COMMISSION ON AUDIT

OFFICE OF BUDGET AND MANAGEMENT

MINISTRY OF FINANCE

JOINT CIRCULAR NO. 2-86

March 30, 1986

TO : Heads of Local Governments; Metro Manila Commission (MMC) Finance Action

Officer and Provincial, City and Municipal Treasurers; COA Managers and Regional
Directors; MMC Auditor, Provincial, City, Municipal and Circuit Audit Unit Auditors;
and All Others Concerned.

SUBJECT : Guidelines and Procedures in the segregating the accounting for financial
transaction pertaining to the old administration from those of the new administration
and establishing March 31, 2986 as cut-off date

1.0 Rationale

The change of leadership in the Government necessitates the segregation of

financial transactions of the old administration from the new administration. For the
purpose, March 31, 1986 in hereby established as the cut-off date.

2.0 Objective

2..1 To prescribe guidelines and procedures in the segregation of financial transactions

pertaining to the old administration covering the period January 1 to March 31, 1986
and that of the new administrations. starting April 1, 1986;

2.2 To fix responsibility and accountability in the handling of government funds and
properties from January 1 to March 31, 1986 and from April 1, 1986 thereafter.

3.0 Coverage

This Circular shall apply to all funds maintained by local government units such as:

a. General Fund
b. Infrastructure Fund
c. Municipal Development Fund
d. Special Education Fund
e. Trust Funds

4.0 Procedures/Guidelines

4.1 All books of accounts shall be closed on March 31, 1986 properly ensuring that all
transactions up to that date, including the necessary adjustments/corrections shall
have been duly taken up.
4.2 New sets of books shall be opened for financial transactions starting April 1, 1986.

4.3 The balances of assets, liabilities and surplus accounts after the books had been
closed as of March 31, 1986 shall be forwarded to the new sets of books.

4.4 The balances of uncollected income/receipts/transfers, unreleased appropriations

and unexpected allotments shall likewise be forwarded to the new sets of books.

4.5 All Special Journal Vouchers affecting the transfer of balances, stated above shall
be submitted to the unit auditor for review before they are taken up in the books.

4.6 The interim quarterly trial balances (pre- and post-closing) and supporting
statements and documents as of March 31, 1986 duly verified by the unit auditor
shall be submitted not later than April 20,1986 to the following:

Local Government Audit

Office (LGAO), COA - Original and one copy

Ministry of Finance - one copy

Office of Budget and

Management, National
Accountancy Office (NAC) - one copy

COA Regional Director - one copy

Local Executive - one copy

Local Legislative - one copy

On December 31, 1986, the usual financial statements and supporting documents
shall be prepared covering the nine-month period from April 1, 1986 and a
consolidation for a twelve-month period from January 1, 1986 shall likewise be
made with the same distribution as above.

4.7 The following temporary accounts are hereby created to identify the surplus
accounts accumulate during the first quarter of 1986.

8-92-110(1) Current Surplus Unappropriated, Balance at end of the 1st quarter,

1986.

This account shall be used by local governments only to record

the balance of the current surplus unappropriated and accumulated
from January1,1986 to March 31, 1986.

8-94-000(1) Invested Surplus - Principal, Balances at end of the 1st quarter,

1986.

This account shall be used by local governments only to record

the balance of invested surplus accumulated from January 1,
1986 to March 31, 1986.
5.0 Accounting Entries

The illustrative accounting entries are shown in Annex A.

6.0 Effectivity Date

This circular shall take effect March 31, 1986.

(Original Signed) (Original Signed)

ALBERTO G. ROMULO (SGD.) JAIME V. ONGPIN
Minister of the Budget Minister of Finance

(Original Signed)
TEOFISTO T. GUINGONA, JR.
Chairman
Commission on Audit