[ PPA FINANCE MEMORANDUM ORDER NO. 02-2009, April 22, 2009 ]
AMENDMENT TO PPA FINANCE MEMORANDUM ORDER NUMBER 11-2006 ENTITLED GUIDELINES IN SETTING UP ALLOWANCE FOR DOUBTFUL ACCOUNTS
1.1 Section 6a (iii) Presidential Decree No. 857
1.2 Philippine Accounting Standards (PAS) No. 37
2. COVERAGE
This guideline covers the setting up of allowance for doubtful accounts of all unpaid accounts recorded in the PPA Books.
3. MECHANICS
3.1 Rates. The following graduated rates are hereby prescribed to be applied to the balances of the accounts based on age category, to wit:
Not Yet Due 0% 30 days 5% 31-90 days 10% 91-180 days 20% 181-365 days 40% Over 365 days 60% Dormant with Nil Chance 100% 3.2 Computation. Annually, the Allowance for Doubtful Accounts shall be recomputed or updated. The difference between the updated amount and the balance of the Allowance for Doubtful Accounts provided as of the previous years shall be recognized as expense of the current year.
3.3 An account is classified as dormant account without chance of being collected if all of the following conditions are present:
3.3.1 Over 365 days old; and
3.3.2 All collection efforts failed duly supported with the following documentary evidences, among others:
3.3.2.1 Collection letter/s or Committee Report/s
3.3.2.1.1 Certification from the Securities and Exchange Commission/Other Regulatory Government Agencies
3.4 All dormant accounts should be immediately requested for write-o ff in accordance with existing procedural guidelines, for final approval of the following approving officials, pursuant to COA Resolution No. 2009-002.
3.4.1 Supervising Auditor or Head of Audit Group 1) a. Original jurisdiction for losses in amounts not exceeding P50,000.00
3.4.2 Audit Cluster Director or Regional Director 2) a. Original jurisdiction for losses in amounts exceeding P50,000.00 but not exceeding P100,000.00.
b. Appellate jurisdiction over the decision of the Supervising Auditor or Head of Audit Group
c. Appellate jurisdiction over the decision of the Audit Cluster Director or Regional Director
3.4.3 Commission Proper 3) a. Original jurisdiction for losses in amounts exceeding P1,000,000.00. b. Appellate jurisdiction over the decision of the Adjudication and Settlement Board
3.5 Accounting Entries
Once approved, the corresponding provisions for doubtful accounts shall be adjusted based on the following accounting entries:
3.5.1 Balance of Allowance for Doubtful Accounts is less than the updated amount.
dr. 0-90-200 Current Operating Expenses - Non Cash Charges (3-13-300 Bad Debts) cr. 8-80-716 Allowance for Doubtful Accounts
3.5. 2 Balance o f Allowance for Doubtful Accounts is more than the updated amount.
4. REPEALING CLAUSE
This Memorandum Order revokes P PA Finance Memorandum Order No. 11-2006.
5. EFFECTIVITY
This Order takes effect immediately.
Adopted: 22 Apr. 2009
(SGD.) ATTY. GLORIA J. VICTORIA-BA AS
Assistant General Manager
Finance and Administration