Professional Documents
Culture Documents
Local Fiscal
Local Fiscal
1. 1.
2. 2. OVERVIEW:<br /><ul><li>Fiscal administration zeros in on the management of financial
resources and those activities and operations to generate revenue, make those available, and
see to it that funds are wisefully, lawfully, effectively and efficiently spent.
3. 3. The administration of finances is an intrinsic component of management responsibility.
There is an intimate linkage between administering and funding. An administrative act has
financial implications. </li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>OVERVIEW:<br /><ul><li>A decision to increase taxes increases revenue of government;
4. 4. To implement social amelioration program creates a charge on revenue earned while at the
same time distributes and disperses social benefits.
5. 5. Because administrative activity is principally dependent upon availability of allocable
financial resources, the management of finances becomes a very important administrative
responsibility.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>ORGANIZING FOR FISCAL ADMINISTRATION:<br /><ul><li>Fiscal activity is present in all
levels of the organization, whether line or staff; top management level through middle
management; the rank and file.
6. 6. Top management is most interested in it; middle management is deeply involved in it; the
rank and file is affected by whatever results from it. </li></li></ul><li>PHILIPPINE PUBLIC
FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL ADMINISTRATION:<br />The
principal agencies tasked with fiscal functions:<br />Congress, especially the Lower House,
<br />Department of Finance<br />Department of Budget and Management<br />Commission
on Audit<br />
7. 7. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL
ADMINISTRATION:<br />Functions of the Finance Department:<br />Revenue generation and
collection,<br />Fund custody<br />Disbursements <br />Keeping of accounts <br />
8. 8. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL
ADMINISTRATION:<br /><ul><li>Review of estimates and fiscal policy studies are done by the
Department of Budget and Management in close consultation with the National Economic
Development Authority;
9. 9. The Central Bank and other economic planning entities of the state to see to it that fiscal
plans and programs are geared towards national development. </li></li></ul><li>PHILIPPINE
PUBLIC FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL
ADMINISTRATION:<br /><ul><li>The Commission on Audit conducts fund and performance
audit to see to it that expenditures are in accordance with the Appropriation Law approved
10. 10. Congress is responsible for revenue and expenditure
policies.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />FISCAL
CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET:<br />Prevent Misappropriation of Funds<br /><ul><li>requires
review and approval by the administrative official of the line or operating agency, of all requests
for money releases and budgetary allotments, vouchers and similar papers before payments
are made so that expenditures are in accordance with policy and law and not irregular,
unnecessary, excessive, extravagant and unconscionable. </li></li></ul><li>PHILIPPINE
PUBLIC FISCAL ADMINISTRATION<br />FISCAL CONTROL MECHANISMS<br />FOUR
JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:<br />Control
to Implement Prospective Policy<br /><ul><li>proactive administration inhibits governmental
units from directly transacting and negotiating money matters since such kind of transaction is
officially channeled through the Department of Budget and Management in the form of budget
estimates as endorsed by the President.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />FISCAL CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS
FOR EXPENDITURE CONTROL THROUGH THE BUDGET:<br />Ensure the Wisdom and
Propriety of Expenditure<br /><ul><li>claims for payment from public funds, legality, prudence,
reasonableness, the morality of the claim or charge should be established.
11. 11. A review of existing contracts and transactions should be
made.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />FISCAL
CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET:<br />Prevent Deficits<br /><ul><li>Fiscal supervision and control
may be useful but should not unduly interfere with agency prerogative to carry out programs
mandated by the constitution and the laws.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />BUDGETING CONCEPTS<br />Budgeting may be of the:<br /> (1)
Planning-Programming Budget System (PPBS) type<br /><ul><li>gives assurance that the
budget will help achieve desired agency results
12. 12. unit head defends the budget, explains its contribution to the realization of agency goals,
develops a cost projection for each program
13. 13. submits this to top management which reviews the program and decides on the final
budget allocation.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>BUDGETING CONCEPT<br />(2) Zero-Base Budgeting (ZBB) type<br /><ul><li>the agency
justifies the entire appropriation request for the fiscal year as if the programs are entirely new,
instead of justifying only the increase requested above the previous year’s appropriation.
