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76720732 the New Government Accounting System Manual

76720732 the New Government Accounting System Manual

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Published by Rhessa Gatus Amolo

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Published by: Rhessa Gatus Amolo on Jul 04, 2013
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Sec. 01. Objectives of the Manual. – The New Government Accounting SystemManual presents the basic policies and procedures; the new coding system andchart of accounts; the accounting books, reports/forms and financial statements,and illustrative accounting entries to be adopted by all local government unitseffective January 1, 2002. The objectives of the Manual are to prescribe thefollowing:a)Uniform guidelines and procedures in accounting for government funds andproperty;b)New coding structure and new chart of accounts; andc)New accounting books, reports/forms, financial statements and accountingentries.Sec. 02. Coverage. – This Manual shall be used by all local government units(LGUs).Sec. 03. Legal Basis. – This Manual is prescribed by the Commission on Auditpursuant to Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of the Philippines which provides that:"The Commission on Audit shall have exclusive authority, subject to thelimitations in this Article, to define the scope of its audit and examination, establishthe techniques and methods required therefor, and promulgate accounting andauditing rules and regulations, including those for the prevention and disallowanceof irregular, unnecessary, excessive, extravagant, or unconscionable expenditures,or uses of government funds and properties". (underscoring supplied)
Sec. 04. Basic Features and Policies. – The new government accounting system hasthe following basic features and policies, to wit:1.Accrual Accounting. A modified accrual basis of accounting is used. Underthis method, all expenses shall be recognized when incurred. Income shallbe on accrual basis (e.g. Share from Internal Revenue Collections) exceptfor transactions where accrual basis is impractical (e.g. Market Fees) orwhen other methods may be required by law.2.One Fund Concept. This system adopts the one fund concept. Separatefund accounting shall be done only when specifically required by law or bya donor agency or when otherwise necessitated by circumstances subjectto prior approval of the Commission. As required under Sections 308, 309and 310 of the Local Government Code, separate books shall be maintainedfor the General Fund, Special Education Fund and Trust Fund.3.Special Accounts in the General Fund. Special accounts in the GeneralFund complete with subsidiary ledgers, shall be maintained for thefollowing:Public utilities and other economic enterprises;Loans, interests, bonds issued, and other contributions forspecific purposes;Development projects funded from the Share in the InternalRevenue Collections; andSuch other special accounts which may be created by law orordinance.4.Chart of Accounts and Account Codes. A new coding structure and a newchart of accounts with a three-digit account numbering system shall beadopted.5.Books of Accounts. The Books of Accounts are as follows:6.JournalsCash Receipts Journal (CRJ)Cash Disbursements Journal (CDJ)Check Disbursements Journal (CKDJ)General Journal (GJ)7.LedgersGeneral Ledger (GL)Subsidiary Ledgers, where applicable for:CashReceivablesInventoriesInvestmentsProperty, Plant and EquipmentLiabilitiesIncomeExpenses8.All the above records shall be maintained by the accounting unit of theLGUs. However, treasurers and disbursing officers shall also maintain theirrespective cash records such as:Cashbook – Cash in TreasuryCashbook Cash in BankCashbook Cash Advances9.The Treasurers/Collectors shall prepare the Report of Collections andDeposits (RCD) daily and the Report of Accountability for AccountableForms (RAAF) monthly.10.Financial Statements. The following statements shall be prepared:Balance SheetStatement of Income and ExpensesStatement of Cash Flows11.Notes to Financial Statements shall accompany the above statements.12.Trial Balance. The two money-column trial balance shall be used.13.Appropriations, Allotments and Obligations. Journal entry shall no longer beprepared to record the appropriations, receipt of allotments and incurrenceof obligations. In lieu of this, separate registries shall be maintained by theAccounting Unit to control the appropriations, allotments and obligationsfor each of the four classes of expenditures, namely:
Registry of Appropriations, Allotments and Obligations Capital Outlay (RAAOCO)Registry of Appropriations, Allotments and Obligations Maintenance and Other Operating Expenses (RAAOMO)Registry of Appropriations, Allotments and Obligations Personal Services (RAAOPS)Registry of Appropriations, Allotments and Obligations Financial Expenses (RAAOFE).14.Financial Expenses. Financial expenses such as bank charges, interestexpenses, commitment fees and other related expenses shall be separatelyclassified from Maintenance and Other Operating Expenses (MOOE).15.Perpetual Inventory of Supplies and Materials. Supplies and materialspurchased for inventory purpose shall be recorded using the perpetualinventory system. Regular purchases shall be coursed thru the inventoryaccount and issuances thereof shall be recorded as they take place exceptthose purchased out of petty cash fund which shall be for immediate useand not for stock. Such case shall be charged immediately to theappropriate expense accounts.16.Valuation