GOVERNMENT ACCOUNTING

Objectives of government accounting.

CHAPTER 1
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.
 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.
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 or
property received or held by them in
an accountable capacity,
 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.
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
competent authorities.
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.
REGISTRIES
1. Registry of Revenue and Other
Receipts-Summary (RRORS)
 Maintained by the Budget
Division/Unit of NGA to monitor the
revenue and other receipts
estimated/budgeted, collected and
remitted/deposited.
1.1. Registry of Revenue and
Other Receipts – Regular
Agency and Foreign Assisted
Projects. (RROR-RA & FAP)
 1.2. Registry of Revenue and 4. Registry of budget, utilization and
Other Receipts – Special disbursements (RBUD)
Account Locally  Maintained by the Budget
Funded/Domestic Grant Fund Division/Unit to record the approved
and Special Account Foreign special budget and the
Assisted/Foreign Grants corresponding utilizations and
Fund. (RROR-SADFGF) disbursements charged to retained
1.3. Registry of Revenue and income authorized under RA 8292
Other Receipts – Internally for State Universities and Colleges
generated funds (Off- (SUCs) and other retained income
budgetary funds-Retained collections of a NGA with similar
income funds)/business authority.
related (RROr-igf/brf)
1.4. Registry of Revenue and 4.1. Registry of budget, utilization
Other Receipts – Trust and disbursements- personnel
receipts/inter-agency services (RBUD-PS)
transferred funds 4.2. Registry of budget, utilization
2. Registry of appropriation and and disbursements- maintenance
allotment (RAPAL) and other operating expenses
 Maintained by the Budget (RBUD-mooe)
Division/Unit of each entity to 4.3. Registry of budget, utilization
monitor appropriations and and disbursements- financial
allotments charged thereto. expenses (RBUD-fe)
 Shows the original, supplemental 4.4. Registry of budget, utilization
and final budget for the year and all and disbursements- capital
allotments received charged against expenses (RBUD-co)
the corresponding appropriation.
5. Registry of allotments and notice of
 Ensures that allotment releases are
cash allocation (ranca)
within the authorized appropriation.
 Maintained by Accounting
3. Registry of allotments, obligations and
Division/Unit to determine the
disbursements (raod)
amount of allotments not covered by
 Maintained by Budget Division/Unit Notice of Cash Allocation (NCA) and
of each entity to record: to monitor available NCA.

