_________________________

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Annexure 8-9 27

PAYMENT VOUCHER FOR EMBASSIES

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Annexure 8-10 28

ACCOUNT OF EMBASSY ADVANCES

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Annexure 29

REVENUE COLLECTOR’S CASH ANALYSIS BOOK


Location of Collection: _________________________________

1 2 3 4 5 6 7 8 9
DATE RECEIPT DESCRIPTION/ TOTAL AMOUN DATE UNBANK COLLECTO SUPERVISO
NO. TYPE OF T BANKED ED R NAME/ R NAME/
X TO Y REVENUE BANKED AMOUNT SIGNATUR SIGNATURE/
C/F E/DATE DATE

Note:
1. Receipt numbers issued must be in sequence and beginning and ending number for the day must be
indicated in the column 2.
2. Each revenue source must have its own analysis book.
3. Total in column 4 must equal total collection for the day in receipt book.

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Annexure 30

DAILY CASH RECONCILIATION

DAILY CASH RECONCILIATION


Location:__________________ Date:________

US$

1.Cash on Hand (previous day unbanked balance)


Cash Amount
2. Add Amount received from clients today per
receipt book

3. Less amount banked

4.Cash balance on hand

Count of all Cash on Hand

Cash Discrepancy (Excess/Shortage), If Any

DETAILS:
Cash on Hand Closing Balance today (A-B)

Prepared by: Verified by:

Date: Date:

Note: 1. Total Amount receipt must match with amount in revenue collector’s cash analysis
book. See annexure 29.
2. Receipts must be issued for all cash received by location even if they are not
normal revenue transaction.
3. Discrepancies of cash must be reported to head of Finance of revenue collection
Agency and counter signed by head of Agency.

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Annexure 31

SALEABLE DOCUMENT STOCK REGISTER

Date Remarks
Issued and
Detail of Quantity Received Quantity
by/ Balance Quantity
Date Saleable Document by/Verified Document
Verified Stock of
Document Received by Issued
by Physical
Count

Note:
1.This register is to be used for all documents held by the Agency that has cash value such as
Passport, blank cheques, blank TPO forms, visa sticker.
2. Physical stock checks should be conducted by persons other that those receiving and issuing
saleable documents.
3. Ant discrepancies must be reported to head of Finance and countersigned by head of Agency.

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PASSPORT BOOK STOCK REGISTER

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Annexure 32

EMBASSY REVENUE DAY BOOK

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Annexure 33

EMBASSY DAILY REVENUE SUMMARY STATEMENT

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Annexure 34

EMBASSY REVENUE RECONCILIATION STATEMENT- CASH

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Annexure 35

EMBASSY REVENUE RECONCILIATION STATEMENT- BANK

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Annexure 36

BANK RECONCILIATION

BANK RECONCILIATION FOR <MONTH>

FUND: __________________

Amount
(US$)
Central Bank C/B as On <date>

Total Bank Balance as on <date>

Add Payment in Central Bank not in FreeBalance

Less Receipts in Central Bank not in FreeBalance

Modified Bank Balance

TOTAL OPENING BALANCE

G/L Balance
Add Payment in FB not in Central Bank (Outstanding cheques)
Less Receipts in FB not in Central Bank

Calculated G/L Balance

Prepared by
Designation______ : Accounting Officer
Name of Officer__ : Signature:
Date ___________ :

Verified by
Designation_ ___ : Chief of Accounting
Name of Officer__ : Signature:
Date ___________ :

Approved by
Designation_____ : Director National of Treasury
Name of Officer__ : Signature:
Date ___________ :

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APPENDIX I

FORMATS OF REPORTING
STATEMENTS

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Appendix I 1

DEMOCRATIC REPUBLIC OF TIMOR LESTE

TREASURY

Date______________

Revenues / Financing

Revenue Item Day’s Date of Progressive for Progressive for


(category-wise) Collection Reporting Month Month
(US$ m) (US$ m) (US$ m)
1. Tax Revenue
2. Non-Tax
Revenues
3. Loans
4. Transfer from
Petroleum Fund
Payments

