Philippine Public Sector Accounting

1.1 General Provisions, Standards (PPSAS)

Basic Standards and • Are accounting standards based on the

International Public Sector Accounting
Policies Standards (IPSAS) bases of which are the
IFRS.
• Processes and considerations in the
Definition (Sec. 109, P.D. 1445) development of the PPSAS :
o Applicability of the IPSAS to Philippine
Download (Sec. 109, P.D. 1445) setting.
o Philippine application guidance was
• Government Accounting encompasses
issued to change the accounting
the process of analyzing, recording,
principle of IPSAS found to be in conflict
classifying, summarizing, and
with Philippine laws, rules, and
communicating all transactions involving
regulations.
the receipt and disposition of
o For improving fair presentation, if
government funds and property and
significant, disclosure requirements
interpreting the result thereof.
were amended.
o assigned the same number as the
IPSAS, but if the PPSAS has no IPSAS
Objectives of Government equivalent number, a series starting
with 100 will be used and shall be
Accounting (Sec. 110 P.D. 1445) withdrawn if IPSAS issued an
equivalent standard.
• To produce information concerning past
o Relevant accounting standards were
operations and present conditions;
researched to deal with financial
• To provide a basis for guidance for future
reporting issues not dealt with IPSAS.
operations;
o Submission of a draft for consideration
• To provide for control of the acts of public
of the COA, if the standard was
bodies and offices in the receipt, disposition
exposed to significant changes and
and utilization of funds and property; and
unresolved issues.
• To report on the financial position and the
results of operations of government
• Responsibility
agencies for the information and guidance
o Government resources shall be utilized
of all persons concerned.
efficiently and effectively in accordance
with the law.
o The head of the government agency
Public Sector Accounting Standards shall be directly responsible in
implementing this policy and the
Board (PSASB) resources entrusted to them.
o All those exercising authority over a
• Was created by COA in 2008 in order to
government agency shall share fiscal
formulate and implement the Philippine
responsibility.
Public Sector Accounting Standards
(PPSAS) and establish linkages with
• Accountability
international bodies, professional
o A government officer entrusted with the
organizations and academe on accounting
possession of government resources is
related fields on financial management.
responsible for the safekeeping and
therefore should be properly bonded.
 o Transfer of funds from one officer to
another shall be made after
authorization from the COA, which is
properly documented in invoice and
receipt.
• Liability
o Unlawful use of government resources
shall be the personal liability of the
employee found to be directly
responsible.
o Every accountable officer shall be liable
for all losses arising from the unlawful
use or negligence in safekeeping of
resources.
o No accountable officer shall be relieved
from liability merely because he acted
under the direction of a superior (unless
he informed in writing his superior of the
illegality of such transaction, wherein he
will be secondarily liable).
o An accountable officer shall immediately
notify the COA of any loss of
government funds due to "force
majeure" within 30 days from its
occurrence.
Government Offices Charged with
Accounting Responsibility
• Commission on Audit (COA)shall:
o keep the general accounts of the
government;
o promulgates accounting rules and
regulations and
o Submits reports to the President and
Congress within the time fixed by law.
• Department of Budget and Management
(DBM) shall be responsible for the:
o formulation and implementation of the
National Budget;
o responsible for the efficient and sound
utilization of government funds and
revenues and
o Validation and assignment of new
account codes.
• Bureau of Treasury (BTr) shall :
o receive and keep the national funds and
manage and control the disbursements;
o Maintains accounts of all financial
transactions of all national government
offices/agencies.
• Government Agencies
o Responsible in directly implementing
the projects of, and performing the
functions delegated by the government.
o required by law to have budget and
accounting departments/divisions who
shall:
▪ maintain and keep current the
accounting books and budget
records reconciled with COA and
DBM
▪ provide advice on the financial
condition and status of the
appropriations and allotments of the
agency as its Head may require, and
▪ Develop and conduct procedures
designed to meet the needs of
management.
•
o classified according to the type of
governmental organizational unit:
▪ National Government Agencies
(NGAs)
▪ Local Government Units (LGUs)
▪ Government-Owned and Controlled
Corporations(GOCCs) and their
subsidiaries
o Shall adopt the PPSAS except for
agencies classified as Government
Business Enterprise or
GBEs Download Government
Business Enterprise or GBEs which
shall adopt the IFRS.
Concepts of Responsibility
Accounting
• Responsibility accounting involves reporting
data on revenues and cost controlled by a
manager.
• A responsibility reporting system involves
the preparation of a report for each level of
responsibility wherein actual costs is
compared with flexible budget data.
• Evaluation of a manager’s performance is o standards, policies, guidelines, and
based on matters directly under his control. procedures in accounting for
government funds and property
Basic Accounting and Budget o coding structure and accounts
o accounting books, registries, records,
Reporting Principles
forms, reports, and financial statements

• GAAP in accordance with the PPSAS and

pertinent laws, rules and regulations.
• Accrual basis of accounting
• The Budget basis for the presentation of budget
information in the financial statements in
accordance with PPSAS 24. (comparison of
budget and actual amounts)
• Revised Chart of Accounts prescribed by the
Commission on Audit.
• Double-entry bookkeeping
• Financial statements based on accounting and
budgetary records. Legal Basis
• Fund cluster accounting - books of accounts
and budget records are maintained according • Article IX-D, Sec 2 par (2), 1987 Philippine
to their type of fund.
Constitution
• Fund cluster -accounting entity for recording
• Mandates COA to promulgate Accounting
expenditures and revenues associated with a
specific type of activity. rules and regulations
• General Purpose Financial reporting

The Government Accounting Manual (GAM)