14. 14. The agency is obligated to defend all programs every year and rank these in terms of
priority using the ratio between cost and benefit criterion
15. 15. provides opportunity for top management to re-evaluate the need for on-going programs,
compare these with the proposed and the prioritized for
implementation.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>BUDGETING CONCEPT<br />*** Both are special budgeting types to minimize drawbacks
of traditional method wherein budget requires are based on current projects continuing year
after year and where requests for new programs are made without a clear idea of how it will
contribute to the achievement of overall agency goals ***<br />
16. 16. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />LINE ITEM versus
PERFORMANCE BUDGETING<br />Budgeting may also be:<br />(1) Line-Item<br
/><ul><li>object of the expenditure type
17. 17. consists of a detailed listing of every position to be filled
18. 18. gives the legislative body tremendous discretion to strike out or to approve individual items
19. 19. funds appropriated may not be transferred from one category of expense to another.
20. 20. Also known as “rule of thumb” budgeting where figures of past years are reflected but
without income indicators</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />LINE ITEM versus PERFORMANCE BUDGETING<br />Three
columns of figures appear in each budget sheet:<br />(a) actual expenditure for each object
during the previous fiscal year<br />(b) estimated amounts to be spent for the same objects for
the current fiscal year.<br />(c) amount desired for the same objects for the incoming or future
fiscal year<br />
21. 21. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />LINE ITEM versus
PERFORMANCE BUDGETING<br />(2) Performance Budgeting<br /><ul><li>is lump-sum
budgeting
22. 22. is program budgeting which spells out functions, activities and projects
23. 23. allow transfer of funds from one organizational unit to another, between work activities and
objects to be spent for.
24. 24. There is a difficulty in identifying what work units perform or not perform, since its most
important concern is the overall performance of the agency.</li></li></ul><li>PHILIPPINE
PUBLIC FISCAL ADMINISTRATION<br />NEW POLICY GUIDELINES FOR
BUDGETING<br />Based on this agenda: <br /><ul><li>the formulation of the national budget
must be in the context of a three-year planning framework
25. 25. expenditures must achieve program targets and support development strategy.
</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />NEW POLICY
GUIDELINES FOR BUDGETING<br />Agency programs will be supportive of the identified
priority areas which include the following:<br />modernization of the agricultural sector to
augment farmer income, bolster production and attain food security<br />improvement of the
quality of basic social services like health and sanitation, nutrition, education, social welfare
and housing<br />acceleration of countryside infrastructure development<br />
26. 26. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />NEW POLICY GUIDELINES FOR
BUDGETING<br />Agency programs will be supportive of the identified priority areas which
include the following:<br />enhancement of global competitiveness through liberalization,
deregulation, and privatization<br />provision for macroeconomic stability by instilling fiscal
discipline, prudent government spending and efficient revenue generation<br />reform in
governance to make it responsive to the current domestic and global environment<br />
27. 27. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />PRINCIPLES FOR AGENCY
GUIDANCE<br /> (1) Prudent Spending<br /><ul><li>calls for rational fund allocation
28. 28. scaling down or phasing out devolved or non-essential activities
29. 29. doing away with duplicating functions; moratorium on increasing personnel and setting up
new units
30. 30. adopting a system for reasonable use of supplies, materials and
facilities.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />PRINCIPLES
FOR AGENCY GUIDANCE<br />(2) Entrepreneurial Budgeting<br /><ul><li>this involves
mobilization of government resources for development programs
31. 31. improving front-line public services
32. 32. requiring the agencies to study their fee structure in order to recover expenditure for
specific services rendered.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />PRINCIPLES FOR AGENCY GUIDANCE<br />(3) Performance-
Based Budgeting<br /><ul><li>key results areas (KRA’s) and commitment for specific
programs are indentified to optimize effective use of resources.</li></ul> (4) Wholistic
Budgeting<br /><ul><li>expenditure levels of regional units are provided by the agency as
guide for preparing the regional budget.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />PRINCIPLES FOR AGENCY GUIDANCE<br />(5) Consistency with
Sub-Sectoral Development Objectives<br /><ul><li>like that of the Technical Education and
Skills Act of 1994 (TESDA)
33. 33. Research and Development (R&D) in the material, technological and engineering sciences,
implementation of the Systems Designated Statistics pursuant to Executive Order
352.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />INCOME
SOURCES<br />Two general sources of government income :<br />(1) Tax Revenue<br
/><ul><li>income tax
34. 34. property tax
35. 35. domestic goods and services tax
36. 36. international trade and transactions tax , sales
37. 37. value added tax (VAT).</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />INCOME SOURCES<br />Two general sources of government
income :<br />(2) Non-Tax Revenue<br /><ul><li>operating and service income– revenue from
the operations of national and local government and government corporations
38. 38. income from public enterprises and investments – income received for the use of financial
assets dividends; net rent for the use of government land and royalty for the use of copyrights
and patents owned by the government.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />INCOME SOURCES<br />Two general sources of government
income :<br />(2) Non-Tax Revenue<br /><ul><li>miscellaneous income–revenues not
classified under other categories such as sale of goods and merchandise confiscated, waste
materials; inventory adjustments and gains on exchange rate.
