Professional Documents
Culture Documents
BCLTE Lectures and Notes Part I 1
BCLTE Lectures and Notes Part I 1
BCLTE Lectures and Notes Part I 1
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BCLTE Lectures and Notes
REAL PROPERTY TAXATION
General Provisions
1. Fundamental Principles
The appraisal, assessment, levy and collection of RPT shall be :
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l. Fair Market Value – the price at which the seller and buyer are
willing to sell and buy the property
m. Improvement- a valuable addition or repair made to a property
n. Industrial land- devoted principally to industrial activity as capital
investment
o. Machinery- machines, equipment, instruments, apparatus attach
temporarily or permanently to the real property
p. Mineral land – in which metallic or nonmetallic minerals in sufficient
quantity can be extracted and utilized
q. Reassessment – is the assigning of new assessed values to property
as the result of reappraisal
r. Remaining Economic Life – period in years from the date of appraisal
to the date when the machinery becomes valueless
s. Remaining Value- remaining useful life of the machinery
t. Replacement or Reproduction Cost – cost of acquiring or replica of
the property on current prices.
u. Residential Land – principally devoted to habitation
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g. Proof of exemption of real property from Taxation shall be filed
together with the required documents within 30 days from the date
of declaration
h. Notification of transfer of real property ownership shall be filed
within 60 days from the date of such transfer.
i. Registrar of Deeds shall prepare and submit yearly to the assessor
the abstract of his Registry of Property containing description of real
property, present owners, recent transfer with supporting
documents
j. The official issuing building permit or registration of machinery shall
transmit a copy of such permit or certificate to the assessor within
30 days of its issuance
k. Geodetic Engineers shall furnish the assessor the white or blue print
copy of each approved subdivision plans or map of surveys within 30
days from receipt of such plans from LMB, LRA, HLURB
l. The assessor shall prepare a schedule of FMV for the different
classes of real property. This shall be published in newspaper of
general circulation or shall be posted in LGU hall and in two other
conspicuous public places
m. The assessor may recommend to Sanggunian concerned
amendments in valuation of FMV and shall be acted upon by
Sanggunian within 90 days from receipt
n. Real Property shall be classified as:
✓ Residential
✓ Agricultural
✓ Commercial
✓ Industrial
✓ Mineral
✓ Timberland
✓ Special
Each local government unit shall have the power to create its own sources
of revenues and to levy taxes, fees, and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively to the local
governments.
• Local Government Code (RA7160)
Each Local government unit shall exercise its power to create its own
sources of revenue and to levy taxes, fees, and charges subject to the provisions
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herein, consistent with the basic policy of local autonomy. Such taxes, fees and
charges shall accrue exclusively to the local government units.
Nature of the Taxing Power of LGU
• Not inherent, but a direct grant from the constitution
• Limited
Congress • Legislative
– May be exercised only by the Sanggunian
• Territorial
– Can only be exercised within the territorial jurisdiction of the LGU
Taxation powers of LGUs
Common Revenue –Raising Powers
• Reasonable fees and charges for services rendered
• Toll fees
• Exceptions:
4) physically handicapped and disabled citizens who are 65 years old or older;
Specific Power of LGUs to impose taxes
(Business-Related LGU Taxing Powers)
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● Tax on business of printing and publication
● Franchise Tax
● Tax on sand, gravel and other quarry resources
● Professional Tax
● Amusement Tax
● Annual fixed tax on delivery trucks and vans
Tax base - • The total consideration involved or fair market value in case the
consideration is not substantial, whichever is higher.
Exception:
• Transfer or disposition pursuant to RA6657 (CARP)
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Franchise Tax
Enjoyment of a franchise
Tax rate - • Business Province City
• OLD 50% of 1% of GR 75% of 1% of GR
• NEWLY STARTED 1/20 of 1% of CI 3/20 of 1% of CI
Tax base - • OLD: gross annual receipt for the preceding year
• NEWLY STARTED: capital investment
40% 40%
NOTE:
•Extractions from PRIVATE LANDS are within the taxing authority of the Bureau
of Internal Revenue.
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Professional Tax
• Exercise or practice of profession requiring government licensure examination
Amusement Tax
•Ownership, lease or operation of theatres, cinemas, concert halls,
circuses, boxing stadium, and other places of amusement
•Pop, rock, or similar concerts
Tax rate - •Not more than 10%
Tax base- •Gross receipt from admission fees
Exception (not taxable):
•Operas, concerts, dramas, recitals, painting, and art exhibitions, flower shows,
musical programs, literary and oratorical presentations
•PBA games
Under the NIRC:
•Cockpits
•Cabarets
•Night or day clubs
•Boxing exhibitions
•Professional basketball games
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•Jai alai
•Racetracks
Distribution of Proceeds:
•Shared equally between the province and the municipality where such
amusement places are located.
Annual Fixed Tax for Delivery Trucks or Vans
• Use by manufacturer, producers, wholesaler, dealers, retailers of truck, van,
vehicle in the delivery or distribution of distilled spirits, fermented liquors, soft
drinks, cigar, and cigarettes, and other products, determined by the
Sangguniang Panlalawigan, to sale outlets or consumers, whether directly or
indirectly
Tax rate - • Not exceeding P500.00
Tax base - • Every truck, van, or vehicle
Exemption
• Exempt from tax on peddlers imposed by municipalities
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•Agricultural implements, equipment, and post-harvest facilities, fertilizers,
pesticides, herbicides and other farm inputs
•Poultry feeds and other animal feeds
•School supplies and
•cement
Retailers
•400,000 or less Annual Gross Receipt – 2% of the GR for the preceding years
•More than 400,000 AGR – 1% of GR
Contractors and other independent contractors
Banks and other financial institutions
•50% of 1% on the gross receipts of the preceding calendar year derived from
interest, commissions and discounts from lending activities, income from
financial leasing, dividends, rentals on property and profit from sale or exchange
of property, insurance premiums.
Peddlers engaged in any merchandize or article of commerce
•Not exceeding P50.00 per peddler annually
Any business not otherwise specified in the above enumeration
•Provided, businesses subject to NIRC excise, vat, or percentage tax
– not exceeding 2% GR
BUSINESS-RELATED TAXING POWERS OF CITIES
The cities may levy the taxes, fees, and charges which the province or
municipality may impose and may exceed the maximum rates allowed for the
province or municipality by not more than fifty percent (50%) except the rates of
professional and amusement taxes.
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BARANGAY IMPOSITIONS
Taxes – on stores or retailers with gross sales or receipts of the preceding
calendar year of ₱50,000 or less in the case of cities and ₱30,000 or less in the
case of municipalities.
Service Fees and Charges – They may collect reasonable fees or charges for
services rendered
Barangay Clearance – no city or municipality may issue any license or permit
unless a clearance is first obtained from the barangay at reasonable rate.
Other fees and Charges – reasonable fees and charges.
Business taxes
• Those imposed by the local government unit on the privilege of engaging in
business, occupation, and other activities within its territorial jurisdiction.
• The proceeds of these taxes accrue exclusively to local government unit
that imposes them, or may be shared with other local government units when
provided by law.
Gross Sales or Receipts
– the total amount of money or its equivalent representing the contract price,
compensation or service fee, including the amount charged or materials supplied
with the services, and the deposits or advance payments actually or
constructively received during the taxable quarter
INCLUDING
• Amount charged for materials supplied with the services
• Sales returns
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• Excise tax
• Graduated
Step 2.
Determine gross Receipts
Step 3.
