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Miscellaneous TranscationsPrepared bySophia April C. SanesStale MDS and Commercial ChecksChecks may be cancelled when it become stale. The depository bank considers a check stale, if it has been outstanding for over six months from date of issue or as prescribed. A stale check shall be marked cancelled on its face and reported as follows:Unclaimed stale checks which are still with Cashier shall be cancelled and reported in the List of Unreleased Checks as cancelled. The List of Unreleased Checks is attached to the RCI (Reports of Checks Issued).For stale checks which are in the hands of the payees or holders in due course and requested for replacements, new checks maybe issued upon submission of stale checks to the accounting unit. A certified copy of the previously paid DVs (disbursement vouchers) shall be attached to the request for replacement. A JEV shall be prepared to take up the cancellation. The replacement check shall be reported in the RCI.

illustrationA check issued by agency Lee Sod of the national government in the amount of Php 10,000 becomes stale. Accordingly, the stale check, which is still in the possession of the payee, was cancelled and new check is issued for replacement. Since, the check was issued in the previous year, the corresponding NCA was requested in the same year and received in the current year. Check issued in the current/prior year for replacementParticularsAccount TitleAcct.CodeDebitCreditCheck cancellationGovernment Equity 3-01-01-01010,000Accounts Payable2-01-01-01010,000Receipt of NCA for prior year accountCash-MDS,Regular1-01-04-04010,000Subsidy from National Government 4-03-01-01010,000Issuance of a new checkAccounts payable 2-01-01-01010,000Cash-MDS, Regular 1-01-04-04010,000To record the cancellation of stale check issued in the current year. ParticularsAccount TitleAcct.CodeDebitCreditCheck cancellationCash-MDS, Regular1-01-01-04010,000Accounts Payable2-01-01-01010,000Issuance of a new checkAccounts payable 2-01-01-01010,000Cash-MDS, Regular 1-01-04-04010,000Cash Settlement and Disallowance There are payments made by disbursing officer by cash or checks, which at post audit are suspended/disallowed by the resident auditor.Contingent accounts shall no longer be used. Disallowed payments which become final and executory shall be recorded under receivable as, Receivable-Disallowance Charges.

Illustration The resident auditor of agency Keith disallowed payments made by the disbursing officer of Agency Keith in the amount of Php 10,000, which pertains to overstatement of expenses in prior year. Accordingly, the disbursing officer settled the disallowance. Case 1. If the disallowance is not recorded in the books (AR was recorded)Collection of settlementCash-Collecting Officer1-01-01-01010,000Government Equity 3-01-01-01010,000Remittance of the Bureau of Treasury Books of Agency Keith Government Equity 3-01-01-010

10,000 Cash-Collecting Officer1-01-01-01010,000Books of Bureau of Treasury Cash in Bank-LC, Savings Account1-01-02-03010,000Government Equity 3-01-01-01010,000ParticularsAccount TitleAcct.CodeDebitCreditCase 2. If the disallowance was taken up as receivableCollection of settlementCash-Collecting Officer1-01-01-01010,000Receivable-Disallowance/Charges1-03-05-01010,000To record of remittance of the Bureau of TreasuryBooks of Agency Keith Subsidy from National Government4-03-01-010

10,000 Cash-Collecting Officer1-01-01-01010,000Books of Bureau of Treasury Cash in Bank-LC, Savings Account1-01-02-03010,000Other Service Income 4-02-01-99010,000ParticularsAccount TitleAcct.CodeDebitCreditCase 3. If the overstatement of expenses pertains to the current year Collection of settlementCash-Collecting Officer1-01-01-01010,000Accounts Receivable1-03-01-01010,000To record of remittance of the Bureau of TreasuryBooks of Agency Keith Subsidy from National Government4-03-01-010

10,000 Cash-Collecting Officer1-01-01-01010,000ParticularsAccount TitleAcct.CodeDebitCreditSettlement of ChargesIf the suspension/disallowance is for the current year, the settlement is a reduction of the expense if the charge increase the income. The settlement therefore is credit to the appropriate expense of income account. If the suspension/disallowance pertains to the prior year, since the nominal account of the prior years were already closed to the income and expense Summary/Retained Operation Surplus account, these can no longer be reduced/increased. It shall be recorded as credit to Government Equity account.Illustration The disbursing officer of Agency Kohg Mou of the national government settled its accountability in the amount of Php 15,000. However, the resident auditor of Agency Kohg Mou found that his accountability was Php 20,000 due to disallowance of several payments made by the disbursing officer. When informed the disbursing officer settled the charges. Case. 1 If the disallowance of Php 15,000 was made during the prior year and settled in the same year, and the resident auditor discovered the additional disallowance in the current year ParticularsAccount TitleAccount CodeDebitCreditAdditional Charges Receivables Disallowances/ ChargesGovernment Equity1-03-05-010

3-01-01-010 5,0005,000Settlement of Disallowance Cash Collecting officer 1-01-01-0105,000Receivables Disallowances/ Charges1-03-05-0105,000 Case. 1 If the disallowance of Php 15,000 was made and settled during the current year, and the resident auditor discovered the additional disallowance in the same current year ParticularsAccount TitleAccount CodeDebitCreditAdditional Charges Receivables Disallowances/ ChargesOther Services Income1-03-05-010

04-02-01-9905,0005,000Settlement of Disallowance Cash Collecting officer 1-01-01-0105,000Receivables Disallowances/ Charges1-03-05-0105,000Refund of OverpaymentSometimes overpayments or even double payments of expenditures do happen in agencies. These could be avoided with the institution of proper controls but some could not be avoided because of built-in procedures. One example is the payment of payrolls. Payrolls are prepared in advance and some agencies pay their employees through the banking system. All these are done before reports of attendance are submitted, making it impossible to know the exact amount to be paid in case there are absences without pay during the pay periods. In case of overpayments, refunds shall be demanded of the employees concerned.

ParticularsAccount TitleAccountCodeDebitCreditTo record overpayment of salaries and wages (When overpayment is ascertained)Due from Officers and EmployeesSalaries and Wages Regular Pay1-03-05-0105-01-01-0105,0005,000To record refund of overpaymentCash Collecting OfficerDue from Officers and Employees1-01-01-0101-03-05-0205,0005,000To record deposit of collection to the Bureau of Treasury ParticularsAccount TitleAcct.CodeDebitCreditBooks of Agency XY Subsidy from Natl Government Cash Collecting Officer 4-03-01-0101-03-05-010 5,0005,000Books of Bureau of Treasury Cash in Bank-LC, Savings AccountOther Service Income 1-01-02-030

4-02-01-9905,0005,000In case receivable account for the refund of overpayment was not set up ParticularsAccount TitleAccountCodeDebitCreditTo record overpayment of salaries and wages Cash Collecting OfficerSalaries and Wages Regular Pay1-01-01-0105-01-01-0105,0005,000To record deposit of collection to the Bureau of Treasury ParticularsAccount TitleAcct.CodeDebitCreditBooks of Agency XY Subsidy from Natl Government Cash Collecting Officer 4-03-01-0101-03-05-010 5,0005,000Books of Bureau of Treasury Cash in Bank-LC, Savings AccountOther Service Income 1-01-02-030

4-02-01-9905,0005,000