1. An NCA is a disbursement authority issued by the Department of Budget and Management (DBM) to the authorized government servicing bank (AGSB) of a government agency to cover its operating requirements (i.e., payment of salaries, allowances, and benefits of employees, payment of regular maintenance and operating expenses, payment of obligations on infrastructure projects, etc.) or the amount of cash requested to cover a specific purpose (i.e., payment of prior year’s accounts payable, payment of additional employee benefits, etc.).
2. Simultaneously, the DBM issues to the agency an Advice of NCA Issued (NCA), along with a monthly crediting schedule, to inform the government agency of the amount deposited in its Modified Disbursement System (MDS)-sub account.
3. Written on the NCA, ANCAI and the attached schedules, is the period on which the cash allocated to the agency can be spent. Usually, cash allocation is credited in the account of the agency on the first banking day of the first month of the quarter and valid until the end of the quarter. For other requests, cash allocation is credited depending on the program set by the agency as shown in its Monthly Disbursement Program (MDP).
4. The MDP, also known as Budget Execution Document (BED) No. 3, serves as one of the bases of DBM in computing and crediting the cash requested by the agency. Just the same, the cash allocation credited is valid until the end of a quarter, or on a period set by the agency or the DBM.
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5. The quarterly lapsing of NCA is not fixed. In previous years, there were times when NCA lapsing was done on a monthly basis, and there times when it was done per semester. This sometimes depend on the cash reserves of the National Treasury.
6. The NCA/ANCAI provides the cash disbursement ceiling/limit for which the AGSB can release and the government agency can spend, respectively. This means that the bank cannot release cash in excess of the amount written in the NCA. Similarly, the agency cannot disburse in excess of the amount provided in the ANCAI.
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7. Unlike cash or commercial checks, an NCA cannot be deposited in banks other than the AGSBs such as the Landbank of the Philippines (LBP), Development Bank of the Philippines, and Philippine Veterans Bank (PVB). However, some government agencies maintain accounts in banks other than the AGSBs inasmuch as their funds are not maintained under the MDS.
8. Likewise, the cash allocation to the agency cannot be encashed unless an MDS Check or an Authority/Advice to Debit Account (ADA) is presented to the AGSB. Sometimes, the cash allocation within a Department may also be transferred from one operating unit to another using a Notice of Transfer Allocation (NTA). However, the use of NTA is greatly discouraged by the Commission on Audit (COA) and DBM.
9. The NCA is printed on a security paper (SECPA) controlled by the DBM and originally signed by the DBM Secretary or his/her authorized representative. The DBM Regional Offices are authorized to issue NCAs. On the other hand, the ANCAI is printed in a regular bond paper, likewise originally signed by DBM Secretary or his authorized representative and contain security features to prevent falsification.
10. Under the Common Fund System, the cash allocation issued during the current year is allowed to be used to pay prior years’ accounts payable, provided all mandatory obligations have been paid first.
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