• - locate tax due on the tax schedule OR compute: tax due = tax base x tax rate
• Pawnshops
• money shops
• insurance companies
• stock markets
• stock brokers
– But must not exceed the rates provided in Section 143 of the LGC
• For businesses subject to excise, value-added or percentage tax under National
Internal Revenue Code, rate shall not exceed:
– for cities: 3% of GR – for municipalities: 2% of GR
• Cities may impose rates 50% higher than rates allowed in municipalities
LOCAL TAXES P C M
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✔
1. Transfer of Real Property Ownership
✔
✔
2. Printing and Publication
✔
✔
3. Franchise
✔
✔
4. Sand, Gravel, Quarry Resources
✔
✔
5. Professional
✔
✔
6. Amusement
✔
✔
7. Delivery Vehicles for certain products
✔
✔
8. RPT
✔ ✔
✔
9. SEF
✔ ✔
✔
10. Idle Lands
✔ ✔
✔
11. Land Improvement
✔ ✔
✔
12. Service Fees and Charges
✔ ✔
✔
13. Public Utility Charges
✔ ✔
✔
14. Toll Fees
✔ ✔
15. Business
✔ ✔
16. Community
✔ ✔
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17. FC on Business and Occupation
✔ ✔
18. Fees for Sealing/Licenses for
Weights/Measurement ✔ ✔
19. Fishery Rentals
✔ ✔
20. Socialized Housing
✔
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4. Sand, Gravel, Quarry Resources
Province- 10% of FMV per cubic meter
City – 15% of FMV per cubic meter
5. Professional Tax
P300
6. Amusement
10% of Gross Receipts
7. Delivery Vehicles
P500 per vehicle
8. Business Tax
2% for Gross Receipts of 400 000
1% for Gross Receipts in excess of 400 000
9. Banks and other Financial Institutions
50% of 1% of Gross Receipts
10. Peddlers
P50
11. Sari- Sari Stores/ Retailers City- with Gross Receipts of 50 000
Municipality- with Gross Receipts of 30 000
12. Businesses subject to excise tax, value added tax or percentage tax under
NIRC
City - 3% of Gross Receipts
Municipality- 2% of Gross Receipts
13. SEF or Special Education Fund
1% of the assessed value of Real property
14. RPT or Real Property Tax
Province- 1% of the AV
City - 2% of the AV
Municipality- 2% of the AV
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15. Idle Lands
5% of the AV
16. Land Improvement Tax
60% of the actual project cost
17. Community Tax
Individual- basic P5 + P1 for every P1000
Corporate - Basic P500 + P2 for every P5000
Collection of Business Taxes
TAX PERIOD - •the calendar year
MANNER OF PAYMENT - •Annual or in equal quarterly instalments
ACCRUAL - •On the 1st day of January
•On the first day of the quarter next following the effectivity of the ordinance
(new)
TIME OF PAYMENT - •Within the 1st 20 days of January
•1st 20 days of the quarter following the effectivity of the ordinance (new)
•For justifiable reasons, the sanggunian may extend the time for payment
without surcharges or penalties for a period not exceeding 6 months
WHAT IS COACHING?
✔ non- directive
2 KEY PRINCIPLES
1. Awareness
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✔ knowing what is going on around you
2. Responsibility
ESSENCE OF COACHING
5 CHARACTERISTICS OF COACHABILITY
1. Committed to Change
People who are willing to explore their own behaviors and to learn
more about themselves.
People who get excited about finding new ways of looking at a situation
and figuring out how to learn from.
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People who have a fair amount of awareness about themselves and how it
impacts other people.
1. Goal
What do you think is the most important area to improve on?
2. Reality
Could you describe the current situation?
3. Options
What would be the different ways that you could address that?
What else do you think you could do
4. Wrap up
For those options, which do you think would be the most effective?
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CORE SKILLS OF COACHING
The Thinking Environment
“the quality of what we do depends on the quality of the thinking we do first.”
A Thinking Environment is created by the practice of 10 components.
1. Attention
✔ generative attention
2. Equality
3. Ease
4. Appreciation
✔ redress the balance and start to give more positive comments than
negative
5. Encouragement
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6. Feelings
7. Information
8. Diversity
9. Incisive Questions
10. Place
creating a physical environment that says back to people, “You matter”
diverting calls, clearing the work area, or arranging for a pleasant meeting
room
QUALITIES OF A GOOD COACH
1. honest, genuine and authentic
2. Has a positive view of human nature
3. Wants others to succeed
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4. Can create a thinking environment
5. Enjoys seeing others develop
6. Enjoys learning
7. Wants others to be independent
8. Is generous with appreciation
9. Values the opinions and initiative of others
10.Keeps information confidential and is trusted by others
11.Has an open mind and is tolerant of diverse views
12.Motivates others by setting a good example
CSC Leadership Brand:
Coaching for Integrity & Excellence
1. Coaching for the Integrity & Excellence leadership brand is derived from
the institution’s desired image of being known for people and
organizational integrity and excellence
2. The Flag
⮚ the upper stripe of dark blue for peace, truth and justice
⮚ Blue is the color of leadership with intelligence, stability, unity, and kinship.
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CSC is committed to coach – support, help, empower, equip and develop.
The CSC Coach wants to see the people they support rise up, soar and
succeed.
2. LEADING CHANGE
initiate and facilitate change to motivate people to embrace it
3. BUILDING COMMITMENT
inspire, create an encouraging environment of positive collaboration
5. MANAGING PERFORMANCE
provide timely and relevant feedback to improve individual or group
performance
6. DEVELOPING PEOPLE
provide plan and support skills and abilities of people
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Government Expenditures
IRREGULAR EXPENDITURES
Expenditure incurred w/o adhering to established rules, regulations,
procedural guidelines, policies, principles or practices that have
gained recognition in laws
Transactions conducted in a manner that deviates or departs from,
or w/c does not comply w/ standards set
Transaction which fails to follow or violates appropriate rules of
procedure
EXAMPLES
Gant of Christmas bonus, cash gift & other fringe benefits to
consultants & members of the Board who are not salaried officials of
the government
Loyalty service award granted to employees that have not rendered
the minimum service of ten years in government (
Grant of food allowance, rice subsidy and health care allowance,
there is no law authorizing such allowance
UNNECESSARY EXPENDITURES
Not supportive of the implementation of the objectives & mission
agency relative to the nature of its operations
EXAMPLES
Continuous repair of vehicles & equipment already considered
beyond economic repair a evidenced by frequent breakdown and
non-use after repair
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Hiring of consultants whose functions are redundant to the
respective functions of concerned officials - hiring of procurement
consultant, financial consultant, media consultant
ILLEGAL EXPENDITURES
Transactions in violation of laws
EXAMPLES:
For widening, repairing & improving sidewalks of privately owned
subdivision where the land it is situated has not been transferred to
the government by way of donation or acquired by the government
through expropriation
Entering into contracts w/o covering certificates of availability of
funds issued by the Chief Accountant even if the contract is signed
bye the Accountant as witness
EXCESSIVE EXPENDITURES
Signifies unreasonable expense or expenses incurred at an
immoderate quantity or exorbitant price
Expenses w/c exceed what is usual or proper or unreasonably high
and beyond just measure or amount
Expenses in excess of reasonable limits
EXAMPLES
Payment of repair of government equipment at a cost exceeding 30
percent of the current market price of the same or similar
equipment
Procurement of materials/items in excess of the requirements w/c
eventually expired such as vaccines, medicines, seeds, fertilizer,
pesticides, among others.
EXTRAVAGANT EXPENDITURES
Expenses incurred w/o restraint, judiciousness and economy
Expenses that exceed the bounds of propriety
Those w/c are immoderate, prodigal, lavish, luxurious, grossly
excessive and injudicious
EXAMPLES
Purchase of wines, liquors, cigars & cigarettes exept when served
during state functions and government-sponsored international
conferences and conventions
Procurement and use of luxury vehicles
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UNCONSCIONABLE EXPENDITURES
Unreasonable and immoderate, and which no man in his/her right
sense would make, nor a fair and honest man would accept as
reasonable, and those incurred in violation of ethical and moral
standards.
EXAMPLES
Grant of exorbitant & unreasonable bonuses, allowances & fringe
benefits to public officials and employees
Live-in seminars in five-star hotels within an unreasonable period of
time
DEPARTMENT OF FINANCE
BUREAU OF LOCAL GOVERNMENT FINANCE
Net Debt Service Ceiling and Borrowing Capacity of Local Government Units
The Bureau of Local Government Finance
Attached agency of the DOF
Supports the DOF in its mandate to "supervise the revenue
operations of all local government units"
Central Office in Manila, with 15 Regional Offices
Mandated to "develop and promote plans and programs for the
improvement of resource management systems, collections
enforcement mechanisms an credit utilization schemes at the local
levels"
Issues Certificate of Net Debt Service Ceiling (NDSC) and Borrowing
Capacity (BC) to LGU's
Legal Basis of Certification
Sec. 296 of LGC: Basic policy that LGU's may create Indebtedness
and avail of credit facilities
Art. 403 of LGC IRR: DOF is mandated to render technical assistance
to any LGU in the availment of credit facilities, flotations of bonds,
contracting of loans and issue guidelines for the purpose
Sec. 324 of LGC: Appropriations of 20% of the LGU's regular income
for debt servicing
Government regulates through ex-ante controls:
1. Securing the Certificate of Net Debt Service Ceiling and Net
Borrowing Capacity from the BLGF
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2. Favorable Monetary Board opinion from the BSP
Department Order No. 054-2016: DOF order prescribes the updated
and streamlined guidelines governing the issuance of Certificate of
NDSC and BC ("Certificate) to all LGU's.
DOF Policies on LGU Loan Certification
Local Finance Circular (LFC) No. 1-2000, dated 19 January 2000:
issued to enhance the access of all LGUs to credits and other forms
of indebtedness.
LFC No. 01-2012: Amended the previous LFC, and released on 16
April 2012, to ensure a more accurate and appropriate evaluation of
the maximum borrowing and debt servicing capacities of all LGU's.
LFC No. 01-2014: Issued on April 22, 2014 for 171 LGUs affected by
Typhoon Yolanda, from 12 to 4 requirements, and extending the
validity by 1 year
Streamlined Documentary Requirements for Certification
1. Letter request from the Local Chief Executive indicating:
The lending institution where to apply for a loan;
Terms and condition of the proposed loan; and
The purpose of the loan.
