Chapter 1: GOVERNMENT ACCOUNTING
or property received or held by them in an accountable capacity,
Fundamental principles of any government agencies’ financial
transactions and operations.
1. No money shall be paid out of any public treasury of depository
except in pursuance of an appropriation law or other specific
statutory authority.
2. Government funds or property shall be spent or used solely for
public purposes.
3. Trust funds shall be available and may be spent only for the specific
purpose for which the trust was created or the funds received.
4. Fiscal responsibility shall, to the greatest extent, be shared by all
those exercising authority over the financial affairs, transactions,
and operations of the government agency.
5. Disbursements or disposition of government funds or property shall
invariably bear the approval of the proper officials.
6. Claims against government funds shall be supported with complete
documentation.
7. All laws and regulations applicable to financial transactions shall be
faithfully adhered to.
8. Generally accepted principles and practices of accounting as well
as of sound management and fiscal administration shall be
observed, provided that they do not contravene existing laws and
regulations.
GOVERNMENT ACCOUNTING
Encompasses the processes of analyzing, recording, classifying, summarizing
and communicating all transactions involving the receipt and disposition of
government funds and property, and interpreting the results thereof.
(PD 1445, Sec. 109)
Objectives of government accounting.
▪ produce information concerning past operations and present
conditions;
▪ provide a basis for guidance for future operations;
▪ provide for control of the acts of public bodies and officers in the
receipt, disposition and utilization of funds and property; and
▪ report on the financial position and the results of operations of
government agencies for the information of all persons concerned.
(PD 1445, Sec. 110)
Accounting Responsibility
The Constitution of the Philippines mandates the keeping of the general
accounts of the government, promulgation of accounting rules, and the
submission of reports covering the financial condition and operation of the
government.
The government agencies charged with accounting responsibility are:
▪ Commission on Audit
▪ Department of Budget and Management
▪ Bureau of Treasury
▪ Government Agencies discharging the functions of government to
enable it to attain it commitments to the Filipino people.
Commission on Audit
The authority and powers of the Commission shall extend to and comprehend
all matters relating to:
▪ auditing procedures,
▪ systems and controls,
▪ keeping of the general accounts of the Government,
▪ preservation of vouchers pertaining thereto for a period of ten
years,
▪ examination and inspection of the books, records, and papers
relating to those accounts;
▪ audit and settlement of the accounts of all persons respecting funds
▪ examination, audit, and settlement of all debts and claims of any
sort due from or owing to the Government or any of its subdivisions,
agencies and instrumentalities.
COA’s jurisdiction extends to:
▪ all government-owned or controlled corporations, including their
subsidiaries, and other self-governing boards, commissions, or
agencies of the Government,
▪ non-governmental entities subsidized by the government
▪ those funded by donations through the
government
▪ those required to pay levies or government
share
▪ those for which the government has put up a
counterpart fund or those partly funded by
the government.
Commission on Audit Mandates
1. To determine whether or not the fiscal responsibility that rests
directly with the head of the government agency has been properly
and effectively discharged;
2. To develop and implement a comprehensive audit program that
shall encompass an examination of financial transactions,
accounts, and reports, including evaluation of compliance with
applicable laws and regulations;
3. To institute control measures through the promulgation of rules and
regulations governing the receipts, disbursements, and uses of
funds and property, consistent with the total economic development
effort of the government;
4. To promulgate auditing and accounting rules and regulations so as
to facilitate the keeping, and enhance the information value, of the
accounts of the government;
5. To adopt measures calculated to hasten the full professionalization
of its services;
6. To institute measures designed to preserve and ensure the
independence of its representatives; and
7. To endeavor to bring its operations closer to the people by the
delegation of authority through decentralization, consistent with the
provisions of the new Constitution and the laws.
Department of Budget and Management
The DBM shall assist the President in the:
1. preparation of a national resources and expenditures budget,
2. preparation, execution and control of the National Budget,
3. preparation and maintenance of accounting systems essential to
the budgetary process,
4. achievement of more economy and efficiency in the management
of government operations,
5. administration of compensation and position classification systems,
6. assessment of organizational effectiveness and review
7. evaluation of legislative proposals having budgetary or
organizational implications.
Mandates of DBM
▪ The Department shall be responsible for the formulation and
implementation of the National Budget with the goal of attaining our
national socio-economic plans and objectives.
▪ The Department shall be responsible for the efficient and sound
utilization of government funds and revenues to effectively achieve
our country's development objectives.
(EO 292, Title XVII)
Bureau of Treasury
Plays the pivotal role in the cash operations, collections, remittances and
disbursements in the government.
Mandates of Bureau of Treasury
▪ Assist in the formulation of policies on borrowing, investment and
capital market development;
▪ Formulate adequate operations guidelines for fiscal and financial
policies;
▪ Assist in the preparation by government agencies concerned of an
annual program for revenue and expenditure targets, borrowing