 allotments received for the year 6. Registry of allotments and notice of

 obligations incurred (through transfer of allocation (Ranta)
issuance of Obligation Request
 Maintained by Accounting
Status)
Division/Unit to determine the
 the actual disbursements made. amount of allotments not covered by
3.1 Registry of allotments, obligations Notice of Transfer Allocation (NTA)
and disbursements – personnel and to monitor NTA.
services (raod-ps)
3.2 Registry of allotments, obligations Basic accounting and budget reporting
and disbursements – Maintance principles
and other operating expenses
1. GENERALLY ACCEPTED
(raod-mooe)
GOVERNMENT ACCOUNTING
3.3 Registry of allotments, obligations
PRINCIPLES IN ACCORDANCE
and disbursements – financial
WITH PPSAS AND PERTINENT
expenses (raod-fe)
RULES AND REGULATIONS.
3.4 Registry of allotments, obligations
and disbursements- capital outlays  The use of Philippine Public Sector
(raod-co) 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 it
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
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
• 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
Local Government Units (LGUs)
from the revenue collections of the
National Government. The total
ALGU is based on a sharing scheme
computed for each LGU, as provided
for under the Local Government
Code and other special laws.
• Budgetary Support to Government
Corporations (BSGC)- refers to
either subsidies for operations or
projects, equity contributions, and
net lending and/or advances to
Government-Owned or Controlled
Corporations (GOCC) for loan
repayments.
• Financial Assistance to
Metropolitan Manila Development
Authority-refers to national
government subsidy in the form of
regular appropriations as provided in
the GAA which shall only be used to
augment any deficiency in the
consolidated funds of the MMDA to
cover valid and authorized
expenditures.
• A Special Account in the General
Fund (SAGF)- is a fund where
proceeds from specific revenue
measures and grants earmarked by
law for priority projects are recorded.
These sources are automatically
appropriated.
• Special Purpose Funds (SPF)- are
lump-sum funds included in the GAA
which are not within the approved
appropriations of
Departments/Agencies/Lower Level
Operating Units, and which are
available for allocation to any
Department/Agency/Lower Level
Operating Unit or Local Government
Unit for a specific purpose, as may
be duly approved in accordance with
special provisions on the use of
these funds.
Department Agency except
• Department – the primary
subdivision of the Executive
Branch responsible for the overall
management of a sector or a
permanent national concern with
nationwide or international impact1.
A department is headed by a
Secretary or an official with an
equivalent position level.
• Agency – refers to any of the
various units of the government,
including an office, instrumentality or
Government-Owned and/or
Controlled Corporation (GOCC)2
that may not approximate the size
of a Department, but which
nevertheless performs tasks that are
equally important and whose area of
concern is nationwide in scope (e.g.,
Other Executive Offices [OEOs]).
• Operating Units – organizational
entities charged with carrying out
specific substantive functions or with
directly implementing
programs/projects of a department or
agency, such as line bureaus and
field units.
Region - a sub- national
administrative unit composed of several
provinces having more or less homogenous
characteristics, such as ethnic origin of
inhabitants, dialect spoken, agricultural
produce, etc.
-Region Code. This is a two-digit code that
identifies a specific region. It ranges from
01 to 99.
Province - a political corporate unit of
government which consists of a cluster of
municipalities, or municipalities and
component cities. A province serves as a
dynamic mechanism for developmental
processes and effective governance of local
government units within its territorial
jurisdiction.
-Province Code. This is a two-digit code
that identifies the province. It ranges from
01 to 99,
generally defining the relative alphabetic
sequence of all provinces in the country,
those created after 1977, which were added
to the list following the updating
procedures.
City - a political corporate unit of
government which consists of a more
urbanized and developed group of
barangays. It serves primarily as a
general-purpose government for the
coordination and delivery of basic, regular
and direct services and effective
governance of the inhabitants within its
territorial jurisdiction.
Municipality - a political corporate unit of
government which consists of a group of
barangays. It serves primarily as a general- • Program- is an integrated group of
purpose government for the coordination activities that contributes to an
and delivery of basic, regular and direct agency or department’s continuing
services and effective governance of the objective. Examples include General
inhabitants within its territorial jurisdiction. Administration and Support, Support
to Operations,
-Municipality Code. This is a two-digit and Operations.
code that generally used to identify the
municipalities, cities or municipal districts in • Activity- is defined as a work
a particular province, and is dependent process that contributes to the
upon the Province Code to fully establish fulfillment of a program or project.
the identity of municipality. Each activity shall be attributed to
It ranges from 01 to 99. only one MFO. Activities are to be
assigned to General Administration
and Support, or Support to
Barangay - the basic political unit of Operations if they benefit internal
government. It serves as the primary clients. On the other hand, an activity
planning and implementing unit of that benefits external clients shall be
government policies, plans, programs, attributed to an MFO.
projects and activities in the community,
and also as a forum where the collective • Projects- are special
views of its constituents may be expressed, department/agency undertakings
crystallized and considered, and where carried out within a definite
disputes may be amicably settled. timeframe, and which are designed
to produce a pre-determined
- Barangay Code. This is a three-digit code measure of goods or services
which generally defines the relative (MFOs). A project is considered an
alphabetical investment toward expanding the
sequence of the barangays within the capacity of a department/agency to
municipality. The code ranges from 001 to deliver MFOs.
999.
Barangay Code 010 means it is the 10th
barangay in alphabetical sequence within
that Revised Chart of Sub-Object
municipality. The Barangay Code is Accounts
dependent upon the Municipality Identifier
to fully 00000000 00
establish the identity of a given barangay
OBJECT

