FINANCIAL STATEMENTS & REPORTS

Under the New Government Accounting

System, financial reporting includes the
preparation and submission of trial balances,
financial statements and other reports
needed by fiscal and regulatory agencies.

The sub-systems are as follows:

(1.) Preparation and submission of trial
balances and other reports; and

(2.) Preparation and submission of financial

statements.
A trial balance is a listing of general ledger accounts
with their corresponding debit and credit balances.
It is used to determine equality of debit and credit
balances after the recording process. It may be
prepared anytime; usually before financial
statements are prepared. A two-money column
trial balance is required under the new system.
The preparation of a trial balance shall serve the
following purposes:

1. To prove the mathematical equality of the debits

and credits after posting.
2. To uncover errors in journalizing and posting; and
3. To serve as basis for the preparation of the
financial statements.
A worksheet is “a columnar sheet of paper on which
accountants have summarized information needed to make
the adjusting and closing entries and to prepare the financial
statements.”
It is also a useful tool for the auditor in the analysis and
examination of the accounts. The following are the steps in
preparing the worksheet:
1. Enter the titles and balances of the ledger accounts in the
Pre-Closing Trial Balance Column.
2. Enter the adjusting entries and the closing entries in the
Adjustments Column.
3. Extend the adjusted account balances in the Post-Closing
Trial Balance column.
4. Extend the adjusted balances of the expense and income
accounts to the Statement of Income and Expenses
column.
5. Extend the adjusted balances of the assets, liabilities and
equity accounts to the Balance Sheet Statement column.
The Pre-Closing Trial Balance, otherwise known as the Adjusted
Trial Balance, is prepared after adjusting journal entries are
recorded in the General Journal and posted to the General Ledger.
It shows the adjusted balances of all accounts as of a given period.

Adjusting journal entries are made to ensure that revenues and

expenses are recorded in the period when they are earned or
incurred. Adjustments are of two main types, namely:

a. Accrued Items

These are adjusting entries for economic activities already

undertaken but not yet recorded as asset and revenue accounts or
a liability and expense account. Examples are: accrued salaries
and interest income.

b. Deferred Items

These are adjusting entries transferring data previously recorded in

asset account to an expense account or data previously recorded in
liability account to revenue account. Examples are: prepaid
expenses, bad debts and depreciation.
The Post-Closing Trial Balance shall be prepared
after recording the closing journal entries in the
General Journal and Posting to the General Ledger.
*It contains a listing of all real accounts in the
general ledger.
*Closing journal entries are general journal entries,
which zeroes out the balances of all nominal and
temporary and intermediate accounts at the end of
the accounting period.
*Nominal accounts, such as, subsidies, income
and expenses accounts are closed to Income and
Expense Summary account; while intermediate
accounts, such as, cost of goods sold, income and
summary, prior years’ adjustments, retained
operating surplus, and subsidies to regional
offices/staff bureaus and operating units, are closed
to government equity at the end of the period.
To achieve fair presentation and reliable information
of the financial statements, the following standards
shall be observed:

1. Fairness of Presentation – This refers to the

overall propriety in disclosing financial information.
Full disclosure in financial aspect requires
observance of the following standards of reporting:

v All essential facts relating to the scope and

purpose of each report and the period involved
shall be included and clearly displayed.

v All financial data presented shall be accurate,

reliable and truthful.
v Financial reports shall be based on official records
maintained under an adequate accounting system
that produces information objectively and
discloses the financial aspects of all events or
transactions taking place.

v The financial data reported shall be derived from

accounts that are maintained in all material
respects on a consistent basis from period to
period; material changes in accounting policies or
methods and their effect shall be clearly
explained.

v Consistent and non-technical terminology shall be

used in financial reports to promote clarity and
usefulness.
2. Compliance – The report shall be in accordance
with prescribed government requirements and
international accounting standards of reporting.

3. Timeliness – All needed reports shall be

produced promptly to be of maximum usefulness.