levels and cash balances of National Government;
▪ Maintain books of accounts of the cash transactions;
▪ Manage the cash resources, collect taxes made by the National
Government (NG) and guarantee forward cover fees due NG,
control and service its public debt, both foreign or domestic;
▪ Issue, service, redeems government securities for the account of
the National Government as may be authorized by the President
pursuant to law;
▪ Administer the Securities Stabilization Fund by purchase and sale
in the open market of government bills and bonds to increase the
liquidity and stabilize the value of said securities in order to promote
private investment in government securities;
▪ Act as principal custodian of financial assets of the National
Government, its agencies and instrumentalities;
▪ Bond all accountable public officials and employees pursuant to the
provisions of the Public Bonding Law and issue appropriate
guidelines therefore;
Perform such other related functions as may be assigned to it by
National Government Agencies
All instrumentalities of the National Government, including the Congress, the
Judiciary, the Constitutional bodies, state Universities and colleges and self-
contained institutions and hospitals are required by law to have accounting
units/divisions/departments, which are to be the same level with other
units/division/departments and under the supervision of the Head of the
Agency.
Accounting personnel shall:
1. Maintain and keep current the accounts of the agency.
2. Provide advice on the financial condition and status of the
appropriations and allotments of the agency as its Head may
require.
3. Develop and conduct procedures designed to meet the needs of
management.
They shall perform the aforesaid duties in accordance with existing laws, rules,
regulations, procedures and comply with the reporting requirements of COA,
DOF and DBM. Failure to comply is sufficient ground for dismissal from the
government service. (Insert Registries)
Basic accounting and budget reporting principles
Government entities are required to recognized and present its financial
transactions and operations in conformity with the following:
1. Generally accepted government accounting principles in accordance
with PPSAS and pertinent rules and regulations.
• The use of Philippine Public Sector Accounting Standard (PPSAS)
effective January 1, 2014 is in accordance with COA Resolution
No. 2014-0030.
• PPSAS was based on International Public Sector Accounting
Standards.
2. Accrual basis of accounting in accordance with PPSAS
▪ Transactions and other events are recognized when they occur,
and not when cash or its equivalent is received or paid.
3. Budget basis for presentation of budget information in the financial
statement in accordance with PPSAS 24.
▪ Requires comparison of budget amounts and actual amounts arising from
execution of the budget to be included in the financial statements.
▪ Requires disclosure of an explanation of the reasons for material differences
between budget and actual amounts.
4. Revised Chart of accounts prescribed by commission on audit
▪ Uniform accounts to be used in the government accounting and
budget systems to facilitate the preparation of harmonized financial
and budget accountability reports.
5. Double entry bookkeeping
▪ Two accounting entries (debit, credit) are required to record each
accounting transactions.
6. Financial statements based on accounting and budgetary records.
Provide information:
▪ useful in decision making
▪ about the sources, allocation, and uses of financial resources
▪ about how the entity financed its activities and met its cash
requirement
▪ useful in evaluating the entity’s ability to finance its activities and
meet its liabilities and commitments
▪ about the financial condition of the entity and changes in it
▪ useful in entity’s performance in terms of service costs, efficiency
and accomplishments
▪ whether resources were obtained and use in accordance with
legally adopted budget
▪ whether resources were obtained and used in accordance with
legal and contractual requirements, including financial limits
established by appropriate legislative authorities.
7. Fund cluster accounting
Fund cluster – an accounting entity for recording expenditures and revenues
associated with specific activity for which accounting records are maintained
and periodic financial reports are prepared.
Detailed financial statements and trial balances consolidated by the fund
cluster as follows:
▪ Regular Agency Fund
▪ Foreign Assisted Projects Fund
▪ Special Account- Locally Funded/Domestic Grants Fund
▪ Special Account- Foreign Assisted/Domestic Grants Fund
▪ Internally Generated Funds
▪ Business Related Funds
▪ Trust Receipt/Inter-agency Transferred Funds (IAFT)
Responsibility Accounting
▪ System that relates the financial results to a responsibility center,
which provides access to cost and revenue information under the
supervision of a manager having direct responsibility for it
performance.
▪ System that measures the plans (by budget) and actions (by actual
results) of each responsibility.
Responsibility center
Part, segment, unit or function of government agency a government agency,
headed by a manager, who is accountable for a specified set of activities.
Responsibility accounting aims to:
▪ Ensures that all costs and revenues are properly charged/credit to
the correct responsibility so that the deviations from the budget can
be readily attributed to managers accountable therefor,
▪ Provide a basis for making decisions for future operations,
▪ Facilitate review activities, monitoring the performance of each
responsibility center and evaluation of the effectiveness of agency’s
operation.
CHAPTER 2: UNIFIED ACCOUNT CODE STRUCTURE (UACS)
The Unified Account Code Structure (UACS)
- is a government-wide harmonized budgetary, treasury and accounting
code classification framework jointly developed by the Department of
Budget and Management (DBM), the Commission on Audit (COA), the
Department of Finance (DOF) and the Bureau of the Treasury (BTr) to
facilitate reporting of all financial transactions of agencies including
