UPLAND DEVELOPMENT PROGRAMME SOUTHERN MINDANAO (UDP) FINANCIAL MANUAL

Transcription

1 UPLAND DEVELOPMENT PROGRAMME in SOUTHERN MINDANAO (UDP) FINANCIAL MANUAL

2 UDP Financial Manual Table of Contents Page No. 1. INTRODUCTION 1 2. SEGREGATION OF DUTIES 4 3. FUNDING & AUDIT Funding Channels 3.2 Auditing of Accounts 3.3 Annual Budgeting 3.4 Fund Releases 3.5 Funds Flow 3.6 Monitoring of Bank Accounts 3.7 Monitoring of Systems Implementation CASHIERING Policies 4.2 Cheques 4.3 Petty Cash Fund 4.4 Petty Cash Replenishment 4.5 Cash Receipts 4.6 Overages and Shortages 4.7 Accommodation of Cheques DISBURSEMENTS Policies 5.2 Budget Monitoring and Control 5.3 Processing of Cheque Payments 5.4 Receipts 5.5 Release of Payments 5.6 Payment Procedures 5.7 Filing 5.8 Cancelled Documents PROVINCIAL OPERATIONAL FUND TRANSACTIONS 21 i

3 UDP Financial Manual 7. CASH ADVANCES Granting of Cash Advances 7.2 Liquidation of Cash Advances 7.3 Other Advances 7.4 Official Travel 7.5 Payrolls PROGRAMME ACTIVITIES Infrastructure Resource Management & Sustainable 29 Agriculture 8.3 Other Activities PROCUREMENT STUDIES and TRAINING ACTIVITIES Training Financial Expenditure 10.2 Contracting REPRESENTATION INVENTORY CONTROL Equipment 12.2 Office Supplies 12.3 Training Supplies ACCOUNTING RECORDS & RECONCILIATION FINANCIAL REPORTS 38 LIST OF APPENDIXES 38 LIST OF FORMS USED 47 DILG CLASSIFICATION OF CITIES & PROVINCES ABBREVIATIONS USED 64 iii ii

4 UDP Financial Manual Abbreviations used in the Manual AB AR AWP & B CDR CL COBA COD CRR DA Delegation DV ESC FAD FAS GJB GL LO LS PRC MR OR PCB PCF PCV PMO PO RCA RIR RIV TO Abstract of Canvass Acknowledgement Receipt Annual Work Plan & Budget Cash Disbursement Register Credit Lyonnais Bank Committee on Bids & Awards Cash on Delivery Cash Receipts Register Department of Agriculture Delegation of European Commission in the Philippines Disbursement Voucher Executive Steering Committee Finance & Administration Division Finance & Administration Section General Journal Book General Ledger Letter Order Liquidation Summary Project Review Committee Memorandum of Receipt Official Receipt Petty Cash Book Petty Cash Fund Petty Cash Voucher Project Management Office Purchase Order Request for Cash Advance Receiving & Inspection Report Requisition and Issue Voucher Travel Order iii

5 1. INTRODUCTION UDP Financial Manual This Manual establishes the accounting policies and procedures to be adopted by the Upland Development Programme in Southern Mindanao, hereinafter referred to as the Programme or UDP, in managing the project funds to be administered by the National Co-Director and the European Co-Director, hereinafter referred to as the Co-Directors. This is in accordance with the provisions of Article of the Financing Agreement (PHI/B7-3000/IB/ALA 97/68) signed by the Government of the Philippines, hereinafter referred to as the Recipient, and the European Commission, herein after referred to as the Commission, on 20th October 1998 Section 2.8 Financial Procedures of the Financing Agreement (referred to above) sets down guidelines for the disbursement, accounting for, reporting, and audit of project funds. For ease of reference these guidelines are quoted below: 2.8. Financial Procedures For those expenditures funded under the EC grant and involving direct payments in currencies other than Pesos, payment shall be made directly by the Commission using its own procedures For those expenditures funded under the EC grant and involving local expenditures in Pesos, payment shall be made as follows: - the project shall establish appropriate bank accounts in the Philippines (one in Euro and one in Pesos) for this sole purpose. These accounts shall be operated with joint signatures of the two Directors; - the Commission shall make an initial advance up to Euro 100,000 on signature of the Financing Agreement following notification of the bank accounts and upon presentation of an Initial Plan of Activities in order to cover the personnel and recurrent costs of the starting up of the project. - the Commission shall, on the basis of the agreed Global Workplan and first year Workplan and estimates, make a further advance of up to 100% of the estimated expenditure during the first year of implementation, decreased by the amounts already transferred; - disbursement from the project accounts shall be made jointly by the two Co-Directors, in line with project requirements and the agreed Workplan and estimates; - transfers from the Euro account to the Peso account shall be made Page 1