4. Usefulness – Financial reports shall be carefully

designed to present information that is relevant to the
needs of the reports’ users.
The Statement of Management Responsibility for
Financial Statements shall serve as the covering
letter in transmitting the agency’s financial
statements to the Commission on Audit, Department
of Budget and Management, other oversight
agencies and other parties.

It acknowledges the agency’s responsibility for the

preparation and presentation of the financial
statements. This shall be signed by the Director of
Finance and Management Officer or Comptrollership
Office, Chief of Office, and Head of Agency.
The new accounting system generally requires the
preparation of the following financial statements:

1. Balance Sheet – It is a formal statement, which

shows the financial condition of the agency as of a
certain date. It includes information on the three
elements of financial position: assets, liabilities, and
government equity. It shall be prepared from information
taken directly from the year-end Post-Closing Trial
Balance and presented in detailed and condensed form.

2. Statement of Income and Expenses – This financial

statement shows the results of operation/performance of
the agency at the end of a particular period. It shall be
prepared by the accounting unit from the information
taken directly from Pre-Closing Trial Balance and it is
also presented in detailed and condensed form.
3. Statement of Government Equity – This financial
statement shows the financial transactions, which
resulted to the change in government equity account at
the end of the year. Government equity represents the
difference between the assets and liabilities of
government agencies.

4. Statement of Cash Flows – It is a statement

summarizing all the cash activities of an agency. This
includes the operating, investing and financing activities
of the entity and provides information on the cash
receipts and cash payments during the period. The
primary purpose of the Statement of Cash Flows is to
give relevant information on the agency’s overall cash
position, liquidity and solvency.
There are two methods used in the preparation of the Cash
Flow Statements, namely:

Balance Sheet Approach – this method shows the agency’s

net cash flow from all of its activities calculated by adding the
individual cash inflows and then deducting the individual cash
outflows. This method is the preferable approach.

Income Statement Approach – this method starts with the

net income and adds back expenses and charges that do not
entail cash payments. The more important of these non-cash
expenses include depreciation, depletion, and amortization
charges. Increases in current asset values or decreases in
current liability values that do not have a corresponding
increase or decrease in cash (and yet are involved in the
determination of net income) are subtracted from net income.
Because of the nature of computations (increase or decrease
in current assets and current liabilities), the presentation of
the comparative balances is significant.
Notes to financial statements are integral parts of the
financial statements that provides to additional information
necessary for the fair presentation of the financial statements
in conformity with generally accepted accounting principles.

The four types of disclosure considered necessary are as

follows:

1. Customary or Routine Disclosure

Information about measurement bases of important assets,

restrictions on assets and government equity, important
long-term commitments not recognized in the body of the
statements, information on terms of owners’ equity and long-
term debt, and certain other items that are necessary for full
disclosure.
2. Disclosure of Changes in Accounting Principles

Changes in accounting principles, practices, or the methods

of applying them, together with the financial effect, and the
justification for the change shall be disclosed in the financial
statements or a note thereto.

3. Disclosure of Subsequent Events

Disclosure of events that have a direct effect to the agency

and that occurred between the date or end of the period
covered by the financial statements and the date of
completion of the same is necessary if knowledge of the
events might affect the interpretation of the statements, even
though these events do not affect the propriety of the
statements themselves.
4. Disclosure of Accounting Policies

Accounting policies adopted by the reporting entity is required as

integral part of the financial statements. It is usually captioned
“Summary of Significant Accounting Policies”, and placed as first
items in the notes to financial statements. It shall be limited to the
qualitative description of the policies.

