COMMISSION ON AUDIT CIRCULAR NO.

94-009 August 16, 1994

TO : All Heads of Departments, Bureaus and Offices of the National Government;

Managing Heads of Government-Owned and/or Controlled Corporations, Boards
and Commission; Provincial Governors; City/Municipal Mayors; Chief
Accountants/Corporate Treasurers; Local Treasurers; COA Directors and
Auditors; and All Others Concerned.

SUBJECT: Amendments to Volume II of the Government Accounting and Auditing Manual

prescribed under COA Circular No. 91-368 dated December 19, 1991.

1.0 PURPOSE

This circular is issued to:

1.1 Clarify/restrict the use of certain accounts in the Standard Government Chart of
Accounts.

1.2 Delete/change/expand some accounts;

1.3 Prescribe reclassification accounting entries for affected accounts.

2.0 CLARIFICATION/RESTRICTION ON THE USE OF NEW CONTINUING

APPROPRIATION ACCOUNTS PERTAINING TO CURRENT OPERATING
EXPENDITURES

2.1 The following accounts shall be for the exclusive use of the national government
agencies and shall be limited to current operating expenditures specifically approved
by the President to be retained as Continuing Appropriations in support of projects
whose effective implementation calls for multi-year expenditure commitments:

ACCOUNT CODE ACCOUNT TITLE

8-81-410 - Unliquidated Obligations - Continuing Appropriations,

Personal Services
8-81-420 - Unliquidated Obligations - Continuing Appropriations,
MODE
0-82-100 - Obligations Incurred - Continuing Appropriations, Personal
Services
0-82-200 - Obligations Incurred - Continuing Appropriations, MODE
0-83-100 - Obligations Liquidated - Continuing Appropriations,
Personal Services
0-83-200 - Obligations Liquidated - Continuing Appropriations, MODE
0-90-100 - Appropriations Allotted/Expenditures - Continuing
Appropriations, Personal Services
0-90-200 - Appropriations Allotted/Expenditures - Continuing
Appropriations, MODE

2.2 Unexpended balances of appropriations for personal services and maintenance and
other operating expenses of Local Government Units (LGUs) shall be reverted to the
 Cumulative Results of Operation - Unappropriated at the end of the fiscal year
pursuant to Section 322 of RA 7160, The Local Government Code.

3.0 DELETION/CHANGES/EXPANSION IN SOME ACCOUNTS

3.1 Residual Equity and Liabilities Accounts

The following residual equity accounts are hereby deleted and replaced by Deferred
Credits accounts, to wit:

DELETED ACCOUNTS REPLACED BY

ACCOUNT CODE ACCOUNT TITLE ACCOUNT CODE ACCOUNT TITLE

8-90-560 Cumulative Results of Operation (CRO) - 8-86-600 Deferred

Appropriations Allotted/Expenditures - Credits - Semi-
Semi-Expendable Supplies, Containers Expendable
and Property Supplies, Containers
and Property

8-90-570 CRO - Appropriations Allotted/Expenditures - 8-86-700 Deferred -

Supplies and Materials Charged to Credits Supplies and
Appropriations Materials Charged
to Appropriations

8-90-620 CRO - Appropriations Allotted/Expenditures - 8-86-720 Deferred

Accountable Forms With Face Value Credits -
Accountable Forms
With Face Value

8-90-630 CRO - Appropriations Allotted/Expenditures - 8-86-730 Deferred

Unused Construction Materials Charged Credits - Unused
to Capital Outlay Construction
Materials
Charged to Capital Outlay

In addition, the account group captioned "Other Liabilities" is deleted and its
components heretofore described and classified as Miscellaneous Liabilities and Deferred
Credits are reclassified as Deferred Credits under Current Liabilities. These are as
follows:

8-86-000 Deferred Credits -

8-86-100 Deferred Credits to Income
8-86-200 Undistributed Collections
8-86-320 Insurance Claims
8-86-500 Goods/Merchandise Confiscated
8.86.800 Supplies and Materials Acquired
Free of Charge
8-86-850 Livestock and Crops
 8.86.900 Miscellaneous

Correspondingly, the Statements of Operations prepared by national government

agencies and local government units at year-end, are hereby revised in accordance, with
the formats prescribed in Annexes A and B hereof.

3.2 Description of the Deferred Credits Accounts

The description of the Deferred Credits' Accounts are enumerated as follows:

3.2.1 Deferred Credits - Semi-expendable Supplies, Containers and Property (8-

86-600). This account is used as contra account of 8-72-600 representing
semi-expendable supplies, containers and property which had been charged
to appropriations.