6 UDP Financial Manual in line with the monthly requirements of the project. The balance in the Pesos account shall not be normally exceed two months estimated expenditure, nor fall below one month's estimated expenditure. The exchange rate applied to transfers from the Euro account shall be the regular market rate applicable on the day on which the transfer is made; - reporting of expenditure on a quarterly basis from the project accounts shall be prepared by the two Directors and submitted for inspection to a qualified firm of auditors to be hired for the purpose. The selection of the auditors shall be subject to the concurrence of both the DA and the Commission. Once certified by the auditors as being in conformity with project progress and the agreed work plan and estimates, these audited quarterly reports shall be the basis of requests by the two Co-Directors through Executing Agency to the Commission for the transfer of additional funds; such requests shall normally be made quarterly. Once the project is able to establish a stronger internal control system, the project may move to semi-annual audit and the request for funds on a semi-annual basis. - in case of urgency, duly justified by the two Co-Directors through the Executing Agency, the Commission may be requested to make a temporary partial reimbursement on the basis of a non-audited request. Any such temporary reimbursement will be recovered from subsequent audited requests; - for the second and subsequent years of project implementation, the outstanding advance of the proceeding year shall be adjusted to reflect the agreed estimates of the expenditure of the current year. This adjustment will be effected by providing a supplementary advance, or by decreasing subsequent payment installments made in respect of reimbursement requests during the current year; - interest generated in the project accounts will be accounted for separately. Their utilisation for the benefit of the project will require written authorisation from the Commission; - all funds in the project accounts, including any interest generated thereon, shall remain the property of the Commission. Any unused balances remaining available on the termination of the project shall revert to the Commission; Page 2

7 UDP Financial Manual For recording purposes, the PMO shall inform the Department of Budget Management (DBM), on a quarterly basis, on the value of goods and services received by the project in reflection of expenditures funded under the EC grant. These statements shall be the basis for DBM to issue the necessary Advice of Allotment (AA) and Non-Cash Availment Authority (NCAA) required for recording disbursements under a grant in kind procedure. In accordance with the requirements of the Financing Agreement (above) two (2) bank accounts have been established for the Programme. The first bank account with Credit Lyonnais in Manila is the official transitory bank account, denominated in Euro, and is used to receive funds from the Commission. The second account is with the Land Bank of the Philippines in Davao City, which is a combination savings/checking account denominated in Pesos (P), and is used to disburse funds for the project. Additional Peso accounts to be opened in the Provinces will require the prior approval of the Delegation of the European Commission of the Philippines, hereinafter referred to as the Delegation. The funds covered by these guidelines (EC grant funds only) are used for payment of local expenditures in Pesos for Programme implementation, which include the procurement of services, hiring of contractual employees, purchase of equipment and office supplies, training, implementation of micro-project activities by the local communities, general operating expenses, and miscellaneous disbursements. The accounting guidelines serve as a tool for the following: _ clarification of accounting responsibilities; _ standardization of accounting effort; _ consistent application of policies and procedures; _ early resolution of routine accounting questions; and _ training of personnel. The Finance and Administration Chief (hereinafter referred to as the FAD Chief) and the Finance and Administration Specialist, in conjunction with the Programme Management, will undertake further updating of the Manual as necessary. The Manual describes the financial guidelines and controls designed to safeguard and manage the Programme's assets, and provide an accurate reflection of the current system of accounting in use by the Programme. Any changes required to the approved procedures are subject to the prior approval of the Department of Agriculture and the Delegation. References in the text to "the Project Co-Directors" refer to the National Co-Director (or in his absence the Deputy Project Director) and the European Co-Director (or in his absence the Acting Team Leader). Due to the limited input of the Finance and Administration Specialist, exceptionally, in his absence the signing authority delegated to him as a result of this manual may be assumed by another member of the TA team nominated by the Co-Directors. Page 3

8 UDP Financial Manual 2. SEGREGATION OF DUTIES Budgeting, accounting and cashiering duties are the responsibility of the Finance Section, under the overall responsibility of the FAD Chief. However, Treasury or custodianship functions are segregated from accounting at all levels so that no single employee shall have such control of a significant financial transaction as to be able to commit an irregularity and conceal it without collusion with other employees. The segregation of duties provides for standard internal control procedures, such that the functions performed by one employee are subject to review through the performance of interrelated functions of another employee. Any delegation of responsibilities not specified in this Manual requires the prior written authorization of the Co-Directors. The general delegation of day to day responsibilities in the absence of the Co-Directors will be as follows: For the National Co-Director, a National staff member designated by both of the Co-Directors. For the European Co-Director, a member of the Technical Assistance Team designated by both of the Co-Directors. For day-to-day approvals of RIVs, POs, etc., these may be delegated within clearly laid down limits. 3. FUNDING & AUDIT As per the Financing Agreement for the Programme, the Commission grant of Euro 18.3 million will cover the entire cost of services, including technical assistance (expatriate and local consultants), audit and evaluation, research and studies, training, travel (per diem), the cost of equipment and vehicles, part of the infrastructure, information/communication activities, the recurrent costs of the programme and part of the credit revolving fund and other credit activities. As per the Financing Agreement for the Programme, the Philippine Government contribution of Euro 7.68 million will cover the programme staff salary costs including any increase in salary as well as additional government benefits over time. Page 4

