UPDATED

LOCAL TREASURY OPERATIONS

MANUAL (LTOM)

Book3

FUND MANAGEMENT PRACTICES;

EXPENDITURES AND DISBURSEMENT

Updated Local Treasury Operations Manual (LTOM)

Bureau of Local Government Finance
Department of Finance

Copyright © Bureau of Local Government Finance, 2016

Telefax: (+632) - 522 - 8770 or 71
Wed: [Link]
E-mail: blgf@[Link]

Published by:

Bureau of Local Government Finance

Department of Finance
8th Floor, EDPC Bldg., BSP Complex
Roxas Blvd., Metro Manila
Philippines 1004

First Printing, 2008.

PHALTRA

2016 Revised Edition

All rights reserved.

No part of this book may be reproduced in any form or by any means without express permission
of the copyright owner and the publisher.

ISBN: 978-971-94098-8-5

Printed in the Philippines

Updated Local Treasury Operations Manual (LTOM) 2

 ACRONYMS
ACR - Abstract of Collection Report
ADB - Asian Development Bank
ADP - Authority for Debit Payment
AGDB - Authorized Government Depository Bank
AJE - Adjusting Journal Entry
AO - Accountable Officer
AOM - Audit Observation Memorandum
APP - Annual Procurement Plan
ARMM - Autonomous Region in Muslim Mindanao
ARO - Allotment Release Order
BAC - Bids and Awards Committee
BEI - Board of Election Inspectors
BIR - Bureau of Internal Revenue
BLGF - Bureau of Local Government Finance
BLT - Build-Lease-and Transfer
BMBE - Barangay Micro Business Enterprises
BOO - Build-Own-and Operate
BOT - Build-Operate-and Transfer
BRK - Barangay Record Keeper
BSP - Bangko Sentral ng Pilipinas
BT - Barangay Treasurer
BT - Build-and Transfer
BTO - Build-Transfer-and Operate
BTr - Bureau of the Treasury
CA - Certificate of Authority
CAO - Contract-Add-and Operate
CAMELS - Capital Adequacy, Asset Quality, Management, Earnings,
Liquidity and Sensitivity
CDF - Cash Disbursement Forecast
CFA - Cash Flow Analysis
CFF - Cash Flow Forecast
CHBReg - Cash On Hand and in Bank Register
CM - Credit Memo
CN - Credit Notice
CO - Capital Outlay
COA - Commission on Audit
COA ATL - COA Audit Team Leader
COE - Current Operating Expenses
COMELEC - Commission on Elections
CRAAF - Consolidated Report of Accountability for Accountable Forms
CRDReg - Cash Receipts and Deposits Register
CRF - Cash Receipts Forecast
CSB - Certificate of Settlement and Balances
CSC - Civil Service Commission
CT - Community Tax
CTC - Community Tax Certificate
DBC - Deputized Barangay Collector
DBM - Department of Budget and Management
DBP - Development Bank of the Philippines
DepEd - Department of Education
DM - Debit Memo
DOF - Department of Finance
DOH - Department of Health
DOJ - Department of Justice
DOST - Department of Science and Technology

Updated Local Treasury Operations Manual (LTOM) 3

DOTC - Department of Transportation and Communication
DV - Disbursement Voucher
EO - Executive Order
EU - European Union
eOR - Electronic Official Receipt
FE - Financial Expenses
GAAM - Government Accounting and Auditing Manual
GAO - General Auditing Office
GDF - Gender and Development Fund
GF - General Fund
GOCC - Government Owned and Controlled Corporation
GSIS - Government Service Insurance System
HLURB - Housing and Land Use Regulatory Board
HoA - Head of the Agency
ICFAU - Intelligence and Confidential Fund Audit Unit
ICO - In-Charge of Office
IF - Intelligence Fund
ICS - Inventory Custodian Slip
IRA - Internal Revenue Allotment
IRR - Implementing Rules and Regulations
IT - Itinerary of Travel
IUEEU - Irregular, Unnecessary, Excessive, Extravagant or
Unconscionable
JEV - Journal Entry Voucher
JMC - Joint Memorandum Circular
LBM - Local Budget Matrix
LBP - Land Bank of the Philippines
LCE - Local Chief Executive
LDP - Local Development Plan
LDRRMF - Local Disaster Risk Reduction and Management Fund
LFC - Local Finance Committee
LGC - Local Government Code
LGU - Local Government Unit
LMB - Land Management Bureau
LO - Liquidating Officer
LOA - Letter of Authority
LR - Liquidation Report
LTO - Local Treasury Operations
MB - Monetary Board
MC - Memorandum Circular
MDF - Municipal Development Office
MDFO - Municipal Development Fund Office
MMA - Metro Manila Area
MMDA - Metro Manila Development Authority
MOA - Memorandum of Agreement
MOOE - Maintenance and Other Operating Expenses
MOU - Memorandum of Understanding
MRPAAO - Manual on Real property Appraisal and Assessment Operations
MTOP - Motorized Tricycle Operators Permit
NC - Notice of Charge
NCA - Notice of Cash Allocation
ND - Notice of Disallowance
NEDA - National Economic and Development Authority
NGAS - New Government Accounting System
NIRC - National Internal Revenue Code
NPC - National Power Corporation
NPO - National Printing Officer

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NPV - Net Present Value
NS - Notice of Suspension
NSO - National Statistics Office
ObR - Obligation Request
ODA - Official Development Assistance
OIC - Officer-In-Charge
OR - Official Receipt
PAR - Property Acknowledgement Receipt
PB - Punong Barangay
PCF - Petty Cash Fund
PCFReg - Petty Cash Fund Register
PCV - Petty Cash Voucher
PD - Presidential Decree
PDAF - Priority Development Assistance Fund
PI - Public Infrastructure
PNB - Philippine National Bank
PO - Purchase Order
POP - Peace and Order Programs
PPE - Plant, Property and Equipment
PPSAS - Philippine Public Sector Accounting Standard
PS - Personal Services
RA - Republic Act
RAAF - Report of Accountability for Accountable Forms
RAAO - Register of Appropriation, Allotments and Obligations
RAC - Registry of Appropriation and Commitments
RATA - Representation and Transportation Allowance
RCD - Report of Collections and Deposits
RCI - Report of Checks Issued
RIS - Requisition and Issue Slip
RMIT - Revised Manual of Instructions to Treasurers
ROO - Rehabilitate-Own-and Operate
ROT - Rehabilitate-Operate-and Transfer
RPT - Real Property Tax
RPTAR - Real Property Tax Register
RPTOP - Real Property Tax Order of Payment
RRACCS - Revised Rules on Administrative Cases in the Civil Service 
SAM - State Audit Manual
SB - Sangguniang Barangay
SCD - Summary of Collections and Deposits
SCkI - Summary of Checks Issued
SCP - Summary of Cash Payments
SCR - Summary of Collections and Remittance
SDO - Special Disbursing Officer
SEF - Special Education Fund
SIE - Statement of Income and Expenditures
SKF - Sangguniang Kabataan Fund
SOE - Statement of Expenditures
SPL - Special Leave Privilege
SPPCV - Summary of Paid Petty Cash Vouchers
SRE - Statement of Receipts and Expenditures
SRS - Statement of Receipt Sources
TDAF - Tax Data and Assessment Form
TO - Travel Order
UBOM - Updated Budget Operations Manual
VAT - Value Added Tax
VDS - Validated Deposit Slip
WB - World Bank

Updated Local Treasury Operations Manual (LTOM) 5

 Table of Contents

Section 63. Definition of Terms.................................................................................................10

Chapter 1. CONCEPT OF FUNDS..................................................................................................14

Section 64. Introduction.............................................................................................................14
Section 65. Fundamental Principles Governing Utilization of Local Funds...............................14
Section 66. Classification and Basic Maintenance of Funds.....................................................15

Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT AND OBLIGATION.......................17

Section 67. Classification of Appropriation................................................................................17
Section 68. Local Budget Cycle................................................................................................19
Section 69. Use of Appropriated Funds and Savings...............................................................21
Section 70. Use of Unexpended Balance/ Transfer of Unexpended Balance to the General
Fund...........................................................................................................................................21
Section 71. The Allotments System in Local Government Units...............................................22
Section 72. Obligation of Local Funds.......................................................................................23
Section 73. Government Expenditures......................................................................................23
Section 74. Types of Unlawful Expenditures.............................................................................24

Chapter 3. DISBURSEMENT OF LOCAL FUNDS.........................................................................37

Section 75. General Principles Governing Fund Disbursements..............................................37
Section 76. Basic Requirements for Disbursements from the General Fund and Special Funds
...................................................................................................................................................38
Section 77. Modes of Disbursement.........................................................................................38
Section 78. Disbursement by Checks.......................................................................................39
Section 79. Preparation and Signing of Checks........................................................................39
Section [Link] of Check Disbursements in the Cashbooks...........................................39
Section 81. Release of Checks.................................................................................................39
Section 82. Reporting of Checks Issued...................................................................................39
Section 83. Disbursements Through Cash Advances...............................................................41
Section 84. General Guidelines in the Grant and Utilization of Cash Advance........................41
Section 85. Reporting of Cash Disbursements.........................................................................43
Section 86. Specific Guidelines on the Grant of Cash Advance for Payroll, Field Operating
Expenses and Travel.................................................................................................................43
Section 87. Liquidation of Cash Advances................................................................................47

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 Section 88. Guidelines on Granting of Cash Advance for Intelligence and Confidential
Expenses...................................................................................................................................49
Section 89. Liquidation of Cash Advance for Confidential/Intelligence Expenses...................51
Section 90. Handling, Custody and Disposition of Cash Book.................................................52
Section 91. Disbursements out of Petty Cash Fund.................................................................53
Chapter 4. FUND MANAGEMENT PRACTICES............................................................................53
Section 92. Programming Tools................................................................................................53
Section 93. Cash Flow Forecast...............................................................................................53
Section 94. Cash Flow Analysis................................................................................................56
Section 95. Information Provided by the Cash Flow Forecast and Cash Flow Analysis...........57
Section 96. Daily Cash Flow......................................................................................................58
Section 97. Number of Days’ Usage in Cash............................................................................58
Section 98. The Administrative Process for Capital Expenditures............................................58
Section 99. Payback Period......................................................................................................58
Section 100. Discounted Cash Flow.........................................................................................59
Section 101. Purpose and Need for Debt..................................................................................62
Section 102. Funding Competing Capital Projects....................................................................62
Section 103. Debt Management Policy.....................................................................................62
Section 104. Local Governments Units Financing Modalities and Debt Management Manual 65

Chapter 5. RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OF LOCAL

TREASURERS FOR FUNDS...........................................................................................................65
Section 105. Responsibility, Accountability and Liability...........................................................65
Section 109. Responsibility of Local Treasurer.........................................................................65
Section 106. Accountability of Local Treasurer over Government Funds and Properties........65
Section 107. Liability of Accountable Officers...........................................................................66
Section 108. Liability for Acts Done Upon Direction of Superior Officer, or Upon Participation of
Other Department Heads or Officers of Equivalent Rank.........................................................66
Section 109. Period of Accountability........................................................................................66
Section 110. Prerequisite to accepting new accountabilities....................................................67
Section 111. Advice of Retirement, Transfer and Settlement of Accounts...............................67
Section 112. Closing of Book Preparatory to Transfer of Accountabilities................................67
Section 113. Preparation of Invoice Receipts...........................................................................68
Section 114. Death or Incapacity of a Local Treasurer or Accountable Officer........................70
Section 115. Basic Requirements for Request for Relief from Accountability..........................70

Chapter 6. EXAMINATION OF ACCOUNTS BY THE COMMISSION ON AUDIT........................74

Section 116. Examination by the Commission on Audit............................................................74

Updated Local Treasury Operations Manual (LTOM) 7

 Section 117. Service of Demand Upon the Accountable Officer to Produce His Cash and
Other Accountabilities................................................................................................................74
Section 118. Sealing of Safes...................................................................................................74
Section 119. Cash Count and Inventory of Cash......................................................................75
Section 120. Inspection of the Safe or Safes and Other Cash Receptacles............................75
Section 121. Certification of the Cash Books in the Course of Cash Examination...................75
Section 122. Certification in General Form No. 74(A)...............................................................76
Section 123. Report of Cash Examination................................................................................76
Section 124. Presentation of Formal Written Demand to the Accountable Officer...................77
Section 125. Seizure of Office by the Examining Officer..........................................................77
Section 126. Constructive Distraint of Property of Accountable Officer....................................77
Section 127. Withholding of Payment of Money to Accountable Officer...................................78
Section 128. Transcript of Auditor’s Record as Evidence of Liability........................................78
Section 129. Auditor’s Certificate of Balance............................................................................78
Section 130. Auditor’s Notice to Accountable Officer of Balance Shown Upon Settlement.....78
Section 131. Certificate of Settlement and Balances................................................................79
Section 132. Audit Observation Memorandum..........................................................................79
Section 133. Notice of Suspension (NS)...................................................................................80
Section 134. Notice of Disallowance (ND)................................................................................80
Section 135. Notice of Charge (NC)..........................................................................................81
Section 136. Service of Copies of NS/ND/NC...........................................................................81
Section 137. Notice of Settlement of Suspension/Disallowance/Charge (NSSDC)..................82
Section 138. Statement of Audit Suspensions, Disallowance and Charges (SASDC).............82
Section 139. Issuance of Notices By Special Audit Team........................................................83
Section 140. Determination of Persons Liable for Audit Disallowance and Charges................83
Section 141. Period to Appeal...................................................................................................84
Section 142. Proceedings Before The Director.........................................................................84
Section 143. Proceedings Before The Adjudication And Settlement Board (ASB)...................85
Section 144. Proceedings Before The Commission Proper (CP).............................................85
Section 145. Appeal To The Supreme Court............................................................................86
Section 146. Notice Of Finality Of Decision (NFD)....................................................................86
Section 147. COA Order of Execution (COE)...........................................................................87
Section 148. Failure of a Responsible Public Officer to Render Accounts before Leaving the
Country......................................................................................................................................87

Chapter 7. CODE OF CONDUCT AND ETHICAL STANDARDS OF PUBLIC OFFICIALS AND

EMPLOYEES...................................................................................................................................88
Section 149. Code of Conduct and Ethical Standards of Public Officials and Employees......88

Updated Local Treasury Operations Manual (LTOM) 8

Chapter 8. ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL TREASURERS
IN THE ADMINISTRATION OF LOCAL TAXES, FEES AND CHARGES.....................................89
Section 150. Shortage, Overage and Malversation..................................................................89
Section 151. Under R.A. No. 7160 or the Local Government Code of 1991............................89
Section 152. Under the Revised Penal Code............................................................................90
Section 153. Under the Anti-Graft and Corrupt Practices Act...................................................91

Forms and Annexes.......................................................................................................................94

LTO Annex 8: Barangay Appropriations, Commitments and Disbursements...........................94
LTO Annex 9: Sangguniang Kabataan Budget.......................................................................104
LTO Form 42 – Disbursement Voucher (DV)..........................................................................105
LTO Form 43 – General Payroll..............................................................................................108
LTO Form 44 – Daily Wage Payroll.........................................................................................110
LTO Form 45 – Check Register..............................................................................................112
LTO Form 46 – Report of Checks Issued (RCI)......................................................................114
LTO Annex 47 – Process Flow on Disbursement by Checks.................................................115
LTO Form 49 – Report of Disbursement (RD)........................................................................116
LTO Form 50 – Liquidation Report..........................................................................................118
LTO Annex 51 – Process Flow on Cash Disbursement..........................................................120
LTO Annex 52 – Process Flow on Disbursements Through Bank – Payroll Payment...........122
LTO Form 53 – Petty Cash Voucher (PCV)............................................................................123
LTO Form 54 – Petty Cash Replenishment Report................................................................126
LTO Annex 55 – Process Flow on Petty Cash Fund Disbursements, Liquidation and
Replenishment.........................................................................................................................127
LTO Form 56 – Disbursement Voucher (Barangay)...............................................................129
LTO Form 57 – Payroll (Barangay).........................................................................................130
LTO Form 58 – Purchase Order (PO) (Barangay)..................................................................132
LTO Form 59 – Purchase Request (PR) (Barangay)..............................................................134
LTO Form 60 – Summary of Checks Issued (Barangay)........................................................136
LTO Form 61 – Check Disbursement Register (Barangay)....................................................138
LTO Annex 62 – Process Flow on Barangay Disbursement By Check..................................141
LTO Form 63 – Summary of Cash Payment...........................................................................145
LTO Form 64 – Cash Disbursement Register.........................................................................147
LTO Form 65 – Liquidation Report..........................................................................................149
LTO Form 66 – Process flow on Receipt of Barangay Cash Advance, Payment and Liquidation
of Payroll/Travel.......................................................................................................................151
LTO Form 67 – Petty Cash Voucher (Barangay)....................................................................155
LTO Form 68 – Summary of Paid Petty Cash Voucher..........................................................157
LTO Form 69 – Petty Cash Fund Register (Barangay)...........................................................159

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 LTO Form 71 – Inspection and Acceptance Report................................................................165

Section 63. Definition of Terms. –The following terms shall be understood in the sense as
hereunder defined, unless the context otherwise indicates:

1) Accounts Payable – Obligations of government agencies, whether current year or prior

years, for which services had been rendered, goods have been delivered or projects
have been completed and accepted. (4.6, COA & DBM Joint Circular No. 2013-1 dated
March 15, 2013)

2) Accountable Officer –the officer of any government agency whose duties permit or
require the possession or custody of government funds or property, (such as the Local
Treasurer, Collecting Officer, Disbursing Officer, Cashier, Paymaster, Property Officer
and the like) who is required by law to render account to the Commission on Audit 1.

3) Allotment –An allotment is an authorization issued by the Local Chief Executive to a

department office of the local government unit, which allows it to incur obligations for
specified amounts within the appropriations ordinance (p. 87, UBOM for LGUs), (Sec. 8,
COA Cir. 2002-003 dated June 20, 2002). The authorization is called the Allotment
Release Order (ARO), which is a specific authority to incur obligations not exceeding the
amount for the specific purpose indicated. (p. 88, UBOM for LGUs)

4) Appropriation –refers to an authorization made by ordinance, directing the payment of

goods and services from local government funds under specified conditions or for
specific purposes. (Sec. 306 (b), LGC)Generally, there are appropriations for a general
purpose requiring expenditures to be made for a number of incidental purposes without
specifying an exact amount for any one of the incidental purposes. There are those which
go into considerable detail and limit the expenditure to certain amounts for certain very
specific purposes. (Sec. 140, Book III, Vol. I, GAAM)

5) Cash – Cash means money, which is the standard medium of exchange in business
transactions. Cash includes “money and other negotiable instrument that is payable in
money and acceptable by the bank for deposit and immediate credit”. It includes checks,
bank drafts and money orders. (3.1, Annex A, COA Resolution No. 2006-006 dated
January 31, 2006, PGAS)

6) Cash Advance - Advances granted to officers and employees which may be classified
into:

a) Regular cash advance – those granted to cashiers, disbursing officers, paymasters

and/or property/supply officers for salaries and wages, commutable allowances,
honoraria and other similar payments and petty cash operating expenses;

b) Special cash advances – those granted on the explicit authority of the agency
heads to duly designated disbursing officers or employees for other legally authorized
purposes.

(Glossary of Terms of Budget of Expenditures and Sources of Financing 2014, DBM,

GAA 2014)

1
Governance for Sustainable Human Development, United Nations Development Programme (UNDP), 1997.

Updated Local Treasury Operations Manual (LTOM) 10

 7) Cash Analysis – Cash analysis begins with a starting balance and generates an ending
balance after accounting for all cash receipts and paid expenses during the period.

8) Cashbook for Cash in Bank – shall be used to record deposits of collections (Debit
column) and withdrawals from the bank thru the issuance of checks (Credit column). The
cashbook shall be maintained by bank account and by fund and shall be updated and
balanced daily. The accountable officer shall, at the end of the month or when required to
do so by proper competent authority, rule and foot the cashbook (Section 27, MNGAS for
LGUs, Vol. II).

9) Cashbook for Cash in Vault – shall be used to record collections (Debit column) and
deposits to the bank (Credit column) based on the RCD. The cashbook shall be
maintained by the Treasurer by fund and shall be updated and balanced daily. The
accountable officer shall, at the end of the month or when required to do so by proper
competent authority, rule and foot the cashbook.(Section 26, MNGAS for LGUs, Vol. II).

10) Cash flow – Record of inflows and outflows of cash, representing the operating activities
during a given period.

11) Cash Flow Forecasting –Estimate of the timing and amounts of cash inflows and
outflows over a specific period, usually one year.

12) Certificate of Settlement and Balances –a written notification by the Auditor to the
agency head and the accountable officer concerned of the total suspensions,
disallowances and charges found in audit, as well as the settlements thereof.

13) Charge – refer to pecuniary liability, as rents or fees against persons or property. (Sec.
131 (g), LGC)

14) Check –is a negotiable instrument drawn against deposited funds, to pay a specific entity
a specific amount of funds on demand.

15) Credit Memo –A credit memo is a contraction of the term "credit memorandum," which is
a document issued by the seller of goods or services to the buyer, reducing the amount
that the buyer owes to the seller under the terms of an earlier invoice. The credit memo
usually includes details of exactly why the amount stated on the memo has been issued,
which can be used later to aggregate information about credit memos to determine why
the seller is issuing them.

16) Current Assets –cash and other assets that are not earmarked for specific purposes
other than the payment of a current liability or a readily marketable investment. (p. 391,
Glossary of Terms for State Auditors)

17) Current Liability –A current liability is an obligation that is payable within one year.

18) Debit Memo –A bank creates a debit memo when it charges a fee on its bank statement,
thereby reducing the balance in the checking of account.

19) Disallowance –the disapproval in audit of a transaction, either in whole or in part.

20) Disbursement - Disbursements constitute all payments made during a given period
either in currency, by check, through bank and electronic transfers, telegraphic transfers,
letters of credit, credit/debit cards and other non-conventional modes of payment.

21) Equity – residual interest of the government in an agency which is the excess of the
agency’s assets over its liabilities. (Sec. 3 (c), Vol 3, NGAS)

Updated Local Treasury Operations Manual (LTOM) 11

 22) Financial Expenses (FE)–These accounts include bank charges, interest expense,
commitment charges, documentary stamp expense and other financial charges. It also
includes losses incurred relative to foreign exchange transactions and debt service
subsidy to GOCCs. (Sec. 7 (c), NGAS)

23) Fixed Assets –fixed assets are items of property, plant and equipment and are referred
to as "fixed" because of their permanent nature and because they are not subject to rapid
turnover. They include equipment, furniture and fixtures, land and buildings and any other
property considered tangible or long-lasting. (pp. 273-274, Glossary of Terms, for State
Auditors)

24) Fund –refers to a sum of money, or other assets convertible to cash, set aside for the
purpose of carrying out specific activities or attaining certain objectives in accordance
with special regulations, restrictions, or limitations, and constitutes as independent fiscal
and accounting entity. (Sec. 306 (h), LGC)

25) Fund Transfer –a transfer of money from one bank account to another, either within a
single financial institution or across multiple institutions.

26) Government Expenditures – include all charges against the fund of the local
government unit for current operating expenditures, capital outlays and provisions for
retirement of long term obligations. The charges are both the amounts actually paid and
those incurred and recorded as liabilities to be paid in the future. (Sec. 154, Book 111,
Vol. I, GAAM)

27) Government Funds –include public moneys of every sort and other resources pertaining
to any agency of the government. (Sec. 3 (2), P.D. No. 1445)

28) Head of Agency (HoA) –refers to the highest official of the NGA and LGU. In the case of
GOCCs, however, and solely for purposes of this Circular, the HoA refers to the
President and/or Chief Executive Officer, who is in-charge of the day to day operations of
the corporation.

29) Intelligence and Confidential Fund Audit Unit (ICFAU) –refers to the unit created
under the Office of the Chairperson of the COA in charge of the audit of CF and IF.

30) Intelligence Fund (IF)–refers to the lump-sum amount provided as such in the GAA for
NGAs

31) Inventory – Consist of all expendable commodities which are normally consumed within
one year in connection with government operations or used in the process of
manufacture or construction. Property with a unit value of ₱1,500 and less, used in
government operations but not consumed in such operations is also included under
inventories. (Sec, 420, Vol. I, GAAM)

32) Liability–a personal obligation arising from an audit disallowance or charge in the course
of post audit of a transaction or examination of the cash and accounts of an accountable
officer, which may be satisfied thru payment or restitution as determined by competent
authority and in accordance with law.

33) Long Term Liability –An obligation which will not become due within a relatively short
period, usually a year. (Sec. 28, Vol. III, GAAM)

34) Obligations –refers to an amount committed to be paid by the local government unit for
any lawful act made by an accountable officer for and in behalf of the local unit
concerned. (Sec. 306 (j), LGC)

Updated Local Treasury Operations Manual (LTOM) 12

 35) Persons Liable –the persons determined by the auditor to be answerable for an audit
disallowance or charge arising from the post-audit of transaction or examination of the
cash and accounts of an accountable officer.

36) Persons Responsible –the persons determined by the auditor to be answerable for
compliance with the audit requirements as called for in the notice of suspension.

37) Peace and Order Programs (POP) –refers to any or a combination of the following
programs, activities and projects which may be included as part of the Peace and Order
and Public Safety Plan of an LGU so that these shall be eligible for funding of the CF:

a) Crime prevention and law enforcement activities, (e.g. conduct of coordination

meetings with partner agencies/stakeholders, increase in police visibility, provision of
equipage and/or logistical support for law enforcement agencies and conduct of
awareness raising activities for the community);

b) Aid and/or capability development for personnel of law enforcement agencies, and
volunteers/partners;

c) Programs for anti-illegal drug, illegal gambling, counter-insurgency and/or counter-

terrorism, illegal logging, illegal mining, illegal fishing, smuggling and human
trafficking.

38) Quick Assets –a holding that can be converted into cash within a short period of time.
An example would be a marketable security that is immediately saleable at a quoted
price in the open market. (p. 541, Glossary of Terms for State Auditors)

39) Reconsideration – the process whereby an aggrieved party requests the very officer or
body who made the decision, order, or ruling to review the same with the view of its
modification or reversal. This should be distinguished from "appeal" which is the process
of elevating to the next higher authority a decision, order, or ruling.

40) Responsibility –the obligation to prudently exercise assigned or imputed authority

attaching to the assigned or imputed role of an individual or group participating in
organizational activities or decision.

41) Real Property Tax Receivable – an annual ad valorem tax on real property such as
land, building, machinery, and other improvement not hereinafter specifically exempted.

a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed
value of real property; and

b) In the case of a city or a municipality within the Metropolitan Manila Area, at the rate
not exceeding two percent (2%) of the assessed value of real property.

(Sec. 233, LGC)

42) Receivables – represents amounts collectible from customers and other debtors arising
from sale of merchandise or the performance of services on account and claims for
money lent, including real property taxes due the Local Government Units (LGUs). (4.1,
PGAS 4, Annex A, Resolution No. 2006-006 dated January 31, 2006)

43) Settlement –the process of determining the status or balance of the accountability of an
accountable officer.

Updated Local Treasury Operations Manual (LTOM) 13

 44) Special Disbursing Officer (SDO)–refers to the HoA or a regular employee designated
by the HoA to be in charge of making disbursements of CF and/or IF so received and
accountable therefor;

45) Special Education Tax Receivable–annual tax of one percent (1%) on the assessed
value of real property in addition to the basic real property tax. (Sec. 235, LGC)

46) Suspension –the deferment of action to allow or disallow in audit a transaction pending
compliance with certain requirements.

47) Trust Liability – An account used to record collections, income, or receipts of agencies
held in trust or guarantee for another agency and for a specific purpose. (Glossary of
Terms of Budget of Expenditures and Sources of Financing 2014, DBM, GAA 2014)

Chapter [Link] OF FUNDS2

Section 64. Introduction. –

A. In line with the increased fiscal responsibility of Local Treasurers and pursuant to good
governance of local funds, it is incumbent upon the Local Treasurers and other fiscal
officers to embrace and apply effective fund management practices benchmarked from
the private sector in the daily operations of local government units.

B. Governance in the local context is how decisions are made and implemented at the local
level and by [Link] governance is viewed as the exercise of economic, political
and administrative authority to manage a country's/local government's affairs at all levels.
It comprises mechanisms, processes, and institutions through which citizens and groups
articulate their interests, exercise their legal rights, meet their obligations, and mediate
their differences.

C. Good governance is about efficiency in the management of public funds, demanding high
standards of integrity, transparency and accountability. Thus, Local Treasurers need to
continuously update their knowledge and skills on their specific area of good governance,
which is fund or cash management.

Section 65. Fundamental Principles Governing Utilization of Local Funds. – The utilization
of local funds shall be governed by the following fundamental principles:

a) No money shall be paid out of the local treasury except in pursuance of an appropriations
ordinance or law;

b) Local government funds and monies shall be spent solely for public purposes;

c) Local revenue is generated only from sources expressly authorized by law or ordinance,
and collection thereof shall at all times be acknowledged properly;

2
The discussion under expenditures and disbursements includes a brief but concise discussion of the concept of funds which
are the very subject of expenses and disbursements, the concept of appropriations, allotments, and obligations which
constitute the budgetary stages before expenditures and disbursements take place, as well as the related internal control
guidelines to ensure good governance and accountability. On the other hand, the revised complete budget process for LGUs is
already thoroughly discussed in the Updated Budget Operations Manual (UBOM) for LGUs promulgated by the Department of
Budget and Management.
3
P. 101, East and Southeast Asia Conference on Decentralization

Updated Local Treasury Operations Manual (LTOM) 14

 d) All monies officially received by a local government officer in any capacity or on any
occasion shall be accounted for as local funds, unless otherwise provided by law;

e) Trust funds in the local treasury shall not be paid out except in fulfillment of the purpose
for which the trust was created or the funds received;

f) Every officer of the local government unit whose duties permit or require the possession
or custody of local funds shall be properly bonded, and such officer shall be accountable
and responsible for said funds and for the safekeeping thereof in conformity with the
provisions of law;

g) Local governments shall formulate sound financial plans, and local budgets shall be
based on functions, activities, and projects, in terms of expected results;

h) Local budget plans and goals shall, as far as practicable, be harmonized with national
development plans, goals, and strategies in order to optimize the utilization of resources
and to avoid duplication in the use of fiscal and physical resources;

i) Local budgets shall operationalize approved local development plans;

j) Local government units shall ensure that their respective budgets incorporate the
requirements of their component units and provide for equitable allocation of resources
among these component units;

k) National planning shall be based on local planning to ensure that the needs and
aspirations of the people as articulated by the local government units in their respective
local development plans are considered in the formulation of budgets of national line
agencies or offices;

l) Fiscal responsibility shall be shared by all those exercising authority over the financial
affairs, transactions, and operations of the local government units; and

m) The local government unit shall endeavor to have a balanced budget in each fiscal year
of operation.

(Section 305, LGC)

n) No contract involving the expenditure of public funds shall be entered into unless there is
an appropriation therefor, the unexpended balance of which, free of other obligations,
shall be sufficient to cover the proposed expenditure; (Sec. 85 (1), P. D. No. 1445)

o) Trust Funds shall be available and may be spent only for the specific purpose for which
the trust was created or the funds received.

p) Disbursements or disposition of government funds or property shall invariably bear the

approval of the proper officials.

q) Claims against government funds shall be supported with complete documentation.

r) All laws and regulations applicable to financial transactions shall be faithfully adhered to.

s) Generally accepted principles and practices of accounting as well as of sound

management and fiscal administration shall be observed, provided that they do not
contravene existing laws and regulations.

Updated Local Treasury Operations Manual (LTOM) 15

 t) Expenditures of government funds or uses of government property in violation of law or
regulations shall be the personal liability of the official or employee found to be directly
responsible therefor.

(Section 4, PD 1445)

Section 66. Classification and Basic Maintenance of Funds. –

a) Government funds are generally classified into Local Funds (General Fund), Special
Funds (Special Education Fund and Trust Funds) and Special Accounts in the General
Fund of the Local Government Units.

b) Local Funds.– Every local government unit shall maintain a General Fund which shall be
used to account for each monies and resources as may be received by and disbursed
from the local treasury. The General Fund shall consist of monies and resources of the
local government which are available for the payment of expenditures, obligations or
purposes not specifically declared by law as accruing and chargeable to, or payable
from, any other fund. (Sec. 308, LGC)

c) Special Funds.–There shall be maintained in every provincial, city or municipal treasury

the following special funds: (Sec. 309, LGC)

1. Special Education Fund (SEF) - (a) Special Education Funds shall consist of the
respective shares of provinces, cities, municipalities and barangays in the proceeds
of the additional one percent (1%) tax on real property (Sec. 309 (a), LGC), which
shall be automatically released to the local school boards.(Sec. 272, LGC). The
corresponding budget shall be prepared by the Local School Board, which shall
authorize the Local Treasurers concerned to disburse the funds from the Special
Education Fund.

2. Trust Funds - Trust Funds shall consist of private and public monies which have
officially come into the possession of the local government or of a local government
official as trustee, agent or administrator, or which have been received as guaranty
for the fulfillment of some obligation. A Trust Fund shall only be used for the specific
purpose for which it was created or for which it came into the possession of the local
government unit. (Sec. 309 (b), LGC)

d) Special Accounts shall be maintained in the General Fund for the following:

1. Public utilities and other economic enterprises;

2. Loans, interests, bond issues, and other contributions for specific purposes; and

3. Development projects funded from the share of the local government unit concerned
in the internal revenue allotment and such other special accounts which may be
created by law or ordinance.

Receipts, transfers, and expenditures involving the foregoing special accounts shall be
properly taken up in the accounts of the respective Special Accounts.

Profits or income derived from the operation of public utilities and other economic
enterprises, after deduction for the cost of improvement, repair and other related
expenses of the public utility or economic enterprise concerned, shall first be applied for
the return of the advances or loans made therefor. Any excess shall form part of the
General Fund of the local government unit concerned. (Sec. 313, LGC)

Updated Local Treasury Operations Manual (LTOM) 16

 No separate books of accounts shall be maintained for these special accounts.
Transactions pertaining thereto shall be recorded in the General Fund books. (Sec. 353,
NGAS for LGUs)

e) Separation of Books and Depository Accounts. –Local accountants and treasurers

shall maintain separate books and depository accounts, respectively, for each fund in
their custody or administration under such rules and regulations as the Commission on
Audit may prescribe. (Sec. 310, LGC)

f) Depository Accounts. –Local treasurers shall maintain depository accounts in the name
of their respective local government units with banks, preferably government-owned,
located in or nearest to their respective areas of jurisdiction. Earnings of each depository
account shall accrue exclusively thereto. (Sec. 311, LGC)

g) Separation of Personal Money from Public Funds. –Local treasurers and other
accountable officers shall keep monies separate and distinct from local public funds in
their custody and shall not make profit out of public money or otherwise apply the same
to any use not authorized by law or ordinance. (Sec. 312, LGC)

Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT AND OBLIGATION

Section 67. Classification of Appropriation. –

a) Annual Appropriation. –An Annual Appropriation is an appropriation consisting of

specified amounts for salaries, wages, and sundry expenses, etc., authorized by the
sanggunian as necessary for the regular operations of the local government unit during
any given year (Sec. 141, Book III, Vol. 1, GAAM). This is also the "Annual Budget" of a
local government unit which refers to a financial plan embodying the estimates of income
and expenditures for one (1) fiscal year. (Sec. 306 (a), LGC)

b) Form and Content of Local Government Budget. –

1. Estimates of income; and

2. Total appropriations covering the current operating expenditures and capital
outlays (Sec. 314 (a), LGC)

c) Submission of Budget Proposals by Heads or Departments or Offices (LGC, Sec.

317). –

1. Each head of department or office shall submit a budget proposal for his/her
department or office to the local chief executive on or before the fifteenth (15th) of
July of each year: Provided, That the budget proposal of each department of office
shall be categorized under either economic, social or general services: Provided,
further, That each service shall be covered by the budget of at least one (1)
department or office of the local government unit concerned.

2. The said budget proposal shall be prepared in accordance with such policy and
program guidelines as the local chief executive concerned may issue in conformity
with the local development plan, the budgetary ceilings prescribed by the local
finance committee, and the general requirements prescribed in this Title.

3. Budget proposals of departments or offices shall be divided into two (2) primary
categories, namely: the current operating expenditures and the capital outlays. Such
budget proposals shall contain the following information:

Updated Local Treasury Operations Manual (LTOM) 17

 3.1. Objectives, functions, and projects showing the general character and relative
importance of the work to be accomplished or the services to be rendered, and
the cost thereof;

3.2. Organizational charts and staffing patterns indicating the list of plantilla
positions with their corresponding salaries, and proposals for reclassification of
positions and salary changes, as well as the creation of new positions with their
proposed salary grade, duly supported by proper justification;

3.3. Brief description of the functions, projects and activities for the ensuing fiscal
year, expected results for each function, project and activity, and the nature of
work to be performed, including the objects of expenditures for each function,
project and activity;

3.4. Relation of the work and financial proposals to approved local development
plans;

3.5. Estimated current operating expenditures and capital outlays with comparative
data for the last two (2) preceding, current, and ensuing fiscal years; and

3.6. Accomplishment reports for the last two (2) preceding and current fiscal years.

d) Continuing Appropriation. – A Continuing Appropriation refers to an appropriation

available to support obligations for a specified purpose or project, such as those for the
construction of physical structures or for the acquisition of real property or equipment,
even when these obligations are incurred beyond the budget year. (Sec. 306 (e),
LGC).The Continuing Appropriation includes the unexpended balance of 20%
development fund; unexpended balance of capital outlay from the Local Disaster Risk
Reduction Management Fund (LDRRMF)4; and unexpended balance of capital outlay of
the different departments of the local government.

e) Reversion of Unexpended Balances of Appropriations, Continuing Appropriations.

–

1. Unexpended balances of appropriations authorized in the annual appropriations

ordinance shall revert to the unappropriated surplus of the general fund at the end of
the fiscal year and shall not thereafter be available for the expenditure except by
subsequent enactment.

2. Appropriations for capital outlays shall continue and remain valid until fully spent,
reverted or the project is completed.

3. Reversions of continuing appropriations shall not be allowed unless obligations

therefor have been fully paid or otherwise settled.

4. The balances of continuing appropriations shall be reviewed as part of the annual

budget preparation and the sanggunian may approve, upon recommendation of the
Local Chief Executive, the reversion of funds no longer needed in connection with the
activities funded by said continuing appropriations subject to the provisions of this
Section.
(Sec. 322, LGC)

f) Supplemental Appropriation.–A Supplemental Appropriation is one prepared to adjust

the equilibrium of the first approved budget which has been disturbed as supplemental to

4
Formerly the Local Calamity Fund renamed Local Disaster Risk Reduction and Management Fund (LDRRMF) under RA
10121 otherwise known as the Philippine Disaster Risk Reduction and Management Act of 2010.

Updated Local Treasury Operations Manual (LTOM) 18

 by current economic, political or social conditions, or to provide an additional amount to
the original appropriation which proved to be inadequate or insufficient for the particular
purpose intended. (Sec. 144, Book III, Vol. I, GAAM)

g) Changes in the Annual Budget. –

1. All budgetary proposals shall be included and considered in the budget preparation
process. After the local chief executive concerned shall have submitted the executive
budget to the sanggunian, no ordinance providing for a supplemental budget shall be
enacted, except when supported by funds actually available as certified by the local
treasurer or by new revenue sources.

2. A supplemental budget may also be enacted in times of public calamity by way of

budgetary realignment to set aside appropriations for the purchase of supplies and
materials or the payment of services which are exceptionally urgent or absolutely
indispensable to prevent imminent danger to, or loss of, life or property, in the
jurisdiction of the local government unit or in other areas declared by the President in
a state of calamity. Such ordinance shall clearly indicate the sources of funds
available for appropriations, as certified under oath by the local treasurer and local
accountant and attested by the local chief executive, and the various items of
appropriations affected and the reasons for the change.(Sec. 321, LGC)

h) Failure to Enact the Annual Appropriations.–

1. In case the sanggunian concerned fails to pass the ordinance authorizing the annual
appropriations at the beginning of the ensuing fiscal year, it shall continue to hold
sessions, without additional remuneration for its members, until such ordinance is
approved and no other business may be taken up during such sessions. If the
sanggunian still fails to enact such ordinance after 90 days from the beginning of the
fiscal year, the ordinance authorizing the appropriations of the preceding year shall
be deemed reenacted and shall remain in force and effect until the ordinance
authorizing the proposed appropriations is passed by the sanggunian concerned.
However, only the annual appropriations for salaries and wages of existing positions,
statutory and contractual obligations, and essential operating expenses authorized in
the annual and supplemental budgets for the preceding year shall be deemed
reenacted and disbursement of funds shall be in accordance therewith.(Section 323,
LGC)

2. In the implementation of such reenacted ordinance, the local treasurers concerned

shall exclude from the estimates of income for the preceding fiscal year those
realized from nonrecurring sources, like national aids, proceeds from loans, sale of
assets, prior year adjustments and other analogous sources of income. No ordinance
authorizing supplemental appropriations shall be passed in place of annual
appropriations.

