CHAPTER 6:

GOVACC-DISBURSEMENT-RTCANLAS
LEARNING OBJECTIVES:
1. State the main concept(s) in the disbursement
of government funds.
2. Account for the different modes of
disbursements.

GOVACC-DISBURSEMENT-RTCANLAS
WHAT IS DISBURSEMENT?
constitute all payments in cash, in whatever manner, i.e., cash,
check or cashless payment.
shall be supported by Disbursement Vouchers (including Petty Cash
Vouchers) or Payroll.

GOVACC-DISBURSEMENT-RTCANLAS
FUNDAMENTAL PRINCIPLES FOR
DISBURSEMENT OF PUBLIC FUNDS
P.D No. 1445, the Government Auditing Code of the Philippines, provides that all
financial transactions and operations of any government entity shall be
governed by the following fundamental principles:
1. No money shall be paid out of the public treasury or depository except in
pursuance of an appropriation law or other specific statutory authority;
2. Government funds or property shall be spent or used solely for public
purposes;
3. Trust funds shall be available and may be spent only for the specific purpose
for which the trust was created;
4. Fiscal responsibility shall, to the greatest extent, be shared by all those
exercising authority over the financial affairs, transactions, and operations of the
government agency;
GOVACC-DISBURSEMENT-RTCANLAS
5. Disbursements or disposition of government funds or property
shall invariably bear the approval of the proper officials;
6. Claims against government funds shall be supported with
complete documentation;
7. All laws and regulations applicable to financial transaction shall be
faithfully adhered to;
8. Generally accepted principles and practices of accounting, as well
as, of sound management and fiscal administration shall be
observed, provided they do not contravene existing laws and
regulations.
GOVACC-DISBURSEMENT-RTCANLAS
BASIC REQUIREMENTS FOR DISBURSEMENTS
AND THE REQUIRED CERTIFICATIONS
Disbursements of government funds shall comply with
the following basic requirements and certifications:
a. Availability of allotment/budget for
obligation/utilization certified by the Budget
Officer/Head of Budget Unit;
b. Obligations/Utilizations properly charged against
available allotment/budget by the Chief
Accountant/Head of Accounting Unit;
c. Availability of funds certified by the Chief Accountant.

GOVACC-DISBURSEMENT-RTCANLAS
d. Availability of cash certified by the Chief Accountant.
e. Legality of the transactions and conformity with
existing rules and regulations.
f. Submission of proper evidence to establish validity of
the claim.
g. Approval of the disbursement by the Head of Agency
or by his duly authorized representative.

GOVACC-DISBURSEMENT-RTCANLAS
DISBURSEMENT AUTHORITIES
1. Notice of Cash Allocation (NCA)
2. Notice of Transfer of Allocation (NTA)
3. Tax Remittance Advice (TRA)
4. Non-Cash Availment Authority (NCAA)
5. Cash Disbursement Ceiling (CDC)

GOVACC-DISBURSEMENT-RTCANLAS
Notice of Cash Allocation (NCA)
The NCA is an authority issued by the DBM to central, regional and provincial
offices and operating units to cover their cash requirements. The NCA specifies
the maximum amount of cash that can be withdrawn from a government
servicing bank in a certain period.
ILLUSTRATION:
Agency X of national government received the following NCA from DBM for the
first quarter of the current year:
Regular Agency Fund P 500,000
Special Account in the General Fund 300,000
Trust Receipt Fund 200,000

GOVACC-DISBURSEMENT-RTCANLAS
The accounting entries to recognize receipt of NCA are as follows:
Regular Agency Fund

Account Title Account Debit Credit

Code
Cash – Modified Disbursement
10104040
System (MDS), Regular
Subsidy from the National 40301010
Govt.