2. Certification of existing of loan/s duly certified by the Local Treasurer
with the following details:
Types of loans & other obligations contracted;
Purpose of loans & other obligations contracted;
Name of the lending institutions;
Date of approval & maturity;
Terms & Conditions (interest rate & number of years to pay);
Remaining balances of loans and other obligations; and
Annual amortization schedules (segregating the principal from
the interest) issued by the lending institution.
3. COA Annual Audit Certificate for the past 3 fiscal years showing no
adverse finding against the LGU, which is supported by the following
year-end financial reports:
Pre-closing trial balance (general fund);
Detailed Statement of Financial Performance
4. Certification issued by the lending institution stating that it shall not
require LGU deposits as compensating balance for the loan if such
lending institution is not (1) not an authorized government
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depository bank or (2) an authorized government bank required to
obtain the prior approval of the Department of Finance as provided
under the DOF Department Order No. 27-05 (Banks other than LBP
and DBP);
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Where ARI is the average previous 3-year locally sourced
income + other shares from national taxes based on COA data,
+ actual annual IRA based on DBM data
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Cash - Cash means money, which is the standard medium of
exchange in business transactions. Cash includes "money and other
negotiable instrument that is payable in money and acceptable by
the bank for deposit and immediate credit". It includes checks, bank
drafts and money orders.
Cash Analysis - Cash analysis begins with a starting balance and
generates and ending balance after accounting for all cash receipts
and paid expenses during the period.
Cashbook for Cash in Bank - shall be used to record deposits of
collections (Debit column) and withdrawals from the bank thru the
issuance of checks (Credit column). The cashbook shall be
maintained by bank account and by fund and shall, at the end of the
balanced daily. The accountable officer shall, at the end of the
month or when required to do so by proper competent authority,
rule and foot the cashbook
Cash for Cash in Treasury - shall be used to record collections (Debit
column) and deposits to the bank (Credit column) based on the RCD.
The cashbook shall be maintained by the Treasurer by fund and shall
be updated and balanced daily. The accountable officer shall, at the
end of month or when required to do so by proper competent
authority, rule and foot the cashbook.
Cash flow - Record of inflows and outflows of cash, representing the
operating activities during a given period.
Cash Flow Forecasting - Estimate of the timing and amounts of cash
inflows and outflows over a specific period, usually one year.
Certificate of Settlement and Balances - a written notification by the
Auditor to the agency head and the accountable officer concerned of
the total suspensions, disallowances and charges found in audit, as
well as the settlements thereof.
Charge - refer to pecuniary liability, as rents or fees against persons
or property.
Check - is a negotiable instrument drawn against deposited funds, to
pay a specific entity a specific amount of funds on demand.
Credit Memo - A credit memo is a contraction of the term "credit
memorandum," which is a document issued by the seller of goods or
services to the buyer, reducing the amount that the buyer owes to
the seller under the terms of an earlier invoice. The credit memo
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usually includes details of exactly why the amount stated on the
memo has been issued, which can be used later to aggregate
information about credit memos to determine why the seller is
issuing them.
Current Assets - cash and other assets that are not earmarked for
specific purposes other than the payment of a current liability or a
readily marketable investment.
Current Liability - A current liability is an obligation that is payable
within one year.
Debit Memo - A bank creates a debit memo when it charges a fee on
its bank statement, thereby reducing the balance in the checking of
account.
Disallowance - the disapproval in audit of a transaction, either in a
whole or in part.
Disbursement - Disbursement constitute all payments made during a
given period either in currency, by check, through bank and
electronic transfers, telegraphic transfers, letters of credit,
credit/debit cards and other non-conventional modes of payment.
Equity - residual interest of the government in an agency which is
the excess of the agency's assets over its liabilities.
Financial Expenses (FE) - These accounts include bank charges,
interest expense, commitment charges, documentary stamp
expense and other financial charges. It also includes losses incurred
relative to foreign exchange transactions and debt service subsidy to
GOCCs.
Fixed Assets - fixed assets are items of property, plant and
equipment and are referred to as "fixed" because of their
permanent nature and because they are not subject to rapid
turnover. They include equipment, furniture and fixtures, land and
buildings and any other property considered tangible or long-lasting.
Fund - refers to a sum of money, or other assets convertible to cash,
set aside for the purpose of carrying out specific activities or
attaining certain objectives in accordance with special regulations,
restrictions, or limitations, and constitutes as independent fiscal and
accounting entity.
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Fund Transfer - a transfer of money from one bank account to
another, either within a single financial institution or across multiple
institutions.
Government Expenditures - include all charges against the fund of
the local government unit for current operating expenditures,
capital outlays and provisions for retirement of long term
obligations. The charges are both the amounts actually paid and
those incurred and recorded as liabilities to be paid in the future.
Government Funds - include public moneys of every sort and other
resources pertaining to any agency of the government.
Head of Agency (HoA) - refers to the highest official of the NGA and
LGU. In the case of GOCCs, however, and solely for purposes of this
Circular, the HoA refers to the President and/or Chief Executive
officer, who is in-charge of the day to day operations of the
corporation.
Intelligence and Confidential Fund Audit Unit (ICFAU) - refers to the
unit created under the Office of the Chairperson of the COA in
charge of the audit of CF and IF.
Long Term Liability- An obligation which will not become due within
a relatively short period, usually a year.
Obligations - refers to an amount committed to be paid by the local
government unit for any lawful act made by an accountable officer
for and in behalf of the local unit concerned.
Persons Liable - the persons determined by the auditor to be
answerable for an adult disallowance or charge arising from the
post-audit of transaction or examination of the cash and accounts of
an accountable officer.
Persons Responsible - the persons determined by the auditor to be
answerable for compliance with the audit requirements as called for
in the notice of suspension.
Quick Assets - a holding that can be converted into cash within a
short period of time. An example would be a marketable security
that is immediately saleable at a quoted price in the open market.
Reconsideration - the process whereby an aggrieved party requests
the very officer or body who made the decision, order, or ruling to
review the same with the view of its modification or reversal. This
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should be distinguished from "appeal" which is the process of
elevating to the next higher authority a decision, order, or ruling.
Responsibility - the obligation to prudently exercise assigned or
imputed authority attaching to the assigned or imputed role of an
individual or group participating in organizational activities or
decision.
Real Property Tax Receivable - an annual ad valorem tax on real
property such as land, building, machinery, and other improvement
not hereinafter specifically exempted.
Receivables - represents amounts collectible from customers and
other debtors arising from sale of merchandise or the performance
of services on account and claims for money lent, including real
property taxes due to the Local Government Units.
Settlement - the process of determining the status or balance of the
accountability of an accountable officer.
Special Disbursing Officer (SDO) - refers to the HoA or a regular
employee designated by the HoA to be in charge of making
disbursements of CF and/or IF so received and accountable therefor.
Special Education Tax Receivable - annual tax of one percent (1%) on
the assessed value of real property in addition to the basic real
property tax.
Suspension - the deferment of action to allow or disallow in audit a
transaction pending compliance with certain requirements.
Trust Liability- An Account used to record collections, income or
receipts of agencies held in trust or guarantee for another agency
and for a specific purpose.
