Accounting Gov

LYCEUM ACCOUNTING FOR GOVT AND NON-PROFIT ORGANIZATIONS
OF ALABANG
Km.30, National Road., Tunasan, Muntinlupa City, Philippines
Tel. Nos. (02)856-93-23 / (02)856-9246 / (02)403-8248
COURSE DESCRIPTION
The course is designed to teach the students about the historical background, legal and
regulatory frameworks, financing, managing, and accounting for non-government
organizations/non-profit organizations
LEARNING OUTCOMES
1. Explain government accounting including responsibility, accountability, and

liability over government funds and property; accounting responsibility; the
Government Accounting Manual (GAM) for New Government Accounting System
(NGAS); basic accounting and budget reporting principles; qualitative
characteristics of financial reporting; components of general-purpose financial
statements; and elements of financial statements.
2. Explain the government budget process: the national budget, the budget cycle-
Preparation-Legislation-Execution, and Accountability (Responsibility
Accounting).
3. Discuss the government accounting process: books of accounts and registries;
budget registries, objects of expenditures; keeping of the general accounts; basic
recordings (appropriations, allotments, obligations, disbursements; billings,
collections and remittances; notice of cash allocations; the revised chart of
accounts; the government accounting cycle. Understand Revenues and Other
Receipts: fundamental principles for revenue; types of funds; sources of
revenues (exchange and non-exchange transactions ( bequests, grants, pledges
and concessionary loans.
4. Describe government disbursements of public funds: fundamental principles for
disbursements; authorization for disbursements; basic requirements and
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certifications; modes of disbursements; accounting for COA disallowances and

for overpayments.
5. Explain government financial assets: cash and cash equivalents; receivables;

investments, derivatives, etc.
6. Explain government inventories: measurement, cost formulas, receipts and
dispositions.
7. Explain agriculture accounting: recognition, measurement, determination of fair
value, and disclosures.
8. Discuss investment property: initial and subsequent measurement; transfer to
and from investment property, derecognition, impairment, cash generating unit,
and reversal of impairment
9. Explain property, plant, and equipment: recognition, initial and subsequent
measurement, impairment, heritage assets, reforestation projects,
derecognition, unserviceable PPEs, receipts and dispositions of PPE and
borrowing costs.
10. Explain intangible assets, liabilities including leases.
11. Illustrate the financial statements in the government sector.
12. Discuss miscellaneous topics like service concession arrangements by grantor,
interests in joint venture, and effects of changes in foreign exchange rates.
13. Explain intangible assets, liabilities including leases.
14. Illustrate the financial statements in the government sector.
15. Discuss miscellaneous topics like service concession arrangements by grantor,
interests in joint venture, and effects of changes in foreign exchange rates.
16. Explain non-profit organizations: current trend in practice; characteristics; PFRSs
applicable to NPOs; accounting for NPOs; Fund Theory vs. Fund Accounting;
Contributions, Recognition and Measurement of elements of financial
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statements; financial statements of NPOs; accounting procedures applicable to

NPOs; illustrative financial statements for NPOs
TOPIC OUTLINE
1. Overview of government accounting

2. Responsibility, accountability and liability over governments funds and property.
3. Accounting responsibility
4. The New Government Accounting System (NGAS)
5. Basic Accounting and Budgeting Principles
6. The National Budget
7. The Budget Cycle
-Budget Preparation
-Budget Legislation
-Budget Execution
-Budget Accountability
8. Responsibility Accounting
9. The government accounting process:
-books of accounts and registries;
-budget registries,
-objects of expenditures;
10. Keeping of the general accounts; basic recordings appropriations, allotments,
obligations, disbursements;
11. Billings, collections and remittances; notice of cash allocations; the revised chart of
accounts; the government accounti
ng cycle.
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PRELIMINARY TERM
WEEK # 1-5
OVERVIEW
An overview of government accounting and the roles and responsibilities of

