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MASAGANANG SAKAHAN, INC.

A Landbank Subsidiary

ACCOUNTING SYSTEM MANUAL


DECEMBER 2012

Accounting System Manual Page 1


TABLE OF CONTENTS
Page No.
I. INTRODUCTION 4
II. GENERAL ACCOUNTING PLAN 5
III. A. Chart of Accounts 6

B. Description of Accounts 11 – 30
IV. DETAILED POLICIES, SYSTEMS & PROCEDURES
 Cash Receipt System 30 - 32
 Cash Disbursement System 31
A. Preparation of Voucher & Recording of
Obligation 32 - 34
B. Preparation of Check and Recording of
Payment
 Accounting System for Sales 35
 Recording of Non-Cash Transactions
- Journal Voucher Preparation 36

 Bank Reconciliation Statement 37


 Petty Cash Fund Operation 38
 Granting & Liquidation of Cash Advance 39
 Granting & Liquidation of Cash Advance official travel 40 - 42
 Emergency Purchases 42
 Requisition and Purchase of Supplies and Materials 42
 Requisition and Purchase of Property and Equipment 42
 Receipt of Supplies and Materials 43
 Receipt of Property and Equipment 43
 Issuance of Supplies 44
 Issuance of Property and Equipment 44
 Insurance Coverage of Property and Equipment 44
 Depreciation of Property and Equipment 44-45
 Repairs and Maintenance of Equipment 45-46
 Physical Inventory of Property and Equipment 46
 Return and Transfer of Property and Equipment 46
 Retirement and Disposal of Property and Equipment 47

Accounting System Manual Page 2


FORMS EXHIBITS

Title Exhibit No.

 General Ledger 1
 General Journal 2
 Cash Receipts and Deposits Book 3
 Voucher Register Book 4
 Check Register Book 5
 Sales Book 6
 Report of Collections and Deposits 7
 Petty Cash Advance 8
 Reimbursement/Liquidation Form 9
 Temporary Cash Advance 10
 Subsidiary Ledger 11
 Travel Itinerary 12
 Travel Order 13
 Purchase Order 14
 Purchase Requisition 15
 Materials Received Report 16
 Requisition and Issue Slip 17
 Memorandum Receipt 18
 Check Voucher 19
 Disbursement Voucher 20
 Collection Receipt/ Official Receipt 21

Accounting System Manual Page 3


I. INTRODUCTION

This Accounting Manual of the Masaganang Sakahan, Inc. was specifically


designed to fit the needs of the corporation in respect to its operations and
financial control system.

The objectives of the system are:

1. To optimize the use of its resources through efficient operations;


2. To ensure proper and expedient accumulation of data;
3. To provide for an effective internal control system and procedures that will
safeguard the company’s assets;
4. To equip management with vital and meaningful information by way of
accurate as well as timely reporting; and
5. To ascertain from such management and financial reports the viability of its
operations.

This Manual consists of the following:

1. General Accounting Plan


2. Chart of Accounts
3. Description of Pertinent Accounts
4. Illustrative Accounting Entries
5. Formats of Books of Accounts
6. Formats of Subsidiary Ledgers
7. Form Exhibits

The detailed procedures show the route the forms follow and indicate how these
forms are entered in the Books of Accounts; likewise indicating the level of
responsibilities involved in each transaction, the number of required copies as
well as the proper distribution of copies for various forms.

Accounting System Manual Page 4


II. GENERAL ACCOUNTING PLAN

Various transactions involved in the corporations’ operations are linked


progressively from the source documents to the Books of Accounts to the
General Ledger and finally to the Subsidiary Ledger. This inter-relationship is
presented more coherently in graphic form in the General Accounting Plan (See
Exhibit GAP-1).

The underlying general principles comprising the basic features contained in the
accounting system are follows:

1. Accountability for the discharge of duty; i.e. responsibility for the


performance of a specific duty is fixed:

2. Automatic check through widely dispersed functions; i.e. no one person


should have complete in charge of a business transaction to ensure that
errors committed inadvertently or deliberately will be discovered
subsequently by others handling the same transaction;

3. Test of accuracy; i.e. all proofs of accuracy to the extent practicable should be
employed to ensure the correctness of the accounting data compiled;

4. Segregation of duties; i.e. the performance of physical functions should be


separated from recording functions so that an employee is not in a position
where he/she has control of the records and at the same time control of the
operations giving rise to the records; and

5. Integrity of record; i.e. only transactions pertaining to the operations of the


corporation should be included in the books of accounts.

Accounting System Manual Page 5


MASAGANANG SAKAHAN, INC.

CHART OF ACCOUNTS

ASSETS
CURRENT ASSETS

Cash

Cash In Bank

Petty Cash Fund

Area Operating Fund

Cash Collecting Officer

Cash Other Officer

Marketable Securities

Accounts Receivables

Receivables - Trade/Business

Receivables - Miscellaneous

Receivables - Others

Receivables - Notes

Receivables – Sales Contract

Inventories

Inventories - Rice

Inventories - Palay

Inventories - Brokens

Inventories - By-Products

Inventories - Binlid

Inventories - Supplies and Materials

Prepaid Expenses

Accounting System Manual Page 6


Other Assets

Miscellaneous Assets and Deferred Charges

Miscellaneous Assets and Deferred Charges - Guaranty Deposits

Miscellaneous Assets and Deferred Charges - Short Term Investment

Miscellaneous Assets and Deferred Charges – Miscellaneous

Contingent Assets

Contingent Assets - claims from accountable officers for cash shortages

Contingent Assets - claims for dishonored checks

Non- Current Assets

Plant, Property and Equipment

Transportation Equipment

Furniture and Fixtures

Office Equipment

Other Property Plant and Equipment

Machineries

Investment Property

Investments

Investments on Stocks and Bonds

Deductions from Assets

Allowance from Valuation and Accumulated Depreciation

Allowance for Doubtful Accounts - Receivables -Trade/Business

Allowance for Doubtful Accounts – Receivables- Miscellaneous

Allowance for Doubtful Accounts - Receivables- Others

Allowance for Doubtful Accounts - Receivables- Notes

Allowance for Doubtful Accounts - Receivables- Sales Contract

Allowance from Valuation and Accumulated Depreciation - Transportation

Accounting System Manual Page 7


Equipment

Allowance from Valuation and Accumulated Depreciation - Furniture and


Fixtures

Allowance from Valuation and Accumulated Depreciation - Office Equipment

Allowance from Valuation and Accumulated Depreciation - Other Property


Plant and Equipment

Allowance from Valuation and Accumulated Depreciation – Machineries

*Allowance for Market Decline

---

*Revised as of September 2014

Accounting System Manual Page 8


LIABILITIES

CURRENT LIABILITIES

Payables

Payables – Vouchers

Payables - Trade/Business

Payables – Miscellaneous

Payables – Income Tax

Trust Liabilities

Trust Liabilities - Withholding Tax Payable

Trust Liabilities – SSS Premium Payable

Trust Liabilities – SSS Loans payable

Trust Liabilities – Philhealth Premium Payable

Trust Liabilities – PAG-IBIG Premium Payable

Trust Liabilities – PAG-IBIG Loans Payable

Trust Liabilities – Miscellaneous

Other Liabilities

Miscellaneous Liabilities and Deferred Credits

Miscellaneous Liabilities and Deferred Credits – Containers and property

Miscellaneous Liabilities and Deferred Credits - Miscellaneous

Accounting System Manual Page 9


S U R P L U S and C A P I T A L

Income / Estimated Revenue (Summary Account)

Current Surplus Unappropriated – Earned Surplus and Reserves

Current Surplus Unappropriated – Balance At the End of the Year/


Retained Earnings

Provision for Income Tax

Surplus Reserves

- For Plant Expansion


- For Retirement Of Employees
- For Replacement Of Plant and Office Equipment
- Others

Capital

Authorized Capital Stock

Accounting System Manual Page 10


ASSETS

CASH

CASH IN BANK

This account is used to record deposits in a current account with authorized domestic
depository banks.