9 UDP Financial Manual As per the Financing Agreement for the Programme, the Local Government Units contribution of Euro 9.6 million will cover the LGU regular staff costs assigned to the Programme, part of the infrastructure and part of credit activities. As per the Financing Agreement for the Programme, the Partner Institutions contribution of Euro 0.55 million will cover part of credit activities. As per the Financing Agreement for the Programme, the programme beneficiaries contribution of Euro million will cover part of the infrastructure costs (contribution in kind), farm labour and part of credit activities. 3.1 Funding Channels The Programme funds are administered through three funding "channels". 1. Expenditures funded under the Commission grant and involving direct payments, in currencies other than Pesos, shall be made directly by the Commission using its own procedures. 2. Local expenditures, in Pesos, funded under the Commission grant are administered and operated by the Co-Directors, for which the Programme shall establish appropriate bank accounts in the Philippines (one in Euro and one in Pesos) for this sole purpose. 3. Expenditures funded by the Government of the Philippines and Local Government Units, from their own budgetary resources in accordance with normal national and local Government procedures. This Manual covers the administration and control of the Commission funds only, except where otherwise stated. 3.2 Auditing of Accounts SyCip Gorres Velayo & Co. (SGV & Co.) have been appointed to examine the ledgers and selected supporting documents relative to the utilization of the Operational Funds. A contract has been awarded on an initial two-year basis, following the concurrence of the Delegation and the Department of Agriculture. The actual quarterly and annual audit of expenditures shall be conducted at the Programme Office, and in the field, where records and field inputs will be examined. At the time of audit, the auditors shall have full access to documents relating to expenditures from the Operational Funds. The Audit reports shall include, among others, a summary table showing actual expenditure vis-a-vis the allocations for the components as presented in the Financing Agreement. Page 5

10 UDP Financial Manual Audits may be reduced in frequency to semi-annual basis where the Programme performance demonstrates this to be prudent and following the approval of the Delegation. 3.3 Annual Budgeting The Annual Work Plan & Budget (AWP & B) sets the expenditure allocations of the Programme s Components for the year, utilizing the three channels of funding. The AWP & B is required to be approved by the Executive Steering Committee (ESC) the Department of Agriculture and the Delegation prior to implementation. 3.4 Fund Releases As per the Financing Agreement, the Commission shall, on the basis of the agreed Work Plan, make an initial advance equivalent of up to 100% of the estimated expenditure of the first year of implementation to the Programme s Euro account, decreased by the Euro 100,000 transferred as an initial advance. The Co-Directors shall prepare monthly returns of expenditure from this account. Based on these monthly returns, 100% of approved audited quarterly expenditure may be reimbursed by the Commission, through a replenishment request, which will be endorsed by the Department of Agriculture. Ninety-five (95%) is reimbursed based on satisfactory external audits. The reimbursement of the remaining 5% is subject to the result of the financial review conducted by the Delegation at a later date. In cases of urgency, duly justified by the Co-Directors, the Delegation may be requested to make temporary partial reimbursements based on accounts not yet audited. Any such temporary reimbursements will be recovered from subsequent audited requests. Further adjustments to the advance will be made on an annual basis, where an adjustment is indicated due to an increase or decrease in estimated annual expenditures, or due to an adjustment in the advance percentage level. Page 6

11 UDP Financial Manual 3.5 Funds Flow The basic operating framework for the Programme bank accounts to administer funds provided by the Commission is as follows: - Funding is received from the Commission in Brussels into the Credit Lyonnais account in Manila operated by the Co-Directors. This is the official transitory bank account, denominated in Euro, which is used for receiving funds from the Commission, and as a foreign currency holding account. There is normally no advance notice to the Programme from the Commission of incoming funds to this account (although the Delegation, Manila, advises of the processing). Credit Lyonnais will forward notification to the Programme upon the arrival of funds. Fund transfers are monitored from the bank statements and advice for the account. The Delegation is to be advised of any fund transfers being received, with details of any deduction of bank charges from transfers if this arises. Euro account fund movements are to be summarized each month, with the Euro Movement Report being formally reported to the Delegation by the fifth day of the following month. The Programme has opened a Peso account with the Land Bank of the Philippines in Davao City, for the operation of the Programme accounts. This is a combination savings/checking account through which all Programme expenditures are channeled either as direct expenditure from the account, or through the transfers to the Provincial bank accounts in each Province. - The Programme will open a Peso Account in each Province with the Land Bank of the Philippines. The accounts will be operated on a reimbursable basis. The main accounting processes are centralised at the PMO in Davao. The amount of the initial advance set by PMO, after agreement by the Delegation, is Peso 500,000 per Province. This account shall be reimbursed up to the limit, following the submission to the PMO of the original signed disbursement vouchers for the amounts paid out, together with a reimbursement request signed by the Provincial Manager. Any increase in the initial advance needs the approval of the Delegation. - The Co-Directors will, together with the FAD Chief and F & A Specialist, at the beginning of each month, review the expenditure requirements of the Programme and transfer sufficient funds to the Land Bank of the Philippines Peso account in Davao from the Credit Lyonnais Euro account in Manila to restore the account balance to the estimated expenditure for up to the next two months following the date of transfer. - Such transfer from the Credit Lyonnais Euro account in Manila to the Land Bank of the Page 7