1.2 The Philippine Budget
Process

• Is prescribed to be used by all national

government agencies and local government
units.
• shall serve as a guide in the:
Government Budgeting
•
o preparation of the general purpose • Refers to methods and practices of
financial statements in accordance with government planning, adopting and
the PPSAS and other financial reports executing financial policies and programs.
o reporting of budget, revenue, and
expenditure in accordance with the
PPSAS
• aims to update the :
Government Budget
• refers to a plan for financing government
activities for a fiscal year,
• it is a definite proposal of estimates of
receipts and expenditures.
Budgetary Approaches
• Bottom-Up Budgeting Approach
• Incremental Budgeting Approach
• Zero-based budgeting Approach
• Performance-Informed Budgeting
Budgetary Approaches
• Bottom -Up Budgeting Approach - several
parties participates in the preparation of the
budget, starting from the lowest to the highest
level of the Government. This is the opposite of
“top-down" budgeting wherein the budget
preparation starts from the agency heads.
• Incremental Budgeting Approach - current
year budget is based on previous year’s
budget, which is just adjusted for any variances
experienced in the past. It also called the "roll
over” approach and this is prone to abuse.
• Zero-based budgeting Approach - the current
year' budget is formulated without regard to the
previous year’s budget. Government agencies
are required to justify their current year’s
programs and expenditures. This is a "back -to-
zero" or "clean slate" approach. It promotes
efficient and effective utilization of funds.
• Performance-Informed Budgeting - uses
performance information to deciding where the
funds will go.
Types of Budgets
• Special budget
• Annual budget
• Line Item budget
• Performance Budget
• Obligations budget
Types of Budgets and
Budgetary Terms
• Supplemental budget - supplements or adjust
the previous budget which is deemed
•
inadequate for its intended purpose.
Annual budget - covers a period of one year
and forms the basis for the annual
appropriation.
• Special budget - provides for items not
adequately covered or not included in the GAA.
• Line Item budget - focuses on specific
expenditures such as salaries and wages,
travel expenses, freight, materials, supplies and
equipment.
• Performance Budget - a plan of activities to be
undertaken including their related costs, with
the emphasis on meeting targets and desired
results. The main focus in on the work to be
done or services to be rendered.
• Obligations budget - focuses on expenditures
in incurred in the current year which are to be
paid either in the same year or in the following
year.
Budgetary Accounts
• Appropriation - authorization by a legislative
body to allocate funds for a specified purpose
• Allotment- authorization to agencies to incur
obligations or the "obligational authority"
• Obligation - amount contracted by an
authorized officer for which the government is
liable.
• Disbursements- actual amount paid out of the
budgeted amount.
Kinds of Appropriations
• New General Appropriations - authorization
made by a legislative body to allocate funds for
purposes specified by a legislative body or
similar authority.
• Continuing Appropriations- authorizations to
support the incurrence of obligations beyond
the budget year (e.g., multi-year construction
projects).
• Supplemental Appropriations-additional
appropriations to augment the original
appropriations which proved to be insufficient.
• Automatic Appropriations-authorizations
programmed annually which do not require
periodic action by Congress.
• Unprogrammed Funds-standby appropriations
which may be availed only upon the occurrence
of certain instances.
• Retained Income Funds-collections which the
agencies can use directly in their operations
• Revolving Funds -receipts from business-type
activities of agencies which are authorized to
be constituted as such. These are self-
liquidating and all obligations and expenditures
incurred by virtue of said business-type activity
shall be charged against the fund.
• Trust Receipts- receipts by a government
agency acting as an agent.
1.2.1 The Philippine
Budget Process and the
National Budget
National Budget
(Government Budget)
• is the government's estimate of the sources and
uses of government funds within a fiscal year.
• is the basis for expenditures and is the
government's key instrument for implementing
its socio-economic objectives.
• The Bottom-Up Budget approach is used by
the Philippine Government in preparing its
budget. Several parties participate in the
preparation of the budget, starting from the
lowest to the highest level of the Government
and even the ordinary citizens.
• In 2011, The Philippine Government adopted
the “Zero-based budgeting" approach. The
current year's budget is formulated without
regard to the previous year’s budget.
Budget
Preparation
• This is where the estimates for revenues and
expenditures are prepared
• The main agency involved is the Development
Budget Coordination Committee
(DBCC) composed of the following economic
agencies:
o DBM
o Dept. of Finance
o NEDA
•
o BSP
and the Office of the President for oversight
• It starts with the "Budget Call" for all
government agencies which contains the
budget parameters.
• Each agency is required to submit its detailed
budget proposals in the Technical Budget
Hearings
• After consolidation, it is presented to the
President and Cabinet members for further
refinement and prioritization.
• The DBCC prepares the finalized budget
proposal and submits the same to the President
and cabinet members for approval.
• The President submits the budget to Congress
for approval.
Budget Legislation
Budget Legislation
Budget Execution
• The President submits the annual budget
proposal to Congress. Documents and Authority
• It starts with the enactment of the Bill. Congress
assigns the General Appropriation Bill (GAB) to
the Committee on Appropriations (CA).
• Proposed budget is reviewed by the CA. Each Budget Execution Documents (BEDs)
agency is summoned to justify their budgets.
• The CA presents to the house body the • These are reports used in the releasing of
proposed budget. It passes through (3) allotments to government agencies.
readings.
• The Congress submits it to the Senate Finance
Committee (SFC) for hearings and deliberation.
• The SFC submits amendments to the GAB to General Appropriations Act Release
the Senate for approval. Document (GAARD)
• The Bicameral Committee composed of both
houses convenes to resolve the differences. • Serves as obligational authority for the
• The common version is submitted to the comprehensive release of budgetary items
President, for “line item veto power ". appropriated in the GAA categorized as “For
• The President signs it to the Law “The General Comprehensive Release".
Appropriations Act (GAA).
Special Allotment Release Order (SARO)

