Legal basis, policy, and intent
- Executive Order No. 431 directs the reversion of all dormant accounts and unnecessary special and trust funds to the General Fund.
- Permanent Committee Joint Circular No. 4-2012 provides the implementing rules for Executive Order No. 431.
- COA Circular No. 2015-001 sets accounting guidelines and procedures for NGAs using depository banks to revert cash balances and related funds to the General Fund through the NT.
Scope: who and what is covered
- The circular applies to national government agencies (NGAs) that maintain:
- dormant cash balances, and
- unauthorized accounts, and
- unnecessary special and trust funds, including related accounts.
- The circular applies when the NGAs’ dormant/unauthorized/unnecessary funds are maintained by NGAs with depository banks.
- The circular specifically addresses NGAs with dormant cash/unauthorized accounts and unnecessary special and trust funds and recipients of inter-agency fund transfers (Section 3.1 and Section 3.7).
- The circular also addresses the Source Agency (SA) for inter-agency fund transfer, and the Bureau of the Treasury (BTr) for receipt and accounting of reverted balances (Section 3.7 and Section 3.8).
How accounts are identified and grouped
- The Head of the Accounting Unit of an NGA must conduct thorough analysis of the cash accounts and provide cash account mapping and/or group cash accounts into the following categories (Section 3.1):
- (a) Accounts pertaining to collections deposited/maintained with an Authorized Government Depository Bank (AGDB) that have remained inactive, or that have no transactions other than periodic bank charges based on BSP existing regulation.
- (b) Accounts or cash balances maintained without specific authority or legal basis or specific purpose.
- (c) Accounts or cash balances maintained with specific authority but deposited with non-AGDBs.
- (d) Cash accounts, special and trust funds maintained with AGDBs but without valid claimants, or no longer necessary for the purpose for which funds were established/received, or where project implementation has been completed, terminated, cancelled, or abandoned.
- (e) Cash balances intended to fund liabilities with valid claimants, but payments are held in abeyance pending completion of certain requirements.
- (f) All other accounts similar to those in (a) to (e).
- The NGA’s grouping requirement applies after the accounting unit completes analysis and mapping/grouping (Section 3.1).
Core procedures for reversion
- After analysis, the NGA officials/personnel must perform the following actions (Section 3.2):
- (a) Evaluate all valid claims.
- (b) Prepare Disbursement Voucher (DVL) and the corresponding check for settlement of valid claims.
- (c) Determine remaining balances of cash in bank accounts listed under Section 3.1, as recorded in the books of accounts.
- (d) In inter-agency fund transfer, confirm from the Source Agency (SA) the existing balance per books.
- (e) Obtain the latest bank statements of the dormant accounts, prepare bank reconciliation, and reconcile bank balances with book balances.
- (f) Evaluate the legal bases to determine if continuing existence of the accounts/funds is still necessary.
- (g) After completing steps (c) to (f), determine the proper disposition of cash balances based on Permanent Committee instructions, including the following:
- Prepare the DV and check for withdrawal from the AGDB or non-AGDB cash account balances, and deposit to the NT.
- Prepare Journal Entry Vouchers (JEVs) to record reversion to the NT of the balances of dormant accounts and unnecessary unused balances of special and/or trust funds.
- Return unutilized balances to the SA/donors/financing entities for grants or foreign-funded programs/projects where attendant agreements require return of unused balances.
Accounting entries and required submissions
- In the NGA’s books, the remittance entry must record:
- a credit to the Cash in Bank account, and
- a debit to the related accounts (Section 3.3).
- The NGA must submit through its Audit Team Leader (ATL) the audited/verified copies of the JEVs on remittance of dormant balances to the NT to (Section 3.4):
- (a) the SA, if any, within 30 days after remittance;
- (b) the BTr, within 30 days after remittance, together with copies of validated remittance advices or deposit slips; and
- (c) COA as Government Accountancy Sector (GAS), together with the agency’s year-end financial reports.
- For inter-agency fund transfers, the Implementing Agency must coordinate with the SA to close related dormant accounts in the SA’s books (Section 3.5).
Reconciliation gaps and write-off process
- If unreconciled differences/balances remain after the reconciliation procedures due to absence or lack of underlying records and documents, the Head of the Agency must immediately submit a request for write-off to COA, consistent with Section A.10 of COA Circular No. 97-001 dated February 5, 1997, supported by (Section 3.6):
- (a) a list of available records and the extent of validation made; and
- (b) a certification stating the reasons why the agency’s books of accounts/records, financial statements/schedules, and supporting vouchers/documents cannot be located.
Inter-agency and Treasury accounting handling
- For inter-agency fund transfer, the Head of the Accounting Unit of the SA must (Section 3.7):
- (a) confirm and reconcile the unliquidated balance of fund transfers with the recipient/implementing agency and effect adjustment if warranted;
- (b) record the adjustment of the receivable account by debiting Accumulated Surplus/(Deficit) and crediting the appropriate receivable account, based on the copy of the JEV furnished by the recipient/implementing agency; and
- (c) furnish the recipient/implementing agency and GAS, COA, through the ATL concerned, with audited/verified copies of the JEVs covering the reversion.
- Upon receipt of verified/audited copies of JEVs and the bank’s Abstract of Collections and Deposit, the BTr must (Section 3.8):
- (a) take up the amount of reverted cash balances with a corresponding credit to Accumulated Surplus/(Deficit); and
- (b) submit audited/verified copies of the JEV through the BTr ATL of the BTr to GAS, COA.
Administrative sanctions and effectiveness
- Failure of officials/employees concerned, including the Head of the concerned Agency/Office, to comply with the circular’s requirements subjects them to administrative disciplinary action under:
- Section 122 (2), Chapter 3, Title III, P.D. No. 1445, and
- Section 55, Chapter 10, Sub-title I-B, Book V of Executive Order No. 292, series of 1987 (Section 5).
- In the event of inconsistency, all circulars, memoranda, and other issuances or parts that are inconsistent with the circular are repealed/modified accordingly (Section 6).
- The circular’s effectivity is 15 days after publication in newspapers of general circulation (Section 7).