revenue reporting.
- its key purpose is to enable the timely and accurate reporting of actual
revenue collections and expenditures against budgeted programmed
revenues and expenditures.
KEY ELEMENTS OF UACS
• Funding Source (8-digit)
• Organization (12-digit)
• Location (9-digit)
• MFO/PAP (15-digit)
• Object (10-digit
01-1-03-251
• General Funds- are funds available for any purpose that Congress may
choose to apply, and is composed of all receipts or revenues that do not
otherwise accrue to other funds.
• Off-Budgetary Funds - refer to receipts for expenditure items that are
not part of the National Expenditure Program, and which are authorized
for depositing in government financial institutions. These are categorized
into:
• Retained Income/Receipts, and
• Revolving Funds
• Custodial Funds- refer to receipts or cash received by any government
agency—whether from a private source or another government
agency—to fulfill a specific purpose. Custodial receipts include receipts
collected as an agent for another entity.
• New General Appropriations- are annual authorizations for incurring
obligations during a specified budget year, as listed in the General
Appropriations Act (GAA). The GAA is the legislative authorization that
identifies new appropriations for the implementation of programs,
projects and activities of all departments, bureaus and offices of
government for a given year.
• Continuing Appropriations- are authorizations to support obligations
for a specified purpose or project, even when these obligations are
incurred beyond the budget year. Because MOOE and CO
appropriations in the GAA are valid for two years, unobligated and
unreleased appropriations for these budget items are valid until the end
of their second year and are classified as Continuing Appropriations.
• Supplemental Appropriations- are additional appropriations
enacted by Congress to augment original appropriations that have
proven insufficient for their intended purpose because of economic,
political or social conditions. Supplemental Appropriations must also be
supported by a certification of availability of funds by the BTr.
• Automatic Appropriations- are authorizations made annually or for
some other period prescribed by law, by virtue of standing legislation,
which do not require periodic action by the Congress. These are
automatically and annually included in the National Expenditure Program
of the National Government.
Examples:
1. Retirement and Life Insurance Premiums
2. Pension under R.A. No. 2087, as amended by P.D. No. 1625
and R.A. No. 5059
3. Domestic Grant Proceeds
4. Customs duties and taxes, including tax expenditures
• Unprogrammed Funds- are standby appropriations for priority
programs or projects of the government. The utilization of
Unprogrammed Funds may be approved if any of the following conditions
are met:
• Revenue collections for the year exceed targets
• New revenues not included in the original revenue targets are
successfully generated, or
• Foreign loan proceeds are generated for newly approved
projects covered by perfected loan agreements.
• Retained Income/Funds- are collections that are authorized by law to
be used directly by agencies for their operation or specific purposes.
These include but are not limited to receipts from:
• State Universities and Colleges (SUCS) - tuition and
matriculation fees and other internally generated receipts
• Department of Health (DOH) - hospital income.
• Revolving Funds- are receipts derived from business-type activities of
departments/agencies as authorized by law, and which are deposited in
an authorized government depository bank. These funds shall be self-
liquidating. All obligations and expenditures incurred because of these
business-type activities shall be charged against the Revolving Fund.
• Trust Receipts- are receipts that are officially in the possession of
government agencies or a public officer as trustee, agent, or
administrator, or which have been received for the fulfillment of a
particular obligation.
These receipts may be classified as:
• Inter-Agency Transferred Funds (IATF), which are receipts or
fund transfers from any government-agency or Government
Owned and/or Controlled Corporations (GOCC) to another
agency, and which are deposited in the National Treasury to
facilitate project implementation;
• Receipts deposited with the National Treasury other than IATF,
which are receipts from other sources—including private persons
or foreign institutions—which are deposited with the National
Treasury, pursuant to E.O. No. 338, for the fulfillment of some
obligations; and,
• Receipts deposited with Authorized Government Depository Bank
(AGDB), which are receipts from other sources that should be
deposited in the AGDB for the fulfillment of some obligations.
• Specific Budgets of National Government Agencies- refers to the
budgets appropriated for a specific department or agency of the
National Government.
• GoP Counterpart Funds and Loans/Grants from Development
Partners or the Multilateral/Bilateral Assistance- fund category code
for counterpart funds, loan proceeds and grant proceeds.
The authorization code—which precedes the fund category code—will
vary depending on whether funds were loans or grants, as well as if they
were unprogrammed or included in the regular budget. Appropriated loan
proceeds will use authorization code 01, grant proceeds will use
authorization code 04 and unprogrammed loan proceeds will use
authorization code 05.
• Allocation to Local Government Units (ALGU)- refers to the share of • City - a political corporate unit of government which consists of a more
Local Government Units (LGUs) from the revenue collections of the urbanized and developed group of barangays. It serves primarily as
National Government. The total ALGU is based on a sharing scheme a general-purpose government for the coordination and delivery of basic,
computed for each LGU, as provided for under the Local Government regular and direct services and effective governance of the inhabitants
Code and other special laws. within its territorial jurisdiction.