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Objective
> To assess individual LGU performance
> To provide active advisory to LGUs
> To support LGU credit assessment
> To support policy formulation
Category
> Revenue Indicators (Revenue Generation Capacity)
> Expenditure Indicators (Expenditures Rigidity)
> Debt Indicators (Debt Carrying Capacity of LGU)
> Overall Financial Indicators (Financial Management Capacity)
INDICATORS
1. REVENUE LEVEL - Total Revenues as compared to the average value for the
LGU income class to which the LGU belongs
FORMULA: TOTAL REVENUES
Real Property Tax (General Fund + SEF) + Tax on Business + Other Taxes +
Regulatory Fees + Service/User Charges + Receipts from Economic Enterprises +
Other Receipts + Internal Revenue Allotment + Other Shares from National Tax
Collection + Inter-Local Transfer + Extraordinary Receipts
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BENCHMARK: Per capita locally sourced revenue + SEF ≥ average for the LGU
income class to which the LGU belongs
BENCHMARK: Growth in Locally Sourced Revenue per Capita ≥ average for the
LGU income class to which the LGU belongs
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7. RATIO OF TOTAL REVENUE OFFICE OPERATIONS COST (TROOC) TO LOCALLY
SOURCED REVENUES + SEF - The full cost of collecting a peso of revenues
FORMULA:
TROOC x 100
LSR + SEF
TROOC = Ps and MOOE of the LGUs Assessor's Office + PS and MOOE of LGUs
Treasurer's Office
BENCHMARK: TROOC ≤ average for the LGU income class to which the LGU
belongs
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Fund (GF), Special Education Fund (SEF) and Trust Fund (TF) Non-Operating
Expenditures (Capital Outlay)
BENCHMARK: Per capita total LGU expenditures ≥ average for the LGU income
class to which the LGU belongs
BENCHMARK: PSER ≤ 45% for 1st to 3rd income class LGUs and 55% for 4th or
lower income class LGUs and should exhibit a decreasing trend
11. TOTAL PERSONAL SERVICES EXPENDITURES RATIO (TPSER) - The ratio of LGU
expenditures for personal services to total LGU expenditures
FORMULA:
Total Personal Services Expenditures x 100
Total Expenditures
Total Personal Services Expenditures = Personal Services Expenditures General
Fund + Trust Fund + Special Education Fund (SEF)
BENCHMARK: PSERT ≤ average for the LGU income class to which the LGU
belongs and should be decreasing
12. TOTAL DEBT SERVICE EXPENDITURES RATIO (DSER) - The ratio of LGU total
debt service expenditures to LGU total expenditures
FORMULA:
Total Debt Service Expenditures x 100
Total Expenditures
Total Debt Service Expenditures = Debt Service (FE) (Interest Expense & Other
Charges) + Debt Service (Principal Cost) (GF + TF + SEF)
BENCHMARK: DSER ≤ average for the LGU income class to which the LGU belongs
and should be decreasing
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13. SOCIAL SERVICES EXPENDITURE RATIO (SSER) - The ratio of LGU social
expenditures to total LGU expenditures
FORMULA:
Social Services Expenditures x 100
Total Expenditures
Social Services Expenditures = Education, Culture & Sports/Manpower
Development + Health, Nutrition & Population Control + Housing and Community
Development + Social Services and Social Welfare (GF + SEF + TF)
BENCHMARK: SSER ≥ average for the LGU income class to which the LGU belongs
and should be increasing
14. ECONOMIC SERVICEZ EXPENDITURE RATIO (ESER) - The ratio of LGU economic
expenditures to total LGU expenditures
FORMULA:
Economic Services Expenditures x 100
Total Expenditures
Economic Services Expenditures = Economic Services (GF + SEF + TF)
BENCHMARK: ESER ≥ average for the LGU income class to which the LGU belongs
and should be increasing
15. DEBT SERVICE RATIO (DSR) - The ratio of LGU expenditures for debt service to
total LGU annual regular income
FORMULA:
Debt Service Payment (GF) x 100
Annual Regular Income
Debt Service (GF) = Debt Service (FE) (Interest Expense & Other Charges) + Debt
Service (Principal Cost) (GF)
BENCHMARK: DSR ≤ 20% of annual regular income and ratio should at least be
stable if not decreasing across time
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16. GROSS OPERATING SURPLUS (GF) TO DEBT SERVICE RATIO (GOSDSR) - The
ratio of LGU operating surplus to debt service
FORMULA:
Gross Operating Surplus (Deficit) (GF)
Debt Service payment (GF)
Gross Operating Surplus/Deficit = Net Operating Income/ (Loss) From Current
Operations + Debt Service (FE) (GF)
Operating Surplus = Operating Revenues - Operating Expenditures
BENCHMARK: GOSDSR ≥ average for the LGU income class to which the LGU
belongs and should be increasing
17. DEBT TO NET ASSET RATIO (DNAR) - The ratio of an LGUs outstanding debt to
its depreciated asset base
FORMULA:
Total Outstanding Debt x 100
Total Net Assets
Total Net Assets = Total Assets (Net of Depreciation)
BENCHMARK: CIETRR ≥ average for the LGU income class to which the LGU
belonhs and should be stable if not increasing
19. NET OPERATING SURPLUS TO TOTAL LGU REVENUE RATIO (NOSTRR) - The
ratio of LGU net operating surplus to total LGU revenues
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FORMULA:
Net Operating Surplus (Deficit) x 100
Total Revenues
Net Operating Surplus/Deficit = Net Operating Income/ (Loss) from Current
Operations
BENCHMARK: NOSTRR ≥ average for the LGU income class to which the LGU
belongs and should be increasing in case of operating surpluses and decreasing in
case of operating deficits
BENCHMARK: UCBTER ≥ average for the LGU income class to which the LGU
belongs and should be increasing
> Comparison will be made across LGU Types (Province, City, and Municipality)
and across LGU Income Class
> Most LGU governance rating system require at least 1/3 of the benchmarks
must be attained for a good rating
REVENUE PERFORMANCE
> Must meet indicators 2 and 5 plus at least 4 of the remaining 11 revenue
performance indicators (1,3,4,6,7,8,15,16,17,19, and 20) to be rated good
EXPENDITURE PERFORMANCE
> Must meet indicators 9 and either 13 or 14 plus at least 1 of the remaining 4
expenditure performance indicators (10,11,12 and 18) to be rated good.
OVERALL PERFORMANCE
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> an LGU will have to pass at least nine (9) out of twenty (20) financial
performance benchmarks with 4 indicators as "musts" to attain a good revenue
plus good expenditure rating.
TYPE 1 :
GOOD REVENUE
GOOD EXPENDITURE
TYPE 2:
GOOD REVENUE
POOR EXPENDITURE
TYPE 3:
POOR REVENUE
GOOD EXPENDITURE
TYPE 4:
POOR REVENUE
POOR EXPENDITURE
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Sanitation
Public transportation and transport terminals
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LGUs shall enjoy full autonomy in the exercise of their proprietary functions and
in the management of their economic enterprises, subject to the limitations
provided in this Code (LGC) and other applicable laws.
LGUs are enjoined to be self-reliant and shall continue exercising the power and
discharging the duties and functions currently vested upon them.
Transfer/advance to the LEE/PU shall be subject to the rule under Section 313 of
the LGC.
No amount of the LGU transfer/advance to the LEE/PU shall be used to fund the
PS requirements of the said LEE/PU.
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STEP 1: EVALUATE WHETHER THE LGU SHOULD ENGAGE IN LEE
RESPONSIBLE PERSON / UNIT
The LCE may assign or designate the relevant local officials who will be
responsible for planning and implementing the new LEEs.
4-HURDLE CRITERIA
1. Satisfy the LGU economic and social objectives as reflected in the PDPFP/CDP
and LDIP and AIP
2. Fill gaps and services not adequately provided by private sectors.
3. Operate as a business enterprise with its own business plan and budget.
4. Operate with appropriate staffing complement to satisfy its operating
objectives.
If:
✔ 1. Satisfy the LGU economic and social objectives as reflected in the PDPFP/CDP
and LDIP and AIP
✔ 2. Fill gaps and services not adequately provided by the private sectors.
3. Operate as a business enterprise with its own business plan and budget.
4. Operate with appropriate staffing complement to satisfy its operating
objectives.
Then:
The LGU should consider partnering with the private Sector or other LGUs:
1. Contracting out- service, management, lease and concession contracts;
2. Build-operate-transfer (BOT) and its variants;
3. Joint ventures - with other LGUs, NGOs, CSOs; and
4. Inter LGU partnerships.
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5 MAJOR COMPONENTS OF A FEASIBILITY STUDY
SOURCES OF FINANCING
1. Current Available LGU Revenues
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Taxes
Fees and charges
Revenues from existing LEE reserves
Surpluses
IRA
Transfers to LEEs shall take the form of advances or subsidy from the General
Fund pursuant to LGC Section 313, subject to existing COA rules and regulations.
These advances or subsidy, however, cannot be used to finance the personnel
services of LEE staff.
2. Borrowings
direct loans from lending institutions
bond proceeds
3. Foreign and Local Grants
for "hard" projects - whose results are capital outlays and other
infrastructure projects whose results are tangible assets)
for "soft" projects - whose results are not tangible, such as capacity
building, systems improvement and the like
4. Capital Income
derived from sales or use of existing LGU assets.
5. Cost Recovery
User fees and charges; and
Revenue anticipating measures like special levies, and earmarked taxation
of future benefits.
LGC Section 240 allows the LGUs to impose a special levy on lands especially
benefited by public works projects or improvements funded by the LGU provided
that the special levy shall not exceed 60% of the actual cost of such projects and
improvements.
The special levy takes the form of an additional real property tax imposed on the
benefited properties. The imposition of a special levy requires the enactment of
an enabling ordinance.
6. Cost Sharing
Share the cost in operating LEEs mutually beneficial to other parties, such
as with other LGUs, the national government, or with the private sector.
7. Public Private Partnerships
BOT and its variants;
lease financing;
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contractor/supplier credit; and
subject to the applicable rules and regulations set by the PPP Center.
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It is a powerful management tool that details how the LEE is going to reach
its objectives and where it plans to go in relation to where it is.
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CONTENTS OF THE ORDINANCE
The ordinance enacted by the Local Sanggunian should contain, among others:
purpose and justification for the LEE;
capitalization;
sources of financing;
organization and staffing; pricing policy; and
Sunset provision.
