Updates on IUEEU, PPE, SEF and Unconscionable Expenditures
This content provides insights into the 18th Annual National Conference of the Philippine Association of Local Government Accountants, focusing on updates regarding Irregular, Unnecessary, Excessive, Extravagant, and Unconscionable (IUEEU) expenditures. It covers guidelines, definitions, and examples of irregular expenditures, unnecessary expenditures, and excessive expenditures. The aim is to enhance understanding and compliance with expenditure regulations in local government accounting.
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Philippine Association of Local Government Accountants, Inc. 18th Annual National Conference Updates on IUEEU, PPE, SEF Updates on IUEEU, PPE, SEF Utilization and Sangguniang Utilization and Sangguniang Kabataan Reform Act Kabataan Reform Act May 24, 2023 KCC Convention and Events Center KCC Mall, General Santos City 1 1
UPDATED GUIDELINES FOR THE PREVENTION AND DISALLOWANCE OF IRREGULAR, UNNECESSARY, EXCESSIVE, EXTRAVAGANT AND UNCONSCIONABLE (IUEEU) EXPENDITURES (COA CIRCULAR NO. 2012-003 DATED OCTOBER 29, 2012) 2 2
COA COA Circular Circular No Re: Updated Guidelines for the Prevention and Disallowance of Irregular, Unnecessary, Excessive, Extravagant and Unconscionable (IUEEU) Expenditures No. . 2012 2012- -003 003 dated dated October October 29 29, , 2012 2012 provides the updated list of situational cases considered as IUEEU expenditures. presents the actual transactions/expenditures declared as IUEEU expenditures under various jurisprudence, COA-issued decisions, and released audit reports. discusses illegal expenditures as differentiated from irregular and unconscionable expenditures. 3
IRREGULAR EXPENDITURES those incurred without adhering to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in laws. those incurred if funds are disbursed without conforming with the prescribed usages and rules of discipline. those incurred without observance of an established pattern, course, mode of action, behavior, or conduct. transactions conducted in a manner that deviates or departs from, or which do not comply with the standards set. transactions which violate, or fail to follow, appropriate rules of procedure. 4
UNNECESSARY EXPENDITURES those expenditures which could not pass the test of prudence or the diligence of a good father of a family. not supportive of the implementation of the objectives and mission of the agency relative to the nature of its operation. not dictated by the demands of good government, and those the utility of which cannot be ascertained at a specific time. not essential or that which can be dispensed with without loss or damage to property. to determine whether an expenditure is necessary, the mission and thrusts of the agency incurring the expenditures must be considered. 5
EXCESSIVE EXPENDITURES unreasonable expenses, or expenses incurred at an immoderate quantity and exorbitant price. they also includes expenses which exceed what is usual or proper, as well as expenses which are unreasonably high and beyond just measure or amount. they also include expenses in excess of reasonable limits. 6
EXTRAVAGANT EXPENDITURES those incurred without restraint, judiciousness and economy. Extravagant expenditures exceed the bounds of propriety. these expenditures are immoderate, prodigal, lavish, luxurious, grossly excessive, and injudicious. 7
UNCONSCIONABLE EXPENDITURES unreasonable and immoderate, and which no man in his right sense would make, nor a fair and honest man would accept as reasonable. in violation of ethical and moral standards. 8
Illegal Expenditures as Differentiated from Irregular and Unconscionable Expenditures Illegal Illegal Expenditures Expenditures those incurred in violation of laws. Irregular Irregular Expenditures Expenditures those incurred in violation of established rules, regulations, procedural guidelines, policies, principles or practices. Unconscionable Unconscionable Expenditures of ethical and moral standards. Expenditures those incurred in violation 9
UPDATES ON PPE Increased Capitalization Threshold Increased Capitalization Threshold from below P15,000 to below from below P15,000 to below P50,000.00 pursuant to Section 23 of P50,000.00 pursuant to Section 23 of RA No. 11639, or the General RA No. 11639, or the General Appropriations Act (GAA) for Fiscal Year Appropriations Act (GAA) for Fiscal Year 2022 2022 COA Circular No. 2022 COA Circular No. 2022- -004 dated May 31, 2022 re: Guidelines on the 31, 2022 re: Guidelines on the Implementation of Section 23 of the Implementation of Section 23 of the General Provisions of RA No. 11639 General Provisions of RA No. 11639 004 dated May 10 10