relevant agencies in government accounting.
Government accounting is a system of analyzing, recording, classifying and
summarizing transactions and accounts related to the receipts and disbursements of
public funds and interpreting the results thereof.
Basically, government accounting is almost the same as commercial accounting
as they are founded on the same generally accepted accounting principles and
standards that are being adopted worldwide. However, government accounting and
accounting for non-profit organizations are concerned more on accountability over
funds and property that come to their possession, while commercial accounting is
focused more on how to maximize profits of business organizations and create values
for their stockholders. To a greater extent both government accounting and commercial
accounting provide their users financial information useful in making informed and
economic decisions. They derive this financial information through well-structured
accounting information process/system/cycle whose end-results are the general-
purpose financial statements which are very significant in financing, investing and
operating decisions of these government and non-government organizations, profit or
non-profit organizations. Another explicit difference is government accounting is more
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anchored on laws and regulations while commercial accounting on business policies and
best practices in operating the business.
The relevant agencies which have major roles and responsibilities in government
budgeting, accounting and auditing are as follows:
1. As stated in the website of the Official Gazette of the Republic of the Philippines
The Commission on Audit (COA) is empowered under the Philippine Constitution
to promulgate accounting and auditing rules and regulations in the government
sector. Thus, COA implements the decade old Presidential Decree No. 1445, as
amended, otherwise known as the Auditing Code of the Philippines. Aside from
the issuance of rules and regulation on government accounting, COA also acts as
the independent auditor of the government agencies in terms of fulfilling its
responsibility as the precursor of accountability of government funds and
property entrusted to government officials and employees.
https://lakansining.wordpress.com/2017/05/11/commonwealth-avenue-quezon-city-
commission-on-audit-complex-part-i/
2. The Department of Budget and Management (DBM) is the one which causes the
preparation and consolidation of the national budget of all government agencies
and offices. Annually, DBM issues a budget call to all government agencies and
offices for them to prepare their respective budget proposals that would be
consolidated in a national budget to be submitted to the President of the
Philippines and the Congress of the Philippines. The national budget will be
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deliberated upon by both Houses of Congress and their Bilateral Committee and
will be enacted into an Annual General Appropriations Act (GAA). The DBM is
also responsible for the allocation and monitoring of the respective approved
budget of the different agencies and offices of the government. In the
monitoring of the respective budget of various government offices and
departments, the DBM adopts performance-based budget evaluation and review
focusing on the outputs and outcomes of every peso allocated to these
government agencies and offices.
https://www.slideshare.net/abdulmohayminm/department-of-budget-and-managemet
3. The Congress of the Philippines is the one legislating the budget and tax
measure to finance such a budget. It has the power of the purse, as it is
portrayed. It deliberates on the national budget that consists of the target
revenues and expenditures of the government during a given year. It also has an
oversight power over the executive branch in terms of how they spend their
budget allocated to them by way of appropriations, allotments, and cash
allocations. During the budget deliberations, heads of government agencies and
offices are called to present and depend on their proposed budgets before the
appropriation committees, other sub-committees, and the plenary session of
both houses of congress. This is a rigorous, heart-breaking, and mind-boggling
dilemma of the Secretaries, Under-Secretaries, Assistant Secretaries who have to
undergo direct and face-to-face questionings from congressmen and senators
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who possess legislative immunity and ask even incriminating and offensive
questions in the guise of an aid-in legislation.
https://www.benarnews.org/english/news/philippine/duterte-address-07242017132031.html
4. The Department of Finance (DOF) is the one raising money through the Bureau
of Internal Revenues and Bureau of Customs in the form of taxes, tariff, and
custom duties. There are also other government agencies that contribute non-
tax revenues such as the GOCCs, Land Transportation Office, etc. The DOF is also
responsible for financing the budget deficit through local and foreign
borrowings. The Bureau of Treasury under the DOG is in charge of the issuance
of Notice of Cash Allocation in support of the budget allotments issued by the
DBM to various government agencies and offices. While Notice of Allotment is
the basis for incurrence of obligation, Notice of Cash Allocation is the basis to
pay that obligation.
https://www.linkedin.com/company/department-of-finance-philippines
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5. Various government branches, departments, agencies, instrumentalities, and

offices including GOCCs and local government units. They are responsible for the
preparation and submission of their respective budget proposals for inclusion in
the national budget. They are also responsible for the maintenance of their
respective separate books of accounts to account and report the receipts and
disbursements of public funds that come to their possession and accountability.
They are also responsible to provide basic and essential services to the public
and citizenry in accordance to their legal mandate.
https://www.slideshare.net/afcab/political-and-administrative-structure
TOPIC / LESSON
How does government accounting differ from commercial accounting? Does

government accounting follow generally accepted accounting principles and standards
like in commercial accounting? What is the overall significance and objective of
government accounting? Does the government earn profit from its operations? These
and other related questions must be addressed accordingly in the study of government
accounting: its principles, standards, policies, and procedures.
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https://slideplayer.com/slide/3927929/
IMPORTANT TERMS
Definition of key terms
1. “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.” (Milan, 2018)
2. “Government Agency refers to any department, bureau or office of the national
government, or any of its branches and instrumentalities, or any political
subdivision, as well as any government owned and controlled corporation
(GOCC), including its subsidiaries, or self-governing board or commission of the
government.”(The State Audit Code of the Philippines (P.D. No. 1445), 1978)
3. “Entity refers to a government agency, department or operating field
unit.”(Milan, 2018,)
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4. “Financial reporting is the process of the preparation, presentation, and

