SOP No: FS-GP02

SOP Library

SOP NO: FS-GP02 (List of Exhibits/Attachments)

Mission: Finance and Administration

Area: Financial Services (FS)

Activity: General Accounting Plan (FS-GP)

Title:

Decentralized Accounting System

Date Approved/Issued: 03/05/1984

Date Effective: 03/05/1984

Digest:

I. TERMS OF REFERENCE

A. Rationale

B. Objective

C. Scope

D. Basis

II. IMPLEMENTING GUIDELINES

General Policies

1. Central Office finance functions and responsibilities over

Provincial Office

s shall be delegated to the

Regional office

2. Respective

Regional Office

s shall assume direct supervision and control over its

provincial office

s in terms of funds remittances, budget preparation and analysis, financial reporting and other financial functions that may be delegated by the Central Office.

3. The

Provincial Office

s shall be accountable to the

regional office

and the latter to the Directorate for Accounting and Budget with regards to operation of financial matters.

Specific Policies

Organization

1.1 The

Regional Office

s shall be distinct, independent and separate from the

Provincial Office

s (in the regional seat) with its own personnel complement.

1.2 The

Provincial Office

(in the regional seat) shall be treated just like any other branch office within its own staff.

1.3 The

Regional Office

shall be headed by the Regional Accountant who shall be designated as supervisory head of the Provincial Accountants within the region in the matters of financial management.

1.4 The

Regional Office

shall maintain separate bank current and savings accounts.

Books of Accounts and Financial Reports

2.1 The

Regional Office

shall have two (2) books of accounts - one for the

Regional Office

to record its own financial transactions and another for the consolidation of financial transactions of the whole region.

a. Books of Accounts for

Regional Office

Transactions only :

1. Voucher Register Journal

2. Cash/Check Register

3. Journal of Collections and Deposits

4. Advice Register Journal

5. General Journal

6. General Ledgers

7. Subsidiary Ledgers :

7.1 Cash with PNB - by bank account

7.2 Cash with other officers

7.3

COCA-R

- Cash

7.4

COCA-R

- Inventories

7.5

COCA-R

- Fixed Assets

7.6 POA - Cash - per province

7.7 POA - Inventories - per province

7.8 POA - Fixed Assets - per province

7.9 Inventories

7.10 Fixed Assets

7.11 Expenses by Activity

b. Consolidated Books of Accounts for the whole region :

1. General Journal

2. General Ledgers for all trial balance accounts

3. Subsidiary Ledgers

3.1 Cash with PNB - by bank account

3.2 COCA - Cash (Old, New, CF, R)

3.3 COCA - Inventories (Old, New, CF, R)

3.4 COCA - Fixed Assets (Old, New, CF, R)

3.5 Inventories per cereal type

3.6 MTS per type and capacity

3.7 Expenses by activity

2.2 The financial reports to be prepared by the

regional office

are :

a. For

Regional Office

transactions only :

1. Trial Balance and Supporting Schedules

2. Profit and Loss Statements

2.1 Project 1 - Income and Expenses

2.2 Total Project Income and Expenses

3. Statement of Remittances and Disposition of Funds (SRDF)

4. Statement of Obligations Incurred (SOI)

5. Other reports presently required by Central Office

2.3 Reciprocal accounts which shall be used under the

decentralization

concept shall be

ROA-R

for

provincial office

POA-R

and

COCA-R

for

Regional Office

and

BOCA-R

for Central Office. The COCA-Corporate Fund shall not be closed. This account shall be maintained for future use like correction of prior years (before regionalization) transactions. COCA-CF and

COCA-R

shall be reflected separately in the consolidated

trial balance.

Home Office and Branch Office Accounting

3.1

Preparation of Advice

a. Advice Control number

Each office shall maintain a separate numbering series on the advice for easy reference and control. the series shall be maintained and controlled separately for each classification (Cash, Inventory and Fixed Assets) and advice (Debit and Credit). The reference code shall follow the following format :

Document Classification Year Month Series Final

Code Action Code Code Code No. Code

___ ____ ____ ____ ____

Debit Advice (DA)

/ A /

/ N /

/ N

/ A /

Credit Advice (CA)

Each box shall correspond with a code where

represented alphabetic characters and

represented numeric characters.