of Inventory. Cost of ending inventory of supplies and materialsshall be computed using the moving average method.17.Maintenance of Supplies and Property, Plant and Equipment Ledger Cards. The Accounting Unit shall maintain Supplies Ledger Cards by stock numberand Property, Plant and Equipment Ledger Cards by category of assets.18.Construction of Assets. For assets under construction, the ConstructionPeriod Theory shall be applied for costing purposes. Bonus paid to thecontractor for completing the work ahead of time shall be added to thetotal cost of the project. Liquidated damages charged and paid for by thecontractor shall be deducted from the total cost of the asset. Any relatedexpenses incurred during the construction of the project, such as, licensefees, permit fees, clearance fees, etc. shall be capitalized.19.Public Infrastructures. Public infrastructures are assets for use of thegeneral public, such as roads, bridges, waterways, railways, plazas,monuments, etc. A Registry of Public Infrastructures (RPI) shall bemaintained according to classification to record all infrastructures for use of the general public. The following are the Registries to be maintained,classified by category of property, plant and equipment:Registry of Public Infrastructure – Bridges (RPIB)Registry of Public Infrastructure – Roads (RPIR)Registry of Public Infrastructure – Plazas, Monuments, etc.(RPIP)20.During construction these infrastructures shall be recorded in the booksunder the account “Construction in Progress”. Upon completion, thecompleted asset shall be transferred to the account “Public Infrastructure”.At the end of the year, completed assets under “Public Infrastructure” shallbe transferred to the respective registry.21.Completed public infrastructures funded out of a loan shall, however, beretained in the books of accounts until the loan is fully paid.22.A Summary of all Public Infrastructures (based on the different registries)shall be prepared annually and included in the Notes to FinancialStatements.23.Depreciation. The straight-line method of depreciation shall be used. Aresidual value equivalent to ten percent (10%) of the cost shall be set-upand depreciation shall start on the second month afterpurchase/completion of the property, plant and equipment. Publicinfrastructures shall not be charged any depreciation.24.Reclassification of Obsolete and Unserviceable Assets, as well as Assets NoLonger Used by the Agency to “Other Assets” Account. Assets declared byproper authorities as obsolete and unserviceable, including assets of theagency no longer used, shall be reclassified to “Other Assets” account fromthe corresponding inventory and property, plant and equipment accounts.25.Allowance for Doubtful Accounts. An Allowance for Doubtful Accounts shallbe set up for estimated uncollectible receivables. This will allow for a fairvaluation of receivables. Allowance for Doubtful Accounts shall be providedonly for trade receivables.26.Elimination of Contingent Accounts. Contingent accounts shall no longer beused. All financial transactions shall be recorded using the appropriateaccounts. Cash shortages and disallowed payments shall be recorded underreceivable accounts “Due From Officers and Employees” and“Receivables– Disallowances/Charges”, as the case may be.27.Recognition of Liability. Liability shall be recognized at the time goods andservices are accepted or rendered and supplier/creditor bills are received.28.Interest Accrual. Whenever applicable and appropriate, interest incomeand/or expense shall be accrued and recognized in the books of accounts.29.Accounting for Borrowings and Loans. All borrowings and loans incurredshall be recorded direct to the appropriate liability accounts.30.Elimination of corollary and negative entries. The use of corollary andnegative entries shall be stopped. Acquisition/Disposition of assets shall bedebited/credited direct to the appropriate asset accounts. If an error iscommitted, a correcting entry shall be prepared to adjust the original entry.
Chapter 3. ACCOUNTING SYSTEMA. GENERAL ACCOUNTING PLANSec. 05. General Accounting Plan.
The General Accounting Plan shows theoverall accounting cycle in the Local Government Unit. Transactions shall emanatefrom the different offices/departments of the local government units (LGUs). Theseoffices/departments will provide/produce the source documents and otheraccounting forms leading to the perfection of the transaction, whether it bebudgetary, collections or disbursements. The source documents and accountingforms shall be the basis for the preparation of reports by the Office of the Treasurer. The Office of the Accountant shall record the transactions to the registries or to thecorresponding books of original entry. Posting to the books of final entry and
preparation of the financial reports shall also be undertaken by the Office of theAccountant. The General Accounting Plan
(Table 1)
is presented as to the following typeof transactions:1)Appropriations, Allotments and Obligations2)Collections and Deposits3)Disbursements a)By cashb)By check4)Miscellaneous and Other transactions
B.BUDGETARY ACCOUNTSSec. 06. Budgetary Accounts. –
Budgetary accounts are composed of appropriations, allotments and obligations.
Sec. 07. Accounting for Appropriations.
– Appropriation refers to anauthorization made by ordinance, directing the payment of goods and services fromlocal government funds under specified conditions or for specific purposes.GENERAL ACCOUNTING PLAN (MS Excel file)

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