submission of general-purpose financial statements and other reports.” (Milan,
2018)
5. “Government Accounting Manual for National Government Agencies (GAM for
NGAs) was promulgated by the Commission on Audit to harmonize the
government accounting standards with international accounting standards,
particularly the International Public Sector Accounting Standards (IPSAS) which
has been adopted by the Philippine Government through the Philippine Public
Sector Accounting Standards (PPSAS) and incorporated in the GAM for NGAs.”
(Milan, 2018)
6. Accrual basis of accounting- these are transactions that are recognized when
they occur, not when cash is received or paid, during the accounting period the
transactions relate. (Milan, 2018)
7. Fund Cluster Accounting means that books of accounts are maintained by fund
cluster (i.e, according to the types of funds being accounted for) ,e.g, regular
agency fund, foreign assisted projects fund, special account in the general fund,
trust receipts, etc.
8. Fundamental Qualitative Characteristics of financial statements refer to the
relevance and faithful representation of the accounts and figures shown in the
financial statements for a given date or period.
9. Enhancing qualitative characteristics include understandability, comparability,
materiality, timeliness, reliability, objectivity, and full disclosures of financial
information found in the financial statements for a given date or given period.
10. Elements of financial statements are the assets, liabilities, equity, income, and
expense transactions that are classified, summarized, and presented in the
financial statements of an entity.
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11. Recognition of the element of financial statements means the recording of the
element due to conformity with its meaning and criteria set in the revised
conceptual framework in financial reporting and applicable accounting rules and
regulations issued by the government.
12. National Budget- is the government estimation of the sources and uses of
government funds within a fiscal year. (Millan, 2018).
13. Bottom-up budgeting approach is one wherein several parties participate in the
budget preparation, starting from the lowest to the highest levels of the
government. The opposite is a top-down budgeting approach. (Millan, 2018).
14. Incremental budgeting is an approach wherein the current year’s budget is
formulated based on the previous year’s budget, which is just adjusted to any
variances experienced in the past. (Millan, 2018)
15. Zero-based budgeting is an approach wherein budget is formulated without
regard to the previous year’s budget. (Millan, 2018)
16. Budget call-the budget preparation starts when the Department of Budget and
Management (DBM) issues a budget call to all government agencies. (Millan,
2018)
17. President’s Budget Message- contains the President’s explanation of the
country’s fiscal policy and budget priorities. (Millan, 2018)
18. National Expenditure Program (NEP)- this contains the details of all the
government entities’ proposed expenditures in the coming year. (Millan, 2018)
19. Budget of Expenditures and Sources of Financing (BESF)- this contains the
estimated expenditures accompanied by estimates of expected sources of
financing.(Millan, 2018)
20. Budget legislation is a process of deliberating the national budget at the House
of Representatives, the House of Senate, and the Bilateral Committee of both
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Houses, which enact the national budget into a General Appropriations Act
(GAA) for approval by the President of the Philippines.
21. Approved budget is the expenditure authority derived from appropriation laws,
government ordinances, and other decisions related to the anticipated revenues
or receipts, and expenditures for the budgetary period. (Millan, 2018)
22. Appropriations is the authorization made by Congress of the Philippines to
allocate funds for purposes specified by the legislative body or similar authority.
(Millan, 2018)
23. New General Appropriations- are annual authorizations for incurring obligations
during a specified budget year, as listed in the GAA. (Millan, 2018)
24. Continuing Appropriations- are the authorizations to support obligations for
specific purposes of a project, such as multi-year construction projects which
require the incurrence of obligations even beyond the budget year. (Millan,
2018)
25. Supplemental appropriations are additional appropriations authorized by law to
augment the original appropriations which proved to be insufficient for their
intended purpose due to economic, political or social conditions supported by a
Certificate of Availability of Funds from the Bureau of Treasury. (Millan, 2018)
26. Automatic Appropriations are the authorizations programmed annually or for
some other period covered by law which do not require periodic action by
Congress. (Millan, 2018)
27. Revolving Funds- “receipts derived from business-type activities of departments
or agencies which are authorized by law to be constituted as such and deposited

in an authorized government depository bank. These funds shall be self-
liquidating and all obligations and expenditures incurred by virtue of said
business type activity shall be charged against said
fund.”(http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2016/GLOSSARY.pdf)
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28. “Trust Receipts-receipts by any government agency acting as agent, trustee,

administrator for the fulfilment of some obligations of conditions.”
(http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2016/GLOSSARY.pdf)
29. Budget execution is the phase in the national budget process which involves the
use and application of funds for programs, projects, and activities of government
agencies. This stage is executed or implemented by all government entities in
the course of their operations.
30. Budget Execution Documents include physical and financial plan, monthly cash
program, estimate of monthly income, and list of obligations that are not yet due
and demandable required by the DBM from various government agencies.
31. Allotment is an authorization issued by the DBM to each of the government to
be used for incurring obligation of funds in accordance with the appropriation
and other relevant laws based on Allotment Release Program and Cash Release
Program prepared by the DBM. It is also known as obligation authority.
32. Obligation is a process whereby a duly authorized official binds the government
for the eventual and immediate payment of sum of money in accordance with
certain appropriations and allotment authorizations.
33. Notice of Cash Allocation is an authorization issued by the DBM to central,
regional and provincial offices, and operating units to cover their cash
requirements.
34. Modified Disbursement System (MDS) Checks is a scheme wherein
disbursements of government funds are made by checks against the account of
the Treasurer of the Philippines.
35. Budget accountability is the last stage in the budget process whereby all
government agencies are required by the Commission on Audit to report and
account for the usages of the budget appropriated and allotted to them.
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36. Responsibility Accounting is a system of providing cost and revenue information

over which a manager has direct control of. (Millan, 2018)
37. Government accounting process comprises the activities of analyzing, recording,
classifying, summarizing, and communicating transactions involving the receipts
and disbursements of government funds and property and interpreting the
results thereof.
38. Books of Accounts include journals and ledgers to record government
transactions and economic events.
39. Budget Registries are budgetary control measures to monitor the use and
application of the budgets allocated to different government agencies, namely:
Registries of Revenue and Other Receipts (RROR); Registries of Appropriations
and Allotments (RAPAL); Registries of Allotments, Obligations and Disbursements
(ROAD), and Registries of Budget Utilization and Disbursements (RBUD). (Millan,
2018)
40. Allotment classes consist of personal services, maintenance, other operating
expenses, and capital outlay used to record and report on allotment released,
used and applied by government agencies.
IDEATION
The sheer size and complexities of government transactions manifests