3. In case the revised income estimates be less than the aggregate re-enacted
appropriations, the local treasurer concerned shall accordingly advise the
sanggunian concerned which shall, within 10 days from the receipt of such advice,
make the necessaryadjustments or reductions. The revised appropriations authorized
by the sanggunian concerned shall then be the basis for disbursements.(Sec. 323,
LGC)

Section 68. Local Budget Cycle5. –

5
Source: Updated Budget Operations Manual (UBOM)

Updated Local Treasury Operations Manual (LTOM) 19

 SYNCHRONIZED LOCAL PLANNING-BUDGETING CALENDAR
PERIOD COVERED ACTIVITY OUPUT/S PERSON
RESPONSIBLE

Budget Preparation
January (first Week) PPDC sets guidelines for data gathering Guidelines for data PPDCs
gathering
January to March Updating of planning and budgeting Update planning, LPDCs, budget
database (socioeconomic, physical budgeting and officers,
resources, time series, revenue and financial database treasurers,
expenditure data, project profiles status, department
among others heads,
NGAs/RLAs
April-May Analysis of planning environment for plan Draft situational LPDCs,
preparation/review updating analysis and NGAs/RLAs
assessment of plan
implementation
Updating of appropriate AIP in the LDIP
as input to budgeting Indicative AIP (the first
year of the LDIP in the LDCs, LPDCs
case of election year)
June 1 to 15 Preparation of the AIP Summary for the AIP Summary Form LPDCs, Local
budget year Budget Officers

Not later than first Approval of the AIP AIP for the budget Sanggunian
week of August
PDPFP/CDP Preparation

Last week of July Reconstitution of the LDC based on initial Timetable and tasking LCEs
guidelines, including mechanism for for plan
choosing private sector representatives, preparation/updating
prepared by LPDC

Whole month of July Formulation of development vision, goals, Vision, Goals,

strategies, objectives/targets and Strategies, LDCs, LPDC,
identification of PPAs. Objectives/Targets Department
and PPAs Heads,
Harmonization and complementation of NGAs,/RLAs
development vision, goals, strategic Harmonized vision,
direction between and among province goals and strategic Jointly by the
and component cities/municipalities. direction province and
component LGUs

Approval of the PDPFP/CDP PDPFP/CDP

Sanggunian

LDIP Preparation

June 1 to July 31 Identification of areas for Joint

during election year complementation of PPAs between and programs/projects Provinces and
among province and component their component
cities/municipalities. cities and
municipalities,
Prioritization of PPAs Prioritized PPAs NGAs/RLAs.

LDC,LFC,NGAs/R

Updated Local Treasury Operations Manual (LTOM) 20

 Matching of PPAs with available LDIP, revenue LAs
financing resources and determination of generation measures
additional revenue sources to finance the LDC, LFC,
PPAs NGAs/RLAs
Approval of LDIP Prioritized PPAs

LDIP, revenue generation measures

Approved LDIP Approved LDIP

Sanggunian
Budget Authorization
16-30 or 1st week of LCEs (Province,
July during election Issuance of Budget Call Budget Call City, Municipality)
year
July 1-15 Submission of LCE of detailed 3- year Certified statement of Local Treasurer
statement of income and expenditures income and (Province, City,
expenditures Municipality)
Preparation and submission of budget
proposals Budget Proposals Local Department
Heads
Budget Review
July 16-August 31 Conduct of technical budget hearings on Reviewed budget LFCs and LCEs
budget proposals submitted by proposals
Department Heads
On or before the 15th Submission to the Punong Barangay of Statement of income Barangay
day of September Statement of income and expenditure for and expenditure Treasurer
the ensuing year
September 16 -30 Consolidation of budget proposals into Local Expenditure LFC
the Local Expenditure Program and Program and BESF
preparation of Budget Sources of
Financing (BESF)
Budget Execution and Accountability
Not later than Oct. 16 Preparation of the budget message and Budget message and LCE of Province,
submission of executive budget to the executive budget City, Municipality
Sanggunian

October 17 onwards Enactment of the annual budget of the Enacted annual Sanggunian
ensuing fiscal year by the Sanggunian budget (Province, City,
concerned Municipality)
Within three (3) days
from approval by the Submission of the annual or Annual Supplemental Secretary to the
LCE of the annual supplemental budgets of province, city Budget submitted for Sanggunian
supplemental budget and municipality to appropriate reviewing review
authority
Within ten (10) days Submission of the annual or Annual or Sanggunian
from the approval by supplemental budgets of barangays to supplemental budgets
the Punong Barangay appropriate reviewing authority submitted for review
Treasurer of the
annual or
supplemental budgets
of barangays
Within 60 days from Review of the annual or supplemental Reviewed annual or Sangguniang
receipt of the budgets of barangays supplemental budgets Panlungsod,
submitted annual or of barangays Sangguniang
supplemental budgets Bayan, City or
of barangays for Municipal Budget

Updated Local Treasury Operations Manual (LTOM) 21

 review Officer
Within ninety (90) Review of the annual or supplemental Reviewed annual or DBM regional
days from the receipt budgets of province, city and municipality supplemental budgets offices,
of the submitted of province, city and Sangguniang
annual or municipality Panlalawigan
supplemental budgets
for review of province,
city and municipality
January 1 to Implementation/Execution of the annual Annual or LCEs of Province,
December 31 or supplemental budgets supplemental budgets city, Municipality
and Barangay

Section 69. Use of Appropriated Funds and Savings. –Funds shall be available exclusively
for the specific purposes for which they have been appropriated. No ordinance shall be passed
authorizing any transfer of appropriations from one item to another. However, the Local Chief
Executive or the presiding officer of the sanggunian concerned may, by ordinance, be
authorized to augment any item in the approved annual budget for their respective offices " from
savings in other items within the same expense class of their respective appropriations. (Sec.
336, LGC).

Section 70. Use of Unexpended Balance/ Transfer of Unexpended Balance to the General
Fund.–The Commission on Audit (COA) may authorize the transfer at any time, from moneys
appropriated for a specific purpose, to the unappropriated general fund any surplus balance
standing to the credit of any appropriations or funds upon certification thereof to the COA by the
officer having administrative control thereof that there is a surplus in excess of the requirements,
or that the work or purpose for which the appropriation was made has been completed,
indefinitely postponed or abandoned, and that there is no outstanding obligation to be paid
therefrom.(Sec. 99, PD 1445) (Sec. 160, GAAM Vol. 1)

Section 71. The Allotments System in Local Government Units. –

a) The Local Budget. –

1. The local budget is based on estimated income and program of expenditures for a
given year. It specifies annual expenditure ceilings. However, actual releases of
funds and disbursements depend on the collection and receipt of funds by the local
government unit.

2. Since funds will have to be committed and disbursed even as revenues are being
collected, there is a need for a system to ensure that obligations and payments will
not exceed the approved budget and the amount that will ultimately be collected is
available.

3. Hence, we use one system of budget control which is the Allotment System to ensure
that obligations incurred will not exceed appropriations or authorizations made by
appropriation ordinance, directing the payment of goods and services from local
government funds under specified conditions or purposes.

4. Under the Allotment System, obligations may be incurred as long as it is within the
allotment ceiling even if the total amount of the obligation is not supported by cash in
the bank at the time it is incurred. This provides flexibility in the implementation of
programs and projects.

(p. 87, UBOM for LGUs)

Updated Local Treasury Operations Manual (LTOM) 22

 b) Control Devices Used in the Allotment System6. –

1. Local Budget Matrix (LBM) –

1.1 The Local Budget Matrix is the yearly overall financial plan of the local
government unit equivalent to its approved appropriation disaggregated into
components or categories. The category of the expense item as reflected in the
Local Budget Matrix determines the timing and magnitude of the release of
allotment.

1.2 Through the Local Budget Matrix, a comprehensive authority is issued to each
department/office to incur obligations not exceeding a certain amount for a
specified period usually for regular/current operating expenditures. This device
allows the imposition of reserves, non-release of any unprogrammed portion of
the appropriation, earmarking of funds for clearance and withholding of funds
for later release to provide for any shortfall in the collection of anticipated
revenues.

1.3 The Local Budget Matrix classifies budgetary items under Not-Needing
Clearance (NNC), Needing Clearance (NC), Reserve, Later Release, and
Unprogrammed Appropriation.

(p. 88, UBOM for LGUs)

2. Cash Program –The Cash Program must be able to facilitate the management of
cash such that it is available when it is needed for payment of obligations and at the
same time optimizes its utilization; ensures that released allotment are adequately
covered by available cash and/or future collections; and provides information for
control of expenditures and future planning of activities. 7The toolsused in cash
programming are the Cash Flow Forecast and the Cash Flow Analysis.

3. Physical Performance Targets–The Physical Performance Targets reflect the

targeted units of work under each Program/Activity/Project (PAP) for each
department/office based on the historical data of peaks and slumps of activities/tasks
and the peculiar requirements of certain PAPs. The plan is prepared for the entire
calendar year with quarterly/semi-annual targets for the departments/offices to
achieve. (p. 95, UBOM, for LGUs)

Section 72. Obligation of Local Funds.– Obligation shall be limited to the available allotment
for the purpose. Consistent with the New Government Accounting System, obligations shall be
taken up in the registries as they are incurred. Accordingly, expenditures and obligations
incurred during a fiscal year shall be taken up in the accounts of that year. (p. 98, UBOM
LGUs)

a) Steps in the Obligation Process8 -

1. The Head of the requesting office in the LGU shall prepare the Obligation Request
(ObR), LTO Form 40) and the Disbursement Voucher (DV) and certify on the necessity
and legality of charges to appropriation and allotment under his/her direct supervision.
He/she shall also certify to the validity, propriety and legality of the supporting
documents (Box A of ObR); and

6
The detailed guidelines in the preparation of the Local Budget Matrix, Cash Program and Performance Targets are contained in the UBOM for
LGUs.
7
p. 91, UBOM for LGUs
8
COA Circular No. 2006-002, dated January 31, 2006

Updated Local Treasury Operations Manual (LTOM) 23

 2. The Local Budget Officer shall certify as to the existence of available appropriation that
has been legally made for the purpose (Box B of ObR) and shall maintain the
appropriate Registries of Appropriation, Allotments and Obligations as prescribed
under the New Government Accounting System for LGUs;

b) Adjustment or Corrections of Obligations - Any corrections or adjustments made after

the processing of the claims but before payment is made shall be effected either through a
positive entry or negative entry in the Obligations incurred column of the Registries of
Appropriations, Allotments and Obligations by the Accountant.

Section 73. Government Expenditures. – Government expenditures are classified as follows:

1. Current Operating Expenditures - "Current Operating Expenditures" refer to

appropriations for the purchase of goods and services for current consumption or for
benefits expected to terminate within the fiscal year, including goods and services
that will be used or consumed during the budget year. (Sec. 306 (1), LGC)Current
Operating Expenditures are classified into:

1.1 Personal Services;

1.2 Maintenance and Other Operating Expenses (Sec. 155 (a), Book III, Vol. I,
GAAM); and

1.3 Financial Expenses (Chapter 2, Sec. 10, NGAS)

2. Capital Outlays- Capital Outlays refer to appropriations for the purchase of goods
and services, the benefits of which extend beyond the fiscal year and which add to
the assets of local government unit concerned, including investments in public utilities
such as markets and slaughterhouses. (Sec. 306 (d), LGC)

Section 74. Types of Unlawful Expenditures. –

a) Irregular Expenditures.– The term "Irregular Expenditure" signifies that the

expenditure incurred without adhering to established rules, regulations, procedural
guidelines, policies, principles or practices that have gained recognition in law.
Irregular expenditures are incurred if funds are disbursed without conforming to
prescribed usages and rules of discipline. There is no observance of an established
pattern, course, mode of action, behavior, or conduct in the incurrence of an irregular
expenditure. A transaction conducted in a manner that deviates or departs from, or
which does not comply with standards set is deemed irregular. A transaction which
fails to follow or violates appropriate rules of procedure is likewise irregular (3.1, COA
Circular No. 2012-003, dated October 29, 2012).

1. Cases that are considered “Irregular” Expenditures or Uses of Government

Funds and Property are:

1.1 Payments of salaries, allowances and other forms of additional compensation

under the following cases:

i. Payment of salaries and wages wherein the signature in the logbook

vary with the signatures of the workers in the payroll (COA Decision No.
2008-083 dated September 11, 2008)

Similar case that may also fall under this category follows:

Updated Local Treasury Operations Manual (LTOM) 24

 Payment of salaries or wages of laborers under a labor payroll to
persons other than the payee unless properly authorized by the latter.

ii. Honoraria granted to members of special committees such as an

Executive Committee, Program on Awards and Incentives for Service
Excellence and Regional Selection and Promotions Board, which are
performing functions inherent in the regular functions of the agency.
(COA Decision No. 2008-126 dated December 24, 2008).

Similar cases that may also fall under this category follow:

(a) Honoraria to private individuals sitting as members of special

committees (e.g., Ethic Committee) of a government agency, without
authority of approval from the DBM.

(b) Honoraria or Representation and Transportation Allowance (RATA)

granted to members of different committees on various Regional and
District Offices (ex. Region Acting Vice president and District
Supervisors) in violation of Section 4 of DBM Budget Circular No.
2003-5 dated September 23, 2003, as amended.

iii. Honoraria paid to members of the Bids and Awards Committee (BAC)
and Technical Working Group (TWG) in excess of the rates provided for
under DBM Budget Circular No. 2004-5A dated October 7, 2005 and for
procurement activities pertaining to contracts not yet awarded to the
winning bidder.9

iv. Grant of Christmas bonuses, cash gift and other fringe benefits to
consultants and to members of the Board who are not salaried officials
of the government as they are not considered employees of the hiring
agency.10

v. Grant of amelioration allowance or any similar benefits to private

employees of service contractors contrary to Administrative order (A.O.)
No. 365 dated October 10, 1997.11

vi. Loyalty service award granted to employee that have not yet rendered
the minimum service of ten (10) years on the government required under
the CSC Memorandum Circular No. 42, s 1992. 12

Similar case that may also fall under this category follows:

(a) Annual payment of Anniversary Bonus to government employees

which is not consistent with A.O. No. 263 dated March 28, 1996,
authorizing the grant thereof of their agencies’ milestone years-that
is, on the 5th anniversary and 5th year thereafter.

vii. Payment of COLA and other allowances deemed integrated in the salary
per DBM-NCC No. 59 and DBM-CCC No. 10.13

9
Joseph Peter Sison, et al. vs. Rogelio Tablang, et al., G.R. No. 177011 dated June 5, 2009
10
COA Decision No. 2006-030 dated April 11, 2006, BCDA vs. COA, G.R. No. 178160 dated February 26, 2009
11
HDMF vs. COA, G.R. no. 157001 dated October 19, 2004
12
BCDA vs. CA, G.R. no. 142760 dated August 6, 2002
13
Victoria C. Gutierrez, et al. vs. DBM, G.R. No. 153266 dated March 18, 2010

Updated Local Treasury Operations Manual (LTOM) 25

 viii. Grant of food allowance, rice subsidy and health care allowance as there
is no law authorizing the grant of such allowance. 14

Similar case that may also fall under this category follows:

(a) Payment of health care insurance, except for local government units
(LGUs).15

ix. RATA and cash gift to the office of the Government Corporate Counsel
(OGCC) Lawyers rendering legal assistance to government-owned and
controlled corporations (GOCCs) without the presence of the three
concurring conditions required under Section 6 of Executive Order (E.O.)
No. 878 dated March 4, 1983. 16

Similar case that may also fall under this category follows:

(a) Attorney’s fees paid to regular employees.

x. Payment of Collective Negotiation Agreement (CAN) signing bonus to

members of governing board (non-organic employees) and those
occupying managerial positions higher than division chief. 17

xi. Payment of CNA cash incentive/benefit to rank-and-file employees

where the conditions required in determining “savings” under Public
Sector Labor-Management Council (PSLMC) Resolution No. 2, s. 2003
dated May 19, 2003 and DBM Budget Circular No. 2006-1 dated
February 1, 2006 are not met.

xii. Premiums paid for the Personnel Accident Insurance of officers and
employees of GOCCs without prior authority from the DBM and/or
the Office of the President (COA Decision No. 2006-030 dated April
11, 2006).

Similar case that may also fall under this category follows:

(a) Procurement and payment of corresponding premiums for

Directors and Officers Liability Insurance (DOLT).

1.2 Hiring of private lawyers by the GOCCs to handle their cases and legal
matters without prior written conformity and acquiescence of the Solicitor
General or the Government Corporate Counsel, as the case may be, and the
written concurrence of the COA (Phividec Industrial Authority and Atty. Cesilo
Adaza vs. Capitol Steel Corp. and Cheng ITan Sui, G.R. No. 155692 dated
October 23, 2003).

1.3 Hiring of casual and probationary employees under job order with entitlement
and benefits enjoyed by regular government employees, in violation of CSC
Resolution No, 020790 dated June 5, 2002 and CSC Memorandum Circular
No. 15, s. 1999.

14
BFAR Employees Union, R.O. VII vs. COA, G.R. No. 169815 dated August 13, 2008 and Benguet State University vs. COA,
G.R. No. 169637 dated June 8, 2007.
15
Province of Negros Occidental vs. the Commissioners COA, et al., G.R. No. 182574 dated September 28, 2010
16
COA Decision No. 2006-030 dated April 11, 2006
17
COA Decision 2008-029 dated February 29, 2008

Updated Local Treasury Operations Manual (LTOM) 26

 1.4 Hiring of consultants/retired employees, such as:

i. Hiring of consultants and contractuals to perform functions that will

exercise control and supervision over regular employees (CSC
Memorandum Circular No. 26, s. 1997).

ii. Continuous extension of the services of a foreign consultant to undertake

relatively simple supervisory work required for the final stages of the
project that can be done by the implementing agency itself or a local
consultant (NI-IA vs. COA, G.R. No. 101370, September 2, 1993).

iii. Hiring of employees who had previously opted to retire/be separated from
the service as a result of rationalization efforts of their agency within five
(5) years after retirement/separation (DBM Circular Letter No. 2011-14,
dated December 22, 2011 and Civil Service regulations).

1.5 Payment for damages, litigation costs and attorney's fees awarded by the
court to a contractor caused by serious lapses and omissions of a public
officer such as the issuance of change orders without authority from the
Sangguniang Panlungsod and his/her failure to protect public funds from
being garnished (COA Decision No. 2008-043 dated May 6, 2008).

1.6 Reimbursement and/or payments of expenses, such as:

i. Reimbursement of expenses incurred by persons who are not authorized

to attend conferences, meetings and other official functions.

ii. Unless there is a law which provides otherwise, reimbursement of legal

expenses incurred by public officials and employees against whom
criminal/civil/administrative suits have been filed, in relation to the
performance of their public functions.

1.7 Payment of rental contracts for service vehicles covering a continuous

period of more than 15 days without the authority or approval of the
Secretary of the DBM, appropriation and certification of availability of funds
(COA Decision No. 2009-007 dated February 9, 2009).

1.8 Release of funds to non-government organization/people's organizations

(NGOs/POs) for money market placement, time deposit or other forms of
investments (COA Circular No. 2007-001 dated October 25, 2007).

1.9 Release of assistance such as fertilizers, seeds and other farm inputs and
equipment other than to the intended farmer beneficiaries.

1.10 Advertisements

i. Media advertisements, except those required in the issuance of agency

guidelines, rules and regulations, the conduct of public biddings, and the
dissemination of important public announcements (A.O. No. 103 dated
August 31, 2004).

ii. Expenses for advertisements of anniversaries, etc. in newspapers, TV or

radio merely for publicity or propaganda purposes except when the
nature of the agency's mission would require such expenses as in the
case of promotion of trade and business.

Updated Local Treasury Operations Manual (LTOM) 27

 1.11 Donations, contributions, grants and gifts, except if said activities are
undertaken pursuant to the mandate of the donor-agency (A.O. No. 103
dated August 31, 2004).

Similar case that may also fall under this category follows:

i. Release of funds as financial assistance to civic organizations such

as Rotary, Jaycees and Lions, non-stock non-profit
corporations/foundations and private corporations.

1.12 Payment of foreign travel expenses to private individuals purportedly as

representatives of an international organization for the purpose of
attending a convention, using the travel rates prescribed under F.O. 298
dated March 23, 2004, which governs government personnel only.

1.13 Including names or initials and/or images or pictures of government

officials in the billboard and signages on government programs, projects
and properties banned under Department of the Interior and Local
Government (DILG) Memorandum Circular No. 2010-101 dated
September 23, 2010.

1.14 Acceptance of a project as 100 percent complete pursuant to Certificate of

Inspection Report when the project was not yet completed (Manuel
Leycano, Jr. [Link], G.R. No. 154665, February 10, 2006).

Similar cases that may also fall under this category follow:

i. Acceptance of a project constructed not in accordance with plans and

specifications and with noted deficiencies.

ii. Acceptance of seeds and other articles/goods without passing the

required quality test by the responsible government entity such as by
the Bureau of Plant Industry, in case of seeds.

1.15 Use of government motor vehicles for private social functions such as
receptions, balls, theaters and for other personal purposes; use by
spouse, children, friends and the like, of the official entitled thereto, even if
they are in the company of said officials; or on Sundays, legal holidays or
out of their regular office hours or outside the route of the official or
employee, unless properly authorized. (A.O. No. 239 dated September 15,
2008).

(Annex A, COA Circular No. 2012-003 dated October 29, 2012)

2. Cases that are considered "Illegal" Expenditures or Uses of Government Funds

and Property:

2.1 Payment of claims under a contract awarded not strictly in accordance with
the procedures prescribed under Republic Act (R.A.) No. 9184 and its
Revised Implementing Rules and Regulations (IRR):

i. For contracts entered into containing provisions that substantially depart

from the draft Agreement included in the Bid Documents (Demosthenes
P. Again, Jr. et. al., MWU-NLU and PALEA vs. PIATCO, Inc., MIAA,
DOTC and Sec. L. Mendoza, G.R. No. 155001 dated May 5, 2003).

Updated Local Treasury Operations Manual (LTOM) 28

 ii. For contracts awarded under an alternative mode of procurement for
items that should have undergone complete public bidding process and
eventually resulted in overpricing (Dir. Fredric Villanueva, [Link]. vs. COA,
G.R. No. 151987 dated March 18, 2005 and Venancio R. Nava vs.
Rodolfo G. Palattao, et al., G.R. 160211 dated August 28, 2006).

iii. For contracts awarded to a bidder who failed to meet the minimum
amounts required to be put up at the time the bids were submitted
(Demosthenes P. Agan, Jr. et al., MWU-NLU and PALEA vs. PIATCO,
Inc., MIAA, DOTC and Sec. L. Mendoza, G.R. No. 155001 dated May 5,
2003).

iv. For delivery of equipment that is not brand new and does not conform to
the specifications called for in the Invitation to Bid (Ramon T. Lim vs.
COA, G.R. No. 130325 dated March 12, 2003).

Similar case that may fall under the category follows:

(a) For deliveries of imported rice and other similar goods not
conforming to the required specifications.

v. For base and portable radio communications equipment without

purchasers' and dealers' permits from the National Telecommunications
Commission (NTC) in violation of Act No. 3846, otherwise known as the
"Radio Control Law" (Fe D. Laysa vs. COA, G.R. No. 128134 dated
October 18, 2000).

2.2 Payment liar contracts under the following conditions without the prior
approval or authorization of the local Sanggunian which is required under
Section 22 (c) of R.A. No. 7160 (Local Government Code of 1991) [Hon.
Gabriel Luis Quisumbing, et al. vs. I-Ion. Gwendolyn F. Garcia (Cebu) and
Hon. Delfin P. Aguilar (COA), O.R. No. 175527 dated December 8, 2008] as
clarified under COA Memorandum No. 2010-014 dated April 22, 2010.

i. In case of regularly enacted budget

(a) For projects described in appropriation ordinances in generic terms

such as infrastructure projects, inter-municipal waterworks, drainage
and sewerage, flood control, irrigation systems projects, reclamation
projects, roads and bridges.

(b) For purchase of goods and services which are neither specified in the
appropriation ordinance nor encompassed within the regular personal
services and maintenance operating expenses.

ii. In case of a reenacted budget

(a) For new contracts entered into by the local chief executive covering
contractual obligations included in the previous year's annual and
supplemental budgets.

2.3 Payment of compensation or benefits to government personnel under the

following circumstances:

Updated Local Treasury Operations Manual (LTOM) 29

 i. Exemplary public service award incentive paid to three term local officials
as this is not among the compensation and benefits enumerated under
Article 77 of the IRR of R.A. No. 7160 as due the elective local officials,
and that such payment contravenes Article 170 (c) of the said IRR which
provides that no elective or appointive official shall receive additional,
double or indirect compensation unless specifically authorized by law
(COA Decision No. 2008-088 dated September 26, 2008).

ii. Separation/disability/death plan benefits to retiring employees which

constitute supplementary retirement plan prohibited under Section 28 (b)
of Commonwealth Act No. 186, as amended by R.A. No. 4968 (COA
Decision No. 2008-078 dated August 20, 2008).

iii. Financial assistance granted to retiring employees which constitutes

supplementary pension/retirement benefit plan proscribed by law (Avelina
B. Conte and Leticia Boiser-Palma vs. COA, G.R. No. 116422 dated
November 4, 1996).

iv. Partial release/payment or enjoyment of retirement benefits in whatever

guise, such as in the form of loan before actual retirement (DBP vs. COA,
G.R. No. 144516 dated February 11, 2004).

v. Additional retirement benefits which are beyond that allowed under

existing retirement laws (COA Decision No. 2006-030 dated April 11,
2006).

vi. Additional benefits paid to officials and employees of GOCCs based on

Governing Board resolutions whose power to fix compensation and
benefits were revoked under R.A. No. 6758 effective July 1, 1989 unless
subsequently restored (SSS vs. COA, G.R. No. 149240 dated July II,
2002).

vii. Fringe benefits paid to Board of Directors, officers and employees

exceeding the limitations prescribed under R.A. No. 6758 such as Social
Amelioration Benefits, two-month Christmas bonus and Mid-year Financial
Assistance (COA Decision No. 2006-030 dated April 11, 2006).

viii. Hazard pay paid to health workers/employees not assigned in

establishments specifically mentioned in Section 21 of R.A. No. 7305 and
without proof of exposure to specific health hazards for at least 50 percent,
of his/her working hours (COA Decision No. 2010-092 dated October 21,
2010).

ix. Hazard allowance paid to employees who are not principally engaged in
the delivery of health or health-related services such as Social Insurance
Group of Government Service Insurance System (KMG vs. COA, G.R. No.
1 50769 dated August 31, 2004).

x. Hazard pay of public health workers at a predetermined or fixed amount

(i.e., P4,988.75/month for Health workers, receiving salary grade 20 and
above) which contravenes Section 21 of R.A. No. 7305 (Magna Carta for
Public Health Workers) and Rule XV, Section 7.1.5 of its IRR (A.M. No.
03-9-02-SC, November 27, 2008).

xi. Payment of honoraria without covering appropriation (Fe D. Laysa vs.

COA, G.R. No. 128134 dated October 18, 2000).

Updated Local Treasury Operations Manual (LTOM) 30

 xii. Grant of allowances and bonuses to Board Members of water districts
other than per diems allowed pursuant to Section 13 of P.D. No. 198
(Rodolfo S. De Jesus, et al. vs. COA, G.R. No. 156641 dated February 5,
2004).

xiii. Payment of transportation allowance paid to officials who are assigned or

presently use government motor vehicles [Sec. 45, R.A. No. 10155 (GAA
2012)]. Similarly, grant of gasoline allowance or reimbursement of gasoline
expenses to officials who are receiving transportation allowance is also
considered illegal.

xiv. Extraordinary and Miscellaneous Expenses (EME) of LGUs in excess of

the limitations provided for discretionary expenses under Section 325(h) of
R.A. No. 7160.

xv. Payment of personal services expenditures such as salaries, honoraria,

allowances, bonuses, and other similar forms of compensation out of
financial subsidy to LGUs - [DBM Local Budget Circular (LBC) No. 89
dated June 23, 2008].

Similar case that may also fall under this category follows:

Payment of personal services expenditures in excess of the limitation

prescribed under Section 325(a) of R.A. No. 7160.

xvi. Honoraria and other forms of allowances such as per diems,

representation allowance, Christmas gift checks paid to Department
Secretaries/Undersecretaries/Assistant Secretaries or their alternates as
members of' governing boards of collegial bodies as these partake of the
nature of additional compensation or remuneration proscribed under
Section 13, Article VII of the 1987 Philippine Constitution (Bitonio, Jr. vs.
COA, G.R. No. 147392 dated March 12, 2004, National Amnesty
Commission vs. COA, G.R. No. 156982 dated September 8, 2004 and
Dela Cruz, et al. vs. COA, G.R. No. 138489 dated November29, 2001).

Similar cases that may also fall under this category follow:

(a) Payment of per diems and allowances to Board of Director Secretariat

and other officers in subsidiaries of GOCCs acquired by the
government through Proclamation No. 50, s. 1986, dated December
15, 1986.

(b) Payment of EME to an ex-officio member of the Board.(COA Decision

No. 2010-048 dated March 23, 2010)

(c) Additional benefits paid to officials, employees and the members of

Board of GOCCs based on issuances of the Department Secretary to
which the GOCCs are attached.

xvii. Payment of COLA and other allowances deemed integrated in the salary
per DBM NCC No. 59 and DBM-CCC No. 10 (Victoria C. Gutierrez, et at.
vs. DBM, G.R. No. 153266 dated March l 8, 2010).

2.4 Payments thru checks that are countersigned by Secretary to the Local Chief
Executive contrary to Section 345 of R.A. No. 7160 which requires that the

Updated Local Treasury Operations Manual (LTOM) 31

 countersigning be made by the local administrator or in his/her temporary
absence or incapacity by his/her immediate assistant (COA Decision No. 2008-
061 dated July 3, 2008).

2.5 Use of public funds for private purposes [Section 4(2) of P.D. No. 1445], such
as:

i. For repair/rehabilitation or construction of multi-purpose building or a

specific cooperative composed of private individuals where the lot and
building subject of improvement are privately owned (COA Decision No.
2008-127 dated December 24, 2008).

ii. For widening, repairing and improving sidewalks of a privately owned

subdivision where the land on which it is situated had not been transferred
to the government by way of donation or acquired by the government
through expropriation (Aniano A. Albon vs. Bayani Fernando, et al., G.R.
No. 148357 dated June 30, 2006).

iii. Use of government property such as office supplies and office equipment,
and government facilities and buildings for personal purposes.

2.6 Entering into contract in an amount way beyond the appropriated amount in
violation of Section 85 of P.D. No. 1445 (Hon. Tomas R. Osmena vs. COA, G.R.
No. 98355 dated March 2, 1994).

2.7 Entering into contracts without covering certificates of availability of funds issued
by the Chief Accountant even if the contract is signed by the Accountant as
witness (DOH vs. CVCAA, et al., G.R. Nos. 151373-74 dated November 17,
2005).

2.8 Purchase of science education facilities by the Schools Division Superintendent

using funds intended for the improvement of facilities of nationalized High
Schools (Venancio R. Nava vs. Rodolfo G. Palattao, et al., G.R. No. 160211
datedAugust 28, 2006).

2.9 Expenses for foreign travel of officials or employees, including uniformed

personnel of the DILG and Department of National Defense (DND) who are due
to retire within one year after the said foreign travel [Section 16(c), General
Provisions, 2012 GAA or pertinent provisions of the GAA for the year].

2.10 Charges to accounts payable not founded on valid claims in violation of Section
46 of P. D. No. 1177 (Fe D. Laysa vs. COA, G.R. No. 128134, October 18,
2000).

2.11 Hiring of private lawyers by LGUs except in cases where a component city or
municipality is a party adverse to the provincial government or to another
component city or municipality (COA Circular No. 98-002 dated June 9, 1998).

2.12 Use of funds intended for a specific purpose/project, for other purposes such as
administrative and miscellaneous expenses of the implementing agency, and for
projects not intended to be implemented under the program.

2.13 Grant of cash advance for no specific stated public purpose (Section 89 of P.D.
No. 1445).

(Annex B, COA Circular No. 2012-003 dated October 29, 2012)

Updated Local Treasury Operations Manual (LTOM) 32

 b) Unnecessary Expenditures. –The term pertains to expenditures which could not
pass the test of prudence or the diligence of a good father of a family, thereby
denoting non-responsiveness to the exigencies of the service. Unnecessary
expenditures are those not supportive of the implementation of the objectives and
mission of the agency relative to the nature of its operation. This would also include
incurrence of expenditure not dictated by the demands of good government, and those
the utility of which cannot be ascertained at a specific time. An expenditure that is not
essential or that which can be dispensed with without loss or damage to property is
considered unnecessary. The mission and thrusts of the agency incurring the
expenditures must be considered in determining whether or not an expenditure is
necessary.(4.1, COA Circular No. 2012-003 dated October 29, 2012)

1. Cases that are considered "Unnecessary" Expenditures or Uses of Government

Funds and Property are:

1.1 Creation or continued operation of subsidiaries, the function of which

duplicates that of the parent corporation.

1.2 Hiring of public relations (PR) companies.

1.3 PR expenses by government insurance corporations whose members and

where government properties are compulsorily insured.

1.4 Hiring of consultants whose functions are redundant to the respective

functions of concerned officials, for example hiring of procurement
consultant, financial consultant or media consultant.

1.5 Hiring of consultants rendering services not aligned/related to the

mandate/thrusts of the hiring Agency anchor exceeding the agreed
consultancy period including renewals.

1.6 Professional service contract for the design of a building with already
existing design/plan, and subject services of the Architect was superfluous
and unnecessary (COA Decision 94-117 dated March 10, 1994).

1.7 Purchase of high-end or expensive models/brands of electronic gadgets

such as mobile phones, desktops, laptops, etc. unless justified by
circumstances.

1.8 Construction of buildings and/or procurement of equipment not actually

needed or without any intended purpose, not put to use or use for purposes
other than the intended purpose, not completed and could not be properly
maintained or operations sustained.

1.9 Construction of housing units which were not distributed/awarded or

disposed of within considerable period of time as evidenced by the
deterioration of the units.

1.10 Replacement of serviceable structure/equipment.

1.11 Continuous repair of vehicles and equipment already considered beyond

economic repair as evidenced by frequent breakdown and non-use after
repair.

Updated Local Treasury Operations Manual (LTOM) 33

 1.12 Grant of overtime pay for work that is not of urgent nature as to require
completion within a specified time or that can be undertaken during regular
office hours.

(Annex C, COA Circular No. 2012-003 dated October 29, 2012)

c) Excessive Expenditures.–The term "excessive expenditures" signifies unreasonable

expense or expenses incurred at an immoderate quantity and exorbitant price. It also
includes expenses which exceed what is usual or proper, as well as expenses which are
unreasonably high and beyond just measure or amount. They also include expenses in
excess of reasonable limits.(5.1, COA Circular No. 2012-003 dated October 29, 2012)

1. Cases that are considered "Excessive" Expenditures of Government Funds

are:

1.1 Overpricing of purchases, characterized by grossly exaggerated or

inflated quotations, in excess of the current and prevailing market price by
a 10 percent variance from the purchased item.

1.2 Payment for repair of government equipment at a cost exceeding 30

percent of the current market price of the same or similar equipment.

1.3 Expenditures for supplies and materials including fuel inventory in

quantities exceeding the normal three-month requirements, except under
the circumstances enumerated under the pertinent provision of the GAA.

1.4 Granting of cash advance in excess of estimated budget.

1.5 Provision of mobile phone, whether postpaid line subscription or prepaid,

in excess of one unit for each entitled official which should not be lower
than Division Chief rank.

1.6 Grant of cash advance for intelligence funds in excess of one-month

requirement. In emergency cases, cash advance in excess of one-month
requirement may be granted but not to exceed the three-month
requirement.

1.7 Release of funds to NGOs/POs in excess of the project requirements.

1.8 Using expensive thermoplastic materials with longer life span on an

asphalt overlay with shorter life span.

1.9 Installation of materials/items in excess of the requirements prescribed

under existing regulations and/or in places without the need for the same
or with already existing installations, such as:

1.9.1 Installation of another camera in places with existing functional

camera.

1.9.2 Installation of raised pavement studs with spacing shorter than

the 9-meter requirement.

1.10 Procurement of materials/items in excess of the requirements which

eventually expires such as vaccines, medicines, seeds, fertilizer,
pesticides, among others.

Updated Local Treasury Operations Manual (LTOM) 34

 1.11 Inclusion in the contract of a specific infrastructure project, special items
such as motor vehicles and computers which unnecessarily increased
project costs due to the provision of indirect costs.

1.12 Procurement and distribution of seeds to farmers in excess of the

required number of bags of seeds per hectare.

1.13 Purchase of expensive specialized folders and other easily accessible

and readily available items which have limited useful life.

1.14 Payment of cost of imported equipment in excess of the cost of

importation indicated in pro-forma Consular Invoice of the foreign
supplier, Bureau of Internal Revenue (BIR) and Bureau of Customs
(BOC) tax receipts, and other cost of importation and reasonable mark-
up.

1.15 Excessive expenditures in the celebration of Christmas, anniversary and

other special occasions.

1.16 Excessive allowances to participants and expenses in relation to lakbay-

aral, seminars or trainings.

1.17 Claims for EMEs and other similar expenses of GOCCs in excess of the
amounts authorized in their corporate charters and in the absence
thereof, the amounts fixed under the GAA. The amount provided to in the
charter shall be included in the Corporate Operating Budget (COB),
subject to the approval of the DBM.

(Annex D, COA Circular No. 2012-003 dated October 29, 2012)

d) Extravagant Expenditures.–The term "extravagant expenditure" signifies those incurred

without restraint, judiciousness and economy. Extravagant expenditures exceed the bounds
of propriety. These expenditures are immoderate, prodigal, lavish, luxurious, grossly
excessive, and injudicious.(6.1, COA Circular No. 2012-003 dated October 29, 2012)

1. Cases that are considered "Extravagant" Expenditures of Government Funds

are:

1.1 Purchase of wines, liquors, cigars and cigarettes, except when served
during state functions and government-sponsored international
conferences and conventions.

1.2 Payment for rent of expensive halls or rooms in luxury hotels or

restaurants used for meetings/seminars and other official functions,
except when such hotels or restaurants are used for government-
sponsored international conventions, meetings and the like.

1.3 Conduct of out-of-town meeting which can be made within the office
premises.

1.4 Hiring of expensive vans, cars, aircraft when there is available ordinary
public conveyance, except in meritorious cases and justified by prevailing
circumstances.

1.5 Use of expensive decorative lamp posts and other similar items/fixture.

Updated Local Treasury Operations Manual (LTOM) 35

 1.6 Procurement and use of luxury vehicles by government officials, except
those allowed under Section 6 of Administrative Order No. 3 issued on
February 27, 2001.

1.7 Luxurious furnishings for government buildings, except those intended for
showcase, trade and commerce, promotion of arts and culture and use of
dignitaries.

1.8 Installation of highly sophisticated outdoor signs, billboards and neon

signs advertising the office, except for banks, trading corporations, hotels,
or buildings used for culture and arts.

(Annex E, COA Circular No. 2012-003 dated October 29, 2012)

e) Unconscionable Expenditures.–The term "unconscionable expenditures" pertains to

expenditures which are unreasonable and immoderate, and which no man in his/her right
sense would make, nor a fair and honest man would accept as reasonable, and those
incurred in violation of ethical and moral standards.(7,1, COA Circular No. 2012-003, dated
October 29, 2012)

1. Cases that are considered "Unconscionable" Expenditures of Government

Funds are presented are:

1.1 Grant of exorbitant and unreasonable bonuses, allowances and fringe

benefits to public officials and employees and members of governing
boards.

1.2 Live-in seminars in five-star hotels with significant numbers of participants

and unreasonable period of time.

1.3 Payment of excessive and unreasonable retirement benefits.

1.4 Purchase of supplies and materials including agricultural

equipment/machineries and other farm inputs in significant quantities far
exceeding the requirements and were not actually needed, thus, left idle
and unused.

1.5 Extension of loans in significant and unreasonable amount to unqualified

borrowers whereby recovery of the loans granted is remote.

