Financial Mangement in LGUs

B. PROCESSING OF FINANCIAL DOCUMENTS (PROCUREMENT)

1. Why is thorough understanding of this is important for Administrators?

Accountability is one of the responsibilities of the administrators and anyone in the public service. In government financial transactions, signatories for every document are accountable for a particular transaction. In fact, if a transaction is proven to have been anomalous, the signatories are held liable.

When we talk about procurement, we always refer to Republic Act 9184 of the Government Procurement Reform Act. All policies and requisites dictated in this act must be complied with prior the processing of financial documents for payment.

2. What are the required documents necessary to complete a financial transaction?

Following are the various documents that will be required for the processing of payments to suppliers and contractors:

· PURCHASE REQUEST (PR)

This form shall be used by any government agency as a proof or basis in placing purchase orders, provided however, that the requested items are not on stock. (if on stock, what ___)

The PR is signed by the head of the procuring agency as approval of the request, signed by the treasurer to certify cash availability and the local chief executives as approval of the purchase.

· OBLIGATION SLIP (OS)

This form is used by the budget office to obligate the expense for the particular procurement. The certification of the budget officer of this form signifies that there is budget allocated for the particular expense. This action therefore becomes the basis for the treasurer and the local chief executive to approve the request to procure.

This is processed with the purchased request.

PURCHASE ORDER (PO)

· Upon approval of the purchase request the appropriate procurement process is performed, as prescribed by RA 9184, all procurements must undergo public bidding unless otherwise it falls under any of the alternative methods of procurement. When a winnieng bidder has been determined, the purchase order is issued containing the items awarded and the contract price (which must be equal to or lower than the approved budget for the contract)

The Purchase Order is the proof of purchase which binds the supplier and the government agency.

The PO is signed by the head of the procuring entity, or the local chief executive.

ACCEPTANCE AND INSPECTION REPORT (AIR)

This form is prepared each time a delivery is made. This is used to recognize the acceptance of goods delivered and inspected of the same according to specifications.

The AIR is signed by the accepting officer and the inspecting officer.

DISBURSEMENT VOUCHER (DV)

This form is used for all money claims. This document shall be attached with the proper and complete supporting documents.

Supporting documents may vary. However for the case of procurement the following shall be the supporting documents:

· Approved Purchase Request

· Approved Obligation Slip

· Approved Purchase Order

· Duly signed Acceptance and Inspection Report (which quantity and total amount equals the purchase order)

· Delivery Receipt or Sales Invoice duly issued.

3. What is the step-by-step procedure in processing financial documents?

All procurements must undergo public bidding, however, a most common transaction encountered especially for smaller amount of procurements is the shopping process.

Public bidding involves big amounts per purchase request, usually P250,000.00 and above for items not on stick and for items not available at the Department of Budget and Management-Procurement Service (DBM-PS)

The difference between bidding and shopping is that bidding is a longer process where price is not the only qualifying factor, quality and compliance with eligibility requirements are also factor thereby determining the lowest responsive bidding. In shopping, the lowest price among the suppliers that have submitted price quotations is normally awarded the contract.

The process below is patterned from a centralized procurement setup, where the General Services Office is the central warehouse and central procurement agency.

PROCESS NO.	PROCEDURE	OFFICE/PERSON RESPONSIBLE
1	Prepare Request Form with the following attachments: (certifications may also be required to assure the need for procurement)	Requesting Office
2	Receive Request Form and evaluate request.	General Services
2.1a	If the request is included in the Annual Procurement Plan (APP), prepare Purchase Request (PR) and the Obligation Slip (OS), attach the request form with the corresponding attachment documents
2.1b	If request is not included in the APP, ensure that there is an Amendatory Form attached and the amendment is within the Amendatory Procurement Plan. Otherwise, the request is returned to the requesting office
2.2a	If the request is within the Approved Project Plan/ Proposal, prepare Purchase Request (PR) and the Obligation Slip (OS), attached the request form with the corresponding attachment documents	General Services
2.2b	If the request is not within the APP or Approved Project Plan/Proposal, disapproved request and return the request form to the requesting office.
3	Receives Purchase Request (PR) with the appropriate Obligation Slip (OS). Obligates the expense and approves the obligation.	Budget Office / Budget Officer