the need for an advanced and computerized government accounting information
system in order to improve the quality of public services. Like commercial
accounting which is always attuned to the modern and globalized business
environment, government accounting must be aligned with the political, legal,
and regulatory environment that besets government operations.
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The government does not operate to make a profit, but its focus is more
on how to manage and be accountable for the money and funds it has collected
from taxes and non-taxes revenues. These government revenues are kept and
treated in the general fund of the government and used to defray the national
budget that amounts to around four trillion pesos in 2020 and is growing year on
year by a considerable amount. Thus, government accounting becomes more
significant in this regard.
Accordingly, fund accounting is the one applied more appropriately in
accounting for revenues, receipts and disbursements of government funds.
Public funds are considered as an accounting entity that must have separate and
distinct books of accounts to analyze, record, classify, summarize and report on
all transactions related to these funds. In government, there is a “one-fund
concept” wherein all funds must be managed and kept in the “General Fund”
unless otherwise provided for in a special law or regulation.
https://www.youtube.com/watch?v=cYRMqVcjDVM
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The Commission on Audit prescribes the accounting rules and regulations

in government financial operations. COA has adopted the “Philippine Public
Sector Accounting Standards” and the “Philippine Financial Reporting Standards”
in the development and implementation of government accounting rules and
regulations. These accounting rules and regulations are enshrined in the New
Government Accounting System (NGAS) in government.
The NGAS is basically similar with commercial or private accounting

systems in the sense that it follows the same steps in the accounting process or
cycle, has made use of general and special journals as well as general and
subsidiary ledgers, formulates its own government standard chart of accounts,
among others. However, NGAS is different from a commercial accounting system
because of some peculiar nature and characteristics of certain accounts and
records found in government budget, accounting, tax, and audit systems. For
example, the presence of appropriations, allotments, cash allocations, the
budget registries, and execution documents in relation thereto which are not
applied in private business accounting.
In broad sense, we have to start with the budgetary system before we
understand clearly the essence of government accounting. There are four phases
or stages in this budgetary system, namely:
1. Budget preparation
2. Budget legislation and approval
3. Budget execution and implementation, and
4. Budget monitoring and accountability.
First, budget preparation deals with the coordination and cooperation
among government agencies and offices on how to come up with the national
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budget to be presented by the President of the Philippines before both houses of

Congress of the Philippines during his State of the Nation Address (SONA). The
DBM takes the lead in formulating the policies and standards in preparing the
national budget. The DBM issues a “budget call” which provides for the
guidelines and calendar by which the various government agencies and entities
will follow in preparing their respective budget proposals. Then, DBM collates
and consolidates each of the budget proposals submitted by all government
agencies and offices. The consolidated budget becomes the national budget that
contains the estimated annual revenues, receipts, and expenditures of the
government for the ensuing fiscal year.
Second, budget legislation and approval is the province of the legislative
branch of government, which is the House of Representatives and the House of
Senate. Both houses of Congress deliberate on the national budget submitted by
the President of the Philippines. They call the cabinet members by cluster to
explain and depend on their respective budget before subcommittees,
committee on appropriations and the plenary session before the national budget
is enacted into the General Appropriations Act. Once the GAA is enacted, it is
submitted to the President of the Philippines for approval and signature before it
can be implemented. Then, the President has the right to veto or approve
certain items in the GAA that he may find appropriate and necessary.
Third, budget execution and implementation start with the approval of the
President of the GAA. Based on the duly approved GAA, DBM starts the
allocation and allotment of the budget to the various government agencies and
offices which will obligate and disburse their respective budget in a manner that
is in accordance with the rules and regulations prescribed by the Commission on
Audit and other fiscal authorities of government. These government agencies
and offices use their budget allotment and allocation in performing their
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programs/projects/activities during the budget year which include personal

services (PS) , maintenance and operating expenses (MOOE), and capital
outlay(CO). Personal Services refer to the salaries and wages, allowances and
other fringe benefits of government officials and employees. Maintenance and
Other Operating Expenses include transportation, communication, repairs and
maintenance, rentals, office supplies, advertising, representation, fuels, utilities,
and other operating expenses. Capital Outlay is used to buy and construct
equipment, machineries, buildings, bridges, roads, and other infrastructures of
the government. These government agencies and offices maintain books and
records for their receipts and uses of these government funds and submit
reports thereon.
Fourth, budget monitoring and accountability is done by the DBM, COA, and
Congress Oversight Committees. It involves the review and evaluation of the
programs, projects, activities accomplished and not accomplished by concerned
government agencies and offices. The target outputs and outcomes set by these
government agencies and offices must be met. Variances, if any, are well
explained and justified. The COA suspends or disallows disbursements of funds
that do not comply with laws, rules, and regulations related thereto. Suspension
of disbursements means that an explanation and supporting evidence need to be
submitted to COA within ninety (90) days, or else they become disallowed.
Disallowance means there is an illegality and irregularity in the use of funds and
refund thereof is required of the concerned officials and/or employees. But the
decision of COA can be appealed before the Supreme Court on certiorari. On the
other hand, the DBM may withhold release of additional funds to a government
agency which does not observe the proper use of funds to
programs/projects/activities and does not achieve certain set performance
targets.
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The NGAS is used by government agencies and offices in accounting for the
receipts and disbursements of funds in accordance with the following underlying
disbursement principles set by COA:
1. No public funds shall be disbursed without an appropriation provided for by
law.
2. Public funds must be used solely for public purpose.
3. All disbursement of public funds must bear the approval of a proper
government official.
4. All disbursement of public funds must be supported by complete, proper,
and valid documents.
5. Trust funds shall be used only for the specific purpose intended.
6. Disbursement of funds must comply with relevant laws, rules and regulation.
7. Public officers and employees entrusted with the custody and disbursements
of public funds must be bonded with the fidelity fund of the Bureau of the
Treasury.
The NGAS observes the same steps in the accounting cycle similar to commercial
accounting such as the following:
1. Identification and analysis of financial transactions based on underlying
documentation.
2. Journalization or recording of these transactions in the general and/or special
journals in a systematic and chronological manner.
3. Posting – classifying accounts balances from the journals to the ledgers.
4. Trial Balance -checking the equality of debit balances and credit balances of
the accounts recorded and classified in the ledgers.
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5. Worksheet- an optional device used to facilitate the preparation of the