Debit this account for:

- Current account deposits with authorized depository banks.


- Special deposits with authorized depository banks
- Credit advices received from depository banks

Credit this account for:

- Withdrawals or reduction of deposits with authorized depository banks


- Debit advices received from depository banks.

CASH – COLLECTING OFFICERS

This account is used to record unremitted or undeposited collections of collecting officers of


the corporation.

Debit this account for:

- Collections made by collecting officers

Credit this account for:

- Remittances by collecting officers or deposit to corporate account.

CASH- DISBURSING OFFICERS

This account is used to record the amount of cash advances in the custody of officers of the
agency/corporation granting the cash advance who are duly designated regular and special
disbursing officers and whose duties are to disburse funds in payment of authorized official
expenditures.

Debit this account for:

- Cash advances to duly designated regular and special disbursing officers

Accounting System Manual Page 11


Credit this account for:

- Authorized official payments made by the disbursing officers.


- Cash advances refunded.

CASH – OTHER OFFICERS

This account is used to record cash advances granted to officers and employees of the
corporation for specific authorized official expenditures.

Debit this account for:

- Cash advances granted.

Credit this account for:

- Payments made by the officer /employee


- Cash advance refunded.

RECEIVABLES

RECEIVABLES – TRADE/BUSINESS

This account is used to record the amount due from customers resulting from
trading/business transactions, other than those supported by some form of commercial papers,
which are expected to be collected in the regular course of business.

Debit this account for:

- Sale of goods and services on account.


- Other amounts due from customers resulting from trading/business transactions.

Credit this account for:

- Settlement of above-mentioned accounts.


- Write-off of uncollected accounts.

RECEIVABLES – MISCELLANEOUS

This account is used to record the amount due from all parties which do not fall under any of
the other classes of receivables. Included in this account are lease/rental and commission
receivables.

Debit this account for:

- Salaries, pensions or gratuities refundable.


- Other amounts due from private debtors and entities which cannot be classified under
any of the other foregoing receivables accounts.
- Interest accrued but not yet due/collectible.

Credit this account for:

Accounting System Manual Page 12


- Collection of above-mentioned items.

INVENTORIES

INVENTORIES – RICE

INVENTORIES – PALAY

INVENTORIES – BROKENS

INVENTORIES – BY PRODUCTS

This account is used to record the cost or other appropriate value of merchandise in stock
which have been purchased/ produced/ milled and intended for sale.

Debit this account for:

- Goods purchased for sale.


- Goods or merchandise for sale which have been manufactured/ produced/ milled

Credit this account for:

- Sales or disposition of the above items.


- Inventory shortage or deterioration

INVENTORIES – SUPPLIES AND MATERIALS

This account is used to record the cost or other appropriate value of supplies and materials
acquired for immediate use in the course of operations.

Debit this account for:

- Supplies and materials purchased for use.

Credit this account for:

- Use/consumption/disposition of the above items.

PREPAID EXPENSE

This account is used to record expenses paid in advance but not yet incurred

Debit this account for:

- Advance payment made for billings

Credit this account for:

- Recording of expenses incurred (expired portion) for the period

MISCELLANEOUS ASSETS AND DEFERRED CHARGES

MISCELLANEOUS ASSETS AND DEFERRED CHARGES – GUARANTY DEPOSITS

Accounting System Manual Page 13


This account is used to record the amount of deposits subject to refund which are made to
secure or guaranty compliance with certain requirements in a transaction.

Debit this account for:

- Deposits for the exercise of an option to buy or lease


- Deposits to secure stocks and bonds of government corporations.
- Other deposits to guaranty performance.

Credit this account for:

- Refund or forfeiture of the above deposits.

MISCELLANEOUS ASSETS AND DEFERRED CHARGES – SHORT TERM INVESTMENT

This account is used to record the cost or other appropriate value of authorized marketable
securities acquired as a means of temporarily investing excess/idle funds.

Debit this account for:

- Government bonds
- Treasury bonds
- Other authorized marketable securities

Credit this account for:

- Resale or disposition of the above

MISCELLANEOUS ASSETS AND DEFERRED CHARGES – MISCELLANEOUS

This account is used to record the amount of deposits, charges and other assets which do
not fall under any of the miscellaneous assets and deferred charges.

Debit this account for:

- Installment sales over one year.


- Deposits on light, water, and gas meters.
- Deposits for goods transported COD.
- Deposits on Telephone installation.
- All other deposits, deferred charges, and other assets.

Credit this account for:

- Settlement or disposition of the above.

CONTINGENT ASSETS

CONTINGENT ASSETS – CLAIMS FROM ACCOUNTABLE OFFICERS FOR CASH SHORTAGES.

This account is used to record the amount of cash shortages in the accountability of
collecting/disbursing officers pending final settlement or disposition.

Accounting System Manual Page 14


Debit this account for:

- Shortages arising from embezzlements.


- Shortages arising from robbery, theft, fire or other calamities.

Credit this account for:

- Settlement or disposition of the above.

CONTINGENT ASSETS – CLAIMS FOR DISHONORED CHECKS

This account is used to record the amount due from third parties whose checks, previously
issued were dishonored by their banks.

Debit this account for:

- Dishonored checks

Credit this account for:

- Collections made on the above items.

INVESTMENTS

INVESTMENTS – ON STOCKS AND BONDS

This account is used to record long-term investments on stocks and bonds.

Debit this account for:

- Subscriptions to capital stocks of government and private corporations other than public
enterprises.
- Subscriptions to bond issues of government and private corporations.

Credit this account for:

- Redemption of bonds by issuing corporations.


- Resale of bonds.

PROPERTY, PLANT AND EQUIPMENT

BUILDINGS AND STRUCTURES

This account is used to record the cost or appraised value or other appropriate value of
buildings and structures which are more or less permanent and capital in nature.