EXISTING LEEs
Implementing procedures for Existing LEEs
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LOCAL BUDGET PROCESS
1. Budget is a financial plan of estimates of income and expenditures for one
fiscal year.
2. Budgeting helps LGUs to:
Spend within their means
Invest in the right priorities
Deliver measurable results
Empower citizens through fiscal transparency
3. Budgeting Framework
Participatory
policy-based
performance-informed
4. The 5 local budget processes are
Preparation
Authorization
Review
Execution
Accountability
5. BUDGET PREPARATION
Cost estimation of PPA
Review of budget proposal
LEP preparation
Budget Message
Flow:
Budget call – LCE – June 16
Budget Forum – LCE, LFC, Department Heads- June 16
Budget proposal – Department Heads- July 15
Budget hearing – LCE, LFC – August 15
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Executive budget – LCE, LFC – October 10
Budget Message - LCE, LFC – October 10
Executive Budget Submission- LCE - October 16
6. BUDGET AUTHORIZATION
Anchored on the fundamental principle NO MONEY SHALL BE PAID OUT OF
THE TREASURY EXCEPT IN PURSUANCE OF AN APPROPRIATION
ORDINANCE.
Flow:
LEP Executive Budget submission- LCE
LEP Preliminary Review and Evaluation – Sanggunian and
Department Heads
LEP Deliberation- Sanggunian and LFC
Budget Authorization- Sanggunian
Posting of AO and forwarding of copies to reviewing authority-
Sanggunian Secretary
7. BUDGET REVIEW
To determine whether the AO has complied with budgetary requirements
and limitations of LGC
Flow:
AO submission- Sanggunian Secretary
Check budgetary requirements- Reviewing Authority
Review AO- Reviewing Authority
Issues Review Action- Reviewing Authority
Compliance with the Budge Review findings- LCE
Acts on Budget Review findings- Sanggunian
8. BUDGET EXECUTION
Flow:
Release of Allotment- LBO
Prepare detailed financial and physical performance target –
Department Heads
Prepare summary financial and physical performance target- LFC
Prepare cash program- Treasurer
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Obligate and disburse funds – Accountant
Adjustments of cash program- LFC
Corrective Actions – Department Heads
9. BUDGET ACCOUNTABILITY
Tracking receipts of income and expenditures and evaluation of financial
and physical performance .
Flow:
Monitor receipts and expenditures –Treasurer
Monitor outputs- LCE
Submit accountability reports- LCE and treasurer
Submit performance evaluation ( output vs. target) – LCE
A. IF YES
7. Evaluate financial reports of the LGU (BLGF- RO)
8. Compute preliminarily LGU Net Debt Service Ceiling and Borrowing Capacity
(NDSCBC)
(BLGF-RO)
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9. Submit to BLGF-CO all documentary requirements and the preliminary
computation for the issuance of certificate of NDSCBC (BLGF- RO)
10. Final computation and issuance of certificate of NDSCBC (BLGF- CO)
Is the Proposed Loan Higher than BLGF Certification?
If yes
11. Re-negotiate with the lending institution for lower interest rate, longer tenor,
or consider other lending institutions, then re-submit to BLGF (LGU)
if no
11. Submit to BSP a written request for Monetary Board Opinion (LGU)
12. Evaluate LGU request and supporting documentary requirements (BSP)
13. Monetary Board renders Opinion on the Monetary Balance and Payments
implications of the proposed LGU borrowing, per BSP Circular No.926 -2016 (BSP)
14. Submit to the Lending Institutions the BLGF Certification, MB Opinion and
Other Requirements (BSP)
15. Approval and Signing of Loan Agreement with the LGU (Lending Institution)
16. Release of Loan (Lending Institution)
17. Record receipt of Loan Proceeds and prepare borrowing reports for
submission to BLGF-RO and BSP (LGU)
18. Receive LGU Post Borrowing Report (BLGF- RO) (BSP)
B. IF NO - Submit the required additional documents (LGU)
7. Evaluate financial reports of the LGU (BLGF- RO)
8. Compute preliminarily LGU Net Debt Service Ceiling and Borrowing Capacity
(NDSCBC)
(BLGF- RO)
9. Submit to BLGF-CO all documentary requirements and the preliminary
computation for the issuance of certificate of NDSCBC
(BLGF- RO)
10. Final computation and issuance of certificate of NDSCBC
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(BLGF- CO)
Is the Proposed Loan Higher than BLGF Certification?
If yes
11. Re-negotiate with the lending institution for lower interest rate, longer tenor,
or consider other lending institutions, then re-submit to BLGF (LGU)
if no
11. Submit to BSP a written request for Monetary Board Opinion (LGU)
12. Evaluate LGU request and supporting documentary requirements (BSP)
13. Monetary Board renders Opinion on the Monetary Balance and Payments
implications of the proposed LGU borrowing, per BSP Circular No.926- 2016 (BSP)
14. Submit to the Lending Institutions the BLGF Certification, MB Opinion and
Other Requirements (BSP)
15. Approval and Signing of Loan Agreement with the LGU (Lending Institution)
16. Release of Loan (Lending Institution)
17. Record receipt of Loan Proceeds and prepare borrowing reports for
submission to BLGF-RO and BSP (LGU)
18. Receive LGU Post Borrowing Report (BLGF- RO) (BSP)
CONTRACTUAL ARRANGEMENTS
1. BT – Build-Transfer
2. BLT – Build-Lease-Transfer
3. BOT – Build- Operate - Transfer
4. BOO – Build- Own – Operate
5. BTO- Build-Transfer - Operate
6. CAO – Contract-Add -Operate
7. DOT – Develop-Operate-Transfer
8. ROT – Rehabilitate-Operate-Transfer
9. ROO – Rehabilitate-Own-Operate
1. Build-Transfer
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o Project proponent finances and constructs facilities
o Turn over to LGU after completion
o LGU pays total investment plus Rate of Returns not exceeding 12%
2. Build-Lease-Transfer
o Project proponent finances and constructs facilities
o LGU leases for a fixed period after completion
o After the leasing period, ownership is transferred to LGU
3. Build- Operate – Transfer
o Project proponent finances, constructs and operate facilities not
exceeding 50 years.
o For Franchised, must be operated by a Filipino
o If corporation, 60% Filipino 40% foreign ownership
o Transfer ownership to LGU after 50 years.
4. Build- Own – Operate
o Project proponent finances, constructs and operate facilities
o Must be approved by the President upon recommendation
of ICC NEDA or Investment Coordination Committee- NEDA
5. Build-Transfer - Operate
o Project proponent finances and constructs facilities
o Transfer ownership to LGU upon completion
o Project Proponent may operate under an agreement
6. Contract-Add -Operate
o Project Proponent adds facilities to an existing infrastructure being
rented from LGU.
o Project Proponent operates on a franchised period
o May or may not transfer ownership to LGU.
7. Develop-Operate-Transfer
o Project Proponent develops adjoining properties for higher
rent values
o Transfer ownership to LGU
8. Rehabilitate-Operate-Transfer
o Project Proponent refurbishes existing facilities and operate
for a franchised period
o Transfer ownership to LGU after.
9. Rehabilitate-Own-Operate
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o Project Proponent refurbishes and operate facilities
o No time limitation on ownership as long as no violation of
franchised policies.
1. Project Proponent can loan 50% of the project cost from ODA or Official
Development Assistance – NEDA or any lending institution.
2. Solicited Projects are enlisted priority projects of LGUs.
3. Unsolicited Projects are from private sector and not in the list of PP of
LGUs.
4. Priority Projects are:
a. Highways , railways and mass transit ,Ports, airports
b. Facilities of power generation, telecom and IT
c. Irrigation and water supply
d. Education and health
e. Land reclamation and eco-tourism
f. Government buildings and housing
g. Market and post- harvest facilities
h. Environmental and solid waste management
i. Climate change mitigation infrastructure
5. National Priority Projects
Public Investment Program PIP
Comprehensive and Integrated Infrastructure Program CIPP
6. Local Priority Projects
Provincial Development and Investment Program PDIP
Local Development and Investment Program LDIP
7. Any updates on Priority Projects must be submitted to PPP centre within 5
days from approval.
8. List of PPs must be published at least once every 6 months in national
newspaper.
9. Approval of Priority Projects
a. National Projects
300M – ICC
More than 300M – ICC and NEDA Board
b. Local Projects
20M – Municipal Council
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20M - 50M – Provincial Council
50M- City Council
More than 50M – 200M – Regional Council
More than 200M- ICC of NEDA
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2. Submit Latest SALN
3. Submit list of bondable public officers certified by agency.
4. Submit 1 to 3 to BTR RD
5. ATAP shall be issued to the officer for the payment of bond.
Schedule of Cash Accountability and the Corresponding Bonds
1. Amount of bond shall be based on the total accountability of cash, property
and accountable forms.