• Covers budgetary items under "For Later

Budget Execution Release" subject to compliance of required
documents or clearance. Ex. Calamity Fund
Budget Execution
General Allotment Release Order (GARO)
• This is the implementation of the GAA.
• Comprehensive authority issued to all national
• This contains the agencies targets and plans
government agencies, in general, to incur
for the financial year.
obligations not exceeding an authorized
• Allotments are issued, chargeable against the
amount for a certain purpose during a specified
regular agency budget by the DBM.
period. It covers expenditures common to most
• Agencies may submit request for availment
agencies without need of special clearance. Ex.
from special purpose funds.
Retirement and Life Insurance Fund
• Agencies are mandated to submit based on the
National Expenditure Program (NEP),
the Budget Execution Documents (BEDs)
• Cash releases are made to agencies to cover
obligations that are current or carried forward
from the previous year by the Bu. of Treasury Budget Disbursement Authority's
(BTr) through the Budget Disbursement
Authorizations (BDAs). (BDAs)

• These are documents needed for government

agencies to have access to the government
funds.
Notice of Cash Allocation (NCA)
• Authority issued by the DBM to central, regional
and provincial offices and operating units to
cover their cash requirements.
• The NCA specifies the maximum amount of
cash that can be withdrawn from the
government servicing bank (GSB) in a certain
period. This is based on the agency's Monthly
Cash Program (MRP).
Notice of Transfer of Allocation (NTA)
• Authority issued by an agency's Central Office
(CO) to its regional operating units (ROU) to
cover the latter’s cash requirements.
• Those that are excessive, inappropriate or
illegal are not passed in audit.
• COA recommends means for setting them right
if such is still possible.
• Financial Statement of agencies are submitted
to DBM and COA on a quarterly and annual
basis which shows how these agencies used
up their allotments or cash allocations.
BFARs
These are reports submitted by the
government agencies to DBM and COA to
monitor the conformance of actual results with
the planned targets.

Non-Cash Availment Authority (NCAA)

Monthly Report of Disbursements (MRD)
• Authority issued by the DBM to agencies to
cover the liquidation of their actual obligations
• Shows the disbursements of the entity during
incurred against available allotments for
the month, classified according to type of
availment of proceeds from loan/ grants
disbursement authority.
through supplier's credit/ constructive cash.
• This report is submitted 30 days after the end
of each month.
Cash Disbursement Ceiling (CDC)

• authority issued by the DBM to agencies with

foreign operations like the DFA allowing them Quarterly Physical Report of
to use income collected by their foreign service Operation (QPRO)
post to cover their operating requirements.
• Shows the agency's physical accomplishments
in a given quarter vs its physical targets.
• This report is submitted within 30 days after
Note: the end of each quarter.
Disbursements are most commonly made
through checks that are chargeable against the
account of the Bureau of Treasury under the Statement of Appropriations, Allotments,
scheme called "Modified Disbursement System Obligation, Disbursements, and
(MDS) Checks". There are also other modes of Balances (SAAODB)
disbursement available that we will discuss
later. • Shows the agency's authorized appropriations,
allotments received, obligations incurred,
Budget Accountability disbursements
unreleased
made, the
appropriations,
balance of
unobligated
allotments, and unpaid obligations.
Budget Accountability • This report is submitted within 30 days after
the end of each quarter.
• Agencies report their actual physical and
financial performance through the submission
of Budget Financial Accountability Reports
(BFARs).
• The Commission on Audit (COA) is in charge of
assessing agency performance.
Summary of Appropriations, Allotments,
Obligation, Disbursements, and Balances by
Object of Expenditure (SAAODBOE)
• Shows the agency's authorized appropriations,
allotments received, obligations incurred,
disbursements made, the balance of
unreleased appropriations, unobligated
allotments and unpaid obligations with details of
expenditures.
• This report is submitted within 30 days after
the end of each quarter.
List of Allotments and Sub-Allotments(LASA)
• Shows the allotments received by the agency
from DBM and the sub-allotments issued by the
agency's CO or RO to lower operating units.
• This report is submitted within 30 days after
the end of each quarter.
Statement of Approve Budgets, Utilizations,
Disbursements, and Balances (SABUDB)
• This report is prepared by agencies that have
the authority to use their revenues. It shows the
Budgeted revenue, the utilizations and
disbursements, and the unutilized amounts
• This report is submitted within 30 days after
the end of each quarter.
Summary of Approved Budgets, Utilizations,
Disbursements, and Balances (SABUDBOE)
• This report is prepared by agencies that have
the authority to use their revenues. It shows the
Budgeted revenue, the utilizations and
disbursements, and the unutilized amounts.
• This report is submitted within 30 days after
the end of each quarter.
Quarterly Report of Revenue and Other
Receipts (QRROR)
• Shows the actual revenues and other receipts
remitted to the Bu. of Treasury (BTr) and
deposited in authorized government depository
banks in a given quarter.
• This report is submitted within 30 days after
the end of each quarter.
Aging of Due and Demandable
Obligations (ADDO)
• shows the name of creditors, amounts owed,
an’d the no. of days these amounts are
outstanding.
• This report is submitted within 30 days after
the end of each year.
Consolidated Statement of Allotments,
Obligations, and Balances per Summary of
Appropriations (CSAOBSA)
• this report is based on SAAODB and
SAAODBOE.
• This report is submitted on or before February
14 of the following year.
The DBM and COA perform periodic reviews of
the agency's performance and budget
accountability and report this to the President.
In case of non-submission of the reports on
time, the units concerned will be penalized by
DBM by withholding their salaries.
These documents are also the basis of the
COA in auditing government agencies. These
budgetary reports and other budgetary records
provide information in preparing the agency's
Statement of Comparison of Budget and Actual
Amounts which is one of the components of a
complete set of Financial Statements.