A. CPV Status
Day Total Progressive for Year
(Nos) (Nos)
CPVs received by Budget Execution
CPVs returned by Budget Execution
Payment Requests received by Payment Division
Payment Requests Pending in Payment Division
Payments Approved by Payment Division
Cheques Prepared
TPOs prepared
Letter of Credit Approved / Issued
Cheques / TPOs delivered by Budget Execution
Division

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B. Expenditures
Day Total Progressive for Year
(US$ m) (US$ m)
Total Amount Payments Made (category-
wise)
i) CFET
ii) IF
iii) HCDF
Total Amount of Imprest Paid
Total Amount of Embassy Advance Paid
Outstanding Imprest Advances
Outstanding Embassy Advances
Reconciliation of Payroll data with General
Ledger

C. Accounting
Day Total Progressive for Year
(Nos) (Nos)
No. of Manual JVs posted
No. of Expense JVs posted
No. of Revenue JVs posted

D. Reconciliation
Date
1. Latest Bank Statement Received from Central Bank
2. Latest Posting Date of Revenue completed
3. Last date of Bank Statement from Central Bank incorporated
into FreeBalance
4. Revenue Reconciliation completed Date
5. Expenditure Reconciliation Completed Date
6. Bank Reconciliation Completion Date
7. Reconciliation between Payroll and G/L

E. Cash Balances as on ___________(date)


Bank FreeBalance
Statement
1. CFET (US$ m)
2. Infrastructure Fund (US$ m)
3. Human Capital Dev Fund (US$ m)

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FORMATS FOR MONTHLY ACCOUNTS STATEMENTS

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Appendix I 2A
Revenue Report for the <Month>
Code Item of Original/Final Pro- Actual Progressive % Receipt Total
Receipt Estimates rate Receipt Receipt Receipt Collection Revenue
US$ Target during during Collected against Collected
US$ Month Year During Target in
US$ US$ Year Surplus / Previous
shortfall Year (as
US$ % of
estimates)
A B C D D/A*100 D-B

Appendix I 2B
Category-wise Expenditure Report for the <Month>
Code Item of Original Final Total Expenditure Progressive Utilization of Utilization against Utilization of
Expenditure Appropriation Appropriation EANs During the Expenditure Appropriations as EANs as % Appropriation in
s US$ Issued Month during Year % Previous Year as %
US$ US$ US$ US$
A B C D E E/B*100 E/C*100
Category
Item

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Appendix I 2C
Summary Statement of Overall Fiscal Performance for <MONTH>
Budget Actuals for Progressive % to Estimates / % to
Estimates / <Month> Receipt / Appropriations Estimates /
Appropriations US$ Expenditure Appropriation
US$ during Year during
US$ Previous Year
A B C C/A*100

Receipts

1. Domestic Receipts (2+3)


2.Tax Receipts
3. Non-Tax
Receipts
4. Receipts from Petroleum Fund

5. Capital Receipts (loans)

6. Total Receipts (1+4+5)

Expenditures

7. Recurring Expenditures
(8+9+10)
8. Salary and Wages

9. Goods and Services

10. Transfers

11. Minor Capital

12. Major Capital

13. Total Expenditures (7+11+12)

Excess / Deficit

14. Recurrent (1-7)

15. Fiscal (1+5-12)

16. Financing for Deficit

a. Transfers from Petroleum


Fund
b. Drawdown from Cash
Balances

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Appendix I 2D

Statement of Expenditure by Functions


Code Expenditure Original Final Expenditure Progressive % Expenditure % Expenditure to
Function Appropriations Appropriation During the Expenditure to Appropriation Appropriation in Previous
US$ US$ Month during Year Year
US$ US$
A B C D E/B*100

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Appendix I 2E
Statement for Special Funds
Infrastructure Fund Statement

Opening Expenditures Appropriations Receipts Expenditures Expenditures % Total Closing


Balance made during for the Year during the made during made during expenditure Expenditures Balance
from year from year month the year to made during of the
previous previous year appropriation year Fund
month funds
A B C D E F F/C*100 B+F A+D-B-
F

