10.1 COA Circular No. 2023-008 dated August 17, 2023, establishes guidelines for
the proper disposition of dormant accounts held by local government units
(LGUs) that are not governed by specific laws, rules, or regulations. It also aims
to expedite the cleansing of dormant accounts across government agencies,
ensuring the fair presentation of financial statements. This Circular amends COA
Circular No. 2016-005, dated December 19, 2016. Under the new Circular,
dormant accounts—defined as those that have remained inactive in the books of
accounts for ten (10) years or more—may only be derecognized upon the grant
of specific authority by the Commission on Audit (COA).
10.2 The Circular provides for the procedures for the proper disposition of dormant
accounts, derecognition of dormant accounts, journal entries, and monitoring and
reporting. However, it expressly states that its provisions should not be
interpreted as condoning the write-off of these accounts or extinguishing existing
obligations. Furthermore, the Circular does not serve as grounds for exonerating
officers or employees from liability in cases of infidelity in the custody of official
documents. It reinforces the principle that accountability and proper stewardship
of government records remain imperative, even in the process of addressing
dormant accounts.
10.3 Item 7.0 of the Circular requires the Head of the Accounting Unit to review and
analyze the existence of all dormant accounts and secure all available documents
related to those accounts. However, if the review and analysis are impossible due
to the absence of records and documents, or if original documents are lost,
destroyed, or cannot be produced, the Head of the Accounting Unit shall prepare
a list of available records related to the dormant account, indicate the extent of
validation conducted, and attach all relevant documents to the list. Additionally,
a detailed list of all the lost documents or records must be included. He will then
prepare and submit a detailed report to the Head of the Agency recommending
the conduct of an investigation to determine the cause/s of the loss of documents
and identify the official/s and employee/s responsible for the loss.
10.4 The Head of Agency (HoA) will establish an Investigation Committee tasked
with conducting a thorough review of dormant accounts. The Committee will
prepare an Investigation Report, which will be submitted to the HoA for approval.
Based on the findings, the HoA will then render a final decision and provide a
copy of the report to the Accountant for proper documentation.
10.5 Within one year from the Circular’s effective date, the Head of the Accounting
Unit, through the HoA, must submit a request to the Audit Team Leader (ATL)
and/or Supervising Auditor (SA)—depending on the jurisdictional amount—for
COA’s approval to write off or derecognize dormant accounts from the books.
This request must be accompanied by the supporting documents specified in
Annex 8 of the Circular.
10.6 Our review of the General Ledger (GL) revealed the following ending receivables
balances as of December 31, 2024:
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