Debit this account for:

Loss of semi-expendable items

Use, sale and other disposition of semi-expendable items
Adjustment - reduction (in parenthesis)

Credit this account for:

Purchases of -
Spare Parts
Semi-expendable supplies, containers, furniture and fixtures
and equipment and books with a value that may be
assigned by the Commission on Audit and/or with a life
expectancy of more than one year, charged to
appropriations
Containers charged to appropriations
Empty containers left after the contents were used
Adjustment - reduction (in parenthesis)

3.2.2 Deferred Credits - Supplies and Materials Charged to Appropriations (8-86-

700). This account is used as contra-account of 8-72-700 representing
supplies and materials for use or stock which had already been charged to
appropriations.

Debit this account for:

Use, consumption and other disposition of the items

Cost of medicines and drugs transferred to Pharmacy Unit
Adjustment - reduction (in parenthesis)

Credit this account for:

Purchases of -
Supplies and materials
Government accounting and accountable forms
 Subsistence supplies for certain government and non-
government personnel, inmates and animals
Materials and supplies for use in the repair of building
structures, equipment and other fixed assets except those
charged against capital outlays
Medicine and drugs
Gasoline, oil and lubricants
Adjustment - reduction (in parenthesis)

3.2.3 Deferred Credits - Accountable Forms with Face Value (8-86-720). This
account is used as contra-account of 8-72-720 representing the face value of
accountable forms.

Debit this account for:

The face value of accountable forms issued

Adjustment - reduction (in parenthesis)

Credit this account for:

The face value of accountable forms received

Adjustment - reduction (in parenthesis)

3.2.4 Deferred Credits - Unused Construction Materials Charged to Capital Outlay

(8-86-730). This account is used as contra-account of 8-72-730, representing
the value of construction materials which had already been charged to
appropriation for capital outlay.

Debit this account for:

Construction materials issued

Adjustment - reduction (in parenthesis)

Credit this account for:

Construction materials already charged to capital outlay

Inventory shortage or deterioration duly authorized (in
parenthesis)
Adjustment - reduction (in parenthesis)

3.3 Traveling Expense Account

The description of the account Traveling Expense (3-02-000) shall be amended

and sub-accounts to identify the nature of travel whether foreign or local shall be
provided as follows:

"This account includes expenses incurred in the movement of persons whether

employed in the government or not, such as transportation, subsistence, lodging and
travel per diems, hire of guides or patrol; transportation of personnel baggage or
household effects; bus, railroad, airline and steamship fares, tips, transfers, etc.,
non-commutable transportation allowances, road tolls; parking fees and all other
 similar expenses. Sub-accounts to be used are as follows:

3-02-100 Traveling Expenses - Foreign

3-02-200 Traveling Expenses - Local

3.4 Other Services Account

Account Advertising and Publication Expenses (3-23-000), which is separately

provided under Section 368, Volume II of the GAAM is deleted. Expenses of this
nature shall be charged against Other Services expense account (3-29-000) and
shall be limited to publication of notices and announcements of bids, vacant positions
and the like, in newspapers and magazines of general circulation. Correspondingly,
description of Other Services account under Section 372 of the GAAM, shall be
revised as follows:

"This account includes the cost of all other services which are not
otherwise classified under other accounts. Examples are: publication of
notices and announcement of bids, vacant positions, and the like;
repairs and maintenance of equipment, other than government vehicles,
when done by other government agencies or private contractors;
printing and binding; subscriptions; money order fees; medical
attendance fees; industrial costs and surveys; meal and transportation
or motor vehicle allowance for overtime work and election expenses."

4.0 EXPANSION OF ACCOUNTS TO PROVIDE SEPARATE EXPENSE ACCOUNT FOR

GASOLINE, OIL AND LUBRICANTS AND INVENTORY ACCOUNT FOR THE SAME

4.1 Gasoline, Oil and Lubricants (3-23-000)

Republic Act No. 7886 requires submission of a report to Congress with

specific identification, among others, of certain expenditure items which include
cost of gasoline, oil and lubricants. To easily generate the total amount expended
for this purpose, a separate account is herein provided for Gasoline, Oil and
Lubricants with account code 3-23-000 to be incorporated in the Standard
Government Chart of Accounts under Section 368, Vol. II of GAAM. This account
shall be described as follows:

"This account includes the cost of gasoline, oil and lubricants

purchased for stock or immediate use in connection with government
operations."

