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Department of Finance
Department of Budget and Management
Commission on Audit
PERMANENT COMMITTEE
Joint Circular No. _4- 20/2
September 11, 2012
RULES AND REGULATIONS IMPLEMENTING EXECUTIVE ORDER NO. 431
DATED MAY 30, 2005 DIRECTING THE REVERSION OF ALL DORMANT
ACCOUNTS, UNNECESSARY SPECIAL AND TRUST FUNDS TO THE
GENERAL FUND AND FOR OTHER PURPOSES
Section 1.0 Purpose
These Rules are promulgated to prescribe the procedures and guidelines for the
implementation of Executive Order (EO) No. 431 in order to facilitate compliance
therewith and achieve the objectives thereof.
Section 2.0 Rationale
2.1 It is hereby declared policy of the State that unless otherwise specifically
provided for by law, all income collected by agencies of the government by
virtue of the provisions of law, orders and regulations shall be deposited in the
National Treasury, and shall accrue to the unappropriated surplus of the
General Fund of the Government;
2.2 It is also the policy of the State that receipts of agencies authorized by law to
be recorded as a Special Account in the General Fund, Fiduciary or Trust Fund
or a fund other than the General Fund shall be separately recorded and
disbursed in accordance with such rules and regulations as may be determined
by a Permanent Committee composed of the Secretary of the Department of
Finance (DOF) as Chairman, and the Secretary of the Department of Budget
and Management (DBM) and the Chairman of the Commission on Audit (COA),
as members;
2.3 Reports of COA show that there are huge cash balances being maintained by
government agencies deposited in authorized government depository banks
(AGDBs) and other institutions, which may include dormant accounts or
unnecessary special and trust funds; and
PM2.4 EO No. 431 directed that the Permanent Committee shall promulgate the
implementing rules and regulations for the transfer of such cash balances to
the account of the National Treasury.
Section 3.0 Definition of Terms
For the purpose of these Rules, the following terms shall be construed to mean as
follows:
3.1 Authorized Government Depository Banks (AGDBs) - refer to financial
institutions/banks authorized by the Bangko Sentral ng Pilipinas to accept
deposits from government agencies.
3.2 Dormant Accounts — refer to collections authorized by law to be deposited
with an AGDB but have remained inactive for more than five (5) years.
3.3 Unauthorized Accounts - refer to:
* Cash account balances maintained by agencies without specific
authority or legal basis; or
+ Cash account balances with a specific authority but maintained with
non-AGDBs.
3.4 Unnecessary special and trust funds ~ refer to authorized special and trust
funds maintained by government agencies with AGDBs but which are no
longer necessary for the attainment of the purposes for which said funds
were established i.e., specific projects/programs, the implementation of
which have been completed or abandoned.
Section 4.0 Responsibil of the Permanent Committee in the
Implementation of EO No. 431
4.1 Prepare an inventory of the cash accounts and balances of each and every
department, bureau and agency of the National Government;
4.2 Coordinate with the heads of agencies concerned to inform them that the
Permanent Committee and its authorized representatives shall conduct
inspection of their books of accounts in order to examine, look into and
evaluate all existing cash deposits of whatever nature, whether in foreign or
local currency maintained with AGDBs and other institutions;
4.3 Review and determine the legal basis for the maintenance of said cash
account balances with AGDBs or other institutions where the funds are
deposited; and
4.4 Recommend to the President the transfer thereof to the National Treasury
where no legal impediment exists pursuant to the provisions of Sections 44
and 45, Chapter 5, Book VI of the Administrative Code of 1987.
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[Section 5.0 Procedural Guidelines
5.1 COA shall submit to the Permanent Committee the status of the cash account
balances of each department/agency of the national government with AGDBs
and other institutions (both local and foreign) as reflected in the Annual
Financial Report as of December 31, 2010.
5.2 DOF, through BTr, shall provide the Department Secretaries a copy of the
report cited under Section 5.1 above covering agencies/bureaus/offices under
thelr jurisdiction. These cash account balances shall be the reference point in
preparing the report required under Section 1 of the DBM-DOF-COA Joint
Administrative Order (JO) No. 2012-01.
5.3 Agencies shall include any cash account balances not included in the COA
report for the preparation of the report required under JAO No. 2012-01.
5.4 BTr shall submit a report to the Permanent Committee highlighting its findings
relative to the following:
5.4.1 __ If the cash account balances are maintained in AGDBs.
5.4.2 The legal basis for the maintenance of the cash accounts balances
outside of the Bureau of Treasury.
5.5 Permanent Committee shall:
5.5.1. — Require the immediate transfer to the National Treasury of the cash
balances of unauthorized accounts as defined in Item 3.3 maintained
with AGDBs and other banks. For those bank accounts which are
authorized under existing laws including dormant accounts as
defined under Item 3.2, the Permanent Committee shall evaluate
their legal bases to determine if their continuing existence is _ still
necessary and make a recommendation to the President for the
purpose.
5.5.2. Request the agency head for further inspection of its books of
accounts, if found necessary.
5.6 COA shall prescribe the necessary accounting entries and supporting
documents for the transfer of the cash balances of unauthorized
accounts to the National Treasury.
5.7 Agencies, upon the directive/instruction of the Permanent Committee, shall
immediately effect the closure of the cash balances of their unauthorized
accounts and transfer the same to the National Treasury. They shall prepare
the adjusting entries as maybe prescribed by COA under Item 5.6. If there
are accounts which will affect the books of the National Treasury, they shall
furnish the BTr with the Journal Voucher pertaining thereto.
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aySection 6,0 Responsibilities of departments, bureaus and agencies of
the National Government
The heads of departments, bureaus and agencies of the National Government
shall have the following responsibilities:
6.1 Cooperate, open their books of account and assist the Permanent Committee
and its authorized representatives in the conduct of inspection and review of
their cash balances; and
6.2 Provide the Permanent Committee with the required information and instruct
their officials concerned to effect the smooth and efficient transfer to the
National Treasury of the cash balances of unauthorized accounts.
Section 7.0 Monitoring of Compliance
The COA shall monitor compliance of the guidelines stated above and shall report
to the Permanent Committee.
Section 8.0 Administrative Sanction
Heads of the departments, bureaus and all other agencies of the National
Government along with the Permanent Committee shall ensure the strict
implementation of EO No. 431 and these Rules. Any violation hereof shall be
sternly dealt with in accordance with law.
Section 9.0 Repealing Clause
‘All circulars, memoranda and other issuances or parts thereof which are
inconsistent with the provisions of this issuance are hereby rescinded/ repealed/
‘modified accordingly.
Section 10.0 Effectivity
These Rules shall take effect immediately.
bE Bann
Secretary of Finance
Chairman Permanent Committee
005664 ee
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FLORENCIO B. ABAD MA. GRAC PULIDO-TAN
Secretary of Budget and Management Chairperson Commission on Audit
Member Member