SOP No: FS-CS08

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SOP NO: FS-CS08 (List of Exhibits/Attachments)

Mission: Finance and Administration

Area: Financial Services (FS)

Activity: Cashiering (FS-CS)

Title:

Revised SOP on Check Issuance and Disbursement Control System

Date Approved/Issued: 12/09/1996

Date Effective: 12/09/1996

Digest:

I. TERMS OF REFERENCE

A. Rationale

B. Objective

C. Scope

D. Basis

II. IMPLEMENTING GUIDELINES

Maintenance of Current Accounts

1. Opening and closing of current accounts shall be authorized by the Department Management for Department for Treasury, Budget, and Fund Management (DTBFM). The accounts shall be maintained under the name of National Food Authority.

2. The

drawing accounts

shall be deposited with the authorized depository banks, as follows:

a) Philippine National Bank

b) Other Government Banks

c) Private banks as may be authorized by the Central Bank

3. The bank shall be furnished with the specimen signatures of authorized signatories and counter signatories on checks. The bank shall be notified whenever there is a change in management and authorized signatories and counter-signatories.

Drawing accounts

shall be maintained under current accounts to be utilized for various check disbursements in payment for expenses, acquisition of assets and settlement of liabilities. For field offices' accounts, deposits to

drawing accounts

will come from Central Office/Regional Offices remittances based on quarterly allotment as advised by Budget Division. The

drawing accounts

and specific purpose for each fund is discussed in Annex A.

Disbursements Payable in Checks

1. All disbursements payable to creditors for obligations incurred shall be paid in check.

2. The following claims of NFA employees shall be paid in checks:

a. Travelling expenses amounting to more than P1,000;

b. Refund of TEV payable to employees amounting to more than P500;

c. All kinds of loans;

d. Honoraria; and

e. All reimbursements/replenishments of RDO/SDO.

Other Disbursements Drawn Against Bank Account

1. As a general rule, disbursement shall be drawn against bank accounts thru the issuance of checks, however, for facility, Central Office payroll thru PNB permits that the same be drawn against NFA account and be credited to employees' account based on a duly approved payroll voucher and a bank debit memorandum.

2. Payment of NFA's obligations whether local or foreign and other bank charges are likewise directly debited by the bank against NFA's accounts based on letter/communication sent by Fund Management Division, DTBFM or in the form of a Manager's Check if the payee is not the depository bank.

Check Preparation, Approval and Payment

1. Only one (1) checkbook per bank account shall be opened and used at a time for check issuances. Checks shall be prepared and issued in sequential order regardless of expense category, e.g. TEV, discretionary, other expenses.

2. The checks shall be made payable to a specific payee. In no case shall it be drawn payable to "CASH" or to "BEARER".

3. The checks shall be properly dated and the amount payable shall be stated in words and in figures. If possible, check writers shall be used.

4. The check shall be prepared in four (4) copies (with half sheets of bond paper used as duplicates) distributed as follows:

Copy 1 - (the check) - payee

2 - Disbursing Officer

3 - Provincial Accountant/GAD

for recording to Cash and Check Register

4 - Commission on Audit

The Disbursing Officer/Cashier I shall see to it that all relevant data in the check such as check number, bank account number, date of check, payee, amount and signatures are reflected in all copies prepared.

5. All checks shall be signed and countersigned by the officials/employees in accordance with the following:

Amount Involved Signatory Counter Signatory

Central Office

P200,000 and below Cashier Division Chief, Cash DTBFM

Above P200,000 to Division Chief, Asst. Department Manager,

P300,000 Cash, DTBFM DTBFM

Above P300,000 to Asst. Department Department Manager,

P500,000 Manager, DTBFM DTBFM

Above P500,000 to Department Manager, Asst. Administrator for

P2.0M DTBFM Finance and Administration

Above P2.0M to Asst. Adm. for Deputy Administrator for

P3.0M Finance and Adm. Finance and Administration

or in his absence, Deputy

Administrator for Operations

Above P3.0M Dep. Adm. for Finance Administrator*

and Adm. or in his absence

Dep. Adm. for Operations

Regional Office/FOUs

P.O.

P20,000 and below Provincial Cashier Asst. Provincial Manager

Above P20,000 Provincial Cashier Provincial Manager

R.O.

P30,000 and below Regional Cashier Asst. Regional Manager

Above P30,000 Regional Cashier Regional Manager*

* In the absence of the Administrator the Deputy Administrator for

Operations can countersign the checks.

**The Assistant Regional Manager can countersign the checks in he absence

of the Regional Manager.

6. All checks payable to outside creditors shall be crossed and stamped "FOR THE ACCOUNT OF THE PAYEE ONLY" for control purposes, except when the payee requested otherwise.

7. There shall be no post-dating and pre-signing of checks. The Disbursing Officer and the signatories shall be held liable for any misappropriation of funds that may arise as a result of such action.

8. Issued checks shall be released only to the payee as specified in the check or to his duly authorized representative. Disbursing Officer shall require the identification of payee/authorized representative and obtain the acknowledgement of payment on the voucher and require an official receipt, whenever applicable, from the payee/authorized representative upon release of checks.

9. All paid vouchers including supporting documents shall be stamped "PAID" by the Disbursing Officer immediately upon payment. All paid voucher shall be forwarded to the Commission on Audit post-auditing.

Custodianship of Unused, Issued and Paid Checks

1. Check booklets and check stub shall be kept and controlled by the Disbursing Officer. A record of used and unused check booklets shall be kept.

