Overlapping of Cash Advance Grants

1. Additional cash advances were granted to the disbursing officers despite

pending or non-liquidation of their previously granted cash advances ranging
from ₱XXXX to ₱XXXXX contrary to provisions of COA Circular No. 97-
002 dated February 10, 1997, thus exposing government funds to possible
losses and misuse.

2.1 COA Circular No. 97-002 dated February 10, 1997 provides the following:

“4.1.2 No additional cash advances shall be allowed to any official or

employee unless the previous cash advance given to him is first settled or a
proper accounting thereof is made.”

“5.3 Within ten (10) days after receipt of the report and supporting documents
from the SDO, the Accountant shall verify the report, record it in the books
and submit the same with all the vouchers/payrolls and supporting documents
to the Auditor. The cash advance shall be considered liquidated upon the
recording thereof by the Accountant in the books of accounts although not
yet audited by the COA auditor.” Emphasis supplied

2.2 Section 5.0 of COA Circular No. 2012-004 dated November 28, 2012, on the
legal presumption against non-liquidation of CA under Article 217 of the Revised
Penal Code states in unequivocal terms that: “The failure of a public officer to have
duly forthcoming any public funds or property with which he is chargeable, upon
demand by any duly authorized officer, shall be prima facie evidence that he has put
such missing funds or property to personal use.”

2.3 Further, Presidential Decree (PD) No. 1445 provides the following provision
on limitations of cash advance and corresponding penalty clause as follows:

Section 89. Limitations on cash advance. No cash advance shall be given

unless for a legally authorized specific purpose. A cash advance shall be
reported on and liquidated as soon as the purpose for which it was given has
been served. No additional cash advance shall be allowed to any official or
employee unless the previous cash advance given to him is first settled or a
proper accounting thereof is made. (underlined for emphasis)

Section 128. Penal provision. Any violation of the provisions of Sections 67,
68, 89, 106, and 108 of this Code or any regulation issued by the Commission
implementing these sections, shall be punished by a fine not exceeding one
thousand pesos or by imprisonment not exceeding six (6) months, or both such
fine and imprisonment in the discretion of the court.

2.4 Audit of the grant of cash advances showed that CAs were authorized by the
XXXX as per issuance of various Office Orders (OOs) with a stipulation, “no
liquidation of cash advances, no granting of additional cash advances.”

2.5 However, verification of the Journal Entry Vouchers (JEVs) and Subsidiary
Ledgers (SLs) and analysis of other accounting records of XXXX for the period
January to December XXX disclosed that cash advances were granted to the

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Disbursing Officers (DOs) despite non-liquidation of their previous cash advances
and two or more cash advances were granted to them on the same day, as shown in
Table 2 below. Annexes A and B present the complete CAs for the period January –
December 2022 granted to the AOs.

2.6 As can be gleaned from the preceding table, delays in the liquidation of cash
advances had been a regular occurrence in the XXXX as there were cash advances
granted to the two disbursing officers despite pending or non-liquidation of previous cash
advances ranging from ₱XXXX to ₱XXXX. Inquiry with the Accounting personnel
revealed that there was overlapping of unliquidated cash due to the existing circumstance
where there were various cash advances for different purposes and only two (2) agency
personnel were authorized as disbursing officers. Thus, the accountability for the various
pending liquidation of cash advances were unjustly shouldered by the said DOs.

2.7 As a result, the inadequacy of DOs to handle the various cash advances of the
agency, the granting of material amount of cash advance and the grant of additional cash
advance without first requiring them to completely liquidate their previous cash advances
resulted in the significant amount of accumulated cash advances and exposed government
funds to the risk of possible losses thru misapplication/misuse.

2.8 An AOM was previously issued on the issue of granting additional cash advances
even if the previous cash advances were not fully settled or proper accountings thereof
were made. It is unfortunate that despite the previous observation and recommendations
to cease from granting additional cash advances to disbursing officers with previous
unliquidated cash advances, among others, such recommendation was not implemented
which led to the lumping of cash advance of disbursing officers.

