AC 416N (PHIL) GOVERNMENT

ACCOUNTING, NON-PROFIT
ENTITIES & SPECIALIZED
INDUSTRIES - 54 HRS
GOVT ACCOUNTING 21 HOURS ....
TEXTBOOK: GOVT ACCTG BY ANGELITO
PUNZALAN AND MILAGROS CARDONA --- PLS
SECURE A COPY (BOUND OR XEROX) SAY P350
AT NBS, CONANAN BOOKSHOP
GOVERNMENT ACCOUNTING

WHY THE NEED TO BE AWARE, KNOW AND

STUDY GOVT ACCOUNTING?
TO PREPARE FOR CPA LICENSURE
EXAMINATION, AND
THE POSSIBILITY OF ONES CAREER IN THE
GOVERNMENT CIVIL SERVICE
 INTRODUCTION GOVT ACCTG
Accounting is tool of management in
evaluating the performance of the various
agencies of government.
The performance of the public managers
would depend at most, on financial reports
generated by the use of accounting systems.
 INTRODUCTION GOVT ACCTG
Cognizant of this need, a new accounting
system needs to be develop that would help
the different agencies to hit on financial
targets, and at the same time be understood
by all users of financial reports.
 INTRODUCTION GOVT ACCTG
With this new development, the Commission
on Audit (COA), under the new 1987
Constitution, promulgated the New
Government Accounting System in the
Philippines (NGAs) for use by all government
agencies.
 DEFINE GOVT ACCOUNTING
Under Section 109, of the Presidential Decree
(PD) no. 1445, defines Government
Accounting as one that encompasses the
process of analyzing, classifying, summarizing
and communicating all transactions that are
involved in the receipt and disbursement of all
government funds and properties, and
interpreting the results thereof
 DEFINE GOVT ACCOUNTING
In pursuant to this definition, objectives were
set to cover several areas in government
operations.
 OBJECTIVES OF GOVT ACCTG
1. To produce relevant financial information
about past and present transactions of
government.

2. To serve as basis for decision making for

future operations
 OBJECTIVES OF GOVT ACCTG
3. To serve as the control mechanism for the
receipt, disposition and utilization of
government funds and properties

4. To produce financial reports pertaining to

financial position and results of operations of
various government agencies that are for
dissemination to the public
 WHY THE SHIFT TO NGAS?

1. Adoption of an accounting system that is in

conformity with the International Accounting
Standards.
2. Computerization of the accounting systems
to generate reports that will be easy to
understand by the general public.
 WHY THE SHIFT TO NGAS?

3. Preparation of regular and routine financial

reports.