Section Section 23 provides that tangible items below Fifty Thousand Pesos (P50,000) shall be accounted as semi-expendable property. (CONDITIONAL IMPLEMENTATION Message, December 30, 2021, Volume I-B, page 819, R.A. No. 11639) 23 of of the the General General Provisions Provisions of of GAA GAA FY FY 2022 2022 - President s Veto President s Veto Message - the implementation of the above-mentioned provision shall be subject to the issuance by COA of appropriate accounting and auditing rules and regulations. 11
COA COA Circular Circular No No. . 2022 2022- -004 004 dated dated May May 31 31, , 2022 2022 prescribes the guidelines on the implementation of Section 23 of the General Provisions of R.A. No. 11639. the Circular shall be implemented by all National Government Agencies (NGAs), Local Government Units (LGUs) and Government Corporations (GCs). the increase in the capitalization threshold shall be considered as a change in accounting policy and shall be applied retrospectively. 12
COA COA Circular Circular No No. . 2022 2022- -004 004 dated dated May May 31 31, , 2022 2022 Accounting for tangible items acquired prior amounts from P15,000.00 to below P50,000.00 previously classified as PPE: prior to to CY CY 2022 2022 with a) If already issued the carrying amounts shall be expensed/charged to the Prior Period Adjustment and Government Equity accounts for LGUs. b) If still in custody of the Supply or Property Division the cost of these items shall be reclassified to the appropriate semi-expendable property account. 13
UPDATES ON THE IMPLEMENTATION OF THE GOVERNMENT ACCOUNTING MANUAL FOR LOCAL GOVERNMENT UNITS 14 14
Government Government Accounting Still deferred under COA Circular No. 2021-007 dated September 6, 2021. Accounting Manual Manual (GAM) (GAM) for for LGUs LGUs Revised Revised Government Government Accounting Already includes the following: a) new accounting capitalization threshold, b) appropriate accounts pertaining to the semi- expendable properties, and c) other revisions/enhancements relative to the adoption of the IPSASs. Accounting Manual Manual (GAM) (GAM) for for LGUs LGUs policy on the increased 15
UPDATES ON SANGGUNIANG KABATAAN Republic Act (RA) No. 11768 dated Republic Act (RA) No. 11768 dated May 06, 2022 May 06, 2022 (An Act Strengthening the (An Act Strengthening the Sangguniang Kabataan, Institutionalizing Sangguniang Kabataan, Institutionalizing Additional Reforms to Revitalize Youth Additional Reforms to Revitalize Youth Participation in Local Governance and By Providing Participation in Local Governance and By Providing Honorarium, Other Benefits, And Privileges, Honorarium, Other Benefits, And Privileges, Amending for The Purpose Certain Sections of Amending for The Purpose Certain Sections of Republic Act No. 10742, Otherwise Known as the Republic Act No. 10742, Otherwise Known as the "Sangguniang Kabataan Reform Act Of 2015 ) "Sangguniang Kabataan Reform Act Of 2015 ) 16 16
Grant Grant of of Honorarium Honorarium to to the the SK SK Members, Members, Treasurer Treasurer and and Secretary Secretary SK Reform Act of 2015 SK Reform Act of 2015 (R.A. No. 10742) (R.A. No. 10742) Amendment under R.A. No. 11768 Amendment under R.A. No. 11768 Section 16. Privileges of SK Officials: Section 4, Amending Section 16 of R.A. No 10742: Item a (6) - The SK members, including the SK treasurer and secretary, shall receive a monthly honorarium, chargeable against the SK funds, in addition to any other compensation provided by the Act and shall be granted at the end of every regular monthly SK meeting: Provided, That the monthly honorarium shall not exceed the monthly compensation chairperson: Provided, further, That not more than 25% of the SK funds shall be allocated for personnel services. The DBM shall issue the necessary guidelines implementing this provision. (6) The SK chairperson shall have the same privileges enjoyed by other Sangguniang Barangay officials. received by their SK The LGUs may provide additional honorarium as well as social welfare contributions and hazard pay to the SK chairperson and the elected and appointed members through their own local ordinances: Provided, That the honorarium as stated in this section shall be subject to the post-audit jurisdiction of the COA. Xxx. Item b - The SK Chairperson shall have the same privileges enjoyed by other SK officials xxx. 17 17 17
D DBM BM Local dated dated December December 23 Local Budget Budget Circular 23, , 2022 Circular (LBC) 2022 (LBC) No No. . 148 148 This prescribes the guidelines and procedures on the grant of honorarium to SK Officials pursuant to Section 4 of R.A. No. 11768. SK Officials: SK Chairperson SK Members (7) SK Treasurer SK Secretary 18