Debit this account for:

- Acquisitions or additions through –


a. Purchase or construction
b. Transfers from other government agencies

Accounting System Manual Page 15


c. Transfers from other funds
d. Free acquisition
e. Donations received
f. Appreciation
g. Adjustments (Addition)

Credit this account for:

Disposition or reductions through -

a. Sale
b. Transfers to other government agencies
c. Transfers to other funds
d. Losses or other involuntary disposition
e. Donation given
f. Depreciation/Destruction
g. Adjustment (reduction)

TRANSPORTATION EQUIPMENT

FURNITURE AND FIXTURES

OFFICE EQUIPMENT

Debit the pertinent account for:

Acquisition or additional through –

 Purchase or construction
 Transfers from other government agencies
 Transfers from other funds
 Free acquisition
 Donations received
 Appreciation
 Adjustment (additions)

Credit the pertinent account for:

Disposition or reductions through –

 Sale
 Transfers to other government agencies
 Transfers to other funds
 Losses or other involuntary disposition
 Donation given
 Destruction
 Adjustments (reduction)

ALLOWANCES FOR VALUATION AND ACCUMULATED DEPRECIATION

Accounting System Manual Page 16


ALLOWANCE FOR DOUBTFUL ACCOUNTS

This account is used to record reduction in the value of receivable accounts which are
considered uncollectible.

Debit this account for:

- Accounts of particular customers which have been determined to be uncollectible

Credit this account for:

- Estimated amount of uncollectible accounts

ALLOWANCE FOR VALUATION AND ACCUMULATED DEPRECIATION- BUILDINGS AND STRUCTURES

This account is used to record the estimate of the cumulative amount of capital (originally
invested in buildings and structures) used up because of fixed assets services consumed in operation
or in production of income. A separate allowance for depreciation account should be maintained for
each group of depreciable fixed assets.

Debit the pertinent account for:

- Value of the building or structure to which the allowance relates upon its retirement or
sale or demolition.

Credit the pertinent account for:

- Amount of periodic charges as depreciation expenses for buildings and structures.

ALLOWANCES FOR VALUATION AND ACCUMULATED DEPRECIATION –

TRANSPORTATION EQUIPMENT
FURNITURE AND FIXTURES
OFFICE EQUIPMENT
OTHER PROPERTY PLANT AND EQUIPMENT
MACHINERIES

This account is used to record the estimate of the cumulative amount of capital (originally
invested) used up because of fixed assets services consumed in operation or in the production of
income. A separate allowance for depreciation account should be maintained for each group of
depreciable fixed assets.

Debit the pertinent account for:

- Value of the pertinent property to which the allowance relates upon its retirement or
sale.

Credit the pertinent account for:

- Amount of the periodic charges to depreciation expenses for the pertinent property

Accounting System Manual Page 17


LIABILITIES
PAYABLES

PAYABLES – VOUCHERS

This account is used to record the amount of goods and services purchased on account.

Debit this account for

- Amounts paid to settle or liquidate the liabilities.

Credit this account for:

- Purchases of goods and services on account.

PAYABLES – TRADE/BUSINESS

This account is used to record liabilities for purchases of goods for resale and raw materials
for manufacture or production and other obligations in connection with the agency’s trade/business.

Debit this account for:

- Payments to settle or liquidate the liabilities.

Credit this account for:

- Liabilities arising from the agency’s trade/business

PAYABLES – NOTES, ACCEPTANCES AND LC’s

This account is used to record liabilities represented and letters of credit.

Debit this account for:

- Payments to settle promissory notes, trade acceptances and letters of credit.

Credit this account for:

- Amount due represented by promissory notes.


- Amount due represented by trade acceptance.
- Amount due represented by letters credit.

PAYABLES – MISCELLANEOUS

This account is used to record all other liabilities not falling under any of the above types or
classes of accounts payable. Included in this account is interest payable on loans.

Debit this account for:

- Payments made to settle the liabilities.

Accounting System Manual Page 18


Credit this account for:

- Excess payments received from parties other than government entities.


- Amount due for goods and services furnished by parties other than government entities.
- Unpaid obligations to officials and employees of the national and local government
agencies and government corporations.
- Liabilities arising from transactions with non-government parties.
- Dividends declared by the board.
- Portion of loans payable due within the year.

TRUST LIABILITIES

TRUST LIABILITIES – WITHHOLDING TAX PAYABLE

This account is used to record the liability for collections received or amounts withheld in
trust for the account of national government agencies and advances made by national agencies for
specific purposes or expenditures.

Debit this account for:

- Remittance to the national government agencies concerned of collections received or


amount withheld for their account.

Credit this account for:

- Amounts received or collected/withheld for the account of national government


agencies.
- Advances received/withheld from national agencies for specific expenditures or
purposes.

TRUST LIABILITIES –

SSS PREMIUM WITHHELD

SSS LOAN WITHHELD

PAG-IBIG PREMIUM WITHHELD

PAG-IBIG LOAN WITHHELD

PHILHEALTH PREMIUM WITHHELD

This account is used to record the liability for collections received or amounts withheld in
trust to government-owned or controlled corporations.

Debit this account for:

Remittance of collections received or amounts withheld for the account of the government-owned
and/or controlled corporations concerned.

Accounting System Manual Page 19


Credit this account for:

- Amounts collected/withheld for the account of government corporation.

TRUST LIABILITIES – MISCELLANEOUS

This account is used to record the amount of funds collected or amount withheld in trust not
falling under any of the other types or classes of trust liability accounts.

Debit this account for:

- Amount of collections remitted to the private individual or entity concerned.


- Liquidation of the advances received from private individual or entities.

Credit this account for:

- Amounts collected for the account of private individuals and entities.


- Advances received from private individuals and entities for specific purposes or
expenditures.
- Contractor’s retention money.

MISCELLANEOUS LIABILITIES AND DEFERRED CREDITS –


MISCELLANEOUS LIABILITIES AND DEFERRED CREDITS – SUPPLIERS

Debit this account for:

- Return of guaranty deposit

Credit this account for:

- Amount received as guaranty deposits

MISCELLANEOUS LIABILIITES AND DEFERRED CREDITS - MISCELLANEOUS

This account is used to record all other miscellaneous liabilities and deferred credits which
cannot be classified under any of the miscellaneous liabilities and deferred credits account.

Debit this account for:

- Disposition of the miscellaneous items.

Credit this account for:

- Other deferred credits.

SURPLUS AND CAPITAL

INCOME/ESTIMATED REVENUE

This shall be used as a summary account for income only at year-end. Correction of prior
year’s profit is included in this account.

Accounting System Manual Page 20


Debit this account for:

- Year-end reversion of income to retained earnings.


- Adjustment (correction of prior year’s adjustment)

Credit this account for:

- Income realized
- Adjustment (correction of prior year’s adjustment)

CURRENT SURPLUS UNAPPROPRIATED – EARNED SURPLUS AND RESERVES

CURRENT SURPLUS UNAPPROPRIATED – BALANCE AT END OF YEAR/RETAINED EARNINGS

This account reflects profits and losses of a corporation. Its balance indicates the cumulative
amount earned over the corporate life of a business which has not been capitalized, consumed by
losses, or distributed as dividends to stockholders.

Debit this account for:

- Net loss of each accounting period.


- Distribution of earnings to stockholders in the form of dividends.
- Reserve for plant expansion.
- Reserve for pending litigation.
- Reserve for retirement gratuities.
- Reserve for corporate sinking fund.
- Reserve for treasury stocks.

Credit this account for:

- Net income of each accounting period

PROVISION FOR INCOME TAX

This account is used to record provision for income tax.

Debit this account for:

- Provision for periodic payment of income tax.