Document Code - identifies the particular document whether it is a

Debit Advice (DA) or a Credit Advice (CA)

Classification Code - represents the classification where the advice belongs "C" for cash, "I" for inventory and "FA" for Fixed Assets.

Year Code - represents the particular year when the transactions occurred.

Month Code - identifies the month when the transaction occurred. Each month shall be represented by number starting from "1" for January and up to "12" for December.

Series No. - represents the number in the order of preparation for the period. The number series shall be continuous starting from number one (1) at the beginning of each month for each classification and advice.

Final Code - represented by "F" meaning final, which shall be indicated on the last advice accomplished for each classification and advice by respective office during the month.

For Central Office use, advices shall be further classified into :

Advice A - Central Office as the Sending Office

Advice B - Central Office as the Receiving Office

Advice C - Central Office as a Clearing Account

b. Copy Distribution

The

Debit or Credit Advice

shall be prepared in three copies, distributed accordingly as follows :

b.1

Provincial Office

Regional Office

and vice versa

Copy 1 - Addressee's Bookkeeper

2 - Addressee office to be returned to Sender

3 - Sender's Bookkeeper

b.2

Regional Office

to Central Office

Copy 1 - Central Office - DAB

Copy 2 - Central Office to be returned to

Regional Office

Copy 3 -

Regional office

(Sender's Bookkeeper)

b.3 Central Office to

Regional Office

Copy 1 -

Regional Office

Copy 2 -

Regional Office

to be returned to Central Office

Copy 3 - Central Office - DAB

The upper portion of the advice shall be filled up by the sending office. The advice shall be acknowledged/confirmed by the addressee office by filling up the lower portion and returning copy 2 to the sender.

The responding entry shall be originally typewritten on copy 2 to be returned to the sending office

. (Exhibit 1)

c. Transmittal and Reply

c.1 NFA Accountants shall practice timely preparation of advice. Advices shall be prepared whenever a transaction requiring an advice transpired and be sent or transmitted weekly thru the fastest means of communication.

c.2 The sending office shall see to it that the sender's portion of the advice have been properly filled up and its particulars shall be understandable and informative with complete references as follows :

Cash Remittances

Date of remittance

Account

Office who remitted

PNB Branch

Expenses

Object of expenditure

Gas and Oil - vehicle plate number and place of assignment

Dispersal expenses - specific advice number related to stocks transferred

Prior year expense - specific advice number related to stocks transferred

Prior years expense - specific period/date/year the expense was incurred

Office who paid the expenses

Office who incurred the expense

Cash Advances

Office where the travelling employee belongs

Date of Cash Advance

Purpose of Cash Advance

Name of employee

Office who extended cash advance

Assignment of Receivables

Date when the receivable was granted

Name of employee/government agency/private institution

Nature of account i.e. salary loan, educational loan, rice loan, etc.

Stock Transfers

Issuing Office

Recipient Office

Date of Issuance

Bill of Lading Number

Hauler/truck number/Name of Vessel

Warehouse/Warehouse Supervisor Issuing

WSI/WCI/ESI Number

Variety/Commodity Specification

Quality Net Kilos

If the Debit Advice covers several documents (WSI/WCI/ESI), a statement of stock transfers (at least four copies) shall be attached to the advice enumerating the above information.

