On March 8, 2021, the Commission on Audit (COA) and the Department of Budget and Management (DBM) issued a Joint Circular (JC) prescribing the updated policies of the government with regards to accounts payables (A/Ps) that remain outstanding for two (2) years or more.
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The newly-issued JC aims to prescribe implementing guidelines for Executive Order No. 87 which was signed by President Duterte on August 13, 2019.
All accounts payable of national government agencies (NGAs) and government-owned and controlled corporations (GOCCs) maintaining Special Account in the General Fund (SAGF) are covered by the JC except for: 1) trust or fiduciary funds for as long as the purposes for its creation have not been accomplished; and 2) A/Ps corresponding to Foreign-Assisted Projects for the duration of the said projects.
What are A/Ps?
A/Ps are valid and legal obligations of NGAs/GOCCs for which goods/services/projects have been delivered/rendered/completed and accepted regardless of the year when these obligations were incurred.
[You May Want to Know: What’s the difference between Due and Demandable Accounts Payable and Not Yet Due and Demandable Obligations]
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What do Agencies concerned need to do?
All government entities concerned are required to prepare an inventory of A/Ps incurred in FY 2017 and years prior thereto, as of December 31, 2020.
The inventory shall reflect the name of creditor, Obligation Request and Status (ORS) Number, allotment class, funding source, year of incurrence and obligations, etc., and shall be submitted to DBM and COA not later than June 30, 2021.
The inventory shall serve as one of the bases for reversion of the A/P and for the purpose of payment after reversion, subject to agency validation procedures.
All valid A/Ps, for FY 2017 and prior years thereto, are required to be reverted in the Accumulated Surplus/(Deficit) account on or before the end of 2021.
Valid claims after reversion
If there are legitimate claims after reversion of prior years’ A/Ps, government agencies concerned may pay said claims to be charged against the Contingent Fund, subject to validation by the DBM, and/or the specific budget of the agency concerned under succeeding year’s annual General Appropriations Act (GAA).
However, the JC provides that while these prior years’ A/Ps may be paid, this shall in no way be construed as authority to revive or validate claims and accounts payable that are already barred by prescription or disallowed by final judicial or administrative determination.
Accounting procedures for the reversion of A/Ps to the Accumulated Surplus/Deficit account
Item 5.2 of the JC states that to effect the reversion of A/Ps to the Accumulated Surplus/(Deficit) account, a Journal Entry Voucher (JEV) shall be prepared.
A copy of the JEV, certified by the Chief Accountant and supported with List of Reverted A/Ps (see Annex A of the JC), shall be submitted to DBM and GAS-COA.
The Accounting Unit shall furnish the Budget Unit copies of JEV for the reversion of A/Ps, to adjust the Registry of Allotments, Obligations and Disbursements (RAOD) and ORS.
The Chief Accountant shall record the reverted A/Ps to the Registry of Reverted Accounts Payable (RRAP) (see Annex B of the JC). The registry shall be maintained by the Accounting Division/Unit.
Agencies may refer to Annex C of the JC for the pro-forma entries to be used from reversion to payment of valid claims.
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What do claimants need to do in order to be paid?
Reverted A/Ps may still be paid subject however to the conditions prescribed under the JC.
The claimants need to take the initiative to file their requests with the agency concerned. They are required to submit pertinent documents as provided in the JC, subject to validation by the agency concerned. After validation, the agency concerned shall submit request for funding from the DBM, subject further to the submission of required supporting documents.
The Special Allotment Release Order (SARO) issued by the DBM to cover the obligation for the valid claim cannot be used for other purposes. The SARO is likewise valid only during the year it is issued. Thus, if for any reason, the allotment was not obligated before it expires, the same will no longer be re-issued by the DBM.
Henceforth…
The policies provided in the JC have a continuing effect. Meaning, for the succeeding years, agencies shall pay only those A/Ps which are outstanding for less than two (2) years, except those pertaining to exemptions as mentioned in the JC.
[Download COA-DBM Joint Circular No. 1, series of 2021, dated March 8, 2021]
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Open Forum
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Does E.O. No. 87 covers GOCCs with own Corporate Operating Budget?