12 UDP Financial Manual Philippines Peso account in Davao shall require the authorized signatures of both the Co- Directors, or designates duly approved by the Delegation. 3.6 Monitoring of Bank Accounts The FAD Chief and F & A Specialist shall monitor overall fund availability in the Credit Lyonnais Euro account in Manila and the Land Bank of the Philippines Peso account in Davao. (In order to maintain liquidity, the Finance and Administration Section Chiefs (FAS Chiefs) in the Provincial Offices shall closely monitor the cash flow of their respective offices and prepare necessary replenishment requests, as required. Accounts must not be overdrawn.) A weekly Cash Position Report (WCPR) shall be prepared by the cashier, a copy of which shall be forwarded, on the next Monday to the FAD Chief and F & A Specialist for onward submission to the Co-Directors. The Cashier reconciles the WCPR to the bank account each month. The Cashier attaches the pink copy of each DV for which a cheque has been issued to the WCPR. The whole report is presented to the Co-Directors each Monday morning, to enable the Co-Directors to review and approve, by way of their signatures on the WCPRs, the PMO disbursements for the previous week, particularly where the DVs and cheques have been signed by the designates. (The pink copy of Disbursement Vouchers is not required to be signed by the supplier, for receipt of payment.) The WCPR will be prepared in two copies, one copy to be kept in Accounting Section, and one copy kept by the Cashier (routed to the Co-Directors, with the pink copy DVs, on a weekly basis). For Provincial Offices, a WCPR must also be prepared by the FAS Chiefs and forwarded to the PMO weekly. A Bank Reconciliation Statement shall be prepared on a monthly basis for all Peso accounts by the PMO Accountant and Provincial FAS Chiefs. All Programme accounts are for the sole purpose of Programme activities and no funds, other than the EC grant and any interest accruing thereon shall be deposited in these accounts. (However with the authority of the Directors other monies, being the property of the Programme, e.g. cheques received in payment of motor vehicle insurance claims may also be credited to programme bank accounts). The Programme is required to maintain a full and proper accounting record of the bank accounts and to make this available on request to the Delegation or the external auditors. Page 8

13 UDP Financial Manual The Programme is required to remit to the Delegation immediately upon request any balance of funds, including interest, in the accounts. Interest income remains the property of the Commission and the use of this income, in part or in full, must be proposed by the Department of Agriculture and approved by the Commission. 3.7 Monitoring of Systems Implementation The FAD will provide an internal control function to ensure that the systems and controls are being properly and effectively implemented in the PMO and Provincial Offices. This will include, among others, spot checks of any petty cash and other cash balances, bank accounts and disbursement vouchers. In support of this, the Chief Accountant (or his/her designate) will make internal control visits to Provincial Offices and the Liaison Office. 4. CASHIERING 4.1 Policies The Cashier's Office is part of the Finance and Administrative Division in the PMO. It is staffed by a single cashier. The Petty Cash Fund is maintained under the custodianship of the Cashier at the Programme Management Office (PMO), and by an officer approved by the Co-Directors at any other Programme office, which requires to hold a petty cash fund. The Cashier is responsible for: Petty Cash Fund The management and documentation of the Petty Cash Fund (PCF). Issuing cash against Petty Cash Vouchers. Cashing PCF replenishment cheques. Collections Receiving cash and issuing Official Receipts (ORs). Depositing funds received into the bank account. Preparation of Cheques Preparing and issuing cheques. Salary payments Page 9

14 UDP Financial Manual Staff salary payments are always paid by way of cheque, a direct credit to the employee's bank, or an account transfer, except in exceptional circumstances. The Cashier is responsible for obtaining the employee s signature of acceptance on the Payroll sheet, and for issuing bank deposit slip to each employee. Cash Advances Cash Advances are issued by the Cashier. These may, where practical, be issued as a payroll system where one cheque is drawn to pay several cash advances. The Cashier issues the individual cash advances and maintains a record of such until they are liquidated. (The Accountant maintains the Cash Advance Subsidiary ledger). Other Responsibilities Releasing approved cash payments The reconciliation of cash funds. Preparation of the Weekly Cash Position Report (WCPR). Forwarding of Official Receipts, Deposit Slips, and DVs (with supporting documents) to the Accounting Section. All cash and unused cheques shall be kept locked in a safe. The safe will be kept locked except when access is required. The combination and keys will be held by two persons at each location where there is a safe. This will be the FAD Chief and the Cashier at the PMO. For Provincial offices, suitable arrangements will be made. All persons entrusted with the issue and receiving of cash shall be bonded, for amounts covering the value of cash handled at any time. In the case of the PMO this will be the Cashier. All Petty Cash Vouchers, Official Receipts, and Cheques shall be accounted for. The following will apply at the PMO and in all the Provincial Offices: The Cashier s Office is part of the Finance and Administrative Division. It is staffed by one cashier acting under the designated authority of the Co-Directors. The Petty Cash Funds are maintained as follows: PMO - Cashier PMO Provincial Offices - Cashier approved by Programme Co-Directors Liaison Office - An Officer approved by the Programme Co-Directors Provincial & Liaison Office Cashiers are responsible for: - The management and documentation of the Provincial/Liaison Office Petty Page 10