2.9 In view of the foregoing, we recommend that the Chief of XXXX should:

a. require the Accountant to see to it that the previous cash advances of

the designated DOs are liquidated prior to the granting of another cash
advance;

b. instruct the concerned personnel/ recipient of payments from cash

advances to prepare and submit the necessary documents as early as
possible to facilitate timely preparation of the liquidation vouchers by
the DOs;

c. instruct the DOs to liquidate their cash advances as soon as the purpose
for which it was given has been served and within the reglementary
period;

d. assign additional personnel to the Cashier to assist her in gathering the

supporting documents for the liquidation of various cash advances
granted to her and the corresponding recording of the same considering
that collection of hospital fees and their respective recording was also
assigned to her; and

e. designate additional Disbursing Officer/s to handle other cash advances

to share the responsibility of recording and monitoring of CAs and the
corresponding financial accountability for their utilization and
liquidation.

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Incomplete Supporting Documents of Cash Advance and its Liquidation

2. Grant of cash advances for special purpose/ time-bound undertaking and official
travel totaling ₱XXXXX and liquidation of said cash advances amounting to
₱XXXXX were not supported with complete documentation contrary to the
provisions of COA Circular No. 2012-001, Government Accounting Manual
(GAM) for National Government Agencies (NGAs), and Presidential Decree
(PD) No. 1445 thereby casting doubts as to the validity, propriety and legality of
these expenditures

4.1 Section 36, Chapter 2, Volume I of GAM for NGAs provides the basic
requirements for disbursements and the required certifications which include, among
others the following:

a. Availability of cash certified by the Chief Accountant. The Head of the

Accounting Unit shall certify the availability of cash and
completeness of the supporting documents in the disbursement
voucher and payroll…;

b. xxx

c. Submission of proper evidence to establish validity of the claim. The

Head of the Requesting Unit shall certify on the necessity and legality
of charges to allotments under his/her supervision as well as the
validity, propriety and legality of supporting documents. xxx emphasis
supplied

4.2 Section 4.6 of PD 1445 provides that, “claims against government funds shall
be supported with complete documentation.”

4.3 Meanwhile, item 2 of COA Circular No. 2012-004 states that, “A cash
advance is settled and liquidated either by returning the money advanced if unspent,
or by the presentation of regularly accomplished vouchers, giving satisfactory detail
of the items thereon paid which must be in accordance with the purpose for which the
cash advance was granted, and further supported by proper receipts and other
evidence of payment, subject to the result of the post-audit thereof by the auditor
concerned.”

4.4 Further, COA Circular No. 2012-001 dated June 14, 2012 provides the
following documentary requirements in the granting and liquidation of Cash
Advances:

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 Granting of Cash Advance

1.1 Documentary requirements common to all cash advances except for travels:

▪ xxx

▪ Certification from the Accountant that previous cash advances have been
liquidated and accounted for in the books. Emphasis supplied
▪ xxx

1.1.3 Field/ Activity Current Operating Expenses (COE) – The amount of the cash advance
shall be limited to the requirement for two months. Additional cash advances shall be granted
on the basis of the activity budget or the requirement for two months, whichever is lower.

▪ Approved Budget for COE of the agency field office or agency activity in the field

1.1.4.1 Local Travel (Grant)

▪ Office/Travel Order approved in accordance with Section 3 of EO No. 298

▪ Duly approved Itinerary of Travel

▪ Certification from the Accountant that previous cash advance has been liquidated
and accounted for in the books. Emphasis supplied

Liquidation of Cash Advance

1.2.2 Petty Cash Fund (updated per GAM for NGS)

▪ Report on Paid Petty Cash Vouchers (RPPCV);

▪ Approved purchase request with certificate of Emergency Purchase if necessary;

▪ Bill, receipts, sales invoices

▪ Inspection and Acceptance Report (IAR);

▪ Waste Materials Report (WMR) in case of replacement/repair;

▪ Approved Trip Ticket, for gasoline/fuel expenses;

▪ Canvass from at least three suppliers for purchases involving P1,000 and above,
except for purchases made while on official travel;
▪ Summary/Abstract of Canvass;

▪ PCVs duly accomplished and signed;

▪ OR in case of refund;

▪ For reimbursement of toll receipts; and

o Toll Receipts
o Trip Tickets
▪ Such other supporting documents that may be required.

