CHAPTER 5

ACCOUNTING FOR DISBURSEMENTS

AND RELATED TRANSACTIONS
Fundamental Principles of
Disbursement
of Public Funds
Basic Requirements for Disbursements
and the Required Certifications
Availability of Funds

No funds shall be disbursed, and no expenditures or obligations chargeable

against any authorized allotment shall be incurred or authorized in any
department, office or agency without first securing the certification of its Chief
Accountant or head of accounting unit as to the availability of funds and the
allotment to which the expenditure or obligation may be properly charged.
Non-Cash Availment Authority (NCAA)

Is an authority issued by the DBM to agencies to cover the liquidation of their

actual obligations incurred against available allotments for availment of
proceeds from loans/grants through supplier’s credit/constructive cash.
Cash Disbursement Ceiling (CDC)

Is an authority issued by DBM to the Department of Foreign Affairs and

Department of Labor and Employment to utilize their income
collected/retained by their Foreign Service Posts to cover their operating
requirements, but not to exceed the released allotment to the said post.
Modes of Disbursements

Different Modes of Disbursements are as follows:

 checks (MDS or commercial checks)
 Cash
 Advice to debit the account
 Tax remittance advice
 Working fund/CDC
 Direct payment method
Disbursements by Check

Checks shall be drawn only on approved Disbursement Voucher (DV) or

payroll. These shall be used for payment of regular expenses which cannot be
conveniently nor practically paid using the ADA or not authorized to be paid
using the petty cash fund or advances for operating expenses.
Two types of checks being issued by government agencies:
a. Modified Disbursement System Checks
b. Commercial Checks
Disbursements by Cash

Constitute payments out of cash advances granted to the regular and special
disbursing officers for personal services, petty expenses and MOOE for field
operating requirements.
Cash Advance for Payroll

Advances for payroll shall be granted to Regular Disbursing Officers for

payment of salaries, wages, honoraria, allowances and other personnel
benefits of officials and employees.
Accounting for Overpayments

Sometimes overpayments or even double payment of expenditures do

happen in agencies. These could be avoided with the institution of proper
controls but some could not be avoided because of built-in process.
 Cash Advances for Operating Expenses of
Government Units without Complete Set of
Books of Accounts
Some government units under the central/regional/district offices without complete set of
books of accounts:
 Field
 Extension
 Satellite Offices
Cash Advances for Travel

Section 2 of Executive Order(EO) No. 248 dated May 29, 1995, as amended by
EO No. 298 dated August 14, 1995 and March 23, 2004, respectively, provide
that travels shall cover only those that are urgent and extremely necessary, will
involve the minimum expenditure and are beneficial to the agency
concerned and/or the country.
Cash Advance for Specific
Purpose/Time-Bound Undertaking
Shall be granted only to duly authorize accountable officer/special disbursing
officer. It shall be accounted for in the books of accounts as “Advances to
Special Disbursing Officer.” It shall be liquidated by the accountable officer
within a specified period.
Advance for Petty Operating Expenses

The Petty Cash Fund (PCF) to be set up shall be sufficient for the recurring
petty operating expenses of the agency for one month. It shall be maintained
using the Imprest System. All replenishments shall be directly charged to the
expense account at all times, the PCF shall be equal to the total cash on hand
and the unreplenished expenses. The PCF shall be replenished as soon as
disbursements reach at least 75% or as needed.
 Disbursements through List of Due and
Demandable Accounts Payable-Advice
to Debit Account (LDDAP-ADA)
All LDDAP-ADA prepared/issued during the day shall be recorded chronologically in the
CkADADRec maintained by the Cash/Treasury Unit, which shall monitor the receipt of the
validated LDDAP-ADA from the MDS-GSB and the issue of Official Receipt (OR) or other
acceptable evidence of receipt of payments by the creditors/payees.
 Disbursement through Electronic Modified
Disbursement System as part of the Modified
Disbursement Scheme

electronic Modified Disbursement System (eMDS)

has been adopted as one of the modes of
disbursement under Joint Administrative Order (JAO)
No. 2015-1 dated March 12, 2015 of the DBM and
DOF.
Disbursements through Cashless
Purchase Card (CPC) System
The CPC System was prescribed as an alternative mode of payment for goods
and services under Joint Memorandum Circular (JMC) No. 2014-1 dated May
15, 2014 of the Department of National Defense(DND), Armed Forces of the
Philippines and the DBM.
Disbursements by Foreign-based
Government Agencies
CDC is an authorization issued by the DBM to DFA and other agencies with
foreign posts to utilize their collections retained by their Foreign Service Posts
(FSPs) to cover operating requirements, but not exceed the released allotment
to the said post.
Disbursement through Direct Payment
Method
This type of disbursement should be covered by an NCAA. This mode of
disbursement is made through the JEV issued by the BTr to the
availing/implementing agency to record payment of goods and services
made directly by the lending institution to the supplier or contractor. The JEV
shall be recorded in the General Journal.