Human Capital Development Fund Statement

Opening Expenditures Appropriations Receipts Expenditures Expenditures % Total Closing


Balance made during for the Year during the made during made during expenditure Expenditures Balance
from year from year month the year to made during of the
previous previous year appropriation year Fund
month funds
A B C D E F F/C*100 B+F A+D-B-
F

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Appendix I 2F

Statement of District-wise Expenditures


District Code Category of Expenditure Progressive % spending for % spending for
Expenditure During the Month Expenditure during District District Previous
US$ Year Year
US$
A B B/C*100
Dili Total
Salary & Wages
Goods & Services
Minor Capital
Transfers
Major Capital
Liquica Total
Salary & Wages
Goods & Services
Minor Capital
Transfers
Major Capital
.
.
.
.
Summary Total
Totals
(C)
Salary & Wages
Goods & Services
Minor Capital
Transfers
Major Capital

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FORMATS FOR QUARTERLY BUDGET EXECUTION


REPORTS

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Appendix I 3A
1. Budget Comparison

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Appendix I 3B

2. Budget to Actual Receipts / Expenditures

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Appendix I3C

3. Summary Revenues

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Appendix I3D
Item-wise Expenditure – Whole of Government

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Appendix I 3E
Function Based Expenditure

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Appendix I 3F

Division-wise Budget Execution Statements


Code Category / <Previous Original Final Cash % Advances Obligations Commitments Balance
Item FY> Budget Budget Expenditure $ $ $ $
$ $
Salary &
Wages

Goods and
Services

Minor
Capital

Capital
Development

Transfers

Contingencies

Total

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Appendix I 3G

4. Infrastructure Fund Budget Execution Statement ($’000)

Code Program Sub- Project Project Type Balance Original Final Cash % Obligations Commitments Balance Total
Program Owner Name of <Previous Budget Budget Expenditure $ $ $ $
Project FY> $ $

Total

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Appendix I 3H

5. Human Capital Development Fund Budget Execution Statement ($’000)


Code Program Sub- Project Project Type Balance Original Final Cash % Obligations Commitments Balance Total
Program Owner Name of <Previous Budget Budget Expenditure $ $ $ $
Project FY> $ $

Total

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FORMATS FOR ANNUAL FINANCIAL STATEMENTS

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Appendix I 4A

1. Consolidated Receipt and Payment (Cash Basis)

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Appendix I 4B

2. Original And Final Approved Budget And Comparison Of Actual And


Budget Amounts

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Appendix I 4C

External assistance balances recorded on the Aid Effectiveness portal by


providers of external assistance

<Year>
Multilateral Bilateral Other
Agencies Agencies Agencies Total
US$ 000's US$ 000's US$ 000's US$ 000's

Salary & Wages


Goods & Services
Purchase of Minor Capital
Equipment
Purchase of Capital Assets and
Major Capital Equipment
Un-disaggregated Amount (a)
TOTAL

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Appendix I 4D

Summary Receipts

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Appendix I 4E

Item-wise Expenditure – Whole of Government

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Appendix I 4F

3. Function Based Expenditure

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Appendix I 4G

Contingency Expenditures

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Appendix I 4H

Staffing Profile through Payroll


A. Civil Servants

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B. Non-Civil Servants

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Appendix I 4I

Division-wise Budget Execution Statements

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Appendix I 4J

Infrastructure Fund Budget Execution Statement ($’000)


Code Program Sub- Project Project Type Balance Original Final Cash % Total
Program Owner Name of <Previous Budget Budget $ Expenditure $
Project FY> $

Total

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Appendix I 4K

4. Human Capital Development Fund Budget Execution Statement ($’000)


Code Program Sub- Project Project Type Balance Original Final Cash % Total
Program Owner Name of <Previous Budget Budget $ Expenditure $
Project FY> $

Total

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APPENDIX II
CHECKLISTS

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Appendix II A

CHECKLIST FOR PAYROLL PROCESSING

Month/ Year

1.1 Payroll Calculation

1.1.1. Data entry work has Finished

1.1.2. Approve all Salary Transition Approval Requested

1.1.3. Calculate Regular Payroll For All Employees (00-RDTL)

1.1.4. Payroll Calculation Log-Message is ‘payroll calculation completed successfully’ go


to step 1.1.7 to finalize payroll. Message is ‘an error occurred during payroll calculation
please see the calculation log details tab to obtain further info ‘ (go to step 1.1.5).