2.1 The Government
Accounting Process
Government Accounting is
primarily budgetary accounting. It does not
only provide information on past events and
current transactions of the government, but it
also revolves around budget information in
accordance with PPSAS 24.
And all of this is under the supervision of
the Commission on Audit (COA). But, who is
COA? Let us first get to know COA and the
importance of its role in the government
accounting process to safeguard the funds and
resources of the government. Facing the
current situations, do you think COA is
effective in doing its' job.
The General Accounting Plan
(GAP)
 shows the overall accounting system of a
government agency/unit
 It includes the source documents, flow of
transactions, and its accumulation in the books
of accounts and conversion of financial
information into reports.
The New Government Accounting
Systems (NGAS)
 Budgetary Accounts System
o involves the preparation of the budget
release documents,
o monitoring and recording of
o
allotments, releasing of sub-allotments and
recording and monitoring of obligations
 Receipts/Income and Depository System -
covers acknowledging and reporting
income/collections and deposits with AGDBs
 Disbursement Systems - constitutes
payments during the period by cash or check.
 Financial Reporting System
o preparation and submission of trial
balances and reports and
o Submission of the financial statements.
2.1.1 The Revised Chart of
Accounts (RCA)
In Financial Accounting, we have
learned that a Chart of Accounts is a list of all
account titles used by a business entity. This is
the same as a government entity. The main
difference between the chart of accounts of a
business entity and a government entity is the
use of Account Codes.
 provides the framework within which the
accounting records are constructed
 It is a list of general ledger accounts
consisting of real and nominal accounts.
 Contains the description of all the accounts
and the instructions as to when these are to
be debited or credited to achieve uniformity
in the recording of government financial
transactions.
 The Chart of Accounts is prescribed for use
by all national government agencies and
local government units.
 The original Chart of Accounts was revised
from the original 3 digits to eight (8) digits.
 The latest revision of the RCA was in 2019
adopted under COA Memo-Circular 2020
dated January 8, 2020. As we have already
mentioned in our previous discussion of the
GAM, the RCA is under Volume III of the
GAM.
 Another peculiarity is the classification of
the Expense accounts as follows:
o Personnel Services(PS)- ex. salaries
and wages, employee allowances and
benefits
 o Maintenance and Other Operating
Expenses(MOOE)- ex. supplies, utility
expense
o Capital Outlay (CO) - Equipment,
Machinery, etc.
o Financial expenses(FE)- ex. bank and
other financial charges, direct costs-
COGM/COS, non-cash expenses-
depreciation, amortization, impairment
loss
The COA RCA is an 8-digit code grouped as
follows:
2.1.2 The Unified Account
Code Structure (UACS)
The Unified Accounts Code Structure or UACS is a
government-wide harmonized budgetary, treasury
and accounting code classification framework jointly
developed by the Department of Budget and
Management (DBM), the Commission on Audit
(COA), the Department of Finance (DOF) and the
Bureau of the Treasury (BTr) to facilitate reporting of
all financial transactions of agencies including
revenue reporting.
The Unified Account Code
Structure (UACS)
 The objective of the government-wide UACS is
to establish the accounts and codes needed in
reporting the financial transactions of the
National Government of the Republic of the
Philippines.
 Provides a framework for identifying,
aggregating, and reporting financial
transactions in budget preparation, execution,
accounting, and auditing.
 The key purpose of the UACS is to enable the
timely and accurate reporting of actual revenue,
collections, and expenditures against budgeted
programmed revenues and expenditures.
 Classification:
o Funding Source (8 digits)
o Organization (12 digits)
o Location (9 digits)
o Major Final Output -MFO/Program Activity
and Project-PAP (15 digits)
o Object Code (10 digits)
The RCA as Object Code in the UACS
 Its' purpose is to capture all government
financial transactions and enable the
classification and coding of transactions for
reporting revenues and expenditures on the
economy as well as internal departmental
analysis and decision-making by oversight
agencies.
This new 10 digit Code is what we call
the RCA-UACS Object Code.
2.1.3 The Books of
Accounts and Budget
Registries
The Books of Accounts -accounting records
consisting of Journals and Ledgers.
1. Journals
 General Journal
 Cash Receipts Journal
 Cash Disbursement Journal
 Check Disbursement Journal
2. Ledgers
 General Ledger
 Subsidiary Ledgers
The Books of Accounts
 Are accounting records maintained by the
accounting unit of the agency.
 Separate books of accounts are
maintained by fund cluster.
General Journal (GJ) (Appendix 1 - GJ)
 Shall be maintained in the Accounting
Division/unit by fund cluster.
 Only transactions not recorded in the
Special Journals shall be recorded in this
journal.
Cash Receipts Journal (CRJ) (Appendix 2 -
CRJ)
 used to record the Registry of Collections
and Disbursements (RCD) / Cash Receipts
Registry (CRReg)
 Submitted by the collecting officers to the
Accounting Div./Unit by fund cluster.
Cash Disbursements Journal
(CDJ) (Appendix 3 - CDJ)
 Used by the Accounting Div./Unit to record
the disbursements made by the Disbursing
Officer.
 shall be maintained by fund cluster
Check Disbursements Journal
(CkDJ) (Appendix 4 - CkDJ)
 Used to record the disbursements through
checks made by the Disbursing Officer in
the Accounting Div./ Unit.
 shall be maintained by fund cluster
General Ledger (GL) (Appendix 5 - GL)
 summarizes all transactions recorded in the
journals
 Accounts in the General Ledger are
arranged according to their sequence in the
Revised Chart of Accounts (RCA)
Subsidiary Ledger (SL) (Appendix 6 - SL)
 shows the detail for each control account in
the GL which is maintained per account
and fund cluster by the Accounting Div./Unit
The Budget Registries -budget records used
to monitor the budget.
Examples are:
 Registries of Revenues and other Receipts
(RROR)
 Registry of Appropriations and Allotments
(RAPAL)
 Registries of Allotments, Obligations, and
Disbursements (RAOD)
 Registries of Budget Utilization and
Disbursements (RBUD)
The Budget Registries
 Are budget records used to monitor the
budget?
 Are actually "log books" with debit and credit
columns?
 Are maintained by the budget division of the
agency maintains per fund cluster.
Registry of Revenues and Other
Receipts (Appendix 7 - RROR )
 used to monitor the budgeted amounts, actual
collections and remittances of revenue and
other receipts.
Registry of Appropriations and
Allotments (Appendix 8 - RAPAL)
 Used to monitor appropriations and allotments.
This is to ensure that allotments will not exceed
appropriations.
Registry of Allotments, Obligations and
Disbursements (Appendix 9A - RAODPS)
 used to monitor
the allotments received, obligations incurred
against the corresponding allotment, and the
actual disbursements
 Ensures that obligations incurred will not
exceed allotments while actual disbursements
will not exceed the obligations incurred.
 is maintained separately for each “object of
expenditure” (PS, MOOE, FE,CO)
Registry of Budget Utilization and
Disbursements ((Appendix 10A -
RABUDPS)
 Used to record the approved special budget
and corresponding utilization and
disbursement charged to Retained Income.
 is maintained for each “object of expenditure”
( PS,MOOE,FE,CO)
Classification of Expenditures as to
Object
 Personnel Services (PS) -pertains to all types
of employee benefits, e.g. salaries , bonuses,
allowances, cash gifts
 Maintenance and Other Operating Expenses
(MOOE) -pertains to various operating
expenses other than employee benefits and
financial expenses e.g. travel, utilities, supplies
etc.
 Financial Expenses (FE)-pertains to finance
costs e.g. interest expense, bank charges etc .
Including loss on foreign exchange
transactions.
 Capital Outlays (CO)-pertains to capitalizable
expenditures e.g. Acquisition of equipment,
 expenditures on the construction of public
roads, building, bridges etc.
Remember this:
 The books of accounts are maintained by
the accounting division/ unit while the
budget records are maintained by the
budget division/unit of the agency.
 Separate accounting records are
maintained for each fund cluster.
 COA shall keep the general accounts of the
government and preserve the vouchers and
supporting documents.
In financial accounting, the documents
themselves are the basis for recording the
transactions in the General and Special
Journals. But in government accounting, this is
not the case because every transaction should
be recorded first in the "Journal Entry
Voucher or the JEV" or the JV as we simply
call it.
The transactions for the day (source: abstract
of collections/disbursements and other
transactions-DR/CR Memos ) are summarized
in the daily JV, and from the daily JVs, the
monthly JV is prepared which is then recorded
in the Journals. As we have already studied
before, we have four types of Journals namely:

2.1.4 Basic Recordings 


General Journal
Cash Receipts Journal
 Cash Disbursements Journal
Now, that you are already familiar with the
 Check Disbursement Journal
books of accounts, the budget registries and
the UACS Object Codes, it is now time for
you to learn how to record the transactions of a
government entity in the Budget Registries and
the Books of Accounts.

2.1.4.1 Basic Recordings

in the Budget Registries
We have three three (3) basic recordings in the
budget registries:

 Appropriation-authorization made by the

legislative body to allocate funds for purposes
specifies by the legislative or similar authority.

 Allotment -is an authorization issued by the

DBM to government agencies to incur
obligations for specified amounts contained in a
legislative appropriation in the form of budget
release documents. It is also referred to as
Obligational Authority.
 Obligation-amount contracted by an
authorized officer from which the government is
held liable.

2.1.4.2 Basic Recordings

in the Journals
 17. Remittance of GSIS, Pag-ibig, Philhealth

The receipt and deposit of excess Cash

advance

Note:
Correction to entry
# 3, Description: Grant of cash advance for
payroll
# 4, Description: liquidation of payroll
# 17, Description: Remittance of Premiums to
GSIS, PAG-IBIG and Philhealth
# 19 Description: Collection of Billed Income
# 20 Description: Remittance of Billed Income
less BIR 10% retention fee
#22 Description: Remittance of Unbilled
Income less BIR 10% retention fee
#23 Description: Collection of unbilled Income
deposited to the AGDB
UACS Object Codes:
Due BIR ...............2020101000
Due GSIS..............2020102000
Due PAGIBIG......2020103000
Due Philhealth.. 2020104000
2.1.4.3 Adjusting Entries
Adjusting Journal Entries (AJEs)
Adjusting journal entries are made at the end
of an accounting period to allocate revenue
and expenses to the period in which they
actually occurred. AJEs are required every
time a financial statement is prepared to make
the statement truly reflective of the financial
condition of the entity at a given period.
Adjustments are of two main types:
1. Accrued items
2. Deferred items
In government accounting , Other
Adjustments shall also be made (if applicable)
for fair presentation of the results of operation
of the entity in the financial statements:
Other Adjustments
1. Unused NCA (National)
2. Petty Cash Fund
3. Unreleased Commercial Checks
4. Allowance for/Accumulated Impairment Losses
of asset accounts
5. Write-down of Inventories
6. Correction/Reclassification Entries
7. Adjustment for reversal of Impairment Losses
8. Depreciation Expense
9. Exchange differences on foreign currency
10. Other adjustments
Adjustment for Accrued Items
Asset/Revenue Adjustment.
Example: receivables for revenues already
earned but not yet collected nor billed as at the
year-end
Liability/Expense Adjustment.
Example: salaries and wages, water, electricity
and other expenses which are already incurred
but not yet paid.

