Implementation of the Expanded Modified Direct payment Scheme(EXMDPs) for Accounts Payable Due to Creditors/Payees of All National Government Agencies

Implementation of the Expanded Modified Direct payment Scheme(EXMDPs) for Accounts Payable Due to Creditors/Payees of All National Government Agencies Circular Letter Nos. 2013-16 dated Dec. 23, 2013, 2013-16A dated Feb. 6, 2014, and 2013-16B dated Feb. 25, 2014

BackgroundTwo schemes for the payment of Accounts Payables (A/Ps):MDS Check 0123456789February 20, 2015Pay to Supplier X for the amount of One Million Pesos Only (P1,000,000.00). _____________________ Authorized signatory Treasurer/cashier List of Due and demandable Accounts Payable Advice to Debit Accounts (LDDAP-ADA)Presently, the National Government uses two schemes for payment of APs: 1) the Common Fund Scheme where payment is made through issuance of MDS checks; and 2) The Direct Payment Scheme via bank debit system through the issuance of Advice to Debit Account (ADA)2BackgroundModified Disbursement Payment Scheme (MDPS) - Authorizes the MDS-GSB to credit payment directly to the creditors account

Effect of its implementation: - remove discretion in the payment of A/P - ensure predictability of resource allocation to these creditors - contributed to the substantial reduction of agencies due and demandable (A/Ps) - minimized the volume of outstanding checks

Circular Letter No. 2013-16 Re: Implementation of the ExMDPs for Accounts Payable Due to Creditors/Payees of all NGAs

Purpose:1) Provides guidelines in the use for the ExMDPs for payment of A/Ps due to creditors/payees of all NGAs/OusPrescribe2) To prescribe the LDDAP-ADA as an accountable form to be used 4Important Terms:Accounts Payable (A/P)good/services/projects have been delivered/rendered/completed and accepted, regardless of the year of obligations incurredAdvice to Debit Account (ADA)Authorization issued by the NGA/OU appearing in the lower portion of the LDDAPInstruction to MDS-GSB to debit specified amount from its available NCA balance under the regular MDS sub-account for payment of A/PCreditors/PayeesRefers to Internal and External creditors/payees

General GuidelinesOnly valid and legal A/Ps shall be considered for paymentStarting January 1, 2014, A/Ps due to creditors/payees shall be settled thru the ExMDPs *All NGAs/OUs shall use the LDDAP-ADA which shall be considered an accountable formAll NGAs/OUs shall encourage or advise their creditors/payees to open a Current or Savings account with any branch of their authorized MDS-GSB [Letter of Introduction (LOI)]

Summary of the General Guidelines:Only valid and legal A/Ps shall be considered for payment meaning only g/s/p which has been delivered/rendered/completed and acceptedObligations for which g/s/p have NOT YET been delivered. Shall NOT BE recorded as ApsStarting January 1, 2014, A/Ps due to creditors/payees shall be settled thru the ExMDPs. However, CL No. 2013-16A deferred the implementation of such to March 1, 2014All NGAs/OUs shall use the LDDAP-ADA which shall be considered an accountable formAll NGAs/OUs shall encourage or advise their creditors/payees to open a Current or Savings account with any branch of their authorized MDS-GSBAll NGAs shall issue LOI this shall be addressed to its MDS-GSB for the opening or validation of account of the creditor/payee

6General GuidelinesFor creditors without existing accounts with NGA/OUs MDS-GSB, payment shall be through bank transfer Discontinue the use of Managers checkAll payments of A/Ps reflected in LDDAP-ADA are assumed duly programmed in the agency-submitted MDP as evaluated by DBMPrepare in four copies, a Summary of LDDAP-ADAs Issued and Invalidated ADA Entries (SLIIE) for all LDDAP-ADAs issued