• Municipality - a political corporate unit of government which consists of
• Budgetary Support to Government Corporations (BSGC)- refers to
a group of barangays. It serves primarily as a general-purpose
either subsidies for operations or projects, equity contributions, and net
government for the coordination and delivery of basic, regular and direct
lending and/or advances to Government-Owned or Controlled
services and effective governance of the inhabitants within its territorial
Corporations (GOCC) for loan repayments.
jurisdiction.
• Financial Assistance to Metropolitan Manila Development • Municipality Code. This is a two-digit code that generally used to
Authority-refers to national government subsidy in the form of regular identify the municipalities, cities or municipal districts in a particular
appropriations as provided in the GAA which shall only be used to province, and is dependent upon the Province Code to fully
augment any deficiency in the consolidated funds of the MMDA to cover establish the identity of municipality.
valid and authorized expenditures. It ranges from 01 to 99.
• A Special Account in the General Fund (SAGF)- is a fund where • Barangay - the basic political unit of government. It serves as the primary
proceeds from specific revenue measures and grants earmarked by law planning and implementing unit of government policies, plans, programs,
for priority projects are recorded. These sources are automatically projects and activities in the community, and also as a forum where the
appropriated. collective views of its constituents may be expressed, crystallized and
• Special Purpose Funds (SPF)- are lump-sum funds included in the considered, and where disputes may be amicably settled.
GAA which are not within the approved appropriations of • Barangay Code. This is a three-digit code which generally defines
Departments/Agencies/Lower Level Operating Units, and which are the relative alphabetical sequence of the barangays within the
available for allocation to any Department/Agency/Lower Level municipality. The code ranges from 001 to 999.
Operating Unit or Local Government Unit for a specific purpose, as may Barangay Code 010 means it is the 10th barangay in alphabetical
be duly approved in accordance with special provisions on the use of sequence within that municipality. The Barangay Code is
these funds. dependent upon the Municipality Identifier to fully
establish the identity of a given barangay
Department Agency Operating Unit Lowel Level
Class Operating Unit Sector or Program MFO or Activity Activity
00 000 00 00000 Horizontal / Project Project Level 1 Level 2
Organization Outcomes Category
• Department – the primary subdivision of the Executive Branch 00000 0 00 00 00000
responsible for the overall management of a sector or a permanent Major or Final Output (MFO) / Program, Activity & Project (PAP)
national concern with nationwide or international impact1. A department • Sector/Horizontal Outcomes- are specific programs implemented with
is headed by a Secretary or an official with an equivalent position level. the aim of achieving common policy objectives among government
• Agency – refers to any of the various units of the government, including agencies.
an office, instrumentality or Government-Owned and/or Controlled • Major Final Output- defined as a good or service that a department or
Corporation (GOCC)2 that may not approximate the size of a agency is mandated to deliver to external clients through the
Department, but which nevertheless performs tasks that are equally implementation of programs, activities and projects.
important and whose area of concern is nationwide in scope (e.g., Other • Program- is an integrated group of activities that contributes to an
Executive Offices [OEOs]). agency or department’s continuing objective. Examples include General
• Operating Units – organizational entities charged with carrying out Administration and Support, Support to Operations,
specific substantive functions or with directly implementing and Operations.
programs/projects of a department or agency, such as line bureaus • Activity- is defined as a work process that contributes to the fulfillment
and field units. of a program or project. Each activity shall be attributed to only one MFO.
Region Province City / Municipality Barangay Activities are to be assigned to General Administration and Support, or
00 000 Support to Operations if they benefit internal clients. On the other hand,
00 00 an activity that benefits external clients shall be attributed to an MFO.
Location • Projects- are special department/agency undertakings carried out within
• Region - a sub-national administrative unit composed of several a definite timeframe, and which are designed to produce a pre-
provinces having more or less homogenous characteristics, such as determined measure of goods or services (MFOs). A project is
ethnic origin of inhabitants, dialect spoken, agricultural produce, etc. considered an investment toward expanding the capacity of a
• Region Code. This is a two-digit code that identifies a specific department/agency to deliver MFOs.
region. It ranges from 01 to 99. Salaries and Wages – Regular 50101010 00
• Province - a political corporate unit of government which consists of a Basic Salary – Civilian 50101010 01
cluster of municipalities, or municipalities and component cities. A Revised Chart of Sub-Object
province serves as a dynamic mechanism for developmental processes Accounts 00
and effective governance of local government units within its territorial 00000000
jurisdiction. Object
• Province Code. This is a two-digit code that identifies the province. Particulars UACS
It ranges from 01 to 99, generally defining the relative alphabetic Assets 1
sequence of all provinces in the country, except those created after Liabilities 2
1977, which were added to the list following the updating Equity 3
procedures. Income 4
Expenses 5
CHAPTER 4: ACCOUNTING FOR BUDGETARY ACCOUNTS The Budget Cycle
The Philippine Government Accounting System
• Budgetary Accounts System
• Receipt/Income and Deposit System
• Disbursement System
• Financial Reporting System