1.1.5. Pay Calculation Log Details. Take note of the Employee Number in error and fix
them one by one.

1.1.6. Recalculate the payroll for each employee in error that has been fixed in 1.1.5.

1.1.7. Generate pre- Finalization Exceptions Report And Fix any data if necessary
(Payroll Management- Reports – Payroll- Pre-Finalize Exception Report)

1.1.8. Generate Payroll Appropriations Analysis Report (Payroll Management – Reports –


Payroll - Payroll Appropriations Analysis Report). The question ‘data imported on date ,
do you want to import the latest data from FA ? Click CANCEL. Check with treasury if
any column (B/A) is smaller < 1 (line in RED on the report).

1.2 Finalize payroll

1.2.1 Finalize Payroll (Payroll Management - Payroll Transaction Processing - Payroll


Calculation - Finalize Pay Period).
1.2.2 1.2.2 View Payroll Calculation Log – Calculating is unchecked, Message is
‘Finalize pay period completed successfully ‘go to 1.3 generate payroll files.
Message is ‘an error occurred during the finalize pay period process. Please see
the calculation log details tab to obtain further info.’ ( go to step 1.2.3)
1.2.3 1.2.3. Pay Calculation Log Details. Take note of the employee number in error
and fix them one by one.
1.2.4 1.2.4. Finalize the payroll for each employee in error that has been fixed in 1.2.3.

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1.3 Generate Payroll Files

1.3.1 Generate Payment Batch For Salaries (Payroll Management -Payroll Transaction
Processing - Payroll Calculation - Payroll Batch For Salaries). Select the Current
Pay Period, Check the Institution 00- Democratic Republic of Timor Leste, update
and propagate to child and click the button ‘Execute Payment Batch’.
1.3.2 View Payment Batch Summary for Salaries (Payroll Management- Payroll
Transaction Processing - Payroll Calculation - Payment Summaries for Salaries).
Do this step until the current pay period is displayed on the last row.
1.3.3 Click on the last row (id column). At the bottom of the screen click the button
‘Generate Employees Direct Deposit Files (S)’.
1.3.4 Wait for the ‘Employees Direct Deposit Files(s) to be generated. (Payroll
Management - Payroll Transaction Processing - Payroll Calculation - Payment
Summaries for Salaries). Go on the last batch generated and check if the
‘Employee Direct Deposits Generated’ check box is checked. If not go 1.3.4 again
until this check box is checked.

1.4 Generate Expense Voucher

1.4.1 Generate Expense Vouchers (Payroll Management - Payroll Transaction


Processing - Payroll Calculation - Payment Summaries For Salaries)
1.4.2 Click on the last row (id column). At bottom of the screen click the button
‘generate expense voucher’.
1.4.3 Wait for the Expense Voucher to be generated. (Payroll Management - Payroll
Transaction Processing - Payroll Calculation - Payment Summaries for Salaries).
Go on the last batch generated and check if the ‘EV’s generated’ check box is
checked. If not go 1.4.3 again until this check box is checked.

1.5 General Ledger – Financial Operations

1.5.1 Approve and post to FA the EVS (Menu General Ledger – Financial Operations).
1.5.2 On the field ‘financial operation status select ‘approval requested’ and clicks the
find button.
1.5.3 Click on the first EV on the list and change the fiscal period with the current
month, change the transition to ‘approve en, click the lookup ‘ button at the right
of ’Transition’ field (click finish) and click the update button at the bottom of the
screen.
1.5.4 Change the transition to ‘post to FA en’. Click the ‘Lookup’ button at the right
of ‘Transition’ field (click finish).

Repeat 1.5.3 and 1.5.4 for each EV to be approved and sent to FA.

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1.6 Generate Payroll Reports

1.6.1. Generate Bank / Pay Agent Summary Report (Payroll Management – Reports –
Payroll - Bank/Pay Agent Summary Report).