*Interim reports are financial statements required to be

prepared at any given period or at a financial reporting period
without closing the books of accounts.
*The following interim financial statements shall be prepared
and submitted quarterly with the Notes to Financial
Statements: Statement of Income and Expenses, Balance
Sheet, and Statement of Cash Flows.
The interim financial statements shall be prepared employing
the same accounting principles used for annual reporting.
 Decentralized Accounting System

*National government agencies with established regional

accounting offices adopt a Home Office - Branch accounting
system of commercial accounting, which is commonly known
as the decentralized accounting system.
*Under this system, a complete set of books of accounts is
kept and maintained by the accounting units of the Regional
Office (RO) and the Operating Unit (OU) to reflect the
financial condition and activities of the RO/OU; and to keep
accounts in such detail, which is necessary to meet the
financial information needs of the Operating Unit, the
Regional Office, Central Office (CO) and control fiscal
agencies. &Inter-office transfer of accounts or reciprocal
accounts are used to reflect inter-office transactions.
*Inter-office accounts are reconciled and eliminated in the
process of consolidation of the central office and regional
trial balance.
*In decentralized accounting, the Regional Accountants are
required to submit the following monthly reports:

1. Monthly Trial Balance

2. Monthly Report of Cash Disbursements
3. Monthly Report of Checks Issued and Cancelled

*In decentralized accounting, the Regional Accountants are

required to submit the following quarterly reports:

1. Quarterly Trial Balance

2. Quarterly Statement of Subsidiary Ledger Balances
3. Statement of Collecting Officers Account Balances
4. Statement of Disbursing Officers Account Balances
5. Statement of Other Officers Balances
In decentralized accounting, the Regional Accountants are
required to submit the following semi-annual reports:

1.Statement of Accounts Payable

2. Statement of Accounts Receivable

3. Detailed Statement of Subsidiary Ledger Balances, except

the Statement of Collecting Officers Account Balances,
Statement of Disbursing Officers Account Balance, and
Statement of Other Officers Balances of quarterly reporting.
*Receipt of funds (allotments and Notice of Cash Allocation)
by the Regional Office and Operating Unit may take two forms,
namely:
a. Allotments and Notice of Cash Allocation directly from the
Department of Budget and Management.
b. Transfer of allotments and funding checks from the Central
Office/Regional Office, in case of the Operating Unit.

*To record receipt of Notice of Cash Allocation from Central Office.

Books of Regional Office (From Central Office to Regional Office)

Cash in Bank – Local Currency, Current Account xxx

Subsidy Income from Central Office xxx

Books of Operating Unit (From Regional Office to Operating Unit)

Cash in Bank – Local Currency, Current Account xxx

Subsidy Income from Regional Office xxx
*To record the receipt of sub-allotment received, the
Regional Office and Operating Unit shall enter the
amount of sub-allotment received in the Allotment
Received column of the respective Registry of
Allotment and Obligations it maintain.

The amount of allotment received shall increase the

amount reflected in the Balance column.
The recording of the allotment received, as to what
particular Registry of Allotment and Obligations,
depends on the classification of allotment, such as,
personal services, maintenance and other operating
expenses, capital outlay, and financial expenses.
 *Under the decentralized accounting system, the
financial statements of Central Office, Regional
Office and Operating Unit should be consolidated. In
the consolidation process, Inter-office accounts
(e.g. Subsidy to Regional Office/Operating Unit, and
Subsidy from Central Office/Regional Office), which
are used to reflect inter-office transactions, are
reconciled and eliminated.
ACCOUNTING FOR LOCAL GOVERNMENT UNITS

*The three separate books that shall be maintained by

local government units under Section 308 – 310 of the
local government code are:

General Fund

This consists of monies and resources not accruing to

any other fund and shall be available for payment of
expenditures, obligations or purposes not specifically
declared by law as chargeable to or payable from, any
other fund, though transfers of monies or resources
therefrom to other funds of local government may be
made by proper appropriation.
Special Education Fund

This consists of the respective shares of provinces, cities

and municipalities in the proceeds of the additional one
percent (1%) tax on the assessed value of real property
for education purposes under the Real Property Tax
Code. This amount accruing to special education fund
shall be automatically released to the local schools.