2. Individual maximum accountability shall not exceed 100 million pesos.
3. The TOP with the approval of Secretary of Finance shall fix and review uniform
rate of premium bond under Public Bonding Law.
4. The rate of premium of the Fidelity Bond is equal to 1.5% of the amount of
bond but shall not be less than P150.
5. Property Accountability includes:
A. Government securities
B. Equipment
C. Supplies and Materials
30% of their total value x 1.5% = premium bond
6. Accountable Forms
A. Internal revenue stamp
B. Documentary Stamp
C. Customs Documentary Stamp
D. Cash tickets
E. Postage
F. Cattle registration certificate
G. Marriage certificate
H. Auto driver certificate
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I. Motor vehicle license
J. Other accountable forms with face value
10% of their total value x 1.5% = premium bond
Renewal of Bonds
1. Fidelity Bond shall be renewed before the expiration date. ( 1 year)
2. Accomplish GF 57A.
3. Agency certification of no pending administrative/criminal case.
4. Copy of the latest BTr approved bond.
5. Latest sworn SALN
Increase in the Amount of Accountability
1. Increase in the amount of accountability will have a corresponding increase in
the premium bond.
2. Accomplish GF 57A .
3. Submit special order increasing the amount of accountability.
4. Certified list of bonded officers.
5. The bond shall take effect upon the payment of new premium bond.
6. The Chief Treasury Operations Officer II or BTr shall cancel the previously
assigned risk number and issue a new one.
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Fidelity Bond is valid for 1 year from the time of payment and subject to renewal
yearly before the expiration date. Failure to renew shall consider such bonds
automatically cancelled.
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The Internal Revenue Allotment (IRA) refers to the shares of LGUs from the
national internal revenue taxes (NIRT) equivalent to 40% of the total annual
revenue collection of the 3rd year preceding the current fiscal year.
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of Environment and Natural Resources (DENR) 3 years. The allocation of the
individual share in the case of barangays, shall be P80,000 for each barangay with
a population of not less than 100 inhabitants. The balance to be distributed shall
be based on population( 60%) equal sharing.
Social Development
Construction or rehabilitation of health centers, rural health units or hospitals,
and purchase of medical equipment;
1. Construction or rehabilitation of local government-owned potable water
supply system;
2. Establishment or rehabilitation of Manpower Development Centers;
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3. Construction or rehabilitation of evacuation centers;
4. Purchase or repair of area-wide calamity related alarm or warning system;
5. Rehabilitation of cultural/historical sites;
6. Purchase or repair of appropriate calamity-related rescue operations
equipment such as inflatable boats, breathing apparatus, extraction tools,
safe line rescue ropes, fire extinguishers, chainsaws, 2- way handheld
radios and the like;
7. Purchase and development of land for the relocation of informal settlers
and relocation of victims of calamities;
8. Construction or rehabilitation of facilities such as multi-purpose hall
intended to cater out-of-school youths, women, senior citizens, minors,
displaced families,
indigenous people and differently-abled persons; and
9. Installation and maintenance of street lighting system except payment of
electric bills.
Economic Development
1. Construction or rehabilitation of communal irrigation or water impounding
system and purchase of post-harvest facilities such as farm or hand tractor
with trailer, thresher and mechanical driers;
2. Construction or rehabilitation of local roads or bridges and purchase of
appropriate engineering equipment such as dump trucks, graders and pay
loaders;
3. Capital expenditures related to the implementation of livelihood or
entrepreneurship/local economic development projects; and
4. Amortization of loans used to finance development projects subject to the
20% debt service cap.
Environmental Management
1. Reforestation and urban greening;
2. Construction or rehabilitation of sanitary landfills, material recovery
facilities and purchase of garbage trucks and related equipment;
3. Implementation of flood and erosion control projects such as
rehabilitation and construction of drainage systems, de-silting of rivers, de-
clogging of canals; and
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4. Other environmental management projects that promote air and water
quality, as well as productivity of the coastal or freshwater habitat,
agricultural land and forest land.
CITY
City 65%
Barangay 35 %
If there are 2 or more cities, sharing is based on
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Population 70%
Land area 30%
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Factory or plantation 70%
c. With factory and plantation in different locations
Main office 30%
factory 42%
plantation 28%
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Transaction #
Mode of payment
Order of payment slip#
Collection of NGA must be deposited to Treasurer of the Philippines
LGU and GOCC collection must be deposited to AGDBs
LGU must provide read-view- print access rights to the COA Auditor.
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6. Must be included in the RAAF or Report of Accountability for Accountable
Forms
7. RAFF must be submitted to COA Unit Auditor not later than 5th day of
ensuing month.
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5. Stale
L. Any check that has alteration in the following shall not be accepted.
Regardless of any authorization made to indicate alterations.
1. date;
2. name of the payee
3. signature/s of the Drawer/s or the Drawer’s signatory/ies;
4. account name;
5. account number;
6. check number; or
M. No service and goods shall be rendered or delivered by the local
government unit unless the private check is acknowledged by the
drawee bank.
N. Money collected by the collecting officer shall not be used for
encashing private checks.
O. The transfer of government funds from one officer to the other shall
only be allowed upon direct authorization of the commission on
audit or its representative.
P. The transfer of government funds shall be done upon properly
itemized invoice and receipt which shall support the clearance to be
issued to the relieved or outgoing officer subject to regulations of
the commission of
Q. In the event that government funds are lost during transit or caused
by fire, theft, or other casualties, the officer in charge shall report
the incident with evidence to the commission of audit or the auditor
concerned within 30 days .
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2. Barangay treasurers shall follow the same procedure in the
remittance of their collections with the Local treasurer.
3. For field collectors, Turnovers of collection shall only be made once a
week or if the total collection reach five thousand pesos (₱ 5,000)
4. The Accountable Officer shall provide denomination of cash
collections and list of checks received upon remittance of daily
collections.
5. The Local Treasurer or Liquidating Officer shall verify the RCD as to
initial balances on hand, receipts, sales and issues, and the new
balances on hand;
6. make a physical count of the accountable forms remaining in the
custody of the Collectors
7. The local treasurer may assign a liquidating officer from among the
collector to prepare a consolidated RCD and turn over cash
collections to the Local Treasurer together with the original and two
(2) copies of the RCD of Collectors and the duplicates of the official
receipts issued.
8. Local treasurers shal maintain separate depository accounts for each
fund in his custody
9. Local government units’ depository accounts shall only be under the
Government Financial Institutions that have a universal bank license
and a CAMELS rating of at least 3.
10.LGUs may use the collection services of a bank thru a transaction
based arrangement without approval, provided that all collections
shall be transferred to any GFIs on the next banking day.
11.Banks that are not GFIs may be allowed under the following:
GFIs in the area cannot provide the services.
No accessible GFIs within 20KM
Security matters
12.Maintaining balance can be requested up to 3 months worth or ₱500,000
whichever is lower. All funds deposited are only for the use of operation
funds. Remaining funds are to be returned to the nearest GFI.
13.If LGUs cannot meet conditions set by numbers 1, 2 and 3, it
shall request approval from the BGLF to open and maintain an
account under the following requirements.
letter from the Local Chief Executive or from his designated officer
seeking approval from the BLGF.
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Certification from the bank that no LGU is connected to any high
standing officer of the proposed bank, unless certified that it is the
only bank operating in the area of jurisdiction of the LGU.
Resolution of the local sanggunian authorizing the LGU to deposit
funds with the proposed bank with the approval of the Local Chief
Executive.
Certification form the DILG (Department of Interior and Local
Government) on the practice of accountability and transparency.
Certification from the Philippine National Police Provincial Office
confirming the security risk matters for opening and maintaining an
account in a proposed bank.
CAMELS rating issued by BSP
Vicinity map showcasing the location and distance between the LGU,
GFI and the proposed bank.
Other information required by the BLGF in the course of the
evaluation.
14.In case the GFIs operate a branch within the territorial jurisdiction of the
LGU no longer prevail, the LGU shall transfer all funds and cash balance to
the GFIs within three banking day.
15.The local treasurer shall deposit all collections with the authorized
depository bank daily.
All deposits shall be Recorded in the Cashbook — Cash in Bank
16.Collections shall be remitted to the Cashier of the field office of the
LGU
When travel distance from the field office to the local treasurer may
expose government funds to risk, the collection may be deposited in
the authorized bank near the office of the LGU, upon authorization
by the local treasurer.
17.Idle funds must be in time deposit account - cash which the LGU can
freely invest in government securities or fixed term deposits with
authorized government depository banks, after considering the
coverage of regular and recurring operating expenses.
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1. Cashbook-Cash in treasury - Used by the Local treasurer to record
daily collections (debit) and deposit (credit).
This cashbook shall be maintained by fund and shall be updated and
balanced daily.
2. Cashbook-Cash in Bank - Used to record all deposits and withdrawals thru
checks issued by the bank. Separate cashbook is sued for each depository
account.