1.6.2. Generate Payment List Report for each Pay Agent Report (Payroll management –
Reports – Payroll - Payment List Report). Launch the report for each Pay Agent one by
one for the current period.

1.6.3. Generate Payment Information by Ministry Report (Payroll Management – Reports


– TL Report- Payroll Information Report). Enter the current period and select institution
’00’ Democratic Republic of Timor Leste.

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Appendix II B

CHECKLIST FOR ACCOUNTING MONTH END CLOSURE

MONTH :____ ____________


S No Activity Completed Division Sign
(Y/N)
1 The complete revenue data has been Revenue
posted in the system for the previous
month e.g. revenue collection data for
month of February mandatorily
posted into system by March closing.
2 The revenue data for the month has Revenue
been posted for the last day data for
which statement has been received
from the bank by the Treasury.
3 All Expense Vouchers posted in the Payment
system have been approved in the
system (except possibly for last 2
days)
4 TPOs /cheques for all EVs approved Payment
in the system have been prepared
(except for last 2 days).
5 TPOs / cheques for all EVs approved Payment
in the system for a previous month
(eg. June approved EVs) have been
either issued in the reporting month
(eg. July for June approvals) or
reversed.
6 All approved EV reversals have been Payment
posted and approved in the system
during the month.
7 All JVs for corrections, advance Inter-Govt.
retirements received during a month
have been finalized and posted in the
system.
8 All “temp” saved EVs and JVs have Accounting
been finalized and either posted or
deleted from the system (except for
last few days).
9 All Letter of Credits issued have been Payment
posted in the system.
10 Bank Reconciliation for all bank Accounting
accounts / funds has been completed
for the previous month (eg. for July
account report, Bank reconciliation
statement for June account) and
consolidated BR statement prepared.
11 Reconciliation between the payroll Payroll

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S No Activity Completed Division Sign
(Y/N)
data and G/L in the FA module has /Accounting
been completed for the previous
month.
12 Time barred cheques (un-encashed Payment
cheques of more than 3 months date)
have been taken up with Central
Bank (for no payment in future) and
written back in the accounts latest
within two months of time barring.
13 System integrity check has been done FMIS
and database is confirmed to be in
balance. Database reconstruct has
been done if it was out of balance.
14 Trial balance has been prepared and Accounting
steps taken to rectify any
discrepancies by posting required
JVs.
15 The Month end closure and New FMIS
month opening in the FMIS
procedure available in the system
documentation has been followed.
These essentially involve setting
system to single-user access at time
of the operation, all period-end data
imports and exports, production of
required reports for current month,
including bank reconciliation,
backing up of database.
16 Monthly accounts statements are Accounting
prepared and checked, before and
submission. Reporting
Date of Closure of Accounting Month:________________________

Prepared by:

Approved by:

Head Accounting and Reporting

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Appendix II C

MASTER CHECKLIST FOR END OF YEAR CLOSING FOR


TREASURY

Item Activity Status


(Tick if
completed)
1. Closing schedule / calendar of activities has been issued
2. Circular to all agencies advising calendar for submission of
payment requests to Treasury issued
3 Updated master checklist for all activities for EOY prepared
4 Posting for all transactions for revenue in bank statements up
to end of year completed
5 All commitments posted in the system acted upon and balances
dropped for closed ones
6 Posting of all payment requests received till last date of
financial year in the system completed
7 No Goods Received Notes are pending for invoices in the
system
8 All Expense Vouchers posted in the system till last date of
financial year have been processed
9 All TPOs /cheques for EVs approved in the system have been
prepared
10 Posting of all approved reversals for EVs completed
11 All "temp" saved EVs and JVs have been finalized
12 Posting of all Letter of Credits issued during the year
completed
13 Review the detailed description for the contingency funds
utilization available in the system, else approach concerned
agencies for details
14 Reconciliation of revenue between the Treasury and revenue
agencies completed
15 Posting of all petty cash and advance retirements through the
JVs completed
16 Posting of JVs for acquittal of all embassy advances
completed
17 No Purchase Requisition and Purchase Orders are pending in
the system and all outstanding POs have been closed
18 Reconciliation between the payroll data and G/L accounts for
salary & wages in the FA module completed
19 Time barred cheques (un-encashed cheques of more than 3
months date) have been acted upon and written back in the
system through posting of appropriate JVs
20 Control totals have been cleared
21 Accounts payables have been cleared by posting appropriate
JVs
22 All controlled entities forming part of the accounts have been