Trust Fund

This consists of private and public monies received, by

local government or of a local government official as
trustee, agent or administrator, as a guaranty for the
fulfillment of some obligations. A trust fund shall only be
used for the specific purpose for which it was intended
*Special accounts maintained in the General Fund
that shall be supported by subsidiary ledgers are the
following:

a. Public utilities and other economic enterprises;

b. Loans, interests, bonds issued, and other
contributions for specific purposes;
c. Development projects funded from the Share in
the Internal Revenue Collections; and
d. Other special accounts, which may be created by
law or ordinance.
*The accounting unit of the Local Government Units
shall maintain the following books of accounts:

Journals
Cash Receipt Journal (CRJ)
Cash Disbursements Journal (CDJ)
Check Disbursements Journal (CkDJ)
General Journal (GJ)

Ledgers
General Ledger (GL)
Subsidiary Ledgers:
Cash
Receivables
Inventories
Investments
Property, Plant and Equipment
Liabilities
Income
Expenses

In addition to the preceding records, the

treasurers and disbursing officers, however,
shall maintain their respective cash records,
such as:

Cash book – Cash in Treasury

Cash book – Cash in Bank
Cash book – Cash Advances
*The local government budget primarily consist of two
parts, namely:

1. The estimates of income certified collectible by the

treasurer; and

2. The total appropriations covering the current operating

expenditures and the capital outlays.

*The main sources of income of local government units

are as follows:

Tax revenues, fees and charges.

Share from Internal Revenue Collections.
Share from National Wealth.

The sources of income are further classified into general

income accounts and specific income accounts.
*The following accounting methods shall be adopted
in recording income:

Accrual Method – Accrual method of accounting

shall be used to record Share from Internal Revenue
Collections in the books of accounts. Upon receipt of
the Notice of Funding Check Issued from the
Department of Budget and Management, Share from
Internal Revenue Collections shall be taken up as
Due from National Government Agencies and
credited to Share from Internal Revenue Collections.
However, Cash in Bank account shall be debited
upon receipt of Bank Credit Advice as to receipt of
the Share from Internal Revenue Collections
regardless of whether or not the Notice of Funding
Check Issued has been received from the
Department of Budget and Management.
Modified Accrual Method – Modified accrual
method of accounting shall be used for real property
taxes; that is, Real Property Tax Receivable and
Special Education Tax Receivable shall be
established at the beginning of the year. This in view
of the need to record in the books the actual
receivables from said taxes and not mere income
estimates from real property taxes.

Cash Basis – Cash basis of accounting shall be

used for all other taxes, fees, charges and other
revenues.
Other receipts of the local government units shall be
comprised of, but not limited to, the following:
• Borrowings – Borrowings are proceeds of
repayable obligations, generally with interest from
the bank, national agency, another local
government unit, and private sector. All
borrowings incurred shall be recorded directly to
the appropriate liability accounts.
• Sale of Property, Plant and Equipment – Sale of
property, plant and equipment refers to the
proceeds from the sale of fixed assets, such as:
land, buildings, equipment, furniture and fixtures,
etc. Similar to commercial accounting, the
applicable asset accounts shall be cancelled from
the books upon disposal.
• Refund of Cash Advances – Cash advances for official
travel shall be recorded as a receivable from the concerned
official or employee. Refunds made shall be credited to the
receivable account previously recorded. Cash advances for
salaries and wages shall be recorded as debits to the
account Cash Disbursing Officers, and any refund shall be
credited to the same account.
• Receipt of Performance/Bidders’ Bonds – Similar to
national government accounting, performance bond posted
by contractor or supplier to guaranty full and faithful
performance of their work may be in form of cash, certified
check or surety. Performance bond in cash or certified
check shall be acknowledged through the issuance of
official receipt and recorded in the books by the accountant
using a Journal Entry Voucher. In case of surety bond, this
is recognized by an acknowledgment receipt to be issued
by the authorized official.
*Accounting procedures for the operations of the
special accounts are adopted for the following
purposes:

To determine whether the income generated by the

public utilities or economic enterprises are sufficient
to meet their respective operating costs.