Accordingly, the description of expense account "Supplies and Materials" (3-

07-000) under Section 352, Volume II of the GAAM, which originally includes the
cost of gasoline, oil and lubricants shall be amended to read as follows:

"This account includes the cost of all expendable commodities

acquired or ordered for immediate use in connection with government
operations. It also includes, but is not restricted to items (1) normally
consumed within one year after being put into use, or (2) converted in
the process of manufacture or construction, having a life expectancy
of more than one year but which shall have decreased substantially in
 value after being put into use in only one year. Examples are: printed
forms, cards, ledgers, journals, pencils, cartridge, brooms, paint,
brushes, nails, soaps, powder, inks, pad, medical supplies,
construction materials for instruction purposes, spare parts, semi-
expendable property having a value that may be assigned by the
Commission on Audit and other expendable property consumed in a
function, activity or office."

4.2 Inventories - Gasoline, Oil and Lubricants (8-72-710) and Deferred Credits -
Gasoline, Oil and Lubricants (8-86-710)

In order to effectively control procurement of Gasoline, Oil and Lubricants,

such purchases shall be recorded as Inventories under the accountability of an
authorized official and the issuances thereat shall be deducted from his
accountability. This scheme will not only enable the agency to reflect in its books
of accounts the monthly balance of the inventory account but will also guide
officials concerned as to the quantity of the products to be procured in the
succeeding month or quarter.

4.2.1 Inventories - Gasoline, Oil and Lubricants (8-72-710)

This account is used to record the cost of gasoline, oil and lubricants
purchased for use or stock in the course of government operations and
already charged to appropriations. This has a contra account 8-86-710.

Debit this account for:

Purchase of gasoline, oil and lubricants

Adjustment - reduction (in parenthesis)

Credit this account for:

Issuance, consumption and other disposition of the above items

Adjustment - reduction (in parenthesis)

4.2.2 Deferred Credits - Gasoline, Oil and Lubricants (8-86-710)

This account is used as contra-account of 8-72-710, representing

gasoline, oil and lubricants for use or stock which had already been
charged to appropriations.

Debit this account for:

Issuance, consumption and other disposition of gasoline, oil and

lubricants
Adjustment - reduction (in parenthesis)

Credit this account for:

Purchase of the above items

Adjustment - reduction (in parenthesis)
 Accordingly, the description of account Inventories - Supplies and
Materials Charged to Appropriation (8-72-700), under Section 57, Volume II
of GAAM shall be amended to delete the items gasoline, oil and lubricant.

5.0 RECLASSIFICATION OF ACCOUNTS

As a result of the changes made in the GAAM which are effected in this circular,
some accounts shall be reclassified. Affected accounts in the GAAM which were already
used by agencies shall be debited and credited for their amount totals in parenthesis and
these shall be reclassified to conform with the changes made in this circular by debiting
and crediting them for the same amount.

Sample illustrative accounting entries as follows:

Account Description Account Code Dr. Cr.

5.1 Cumulative Results of Operation (CRO) - 8-90-560 (xx) (xx)

Appropriations Allotted/Expenditures -
Semi-Expendable Supplies, Containers
and Property
Deferred Credits - Semi-Expendable 8-86-600 xx xx
Supplies, Containers and Property

5.2 For gasoline, oil and lubricants

which were included in the Supplies and
Materials Charged to Appropriation.

Inventories - Supplies and Materials

Charged to Appropriations 8-72-700 (xx) (xx)
CRO - Appropriations Allotted/Expenditures 8-90-570 (xx) (xx)
Supplies and Materials Charged to
Appropriation

Account Description Account Code Dr. Cr.

Inventories - Gasoline, Oil and 8-72-710 xx xx

Lubricants
Deferred Credits - Gasoline, Oil and 8-86-710 xx xx
Lubricants

5.3 Supplies and Materials 3-07-000 (xx)

Gasoline, Oil and Lubricants 3-23-000 xx

5.4 Advertising and Publication Expense 3-23-000 (xx)

Other Services 3-29-000 xx

All accounts affected shall be reclassified so that the 1994 Year-End Preliminary
Trial Balance shall then reflect the new accounts.

6.0 REPEALING CLAUSE

 All circular/issuances inconsistent herewith are hereby modified accordingly.

7.0 EFFECTIVITY

The implementation of this circular shall take effect immediately.

(SGD.) CELSO D. GAÑGAN, Chairman

(SGD.) ROGELIO B. ESPIRITU, Commissioner
(SGD.) SOFRONIO B. URSAL, Commissioner