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identified and all flows within such entities to net out these
transactions to consolidate the accounts have been worked out
23 Tax deduction from payroll captured in system with the gross
payments made and tax deductions in the G/L have been
validated
24 Final list of all virements has been obtained from the Budget
Directorate and validated with the FreeBalance appropriations
25 Infrastructure Fund expenditures at project levels (which are
below appropriation category controls) have been reconfirmed
in instances with negative balances
26 Transactions where payments from CFET have been made on
behalf of the special funds have been identified and treated as
receipts from CFET to the funds
27 Withholding tax deducted for Infrastructure Fund payments
has been credited to CFET and not to Infrastructure Fund
28 Full Bank Reconciliation for all bank accounts (CFET and
special funds) completed and Bank Reconciliation Statement
has been prepared after posting all required JVs
29 List of autonomous agencies and the transfers made /
investments made in these have been identified
30 Statement on staffing profile using the payroll data has been
prepared
31 Supplementary statements (in addition to audited ones) as
prescribed have been prepared
32 All draft financial statements (including all Notes) conforming
to IPSAS cash basis have been prepared and provided to
auditors
33 Period closing operations in the FMIS have been adopted as
available in the system documentation
34 Final Period (period 14) has been closed and database frozen
for any changes through user access control

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SUPPLEMENTS

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Supplement A
CHART OF ACCOUNTS (including Line Item Codes)

CFET OBJECT CLASSIFICATION

Appropriation Item Line Item


category

XX Balance 100 Cash Balance with CPO 1000 Cash Balance with CPO
Sheet Item
110 Cash Balance with Other Banks 1100 Cash Balance with Other Banks

119 Special Encumbered Account 1109 Special Encumbered Account

120 UN Trust Fund Balance at UNHQ 1200 UN Trust Fund Balance at UNHQ

130 UNOPS Advance Account 1300 UNOPS Advances

140 General Imprest Account 1400 General Imprest Account

150 Other Loans & Advances 1500 Loans to Individuals & NGOs

1501 Loans to Public Enterprises

1502 TFET Retroactive Financing

160 Capital transfers 1600 Capital Transfers to Individuals &


NGOs

1601 Capital Transfers to Public Enterprises

1602 Capital Transfers to Financial


Institutions

170 Stocks & Stores 1700 Fuel Security Stock

1701 Unallocated Stores

220 Other Current Liabilities 2200 Other Current Liabilities

250 Special Funds 2500 Special Funds

290 Public Debt 2900 Internal Debt

2901 External Debt

299 Timor Gap Royalties 2999 Timor Gap Royalties

300 Consolidated Fund of East Timor 3000 Consolidated Fund of East Timor

09 Revenues 500 Taxes on Commodities 5000 Sales tax

5001 Excise tax

5002 Import duties

5003 Export Duties

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510 Taxes on Income 5100 Individual Income Tax (ETTA)

5101 Individual income tax (Others)

5102 Other Withholding Tax

5103 Other Corporate Taxes

520 Service Tax 5200 Service tax

530 Other Tax Revenues 5300 Other Tax Revenues

540 Fees & Service Charges 5400 Business Registration fee

5401 Postage Fees

5402 Property Rentals

5403 Interest Receipts

5404 Water Fees

5405 National University Fees

5406 Vehicle Registration Fees

5407 Vehicle Inspection Fees

5408 Driver Licence Fees

5409 Franchising Public Transport Fees

5410 Transport Penalties

5411 Other Transport Fees

5412 Telecommunication Fees

5413 ID, Passport & Visa Fees

5499 Other Fees

550 Other Non Tax Revenue 5500 Dividends, Profits & Gains

5501 Fines & forfeits

5599 Other non tax revenue

560 Revenue from Timor GAP 5600 Timor Gap Withholding Tax

5601 Timor Gap Income Tax

5602 Timor Gap Value Added Tax

570 Grants & Contributions 5700 Aid Material & Equipment

5701 Grants & Contributions

590 Revenue Retention Ministries 5900 Electricity Fees & Charges

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5901 Port charges & fees

5902 Aviation service fees

01 Salaries & 600 Salary 6000 Salary - Permanent Employees


Wages
6001 Salary - Temporary Employees (Local)