Credit this account for:

- Income tax charged to retained earnings.

SURPLUS RESERVES

CURRENT SURPLUS UNAPPROPRIATED – SURPLUS RESERVES - RESERVE FOR PLANT EXPANSION

This account is used to record retained earnings earmarked for the expansion of plant.

Debit this account for:

Accounting System Manual Page 21


- Value of the expansion that had already been completed and paid for.

Credit this account for:

- Retained earnings earmarked for plant expansion.

CURRENT SURPLUS UNAAPROPRIATED – SURPLUS RESERVES – RESERVE FOR RETIREMENT


GRATUITIES

This account is used to record the accumulated amount of retained earnings earmarked
each year for the payment of retirement gratuities of corporate personnel.

Debit this account for:

- Gratuities paid to retired corporate personnel.

Credit this account for:

- Retained earnings earmarked each year for retirement gratuities.

CURRENT SURPLUS UNAPPROPRIATED – SURPLUS RESERVES – RESERVE FOR REPLACEMENT OF


FIXED ASSETS

This account is used to record retained earnings earmarked for replacement of fixed assets.

Debit this account for:

- Fixed assets acquired as replacements.

Credit this account for:

- Retained earnings earmarked for replacement of fixed assets.

CURRENT SURPLUS UNAPPROPRIATED –SURPLUS RESERVES – OTHER RESERVES

This account is used to record the amount of retained earnings earmarked for reserves other
those specified above.

Debit this account for:

- Charges to other reserves.

Credit this account for:

- Retained earnings earmarked for other reserves.

CAPITAL

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CAPITAL

This is account is used to record capitalization given to the corporation or the capital stock
which it is legally authorized to issue as stated in its charter.

Debit this account for:

- Write-off upon liquidation or dissolution of the corporation after all its liabilities has
been paid.

Credit this account for:

- Capital/capital stock authorized by the charter of the corporation

Accounting System Manual Page 23


EXPENDITURES

PERSONAL SERVICES

PERSONAL SERVICES

This account includes the pay proper, accrued terminal leave pay, salary adjustments and
standardization; allowances for subsistence, quarters, laundry, cost of living, per diem compensation
and longevity pay; premiums for social security insurance; overtime pay; commutable allowances for
transportation and representation expenses for training and improvement of personnel by agencies
with schooling activities; fees, allowances and other emoluments given to consultants and
specialists; bonuses and incentives; and hospitalization, medical, dental, optical, hazard pay, and
other benefits given to officials and employees.

SALARIES AND WAGES

SALARIES AND WAGES – TERMINAL LEAVE

PER DIEM COMPENSATION AND NON-COMMUTABLE ALLOWANCES

SSS PREMIUM

PHILHEALTH PREMIUM

PAG-IBIG PREMIUM

OVERTIME PAY

COMMUTABLE ALLOWANCES

CONSULTANTS’ AND SPECIALISTS’ FEES AND ALLOWANCES

BONUSES AND INCENTIVES

OTHER BENEFIT

PENSIONS

MAINTENANCE AND OTHER OPERATING EXPENSES


TRAVELLING EXPENSES

This account includes expenses incurred in the movement of persons, whether employed in
the government or not, such as transportation, subsistence, lodging and travel per diem, hire of
guides or patrol, transportation of personnel baggage or household effects; railroads, airline, and
steamship fares, tips transfers, etc. of persons while travelling abroad; charter of boats, launches,
automobiles, etc., non-commutable transportation allowances, road tolls, parking fees and all other
similar expenses.

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COMMUNICATION SERVICES

This account includes expenses for the communication of messages such as telephone,
wireless and cable charges and tolls, postage charges; rent of post office boxes; and messengerial
services.

REPAIR AND MAINTENANCE OF GOVERNMENT FACILITIES

This account includes the cost of repairing and maintaining government facilities such as
public buildings, roads, bridges, irrigation systems, river control and sea protection works, artesian
wells, water supply systems, telegraph lines, radio stations, wharves and other public structures.

TRANSPORTATION SERVICES

This account includes cost of transportation of things such as commercial transportation of


mail hauling charges and insurance of items sold by the government, hauling of government
equipment or materials from one place to another, including cargadores and storage, if any, and
freight charges.

OTHER SERVICES

This account includes the cost of all other services which are not otherwise classified under
any other account. Examples are: expenses for training; seminars/workshops of personnel;
advertising and publication of notices in newspapers; repairs and maintenance of equipment (except
motor vehicle) when done by other government agencies or by others and the cost of their
alterations and improvements. Examples are: office and grounds, quarters of personnel, arsenal,
barracks, warehouses, school houses, office machines, and road and other maintenance equipment.

INTERESTS

This account includes charges for the use of funds belonging to others such as interest on
bonds, loans, overdrafts, treasury notes, certificates of indebtedness, and other interest-bearing
obligations.

LOAN REPAYMENT AND SINKING FUND CONTRIBUTION

This account includes payments made either directly or into a sinking fund established for
the retirement of public debt and other long term obligations.

LOSSES/DEPRECIATION/DEPLETION

This account includes losses of current assets due to deterioration of supplies and sales
stock, uncollectible debts and losses of government funds or property.

SUPPLIES AND MATERIALS

This account includes the cost of all expendable commodities acquired or ordered for
immediate use in connection with company’s operation. It also includes, but is not restricted to

Accounting System Manual Page 25


items (1) normally consumed within one year after being put into use, or (2) converted in the
process of manufacture or construction, having a life expectancy of more than one year but which
shall have decreased substantially in value after being put into use in only one year.

RENTS

This account includes the fees for the use of facilities or equipment.

WATER, ILLUMINATION AND POWER SERVICE

This account includes the cost of water and electricity or gas for illumination, consumed in
facilities such as office buildings, shops and grounds; streets, plazas, parks and monuments; etc. in
connection with the company’s operations and projects.

MAINTENANCE OF MOTOR VEHICLES USED FOR OFFICIAL TRAVELS OF OFFICIALS AND EMPLOYEES

This account includes the cost of maintaining automobiles and other vehicles for official
travels of officials and employees. The following sub-accounts shall be used to identify the purpose
of expenditures:

1. Repairs and servicing


2. Spare parts
3. Gasoline & Oil

DISCRETIONARY EXPENSES

This account includes the cost of services, which are confidential in nature, rendered by
persons who are temporarily employed by authorized administrative or executive officers to carry
on successfully administrative activities; and expressly authorized confidential expenses for which
appropriations have been approved specifically for the purpose.

REPRESENTATION EXPENSE

This account includes the expenses for entertainments, memorials, flowers and the like. The
purpose of the expenses should be of public character, beneficial to the interest of the public
service, and connected with the exercise of the powers and functions of the agency concerned.

TAXES, DUTIES AND FEES

This account includes payments and provisions for all taxes and licenses except income tax.

TRADING/PRODUCTION

This account is for the exclusive use of agencies engaged in trading/production. Each agency
shall supply the sub-accounts of expenditures peculiar to its business such as cost of sales, cost of
production/manufacturing, direct cost, indirect cost, etc.

