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Warranty Security

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Warranty Security

Post by Berna on Mon Mar 08, 2010 4:18 pm

RDV @ GPPPI wrote:
charlie brown wrote:
engrjhez® wrote:
charlie brown wrote:
My concern is actually centered on step 2 you mentioned. please note that pursuant to section 321 of the Local Government Code there are only 3 instances when a supplemental budget can be enacted by the sanggunian: 1) when funds are actually available 2) if covered by new revenue source; and 3) in times of public calamity. A detailed discussion of these sources are also provided under AO 47 by then Pres. Ramos. if a got it right, there is no mention that a bank approval -without the corresponding receipt of the amount of the loan - can be a source of a supplemental budget. by the way the suplemental budget is enacted by way of an appropriation ordinance and not just a resolution as mentioned.

My concern as i have said is, what is the basis of the sanggunian for step 2 you described? and without the enactment of an ordinance authorizing the supplemental budget how can there be an ABC as defined under section 5 of the IRR? Im sure thre is a way out of this but i beleive there is a need to harmonize the existing bankloan policies with the provisions of RA 9184 AND ra 7160

In case of LGU, I think it will fall under "(1) when funds are actually available".

First and foremost, before an LGU is granted a loan, it should have determined the intention and need of the LGU itself;

Second, when the intention or project is realized, the LCE requests for the authority from the Sanggunian to authorize him/her to invite proposals and to negotiate with banks and other financing institution;

Third, once the most advantageous terms and conditions is determined (it may be evaluated by other means or may hire the expertise of the BAC for the purpose), the recommendation and award is brought to the Sanggunian again for ratification;

Finally, only when the loan is granted can the Sanggunian concurrently enact the Supplemental Budget based on the approval of the bank or financing institution.

It is actually during the same time the amount of loan is realized it is only logical to have the ABC determined properly (or adjusted accordingly) for Supplemental APP and for Supplemental Budget.

the definition of "funds are actually available" can be found in AO 47 issued during the time of Pres. Ramos. part of the definition is savings and when actual collections exceeds targets. In both instances, the money is firmly in the coffers of the LGU and not merely a bank loan approval

It does not require that the funds should be actually available before the LGU could pass a budget for the purpose. On the basis of estimates of income (by the Treasurer), the LGU could already include the estimated amount, such as the proposed loan, in its budget.

In the case at hand, it would not even require the prior approval of loan, much less the release of the loan, before the LGU could budget for the intended loan. On that basis therefore, I would assume that there is already an approved budget for the purported loan, therefore there is already an ABC which should be the basis by the LGU in conducting public bidding for the equipment or materials for which the loan is intended.

If the bank condition is that the loan will have to be released directly to the winning bidder, there has to be some accounting entries that the LGU has to reflect in order that the loan will have to be recorded first as received by the LGU and then paid to the winning bidder. Otherwise, the loan would not be taken up in the LGU books of accounts as having been received or disbursed. Only a Memorandum Entry for the receipt of the equipment purchased would have to be recorded and it would not reflect a correct and complete accounting record of all the transactions.

RDV @ GPPPI

Gotcha po... that is why the accounting issued certification that the procurement has been included in the book of accounts.
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Re: Warranty Security

Post by charlie brown on Mon Mar 08, 2010 6:31 pm

Bernadette G. Driza wrote:
RDV @ GPPPI wrote:
charlie brown wrote:
engrjhez® wrote:
charlie brown wrote:
My concern is actually centered on step 2 you mentioned. please note that pursuant to section 321 of the Local Government Code there are only 3 instances when a supplemental budget can be enacted by the sanggunian: 1) when funds are actually available 2) if covered by new revenue source; and 3) in times of public calamity. A detailed discussion of these sources are also provided under AO 47 by then Pres. Ramos. if a got it right, there is no mention that a bank approval -without the corresponding receipt of the amount of the loan - can be a source of a supplemental budget. by the way the suplemental budget is enacted by way of an appropriation ordinance and not just a resolution as mentioned.

My concern as i have said is, what is the basis of the sanggunian for step 2 you described? and without the enactment of an ordinance authorizing the supplemental budget how can there be an ABC as defined under section 5 of the IRR? Im sure thre is a way out of this but i beleive there is a need to harmonize the existing bankloan policies with the provisions of RA 9184 AND ra 7160

In case of LGU, I think it will fall under "(1) when funds are actually available".