PARTICULARS UACS
Sector or MFO or
Horizontal Outcomes Program/Project Project Category Activity Level 1 Activity Level 2
Assets 1
00000 0 00 00 00000
Liabilities 2
Major Final Output (MFO)/ Program, Acticvity & Project (PAP)
Equity 3

Income 4
• Sector/Horizontal Outcomes- are
specific programs implemented with
the aim of achieving common policy Expenses 5
objectives among government
agencies.
• Major Final Output- defined as a
good or service that a department or CHAPTER 3 - CHART OF
agency is mandated to deliver to ACCOUNTS
external clients through the
implementation of programs,
activities and projects.
CHAPTER 4 - ACCOUNTING • The cost of the programs and
activities proposed to achieve
FOR BUDGETARY the objectives.
ACCOUNTS
• Simplified budgeting approach that
Accounting for Budgetary Accounts focuses more on outputs and
outcomes and places less emphasis
• Budgetary Accounts System on the inputs.
• Receipt/Income and Deposit System • PIB is an integral process whereby
agency performance information and
• Disbursement System
their corresponding indicators under
• Financial Reporting System their Organizational Performance
Indicator Framework (OPIF) is
Accounting for Budgetary Accounts presented hand-in-hand with the
agency budget to ensure that the
Article VI of the 1987 Constitution Section outcomes an agency is committing to
29 (1). deliver in exchange for its budget are
“No money shall be paid out of the clear to the public and the
Treasury except in pursuance of an legislators.
appropriation by law.” Kinds of Budget
THE NATIONAL BUDGET
- 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.
The Budget Cycle
• Performance information typically
1. Budget Preparation
includes:
1.Determination of the overall economic
• The purpose for the funds
targets, expenditure levels, revenue
required.
projection and the financing plan by the
• The outputs that would be Development Budget Coordinating
produced or the services that Committee (DBCC).
would be rendered.
-The DBCC is an inter-agency body
• The outcomes that would be composed of the DBM Secretary as
achieved by the outputs and Chairman and the Bangko Sentral
services. 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 a 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 & Operation
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 Service Post of FDA and
schedules that will guide agencies in the DOLE.
early implementation of priority programs
and projects. • NCAA for the cost of goods
and services paid directly by
- Must be submitted to the DBM every lending institutions to creditors
November 30, before financial year. If of the NGAs/GOCCs.
there are any adjustments, revision shall be
submitted on or before January 7 of the • Tax Remittance Advice (TRA)
financial year. for the remittance of tax
withheld computed and
BED No. 1: Financial Plan estimated: PS (8%), MOOE
and CO (5%).
-Includes the comparative obligation level
for the budget year (2019) broken down by • Other tax expenditures such
quarter, versus current year (2018) actual as: Custom Duties and Taxes,
obligations as of September 30 and the BTr Documentary Stamps.
emerging level obligations for the remaining
quarter. BED No. 4: Annual Procurement Plan for
Common-Use Supplies and Equipment
BED No. 2: Physical Plan
• Shall reflect the monthly quantity and
• Consists the performance indicators cash requirements by items
and targets of department/ agency categorized:
such as:
• Available at Procurement
• For Operations, the Service Stores
performance indicators by
MFOs. • Other items not available at
Procurement Service but
• For Major Programs and regularly purchased from
Projects committed to the other sources.
President and closely
monitored by Presidential • Submitted through e-mail to
Staff. DBM-PS and Philippine
Government Electronic
• For other projects, consider Procurement System
those milestones indicated in (PhilGEPS).
approved project profile.
2. Budget and Financial Accountability
• Physical Plan must be same Reports (BFARs)
with those appearing in the
Financial Plan. • Use to monitor and/or evaluate
agency performance versus plans
BED No. 3: Monthly Disbursement Program and target which shall serve as a
(MDP) basis for sound policy decisions.
• Used by the DBM as basis for BAR No. 1: Quarterly Report of Operation
determining the monthly level of (QRPO)
disbursement authorities to be used
by national government agencies. • Reflects the department’s/ agency’s
actual physical accomplishments as
