udg efor rogra

March 8, 2019 et m m
Updated guidelines in the
implementation of the Modified Direct
Payment Scheme (MDPS) for A/Ps Due
Creditors/Payees of All NGAs

DBM Circular Letter 2018-14

Dated December 28, 2018
 ackground
DBM Circular Letter No. 2013-16, dated December 23, 2013,
Implementation of the Expanded Modified Direct Payment
Scheme (ExMDPS) For A/Ps Due Creditors/Payees of All
NGAs

BTr issued Treasury Circular No. 3-2018 on the handling of

LDDAP-ADA by the NGAs and GSBs
 urpose
To direct NGAs to pay using advice to debit account (ADA)
to suppliers/creditors

Clarify procedures for payment of obligations for small

creditors (P10,000 and below) and those creditors which
cannot be conveniently nor practicably paid using the ADA

Provide guidelines on the bank transaction fees and

issuance of official receipt by the suppliers/creditors
 eneral Guidelines: Use of LDDAP-
ADA through GSBs
Use existing LDDAP-ADA and SLIIE to settle all A/Ps to the
creditors/payees including utility companies and social
insurance corporations except GSIS.

Use of LDDAP-ADA shall be free of transaction cost,

provided said creditors/payees maintain Current/Savings
Account (CA/SA) with any branch of the same MDS-GSB of
the NGA.
 se of LDDAP-ADA for suppliers without an
account with the GSB
The NGAs shall require its creditors/payees without CA/SA accounts with
the agency’s MDS-GSB to issue a remitter’s instruction to the agency GSB
as sender of the fund.
The GSBs shall follow BSP Circular 980 series of 2017 on the National Retail Payment
System (NRPS) framework which specified that transaction cost/s shall be paid by the
sender.

The suppliers/creditors as remitter shall shoulder the cost of transferring

payment from NGA’s GSB to the other GSB (Land Bank of the Philippines to
Development Bank of the Philippines) and NGA’s GSB to other non GSBs
(LBP to BDO, etc.)
 ubmission of LDDAP-ADA
and SLIIE
NGAs shall submit duly signed LDDAP-ADA and the
covering SLIIE (equivalent ACIC) to the MDS-GSBs. The MDS-
GSBs shall not process LDDAP-ADA without the covering
SLIIE consistent with the provisions of BTr Letter Circular No.
3-2018.
 se of MDS Check
Creditors/suppliers who cannot be conveniently nor practicably be paid using the ADA
as determined by the Agency Head, may continue to be paid through issuance of MDS
checks or cash. These accounts includes:

 Small value creditors/payees with claims during the year costing P10,000 and
below, e.g., government scholars, recipients of DOLE’s Special Program for the
Employment of Students (SPES)
 Creditors/payee of the agency with non-regular transaction or one time
transaction during the year, e.g., Right-of-Way claimants, relocation expenses for
informal settlers and others
 Components which are not authorized, per their internal policy, to open current
accounts in addition to their existing accounts.
 DS-GSB payment
framework
The MDS-GSB shall effect payment of A/Ps to the individual accounts of creditors within
the next two (2) banking days after receipt of the LDDAP-ADA and SLIIE. Exemptions from
the two (2) banking days crediting through LDDAP-ADA and SLIIE shall be allowed for :

 Payroll fund except pension benefits, to facilitate payments of salaries and other
personnel benefits, and professional services rendered under job order and
contract of service status.
 Cash advances

Since GSBs designate a cut-off time, receipt of LDDAP-ADA and SLIIE after said time, shall
be considered submission on the following day.
 EQUIREMENT OF OFFICIAL RECEIPT AND
ATTACHMENT TO DV
Consistent with accounting and auditing rules and regulations,
the NGAs are reminded to require their creditors to issue Official
Receipts (ORs) or Sales Invoice as evidence of receipt of
payment through LDDAP-ADA and SLIIE or MDS Check.