Statement of Income and Statement of Financial condition. This becomes
obsolete under a computerized accounting system.
6. Adjusting Entries- update and adjustment of certain accounts to prepare fair
and accurate financial statements free from error like overstatement and
understatement of certain accounts.
7. Preparing the Statement of Income/Comprehensive Income and Statement
of Financial Statements based on the Worksheet, if any.
8. Closing entries- the temporary or nominal accounts presented in the
Statement of Income and Comprehensive Income are closed to Income and
Expense Summary Account and finally to Equity Account to line with the start
of the next accounting period. Simply stated, all income and expense
accounts are closed to equity accounts.
9. Post-closing trial balance- to check the equality of debit balances and credit
balances of permanent or real accounts after closing entries on temporary
and nominal accounts are done.
10. Reversing entries – all adjusting entries which affected the asset accounts
and liability accounts are reversed to avoid duplication of transaction entries
in the next accounting period. Thus, reversing entries are done before the
start of the next accounting period.
Books of Accounts and Registries of government entities are:

1. Journals
a. General Journal
b. Cash Receipts Journal
c. Cash Disbursements Journal
d. Check Disbursements Journal
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2. Ledgers
a. General Ledgers
b. Subsidiary Ledgers
3. Registries
a. Registries of Revenue and Other Receipts (RROR)-used to monitor the
actual and budgeted collections and remittances of revenues and
other receipts.
b. Registry of Appropriations and Allotments (RAPAL)-used to monitor
appropriations and allotments.
c. Registries of Allotments, Obligations, and Disbursements (RAOD)-
used to monitor the amounts released and the amounts actually used
and analyze the variances, if any.
d. Registries of Budget, Utilization and Disbursement (RBUD)-used to
monitor special budgets and the corresponding utilizations and
disbursements.
Technically, the journals, and ledgers are the accounting records, while the
registries are budget records used to monitor and control the budget. (Millan, 2018)
Basic Recordings- Illustrated
1. Appropriations and Allotments

A government agency has the following budget duly approved in the GAA as
follows:
Appropriations Allotments
PS
P 10,000,000 P 9,000,000
MOOE
100,000,000 P. 90,000.000
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CO
500,000,000 450,000,000
Total Appropriations for CY 2020
P610,000,000 P 549,000,000
The receipt of appropriations and allotment by this government agency from

DBM is recorded in RAPAL as follows:
REGISTRY OF APPROPRIATIONS AND ALLOTMENTS (RAPAL)
Agency Name:
Fund Title:
Date Ref Appropriations(Millions PhP) Allotments ( Millions PhP Unreleased Appropriations(Milion PhP)
PS MOO FE CO Tot PS MOO FE CO Tot PS MOO FE CO Tot

E E E
1/1/20 GAA 10 100 0 500 610 9 90 0 450 549 1 10 0 50 61
REGISTRY OF ALLOTMENTS, OBLIGATIONS AND DISBURSEMENTS (RAOD)-PS
Agency Name:
Fund Title:
Date Ref Allotments Obligations Unobligated Disbursements Unpaid Obligations
Allotment
Due Not Yet Due
<AUTHOR> 22
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1-1-20 NOA 9,000,000
Note: Each of the allotment classes: PS, MOOE, and CO has RAOD
2. Incurrence of Obligations
Obligations shall be incurred by issuing Obligations Request and Status (ORS)
to be supported by valid claim documents like disbursement vouchers, payroll,
purchase /job orders, etc. The head of the requesting unit shall certify the
necessity and legality of the obligations and the validity of supporting
documents. The head of the budget division shall certify the availability of
allotment.
Using the above illustration, the government agency enters into the following
contracts:
a. Employment Job Orders
P 1,000,000
b. Purchase of Office Supplies
2,000,000
c. Purchase Office Equipment 50,000,000
The obligations of P 1,000, 000 shall be recorded in the above RAUD for PS,
while the obligations for office supplies is recorded in the RAUD for MOOE in the
amount of P 2,000,000 and also the obligations for purchase of office equipment
in the RAUD for CO for P 50,000,000.
<AUTHOR> 23
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To illustrate further the OSR, observe the following OSR format:
OBLIGATION REQUEST AND STATUS Date:
Agency Name: Fund Title:
PAYEE JUAN DELA CRUZ
OFFICE XYZ CORPORATION
ADDRESS MAKATI, PHILIPPINES
Responsibility PARTICULARS MFO/PAP Uacs AMOUNT

Center
HRD
JOB ORDER XXX XXX 1,000,000
Certified: Charges to appropriations/allotment are necessary, legal and Certified: Allotment available and obligated for the purpose/adjustment
under my supervision and supporting documents valid, proper and legal. necessary as:
Signature: Signature:
Printed Name: Printed Name:
Position Position: Head, Budget Division
Date Date:
STATUS OF OBLIGATION
REFERENCE AMOUNT
DATE PARTICULAR REF. OBLIGATION PAYABLE PAYMENT BALANCE