Adjustment for Deferred Items
In contrast to the accrued items, it requires
asset/expense adjustments and
liability/revenue adjustment.
Asset/Expense Adjustments.
Examples of these adjustments are
prepayments.
Liability/Revenue Adjustments.
Examples are advance income collections.
Other Adjustments
Reversion of Unused Notice of Cash
Allocation.
For NGAs receiving subsidies from the national
government in the form of NCA, adjusting
journal entry shall be made for the reversion of
the unused or unutilized NCA at the end of the
accounting period.
Adjustments for Unreleased Commercial
Checks.
 A Schedule of Unreleased Commercial
Checks shall be prepared by the Cashier
for submission to the Accounting
Division/Unit
 All unreleased checks at the end of the
year shall be reverted back to the cash
accounts.
 A JEV shall be prepared to recognize the
restoration of the cash equivalent to the
unreleased checks and the recognition of
the appropriate liability/payable account.
This procedure shall not apply to “Cash-
Modified Disbursement System (MDS)” since
there is no actual cash with the GSBs.
2.1.4.4 Closing Entries
Closing Journal Entries
Closing journal entries are entries that close
out the balances of all nominal/temporary and
intermediate accounts at the end of the year.
The closure will reduce the balance of those
accounts to zero.
The nominal and intermediate accounts that
shall be closed at the end of the year are as
follows:
 Balance of all income accounts to the “Revenue
and Expense Summary” account
 Balance of all expense accounts to the
“Revenue and Expense Summary” account
1. To close the Income and Expense Accounts
to Revenue and Expense Summary
Account
2. To close "Subsidy from National
Government" to Revenue and Expense
Summary
3. To close the balance of "Revenue and
Expense Summary " to "Accumulated
Surplus/Deficit"
4. To close "Cash-Treasury-Agency Deposit -
Regular" to Accumulated Surplus Deficit
 Other Closing Entries.
For the purpose of preparing the financial
statements for the first, second and third
quarters, the closing entries shall be prepared,
but shall not be recorded in the books of
accounts.
2. 2 Revenues and Other
Receipts
Revenue
 Pertains to the gross inflow of economic
benefits or service potential during the reporting
period when those inflows result in an increase
in net assets/equity, other than increases
relating to contributions from owners.
Receipts
 refers to actual cash collections from all
sources during the period
Revenue funds
 Comprise of all funds derived from the income
of any agency of the government and available
for appropriation or expenditure in accordance
with the law.
Types of Funds
 General fund-fund available for any purpose,
other than those which other funds have been
designated to.
 Special fund-fund designated for a special
purpose
 Trust fund (Fiduciary Fund)-fund held by a
government agency of public officer acting as a
trustee, agent, or administrator for the
fulfillment of a condition.
 Revenue fund-comprises all funds derived
from the income of the government agency and
available for appropriation or expenditure in
accordance with the law
 Depository fund-fund held in an authorized
depository bank over which a recipient agency
retains control for the lawful purpose for which
the fund was received.
 Special Account in the GF (SAGFs)-
established to facilitate the funding of priority
activities of the government.
 Special Purpose Funds (SPFs)-funds that the
President of the Phils. Allocates for special
funds and projects.
o Amounts received in trust and from
business-type activities of government may
be separately recorded and disbursed in
accordance with relevant rules and
regulations.
4. Recording of receipts
o Receipts shall be recorded as revenue of
Special, Fiduciary or Trust Funds or Funds
other than the GF, only when authorized by
law.
5. Issuance of Official Receipt
o No payment of any nature shall be received
by a collecting officer without immediately
issuing an official receipt in
acknowledgement thereof.
6. Temporary Receipts
o At no instance shall temporary receipts be
issued to acknowledge the receipt of public
funds;

2. 2.1 Fundamental 7. Pre-numbered ORs

Principles of Revenues o The ORs shall be issued in a strict

numerical sequence.
and Other Receipts o All copies of each receipt shall be exact
copies or carbon reproduction in all
respects of the original;
1. Deposit/remittance of revenues

o All revenues accruing to an entity shall be 2.2.2 Sources of

Revenues
deposited/remitted in the National Treasury
(NT) or in any duly authorized government
depository,
o and shall accrue to the General Fund (GF)
of the NG; unless otherwise specifically
provided by law,

2. Receipt of all moneys and property

o All moneys and property officially received

by a public officer in any capacity or upon
any occasion must be accounted for as
government funds and government
property;
o except as may otherwise be specifically Exchange transactions
provided by law or competent authority,
 Are transactions in which one entity
3. Amounts received in trust receives assets or services, or has liabilities
extinguished, and directly gives
 approximately equal value (primarily in
the form of cash, goods, services, or use of
assets) to another entity in exchange?
 shall be measured at fair value of the
consideration received or receivable and
 shall be recognized when it
is probable that future economic benefits
or service potential will flow to the entity
and these benefits can be measured
reliably.
 Revenues received by the NGAs from
exchange transactions are derived from the
o a) sale of good, and
o b) provisions of services to third parties
or to other NGAs such as business and
service income
o c) use by other entity of assets yielding
interest, royalties or dividends.
Non-exchange transactions
 are transactions in which an entity either
receives value from another entity without
directly giving approximately equal value
in exchange, or gives value to another
entity without directly receiving
approximately equal value in exchange.
 the cash basis of accounting shall be
applied by all government agencies in
the recognition of revenue from non-
exchange transactions until a reliable
model of measurement of this revenue is
developed.
 shall be measured at the amount of the
increase in net assets recognized by the
entity, unless it is also required to recognize