4. The use of the generated financial reports

as tools of management in decision making.
RESPONSIBILITY ACCOUNTING

THIS IS A CONCEPT IMPLYING THAT EVERY

ECONOMIC ACTIVITY EVENT AFFECTING AN
ORGANIZATION IS THE RESPONSIBILITY OF
AND CAN BE TRACED TO AN INDIVIDUAL
MANAGER.
ACCOUNTING RESPONSIBILITY
AGENCIES CHARGED BY THE REPUBLICS
CONSTITUTION:
COMMISSION ON AUDIT (COA)
DEPT OF BUDGET AND MANAGEMENT (DBM)
BUREAU OF TREASURY (NATIONAL TREASURY)
VARIOUS GOVT SUBDIVISIONS, AGENCIES,
INCLUDING GOCCs
COMMISSION ON AUDIT
ACCOUNTING RESPONSBILITY:
KEEPS THE GENERAL ACCOUNTS OF THE
GOVT, PROMULGATES ACCOUNTING RULES
AND REGULATIONS AND SUBMITS TO THE
PRES OF THE REPUBLIC AN ANNUAL REPORT
OF THE GOVERNMENT NOT LATER THAN LAST
DAY OF SEPTEMBER OF EACH YEAR
Q.: WHAT IS THE LEGAL BASIS OF
THE COMM ON AUDIT IN
PRESCRIBING THE NGAS?
a. Presidential Decree 1445
b. COA Circular No. 2002 001
c. The Constitution of the Republic
d. PD 1445 and the Constitution
DEPT OF BUDGET & MANAGEMENT
ACCOUNTING RESPONSIBILITY:
...SHALL BE RESPONSIBLE FOR THE
FORMULATION AND IMPLEMENTATION OF
THE NATIONAL BUDGET WITH THE GOAL OF
ATTAINING THE REPUBLICS NATIONAL SOCIO-
ECONOMIC PLANS AND OBJECTIVES
BUREAU OF TREASURY
ACCOUNTING RESPONSIBILITY:
RECEIVES AND KEEPS NATIONAL
FUNDS,MANAGE AND CONTROL THE
DISBURSEMENTS;
MAINTAIN ACCOUNTS OF FINANCIAL
TRANSACTIONS OF ALL NATIONAL
GOVERNMENT OFFICES,AGENCIES AND
INSTRUMENTALITIES.
Q.:WHAT IS THE ROLE OF THE
BUREAU OF TREASURY IN
RELATION TO GOVERNMENT
ACCOUNTING RESPONSIBILITY?
a. To design prepare and approve the accounting system of the
national government agencies.
b. To keep the general accts of the national government
c. To receive and keep national funds and manage or control
disbursements thereof.
d. To prepare the annual report of national government,
agencies and GOCCs
OTHER GOVT AGENCIES & GOCCs
ACCOUNTING RESPONSIBILITY:
THESE UNITS ARE REQUIRED BY LAW TO HAVE
ACCOUNTING UNITS/ DIVISIONS/
DEPARTMENT TO BE SUPERVISED BY THE
HEAD OF THE AGENCY CONCERNED
Q.: Which is not charged with the
government accounting
responsibility?
a. Upper and lower legislative houses
b. Department of Budget and Management
c. National Government Agencies and GOCCs
d. Commission on Audit
WHY THE NEED FOR NGAS?
TO CONFORM WITH IAS
TO PREPARE FOR AUTOMATION,INCLUDING
RESPONSIBILTY ACCOUNTING
TO GENERATE RELEVENT AND PERIOD
FINANCIAL STATEMENTS
TO PROVIDE GOOLS FOR MANAGERS AND
EXECUTIVES IN THE GOVT FOR THE
MONITORING OF AGENCY PERFORMANCE
Q.: The following are the objectives
of NGAS, which is NOT:
a. To generate periodic and relevant financial
reports for better monitoring or performance.
b. To simplify government accounting.
c. To conform to IAS.
d. To comply with the requirement of Word
Bank and International Monetary Board
WHAT IS NGAS? (NEW GOVT ACCTG
SYSTEM)
IT IS A SET OF ACCOUNTING CONCEPTS,
GUIDELINES AND PROCEDURES DESIGNED TO
ENSURE CORRECT,COMPLETE AND TIMELY
RECORDING OF GOVERNMENT FINANCIAL
TRANSACTIONS AND THE PRODUCTION OF
ACCURATE AND RELEVANT FINANCIAL
REPORTS.
WHAT IS NGAS? (NEW GOVT
ACCTG SYSTEM)
THE NGAS INTRODUCED BASIC POLICIES AND
PROCEDURES, NEW CODING SYSTEMS,
BOOKS, REGISTRIES, RECORDS, FORMS,
REPORTS AND FINANCIAL STATEMENTS TO BE
ADOPTED BY ALL NATIONAL GOVT AGENCIES
EFFECTIVE 01 JANUARY 2002
FEATURES OF THE NGAS (1)
ACCOUNTING METHODS:
MODIFIED ACCRUAL BASIS OF ACCOUNTING -
ONE FUND CONCEPT
CHART OF ACCOUNTS AND ACCOUNT CODES
RESPONSIBILITY ACCOUNTING
BOOKS OF ACCOUNTS
FINANCIAL STATEMENTS - MORE....
FEATURES OF THE NGAS (2)
TWO- MONEY COLUMN TRIAL BALANCE
ALLOTMENT AND OBLIGATION -
NOTICE OF CASH ALLOCATION
FINANCIAL EXPENSES
PERPETUAL INVENTORY OF SUPPLIES &
MATERIALS
MAINTENANCE OF LEDGER CARDS FOR
SUPPLIES, PROPERTY, PLANT & EQUIPT... more
FEATURES OF THE NGAS (3)
CONSTRUCTION OF ASSETS -
REGISTRY OF PUBLIC INFRASTRUCTURES -
REGISTRY OF REFORESTATION PROJECTS -
DEPRECIATION
RECLASSIFICATION OF ASSETS
RECOGNITION OF LIABILITY
ELIMINATION OF CONTINGENT ACCOUNTS
INTEREST ACCRUAL ..... more
FEATURES OF THE NGAS (4)
ACCOUNTING FOR BORROWINGS AND LOANS-