2. An inventory of unused checks shall be conducted every end of the month in the presence of the Provincial Accountant/Cashier IV to attest that check issuances are properly controlled.

3. Issued checks ready for release to payees shall be properly safeguarded. A logbook, containing date of check, payee, amount, date received and signature of recipient shall be maintained to monitor releasing of checks.

4. Spoiled checks must be mutilated at the signature portion of the check and attached to the stub after notation by the Provincial Accountant/Chief, General Accounting Division (GAD).

5. Paid checks returned by the bank together with the monthly bank statement shall be kept under the custody of the Provincial Accountant/GAD.

6. Stale checks shall likewise be under the custody of the Provincial Accountant/GAD.

Fund Monitoring, Reporting and Books of Accounts

1. A cash book for each drawing account shall be maintained by the Disbursing Officers to record all checks issued for the day and to update the daily balance of each bank account. The Disbursing Officers shall be responsible for bank overdraft. The balances of each drawing account shall be properly monitored to ensure that all checks will be honored by the bank.

2. At Central Office, bank balances shall be controlled by the Fund Management Division, DTBFM.

3. The Disbursing Officer shall prepare a

Daily

List of Checks Issued

in five (5) copies, distributed as follows:

Copy 1 - Provincial Accountant/Claims and Inter-branch Division

2 - Commission on Audit

3 - Drawee Bank

4 - Disbursing Officers; File

5 - Fund Management Division (for C.O. only)

4. The

List of Checks Issued

shall be used as basis for recording in the Cash and Checks Register Journal (CCRJ). The disbursement drawn against NFA account shall be recorded as credit to account Cash with other Banks, Current.

Accountability of Signatory and Counter-Signatory

1. Signatory and counter-signatory are responsible for check disbursements and no amount will be drawn against the bank account unless properly authorized by them, as such, they are accountable officers.

2. They shall be held liable for all losses attributable to negligence in the keeping and disbursement of funds. They shall see to it that the disbursement is approved by proper authority and duly supported by authentic evidence.

Bank Reconciliation Statement

1. The monthly bank statement together with the paid checks shall be picked-up by the Provincial Accountant/GAD or delivered to him at the end of every month for the preparation of bank reconciliation statement.

2. The bank shall be immediately notified of any error committed by it for the adjustment of the bank records.

3. The Disbursing Officer (F.O.) shall be notified of the bank charges for updating of cash book. Bank charges shall be entered to the credit column of the cash book to update the balance of the bank account.

Accounting for Returned and Stale Checks

1. Checks already released to creditors which remained outstanding for more than six (6) months shall be considered stale checks and shall be reverted to account Cash with Other Banks, Current thru a Journal Voucher.

Checks not claimed by the payee after six (6) months shall also be considered stale checks. Replacement check shall be prepared only upon request of the claimant.

2. The drawee bank shall be notified accordingly to dishonor stale checks.

3. The Disbursing Officer shall cancel the stale checks returned by the payee and prepare the replacement check. Upon approval of the replacement check, the stale check shall be stamped "replaced". The Disbursing Officer shall disclose in the

List of Checks Issued

that the specific check issued is a replacement and the number of the check replaced shall also be indicated in the report.

Returned Check for Cancellation

In such cases where the payee returned his check for cancellation, he shall prepare and submit a letter request for cancellation of check (e.g. returned TEV check when the travel is cancelled), the check shall be cancelled by the disbursing officer and the cancelled check together with the DV shall be forwarded to the Provincial Accountant/GAD for proper accounting. A journal voucher shall be prepared to record the cancellation of check.

Pro-Forma Journal Entries

1. To record check issuances based on List of Check Issued:

DR: Voucher Payable xxx

CR: Cash, Other Banks Current xxx

2. To revert stale checks to cash account:

DR: Voucher Payable (xxx)

CR: Cash, Other banks, Current (xxx)

3. To record replacement of stale check:

Cash and Check Register Journal

DR: Voucher Payable xxx

CR: Cash, Other Banks, Current xxx

III. RESPONSIBILITIES

Disbursing Officer/Cashier I

Prepares check based on duly approved disbursement voucher/payroll;

b) Keeps unused checks and issued checks in safe, maintains logbook for issued checks to monitor their release.

c) Releases checks to payees. Requires identification of payee/authorized representative and acknowledgement of payment on the voucher. Stamps "PAID" on the disbursement voucher and supporting documents.

d) Prepares

list of checks issued

e) Maintains cash book for each drawing account.

f) Monitors unclaimed checks and notifies payee/s to pick-up said checks before getting stale.

g) Prepares report of checks cancelled/ or replaced for submission to Provincial Accountant/General Accounting Division.

Signatory/Counter-signatory

Checks accuracy of the prepared check or disbursement.

b) Signs/countersigns on the check.

Provincial Accountant/GAD

a) Records

List of Checks Issued

on the Cash/Checks Register Journal.

b) Prepares bank reconciliation statement.

c) Prepares adjusting entries for checks cancelled/replaced.

Cash Clerk/Cashier's Aide (F.O.)

Assists the Disbursing Officer in the preparation of checks list of checks issued and in other cashiering activities.

The foregoing SOP supersedes SOP No. FS-CS03 and SOP No. FS-CS03.A effective September 1, 1987 and December 1, 1987, respectively.

IV. FLOW CHART
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EXHIBITS

Drawing Accounts

List of Checks Issued