NEW STANDARD

CHART OF ACCOUNTS

KMBA EXPERIENCE

BEFORE NEW SCA

NEW STANDARD CHART

OF ACCOUNTS FOR MBACircular Letter 2014-41

This CL No. 2014-41 shall take effect

immediately and will be used in the

financial statement for calendar year 2014.

Signed this day of: September 25,2014.

Circular Letter (CL) No. 2014-41

The SCA for MBAs will list a

uniform system of account

numbers categorized based on

MBA’s revenue, expenses,

assets, liabilities and fund value

for similar transactions and

events, in compliance with the

latest Philippine Accounting

Standards (PAS) and Philippine

Financial Reporting Standards

(PFRS).

THE SCA FOR MBAs OBJECTIVES

1) To establish uniform, comprehensive, minimum chart of

accounts to improve financial data collection, reporting,

accuracy and comparability;

2) To meet both the internal and external reporting requirements;

3) To ensure that MBAs comply with the generally accepted

accounting principles (PAS/PFRS);

4) To allow for timely and accurate recording of financial

transactions;

5) To allow for logical framework that can be used to determine

where the funds are allocated and used in compliance with the

requirements of The Amended Insurance Code; and

6) To provide comprehensive, full disclosure of the Financial

Position of the MBA to its members and regulators.

Section 408 states that:

The constitution or bylaws of

a mutual benefit association

must distinctly state the

purpose for which dues

and/or assessments are made

and collected and the portion

thereof which may be used

for expenses.

Section 408 states that:

MUTUAL BENEFIT FUND

OPTIONAL BENEFIT FUND

– death benefits & other relief funds shall be

created & used exclusively for paying

benefits due the members under their

respective membership certificates.

GENERAL FUND

– shall likewise be created & used for

expenses of administration of the

association.

•

FUND ACCOUNTING

1. Fund Accounting is a self-balancingset of accounts, segregated forspecific purpose in accordance withlaws and regulations or specialrestrictions and limitations.

2. Emphasizing accountability ratherthan profitability.

3. Purpose:

• Manage Receipt

• Monitor Restrictions

1. Establish separate bank

account per Fund.

Fund Accounting

To apply fund accounting

MBA should:

2. Create separate books of

account per fund.

GENERAL FUND1. Cash Receipt Book2. Cash Disbursement Book3. Journal Voucher Book4. General Ledger

MUTUAL BENEFIT FUND1. Cash Receipt Book2. Cash Disbursement Book3. Journal Voucher Book4. General Ledger

OPTIONAL BENEFIT FUND1. Cash Receipt Book2. Cash Disbursement Book3. Journal Voucher Book4. General Ledger

Fund Accounting

To apply fund accounting

MBA should:

HOW KMBA APPLIED THE

NEW STANDARD CHART OF

ACCOUNTS & FUND

ACCOUNTING?

1. Input new

account title

into the

system.

KMBA APPLICATION- NEW SCA

2. Identification of all

accounts to be transferred /

adjusted into new standard

chart of account.

KMBA APPLICATION- NEW SCA

3.Reclassification of

accounts .

KMBA APPLICATION- NEW SCA

1. Established bank

account per Fund

GENERAL FUND

MUTUAL BENEFIT FUND

OPTIONAL BENEFIT FUND

Note: Purpose of several account in one bank –for easy fund transfer

KMBA APPLICATION – FUND ACCOUNTING

2. From 2014

consolidated

books, KMBA

Identified and

transferred

accounts

according to its

fund

classification.

KMBA APPLICATION – FUND ACCOUNTING

3. Any difference

between funds

will be debited/

credited to Due

to/from other

funds (Gen Fund,

MBF & OF).

KMBA APPLICATION – FUND ACCOUNTING

4. Adjustment of beginning

balances to setup separate books

per fund.

5. Segregation of Jan – July 2015

Mutual Benefit Fund, Optional

Fund and General Fund

transactions from consolidated

books.

KMBA APPLICATION – FUND ACCOUNTING

1. Segregates MBF transactions, General

Fund transactions and Optional Fund

transactions from consolidated CDB,

CRB and JV.

Note: Cash Transaction – If it is disbursed

or deposited from General Fund Bank

Account, the transactions should be included

in General Fund Book even it is MBF

transaction. This is to avoid complications in

Bank Reconciliation. But adjusting entry

should be made to transfer the transactions

to appropriate book.

KMBA SEGREGATION OF CONSOLIDATED BOOKS

2. Segregates Gen. Ledger according

to segregations made from CDB,

CRB and JV.

3. Balance/Tally the total amount of

GL per fund to the total amount of

CDB,CRB and JV per fund.

4. Creates Trial Balance per fund.

5. Prepares adjusting entry if any.

KMBA SEGREGATION OF CONSOLIDATED BOOKS

6. August 2015 - Starts

recording of transactions

according to fund

classification.

KMBA APPLICATION – FUND ACCOUNTING

.

.

• Coordination

with MIS for

the system.

• Seek Auditor’s

& other MBA

partner’s

Advise & Tips

• OJT manpower

KMBA APPLICATION – FUND ACCOUNTING

1. Adjustment to new account title.

2. One transaction required multiple

entry.

3. Manual segregation of transaction’s

entry from Jan-July (CDB, JV, CRB GL

& Trial Bal.). It was recorded in a

consolidated book.

SOME CONCERNS

4. Due to no license MIS, KMBA

maintains 3 sets of manual books

(CRB, CDB, JV & GL) 1 for Gen

Fund, 1 for Mutual Benefit Fund

and 1 for Optional fund.

SOME CONCERNS

THE POSITIVE SIDE OF NEW SCA

1. With standard chart of accounts, MBAs

are guided what account title to be

used that is applicable to MBA’s

transactions

2. Uniform account title. Consistent with

new Annual Statement format.

3. Easy monitoring of funds restrictions.

4. Clear picture of Financial Position and

Comprehensive Income per fund.

BEFORE SCA

DURING TRANSITION

DURING APPLICATION

.....The only impossible journey is the one you

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