To provide adequate information as to the assets,

liabilities and equity of each special account.
 The following shall be the sub-codes for the special accounts:
SPECIAL ACCOUNTS SUB-CODE
General Fund Proper 01
Market Operation 02
Slaughterhouse Operation 03
Waterworks System 04
Electricity, Light and Power System 05
Telephone System 06
Toll Roads, Bridges and Ferries 07
Transportation System 08
Hospital 09
School 10
Sport Center 11
Recreational Center 12
Housing Projects 13
Convention/Conference Center 14
Parking Space 15
Ice Plant 16
Cemetery 17
20% Development Fund 18
80% Share from Energy Sources 19
Share from Development of National Wealth 20
Loans 21
Interests 22
Bond Issues 23
*Supplies or property shall have the following classification:

Expendable Supplies or Property

These are articles, which are normally consumed in use within one year or
converted in the process of manufacture or construction, or those having a
life expectancy of more than one year but which shall have decreased
substantially in value after being put to use for only one year. Examples
are stationery, fuel, spare parts, etc. Expendable supplies are part of the
maintenance and operating expenses of the Local Government Unit.

b. Non-expendable Supplies or Property

These are articles, which are not consumed in use and ordinarily retain
their original identity during the period of use, whose serviceable life is
more than one year and which add to the assets of the government.
Examples are furniture, fixtures, transport equipment, etc. Non-expendable
supplies or property are capital outlays of LGU.

c. Non-personal Services

These articles include, but not limited to repairing, cleaning, redecorating,

and furnishing of necessary repair parts or other supplies as part of the
services performed. Examples are contractual services like trucking,
hauling, janitorial, security and related services. Non-personal services are
charged to maintenance and operating expenses of LGU.
The basic features and policies of the new barangay accounting system
are:

a. Accounting Method

Modified accrual accounting is adopted. Under this method, income shall

be recorded when earned except when use of accrual basis is impractical
or when other methods are required by law and expenses shall be
recorded when incurred irrespective of time of payment. Income and
expenses shall be reported in the financial statements in the period in
which they relate.

b. Recognition of Liability

Liabilities shall be taken up only for goods actually delivered and accepted
or services rendered or upon receipt of bills from suppliers/creditors. Cash
received to guaranty faithful performance of an activity shall be recorded
as a liability. Surety bonds shall not be recorded in the books.

c. Purchase of Supplies and Materials and Small Items

Purchase of supplies and materials and small items with serviceable life of
more than one year, like stapler, puncher, ruler, mechanical tools, etc.,
shall be directly charged to expense account. Cost of transporting
supplies and materials to barangay shall be charged to “Delivery
Expense” account.
d. Cash Advances

Cash advance for payment of personal services shall be accounted for as

“Payroll Fund”; while cash advance granted for travel and other special
time – bound undertaking shall be accounted for as “Advances to
Officers and Employees”.

e. Audit Disallowances

Audit disallowances shall be recorded only when they become final and
executory.

f. Barangay Accounts

Barangay accounts shall be kept within the framework of the New

Government Accounting System (NGAS) chart of accounts.

g. Processing of Transaction and Recording in the Books

Processing of transactions shall be done at the barangay level; while

recording in the books through Journal Entry Voucher shall be done by the
City/Municipal accountant.
 The financial records (General Journal, General Ledger, Subsidiary
Ledger) of the barangays shall be kept in the office of the City/Municipal
Accountant. Recording in the barangay books shall be based on the
reports submitted by the Barangay Treasurer/Barangay Record Keeper

Reports and documents supporting entries in the reports shall remain with
the Barangay Treasurer/Barangay Record Keeper in the Barangay and
shall be made available to the Commission on Audit anytime for
examination.

h. Certified Registers

In accordance with the New Barangay Accounting System, the following

certified registers shall be used:
Cash Receipt Registers
Cash on Hand and in Bank Registers
Cash Disbursement Registers
Check Disbursement Registers
Petty Cash fund Registers
i. Status if Appropriations, Commitments and Balances

