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Inter-Office Memo

Branch Accounting 2015-08


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June 1, 2015
All Branch Managers
All RAs, AMs, SMs, RHs, IAS, VCL
Edith L. Jimena Accounting Manager Branch Accounting
Write-Off Guidelines and Reminders

Branch Accounting started posting approved recommendations for write-off last May 14, 2015. We were able to effect total
write-off amounting to P773,199.90 as of May 31, 2015. Another P550,648.98 will be posted as soon as we receive the Board
Resolution for this approval. The total amount of recorded and still to be recorded write-off represent only 5% of the P24.9M
overdue accounts identified by Comptrollers from CY 2010-CY2012. Hence, Id like to call on all the branches to start sending
your recommendations. And please note the following additional procedures and reminders to guide you in preparing your
recommendations for write-off:
1.

In preparing the list of clients that are to be recommended for write-off, make sure to consider combined overdue loan
amount per client. Please ensure to sum up all loan types of each client.

2.

If the total loan of the client is more than P5,000.00, recommendation shall pass through the usual procedures for
write-off following the Delinquency Manual (i.e. demand letters should be sent up to the level of Legal and
recommendation shall pass through Internal Audit Services (IAS) who will recommend to the Board Audit and Risk
Management Committee (ARMC) before this is recommended to the Board of Trustees (BOT) for approval).

3.

If the total loan of the client is P5,000.00 and below the account can be recommended following the Special WriteOff Policy (SWOP) subject to the following requirements:

4.

Accounts for write-off are already 365 days overdue


Incident Report (IR) and Recovery Visit Reports (RVR) are accomplished as provided for in the Delinquency
Management Policy
Notices of Payments are issued by the Branch Manager (BM) and Demand Letters are issued by the Area Manager
(AM) and Sector Manager
The written recommendation to write-off is endorsed up to the level of the Region Head
Approval shall be up to the level of the Executive Director (ED)

For recommendations under the SWOP, the following are the requirements of Branch Accounting and IAS:
4.1 Attach to the recommendation the updated account listing as of April 30, 2015. Use the SWOP List of Accounts
(see attached) for this purpose. Make sure to provide all the details in the template as all of the data there are
needed in recording the write-off in Polaris once these are approved.
4.2 Requests duly endorsed by RHs must be sent directly to EDs Office and not anymore to IAS.
4.3 Requests approved by the ED shall be sent directly to the Regional Accountants. Only approved requests
received until the 3 rd working day before month-end shall be recorded on the same month. Those received
after this cut-off shall be recorded the following month.
4.4 Branches shall file all approved special write-off requests and attachments in one folder and ensure availability for
review during regular audit.

Also attached is the procedures for implementing the SWOP which I issued last May 8, 2015 with some revisions. Hoping to
receive more approved recommendations from all of you.
Thank you very much.

Procedures for Implementing Write-Off of Overdue Accounts Amounting to P5,000 and Below
The Board of Trustees, during its meeting on April 21, 2015, approved ARMCs recommendation for the special write-off of
overdue loan accounts amounting to P5,000 and below. This special write-off will no longer pass through the Internal Audit
Services (IAS) but this is subject to the following conditions:
1.
2.
3.
4.
5.
6.
7.

Accounts for write-off are already 365 days overdue.


Incident Report (IR) and Recovery Visit Reports (RVR) are accomplished as provided for in the Delinquency
Management Policy.
Notices of Payments are issued by the Branch Manager (BM) and Demand Letters are issued by the Area Manager
(AM) and Sector Manager.
The written recommendation to write-off is endorsed up to the level of the Region Head.
Approval shall be up to the level of the Executive Director (ED).
Write-off to be effected monthly by Accounting.
Monthly summary of written-off accounts per branch to be monitored by Management and submitted to Internal Audit.

OBJECTIVE
To establish specific procedures on how to implement the BOT approved write-off of overdue accounts.
SCOPE
All loan accounts which are already 365 days overdue with amounts of P5,000 and below.
PROCEDURES
1. Branch Manager (BM)/Senior Account Officer (SAO)
1.1 Using the Aging Report as of the end of April 2015, the BMs/SAO shall sort their PAR accounts to make a list of
accounts which are already 365 days overdue and with amounts of P5,000 and below. Use recommended template
for this purpose (Schedule 1 - SWOP List of Accounts). Consider combined overdue loan amount per client
1.2 BM/SAO will gather all the supporting documents per client that will prove that the steps provided for in the
Delinquency Management Policy were observed by the branch. These documents are as follows:
1.2.1
1.2.2
1.2.3
1.2.4

Incident reports (IR)


Recovery Visit Reports (RVR)
Notices of Payments issued by the BM
Demand Letters issued by the Area Manager (AM) and Sector Manager (SM)

1.3 BM/SAO will then prepare a written recommendation addressed to the Executive Director to be endorsed by the
AM, SM and the Region Head (RH). Attachments to this recommendation are the documents listed in procedure
number 2.
2. Area Manager (AM)
Upon receipt of the recommendation for write-off from the BM/SAO, the AM shall do the following:
2.1 Check the maturity dates of the accounts being endorsed for write-off if these are 365 days overdue.
2.2 Check combined overdue loan amount per client if this is below P5,000.00
2.3 Check the completeness of the supporting documents listed in procedure number 2 under the BM/SAO.
2.4 Return the recommendation to the BM/SAO if there are lacking documents or corrections in the list.
2.5 If everything is in order, forward the recommendation to the SM.
3. Sector Manager (SM)
Upon receipt of the recommendation for write-off from the AM, the SM shall do the following:
3.1 Check the list of accounts for write-off if these are 365 days overdue

3.2 Test check combined overdue loan amount per client if this is below P5,000.00
3.3 Check the completeness of the supporting documents as listed in procedure number 2 of the BM/SAO
3.4 Return the recommendation to the AM if there are lacking documents or corrections in the list.
3.5 If everything is in order, forward the recommendation to the RH.
4. Region Head (RH)
Upon receipt of the recommendation for write-off from the SM, the RH can test check the accuracy of the list of
accounts being recommended for write-off as well as the completeness of the supporting documents. If he/she has no
questions/clarifications, the RH will forward the recommendation for write-off to the Executive Director.
5. Executive Director (ED)
The ED approves the recommendation for write-off.
6. Regional Accountants
Upon receipt of the approved recommendation
6.1 The RA shall post the write-off approved by the ED
6.2 The RA shall prepare a summary of accounts written-off monthly, per client, per branch, per area and per
Sector and emails this to the BM cc: AM, SM, RH, and Branch Accounting Head
6.3 Provides the Branch Accounting Head with a copy of the approved recommendation
7. Branch Accounting Head
7.1 Prepare a summary of written-off accounts per branch monthly
7.2 Provide Corporate Accounting and Internal Audit Services (IAS) with a copy of the summary of monthly
written-off accounts

Prepared by: Editha L. Jimena


Acctg. Manager