15 Cash Fund (PCF) - Issuing cash against petty cash vouchers UDP Financial Manual - Preparation of Petty Cash Replenishment summaries for presentation to the PMO. 4.2 Cheques All Cheques must be stamped "Payee's Account Only", or crossed, except for the payment of cash advances to Programme employees. Uncrossed cheques may only be used at the express request of the recipient with a note of justification attached to the disbursement documentation. Acceptable situations would be where the payee has no bank account or resides in a remote area. Programme employees are not allowed to facilitate the cashing of uncrossed cheques. Disbursements shall be made by cheques or from the PCF, and not from cash receipts. The delivery of payment to local suppliers is discouraged and, wherever possible, payments should be made at the Programme Offices. Where this procedure is not practical, such as out of town suppliers, cheques may be delivered to the supplier by a member of the staff authorised by the FAD Chief and/or F & A Specialist. All unused cheques shall be stored in the safe. Cheques shall be used strictly in numerical order. Cheques must never be post-dated nor pre-signed. Cheques are signed only by the authorized signatories, in accordance with the approved procedures as described in this manual. All cancelled cheques shall be clearly marked as such in order to preclude presentation for payment. The cancelled cheque shall be attached to the replacement cheque when presented to the cheque signatories for signature. Voided/cancelled cheques shall be retained and filed numerically together with the paid cheques returned by the bank to support entries made for the cancellation and to show that all cheques are properly accounted for. Cheque writers or typewriters will be used in the preparation of all cheques. 4.3 Petty Cash Fund The Petty Cash Fund (PCF) shall be used solely to pay for expenses that do not exceed P3,000. Amounts exceeding P3,000 shall be paid by cheque. The Fund for the PMO is set at P40,000. The fund for the Liaison Office is set at P 10,000 and for the Provincial Offices at P20,000. Any increase in these amounts shall require the approval of the Delegation. All funds shall have a minimum balance of P5,000 to facilitate replenishment. Page 11

16 UDP Financial Manual When the Petty cash balance reaches the minimum balance, the Cashier shall prepare a Petty Cash Replenishment Summary and draw the funds using a cheque drawn on the Programme or Provincial Peso bank account, payable to the Cashier using the Disbursement Voucher system. The fund shall be used to pay for normal daily expenses, which are immediate in nature. Under no circumstances will advances be made for personal expenses from the fund. Replenishment of expenditures for authorised payments on official Programme business which do not exceed P3,000 may be drawn from the Petty Cash Fund. Splitting of Petty Cash Vouchers to accommodate payments over the limit is strictly prohibited. The Cashier shall accomplish a pre-numbered Petty Cash Voucher (PCV) which shall be recommended for payment by the respective Division/Section Head, and duly approved by the FAD Chief or F & A Specialist, (or either of the Co-Directors in their absence), prior to the release of funds. For the Provinces, the Provincial Manager will approve the PCV ( or the approved designate when absent). In the Liaison Office, the Liaison Office Chief (or the approved designate when absent) shall approve PCVs. Where the approver is the person claiming, then the approval will be sought from his/her immediate supervisor. The PCV will be accompanied by the respective supporting documents, including an Official Receipt and/or Acknowledgment Receipt. The PCV will be correctly completed prior to the issuance of any petty cash. PCVs are not to be pre-signed. PC advances will be approved and issued via the standard PCV. All advances from the petty cash fund shall normally be liquidated within five (5) working days from completion date of the stated purpose dependent on Programme circumstances or of the activity; the exception being where the person is on travel. The Cashier is authorized to deduct non-liquidated petty cash advances from the salaries of the employees concerned, without exception, within the nearest payroll period after the prescribed time. This will be accomplished through the Personnel Section. Persistent offenders will be subject to Programme disciplinary procedures. Petty Cash Books (PCB) will be maintained at the PMO and Programme Provincial & Liaison Offices to account for the disbursements. The books will record the date, PCV number, payee, account codes, amount and balance. PCVs will only be entered when liquidated. The PCB running balance will be represented by cash plus outstanding Petty Cash Advances. The cashing of cheques from the PCF, whether personal or official, is strictly prohibited. The PCF in the form of cash and outstanding PCVs will be kept in the Petty Cash box at all times and shall be held securely by the Cashier. In the absence of the Cashier the funds will be locked in the safe. Page 12

17 UDP Financial Manual All unused Petty Cash Voucher forms shall be controlled and accounted for in order to prevent false preparation. Petty Cash Supporting Documentation Requirements: - For purchases - Itemized receipt(s) - Official Receipt/Acknowledgment Receipt For Goods Received - The PCV or receipt must be stamped and signed by either the PMO or PPO property custodian certifying that the goods have been received. - Where the property custodian is the claimant certification must be given by the Procurement Officer (PMO) or FAS Chief (PPO). For travel - Approved travel order and itinerary/claim. - Itemized receipts (if applicable). - Used travel tickets/other travel supporting documents. - Travel completed form. 4.4 Petty Cash Replenishment Replenishment is made from Programme funds by cheque with the Cashier as payee. Documentation is submitted to the Accounting Clerk for preparation of the Disbursement Voucher, which follows the normal preparation and approval procedure. The Cashier will cash the cheque at the bank and deposit the cash to the PCF. Cancelled PCVs are to be included in the request for re-reimbursement, and filed in sequential order with the Vouchers in the Accounting section. Cancelled vouchers must be clearly stamped "Cancelled" and initialled by the Cashier. Documentation for replenishment of the Petty Cash Funds is as follows: - Summary of expenses - Petty Cash Vouchers, in sequential order Page 13