39. 39. capital revenue – income derived from the sale of capital assets like buildings, equipment,
machines, land and intangible assets like patent, copyright and
trademark</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />INCOME
SOURCES<br />Two general sources of government income :<br />(2) Non-Tax
Revenue<br /><ul><li>grants –non-repayable transfers received from other levels of the
government, private sector or international institutions.
40. 40. borrowings– includes domestic and foreign debts, regardless of source, whether in cash or
in kind.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>APPROPRIATIONS AND OBLIGATIONS<br />These are estimates and projections of what
the departments and agencies incur or expect to incur. <br />These include:<br />New General
Appropriations – as provided for in the General Fund, Fiduciary Fund or Special Account in the
General Fund<br />Supplemental Appropriations – these are stand-by appropriations
authorized by Congress apart from the programmed appropriations for a given fiscal year.
<br />
41. 41. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Automatic Appropriations –expenditures authorized by specific laws like
Commonwealth Act 186 and Republic Act 660 for retirement and insurance premiums of
government employees; Presidential Decree 1234 and other laws for special accounts and
funds; grant proceeds; custom duties and taxes; proceeds from the sale of non-serviceable,
obsolete and unnecessary equipment ; net lending; interest payment for national debt;
amortization for domestic and foreign debts as per Presidential Decree 1967 and Republic
Acts 4860 and 245.<br />
42. 42. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Continuing Appropriations – obligations provided under Executive Order
No. 182 known as Public Works Act for Multiyear infrastructure Projects; agrarian reform;
unobligated allotments for maintenance and other operating expenses and unreleased
appropriations for maintenance and other operating expenses and capital outlays as provided
by RA 8250 and RA 8522.<br />
43. 43. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Budgetary Adjustments –transfers to the reserve fund; transfer from the
agrarian reform fund; organizational adjustment fund; general fund adjustment; miscellaneous
personnel benefits; contingency fund; sale of military camps; countrywide development;
Pinatubo assistance resettlement and development and unprogrammed projects.<br />
44. 44. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE BUDGET<br /> The budget is
a management tool <br /><ul><li>to account for what has been received
45. 45. how this will be spent at a given period of time. </li></ul>How a government forecasts and
allocates its income and expenditures is illustrated in the budget document.<br />
46. 46. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE BUDGET<br />PHILIPPINE
NATIONAL BUDGET<br />The National Budget represents the estimate of expected income
and projected expenditures over a period of time referred to as the fiscal year.<br /> It is what
government plans:<br /> (1) to spend for its programs and projects<br /> (2) where the money
will come from<br />
47. 47. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />Section 22, Article VII of the 1987 Constitution sets the tone for the budgetary
process. <br />Under this Article, the President submits to Congress within thirty days from the
opening of every regular session, a financial plan of expenditures and sources of financing,
including receipts from existing and proposed revenue measures as basis for a general
appropriations bill.<br />
48. 48. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br /> (1) Budget Preparation -
the determination of budgetary priorities and activities guided by the overall national
development plan with the ceilings and constraints imposed by available revenues and
borrowing limits. <br />
49. 49. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(2) Budget Authorization –
the President submits the overall budget to Congress in the form of detailed Expenditure
Program accompanied by the Budget of Expenditures and Sources of Financing; the Budget
Message of the President, and the Regional Allocation of the Expenditure Program.<br />
50. 50. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(3) Budget
Implementation – after the President signs the General Appropriations Act into law, the
Department of Budget and Management requires the different agencies of government to
submit their respective work and financial work plans.<br />
51. 51. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(4) Budget Accountability
– evaluation of actual performance and initially-approved work targets, obligations incurred,
<br />
52. 52. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br /><ul><li>Personnel hired and work accomplished by comparing all these with
the targets set at the time agency budgets were approved.