Accounting for Budgetary Accounts

- Article VI of the 1987 Constitution Section 29 (1).
- “No money shall be paid out of the Treasury except in pursuance of
an appropriation by law.”

THE NATIONAL BUDGET 1. BUDGET PREPARATION

- plan for financing the government activities for a fiscal year prepared and
submitted by responsible executive to a representative body whose
approval and authorization are necessary before the plan can be
executed.
- definite proposal or estimate or statement of receipts and expenditures
that may be approved or rejected.
- the financial blue print of a country’s development plan.
Balanced Budget
The budget where the proposed expenditures are equal or less than the
estimated revenues.
Performance-Informed Budgeting (PIB)
• Budgeting approach that uses performance information to assist in
deciding where the funds will go.
• Performance information typically includes:
• The purpose for the funds required.
• The outputs that would be produced or the services that would be
rendered.
• The outcomes that would be achieved by the outputs and services.
• The cost of the programs and activities proposed to achieve the
objectives.
• Simplified budgeting approach that focuses more on outputs and
outcomes and places less emphasis on the inputs.
• PIB is an integral process whereby agency performance information and
their corresponding indicators under their Organizational Performance
Indicator Framework (OPIF) is presented hand-in-hand with the agency
budget to ensure that the outcomes an agency is committing to deliver
in exchange for its budget are clear to the public and the legislators.
Kinds of Budget
1. Determination of the overall economic targets, expenditure levels,
revenue projection and the financing plan by the Development
Budget Coordinating Committee (DBCC).
• The DBCC is an inter-agency body composed of the DBM
Secretary as Chairman and the Bangko Sentral Governor, the
Secretary of the Department of Finance, the Director General of the
National Economic and Development Authority and a
representative of the Office of the President as members.
2. Issuance by the DBM of the Budget Call which defines the budget
framework; sets economic and fiscal targets; prescribe the priority thrusts
and budget levels; and spells out the guidelines and procedures,
technical instructions and the timetable for budget preparation;
3. Preparation by various government agencies of their detailed budget
estimates ranking programs, projects and activities using the capital
budgeting approach and submission of the same to DBM;
4. Conduct budget hearings were agencies are called to justify their
proposed budgets before DBM technical panels;
5. Submission of the proposed expenditure program of
department/agencies/special for confirmation by department/agency
heads.
6. Presentation of the proposed budget levels of
department/agencies/special purpose funds to the DBCC for approval.
7. Review and approval of the proposed budget by the President and
the Cabinet;
8. Submission by the President of proposed budget to Congress.
2. BUDGET LEGISLATION
1. The President submits his/her proposed annual budget in the form of
Budget of Expenditure and Sources of Financing (BESF) supported by
details of proposed expenditures in the form of a National Expenditure
Program (NEP) and the President's Budget Message which summarizes
the budget policy thrusts and priorities for the year.
2. The proposed budget goes first to the House of Representatives, which
assigns the task of initial budget review to its Appropriation Committee.
3. The Appropriation Committee together with the other House Sub-
Committee conduct hearings on the budgets of departments/agencies
and scrutinize their respective programs/projects. Consequently, the
amended budget proposal is presented to the House body as the
General Appropriations Bill (GAB).
4. While budget hearings are on-going in the House of Representatives, for
expediency, the Senate Finance Committee, through its different
subcommittees also starts to conduct its own review and scrutiny of the
proposed budget and proposes amendments to the House Budget Bill to
the Senate body for approval. The Committee submits its proposed
amendment to the GAB to plenary only after it has been formally
transmitted by the House of the Representatives.
5. To thresh out differences and arrive at a common version of the General
Appropriations Bill, the House and the Senate creates a Bicameral
Conference Committee that finalizes the General Appropriations Bill.
6. The Bicam version is then submitted to both Houses, which will then vote
to ratify the final GAB for submission to the President. Once submitted to
the President, the GAB is considered enrolled.
7. Budget legislation ends when the President signs the GAA into law. Prior
to this, the President may veto or set conditions for implementation
of certain items in the GAA, which are then specified in the President’s
Veto Message. Unlike other legislation, the President may effect a “line
item veto” of specific provisions of the GAB.
If in case Congress fails to pass the GAB on time, the President may re-enact
the previous year’s GAA until such time that the fresh Budget is passed.
• The General Appropriations Act (GAA) is the legislative authorization
that contains the new appropriations in terms of specific amounts for
salaries, wages and other personnel benefits; maintenance and other
operating expenses; and capital outlays authorized to be spent for the
implementation of various programs/projects and activities of all
departments, bureaus and offices of the government for a given year.
3. BUDGET EXECUTION & PREPARATION
1. Early Procurement Activities - Agencies are required to prepare their
Annual Procurement Plans and other bid documents before the new
fiscal year starts. Moreover, the government adopted a policy of allowing
agencies—such as the DPWH and others which implement infrastructure
projects—to bid their projects before the GAA is enacted. Early bidding
allows agencies to award their approved projects as soon as the new
GAA takes effect.
2. Budget Program- Agencies submit Budget Execution Documents
(BEDs) to outline their financial plans and performance targets for the