Supplies and Materials Issuances

Delivery Receipt Number

Date of Issuance

Brief description, i.e. Office Supplies, Spare Parts, Accountable Forms

Fixed Asset Issuances

Date of Issuance

Delivery Receipt Number

Fixed Asset Serial Number

Specific Asset Serial Number

Estimated Life of Asset

Remaining Life of Asset

Accumulated depreciation to be transferred

Issuing Office

Recipient Office

Adjustments

Specific advice being adjusted

Gift Certificates

Attached Kadiwa gift certificates redeemed

Sales Outlet - office who issued the gift certificates

Office who redeemed the gift certificates

c.3 In preparing Debit Advice for cash remittances,

one advice shall be prepared for

each bank ticket.

c.4 Debit Advice shall be prepared separately for each transaction with each office/branch affected this means that

there shall be no Debit Advice with

several offices affected covering several transactions.

For instance, Province A extended cash advances to employees X and Y of Province B and C respectively. Two (2) Debit Advices shall be prepared by Province A.

c.5 The responding office shall reply for the whole amount stated in the Debit Advice. There shall be no responding entry covering partial amounts. If the amount stated in the Debit Advice is not yet fully received, the recipient office shall verify and follow up until the amount is fully cleared before responding on the Debit Advice. However, if there is an error from the sending office, the responding entry shall state the corrected amount with adequate disclosure as to errors and adjustments made.

c.6 NFA Accountants are encouraged to reply promptly on incoming advices. Unacknowledged advices shall be brought to the attention of concerned addressee office every end of month.

3.2 Office to Send

Debit/Credit Advice

a. The Office where the transaction originated shall initiate the sending of advice. The particular office who remit cash, issues inventory for transfer and issues fixed assets shall send the Debit Advice.

b. Transactions are enumerated below with the corresponding office who shall send

the

Debit Advice

Cash

Central Office remits cash to Regional Office - Central Office

Regional Office remits cash to Provincial Office - Regional Office

Provincial Office remits collections to Central Office - Provincial Office

Expenses incurred by Prov. B paid by Prov. A - Province A

Receivables - Educational, Emergency Loans, etc. of

Province A assigned to Province B - Province A

Inventories

Transfer of inventories from province A to Province B - Province A

Supplies and Materials transferred from Central Office

to Regional/Provincial Offices - Central Office

Fixed Assets

Transfer of FA from Office A to Office B - Office A

c. The crediting office for the following transactions shall prepare

and send the

Credit Advice

Central Office collects cash from PAFMI member as payment

from sales at Provincial Office - Central Office

Salary deductions made by Provincial Office for SLVF

account maintained by Central Office - Provincial Office

3.3

Bases for Entries

a. Advices shall be prepared/sent and recorded based on the

following documents/accountability reports.

DOCUMENTS

TRANSACTIONS

OUTFLOW

INFLOW

Cash

Remittances Bank Debit Memo Bank Credit Memo

Payment of Expenses Disbursement DA from Sending

Voucher Office

Assignment of Journal DA from Sending

Receivables Voucher Office

Collection of Receivable CA from office Official Receipt /

not previously assigned who made Report of Collections

assigned collections & Deposits

Inventories

Transfer Delivery Receiving

Receipts Reports

b. The

Debit or Credit Advice

shall serve as the immediate reference in recording the transaction to the Advice Register Journal. However, should an office has already received the item (cash, inventory or fixed asset) and, the corresponding advice is not yet available, same shall be recorded in the ARJ if the amount can be determined as supported with appropriate source documents such as bank tickets, bank statements, warehouse documents - WSR, ESR, WCR, receiving reports and radiograms. The corresponding entry shall be assigned a control advice number and shall be matched with the incoming advices. No advices shall be prepared/send until the advice of the sending office is received by recipient office.

3.4

The Advice Register Journa

a. All inter-office transactions shall be recorded or noted in the Advice Register Journal. The ARJ shall be divided into three (3) separate journals to be maintained for each classification - cash, inventory and fixed asset. This will facilitate accounting Advice Control numbers, matching incoming advices with recorded entries and locating reconciling items.

b. Subsidiary ledgers shall be maintained for each classification.

b.1 The

Regional Office

shall also maintain subsidiary ledgers for each Provincial Office Account (POA).

b.2 The Central Office shall also maintain subsidiary ledgers for each Regional Office Account (BOCA).

b.3 Monthly debit and credit totals of the subsidiary ledgers shall be reconciled with balances of the general ledger control accounts.

c. The Advices prepared for transactions which have been recorded in other books of original entry such as payment for expenses incurred by other office already entered in the VRJ shall be assigned a control number and noted on the ARJ as a memorandum entry with no amount extended to the money columns.