First and foremost, before an LGU is granted a loan, it should have determined the intention and need of the LGU itself;

Second, when the intention or project is realized, the LCE requests for the authority from the Sanggunian to authorize him/her to invite proposals and to negotiate with banks and other financing institution;

Third, once the most advantageous terms and conditions is determined (it may be evaluated by other means or may hire the expertise of the BAC for the purpose), the recommendation and award is brought to the Sanggunian again for ratification;

Finally, only when the loan is granted can the Sanggunian concurrently enact the Supplemental Budget based on the approval of the bank or financing institution.

It is actually during the same time the amount of loan is realized it is only logical to have the ABC determined properly (or adjusted accordingly) for Supplemental APP and for Supplemental Budget.

the definition of "funds are actually available" can be found in AO 47 issued during the time of Pres. Ramos. part of the definition is savings and when actual collections exceeds targets. In both instances, the money is firmly in the coffers of the LGU and not merely a bank loan approval

It does not require that the funds should be actually available before the LGU could pass a budget for the purpose. On the basis of estimates of income (by the Treasurer), the LGU could already include the estimated amount, such as the proposed loan, in its budget.

In the case at hand, it would not even require the prior approval of loan, much less the release of the loan, before the LGU could budget for the intended loan. On that basis therefore, I would assume that there is already an approved budget for the purported loan, therefore there is already an ABC which should be the basis by the LGU in conducting public bidding for the equipment or materials for which the loan is intended.

If the bank condition is that the loan will have to be released directly to the winning bidder, there has to be some accounting entries that the LGU has to reflect in order that the loan will have to be recorded first as received by the LGU and then paid to the winning bidder. Otherwise, the loan would not be taken up in the LGU books of accounts as having been received or disbursed. Only a Memorandum Entry for the receipt of the equipment purchased would have to be recorded and it would not reflect a correct and complete accounting record of all the transactions.

RDV @ GPPPI

Gotcha po... that is why the accounting issued certification that the procurement has been included in the book of accounts.

if you examine carefully the manner of preparing the budget of LGUs, the only time that an estimate is used (estimate of local and other income) is during the preparation of the annual budget. after that, a LGU is no longer encouranged to modify their annual budget except when: 1) funds are actually available 2) when there are new revenue measures and 3) in times of calamity. for a detailed discussion on what constitutes "funds actuallyn available" i suggest AO 47

a mere approval of a loan cannot be construed as funds actually available more so because the approval is based on certain conditionalities which the LGU may or may not be able to comply. It would also require some strench of the imagination to consider the loan a new revenue measure nor a realignment in times of calamity. the problem as i see it is not on the accounting entry - yet. but rather on how the loan can be appropriated thru the enactment of an appropriation ordinance to ensure that the BAC will have an ABC. I also understand why banks makes these conditions in the release of the loan. which is why i Have said early on that perhaps a dialogue between the bank and the LGU and maybe even with DBM must be had to thresh out issues.
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Re: Warranty Security

Post by RDV @ GP3i on Tue Mar 09, 2010 8:44 am

charlie brown wrote:
Bernadette G. Driza wrote:
RDV @ GPPPI wrote:
charlie brown wrote:
engrjhez® wrote:
charlie brown wrote:
My concern is actually centered on step 2 you mentioned. please note that pursuant to section 321 of the Local Government Code there are only 3 instances when a supplemental budget can be enacted by the sanggunian: 1) when funds are actually available 2) if covered by new revenue source; and 3) in times of public calamity. A detailed discussion of these sources are also provided under AO 47 by then Pres. Ramos. if a got it right, there is no mention that a bank approval -without the corresponding receipt of the amount of the loan - can be a source of a supplemental budget. by the way the suplemental budget is enacted by way of an appropriation ordinance and not just a resolution as mentioned.

My concern as i have said is, what is the basis of the sanggunian for step 2 you described? and without the enactment of an ordinance authorizing the supplemental budget how can there be an ABC as defined under section 5 of the IRR? Im sure thre is a way out of this but i beleive there is a need to harmonize the existing bankloan policies with the provisions of RA 9184 AND ra 7160

In case of LGU, I think it will fall under "(1) when funds are actually available".