18 - Attached receipts and supporting documents - Reconciliation statement for the PCF. UDP Financial Manual All other offices (Provinces, Liaison) are required to avoid requesting near to the month end closing of the books. This will assist the PMO accounting staff to close the Programme s books of account promptly. 4.5 Cash Receipts All collections whether in cash or in cheque shall go directly to the Cashier who shall immediately issue a pre-numbered Official Receipt (OR). The Official Receipt shall be accom-plished in triplicate and recorded in the Cash Receipts Register chronologically. The distribution of the three copies is: Original - Payer Duplicate - Accounting Section Triplicate - Cashier The OR sequence is controlled by the Cashier, who will ensure that all ORs are accounted for, including cancelled ORs. The Chief Accountant at the PMO and the Finance and Administration Section Chief (FASC) in the Provinces and the Cashier shall undertake a monthly reconciliation of receipts against the Cash Receipts Register. All deposits shall be covered by validated deposit slips attached to the Official Receipt, which will be retained for record purposes. The bank deposit slip shall be prepared in triplicate, with the original retained by the bank. The first copy, together with the attached OR(s) is submitted to the Accounting Section and the second copy is retained and filed by the cashier. The Deposit Slip should quote the OR numbers included therein. ORs should identify cash and cheque receipts separately, showing cheque numbers where applicable. Accumulated collections of P1,000 and above shall be deposited on the next banking day. For security reasons there shall be no regular or scheduled trips to the bank. Collections should be held separately from the Petty Cash Fund. 4.6 Overages and Shortages All overages and shortages will be reported immediately to the Chief Accountant at the PMO, to the Provincial Manager in Provinces and to Officer in Charge in Liaison Office. Overages will be banked as a separate deposit on the next available banking day. Shortages will Page 14

19 UDP Financial Manual be made good by the Cashier unless the Co-Directors otherwise decree. 4.7 Accommodation of Cheques The cashing of personal or Programme cheques is strictly prohibited. 5. DISBURSEMENTS 5.1 Policies The Financing Agreement provides that disbursements are made in line with the Programme s progress and the agreed Work Plan and budget estimates, and are administered by the Co- Directors on behalf of the Commission. In practice, this will be implemented as follows: Cheque Signatories (Peso Account) Cheque signatories for the Peso account shall be the Co-Directors, or their designates who have been duly approved by the Delegation. Cheques must always have two signatures and be a combination of one local staff member and one member of the Technical Assistance Team, the Co-Directors will advise their names and the terms of their authority to the Bank in writing. Cheque Signatories (Provincial Peso Accounts) Cheque signatories for the Provincial Peso account shall be the Provincial Manager and one nominated officer approved by the Co-Directors, or their designates who have been duly approved by the Co-Directors. Cheques must always have two signatures one of which must always be one of the two main signatories, the Co-Directors will advise their names and the terms of their authority to the Bank in writing. Cheque Signatories (Euro Account) Transfers from the Euro Account to Pesos, which may only be made to the PMO Peso Account at Land Bank of the Philippines in Davao City, require two signatories, as stated above, or as directed to the Bank by the Delegation. Page 15

20 Disbursement Vouchers (DVs) at PMO. UDP Financial Manual Approval and signatories for the Disbursement Vouchers (DVs) shall be the Co- Directors, or their designates. All DV's will always be approved and signed by a combination of one local staff member and one member of the Technical Assistance Team. The names of the designates and terms of their authority will be promulgated in writing. Designates: Where either or both Co-Directors are not available to sign DVs and/or cheques due to meetings, etc., the designated signatories may sign up to P100,000. The designated signatories will sign all DVs and cheques when either or both Co-Directors are on travel or leave. Disbursement Vouchers (DVs) at Province Approval and signatories for the Disbursement Vouchers (DVs) shall be the Provincial Manager and one nominated Officer (preferably a different Officer to the cheque signing authority) approved by the Co-Directors, or their designates. All DV's will always be approved and signed by two officers. The names of the designates and terms of their authority will be promulgated in writing. Normally, payments to suppliers shall be processed and released only upon full and satisfactory receipt of goods/services, as identified in the Receiving and Inspection Report(s). Disbursements shall be made in accordance with the contract of purchase or purchase order, which may allow for a deposit to be paid in advance, or for Cash on Delivery, under no circumstances will complete payment be made before the goods/services have been received. Where: Cash on Delivery (COD) terms of payment, are stated on the PO, then the payment may be processed prior to the receipt of goods/services, but only released on/after the receipt of goods/services being paid for. If the payment is for less than that stipulated in the PO, the reasons for this must be made clear, and approved by the Co-Directors. Operationally, a transaction will proceed if both Co-Directors have signed either a contract or any one of the following: a purchase or letter order, a request for authority to travel, the fuel and oil withdrawal slip, or the liquidation of a cash advance; and the vouchers for payment after the Page 16