Summary of the General Guidleines:Only valid and legal A/Ps shall be considered for payment meaning only g/s/p which has been delivered/rendered/completed and acceptedObligations for which g/s/p have NOT YET been delivered. Shall NOT BE recorded as ApsStarting January 1, 2014, A/Ps due to creditors/payees shall be settled thru the ExMDPsAll NGAs/OUs shall use the LDDAP-ADA which shall be considered an accountable formAll NGAs/OUs shall encourage or advise their creditors/payees to open a Current or Savings account with any branch of their authorized MDS-GSBAll NGAs shall issue LOI this shall be addressed to its MDS-GSB for the opening or validation of account of the creditor/payee

7Specific Guidelines and ResponsibilitiesNGAs/OUs shall:Require the creditors to furnish them with their respective bank account numbers and bank branchesObserve the policies and procedures in the preparing the LDDAP-ADAIn case of insufficient balance of its Common Fund under regular MDS account, submit a request for release of additional NCA to cover payment of A/Ps to DBM

Specific Guidelines and ResponsibilitiesLet me focus our discussion to the NGAs/OUs responsiblities-Require the creditors to furnish them with their respective bank account numbers and bank branches-Observe the policies and procedures in the preparing the LDDAP-ADA-In case of insufficient balance of its Common Fund under regular MDS account, submit a request for release of additional NCA to cover payment of A/Ps to DBM

8Specific Guidelines and ResponsibilitiesNGAs/OUs shall:Remind their creditors/payees consistent with the auditing regulationsAutomatic issuance of evidence of receipt of payment for disbursement thru official receiptsPost on its website the following:LDDAP-ADA numbers notice to creditors/payees concernedAgencys established procedures in processing A/Ps as reflected in its Citizens Charter

Continuation:-Remind their creditors/payees consistent with the auditing regulations-Observe the policies and procedures in the preparing the LDDAP-ADAIn case of insufficient balance of its Common Fund under regular MDS account, submit a request for release of additional NCA to cover payment of A/Ps to DBM 9

The MDS-GSB shall effect payment thru the MDPs NOT earlier than 24 hours but not later than 48 hours after receipt of the said document10

Department of Budget and Management, Regional Office I06001030000101101101LBP San Fernando City Branch/ 0123-456-78

Fund Category Code Month Series for the month - Year101101 02 001 2015Feb. 20, 201513Summary of LDDAP-ADAs Issued and Invalidated ADA Entries (SLIIE)

Specific Guidelines and ResponsibilitiesChanges/corrections in the names of creditors:The Head/Representative of the agency shall be the sole authority in approving any corrections Corrections shall be made through a letter authority to the MDS-GSB to be signed by the signatories in the LDDAP-ADAAllowed corrections:Change of one letter in the name of creditors/payeesAbbreviations usedCorrection in the name of creditor/retiree referring to one and the same person or company

The Head/Representative of the agency shall be the sole authority in approving any corrections in the names of creditors/payees and in certifying the consistency in the identity of its creditors/payeesCorrections shall be made through a letter authority to the MDS-GSB to be signed by the signatories in the LDDAP-ADAAllowed corrections:Change of one letter in the name of creditors/payees (example Lito construction to Lilo construction)Abbreviations used ( eg. Co. to Company, Inc. to Incorporated or vice-versa)Correction in the name of creditor/retiree referring to one and the same person or company (Change in family name as a result in change in status

15Specific Guidelines and ResponsibilitiesChanges/corrections in the names of creditors:Non-payment due to error not falling under the allowable typographical errors, the agency shall include the creditors/payees concerned in the succeeding LDDAP-ADA to be prepared.Only one creditor/payee - LDDAP-ADA shall be cancelled Multiple creditors/payees - MDS-GSB shall indicate in the remarks portion non-payment due to inconsistency of information

Non-payment due to error not falling under the allowable typographical errors, the agency shall include the creditors/payees concerned in the succeeding LDDAP-ADA to be prepared.Only one creditor/payee - LDDAP-ADA shall be cancelled Multiple creditors/payees - MDS-GSB shall indicate in the remarks portion non-payment due to inconsistency of information MEANS that the LDDAP shall not be invalidated as a whole. Only the creditor whose information is inconsistent shall be stricken off the list.

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