*LOSS ON SHRINKAGE

Accounting System Manual Page 26


This account is use to record the total cost of palay shrinkage at the end of the year or after
the
issuance of the stocks. The loss on shrinkage will be the difference in the weight/cost of palay
received and t of palay issued.

----

*Revised as of September 2014

Accounting System Manual Page 27


INCOME/RECEIPTS

OPERATING AND MISCELLANEOUS INCOME


OPERATING AND SERVICE INCOME

INTEREST INCOME – DEPOSITS WITH GOVERNMENT BANKS

This account includes all interest earned on account of the agency’s business operation and
rendition of government service and deposits with banks.

COMMISSION

This account includes all commissions earned on account of the agency’s operations.

RENT

This account includes rents earned for lease of property such as land, buildings, machinery
and equipment to the private sector.

OPERATING AND SERVICE INCOME – TRADING/PRODUCTION

SALES

SALES RETURNS

This account includes all income derived from business trading operation.

MISCELLANEOUS INCOME

This account includes all other income derived on account of corporate service and business
operations not falling under any of the above-mentioned incomes.

INCOME FROM PUBLIC ENTERPRISES/INVESTMENT

This refers to interest income and dividends, in respect of financial assets, rent and royalties,
in respect of the use of land.

INCOME FROM PUBLIC ENTERPRISES INVESTMENTS – DIVIDENDS ON STOCKS

This account includes dividends in any form derived from investments on stocks of
corporations including public enterprises.

MISCELLANEOUS INCOME INVENTORY ADJUSTMENTS

This account includes the value of articles found as overages in any of the items falling under
asset account “Inventories”.

MISCELLANEOUS INCOME – MISCELLANEOUS

This account includes all other income not included in the income accounts previously
enumerated.

Accounting System Manual Page 28


GRANTS
GRANTS

This includes all non-repayable unrequited transfers received from other levels of
government, private sector or international institutions. Grants encompass reparations and gifts for
particular projects or programs, general budget support or of any other purposes.

GRANTS AND AIDS – FROM OTHER LEVELS OF GOVERNMENT

This account includes grants and aids consisting of money and/or materials coming from
another level of government within the country such as from national to local government and vice-
versa; and from national or local government to government-owned or controlled corporations and
vice-versa.

DUE FROM ACCOUNT

DUE FROM PLANT/FIELD OFFICE

This account is used to record the amount due from/to the field office/unit of government
and/or controlled corporations.

Debit this account for:

- Transfer of funds and/or assets to field office.


- Payment of field office expenses/ payables.
- Income transferred from field office.

Credit this account for:

- Remittance of collection from field office through authorized government depository


bank.
- Transfer of assets from field office.
- Expenses paid by field office.
- Receipt of refund for excess funds from field office.
-

CASH RECEIPTS
1. The responsibility for the receipts, custody and subsequent deposit of all collections
is vested in the Cashier.

2. All cash receipts are deposited intact the following banking day. While on hand,
these collections are segregated from other funds.

3. Encashment of personal checks from the undeposited collections is prohibited.

Accounting System Manual Page 29


4. Only the cashier or the duly designated employee is authorized to issue Official
Receipt.

5. Cash receipt is reported in the daily Report of Collections and Deposits and must
equal the total of Official Receipts issued during the day.

6. The Cashier must not have access to the accounting records.

7. Post-dated checks received from customer/s shall be acknowledged by a provisional


receipt only and once deposited and cleared, an Official Receipt shall be issued.

8. The Corporations Provisional Receipt and Official Receipt are in booklet form, pre-
numbered and in three copies each.

9. Proper accounting and filing of said forms must be properly arranged according to its
numerical sequence.

10. Cancelled Provisional Receipt and Official Receipt must be voided properly and must
not be detached from the booklets.

CASH RECEIPT SYSTEM


Area of responsibility Activity
Corporate Services Department

Cashier/Collecting 1. Receives cash/check from clients/Online


Officer Collection report from banks

2. Prepares and issues Official Receipt

3. Issues original copy of OR to clients/payors


and files copies.

4. Prepares Deposit Slip (DS) in 2 copies based


on OR.

5. Deposit collection the following day to the


authorized bank.

6. Receives duplicate copy of DS from the bank

7. Based on OR and DS, prepare daily Report of

Accounting System Manual Page 30


Collections and Deposits (RCD)

8. Signs certification portion of RCD

9. Forwards RCD together with the OR and DS


copy to the Accountant II.

10. Checks RCD. Sign on the “Checked by”


portion

11. Forwards RCD to the Bookkeeper

Bookkeeper 12.Records collection and deposits to


Account Receivable Subsidiary Ledger

12. Record OR and DS on the Cash Receipts and


Deposits Book

13. Rule columnar balances at the end of the


month

CASH DISBURSEMENT
1. All classes of disbursement shall meet the following basic requirements:

a. All disbursement must be for a legal purpose, properly documented


and sufficient funds certified by the Treasurer / Accountant II.

b. Legality of transaction and conformity with accounting rules and


regulations and existing corporate policies.

c. Approval of the expense by the duly authorized officer

d. Submission of proper evidence to establish claims

2. All disbursement shall be by check which shall be issued in numerical


sequence, except those which are paid from petty cash fund.

3. Disbursement in check shall be covered by properly supported and


approved voucher.

4. Check voucher shall be prepared for every disbursement voucher. The check
voucher shall serve as the duplicate copy of the check and must be
attached to the DV.

Accounting System Manual Page 31


5. A mechanical check writer shall be used as a safeguard against possible
alterations in the amount of check. Voided and cancelled checks should be
properly stamped cancelled and held available for inspection and reporting.

6. Checks shall be made payable to a specific person or entity and not to


“CASH” or “BEARER”.

7. Signing and countersigning of blank checks are prohibited.

8. No expenditures or obligations in excess of the approved budget and/or


funds available shall be allowed.

9. Release of checks shall be effected only after it has been signed by at least
two authorized/designated signatories.

10. All checks issued shall be recorded in a Check Register. After payment, the
disbursement voucher and supporting documents shall be stamped “PAID” so
that these may not be presented for second payment.

11. Official Receipt will be required from authorized collectors upon release of
their checks.

12. Blank checks shall be kept in the proper custody of the Cashier as
accountable Forms.

13. The Cashier and other fund custodian shall properly bonded.

14. Assuming all papers are complete, the normal processing period for the
voucher and check is three (3) working days.

Preparation of Voucher and recording of obligation

Area of Responsibility Activity


Corporate Services Department

Accounting Assistant 1. Receives Suppliers’ Sales Invoice (SSI) and other


Supporting Documents (SD) from different
originating sources.
2. Checks accuracy of extension and footings of
documents presented for voucher preparation.

Accounting System Manual Page 32


Area of Responsibility Activity
Corporate Services Department
3. On the basis of these documents, prepare
Disbursement Voucher (DV).
4. Attaches Tax Certificate, if applicable, SSI and
SD to DV.
5. Forwards DV to the Bookkeeper
Bookkeeper 6. Record DV in Voucher Register Book (VRB).
7. Forwards DV to the Accountant II

Accountant II 8. Receives DV from the Accounting Assistant


9. Verify correctness of entries and footings.
Checks legality and conformity of transactions
with accounting rules and regulations and
existing corporate polices.
10. Signs “Certified Fund Available” and “Certified
Correct” portion of DV.
Internal Auditor 11. Receives DV from the Accountant II.
12. Checks completeness of the required supporting
documents.
13. Recommends approval of obligation.
14. Signs the “Audited By:” portion of the DV.
15. Forwards DV to the President and CEO for
approval.
President and CEO 16. Receives DV and signs “Approved for Payment”
portion.