• Reflects the total cash and non-cash of given quarter in terms of
program for the budget year, by fund performance measures indicated in
category, by allotment class and by BED No. 2 (Physical Plan.)
type of disbursement authority, such
as: • Submitted to DBM and COA within
30 days after the end of each
• NCA for cash requirements of quarter.
the national government.
FAR No. 1: Statement of Appropriations,
• CDC for authorized Allotments, Obligations, Disbursements and
disbursements charged Balances (SAAODB)
against income collected and
retained by the Foreign • Shall reflect the authorized
appropriations and adjustments, total
 allotments received including by law to use their income. ( ex.
transfers/adjustments, total SUC)
obligations, total disbursements and
balances of unreleased • Submitted to COA and DBM within
appropriations, unobligated 30 days after the end of each
allotments, and unpaid obligations of quarter.
department/office/agency by fund
FAR No.2-A: Summary of Approved
cluster and by allotment class.
Budget, Utilizations, Disbursements and
• Presented by the following: Balances by Object of Expenditures
(SABUDBOE)
• Fund Authorization (for Off-Budget Fund)
• Major Final Output • Shall reflect the approved budget,
utilizations, disbursements, and
• Program/Activity/Project balances of the agency authorized
by law to use their income. ( ex.
• Major Programs/Project
SUC)
• Submitted to DBM and COA within
• Submitted to COA and DBM within
30 days after the end of each
30 days after the end of each
quarter.
quarter.
FAR No.-A: Summary of Appropriations,
FAR No. 3: Aging of Due and
Allotments, Disbursements and Balances
Demandable Obligations (ADDO)
by Object of Expenditures (SAADBOE)
• Reflect the balances of unpaid
• Reflect the summary of
obligations as indicated in the
appropriations, allotments,
Obligation Request and the aging of
obligations, disbursements and
due and demandable obligations as
balances detailed by object of
of year end.
expenditures consistent with RCA.
• Submitted to COA and DBM on or
• Prepared by Fund Cluster
before the 30th day of the month
• Submitted to COA and DBM within following end of the year.
30 days after the end of each
FAR No. 4: Month Report of Disbursements
quarter.
(MRD)
FAR No. 1-B: List of Allotments and Sub-
• Reflect the total disbursements
Allotments (LASA)
made by department, office or
• Reflects the allotments released by agency and operating unit by Fund
DBM and the sub-allotments issued Cluster through disbursement
by Central Office/Regional Office, authorities.
and their corresponding numbers,
• Track the actual disbursement of the
date of issuances, and amounts by
department/agencies against their
allotment class and by Fund Cluster.
Disbursement Program, and the
• Total allotments per this report reason for over or under spending
should be equal to the total shall be indicated.
allotments appearing in the FAR No.
• Submitted to DBM and COA on or
1 (SAAODB)
before the 30th day of the following
• Submitted to COA and DBM within month covered by the report.
30 days after the end of each
FAR No. 5: Quarterly Report of Revenue
quarter.
and Other Receipts (QRROR)
FAR No. 2: Statement of Approved Budget,
• Reflects the report om actual
Utilizations, Disbursements and Balances
revenue and other receipts of the
(SABUDB)
agency/operating units for the
(for Off-Budget Fund)
current year presented by quarter
• Shall reflect the approved budget, and by specific sources consistent
utilizations, disbursements, and with RCA.
balances of the agency authorized
 • Shall be submitted to COA and DBM the amount of the estimated taxes
within 30 days after the end of each expected to be remitted by the
quarter. agency. (NCA net of TRA)

• PS = 8%

Consolidation of Quarterly Reports
Agency Performance Review
CENTRAL OFFICE- Prepare an overall
consolidated reports of the
department/agency and submit the report to
the Central Office of DBM and COA within
30 days after the end of each quarter
REGIONAL OFFICE-Consolidate report
covering the report of the region and its
lower operating units, submit the same to
the Central Office within 10 days after the
end of each quarter.
• MOOE & CO = 5%
• 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.

Lower Operating Units - Furnish the

SEE SAMPLE ILLUSTRATIONS AT THE
Regional and Agency Central Office
POWERPOINT
copies of their reports within 5 days at
the end of each quarter.

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