ELIMINATION OF COROLLARY AND NEGATIVE
JOURNAL ENTRIES
PETTY CASH FUND AND
FOREIGN CURRENCY ADJUSTMENTS
ACCOUNTING METHODS
ACCRUAL CONCEPT .... (REMEMBER?)
MODIFIED ACCRUAL ... ACCRUAL IS NOT
APPLIED OR OBSERVED ON CASES WHERE
SUCH CONCEPT IS IMPRACTICAL OR WHEN
OTHER METHODS ARE REQUIRED BY LAW.
TAXES ... FOR EXAMPLE IT IS DIFFICULT TO
DETERMINE HOW MUCH AND FROM WHOM
TO COLLECT, SO, CASH BASIS IS OBSERVED.
ONE FUND CONCEPT UNDER NGAS
PRIOR TO NGAS (PRIOR TO JAN 1, 2002):
ALL INCOME FOR THE AGENCY SHALL ACCRUE TO
GENERAL FUND
ALL MONEY COLLECTED BY THE AGENCY IS TREATED AS
SPECIAL FUND
UNDER NGAS (STARTING JAN 1, 2002) ONE FUND
CONCEPT
GENERAL FUND IS AVAILABLE FOR ALL FUNCTIONS OF
GOVT
SEPARATE FUND ACCOUNTING IS DONE ONLY WHEN
NECESSITATED BY CIRCUMSTANCES, OR APPROVED BY
COA
CHART OF ACCOUNTS AND ACCT
CODES
FROM 6 DIGITS, DOWN TO ONLY 3 DIGITS
SOME ACCOUNT TITLES HAVE BEEN CHANGED,
ADDED
NO MORE CONTINGENT ACCOUNTS
CAPEX ARE NO LONGER SHOWN AS OPEX
SEPARATE EXPENSE ITEMS
INCOME ACCTS FURTHER CATEGORIZED TO
GENERAL INCOME; OR AGENCY-SPECIFIC ACCTS
RESPONSIBILITY ACCOUNTING
RECALL THE DEFINITION
IN THE GOVERNMENT IT MEASURES THE
PLANS REFERRING TO THE BUDGET AND
ACTUAL RESULTS OF EACH RESPONSIBILTY
CENTER.
RESPONSIBILITY ACCTG IN GOVT
CONCEPTS UNDER NGAS:
INVOLVES ACCUMULATION OF DATA ON
INCOME AND COSTS ON THE BASIS OF
MANAGERS ACTION (OR INACTION)
PERFORMANCE EVALUATION
DISTINCTION BETWEEN CONTROLLABLE AND
NON-CONTROLLABLE COSTS
RESPONSIBILITY REPORTING - ACTUAL COSTS
VS BUDGET
BOOKS OF ACCOUNTS
USE OF GENERAL JOURNAL
USE OF JOURNAL ENTRY VOUCHER
MAINTENANCE OF REGULAR AGENCY BOOKS
MAINTENALCE OF NATIONAL GOVERNMENT
BOOKS
Q: THE BOOKS OF ACCOUNTS OF
THE GOVERNMENT ARE
COMPOSED OF THE FOLLOWING:
a. Regular agency books and National
Government books.
b. National government books and books of
original entry.
c. Journals and general/ subsidiary ledgers
d. Regular agency books and books of original
entry.
Q: THE BOOKS OF ACCOUNTS OF
THE GOVERNMENT ARE
COMPOSED OF THE FOLLOWING:
a. Regular agency books and National
Government books.
b. National government books and books of
original entry.
c. Journals and general/ subsidiary ledgers
d. Regular agency books and books of original
entry.
FINANCIAL STATEMENTS (REQUIRED)
BALANCE SHEET
STATEMENT OF INCOME AND EXPENSES
STATEMENT OF GOVERNMENT EQUITY
STATEMENT OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS, IF
WARRANTED.
TWO MONEY COLUMN TRIAL
BALANCE
ADOPTION OF TRIAL BALANCE UNDER
COMMERCIAL ACCOUNTING
UNDER THE OLD ACCOUNTING FOUR
MONEY COLUMN WAS A REQUIREMENT
CONSISTS OF DEBIT BALANCE, DEBIT TOTALS,
CREDIT TOTALS AND CREDIT BALANCE
Q.: THE FOLLOWING ARE THE
SYSTEMS FOLLOWED IN THE NGAS:
a. Commercial accounting
b. Double entry bookkeeping
c. Responsibility accounting
d. Fund accounting
Q.: THE FOLLOWING ARE THE
SYSTEMS FOLLOWED IN THE NGAS:
a. Commercial accounting
b. Double entry bookkeeping
c. Responsibility accounting
d. Fund accounting
ALLOTMENT AND OBLIGATION
ALLOTMENT
THE AUTHORIZATION ISSUED BY DBM THAT
WILL ENABLE THE AGENCY CONCERNED TO
INCUR OBLIGATION UP TO A SPECIFIED
AMOUNT W/N LEGISLATIVE APPRIATION.
ALLOTMENT AND OBLIGATION
OBLIGATION
REFERS TO THE COMMITTEMENT BY AN
AGENCY WHICH BINDS THE GOVT THE
EVENTUAL PAYMENT OF SUM/S OF MONEY
NOTICE OF CASH ALLOCATION
THIS IS AN AUTHORIZATION ISSUED BY THE
DBM TO GOVT AGENCIES TO WITHDRAW
CASH FROM THE NATIONAL TREASURY THRU
THE ISSUANCE OF CHECKS OR OTHER
AUTHORIZED MODE OF DISBURSEMENTS.
FINANCIAL EXPENSES
INCLUDES BANK CHARGES, INTEREST
EXPENSE, COMMITTMENT CHARGES,
DOCUMENTARY STAMPS AND OTHER RELATED
EXPENSES.
THIS WAS REMOVED FROM MAINTENANCE
AND OTHER OPERATING EXPENSES ACCOUNT.
PERPETUAL INVENTORY OF SUPPLIES
& MATERIALS
PURCHASES FOR MATERIALS AND SUPPLIES
ARE RECORDED UNDER THE ASSET METHOD
USAGE OF THESE CONSUMABLES ARE
REPORTED UNDER THE REPORT ON SUPPLIES
AND MATERIALS ISSUED
PURCHASES OF THESE ITEMS USING PCF ARE
CHARGED TO EXPENSE
MOVING AVERAGE OF COSTING IS USED.
MAINTENANCE OF SUPPLIES AND
PROPERTY, PLANT AND EQUIPMENT
LEDGER CARDS