NO
NOT DUE DUE
A B C D E
1-01-20 JOB ORDER XXX 1,000,000 0 0 1,000,000 0
<AUTHOR> 24
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At this point, the government agency has not yet recorded anything in the
books of accounts. The above recordings were made only in the Budget registries
for monitoring and control purposes. The journal entries shall be made only
when:
1. The employees have rendered the services.
2. The office supplies are delivered and received.
3. The office equipment is delivered and received.
Only when these economic events occur does the government agency
recognize accountable events that affect the elements of the financial
statements; hence the need for recording in the books of accounts of the
government agency.
Disbursement Authority-Notice of Cash Allocation (NCA) -Illustrated

Using the same illustration above, assuming that the government agency
has received NCA from DBM amounting to P 200,000,000, net of tax. This time, a
journal entry is required to record the increase in cash and increase in revenue
on the part of the concerned government agency.
Date Cash- MDS (Regular) 200,000,000
Subsidy from National Government 200,000,000
To record receipt of NCA from DBM
The registries used by the DBM to record and monitor the NCA are the following:
1. Registry of Allotments and Notice of Cash Allocations (RANCA)
2. Registry of Allotments and Notice of Transfer of Allocation (RANTA)
<AUTHOR> 25
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REGISTRY OF ALLOTMENTS AND NOTICE OF CASH ALLOCATION (RANCA)
For the period _________
Agency Name:
Fund Title:
Sheet No.
AMOUNT
Date/ Ref NOTICE OF CASH ALLOCATION BALANCE
Allotment Received Utilized Unutilized Unfunded Allotment

NCA
a b c d e
1/4/20 200,000,000 100,000,000 100,000,000 100,000,000
The government accounting cycle includes the following:

1. Appropriations
2. Allotment
3. Incurrence of Obligations
4. Disbursement Authority-NCA
5. Disbursements
6. Billings, Collections and Remittances
7. Unadjusted Trial Balance
8. Adjusting Entries
9. Closing Entries
10. Preparation of Financial Statements
<AUTHOR> 26
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The books of accounts used by government agencies and offices consist of the
following:
1. Journals- books of original entry which include:
a. General Journal-used to record transactions not in the special journals.
b. Special Journals
i. Cash Receipts Journal- used to record the Report of Collections
and Deposits of Designated Collecting Officers and Cash Receipts
Register of Field Collecting Officers.
ii. Cash Disbursement Journal- used to record cash disbursements
of duly designated disbursing officers.
iii. Check Disbursement Journal-used to record check disbursements
of duly designated disbursing officers.
2. Ledgers- books of final entry which include:
a. General Ledger-summarizes all transactions recorded in the Journals in
accordance with the sequence shown in the Standard Government Chart
of Accounts
Subsidiary Ledger-shows the details of the controlling accounts shown in the general
ledger. ( Milan, 2018, pp. 61-62)
Summary of Basic Recordings:
Transaction Registries and Other Records Journals and Ledgers
1. Appropriations RAPAL None
2. Allotment RAPAL and RAODs None
<AUTHOR> 27
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3. Obligation RAODs and ORSs None
4. NCA RANCA Cash-MDS Regular xxx
Subsidy from NG xxx
5. Disbursements RAODs and ORSs Updated Expense/Asset xxx
Payable xxx
Payable xxx
Cash-MDS Regular xxx
6. Tax Remittance Advice (TRA)- RAODs and ORSs Updated Cash-TRA xxx
used to remit taxes withheld
Subsidy from Ng xxx
Due to BIR xxx
7. Billings, Collections and RROR, RCD/CRReg Accounts Receivable xxx

Remittances
Cash-CO xxx
Cash-CO xxx
Accounts Receivable xxx
Cash-Treasury/Agency
Deposit (Regular) xxx
Cash-CO xxx
8. Reversion of Unused NCA RANCA Subsidy from NG xxx
<AUTHOR> 28
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ACTIVITY
The students will be given assessment tests which include:

1. Review questions requiring short answers on the topics discussed
2. Exercises on the budget and acounting processes as discussed
3. Quizzes- Multiple Choice Questions to prepare them for the CPA Licensure
Examination.
4. Case Problems pertaining to Fundamentals of Government Accounting. These
activities will be done through the Microsoft Teams, Google Classroom, Class Marker,
etc.
I. REVIEW QUESTIONS
1. What is the meaning of government accounting?
2. How do you distinguish government accounting and commercial
accounting?
3. What is meant by fund accounting?
4. What is meant by “one-fund concept” in government accounting?
5. How do you describe the Philippine Public Sector Accounting Standards?
What is its purpose?
6. Which government agency is empowered under the Philippine
Constitutions to promulgate accounting and auditing rules and
regulations in government?
7. What are the underlying principles prescribed by COA in the
disbursements of public funds?
8. Which government agency leads in the preparation of the national
budget for submission to the President of the Philippines and Congress of
the Philippines?
9. What is meant by appropriations, allotment, obligations, and
disbursements of government funds?
<AUTHOR> 29
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10. How would you describe the government accounting cycle/process?
II. MULTIPLE-CHOICE QUESTIONS
1. Which of the following is a unique requirement in government accounting that is