year. The DBM consolidates these plans into the budget program, which
breaks down the allotment and cash releases for each month of the year.
3. Allotment Release- The DBM issues allotments to agencies to authorize
the latter to incur obligations. With the GAA-as-Release Document, the
enacted Budget itself serves as the allotment release for all budget items
except those contained in a negative list that are issued the Special
Allotment Release Orders (SAROs) after agencies comply with the
documentary requirements.
4. Obligation - Agencies incur liabilities that the national government will
pay for, as they implement programs, activities, and projects. Agencies
incur obligations when they hire new staff or enter into a contract with
suppliers of goods and services that are subject to a transparent and
competitive procurement process.
5. Cash Allocation- The DBM issues disbursement authorities, such as
the Notice of Cash Allocation (NCA), to authorize an agency to pay the
obligations it incurs. To ease budget execution, the DBM issues
comprehensive NCAs to cover the cash requirements of agencies for the
first semester.
6. Disbursement- Monies are paid out from the Treasury to settle
obligations that government incurred for the delivery of services to
citizens. To ease the payments process, the DBM introduced checkless
and cashless disbursement schemes.
4. BUDGET ACCOUNTABILITY
1. Performance Targets- Budget accountability starts with the setting of
targets that agencies are to be held accountable for. With the
Performance-Informed Budget, the GAA now contains the targeted
outcomes, outputs and performance indicators of each agency. These
targets are also reflected in agencies’ BEDs (see “Budget Program”
under Budget Execution), which effectively serve as the agencies’ plans
for the year
2. Citizen Engagement- To empower citizens during Budget
Accountability, the government ensures transparency-agencies disclose
their budgets, reports, and other relevant information through the
Transparency Seal; and make available data in open format. In addition,
the government also publishes the People’s Budget along with other
technical documents and reports.
3. Monitoring and Evaluation- Agencies must set-up and implement
monitoring and evaluation mechanisms to ascertain the effectiveness of
the programs and projects on which they spend. Agencies must have
internal control mechanisms to ensure that public funds are spent and
accounted for properly.
4. Agencies’ Accountability Reports- Agencies submit Financial
Accountability Reports on a monthly or quarterly basis, as required by
the DBM and the COA. These reports are submitted online through the
Unified Reporting System.
5. Performance Review- The DBM reviews the financial and physical
performance of agencies against their targets.
6. In -Year Reports- The DoF and the DBM regularly publish snapshots of
the government’s fiscal performance, revenue collections, debt, and
expenditures.
7. DBCC Mid-Year Report- The DBCC publishes a comprehensive report
on macroeconomic developments, the fiscal situation of the national
government, and the performance of key programs and projects. The
Mid-Year Report also discusses any adjustments that the DBCC makes
to the government’s economic projections and fiscal targets for the rest
of the year
8. DBCC Year-End Report- The DBCC publishes another comprehensive
report covering the full year. Compared to the Mid-Year Report, the Year-
End Report provides more discussions and details about actual revenue
and expenditure outturns against program, and the financial and physical
performance of priority programs.
9. Audit- The COA reviews the accounts of each agency to ascertain if
public funds are used properly, according to the law and standards, and
with value-for-money. The COA produces audit reports for each agency;
a whole-of-government Annual Financial Report; as well as Special Audit
Reports. The DBM uses COA’s Audit Reports in confirming agency
performance, determining budgetary levels for agencies, and addressing
issues in fund usage.
Budgetary Account System
Allotment Release Program (ARP)
- Shall serve as the ceiling for the aggregate allotment releases during the
year from all sources.
- Composed of the following:
- Obligations incurred,
- Obligations authorized as overdraft,
- Special Allotment Release Order (SAROs) issued from the
beginning of the fiscal year to the effectivity date of the current GAA,
- Releases from the unprogrammed fund (UF).
Budgetary Accounts
• Appropriation – an authorization made by law or other legislative
enactment, directing payment of goods and services out of
government funds under specific purposes.
• Allotment- An Authorization issued by the DBM to the government
agencies, which allow them to incur obligations, for specified
amounts, within the legislative appropriation.
• Obligation- a commitment by government agency arising from an
act of duly authorized official which binds the government to the
immediate or eventual payment of sum of money.
Fund Release Documents
1. Obligational Authority or Allotment
a. General Appropriation Act Release Document (GAARD)- serves as the
obligational authority for the comprehensive release of budgetary items
appropriated in GAA, categorized as For Comprehensive Release
(FCR).
b. Special Allotment Release Order (SARO)- covers budgetary items under
For Later Release (FLR) (negative list) in the entity submitted Budget
Execution Documents (BEDs), subject to compliance of required
documents/clearances. Releases of allotments for Special Purpose
Funds (SPFs), like Calamity Fund, are also covered by SARO.
c. General Allotment Release Order (GARO)- is a comprehensive authority
issued to all national government agencies, in general, to incur
obligations not exceeding an authorized amount during a specified
period for the purpose indicated therein. It covers automatically
appropriated expenditures common to most, if not all, agencies without
need of special clearance or approval from competent authority, i.e.
Retirement and Life Insurance Premium.
2. Disbursement Authority
a. Notice of Cash Allocation (NCA) – authority issued by the DBM to central,
regional and provincial offices and operating units to cover the cash