The Status of Appropriations, Commitments and Balances of each

barangay under the city/municipality shall be consolidated by the
city/municipal Budget Officer.

j. Trial Balance

The two-money column trial balance shall be used.

k. Financial Statements

The New Barangay Accounting System requires the preparation of the

following financial statements:
Balance Sheet (Detailed and Condensed)
Statement of Income and Expenses (Detailed and Condensed)
Statement of Cash Flows (Direct Method)
Statement of Changes in Government Equity

The City/Municipal accountant shall furnish the Sangguniang Barangay

and the Auditor/Audit Team Leader with financial statements within thirty
(30) days after the close of each month.
l. Schedules Supporting the Financial Statements

The following schedules supporting the financial statements prepared by

Barangays shall be used
Schedule of Public Infrastructures and Reforestation Projects
Schedule of Accounts Payable
Schedule of Accounts Receivables

m. E-NGAS

Whenever possible, the use of the Electronic New Government Accounting

System at the City/Municipality level is encourage to facilitate the
recording of barangay transactions and to hasten the consolidation of all
barangay financial statements and reports.
*The Barangay Accounting System Plan shows the
accounting flow of barangay transactions in the books
maintained by the City/Municipal accountant. It starts with the
receipt of the certified registers/reports from the Barangay
Record Keeper on or before the 5th day of the following
month, the recording of the barangay financial transactions in
the books of the original and final entry and the ultimate
conversion into financial information as presented in the
financial statements. Presented in the Accounting System
Plan are the following:
Receipts and Deposits
Disbursements (Cash or Checks)
Public Infrastructures and Reforestation Projects
Registries of Public Infrastructures and Reforestation Projects
The new Government Accounting System for Barangays
prescribes the following major categories of financial
transactions:
1. Appropriations and Commitments
Appropriations are amounts in the annual or supplemental
budget that are authorized by the Sanggunian to be obligated for
the undertaking of a particular function, program, activity or
project. The approved appropriations of barangays are covered
by General Appropriation Ordinance (GAO).

Commitments are amounts earmarked by the barangay arising

from an act of a duly authorized official, which binds the
barangay to the immediate or eventual payment of money.

2. Receipts and Deposits

Receipts represent all collections in form of cash and checks

received by the Barangay for a given period such as: share in
national taxes and revenues, Barangay taxes, other revenues
and other sources.
 Deposits represent money or its equivalent
received by the bank for safekeeping and for
credit to a checking, savings or time deposit
account of an agency.
The Barangay Treasurer shall be responsible
in handling collections of income and other
receipts of the Barangay and the deposit of the
same with Authorized Government Depository
Bank (AGDB), such as: Development Bank of the
Philippines, Land Bank of the Philippines,
and Veterans Bank of the Philippines. However,
agencies may seek authority from Monetary Board
of the Banko Sentral ng Pilipinas to designate
other depository banks.
 3. Disbursements

Disbursements refer to all cash/check paid out

during a given period for settlement of government
expenditures/payables. It also represents the
movement of cash from an AGDB or from the
Barangay Treasurer/authorized disbursing officer
to the final recipient. Existing rules ands
regulations require that all disbursements of public
funds be supported by documents necessary to
prove their validity, propriety, and legality.
 4. Supplies and Materials, Property, plant and
Equipment, Public Infrastructures/Reforestation
Project

