Professional Documents
Culture Documents
MINISTRY OF FINANCE
OFFICE OF BUDGET AND MANAGEMENT
SUBJECT : Guidelines and accounting procedures for the closing of books of accounts of
abolished / transferred / merged / consolidated / converted / sub- divided
agencies and the opening of books of accounts for agencies created by virtue of
said abolition/merger/consolidation/ conversion/ subdivision, pursuant to
provisions of law and to prescribe the accounting procedures to be followed by
district offices.
1.0 PROCEDURES
1.1 This circular is issued to prescribe the guidelines and accounting procedures to
be followed by government agencies which were either abolished, transferred,
merged, consolidated, converted, or sub-divided and by agencies which were
created either by abolition, transfer, merger, consolidation, conversion or sub-
division, pursuant to provisions of law.
2.1 Agency is any ministry, bureau or office of the national government or any of its
branches and instrumentalities, or any political subdivision, such as provinces,
cities and municipalities as well as government-owned or controlled corporations
including its subsidiaries or other self-governing board or commission of the
government and state colleges and universities.
2.3 Transferred agencies are agencies, the functions and supervision of which are
removed from one agency and transferred to another.
2.4 Merged agencies are agencies which have been acquired/absorbed by another,
the acquired agency is dissolved, and the acquiring agency continues to maintain
its identity.
2.5 Consolidated agencies are agencies which have been dissolved and are
combined to form a new agency.
2.6 Converted agencies are agencies wherein their financial identity and organization
are changed from corporation to national, or vice-versa, from operating unit to
central office or from a municipality to city, etc.
2.7 Sub-divided agencies are agencies which are formed out of another agency and
whose identity is changed.
For purposes of easy reference in this circular, the term "old agency" shall refer
to the abolished, transferred, merged, dissolved, consolidated, sub-divided and/or
converted agencies while the term "new agency" shall refer to the agency which
absorbed or was formed in view of the transfer, merger, consolidation, sub-division
and/or conversion.
The cut-off date to effect the transfer of balances of accounts from the old to the
new agency is the effective abolition, transfer, merger, consolidation or sub-division as
determined/implemented by the head of the new agency. However, for purposes of
reconciliation, consolidation, adjustment, closing of books of accounts of the old agency
and opening of books of accounts of the new agency, a maximum of six (6) months
transitory period from the cut-off date shall be allowed to effect such transfer.
4.1 The new agency shall acquire a new personality separate and distinct from that
of the old agency.
4.2 The old agency shall close its books of accounts as of the cut-off date and
transfer the balances of all existing assets, liabilities, and surplus/capital to the
new agency/agencies.
4.3 The new agency shall open a new set of books of accounts and transfer the
balances as of the cut-off date all existing assets, liabilities, and surplus/capital
from the old agency.
4.5 The inter-agency committee herein created shall supervise the implementation of
this circular.
4.5 Pending the final transfer, the new agency can already transact business and
such transactions shall be recorded in its new set of books including the
expenses incurred in connection with the winding up process.
6.1 The head of the new agency may authorize existing personnel to continue
rendering services for them to analyze, reconcile and effect the transfer as
provided herein.
6.2 Clearances of all officials and employees of the old agency who may not be
retained shall not be issued until after they have fully satisfied or settled their
accountabilities/liabilities.
7.0 PROCEDURES FOR NATIONAL GOVERNMENT AGENCIES
7.1.2 The Head of the Regional Office/Field Office of the old agency shall make
it a point that all the procedures enumerated in sub-paragraph 7.1.1
(letters a to e) have been complied with in the Regional Office/Field
Office.
7.1.3 The Chief Accountant/Head of Accounting Unit of the Central Office of the
old agency shall:
d) After all the records have been updated and the necessary
adjustments made, prepare a preliminary trial balance (PTB)
supported by the required schedules of subsidiary ledger balances,
certify the same and submit to the unit auditor for verification.
e) On the basis of the PTB, prepare the usual adjusting and closing
entries as though it were the end of the year using the applicable
accounts in the Standard Government chart of Accounts.