requirements of the agencies;
b. Non-Cash Availment Authority (NCAA) – authority issued by the DBM to
agencies to cover the liquidation of their actual obligations incurred
against available allotments for availment of proceeds from loans/grants
through supplier’s credit/constructive cash;
c. Cash Disbursement Ceiling (CDC) – authority issued by DBM to the
Department of Foreign Affairs (DFA) and Department of Labor and
Employment (DOLE) to utilize their income collected/retained by their
Foreign Service Posts (FSPs) to cover their operating requirements,
but not to exceed the released allotment to the said post; and
d. Notice of Transfer of Allocation – authority issued by the Central Office
to its regional and operating units to cover the latter’s cash requirements.
Reporting Requirements
1. Budget Execution Documents (BEDs)
• Reflected the plans, targets and schedules that will guide agencies
in the early implementation of priority programs and projects.
• Must be submitted to the DBM every November 30, before financial
year. If there are any adjustments, revision shall be submitted on
or before January 7 of the financial year.
BED No. 1: Financial Plan
• Includes the comparative obligation level for the budget year (2019)
broken down by quarter, versus current year (2018) actual obligations
as of September 30 and the emerging level obligations for the remaining
quarter.
BED No. 2: Physical Plan
• Consists the performance indicators and targets of department/ agency
such as:
• For Operations, the performance indicators by MFOs.
• For Major Programs and Projects committed to the President and
closely monitored by Presidential Staff.
• For other projects, consider those milestones indicated in
approved project profile.
• Physical Plan must be same with those appearing in the Financial
Plan.
BED No. 3: Monthly Disbursement Program (MDP)
• Used by the DBM as basis for determining the monthly level of
disbursement authorities to be used by national government agencies.
• Reflects the total cash and non-cash program for the budget year, by
fund category, by allotment class and by type of disbursement authority,
such as:
• NCA for cash requirements of the national government.
• CDC for authorized disbursements charged against income
collected and retained by the Foreign Service Post of FDA and
DOLE.
• NCAA for the cost of goods and services paid directly by lending
institutions to creditors of the NGAs/GOCCs.
• Tax Remittance Advice (TRA) for the remittance of tax withheld
computed and estimated: PS (8%), MOOE and CO (5%).
• Other tax expenditures such as: Custom Duties and Taxes, BTr
Documentary Stamps.
BED No. 4: Annual Procurement Plan for Common-Use Supplies and
Equipment
• Shall reflect the monthly quantity and cash requirements by items
categorized:
• Available at Procurement Service Stores
• Other items not available at Procurement Service but regularly
purchased from other sources.
• Submitted through e-mail to DBM-PS and Philippine Government
Electronic Procurement System (PhilGEPS).
2. Budget and Financial Accountability Reports (BFARs)
• Use to monitor and/or evaluate agency performance versus plans
and target which shall serve as a basis for sound policy decisions.
BAR No. 1: Quarterly Report of Operation (QRPO)
• Reflects the department’s/ agency’s actual physical
accomplishments as of given quarter in terms of performance
measures indicated in BED No. 2 (Physical Plan.)
• Submitted to DBM and COA within 30 days after the end of each
quarter.
FAR No. 1: Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances (SAAODB)
• Shall reflect the authorized appropriations and adjustments, total
allotments received including transfers/adjustments, total obligations,
total disbursements and balances of unreleased appropriations,
unobligated allotments, and unpaid obligations of
department/office/agency by fund cluster and by allotment class.
• Presented by the following:
• Fund Authorization
• Major Final Output
• Program/Activity/Project
• Major Programs/Project
• Submitted to DBM and COA within 30 days after the end of each quarter.
FAR No.-A: Summary of Appropriations, Allotments, Disbursements and
Balances by Object of Expenditures (SAADBOE)
• Reflect the summary of appropriations, allotments, obligations,
disbursements and balances detailed by object of expenditures
consistent with RCA.
• Prepared by Fund Cluster
• Submitted to COA and DBM within 30 days after the end of each quarter.
FAR No. 1-B: List of Allotments and Sub-Allotments (LASA)
• Reflects the allotments released by DBM and the sub-allotments issued
by Central Office/Regional Office, and their corresponding numbers, date
of issuances, and amounts by allotment class and by Fund Cluster.
• Total allotments per this report should be equal to the total allotments
appearing in the FAR No. 1 (SAAODB)
• Submitted to COA and DBM within 30 days after the end of each quarter.
FAR No. 2: Statement of Approved Budget, Utilizations, Disbursements
and Balances (SABUDB) (for Off-Budget Fund)
• Shall reflect the approved budget, utilizations, disbursements, and
balances of the agency authorized by law to use their income. ( ex. SUC)
• Submitted to COA and DBM within 30 days after the end of each quarter.
FAR No.2-A: Summary of Approved Budget, Utilizations, Disbursements
and Balances by Object of Expenditures (SABUDBOE)
(for Off-Budget Fund)
• Reflects the details of the approved budget, utilizations, disbursements
and balances of the agency authorized by law to used their income
presented by object of expenditures consistent with RCA.
• Submitted to COA and DBM within 30 days after the end of each quarter.
FAR No. 3: Aging of Due and Demandable Obligations (ADDO)
• Reflect the balances of unpaid obligations as indicated in the
Obligation Request and the aging of due and demandable
obligations as of year end.
• Submitted to COA and DBM on or before the 30th day of the month
following end of the year.
Agency Performance Review
• The DBM shall conduct a quarterly evaluation by comparing
agency plans and targets per BEDs to the actual accomplishments
reflected on the BFARs.
• This is to ensure that programs and projects reflected in the
financial and physical plan will be accomplished.