1.6 Overpricing in significant amounts exceeding 100 percent of the current

and prevailing market value.

1.7 Payment for repairs of government equipment involving significant

amount exceeding 100 percent of the current market value price of the
same or similar equipment.

1.8 Release of significant amounts to NGOs/POs without evaluating the

necessity of the project, the needs of the intended recipients and the
reasonableness of the project requirements.

(Annex F, COA Circular No. 2012-003 dated October 29, 2012)

f) Inclusion Of Situations Deemed IUEEU Expenditures In The Updated List

1. Need/Justification. –

Updated Local Treasury Operations Manual (LTOM) 36

 1.1 As the lists of IUEEU expenditures cannot exhaust the situations which are
deemed such, there is a need to set up a system whereby a list of disallowed
expenditures peculiar to an agency or a class/category shall be made using a
self-propelling or time-adjusting mechanism such that a case declared IUEEU
expenditure in a particular situation/sector is, likewise, deemed IUEEU
expenditure in other cases/sectors similarly situated.

1.2 Criteria for Inclusion of an IUEEU situation in the Updated Lists. - A situation
may be included in the updated list if it corresponds positively to at least one of
the following criteria:

i. there is no established judicial precedents relative to the case/issue;

ii. there is a substantial/notable recurrence of a particular problem within a

very limited time;

iii. it results in losses or non-operation of the agency; and

iv. the case is an accurate illustration of the substantive area of the IUEEU
expenditure definition.

2. Procedure for Inclusion. –In case an IUEEU situation corresponds to any, several
or all of the criteria set above, the following steps should be observed in including the
IUEEU situation into the Updated List:

i. The Supervising Auditor/Audit Team Leader, through the Cluster

Director/Assistant Commissioner recommends to the Commission
Proper, IUEEU situations deemed ripe for inclusion in the Updated List.

ii. The IUEEU situation will be taken up in a Commission Proper meeting

where the proposed inclusion will be deliberated, upon resolving among
other things, whether or not the situation will apply only to the agency
classification involved or to the three sectors (national, local and
corporate) of government.

iii. Thereafter, the Commission Proper shall issue a Resolution effecting the
inclusion of the IUEEU situation in the Updated List.

iv. Finally, the Resolution shall be published and circularized for the
information of all sectors concerned.

g) Liability for Unlawful Expenditures.-

1. Expenditures of funds or use of property in violation of Title V (Local Fiscal

Administration) of the Local Government Code of 1991 and other laws shall be a
personal liability of the official or employee responsible therefore. (Sec. 351, LGC)

2. Any official or employee of the local government unit knowingly incurring any
obligation, or authorizing any expenditure in violation of the provisions of the
Administrative Code of 1987 (E.O. No. 292) or taking part therein, shall be dismissed
from the service, after due notice and hearing by the duly authorized appointing
official. If the appointing officials other than the President and should he fail to
remove such official or employee, the President may exercise the power of removal.
(Sec. 43, Book VI, E. O. No. 292)

Updated Local Treasury Operations Manual (LTOM) 37

Chapter 3. DISBURSEMENT OF LOCAL FUNDS

Disbursement of local funds for the settlement of government payables/obligations must

be made in accordance with the appropriation ordinance authorizing the annual or supplemental
appropriations without the prior approval of the sanggunian concerned.

Section 75. General Principles Governing Fund Disbursements. –

a) The Official Fiscal Year. –The official fiscal year of local government units is the period
beginning with the first (1st) day of January of a given year and ending with the thirty-first
(31st) day of December of the same year.

b) Disbursements in Accordance with Annual or Supplemental Appropriations. –

Disbursements of local funds shall be made in accordance with the ordinance authorizing
the annual or supplemental appropriations without the prior approval of the sanggunian
concerned. (Sec. 346, LGC)The approved budget and/or appropriation and
corresponding release of allotments in the local government units shall be the basis for
the disbursements of its funds for the fiscal year. The appropriations insofar as
practicable, shall be in a lump sum amount set aside by programs and further subdivided
into Current Operating Expenditures composed of Personal Services and Maintenance
and Other Operating Expenses and Capital Outlays. Further, the object of expenditures
for each allotment class should be specified to be able to properly monitor expenditures.

c) Use of Appropriated Funds and Savings. –Funds are available exclusively for the
specific purpose for which they have been appropriated.

d) Restriction Upon Limit of Disbursements. –

1. Disbursements in accordance with appropriations in the approved annual budget may

be made from any local fund in the custody of the Local Treasurer, but the
disbursement from any local fund shall in no case exceed fifty percent (50%) of the
uncollected estimated revenue accruing to such local fund in addition to the actual
collections. Provided, however, that no cash overdraft in any local fund shall be
incurred at the end of the fiscal year.

2. In case of emergency arising from typhoon, earthquake, or any other calamity, the
sanggunian concerned may authorize the Local Treasurer to continue making
disbursements from any local fund in his/her possession in excess of the limitations
herein provided, but only for such purposes and amounts included in the approved
annual budgets.

3. Any overdraft which may be incurred at the end of the year in any local fund by virtue
of the provisions hereof, shall be covered with the first collections of the immediately
succeeding fiscal year accruing to such local fund. (Sec. 337, LGC)

e) Prohibitions on Disbursements. –Disbursements of public funds shall be guided by the

following prohibitions. –

1. Advance Payments –No money shall be paid on account of any contract under
which no services have been rendered or goods delivered. (Sec. 338, LGC)

2. Expenditures for Religious or Private Purposes –No public money or property

shall be appropriated or applied for religious or private purposes. (Sec. 335, LGC)

3. Expenses for Reception and Entertainment –No money shall be appropriated,

used, or paid for entertainment or reception except to the extent of the representation
allowances authorized by law or for the reception of visiting dignitaries of foreign

Updated Local Treasury Operations Manual (LTOM) 38

 governments or foreign missions, or when expressly authorized by the President in
specific cases. (Sec. 343, LGC)

Section 76. Basic Requirements for Disbursements from the General Fund and Special
Funds. – Disbursements from the General Fund and Special Funds shall require the following:

a) Certification in the Disbursement Voucher (Box "A”) by the Local Accountant that
allotment has been obligated for the purpose and the supporting documents are
complete;

b) Certification in the Disbursement Voucher (Box "B'’) by the Local Treasurer that funds are
available for the purpose;

c) Approval by the Local Chief Executive (Box “C”), except for regularly recurring
administrative expenses such as: payrolls for regular or permanent employees, expenses
for light, water, telephone and telegraph services, remittances to government creditor
agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM and
others, where the authority to approve may be delegated.

d) The Disbursement Voucher for expenditures appropriated for the operation of the
sanggunian shall be approved by the Vice-Governor or the Vice-Mayor of the
province/city or municipality, as the case may be.

e) The disbursements for Special Education Fund (SEF) shall be approved by the Local
Chief Executive as Chairperson of the Local School Board based from the annual budget
as approved by the Board.

f) Trust Funds maintained for projects implemented by the LGU sourced from domestic or
foreign grants/loans (local/foreign-assisted projects) should be utilized strictly in
compliance with the provisions of the Memorandum of Agreement (MOA), Memorandum
of Undertaking (MOU) or other agreements signed by the LGU with other government
agencies or private entities. In no case shall these trust funds be used for purposes other
than what is provided in the MOA/MOU, or temporarily transferred to other funds of the
LGU, since this constitutes violation of the grant/loan agreements of the government with
the local/foreign donors. Funds received from these sources shall be maintained in
separate bank accounts and shall never be commingled with other funds of the LGU.

g) Documents supporting the Disbursement Vouchers and Payrolls shall be reviewed by the
Local Accountant or Head of Accounting Unit.

Section 77. Modes of Disbursement. –Disbursements covered by Disbursement Vouchers

and/or Payrolls are usually paid either by check or in cash. Other modes of disbursements
include direct payments and/or bank [Link], cash should be handled under the general
principles of the Imprest System where all payments must be made by check and only payments
in small amounts may be made in cash through the petty cash fund. (Sec. 172, Book III, Vol. I,
GAAM)

Section 78. Disbursement by Checks.– Upon receipt of the Disbursement Voucher for
payment, the Local Treasurer shall verify the propriety of the certifications and approvals
required therein. If complete, the Local Treasurer shall then draw a check in payment therefor.

Section 79. Preparation and Signing of Checks. –

a) Checks shall be prepared and signed by the Local Treasurer and countersigned by the
Local Administrator (NGAs for LGUs, Sec. 40).

Updated Local Treasury Operations Manual (LTOM) 39

 b) In case of temporary absence or incapacity of the aforesaid officials these duties shall
devolve upon their immediate assistants. (Sec. 345, LGC; NGAs for LGUs, Sec. 40)

c) In the case of municipalities where no Administrator has been appointed, checks shall be
countersigned by the Municipal Mayor. In case, however, of expenditures for the
operation of the sanggunian, checks drawn thereon shall be countersigned by the
provincial Vice Governor, the city Vice Mayor, or the municipal Vice Mayor, as the case
may be. (Sec.43, COA Circular No. 92-382; NGAs for LGUs, Sec. 40)

d) Checks shall always be made payable to a specific person or entity and never to "Cash"
or "Bearer". All checks shall be crossed for deposit to the payee's account, except checks
which are payable to government employees, financial assistance, Assistance for
Individual Crisis Situation (AICS), not exceeding ₱15,000.00. Unused checks shall be
kept in the vault, which shall be accessible only to the Local Treasurer. The signing or
countersigning of blank checks shall not be allowed.

Section [Link] of Check Disbursements in the Cashbooks. – All checks issued

including cancelled checks shall be recorded chronologically in the Cashbook-Cash in Bank.
(NGAs for LGUs, Sec. 41)

Section 81. Release of Checks. –

a) The Local Treasurer shall release the check only to the payee or his/her duly authorized
representative. For purposes of releasing checks, the Local Treasurer shall maintain a
Check Register where all checks issued shall be recorded chronologically and where the
claimants shall be required to acknowledge receipt hereof. (NGAS for LGUs, Sec. 41)

b) It shall be released only when the Accountant's Advice of Local Check Disbursements'
has been prepared and submitted to the bank. All checks issued shall be recorded
chronologically in the Control Book of Checks Issued/ Check Register. Upon release of
the check, the payee shall be required to issue an Official Receipt for the payment
received and/or affix his/her signature and the date of receipt of the check on the
Disbursement Voucher (Box “D”) and the Control Book of Checks Issued. The
Disbursement Voucher and the supporting documents shall be stamped "PAID" by the
Local Treasurer immediately after claim is paid to prevent their possible re-use.

Section [Link] of Checks Issued.–The checks released to claimants shall be reported in

the Report of Checks Issued (RCI) which shall be prepared daily by the Local Treasurer for each
fund. It shall be submitted to the Accountant for preparation of Journal Entry Voucher based on
individual checks issued and recording in the Check Disbursement Journal. (NGAs for LGUs,
Sec. 43)

a) Preparation of Report of Checks Issued–The checks issued including cancelled or

voided checks shall be recorded chronologically in the Report of Checks Issued which
shall be prepared dailyfor each fund in three (3) copies by the Local Treasurer. The
original and duplicate copies of the Report of Checks Issued together with the claimed
vouchers/payrolls and other supporting documents shall be submitted daily to the
Accounting Department. Unclaimed vouchers and all supporting documents shall remain
with the Local Treasurer until paid and duly noted as "Unclaimed" in the Report of
Checks Issued.

b) Spoiled and Stale Checks – Checks may be cancelled when they become spoiled or
stale. A check is considered spoiled when it is torn, mutilated, defaced, or contains
erasures/errors affecting the genuineness of material information. On the other hand, a
check is considered stale when it is outstanding for over six months from date of issue, or
as prescribed by the government authorized depository bank. A spoiled or stale check
shall be marked "CANCELLED" on its face and reported, as follows:

Updated Local Treasury Operations Manual (LTOM) 40

 1. For checks immediately cancelled and for which the Report of Checks Issued has not
yet been prepared, the cancelled check shall be attached to the said Report of
Checks Issued and reported chronologically with the other checks issued and the
word "Cancelled" shall be indicated on the report.

2. For stale checks which have been unclaimed and thus, the original Disbursement
Voucher and supporting documents are still with the Local Treasurer, the
Disbursement Voucher shall also be marked "Cancelled." The cancelled check shall
be reported and attached to the Report of Checks issued prepared at the period of
cancellation. The cancelled check shall be presented in the Report of Checks Issued
after the last check issued for the period indicated in the report. The original
Disbursement Voucher and supporting documents shall be returned to the
Accountant who shall prepare a Journal of Entry Voucher to record the transaction as
Accounts Payable.

3. For checks which became spoiled or stale in the hands of the payee and which
require replacement, a new check may be issued after the stale check has been
submitted by the payee to the Local Treasurer, marked "CANCELLED" and the
authenticity of the claim established. A certification from the Local Accountant that
the check has been outstanding as of date shall also be obtained. A certified copy of
the Disbursement Voucher shall be requested from the Auditor for presentation to the
Local Chief Executive or the Administrator who shall countersign the check. The
replacement check shall be reported chronologically in the Report of Checks Issued
and the words, "Issued in replacement of Check No. dated which has become stale
“shall be indicated in the report. The cancelled stale check shall be reported and
attached to the Report of Checks Issued prepared at the period of cancellation.

(Sec. 59, LGU-NGAS)

c) Lost Checks – A check is considered lost under the following circumstances:

1. When it is misplaced, waylaid or left behind inadvertently or negligently by the

payee or holder in due course, or by the custodian or carrier thereof, and after
diligent search cannot be found or located.

2. When it is lost due to fortuitous event such as fire, perils of travel, flood or
typhoon or other causes due to force majeure and after diligent search, cannot be
found or recovered.

3. When it is lost by theft or robbery(Sec. 187 (a), Vol. I, GAAM). Upon submission
of a sworn statement from the payee that a check issued by the local government
unit is lost, the Local Treasurer shall immediately notify the bank concerned for
the stoppage of payment. The Local Treasurer shall forward the sworn statement
to the Local Accountant who shall prepare the Journal Entry Voucher to cancel
the payment made. A copy of the Journal of Entry Voucher shall be furnished the
Local Treasurer as basis for him/her to debit the amount in the Cashbook - Cash
in Bank.

d) General Guidelines in the replacement of Lost, Destroyed and Obsolete checks –if
a check is lost, destroyed or become stale or obsolete the issuing agency may issue a
replacement check which shall be made under such regulation in regard to issuance and
payment and upon compliance with requirements, to wit:

1. A stale and/or obsolete check shall be replaced with a new one provided the
original check is presented/surrendered for cancellation.

Updated Local Treasury Operations Manual (LTOM) 41

 2. MDS/other government check found to have been fraudulently encashed shall be
dishonored and charge back (photocopy only to the GSB through the BTR.

(Section 189, GAAM, Vol. 1)

e) Payment of lost or fraudulently encashed checks –when any check is lost, stolen or
destroyed, the issuing officer may issue a replacement check which shall be paid under
the regulations of the Commission on Audit in regard to issuance and payment and upon
execution of a bond to indemnify the issuing agency in such amount and with such
security as the Commission may require.

(Sections 190, GAAM, Vol. 1)

Section 83. DisbursementsThrough Cash Advances. –Cash payments shall be made only on
duly approved Payrolls/Disbursement Vouchers/Liquidation Vouchers out of regular cash
advances or special cash advances (Sec.45, COA Circular No. 92-382).Cash advances are of
two types, as follows:

a) Regular Cash Advances – Regular Cash Advances are those granted to Cashiers,
Disbursing Officers, Paymasters and/or Property/Supply Officers separately for any of the
following purposes:

1. Salaries and Wages;

2. Commutable Allowances

3. Honoraria and other similar payments to officials and employees; and

4. Petty operating expenses (COA Circular 2012-001, 1.1.2)

b) Special Cash Advances – Special Cash Advances are those granted on the explicit
authority of the Local Chief Executive only to duly designated disbursing officers or
employees for other legally authorized purposes such as:

1. Confidential expenses; and/or

2. Expenditures for activities of the agency undertaken in the field when it is

impractical to pay by check.

(Sections 46 and 47, COA Circular No. 92-382)

Section 84. General Guidelines in the Grant and Utilization of Cash Advance.–No cash
advance shall be granted to any local official or employee, elective or appointive, unless made in
accordance with the rules and regulations as the Commission on Audit may prescribe. (Sec. 339,
LGC)In the grant and utilization of cash advance, the following rules shall be observed:

a) Only permanently appointed officials and employees who are bonded shall be granted
cash advances.

b) Only duly appointed or designated disbursing officers may perform disbursing functions.
Officers and employees who are given cash advances for foreign travel need not be
designated as disbursing officers.

c) Only one disbursing officer shall be assigned/designated for a specific legal purpose.
Additional disbursing officers may be assigned/designated for the same purpose only
when fully justified by the local chief executive.

Updated Local Treasury Operations Manual (LTOM) 42

 d) Transfer of cash advance from one accountable officer to another shall not be allowed.

e) 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.

f) The accountant shall obligate all cash advances granted. Cash advances for a particular
year shall not be used to pay expenses of other years.

g) The cash advance for salary payments shall be equal to the net amount of the payroll for
a pay period.

h) The cash advance for petty operating expenses shall be sufficient for the recurring
expenses of the agency for one month. The accountable officer may request
replenishment of the cash advance when the disbursements reach at least 75%, or as
needed, by submitting a replenishment voucher with all supporting documents duly
summarized in a report of disbursements.

The cash advance for petty operating expenses shall not be used for payment of regular
expenses, such as rentals, subscriptions, light and water and the like.

i) The cash advances shall be liquidated as follows:

1. Salaries, wages, etc. - within 5 days after each 15 days/end of the month pay
period.

2. Petty operating expenses - during the year; subject to replenishment during the year.

3. Foreign Travel - within 60 days after return to the Philippines.

j) The accountable officer shall prepare the Report of Disbursements. LTO. Form No. 49,
in three (3) copies and submit the original and duplicate of the same with the
vouchers/payrolls and supporting documents to the accountant. For payments based
on receipts and invoices only, he shall also prepare a disbursement (liquidation)
voucher which shall be submitted with the report and the supporting documents to the
accountant. He shall ensure that the receipt of the report is properly acknowledged by
the accountant.

k) Within ten days after receipt of the report and supporting documents form the
accountable officer, the accountant shall verify the report including the completeness
of the supporting documents, record it in the Journal of Disbursements by
Treasurer/Disbursing Officer and submit the report with all the vouchers/payrolls and
supporting documents to the unit auditor.

l) When a cash advance is no longer needed or has not been used for a period of two (2)
months, it must be returned or deposited immediately with the collecting officer.

m) All cash advances shall be fully liquidated at the end of each year. The accountable
officer shall refund any unexpected balance to the cashier/collectingofficer who shall
issue the necessary official receipt.

n) At the start of the ensuing year, a new cash advance may be granted, provided that a
list of expenses against the previous cash advance is submitted. However, when
no liquidation of the previous cash advance is received on or before January 20 of
the accountant shall cause the withholding of the accountable officer's salary.

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 o) The accountable officer shall maintain an official cashbook to record the transactions on
each cash advance fund.(Sections 48 (a-q) COA Circular 92-382 dated July 3, 1992)

p) No additional cash advance shall be allowed to any official or employee unless the
previous cash advance given to him/her is first settled or a proper accounting thereof is
made. (Sec. 89, P. D. No. 1445)

Section 85. Reporting of Cash Disbursements.–To account for cash disbursements, from
regular and special cash advances, the Accountable/Disbursing Officer shall prepare the Report
of Disbursements and submit the original and duplicate copy with vouchers/payrolls/petty cash
vouchers to the Accountant. He shall ensure that the receipt of the report and supporting
documents are properly acknowledged by the Accountant. The Accountant shall verify the report
including the completeness of the supporting documents, prepare the Journal Entry Voucher
(JEV) and record the transaction in the Cash Disbursement Journal. (NGAs for LGUs, Sec. 46)

Section 86. Specific Guidelines on the Grant of Cash Advance for Payroll, Field Operating
Expenses and Travel.–

a) Documentary Requirements common to all cash advances except for travels –

1. Authority of the accountable officer issued by the Head of the Agency or his/her duly
authorized representative indicating the maximum accountability and purpose of cash
advance (for initial cash advance)

2. Certification from the Accountant that previous cash advances have been liquidated
and accounted for in the books

3. Approved application for bond and/or Fidelity Bond for the year for cash
accountability of ₱2,000 or more

b) Payroll Fund for Salaries, Wages, Allowances, Honoraria and Other Similar
Payments –

1. The cash advance for payment of salaries shall be equal to the net amount of the
payroll for the pay period.

2. The cash advance shall be supported by the following additional documentary

requirements:

2.1. Approved contracts (for initial payment)

2.2. Approved Payroll or list of payees indicating their net payments

2.3. Approval/authority (presidential directive or legislative enactment) or legal basis

to pay any allowance/salaries/wage/fringe benefits

2.4. Daily time record (DTR) approved by the supervisor

c) Petty Cash Fund –

1. The PCF to be set up shall be sufficient for the recurring petty operating expenses of
the agency for one (1) month. The cash advance shall not be used for payment of
regular expenses, such as rentals, subscriptions, light and water bills and the like.
Payment out of PCF, which shall be made through a Petty Cash Voucher, shall be
allowed only for amounts not exceeding ₱15,000 for each transaction, except when a
higher amount is allowed by law and/or specific authority by the Commission on

Updated Local Treasury Operations Manual (LTOM) 44

 Audit. Splitting of transaction to avoid exceeding the ceiling shall not be allowed.

2. The cash advance shall be supported by the following additional documentary

requirements:

2.1 Approved estimates of petty expenses for one month

2.2 Copy of policy for maintaining PCF under the imprest system for GOCCs.

d) Field/Activity Current Operating Expenses(COE) –

1. The amount of the cash advance shall be limited to the requirements for two
months. Additional cash advances shall be granted on the basis of the activity
budget or the requirements for two months, whichever is lower.

2. The cash advance shall be supported by the following additional documentary

requirements:

2.1 Authority of the accountable officer issued by the Head of the Agency or
his/her duly authorized representative indicating the maximum
accountability and purpose of cash advance (for initial cash advance)

2.2 Certification from the Accountant that previous cash advances have been
liquidated and accounted for in the books

2.3 Approved application for bond and or Fidelity Bond for the year for cash
accountability of ₱2,000 or more

2.4 Approved budget for COE of the agency field office or agency or agency
activity in the field.

e) Travelling Allowances –

1. General Guidelines –

1.1 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 country.(EO 298, dated March 23, 2004, as amended)

1.2 No government fund shall be utilized to defray foreign travel expenses of any
government official or employee, except in the case of training, seminar or
conference abroad when the officials or other personnel of the foreign mission
cannot effectively represent the country therein, and travels necessitated by
international commitments; provided that no official or employee, including
uniformed personnel of the Department of the Interior and Local Government
(DILG) and Department of National Defense (DND) will be sent to foreign
training, conferences or attend international commitments when they are due to
retire within one year after the said foreign travel. (Section 16 c of FY 2012
GAA)

1.3 Under Memo Circular No. 52 dated October 2, 2003 of the Office of the
President, the grant of clothing allowance in all categories of trips is suspended
indefinitely.

Updated Local Treasury Operations Manual (LTOM) 45

 1.4 Travelling allowances granted shall be treated and accounted for as cash
advances. No additional cash advance shall be granted to any official or
employee unless the previous cash advance given to him/her for travel is first
liquidated and accounted for in books as stated under Item 4.1.3 (ii) of COA
Circular No. 2009-002 dated May 18, 2009. The guidelines on the grant of
travelling allowances are prescribed under COA Circular No. 96-004 dated April
19, 1996.

2. Documentary Requirements on Official Local and Foreign Travel of Local

Treasurers and their Assistants –

2.1 Local Travel:

2.1.1 Travel Authority issued by the LCE

2.1.2 Duly approved Itinerary of Travel

2.1.3 Certification from the Accountant that the previous cash advance has
been liquidated and accounted for in books

2.2 Foreign Travel:

2.2.1 Funded by LGU

a) Office Order/Travel Order issued by the Secretary of Finance

b) Documentary requirements for the issuance of the Travel Authority

i. Affidavit on who should shoulder the expenses to be incurred

during the duration of travel

ii. Clearance from money, property and accountability

c) Duly approved itinerary of travel

d) In case of seminars/trainings (if applicable)

i. Invitation addressed to the agency inviting participants (issued by

the foreign country)
ii. Acceptance of the nominees as participants (issued by foreign
country)

iii. Program Agenda and Logistics Information

e) Certification from the Accountant that the previous cash advance has
been liquidated and accounted for in the books in case of
seminars/trainings.

2.2.2 Funded by the National Government

a) Office Order/Travel Order approved by the Secretary of Finance

b) Documentary requirements for the issuance of the Travel Authority

i. Affidavit
ii. Clearance

Updated Local Treasury Operations Manual (LTOM) 46

 c) Duly approved itinerary of travel

d) In case of seminars/trainings (if applicable)

i. Invitation addresses to the agency inviting participants (issued

by the foreign country)
ii. Acceptance of the nominees as participants (issued by foreign
country)
iii. Program Agenda and Logistics Information

e) For plane fare, quotations of 3 travel agencies or its equivalent

f) Flight itinerary issued by the airline/ticketing office/travel agency

g) Copy of the United Nations Development Programme (UNDP) rate

for the daily subsistence allowance (DSA) for the country of
destination for the computation of DSA to be claimed

h) Document to show the dollar to peso exchange rate at the date of

grant of cash advance

i) Where applicable, authority from the Office of the President to claim

representation expenses

2.2.3 Funded by a Foreign Institution/Country

a) Office Order/Travel Order approved by the Secretary of Finance

b) Duly approved itinerary of travel

c) Letter of invitation of host/sponsoring country/agency/organization

d) In case of seminars/trainings (if applicable)

i. Invitation addresses to the agency inviting participants (issued

by the foreign country)
ii. Acceptance of the nominees as participants (issued by foreign
country)
iii. Program Agenda and Logistics Information

e) For plane fare, quotations of 3 travel agencies or its equivalent

f) Flight itinerary issued by the airline/ticketing office/travel agency

g) Copy of the United Nations Development Programme (UNDP) rate

for the daily subsistence allowance (DSA) for the country of
destination for the computation of DSA to be claimed

h) Document to show the dollar to peso exchange rate at the date of

grant of cash advance

i) Where applicable, authority from the Office of the President to claim

representation expenses

2.2.4 Personal Foreign Travel

a) Authority to travel issued by the Secretary of Finance

Updated Local Treasury Operations Manual (LTOM) 47

 b) Documentary requirements for the issuance of the Travel Authority

i. Affidavit that no government money is involved

ii. Clearance from money property and accountability
iii. Application for leave indicating the number of days

(COA Circular No. 2012-001, dated June 14, 2012)

Section 87. Liquidation of Cash Advances. –

a) General Guidelines.–The Accountable Officer shall liquidate each cash advance within
the following periods:

1. Salaries, Wages, Allowances, Honoraria and other similar payments –within

5 calendar days after the end of the pay period.

2. Field Operating Expenses–within 20 calendar days after the end of the year
subject to replenishment as frequently as necessary during the year.

3. Petty Cash Fund (PCF)–as soon as the disbursement reaches 75% or as

needed, the PCF shall be replenished which shall be equal to the total amount of
expenditures made therefrom. In case of termination, resignation, retirement or
dismissal of the PCF custodian, the remaining balance shall be liquidated
thereafter.

4. Travelling Expenses–within 30 days after the return of the official/employee

concerned to his/her official station for local travel and within 60 days after the
return of the official/employee concerned to the Philippines in the case of foreign
travel.

5. Special Purpose–as soon as the purpose of the cash advance has been served.

b) Documentary Requirements. –

1. Payroll Fund for Salaries, Wages, Honoraria and other similar expenses –

1.1 Report of Disbursements certified correct by the Accountable Officer

1.2 Approved payrolls/vouchers duly acknowledged/signed by the payee/s
1.3 Approved Daily Time Records (DTRs) or Certificate of Service
1.4 Approved application for leave
1.5 In case of payment of personnel under the “job order” status, duly
verified/accepted accomplishment report
1.6 Official Receipt (OR) in case of refund for unclaimed salaries
1.7 Authority from the claimant and identification of documents, if claimed by
person other than the payee
1.8 Such other pertinent supporting documents as are required by the nature of
expense

2. Petty Cash Fund –

2.1 Summary of Petty Cash Vouchers

2.2 Report of Disbursements
2.3 Petty Cash Replenishment Report
2.4 Approved purchase request with Certificate of Emergency Purchase, if
necessary
2.5 Bills, Receipts, Sales Invoice

Updated Local Treasury Operations Manual (LTOM) 48

 2.6 Certificate of inspection and acceptance
2.7 Report of Waste Materials in case of replacement/repair
2.8 Approved Trip Ticket for gasoline expenses
2.9 Canvass from at least three suppliers for purchases involving ₱1,000 and
above, except for purchases made while on official travel
2.10 Summary/Abstract of Canvass
2.11 Petty Cash Vouchers duly accomplished and signed
2.12 OR in case of refund
2.13 For reimbursement of toll receipts: toll receipts and trip tickets
2.14 Such other supporting documents that may be required and/or required
under the company policy depending on the nature of the expenses

3. Field/ Activity Current Operating Expenses – Same requirements as those for

salaries, petty operating expenses, other personal services, and maintenance
and other operating expenses depending on the nature of expenses incurred.

4. Travelling Expenses–

4.1 Local Travel

i. Paper/electronic plane, boat or bus tickets, boarding pass, terminal fee

ii. Certificate of appearance/attendance
iii. Copy of previously approved itinerary of travel
iv. Revised or supplemental Office Order or any proof supporting the change
of schedule
v. Certification by the Head of Agency as to the absolute necessity of the
expenses together with the corresponding bill or receipts, if the expenses
incurred for official travel exceeded the prescribed rate per day
(certification or affidavit of loss shall not be considered as an appropriate
replacement for the required hotel/lodging bills and receipts)
vi. Liquidation report
vii. Reimbursement Expense Receipt (RER)
viii. OR in case of refund of excess cash advance
ix. Certificate of Travel Completed
x. Hotel room/lodging bills with official receipts in the case of official travel to
places within 50-kilometer radius from the last city or municipality covered
by the Metro Manila Area, or the city or municipality where their
permanent official station is located in the case of those outside the Metro
Manila Area, if the travel allowances being claimed include the hotel
room/lodging rate

4.2 Foreign Travel

i. Paper/electronic plane, boat or bus tickets, boarding pass, terminal fee

ii. Certificate of appearance/attendance

iii. Bills/receipts for non-commutable representation expenses approved by

the President under Section 13 of EO No. 248
iv. For reimbursement of actual travel expenses in excess of the prescribed
rate (EO No. 298):

a) Approval by the President

b) Certification from the Head of Agency that it is absolutely necessary

Updated Local Treasury Operations Manual (LTOM) 49

 c) Hotel rooms with official receipts (certification or affidavit of loss shall
not be considered as an appropriate replacement for the required
hotel/lodging bills and receipts)

v. Revised Itinerary of Travel, if applicable

vi. Narrative report on trip undertaken/Report on Participation
vii. OR in case of refund or excess cash advance
viii. Certificate of Travel Completed
ix. Liquidation Report

(COA Circular 2012-001, dated June 14, 2012)

Section 88. Guidelines on Granting of Cash Advance for Intelligence and Confidential
Expenses. –

a) Cash advances shall be used for specific legal purpose related to CF and/or IF.
Under no circumstance shall it be used for liquidation of the previous cash advance
or be transferred from one accountable to another.

b) Cash advances for CF and/or IF shall be drawn by duly designated and bonded
SDOs or HoA for the implementation of a program, activity, and project chargeable
to the corresponding CF and/or IF of the agency, upon approval of the HoA. In no
case shall cash advance for CF and/or IF be utilized as reimbursement of the
expenses prior to the granting of cash advance.

c) The cash advance shall not exceed the maximum cash accountability of the
SDO/HoA as indicated in his/her designation order and approved bond application.

d) Cash advances chargeable against the CF and IF of agencies shall not exceed the
appropriation therefor and the ceilings as specified herein.

e) Cash advances shall be limited to the requirements for three (3) months. The
disbursement voucher (DV) shall clearly state the duration of implementation of the
projects. If the implementation of the project will extend to more than three months,
additional amount may be granted only after liquidation of the previous cash
advance. If on the other hand cash advances are drawn monthly, liquidation shall
also be done monthly. Cash advances shall be granted only upon the certification of
the Agency Accountant stamped or printed on the disbursement voucher (DV) that
previous cash advance for the same purpose, project or activity given to the SDO
requesting cash advance has been liquidated and proper accounting thereof was
made in accordance with this Joint Circular.

f) No transfer of funds/appropriation through cash advances or any form of payment

from one agency to another for purposes of confidential and intelligence activities
shall be allowed.

g) The following are the required documents to support the DV for the grant of cash
advance for CF and IF common to NGAs, GOCCs and LGUs:

1. Certified copy of the designation of the SDO. If the HoA is the SDO, a
Certification by the HoA to that effect shall be signed by him/her;

2. Certified copy of the approved application for fidelity bond together with a copy
of the Official Receipt (OR) evidencing payment of premium or List of
Accountable Officers with Approved Bond issued and duly certified by the
Bureau of Treasury;

Updated Local Treasury Operations Manual (LTOM) 50

 3. Certified copy of the transmittal letter of the LR of the previous cash advances
duly stamped "received" by the 1CFAU, COA and certification of the
Accountant that the SDO has no unliquidated CF/IF cash advances;

4. Original specimen signatures of signatories to DV and Obligation Requests

(ObR) in case of GOCCs, NGAs, and LGUs;

5. Certified copy of the Physical and Financial Plan where disbursements of the
cash advance of the CF/IF shall be based; and

6. Certified copy of the annual budget bearing approval of proper authorities

concerned except for NGAs whose budget is reflected in the GAA;.

h) In addition to those mentioned in g), the following are the required documents to
support DV for the grant of cash advance for CF and IF for a specific sector;

1. For NGAs

1.1. Approval of the President of the Philippines to release the I F and the
Department Secretary concerned for CF;

1.2. Certified copy of the SBR;

1.3. Certified copy of the Special Allotment Release Order (SARO) or any
equivalent release order document from DBM

1.4. Certified copy of the Notice of Cash Allocation (NCA);

1.5. Certified copy of the ObR.

2. For GOCCs

2.1. Approval of the President of the Philippines to release the CF except for
Bangko Sentral ng Pilipinas;

2.2. Copy of the GCG or Clearance required under Section [Link] COA-
DBM-DILG-GOCCs-DND Joint Circular No. 2015-01 dated January 8,
2015hereof;

2.3. Certified copy of the DBM approved COB/Supplemental COB, showing

the approved budget for CF.

3. For LGUs

3.1. Certified copy of Annual/Supplemental Budget supported with the AIP

showing the allocation/budget for POP of the LGU, and the
corresponding Appropriation Ordinance approving the budget;

3.2. Statement of Itemized POP of the LGU where the allowable CF was
computed duly certified by the Budget Officer;

3.3. Certified copy of the minutes of the meeting evidencing the 2/3 votes of
the Local Peace and Order Council approving the POP and the release
of the CF;

Updated Local Treasury Operations Manual (LTOM) 51

 3.4. Certification from the concerned PNP Chief in the locality highlighting
the peace and order situation in the locality and supporting the need to
release and use the CF;

3.5. Approval by the DILL Secretary in case of additional appropriation for

CF; and.

3.6. Certified copy of the ObR.

4. Within seven (7) days after release of check, the cash advance voucher with
covering transmittal letter (Annex D) enumerating the supporting
documentsshall be submitted by the Agency Accountant or authorized
representative in a sealed envelope, to the concerned COA Audit Team
Leader (COA ATL) for post audit.

(6.0 – [Link] COA-DBM-DILG-GOCCs-DND Joint Circular No. 2015-01 dated

January 8, 2015)

Section 89. Liquidation of Cash Advance for Confidential/Intelligence Expenses.–

a) Liquidation of cash advance for CF and IF shall be audited by the ICFAU.

b) All cash advances for CF and IF shall be liquidated within 30 days after every quarter, or
from the approved target date of completion of the project/activity, or after the cash
advance had been fully utilized whichever comes first in accordance with the following
procedures:

1. Submission of the Liquidation Report (LR) (Annex E) duly signed by the HoA or SDO
approved by the HoA, together with the supporting documents under Section 6.2.3
hereof and listed in the covering transmittal letter of the LR. These shall be submitted
directly to the ICFAU in a sealed envelope with a visible label "CONFIDENTIAL - For
ICFAU Only" through any of the following:

1.1 registered mail

1.2 courier
1.3 authorized liaison officer

2. The agency liaison officer's authorization by the HoA must be presented to the
receiving staff designated by the ICFAU.

3. The ICFAU authorized receiving staff shall open the sealed envelope in front of the
liaison officer to verify completeness of the documents stated in the covering
transmittal letter (Annex F). If incomplete, the ICFAU authorized receiving staff shall
not stamp "received" and shall return the documents in a sealed envelope signed by
the ICFAU staff.

4. A copy of the transmittal letter, duly received by the ICFAU authorized staff, shall be
forwarded by the liaison officer to the Agency Accountant and the COA ATL
concerned. Upon receipt of said transmittal letter, the Agency Accountant shall record
the liquidation of the cash advance in the books of accounts.

5. In case of LR received by ICFAU thru mail, the "Received" copy shall immediately be
sent to the concerned agency within five (5) days upon its receipt.

Updated Local Treasury Operations Manual (LTOM) 52

 6. In case ND is issued by ICFAU after post audit of the liquidation of the cash advance,
the Agency Accountant shall restore in the books of accounts the cash advance
corresponding to the amount of disallowance and shall form part of the unliquidated
cash advance of the SDO/HoA.

7. All cash advances for CF and/or IF shall be liquidated at year-end.

c) The liquidation of cash advances for CF and/or IF shall be supported by the following
documentary requirements:

1. Liquidation Report (Annex E);

2. Certified copy of the check and paid DV of the cash advance drawn for CF and or IF
being liquidated signed and/or approved by the HoA with certification by the Agency
Accountant stamped or printed on the DV pursuant to Sec. 6.1.5 COA-DBM-DILG-
GOCCs-DND Joint Circular No. 2015-01 dated January 8, 2015 hereof;

3. Documentary evidence of payments and Certification by the HoA, required under

Sections 4.12, 4.13, 4.14 and 4.15 of COA-DBM-DILG-GOCCs-DND Joint Circular
No. 2015-01 dated January 8, 2015 hereof;

4. Copy of the Physical and Financial Plan;

5. Copy of the Accomplishment Report and its proof of submission to the concerned
agencies as required under Sec. 5.2 ofCOA-DBM-DILG-GOCCs-DND Joint Circular
No. 2015-01 dated January 8, 2015 hereof;

6. Copy of the transmittal letter of the DV and supporting documents pertaining to the
cash advance being liquidated duly stamped "Received" by the office of the COA
ATL; and

7. Other supporting documents the ICFAU deems necessary for the proper evaluation
of liquidation documents submitted.

(6.2 – [Link] COA-DBM-DILG-GOCCs-DND Joint Circular No. 2015-01 dated

January 8, 2015)

Section 90. Handling, Custody and Disposition of Cash Book.–The following guidelines for
the handling, custody, and disposition of the cashbook shall be observed:

a) A newly appointed or designated Accountable Officer shall start with a new cash book.
Before discharging his/her duties, the new Accountable Officer shall be briefed by the
Local Accountant and the Auditor on the proper recording of the transactions and other
matters related to his/her work.

b) The Accountable Officer shall maintain separate cashbooks for salaries, wages,
allowances, etc., and for petty operating expenses. He shall record daily the transactions
in the prescribed cashbook. He may record each invoice/receipt/voucher individually or
the total disbursements for the day, depending upon the volume of the transactions.

c) The Accountable Officer shall reconcile the book balance with the cash on hand daily. He
shall foot and close the books at the end of each month. The Accountable Officer and the
Local Accountant shall reconcile their books of accounts at least quarterly.

d) The cashbooks shall be kept at the Office of the Accountable Officer and placed inside
the safe or cabinet when not in use. It may be taken from his/her custody only by the

Updated Local Treasury Operations Manual (LTOM) 53

 Auditor or an official duly authorized by the agency head who shall issue the necessary
receipt.

e) When the Accountable Officer ceases to be one, the cashbook shall be submitted to the
Local Accountant and shall form part of the accounting records. No clearance shall be
issued to an Accountable Officer if he fails to submit the cashbook as required.