a liability.
Where a liability is recognized and
subsequently reduced, because the taxable
event occurs, or a condition is satisfied, the
amount of the reduction in the liability
will be recognized as revenue.
 revenue of the NGAs from non-exchange
transactions are derived mostly from taxes,
gifts, and donations, goods in kind, and
fines and penalties.
Other Receipts
 Tax Remittance Advice - tax withheld
 Refunds of excess cash advances granted
to officers and employees.
 Receipt of subsidy assistance from other
NGAs, LGUs and GOCCs, and other
Funds
 Performance bond/ security deposit
 refund of an overpayment of expenses
 Collections made on behalf of another
entity or non-government /private
organization.
 Intra/Interagency fund transfer
Reporting of Collections and
Deposits
 at the close of business day, the
Collecting Officers shall prepare the Report
of Collections and Deposits (RCD) for
submission to the Accounting Office
/unit evidenced by ORs and validated
deposit slips. These shall be submitted
daily to COA.
 for field offices (FOs)/ operating units
(OUs) shall record their collections of
income chronologically in the Cash receipts
register (CRReg); then submit to the
mother unit the Certified true copy of the
CRReg and duplicate ORs and deposit
slips within 5 days at after the end of
each month for review and recording of
transactions in the CRJ by the Chief
accountant.
2.3 Disbursements and
Other Related
Transactions
Disbursements
 constitute all payments in cash, in whatever
manner (cash, check, or other means).
 Disbursements shall be supported by
Disbursement Vouchers (DVs) (including Petty
Cash vouchers) or Payroll.
The Disbursement System involves
the :
1. preparation and processing of disbursement
vouchers,
2. preparation and issuance of the check,
3. payment by cash
4. granting utilization, and
5. liquidation/replenishment of cash advances
The Disbursement Activities of the NGAs
 Starts from the receipt of the NCA from the
DBM.
 The NCA received maybe the net amount of the
TRA system.
 The NCA may be used for payment of PS,
MOOE, FE, CO, and other Miscellaneous
transactions.
2.3.1 Fundamental
Principles, Basic
Requirements and
Certifications for
Disbursements
Fundamental Principles for the
Disbursement of Public Funds
a. No money shall be paid out of any public
treasury or depository except in pursuance of
an appropriation law or other specific
statutory authority;
b. Government funds or property shall be spent or
used solely for public purposes;
c. Trust funds shall be available and may be spent
only for the specific purpose for which the
trust was created or the funds received;
d. Fiscal responsibility shall, to the greatest
extent, be shared by all those exercising
authority over the financial affairs,
transactions, and operations of the government
agency;
e. Disbursement or disposition of government
funds or property shall invariably bear
the approval of the proper officials;
f. Claims against government funds shall be
supported with complete documentation;
g. All laws and regulations applicable to financial
transactions shall be faithfully adhered to; and
h. Generally accepted principles and practices of
accounting as well as of sound management
and fiscal administration shall be observed,
provided that they do not contravene
existing laws and regulations.
Basic Requirements and Certification for
Disbursement of Public Funds
a. Availability of allotment/budget for
obligation/utilization certified by the Budget
Officer/Head of Budget Unit;
b. Obligations/Utilizations properly charged
against available allotment/budget by the Chief
Accountant/Head of Accounting Unit;
c. Availability of funds certified by the Chief
Accountant;
d. Availability of cash certified by the Chief
Accountant;
e. The legality of the transactions
and conformity with existing rules and
f.
regulations;
Submission of proper evidence to establish
g.
the validity of the claim; and
Approval of the disbursement by the Head of
Agency or by his duly authorized
representative.
2.3.2 Disbursement
Authority and Modes of
Disbursements
Disbursement Authority
1. The Notice of Cash Allocation (NCA)
 shall be the authority of an agency to
pay operating expenses, purchases of supplies
and materials, acquisition of PPE, accounts
payable, and other authorized disbursements
 through the issue of MDS checks, ADA, or
other modes of disbursements.
 The NCA specifies the maximum amount of
withdrawal that an entity can make from a
government bank (GSB) for the period
indicated.
 reduced by the estimated taxes to be
remitted by the agency thru the TRA based on
the following rates: PS- 8%; MOOE-5%; CO-
5%.
2. The Notice of Transfer of Allocation(NTA)
 shall be the authority of the regional and
operating units to pay their operating
expenses, purchases of supplies and materials,
acquisition of PPE, accounts payable, and
other authorized disbursements through the
issue of MDS checks, ADA, or other modes
of disbursements.
3. Cash Disbursement Ceiling
 authorization issued by the DBM to DFA and
other agencies with foreign posts to utilize
their collections retained by their Foreign
Service Posts to cover operating requirements,
but not to exceed the released allotment to
the said post.
4. Tax Remittance Advice (TRA)
 refers to a serially-numbered document
prescribed by the DBM that should be used
by the NGAs in the remittance of withheld
taxes on funds coming from DBM.
5. Non-Cash Availment Authority (NCAA)
 the authority issued by the DBM to agencies to
cover liquidation of their actual obligations
against available allotments through Suppliers'
Credit/Constructive Cash.
 a non-Cash Disbursement ( Direct Payment
scheme of Loan Availment) is made through a
JEV only issued by the BTr to the agency to
record payment of goods to the supplier or
contractor.
Modes of Disbursements
1. Checks (MDS or Commercial checks)
2. Cash (out of cash advance to authorized
disbursing officer)
3. Cashless payments:
o Advice to Debit Account (ADA),
o Electronic Modified Disbursement System
(eMDS),
o Cashless Purchase Card System (Credit
Card),
o Non-Cash Availment Authority (NCAA), and
o Tax Remittance Advice (TRA)
Types of Checks
1. Modified Disbursement System Checks -are
checks issued by government
agencies chargeable against the account of
the Treasurer of the Philippines, which are
maintained with different MDS-GSBs; and
2. Commercial Checks -are checks issued by
NGAs chargeable against the Agency
Checking Account with GSBs. These shall
be covered by income/receipts authorized to be
deposited with AGDBs.
COA rules on the Grant and
Liquidation of Cash Advances:
 No cash advance shall be given unless for
a legally authorized specific purpose;
 A cash advance shall be reported on and
liquidated as soon as the purpose for which
it was given has been served;
 No additional cash advance shall be allowed to
any official or employee unless the previous
cash advance given to him/her is
first settled/liquidated or a proper
accounting thereof is made;
 Except for cash advance for official travel, no
officer or employee shall be granted cash
advance unless he/she is properly
bonded in accordance with existing laws or
regulations.
 Only permanently appointed officials shall
be designated as disbursing officers;
 Only duly appointed or designated disbursing
officers may perform disbursing functions.
Officers and employees who are given cash
 advances for official travel need not be
designated as Disbursing Officers;
 Transfer of cash advance from one
accountable officer to another shall not be
allowed; and
 The cash advance shall be used solely for the
specific legal purpose for which it was
granted. Under no circumstance shall it be used
for encashment of checks or for liquidation of a
previous cash advance.
3.1 PPSAS 29 - Illustrative Entries
Cash and other for Receipt of
Financial Assets NCAs
Financial Assets include