Cashbook-Cash Advances - Used by the local treasurer to record cash
advances received, paid, refunded, adjusted and the balance.
B. The Liquidating officers cashbook
Shall be used to record all collections turned over to him by
designated revenue collectors, remittances to the local treasurer or
liquidating officer. Separate cashbooks are used for each fund. Must
be updated and balanced daily.
C. The collectors cashbook
Maintained by collecting officers including the collecting officers for
the local government office. Record all daily collections for the local
government office received and all remittances to the designated
liquidating officer.
At the end of the month or when required, the month's account and
transactions shall be closed, ruled, and the accountable officers will
accomplish the certificate of transactions in the respective
cashbooks.
D. Accountable Officers Certificate of Transactions in the cashbooks
Local treasurers entrusted by reason, at the end of the month or
when tasked, shall accomplish the following certificate.
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All accountable officers shall reconcile their cashbook balances if
needed with the subsidiary accounting records
E. Safeguarding of Cashbook
All cashbook shall be locked up in a fire-proof safe or a vault.
Forms and Reports Used by the Local Treasury Officials
a. Report of the Collection and Deposits shall be prepared daily by the
following:
1. Collectors
1. RCDs shall reflect collections, remittances and duplicate copies
of the Official Receipt issued to their designated Liquidating
Officer.
2. It shall also contain a report of accountability for accountable
forms used showing the name of the forms and number,
beginning balance, received, issued and ending balance.
2. Local Treasurer
1. The Local Treasurer shall verify and acknowledge the
submitted consolidated RCD and shall deposit all collections
turned-over by the Liquidating Officer to the authorized
depository banks.
2. separate RCD shall be prepared for the collections pertaining
to the Basic RPT Special Education Fund (SEF).
3. Submission of Collection Reports
Treasurers shall submit daily records of receipts, together with
the supporting documents, to the Chief Accountant. The
official assigned to the daily recording
of transaction shall turn-over the receipts and supporting
documents to the Auditor within ten (10) days
COA auditor will check and verify documents within 30 days.
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5. It exercises administrative, technical supervision and coordination over
local treasury and assessment operations.
6. It develops, implement and monitor programs for collection of taxes and
management of revenues and credit financing of 15 Regional offices.
9. The 3 KRAs or Key Result Areas of BLGF strategies are Policy Development,
Technical Assistance and Financial Performance Monitoring and
Evaluation.
10.The MFO or major final output is the Regulation of LGUs Financial
Management.
11.BLGF adopts 3- Level Certification System or SEAL Program
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( Standardized Examination and Assessment for Local Treasury
Operations)
12.Level 1 Basic Competency
Level 2 Intermediate Competency
Level 3 Advanced Competency
13. SEAL Program aims to improve the selection and appointment process of
treasury employees and minimize political pressure to Secretary of Finance
as appointing authority.
14.The appointment of Treasurer is mandatory for PCM.
15.The appointment of Assistant Treasurer is optional for PCM.
16.The Secretary of Finance may delegate appointing authority for LT and ALT
in PCM except in Metro Manila.
17.LT and ALT in Metro Manila are appointed by Secretary of Finance.
18.The Treasurer is under the supervision of LCE or governor/mayor.
19.Qualifications of LT and ALT
Filipino citizen ( no dual citizenship)
Resident of the LGU concerned
Of good moral character
Degree holder preferably in commerce or public administration
Civil service eligible
Accounting or Treasury service experience of 5 years for P/C and 3
years for Municipality.
20. Automatic Succession of the ALT as OIC in the absence or disability of LT.
21. In the absence of ALT the Secretary of Finance may designate other
treasury employee without additional compensation, in the absence of
ALT.
22.Employees outside the treasury department may be considered for OIC
when there’s no qualified treasury personnel.
23.The OIC shall notify BLGF within 24 hours of assumption.
24.The BLGF Regional Director shall issue Order of Designation with the
confirmation of Secretary of Finance within 48 hours upon the receipt of
notice.
25. A detail is the movement of an employee from one dept/ agency to
another.
26.The LCE shall submit a written request for detail to the Sec. of Finance.
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27.The Detail is temporary, no reduction in rank or salary and employee
receives salary from mother agency.
28.No detail is made within 3 months before any election.
29.Powers and Duties of LT and ALT
I. General Functions
1. Collect all local taxes, fees and charges.
2. Advise the LCE and Sanggunian on disposition of LGU funds.
3. Exercise custody and proper management of funds.
4. Inspect business establishments in compliance with tax
ordinances.
5. Maintain and update the tax information system.
II. Specific Functions
a.
Certify as to the availability of funds.
b.
Implement tax collection and enforcement program.
c.
Prepare and submit reports.
d.
Certify RPT delinquencies remaining uncollected.
e.
Examine the Books of Accounts and Pertinent Records of Businessmen.
f.
Submit Certified Statement Covering Income and Expenditures.
g.
Issue a Certified Statement Covering Actual Income
h.
Keep full sets of secondary standards for use in the Testing of Weights and
Measures.
i. Register in a Book All Branded and Counter Branded Animals.
j. Recommend to the LCE The Disapproval of Application for the Termination
of Business which tries to avoid tax obligations.
k. Attend sessions of the Sanggunian.
l. As Deputies of the National Government Alien Registration Fees.
m. As member of the following:
Local Finance Committee
Local School Board
Appraisal Committee
n. Remit dues to the following :
BIR
GSIS
PHILHEALTH
MMDA
o. Other duties prescribed by Omnibus Election Code
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Basics of Local Finance and Taxation
30.The Constitution vests on LGUs the power to create their own sources of
revenues and levy taxes, fees and charges through appropriate
ordinances.
31.The LGUs can establish economic enterprises and enter into contracts.
32.Legal framework of LGUs taxing power are : Constitution, Local
Government Code and Local Ordinance.
33. General Principles on Local Finance
1. No money shall be paid out of the local treasury except in pursuance
of an appropriate ordinance.
2. PCM Treasurers shall open and maintain separate depository
accounts for each fund with GFIs of universal bank license and
CAMELS rating of at least three.
3. The depository accounts must be under the name of the LGU.
4. Funds shall be spent solely for public purposes.
5. Local revenues is generated only from sources expressly authorized
by law and at all times be acknowledged.
6. Official Receipt must be issued immediately after receiving
payment.
7. All monies officially received by LGUs shall be accounted as local
funds.
8. PCM shall maintain a general fund.
9. SEF, trust fund, and special accounts in the General Fund must be
maintained,.
10.Profits from economic enterprises shall be first applied for the
return of advances or loans.
11.Any excess must be placed in the General Fund.
12.Custody of local funds shall be bonded.
13.LGU shall formulate sound financial plan and budget based on
functions, projects in terms of expected result
34.Fundamental Principles in Local Taxation
Taxation shall be :
a. Uniform in each LGU.
b. Equitable and practicable and progressive.
c. Levied and collected only for public purposes.
d. Not contrary to law or in restraint of trade.
e. Shall not be let in any private person.
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35.Limitations on the Taxing Powers of LGUs
Shall not extend to the levy if the following:
a. Income tax
b. Documentary stamp
c. Estate tax
d. Customs fees and charges
e. Value- added tax or VAT
f. TFC on agricultural and aquatic products by marginal farmers and
fishermen.
g. Businesses under Board of Investment.
h. Taxes on transportation by air ,land or water.
i. Taxes on insurance.
j. TFC on registration of motor vehicles except tricycles.
k. Taxes on exported products.
l. Countryside and Barangay enterprises and cooperatives.
36.Tax Exemptions
1. Local Water District
2. Registered cooperatives
3. Hospitals and educational institutions
4. Reading Materials by DEPED
5. Business Enterprise under Board of Investment for the period of 4 to
6 years.
6. Business within Export Processing Zones
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7. SALN of President, VP, members of the cabinet, congress, Supreme Court,
constitutional commission and AFP generals shall be disclosed to the
public.
8. Responsibility is the obligation to exercise assigned authority.
9. Accountability is the answerability of public officers in safekeeping
government properties and funds.
10.Local Treasurer is accountable to proper management and disbursement
of local funds, real properties and accountable forms of the LGUs.
11.All accountable officers shall be properly bonded.
12. Liability is a personal obligation arising from audit disallowance.
13.Public officers is liable even if he only acted upon the direction of his
superior unless objection in writing is registered.
14.Turnover of accountabilities, advice of retirement, transfer and settlement
of accounts to the resident Auditor shall be done.
15.All books and accounts shall be completely written, updated, totaled and
closed as the date of transfer.
16.Invoice Receipts of accountability in 4 copies.
17.Acknowledgement Receipt for Equipment.
18.Consolidated Report of Accountability and Accountable Forms or CRAAF
with RAFF of accountable officers.
19.Officers who fails to notify and apply for relief from accountability within
30 days shall be liable for any loss.
