Law Summary

1.0 Rationale

• Legal Basis: This Circular implements the Permanent Committee Joint Circular No. 4-2012, which enforces Executive Order No. 431, mandating the reversion of dormant accounts and unnecessary funds to the General Fund.
• Key Provision: Section 5.6 of the Joint Circular states that the Commission on Audit (COA) is responsible for establishing necessary accounting entries and documents for transferring cash balances of unauthorized accounts to the National Treasury (NT).

2.0 Purpose

• Objective: The Circular sets forth accounting guidelines and procedures for reverting dormant cash balances, unauthorized accounts, and unnecessary special and trust funds maintained by national government agencies (NGAs) to the General Fund.

3.0 Procedural Guidelines

3.1 Identification of Accounts

• Classification of Accounts: The Head of the Accounting Unit of the NGA must analyze and categorize cash accounts into specific groups: • Dormant accounts with inactivity beyond bank charges. • Accounts without legal authority or specific purpose. • Accounts with specific authority but held in non-Authorized Government Depository Banks (AGDBs). • Special and trust funds that are no longer necessary or have no valid claimants. • Cash balances held for liabilities pending requirements. • Other similar accounts.

3.2 Actions Required by Agency Officials

• Steps to Follow: • Evaluate and settle all valid claims. • Prepare Disbursement Vouchers (DVs) and checks. • Confirm existing balances with source agencies. • Obtain bank statements, reconcile balances, and assess necessity of accounts. • Determine proper disposition of cash balances, including withdrawals and returns to donors.

3.3 Accounting Entries

• Journal Entries: The NGA must record remittances to the NT as a debit to related accounts and a credit to Cash in Bank.

3.4 Submission Requirements

• Documentation: NGAs must submit verified copies of Journal Entry Vouchers (JEVs) and remittance documents within 30 days to: • Source Agency (if applicable). • Bureau of the Treasury (BTr). • COA.

3.5 Coordination with Source Agencies

• Closing Dormant Accounts: Implementing agencies must work with source agencies to close related dormant accounts.

3.6 Handling Unreconciled Differences

• Write-off Request: If discrepancies arise, agencies must request write-off from COA, supported by documentation of efforts made to reconcile.

3.7 Source Agency Responsibilities

• Adjustments: Source Agencies must confirm balances with recipient agencies and adjust financial records based on remittance information.

3.8 Bureau of the Treasury Actions

• Recording Reversions: Upon receiving JEVs, the BTr must record reverted cash balances and submit copies to COA.

4.0 Illustrative Accounting Entries

• Documentation: The Circular includes Annexes B1 and B2, which illustrate accounting entries and required supporting documents for the reversion process.

5.0 Administrative Sanctions

• Consequences for Non-compliance: Failure to adhere to the Circular's requirements may lead to disciplinary action under P.D. No. 1445 and Executive Order No. 292.

6.0 Repealing Clause

• Revocation of Prior Issuances: Any circulars or memoranda inconsistent with this Circular are repealed or modified accordingly.

7.0 Effectivity

• Effective Date: The Circular takes effect 15 days after publication in a newspaper of general circulation.

Key Takeaways

• The Circular establishes mandatory procedures for reverting dormant and unauthorized accounts to the General Fund by NGAs.
• It outlines specific classifications of accounts, required actions by agency officials, and submission protocols.
• Non-compliance may result in administrative sanctions, emphasizing the importance of adherence to the guidelines set forth.
• The Circular reinforces the need for proper accounting and documentation throughout the reversion process.