not present in business entity accounting?
a. The use of double-entry recording system
b. The use of single-entry recording system
c. The use of accrual basis of accounting
d. The presentation of budget presentation in the
2. What is the legal basis of the COA in promulgating GAM for NGAs?
a. PD 1445, State Audit Code of the Philippines
b. The Philippine Constitution
c. RA 9298, The Philippine Accountancy Act of 2004.
d. Philippine Public Sector Accounting Standards (PPSAS)
3. Which of the following is tasked in keeping the general accounts of the
government, supporting vouchers and other documents?
a. COA c. DOF
b. DBM d. BTr
4. The Bureau of Treasury is responsible for
a. Promulgating accounting rules and regulations
b. Formulation and implementation of national budget
c. Receiving and keeping national funds
d. Directly implementing government projects.
5. The basis of accounting to be applied by government agencies under GAM for
NGAs is?
a. Cash basis c. modified accrual basis
b. Accrual basis d. all of the above
<AUTHOR> 30
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6. Government resources must be used efficiently and effectively. PD 1445 provides

that the implementation of this policy is the responsibility of
a. All employees c. COA
b. Head of agency d. Elected officials
7. The transfer of funds from one officer to another requires authorization of the
a. COA c. President of the Philippines
b. Head of Agency d. Bureau of Treasury
8. This refers to the attributes that make information useful to users of financial
statements
a. Usefulness characteristics c. qualitative characteristics
b. Quantitative characteristics d. fundamental principles
9. Which of the following is not charged with government accounting responsibility
under the GAM of NGAs?
a. COA c. BTR
b. DBM d. Congress
10. It is an authorization issued by the DBM to NGAs to incur obligations. It is also
referred to as obligational authority.
a. Appropriations c. budget call
b. Allotment d. budget hearing
11. It refers to the amount contracted by duly authorized government officials for
which the government is held liable.
a. Appropriations c. obligations
b. Allotment d. disbursement
12. Disbursement of government funds are most commonly made through.
a. MDS Checks c. Petty cash fund
b. Cash d. credit card
13. In the GAA, Agency A has an approved budget of P 200 million to support its
operations during the year. DBM issued notice of allotment to Agency A for P
<AUTHOR> 31
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100 million. During the first quarter of the year, DBM issued a quarterly NCA of P
50 million. At the end of the year, Agency A also received notice of allotment for
P100 million at the start of third quarter of the year. At the end of the year total
obligations incurred is P 180 million and total amount disbursed is P 150 million.
The allocation of P 200 million to Agency A is referred to as
a. Allotment c. obligation
b. Appropriations d. sub-allotment
14. Same as problem 13, the appropriations of Agency B are released by
a. Congress of the Philippines c. Bureau of Treasury
b. Department of Budget and Management d. Commission on Audit
15. Same as problem 13, the unreleased or unallotted balance of appropriations is?
a. P 20 million c. P 100 million
b. P 50 million d. None
16. Same as problem 13, the unpaid obligation at the end of the year is?
b. P 30 million d. P 100 million
17. Same as problem 13, the allotment of Agency A has an unobligated amount of
b. P 30 million d. P 100 million
18. The various registries maintained by government entities are considered,
technically as
a. Books of accounts c. General ledgers
b. Budget records d. log books
19. Which of the following is recorded in the Obligation Request and Status (ORS)?
a. Receipt of notice of appropriations
b. Receipt of allotment from DBM
<AUTHOR> 32
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c. Receipt of NCA from DBM

d. Entering into employment contracts with employees
20. This type of expenditure pertains to all types of employee compensation and
benefits.
a. Personal Services
b. Maintenance and Other Operating Expenses
c. Financial Charges
d. Capital Outlay
21. Travel expenses of government personnel are classified as
a. Personal services
c. Financial Charges
d. Capital Outlay
22. Interest expenses on loans incurred by government agency is considered as ___
a. Personal services
c. Financial Charges/Expense
d. Capital Outlay
23. The receipt of allotment is recorded by government agency in the
a. RAOD c. RAPAL
b. ORS d. a and c
24. The receipt of appropriations is recorded by a government agency in
a. RAOD c. RAPAL
b. ORS d. a and b
25. According to the Revised Chart of Account issued by COA, the “Subsidy from
National Government “account is a/an
a. Asset c. Revenue
<AUTHOR> 33
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b. Liability d. Equity
III. BASIC RECORDING DRILLS