FAR No. 4: Month Report of Disbursements (MRD) Sample Illustration

• Reflect the total disbursements made by department, office or Upon approval of the GAA, the DBM released the following to the Department
agency and operating unit by Fund Cluster through disbursement of Health:
authorities. General Appropriation Allotments NCA
• Track the actual disbursement of the department/agencies against Personnel Services 100,000,000.00 70,000,000.00 63,000,000.00
their Disbursement Program, and the reason for over or under MOOE 500,000,000.00 350,000,000.00 315,000,000.00
spending shall be indicated. Financial Expenses 100,000,000.00 70,000,000.00 63,000,000.00
Capital Outlay 1,000,000,000.00 700,000,000.00 630,000,000.00
• Submitted to DBM and COA on or before the 30th day of the
Total 1,700,000,000.00 1,190,000,000.00 1,071,000,000.00
following month covered by the report.

FAR No. 5: Quarterly Report of Revenue and Other Receipts (QRROR) For the first quarter of the fiscal year, DOH incurred the following
• Reflects the report om actual revenue and other receipts of the obligations/expenses.
agency/operating units for the current year presented by quarter Obligation
and by specific sources consistent with RCA. Personnel Services 15,750,000.00
MOOE 78,750,000.00
• Shall be submitted to COA and DBM within 30 days after the end
Capital Outlay 157,500,000.00
of each quarter.
Total 252,000,000.00

Consolidation of Quarterly Reports

Non-submission of the said reports will result to the automatic

suspension of the salary payments to the concerned Budget
Officer/Chief Accountant or their authorized representatives.

Three consecutive violations during the year without justifiable cause

shall be a ground for administrative disciplinary action, subject to
pertinent civil service rules and regulations.

Validity of Appropriation
• Personnel Service – until the end of the current year.
• MOOE and CO – until the end of the following year.
• Continuing Appropriation of the previous year (MOOE & CO) – until
the end of the current year.
• Supplemental Budget for MOOE and CO appropriation – until the
end of the current year.
• Automatic Appropriations for PS,MOOE and CO – until the end of
the current year.

Tax Remittance Advice (TRA) System

• The NCA released to the government agency is reduced by the
amount of the estimated taxes expected to be remitted by the
agency. (NCA net of TRA)
• PS = 8%
• MOOE & CO = 5%