21 UDP Financial Manual consummation of the transaction. The limits of authority, whereby minor approvals are delegated, are provided under Appendix B. All payments exceeding P3,000 shall be made by cheque. Splitting of payment for a disbursement to circumvent the signing limits is prohibited. A signed binding legal document is required for procurement, other than petty cash. This will be a Purchase Order, Contract, Memorandum of Agreement or training course approval and will state the terms, responsibilities and obligations of each party, and all data relevant to the procurement. The document will provide written proof of the agreement, and protect the Programme in the event of any dispute or litigation relating to the procurement. 5.2 Budget Monitoring and Control To ensure that expenditure against approved budget is properly controlled, an effective system of monitoring commitments and expenditure against approved budgets will be applied. Programme Component expenditure will be monitored as follows: For Activity expenditure (training, workshop, contractual services etc.) within a Component Approval of any activity is achieved by the signing of a one-page approval sheet, which is a summary of the activity. An approval sheet may be prepared by unit or division heads or may be generated from the Project Review Committee and submitted for approval to the Co-Directors, with the exception that a Provincial Manager may approve an activity within the Province up to P50,000 provided the activity has been identified in the approved AWP. The Project Review Committee will be responsible for reviewing and recommending to the Co- Directors for approval all Projects and activities with an estimated value above P 100,000, all activities below this amount will be recommended directly to the Co-Directors by the Division Heads or Provincial Managers. The Project Review Committee will be chaired by the Deputy Director Together with the respective Provincial Managers, and one other Technical Officer nominated by the Co-Directors. The Co-Directors may nominate additional representatives from within the Programme or externally as they deem fit. On a monthly basis, the total component expenditure to date is monitored against component quarterly and annual budgets per the AWP & B. Any increase required to the individual activity Page 17

22 is subject to the procedures as laid out in Section 8 of this Manual. UDP Financial Manual For Project Management Office Recurrent Costs: Expenditure can be incurred against individual cost headings, as laid out in the AWP & B on a quarterly basis. A variation of up to 20% in any cost heading budget may be approved in advance by the Co-Directors. The total Component expenditure to date is monitored monthly against the Component quarterly and annual budget per the AWP & B, to ensure that the Component budget is not overspent. The Programme shall operate within the budget of each component. Any increase in the budget of a Component requires a written justification for the approval of the Commission and the Department of Agriculture. The budgetary control is provided by the Bookkeeper, who will be responsible for ensuring that proposed expenditure is within the approved budget, or the necessary additional approvals have been given, prior to the commitment being undertaken. The Budget Confirmation form displays the current budget position for the information of those approving and signing the Disbursement Vouchers and cheques. Charging of expenditures must be in line with the relevant activity for which costs have been incurred and applied against the same cost heading under which it was budgeted. Each AWP & B must budget for costs to be incurred in the year covered by the AWP & B. No increase is automatically made to a current AWP & B for expenditure which was budgeted in the previous year but not expended nor included in the current year's budget. Thus when preparing an AWP & B, expenditure, which was planned in the current year's AWP & B, which will be delayed until the next year, must be included in the AWP & B for the following year. 5.3 Processing of Cheque Payments The Disbursement Voucher (DV) is the controlling document for all cheque payments. The DV is pre-numbered to establish accountability. All the supporting documents of the DVs shall be stamped "PAID" immediately after cheque signing, by the cashier who shall ensure that the cheque number is indicated in all the supporting documents. 'Particulars of Payment' section shall contain a clear identification/description of the expense, and include persons' names, places, etc. where applicable. Only one cheque shall be issued for one disbursement voucher, and vice versa. The documents required to support the disbursement shall depend on the category and value of the transactions as detailed elsewhere in this Manual. Page 18

23 UDP Financial Manual The Programme shall reimburse expenses incurred by individuals using personal funds for expenditures, which are either properly approved in advance, or approved retrospectively for an emergency. A Request for Reimbursement form, detailing each item in the claim, will be required to process the claim. This should be signed by the claimant and approved by the Co- Directors. In addition, the documents, which are required for normal approval of this type of disbursement (depending on the type and value of expenditure), must be attached. Claims for reimbursement of personal funds expended must be made within one month of incurring the expense. Claims over one month require the approval of the Co-Directors. Claims over 3 months from the occurrence of the expense will not be reimbursed. 5.4 Receipts All expenditures must be supported by receipts. All receipts must be dated by the supplier at the time of issue. Any receipts with no dates indicated, unidentifiable, or tampered with shall be rejected for payment by the Accounting Section. Should the Accounting Section suspect that any receipt submitted for payment has been altered or tampered with by the requesting employee, then the Accounting Section shall immediately advise the Co-Directors and Provincial Manager if applicable, of their suspicions. Where no official receipt is provided for minor expenses, such as taxi or tricycle fares, boat hire, etc., a written statement of expenditure will be acceptable for reimbursement in place of a receipt, provided it contains the date, description and amount, and is signed by the payee. In the case of receipts for fuel and oil, a justification (attached on the expense claim or liquidation) is required identifying why an accredited station was not used to charge the purchase. The vehicle identity, fuel quantity, date and km. reading, shall be reflected in the justification. 5.5 Release of Payments Payment shall be made directly by the Cashier to the supplier, i.e., the supplier shall claim the payment directly from the Programme Offices. In cases where the delivery of payment directly to the supplier's office cannot be avoided, the person who received the cheque from the cashier shall sign an Acknowledgment Receipt (AR). Such AR shall be attached to the DV. The supplier s OR shall likewise be attached to the DV as soon as this is received. Programme documents shall not normally be taken out of the office, to avoid loss or misappropriation. Full payment to suppliers shall be released only upon verification of the complete and satisfactory Page 19