FOR CHECK AND BALANCE, PROPERTY

CUSTODIANS OR ACCOUNTING UNITS OF
AGENCY ARE REQUIRED TO MAINTAIN HARD
COPIES OF THESE ASSETS
THIS IS CLASSIFIED BY CATEGORY OF PPE.
CONSTRUCTION OF ASSETS
CONSTRUCTION PERIOD THEORY IS APPLIED
FOR COSTING PURPOSES
BONUS PAID TO CONTRACTOR IS ADDED TO
COST.
LIQUIDATED DAMAGES DUE FROM
CONTRACTOR IS DEDUCTED FROM PROJECT
COST
Q.: UNDER THE NGAS,
SERVICEABLE ASSETS NO LONGER
BEING USED SHALL BE CLASSIFIED
AS:
a. PPE
b. Obsolete property
c. Depreciated assets
d. Other assets
e. Assets for disposal
Q.: UNDER THE NGAS,
SERVICEABLE ASSETS NO LONGER
BEING USED SHALL BE CLASSIFIED
AS:
a. PPE
b. Obsolete property
c. Depreciated assets
d. Other assets
e. Assets for disposal
REGISTRY OF PUBLIC
INFRASTRUCTURE AND REGISTRY
OF REFORESTATION PROJECTS
THIS APPLIES TO PUBLIC GOODS
ROADS,BRIDGES, WATERWAYS, RAILWAYS,
PLAZA, MONUMENTS, ETC. (BY THE DPWH,
OTHER GOCCS)
ALSO FOR THE REFORESTATION (BY THE DENR,
OTHER GOCCS)
DEPRECIATION
STRAIGHT LINE METHOD IS USED.
UNIFORM ESTIMATED LIFE OF PUBLIC GOODS,
EXAMPLES:
RUNWAYS 20 YEARS
RAILWAYS - 40 YEARS
BUILDING MADE OF WOOD 10 YEARS ...
RECLASSIFICATION OF ASSETS
OTHER ASSETS
NO DEPRECIATION
UNSERVICEABLE ASSETS
ALLOWANCE FOR DOUBTFUL
ACCTS

