Generally accepted accounting
principles for governments are
basically set by the Governmental
Accounting Standards Board,
or as it is commonly called, the GASB.
The GASB is a private
organization that is financially controlled
by the Financial Accounting
Foundation (FAF), which is a
not-for-profit organization.
The GASB is composed of seven board
members.
The Chair of the GASB is a full-time
board member, while the
other six members serve on a part-time
basis. The GASB has full-time technical
staff, which reports to its Director of
Research.
TO WHAT ENTITIES DO
GOVERNMENTAL GENERALLY
ACCEPTED ACCOUNTING
PRINCIPLES APPLY?
State governments
Local governments such as cities,
counties, towns, and villages
Public authorities, such as housing
finance, water and
other utilities, economic development,
and airport authorities
Governmental colleges and universities
School districts
Public employee retirement systems
Public hospitals and other health care
providers
Government accounting
is the process of recording,
analyzing, classifying, summarizing,
communicating and interpreting
financial information about
government in aggregate and in detail
reflecting transactions and other
economic events involving the receipt,
spending, transfer, usability and
disposition of assets and liabilities.
OBJECTIVE
--To carry out the financial business
of government in a timely, efficient
and reliable manner (e.g. to make
payments, settle liabilities, collect
sums due, buy and sell assets etc.)
subject to necessary financial
controls
To keep systematic, easily accessible
accounting and documentary
records as evidence of past
transactions and current financial
status, so that detailed transactions
can be identified and traced and all
aggregates can be conveniently
broken down into their constituent
parts
To provide periodic financial
statements, containing
appropriately classified financial
information, as a basis for (a)
stewardship and accountability and
(b) decision-making
To maintain financial records suitable
for budgetary control, internal
control and the needs of auditors
To provide means for effective
management of government assets,
liabilities, expenditures and
revenues
WHAT IS FUND
is defined as a sum of money
or other resources set aside for the
purpose of carrying out specific
activities or attaining certain
objectives in accordance with special
regulation, restriction, or limitations.
Likewise, a fund constitutes an
independent fiscal and accounting
entity with a self-balancing set of
accounts recording cash and other
financial resources, together with all
related liabilities and equities and
charges therein.
* A fund is a separate accounting and
financial reporting entity.
It is what is called a self-balancing set
of accounts. This
means that a funds assets will equal
the total of its liabilities
and its fund balance (or net assets),
similar to the way financial
statements for a legal entity work,
although funds are usually not
separate legal entities. Fund accounting
for governments was
developed in response to the need for
governments to be fully
accountable for their collection and
use of public resources. The
use of funds is an important tool for
governments to demonstrate
their legal compliance with
the lawfully permitted use of
resources.
the difference between the assets
and liabilities being called fund
balance. That fund balance does
not represent cash that can be readily
spent. Not all of the
assets will be in the form of cash, so it
cannot be expected thE the fund balance
is the equivalent of the balance of cash in
a
bank account.
One additional aspect to consider is that
while governments
use fund accounting, most
governmental entities that are not
like general-purpose governments do
not use fund accounting.
The governmental entities that do not
use fund accounting are
often those separate legal entities
whose activities are accounted
for as proprietary activities. These are
typically the public authorities
(utilities, hospitals, etc.), whose
activities use proprietary
accounting as described in Chapter 2.
FINANCIAL ASSET - RELATED
LIABILITIES = FUND BALANCE
1. GOVERNMENT FUND
Special Fund - includes the proceeds
of specific revenue from the taxes
that are legally restricted to
expenditures for specified
purpose.
-If new revenue is obtained that
must be used for a particular purpose,
some governments automatically
set up a new special revenue fund
-Exist as long as the government
has resources dedicated to specific
purposes
 for in the general fund. Usually the asset
side of the balance sheet consists of cash,
Example:The second common example
investments, receivables, and
where special revenue funds
inventories.
are used is instances where the proceeds
Only fund that all governments
from specific taxes are
have.
restricted for certain purposes. For
example, a state may impose
a gasoline tax, the proceeds from which
are required to be used There are two acceptable accounting
methods for inventories
for the construction and maintenance of
state highways. A special in the general fund and other
governmental funds. The first is
revenue fund may be established to
account for the gasoline called the purchase method. This
method simply records an expenditure
tax revenues and the expenditures related
to state highways. for materials and supplies when they are
purchased.
The second method is called the
consumption method. This
General Fund - includes all financial
method records an expenditure for
resourses except those required to be
inventories when they are
accounted for in another fund. This is
generally available for all function of consumed. Under this method, when
the government. inventories are purchased,
-chief operating fund of a they are recorded on the balance sheet as
government. an asset. As they are
Generally accepted accounting principles used during the year, the asset account is
permit a government reduced and an expenditure
to have only one general fund. The is recorded
general fund is a catchall
fund. It accounts for all current financial
resources of a government