PROCESS NO.	PROCEDURE	OFFICE/PERSON RESPONSIBLE
4	Receives Purchase Request (PR) from the General Services. Certify as to availability of cash. Disapproved requests shall be returned to the requesting office	Treasurer’s Office / Treasurer
5	Receive Purchase Request (PR) from the Treasurer’s Office. Initial on the request. Disapproved requests shall be returned to the requesting office	Administrator’s Office / Administrator
6	Receive Purchase Request (PR) from the Administrator’s Office with the Administrator’s initial. Approved of the request. Disapproved requests shall be returned to the requesting office.	Local Chief Executives
7	Receive approved Purchase Request (PR) with the approved Obligation Slip (OS) from office of the Local Chief Executive	General Services
8	Conduct appropriate procurement processes, prepare required procurement documents, sign on procurement documents.	Bids and Awards Committee (BAC), BAC Secretariat, BAC Chairman
9	Prepare Purchase Order (PO), attach appropriate supporting documents (Approved Purchase Request with appropriate attachments whenever applicable, Approved Obligation Slip)	BAC Secretariat
10	Received Purchase Order (PO) with the appropriate supporting documents from the general services office. Initial on the purchase.	Administrator’s Office / Administrator
11	Receives Purchase Order (PO) with the appropriate supporting documents and with the administrator’s initial from the Administrator’s Office. Approve the purchase	Local Chief Executive
PROCESS NO.	PROCEDURE	OFFICE/PERSON RESPONSIBLE
12	Approved Purchase Order (PO) is issued to the contracted supplier	BAC Secretariat
13	Upon delivery of goods, the supplier must have the goods/ equipment inspected at the Accounting-Inspection Division, as to quantity and quality. The Delivery Receipt (DR), Invoice and Approved Purchase Order (PO) must be presented to the inspector. The inspector signs on the Delivery Receipt (DR) for goods/equipment inspected of proper quantity and quality	Supplier
14	Delivers inspected goods at the General Services Office	Supplier
15	Prepares the Acceptance and Inspection Report (AIR)	General Services
16	Accept inspected goods. Signs on the Acceptance and Inspection Report (AIR). Attaches inspected Delivery Receipt, Invoice, Purchase Order (PO), Quotation/Contract, Obligation Slip (OS), Purchase Request (PR) and its supporting documents	General Services
17	Receives signed Acceptance and Inspection Report (AIR) from the general services office with the proper supporting documents. Approves AIR	Accounting Office / (Inspection Division)
18	Prepares Disbursement Voucher (DV) and attaches the documents stated in process no. 16	General Services
19	Prepare Request for COA Inspection	General Services

PROCESS NO.	PROCEDURE	OFFICE/PERSON RESPONSIBLE
20	Audits completeness of documents. Approves disbursement. Supporting documents with discrepancies are returned to the general services office/ Requesting Office	Accounting Office / Accountant
21	Receive Disbursement Voucher (DV) from Accounting Office, Initial on the Disbursement	Administrator’s Office / Administrator
22	Receive initialed Disbursement Vouchers (DV) from the administrator’s Office. Approve of the Disbursement	Local Chief Executive
23	Receive Approved Disbursement Vouchers (DV) from Office of the Local Chief Executive. Prepare Check	Treasurer’s Office
24	Sign Check	Treasurer
25	Receive Check with complete supporting documents. Initial on Check.	Administrator’s Office / Administrator
26	Receive Checks with the adminstrator’s initial. Sign check	Local Chief Executive
27	Received duly signed checks and prepare transmittal of signed checks for the preparation of Accountants Advise	Treasurer’s Office
28	Receive transmittal or approved checks and prepare Accountant’s Advice	Accounting Office
29	Receive Checks with transmittal. Release Check	Treasurer’s Office

PROCESS NO.	PROCEDURE	OFFICE/PERSON RESPONSIBLE
30	Issues check. Require recipient’s signature and photocopy of recipient’s ID	Treasurer’s Office
31	Receive paid vouchers for posting to appropriate ledgers	Accounting Office
32	Transmit paid vouchers to COA	Accounting Office