First and foremost, before an LGU is granted a loan, it should have determined the intention and need of the LGU itself;

Second, when the intention or project is realized, the LCE requests for the authority from the Sanggunian to authorize him/her to invite proposals and to negotiate with banks and other financing institution;

Third, once the most advantageous terms and conditions is determined (it may be evaluated by other means or may hire the expertise of the BAC for the purpose), the recommendation and award is brought to the Sanggunian again for ratification;

Finally, only when the loan is granted can the Sanggunian concurrently enact the Supplemental Budget based on the approval of the bank or financing institution.

It is actually during the same time the amount of loan is realized it is only logical to have the ABC determined properly (or adjusted accordingly) for Supplemental APP and for Supplemental Budget.

the definition of "funds are actually available" can be found in AO 47 issued during the time of Pres. Ramos. part of the definition is savings and when actual collections exceeds targets. In both instances, the money is firmly in the coffers of the LGU and not merely a bank loan approval

It does not require that the funds should be actually available before the LGU could pass a budget for the purpose. On the basis of estimates of income (by the Treasurer), the LGU could already include the estimated amount, such as the proposed loan, in its budget.

In the case at hand, it would not even require the prior approval of loan, much less the release of the loan, before the LGU could budget for the intended loan. On that basis therefore, I would assume that there is already an approved budget for the purported loan, therefore there is already an ABC which should be the basis by the LGU in conducting public bidding for the equipment or materials for which the loan is intended.

If the bank condition is that the loan will have to be released directly to the winning bidder, there has to be some accounting entries that the LGU has to reflect in order that the loan will have to be recorded first as received by the LGU and then paid to the winning bidder. Otherwise, the loan would not be taken up in the LGU books of accounts as having been received or disbursed. Only a Memorandum Entry for the receipt of the equipment purchased would have to be recorded and it would not reflect a correct and complete accounting record of all the transactions.

RDV @ GPPPI

Gotcha po... that is why the accounting issued certification that the procurement has been included in the book of accounts.

if you examine carefully the manner of preparing the budget of LGUs, the only time that an estimate is used (estimate of local and other income) is during the preparation of the annual budget. after that, a LGU is no longer encouranged to modify their annual budget except when: 1) funds are actually available 2) when there are new revenue measures and 3) in times of calamity. for a detailed discussion on what constitutes "funds actuallyn available" i suggest AO 47

a mere approval of a loan cannot be construed as funds actually available more so because the approval is based on certain conditionalities which the LGU may or may not be able to comply. It would also require some strench of the imagination to consider the loan a new revenue measure nor a realignment in times of calamity. the problem as i see it is not on the accounting entry - yet. but rather on how the loan can be appropriated thru the enactment of an appropriation ordinance to ensure that the BAC will have an ABC. I also understand why banks makes these conditions in the release of the loan. which is why i Have said early on that perhaps a dialogue between the bank and the LGU and maybe even with DBM must be had to thresh out issues.

I agree with you on that. I am of the assumption that the projected loan was included in the approved Annual Budget of the LGU. In that case there is an ABC.
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Re: Warranty Security

Post by charlie brown on Tue Mar 09, 2010 3:51 pm

RDV @ GPPPI wrote:
charlie brown wrote:
Bernadette G. Driza wrote:
RDV @ GPPPI wrote:
charlie brown wrote:
engrjhez® wrote:
charlie brown wrote:
My concern is actually centered on step 2 you mentioned. please note that pursuant to section 321 of the Local Government Code there are only 3 instances when a supplemental budget can be enacted by the sanggunian: 1) when funds are actually available 2) if covered by new revenue source; and 3) in times of public calamity. A detailed discussion of these sources are also provided under AO 47 by then Pres. Ramos. if a got it right, there is no mention that a bank approval -without the corresponding receipt of the amount of the loan - can be a source of a supplemental budget. by the way the suplemental budget is enacted by way of an appropriation ordinance and not just a resolution as mentioned.

My concern as i have said is, what is the basis of the sanggunian for step 2 you described? and without the enactment of an ordinance authorizing the supplemental budget how can there be an ABC as defined under section 5 of the IRR? Im sure thre is a way out of this but i beleive there is a need to harmonize the existing bankloan policies with the provisions of RA 9184 AND ra 7160

In case of LGU, I think it will fall under "(1) when funds are actually available".