24 UDP Financial Manual delivery of items purchased, unless provided for under the contract of purchase or procurement. 5.6 Payment Procedures The invoice and supporting documents are received from the Procurement Officer by the Accounting Clerk who checks the mathematical accuracy and completeness of the documents, then prepares a pre-numbered Disbursement Voucher (DV) and logs the DV number in the Voucher Log Book. The package is passed to the Bookkeeper, with all supporting documentation. The Bookkeeper enters the account classifications and descriptions in accordance with the charge code pre-determined under the budgetary control system, and enters the details in the Component Subsidiary Ledger, where appropriate. The Chief Accountant reviews the DV, checks the account allocations, and signs it to certify that it is legal and proper and that it is supported by the necessary documents. (In the Provincial Office, the Finance & Administration Section Chief) On satisfactory review of the DV and supporting documents, the Payment Recommendation portion of the DV is signed by the FAD Chief and F & A Specialist and the package is forwarded to the Cashier. The Cashier prepares the Cheque and enters the cheque and DV numbers in the Cheque Register. The complete set of documents is presented to the Co-Directors for their approval and cheque signature. On completion of the cheque signatures the Disbursement Voucher package is passed to the Cashier who stamps the DV and all the supporting documents with the respective cheque number and "PAID" stamp and enters the details in the Cash Disbursement Register. The package is the passed to the Bookkeeper who records the details of the expenditure in the Subsidiary Component Ledger; The DV package is then passed to the Cashier for release of the cheque. The Payee (or person authorized in writing by the payee to collect the cheque) signs and dates the DV and signs the Cheque Register to indicate receipt of payment, issues an Official Receipt (OR) to the Programme (which is attached to the DV supporting documents) and receives the cheque. Where an OR is not available, an Acknowledgment Receipt (AR) should be used. ORs should be used as far as possible. Where cheques are delivered, the person responsible for delivery signs the Cheque Register. Page 20

25 UDP Financial Manual If at any stage in the above process, documents are incomplete, there is insufficient budget, or for any reason approval is not obtained, then the documents are returned to the relevant stage for appropriate action. 5.7 Filing Once the cheque has been released and the transaction entered in the Disbursement Register, the Disbursement Voucher and supporting documents are filed as follows: At the PMO 1. Yellow copy to the Accounts section, with all supporting documents, where it is filed by cheque number sequence. 2. Pink copy to the Cashier. ( attached to Cashier's copy of CPR, in weekly batches for the review of the Co-Directors). 3. Blue copy. to Accounts Section where it is filed by DV number. At Provincial Office 1. Yellow copy to PMO, with replenishment request 2. Pink Copy with all supporting documents, in check number sequence 3. Blue Copy with accounts section in DV number sequence 5.8 Cancelled Documents All cancelled documents shall be clearly marked as such in order to preclude presentation for payment. Cancelled documents will be filed with used documents in numerical order, or, in the case of a cancelled DV, with the Accounts Section DV file. Cancelled cheques shall be attached with the replacement cheque when presented to the cheque signatories for replacement to avoid duplication of payment. Cancelled cheques will be filed in sequence with returned paid cheque. 6. PROVINCIAL OPERATIONAL FUND TRANSACTIONS The Provinces will not be self-accounting and all accounting and expenditure records will be maintained by the PMO. Each Province will operate on the basis of an initial advance of up to a maximum of P 500,000, from the PMO account, to allow the Province to meet its day to day operational expenses. All expenditure shall be liquidated by the submission of a request for replenishment, attaching the original (yellow) copy of all DVs pertaining to the replenishment amount will only include payments actually received by the payees. Page 21

26 UDP Financial Manual The request for replenishment shall be initiated by the Province to replenish the account to the value of the Provincial Operational Fund on a bi-weekly basis or more frequently once over half of the advance has been expended. Replenishment of the Provincial Operational Funds shall be by interbank transfer or by issuance of a cheque, which shall be crossed and deposited only to the Provincial Office Account for the Provincial Operational Fund, with an OR issued by the Province to PMO in order to maintain a full sequence of ORs for all receipts. Requests for replenishment will be made by listing all cheques (no., DV no., payee, and amount) issued for the current period, including all cancelled cheques. Thus ensuring that all cheques are accounted for. A full bank account reconciliation will accompany each weekly request for replenishment. The Provincial account may not have a balance in excess of the initial approved advance. The maximum amount that the Provincial Office may issue a cheque is set at P50,000. Any payment required in excess of this amount shall be made by the PMO using a cheque drawn on the PMO Bank Account. For such items, procurement will be handled in agreement with the PMO. For individual Provincial disbursements within the approved ceiling, these will normally be processed through the relevant Province, except where it is more practical that PMO handle procurement and payment - for instance where PMO may have a particular procurement or other expertise. Where the Province handles procurement, the Province will normally process the payment 7. CASH ADVANCES The Programme generally pays for goods and services or works undertaken upon delivery or completion, with payment processed at the PMO or Province. There are cases where funds are required either in advance (cash advances) or retrospectively by the Programme personnel to pay for approved goods and services. Cash advances are allowable for authorized Programme expenditure. For travel expenses, an approved Travel Order is sufficient. The Travel Orders states the number of days to liquidation, and that full deduction from salary is authorized if not liquidated on time. A Request for Cash Advance (RCA) is required for advances to be used for purposes other than those related to the travel. Page 22