(Sec. 181, Book III, Vol. I, GAAM)

Section 91. Disbursements out of Petty Cash Fund. –

a) Petty Cash Fund shall be maintained under the Imprest System. The fund should be
sufficient for the non-recurring, emergency and petty expenses of the Local Government
Unit for one (1) month. Disbursements from the Petty Cash Fund shall be through the
Petty Cash Voucher which shall be signed by the payee to acknowledge the amount
received.

b) Petty Cash Fund shall be set up at the beginning of the year. An Obligation Request shall
be prepared for the fund, recorded in the registers and obligated as Other Expenses.

c) Payments out of the Petty Cash Fund shall be made through the use of Petty Cash
Voucher duly supported by official receipts and other required documents, Each Petty
Cash Voucher shall not exceed ₱ 15,000.00.

d) A Disbursement Voucher shall be prepared for the replenishment of the Petty Cash Fund
during the year, duly supported by the Petty Cash Replenishment Report (PCRR, LTO
Form 54), the Petty Cash Voucher and the supporting documents. An Obligation Request
shall be prepared for each replenishment and recorded in the register based on the
actual expenses.

e) At the end of the year, all balances of the Petty Cash Fund shall be returned to the Local
Treasurer together with the liquidation thereof for the issuance of official receipt and
submit the liquidation report or Report of Disbursement to the accountant.

f) The PCF to be set up shall be sufficient for the recurring petty operating expenses of the
agency for one (1) month. The cash advance shall not be used for payment of regular
expenses, such as rentals, subscriptions, light and water bills and the like. Payment out
of the PCF, which shall be made through a Petty Cash Voucher, shall be allowed only for
amounts not exceeding ₱15,000 for each transaction, except when a higher amount is
allowed by law and/or specific authority by the Commission on Audit. Splitting of
transactions to avoid exceeding the ceiling shall not be allowed.

g) Additional Documentary Requirements for initial cash advances:

1. Approved estimates of petty expenses for one (1) month.

2. Copy of policy for maintaining PCF under the imprest system for LGUs.

Chapter 4. FUND MANAGEMENT PRACTICES

Section 92. Programming Tools.–Cash Programming Tools that may aid the Local Treasurer in
cash management and programming are the Cash Flow Forecast and the Cash Flow Analysis.

Section 93. Cash Flow Forecast (CFF). –

Updated Local Treasury Operations Manual (LTOM) 54

 a) The BLGF Revenue Forecasting Model – Summary Overview

1. The BLGF revenue forecasting model arrives at LGU-level projections via a three-
step forecasting process.

1.1 Step 1: The annual growth rates for each revenue category in the Statement of
Receipts and Expenditures (SRE), e.g., real property tax, business tax, other
taxes, fees and charges, etc., and for each LGU type — province, city, and
municipality, excluding Inter-Local Transfers, are forecasted. The calculation is
based on estimated elasticities econometrically estimated from available BOS
and SIE data from 1991 to 2005. Box No. 1 presents the mathematical derivation
of the elasticity estimates.

1.2 Step 2: The annual growth rates for each revenue category by individual LGU
are forecasted. The calculation utilizes individual LGU revenue elasticities, by
revenue category, with respect to the LGU type to which they belong calculated
from SIE 2001 to 2005 data.

1.3 Step 3: The annual growth rates for each revenue category, by individual LGU,
are applied on the actual base year (time = t) LGU revenue estimates as stored
in the SRE to come up with the forecast revenue in year t+1. The forecast in year
t+1 becomes the base year for forecasting t+2, and so on, for multi-year
forecasts.

2. For Inter-Local Transfers, the forecasting process is as follows:

2.1 The LGU type, e.g., province, city, municipality, and its income class within the
type to which it belongs, e.g., 1st class province, 2nd class city, 3rd class
municipality is determined.

2.2 The expected value of the inter-local transfer that the LGU will probably receive
in forecast year t is calculated. This is done by multiplying the probability of the
LGU receiving inter-local transfers based on its type and income class by
average inter-local transfer received by an LGU for the LGU type to which it
belongs.

2.3 The forecasting process iterates across time, e.g., t+2, t+3, etc., to arrive at a
set of multi-year revenue targets.

b) The BLGF Expenditure Forecasting Model

1. The BLGF expenditure forecasting model develops LGU-level current operating

expenditure forecasts for all items covered in the SRE. Except for debt service
(financial expenses), all other current operating expenditure items are determined by
total current operating revenue.

2. Similar to current operating revenues, the BLGF current operating expenditure

forecasting model arrives at LGU-level projections via a three-step forecasting
process.

2.1 Step 1: The annual growth rates for each expenditure category in the
Statement of Receipts and Expenditures (SRE), e.g., General Public Service,
Health, Nutrition and Population Control, Labor and Employment etc., and for
each LGU type — province, city, and municipality, excluding Debt Service
(Financial Expenses) are forecasted. The calculation is based on estimated

Updated Local Treasury Operations Manual (LTOM) 55

 elasticities econometrically estimated from available BOS and SIE data from
1991 to 2005.

2.2 Step 2: The annual growth rate for each expenditure category by individual
LGU is forecasted. The calculation utilizes individual LGU expenditure
elasticities, by revenue category, with respect to the LGU type to which they
belong calculated from SIE 2001 to 2005 data.

2.3 Step 3: The annual growth rates for each expenditure category, by individual
LGU, are applied on the actual base year (time = t) LGU expenditure estimates
as stored in the SRE to come up with the forecast expenditure in year t+1. The
forecast in year t+1 becomes the base year for forecasting t+2, and so on, for
multi-year forecasts.

3. Debt Service Financial Expenses Elasticity Estimation. –For Debt Service

(Financial Expenses), the model utilizes three (3) econometric equations estimated
from Year 2004 and Year 2005 COA data relating debt service in Year t of LGU i to
outstanding debt of LGU i in Year t-1.

3.1. Run a simple regression equation using cross-section SRE data for each of the
LGU type for the relevant updating year, e.g. 2008. If the outstanding debt
level is not available or are seriously lacking in the SRE data, data from the
COA can be used.

i. Financial expenses in year t, e.g. 2008 becomes the dependent variable.

ii. Outstanding debt in year t-1, e.g. 2007 becomes the explanatory variable.

3.2 The estimated regression parameter can be interpreted as a measure of the

average cost of money for the borrowings of LGU type and is the updated
parameter to be used in forecasting debt service for year t.

((A & B) Page 7-9, LPFM Tools for eSRE 2015)

c) The Local Treasurer uses the Cash Flow Forecast as a tool in estimating projected cash
flows based on certain assumptions. The Cash Flow Forecast is a monthly schedule of
anticipated receipts and disbursements of the local government unit for the fiscal year
showing the beginning and ending cash balances of each month. The forecast is
prepared at the beginning of the year and revised periodically depending upon the need
of the local government unit and when circumstances require its revision. The Cash Flow
Forecast enables the Local Chief Executive and the Local Treasurer to plan for an
effective management and utilization of cash of the local government unit. (p. 91, UBOM
for LGUs)

d) The Cash Flow Forecast shows the estimated cash inflows and cash outflows of the local
government unit classified according to three (3) activities:

1. Cash Flow from Operating Activities –pertains to the receipts from, and
disbursements of cash out of, the regular and primary operations of the local
government unit such as from collection of taxes, share from IRA, payment to
creditors and employees, etc. This also includes payment of interest on bank loans
and other loan-related charges.

Updated Local Treasury Operations Manual (LTOM) 56

 2. Cash Flow from Financing Activities –includes receipt of cash from bank loans,
proceeds from the flotation of bonds and receipts from other types of borrowings.
This also includes payment of principal on loans and other borrowings.

3. Cash Flow from Investing Activities - pertains to receipts from the sale,
acquisition or purchase of long term investments such as real estate, machinery and
other Plant, Property and Equipment.

e) The Cash Flow Forecast shall be supported by the following:

1. Cash Receipts Forecast (CRF) – This is a schedule of all income collections and
other receipts to be prepared by all collecting units of the local treasury office. All
receipts shall also be classified into operating, financing and investing activities.

2. Cash Disbursement Forecast (CDF) –This is a schedule of all expenditures to be

prepared by the local treasury personnel in charge of expenditures and
disbursements. Under the Cash Disbursement Forecast, all cash outflow shall be
presented according to operating, financing and investing activities of the local
government unit.

f) The preparation of the Cash Flow Forecast involves the following activities:

1. Month-to-month estimates of receipts from taxes based on actual monthly collection

data and reports and historical trends on tax collection by the LGU;

2. Monthly estimate of other revenues based on past collection performances of the

LGU and taking into account the irregularity and seasonality of the collection of non-
tax revenues;

3. Listing of all accounts payable and outstanding obligations to determine when they
will become due and demandable, that is, upon completion or rendition of services
and delivery of goods. These accounts should be grouped according to the month
when they will become eligible for payment;

4. Listing of all regular and recurring expenses such as payroll, rental or lease, security
and janitorial services, utilities, communication, etc.;

5. Estimates and monthly schedule of variable expenses such as travel, supplies and
materials, service contracts, etc.; and

6. Monthly estimates of payments for interest and principal on loans and borrowings,
capital outlay and other material expenses. (pp. 91-92, UBOM for LGUs)

Section 94. Cash Flow Analysis (CFA).–

a) The Cash Flow Analysis is a cash flow monitoring tool used to guide the Local Chief
Executive, the Local Treasurer, and the Local Budget Officer to control the releases of
allotment depending on the collection/expenditure performance during the period. It
provides information on the cash overage/surplus or cash shortage/deficit on a monthly
or periodic basis, so that, timely decisions can be made for wise and prudent cash
utilization.

b) The preparation of the Cash Flow Analysis requires the following information:

1. Actual cash receipts and disbursements of the month or period;

Updated Local Treasury Operations Manual (LTOM) 57

 2. Actual cash receipts and disbursements from the beginning of the year to the end of
the reporting month (Year-to-Date Actual). This will become next month's beginning
balance;

3. Year to date forecast or estimates which is the cumulative total of the projected cash
flow from the beginning of the year to the month under analysis, as indicated in the
Cash Flow Forecast;

4. Adjusted Estimated Annual Amount''' which is computed as follows:

AEAA = Aytd + P + Anc/d - Aac/d

Where:AEAA is the adjusted estimated annual amount;
Aytd is the actual year to date;
P is the projected cash flow for remaining months;

Anc/d are the amounts not yet collected/disbursed but projected for previous/this
month and deemed to be still collectible or payable; and

Aac/d are the amounts already collected/disbursed but projected for next
months.

5. Annual Original Forecast which is the annual total amount in the Cash Flow
Forecast; and

6. Variance between the Adjusted Estimated Annual Amount and the Annual Original
Forecast. The actual and adjusted figures are subtracted from the Annual Original
Forecast figure. (pp. 92-93, UBOM for LGUs)

Section 95. Information Provided by the Cash Flow Forecast and Cash Flow Analysis. –
The analysis of the Cash Flow provides the following information to the Local Chief Executive,
the Sanggunian, the Local Finance Committee and other fiscal officers of the local government
unit, so that, important fiscal decisions and policies could be promptly introduce and
implemented:

a) Excess in the Collection of Taxes and Other Revenues. – This is generally good, but
a regular and very substantial excess in the collection may mean an underestimated
original cash collection forecast. This is particularly applicable if the to-date variance is
also reflected in the annual variance. In this case, a re-evaluation of the annual forecast
may be required. If there is substantial net annual excess in the receipts for whatever
reason, the Local Chief Executive may decide to increase the annual budget for the
succeeding year.

b) Under – Collection of Taxes and Other Revenues. – This may mean more efforts
should be exerted in the collection of such taxes or generation of such revenues. A
consistently big shortfall in collection should cause alarm to the Local Chief Executive
and other local officials on possible in collection efforts or in resource mobilization
operations. In this instance, estimates should be adjusted to a more realistic level. The
shortfall in collection should be considered in deciding any subsequent release of
allotment.

c) Excess in the Disbursement. – This means unplanned expenditures are being paid.
Consistent material on disbursement excess should warn the Local Chief Executive on
the possibility of imposing additional reserve, and suspension or postponement of
planned activities.

Updated Local Treasury Operations Manual (LTOM) 58

 d) Under-Disbursement. – This may mean savings if the annual variance resulted from the
non-incurrence of certain regular expenses or project expenses costing less than the
estimated amounts. Under-disbursement may also result from postponement of
payments to contractors or for obligations that are not yet legally due. Long-outstanding
obligations should be investigated and proper action should be undertaken to settle them
if there are valid claimants, or to revert them to surplus if there are no more valid
claimants after the lapse of two (2) years. Long-outstanding obligations should also warn
local officials of indiscriminate commitment or obligation of funds even without valid
claimants or contracts. Sources of savings should be evaluated and determined as early
as possible, so that, funds can be used or appropriated for some other purpose.

e) Large Amount of Idle Cash that may be Invested 18. – Idle cash is indicated by the
monthly ending cash balances. If the amount is more than next month’s estimated
disbursement, the excess is expected to be idle for at least the succeeding month and
may be invested in short-term investments. The most common investment of idle funds is
the time deposit placement with LGU depository banks. Depending upon the length of
time that the LGU funds are expected to be idle, that is, if funds are not expected to be
disbursed in the short term, such funds should be invested in a risk-free investment with
a higher interest yield. To obtain maximum benefit, the Local Treasurer should select the
government depository bank with the best interest offering.

Section 96. Daily Cash Flow. – The Local Treasurer may also prepare a Daily Cash Flow
Statement to show the highs and lows in cash inflows and cash outflows on a daily basis. The
daily cash flows are manage to avoid embarrassment arising from the inability to meet immediate
cash requirements of the local government unit, to pay suppliers on due dates, and to profitably
make use of temporary idle cash balance. The Daily Cash Flow Statement may be prepared in
addition to the monthly Cash Flow Forecast and the Cash Flow Analysis.

Section 97. Number of Days’ Usage in Cash. –

a) A local government unit may adopt a policy of maintaining its cash at a level equal to a
certain number of days’ requirement. This may be done by computing the average cash
requirement per day and the number of days’ usage in cash. The following formulas are
used in the computation:

Operating Expenses (net of depreciation and other non-cash charges)

(1) Average Cash Requirement = Number of working Days in One Year

Cash Balance

(2) Number of Days’ Usage in Cash = Average Cash Requirement Per Day

b) The resulting Number of Days’ Usage in Cash will show how many days the current cash
balance of the local government unit will be able to cover current operational
requirements.

c) Capital Investment and Expenditure Assessment. – With the expanded role of the
Local Treasurer as the financial adviser to the Local Chief Executive in the sourcing and
management of LGU funds and the increasing opportunity for LGUs to embark on long-
term income-generating capital projects, it is becoming more imperative that the Local
Treasurer should have basic working knowledge of the different tools used in the
evaluation and assessment of capital investment activities. This is because capital

18
Secure a Resolution from the Local Sanggunian authorizing the Local Treasurer and the Local Administrator as signatory to the
investment of idle cash to the authorized government depository bank. In LGUs where there is no Local Administrator, the Local Chief
Executive shall be the co-signatory.

Updated Local Treasury Operations Manual (LTOM) 59

 projects involve the commitment of a large amount of LGU resources and funds and
increase the financial risk in their operation, so much so that whatever decisions made in
the present would have future material repercussions to the LGU.

Section 98. The Administrative Process for Capital Expenditures. – This involves searching
for capital investment opportunities, submission of project proposals to prospective
funders/underwriters, evaluation of various proposals, control of capital expenditures and follow-
up of results. To be assured that capital investment proposal would be consistent with the LGU
long-term plans and programs and to avoid waste of time, effort and resources, criteria for the
project proposal must be established. The criteria may include the objective, relevance, suitability
to the LGU, and most importantly profitability or income-generation potential of the proposed
project. To guide the Local Treasurer in the evaluation and analysis of the different project
proposals, the methods discussed in the succeeding sections may be employed.

Section 99. Payback Period. –

a) The payback period refers to the length of time or number of years it will take to recover
the initial outlay for a project. The formula for this is as follows:

Investment Payback Period = Annual Cash Inflow from Operations

b) The Annual Cash Inflow from Operations is the amount of cash a project is expected to
generate annually. It is Equal to the cash inflows from projected sales and or service fees
minus the estimated cash outflows for operational expenses. The payback period will
determine the number of years of recovering the cost of the project within the economic
life of the asset. The economic life of an asset is its estimated useful life or that length of
period during which economic benefits can be derived there from. It is usually shorter
than the physical life of the asset.

c) Payback Period is Shorter than the Economic Life of the Asset. – If the payback
period is shorter than the economic life of the asset, the LGU is expected to realize profit
or investment return between the payback period and the economic life.

d) Payback Period is Equal to the Economic Life of the Asset. – If the economic life is
just equal to the payback period, the investment would not be bringing in any income and
may even be considered a losing proposition since the time value of money is
disregarded.

e) Annual Cash Inflows is Uneven. – If the annual cash inflows are uneven, the payback
period is computing by adding the annual cash inflows from year to year until the
accumulated amount becomes equal to the investment cost. If the asset has a scrap
value, the payback period may be computed by dividing the investment (less scrap value)
by the annual cash inflow from operation.

Section 100. Discounted Cash Flow(Present Value Cash Returns). –

a) The Discounted Cash Flow Method in the evaluation of capital investment proposal
considers the time value of money.

b) Time value of money refers to the expected increase in its peso value considering the
prevailing interest rates, the passage of time and opportunity cost of capital and similar
factors.

c) In the evaluation of capital projects, it is important to compare the present value of future
cash inflows with the present value of the investment cost. The expected cash inflows of
a capital project represent future values since they are to be realized yet in the future.
On the other hand, the capital investment is an outlay generally made at the inception of

Updated Local Treasury Operations Manual (LTOM) 60

 the project, hence it is a present value. In order to assess the viability and profitability of
an investment or capital project, the present value of the expected cash inflow must
therefore be determined before they are compared with the present value of investment.

Illustrative Box 1:

A peso invested today must be considered greater than ₱ 1.00 after one (1) year. An investment of ₱
600.00 today would be greater than ₱ 700.00 to be collected after one (1) year if the cost of money is
twenty-five percent (25%) per annum. This is because the ₱ 600.00 of today must amount to ₱ 750.00
after one (1) year ₱ 600.00 x 125%). In other words, ₱ 1.00 of today must be ₱ 1.25 after one (1) year.
Thus, the ratio of the present value based on the future value is 1:1.25 or .8 (or 8%). In the reverse,
₱80.00 of today must be worth ₱ 100.00 a year after. The present value of P 700.00 to be collected next
year must be ₱ 560.00 (₱ 700.00/125% or ₱ 700.00 x .8).

d) Present Value of an Annuity of 1. – This refers to the total of all the present values of 1
to be received (or paid) at regular intervals in the future. Thus, the Present Value of an
Annuity of 1 for three (3) years discounted at twenty-five percent (25%) is equal to the
total of the present values of 1 due to after one (1) year, after two (2) years, and after
three (3) years.

Illustrative Box 2:

The present value of an annuity of ₱ 700.00 for three (3) years discounted at twenty-five percent
(25%) will be computed by using the factor under Year 3 and under twenty-five percent (25%) as
shown in the Annuity Table, as follows:

₱ 700.00 x 1.952 = ₱ 1,366.40

This means that an investment of ₱ 1,366.40 today which

brings in net cash inflows of ₱ 700.00 for three (3) consecutive years must be earning at the rate of
twenty-five percent (25%) per annum.

e) Present Value of Uneven Cash Returns. –If the annual cash returns are uneven, their
present values are computed by multiplying each annual net cash inflow by the factor for
the corresponding year and adding the products.

Illustrative Box 3:

Assume that the net cash inflows are as follows and the cost of money is twenty-five percent (25%):
1st Year ₱ 2,000.00
2nd Year ₱ 3,000.00
3rd Year ₱ 3,000.00

Solution: The net cash inflow of each year is multiplied by the present value of 1 discounted at twenty-five
(25%) for one (1) year, two (2) years, and three (3) years, as Table as follows:

₱ 2,000.00 x .800 = ₱ 1,600.00

₱3,000.00 x .640 = ₱ 1,920.00
₱ 3,000.00 x .512 = ₱ 1,536.00
₱ 5,056.00
This means that an investment of ₱ 5,065.00 is earning at twenty-five percent (25%) per annum based on
the given cash returns.

Updated Local Treasury Operations Manual (LTOM) 61

 f) Discounted Rate of Return. – The Discounted Rate of Return is the rate at with
investment is earning. It is the rate of which equates the present value of cash returns
with the present value of the initial investment. In other words, if the cash returns were
discounted at this rate, their present value would be equal to the present value of the
investment. The Discounted Rate of Return is computed as follows:

1. Determine the payback period; and

2. With the payback period as the factor, locate the same in the present value of the
Annuity Table taking into account the economic life of the investment.

Illustrative Box 4:

A machine costing P 1,366.40 has an estimated life of three (3) years without scrap value. Annual cash returns
have been estimated at P 700.00.

Solution: The Discounted Rate of Return is computed as follows:

Step 1: Determine the Payback Period.

Investment Payback Period = ____________

Estimated Economic Life: ₱ 1,366.40
Divided by: Annual Cash Returns: ₱ 700.00

Equals: 1.952 years

Step 2. Locate 1.952 in the present value of the Annuity Table on line “3 years’, the economic life of the asset.
This is found in column “25%”. The Discounted Rate of Return or the rate at which the investment is earning is
twenty-five percent (25%).

Illustrative Box 5:

From a proposed investment of ₱ 1,366.40, annual returns of ₱ 700.00 per annum are expected during its
economic life of three (3) years. Management has adopted the policy of approving project proposals if the rate
of return is twenty percent (20%) or higher.

Solution: The Net Present Value is computed as follows:

Present Value of Annual Cash Returns

discounted at 20% (₱ 700.00 x 2.106) ₱ 1,474.20

Less: Present Value of Investment ₱ 1,366.40

Net Present Value ₱ 107.80

This means that a project from which Annual cash returns is ₱ 700.00 for three (3) years and earning at the
rate of Twenty percent (20%) must require an Investment of ₱ 1,474.20. Inasmuch as the investment
requirement in the project as proposed is ₱ 1,366.40 only or Less by ₱ 107.80, the rate of return on The
project being evaluated must be higher than twenty percent (20%). Therefore, the project should be approved
based on the rate of return criterion.

g) Net Present Value. – This represents the excess of the present value of annual cash
returns (discounted at the lowest acceptable rate) over the present value of the initial
capital investment.

Updated Local Treasury Operations Manual (LTOM) 62

 This method is based on the fact that with identical cash flows from two alternatives, the
project that is expected to earn a higher rate of return must require a smaller amount of
investment. In other words, a project which requires a smaller amount of capital must be
earning at a higher rate if it will bring in the same amount of cash returns for the same
number of years.

h) Present Value (Desirability or Profitability) Index. – The Present Value Index is the
ration of the Present Value of Annual Cash Returns discounted at the lowest acceptable
rate to the Present Value of the Initial Investment Cost. It may also be defined as the
ratio of the required investment under the rate required by management to the
investment requirement for the project under evaluation. Thus, the higher is the present
value index, the higher must be the rate of return on the project under review.

Illustrative Box No. 6:

Using the example for Net Present Value above, the Present Value Index is computed as follows:

Present value of annual cash returns discounted

at the lowest acceptable rate of 20% (P 700.00 x 2.106) ₱ 1,474.20
Divided by: Present Value of Investment ₱ 1,366.40

Present Value Index 108%

This means that under this method, the Present Value must be at least 100% for the proposed project to
deserve an approval based on the rate of return requirement.

Section 101. Purpose and Need for Debt. – The LGU normally should rely on internally
generated funds or grants to finance its capital needs. However, with the enactment of R. A. No.
7160 or the Local Government Code of 1991, more and more LGUs are financing acquisition or
construction of projects and capital assets through the incurrence of loans from government
banks or issuance and sale of bonds. The Local Treasurer should be able to advise the Local
Chief Executive on the propriety of financing capital projects through bank loans or issuance of
debt instruments such as bonds. The LGU should consider long-term financing for the
acquisition, maintenance and replacement or expansion of physical assets (including land) only if
these assets have a useful life of at least five (5) years or if the economic enterprise would be
expected to generate revenue in the near term. Long-term loans should never be used to fund
regular operating expenses.

Section 102. Funding Competing Capital Projects. – It is equally important for the Local
Treasurers to know which capital project to choose from several alternative projects in order to
maximize the utilization of loan proceeds. In the selection of projects to be funded, a balance will
be established between the projects' abilities to meet the priorities of the LGU and the financial
requirements of the projects. For each project, the viability and approvability of the project and its
funding from long-term debt should be assessed based on the following factors:

a) Nature of the Project and Uses of Funds – For each project for which the loan is
proposed, the nature of the project, as well as the intended use of the loan proceeds
should be fully described.

b) Cost-Benefit Analysis of the Project– The benefits of the proposed project should be
defined and, when appropriate, quantified in monetary terms. The sources and uses of
funds should be identified and estimated. Where revenues arc part of the benefits, all
assumptions made in deriving the revenues should be documented. The validity of the
assumptions and the risk associated with the revenue flows will be assessed. The costs

Updated Local Treasury Operations Manual (LTOM) 63

 of the project will be estimated, with the basis of estimates documented and the risk
associated with the estimates assessed. If regular funds are proposed to be utilized, the
impact upon the LGU budgets will be assessed.

c) Expenditure Plan and Sources of Debt Servicing–A detailed plan for the funds
expenditure and debt repayment should be developed for each project. The plan should
demonstrate the timely matching of funds availability with project expenditures and that
debt service should commence with the flow of revenues needed to pay the interest and
principal on the debt. The basis of the estimates for the project cost expenditure plan and
the basis of revenue cash flow estimates should be documented and the risk associated
with those revenue flows should be analyzed.

Section 103. Debt Management Policy. – Since the Local Treasurer is the custodian of all
funds of the LGU including funds sourced from loans and other types of indebtedness, it is
equally important that he should be involved in the overall debt management strategy of the
LGU.

a) The LGU should adopt and maintain effective debt management policies that recognize
the capital improvement needs of the LGU, as well as the taxpayers' ability to pay while
taking into account existing legal, economic, financial and debt market considerations.
The following factors relevant to the issuance of debt should be considered:

1. Legal constraints on debt capacity and various financing alternatives;

2. The urgency of the capital requirements to be met and the economic costs of
delay;

3. Willingness and financial ability of the taxpayers to pay for the capital
improvements;

4. Proper balance between internal and external financing;

5. Current interest rates and other market considerations;

6. The financial condition of the LGU;

7. The types, availability and stability of the revenues to be pledged for the
repayment of the debt; and

8. Type of debt to be incurred/issued.

b) The LGU may adopt a combination of the following debt management policies depending
upon its needs and situation:

1. Capital projects related to economic enterprise operations should be financed

solely by debt to be repaid from user fees and revenues generated from the
respective economic enterprise operations.

2. Capital projects not related to economic enterprise operations shall be financed

by debt to be repaid from available revenue sources earmarked for said projects.

3. Cash surpluses, to the extent available and not restricted, should be used to
finance scheduled capital projects.

4. The LGU shall resort to long-term debt only for purposes of constructing or
acquiring capital assets such as market, Plant, Property and Equipment, and for
making major renovations to existing capital projects.

Updated Local Treasury Operations Manual (LTOM) 64

 5. All capital projects financed through loans and debt instruments should be
financed for a period not to exceed the useful or economic life of the project.

6. The LGU shall not construct or acquire a public facility if it is unable to adequately
provide for the subsequent annual operation and maintenance costs of the
facility.
7. The LGU shall, at all times, manage its debt and sustain its financial position in
order to maximize its debt capacity, and seek and maintain a high credit rating.

8. The LGU should consider coordinating with other local government entities to the
fullest extent possible, so as to minimize the overlapping debt burden to citizens.

9. The LGU shall ensure that an adequate system of internal control exists so as to
provide reasonable assurance as to compliance with appropriate laws, rules,
regulations and covenants associated with its outstanding debts.

10. Revenue sources will only be earmarked for debt service when legally available
and when there are sufficient revenue sources to fund the LGU's regular
operational needs.

11. The LGU shall avail of soft loans with concessional rates of interest and long
repayment terms. In case the LGU issues bonds and other debt instrumentalities,
it shall market its debt through the use of competitive bidding whenever deemed
feasible, cost effective and advantageous to do so.

12. The LGU shall continually monitor its outstanding debt in relation to existing
conditions in the debt market, and shall refinance/restructure its debt when it is
more cost effective and advantageous to do so. The LGU may also consider the
pre termination or early repayment of its debt when sufficient cost savings can be
realized.

13. In case the LGU issues bonds to finance its capital projects, it should stabilize its
debt service payments through the use of appropriate stabilization arrangements
such as the maintenance of a Sinking Fund or the establishment of Fund
Reserves.

c) Checklist of Requirements for the Certification of Debt Service and Borrowing

Capacity:

1. Letter request from the Local Chief Executive indicating:

1.1 The lending institution where to apply for the loan

1.2 Terms and condition of the proposed loan
1.3 The specific purpose of the loan

2. Statement of Receipts and Expenditures for the past three (3) years
uploaded and approved by the BLGF Central Office

3. Certification of existing/absence of loan/loans duly certified by the Local

Treasurer with the following details:

3.1 Types of loans and other obligations contracted

3.2 Purpose of the loans and other obligations contracted
3.3 Name of the lending institutions
3.4 Date of approval and maturity
3.5 Terms and conditions (interest rate and number of years to pay)

Updated Local Treasury Operations Manual (LTOM) 65

 3.6 Remaining balances of loans and other obligations

4. Annual amortization schedules (segregating the principal from the interest)

issued by the lending institution.

5. Commission on Audit (COA) Annual Audit Certificate for the past three (3) fiscal
years showing no adverse findings against the LGU, which is supported by the
following year-end general fund financial reports:

5.1 Pre-closing trial balance

5.2 Balance sheet; and
5.3 Statement of income and expenses

6. Certification by the local accountant that the LGU has not incurred default in the
payment of the amortization of an existing loan.

7. Certification from the secretary of the Sanggunian or the local legislative body
that the proposed project to be financed by the loan is included in the Approved
Annual Investment Plan for the Current year.

8. Authenticated copy of the Resolution authorizing the Local Chief Executive to

negotiate and contract a loan in behalf of the LGU

9. For loan application in relation to foreign-assisted project (MDFO-DOF)

9.1 Certified Statement of Income (LBP Form No. 1)

9.2 Statement of Fund Operation (LBP Form No. 8)

10. Certification issued by the lending institution stating that it shall not require LGU
deposits as compensating balance for the loan if such lending institution is (1) not
an authorized government depository bank or (2) an authorized government bank
required to obtain the prior approval of the Department of Finance as provided
under the DOF Department Order No. 27-05.

11. Department of Interior and Local Government (DILG) Seal of Good Financial
Housekeeping (2014) awarded to the LGU issued by the Central Office.

12. Proof of Compliance with the Full disclosure Policy of the DILG as embodied in
DILG Memorandum Circular No. 2010-83 (2014).
Section 104. Local Governments Units Financing Modalities and Debt Management
Manual. – To enable LGUs to have a publication-ready and web-based manual that will cover
the description of the financing sources and a financing formulation guide for LGUs in analyzing
alternative funding sources vis-à-vis their funding requirements, aid in selecting the appropriate
funding source or sources, advise for the sound management of LGU debts, the LGU Financing
Modalities and Debt Management Manual is separately issued as a volume under Resource
Mobilization Manual.

Chapter 5. RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OF LOCAL

TREASURERS FOR FUNDS

Section 105. Responsibility, Accountability and Liability. – Responsibility refers to the

answerability of every public officer whose duties permit or require the possession or custody of
government funds or property and who shall be accountabletherefor and for the safekeeping
thereof in conformity with law, otherwise shall be liable for the loss thereof.

Updated Local Treasury Operations Manual (LTOM) 66

Section 109. Responsibility of Local Treasurer. –

a) The Local Treasurer as head of the Local Treasury Office is immediately and primarily
responsible for all government funds and properties under his/her custody.

b) Local Treasury Personnel directly entrusted with the possession or custody of the funds
or property under the Office of the Local Treasurer shall be immediately responsible to
the Local Treasurer without prejudice to the liability of either party to the LGU.

(Sec. 102, PD 1445)

Section 106. Accountability of Local Treasurer over Government Funds and Properties. –

1. The Provincial, City and Municipal Treasurer whose duties permit or require the
possession or custody of government funds shall be accountable and responsible
therefor, and for the safekeeping thereof in conformity with the provisions of the 1991
Local Government Code.

2. The Treasurer of a province, city ormunicipality shall be primarily accountable for all
government funds pertaining to theprovince, city or municipality, asthe case may be. In
LGUs which do not have a General Services Office (GSO), the Local Treasurer thereof
shall also be primarily accountable and responsible for all government properties
pertaining to the province, city or municipality, as the case may be.

3. In the effective discharge of the aforementioned responsibility and accountability, the

Local Treasurer should ensure that the following functions are performed:

3.1 Develop and install a sound internal control structure to include the internal
control and environment, accounting system procedures.

3.2 Maintain the internal control environment in order to safeguard assets, produce
reliable financial information and promote operational efficiency.

Section 107. Liability of Accountable Officers. –

a) Liability – a personal obligation arising from an audit disallowance or charge in the course
of post audit of a transaction or examination of the cash and accounts of an accountable
officer, which may be satisfied through payment or restitution as determined by
competent authority and in accordance with law.

b) Every officer directly accountable for government property shall be liable for its money
value in case of improper or unauthorized use or misapplication thereof, by himself or
any person for whose acts he/she may be responsible. He/She shall likewise be liable
for all losses, damages, or deterioration occasioned by negligence in the keeping or use
of the property, whether or not it be at the time of his/her actual custody.

c) Every officer directly accountable for government funds shall be liable for all losses
resulting from the unlawful deposit, use, or misapplication thereof and for all losses
attributable to his/her negligence in the keeping of the funds.

(Sec. 105, PD 1445)

d) The Local Treasurer shall exercise the degree of “diligence of a good father of a family”
over accountable officers under his/her supervision, otherwise he/she shall be jointly and
solidarily liable with them for the loss of government funds or property under their control.

Updated Local Treasury Operations Manual (LTOM) 67

Section [Link] for Acts Done Upon Direction of Superior Officer, or Upon
Participation of Other Department Heads or Officers of Equivalent Rank. –
a) Unless he/she registers his objection in writing, the local treasurer or other accountable
officer in the Local Treasury Office shall not be relieved of liability for illegal or improper
use or application or deposit of government funds or property by reason of his/her having
acted upon the direction of a superior officer, elective or appointive, or upon participation
of other department heads or officers of equivalent rank. The superior officer directing, or
the department head participating in such illegal or improper use or application or deposit
of government funds or property, shall be jointly and severally liable with the local
treasurer or other accountable officer for the sum or property so illegally or improperly
used, applied or deposited. (Sec. 342, LGC)

b) No Local Treasurer or accountable officer in the Local Treasury Office shall be relieved
from liability by reason of his/her having acted under the direction of a superior officer in
paying out, applying or disposing of the funds or property with which he/she is
chargeable unless prior to that act, he/she notified the superior officer in writing of the
illegality of the payment, application, or disposition. The officer directing any illegal
payment or disposition of the funds or property shall be primarily liable for the loss, while
the accountable officer who fails to serve the required notice shall be secondarily liable.

Section 109. Period of Accountability.

a) As a general rule, the accountability of a Provincial, City or Municipal Treasurer for
government funds and property shall begin at the time he/she actually assumes control of
the transactions connected therewith and ends at the time he/she actually ceases to
have such control. Control refers to the actual and complete turnover of the
accountabilities.

b) As the responsibility of each incumbent must be definitely established, complete

inventories of all liquid assets, quick assets, fixed assets, and accountable forms shall be
accomplished upon each transfer of such accountability, whether temporary or
permanent.

c) These inventories shall be dated as of the date of such transfer, although the taking,
checking and preparation of the same may be delayed for several days.

d) The invoice receipt shall bearthe dateof the actual signingof the outgoing and incoming
accountable officer, although the actual signing of the invoice-receipt may be made
several days after the new incumbent has assumed control of the transactions involving
funds, property and accountable forms.

e) However, this should not be taken to mean that if the new incumbent has not actually and
completely received the money, property and accountable forms, he/she does not
bearresponsibility for the interim transactions connected therewith on which he/she has
stamped his/her signature.

f) The predecessor can only be held responsible fortransactions occurring during the period
of his/her accountability. In casethere are transactions or expense vouchers that pertain
to the period of accountability or incumbency of an outgoing accountable officer, but
which for one reason or another are not taken up in the books before the transfer is
effected, such transactions are deemed approved by the outgoing Local
[Link], the incoming Local Treasurer shallcarefullyverify the circumstances
and examine the nature of the transactions before enteringthem into his/her
accountabilities. Where such transactions are taken up in the books of the incoming
Local Treasurer, it is presumed that he/shehas approved said transactions and assumed

Updated Local Treasury Operations Manual (LTOM) 68

 responsibility therefor, even if the same does not bear his/her own approval on the face
of the journal vouchers wherein they are accounted for.

g) In case of willful neglect of transfer of accountability, no clearance shall be granted the

outgoing Local Treasurer. In such event, the incoming Local Treasurer or accountable
officer shall inform the Local Chief Executive or his/her superiors, as the case maybe of
such failure. Consequently, he/she shall request the Secretary of Finance, thru the Local
Chief Executive or his/her immediate superior, as the case maybe, for the creation of a
committee to conduct inventory of the funds and property under the accountability of the
outgoing accountable officer. A copy of such inventory shall be furnished to the Local
Auditor for his/her information and audit.

Section 110. Prerequisite to accepting new accountabilities. –Prior to accepting new

accountabilities, the transferring outgoing accountable officer must first turnover his/her
accountabilities in his/her former station to the incoming accountable officer.

Section 111. Advice of Retirement, Transfer and Settlement of Accounts. – Provincial, City
and Municipal Treasurers shall advise in advance the Resident Auditor concerned of the date of
relinquishment of office due to retirement, resignation, leave of absence, relief, transfer, or detail
to other Offices, to enable their resident Auditors to give preference to the audit of the
Treasurer’s accounts over other works/activities and to give such officers an opportunity to
adjust the differences found in the settlement of accounts before actually effecting the transfer of
accountability. (BLGF Memorandum Circular No. 03-2007 C)

Section 112. Closing of Book Preparatory to Transfer of Accountabilities. –

a) Before the transfer of accountabilities is effected, all the books and accounts shall be
completely written up to date, including supplies adjustment, as well as reports on
accountable forms and cashbooks.

b) The cashbooks shall be totaled and closed as of the date of the transfer and ruled off,
and certified by the outgoing Treasurer, showing the balance as per book and the
amount transferred to his/her successor. The successor shall also certify therein
acknowledging the amount actually received by him/her from his/her predecessor.

c) All cash and cash items, checks, certificate of time deposit, stock certificates shall be
counted and listed in an inventory showing the denomination of each kind of money.

d) The inventory of checks shall also show their respective serial number, date, amount and
name of the payee and of the bank on which they are drawn.

e) Investment certificates like time deposits, treasury bills and stock certificates shall be
inventoried showing their serial numbers and amount and the kind of investment. This
inventory of cash and other cash items shall be compared with the cashbook balances.

(BLGF Memorandum Circular No. 03-2007 dated March 5, 2007)

Section 113. Preparation of Invoice Receipts. –

a) The outgoing officer shall prepare invoice-receipts in quadruplicate covering his/her

entire accountability for money, property, unused accountable forms, and unissued blank
checks. These invoice receipts shall then be submitted to the Provincial/City Auditor for
verification. One duly verified set of invoice-receipt shall be given to the incoming officer;
the original set shall be submitted to the Provincial/City Auditor, one set shall be placed in
the files of the treasury; and the remaining set shall be retained by the outgoing officer.
Each invoice-receipt shall bear the following certificate at the bottom of each sheet:

Updated Local Treasury Operations Manual (LTOM) 69

 I hereby certify that I have this _____ day of _____________________, transferred to my
successor, Mr./Ms._________________________________ the items described above, as of
__________________________, the date of transfer of accountabilities.

_____________________________
Outgoing P/C/M Treasurer

_____________________
Date

I hereby certify that I have this _____ day of _____________________, actually received from
my predecessor, Mr./Ms.__________________________ all the items described above, as of
__________________________, the date of transfer of accountabilities.