17. Forwards DV to the Cashier.


Cashier 18. Checks documents and prepare checks based
on DV.
19. Schedules DV for payment.
20. Files copy of DV until due date of payment
arrive.
Bookkeeper 21. At the end of the month, balances and rules
columns with account balances.
22. Forwards VRB to the Accountant II.
Accountant II 23. Checks equality of columnar totals of VRB.
24. Records totals of VRB to the General Ledger
(GL).
25. Files GL.
Bookkeeper 26. Returns back the VRB to the Bookkeeper.
27. Files VRB.

Accounting System Manual Page 33


Preparation of Check and Recording of Payment
Area of Responsibility Activity
Corporate Services Department

Cashier 1. Prepares Check ( C ) based on the DV.

2. Record name of payee, amount paid and DV


number on Check Register Book.

3. Forwards copy of C, DV and SD to the


Accountant II.

Accountant II 4. Receives copies of C, DV and SD from Cashier.

5. Checks legality of payment and initials on the


Certified Fund Available and Certified Correct
portion on the DV.

6. Forwards copies of C, DV and SD to the President


and CEO.

President and CEO 7. Receives copies of C, DV and SD from the


Accountant II.

8. Signs C and DV.

9. Forwards copies of C, DV and SD to the Cashier.

Cashier 10. Receives C, DV and SD from the President and


CEO.

11. Stamps “PAID” on voucher and supporting


documents.

Bookkeeper 12. Records checks issued in the Check Register


Book (CRB) based on the duplicate copy of
check.
13. Balances CRB and rule columns with balances.

14. Forwards CRB to the Accountant II.

Accountant II 15. Receives CRB from Bookkeeper.

16. Checks equality of ruled balances in the CRB.

17. Records totals of CRB to the General Ledger (GL).

Accounting System Manual Page 34


Accounting System for Sales
Area of Responsibility Activity
Corporate Services Department

Accounting Assistant 1. Receives copy of Request for Payment (RFP) from


the Logistics Unit.

2. Checks accuracy of amount of sales.

Bookkeeper 3. Records SI to the Sales Book (SB)

4. At the end of the month, balances and rules


columns with account balances on SB.

5. Forwards SB to the Accountant II.

Accountant II 6. Receives SB from bookkeeper.

7. Checks equality of ruled balances.

8. Records total of SB to the General Ledger (GL).

9. Returns back SB to the Bookkeeper.

Bookkeeper 10. Receives SB from Accountant II.

11. Files SB.

Accounting System Manual Page 35


RECORDING OF NON-CASH TRANSACTIONS
Policies on preparation of Journal Voucher

1. A Journal Voucher is used to record any or all of the following transactions:


1.1 incurrence of Accounts Payable in General
1.2 End-up month transaction like
 Accruals
 Pre-payments
 Corrections/adjustments
 Non-cash transactions

2. A Journal Voucher is prepared, filed and safe kept in a labeled folder with
attachments.
3. When the transactions to be recorded entails a series of computations that
correspond to different items, a schedule must be prepared.

JOURNAL VOUCHER PREPARATION

Area of Responsibility Activity


Corporate Services Department

Accounting Assistant 1. Whenever there are corrections, adjustments and


items that need to be adjusted or even accruals
prepares Journal Voucher.

2. Signs JV.

3. Forward JV to the Accountant II for review and


certification.

Accountant II 4. Reviews the JV with the attached Supporting


Documents (DSs) and certifies the correctness of
entry.

Accounting Assistant 5. Records entry of JV in the General Journal (GJ).

Accountant II 6. Forwards GJ to the Accountant II.

7. Posts the total of GJ to the General Ledger (GL).

8. Files GL and returns back GJ to the Accounting


Assistant.

Accounting System Manual Page 36


Bank Reconciliation
Policy Guidelines:

1. Bank deposit and withdrawal transactions must be reconciled monthly with the
bank by the Bookkeeper or the duly authorized personnel.

2. Bank Reconciliation must be evidenced by monthly Bank Statement with paid


checks, debit and credit memos attached thereto.

3. Bank Reconciliation Statement must be prepared and presented using the adjusted
balance concept.

Area of Responsibility Activity


Corporate Services Department

Bookkeeper 1. Receives Bank Statement (BS), Paid Check (PC)


and Debit/Credit Memo (DM/CM) from bank.

2. Checks BS, PC and DM/CM against Bank Check


Book (BCB) from Cashier and General Ledger
(GL) retrieved from file.

3. Prepares Bank Reconciliation Statement (BRS) in 3


copies based on BS, PC and DM/CM.

4. Forwards BS, PC, DM/CM, all copies of BRS to the


Accountant II.

Accountant II 5. Receives copies of BRS, BS PC and DM/CM from


Bookkeeper.

6. Certifies correctness of documents and signs.

7. Forwards documents to the Accounting Assistant.

Accounting Assistant 8. Records entry of JV to the General Journal (GJ).

Bookkeeper 9. At the end of the month, balances and rules


columns with account balances of GJ.

10. Forwards GJ to the Accountant II.

Accountant II 11. Receives GJ from the bookkeeper and checks


equality of ruled balance.

12. Posts JV entries to the General Ledger (GL).

Accounting System Manual Page 37


Area of Responsibility Activity
Corporate Services Department
13. Files GL and returns back GJ to the Accounting
Assistant.

PETTY CASH FUND OPERATION


DISBURSEMENT AND REPLENISHMENT

POLICY GUIDELINES:

1. Petty Cash Fund shall be in the sole custody of a single employee.


2. Petty Cash Fund shall be maintained on an interest basis, which means that the
amount of the fund will remain constant that the custodian will be reimbursed by
check for amount paid out of the fund.
3. The amount of the reimbursing check shall be for the exact amount of the
disbursements made from the fund which shall be properly approved and
adequately documented.
4. Reimbursement shall be made only as frequently as the fund requires
replenishing
5. Petty cash disbursement shall be recorded promptly in the petty cash book.
6. Petty cash fund shall be balanced with cashbook periodically by the custodian,
preferably after reimbursement.
7. The practice of cashing checks out of the petty cash fund shall be restricted.
8. Surprise count of the petty cash fund shall be made at regular intervals.
9. Cash and all cash items comprising the fund must be kept in a petty cash box
locked in a safe or vault under the custody of the petty cash custodian.
10. Every disbursement form the fund must be supported by a properly
accomplished petty cash voucher (PCV), duly approved by an authorized
approving officer and the numerical sequence of the PCV must be accounted for
by the petty cash custodian.
11. A maximum disbursement of P3, 000.00 only should be made out of the Petty
Cash Fund.
12. A request for petty cash advance should always be required from employee
making and advance, duly signed by the head of the unit/department where
she/he belongs.