Annual Budgets for the General
except for those current financial
Fund and the Special Revenue Funds
resources that are accounted
are always recorded in the general
for in another fund ledger for control purposes.
-The balance sheet of the general
fund will include those current
1. Governmental funds (general fund,
financial resources related to transactions special revenue funds,
that will be accounted
capital projects funds, debt service
funds, and permanent
funds)
2. Proprietary funds (enterprise
funds and internal service
funds)
3. Fiduciary funds (pension and
other employee benefit trust
funds, investment trust funds,
private-purpose trust funds,
and agency funds)
Measurement Focus (MF) is on current
financial resources what is expendable
Basis of Accounting (BA) is
modified accrual recognition occurs
for
Revenues when measurable &
available
Expenditures when underlying
liability is incurred, except for long-term
debt principal and interest payments
(when due)
These types of expenditures are
those for
Compensated absences
Judgments and claims
Unfunded pension contributions
Special termination benefits
Landfill closure and postclosure costs
Debt service
Inventories (discussed above)
Operating leases with scheduled
rent increases
BUDGETARY PROCEDURES
The budgetary basis of accounting
refers to the accounting principles
that a government uses to prepare its
budget for its main operating fund, the
general fund, as well as certain other
funds called special revenue funds.
When the budgetary basis of
accounting for budget preparation
is not the same as the GAAP basis of
accounting for these
funds, a government has latitude,
generally set by the local laws
governing the governments budget
process, as to what accounting principles
it will use to prepare its budget.
Why is the budgetary basis of
accounting important? In later
chapters, requirements within generally
accepted accounting principles to present
budget-to-actual comparison information
on the budgetary basis of accounting as
required supplemental
information to the financial statements
will be discussed. This can be viewed as
a bit of an anomaly because generally
accepted accounting principles are
requiring budget-to-actual comparison
information to be presented when the
accounting principles used to prepare
these budget and actual numbers are not
in accordance Zwith GAAP.
Budget - is a plan of financial
operation composed of estimate or
proposed expenditures for a given
period or purpose, and the purposed
means of financiang them.
- Used in governmental
accounting to assist in management
control and to provide the legal
authority to levy taxes, collect revenue,
and make expenditures in accordance
with the budget
Types of budgets:
Operating budgets
Capital budgets
Why does the government
prepare a new budget every year?
The preparation of the government's budget
every year is in accordance with
the provision of the Constitution which
requires the President to submit a
budget of expenditure and sources of
financing within 30 days from the
opening of every regular session of
Congress.
The yearly preparation of the budget is also
in consonance with the principle
which requires all government spendings to
be justified anew each year. This
principle ensures that government entities
continuously evaluate and review
the allocation of resources to
project/activities for cost efficiency and
effectiveness.
1. Preparation and Presentation
- covers the estimation,
determination and translation of
government revenues, priorities &
activities
-government agencies prepare their
budgets for the year to be submitted to
Department of Budget and Mnagement
Filipino: Kagawaran ng Pagbabadyet at
Pamamahala)for review. The DBM
consolidate all budget to form a
government wide budget estimate, the
national budget to be submited to the
president for final approval
The Department of Budget and
Management of the Republic of
the Philippines (DBM)
(Filipino: Kagawaran ng Pagbabadyet
at Pamamahala) is an executive body
under the Office of the President of the
Philippines. It is responsible for the
sound and efficient use of government
resources for national development and
also as an instrument for the meeting of
national socio-economic and political
development goals.The current
Secretary of Budget and Management
appointed by President Rodrigo
Duterte is Benjamin Diokno. The
department has four Undersecretaries
and four assistant secretaries
2. Budget Authorization
- submission to National
Government Budget to the Legislative
Body for review, deliberation and
formulation of Appropriation Bill to be
submitted to the president for approval
- APPROPRIATION BILL
An appropriation bill or running bill or
supply bill is a legislative motion (bill)
that authorizes the government to spend
money. It is a bill that sets money aside
for specific spending. In most
democracies, approval of the legislature
is necessary for the government to spend
money.Appropriation: The statutory
authorization for spending a budgeted
amount during a coming year.
-
3. Budget Execution and Operation
 -covers the implementation of
various operational aspect of the
budget, such as the release of allotment
to the various agencies, the continuing
review of the government fiscal position
Allotment. Authorization issued by
DBM to an agency, through Agency
Budget Matrix (ABM) or Special
Allotment Release Order (SARO),
which allows the latter to incur
obligation for specified amounts
contained in a
legislative appropriation.
4. Budget Accountability
Involves the evaluation of
expenditures and perfornance against the
predetermined budget
NEW GOVERNMENT
ACCOUNTING SYSTEM
New government acctg system issued by
the commission of audit with adopt
commercial accounting, double entry
bookkeeping and responsibility acctg
-Simplify government accounting;
Conform to international accounting
standards; and
Generate periodic and relevant
financial reports for better monitoring of
performance
1984 Governmental Accounting
Standards Board (GASB) established
GASB Statement No. 1
The GASB stated that all NCGA