_____________________________
In-coming P/C/M Treasurer

_____________________
Date

b) In case of property, complete detailed inventories shall be made on the regular form
prescribed therefor in the Acknowledgement Receipt for Equipment (ARE). The
inventories, appropriately worded and receipted for, shall serve as the invoice-receipts.
The invoice-receipts covering accountable forms shall be made on the regular form of the
Consolidated Report of Accountability for Accountable Forms (CRAAF). The various
accountable forms in the hands of other accountable officers, which cannot actually be
counted by the incoming Treasurer, shall also be transferred to him/her, supported by the
corresponding Report of Accountability for Accountable Forms (RAAF) held by the
Accountable Officer which were last submitted, duly signed by them.

c) All other important documents such as stock certificates, certificate of time deposits,
treasury bills, duplicate combination of accountable officers safe, etc., pertaining to the
office, which are not included in the inventory aforementioned must also be listed and
invoiced by the outgoing Local Treasurer and receipted for by the incoming Officer.

INVOICE RECEIPT OF TRANSFER OF ACCOUNTABILITIES

I. DEPOSITORY ACCOUNTS: AMOUNT TOTAL

A. CASH IN TREASURY/CASH IN VAULT

GENERAL FUND Php  
TRUST FUND Php  
SPECIAL EDUCATION FUND Php   Php  

B. CASH IN BANK
GENERAL FUND Php  
TRUST FUND Php  
SPECIAL EDUCATION FUND Php   Php  

II. INVESTMENT ACCOUNTS

A. CERTIFICATE OF TIME DEPOSITS

Updated Local Treasury Operations Manual (LTOM) 70

 Date of Security Term/Rate Maturity Principal
Date
Placement
        Php  
         

Use separate sheet/s if necessary

B. TREASURY BILLS
Date of Term/Rate Maturity
Placement
     
     

C. STOCK CERTIFICATES

Name of Stock Certificate No. No. of Amount

Shares
         
         

III. ACCOUNTABLE FORMS

Serial Numbers No. of Quantity
Pads
Accountable Form No. 51-Continous Form      
Accountable Form No. 51-Padded Form      
Accountable Form No. 51-Brgy.      
Community Tax Cert. (Indiv.)      
Community Tax Cert. (Corp.)      
Cash Tickets      
Other Afs (pls. specify)      

Use separate sheet/s if necessary

Blank Unissued Checks (All Funds)

Acct # ___________________      
Acct # ___________________      

IV. OTHERS
1. Property
2. Duplicate Combinations of Accountable Officers Safe
3. Outstanding Checks Check No./Date Payee Amount
     
     

Use separate sheet/s if necessary

CERTIFICATION

I hereby certify that I have this ____ day of I hereby certify that I have this ____ day of
___________, transferred to my successor ____________, actually received from my
________________________, the items predecessor, _____________________, all
the
described above as of _______________ items described above, as of
_______________
the date of the transfer of accountability. the date of transfer of accountability.

       
Outgoing P/C/M Treasurer Incoming P/C/M Treasurer

Updated Local Treasury Operations Manual (LTOM) 71

 SIGNED IN THE PRESENCE OF:

   
COA Representative BLGF Representative

(BLGF Memorandum Circular No. 03-2007 B)

Section 114. Death or Incapacity of a Local Treasurer or Accountable Officer. –

a) When a Local Treasurer or any staff of the Local Treasury Office absconds with public
funds or property, dies, or becomes incapacitated in the performance of his/her duties,
the Secretary of Financeshall designate a custodian to take charge of the funds and/or
property until a qualified successor shall have been appointed. The Local Chief
Executive may designate a committee to count the cash and take an inventory of the
properties for which the officer was accountable and to determine the liability for any
shortage therein, if any. A copy of the inventory duly certified by the committee shall be
filed with the Commission on Audit (COA).However, the findings of the committee shall
not be deemed conclusive until approved by the COA.

b) If the absconding, deceased, incapacitated, or superseded officer is responsible to

another who is accountable, the latter may himself/herselfrequest for the creation of the
committee for the purpose of conducting an investigation to protect his/her interest.

(COA, Training Handbook on Cash Examination, Chapter 1, Accountability,

Responsibility and Liability in Cash Management, 4)

Section 115. Basic Requirements for Request for Relief from Accountability. – The
following documents shall constitute the basic requirements for request for relief from money or
property accountability including accountability for accountable forms with money value:

a) To be submitted by the Accountable Officer concerned:

1. The basic Notice of Loss to be filed immediately after the discovery of the loss and
the Request for Relief from Accountability which should be filed by the proper
accountable officer within the reglementary period of thirty (30) days from the
occurrence of the loss, with auditor concerned or the Commission on Audit;

2. In case of delay in the filing of the aforesaid notice and request, satisfactory
explanation or the reasons for such delay should be submitted after which the
reason or explanation given should be verified or confirmed by the auditor
concerned;

3. If the occurrence of the loss has also been reported to other police agencies, like
the National Bureau of Investigation (NBI), the progress or Final Investigation Report
thereon should be submitted;

4. Affidavit or Sworn Statement of the Local Treasurer or the proper accountable

officer on the facts and circumstances surrounding the said loss, supported by the
Affidavit of two (2) disinterested persons who have personal knowledge of such fact
of loss. Affidavit executed by the accountable officer should state the following
facts:

4.1. Exact or accurate amount of government cash, book value of the property and
money value of accountable forms, subject for request for relief;
4.2. Actual date on which the loss was first noted;

Updated Local Treasury Operations Manual (LTOM) 72

 4.3. Manner of disappearance;
4.4. Efforts put forth to recover the same;
4.5. Provisions made to safeguard the cash, property or accountable forms; and
4.6. Date when the loss was reported to the auditor and the police authorities

5. In case it is not possible to obtain the statement of two disinterested persons and only
one is available, or none at all, such fact should be set forth in the Affidavit of the person
requesting relief, giving the reasons therefor;

6. Comment and/or recommendation of the Local Chief Executive or the Local Treasurer
concerned on the request;

7. Memorandum Receipts covering the properties subject of the request, if any; and

8. In case of accountable forms with money value, evidence of the immediate issuance of
the Notice of Loss of accountable forms as required under Commission on Audit
Circular No. 83-233, dated August 24, 1984.

(Bureau of Treasury Circular No. 02-2009 dated August 6, 2009)

b) To be prepared and submitted bythe COA Auditor concerned:

1. Copy of the Investigation, Inventory and Inspection Report of the proper COA
personnel on the facts and circumstances surrounding the loss;

2. Comment and/or recommendation of the COA Director/OIC and/or unit Head on the
propriety of the request, together with the full statement of the material facts. This
should contain a categorical determination by the COA Director/Auditor concerned on
the absence of fault or negligence on the part of the accountable officer in the
handling/safekeeping; and

3. In addition to the basic requirements, the following documents are required for
specific occurrences:

3.1 Fire –

i. Final Report of the Local Police/Fire Department or Station on the incident.

ii. List or inventory of burned or destroyed properties, as well as those

properties retrieved after the fire, stating thereon the acquisition cost/book
value of each item, duly verified by the auditor concerned.

iii. Authenticated pictures showing the site/office or government properties

razed by the fire.

iv. Fire Insurance Policy, if any, covering the subject property. If then
property is insured, information as to whether or not the agency
concerned has already been paid the proceeds of the said insurance
policy, shall be discussed. If in the affirmative, evidence to this effect
should be submitted. If the property has not been insured, reasons to this
effect shall be submitted.

Updated Local Treasury Operations Manual (LTOM) 73

 3.2 Theft Robbery/Hold-up –

i. Final police report on the theft or robbery case.

ii. In case of theft or robbery with force upon things (destruction of

padlocks, doors, window jalousies, etc.), information as to whether or
not the premises of the government agency or office concerned are
manned by security guards. If so, the respective Sworn Statements or
Affidavits of the guards respecting the incident should be obtained and
submitted.

iii. A certified copy of the Contract of Security Services entered into by and
between the government office and the security agency should also be
submitted.
iv. If the security guards are found to be negligent in the premises, a
recommendation to the agency head should be made appropriate
action be instituted to enforce the civil liability of the security guard
and/or security agency concerned.

v. In cases of theft or robbery/hold-up of government cash/bonds to be

deposited with or withdrawn from a depository bank, information as to
whether or not the proper accountable officer was escorted by a
policeman or security guard, should also be submitted. In the negative,
explanation to this effect should be submitted.

vi. Detailed list of government properties lost or destroyed, as well as

those properties retrieved after the robbery incident, disclosing the book
value of each item or exact amount of government money/cash
involved, duly verified by the auditor concerned.

Updated Local Treasury Operations Manual (LTOM) 74

 vii. Authenticated picture(s) taken relative to the robbery or theft incident.

3.3 Force Majeure (Earthquake, Typhoons, etc.) –

i. Detailed list/inventory of lost or destroyed government properties or lost

cash, as well as those properties retrieved after the calamity, verified by
the auditor concerned.

ii. Certification of the proper official of the local PAGASA or other similar
government agency on the actual occurrence of the calamity specifying
therein the approximate or exact time the incident happened and the
areas or places affected thereby.
(Bureau of Treasury Circular No. 02-2009 dated August 6, 2009)

Updated Local Treasury Operations Manual (LTOM) 75

Chapter [Link] OF ACCOUNTS BY THE COMMISSION ON AUDIT

Updated Local Treasury Operations Manual (LTOM) 76

Section 116. Examination by the Commission on Audit. –The books, accounts, papers, and
cash of Local Treasurers and other accountable officers shall at all times be open to the
inspection and examination of the Commission on Audit or its duly authorized representatives.

Section 117. Service of Demand Upon the Accountable Officer to Produce His/Her Cash
and Other Accountabilities. –All Local Treasurers and accountable officers shall produce all
cash, cash items and accountable forms in his/her possession upon service of demand or cash
production notice by the Auditor as incorporated in General Form No. 74 (A). Failure on the part
of the Local Treasurer and other accountable officers to produce all the funds and property in
his/her charge, on demand of any officer authorized to examine such person or treasury, shall be
deemed to be prima facie evidence that such missing funds or property have been put to
personal use.
Section 118. Sealing of Safes. –The sealing of safes and other cash receptacles shall be
resorted to by the examining officer only in the following exceptional cases:
a) The absence or non-appearance of the accountable officer for the cash count especially
when the intention of the auditor to examine the former has become obvious or made
known to other employees;

b) When the accountable officer refuses to submit himself/herself to cash examination;

c) An interruption or the non-completion of the cash count during the day or the necessity of
controlling cash, cash items and records; and

d) In cases of deceased, incapacitated or absconding accountable officer pending the cash

count to be conducted by a committee created to make an inventory of his/her cash, cash
items, and other accountabilities.

Section 119. Cash Count and Inventory of Cash. –

a) All cash, cash items and accountable forms shall be counted in the presence of the
accountable officer who produced the same.

b) Cash shall be counted from the highest to the lowest denomination. Mutilated bills must
be examined for acceptability. Cash items such as: cash in pay envelopes, checks,
treasury warrants, money orders, paid vouchers, partially paid payrolls, etc., shall be
segregated by groups.

c) The following shall be disallowed as credit to accountable officer’s accountability:

1. Post-dated Checks and Treasury Warrants;

2. Staled Checks and Money Orders;
3. Chits, IOUs, Vales or other forms of Promissory Notes;
4. Private Checks not made payable in the agency or the official title or designation
of the agency head, as well as accommodated Private Checks;
5. Demonetized Bills and Coins; and
6. Unacceptable Mutilated Bills.

d) No accountable officer or employee may leave the desk while the count is in progress
until his/her own particular accountability has been counted, determined as to
correctness, and recorded by the examiner. Nor shall anyone be permitted to approach
the desk while this count is going on. If for any reason, the cash cannot be counted
without interruption, immediately upon the arrival of the examiner, the safe or safes,
drawers, and other possible cash receptacles in the office of the accountable officer shall
be sealed securely so that when counted, the contents of the same will be in the same
condition as when the examining officer arrives.

Updated Local Treasury Operations Manual (LTOM) 77

 e) At the end of the count, the grand total of all cash, checks, warrants, and all cash items,
as well as accountable forms presented will be taken and immediately the cash count
inventory and inventory of accountable forms will be certified and signed by the
accountable officer or employee concerned regardless of whether the grand total tallies
or not with the balance of accountability shown in the cash book of the accountable
officer.

f) The signature of the accountable officer of the officer concerned shall be witnessed by at
least two (2) witnesses,terms, and other accountabilities.

Section 120. Inspection of the Safe or Safes and Other Cash Receptacles. – Prior to or
simultaneous with the inventory of cash and accountable forms, the Local Treasurer and/or
accountable officer shall permit the auditors to inspect and examine the total contents of the safe
or safes, drawers, boxes, and other possible cash receptacles in the office of said accountable
officer if there are envelopes or bound packages inside the safes or drawers or other container in
the office, the same shall be opened and the contents inspected. Money or valuables count in
the government safe and claimed by an officer or employee as hisher own private property shall
be segregated and marked as such.

Section 121. Certification of the Cash Books in the Course of Cash Examination. –
a) When the inventories of cash and cash items, and accountable forms have been made
and certified, the Local Treasurer shall update the recording of his/her accountabilities in
the cashbooks. As soon as all collections and remittances and all paid vouchers will have
been entered in the cashbook as of the date of examination and before the daily
balances and daily totals thereof are actually verified by the examiner, the accountable
officer keeping the same will be required to foot, balance and rule it in ink and to make
the following certification on the line immediately below the last balance to ascertain from
him/her that the transactions therein recorded are true and correct;

“ I hereby certify on my official oath that all cash and depository transactions had by me in my
capacity as ____________________ of ______________________At the time of examination, showing a balance of
_______________________________( ₱ ______________) have been correctly and completely recorded in the
cashbook.

_______________________ _________________________
Date Signature”

b) If after verification of entries in the cash flow, errors or commissions are found therein,
the accountable officer shall be required to effect the adjusting/correcting entries and
then to foot, balance and rule the cashbook. The aforementioned certification above
shall be likewise be required after the last entry.

c) After the completion of the cash examination, the following certification shall be made by
the auditor/examiner on the cashbook below the accountable officer’s certification;

“Examined and verified this _______________ and arrived at an audited balance of ₱_______________, of which the
amount of ₱ _____________ was actually found on hand, consisting of ₱ _______________ in currency and ₱
__________________ in cash items, thereby showing _________________ difference/cash shortage/overage.

__________________________
Signature
_______________________
Title”

Updated Local Treasury Operations Manual (LTOM) 78

Section 122. Certification in General Form No. 74(A). – After the balance of accountability of
the accountable officer has been finally determined, the auditor shall compare such balance to
the inventory of cash and/or allowed cash items to ascertain shortage or overage, if any. The
following certification shall then be executed by the Accountable officer at the back of General
Form No. 74(A), as follows:

“ I HEREBY CERTIFY that my accountability for the above funds of (state the name of the agency )at the time
of examination on (date), is correctly stated above totaling (amount in words ) (₱ ________________).

__________________________ __________________________ __________________

(Signature of Accountable Officer) (Designation) (Agency/Station)”

The Auditor/Examiner, on the other hand shall execute the following certification:

“I HEREBY CERTIFY that the preceding is true and correct Report of Examination of the cash and accounts of
(name of accountable officer), (designation), (agency/station ) .

___________________________
(Signature of Examiner)

Section 123. Report of Cash Examination. – After the cash examination is completed, the
auditor shall prepare and submit a final narrative report, whether there is a shortage or not. The
report shall contain all the important details, data and information disclosed in the examination
and usually consists of three (3) parts, namely, the introduction, the findings and the
recommendations. It shall be supported with documentations prescribed by the Commission on
Audit.

Section 124. Presentation of Formal Written Demand to the Accountable Officer. –

a) The examining officer shall always make a formal written demand, in case of shortage,
upon the defaulting officer to produce the missing funds, immediately upon the discovery
of the same.

b) The demand shall be addressed to the defaulting officer in person; shall give his/her title;
shall notify him/her of the discovery and the amount of the shortage in the examination of
his/her cash, books, and account; shall specify by whom, when, and where the
examination was performed; shall fix within the same period of time a written explanation
why criminal prosecution should not be filed against him/her in view of the shortage.

c) Receipt of the letter of demand served upon the defaulter shall be acknowledged by
him/her in writing, stating in such acknowledgment at what time and on what date it was
received by him/her.

Section 125. Seizure of Office by the Examining Officer. –

a) The books, accounts, papers, and cash of Local Treasurer or other accountable officer
shall at all times be open for inspection of the COA or its duly authorized representative.

b) In case an examination of the accounts of a Local Treasurer discloses a shortage in cash

which should be on hand, it shall be the duty of the examining officer to seize the office
and its contents, notify the COA, the Local Chief Executive concerned, and the Local
Accountant. Thereupon, the examining officer shall immediately turn over to the
accountable officer next-in-rank in the local treasury service, unless the said officer is
likewise under investigation, the office of the treasurer and its contents, and close and
render his/her accounts on the date of turnover. In case the accountable officer next in
rank is under investigation, the auditor shall take full possession of the office and its

Updated Local Treasury Operations Manual (LTOM) 79

 contents, close and render his/her accounts on the date of taking possession of the office
and its contents, close and render his/her accounts on the date of taking possession, and
temporarily continue the public business of such office until such time that the Local
Treasurer is restored or a successor has been duly designated. The Local Treasurer or
accountable officer found with such shortage shall be automatically suspended from
office. (Sec. 348, LGC)

Section 126. Constructive Distraint of Property of Accountable Officer. –

a) Upon discovery in audit of a shortage in the accounts or any accountable officer and
upon finding of a prima facie case of malversation of public funds or property against
him/her, in order to safeguard the interest of the Government, the Commission on Audit
or its duly authorized representative/s may place upon constructive distraint personal
property of the accountable officer concerned where there is reasonable ground to
believe that the said officer is retiring from the government service or intends to leave the
Philippines or remove his/her property therefrom or hide or conceal his/her property.

b) The constructive distraint shall be effected by requiring the accountable officer concerned
or any other person having possession or control of the property to accomplish a receipt
in the form prescribed by the Commission on Audit, covering the property distrained and
obligate himself/herself to preserve the same intact and unaltered and not to dispose of it
in any manner whatsoever without the express authority of the Commission on Audit.

c) In case the said accountable officer or other person having the possession and control of
the property sought to be placed under constructive distraint refuses or fails to
accomplish the receipt herein referred to, the representative of the Commission on Audit
effecting the constructive distraint shall proceed to prepare a list of such property and in
the presence of two (2) witnesses leaves a copy thereof in the premises where the
property distrained is located, after which the said property shall be deemed to have
been placed under constructive distraint.

Section 127. Withholding of Payment of Money to Accountable Officer. –

a) The auditor may direct the proper officer to withhold, the payment of any money except
retirement pay or gratuities, due the defaulting accountable officer once his/her cash
shortage is finally ascertained. The withholding order shall be signed by the auditor in the
following manner:

“By Authority of the Chairman, Commission on Audit”

______________________
Auditor

b) The amount withheld shall be applied to the satisfaction of the accountable officer’s
indebtedness to the Government arising from the cash shortage.(Sec. 37 of P.D. No.
1445)

c) The withholding order shall be reported promptly to the Chairman of the Commission on
Audit by the auditor concerned.

d) The COA is authorized to withhold salary and other emoluments of a Local Treasurer or
Assistant up to the amount of his/her alleged shortage, but not to apply the withheld
amount to the alleged shortage for which his/her liability is still under litigation.
(Encarnacion E. Santiago vs. COA, Et Al., G. R. No. 146824)

Section 128. Transcript of Auditor’s Record as Evidence of Liability. –

Updated Local Treasury Operations Manual (LTOM) 80

 a) In any criminal or civil proceeding against an officer for the embezzlement of
misappropriation of government funds or property, or to recover an amount due the
government from an accountable officer, it shall be sufficient, for the purpose of showing
a balance against him/her, to produce the working papers of the auditor concerned.

b) A showing in this manner of any balance against the officer shall be prima facie evidence
of the misappropriation of the funds or property unaccounted for or of civil liability of the
officer as the case maybe.

c) The existence or contents of bonds, contracts, or other papers relating to or connected

with the settlement of any account may be proved by the production of certified copies
thereof, but the court may require the production of the original when this appears to be
necessary for the attainment of justice.

Section 129. Auditor’s Certificate of Balance.– Auditors of all government agencies shall
certify the balances arising in the accounts settled by them to the Commission on Audit and to
the proper Local Treasurer, Collecting Officer, or Disbursing Officer, in such form as the
Commission on Audit may prescribe, within sixty (60) days from the date of receipt of those
accounts from the Local Treasurer, Collecting Officer, or Disbursing Officer concerned.

Section 130. Auditor’s Notice to Accountable Officer of Balance Shown Upon Settlement.
–
a) The Auditor concerned shall, at convenient intervals, send a written notice, under a
certificate of settlement to each officer whose accounts have been audited and settled in
whole or in part by him/her, stating the balances found due thereon and certified, and the
charges or differences arising from the settlement by reason of disallowances, charges,
or suspensions.

b) The certificate shall be properly itemized and shall state the reasons for the disallowance,
charge, or suspension of credit.

c) A charge of suspension which is not satisfactorily explained within ninety (90) days after
receipt of the certificate or notice by the accountable officer concerned shall become a
disallowance, unless the Commission on Audit or auditor concerned shall, in writing and
for good cause, have extended the time to answer beyond ninety (90) days.

Section 131. Certificate of Settlement and Balances. –

a) The Certificate of Settlement and Balances shall be issued by the auditor to the agency
head and the concerned accountable officers of the audited agencies for all transactions
duly post-audited. The certificate summarizes all suspensions, disallowances and
charges found in audit, including the settlements thereof as of a given date.

b) It shall be issued within ten (10) days after the end of each quarter, for every
accountable officer and for each fund. The Auditor is not, however, precluded from
issuing the Certificate of Settlement and Balances as often as he deems it practicable.

c) The Certificate of Settlement and Balances shall be supported by the Summary of

Suspensions, Disallowances and Charges; Summary of Suspensions Maturing into
Disallowance and Charge; and Summary of Settlements of Suspensions, Disallowances
and Charges, all of which shall form integral parts of the Certificate of Settlement and
Balances.

(COA Cir. No. 2009-006 dated September 15, 2009)

Updated Local Treasury Operations Manual (LTOM) 81

Section 132. Audit Observation Memorandum. – The Audit Observation Memorandum shall
be issued to the agency head and/or other officials concerned relative to the
findings/observations/other deficiencies noted in the audit of accounts/transactions and requiring
comment/reply thereto within the period specified therein. The treasurer should comply with the
auditor’s order within the prescribed period to avoid disallowance. The following are the
Guidelines in the issuance of Audit Observation Memorandum:
a) The Auditor shall issue an AOM - Form I - for observations relating to
financial/operational deficiencies such as accounting, internal control or property
management which do not involve pecuniary loss. An AOM may also be issued for
documentary or other information requirements to enable the auditor to make a decision
in audit.

b) The AOM is addressed to the head of agency and the officer/s concerned stating the
deficiencies noted and/or the requirements to be complied with and requiring a response
thereto. It shall be signed by both the Audit Team Leader and the Supervising Auditor.
The AOM shall be replied to by the agency officials concerned within fifteen (15) calendar
days from receipt thereof.

c) If the agency officials fail to reply within the period specified above, the audit observation
on financial/operational deficiencies shall be deemed accepted and shall be included in
the Management Letter and/or Audit Report. In case of failure to submit the required
documents or information needed to reach an audit decision, an NS/ND/NC may be
issued by the Auditor, as warranted, after a re-evaluation of available
documents/information.

d) The agency reply/comments shall be evaluated by the Auditor vis-a-vis the audit
observations and he shall inform the head of the agency and officer concerned in writing,
of the results of the evaluation.

e) The documents/information submitted in response to the requirements of the AOM may,

after audit and examination, provide the basis for the allowance in audit of the
transactions, or the subsequent suspension, disallowance or charge thereof, as
warranted.19

(COA Circular 2009-006 dated September 15, 2009)

Section 133. Notice of Suspension (NS). –

a) The Auditor shall issue an NS - Form 2 - for transactions of doubtful
legality/propriety/regularity which may result in pecuniary loss of the government, and
which will be disallowed in audit if not satisfactorily explained or validly justified by the
parties concerned.

b) The NS shall be addressed to the head of agency and the accountant and served on the
persons responsible, stating the amount suspended, the reasons for the suspension, the
justification/explanation/legal basis or documentation required in order to lift the
suspension, and the persons responsible for compliance with the requirements. It shall
be signed by both the Audit Team Leader and Supervising Auditor.

c) The NS shall be issued as often as suspensions are made by the Auditor for the purpose
of notifying the agency head and the accountable officer concerned of the amount
suspended in audit.

19
COA Circular 2009-006 dated September 15, 2009

Updated Local Treasury Operations Manual (LTOM) 82

 d) A suspension should be settled within ninety (90) calendar days from receipt of the NS;
otherwise the transaction covered by it shall be disallowed/charged after the Auditor shall
have satisfied himself/herself that such action is appropriate. Consequently, the Auditor
shall issue the corresponding ND/NC.

e) The date of receipt of the NS by the responsible officers or their authorized

representatives as provided in Section 12 hereof shall be the reckoning date for purposes
of counting the 90-day period.

(Sec. 9, COA Circular 2009-006 dated September 15, 2009)

Section 134. Notice of Disallowance (ND). –

a) The Auditor shall issue an ND - Form 3 - for transactions which are

irregular/unnecessary/excessive and extravagant as defined in COA Circular No. 85-55A
as well as other COA issuances, and those which are illegal and unconscionable.

1. Illegal expenditures are expenditures which are contrary to law.

2. Unconscionable expenditures are expenditures which are unreasonable and

immoderate, and which no man in his/her right sense would make, nor a fair and
honest man would accept as reasonable, and those incurred in violation of ethical
and moral standards.

b) The ND shall be addressed to the agency head and the accountant; served on the
persons liable; and shall indicate the transaction and amount disallowed, reasons for the
disallowance, the laws/rules/regulations violated, and persons liable. It shall be signed
by both the Audit Team Leader and the Supervising Auditor.

c) The ND shall be issued as often as disallowances are made by the Auditor in order to
notify the agency head, the accountant, and the persons liable for the amount
disallowed in audit.

d) The disallowance shall be settled within six (6) months from receipt of the ND by the
persons liable.

e) The date of receipt of the ND by the persons liable therefor or by their authorized
representatives as provided in Section 12 hereof shall be the reckoning date for
purposes of counting the 6-month period for appeal.

(Sec. 10, COA Circular 2009-006 dated September 15, 2009)

Section 135. Notice of Charge (NC). –

a) The Auditor shall issue the NC - Form 4 - as follows:
1. If the amount assessed/appraised is less than what is due the government, the
difference shall be a proper audit charge.
2. If the amount billed is less than the amount due the government, the difference
shall also be a proper audit charge.
3. If the amount collected is less than what is due the government, the difference shall
likewise constitute a proper audit charge.
b) The NC shall be addressed to the agency head and the accountant; served on the
persons liable; and shall indicate the transaction and amount charged, reasons for the

Updated Local Treasury Operations Manual (LTOM) 83

 charge, laws/rules/regulations violated; and persons liable. It shall be signed by both the
Audit Team Leader and the Supervising Auditor.
c) The NC shall be used and issued as often as charges are made by the Auditor to notify
the agency head, the accountant and the persons liable for the charges noted in the
audit of revenues/receipts/assessments.
d) The audit charge shall be settled within six (6) months from the date of receipt of the
NC.
e) The date of receipt of the NC by the persons liable therefor or by their authorized
representatives as provided in Section 12 of COA Circular 2009-006 dated September
15, 2009 hereof, shall be the reckoning date for purposes of counting the 6-month
period for appeal.
(Sec. 11, COA Circular 2009-006 dated September 15, 2009)
Section 136. Service of Copies of NS/ND/NC. –
a) A copy of the NS/ND/NC shall be served to each of the persons liable/responsible, by the
Auditor, through personal service. If personal service is not practicable, it shall be served
by registered mail. In case there are several payees, as in the case of a disallowed
payroll, service to the accountant who shall be responsible for informing all payees
concerned, shall constitute constructive service to all payees listed in the payroll.
b) Personal service is done by delivering personally a copy to the party or by leaving it in
his/her office with his/her clerk or with a person having charge thereof If no person is
found in his/her office, or his/her office is not known, or he/she has no office, then by
leaving the copy between the hours of eight in the morning and six in the evening at the
party's residence, if known, with a person of sufficient age and discretion then residing
therein.
c) Service by registered mail is done by sending a copy by registered mail to the office
address of the party, if known; otherwise at his/her residence with instruction to the
Postmaster to return the mail to the sender after ten (10) days, if undelivered. If no
registry service is available in the locality of either the sender or the addressee, service
may be done by ordinary mail.
d) The Auditor shall maintain a record of the date of actual or constructive service of notices
for purposes of determining the running of the ninety (90) days maturity period of the
suspension and the six (6) months period to appeal the disallowances and charges.
These information shall be included in the Record of COA Decisions (ROCD).
(Sec. 12, COA Circular 2009-006 dated September 15, 2009)
Section 137. Notice of Settlement of Suspension/Disallowance/Charge (NSSDC). –
a) The Auditor shall issue the NSSDC - Form 5 - whenever a suspension/disallowance or
charge is settled.
1. A suspension shall be settled by the submission of the justification/explanation
and/or documentation required under an NS and after the Auditor becomes satisfied
that the transaction is regular/legal/proper and that no loss was suffered by the
government. If the Auditor is not satisfied with the justification/explanation and/or
documentation submitted, he shall issue the corresponding ND/NC.
2. A disallowance or charge shall be settled by payment of the amount disallowed or
by such other applicable modes of extinguishment of obligation as provided by law.
In the case of the latter modes, the Auditor may refer to the General Counsel, for
evaluation and advice, the propriety of the settlement.

Updated Local Treasury Operations Manual (LTOM) 84

 3. Settlement of disallowance or charge may also result from a decision of the Director,
Adjudication and Settlement Board or the Commission Proper, lifting the
disallowance or charge.
b) The NSSDC shall be addressed to the agency head and the accountant, copy furnished
the persons responsible/liable and shall indicate the NS/ND/NC settled, amount, nature
of transaction and the mode of settlement. It shall be signed by the Audit Team Leader
and the Supervising Auditor.
(Sec. 13, COA Circular 2009-006 dated September 15, 2009)
Section 138. Statement of Audit Suspensions, Disallowance and Charges (SASDC). –
a) The Auditor shall prepare the SASDC - Form 6 - summarizing the total suspensions,
disallowances and charges of the audited transactions of an agency at the end of each
quarter. The SASDC shall indicate the balance at the beginning of each quarter of the
suspension/disallowances/charges, as well as the suspension/disallowances/charges,
and settlements during the quarter. It shall be signed by the Audit Team Leader and the
Supervising Auditor.

b) The SASDC shall be issued to the agency head and the Chief Accountant within fifteen
(15) calendar days from the end of each quarter, copy furnished the COA Director
concerned.

c) The quarterly SASDC issued by the Auditor shall be the basis for the preparation by the
COA Director of a consolidated quarterly SASDC for his/her region/cluster showing the
total unsettled suspensions/disallowances/charges per auditee department/agency.

d) The Assistant Commissioner for the Sector shall be furnished with a copy of the
consolidated quarterly SASDC of each cluster/region for purposes of national
consolidation into a Sector SASDC as input into a database to be maintained by the
Information Technology Office showing the total unsettled disallowances, charges and
suspensions per sector.

(Sec. 14, COA Circular 2009-006 dated September 15, 2009)

Section 139. Issuance of Notices By Special Audit Team. –

a) The following procedures shall be observed in the issuance of the notices for
transactions disallowed and charged in special audits and settlements thereof:

1. The Special Audit Team Leader and Supervisor shall sign the ND/NC for transactions
audited.

2. The ND and NC issued shall be marked as "Special audit ND/NC No. ________,
Office Order No._______.

3. The ND/NC/ issued shall be transmitted by the Cluster Director of the Office that
conducted the special audit, to the agency head and the accountant through the
Auditor of the agency audited and the concerned Cluster/Regional Director, together
with the special audit report. The Audit Team Leader shall serve the copies of the
ND/NC on the persons liable and such ND/NC shall be included in the SASDC for the
current quarter.

4. In case of settlement of the ND/NC by the person’s liable, evaluation thereof shall be
made by the Director of the Office which conducted the special audit, who shall then
advise the auditor of the agency concerned to issue the NSSDC.

Updated Local Treasury Operations Manual (LTOM) 85

 b) The Special Audit Team shall be authorized to reopen accounts already post-audited
and/or settled pursuant to Section 52 of PD 1445. The Office Order directing the special
audit is deemed sufficient authority to reopen the accounts.

c) In case the transaction subject of the special audit has been earlier allowed in audit, the
special audit team shall preliminarily discuss the disallowance or charge with the Auditor
concerned. If the latter disagrees with the findings of the audit team, the written comment
shall be requested from the Auditor for evaluation of the special audit team.

d) The Auditor shall consider the significance or impact of the disallowances and charges
issued by the special audit team on the fairness of presentation of the balance of the
accounts of the agency, and consequently on the audit opinion.

(Sec. 15, COA Circular 2009-006 dated September 15, 2009)

Section 140. Determination of Persons Liable for Audit Disallowance and Charges. –

a) The Liability of public officers and other persons for audit disallowances/charges shall be
determined on the basis of (a) the nature of the disallowance/charge; (b) the duties and
responsibilities or obligations of officers/employees concerned; (c) the extent of their
participation in the disallowed/charged transaction; and (d) the amount of damage or loss
to the government, thus:

1. Public officers who are custodians of government funds shall be liable for their
failure to ensure that such funds are safely guarded against loss or damage; that
they are expended, utilized, disposed of or transferred in accordance with law and
regulations, and on the basis of prescribed documents and necessary records.

2. Public officers who certify as to the necessity, legality and availability of funds or
adequacy of documents shall be liable according to their respective certifications.

3. Public officers who approve or authorize expenditures shall be liable for losses
arising out of their negligence or failure to exercise the diligence of a good father of
a family.

4. Public officers and other persons who confederated or conspired in a transaction

which is disadvantageous or prejudicial to the government shall be held liable jointly
and severally with those who benefited therefrom.

5. The payee of an expenditure shall be personally liable for a disallowance where the
ground thereof is his/her failure to submit the required documents, and the Auditor is
convinced that the disallowed transaction did not occur or has no basis in fact.

b) The liability for audit charges shall be measured by the individual participation and
involvement of public officers whose duties require appraisal/assessment/collection of
government revenues and receipts in the charged transaction.

c) The liability of persons determined to be liable under an ND/NC shall be solidary and the
Commission may go against any person liable without prejudice to the latter's claim
against the rest of the persons liable.

(Sec. 16, COA Circular 2009-006 dated September 15, 2009)

Section 141. Period to Appeal. –

Updated Local Treasury Operations Manual (LTOM) 86

 a) Any person aggrieved by a disallowance or charge may within six (6) months from receipt
of the notice, appeal in writing as prescribed in these Rules. A disallowance or charge not
appealed within the period prescribed shall become final and executory.

b) The filing by the aggrieved party of an appeal will suspend the running of the prescribed
period.

c) The running of the six (6) month period shall resume upon receipt of a decision from the
Director or the Adjudication and Settlement Board.

(Sec. 17, COA Circular 2009-006 dated September 15, 2009)

Section 142. Proceedings Before The Director. –

a) A person aggrieved by a disallowance/charge of the Auditor may file an Appeal
Memorandum to the Director who exercises supervision over the audited agency, or in
case of a disallowance/charge resulting from a special audit, to the Director of the
Cluster/Office that conducted the special audit, within six (6) months from receipt of the
ND or NC.
b) Within five (5) calendar days from receipt of the Appeal Memorandum, the Director shall
order the Auditor to file his/her Answer, copy furnished the Appellant, and to submit the
entire records of the case including the Excerpt of Documents and Summary of Events
(EDSE), duly numbered at the bottom of each page.
c) The Auditor shall comply with the order of the Director within fifteen (1.5) calendar days
from receipt thereof. The appellant may file a Reply within the same period from receipt
of the Answer.
d) The Director shall decide the appeal within fifteen (15) calendar days from receipt of the
complete documents necessary for evaluation and decision.
e) If the Director reverses, modifies or alters the decision of the Auditor, the case shall be
elevated to the Commission Proper for automatic review of the Director's decision.
f) The Director shall not entertain a motion for reconsideration of his/her decision.
(Sec. 18, COA Circular 2009-006 dated September 15, 2009)

Illustrative Case Box 7:

Public officers who are custodians of government funds and/or property shall be liable
for their failure to ensure that such funds and properties are safeguarded against loss or
damage; that they are expended, utilized, disposed of or transferred in accordance with
law and regulations, and on the basis of prescribed documents and necessary records.

Illustrative Case Box 8:

Public officers who certify to the necessary, legality and availability of funds/budgetary
allotments, adequacy of documents, etc., involving the expenditure of funds or uses of
government property shall be liable according to their respective certifications.

Illustrative Case Box 9:

Public officers who approve or authorize transactions involving expenditure of
government funds and uses of government properties shall be liable for all losses arising
out of their negligence or failure to exercise the diligence of a good father of a family.

Updated Local Treasury Operations Manual (LTOM) 87

 Illustrative Case Box 10:
Public officers and other persons who confederated and conspired in a transaction which
is disadvantageous or prejudicial to the government, shall be held liable jointly and
severally, including those who benefited therefrom.

Illustrative Case Box 11:

The payee/claimant of an expenditure shall be personally liable for the disallowance
where the ground thereof is his failure to submit the required documents, and the auditor
is convinced that the event relative to the disallowed transaction did not occur, or has no
basis in fact.

Section 143. Proceedings Before The Adjudication And Settlement Board (ASB). –

a) A person aggrieved by a decision of the Director involving an amount not exceeding one
million (₱1,000,000.00) pesos may appeal to the ASB within the time remaining of the six
(6) months period to appeal.

b) Upon receipt of the Appeal Memorandum, the ASB, through the Assistant Commissioner
of the Legal Services Sector shall require the Director to file his/her Answer, copy
furnished the Appellant, and to submit the entire records of the case including the EDSE,
duly numbered at the bottom of each page.

c) The Director shall comply with the order of the ASB within fifteen (15) calendar days from
receipt thereof. The appellant may file a Reply within the same period from receipt of the
answer.

d) The ASB shall decide the appeal within fifteen (15) calendar days from receipt of the
complete documents necessary for evaluation and decision.

e) The ASB may affirm, reverse, modify or alter the decision of the Director.

f) The ASB shall not entertain a motion for reconsideration of its decision.

(Sec. 19, COA Circular 2009-006 dated September 15, 2009)

Section 144. Proceedings Before The Commission Proper (CP). –

a) Appeal from the decision of the Director –

1. A party aggrieved by the decision of the Director involving disallowances/charges

exceeding one million (₱1,000,000.00) pesos may file an appeal to the CP within the
time remaining of the six (6) months period to appeal, taking into consideration the
suspension of the running thereof as provided in these Rules.

2. The CP shall decide any case or matter brought before it within sixty (60) calendar
days from the date of its submission for decision or resolution.

3. A case or matter is deemed submitted for decision or resolution upon the filing of the
last pleading, brief, or memorandum required by the rules of the Commission. If the
account or claim involved in the case needs reference to other person or office, or to
a party interested, the period shall be counted from the time the last comment
necessary to a proper decision is received by it.

b) Automatic Review of the Decision of the Director –

Updated Local Treasury Operations Manual (LTOM) 88

 1. A decision of the Director which reverses, modifies or alters a decision of the Auditor
shall be automatically reviewed by the CP as provided in section 18.5 of COA
Circular 2009-006 hereof.

2. The CP shall within sixty (60) calendar days from receipt of the Auditor's decision and
the entire records of the case, review the same and render its own decision.

c) Motion for Reconsideration of CP Decision –

1. Only one motion for reconsideration shall be entertained by the CP on the basis of
new and material evidence, or that the evidence is insufficient to justify the decision,
or the said decision is contrary to law.

2. The motion shall be filed within the remaining of the six (6) month period to appeal.

(Sec. 20, COA Circular 2009-006 dated September 15, 2009)

Section 145. Appeal To The Supreme Court. –

a) The party aggrieved by any decision, order, or ruling of the CP may within thirty (30)
days from his/her receipt of a copy thereof, appeal on certiorari to the Supreme Court
in the manner provided by law and Rules of Court.

b) When the decision, order, or ruling of the CP adversely affects the interest of any
government agency, the appeal may be taken by the head of the agency.

(Sec. 21, COA Circular 2009-006 dated September 15, 2009)

Section 146. Notice Of Finality Of Decision (NFD). –

a) A decision of the Commission Proper, ASB, Director or Auditor upon any matter
within their respective jurisdiction; if not appealed as herein provided, shall become
final and executory.

b) The NFD - Form 7 - shall be issued by the authorized COA official to the agency
head to notify that a decision of the Auditor, Director, ASB or CP has become final
and executory, there being no appeal or motion for reconsideration filed within the
reglementary period.

c) The NFD shall be signed by the:

1. Audit Team Leader and Supervising Auditor, for ND/NC issued by them;

2. Director having supervision over the special audit team, for ND/NC issued by
the team;

3. Director, for decision rendered by him/her;

4. General Counsel, for decision of the ASB

5. Commission Secretary, for a decision of the Commission Proper

d) The NFD shall be addressed to the Agency Head, Attention: the Chief Accountant
and shall indicate the particulars of the COA decision that has become final and
executory and the persons liable.