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 1.2.3 Field/ Activity Current Operating Expenses (COE)

▪ Same requirements as those for salaries, petty operating expenses, other personal
services, and maintenance and other operating expenses depending on the nature of
expenses incurred.

1.2.4.1 Local Travel

▪ Paper/Electronic plane, boat or bus tickets, boarding pass, terminal fee;

▪ Certificate of Appearance/Attendance;
▪ Copy of previously approved IT;
▪ Revised or supplemental Office Order or any proof supporting the change of
schedule;
▪ Revised IT, if the previous approved itinerary was not followed;
▪ Certification by the Head of Agency as to the absolute necessity of the expenses
together with the corresponding bills or receipts, if the expenses incurred for official
travel exceeded the prescribed rate per day (certification or affidavit of loss shall not
be considered as an appropriate replacement for the required hotel/lodging bills and
receipts);
▪ Liquidation Reports;
▪ Reimbursement Expense Receipt (RER);
▪ OR in case of refund of excess cash advance;
▪ Certificate of Travel Completed (CTC); and
▪ Hotel room/lodging bills with official receipts in the case of official travel to places
within 50-kilometer radius from the last city or municipality covered by the Metro
Manila Area, or the city or municipality where their permanent official station is
located in the case of those outside the Metro Manila Area, if the travel allowances
being claimed include the hotel room/lodging rate.

4.5 COA Circular No. 2004-006 dated September 9, 2004 states that the pre-
printed OR is the traditional artifact recognized by government auditors as evidence
of receipt of payment for disbursements of government agencies.

4.6 Likewise, COA Circular No. 2021-001 dated June 24, 2021 clarified the use of
Reimbursement Expense Request (RER) and Certification in relation to
reimbursement of expenses not requiring Official Receipts (ORs) and specified,
among others, the following:

Particulars Documents Required

Expenses amounting to P300.00 or Certification of expenses not
less purchased from/rendered by requiring receipts
establishment not issuing
receipts/invoice
Expenses amounting to more than RER
P300.00 but not exceeding P1,000.00
purchased from/rendered by
establishment not issuing
receipts/invoice

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 4.7 Post-audit of the disbursements of XXXX revealed that all grant of cash
advances (CAs) to disbursing officers amounting to ₱15,161,908.03 and traveling
employees amounting to ₱4,787,593.49 were not supported by Certification from the
Accountant that previous cash advance has been liquidated and accounted for in the
books which is one of the documentary requirements in the grant of cash advance.

4.8 Further, as thoroughly discussed in recently issued AOM No. 2023-004 dated
February 23, 2023, all procurement transactions and expenses paid through cash
advances of DOs, such as payment for meals and snacks in CY 2022, have
circumvented the Revised Implementing Rules and Regulations (IRR) of Republic
Act (RA) 9184 since no evidence of competitive bidding, canvass nor request for
quotation was attached to the report of disbursements.

4.9 It should be noted that the Accounting Division/Unit is responsible for

verifying the completeness and propriety of the supporting documents considering
that the Accountant certified under Box C of Liquidation Report that the “supporting
documents were complete and proper.”

4.10 As a result, without the complete evidence and proper documentation to

support the grant and liquidation of cash advances, there will be doubts as to whether
government funds were expended and utilized in accordance with their specified
purpose and safeguarded against loss or wastage through illegal or improper
disposition.

4.11 We recommend that the Chief of XXXX should:

a. require the Accountant to ensure that supporting documents are

complete and proper before processing and recording as liquidated;

b. require the Accountant to submit immediately the lacking supporting

documents of the liquidation of CAs;

c. instruct the Accountant to stop the practice of accepting RER as

supporting documents in lieu of official receipts/ invoices for the
payment of service or purchases of the agency amounting to more than
₱1,000.00 from establishments not issuing ORs/invoice. RER can be
accepted as supporting document for payments of traveling official/
employee amounting to more than ₱300.00 but not exceeding ₱1,000.00;
and

d. Henceforth, comply strictly with the aforementioned provisions

including the Revised IRR of RA 9184 in all procurement activities and
see to it that agency’s disbursements or payments from government
funds are supported by necessary documents.

May we have your comment/s on the foregoing audit observations within five (5) days
from receipt hereof.

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