Requisition, procurement, issuance, physical

inventory and loss of supplies and materials are
governed by existing government rules and regulation.
Except in emergency cases, all procurement shall be
covered by Approved Procurement Program as required
in RA 9184. Procurement of supplies shall be charged
directly to Maintenance and Other Operating
Expenses and shall be recorded using the
appropriate expense accounts. Supplies, inspected by
Inspection Committee, shall be accepted by Barangay
Treasurer, who will act as the Property Officer of the
barangay. The cost of supplies and materials
acquired through purchase shall be based on the
invoice cost.
 Similar with supplies and materials, all procurement of property,
plant and equipment shall be in accordance with the requirements of RA
9184, and shall be insured with GSIS. All deliveries shall be inspected
by the Inspection Committee headed by Barangay Treasurer with
designated kagawad as member, and shall be accepted by the
Barangay Treasurer, who shall act as the property officer of the
barangay. Procurement of property, plant and equipment and
construction of public infrastructures shall be charged against
appropriation of capital outlay and shall be recorded in Property, Plant
and Equipment Registry for control and monitoring purposes. The cost
of property, plant and equipment acquired through purchase shall
include the purchase cost and expenses incurred in bringing the asset
to its intended location and make it operational. The property, plant and
equipment shall be subject to depreciation using the straight line
method. A residual value of ten percent (10%) of the cost shall be
provided. The estimated useful life of the PPE as prescribed by COA
shall be used in computing the rate of depreciation. Recipient of PPE
shall be covered by Property Acknowledgement Receipt. Any
unserviceable PPE shall be returned to the Barangay Treasurer for the
cancellation of the Property Acknowledgement Receipt and shall be
reported in the Inventory and Inspection Report of Unserviceable
Property.
 Infrastructures and reforestation projects which
are for public use and not for the exclusive use of
the barangay are considered public
infrastructure/reforestation projects.

The cost of the projects and the cumulative

cost of repairs and maintenance shall be
monitored using the appropriate registries such
as, but not limited to:
1. Registry of Public Infrastructure – Roads,
highways and bridges
2. Registry of Public Infrastructure – Parks,
plazas and monuments
3. Registry of Reforestation Projects
 *The five funds to be maintained in the
Registry of Appropriations and Commitments of
barangays are:
1. General Fund

2. 20% Development Fund

3. Calamity Fund

4. Sangguniang Kabataan Fund

5. Gender and Development Fund

 *Section 29, par 1 of the Constitution provides that: No money
shall be paid out of the treasury except in pursuance of an appropriation
made by law. Laws, rules and regulations of the government provide
that all disbursements of public funds, except those received for specific
purposes, shall be covered by an approved General Appropriation
Ordinance (GAO) authorizing appropriation for the annual budget, the
expenditures items of which shall be in accordance with the Philippine
Government Chart of Accounts under NGAS. Unless authorized by the
DBM and covered by subsequent Sangguniang Barangay Resolution
approving the appropriation, in no case shall commitments exceed the
approved appropriation.

Charges (deductions) against the appropriated funds shall be based

on the commitments made by the Barangay as shown in the
Disbursement Vouchers, Payroll for personal services, Contracts or
Purchase Orders, and Purchase Requests. Expenses for personal
services, maintenance and other operating expenses, and financial
expenses shall be charged against respective appropriation; while
investments, purchase of property, plant and equipment, and
construction of public infrastructures and reforestation projects shall be
charged against appropriation for capital outlay.
 *The Barangay Treasurer shall be responsible in
handling collections of income and other receipts of the
Barangay and the deposit of the same with Authorized
Government Depository Bank (AGDB), such as:
Development Bank of the Philippines, Land Bank of the
Philippines, and Veterans Bank of the Philippines. However,
agencies may seek authority from Monetary Board of the
Banko Sentral ng Pilipinas to designate other depository
banks.
All collections shall be acknowledged by the issuance of
a pre-numbered Official Receipt or its equivalent like Real
Property Tax Receipt and Community Tax Certificate subject
to proper custody, accountability and audit, which shall be
secured from the City/Municipal Treasurer. All collections by
the Barangay Treasurer for the Barangay shall be reported
in the Summary of Collections and Deposits, and shall be
deposited with AGDB daily or not later than the following
banking day.
 * Basic requirements applicable to all classes of
barangay disbursements are:
1.Existence of appropriation sufficient to cover the
expenses.
2.Legality of the expenses and in conformity with
rules and regulations.
3. Approval of the expenses by the Punong
Barangay.
4. Submission of documentary evidence to establish
the validity of the expenses.