Updated Local Treasury Operations Manual (LTOM) 89

 e) A copy of the NFD shall be served by the Auditor of the agency concerned on the
persons liable or their authorized representatives who shall indicate their printed
name and signature and the date of receipt thereof.

f) The Chief Accountant shall, on the basis of the NFD, record in the books of accounts,
the disallowance and/or charge as a receivable.

(Sec. 22, COA Circular 2009-006 dated September 15, 2009)

Section 147. COA Order of Execution (COE). –

a) The COE - Form 8 - (Annex 8) shall be issued to enforce the settlement of an audit
disallowance/charge, whenever the persons liable therefor refuse or fail to settle them
after the decision has become final and executory.

b) The COE shall be approved by the following officers, not earlier than five (5) days from
receipt of the NFD by the agency head:

1. Director, for NFD issued by him/her or by the Auditor

2. General Counsel for NFD issued by him/her or by the Commission Secretary, or

for judgment rendered by the Supreme Court

c) The COE shall be addressed to the Agency Head, Attention: the Treasurer/Cashier, and
shall indicate the NFD, the particulars of the decision being enforced and the persons
liable.

d) The Auditor shall monitor the implementation of the COE and report to the Director the
action taken by the agency thereon. Unsettled COEs shall be referred to the General
Counsel for appropriate action including referral to the Office of the Solicitor General and
the Ombudsman.

(Sec. 23, COA Circular 2009-006 dated September 15, 2009)

Section 148. Failure of a Responsible Public Officer to Render Accounts before Leaving
the Country. – Any public officer who unlawfully leaves or attempts to leave the country without
securing a certificate from the auditor showing that his/her accounts have been finally settled,
shall be penalized under Article 219 of the Revised Penal Code of the Philippines.

Chapter [Link] OF CONDUCT AND ETHICAL STANDARDS OF PUBLIC OFFICIALS AND

EMPLOYEES

Section 149. Code of Conduct and Ethical Standards of Public Officials and Employees. –

a) Commitment to public interest. –Public officials and employees shall always uphold
the public interest over and above personal interest. All government resources and
powers of their respective offices must be employed and used efficiently, effectively,
honestly and economically, particularly to avoid wastage in public funds and revenues.

b) Professionalism. –Public officials and employees shall perform and discharge their
duties with the highest degree of excellence, professionalism, intelligence and skill. They
shall enter public service with utmost devotion and dedication to duty. They shall
endeavor to discourage wrong perceptions of their roles as dispensers or peddlers of
undue patronage.

Updated Local Treasury Operations Manual (LTOM) 90

 c) Justness and sincerity. –Public officials and employees shall remain true to the people
at all times. They must act with justness and sincerity and shall not discriminate against
anyone, especially the poor and the underprivileged. They shall at all times respect the
rights of others, and shall refrain from doing acts contrary to law, good morals, good
customs, public policy, public order, public safety and public interest. They shall not
dispense or extend undue favors on account of their office to their relatives whether by
consanguinity or affinity except with respect to appointments of such relatives to positions
considered strictly confidential or as members of their personal staff whose terms are
coterminous with theirs.

d) Political neutrality.–Public officials and employees shall provide service to everyone

without unfair discrimination and regardless of party affiliation or preference.

e) Responsiveness to the public. – Public officials and employees shall extend prompt,
courteous, and adequate service to the public. Unless otherwise provided by law or when
required by the public interest, public officials and employees shall provide information of
their policies and procedures in clear and understandable language, ensure openness of
information, public consultations and hearings whenever appropriate, encourage
suggestions, simplify and systematize policy, rules and procedures, avoid red tape and
develop an understanding and appreciation of the socio-economic conditions prevailing
in the country, especially in the depressed rural and urban areas.

f) Nationalism and patriotism. –Public officials and employees shall at all times be loyal
to the Republic and to the Filipino people, promote the use of locally produced goods,
resources and technology and encourage appreciation and pride of country and people.
They shall endeavor to maintain and defend Philippine sovereignty against foreign
intrusion.

g) Commitment to democracy.–Public officials and employees shall commit themselves to

the democratic way of life and values, maintain the principle of public accountability, and
manifest by deeds the supremacy of civilian authority over the military. They shall at all
times uphold the Constitution and put loyalty to country above loyalty to persons or party.

h) Simple living. –Public officials and employees and their families shall lead modest lives
appropriate to their positions and income. They shall not indulge in extravagant or
ostentatious display of wealth in any form.

(Section 4, RA 6713)

Chapter [Link], CIVIL AND CRIMINAL LIABILITIES OF LOCAL TREASURERS

IN THE ADMINISTRATION OF LOCAL TAXES, FEES AND CHARGES

Section 150. Shortage, Overage and Malversation. –

a) Any public officer who, by reason of the duties of his/her office, is accountable for public
funds or property, shall appropriate the same, or shall take or misappropriate or shall
consent, or through abandonment or negligence, shall permit any other person to take
such public funds or property, wholly or partially, or shall otherwise be guilty of the
misappropriation or malversation of such funds or property, shall suffer the corresponding
penalties prescribed by law.

b) The failure of a public officer to have duly forthcoming any public funds or property with
which he is chargeable, upon demand by any duly authorized officer, shall be prima facie

Updated Local Treasury Operations Manual (LTOM) 91

 evidence that he has put such missing funds or property to personal use. (Art. 217,
Revised Penal Code)

c) The term public officer as used in the law is with reference to a person who, by direct
provision of the law, popular election or appointment by competent authority, shall take
part in the performance of public functions in the government, or shall perform in said
government or in any of its branches public duties as an employee, agent, or subordinate
official, of any rank or class. (Art. 203, Revised Penal Code)

d) The relative importance of the office or employment held by an officer is not the
controlling factor; the nature of duties which he performs – the fact that, as part of his/her
duties, he receives public money or property for which he is bound to account – is that
which determines whether or not he is an accountable officer. (US. Vs. Velazquez, 32
Phil. 157)

e) In case of cash overage, satisfactory explanation shall be submitted by the accountable

officer to the auditor/examiner. If the overage cannot be satisfactorily explained by the
accountable officer, the amount shall be forfeited in favor of the government and an
official receipt issued therefor by the collecting officer. Examination shall be extended, if
necessary, for the purpose of ascertaining the cause of the overage and any underlying
irregularity.

Section 151. Under R.A. No. 7160 or the Local Government Code of 1991. –
a) Penalty for Failure to Issue and Execute Warrant. – Without prejudice to criminal
prosecution under the Revised Penal Code and other applicable laws, any Local
Treasurer who fails to issue or execute the warrant of distraint or levy after the expiration
of the time prescribed, or who is found guilty of abusing the exercise there to by
competent authority shall be automatically dismissed from the service after due notice
and hearing. (Sec. 177, LGC)

b) Attempt to Enforce Void or Suspended Tax Ordinances and Revenue Measurers. –

The enforcement of any tax ordinance or revenue measure after due notice of the
disapproval or suspension thereof shall be sufficient ground for administrative disciplinary
action against the local officials and employees responsible therefor. (Sec. 190, LGC)

c) Penalty for Failure to Issue and Execute Warrant. – Without prejudice to criminal
prosecution under the Revised Penal Code and other applicable laws, any Local
Treasurer or his/her deputy who fails to issue or execute the warrant of levy within one
(1) year from the time the tax becomes delinquent or within thirty (30) days from the date
of the issuance thereof, or who is found guilty of abusing the exercise thereof in an
administrative or judicial proceeding shall be dismissed from the service. (Sec. 259,
LGC)

d) Failure to Post and Publish the Itemized Monthly Collections and Disbursements. –
Failure by the Local Treasurer of the Local Chief Accountant to post the itemized monthly
collections and disbursements of the local government unit concerned within ten (10)
days following the end of every month and for a least two (2) consecutive weeks at
prominent places in the main office building of the local government unit concerned, its
plaza and main street, and to publish said itemization in newspaper of general circulation,
where available, in the territorial jurisdiction of such unit, shall be punished by a fine not
exceeding Five Hundred Pesos (₱ 500.00) or by imprisonment not exceeding one (1)
month, or both, at the discretion of the court. (Sec. 513, LGC)

Updated Local Treasury Operations Manual (LTOM) 92

 e) Failure to Collect Tax Due on Real Property. – Any officer charged with the duty of
collecting the tax due on real property who will fully or negligently fails to collect the tax
and institute the necessary proceedings for the collection of the same shall be punished
by a fine of not less than One Thousand Pesos (P 1,000.00) nor more than Five
Thousand Pesos ( P 5,000.00), or by imprisonment of not less than one (1) month nor
more than six (6) months, or both such fine and imprisonment, at the discretion of the
court. (Sec. 517 2nd par. LGC)

f) Failure to Dispose of Delinquent Real Property at Public Auction. – The Local

Treasurer concerned who fails to dispose of delinquent real property at public auction
incompliance with pertinent provisions of the Local Government Code of 1991, and any
other local government official whose acts hinder the prompt disposition of delinquent
real property at public auction shall, upon conviction, be subject to a fine of not less than
One Thousand Pesos (P 1,000.00) nor more than Five Thousand Pesos (P 5,000.00) , or
imprisonment of not less than one (1) month or more than six (6) months, or both, at the
discretion of the court.

Section 152. Under the Revised Penal Code. –

a) Frauds Against the Public Treasury and Similar Offenses. – The penalty of prision
correccional in its minimum period, or a fine ranging from Two Thousand Pesos
(₱2,000.00) to Ten Thousand Pesos (₱10,000.00), or both, shall be imposed upon any
public officer who been entrusted with the collection of taxes, licenses, fees and other
imposts, shall be guilty of any of the following acts or omissions:

1. Demanding, directly or indirectly, the payment of sums different from or larger

than those authorized by law.

2. Failing voluntarily to issue a receipt, as provided by law, for any sum of money
collected by him /herofficially.

3. Collecting or receiving, directly or indirectly, by way of payment or otherwise,

things or objects of nature different from that provided by law. (Aft. 213, Revised
Penal Code)

b) Malversation/Embezzlement of Public Funds or Property, Presumption of

Malversation. – Any public officer who, by reason of the duties of his/her office, is
accountable for public funds or property, shall appropriate the same, or shall take or
misappropriate or shall consent, or through abandonment or negligence, shall permit any
other person to take such public funds or property, wholly or partially, or shall otherwise
be guilty of the misappropriation or malversation of such funds or property, shall suffer:

1. The penalty of prison correccional in its minimum and medium periods, if the
amount involved is more than Two Hundred Pesos (₱200.00) but does not
exceed Two Thousand Pesos (₱2,000.00).

2. The penalty of prison mayor in tis maximum and medium periods, if the amount
involved is more than Two Thousand Pesos (₱2,000.00) but does not exceed Six
Thousand Pesos (₱6,000.00).

3. The penalty of prison mayor in its maximum period to reclusion temporal in its
minimum period, if the amount involved is more than Six Thousand Pesos
(₱6,000.00) but is less than Twelve Thousand Pesos (₱12,000.00).

Updated Local Treasury Operations Manual (LTOM) 93

 4. The penalty of reclusion temporal in its medium and maximum periods, if the
amount involved is more than Twelve Thousand Pesos (₱12,000.00) but is less
than Twenty-Two Thousand Pesos (₱22,000.00). If the amount exceeds the
latter, the penalty shall be reclusion temporal in its maximum period to reclusion
perpetua.

c) In all cases, persons guilty of malversation shall also suffer the penalty of perpetual
special disqualification and a fine equal to the amount of the funds malversed or equal to
the value of the property embezzled.

d) The failure of a public officer to have duly forthcoming any public funds or property with
which he is chargeable, upon demand by any duly authorized officer, shall be prima facie
evidence that he has put such missing funds or property to personal use. (Art. 217,
Revised Penal Code)

Section 153. Under the Anti-Graft and Corrupt Practices Act. – The following shall constitute
corrupt practices of any public officer:(RA 3019)
a) Persuading, inducing or influencing another public officer to perform an act constituting a
violation of rules and regulations duly promulgated by competent authority or an offense
in connection with official duties of the latter, or allowing himself/herself to be persuaded,
induced or influenced to commit such violation or offense.
b) Directly or indirectly requesting any gift, present, share, percentage, or benefit, for
himself/herself or for any other person, in connection with any contract or transaction
between the local government unit and any other party, wherein the public officer in
his/her official capacity has to intervene under the law.

c) Directly or indirectly requesting or receiving any gift, present or other pecuniary or

material benefit for himself/herself or for another, from any person from whom the public
officer, in any manner or capacity, has secured or obtained, or will secure or obtain, any
local government unit permit or license, in consideration for the help given or to be given.

d) Causing any undue injury to any party, including the local government unit, or giving any
private party any unwarranted benefits, advantage, or preference in the discharge of
his/her official administrative or judicial functions through manifest partially, evident bad
faith or gross inexcusable negligence. This provision shall apply to officers and
employees of offices charged with the grant of licenses permits or other concessions.

e) Neglecting or refusing, after due demand or request, without sufficient justification, to act
within a reasonable time on any matter pending before him/her for the purpose of
obtaining, directly or indirectly, from any person interested in the matter some pecuniary
or material benefit or advantage, or for the purpose of favoring his/her own interest or
giving undue advantage in favor of or discriminating against any other interested party.

f) Entering, in behalf of the local government unit, into any contract or transaction
manifestly and grossly disadvantageous to the local government unit, whether or not the
public officer profited or will profit thereby.

g) Directly or indirectly having financial or pecuniary interest in any business contract or

transaction in connection with which he intervenes or take part in his/her official capacity,
or in which he is prohibited by the constitution or by any law from having any interest.

h) Directly or indirectly becoming interested, for personal gain, or having a material interest
in any transaction or act requiring the approval of a board, panel or group of which he is a
member, and which exercises discretion in such approval even if he votes against the
same or does not participate in the action of the board, committee, panel or group.

Updated Local Treasury Operations Manual (LTOM) 94

 FORMS
Updated Local Treasury Operations Manual (LTOM) 95
 AND
ANNEXES

Forms and Annexes

LTO Annex 8: Barangay Appropriations, Commitments and Disbursements

A. Policies and Procedures on Barangay Appropriations and Commitments.-

a) Appropriations:

Updated Local Treasury Operations Manual (LTOM) 96

 1. The Barangay Kagawad who is designated as Chairman of the Committee on
Appropriation shall be responsible in monitoring the approved appropriations and the
charges against the following funds:

i. General Fund
ii. 20% Development Fund
iii. Calamity Fund
iv. Sangguniang Kabataan Fund
v. Gender and Development Fund

2. The Chairman of the Committee on Appropriations shall monitor the use of

appropriated funds through the Registry of Appropriations and Commitments which
shall be maintained by fund, class, i.e., Personal Services, Maintenance and Other
Operating classification. The Barangay Record Keeper (BRK) shall prepare the
Registry of Appropriations and Commitments may examine/check anytime, the
balance of appropriations and the recording in the registries.

b) Commitments20:

1. Charges (deductions) against the appropriated funds shall be based on the

commitments made by the barangay as shown in the Disbursement Vouchers 21,
Payrolls22, for personal services, Contracts or Purchase Orders 23, and Purchase
Requests.24

2. In addition to the certification in the Disbursement Voucher/Payroll, the existence of

available appropriations as reflected in the Sangguniang Bayan Resolution shall also
be shown on the face of the Contracts and Purchase Orders.

3. For all procurement including infrastructure projects, the Chairman of the Committee
on Appropriations shall certify the availability of funds by stamping “Funds Available”
on the face of the Purchase Request and affix his/her signature indicating the
estimated required amount on the available appropriation on the Purchase Request
based on the Sangguniang Bayan Resolution, authorizing the
construction/procurement, and

4. Expenses for Personal Services, Maintenance and Other Operating Expenses and
Financial Expenses shall be charged against respective appropriations, while
investments, purchase of Property, Plant and Equipment and construction of Public
Infrastructure and Reforestation Projects shall be charged against appropriations for
Capital Outlay.

5. Certification of the Chairman of the Committee on Appropriations on the Purchase

Orders/Contracts, etc., on the “existence of available appropriations” means the
availability of appropriations to cover the commitment.

6. Commitments/Charges against the appropriations for the four major classes of

expenditures shall include, but are not limited to the following:

a. Personal Services (PS) –

20
“Commitment” shall be used synonymously with “Obligations”.
21
DV-Barangay, LTO Form 56
22
Payroll-Barangay, LTO Form 57
23
PO-Barangay, LTO Form 58
24
PR-Barangay,LTO Form 59

Updated Local Treasury Operations Manual (LTOM) 97

 1) Salaries and Wages (Regular)
2) Salaries and Wages (Contractual)
3) Honoraria
4) Cash Gift

b. Maintenance and Other Operating Expenses (MOOE)–

1) Travelling Expenses (Local)

2) Training Expenses
3) Supplies and Materials Expenses
4) Utility Expenses
5) Communication Expenses
6) Membership Dues and Contributions to Organizations
7) Rent Expenses
8) Repairs and Maintenance of Property Plant and Equipment
9) Repairs and Maintenance of Public Infrastructure
10) Taxes, Insurance Premiums and Other Fees
11) Capital Outlay:

11.1 Investment in Treasury Bills

11.2 Purchase/Construction of the following Property Plan and Equipment
(PPE:

i. Land
ii. Land Improvements
iii. Buildings
iv. Leasehold Improvements
v. Office Equipment
vi. Furniture and Fixtures
vii. Books
viii. Motor Vehicles
ix. Other Equipment
x. Public Infrastructures
xi. Reforestation Projects

12) Financial Expenses

13) Interest expenses
14) Bank Charges (cost of checkbooks)
15) Other Financial Charges

B. Registry of Appropriations and Commitments. –

a) The following registries shall be maintained by the Chairman of the Committee on

Appropriations/Barangay Record Keeper for the five (5) funds of the barangay by class
and by object of expenditures:

1. Registry of Appropriations and Commitments – General Fund

2. Registry of Appropriations and Commitments – Calamity Fund
3. Registry of Appropriations and Commitments – 20% Development Fund
4. Registry of Appropriations and Commitments – Sangguniang Kabataan Fund
5. Registry of Appropriations and Commitments – Gender and Development Fund

b) Postings in the appropriations columns of the Registry of Appropriations and

Commitments shall be based on the General Appropriations Ordinance of the
barangay.

Updated Local Treasury Operations Manual (LTOM) 98

 c) Posting of commitments in the Registry of Appropriations and Commitments shall be
based on the amount of commitments/charges as certified in the Disbursement
Voucher, Payroll, and Contract/Purchase Request.

d) Commitments/Charges for Personnel Services, Maintenance and Other Operating

Expenses, Financial Expenses and Capital Outlay shall be recorded in their respective
Registry of Appropriations and Commitments for the General Fund.

e) Commitments/Charges against the Calamity Fund, 20% Development Fund,

Sangguniang Kabataan Fund and Gender and Development Fund shall be recorded in
their respective Registry of Appropriations and Commitments with a detailed
breakdown of expenditures.

f) The balance of appropriations for Personal Services, Maintenance and Other

Operating Expenses, Financial Expenses and Calamity Fund shall be reverted/closed
at the end of the year and shall not be made available for commitments/charges after
the calendar year, unless otherwise authorized to be retained as continuing
appropriations, and

g) Balance of appropriations for Capital Outlay, 20% Development Fund and

Sangguniang Kabataan Fund, however, shall be valid until fully spent or until the
project is completed. The balance, if any shall be forwarded to the Registry of
Appropriations and Commitments of the following year.

C. Basic Supporting Documents for Barangay Disbursements. –

1. For Payment of Salaries/Honoraria and Other Personal Services:

1.1 Approved Payroll supported by Daily Time Record (DTR);

1.2 Minutes of Meeting of the Sangguniang Barangay duly signed by the members of
the Sangguniang Bayan and the Barangay Secretary;

1.3 Approved Application for Leave25; and

1.4 Approved Appointment, Oath of Office, Certificate of Assumption of Office and

Statement of Assets and Liabilities for newly hired employees 26

2. For Cash Advance for Payroll:

2.1 Net amount of approved Payroll for the period.

3. For Grant of Cash Advance for Travel:

3.1 Travel Order; and

3.2 Itinerary of Travel

4. Liquidation of Cash Advance:

4.1 Payroll Fund – paid Disbursement Voucher/Payroll.

4.2 Travel – original of the Travel Order, Plane/Bus Ticket or its equivalent, Official
Receipts, if any, Boarding Pass, Certificate of Appearance and Liquidation Report.

25
For leave with pay
26
For first claim

Updated Local Treasury Operations Manual (LTOM) 99

 4.3 Training Expenses – Certificate of Appearance, Certificate of Training and Invitation
to attend the training.

5. For Payment of Maintenance and Other Operating Expenses:

5.1 Membership Dues – Statement of Account./Bill of the Organization.

5.2 Utility and Communication Expenses – Bills.

5.3 Repairs and Maintenance – Job Orders, Invoices, Certificate of

Warranty/Guarantee, Pre-repair Inspection Report and Post-Repair Inspection
Report, Inspection and Acceptance Report, Labor Payroll or Contract.

6. For Purchase of Equipment, Supplies, Materials and Other Items:

6.1 Purchase Request;

6.2 Purchase Order;
6.3 Bidding Documents27;
6.4 Supplier’s Invoice;
6.5 Delivery Receipt or the Receipt portion of the Supplier’s Invoice duly signed; and
6.6 Inspection and Acceptance Report.

7. For Infrastructure and Reforestation Projects:

7.1 By Contract:

i. Bidding Documents;
ii. Plans and Specifications;
iii. Notice of Building;
iv. Contract;
v. Notice of Proceed;
vi. Billings of Contractors;
vii. Inspection and Acceptance Report;
viii. Duly verified Contractors’ Project Accomplishment/Completion Report;
and
ix. Program of Work,

7.2 By Administration:

i. Supplies – Purchase Orders, Invoices, Bidding documents or equivalent,

Delivery Receipts and Inspection and Acceptance Report.
ii. Wages – Labor Payroll, Daily Time Record and Contract for Labor; and
iii. Plans/Programs of Work.

8. For Repairs and Maintenance of Property Plant and Equipment:

8.1 Pre-Repair Inspection Report;

8.2 Job Order/Contract;
8.3 Supplier’s Invoice;
8.4 Post-Repair Inspection Report; and
8.5 Inspection and Acceptance Report.

D. Barangay Disbursement by Checks Drawn Against Barangay Funds Maintained with

Depository Bank. –

27
If through bidding

Updated Local Treasury Operations Manual (LTOM) 100

 1. Policies and Procedures:

1.1 All disbursements shall be covered with duly processed and approved Disbursement
Vouchers/Payrolls.

1.2 The Disbursement Vouchers/Payrolls shall be prepared by the Barangay Record

Keeper.

1.3 The Barangay Treasurer shall be responsible for paying claims against the
barangay.

1.4 All disbursements shall be in accordance with existing rules and regulations.

1.5 All claims shall be approved by the Punong Barangay and certified as to the validity,
propriety and legality of the claim. In case of claim chargeable against Sangguniang
Kabataan Fund, the Chairman of the Sangguniang Kabataan(SK)shall initial under
the name of the Punong Barangay.

1.6 Payments shall be drawn against the depository account maintained with depository
bank by the barangay.

1.7 The check shall be issued in the name of the payee as indicated in the
Disbursement Voucher/Payroll.

1.8 The check shall be signed by the Barangay Treasurer and countersigned by Punong
Barangay.

1.9 All disbursements by check shall be reported in the Summary of Checks Issued.

1.10 In case checks are waylaid, lost through theft or force majeure, etc., the Barangay
Treasurer shall immediately notify and issue a “Stoppage of Payment” notice to the
bank

1.11 Stale check shall be replaced only when the original is submitted to the Barangay
Treasurer for replacement.

2. Recording:

2.1 All checks issued including cancelled ones shall be recorded by the Barangay
Treasurer in correct numerical sequence in the Summary of Checks Issued 28.

2.2 Recordings shall be based on the original paid Disbursement Vouchers/Payrolls

supported with carbon copy of the checks issued and other supporting documents.

2.3 All the checks issued shall be recorded daily by the Barangay Treasurer in the
Summary of Checks Issued.

2.4 The Summary of Checks Issued shall be sub-totaled and recorded in the Cash on
Hand and in Bank Registers daily.

2.5 The Summary of Checks Issued shall be submitted to the Barangay Record Keeper
for recording in the Check Disbursement Register29 weekly.

28
SCkI-Barangay, LTO Form 60
29
CDR-Barangay, LTO Form 61

Updated Local Treasury Operations Manual (LTOM) 101

 3. Reporting:

3.1 The Barangay Record Keeper shall record check disbursement based on the certified
Summary of Checks Issued in the Check Disbursement Register147 weekly.

3.2 At the end of the month, the check Disbursement Register shall be totaled, balanced,
ruled recapitulated and certified; and

3.3 The Barangay Record Keeper shall submit the Check Disbursement Register
together with the Summary of Check Issued to the City/Municipality Accountant for
recording of the checks issued in the books on or before the 5th day of the following
month.

E. Barangay Disbursement by Checks Drawn Against Barangay Funds Deposited with

the City/Municipality Treasury. –

1. The Barangay Treasurer shall prepare in four (4) copies the barangay Disbursement
Voucher in the name of the payee. The Disbursement Voucher shall be certified as
follows:

1.1 The Barangay Treasurer certifies and approves the Disbursement Voucher or
Payroll as to validity, propriety, and legality of the claim involved;

1.2 The Punong Barangay approves the Disbursement Voucher or Payroll; and

1.3 The City/Municipal Accountant certifies on the Disbursement Voucher that the
disbursement is supported by documents evidencing completeness of requirements
as well as other certifications that may be required by auditing and accounting rules
and regulations.

2. A copy of the duly certified and approved barangay Disbursement Voucher shall be
furnished the City/Municipal Accountant who shall prepare a city/municipal Disbursement
Voucher in the name of the Barangay Treasurer for the withdrawal of the amount.

3. The city/municipal Disbursement Voucher for the withdrawal of barangay funds shall be
certified and approved in accordance with existing regulations. A check shall then be
drawn by the City/Municipal Treasurer and countersigned by the proper city/municipal
official. The check shall be in the name of the payee as appearing in the barangay
Disbursement Voucher.

4. The Barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt portion of the city/municipal Disbursement Voucher. He shall deliver the check to
the payee who shall acknowledge the receipt of the payment by signing the receipt
portion of the barangay Disbursement Voucher and/or issuing the official receipt
therefore. The Barangay Treasurer shall record the transaction in his/her cash book as a
credit to the Cash in City/Municipal Treasury columns, and transmit to the City/Municipal
Accountant, under proper acknowledgement, the copies of the paid barangay
Disbursement Voucher and its supporting papers for recording in the barangay books.

5. The barangay Disbursement Voucher shall be distributed as follows:

Original - to the local Auditor concerned, through the City/Municipal

Accountant.
Duplicate - to the City/Municipal Accountant.
Triplicate - To be attached to the city/municipal Disbursement Voucher for the
withdrawal of deposit.

Updated Local Treasury Operations Manual (LTOM) 102

 Quadruplicate - To the Barangay Treasurer.

6. Disbursements by check shall be recorded in the barangay books.

F. Barangay Disbursement Out of Cash Advance for Payroll Charged Against Barangay
Funds Maintained with Depository Bank. –

1. Policies and Procedures:

1.1 Cash Payments shall be made out of the cash advance given to the Barangay
Treasurer/Accountable Officer.

1.2 The cash advance shall be used solely for payment of salaries, honoraria and other
allowances due the barangay officials and employees.

1.3 The cash advance shall not be used for the encashment of checks or for liquidation
of previous cash advance.

1.4 The cash advance shall be equal to the net amount of the payroll corresponding to
the pay period.

1.5 The cash advance shall be liquidated within five (5) days after the end of the pay
period. Any unclaimed honoraria/salaries/allowances shall be refunded to close the
account.

1.6 All paid Disbursement Vouchers/Payrolls shall be recorded in the Summary of

Cash Payments.

1.7 The Summary of Cash Payments supported by paid Disbursement Voucher/Payroll

shall be accomplished to support the liquidation of the cash advance for payroll. In
case the cash advance is more than the disbursements, the excess shall be
refunded and an official receipt shall be issued therefore.

1.8 Succeeding cash advance shall be granted only after full liquidation of the previous
cash advance.

2. Recording:

2.1 Cash advance for payroll shall be recorded by the Barangay Record Keeper in the
Cash Disbursement Registers based on the Summary of Check Issued submitted
by the Barangay Treasurer;

2.2 All payments out of cash advances for payroll shall be recorded by the Barangay
Treasurer/Accountable Officer in the Summary of Cash Payments30 based on the
paid Disbursement Vouchers/Payrolls;

2.3 Submission of the Summary of Cash Payments to the Barangay Record Keeper
shall be supported with original paid Disbursement Vouchers/Payrolls;

2.4 Liquidation of cash advances shall be supported by Summary of Cash Payments

and paid Disbursement Vouchers/Payrolls; and

2.5 The Barangay Record Keeper shall be responsible in recording transactions in the
Cash Disbursement Registers.

30
SCP-Barangay, LTO Form 63

Updated Local Treasury Operations Manual (LTOM) 103

 3. Reporting:

3.1 The Barangay Record Keeper shall record the cash disbursement based on the
certified Summary of Cash Payments in the Cash Disbursement Register31.

3.2 At the end of the month, the Cash Disbursement Register shall be totaled,
balanced, ruled recapitulated and certified, and

3.3 The Barangay Record Keeper shall submit the certified Cash Disbursement
Registers to the City/Municipal Accountant for recording of the payments made in
the books and postings of the transactions to the Subsidiary Ledger maintained for
the Barangay Treasurer/Accountable Officer on or before the 5th day of the
following month.

G. Barangay Disbursements out of Cash Advance from Payroll Charged Against

Barangay Funds Deposited with the City/Municipal Treasury.–

1. The city/municipal Accountant shall prepare a Disbursement Voucher in the name of the
Barangay Treasurer for the withdrawal of the amount of the payroll based on duly
certified and approved payrolls. At the same time, he shall prepare the corresponding
Debit Advice, Barangay Form No. 1.

2. The Disbursement Voucher for the withdrawal of barangay funds shall be certified and
approved in accordance with existing regulations. A check in the name of the Barangay
Treasurer for the amount of the withdrawal shall then be drawn by the City/Municipal
Treasurer and countersigned by the proper City/Municipal official.

3. The Barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt portion of the city/municipal Disbursement Voucher, and shall record the
transaction in the Barangay Cash Book as a debit in the Cash Advances columns.

4. When the payments on the payrolls have been made, the Barangay Treasurer shall
record in the Barangay cash book the total amount paid as a credit in the Cash
Advances columns, and transmit to the City/Municipal Accountant under proper
acknowledgment, the paid payrolls and their supporting papers, for recording in the
barangay books.

5. The unexpended cash from the cash advance shall be re-deposited with the
City/Municipal Treasurer following the same procedures as in the full liquidation of the
petty cash fund for barangay funds deposited with the city/municipal treasury.

6. Copies of the paid payrolls shall be distributed as follows:

Original - To the Local Auditor concerned, through the City/Municipal Accountant

Duplicate - To the city/municipal Accountant

Triplicate - To be attached to city/municipal disbursement voucher for withdrawal of deposit

Quadruplicate - To the Barangay Treasurer

H. Disbursement out of Cash Advance for Travel and Special Purpose/Time-Bound

Undertaking. –

31
CDReg-Barangay, LTO Form 64

Updated Local Treasury Operations Manual (LTOM) 104

 1. Policies and Procedures:

1.1 For local/foreign travel, liquidation shall be done within a period of thirty/sixty
(30/60) days upon return to the personnel’s workstation.

1.2 Cash advance for special purpose/time-bound undertaking shall be liquidated

upon accomplishment of the purpose for which it was granted.

1.3 Excess cash advance shall be refunded and an official receipt shall be issued by
the Barangay Treasurer.

1.4 The Liquidation Report32 with appropriate supporting documents shall be

submitted to the Barangay Record Keeper, who in turn shall submit it to the
City/Municipal Accountant for recording in the books on or before the 5th day of
the following month.

2. Recording:

2.1 Liquidation of cash advances shall be supported by Liquidation Report and

pertinent.

2.2 The Liquidation Report shall be submitted by the Accountable Officer to the
City/Municipal Accountant, through the Barangay Record Keeper, to serve as basis
in recording the liquidation in the books.

I. Barangay Disbursements Out of the Petty Cash Fund. –

1. Policies and Procedures:

1.1 The Petty Cash fund shall be maintained using the Imprest System. The balance of
the Petty Cash Fund shall not be closed at the end of the year.

1.2 The fund shall be kept separately from the regular collections and advances granted
for a particular purpose and shall not be used for payment of regular expenses.

1.3 The amount of the Petty Cash fund shall be determined by the Sangguniang Bayan,
but the petty cash that the Barangay Treasurer may be authorized to hold shall not
to exceed twenty percent (20%) of the funds available and to the credit of the
barangay treasury. (Sec. 334 (b), LGC)

1.4 All disbursements out of Petty Cash Fund shall be covered by duly accomplished
and approved Petty Cash Vouchers155supported by cash invoice, official receipts or
other evidence of disbursements required under applicable accounting and auditing
rules and regulations.

1.5 All paid Petty Cash Vouchers shall be reported in the Summary of Paid Petty Cash
Vouchers to be certified by the Petty Cash Fund Custodian.

1.6 The Petty Cash Fund shall be replenished as soon as disbursements reach seventy
five percent (75%) of as needed.

1.7 Replenishment of the Petty Cash Fund shall be made by submitting a Disbursement
Voucher for the purpose, supported by duly certified Summary of Paid Petty Cash
Vouchers, paid Petty Cash vouchers and supporting documents.

32
LR-Barangay, LTO Form 65

Updated Local Treasury Operations Manual (LTOM) 105

 1.8 In case the Petty Cash Fund Custodian resigns or ceases as custodian of the Fund,
full accounting/liquidation thereof shall be made. Any remaining cash shall be
refunded to close the account.

1.9 In no case shall the remaining cash of the former Petty Cash Fund Custodian be
transferred to the incoming Petty Cash Fund Custodian. For a complete accounting,
the account of the former Petty Cash Fund Custodian shall be closed and a new
account shall be opened for the incoming Petty Cash fund Custodian.

2. Recording:

2.1 Petty Cash Vouchers shall be recorded in the Summary of Paid Petty Cash
Vouchers which shall be prepared by the Petty Cash Fund Custodian to report all
payments made out of the Petty Cash Fund.

2.2 Replenishment of the Petty Cash Fund shall be supported with the Summary of Paid
Petty Cash Vouchers and all the paid Petty Cash Vouchers supporting the entries in
the Summary of Paid Petty Cash Vouchers.

2.3 The submission of the Summary of Paid Petty Cash Vouchers to the Barangay
Record Keeper shall be supported with original paid Petty Cash Vouchers and their
supporting documents.

2.4 The establishment and replenishment of the Petty Cash fund shall be recorded in
the Petty Cash Fund Register.

2.5 The Petty Cash fund Register which shall serve as the petty cash book shall be
maintained by the Barangay Treasurer/Petty Cash Fund Custodian.

2.6 Recording of payments in the Petty Cash Fund Register shall be based from the
Summary of Paid Petty Cash Vouchers and shall be submitted to the Barangay
Record Keeper for submission to the City/Municipal Accountant for recording in the
books.

3. Reporting:

3.1 The Petty Cash Fund Custodian shall record disbursements out of Petty Cash Fund
based on the certified Summary of Paid Petty Cash Vouchers in the Petty Cash
Fund Register.

3.2 At the end of the month, the Petty Cash Fund Register shall be totaled, balanced,
ruled, recapitulated, certified and submitted to the Barangay Record Keeper.

3.3 The Barangay Record Keeper shall submit the certified Petty Cash Fund Registers
to the City/Municipal Accountant to serve as basis in posting the transaction to the
subsidiary ledger of the Petty Cash Fund Custodian on or before the 5th day of the
following month.

3.4 The Barangay Record Keeper shall submit the certified Summary of Paid Petty
Cash Vouchers for the unreplenished paid Petty Cash Vouchers to the
City/Municipal Accountant on or before the 5th day of January of the following year
to take up expenses which remain unrecorded in the books.

Updated Local Treasury Operations Manual (LTOM) 106

LTO Annex 9: Sangguniang Kabataan Budget

A. General guidelines in the preparation of the Sangguniang Kabataan (SK) Budget. –

1. Ten percent (10%) of the General Fund of the barangay shall be set aside for the
Sangguniang Kabataan.

2. The proceeds of fund-raising activities shall be tax-exempt and shall accrue to the
general Fund of the Sangguniang Kabataan: Provided, however, that in the
appropriation thereof, the specific purpose for which such activity has been held shall be
first satisfied. (Sec. 426 (c), LGC)

3. The annual budget of the SK shall consist of two parts – the income portion and the
Expenditure portion:

3.1 Income Portion. – The Income Portion consists of the beginning balances, which
are the unappropriated and/or unexpended amounts of the revenues and receipts
of prior calendar years carried forward to the budget year, and estimates of income
certified collectible by the city/municipal Treasurer.

3.2 Expenditure Portion. – The expenditure portion consists of estimated

expenditures which are the total appropriations covering Current Operating
Expenditures and Capital Outlays.

4. Sangguniang Kabataan budgeting is the same as that of the other LGUs. The major
phases are:

4.1 Budget Preparation;

4.2 Budget Authorization;

4.3 Budget Review;

4.4 Budget execution; and

4.5 Budget Accountability and Reporting.

B. SanggunianKabataan Disbursements. – Sanggunian Kabataan disbursements shall

conform to the procedures for barangay disbursements outlined in this Manual except that in
the preparation of the Obligation Request and Disbursement Voucher, the requesting official
and signatory in “Box A” of the Disbursement Voucher, respectively, shall be the Sanggunian
Kabataan Chairman.

Updated Local Treasury Operations Manual (LTOM) 107

 LTO Form 42

Republic of the Philippines

Name of Province/City/Municipality
Address

DISBURSEMENT VOUCHER No.

Mode of Check Cash Others

Paymen
tPayee TIN/Employee No. Obligation Request No.

Responsibility Center
Otlice/Unit/Prolect Code
Address
EXPLANATION AMOUNT

A. Certified B. Certified
Allotment obligated for the purpose as indicated above Funds Available
Supporting documents complete
Signature Signature
Printed Date Date
Printed
Name
Name
Position Position
Treasurer/Authorized Representative.

Head, Accounting Unit/Authorized Representative

C Approved for Payment [Link] Payment
. Check No. Bank Name Date
Signature

Printed Date Signature

Printed Date
Name Name
OR/Other Documents 91 No. Date
Position
Agency Head/Authorized

Updated Local Treasury Operations Manual (LTOM) 108

 LTO Form 42 – Disbursement Voucher (DV)

INSTRUCTIONS

B. The DV shall be printed in one whole authorized representative as to obligation

sheet of 81/2 x 11 size bond paper. This of allotment for the purpose as indicated
shall be prepared in three copies to be and completeness of supporting
distributed as follows: documents

Original - Accounting Unit The certifying officer shall affix his/her

Duplicate - Cash Unit signature, print his/her name, indicate
Triplicate – Payee his position, and the date of his/her
signing on the spaces provided.
C. The Accounting Unit shall stamp the
date of receipt on the face of this form. k) Certified (Box B) - certification by the
Treasurer or his/her Authorized
D. This form shall be accomplished in the Representative on the availability of
following manner: fund.
a) DV No. - Number assigned to the
DV by the Accounting Unit. It shall The certifying officer shall affix his/her
be numbered as follows: signature, print his/her name, indicate
0000000000 his position, and the date of his/her
signing on the spaces provided.
Serial number
(One series for each l) Approved for Payment (Box C) -
year) approval by the Agency Head or his/her
Month Authorized Representative on the
Year payment covered by the DV.

b) Mode of Payment - put a check The approving officer shall affix his/her
mark in the appropriate box opposite signature, print his/her name, indicate
the mode of payment his/her position, and the date of his
c) Payee - name of the payee or signing on the spaces provided.
creditor
d) TIN/Employee No. - Tax m) Received Payment (Box D) -
Identification Number (TIN) of the acknowledgment by the claimant or
claimant/Identification Number his/her duly authorized representative
assigned by the agency to the for the receipt of the check/cash and the
officer/employee date of receipt. The claimant/payee shall
e) Obligation Request No. - Number affix his/her signature on the spaces
of the obligation request supporting provided and shall indicate the number
the DV and the date of the check, bank name
f) Address - address of the claimant and number and date of OR/other
g) Responsibility Center relevant documents issued to
(Office/Unit/Project and Code) - acknowledge the receipt of payment.
the office/unit/project and code
assigned to the cost center where n) JEV No. and Date - Number and date of
the disbursement shall be charged the Journal Entry Voucher
h) Explanation - brief description of
the disbursement
i) Amount - amount of claim

j) Certified (Box A) - certification of the

Head of Accounting Unit or his/her
LTO Form 43

Updated Local Treasury Operations Manual (LTOM) 109

 GENERAL PAYROLL
______________________
Sheet ____ of ____ Sheets
LGU
_______________________________________
Period

We acknowledge receipt of the sum shown opposite our names as full compensation for services rendered for
the period stated: No.:_______________

DEDUCTIONS
Monthly Amount Absences Life & Withholding Salary Net Amount
AME ID No. Position Allowance Medicare Pag-ibig No. Received
Salary Earned w/o pay Retirement Tax Loan

CERTIFIED: Services have been duly rendered as

stated
_____________________________________________________
_____________
Name & Signature
______________________________________________ of Officer
Name & Signature of Supervisor
CERTIFIED: Each employee whose name appears above has
CERTIFIED: Funds available in the amount of been paid the amount indicated opposite his/her
₱___________ name.