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GOVACC-DISBURSEMENT-RTCANLAS
Special Account in the General Fund

Account Title Account Debit Credit

Code
Cash – Modified Disbursement System (MDS),
10104050
Special Account
10104020
Cash – Treasury/Agency Deposit, Special
Account
To recognize receipt of NCA for Special Account in the General Fund

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 Account Title Account Debit Credit
Code
Cash – Modified Disbursement System (MDS),
10104050
Special Account
300,000.00
10104020
Cash – Treasury/Agency Deposit, Special
Account
300,000.00
To recognize receipt of NCA for Special Account in the General Fund

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Trust Receipt Fund

Account Title Account Debit Credit

Code

Cash – Modified Disbursement System (MDS),

10104060
Trust

10104030
Cash – Treasury/Agency Deposit, Trust
To recognize receipt of NCA for Trust Receipts Fund

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 Account Title Account Debit Credit
Code

Cash – Modified Disbursement System (MDS), Trust 10104060

200,000.00
10104030
Cash – Treasury/Agency Deposit, Trust
200,000.00
To recognize receipt of NCA for Trust Receipts Fund

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Notice of Transfer of Allocation (NTA)
The NTA is an authority issued by an agency’s Central Office to its regional and
operating units to cover the latter’s cash requirements.

Tax Remittance Advice (TRA)

The TRA is used to recognize: (1) in the books of national government agencies,
the constructive remittance to BIR and BOC of taxes and customs’ duties
withheld, and the constructive receipt of NCA for those taxes and customs
duties; (2) in the books of the BIR and BOC, the constructive receipt of tax
revenue and customs duties; and (3) in the books of the BTr, the constructive
receipt of the taxes and customs duties remitted.
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Non-Cash Availment Authority (NCAA)
The NCAA is the 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)

The CDC is the disbursement authority issued by the DBM to agencies with
foreign operations allowing them to use the income collected by their Foreign
Service Posts to cover their operating requirements.

GOVACC-DISBURSEMENT-RTCANLAS
MODES OF DISBURSEMENTS
1. Check
2. Cash
3. Cashless payments:
I. Advice to Debit Account (ADA)
II. Electronic Modified Disbursement System (eMDS)
III. Cashless Purchase Card System (Credit Card)
IV. Non-Cash Availment Authority (NCAA)
V. Tax Remittance Advice (TRA)

GOVACC-DISBURSEMENT-RTCANLAS
DISBURSEMENT BY CHECKS
Checks shall be drawn only on a duly 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. Checks issued shall be reported
and recorded in the books of accounts whether released or
unreleased to the respective payees.

GOVACC-DISBURSEMENT-RTCANLAS
There are two types of checks being issued by government agencies
as follows:
a. Modified Disbursement System checks – are checks issued by
government agencies chargeable against the account of the
Treasurer of the Philippines, which are maintained with different
MDS-GSBs.
b. Commercial checks – are checks issued by NGAs chargeable
against the Agency Checking Account with Government Servicing
Banks (GSBs). These shall be covered by income/receipts
authorized to be deposited with Authorized Government
Depository Banks (AGDBs).
GOVACC-DISBURSEMENT-RTCANLAS
ILLUSTRATIVE ACCOUNTING ENTRIES FOR
DISBURSEMENTS BY CHECKS:
Payment of the following utility bills: (P4,000)
Electric bill P 2,300
PLDT bill 1,100
Water bill 600
Total P 4,000
Prepare the journal entry

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Water Expenses 50204010

P 600
50204020 2,300
Electricity Expenses
50205020 1,100
Telephone Expenses
10104040
Cash – MDS, Regular
P 4,000
To recognize payment of bills from utility companies based on individual checks.

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Remittance of Government’s Share (P 13,7000)
Retirement and Life Insurance Premium P 8,500
Pag-IBIG Contributions 1,400
PhilHealth Contributions 3,800
Prepare the journal entry

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code
Retirement and Life Insurance Premium 50103010
P 8,500
Pag-IBIG Contributions 50103020 1,400

PhilHealth Contributions 50103030 3,800

Cash – MDS, Regular 10104040

P 13,700

To recognize remittance of government’s share based on individual checks issued to GSIS, HDMF
and PHIC

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Remittance of salary deductions (P14,600)
Retirement and Life Insurance Premium P 8,500
Pag-IBIG Contributions 1,400
PhilHealth Contributions 3,800
GSIS Salary Loan 700
Employee’s Association 200
Total P 14,600
Prepare the journal entry

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code
Due to GSIS 20201020 P 9,200
Due to Pag-IBIG 20201030 1,400

Due to PhilHealth 20201040 3,800

Other Payables 29999990 200

Cash – MDS, Regular 10104040

P 14,600
To recognize remittance of salary deductions based on individual checks issued to GSIS, PhilHealth,
HDMF and Employee’s Association.