Policy Policy Guidelines Guidelines on Social Social Welfare Welfare Contributions, the Grant Grant of of Additional Contributions, and and Hazard on the Additional Honorarium, Honorarium, Hazard Pay Pay by by the the LGUs LGUs Provided to the SK chairperson and the elected and appointed SK members Provided through local ordinances Taken up as financial subsidy to SK in the books of accounts of the LGU concerned Contingent on the fulfillment of the requirements set forth and agreed upon by both parties in a Memorandum of Agreement or contract Subject to their attendance to SK meetings, deliberations, and official activities of the SK 19
Policy Policy Guidelines Guidelines on Social Social Welfare Welfare Contributions, the Grant Grant of of Additional Contributions, and and Hazard on the Additional Honorarium, Honorarium, Hazard Pay Pay by by the the LGUs LGUs Accounted for and recorded in the Registry of Specific Purpose Fund Commitments, Payments, and Balances of the SK Subject to pertinent budgeting, accounting and auditing laws, rules and regulations The grant of hazard pay shall conform with the existing laws and guidelines. 20
Policy Policy Guidelines Guidelines on Social Social Welfare Welfare Contributions, the Grant Grant of of Additional Contributions, and and Hazard on the Additional Honorarium, Honorarium, Hazard Pay Pay by by the the LGUs LGUs Ensure that the grant will not significantly affect the LGU's capability to allocate adequate funds for the delivery of basic services implementation of developmental projects. and facilities and Included in the Annual Investment Program of the LGUs concerned Transferred/downloaded to the account of the SK in accordance with Item 3.4 of the Handbook on the Financial Transactions of the Sangguniang Kabataan (HFTSK) 21
Policy Policy Guidelines Guidelines on Social Social Welfare Welfare Contributions, the Grant Grant of of Additional Contributions, and and Hazard on the Additional Honorarium, Honorarium, Hazard Pay Pay by by the the LGUs LGUs Total Total honoraria honoraria to be received by the SK Officials shall not exceed the amount of honorarium being received by the barangay officials Total honorarium to be received by the SK Chairperson shall not be more than the amount of honorarium being received by the Sangguniang Barangay members. Total honorarium of the SK Officials shall not exceed the rate equivalent to SG SG 9 9, , Step Step 1 1 in the salary schedule implemented by the city or municipality where the barangay belongs 22
Responsibility Responsibility and and Accountability Accountability shall shall rest rest upon upon the the: : SK Officials, with regard to the determination and payment of honorarium charged against the SK funds; LCEs and other local officials concerned, with regard to the payment of additional honorarium, social welfare contributions, and hazard pay charged against the LGU funds; and Both the SK and the local officials in ensuring that public funds are strictly utilized in accordance with applicable budgeting, accounting, and auditing laws, rules and regulations. 23
UTILIZATION OF SPECIAL EDUCATION FUND DepEd DepEd- -DBM s. 2017 s. 2017 DBM- -DILG Joint Circular No. 1, DILG Joint Circular No. 1, DepEd DepEd- -DBM s. 2020 s. 2020 DBM- -DILG Joint Circular No. 1, DILG Joint Circular No. 1, 24 24
DepEd DepEd- -DBM dated dated January DBM- -DILG January 19 DILG Joint 19, , 2017 Joint Circular Circular (JC) 2017 (JC) No No. . 1 1, , s s. . of of 2017 2017 Prescribes the revised guidelines on the use of the SEF; Enumerates the allowable expenses chargeable against the SEF; and Provides the planning and budgeting policies for the SEF. COA Style Guide 25
DepEd DepEd- -DBM 2020 2020 DBM- -DILG DILG JC JC No No. . 1 1, , s s. . of of 2020 2020 dated dated August August 27 27, , Addendum to DepEd-DBM-DILG Joint Circular No. 1, s. of 2017 Provides additional allowable expenses to be charged against the SEF pursuant to R.A. No. 11037, or the Masustansyang Pagkain Para sa Batang Pilipino Act. Provides funding for the implementation of the National Feeding Program COA Style Guide 26
Recapitulation: TOPICS TOPICS LATEST ISSUANCES / STATUS LATEST ISSUANCES / STATUS IUEEU Expenditures Sample transactions for each type of expenditure are provided in Annexes A to F of COA Circular No. 2012-003 Semi-expendable property Deferred implementation by the LGUs of COA Circular No. 2022- 004 pending the issuance of the supplemental guidelines, which will be included in the Revised GAM for LGUs GAM for LGUs Still deferred under COA Circular No. 2021-007 The proposed Revised Revised GAM policy on semi-expendable property, is currently undergoing review and finalization GAM for for LGUs LGUs, which includes the new SK Honorarium Section 4 of R.A. No. 11768 provides for the monthly and additional honorarium to be received by the SK Officials DBM LBC No. 148 dated December 23, 2022 prescribes the guidelines and procedures on the grant of honorarium to the SK Officials SEF Utilization Updated guidelines on the utilization of SEF: DepEd-DBM-DILG JC No. 1, s. 2017 DepEd-DBM-DILG JC No. 1, s. 2020 27 27 27
Thank you. COA Style Guide 28