Instructions: Provide the journal entries to record each of the independent transactions
or events below. If no journal entry is needed, state the registry of other documents
where the transaction of events is recorded.
1. Receipt of P 10 million NCA
2. Remittance to the BIR of P 500,000 taxes withheld
3. Receipt of P 100 million allotment
4. Receipt of P 1 billion appropriations
5. Entering into a purchase contract for future delivery of goods with a contract
price of P 20 million
6. Entering into employment contract worth P 2 million
7. Billings of P 8 million revenue for miscellaneous fees, subsequent collections of P
5 million and full remittance of collections to the BTR.
8. Reversion of P 5 million unused NCA
9. Receipt of equipment purchased on account for P 2.5 million.
10. Payment of accounts payable from purchase of office supplies worth P 600,000.
Tax withheld P 30,000.
11.
WRAPPING UP
The students will be required to make further research and study on how to
distinguish government entities and private business entities as to their similarities and
differences in their accounting terminologies, policies and standards, principles and
accounting process, systems, and procedures. This will be made as a group work. This
study will involve a sample government agency and private business entity that actually
operate and exist at present.
<AUTHOR> 34
OF ALABANG
Tel. Nos. (02)856-93-23 / (02)856-9246 / (02)403-8248
REFERENCE
Books/E-BOOKS
Millan, Z. (2018). Government accounting & accounting for non-profit
organizations
based on government accounting manual for national government agencies
(GAM for
NGAs) & Philippine financial reporting standards (PFRSs). (pp.1-30) Bandolin Enterprise.
The state audit code of the Philippines (P.D. no. 1445), 3 (1978).
IMAGES
<AUTHOR> 35
OF ALABANG
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Avanzado, E. (2011). In Slideshare.
https://www.slideshare.net/abdulmohayminm/department-of-budget-and-managemet
Benarnews. (2017). Philippine President Rodrigo Duterte is seen on a monitor as he
delivers his state of the nation address to congress, in Manila, July 24, 2017. In
BenarNews. https://www.benarnews.org/english/news/philippine/duterte-address-
07242017132031.html
LinkedIn. (2020). Department of Finance. Government Organization. In LinkeIn.
https://www.linkedin.com/company/department-of-finance-philippines
Perez, C. (n.d.). Implementing the computerized government accounting system:
Philippine experience. In SlidePlayer. https://slideplayer.com/slide/3927929/
‌SlideShare. (2011). Political and administrative structure. In SlideShare.
https://www.slideshare.net/afcab/political-and-administrative-structure
The Audiopedia. (n.d.). What is fund accounting? In Youtube.
https://www.youtube.com/watch?v=cYRMqVcjDVM
ONLINE SOURCES
<AUTHOR> 36
OF ALABANG
Tel. Nos. (02)856-93-23 / (02)856-9246 / (02)403-8248
‌Commission on audit “celebrating the CPA.” (2015, January 23). Official Gazette of the
Republic of the Philippines. https://www.officialgazette.gov.ph/section/briefing-
room/commission-on-audit-briefing-room/
Glossary (pp. 852–855). (n.d.). https://www.dbm.gov.ph/wp-
content/uploads/BESF/BESF2016/GLOSSARY.pdf
<AUTHOR> 37

Accounting Gov

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Accounting Gov

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LYCEUM ACCOUNTING FOR GOVT AND NON-PROFIT ORGANIZATIONS

1. Explain government accounting including responsibility, accountability, and

certifications; modes of disbursements; accounting for COA disallowances and

5. Explain government financial assets: cash and cash equivalents; receivables;

statements; financial statements of NPOs; accounting procedures applicable to

1. Overview of government accounting

An overview of government accounting and the roles and responsibilities of

5. Various government branches, departments, agencies, instrumentalities, and

How does government accounting differ from commercial accounting? Does

Definition of key terms

1. “Government Accounting encompasses the processes of analyzing, recording,

4. “Financial reporting is the process of the preparation, presentation, and

or agencies which are authorized by law to be constituted as such and deposited

28. “Trust Receipts-receipts by any government agency acting as agent, trustee,

36. Responsibility Accounting is a system of providing cost and revenue information

The sheer size and complexities of government transactions manifests

The Commission on Audit prescribes the accounting rules and regulations

The NGAS is basically similar with commercial or private accounting

budget to be presented by the President of the Philippines before both houses of

programs/projects/activities during the budget year which include personal

5. Worksheet- an optional device used to facilitate the preparation of the

Books of Accounts and Registries of government entities are:

Basic Recordings- Illustrated

1. Appropriations and Allotments

The receipt of appropriations and allotment by this government agency from

REGISTRY OF APPROPRIATIONS AND ALLOTMENTS (RAPAL)

PS MOO FE CO Tot PS MOO FE CO Tot PS MOO FE CO Tot

1/1/20 GAA 10 100 0 500 610 9 90 0 450 549 1 10 0 50 61

REGISTRY OF ALLOTMENTS, OBLIGATIONS AND DISBURSEMENTS (RAOD)-PS

Date Ref Allotments Obligations Unobligated Disbursements Unpaid Obligations

1-1-20 NOA 9,000,000

To illustrate further the OSR, observe the following OSR format:

OBLIGATION REQUEST AND STATUS Date:

Agency Name: Fund Title:

PAYEE JUAN DELA CRUZ

OFFICE XYZ CORPORATION

ADDRESS MAKATI, PHILIPPINES

Responsibility PARTICULARS MFO/PAP Uacs AMOUNT

Printed Name: Printed Name:

Position Position: Head, Budget Division

DATE PARTICULAR REF. OBLIGATION PAYABLE PAYMENT BALANCE

NOT DUE DUE

1-01-20 JOB ORDER XXX 1,000,000 0 0 1,000,000 0

Disbursement Authority-Notice of Cash Allocation (NCA) -Illustrated

Date Cash- MDS (Regular) 200,000,000

Subsidy from National Government 200,000,000

To record receipt of NCA from DBM

REGISTRY OF ALLOTMENTS AND NOTICE OF CASH ALLOCATION (RANCA)

For the period _________

Date/ Ref NOTICE OF CASH ALLOCATION BALANCE

Allotment Received Utilized Unutilized Unfunded Allotment

1/4/20 200,000,000 100,000,000 100,000,000 100,000,000

The government accounting cycle includes the following:

Summary of Basic Recordings:

Transaction Registries and Other Records Journals and Ledgers

1. Appropriations RAPAL None

2. Allotment RAPAL and RAODs None

3. Obligation RAODs and ORSs None

4. NCA RANCA Cash-MDS Regular xxx

Subsidy from NG xxx

5. Disbursements RAODs and ORSs Updated Expense/Asset xxx

Cash-MDS Regular xxx

Due to BIR xxx