GOVACC-DISBURSEMENT-RTCANLAS
DISBURSEMENT BY CASH
Cash disbursements 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.
All cash payments shall be covered by duly approved
DVs/Payrolls/Petty Cash Vouchers (PCVs).

GOVACC-DISBURSEMENT-RTCANLAS
Cash advances may be granted to the cashiers/disbursing officers/officials and
employees to cover the following: salaries and wages, travels, special time-bound
undertakings and petty operating expenses.
It shall be governed by the following existing rules and regulations, per COA Circular No.
97-002 dated February 10, 1997, as amended by COA Circular No. 2006-005 dated July
13, 2006
a. No cash advance shall be given unless for a legally specific purpose.
b. A cash advance shall be reported on as soon as the purpose for which it was given has
been served.
c. No additional cash advances shall be allowed to any official or employee unless the
previous cash advance given to him is first settled/liquidated or a proper accounting
thereof is made.
GOVACC-DISBURSEMENT-RTCANLAS
d. Except for cash advance shall be allowed to any official or employee shall be granted cash
advance unless he/she is properly bonded in accordance with existing laws or regulations. The
amount of cash advance which may be granted shall not be exceed the maximum cash
accountability covered by his/her bond.
e. Only permanently appointed officials shall be designated as disbursing officers. Elected
officials may be granted a cash advance only for their official traveling expenses.
f. Only duly appointed or designated disbursing officers may perform disbursing functions.
Officers and employees who are given cash advances for official travel need not be designated
as Disbursing Officers.
g. Transfer of cash advance from one Accountable Officer (AO) to another shall not be allowed.
h. The cash advance shall be used solely for the specific legal purpose for which it was granted.
Under no circumstance shall it be used for encashment of checks or for liquidation of a previous
cash advance.

GOVACC-DISBURSEMENT-RTCANLAS
ILLUSTRATIVE ACCOUNTING ENTRIES FOR
DISBURSEMENTS BY CASH:
Salaries and wages P50,000
PERA 20,000
Total 70,000
Less Salary Deductions:
Withholding Tax 9,000
Life and Retirement Premium (GSIS) 8,500
GSIS Salary Loan 700
Pag-IBIG contributions 1,400
PhilHealth Contributions 3,800
Employees Association 200 23,600
Net Amount 46,400
Prepare the journal entry

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 Account Title Account Code Debit Credit
Salaries and Wages-Regular 50101010 50,000

PERA 50102010 20,000

Due to BIR 20201010 9,000

Due to GSIS 20201020 9,200

Due to Pag-IBIG 20201030 1,400

Due to PhilHealth 20101040 3,800

Other Payables 29999990 200

Due to Officer and 20101020 46,400

Employees
Set-up of Due to Officers and Employees and Salary Deductions

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 Account Title Account Debit Credit
Code

Advances for Payroll 19901020

46,400
10104040
Cash – MDS, Regular
46,400

To recognize granting of advances for payroll

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Due to Officer and Employees 20101020

46,400

Advances for Payroll 19901020

46,400

To liquidate payroll fund

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 Account Title Account Code Debit Credit
Due to GSIS 20201020 9,200