First and foremost, before an LGU is granted a loan, it should have determined the intention and need of the LGU itself;

Second, when the intention or project is realized, the LCE requests for the authority from the Sanggunian to authorize him/her to invite proposals and to negotiate with banks and other financing institution;

Third, once the most advantageous terms and conditions is determined (it may be evaluated by other means or may hire the expertise of the BAC for the purpose), the recommendation and award is brought to the Sanggunian again for ratification;

Finally, only when the loan is granted can the Sanggunian concurrently enact the Supplemental Budget based on the approval of the bank or financing institution.

It is actually during the same time the amount of loan is realized it is only logical to have the ABC determined properly (or adjusted accordingly) for Supplemental APP and for Supplemental Budget.

the definition of "funds are actually available" can be found in AO 47 issued during the time of Pres. Ramos. part of the definition is savings and when actual collections exceeds targets. In both instances, the money is firmly in the coffers of the LGU and not merely a bank loan approval

It does not require that the funds should be actually available before the LGU could pass a budget for the purpose. On the basis of estimates of income (by the Treasurer), the LGU could already include the estimated amount, such as the proposed loan, in its budget.

In the case at hand, it would not even require the prior approval of loan, much less the release of the loan, before the LGU could budget for the intended loan. On that basis therefore, I would assume that there is already an approved budget for the purported loan, therefore there is already an ABC which should be the basis by the LGU in conducting public bidding for the equipment or materials for which the loan is intended.

If the bank condition is that the loan will have to be released directly to the winning bidder, there has to be some accounting entries that the LGU has to reflect in order that the loan will have to be recorded first as received by the LGU and then paid to the winning bidder. Otherwise, the loan would not be taken up in the LGU books of accounts as having been received or disbursed. Only a Memorandum Entry for the receipt of the equipment purchased would have to be recorded and it would not reflect a correct and complete accounting record of all the transactions.

RDV @ GPPPI

Gotcha po... that is why the accounting issued certification that the procurement has been included in the book of accounts.

if you examine carefully the manner of preparing the budget of LGUs, the only time that an estimate is used (estimate of local and other income) is during the preparation of the annual budget. after that, a LGU is no longer encouranged to modify their annual budget except when: 1) funds are actually available 2) when there are new revenue measures and 3) in times of calamity. for a detailed discussion on what constitutes "funds actuallyn available" i suggest AO 47

a mere approval of a loan cannot be construed as funds actually available more so because the approval is based on certain conditionalities which the LGU may or may not be able to comply. It would also require some strench of the imagination to consider the loan a new revenue measure nor a realignment in times of calamity. the problem as i see it is not on the accounting entry - yet. but rather on how the loan can be appropriated thru the enactment of an appropriation ordinance to ensure that the BAC will have an ABC. I also understand why banks makes these conditions in the release of the loan. which is why i Have said early on that perhaps a dialogue between the bank and the LGU and maybe even with DBM must be had to thresh out issues.

I agree with you on that. I am of the assumption that the projected loan was included in the approved Annual Budget of the LGU. In that case there is an ABC.

grants and loan proceeds are indeed part of the revenue sources for an annual budget but then the operative word used is receipt. To my understanding that would mean actual receipt of the funds and not merely an approval/conditional approval of a loan - more so when the loan negotiation is still in process and the treasurer cannot determine with reasonable certainty as to to its eventual collection. Unlike say, IRA or new revenue measures
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Re: Warranty Security

Post by RDV @ GP3i on Tue Mar 09, 2010 4:12 pm

charlie brown wrote:
RDV @ GPPPI wrote:
I agree with you on that. I am of the assumption that the projected loan was included in the approved Annual Budget of the LGU. In that case there is an ABC.

grants and loan proceeds are indeed part of the revenue sources for an annual budget but then the operative word used is receipt. To my understanding that would mean actual receipt of the funds and not merely an approval/conditional approval of a loan - more so when the loan negotiation is still in process and the treasurer cannot determine with reasonable certainty as to to its eventual collection. Unlike say, IRA or new revenue measures

For both the national government and LGUs, the annual appropriations/annual budget are based on revenue estimates, which includes loans and borrowings.
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Re: Warranty Security

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