______________________________________________ ______________________________________________
Name & Signature of Supervisor _________________
Disbursing Officer
APPROVED FOR PAYMENT: Date

LTO Form 43 – General Payroll

INSTRUCTIONS

1. This form shall be used for claims for salaries of permanent/regular employees of
national government agencies, local government units as well as government
corporations.
2. The used of this form should indicate on its heading not only the Agency name but also
the name of the office where the claimants/employees are assigned.
3. The shall be numbered as follows:
00 00 00 000

Serial number
(One series per year)
Month of Issue
Year of Issue
Fund

Updated Local Treasury Operations Manual (LTOM) 110

 4. The identification no. of the employees shall be entered in column 2.

5. The position to be shown in column 3 shall be the same as that appearing in the
employee's appointment.

6. The monthly salary shall be the amount corresponding to one-twelfth of the annual salary
stated in the appointment and shall be entered in column 4.

7. If allowance is being paid together with the salary, the amount thereof shall be entered in
the allowance column (column 5).

8. The total amount earned (column 6) shall be the total amount of salary earned for the
stated period plus the allowance stated in column 5.

9. Absences without pay, life and retirement, withholding tax, Pag-ibig, salary loan, etc.
(column 7-14) shall be deducted from the amount earned to get the net amount to be
received.

10. Employees shall affix their signatures on the last column to acknowledge receipt of the
net salaries and allowances.

11. The certification that services have been rendered as stated shall be signed by the
immediate supervisor/head of office.

12. The certification as to completeness and propriety of supporting documents/previous

cash advance liquidated/ existence of funds held in trust shall be certified/signed by the
Accountant.

13. The certification as to availability of funds shall be accomplished/signed by the Treasurer.

14. Payment shall be approved by the head of office or his authorized representative.

15. The certificate of payment shall be accomplished by the Disbursing Officer/Cashier.

16. Blank columns shall be used for other authorized salary deductions and government

17. Shares for GSIS and PAG-1BIG.

LTO Form 44

DAILY WAGE PAYROLL

_____________________________________________________
Project

LGU _______________________________________________________________

DEDUCTION
Number Rate
Gross NET Signatu
NAME Designation of Days per
Salary PAY Thumb
worked day

Updated Local Treasury Operations Manual (LTOM) 111

 TOTAL
CERTIFIED: Approved for Payment: CERTIF
Each person whose name appears on this roll Each p
had rendered services for the time stated. above r
opposite

________________________________ ________________________________ _______

Name & Signature of Name & Signature of Approving Officer Name &

Updated Local Treasury Operations Manual (LTOM) 112

LTO Form 44 – Daily Wage Payroll

INSTRUCTIONS

1. This form shall be used for claims of laborers/casual employees and other daily wage
earners.

2. It shall be accomplished in at least three copies to be distributed as follows: Original copy - to

the Auditor

Duplicate copy - to the Accountant

Triplicate copy - to be retained by the Paymaster or Disbursing Officer

3. The designation of the claimant shall be indicated under "DESIGNATION" column (column
2).

4. The number of days worked for the stated period shall be indicated in column 3.

5. The daily rate of each worker shall be indicated in column 4.

6. The amount computed based on columns 3 and 4 shall be indicated in column 5.

7. Authorized deductions shall be indicated in columns 6-8.

8. The net pay (gross salary less deductions) shall be indicated in column 9.

9. Workers receiving payment hereon shall affix their signature or thumb mark in column 10 to
acknowledge receipt of payment.

10. The Disbursing Officer shall indicate the number, date and place of issue of the

1. Community Tax Certificate presented by the claimants (columns 11, 12 and 13).

11. This payroll shall be certified as to services rendered by the Foreman/Supervisor.

12. The authorized official shall approve the payroll for payment.

13. The disbursing officer shall certify payment of each person indicated in the payroll.

Updated Local Treasury Operations Manual (LTOM) 113

 LTO Form 45

CHECK REGISTER

LGU

Fund ______________________ Bank Account No. __________

Accountable Officer Official Designation Station

CHECK Received by:
Date Date Name of Payee Amount Name/
Number
Issued Released Signature Date

For Accountable Officers' Use

Updated Local Treasury Operations Manual (LTOM) 114

LTO Form 45 – Check Register

INSTRUCTIONS

A. The Check Register shall be accomplished as follows:

1. LGU – name of the municipality/province/city

2. Fund – fund name/code
3. Bank Account No. – name of Bank
4. Date – date of check issued
5. Check Number – serial number of the MDS checks drawn shall be
entered in numerical sequence, including cancelled ones.
6. Check – Date Released – date when the check is released to the
payee.
7. Name of Payee – name of the payee/claimant
8. Amount – amount of check issued by the Accountable Officer.
9. Received by – name and signature of the payee/claimant and the
date received.

B. Each Disbursing Officer/Accountable Officer shall maintain this record. All transactions for
the day shall be recorded immediately.

Updated Local Treasury Operations Manual (LTOM) 115

 LTO Form 46

REPORT OF CHECK ISSUED

LGU

Bank Name/Acct Name:_____________ Report No.:_______________

Sheet No:_________________

Checks Nature of
DV No. Responsibility Center Payee Amount
Date No. Payment

TOTAL

Certified Correct: Received by:

_________________________
Disbursing Officer Accounting Clerk

_________________________
Date Date

Updated Local Treasury Operations Manual (LTOM) 116

LTO Form 46 – Report of Checks Issued (RCI)

INSTRUCTIONS
The RCI shall be accomplished as follows:
1. LGU – name of the province/city/municipality
2. Period Covered – period covered by the report
3. Sheet No. – sheet number of the report
4. Report No. – number assigned by the Treasury Office on the report. It shall be
numbered as follows:
00-00-00-0000

Series (one series per year)

Month
Year
Fund
5. Bank Name/Account No. – name of the bank and the account number where
the check is drawn
6. Check No. – number of the check issued covered by the report including the
cancelled ones.
7. Check Date – date of the check issued covered by the report
8. DV Number – number of the reference DV
9. ResponsibilityCenter– code assigned to each cost center
10. Payee – name of the payee
11. Nature of Payment – nature of claim paid
12. Amount – amount of the check issued
13. Certification – the report shall be certified by the Disbursing Officer on last sheet
of the report.
14. Date – date report was submitted to the Accounting Unit
15. Received by: – name and signature of the designated personnel receiving the
report
16. Date – date of receipt of the report by the Accounting Unit

Additional instructions:
a. The RCI shall be prepared in three copies by the Treasurer’s Office daily to be
distributed as follows:
Original – COA Auditor thru the Accounting Unit together with the
original copy of the paid petty cash
vouchers/payroll/replenishment of PCF and supporting
documents

2nd copy – Accounting Unit

3rdcopy – Treasurer’s file
b. One (1) RCI shall be prepared for each bank account and it shall be the
basis for the preparation of Journal Entry Voucher (JEV).

This report shall be prepared chronologically including cancelled/voided check

Updated Local Treasury Operations Manual (LTOM) 117

LTO Annex 47 – Process Flow on Disbursement by Checks

Area of
Responsibility/Person
Responsible Seq. Activity

Gather supporting documents, and approved ALOBS, prepare DV

Concerned Office 1 and forward to Head of Department.

Supervisor/Head of Sign Box A of DV and submit to the Accounting Unit.

2
Department

Check completeness of documents, assign number to DV, sign

Box B and forward to Treasurer.
Accounting Unit 3

Verify claim, certify cash availability (Box C) and forward to

approving officer.

4 Note: If funds are not available, return to Accountant for recording

Treasurer in the books as Accounts Payable (AP). For AP, JEV shall be
prepared by Accounting Unit and JEV number reflected in the DV.
JEV for AP is recorded in General Journal. Accountant retains
copy of DV and forwards to Treasurer

Local Chief Executive or 5

authorized approving
Approve transaction (Box D) and forward DV to Cashier.
officer

Prepare, sign check and forward check with DV to countersigning

Treasurer 6 officer.

Administrator/ Vice-
Mayor for the Local Countersign check and forward to Accountant for preparation of
7 the Accountant’s Advice of Local Check Disbursements.
Sanggunian
Disbursements
Prepare Accountant’s Advice of Local Check Disbursements and
Accountant 8 submit to bank. Return DV, check and supporting documents to
Cashier/Treasurer.

Treasurer 9 Record check in the Check Register and release check to

claimant. Record disbursement in Cashbook – Cash in Bank.
Prepare Report of Checks Issued. Forward RCI with DV and
supporting documents to Accounting Unit.

Accounting Unit 10 Prepare the JEV based on individual checks/voucher; sign

"Prepared By" portion (approved by Chief Accountant), and
record JEV in the Check Disbursements Journal. Post monthly to
the General Ledger/Subsidiary Ledgers.

Accountant 11 Forward RCI, DV, supporting documents and JEV to the Office of
the Auditor.

Updated Local Treasury Operations Manual (LTOM) 118

LTO Form 49 – Report of Disbursement (RD)

REPORT OF DISBURSEMENTS
LGU

Accountable Officer: Report No.

Designation: Sheet No. :

Date Payee Reference Amount

TOTAL

Certified Correct: Received by:

Disbursing Officer Accounting Clerk

Date Date

Updated Local Treasury Operations Manual (LTOM) 119

 REPORT OF DISBURSEMENTS (RD)

INSTRUCTIONS

A. This report shall be accomplished as follows:

1. LGU – name of the province/city/municipality
2. Accountable Officer – name of the Accountable Officer
3. Designation – position or designation
4. Report No. – assigned RD number which shall be as
follows:
00- 00-00-00-0000

serial number (one series per month)

month
year
Disbursing Officers/Paymasters’ Code
Fund
5. Sheet No – page number of the report
6. Date – date of the DV/source documents
7. DV No. – assigned DV number
8. Payee – name of the person/office to whom payment is
made
9. Nature of Payment – nature of claims paid
10. Responsibility Center – code assigned to each cost
center
11. Amount – amount of disbursement covered in the
DV or supporting documents
12. Certified by – name and signature of Disbursing
Officer/Paymaster
13. Received by – name and signature of the designated
Accounting personnel who will acknowledge the
report
B. The Disbursing Officer/Paymaster shall prepare this report to
liquidate his/her cash advance for each nature of cash advance
such as cash advance for salaries and field operating expenses
and petty cash fund (at end of year)
C. This report shall be prepared in three (3) copies and to be
distributed as follows:
Original – COA thru the Accounting Unit together
with the original copy of the paid
vouchers/payroll and supporting
documents
2nd copy – Accounting Unit

Updated Local Treasury Operations Manual (LTOM) 120

LTO Form 50 – Liquidation Report

LIQUIDATION REPORT No.:

Date:
LGU Responsibility Center

PARTICULARS AMOUNT

Itinerary of Travel:

TOTAL AMOUNT SPENT

AMOUNT OF CASH ADVANCE PER DV NO. ______DTD. ________

AMOUNT REFUNDED PER O.R. NO. ________ DTD _________

AMOUNT TO BE REIMBURSED

Submitted by: Received by:

Accounting Unit

Date

Updated Local Treasury Operations Manual (LTOM) 121

 LIQUIDATION REPORT (LR)

INSTRUCTIONS

A. This report shall be accomplished as follows:

1. LGU – name of the province/city/municipality

2. No. – number assigned by the Accounting Office
which shall be as follows:
00-00-00-0000

Series (one series per year)

Month
Year
Fund
3.
Date – date of the preparation of the report
4.
Responsibility Center – code assigned to each cost
center
5. Particulars and Amount – brief description of what
has transpired of the travel and corresponding costs
6. Total Amount Spent – actual amount spent
7. Amount of Cash Advance – amount of cash
advanced for the travel
8. Amount Refunded – excess amount on the cash
advanced less expenses incurred
9. Amount to be Reimbursed – amount of cash
advanced less expenses incurred in the travel
10. Certified by: - signature of the employees/officer
who made the cash advance
11. Received by: - name and signature of the designated
personnel in the Accounting Office receiving the
report
12. Date – date of receipt of the report by the
Accounting Unit
B. This report shall prepared by the employees/officers who
made the cash advance. It shall be prepared in three
copies:
Original – COA Auditor thru the
Accounting Officer
Duplicate – Accounting Officer
Triplicate – employees/officer concerned

Updated Local Treasury Operations Manual (LTOM) 122

LTO Annex 51 – Process Flow on Cash Disbursement

Area of
Responsibility/Person
Responsible Seq. Activity

Concerned offices 1 Processing of Payrolls to be paid by cash is the same as that of

steps (a) to (e) for check disbursements.

Office of the Treasurer 2 Gather duly certified and approved payrolls to be paid out of cash
advance. Prepare DV for cash advance corresponding to the net
amount of payroll/s. Sign Box A of DV and submit to the
Accounting Unit.

Accounting Unit 2 Check completeness of documents/ previous cash advance

liquidated, assign number to DV, sign Box B and forward to
Approving Officer.

Local Chief Executive 4 Approves DV and forward to Treasurer for preparation of checks.

Treasurer 5 Prepare and sign check, and forward check with DV to

countersigning officer.

Administrator 6 Countersign check and forward to Accountant for preparation of

Advice.

Accountant 7 Prepare Accountant’s Advice of Local Check Disbursements and

return DV, check and supporting documents to Cashier/Treasurer.

Treasurer/ Disbursing 8 Encash check and pay claimants. Record disbursement in

Officer Cashbook – Cash Advances.

Note: Employees/payee shall sign on the received portion of the

payroll/DV to acknowledge receipt of payment.

Disbursing Officer 9 If there are unclaimed salaries, return unused cash to the
Treasurer/ Cashier. An official receipt (OR) shall be issued by the
Treasurer/Cashier to acknowledge the return of unused cash and
indicate check no. of cash advance granted on the face of OR.
Record the refund as credit to cash advance and attach OR to the
Cashbook – Cash Advances.

Disbursing Officer 10 Prepare Report of Disbursement, attach paid payrolls/ supporting

documents and copy of OR for unused cash advance returned to
Treasurer/Cashier. Sign "Certified Correct" portion of Report of

Updated Local Treasury Operations Manual (LTOM) 123

 Disbursement and submit to Accounting Unit.

Note: The RD shall serve as the liquidation report of the cash

advance granted to the Disbursing Officer. The RD shall be
distributed as follows:

Original – Accountant together with the original of the paid

DVs/Payroll and supporting documents

Copy 2 – File

Accountant 11 Prepare JEV to record the liquidation of cash advance. Record

JEV in the Cash Disbursements Journal (CDJ). Post monthly to
the General Ledger/ Subsidiary Ledger.

Accountant 12 Forward Report of Disbursement and supporting documents

including JEV to the Office of the Auditor.

Updated Local Treasury Operations Manual (LTOM) 124

LTO Annex 52 – Process Flow on Disbursements Through Bank – Payroll Payment

Area of
Responsibility/Person
Responsible Seq. Activity

Cash Unit/Cash Staff 1 Receive the approved check, DV and Following Months Payroll
(FMP), sign the logbook of the releasing office, and forward the
documents to the Cashier.

Cash Unit/Cash Staff 2 Deposit the check to the Bank Payroll Account together with the
original of the Summary of Employees Net Earnings (SENE)
received from Accounting Unit. File temporary copies 1-2 of FMP,
copy 2 of the check, and copies 1-3 of DV for the preparation of
RCI.

Note: The payee of the check is the Servicing Bank whose

authorized representative shall acknowledge receipt of the check
by signing on the original of the DV

Updated Local Treasury Operations Manual (LTOM) 125

LTO Form 53 – Petty Cash Voucher (PCV)

PETTY CASH VOUCHER

No.:

LGU Date:
Payee/Office : Responsibility Center:
Address :

I. To be filled up upon request II. To be filled up upon liquidation

Particulars Amount
Total Amount Granted

Total Amount Paid per

OR No. ____________

Amount Refunded/
(Reimbursed)

A Requested by: C
Received Refund

Name of Requestor Reimbursement Paid

Approved by:

Disbursing Officer
Immediate Supervisor Disbursing Officer

B Paid by: D
Liquidation Submitted:

Disbursing Officer Reimbursement Received by:

Cash Received by:

Signature over Printed Name of Payee Signature of Payee

Date: _________________ Date: ___________________

Updated Local Treasury Operations Manual (LTOM) 126

 PETTY CASH VOUCHER (PCV)

INSTRUCTIONS

A. The form shall be accomplished 11. Box B – Cash Received by –

as follows: shall be signed by the recipient
1. LGU – name of the agency of cash.
2. No. – number and date
assigned to the PCV by the
Accounting Section/Unit, it II. To be filled up upon
shall be numbered in the liquidation
following manner:
00 - 00- 00 – 000 12. Total Amount Granted – the
serial number amount of cash received by the
(one series claimant.
for each year) 13. Total Amount Paid Per OR No.
month ___ - the total amount paid as
year
Fund
shown in the invoice presented.
3. Date – date of the preparation 14. Amount Refunded/Reimbursed –
of PCV. the difference between the total
amount granted less amount
4. Payee/Office & Address –
name/office/ address of payee spent .
requesting for petty cash 15. Box C – the DO shall check the
advance. appropriate box and affix his
5. Responsibility Center – code signature.
of the requesting office as 16. Box D – the payee shall check
assigned by the COA. the appropriate box and affix
his signature.
I. To be filled up upon request
B. Part I shall be filled up upon
6. Particulars – purpose of the request of the petty cash
petty cash advance request. advance and Part II shall be
7. Amount – amount of petty filled up upon liquidation.
cash requested.
8. Box A – Requested by – shall C. The PCV shall be prepared in
be signed by the requestor. two copies distributed as
9. Box A – Approved by – shall follows:
be signed by the Immediate Original – Auditor thru the
Supervisor of the Requestor. Chief Accountant together with
10. Box B – Paid by – shall be the supporting documents
signed by the Disbursing Duplicate – retained by the
Officer (DO). DO for his file

Updated Local Treasury Operations Manual (LTOM) 127

Updated Local Treasury Operations Manual (LTOM) 128
 LTO Form 54
PETTY CASH REPLENISHMENT REPORT

_______________________________
Name of Province/City/Municipality

Period Covered:________________

Report No.:_________________
Sheet No.:__________________

Petty Cash
Date Particulars Amount
Voucher

CERTIFICATION

I hereby certify to the correctness of the above information

__________________ _________
Petty Cash Custodian Date

Updated Local Treasury Operations Manual (LTOM) 129

LTO Form 54 – Petty Cash Replenishment Report

INSTRUCTIONS

1. LGU – name of agency

2. Period covered – the period covering the duration of the
replenishment of the petty cash fund
3. Report No. – number of the PCRR
4. Sheet No. – page of the report
5. Date – date of the source document
6. Petty Cash Voucher No. – the number of the PCV
7. Particulars – purpose of the petty cash disbursement
8. Amount – amount appearing in the PCV
9. Certification – the signature of the petty cash custodian
10. Date – date when the PCRR was signed

Updated Local Treasury Operations Manual (LTOM) 130

LTO Annex 55 – Process Flow on Petty Cash Fund Disbursements, Liquidation and
Replenishment

Area of Responsibility/Person
Responsible
Seq. Activity
I. Establishment/Replenishment of Petty Cash Fund

Petty Cash Custodian 1 Receive check from Cashier for the establishment/replenishment of petty
cash fund. Record in the CDR the date, reference and the amount of
check in the “Disbursements” column.

2 Encash check in GSB and keep the cash in a safety vault.

II. Utilization of Petty Cash Fund

Requesting Personnel 1 Accomplish Box A “Requested by” portion of the PCV

Immediate Supervisor 2 Sign Box A “Approved b” portion of the PCV and return to Requesting
Personnel

Requesting Personnel 3 Submit to the Petty Cash Custodian for the release of fund

Petty Cash Custodian 4 Receive from the Requesting Personnel the PCV duly approved by
concerned official

Petty Cash Custodian 5 Upon granting of the petty cash advance, sign in Box B “Paid by” potion
of the PCV

Requesting Personnel 6 Receive petty cash and signs in Box B “Cash Received by” portion of the
PCV

Petty Cash Custodian 7 Issue copy 2 of the PCV to requesting personnel

Petty Cash Custodian 8 Record paid PCVs in the CDR. Fill-up the following columns: date,
reference, name of payee, nature of payment, amount in the credit
column and cash advance balance.

Petty Cash Custodian 9 File the original of the PCV awaiting liquidation

Liquidation of Petty Cash Advance

Petty Cash Custodian 1 Receive from Requesting Personnel copy 2 of the PCV together with
supporting documents. Check and review completeness of documents
such as the date, amount and nature of expenses paid as shown in the
supporting documents

Petty Cash Custodian 2 If incomplete, return to Requesting Personnel for completion of needed
supporting documents

If complete, retrieve the original of PCV from file and fills up Box D
“Liquidation Submitted” portion of the original and copy 2 of PCVs.

Petty Cash Custodian 3 Check the appropriate boxes for “Received Refund” of “Reimbursement

Updated Local Treasury Operations Manual (LTOM) 131

 Paid” portion and sign Box C of the PCV

Requesting Personnel 4 Check and fill up the appropriate boxes for “Liquidation Submitted” and
“Reimbursement Paid” upon submission of necessary supporting
documents and receipt or reimbursements of cash, if any, and sign the
PCV

Petty Cash Custodian 5 Return copy 2 of the PCV to the Requesting Personnel

Petty Cash Custodian 6 If the amount granted is equal to the amount paid as shown in the
liquidated PCV, proceeds to No. 7

If the amount is not equal to the amount paid, retrieve from file the CDR
and record the necessary adjustments based on the liquidated PCV. Fill
up the following columns: date, reference, name of payee, and nature of
payment, amount in the appropriate debit, credit and balance column.

Petty Cash Custodian 7 File the original of the PDV together with the supporting documents
awaiting replenishment.

Replenishment of Petty Cash Fund

Petty Cash Fund Custodian 1 Retrieve from file the original of the PCV together with the supporting
documents. Check the completeness of all PCVs for replenishment.

Petty Cash Fund Custodian 2 Prepare the Petty Cash Replenishment Report (PCRR) in two copies
based on PCVs in numerical sequence and fills up the following columns:
date, PCV No. particulars and amount.

Petty Cash Fund Custodian 3 Sign in the “Certified Correct by” portion of the PCRR

Petty Cash Fund Custodian 4 Based on the PCRR, prepare DV in three copies, and forward copies of
the DV, original of the PCRR and PCV, and supporting documents to
Authorized Official for review and signature

Authorized Official 5 Sign in Box A portion of the DV

Petty Cash Fund Custodian 6 Forward Copies 1-3 of the DV, originals of PCRR and PCVs and
supporting documents to Budget Division for preparation of the Obligation
Request (ObR)

Updated Local Treasury Operations Manual (LTOM) 132

LTO Form 56 – Disbursement Voucher (Barangay)

DV No.:
DISBURSEMENT VOUCHER
Date:
Barangay City/Municipality:
Tel No. Province:
Payee: Employee No.: Fund:
Address: TIN No.:
Particulars Amount

A Certified B Certified: C Certified :

Existence of available appropriations for the Funds (Cash available) As to validity, propriety, and legality of claim
changes/expenses indicated above Approved:
For payment
Signature:______________________ Signature:______________________ Signature:______________________
Printed Name:___________________ Printed Name:___________________ Printed Name:___________________
Position:________________________ Position:________________________ Position:________________________
Date:__________________________ Date:__________________________ Date:__________________________

D. Received Payment:

__________________________________ Check No.:_________________ Date:____________

Signature Over Printed Name/Date Bank Name:________________
Date OR Number:________________ Date:____________

Updated Local Treasury Operations Manual (LTOM) 133

LTO Form 57 – Payroll (Barangay)

Payroll
_____________________________________
Period Coverend
Barangay: City/Municipality: Payroll No. ________
Te. No. Province:

Compensation Deductions
Salaries & BIR Net Signature
No: Name Position
Wages Honoraria Total withholding Others Total Amount of
Regular Tax Due Recipient

A. Certified B. Certified C. Certified D. Paid by:

Existence of available appropriations for the Funds (cash) available As to validity, propriety and
changes/expenses indicated above legality of claim
For payment
Signature:______________________ Signature:______________________ Signature:___________________ Signature:_________________
Printed Name:___________________ Printed Name:___________________ Printed Name:_______________ Printed Name:_____________
Position:________________________ Position:________________________ Position:___________________ Position:__________________
Date:__________________________ Date:__________________________ Date:______________________ Date:____________________

Updated Local Treasury Operations Manual (LTOM) 134

 PAYROLL

INSTRUCTIONS

A. This form shall be 13. Net Amount Due – gross

accomplished as follows: income less total deductions
14. Signature of Recipient –
1. Period Covered – period signature of officer/employee
covered by payroll receiving the net amount due
2. Payroll Number – the payroll 15. Box A – certification by the
shall be numbered as follows: CCA on the existence of
available appropriations for
00 00 0000 the expenses stated
Serial number 16. Box B – certification by the BT
(one series per year ) on the availability of funds
Month of Issue (cash)
Year of Issue
17. Box C – certification by the
3. Barangay – Name of Barangay PB on the validity, propriety
4. Telephone Number – tel. no of and legality of the claim and
barangay approval for payment
5. City/Municipality – 18. Bod D – to be signed by the
city/municipality where the BT/Disbursing Officer
barangay is located
6. Province – Province where the
barangay is located B. This form shall be prepared in
7. No. – entry number in the triplicate copies to be
payroll distributed as follows:
8. Original – BRK to support
9. Name – complete name of the the SCP
officers/employees covered by 2nd copy – BT
the payroll 3rd copy – BRK
10. Position – position of .
officer/employees
11. Compensation:
 Salaries and Wages –
amount of salaries and
wages due the
employees
 Honoraria – amount
corresponding to the
honoraria for the period
 Blank Space – for other
benefits and allowances
due the employees
 Total – total amount of
salaries/honoraria and
other compensation due
for the period.
12. Deductions – amount of
deductions from the employees
such as BIR withholding tax,
others
 Total – total amount of
deductions

Updated Local Treasury Operations Manual (LTOM) 135

LTO Form 58 – Purchase Order (PO) (Barangay)

PURCHASE ORDER
Barangay City/Municipality:
Tel No. Province:
Supplier: PO No.:
Address: Date:
Mode of Procurement
TIN: __Bidding ___Negotiated __Over the Counter
Gentlemen:
Please deliver to this office the following articles subject to the terms and conditions contained herein
Place of Delivery: Delivery Term:
Date of Delivery: Payment Term:
Unit Particulars Quantity Unit Cost Amount

(Total Amount In Words)

Purpose:
In case of failure to make full delivery within the time specified above, a penalty on one-tenty (1/10)
of one percent for everyday of delay shall be imposed

Very truly yours

_______________________________
Sinature over Printed Name
Punong Barangay
_______________________________
Date
Conforme: Existence of Available Appropriations of ______________
(amount in workds/figures)

____________________________ ____________________________
Signature over Printed Name Signature over Printed Name
Supplier Supplier
___________ ___________
Date Date

Updated Local Treasury Operations Manual (LTOM) 136

 PURCHASE ORDER

INSTRUCTIONS

A. This form shall be 15. Unit Cost – cost per unit of the
accomplished as follows: supplies/goods ordered
16. Amount – total amount of the
1. Supplier/Address/TIN – name, goods ordered (quantity
address and TIN of the supplier multiplied by unit cost)
2. PO No. – the PO shall be 17. Penalty Clause – penalty
numbered as follows:: imposed by the barangay in
case of non-compliance with
00 00 0000 the terms of the PO
Serial number 18. Signed by – signature of the
(one series per year ) PB
Month of Issue 19. Conforme – signature over
Year of Issue
printed name of supplier or his
3. Barangay – Name of Barangay representative signifying his
4. Telephone Number – tel. no of approval to the terms set by
barangay the barangay and the date of
5. City/Municipality – signing
city/municipality where the 20. Existence of Available
barangay is located Appropriation – the amount of
6. Province – Province where the available appropriation
barangay is located committed for the purchase.
7. Date – date of PO preparation This shall be signed by the
8. Mode of Procurement – mode of CCA
procurement used such as public
bidding, negotiated purchase, B. This form shall be prepared in
procurement service, etc. as triplicate copies to be
provided under RA 9184 distributed as follows:
9. Place/Date f Delivery – place Original – Supplier for
and definite date/s of delivery. If conforme to the
not stated, it shall mean the terms of the PO
office of the official making the and attachment to
order and the date shall be seven the DV upon
days after receipt of the PO by request for
the supplier payment
10. Delivery Term – delivery Term 2nd copy – BT
i.e. Free on Board (FOB) 3rd copy – BRK
destination, FOB shipping point, .
etc. In the absence of such term, C. In case of negotiated purchase,
it shall mean FO destination the Barangay Secretary shall
11. Payment Term – specified indicate the Sangguniang
period required when the Resolution No. under which the
delivered goods shall be paid SB approved the contract.
and discounts allowed, if any,
such as 2/10, n/30
12. Unit – unit of measure of the
supplies (i.e. box, bottle etc.)
13. Particulars – brief description of
the supplies/goods ordered
14. Quantity – quantity of goods
ordered

Updated Local Treasury Operations Manual (LTOM) 137

LTO Form 59 – Purchase Request (PR) (Barangay)

PURCHASE REQUEST
Barangay PR No.:
City/Municipality Date:
REQUISITION
Estimated
Item Number Unit of Measurement
Unti Cost
Qty. Item Desciption Estimated Amount

Total Estiimated Amount

Purpose:

For use by the Barangay Treasurer

Requested by: Approved by:

____________________________ ____________________________
Signature over Printed Name Signature over Printed Name
Requisitioner Requisitioner
___________ ___________
Date Date

Updated Local Treasury Operations Manual (LTOM) 138

 PURCHASE REQUEST

INSTRUCTIONS

B. This form shall be prepared in

A. This form shall be triplicate copies to be
accomplished as follows: distributed as follows:
Original – Supplier for
1. PR No. – the PR shall be conforme to the
numbered as follows:: terms of the PO
and attachment to
00 00 0000 the DV upon
Serial number request for
(one series per year ) payment
Month of Issue 2nd copy – BT
Year of Issue
3rd copy – BRK
2. Barangay – Name of Barangay .
3. City/Municipality – .
city/municipality where the
barangay is located
4. Date – date of RO preparation
5. Item number – code of requested
goods
6. Quantity – quantity of goods
requested
7. Unit – unit of measure of the
goods requested (i.e. box, bottle,
etc.)
8. Item Description – brief
description of the goods
9. Estimated Unit Cost – the
estimated cost per unit of the
goods being requested
10. Estimated Amount – estimated
total amount of the goods
requested (est. quantity
multiplied by est. unit cost)
11. Total Estimated Cost – total
estimated amount of all the
goods specified in the request
12. Purpose – a brief explanation on
the purpose of the request
13. Requested by – name and
signature of the person
requesting the purchase of goods
14. Approved by – signature of the
PB

Updated Local Treasury Operations Manual (LTOM) 139

Updated Local Treasury Operations Manual (LTOM) 140
LTO Form 60 – Summary of Checks Issued (Barangay)

Summary of Checks Issued

____________________________________

Barangay: City/Municipality: SCkI No.:

Barangay Treasurer: _____________ Province: Page:
Deductions
Check Gross
Date DV No Fund Payee Particulars Witholding Final VAT Net Amount
No. Amount EWT 2% EWT 1% EVAT 1 Others
Tax 5%

Certification: Acknowledgment:
I hereby certify that the foregoing is the complete and correct records I hereby acknowledge receipt of the SCkI complete with carbon
of all checks issued from ________ to _________. The carbon copies of the copies of all checks issued and originals of all paid DVs/payrolls
checks issued and originals of all paid DVs/payrolls are hereto attached. and supporting documents.

___________________ _______________ __________________ ____________

Barangay Treasurer Date Barangay Record Keeper Date

Updated Local Treasury Operations Manual (LTOM) 141

 SUMMARY OF CHECKS ISSUED
INSTRUCTIONS
A. This form shall be
accomplished as follows:
1. Period the inclusive period
covered by the report
2. SCkI No. – the SCkI shall be
numbered as follows:

00 00 0000
Serial number
(one series per year )
Month of Issue
Year of Issue
3. Barangay – name of
barangay
4. Barangay Treasurer – name
of designated brgy treasurer
5. Date – date of the check
6.
7. Check No – serial number
of the check. The check
issued including the
cancelled ones shall be
listed in correct numerical
sequence
8. DV/Payroll – number of the
DV/Payroll
9. Fund – name of the fun to
which the payment was
charged. Example – GF, CF,
etc.
10. Payee – name of the payee
11. particulars – brief
description of the nature of
disbursements
12. Gross Amount – gross
amount of the claim
13. Deductions – deductions on
the total claim
14. Net Amount – amount of
the check
15. Certification – to be signed
by the BT
16. Acknowledgement – to be
signed by the BRK

B. The SCkI shall be prepared in

three copies to be distributed as
follows:
Original – City/Municipal
Accountant
2nd copy – BRK
3rd copy – DBC

Updated Local Treasury Operations Manual (LTOM)142

LTO Form 61 – Check Disbursement Register (Barangay)

CHECK DISBURSEMENTS REGISTER

____________________________________

Barangay: City/Municipality: CDReg No.

Barangay Treasurer: Province: Page No.
BREAKDOWN OF EXPENDITURES
Deductions
Maintenance and Other Operating Expenses FE Capital Outlay Others (See List at the Back
Date Salaries & Gross Amount of
Particular Ref. Payroll Honoraria
2007 Wages Gas, Oil & Telephone Office Furniture & Account Amount Checks Issued
Office Supplies Water Electricity Interest Expense Amount Due to BIR Others
Lubricants Expenses Equipment Fixtures Classification

Certification :
I hereby certify to the correctness of the above data. Records are based
on the SCkI submitted by the B and that the carbon f the checks and all the
original of the paid DVs/payroll supporting the entries are in my file

______________________ ___________
Barangay Record Keeper Date

Updated Local Treasury Operations Manual (LTOM)143

 CHECK DISBURSEMENT REGISTER

INSTRUCTIONS

A This shalll be accomplished as  Financial Expenses – payments

follows: for capital outlay
 Others – accounts which could not
1. Month – month covered by be accommodated in the specific
the Register columns shall be recorded in this
2. Page – number assigned to column
the sheet
3. CkDReg No – The CkDReg 13. Gross amount – gross amount of
shall be numbered as expenditures as indicated in the
follows: DV
14. Deductions – amount of deductions
00 00 0000 as indicated in the DV
Serial number 15. Amount of checks – amount of
(one series per year ) disbursement per SCkI
Month of Issue
Year of Issue
B. A recapitulation of the “Others”
4. Date- date of DV columns shall be made at the bottom of
preparation the page
5. Barangay – Name of the C. At the end of the month, the amount
Brgy columns in this Register shall be totaled,
6. Telephone Number – tel. no. balanced and ruled.
of barangay D. The register shall be certified and
7. City/Municipality – distributed as follows:
city/municipality where the Original – City/Municipal Accountant
barangay is located 2nd copy – BRK
8. Province – Province where E. The certified register shall be submitted
the barangay is locatedDate on or before the 5th day of the following
– date of the transaction month supported with the certified SCkI
9. to the City/Municipal Accountable.
10. Particulars – details or F. \All supporting documents to the SCkI
nature of payments shall remain with the BRK and shall be
11. Reference – the number made available to COA representative
assigned to the SCkI where anytime for examination/audit.
the entry was taken
12. Breakdown of Expenditures
– indicate amount under the
applicable column provided
for the following class
 Personal Services –
payments for PS
(i.e. payroll fund,
salaries or
honoraria
 Maintenance and
Other Operating
Expenses –
payments for
MOOE

Updated Local Treasury Operations Manual (LTOM)144

LTO Annex 62 – Process Flow on Barangay Disbursement By Check

Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Record 1 Prepares Disbursement Vouchers in three copies. Forwards the

Keeper DV together with all supporting documents to the Barangay
Treasurer.

Barangay Treasurer
Receives Disbursement Voucher in three copies duly certified in
2 Box A by the Chairman of Committee on Appropriation as to
availability of appropriations together with all supporting
documents.

Checks the availability of fund (cash) to support the claim

3 Signs Box B of the Disbursement Voucher/Payroll certifying in the

availability of fund (cash)

4
Forwards the signed Disbursement Voucher/payroll to the Punong
Barangay together with the supporting documents for certification
and approval.

5
Certifies the Disbursement Voucher/Payroll as to validity,
propriety and legality and approves it by signing in Box C.

Forwards the approved Disbursement Voucher/payroll to the

6 Barangay Treasurer for the preparation of the check

Receives the approved Disbursement Voucher/Payroll

7
Verifies completeness of signatures on the Disbursement
Vouchers/Payroll

8
Prepares the check in the name of the payee for the amount
indicated in the Disbursement Voucher/Payroll
9 Note 1. The check shall be prepared with a carbon copy, to be
distributed as follows:
Original – Payee

10 Carbon copy – attached to Disbursement Voucher/Payroll

Updated Local Treasury Operations Manual (LTOM)145

 Signs the check

Forwards the check together with the Disbursement

Voucher/Payroll and supporting documents to the Punong
Barangay for countersignature on the check
11

Countersigns the check and returns it to the Barangay Treasurer

12 together with the supporting documents for release.

Punong Barangay
13

Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Treasurer 14 Receives and releases the check to the payee. Attaches the
carbon copy of the check to the paid Disbursement
Voucher/Payroll

Acknowledges the receipt of payment by signing in Box D of the

Payee/Supplier 15 Disbursement Voucher and retains 3rd copy for his file

Issues an Official Receipt, if applicable, to acknowledge the

payment received.
16

Returns the signed Disbursement Voucher to the Barangay

Treasurer with the Official Receipt to the Barangay Treasurer
17 Note 2. The official receipt (if applicable) shall be made as an
additional supporting document to the disbursements.

Attaches the official receipt issued by the payee/supplier to the

original DV together with the carbon copy of the check. Retains

Updated Local Treasury Operations Manual (LTOM)146

 Barangay Treasurer 18 the 2nd copy of the DV for file.

Records all the checks issued, including cancelled ones, in

correct numerical sequence in the Summary of Checks Issued
daily
Note 1. The Summary of Check Issued shall be prepared in three
19 copies to be distributed as follows:
Original – City/Municipal Accountant
2nd copy – Barangay Record Keeper
3rd copy – Barangay Treasurer

Fills out the appropriate columns of the Summary of Check Issued

based on the paid Disbursement Vouchers/Payrolls.