53. 53. Performance and cost effectiveness of agencies are evaluated since no results can be
obtained if agency efficiency is slow and funds are wastefully spent
54. 54. Detailed examination of the agency’s book of account is undertaken to ensure that all
expenses have been disbursed for the purpose for which the funds have been
authorized.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />LOCAL
FISCAL MANAGEMENT<br />FUNDAMENTAL PRINCIPLES <br /><ul><li>The Local
Government Code of 1991 requires local governments to formulate sound financial plans.
55. 55. Local budget plans and goals must harmonize with national development plans, strategies
and goals to optimize utilization of resources, fiscal or physical. </li></li></ul><li>PHILIPPINE
PUBLIC FISCAL ADMINISTRATION<br />LOCAL FISCAL MANAGEMENT<br
/>FUNDAMENTAL PRINCIPLES <br /><ul><li>Local government units should incorporate the
needs and requirements of their component units and equitably allocate resources among said
units.
56. 56. The most basic limitation is the requirement that all local government units should
endeavor to have balanced budget for every fiscal year of its
operation.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGET
FORM AND CONTENT<br /> Two parts Of Local government budget <br />estimate of
income<br />total appropriations covering the current operating expenditures and capital
outlays<br />
57. 57. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGETARY
REQUIREMENTS<br />The budget of local government units for any<br />fiscal year shall
comply with the following:<br />(a) the aggregate amount appropriated shall not exceed the
estimates of income<br />(b) full provisions shall be made for all<br /> statutory and
contractual obligations of the <br /> local government unit concerned, provided <br /> the
amount of appropriations for debt <br /> servicing shall not exceed twenty percent <br /> (20%)
of the regular income of the local <br /> government unit concerned.<br />
58. 58. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGETARY
REQUIREMENTS<br />The budget of local government units for any<br />fiscal year shall
comply with the following:<br />(c) aid to component barangays shall be provided in amounts
of not less than one thousand pesos (P1,000.00) per barangay.<br />(d) five percent (5%) of
the estimated revenue from regular resources shall be set aside as an annual lump-sum
appropriation for unforeseen expenditures arising form the occurrence of calamities<br />
59. 59. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGETARY PROCESS AT THE
LOCAL GOV’T LEVEL<br />The stages of are analogous to that of the national level of
government. <br />Four basic steps are also observed.<br /> (1) Budget Preparation<br /> (2)
Budget Authorization<br /> (3) Budget Implementation<br /> (4) Budget Review<br />
60. 60. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />AUDIT OF FUNDS <br
/><ul><li>Accounting of Funds as a management tool is best ensured by the audit function.
61. 61. It is a component of the budgetary process since it is a mechanism for determining whether
the expenditures are legal and desirable. </li></ul>TWO TYPES OF AUDIT:<br />Pre-
Audit<br />Post-Audit<br />
62. 62. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />TWO TYPES OF AUDIT<br />Pre-
Audit – <br />This is audit performed before money is actually spent and takes place before
payment of an obligation or before the expense is incurred. <br />Post-Audit – <br /> This is
audit after money has been spent in order to find out whether funds are spent in accordance
with the approved appropriation. <br />
63. 63. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />End of Presentation<br />
64. 64. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />Reference: <br />AvelinoP.
Tendero<br />