Area of Responsibility Activity


Corporate Services Department

Cashier 1. Receives Memo Request for Petty Cash Fund

Accounting System Manual Page 38


Area of Responsibility Activity
Corporate Services Department
Advance (MRPCA) from employee requesting
for cash advance.

NOTE:
Before MRPCA is presented to the Cashier, it
should be duly signed by the Department Head.

2. Withdraws cash from safe based on the


memo.

3. Records cash withdrawal in logbook (LB).

4. Forwards cash to the employee concerned.

5. Files temporarily MRPCA.

6. Files back logbook (LB).

Upon Liquidation:

1. Receives Official Receipt (OR) and other


supporting documents (OSDs) from employee
concerned.

2. Attaches MRPCA retrieved from temporary file to


OSDs.

3. Prepares Petty Cash Voucher (PCV) in 3 copies


based on OR and OSDs and initials PCV.

4. Forwards PCV, OR, OSDs and MRPCA to the


Accountant II.

Accountant II 5. Receives PCV, OR, OSDs, MRPCA and checks


from Cashier, reviews documents, approves and
signs PCV. Forwards documents to the cashier
after approval.

Cashier 6. Receives PCV, MRPCA, OR and OSDs from the


Accountant II.

7. Records documents to Petty Cash Book (PCB)


retrieved from file.

8. Files Back PCB.

9. Prepares Petty Cash Replenishment Voucher


(PCRV) in 2 copies based on PCV, OR, OSDs,
MRPCA, and PCB retrieved from file.

Accounting System Manual Page 39


Area of Responsibility Activity
Corporate Services Department

10. Files back PCB.

11. Forwards copy 1 of PCV, OR, MRPCA, OSDs, and


copy 1 & 2 of PCRs to the Accountant II for
signature in the PCRS.

Accountant II 12. Receives copy of 1-2 of PCRV, copy of PCV,


MRPCA, OR and OSDs. Signs PCRV, then forwards
documents to the Internal Auditor.

13. Receives copy of 1-2 of PCRV, copy of PCV,


MRPCA, OR and OSDs from the Accountant II.

Internal Auditor 14. Audit, checks and signs PCRV, then forwards
documents to the President and CEO.

President and CEO 15. Receives copy of 1-2 of PCRV, copy of PCV,
MRPCA, OR and OSDs. Approves and signs PCRV.
Forwards documents to the Accounting Assistant
for Disbursement Voucher preparation. (Please
refer to Disbursement Voucher Narrative
Procedure.)

TEMPORARY CASH ADVANCE


POLICY GUIDELINES:

1. Temporary cash shall be given only for emergency purposes and should be official in
nature.

2. A temporary cash advance shall be granted only upon presentation of duly


accomplished and approved Temporary Cash Advance (TCA) form.

3. Temporary cash advance shall not be allowed unless a previous one has been
settled/liquidated and properly accounted for.

4. Temporary cash advance shall be liquidated within forty eight (48) hours after the
purpose for which it has been granted has been accomplished. Any unused portion
should be refunded to the Cashier.

5. Temporary cash advance shall be granted only if the amount involved is not less than
P3,000.00

Accounting System Manual Page 40


6. Upon liquidation of the temporary cash advance, the TCA must be stamped
“LIQUIDATED” and be made part of the liquidation papers.

Area of Responsibility Activity


Corporate Services Department

 GRANTING

When Emergency Arises:

Employee Concerned 1. Prepares Temporary Cash Advance (TCA) and


signs.

2. Forwards copy of TCA to the approving authority.

Approving Authority 3. Receives copy of TCA from employee


concerned, approves and forwards to the
Accounting Assistant.

Accounting Assistant 4. Receives approved TCA from approving


authority.

5. Prepares Disbursement Voucher (DV) based on


TCA. (Refer to Disbursement System).

 LIQUIDATION

Upon Accomplishment of the Purpose :

Employee Concerned 1. Prepares Reimbursement/Liquidation Form (RF/LF)


and attaches supporting documents.

2. Forwards RF/LFs to the Accountant II.

Accountant II 3. Receives RF/LFs from employee concerned.


Reviews and check documents and signs.
Forwards documents to the Internal Auditor.

Internal Auditor 4. Audit, check and signs LDs, then forwards


documents to the President and CEO.

President and CEO 5. Receives LDs from the Internal Auditor. Approves
and signs the LDs.

Employee Concerned  When there is unused portion of cash


advance, the employee concerned shall
refund to the Cashier then issues OR. (Refer to

Accounting System Manual Page 41


Area of Responsibility Activity
Corporate Services Department
Cash Receipt System – Accounting)

 When exceed approved itinerary, the


employee concerned shall forward TCA to
the Cashier when the amount did not exceed
P3, 000.00 for Petty Cash Fund payment.
(Refer to Disbursement System)

 When there is no refund to be made, the


RF/LFs shall be forwarded to the Accounting
Assistant for JV preparation.

POLICY GUIDELINES ON EMERGENCY PURCHASES

1. The purchase was necessary and absolutely indispensable to prevent immediate


danger to property and avoid detriment to public service.

2. The price being claimed is the lowest price obtainable at the time of purchase.

3. In addition to all the needed supporting documents on purchases of all types must
include a Certification of Emergency Purchase which states :

“This is to certify that the purchase made was necessary and absolutely
indispensable to prevent immediate danger to property and avoid
detriment to public service and that the prices being claimed are the lowest
price obtainable at the time of purchase”.

PURCHASING SYSTEMS AND PROCEDURES (SUPPLIES AND MATERIALS/ PROPERTY


AND EQUIPMENT

POLICY GUIDELINES:

1. Purchases of equipment, supplies and materials shall be made through


canvassing and / or bidding. Quotation shall be obtained from at least three (3)
bonafide suppliers, manufacturers, producers, regular dealers or service
establishment.

2. When purchases are made from an exclusive distributor the supporting papers
needed are certificate of sole distributorship and an official price list.

Accounting System Manual Page 42


3. In cases where an exclusive distributor or manufacturer has several dealers, a bid
and /or canvass shall be made to at least three of its authorized dealers and the
award shall be given to the lowest bidder.

4. In cases where the item/equipment to be procured are technical in nature, the


Procurement Officer shall be accompanied by a representative of the
requisitioning
Unit.

5. Purchases through negotiations shall only be restored to when the requisitioned


articles are sold by an exclusive dealer or manufacturer who does not have sub-
dealers selling at lower prices for which no suitable substitute can be obtained
elsewhere at prices more advantageous to the corporation. These purchases are
made under the following cases:
a) When canvassing/bidding has been conducted and no offer has qualified to
meet specifications, terms and conditions.
b) Where the items to be purchased are “critical” in nature and are not available
in the open market.

RECEIVING AND STOCKING (MATERIALS/SUPPLIES/PROPERTY/EQUIPMENT)

POLICY GUIDELINES:

1. All deliveries shall be checked/compared against the supplier’s invoice/delivery


receipt with the purchase order on file.

2. The property officer shall be assisted by a representative of the requisitioning unit in


cases where the items/equipment to be received are technical in nature.