In case the supplier/contractor failed to submit OR or sale

invoice, the list of bank-validated ADA shall be attached to the
DV as proof of payment.
 uidelines on the Issuance
of OR
 In the case of supplier/contractor maintaining accounts outside
the agency’s MDS-GSB where corresponding bank charges are
paid by the supplier/contractor as remitter (as deduction from the
amounts transferred to their accounts), the OR or Sales Invoice to
be issued by the creditor concerned shall correspond to the gross
amout.

 Non-issuance of OR or Sales Invoice by the contractor/supplier

shall be reported to the BIR as violation of regulations
 osting in Websites of the NGAs
established procedures

The posting at respective agency websites of the Agency’s

established procedures in processing APs as indicated in its
Citizen’s Charter, e.g., flowchart including the timelines.
 pecific Guidelines on use of
LDDAP-ADA
The processing of ADA shall be streamlined as follows:

NGAs/OUs shall use the existing LDDAP-ADA and the SLIIE forms, to be
prepared by the Accounting Division, Certified Correct by the Chief
Accountant/Head of Accounting.

These documents shall be approved by the Cashier or the Agency

Head or his/her authorized signatories, similar to the signatories of the
MDS checks (consistent with the Government Accounting Manual
(GAM) – Sec. 56. Procedures for Disbursements through LDDAP-ADA).
 ersonnel related
transactions
The MDS-BSB shall use the list of payees with account details and
amount duly certified and issued by the agency’s authorized
signatories as attachment to LDDAP-ADA and SLIIE for:

 Personnel-related transaction, e.g., salaries, clothing allowance,

monetization, pension, etc.
 Cash advances granted on the explicit authority of the Head of
Agency or his/her authorized representative to duly designated
disbursing officers or employees for approved purpose.
Management of Cash Advances for
DepEd’s Non-IUs for MOOE and other
purposes
 ackground
Cash advances to the School Heads of non-IUs for school
operations and program funds constitute a sizeable amount
estimated at P2 billion.

The DBM-DepEd Joint Circular No. 2004-1, Guidelines on the

Direct Release of Funds to DepEd Regional Offices and
Implementing Units.
 bjectives

To authorize School Heads of non-IUs to:

a) Open a bank account where the cash advance for
school operating budget and program funds shall be
deposited
b) Negotiate banking arrangements such as minimum
maintaining balance and interest on funds
 ighlights of the Policy
Issunace
Open bank account with GSBs or non-GSBs, in the name of the school with the principal and one
signatory to the account

Still to be treated as Cash Advance of the Principal

Bank account shall be approved by BTr and amount of deposit should not be more than
P500,000 for non-GSBs

Cash advance to Non-IUs can use the Modified Disbursement and Payment System (MDPS)

Liquidation of 75% of the fund shall already allow replenishment. No other funds can be
deposited to the said account except for funds transferred by SDOs/DepEd

Utilities and other operating expenses with amount of P15,000 or less shall be allowed to be
charged to the cash advance
 eneral Guidelines
The Schools Heads of non-IUs to open and maintain a bank account (checking or savings
account) under the name of the school with the GSBs.

Opening an account (checking or savings account) with non-GSBs shall also be allowed
provided that, there is no existing GSBs within the 20km radius from the school.

The School Head shall be the signatory to the account and shall make arrangements with
the Bank relative to the opening of account, maintaining balance and bank
fees/transaction costs to be approved by DepEd authorized personnel.

Maintaining balance and transaction cost/bank fees shall be charged to the schools
MOOE budget.
 pproval on the opening
of Account
The authority to open a bank account for each school shall be approved by the
BTr upon submission of request by DepEd supported with the following
information:
 Name and Address of School
 Name and Address of Bank/Branch where to open an account
 Name of authorized signatory/signatories and designation
 Certification of Approval by the DepEd authorities

In non-GSBs, the bank account of the schools shall not have funds more than the
required amount for the school’s operating budget or P500,000 whichever is
lower, This shall safeguard government deposits with Philippine Deposit Insurance
Corporation insurance.
 ther Guidelines
The cash requirement for MOOE of the schools shall be released
within the first week of every month/quarter, subject to
availability of cash allocations as released by the DBM.