In addition, a one digit number to identify the old agency and a two
digit number to identify the year during which an agency was
abolished/transferred/merged/converted/sub- divided shall be
suffixed to Account 8-81-082 such that it will appear as 8-81-082
(181):
181
represents the year of abolition or merger
represents the agency from which the liability
was transferred
h). Draw a journal voucher (JV) to effect the transfer of the balances
of the accounts as follows:
i) See that clear copies of the preliminary trial balance, final trial
balance and JV are furnished the AO of the COA and NAO of the
OBM. The National Cash Accounting Division (NCAD), BTR shall
likewise be furnished with a copy of the JV transferring the current
account of the old agency to the new agency.
f) The same as in 7.1.3 (g) except that the accounts that should be
suffixed are 8-71-199- 1, 8-71-199-2 and 8-71-199-3 in addition to
0- 82-000 and 0-83-000.
7.2.1 The new agency shall open a new set of books. It shall draw a journal
voucher to record all reconciled balances of accounts of the old agencies
as of the day following the cut-off date.
7.2.2 The journal entries to effect the transfer of balances of accounts in the
books of the new agency are as follows:
7.2.3 The OBM shall issue an Advice of Allotment and a Notice of Cash
Disbursement Ceiling (CDC) to the new agency releasing that portion of
the appropriation intended for use by new agency using its new agency
code. Said advice of allotment and CDC shall be recorded in the usual
manner, after which the transactions of the new agency can be recorded.
7.2.5 All inventories of current and fixed assets as well as accountable forms
and accounting records received from the old agency shall be receipted
for the proper accountable officer of the new agency.
8.1.1 The old agency shall close its books of accounts as of the cut-off date as
stated in paragraph 4.0.
f) See that clear copies of the Preliminary Trial Balance, Final Trial
Balance and closing JV are furnished the Accountancy Division
(AD) of the Local Government Audit Office (LGAO) of theCOA, the
Ministry of Finance (MOF), and the NAO of the OBM.
e) On the basis of the PTB, prepare the usual adjusting and closing
entries as though it were the end of the year using the applicable
accounts in the Standard Government Chart of Accounts.
f) Thereafter, prepare the final trial balance, certify it, and have it
verified by the new auditor. This shall be the basis for the final
transfer of balances of the accounts.
8.2.1 The new agency shall open a new set of books. It shall draw a JV to
record all reconciled balances of accounts of the old agencies as of the
first day of the month following the cut-off date.
8.2.2 The journal entries to effect the transfer of balances of accounts in the
books of the new agency are as follows:
8.2.4 All inventories of current and fixed assets as well as accountable forms
and accounting records received from the accountable officers of the old
agency shall be receipted for by the accountable of the new agency.
"Sec. 1135. Accounting for the distributed funds and property by the entities. - Upon
receipt of the approved distribution of funds and property from the Auditor General (now
Chairman), the treasurers of the newly created entities or political subdivisions will open their
respective sets of books and account for their corresponding shares. A copy of the approved
distribution together with appended inventories and invoice receipts, shall support the special
journal voucher upon which the accounting of the shares of funds and property will be made.
An old province, city or municipality from which the territory has been separated to form another
political subdivision or entity shall close its set of books upon effecting the separation, and open
a new set would be opened for a newly created political entity"
9.0 PROCEDURES FOR GOVERNMENT-OWNED AND/OR CONTROLLED
CORPORATIONS
9.1.1 The old agency shall close its books of accounts as of the cut-off date as
stated in paragraph 2.3.
9.2.1 The new agency shall open a new set of books. It shall draw a journal
voucher to record all reconciled balances of accounts of the old agencies
as of the first date of the month following the cut-off date.
9.2.2 The journal entries to effect the transfer of balances of accounts in the
books of the new agency are as follows:
9.2.3 The OBM shall issue an Advice of Allotment and a Notice of Cash
Disbursement Ceiling (CDC) to the BTR, copy furnished the new agency
releasing that portion of the appropriation intended for use by the new
agency. Said advice of allotment and CDC shall be recorded in the usual
manner after which the transactions of the new agency can be recorded.
9.2.4 All inventories of current and fixed assets as well as accountable forms
and accounting records received from the accountable officers of the old
agency shall be receipted for by the accountable officers of the new
agency.
The accounting treatment applicable in each case together with a listing of the
same is attached as Annex A and Annex A-1 to A-11.
All circulars and memoranda or parts thereof which are inconsistent with the
provisions of this circular are hereby rescinded/repealed/modified accordingly.
12.0 EFFECTIVITY
Concurred In:
____________________________ _________________________
Chairman, Presidential Committee Chairman, Board of Liquidators
or Reorganization