*The following registries shall be maintained for

barangay disbursements:
1. Check Disbursements Register
2. Petty Cash Fund Register
3. Cash Disbursements Register
4. Cash on Hand and in Bank Register
 Modes of disbursements may be classified into two,
namely:
1. By check - Commercial checks for disbursements
is covered by deposit with AGDB. The check shall be
signed by the Barangay Treasurer and countersigned
Punong Barangay.

2. By cash (through Barangay

Treasurer/Accountable Officer)

Cash advance was given to Barangay

Treasurer/Accountable Officer and shall be used solely
for payment of salaries, honoraria, and other allowance
due the barangay officials and employees.

Disbursements made by petty cash custodian out of

his petty cash fund. The petty cash fund shall be
maintained using the imprest system.
 *Requisition, procurement, issuance, physical
inventory and loss of supplies and materials are governed
by existing government rules and regulation. Except in
emergency cases, all procurement shall be covered by
Approved Procurement Program as required in RA 9184.
Procurement of supplies shall be charged directly to
Maintenance and Other Operating Expenses and shall be
recorded using the appropriate expense accounts.
Supplies, inspected by Inspection Committee, shall be
accepted by Barangay Treasurer, who will act as the
Property Officer of the barangay. The cost of supplies and
materials acquired through purchase shall be based on
the invoice cost.

Issuance of supplies and materials shall be covered by

an approved Requisition and Issue Slip. The recipient of
small items with more than one year life shall be
responsible for its upkeep during the estimated life of the
item and shall be issued an Inventory Custodian Slip.
 *The following reports shall be prepared for
PPE of barangays:
1. Inventory and Inspection Report of
Unserviceable Property
2. Report on the Physical Count of Property
3. Inspection and Acceptance Report

*The Construction Period Theory provides that

all costs incurred during the construction of Public
Infrastructures and Reforestation Projects shall form
part of the cost of the projects. Expenses incurred
after the completion shall be charged to operation.
 *The two types of Trial Balance are:

1. Pre-Closing Trial Balance

It is prepared after all the adjusting entries have
been recorded in the General Journal and the
accounts are posted to the General Ledger and
respective Subsidiary Ledger.

2. Post-Closing Trial Balance

It is prepared at year-end after all the closing
journal entries have been recorded in the General
Journal and the accounts are posted to the General
Ledger.
• The financial statements and supporting schedules
for barangays are:

1. Balance sheet
2. Statement of income and expenses
3. Statement of cash flows
4. Statement of government equity
5. Notes to financial statements
6. Schedule of public infrastructures
7. Schedule of reforestation projects
8. Schedule of accounts receivable
9. Schedule of accounts payable
 *The following are the duties and responsibilities of
the city/municipal accountant:

1. Maintain the General Journal, General Ledger,

Subsidiary Ledgers, and Registries of Public
Infrastructures/Reforestation Projects for each of the
barangays under the city/municipality.

2. Prepare Journal Entry Voucher to record the

financial transactions of barangays based on the certified
registers and supporting documents submitted by the
Barangay Record Keeper.

3. Record the Journal Entry Vouchers in the General

Journal and post journal entries to the General Ledgers
and Subsidiary Ledgers.
 4. Prepare the required monthly and year-end Trial
Balances, Financial Statements and reports/schedules for
each of the barangays.

5. Prepare and submit the Bank Reconciliation

Statement to COA auditor/audit team leader concerned.

6. Consolidate the year-end trial balances and financial

statements and reports/schedules of the barangays.

7. Submit monthly and year-end barangay individual

financial reports to the Sangguniang Barangay, and the
printed and digital copies of the consolidated year-end trial
balances, financial statements and reports/schedules of
the barangaya together with those of the city/municipality
to GAFMIS-COA and to the auditor/audit team leader
concerned.