Sub totals the amount of the checks issued for the day
20

Records the disbursements of checks per Summary of Check

21 Issued in the “Checks/Debit Memo/Bank Statements (Out)”
column under the ‘Cash in Bank” section of the Cash on Hand
and in Bank Register
22

Totals and certifies the Summary of Check Issued weekly

Forwards three copies of the duly certified Summary of Check

Issued supported by paid Disbursement Vouchers/Payrolls,
carbon copies of the checks and supporting documents to the
23 Barangay Record Keeper

Receives the certified Summary of Check Issued and checks

completeness of supporting documents, accuracy of recording
24 and correctness of totals

Barangay Record 25
Keeper

Area of
Responsibility/Person

Updated Local Treasury Operations Manual (LTOM)147

 Responsible Seq. Activity
Barangay Record 26 Acknowledges receipt of the three copies of the Summary of
Keeper Check Issued with supporting documents and returns the 3 rd copy
to the Barangay Treasurer for his file

27 Files the original (for City/Municipal Accountant) and 2 nd copy and

the supporting documents for recording in the Check
Disbursement Register

28
Retrieves the Summary of Check Issued. Records the total
checks issued in the Check Disbursement Register, using the
Summary of Check Issued as reference and distributes the
payments made in the appropriate columns under the
“Breakdown of Expenditures” section.
Note 1. The Check Disbursement Register shall be prepared in
two copies to be distributed as follows:
Original – City/Municipal Accountant
2nd copy – Barangay Record Keeper

29
At month end, totals, rules and balances the Check Disbursement
Register

30 Retrieves the Cash on Hand and in Bank Register previous

submitted by the Barangay Treasurer

Reconciles the total checks issued in this register with the totals
31 of checks issued under column “Out” per Cash on Hand and in
Bank Register.

32 Certifies the Check Disbursement Register

33 Submits the certified Check Disbursement Register together with

the Summary of Check Issued to the City/Municipal Accountant
on or before the 5th day of the following month. Keeps 2 nd copy for
file

Updated Local Treasury Operations Manual (LTOM)148

LTO Form 63 – Summary of Cash Payment

Updated Local Treasury Operations Manual (LTOM) 149

 SUMMARY OF CASH PAYMENTS
INSTRUCTIONS
A. This form shall be
accomplished as follows:
1. SCP No. – the SCP shall be
numbered as follows:

00 00 0000
Serial number
(one series per year )
Month of Issue
Year of Issue
2. Barangay – Name of the
Brgy
3. Telephone Number – tel. no.
of barangay
4. City/Municipality –
city/municipality where the
barangay is located
5. Province – Province where
the barangay is located
6. Date – date payment was
made
7. DV/Payroll No. – number of
the paid DV/payroll
8. Payee – name of the payee
as indicated in the DV or the
first name appearing in the
payroll followed by the
word “et al”
9. Particulars – brief
description of the nature of
payments
10. Gross amount – gross
amount of DV/Payroll
11. Withholding Tax – amount
of taxes withheld
12. Net Amount – amount
actually paid
13. Certification – to be signed
by the BT
14. Acknowledgement – to be
signed by the BRK

B. This summary shall be prepared

every time a liquidation of the
payroll fund is to be made in three
copies to be distributed as follows:
Original – City/Municipal
Accountant
2nd copy – BT/AO
3rd copy – BRK

Updated Local Treasury Operations Manual (LTOM) 150

 Summary of Cash Payment
___________________________________

Barangay: City/Municipality:
Barangay Treasurer: Province:
Date DV/
Payee Particulars Gross Am
Payroll No.

Certification: Acknowledgment:

I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified
and correct records of all cash payments for the the originals of the paid DVs/Payrolls and supportin
period ______ to _______. The originals of all paid
DVs/payrolls are hereto attached.

___________________ ____________________
Barangay Treasurer Barang

Updated Local Treasury Operations Manual (LTOM) 151

LTO Form 64 – Cash Disbursement Register
CASH DISBURSEMENTS REGISTER
For the Month of January, 2007

Barangay: City/Municipality: CDReg No.

Barangay Treasurer: Province: Page No.
Payroll Fund Breakdown of Payments Deductions
Date
Particular Reference Salaries and
2007 Cash Advance Disbursements Balance Honoraria Withholding Tax
Wages - Regular

Certification :
I hereby certify to the correctness of the above data. Records are based
on the SCP submitted by the AO and that all the originals of the paid DVs/
payroll are all in my file.

______________________ ___________
Barangay Record Keeper Date

Updated Local Treasury Operations Manual (LTOM) 152

 CASH DISBURSEMENT REGISTER

INSTRUCTIONS

A This shall be accomplished as  Honoraria – amount paid

follows: to barangay officials
 Blank Columns – for
1. Month – month covered by other expenditures where
the Register no special columns have
2. CDReg No – The CDReg been provided
shall be numbered as 13. Deductions – tax withheld from
follows: salary
B. In case where more than one sheet is
00 00 0000 utilized, each sheet shall be totaled and
Serial number the totals shall be carried forward to the
(one series per year )
next sheet. The succeeding sheet shall
Month of Issue
Year of Issue
start with the totals brought forward.
C. Entries in the Register shall be based on
3. Barangay – Name of the the SCP submitted by the BT/Disbursing
Brgy Officer together with original paid
4. Telephone Number – tel. no. DV/Payroll and the SCkI for cash
of barangay advance received.
5. City/Municipality – D. At the end of the month, the amount
city/municipality where the column in this Register shall be totaled,
barangay is located balanced and ruled.
6. Province – Province where E. The Register shall be certified and
the barangay is located distributed as follows
7. Page – number assigned to Original – City/Municipal Accountant
the sheet 2nd copy – BRK
8. Date – date of the F. The certified Register shall be submitted
transaction on or before the 5th of the following
9. Particulars – brief month supported with the certified
description/nature of the SPPVC
disbursement
10. Reference –numbers of DV,
SCP as basis for the entry
11. Payroll fund
 Cash Advances –
amount received
 Disbursements –
amount disbursed
out of the cash
advance
 Balance – the
difference between
the cash advance
and disbursements
made
12. Breakdown of Expenditures
 Salaries and Wages
– Regular – amount
paid to regular
employees

Updated Local Treasury Operations Manual (LTOM) 153

LTO Form 65 – Liquidation Report

LIQUIDATION REPORT
Barangay City/Municipality: LR No.:
Accountable Officer Province: Date:
Particulars Amount

Total amount spent

Amount of cash advance per DV No.______ dated _________
Amount refunded per OR No. ______ dated __________
Amount to be reimbursed
A Certified B Certified : B Certified :
Correctness of the above data Purpose of travel/cash advance duly Supporting documents complete
accomplished

Signature:______________________ Signature:______________________ Signature:______________________

Printed Name:___________________ Printed Name:___________________ Printed Name:___________________
Position:________________________ Position:________________________ Position:________________________
Date:__________________________ Date:__________________________ Date:__________________________

Updated Local Treasury Operations Manual (LTOM) 154

 LIQUIDATION REPORT

INSTRUCTIONS

14. Box B Certified – purpose of

A. This form shall be travel/cash advance duly
accomplished as follows: accomplished – name and
signature of the PB and the
1. lR No. – the PR shall be date it was signed
numbered as follows:: 15. Box C Certified – supporting
documents complete – name
00 00 0000 and signature of the BRK and
Serial number date it was signed.
(one series per year )
Month of Issue A. This form shall be prepared in
Year of Issue
triplicate copies to be
2. Barangay – Name of the Brgy distributed as follows:
3. Telephone Number – tel. no. of Original – City/Municipal
barangay Treasurer to
4. City/Municipality – support the
city/municipality where the liquidation of the
barangay is located cash advance
5. Province – Province where the 2nd copy – BT
barangay is located 3rd copy – BRK
6. Date – date of LR preparation
7. Particulars – brief description of A. Supporting Documents
expenses incurred and detailed Invoices or OR
amount of expenses covered by
the report, as recapitulated in the B. In Case of cash advance for
CDReg travel, supporting documents
8. Amount – detailed payments shall include:
made out of the cash advance Plane/bus/boat tickets or
9. Total Amount Spent – total equivalent
payments Boarding pass
10. Amount of Cash Advance – Certificate of Appearance
amount of cash received (the
date and number of DV granting C. All advances received shall
the cash advance shall be be fully liquidated before a
indicated) new one shall be granted. Full
11. Amount Refunded – amount due accounting shall be made
for refund (amount of cash before a new/additional cash
advance less the total amount advance.
spent). An OR shall be issued for
the refund and such shall be .
recorded in the CRDReg.
12. Amount to be reimbursed –
when total payment is more than
the amount received, a new DV
shall be prepared for the
reimbursement
13. Box A certified – correctness of
the data – name and signature of
the BT-AO and the date it was
signed

Updated Local Treasury Operations Manual (LTOM) 155

LTO Form 66 – Process flow on Receipt of Barangay Cash Advance, Payment and Liquidation
of Payroll/Travel

Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Record 1 Prepares Disbursement Vouchers in three copies.

Keeper Forwards the DV together with all supporting documents to
the Barangay Treasurer.

Barangay Treasurer
Receives Disbursement Voucher in three copies duly
2 certified in Box A by the Chairman of Committee on
Appropriation as to availability of appropriations together
with all supporting documents.

3 Checks the availability of fund (cash) to support the claim

4 Signs Box B of the Disbursement Voucher/Payroll certifying

in the availability of fund (cash)

Forwards the signed Disbursement Voucher/payroll to the

5 Punong Barangay together with the supporting documents
for certification and approval.

6 Certifies the Disbursement Voucher/Payroll as to validity,

propriety and legality and approves it by signing in Box C.

Forwards the approved Disbursement Voucher/payroll to

7 the Barangay Treasurer for the preparation of the check

8 Receives the approved Disbursement Voucher/Payroll

9 Verifies completeness of signatures on the Disbursement

Vouchers/Payroll

Prepares the check in the name of the payee for the

10 amount indicated in the Disbursement Voucher/Payroll
Note 1. The check shall be prepared with a carbon copy, to
be distributed as follows:
Original – Payee

Updated Local Treasury Operations Manual (LTOM) 156

 Carbon copy – attached to Disbursement Voucher/Payroll

11 Signs the check

12 Forwards the check together with the Disbursement

Voucher/Payroll and supporting documents to the Punong
Barangay for countersignature on the check

Punong Barangay 13 Countersigns the check and returns it to the Barangay

Treasurer together with the supporting documents for
release.

Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Record 1 Prepares Disbursement Vouchers in three copies.

Keeper Forwards the DV together with all supporting documents
to the Barangay Treasurer.
Barangay Treasurer
2 Receives Disbursement Voucher in three copies duly
certified in Box A by the Chairman of Committee on
Appropriation as to availability of appropriations together
with all supporting documents.

3 Checks the availability of fund (cash) to support the claim

4 Signs Box B of the Disbursement Voucher/Payroll

certifying in the availability of fund (cash)

5 Forwards the signed Disbursement Voucher/payroll to the

Punong Barangay together with the supporting documents
for certification and approval.

6 Certifies the Disbursement Voucher/Payroll as to validity,

propriety and legality and approves it by signing in Box C.

7 Forwards the approved Disbursement Voucher/payroll to

the Barangay Treasurer for the preparation of the check

8 Receives the approved Disbursement Voucher/Payroll

Verifies completeness of signatures on the Disbursement

9 Vouchers/Payroll

Prepares the check in the name of the payee for the

10 amount indicated in the Disbursement Voucher/Payroll
Note 1. The check shall be prepared with a carbon copy,

Updated Local Treasury Operations Manual (LTOM) 157

 to be distributed as follows:
Original – Payee
Carbon copy – attached to Disbursement Voucher/Payroll

Signs the check

Punong Barangay 11
Forwards the check together with the Disbursement
12 Voucher/Payroll and supporting documents to the Punong
Barangay for countersignature on the check

Countersigns the check and returns it to the Barangay

13 Treasurer together with the supporting documents for
release.

Updated Local Treasury Operations Manual (LTOM) 158

 Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Record 25 Records all the payments made in the “Disbursement”

Keeper column under the “Payroll Fund” section and shows the
“Breakdown of Expenditures”.
Note 1. The Cash Disbursement Register shall be
prepared in two copies to be distributed as follows:
Original – City/Municipal Accountant
2nd copy – Barangay Record keeper

27 Totals, balances and rules the Cash Disbursement

Register at the end of the pay period

Submits the certified Cash Disbursement Register

28 together with the Summary of Cash Payments to the
City/Municipal Accountant on or before the 5 th day of the
following month. Keeps a 2nd copy for file.

Updated Local Treasury Operations Manual (LTOM) 159

LTO Form 67 – Petty Cash Voucher (Barangay)

Updated Local Treasury Operations Manual (LTOM) 160

 PETTY CASH VOUCHER
No.:

LGU Date:
Barangay : City/Municipality:
Petty Cash Cust.: Province:

I. To be filled up upon request II. To be filled up upon liquidation

Particulars Amount
Total Amount Granted

Total Amount Paid per

OR No. ____________

Amount Refunded/
(Reimbursed)

A Requested by: C
Received Refund

Name of Requestor Reimbursement Paid

Approved by:

Disbursing Officer
Punong Barangay Petty Cash Custodian

B Paid by: D
Liquidation Submitted:

Disbursing Officer Reimbursement Received by:

Cash Received by:

Signature over Printed Name of Payee Signature of Payee

Date: _________________ Date: ___________________

Updated Local Treasury Operations Manual (LTOM) 161

Updated Local Treasury Operations Manual (LTOM) 162
LTO Form 68 – Summary of Paid Petty Cash Voucher

Summary of Paid Petty Cash Vouchers

____________________________________

Barangay: City/Municipality: SPPCV No.:

Barangay Treasurer: Province: Page:
Date
PCV No. Payee Particulars Amounts

Certification: Acknowledgment :
I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SPPCVs
and correct records of all payments from the Petty Cash complete with the originals of the paid PCVs and
Fund for period ______ to _________. The originals of supporting documents.
the paid PCVs and supporting documents are hereto
attached.

__________________ __________________
Petty Cash Fund Custodian Barangay Record Keeper

Updated Local Treasury Operations Manual (LTOM) 163

 SUMMARY OF PAID PETTY CASH VOUCHERS
INSTRUCTIONS
A. This form shall be
accomplished as follows:
1. SPPCV No. – the SPPCV
shall be numbered as
follows:

00 00 0000
Serial number
(one series per year )
Month of Issue
Year of Issue
2. Page – page number
3. Barangay – name of
barangay
4. Barangay treasurer – name
of designated barangay
treasurer
5. City/Municipality –
city/municipality where the
barangay is located
6. Province – province where
the barangay is located
7. Date – date the PCV was
paid
8. PCV No. – number of the
paid PCV
9. Payee – name of the payee
10. Particulars – brief
description of the nature of
payments
11. Amount – amount paid
12. Certification – to be signed
by the PCFC
13. Certification – to be signed
by the PCFC
14. Acknowledgement – to be
signed by the BRK

B. It shall be prepared in three

copies to be distributed as
follows:
Original – City/Municipal
Accountant
2nd copy – BRK
3rd copy – PCFC

Updated Local Treasury Operations Manual (LTOM) 164

LTO Form 69 – Petty Cash Fund Register (Barangay)

Updated Local Treasury Operations Manual (LTOM) 165

 PETTY CASH FUND REGISTER
_______________________________________
Period

Barangay: City/Municipal:
Tel. No.: Province: B
PETTY CASH FUND Breakdown of Dis
(104) MAINTENANCE AND OTHER OPERATING EXPE
Ref. Particulars
Traveling Office Gasoline, Telephone
Receipts Payments Balance Expenses - Supplies Oil & Expenses -
Local Expenses Lubricants Mobile
Date

Certification: Acknowledgement:
I hereby certify to the correctness of the above data. Entries are
based on the certified SPPCVs. Original of the unreplenished PCVs are all in my file. I hereby acknowledge receipt of the

_____________________ _________________
Petty Cash Fund Custodian Date Barangay Record Ke
 PETTY CASH FUND REGISTER

INSTRUCTIONS

A This shall be accomplished as  Travelling expenses local

follows: – amount paid for local
travel
1. Month – month covered by  Office supplies expense –
the Register amount paid for office
2. PCFRReg No – The supplies purchased
PCFRReg shall be  Fuel, oil and lubricants
numbered as follows: expenses – amount paid
for fuel, oil & lubricants
00 00 0000  Telephone expense
Serial number mobile – amount paid for
(one series per year )
Month of Issue mobile phone
Year of Issue 13 Others – accounts classification –
specific account title and amount –
3. Page – number assigned to amount paid
the sheet B. A recapitulation of “others” column shall
4. Barangay – name of be made at the bottom of the page
barangay C. Enrtries in the PCFReg shall be based on
5. Telephone number – the SPPCV together with the original paid
telephone number of PCVs and its supporting documents
barangay D. In cases where more than one sheet shall
6. City/Municipality – be utilized, each sheet shall be totaled and
city/municipality where the the totals shall be carried forward to the
barangay is located next sheet. The succeeding sheet shall start
7. Province – province where with the totals brought forward.
the barangay is located E. At the end of the month, the amount
8. Date – date of the PCV and columns in the Register shall be totaled,
replenishment balanced and ruled
9. Reference – number of F. The registers shall be certified and
SPPCV/SCkI distributed as follows:
10. Particulars – details or Original – City/Municipal Accountant
nature of transactions 2nd copy – PCFC
11. Petty Cash Fund 3rd copy – BRK
 Receipts – amount G. The certified Register shall be submitted
of PCF to the City/Municipality Accountant on or
established/replenis before the 5th of the following month
hed supported with the certified SPPCV
 Payments – amount
of disbursed out of
the PCF
 Balance – the
difference between
the receipts and
payments
12 Breakdown of Expenses
 Maintenance and
Other Operating
Expenses

Updated Local Treasury Operations Manual (LTOM) 167

LTO Annex 70 – Process Flow on Establishment of Petty Cash Fund, Payment and
Liquidation of PCF
Area of
Responsibility/Person
Responsible Seq. Activity

A Receipt of the authority as Petty Cash Fund

Custodian and Establishment of Petty Cash Fund

Receives the approved Sangguniang Bayan Resolution

Petty Cash Fund 1 designating the Barangay Treasurer or an official as
Custodian Petty Cash Fund Custodian

2 Forwards the documents to the Barangay Record Keeper

for the preparation of the Disbursement Voucher for the
establishment of Petty Cash Fund.

3 Prepares Disbursement Vouchers in three copies.

Forwards the DV together with all supporting documents
to the Barangay Treasurer.
Barangay Record
Keeper
4 Receives Disbursement Voucher in three copies duly
certified in Box A by the Chairman of Committee on
Appropriation as to availability of appropriations together
Barangay Treasurer with all supporting documents.

5 Checks the availability of fund (cash) to support the claim

6 Signs Box B of the Disbursement Voucher/Payroll

certifying in the availability of fund (cash)

Forwards the signed Disbursement Voucher/payroll to

7 the Punong Barangay together with the supporting
documents for certification and approval.

8 Certifies the Disbursement Voucher/Payroll as to validity,

propriety and legality and approves it by signing in Box
C.

9
Forwards the approved Disbursement Voucher/payroll to
the Barangay Treasurer for the preparation of the check
10
Punong Barangay
Receives the approved Disbursement Voucher/Payroll

Updated Local Treasury Operations Manual (LTOM) 168

 11
Verifies completeness of signatures on the Disbursement
Vouchers/Payroll

Area of
Responsibility/Person
Responsible Seq. Activity

Barangay Treasurer 12 Prepares the check in the name of the payee for the
amount indicated in the Disbursement Voucher/Payroll
Note 1. The check shall be prepared with a carbon copy,
to be distributed as follows:
Original – Payee
Carbon copy – attached to Disbursement
Voucher/Payroll

13
Signs the check

14
Forwards the check together with the Disbursement
Voucher/Payroll and supporting documents to the
Punong Barangay for countersignature on the check

Punong Barangay 15 Countersigns the check and returns it to the Barangay

Treasurer together with the supporting documents for
release

Barangay Treasurer 16 Receives and releases the check to the payee. Attaches
the carbon copy of the check to the paid Disbursement
Voucher/Payroll
17
Receives and encashes the check

Petty Cash Fund B Request for cash from Petty Cash fund
Custodian
18 Prepares the Petty Cash Voucher and signs the
requested by portion of Box A
Requesting Official/Staff Note 2. The Petty Cash Vouchers shall be prepared in
two copies to be distributed as follows:
Original – to support the Summary of Paid Petty Cash
Vouchers
2nd copy – Requesting Official

Forwards the signed Petty Cash Voucher to the Punong

Updated Local Treasury Operations Manual (LTOM) 169

 19 Barangay for approval.
Punong Barangay
Signs the approved by portion of Petty Cash Vouchers
20
Forwards the Petty Cash Vouchers to the Petty Cash
Fund Custodian for payment
21
Petty Cash Fund
Custodian Pays the amount and signs the paid by portion of Box B
22

Requesting Official/Staff Receives the amount and signs the received by portion
23 of Box B

Returns the signed Petty Cash Voucher to Petty Cash

24 Fund Custodian and retains 2nd copy for file

Area of
Responsibility/Person
Responsible Seq. Activity

Requesting Official/Staff 25 Submits to the Petty Cash Fund Custodian the

Invoice/Official Receipt and other evidence supporting
the disbursement
Petty Cash Fund
Custodian
26 Retrieves documents and other evidence of
payments/disbursements

27 Retrieves the original petty cash vouchers and computes

the amount due to/from the recipient of the fund

Reimburses the requesting official/staff for the advances

28 made, if any and signs Box C
Note 3. In case the PCF received exceeds the
disbursements made, the requesting officials shall return
29 the excess to the PCFC and signs Box C.

Signs Box D for the reimbursement received or

30 liquidations made and returns the original of PCV to
PCFC

31
Records all paid PCVs in the Summary of Paid Petty
Cash Vouchers in chronological orders

Updated Local Treasury Operations Manual (LTOM) 170

 Note 1. The Summary of Paid Petty Cash Vouchers in
three copies to be distributed as follows:
Original – attached to DV for replenishment
2nd copy – Barangay Record Keeper
3rd copy – Petty Cash Fund Custodian

32
Records Payments made in the amount column of the
Summary of Paid Petty Cash Vouchers

33 Totals, rules and certifies the Summary of Paid Petty

Cash Vouchers

34 Records the checks received for petty cash under the

“Receipts” column in the “Petty Cash Fund” section of the
Petty Cash Fund Register. Fills out the date and
reference columns for the date and the Summary of
Check Issued check numbers

35 Records the paid Petty Cash Vouchers as shown in the

Summary of Paid Petty Cash Vouchers in the “Payment”
column under the Petty Cash Fund section of the Petty
Cash Fund Registers. Distributes the breakdown of
expenses in the appropriate columns.

Totals, rules and balances the Petty Cash Fund

36 Registers at month end
Recapitulates all entries in the “Others” column
Note 1. the Petty Cash fund Register shall be prepared
in three copies to be distributed as follows:

Updated Local Treasury Operations Manual (LTOM) 171

LTO Form 71 – Inspection and Acceptance Report

INSPECTION AND ACCEPTANCE REPORT

Barangay City/Municipality:
Tel No.: Province:
Supplier: Invoice No.: IAR No.: RIS No.:
PO NO.: Date: Date: Date: Date:
Unit Description Quantity

Inspection Acceptance

Date inspected: Date received:

_____ Inspected, verified as to quantity and specifications ______ Complete

______ Partial (Pls. specify quantity received)

_______________________________ _______________________________
Signature over Printed Name Signature over Printed Name
Authorized Inspector Authorized Inspector

Updated Local Treasury Operations Manual (LTOM) 172

 INSPECTION AND ACCEPTANCE REPORT

INSTRUCTIONS

A. This form shall be B. The receiving Barangay

accomplished as follows: Official shall acknowledge
receipt of the items by
1. Supplier – name of the supplier placing his name and
2. PO No. – number of the PO signature on the
3. Date – date of the PO “Acceptance” box. He shall
4. Invoice No. – number of the indicate whether the delivery
suppliers invoice is complete or partial by
5. Date – date of the invoice putting a check mark on the
6. IAR No. – the IAR shall be boxes provided. The date of
numbered as follows: receipt shall also be indicated

00 00 0000 C. The IAR shall form part f the

Serial number supporting documents to the
(one series per year ) claim of the supplier for
Month of Issue payment
Year of Issue

7. Date – date of IAR preparation D. Disbursement Voucher shall

8. RIS No. – the number of the RIS be prepared only for the items
9. RIS Date – the date of the RIS delivered. Undelivered items,
10. Unit – unit of measurement such although covered by PO,
as ream, box roll, etc. for the shall not paid.
items delivered
11. Description – brief description
or details of the items delivered
12. Quantity – number of units
delivered

B. This form shall be prepared in

triplicate copies to be
distributed as follows:
Original – BRK to support the
DV for payment
2nd copy – City/Municipal
Accountant
3rd copy – BRK
4th copy – BT
C. The “Inspection” box shall be
signed by the authorized
Inspection Officer who conducted
the inspection. The date of
inspection shall also be indicated.

Updated Local Treasury Operations Manual (LTOM) 173

 INVOICE RECEIPT OF TRANSFER OF ACCOUNTABILITIES
I. DEPOSITORY ACCOUNTS: AMOUNT TOTAL
A. CASH IN TREASURY/CASH IN VAULT
GENERAL FUND Php  
TRUST FUND Php  
SPECIAL EDUCATION FUND Php   Php  
B. CASH IN BANK
GENERAL FUND Php  
TRUST FUND Php  
SPECIAL EDUCATION FUND Php   Php  
II. INVESTMENT ACCOUNTS
A. CERTIFICATE OF TIME DEPOSITS
Date of Security Term/Rate Maturity Date Principa
l
Placement
        Php  
         

Use separate sheet/s if necessary

B. TREASURY BILLS
Date of Term/Rate Maturity
Placement
     
     
C. STOCK CERTIFICATES
Name of Stock Certificate No. No. of Shares Amount
         
         
III. ACCOUNTABLE FORMS
Serial Numbers No. of Pads Quantit
y
Accountable Form No. 51-Continous Form      
Accountable Form No. 51-Padded      
Form
Accountable Form No. 51-Brgy.      
Community Tax Cert. (Indiv.)      
Community Tax Cert. (Corp.)      
Cash Tickets      
Other Afs (pls. specify)      

Use separate sheet/s if necessary

Blank Unissued Checks (All Funds)
Acct # ___________________      
Acct # ___________________      
IV. OTHERS
1. Property
2. Duplicate Combinations of Accountable Officers Safe
3. Outstanding Checks Check No./Date Payee Amount
     
     

Use separate sheet/s if necessary

Updated Local Treasury Operations Manual (LTOM) 174

 CERTIFICATION
I hereby certify that I have this ____ day of I hereby certify that I have this ____ day of
___________, transferred to my successor ____________, actually received from my
________________________, the items predecessor, _____________________, all
the
described above as of _______________ items described above, as of
_______________
the date of the transfer of accountability. the date of transfer of accountability.
       
Outgoing P/C/M Treasurer Incoming P/C/M Treasurer
SIGNED IN THE PRESENCE OF:
   
COA Representative BLGF Representative

Updated Local Treasury Operations Manual (LTOM) 175

 BLGF CENTRAL OFFICE DIRECTORS

JOCELYN [Link]
OIC – Executive Director

ATTY. FLOSIE F. FANLO TAYAG, CESO IV JOSE ARNOLD M. TAN, CESO V

Deputy Executive Director for Administration Deputy Executive Director for Operations

ARMI M. ADVINCULA, CESE MA. PAMELA P. QUIZON

Director II OIC – Director
Administration, Financial and Management Service Local Fiscal Policy Service

NIÑO RAYMOND B. ALVINA

Director II
Local Government Units Operations Service

TECHNICAL WORKING GROUP:

CONSOLACION Q. AGCAOILI DIVINA M. CORPUZ

OIC – Regional Director OIC – Regional Director
BLGF Region I BLGF Region III

GUALBERTO B. BERNAS IV AMALIA C. SANTOS

OIC – City Treasurer Parañaque City OIC – City Treasurer, Makati City

ENCARNACION E. SANTIAGO JOSEPHINE A. ASEO

OIC – City Treasurer, Navotas City OIC – Chief
Local Treasury Operations
Division

TOMAS R. CARILLO BRENDA L. MIRANDA

Chief OIC – Chief
Policy, Planning, Programming and Standard Division Local Debt Monitoring and
Evaluation Division

RODERIC R. RAÑESES ALJIENAR J. BALIWAG

Local Treasury Examiner II Administrative Assistant III

Updated Local Treasury Operations Manual (LTOM) 176

 BLGF REGIONAL DIRECTORS

MR. CARMELANE G. TUGAS MS. CONSOLACION Q. AGCAOILI

OIC-Regional Director OIC-Regional Director
BLGF CAR BLGF Region 1

MS. TERESITA S. ATUEL MS. DIVINA M. CORPUZ

OIC-Regional Director OIC-Regional Director
BLGF Region II BLGF Region III

MR. GEORGE T. ROMA MS. AIDA D. ABREGANA

OIC-Regional Director OIC-Regional Director
BLGF Region IV-A (CALABARZON) BLGF Region IV-B (MIMAROPA)

MR. RICARDO T. CAWED MR. GILBERT B. GUMABAY

OIC-Regional Director OIC-Regional Director
BLGF Region V BLGF Region VI

MS. MERCY N. SANTOS MR. PETER PAUL D. BALUYAN

OIC-Regional Director OIC-Regional Director
BLGF Region VII BLGF Region VIII

MS. REMA E. CALDERON MR. HERMINIGILDA G. GARSULA

OIC-Regional Director OIC-Regional Director
BLGF Region IX BLGF Region X

MS. LUNINGNING R. LLANTO MS. TESSIE S. MANGACCAT

OIC-Regional Director OIC-Regional Director
BLGF Region X BLGF Region XI

MR. EDUARDO L. DEL ROSARIO

OIC-Regional Director
BLGF Region XIII

Updated Local Treasury Operations Manual (LTOM) 177

CONTRIBUTORS:

ANASTACIA R. LLANETA
Financial Analyst IV, BLGF Region 5 ILUMINADA B. DIMAYUGA
Local Assessment Operations Officer IV
CYNTHIA G. FAURILLO BLGF Region 4-A
Local Treasury Operations Officer IV DENNIS T. CUNAG
BLGF Region 5 Local Treasury Operations Officer IV
BLGF Region 4-B
NEMIA D. SEGOVIA
Local Treasury Operations Officer IV TROADIO P. BARRADAS
BLGF Region 5 Local Treasury Operations Officer IV
BLGF Region 4-B
MARIA RHODORA C. GASCON
Financial Analyst IV, BLGF Region 6 EILEEN M. VILLAGRACIA
Special Investigator III BLGF
JUNE ANN C. ABELLA Region XI
Financial Analyst IV, BLGF Region 7
LINA R. REOYAN
MARILOU Q. CAÑETE Asst. Provincial Treasurer, Masbate
Local Treasury Operations Officer IV
BLGF Region 7 CONCEPCION M. BENAVIDEZ
Municipal Treasurer, Virac, Catanduanes
LILIAN B. AGTULAO
Local Treasury Operations Officer III AMIE C. CASTELO
BLGF CAR Asst. Municipal Treasurer, Tiwi, Albay

SUSAN S. NISPEROS NILDA V. GENEROSO

Local Treasury Operations Officer IV Provincial Treasurer, Negros Occidental
BLGF Region I
ROSALIA C. AGUILING
CATHERINE B. GUTIERREZ Acting Asst. Provincial Treasurer, Iloilo
Local Treasury Operations Officer III
BLGF Region I ATTY. AMY GRACE O. BOLIVAR
City Treasurer, San Carlos City
MAYVELYN N. RODRIGUEZ
Local Treasury Operations Officer III ELSIE S. JIMENEA
BLGF Region I City Treasurer, Silay City

MARILYN F. RONQUILLO MA. CRISTINA G. FUENTES

Financial Analyst IV, BLGF Region I City Treasurer, Cadiz City

LINA T. DIVINA AYLIN C. PARADO

Local Treasury Operations Officer III Asst. Municipal Treasurer, Consolacion, Cebu
BLGF Region III
DELIA C. VILBAR
ENGRACIO S. MAGSINO JR. Asst. City Treasurer, Ormoc City
Local Treasury Operations Officer III
BLGF Region III ZOSIMA A. CORDANO
City Treasurer, Tacloban City
NORMA M. MALLARE
Local Treasury Operations Officer IV ELIZABETH A. LIM
BLGF Region 4-A City Treasurer, Catbalogan City

Updated Local Treasury Operations Manual (LTOM) 178

HARRIET I. FLORENCIO ALEX B. CABARRUBIAS
Municipal Treasurer, Barauen, Leyte Asst. City Treasurer, Baguio City

CHARITA B. PACAYRA JOSEPHINE P. CALAJATE

Municipal Treasurer, Calbiga, Samar Provincial Treasurer, Ilocos Norte

LIBERTO Y. YUSORES ROMELITA F. ALCANTARA

OIC-Municipal Treasurer, Caramoran, City Treasurer, Dagupan City
Catanduanes
JOSEFINA J. CARANTO
REYMUNDO F. QUIÑONES City Treasurer, San Carlos City
Municipal Treasurer, Gubat, Sorsogon
EDMAR C. LUNA
AUGUSTO CEASAR E. ERMIÑO City Treasurer, San Fernando City
Asst. Municipal Treasurer, Gubat, Sorsogon
NENITA B. COLOMA
DIOSDADO V. LLOSALA Municipal Treasurer Solsona, Ilocos Norte
Municipal Treasurer, Castilla, Sorsogon
SEGUNDINO O. URBANO
Municipal Treasurer, Nueva Era, Ilocos Norte
RICARDO E. BADILLO
ICO-City Treasurer, Masbate City AMI RUEL S. COLOMA
Municipal Treasurer, Pinili, Ilocos Norte
REY C. VILLARUEL
OIC-Municipal Treasurer, Kalibo, Aklan HUBERT MAURICIO A. PAZ
Municipal Treasurer, Bantay, Ilocos Sur
RIC D. TAN
Provincial Treasurer, Siquijor
ISIDRO II A. FERNANDEZ
Municipal Treasurer, Umingan, Pangasinan
ATTY. REGAL M. OLIVA
City Treasurer, Mandaue City
JULIET G. QUINSAAT
City Treasurer, Angeles City
ALLAN G. VALENCIANO
Provincial Treasurer, Northern Samar
ELVIRA M. REYES
MERLINDA L. MARQUEZ City Treasurer, Tagaytay City
Municipal Treasurer, Malitbog, Southern Leyte
[Link] C. NAPALAN
GERARDO AVORQUE City Treasurer, Bacoor City
ICO-Provincial Treasurer, Leyte
FERNANDO M. MANZANERO
ISABELO B. BELISARIO Asst. City Treasurer, Tanauan City
Acting Assistant Provincial Treasurer
ARJAN V. BABANI
WILMA K. IKITAN ICO-City Treasurer, San Pablo City
Municipal Treasurer, Calanasan, Apayao

IMELDA I. MACANES ALEXANDER L. BEJOSANO

Provincial Treasurer, Benguet Municipal Treasurer, Los Baños, Laguna

STEAWART B. BACCAY MINERVA V. BOONGALING

Acting Provincial Treasurer, Ifugao Municipal Treasurer, Pagsanjan, Laguna
CAWED A. GAMONNAC
MOHAYLA B. AMUD
Provincial Treasurer, Mt. Province
Local Treasury Operations Officer IV,

Updated Local Treasury Operations Manual (LTOM) 179

BLGF Region IX

JEAN B. DAANG
Local Treasury Operations Officer IV
BLGF Region X
LYDIA R. PADILLA
Local Treasury Operations Officer II
BLGF Region XI
MIMBAI M. MANGELEN
Local Treasury Operations Officer IV
BLGF Region XII MERLINA G. CABALLERO
City Treasurer, Island Garden City Of Samal
JESSIE A. CONCEPCION
Provincial Treasurer, Zamboanga Del Norte MARTHA FLOR D. DE RAMOS
Municipal Treasurer, Sto. Tomas, Davao Del
SUSAN S. YAMBA Norte
Provincial Treasurer, Zamboanga Del Sur
ALEXANDER U. DIMAPORO
JOJO M. MAR Municipal Treasurer, Amai Manabilang, Lanao
OIC – Provincial Treasurer, Tawi-Tawi Del Sur

SANCEN D. CARORO MARLOUN C. GUMBAO

City Treasurer, Dipolog City City Treasurer, Koronadal City

PURA R. NUÑAL RODILON G. LACAP

City Treasurer, Isabela City ICO – City Treasurer, General Santos City

GLENN C. BAÑEZ MANOLITO S, FILIPINAS

OIC – City Treasurer, Cagayan De Oro City Provincial Treasurer, Cotabato Province

LOUELA S. MAYBITUIN PERLITA S. SEARES

City Treasurer, Iligan City OIC – Provincial Treasurer, Sultan Kudarat
Province
MILDRED J. HINGCO
Provincial Treasurer, Lanao Del Norte TADJUDIN A. BATUA-AN
OIC – Provincial Treasurer, Lanao Del Sur
ELMA B. GULA
Provincial Treasurer, Misamis Occidental ALVIN G. ELORDE
OIC – Provincial Treasurer, Agusan Del Sur
MERCELITA A. BARAN
Municipal Treasurer, Lala, Lanao Del Norte ANNABELLE S. NALUAN
Provincial Treasurer, Dinagat Islands
JUAN DESIDERIO U. PANADERO
Municipal Treasurer, San Fernando, Bukidnon MA. GAY Y. COTIANGCO
ICO – Provincial Treasurer, Surigao Del Norte
REGINA C. RICAFORT
Provincial Treasurer, Davao Del Norte JINKY H. LADIA
Acting Assistant City Treasurer, Bayugan City
MA. LYDIA M. ELLICA
ICO – Provincial Treasurer, Davao Del Sur MA. REMA Q. CABUSAO
Acting Assistant City Treasurer, Butuan City
ADELINDA B. AMACNA
Provincial Treasurer, Davao Oriental

Updated Local Treasury Operations Manual (LTOM) 180

REFERENCES

1. The Local Government Code of 1991, Annotated, Jose A. Nolledo, 1993 Reprint with
August 1993 Addendum;

2. Local Government Taxation ( Philippine Laws on Local Government Finance),

Vol. III, Annotated, Sofronio B. Ursal, 1992;

3. Philippine Law on Local Government Taxation, Annotated, Sofronio B. Ursal, 2000;

4. Real Property Taxation, Annotated, Atty. Florecita P. Flores and Antonio A. Avila, Jr.,
First Edition, 2002;

5. Local Taxation and Fiscal Matters, Book II, LGC of 1991, PACTAA, Inc., 1992;

6. Local Government Code of the Autonomous Region in Muslim Mindanao (Muslim

Mindanao Autonomy Act No. 25);

7. Decentralization in the Philippines – Strengthening Local Government Financing

and Resource Management in the Short-Term, Joint Document of the World Bank
and Asian Development Bank, March 31, 2005;

8. Omnibus Election Code of the Philippines (BP 881), Commission on Elections

(COMELEC), 1992;

9. Omnibus Rules Implementing Book V of EO 292, as Amended by MC No. 41, s.

1998, Civil Service Commission (CSC);

10. State Audit Code (Government Auditing Code of the Philippines or PD 1445),
Reprinted 1999, Accounting and auditing Development Office, Commission on Audit
(COA);

11. Government Accounting and Auditing Manual (GAAM), Vol. 1, Government

Auditing Rules and Regulations, COA, 1992;

12. Government Accounting and Auditing Manual (GAAM), Vol. 2, Government

Accounting, COA, 1992;

13. Government Accounting and Auditing Manual (GAAM), Vol. 3, Government

Auditing Standards and Procedures, and Internal Control System, COA, 1992;

14. Manual on the New Government Accounting System (NGAS) for Local
Government Units, Vol. I – III, Professional Development Center, COA, 2002;

15. Updated Description of Accounts under the NGAS (COA Circular No. 2004-008),
Sept. 20, 2004;

16. 2005 IFAC Handbook of International Public Sector Accounting Standards

(IPSAS);

17. Handbook on the Implementing Rules and Regulations (IRR) to the Government
Procurement Reform Act (RA No. 9184);

18. Updated Budget Operations Manual (UBOM) for Local Government Units,
Department of Budget and Management (DBM), June 2005;
 19. Management Services, Part II, 2nd Ed., Nenita Angeles Deaño-Mejorada, 1993;

20. Manual on Certificate of Settlement and Balances, Revised 1993, COA, 1993;

21. Rules Implementing the Barangay Micro-Business Enterprises (BMBE Act of

2002 or RA 9178), Department of Finance (DOF) Order No. 17-04;

22. Local Administrative Regulation (LAR) No. 1-85, DOF, 1985;

23. Training Handbook on Cash Management and Control System, Professional

Development Center, COA, May 2004;

24. Training Handbook on Internal Control Structure, Professional Development

Center, COA, Nov. 2002;

25. Training Handbook on Risk Management, Professional Development Center, COA,

Dec. 2004;

26. Revenue Audit Manual for Local Governments, Vol. I, COA, 1997;

27. DOF Circulars, Memoranda, Opinions, and Rulings, various years;

28. BLGF Circulars, Memoranda, Circular Letters, Opinions, and Rulings, various
years;

29. COA Circulars and Memoranda, various years.

Updated Local Treasury Operations Manual (LTOM) 182