20.Requirements for Request for Relief from Accountability :
1. Notice of loss
2. Request for relief from accountability
3. Written explanation for delay in filing
4. Progress or Final Investigation Report
5. Affidavit of the accountable officer
6. Affidavit of two disinterested persons
7. Recommendation of the LCE or Treasurer
8. Memorandum Receipt of the property
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5. Responsiveness to the Public
6. Nationalism and Patriotism
7. Commitment to Democracy
8. Simple Living
22.CIVIL LIABILITY
1. GOOD FAITH is an honest intention to abstain from taking
unconscionable advantage.
2. BAD FAITH is not simply judgment or negligence. It is with dishonest
purpose.
23.ADMINISTRATIVE LIABILITY
1. Superior Officers are not liable for acts of subordinates unless
actually authorized by written order.
2. Subordinate officers are liable even if instructed by Superior unless
objection in writing is registered.
3. Prima facie or properties unlawfully acquired will be forfeited by
government.
4. Persuading other public official to violate rules or allowing himself to
be persuaded.
5. Directly or indirectly requesting or receiving any gift and
employment of a family member in connection with government
transactions.
6. Neglecting request from public to favor his own interest or
advantage.
7. Entering any contract in behalf of the government which can be
grossly disadvantageous to the public office.
8. Granting permit or license to unqualified person.
9. Divulging valuable information of confidential matters and releasing
such information in advance of its authorized release date.
PENALTIES
a. Imprisonment of not less than 6 years and 1 month but not more than 15
years.
b. Perpetual disqualification from public office.
c. Confiscation of unexplained wealth.
24.CRIMINAL LIABILITY
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RA 6713 Code of Conduct and Ethical Standards of Public Officials
RA 3019 Graft and Corruption
RA 7080 Plunder
Bribery
Malversation of Public Funds
Failure to Render Account Before Leaving the Country
Illegal Use of Public Funds and Property
Ill- gotten wealth amounting to 75M shall be guilty of plunder and
punished by RECLUSION PERPETUA TO DEATH.
PD 1445 by Commission of Audit – shall be punished a FINE not
exceeding 1000 or Imprisonment not exceeding 6 months or both.
PD 46 on receiving gifts by the reason of official position is
punishable of not less than 1 year but not more than 5 years and
perpetual disqualification from public office.
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14.Funds shall be available exclusively for the specific purpose which they
have been appropriated.
15.Funds cannot be transfer from one item to another.
16.Total disbursement from any local fund shall not exceed 50% of the
uncollected estimated revenue accruing to such local fund.
17. No cash overdraft at the end of the fiscal year.
18. No advance payment on services/goods not rendered or delivered yet.
19. No public money or property shall be applied for religious or private
purposes.
20.No public money or property shall be paid for entertainment except for
representation allowance of foreign missions authorized by the president.
21. Requirements for Disbursements from the general fund and special
funds.
a. Certification in the disbursement voucher by the Local Accountant.
b. Certification in the disbursement voucher by the Local Treasurer.
c. Approval by the LCE, except for regularly recurring administrative expenses.
d. The disbursement voucher for expenditures of Sanggunian shall be approved
by Vice Mayor or Vice-Governor.
e. The disbursement for SEF shall be approved by the LCE as chairperson of the
Local School Board.
f. Trust Funds shall be strictly utilized in compliance with MOA.
g. under the IMPREST SYSTEM, all payments must be made in check.
h. Only payments in small amount may be made in cash through the petty cash
fund.
I. Payrolls are usually paid either by check or in cash.
j. checks shall always be made payable to a specific person or entity and never to
“cash or bearer.”
k. All checks shall be crossed for deposit except those payable to government
employees, financial Assistance not exceeding 15 000.
l. Unused checks shall be kept in the vault accessible only to local treasurer.
m. Signing or countersigning of blank checks are not allowed.
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n. Checks shall be released only when the accountant’s advice of local check
disbursement has been prepared and submitted to the bank.
o. All issued checks shall be recorded chronologically in the Control Book of
Checks Issued.
p. Official receipt must be issued by the payee upon receiving the check and sign
the receipt, disbursement voucher and the Control Books of Checks Issued.
q. The disbursement voucher and supporting documents shall be stamped PAID
by the local treasurer.
r. All checks issued including cancelled or voided checks shall be recorded in the
Report of Checks Issued in 3 copies daily by the local treasurer.
s. A stale check is over 6 months older and must not be accepted.
t. Checks caused by theft, robbery, misplaced, and force majeure which after
diligent search, cannot be found or recovered, are considered lost.
22. Requirements for the Replacement of Lost, Destroyed and Obsolete Checks
a. Submission of the original check
b. MDS checks or Modified Disbursement System fraudulently encashed shall
be dishonored and charge back to GSB through the BTR.
23. Special Cash Advances are granted by the LCE to disbursing officers for
legally authorized purposes.
24. Only permanently appointed officials or employees shall be granted cash
advances.
25. Only one disbursing officer shall be designated for a specific legal purpose.
26. Additional disbursing officers may be assigned when fully justified by the
Agency purpose
27. The accountant shall obligate all cash advances granted.
28. The cash advance for salaries and wages shall be equal to the net amount of
the payroll for a pay period.
29. Documents needed for Cash Advances
Copy of designation by the Agency Head in case the AO is not a disbursing
officer.
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Copy of Approved application for bond.
payroll with their net payments
30. The cash advance for petty operating expenses is good for one month.
31. The AO may request replenishment when 75% has been disbursed or as the
need requires and after submitting all requirements and reports.
32. It shall not be used for payments of regular expenses.
33. Payments out of cash advance shall be allowed not exceeding P5000 for each
transaction except with a specific authority by COA.
34. It shall be supported by :
copy of authority by agency head
copy of Approved application bond
estimate of expenses
35. The special cash advance for current operating expenses is not subject to
amount limitation, provided that it is approved by agency head.
36. It is limited for 2 – month expenses.
37. Additional cash advance shall be granted on the basis of activities or
requirements for 2 months, whichever is lower.
38. It shall be supported by :
copy of authority by agency head
copy of Approved application bond
Budget for COE of the Agency
39. The cash advance for foreign travel shall be supported by:
Authority to travel
Itinerary of travel
Authority from the office of the president for representation allowance
Liquidation of Cash Advances
40. The AO shall liquidate his cash advance as follows
salaries and wages within 5 days after each 15th day/end of the month.
operating expenses within 20 days after the end of the year.
local travel within 30 days after return.
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foreign travel within 60 days after return.
41. Failure to liquidate will cause withholding of salary.
42. The AO shall prepare the Report of Disbursement in 3 copies and submit it to
the accountant.
43. The accountant shall verify the report within 10 days, record it in the books
and submit to the Auditor.
44. The Auditor shall complete the Audit in 30 days and issue Credit Notice to AO
on amount allowed and any disallowances made.
45. The copy for Credit Notice will be furnished to the accountant for restoration
of the cash advances.
46. When a cash advance is no longer needed for 2 months, it must be returned
to the collecting officer.
47. A new cash advance may be granted at the start of an ensuing year provided
all requirements are submitted.
Reports and Documents to support the Liquidation
48. Salaries and Wages
Disbursement report
Signed payrolls
Time records
Approved LOA
49. Petty operating expenses
Disbursement Report
Approved requisitions and issue voucher
Certificate of emergency purchase
Receipts, sales invoices
Certificate of acceptance
Approved ticket for gasoline
50. Current Operating expenses
Same requirements with salaries and wages and Petty operating expenses
Canvass of at least 3 suppliers
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51. Foreign Travel
Itinerary
Certificate of travel completed
Report on trip undertaken
Plane, boat or bus ticket
Receipts for hotel bills and incidental expenses
53. Liquidation of Cash Advance for CF and IF shall be audited by the COA- ICFAU
or Intelligence and Confidential Funds Audit Office.
54. They shall be liquidated within 30 days of each quarter or from the date of
completion of the project.
2. Objectives
Safeguarding assets
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Check accuracy and reliability of Accounting Data
Adherence to Managerial Policies
Comply with laws and regulations
Ensure the 4Es – Economical, Efficient, Effective Ethical
3. Internal Control Framework
The most basic competence that an internal auditor must possess is
the knowledge of internal controls.
Internal control has 5 interrelated components:
Control environment
Risk assessment
Control activities
Information and communication
Monitoring and evaluation
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device, practice, or other conditions and/or actions which
maintain and/or modify risk.
Risk Response
Determining a risk and the response to it is an important
part of decision-making. Because risks are uncertain, deciding
whether to accept or avoid a risk-related activity can have
significant consequences for an organization.
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There are 3 ways through which monitoring is accomplished, to
wit:
a. Ongoing monitoring which is ingrained in the daily operations
and management of the organization.
b. Periodic separate evaluation of the controls’ effectiveness.
c. Combination of ongoing monitoring and separate evaluation.
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