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A little conversation:
Boss: Dumating na NCA natin? (Have we received our NCA?)
Accountant: Wala pa tayong NCA, Boss! (We do not have NCA yet, Boss!)
At the end of the quarter:
Accountant: Boss, meron pa tayong P25,000 na natitirang NCA. Maglalapsed po ito kung di natin magamit. (Boss, we still have P25,000.00 left in our account. This will lapsed if not used.)
Boss: Hayaan mo na. Ipa-revert mo na lang. (It’s ok. Let it revert.)
Reading through the conversation, what have you noticed? What were the terms used? Were they correctly used?
Technically, it’s wrong to say “Wala pa kaming NCA (We do not have NCA yet)” or “Di pa namin narereceived ang aming NCA (We have not received our NCA yet)” unless you’re a Bank.
NCA — or Notice of Cash Allocation — is released by the DBM to the Authorized Government Servicing Banks (AGSB) such as the Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), and the Philippine Veterans Bank (PVB), to fund the Agency’s Modified Disbursement System (MDS) account.
NCA is a disbursement authority given by the DBM to the Agency’s AGSB authorizing the Agency to draw funds from the National Treasury to fund the Agency’s payables. The amount stated in the NCA serves as the limit as to how much the Agency can spend.
What the Agency receives is the ANCAI — or Advice of NCA Issued (not the NCA). This is a Notice from the DBM to the Agency that it has already released the Agency’s cash allocation. The ANCAI is accompanied by a Monthly Requirements Schedule (MRS) that indicates the monthly cash allocation of the Agency.
Starting this year, the cash allocation of the Agency for the whole quarter is released to their MDS Account on the first banking day of the quarter. The unspent amount (i.e remaining balance) in the MDS Account at the end of the quarter will automatically revert to the National Treasury. The cash that was credited to the MDS account of the Agency is valid only until the end of each quarter.
This brings us to another set of misused terms in government accounting — reverted and lapsed.
To revert means to return while lapsed means the validity of something has ceased.
So it’s wrong to say that your NCA has reverted because NCA never reverts. What reverts to the National Treasury is the excess cash that has been allocated to your account. Hence, what’s correct to say is, the validity of the NCA has lapsed and the excess cash has reverted to the National Treasury.
#NoticeOfCashAllocation
#AdviceofNCAIssued
#ValidityOfNCA
#RevertedCash
#LapsedNCA
#GABOTAF
https://gabotaf.com/2018/06/23/explainer-four-4-commonly-misused-terms-in-accounting-nca-ancai-reverted-lapsed/
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i have a theory when i was in my 1st year in the govt.
if i am right, the misconception originated from the pro-forma entry for reversion entry of cash related to unreleased checks at year-end and of the lapsed NCA, particularly the descriptions thereto. the cash also contributes with the confusion.
#JustAnOpinion😁
Great points.
Well put. 🙂