ALLOWANCE FOR DOUBTFUL ACCOUNTS WILL

BE SET UP TO ALLOW FAIR VALUATION.
RECOGNITION OF LIABILITY
ACCRUALS ....
USUALLY RECOGNIZEDAT THE TIME
GOODSAND SERVICES ARE ACCEPTED OR
RENDERED AND SUPPLIER OR CREDITOR BILLS
ARE RECEIVED BY THE CONCERNED AGENCY.
ELIMINATION OF CONTINGENT
ACCONTS
DISALLOWED PAYMENTS, CASH SHORTAGES
SHALL BE RECORDED UNDER RECEIVABLE
ACCOUNTS.
USE OF CONTINGENT ACCOUNTS ARE
STOPPED.
INTEREST ACCRUAL
INTEREST INCOME OR EXPENSE, WHEN
APPROPRIATE ARE TO BE RECOGNIZED
INTEREST INCOME
THOSE EARNED ON DEPOSITS WITH BANKS,
LOANS AND INVESTMENT BONDS, TREASURY
NOTES, TREASURY BILL AND PROMISSORY
NOTES HELD
INTEREST ACCRUAL
INTEREST EXPENSE
TO RECORD CHARGES IMPOSED AS A
CONSEQUENCE ON USE OF MONEY
BELONGING TO OTHER, SUCH US INTEREST IN
BONDS, CERTIFICATES OF INDEBTEDNESS,
TREASURY BILLS, TREASURY NOTES
ACCOUNTING FOR LOANS AND
BORROWINGS
ALL LOANS AND BORROWINGS SHALL BE
RECORDED UNDER APPROPRIATE LIABILITY
ACCOUNTS
DOMESTIC BORROWINGS
FOREIGN BORROWINGS
ELIMINATION OF COROLLARY AND
NEGATIVE JOURNAL ENTRIES
A COROLLARY ENTRY ARISES FROM
OBLIGATION ACCOUNTING

A NEGATIVE ENTRY (USUALLY DONE IN RED) IS

A MEANS OF EFFECTING A CORRECTION/
ADJUSTMENT BY ENCLOSING THE AMOUNT IN
PARENTHESIS
PETTY CASH FUND
FOR PAYING SMALL OR MISCELLANEOUS BUT
AUTHORIZED EXPENDITURES NOT
CONVENIENTLY PAID BY CHECK VOUCHER.
FOREIGN CURRENCY ADJUSTMENT
CASH DEPOSITS BY THE GOVERNMENT IN
FOREIGN CURRENCY WILL BE COMPUTED AT
THE EXCHANGE RATE SET BY THE BANGKO
SENTRAL AS OF BALANCE SHEET DATE
FOREIGN CURRENCY ADJUSTMENT
EACH MONTH, ANY GAIN OR LOSS FROM
FOREIGN EXCHANGE TRANSACTIONS IS
COMPUTED AND RECOGNIZED IN THE BOOKS
FOR FOREIGN CURRENCY LIABILITY, IT IS TO BE
EXPRESSED BOTH IN FOREIGN AND LOCAL
CURRENCY.
NEXT TOPICS
ACCOUNTING FOR BUDGETARY ACCOUNTS
THIS IS ABOUT WAYS OF RECORDING
APPROPRIATIONS, ALLOTMENTS AND
OBLIGATIONS IN THE REGISTRIES MAINTAINED
BY THE DBM, BUREAU OF TREASURY AND
GOVT AGENCIES/ UNITS/
INSTRUMENTALITIES/ GOCCs