COMMISSION ON AUDIT CIRCULAR NO. 96-011
October 2, 1996
TO
: Managing Heads and Governing Boards of Government and/or Private
Financial Institutions; Provincial Governors, City and Municipal Mayors; Local
Chief Accountants/Heads of Accounting Units, Provincial/City/
Municipal/Barangay Treasurers; COA Directors; Provincial/City/Municipal
Auditors; and All Others Concerned.
SUBJECT : Modification of Provincial Circular No.19 dated June 15, 1970 re: Bank
Reconciliation Statements for Depository Accounts.
1.0 PURPOSE
This Circular is issued to modify Provincial Circular No. 19 dated June 15, 1970
and to redefine the duties and responsibilities of the Provincial/City/Municipal
Accountants and Treasurers, and the Local Field Auditors concerned, specifically on the
preparation of bank reconciliation statements (BRS).
2.0 RATIONALE
Pursuant to Section 474 of the Local Government Code of 1991 (RA7160), the
local government units are mandated to appoint an accountant to take charge of the
accounting and internal audit services of the local government unit concerned. As chief
of the accounting department, he shall, among others, prepare and submit financial
statements to the governor or mayor, as the case may be, and to the sangguniang
concerned.
The Commission has noted of late, however, that despite the clear import of the
law, financial statements such as the bank reconciliation statements are not being
prepared and/or submitted to the local auditing unit for review and verification. The
problem lies may be on who shall prepare the required reports because under the
previous organizational set-up of the local government units, the local treasurer has
been singularly obligated to prepare the said financial statements in accordance with
Provincial Circular No. 19 dated June 15, 1970. Since there is now a separation of the
treasury and accounting functions, said provincial circular is observed irrelevant to the
present thrusts of the government. Thus, there is a need for putting together in one
handy issuance clear-cut guidelines towards a timely and accurate financial reporting.
3.0 GENERAL/POLICY GUIDELINES
3.1 The depository/servicing banks shall furnish the Local Accountant with the Bank
Statements (BS) including debit/credit memos (DM/CM), paid checks, etc., within
five (5) days after the end of each month which shall be the basis for the
preparation of the monthly Bank Reconciliation Statements.
3.2 The Local Accountants shall within ten (10) days from receipt of the Bank
Statements, reconcile the same (BS) with the General Ledgers (GL) and prepare
the BRS in five (5) copies, distributed as follows:
1. Original
-
Bank Manager
Thru: The Resident Auditor
2. Duplicate
-
Provincial/City/Municipal Auditor
3. Triplicate
-
Provincial/City/Municipal Barangay
Treasurer
4. Quadruplicate
-
LGUs within Metro Manila
- LGAO Director
LGUs outside Metro
Manila
- COA Regional Director
-
5. Quintuplicate - Provincial/City/Municipal Accountant
3.3 The accountant shall draw journal vouchers to record all valid reconciling items
that require adjustment and correction in the GL.
3.4 The duplicate and quadruplicate copies of the BRS including the paid checks,
original copies of debit/credit memos, shall be submitted to the Auditor concerned
for verification within ten (10) days for receipt after the end of each month.
3.5 The Auditor shall verify the duly certified BRS and supporting schedules within ten
(10) days from receipt of the same. The verification shall cover, but not limited to
reconciling items (exceptions) indicated therein, such as deposit in transit,
deposits per bank statement not reflected in the GL (e.g. Internal Revenue
Allotment), outstanding checks, DM/CM. etc. Also, as part of the verification, the
Auditor shall scrutinize deposit slips, indorsement on checks returned by the bank
because of insufficient funds, cancelled or paid checks returned by the bank,
follow up items in transit of for correction, and inquire into dormant/long
outstanding items, and book and bank errors. He should occasionally obtain direct
from the depository bank a certificate of the bank balance in confirmation thereof.
3.6 The Auditor shall, after verification, affix his signature on the BRS under the
notation "VERIFIED AND FOUND CORRECT" and furnish the COA Directors
concerned the duly verified BRS on a monthly basis or when there is an urgent
need for the same.
3.7 If after the lapse of the ten-day period the Auditor has not received the BRS, he
shall send at least two (2) memoranda (five days apart) to the Agency Head (Attn:
Chief Accountant) demanding submission of the required reports.
3.8 The Auditor shall, after the lapse of five (5) days after receipt of the second
memorandum without the desired reports submitted, notify the Director concerned
of the non-submission of the required financial reports with the necessary
supporting documents.
3.9 Upon receipt of said notification from the auditor, the Director concerned shall,
after evaluation, recommend the filing of administrative charges against officials
responsible for the delayed submission/non-submission, if warranted on the basis
of the evidences/documents.
4.0 DISSEMINATION OF THIS CIRCULAR
COA Directors, Provincial/City/Municipal Auditors are directed to ensure that
copies of this Circular are furnished to the local chief executives, local treasurers and
accountants and all others concerned in their respective audit jurisdiction.
5.0 REPEALING CLAUSE
Provisions of circular, memoranda and/or regulations inconsistent here with and
hereby revoked or modified accordingly.
6.0 EFFECTIVITY
This circular shall take effect immediately.
(Sgd.) CELSO D. GAÑGAN
Chairman
(Sgd.) ROGELIO B. ESPIRITU
Commissioner
(Sgd.) SOFRONIO B. URSAL
Commissioner