Due to Pag-IBIG 20201030 1,400

Due to PhilHealth 20101040 3,800

Other Payables 29999990 200

10104040 14,600
Cash – MDS, Regular

To pay for the contributions and other payables deducted from the salaries

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CASH ADVANCES FOR OPERATING
EXPENSES
Field/Extension/Satellite Offices are some of the
government units under the central/regional/district
offices without complete set of books of accounts.
These offices maybe granted cash advances covering
their two (2) months requirements for
MOOE/authorized expenses to finance their
operations.
Cash Disbursement Register (CDReg) must be
maintained and submitted within five (5) days after
month-end with supporting paid DVs and other
documents.
GOVACC-DISBURSEMENT-RTCANLAS
ILLUSTRATIVE ACCOUNTING ENTRIES FOR
DISBURSEMENTS BY CASH:
2 months operating expenses:
Office Supplies Expenses P22,000
Traveling Expenses 13,000
Water Expenses 6,000
Telephone Expenses 3,000
Electricity Expenses 15,000
Total 59,000
Prepare the journal entry

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Advances for Operating Expenses 19901010

59,000

Cash-MDS, Regular 10104040

59,000

To record granting of cash advance to field units without books of accounts

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 Account Title Account Code Debit Credit
Office Supplies Expenses 50203010 22,000

Traveling Expenses-Local 50201010 13,000

Water Expenses 50204010 6,000

Electricity Expenses 50204020 3,000

Telephone Expenses 50205020 15,000

Advances for Operating Expenses 19901010 59,000

To record liquidation of Cash advance

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CASH ADVANCES FOR TRAVEL
An employee of agency A was granted cash advance
for local travel in the amount of P5,000. Within a week
upon return to the personnel’s workstation this
employee prepared the liquidation report and
submitted it to the Accounting Division with
appropriate supporting documents.
Prepare the journal entry.

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Advances to Officers and Employees 19901040

5,000

Cash-MDS, Regular 10104040

5,000

To record granting of cash advance for local travel to officers and employees

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 Account Title Account Debit Credit
Code

Traveling Expenses-Local 50201010

5,000

Advances to Officers and Employees 19901040

5,000

To record liquidation of cash advance for local travel

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FOREIGN TRAVEL
A uniform personnel of Agency XXX was granted cash
advance for the foreign travel in the amount of
P250,000 to attend foreign training. Training expense
was allowed in the amount of P50,000. Within the
week upon return to the personnel’s workstation, the
employee prepared liquidation report and submitted it
to the Accounting Division with appropriate supporting
documents.
Prepare the journal entry

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Advances to Officers and Employees 19901040

250,000

Training Expenses 50202010

50,000

Cash-MDS, Regular 10104040

300,000

To record granting of cash advance for training abroad.

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 Account Title Account Debit Credit
Code

Travelling Expenses-Foreign 50201020

250,000

Advances to Officers and Employees 19901040

250,000

To record liquidation of cash advance for travel expenses incurred during training abroad.

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CASH ADVANCE FOR SPECIFIC
PURPOSE/TIME-BOUND
UNDERTAKING
It shall be granted only to duly authorized
accountable officer/ special disbursing
officer. It shall be accounted in the books
of accounts as “Advances for Special
Disbursing Officer.”

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Estimated expenses for the 125th anniversary celebration of
Agency AB:

Office Supplies Expenses P15,000

Traveling Expense 3,000
Printing and Publication 2,000
Total 20,000

Prepare the journal entry.

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Advances to Special Disbursing Officers 19901030

20,000

Cash-MDS, Regular 10104040

20,000

To record granting of cash advance for the 125th anniversary celebration.

GOVACC-DISBURSEMENT-RTCANLAS
 Account Title Account Debit Credit
Code

Traveling Expenses 50201010

3,000

Office Supplies Expenses 50203010

15,000

Printing and Publication Expenses 50299020

2,000

Advances to Special Disbursing Officers 10104040

20,000

To record liquidation of cash advance for 125th anniversary celebration.

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PETTY CASH FUND
The Petty Cash Fund of a government
entity is:
maintained using the imprest system.
sufficient to defray recurring petty expenses
for 1 month.
used for disbursements not exceeding
₱15,000 per transaction.
replenished as soon as disbursements reach
at least 75% or as needed.
GOVACC-DISBURSEMENT-RTCANLAS