statements and interpretations issued and
in effect on that date were accepted as
generally accepted accounting principles
for governmental accounting
GASB Statement 34
Established government-wide financial
statements to be prepared on the accrual
basis of accounting and an array of
fund-based financial statements
Income/Revenue Accounts
General Income Accounts
Specific Income Account
Basic Features and Policies
A. Accrual Accounting
Under the accrual basis of
accounting, transactions are recorded
when they occur, irrespective of when
actual cash is received or paid.
Revenues are recorded when earned
or when the government has the right
to receive the revenue. Expenses are
recorded when incurred
Cash Basis of Accounting
the cash basis of accounting is not
an acceptable basis of accounting for
preparing governmental financial
statements in accordance with GAAP
Under the cash basis of accounting,
revenues are recorded
when cash is received. Expenses are
recorded when cash is paid
out.
EXAMPLE OF CASH BASIS
For example, a government
purchases office supplies from a
neighborhood office supply store, Clips.
The supplies are ordered
on January 1, received on January 15,
and paid for on January 31. Under the
cash basis of accounting, no accounting
entries are recorded until January 31,
when the office supplies
are actually paid for.
Again, from an accounting
perspective, recording transactions
on the cash basis could not be simpler.
When are transactions recorded?
Transactions are recorded when cash
is received and when cash is disbursed
What is the difference between
appropriation and allotment?
Appropriation refers to an authorization
made by law or legislative enactment
directing payment out of government
funds under specified conditions or for
specific purposes.
On the other hand, allotment is an
authorization issued by the DBM
(Department of Budget and
Management)to an
implementing agency to incur
obligations for specified amounts
contained in a
legislative appropriation.
Electronic Tax Remittance Advice
(eTRA) System the process of remitting
taxes withheld by NGAs through the
internet using the eFPS facility of the BIR,
in lieu of the manual filing of Tax
Remittance Advice.
Electronic Filing and Payment
System (eFPS) refers to the system
developed and maintained by the BIR for
electronically filing tax returns, including
attachments, if any, and paying taxes due
thereon, specifically through the internet.
ACCOUNTING FOR
DISBURSEMENT
- accountans shall credit CASH
NATIONAL TREASURY-MDS AND
DEBIT THE SPECIFIC ACCOUNT ,
ASSET OR EXPENSE
Disbursing Officer
an officer in any department of the public ser
vice who is charged with the duty of paying out pu
blic money
Double-entry accounting is based on
the fact that every financial transaction
has equal and opposite effects in at least
two different accounts. It is used to
satisfy the equation Assets = Liabilities
+ Equity, in which each entry is
recorded to maintain the relationship.
Operating budgets are focused on
facilitating income. The first and
perhaps most crucial component of the
operating budget is the sales and
collections budget. This is followed by
the projected cost of goods sold budget,
the inventory and purchasing budget,
and the budget for operating expenses.
Cash disbursements, also called cash
payments, in accounting refer to
payments made by a company during a
specified period, such as quarter or year.
It includes payments made by cash, but
also by cash equivalents like checks or
electronic fund transfers.
Under the asset method, a prepaid
expense account (an asset) is recorded
when the amount is paid. Prepaid
expense accounts include: Office
Supplies, Prepaid Rent, Prepaid
Insurance, and others.
Withholding Tax on Compensation is
the tax withheld from income payments
to individuals arising from an
employer-employee relationship.
Withholding Tax on Government
Money Payments (GMP) - Percentage
Taxes - is the tax withheld by National
Government Agencies (NGAs) and
instrumentalities, including
government-owned and controlled
corporations (GOCCs) and local
government units (LGUs), before
making any payments to non-VAT
registered taxpayers/suppliers/payee
A memorandum entry is a short
message entered into the
Disbursing officer
Also found in: Acronyms.
an officer in any department of the public service who is charged with the duty of paying out public money.
general journal and also entered into
a general ledger account. It is not a
complete journal entry because it does
not contain debit and credit amounts.
An example of a memorandum entry
might be the following:
"On May 1, 2013 a 2-for-1 stock split
was declared for the common
stockholders of record as of the end of
the day May 22, 2013. The stock split
will result in the number of issued and
outstanding shares of common shares
increasing from 200,000 shares to
400,000 shares."
Since a stock split does not change the
balance in the Common Stock account, a
complete journal entry was not required.
The memorandum entry merely notes
for future reference that the number of
shares of stock has changed.vices.
A purchase order (PO) is a commercial
document and first official offer issued
by a buyer to a seller, indicating types,
quantities, and agreed prices for
products or services. It is used to control
thepurchasing of products and services
from external suppli
A journal entry is required to record the
transaction to replenish the Petty Cash
fund. will debit the items for
which Petty Cash was withdrawn and
credit Cash. organized and totaled.
These vouchers provide the numbers
used in the debit portion of this entry.
Differences Between Government
Accounting And Commercial
Accounting
1. Meaning
The accounting system maintained by
the government offices is known as
government accounting. The accounting
system maintained by business
organizations is known as commercial
accounting.

Withholding tax

Interest, commission, fee 15%

Royalty or other lump sum payments for

the use of moveable properties 10%

Rent or other payments for the use of

moveable properties 15%