THE MANUAL ON THE

NEW GOVERNMENT ACCOUNTING SYSTEM

for National Government Agencies
(Manual Based)
ACCOUNTING POLICIES
Volume I

Table Of Contents
Page No.

Chapter 1.Introduction

Sec. 1. Objectives of the Manual 1

Sec. 2. Coverage 1
Sec. 3. Legal Basis 1

Chapter 2.Basic Features and Policies

Sec. 4. Basic Features and Policies 2

Chapter 3.Accounting Systems

Sec. 5. General Accounting Plan 8

Sec. 6. Budgetary Accounts System 8

Sec. 7. Budgetary Accounts 8

Sec. 8. Agency Budget Matrix 10

Sec. 9. Procedures for the Preparation of 10

ABM
Sec. 10. Allotment Release Order 11

Sec. 11. Recording of Allotments 11

Sec. 12. Procedures in the Monitoring and 12

Recording of Allotments Received
from DBM
Sec. 13. Procedures for the Recording of 14
Sub-Allotment Release Order
(Sub-ARO by RO/OU)
Sec. 14. Accounting for Obligation 17

Sec. 15. Procedures for the Recording of 17

Obligations
Sec. 16. Receipts/Income Collections and 20
Deposits System
Sec. 17. Sources of Income of the National 20
Government
Sec. 18. Methods of Accounting for Income 21

Sec. 19. Fines and Penalties 21

Sec. 20. Other Receipts 21

Sec. 21. Deposit of Collections 22

Sec. 22. Reporting of Collections and 23

Deposits
Sec. 23. Procedures for Collections and 23
Deposits Through the Collecting
Officer
Sec. 24. Procedures for Collections through 26
Accredited Agent Banks
Sec. 25. Dishonored Checks 27

Sec. 26. Procedures in Recording 28

Dishonored Checks
Sec. 27. Disbursements Defined 30

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Sec. 28. Basic Requirements for 30
Disbursements
Sec. 29. Disbursements System 30

Sec. 30. Certification on Disbursements 30

Sec. 31. Disbursements by Checks 31

Sec. 32. Recording of Checks Disbursements 31

in the Check Disbursements
Record
Sec. 33. Reporting of Checks Issued/ 31
Released
Sec. 34. Procedures for Disbursements by 32
Checks
Sec. 35. Disbursements by Cash 38

Sec. 36. Cash Advances for Travel 38

Sec. 37. Procedures for Disbursements by 39

Cash Payment for Payroll and
Other Expenses
Sec. 38. Disbursements Through Bank 41
Payroll Payment
Sec. 39. Disbursements Through Petty Cash 42
Fund
Sec. 40. Procedures for Disbursements 42
Through Petty Cash Fund
Sec. 41. Purchase or Construction of 46
Property, Plant and Equipment
Sec. 42. Property and Inventory Accounting 46
System
Sec. 43. Perpetual Inventory Method 47

Sec. 44. Moving Average Method 47

Sec. 45. Procedures in the Receipt, 48

Inspection, Acceptance and
Recording Deliveries of

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 Inventory Items and Equipment
Sec. 46. Procedures in the Requisition and 50
Issuance of Inventory Items
Sec. 47. Procedures in the Requisition and 54
Issuance of Equipment
Sec. 48. Miscellaneous Transactions 56

Sec. 49. Accounting for Loss of Cash and 57

Property
Sec. 50. Grant of Relief from Accountability 57

Sec. 51. Accounting for Cash Overages 58

Sec. 52. Accounting for Stale Checks 58

Sec. 53. Accounting for Disallowances 58

Sec. 54. Accounting for Overpayments 59

Sec. 55. Pro-forma Accounting Entries 59

Chapter 4.Trial Balances, Financial Reports and

Statements

Sec. 56. Financial Reporting System 64

Sec. 57. Trial Balance 65

Sec. 58. Purposes of the Trial Balance 65

Sec. 59. Pre-Closing Trial Balance 65

Sec. 60. Adjusting or Correcting Journal 65

Entries
Sec. 61. Adjustment for Accrued Items 65

Sec. 62. Asset/Revenue Adjustment 65

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Sec. 63. Liability/Expense Adjustment 66

Sec. 64. Adjustment for Deferred Items 66

Sec. 65. Asset/Expense Adjustments 66

Sec. 66. Bad Debts 66

Sec. 67. Depreciation for Property, Plant and 67

Equipment
Sec. 68. Method of Depreciation 67

Sec. 69. Closing Journal Entries 68

Sec. 70. Post-Closing Trial Balance 69

Sec. 71. Procedures in the Preparation and 70

Submission of Trial Balances and
Other Reports
Sec. 72. Generation of Financial Statements 75
and Supporting Schedules
Sec. 73. Responsibility for Financial 76
Statements
Sec. 74. Statement of Management 77
Responsibility for Financial
Statements
Sec. 75. Balance Sheet 77

Sec. 76. Statement of Income and Expenses 78

Sec. 77. Statement of Government Equity 78

Sec. 78. Statement of Cash Flows 78

Sec. 79. Preparation of the Statement of 78

Cash Flows
Sec. 80. Notes to Financial Statements 81

Sec. 81. Interim Reports 83

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 Sec. 82. Worksheet 83

Chapter 5.Responsibility Accounting

Sec. 83. Responsibility Accounting Defined 85

Sec. 84. Responsibility Center Defined 85

Sec. 85. Objectives of Responsibility 85

Accounting
Sec. 86. Concepts of Responsibility 85
Accounting
Sec. 87. Responsibility Center Code 87
Structure
Sec. 88. Computerized Accounting System 88

Chapter 6.Illustrative Accounting Entries

Sec. 89. Illustrative Accounting Entries in 89

Regular Agency (RA) Books

Sec. 90. Illustrative Accounting Entries in 89

National Government (NG)
Books

Appendices:

1. Table of Estimated Useful Lives 90

2. Pre-Closing Trial Balance 96

3. Post-Closing Trial Balance 99

4. Statement of Management's 101

Responsibility For Financial

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 Statements
5. Detailed Balance Sheet 102

6. Condensed Balance Sheet 105

7. Schedule of Accounts Receivables 106

8. Schedule of Accounts Payables 107

9. Schedule of Public Infrastructures 108

10. Statement of Allotments, 109

Obligations and Balances
11. Detailed Statement of Income and 110
Expenses
12. Condensed Statement of Income and 112
Expenses
13. Statement of Government Equity 113

14. Statement of Cash Flows 114

15.Notes to Financial Statements 116

Annexes:

A.Illustrative Accounting Entries - 121

Typical transactions of
Central/Regional Offices and
Operating Units receiving NCA
direct from the DBM

B.Illustrative Accounting Entries - 130

Typical transactions of
Central/Regional Offices and
Operating Units receiving NCA
direct from DBM and ROs/OUs
receiving funding checks from
CO/RO
C.Illustrative Accounting Entries - 135

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Typical Transactions of Agencies
with Collections/ Income to be
recorded in the National
Government (NG) books

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