3.5

Reconciliation of Reciprocal Accounts

a. ROA - POA

a.1 Reconciliation of ROA-POA accounts shall be made monthly by the Regional Accountant before the consolidated Regional Trial Balance is prepared for submission to Central Office.

a.2 Reconciling items shall be composed of advices recorded in the

Provincial Office

books not recorded in

Regional Office

books and vice versa. These are usually unresponded advices and credit advices recorded in

provincial office

books with no incoming Debit Advice yet.

a.3 Journal vouchers shall be prepared to take up reconciling items - entries which should have been entered in

provincial office

and

regional office

books. These entries shall not be reversed at the beginning of the succeeding months instead shall be cancelled thru negative entry method only upon receipt of corresponding advice/responding advice.

These entries shall be entered/posted at the Consolidated General Journal.

a.4 Reconciling journal entries with particular

provincial office

concerned shall be properly disclosed in the Trial Balance Schedules of reciprocal accounts.

a.5 The

provincial office

s concerned shall be furnished with the quarterly reconciliation statement.

b. COCA-BOCA

b.1 Reconciliation of COCA-BOCA accounts shall be made monthly by the Central Office and reconciling entries at the end of calendar year shall be entered/posted at the consolidated General Journal.

b.2 Reconciling items shall be composed of entries which should have been entered in provincial/

regional office

books represented by unresponded and unrecorded advices.

b.3 Journal vouchers shall be prepared to take up reconciling items. These shall be cancelled thru negative entry method upon receipt of corresponding advice/responding advice.

b.4 Reconciling journal entries with particular

Regional Office

s concerned shall be disclosed in the trial balance schedules supporting the consolidated trial balance.

b.5 The

Regional Office

s concerned shall be furnished with the quarterly reconciliation statement.

(Please refer to

illustrative Examples for recording of reconciling items)

III. RESPONSIBILITIES

Regional Office

1. To coordinate the flow of transactions of one province to another province within the region and outside the region and in certain cases between the Central Office and the Provincial Office.

2. To analyze the financial situation of each province giving emphasis to fund balances, unremitted deposits to Central Office and inventory levels.

3. To closely supervise performance and efficiency of Provincial Accountants and to check the implementation of accounting systems and procedures as required by Central Office.

4. To maintain consolidated books of account for the whole region and prepare consolidated financial reports.

5. To be directly responsible to the Directorate for Accounting and Budget for the financial operations of the provinces.

Provincial Office

1. To submit financial reports on time.

2. To promply send/reply on advices for inter-office transactions.

3. To be responsible to the regional office for financial operations and reporting.

IV. FLOW CHART

A. Central Office Transactions

C.O. as Sending Office (Advice A)

C.O. as Receiving Office (Advice B)

B. Field Transactions

Province to Province with Regional Office as Clearing Account

Province to Province with Regional Offices and Central Office as Clearing Accounts

(Advice C)

Top Page

EXHIBITS

Illustrative Examples-FS-GP02

Debit Advice-FS-GP02

DFD-CO as Sending Office (Advice A)

DFD-FS-GP02C.O. as Receiving Office (Advice B)

DFD-P to P w/ R.O. as Clearing Account

Prov to Prov w/ R.O & C.O. as Clearing Accounts (Advice C)

Illustrative Examples-FS-GP02
Debit Advice-FS-GP02
DFD-CO as Sending Office (Advice A)
DFD-FS-GP02C.O. as Receiving Office (Advice B)
DFD-P to P w/ R.O. as Clearing Account
Prov to Prov w/ R.O & C.O. as Clearing Accounts (Advice C)