6002 Salary - Temporary Employees


(Overseas)

6003 Consultant Fees - Overseas

6004 Consultant Fees - Local

610 Overtime 6100 Overtime

02 Goods & 620 Travel and Subsistence Allowance 6200 Local travel
Services

6201 Overseas travel

630 Training & Workshops 6300 Staff training -local

6301 Staff training - overseas

6302 Seminars & workshops

640 Utilities 6400 Water

6401 Electricity

6402 Telephone, Fax and Internet

6403 Other Utilities

6404 Rental of property

650 Vehicle Operation 6500 Vehicle Operation Fuel

6501 Vehicle Maintenance

6502 Vehicle/Motorcycle Insurance

6503 Rental of vehicles

660 Office Stationery and Supplies 6600 Office Stationery and Supplies

670 Operational Materials and Supplies 6700 Agricultural Supplies

6701 Defence Supplies

6702 Medical supplies

6703 Rations

6704 School Supplies

6705 Uniforms

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6799 Other supplies

680 Fuel for Generators 6800 Fuel for generator

690 Maintenance of Equipment & 6900 R&M Furniture


Building
6901 R&M Communication Equipment

6902 R&M Building

6903 R&M Electrical

6904 R&M Other Infrastructural Assets

6910 Motor Spare Parts

6911 Generator Spare Parts

6912 Other Spare Parts

6999 Misc. Maintenance services

700 Other Operational Expenses 7000 Official entertainment

7001 Bank charges

7002 Representation allowance

7003 Freight and transport

7004 Rental office equip

7005 Postage

7006 Subscriptions

7007 Contributions for Community Service

7008 TFET Counterpart contributions

710 Other Misc Services 7100 Advertisement & Publicity

7101 Catering Services

7102 Cleaning & Sanitation Services

7103 EDP Services

7104 Educational Services

7105 External audit

7106 Medical Services

7107 Photocopy Services

7108 Printing Services

7109 Security Services

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7110 Translation Services

7111 Other Professional Services

7199 Other Services

720 Current Transfers 7200 Current Transfers to Public Enterprises

7201 Current Transfers to Financial


Institutions

7202 Contributions to International Bodies

7203 Current Transfers to NGOs &


Individuals

730 Interest Payments & Borrowing 7300 Interest expense


Related Charges
7301 Borrowing related Charges

740 Petty Cash 7400 Petty Cash

750 Prior Period Adjustment Account 7500 Prior Period Adjustments

760 General Embassy Advance 7600 Goods & Service for General Embassy
Adv.

7601 Capital

7602 salary & Wages

03 Capital 800 Acquisition of Buildings 8000 Buildings

194
Treasury Manual – Version 1.0 2017

CFET OBJECT CLASSIFICATION

Appropriation Item Line Item


category

810 Purchase of Vehicles 8100 Motorcycles

8101 Vehicles

8102 Boats/vessels

820 EDP Equipment 8200 EDP Equipment

830 Security Equipment 8300 Security Equipment

840 Communication Equipment 8400 Communication Equipment

850 Other Misc Equipment 8500 Household Equipment

8501 Refrigerators

8502 Construction Equipment and Plants

8503 Air-conditioning

8504 Electrical Equipment

8505 Workshop Equipment

8506 Medical Equipment

8599 Other Equipment

860 Furniture & Fittings 8600 Furniture

870 Office Equipment 8700 Other Office Equipment

880 Generators 8800 Generators

890 Water Equipment 8900 Water Equipment

900 Infrastructural Assets 9000 Civil Works

195