CHAPTER 1 OVERVIEW OF GOVERNMENT ACCOUNTING

Learning Objectives:

Differentiate government accounting from the

accounting for business entities.

State the government entities charged with

accounting responsibility.

Describe briefly the GAM for NGAs.

State the basic principles used in

government accounting.

State the recognition criteria for assets.

Definition of Government Accounting

“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.” (State Audit Code of the
Philippines, P.D. No. 1445, Sec. 109)

Government Accounting vs. Business

Accounting
Compared to the accounting for business
entities, government accounting places
greater emphasis on the following:

• Sources and utilization of government

funds; and

• Responsibility, accountability and liability of entities entrusted with government

funds and properties.

• Responsibility, Accountability and Liability over Government Funds and Property

Government resources must be utilized efficiently and effectively in accordance
with the law.
 MODULE ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS

• The head of a government agency is directly responsible in implementing this

policy.

• All other personnel entrusted with the custody of government resources are
responsible to the head of the government agency, are accountable for the
safeguarding thereof, and are liable for any losses.

Accounting Responsibility
The following offices are charged with government accounting responsibility:

1. Commission on Audit (COA)

Responsibilities of COA
 Promulgate accounting and auditing rules
 Keep the general accounts
 Submit financial reports
2. Department of Budget and Management (DBM)
Responsibility of DBM
 Implementation of the national budget
3. Bureau of Treasury (BTr)
Responsibility of DBM
 Cash custody and control of disbursements.
4. Government Agencies

Responsibility of government agencies

 Maintain accounting books and budget registries which are reconciled with
the cash records of the BTr and the budget records of the COA and DBM.
 The GAM for NGAs
The Government Accounting Manual for National Government Agencies
(GAM for NGAs) is promulgated by the COA under the authority conferred to
it by the Philippine Constitution.
 The GAM for NGAs was promulgated primarily to harmonize the government
accounting standards with the International Public Sector Accounting
Standards (IPSAS). The IPSASs are based on the IFRSs.

Objectives of the GAM for NGAs

To update the following:

 Standards, policies, guidelines and procedures in accounting for government

funds and property;

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 MODULE ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS

 Coding structure and accounts; and

 Accounting books, registries, records, forms, reports and financial statements.

 Basic Accounting and Budget reporting Principles

Compliance with PPSAS and relevant laws, rules and regulations

 Accrual basis of accounting

 Budget basis for presentation of budget information in the financial

statements

 Revised Chart of Accounts

 Double entry bookkeeping

 Financial statements based on accounting and budgetary records

 Fund cluster accounting

Fund clusters

Qualitative Characteristics
 Understandability  Substance over form

 Relevance  Neutrality

 Materiality  Prudence

 Timeliness  Completeness

 Reliability  Comparability

 Faithful representation

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 MODULE ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS

Components of General Purpose Financial Statements

1. Statement of Financial Position;

2. Statement of Financial Performance;

3. Statement of Changes in Net Assets/Equity;

4. Statement of Cash Flows;

5. Statement of Comparison of Budget and Actual Amounts; and

6. Notes to the Financial Statements

Recognition of an Asset

An item is recognized as asset if it meets all of the following criteria:

1. It meets the definition of an asset;

2. Probable inflow of future economic benefits; and

3. Reliable measurement of cost or other value (e.g., fair value).

To know more information about CHAPTER 1- Overview of Government Accounting-

PLEASE CLICK THE LINK: https://www.youtube.com/watch?v=sdcR8a9UzsQ

To know more information about CHAPTER 1-Accounting responsibility- PLEASE

CLICK THE LINK: https://www.youtube.com/watch?v=VrHeFUJuZBs

Reference:

Accounting for Government and Non-profit Organization by Zeus Vernon B.

Millan

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