Interest income on the account shall be transferred

automatically to the BTr by the GSBs every quarter, and by the
non-GSBs every end of the year. These shall be recognized in
the BTr’s books of accounts as remittances of income of the
government.
 se of LDDAP-ADA and recognition of
bank charges
The recognition of bank charges and interest in the books of the
DepEd’s Operating Unit (SDOs/Regional Offices (ROs)) shall be
based on the bank statement or passbook entries.
The operating budgets and program funds of non-IUs schools shall be
deposited by the SDOs/ROs through the MDPS using the LDDAP-ADA.
The issuance of MDS checks shall be allowed, in cases where MDPS is
not applicable or practicable

The LDDAP-ADA shall contain the list of bank accounts with the
name of the schools and other information required in the form.
 uidelines on the use of
Bank Account
Only deposits from DepEd’s Operating Unit (SDOs/ROs) and interest shall
be allowed to be credited to the schools bank account.

To liquidate the cash advance, the School Heads of Non-IUs shall submit to
the SDOs/ROs concerned Cash in Bank Register, together with the
supporting documents and a copy of bank statement or passbook.

Liquidation reports for disbursements of up to 75% of the amount given

shall be submitted as basis for the release of MOOE budget for the
subsequent month/s or quarter/s.
 uidelines on the use of
Bank Account
The bank account shall only have the maintaining balance by the end of
the year. The balance of the school bank account in excess of the
required maintaining balance shall be directly remitted to the BTr by the
GSB or non-GSB, at the end of the year.

The School Heads shall make proper liquidation of his/her cash advance if
he/she shall be reassigned to another school or upon his/her
retirement/separation from service.
 ther Guidelines

The DepEd SDOs/ROs shall reconcile the amount withdrawn based on the
bank statement or passbook with the reported disbursement and the
supporting documents submitted for liquidation of the cash advance.

To ensure the smooth implementation of this Circular, a training shall be

conducted for School Heads, accountable officers, and other concerned
on the guidelines and procedures and the required recording/reporting
framework.
 pecific Guidelines: School
Heads
The School Heads of non-IUs shall be granted the authority responsibility
to:
 Open and maintain a bank account under the name of the school
for its operating and program funds;
 Manage the schools operating budgets and program funds that will
be downloaded as cash advances;
 Submit bank statements or passbooks and other reports as may be
required by the SDOs/ROs; and
 Comply with the liquidation requirements and submit reports together
with other supporting documents to the SDOs/ROs concerned
observing the prescribed timeline.
 pecific Guidelines: DepEd
SDOs/ROs
Determine the amount to be transferred as cash advance to the non-IUs for their
operating and program funds;

Adjust the cash advance to be issued to non-IUs based on actual utilization and bank
reports in order to avoid unnecessary amounts outside of the TSA;

Be responsible for the issuance of clearance in case of retirement, resignation, or transfer

from one school to another of School Heads and other school personnel who are
designated as signatories; and

Advise non-IUs to efficiently manage the funds transferred to their accounts (e.g.,
purchase of needed supplies and materials upon receipt of the funds, and the prompt
settlement of accounts payable within target turn-around-time.
 pecific Guidelines: DepEd
CO
Monitor the status of bank accounts opened by the School
Heads and submit the summary of the bank account
opened and outstanding balances to the BTr and other
oversight agencies by the end of the year, for monitoring
purposes; and

Prepare and issue additional procedural guidelines, as

needed
 pecific Guidelines: DBM
DBM shall included in the comprehensive Notice of Cash
Allocation the requirements of DepEd’s non-IUs
corresponding to the amounts indicated in the approved
Monthly Disbursement Program.

The DBM RO concerned shall make sure that proper reports

are submitted by DepEd to advances granted.
 pecific Guidelines: COA
COA shall include in its regular audit the bank accounts
opened by DepEd’s non-IUs to ensure that implementation
is in accordance with the existing rules and regulations,
and funds are used according for their authorized
purpose/s.

COA shall prescribe additional accounting and auditing

guidelines, if necessary.
THANK YOU