3. The property officer shall be responsible for ensuring that the items to be received
from the suppliers are according to specifications as indicated in the Purchase
Order/Contract. For this purpose, a copy of the Purchase Order duly approved by
designated officers shall be furnished by the Property Officer.

4. Delivered items which do not meet the specifications shall be rejected and returned
to the supplier for appropriate action.

Accounting System Manual Page 43


5. A Materials Received Report shall be accomplished by the Property Officer upon
receipt of the delivery of supplies and materials purchased.

ISSUANCE OF SUPPLIES AND MATERIALS /PROPERTY/EQUIPMENT

POLICY GUIDELINES:

1. Issuance of materials and supplies to end-users must be properly accounted for


through a Requisition and Issue Slip (RIS) duly approved by the Department Head.

2. All issuances of materials and supplies must be properly recorded in the stock card.

3. Issuances of semi and non-expendable items must be properly recorded in a ledger


card and shall be covered by a Memorandum Receipt (MR).

INSURANCE COVERAGE OF PROPERTY AND EQUIPMENT

POLICY GUIDELINES:

1. All properties of the corporation which are classified as Property, Plant and
Equipment shall be insured.

2. The properties shall be insured in an authorized government insurance agency.

3. All original insurance record shall be in the custody of the General Services Assistant.

DEPRECIATION OF PROPERTY AND EQUIPMENT

POLICY GUIDELINES:

1. Depreciation is the allocation of cost or value of the Property, plant and equipment
over fixed asset cost to operating periods which benefits from its use in a reasonable

Accounting System Manual Page 44


manner with the objectives of properly matching expenses against revenues rather
than accumulating funds for the replacement.

2. In accordance with generally accepted practice on the depreciation of fixed assets,


all fixed assets except land are subject to depreciation.

3. The straight line method of depreciation is to be adopted in computing for the


depreciation of depreciable fixed assets. Under this method, depreciation is
computed by dividing the depreciable amount (cost less estimated residual value or
scrap value which is 10%) by the estimated economic life of the asset.

4. For expediency, depreciation begins on the month following the date in which the
asset is acquired or put into use or operation.

Depreciation on the addition to an existing asset is computed over the remaining life
of the main existing asset.

REPAIRS AND MAINTENANCE OF PROPERTY AND EQUIPMENT

POLICY GUIDELINES:

1. Repairs and maintenance work either for outside services or for in-house services by
the General Services.

2. The procedures for in-house repairs and maintenance cover only those repair
services requiring the use or purchase of necessary materials and supplies which are
not normally carried as stock items.

3. Repairs and maintenance are to be classified as to :


a) Major Repairs
This involves relatively large expenditures which either or both prolong the
life of the asset beyond its originally estimated economic life and/or enhance
the value of the asset, thereby benefiting future accounting periods. The cost
of major repairs, therefore, should be capitalized as follows:
 If the major repair work prolongs the remaining life of the asset
whether, or not it enhances the value of the asset, the cost should be
charged against or deducted from the accumulated depreciation of
the asset.
 If the major repairs only enhance the value but do not prolong
remaining life of the asset, the cost should be charged or added to the

Accounting System Manual Page 45


cost of the asset; accordingly, the amount of periodic depreciation
should be increased.

b) Minor Repairs
This involves relatively small expenditures which does not prolong the life nor
enhance the value of the asset. Since it does not benefit future accounting
periods, it should be charged directly against current operations.

4. Major repairs require prior written approval by the Department Head with the
concurrence of the President and CEO.

5. Minor repairs require written approval of the President and CEO.

PHYSICAL INVENTORY TAKING

POLICY GUIDELINES:

1. Physical inventory of all fixed assets and supplies and materials shall be conducted
at least once a year, as of December 31 and whenever there is a change of property
officer. The Inventory Report shall be compared with the quantity reflected in the
Fixed Asset Ledger card and eventually with the General Ledger balance.

2. Discrepancies between the actual count and the recorded figure should be properly
investigated, reported and adjusted, if necessary.

RETURN AND TRANSFER OF PROPERTY AND EQUIPMENT

POLICY GUIDELINES:

1. Accountability for fixed asset should be transferred from the original user staff to the new
accountable employee in case the property is transferred from one employee to another.

2. Transfer of accountability should be done by cancelling the old MR and issuing a new MR in
the name of the transferee.

3. The transferor shall notify the General Services Assistant and surrender the copy of covering
MR in case of resignation or transfer from one unit to another.

4. The General Services Assistant shall ensure that accountability is transferred promptly and
properly to the new accountable employee.

Accounting System Manual Page 46


5. The transferee should see to it that accountability for MSI’s property in his/her
possession/disposition is properly documented and charged to his/her name.

RETIREMENT AND DISPOSAL OF PROPERTY AND EQUIPMENT

POLICY GUIDELINES:

1. Retirement, disposal or sale of fixed asset should be made only upon prior approval by the
Board of Directors and is promptly communicated to the accountant for appropriate
recognition thereof in the accounting records.

2. Retirable and obsolete properties are disposed of in the presence of authorized official and
in conformity with existing applicable government rules and regulation.

Accounting System Manual Page 47


FORMS EXHIBITS

No. 1 – General Ledger

Accounting System Manual Page 48


No. 2 – General Journal

Accounting System Manual Page 49


No. 3 – Cash Receipts and Deposit Book

Accounting System Manual Page 50


No. 4 – Voucher Register Book

Accounting System Manual Page 51


No. 5 – Check Register Book

Accounting System Manual Page 52


No. 6 – Sales Book

Accounting System Manual Page 53


No. 7 – Report of Collections and Deposits

Accounting System Manual Page 54


No. 8 – Petty Cash Advance

Accounting System Manual Page 55


No. 9 – Reimbursement/Liquidation Form

Accounting System Manual Page 56


No. 10 – Temporary Cash Advance

Accounting System Manual Page 57


No. 11 – Sunsidiary Ledger

Accounting System Manual Page 58


No. 12 – Travel Itinerary

Accounting System Manual Page 59


No. 13 – Travel Order

Accounting System Manual Page 60


No. 14 – Purchase Order

Accounting System Manual Page 61


No. 15 – Purchase Requisition

Accounting System Manual Page 62


No. 16 – Materials Received Report

Accounting System Manual Page 63


No. 17 – Requisition and Issue Slip

Accounting System Manual Page 64


No. 18 – Memorandum Receipt

General Form No. 32 (A)


Revised July
1974

MEMORANDUM FOR EQUIPMENT, SEMI-EXPENDABLE AND


NON-EXPENDABLE PROPERTY

I acknowledged to have received from _____________________, property Custodian, the following property
for which I am Responsible, Subject to the provisions of the Accounting Law, and which will be used
in Finance/Admin. Unit.

DATE
QTY UNIT NAME AND DESCRIPTION ACCOUNTED PROP. NO. AMOUNT

Approved
Prepared by: by:

Corporate Services
Admin. Asst. I Manager

Received by:

Employee Name and Signature


Designation

Accounting System Manual Page 65


No. 19 – Check Voucher

Accounting System Manual Page 66


No. 20 – Disbursement Voucher

Accounting System Manual Page 67


No. 21 – Collection Receipt/ Official Receipt

Accounting System Manual Page 68


Accounting System Manual Page 69

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