COMMISSION ON AUDIT CIRCULAR NO.

89-302 December 29, 1989

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

Government; Regional Directors; Chiefs of Financial Management Services;
Chief Accountants/Heads of Accounting Units; COA Directors; COA Auditors and
All Others Concerned.

SUBJECT: Accounting and Procedural Guidelines Relative to Unobligated Year-end

Balances of Allotments for Capital Outlays.

1.0 PURPOSE : This circular is issued to provide accounting and procedural guidelines in
the treatment of unobligated balances of allotments at year-end.

2.0 COVERAGE: This circular shall apply to releases of allotments under the Annual
General Appropriation Act, Public Works Acts and Other Special
Appropriation Acts.

3.0 GENERAL GUIDELINES:

3.1 Unobligated balances of allotments for Current Operating Expenditures (COE) as of

December 31 of each year shall reverted to the unappropriated surplus of the
General Fund, while unobligated balances of Capital Outlays (CO) shall be retained
as Continuing Appropriation and shall be made available for obligations until
December 31 of the subsequent year without the need for the issuance of
Confirmation Notice of Allotment Releases (CNAR).

Example: COE CO TOTAL

Unobligated balance of
allotments - Dec 31, 1988 1,000 2,000 3,000

For reversion on Dec. 31, 1988 (1,000) (1,000)

Retained as Continuing Appropriation

available for Obligation
until Dec. 31, 1989 2,000 2,000

3.2 Balances of Capital Outlays retained as Continuing under 3.1 but which were not
utilized during the subsequent year shall be reverted to the unappropriated surplus
of the General Fund, in line with the existing budgetary policy.

Example: CO
1988 Balance retained as Continuing 2,000
1989 Expenditures/Obligations Incurred (1,500)
1989 Balance which should be reverted 500
======

3.3 Journal Vouchers taking up the reversions and retentions of unobligated balances
 shall be duly approved by the agency heads. Copies thereof shall be furnished the
Accountancy Office, Commission on Audit (COA), and the National Accounting and
Finance Bureau, Department of Budget and Management (DBM).

4.0 ACCOUNTING TREATMENT

4.1 The following accounts are hereby prescribed for purposes of recording unobligated
balances for Capital Outlays.

0-90-300 Appropriation Allotted/Expenditures - Continuing Appropriations

This accounts is used to record the amount of unexpended allotments for

capital outlays retained in the books which does not require the preparation of
special budget or plans of work to be available for expenditure in the succeeding
year.

Debit this account for:

Actual expenditures or obligations

Adjustment - reduction (in parenthesis)

Credit this account for:

Amount of the previous year's unexpended/unobligated balance of

allotment for capital outlay

Reversion of unexpended allotments (in parenthesis)

Adjustment - reduction (in parenthesis)

0-82-300 Obligations incurred - Continuing Appropriation

This account is used to record the amount of orders placed, contracts

awarded, or other transactions which are to be charged against the unexpended
balance of allotment for capital outlays.

Debit this account for:

Year-end closing to obligations Liquidated - Capital Outlay (0-83-300) and

Payables - Unliquidated Obligations - Capital outlay (8-81-430)

Credit this account for:

All obligations covered by approved Request for Obligation of Allotments

chargeable against account 0-90-300

0-83-300 Obligation Liquidated - Continuing Appropriations

This account is used to record the payments or liquidations made for Capital
Outlay during the current year, of obligations incurred during the same year.
 Debit this account for:

Payment/liquidation of obligations
Amount received as refund for overpayment made during the year (in
parenthesis)
Adjustment - deduction during the year (in parenthesis)

Credit this account for:

Year-end closing to obligations incurred - Capital Outlay (0-82-300)

Adjustment - Deduction during the year (in parenthesis

8-81-430 Payables - Unliquidated obligations - Continuing Appropriations

This account is used to record at the close of the year the amount of unpaid
obligation for Capital Outlay charged against 0-90-300

Debit this account for:

Amount paid to settle or liquidate the liabilities

Reversion of excess certifications
Adjustment - reduction (in parenthesis)

Credit this account for:

Unliquidated obligations for capital outlay

Adjustment - additions
Adjustment - reduction (in parenthesis)

4.2 The definition and title of Account 8-90-000 is hereby modified as follows:

8-90-000 Appropriations Allotted/expenditures - Unexpended or Unobligated

allotments (continuing approriations)

Debit this account for:

Transfer of the unobligated or unexpended portion of allotments for

continuing appropriations to Appropriation Allotted/Expenditures -
Capital Outlay.

Adjustment - reduction (in parenthesis)

Credit this account for:

Unexpended or unobligated portion of allotments for capital outlay which

is available for expenditure in the succeeding year.

4.3 The following accounts are hereby deleted from the Standard Government Chart of
Accounts:

0-90-419 Appropriation Allotted, Late Releases of Allotments

 0-82-419 Obligations Incurred, Late Releases of Allotments

0-83-419 Obligations Liquidated, Late Releases of Allotments

8-81-419 Unliquidated Obligations, Late Releases of Allotments

The Balance of account 8-81-419 as of December 31, 1988 shall be

transferred/reclassified to 8-81-400.

5.0 SAVING CLAUSE

Cases not covered by the provisions of this Circular shall be referred to the
Accountancy Office, COA.

6.0 REPEALING CLAUSE

Provisions of existing circulars and issuances inconsistent with the provisions of this
Circular are hereby amended or repealed accordingly

8.0 EFFECTIVITY

This circular shall take effect December 1988.

(SGD.) ALBERTO P. CRUZ, Commissioner

(SGD.) BARTOLOME C. FERNANDEZ, JR., Commissioner
(SGD.) EUFEMIO C. DOMINGO, Chairman
 ILLUSTRATIVE ACCOUNTING ENTRIES

1988 Transactions:

1. Receipt of advice of Allotments for Capital Outlay for 1988 amounting to P100,000.

8-99-100 100,000
0-90-000 100,000

4-33-000 100,000

2. Receipt of Bank Credit Advice and Notice of Funding Warrant Issued (NFWI)

8-70-307 100,000
8-99-100 100,000

3. Incurrence of Obligation

0-90-000 80,000
0-82-000 80,000

Corollary Entry:

8-79-900 80,000
0-94-110 80,000

4. Liquidation of Obligation

0-83-000 75,000
8-70-307 75,000

Corollary Entry:

8-79-700 75,000
8-79-900 75,000

5. Closing Entries

a. Unobligated/Unexpended balance of allotment

0-90-000 (20,000)
8-90-000 (RA 6642) 20,000

b. Obligation Incurred and Obligation Liquidated

0-82-000 80,000
0-83-000 75,000
8-81-400 5,000

c. Invested Surplus
 0-94-110 70,000
8-94-000 75,000

1989 Transactions:

6. Transfer of the Unexpended/Unobligated balance of Allotment for Continuing

Appropriations - Jan. 1, 1989.

8-90-000 RA 6642 20,000

0-90-300 20,000

7. Incurrence of Obligation

0-90-300 RA 6642 18,000

0-82-300 18,000

Corollary Entry:

8-79-900 18,000
0-94-110 18,000

8. Liquidation of Obligations

0-83-000 15,000
8-70-307 15,000

Corollary Entry:

8-79-700 15,000
8-79-900 15,000

9. Closing Entries - December 31, 1989

a. Unobligated balance of allotment

0-90-300 RA 6642 (2,000)

8-99-100 (2,000)

b. Obligation

0-82-300 18,000
0-83-300 15,000
8-81-430 3,000