CASH ADVANCES

Audit Criteria
1. COA CIRCULAR No.: 2012-004
Dated NOV. 28, 2012
SUBJECT: Demand for Immediate
Liquidation and Settlement of All
Cash Advances Outstanding as of
December 31,2011

2. COMMISSION ON AUDIT CIRCULAR NO.

97-002 dated February 10, 1997
SUBJECT: Restatement with amendments of
the rules and regulations on the granting,
utilization and liquidation of cash
advances provided for under COA Circular
No. 90-331 dated May 3, 1990.

3. COMMISSION ON AUDIT CIRCULAR NO.

2003-003 dated July 30, 2003
SUBJECT: AUDIT AND LIQUIDATION OF
INTELLIGENCE AND CONFIDENTIAL FUNDS
OF LOCAL GOVERNMENT UNITS.

4. DILG MEMORANDUM CIRCULAR NO.

99-65 dated APRIL 23, 1999
SUBJECT: AMENDING MEMORANDUM
CIRCULAR NO. 98-136 DATED JULY 24, 1998
ENTITLED, REVISED GUIDELINES RELATIVE
TO THE UTILIZATION OF FUNDS FOR
INTELLIGENCE OR CONFIDENTIAL PURPOSES

5. DILG MEMORANDUM CIRCULAR NO.

99-100 JUNE 15, 1999
SUBJECT: DEPARTMENT MEMORANDUM
CIRCULAR NO. 99-65 DATED APRIL 23, 1999
RELATIVE TO THE USE OF PUBLIC FUNDS
FOR INTELLIGENCE OR CONFIDENTIAL
ACTIVITIES

POSSIBLE RISK AREAS

1.

Unliquidated Cash Advances

2.

Implementation of rules and regulations

relative to cash advances

Possible Risk Areas

3.

Maintenance of Subsidiary Ledgers

4.

Reconciliation of General Ledger and

Subsidiary Ledgers

5.

Monitoring and Reporting

AUDIT OBJECTIVES
1. To determine whether the rules and
regulations pertaining to cash advances
are adhered strictly by the audited agency.
2. To determine whether all cash advances
and its liquidations are correctly recorded
in the books of accounts of the audited
agency.

AUDIT OBJECTIVES
3. To determine whether adequate records are
maintained for cash advances.
4. To determine whether General Ledger and
Subsidiary Ledgers on cash advances are
reconciled periodically.
5. To determine whether cash advances are
closely monitored and a report thereon is
prepared and submitted to proper authorities.

AUDIT PROCEDURES
Audit Objective
#1 To determine
whether the rules and regulations
relative to cash advances are strictly
adhered to by the audited agency.
Audit Procedures:
1. Obtain copies of the existing rules and
regulations relative to the granting,
liquidation, utilization and reporting of
cash advances.

2. Conduct an interview with the

Accountant to know their procedures in
the granting and liquidation of cash
advances.
3. Conduct a walkthrough to determine
the actual practice of the agency and to
vouch the result of the interview with
the Accountant.

4. Note differences of information obtained in

Nos. 2 & 3.
5. Prepare an Audit Observation
Memorandum.
6. Issue the Audit Observation Memorandum.

AUDIT PROCEDURES
Audit Objective # 2 - To determine whether
all cash advances and its liquidations
are correctly recorded in the books of
accounts of the audited agency.
Audit Procedures:
1. Obtain a copy of the latest Financial
Statements of the audited agency.
2. Obtain a Schedule of Cash advances and its
General Ledger and Subsidiary Ledgers.

3. Compare the Schedule, the General Ledger

and the Subsidiary Ledgers and note
differences (eg. Accounts with abnormal
balances).
4. Prepare an Audit Query (AQ) for the
accounts with abnormal balances.
5. Prepare an Audit Observation Memorandum
for accounts with abnormal balances due to
errors in recording.
6. Issue the Audit Observation Memorandum.

AUDIT PROCEDURES
Audit Objective #3 - To determine whether
adequate records are maintained for cash
advances.
Audit Objective #4 - To determine whether
General Ledger and Subsidiary Ledgers on
cash advances are reconciled periodically.
Audit Procedures:
1. Obtain a Schedule of Cash Advances as of a
given period.

2. Verify existence of Subsidiary Ledgers and

determine if postings thereto are up to date.
3. Compare the balances appearing in the
Subsidiary Ledgers against that in the
Schedule and the General Ledger.
4. Take note of the difference, if any. (Working
Paper No.___)

5. Conduct an interview with the accountant

regarding the reconciliation of the General
Ledger and Subsidiary Ledger regarding the
frequency of reconciliation of the General
Ledger and Subsidiary Ledgers.
6. Prepare Audit Observation Memorandum
for accounts with discrepancies/differences.
7. Issue the Audit Observation Memorandum.

AUDIT PROCEDURES
Audit Objective # 5 - To determine whether
cash advances are closely monitored and
a report thereon is prepared and
submitted to proper authorities.
Audit Procedures:
1. Obtain reports regarding monitoring of Cash
Advances (e.g. Aging Schedule of Cash
Advances, Reports on Accounts that were not
liquidated within the prescribed period)

2. Verify with the proper authorities if the

reports obtained from procedure No. 1 were
submitted to them on a timely basis.
3. Prepare Audit Observation Memorandum
for cash advances that were not liquidated
within the prescribed period.
4. Issue the Audit Observation Memorandum.

Sample Audit Observation Memorandum

-end-