• Cash;
• An equity instrument of another entity;
• A contractual right to receive cash or
another financial asset from another entity;
• A contractual right to exchange financial
instruments with another entity under
conditions that are potentially favorable; or
• A contract that will or may be settled in the
entity’s own equity instruments.
Cash-TRA and
Cash (1010100000 to 1010400000)
CIR
• Unlike the Cash account of business
entities, the government agency maintains
different types of Cash accounts depending
on its purpose and source of funds.

Entries authorizing the DFA or other Foreign

Service Posts to use their collections for their
foreign operations

*BSP/local Current Account-39/Savings Account-7

(LBP,DBP,PVB,PNB,PAB,PPSB,UCPB)/Time deposit-5
(LBP,DBP,PVB,PNB,UCPB)

**BSP/foreign Current Account-1/Savings Account-4

(LBP,DBP,PNB,UCPB)/Time deposit-4
(LBP,DBP,PNB,UCPB)

Cash Equivalents (10105010-00)
• Only debt instruments acquired within 3
months before its scheduled maturity
date can qualify as cash equivalents.
These are in the form of Treasury Bills.
Investments (10201010-00 to 10207010-00)
• include financial assets at fair value, held to
maturity, and other investments.
Receivables (10301010-00 to 10305991-00)
• claims for cash or other assets from other
entities, such as loans and receivable
accounts, lease receivables, inter and intra-
agency receivables, and other receivable
Initial Recognition of Financial Asset
• An entity shall recognize a financial asset in
its statement of financial position when
it becomes a party to the contractual
provisions of the instrument. (Par. 16,
PPSAS 29)
Initial Measurement of Financial Assets
• When a financial asset at fair value
through surplus or deficit is recognized
initially, an entity shall measure it at its fair
value.
• In the case of a financial asset not at fair
value through surplus or deficit, the
financial asset is recognized at fair value
plus transaction costs that are directly
attributable to the acquisition, issue, or
disposal of the financial asset. (Par. 45,
PPSAS 29)
• If the financial asset is measured at fair
value through surplus or
deficit, transaction costs are expensed
outright.
Subsequent Measurement of Financial
Assets
After initial recognition, an entity shall measure
• financial assets at their fair values,
including derivatives that are assets,
without any deduction for transaction costs
it may incur on sale or other disposals
• Loans and receivables and Held-to-maturity
investments, which shall be measured
at amortized cost using the effective
interest method; and
• Investments in equity instruments that do
not have a quoted market price in an
active market and whose fair value
cannot be reliably measured and
derivatives that are linked to and must be
settled by delivery of such unquoted equity
instruments, which shall be measured at
cost. (Par. 48, PPSAS 29)
3.1.1 Accounting
for Cancelled and
Dishonored
Checks
Commercial Checks
• Unreleased commercial checks are checks
drawn but not yet released to the payees
• Unreleased commercial checks are not
physically canceled, so at the start of the
following year, the adjusting entry for canceled
checks is reversed to recognize the availability
of the checks for release.
• This entry is the same for commercial checks
canceled pertaining to current and prior
years.
• This procedure does not apply to the "Cash-
MDS account" because there is no actual
cash with the GSB. Recall that any unused
NCA is reverted back to the National
Government, therefore, the balance of the
"Cash-MDS account " is zeroed out at the end
of each period.
• Checks may be canceled when they become
stale, voided, or spoiled. The depository bank
considers a check stale if it has
been outstanding for over six months from
the date of issue or as prescribed.
• A stale, voided, or spoiled check shall
be marked canceled on its face and reported
as follows:
1.
1. Voided, spoiled, or unclaimed stale checks
with the Cashier shall be reported as
canceled in the List of Unreleased
Checks that will be attached to the Report
of Checks Issued (RCI.)
2. New checks may be issued for the
replacement of stale/spoiled checks in the
hands of the payees or holders in due
course, upon submission of the
stale/spoiled checks to the Accounting
Division/Unit.
• A certified copy of the previously paid DVs shall
be attached to the request for a replacement.
• A JEV shall be prepared to take up the
cancellation. The replacement check shall be
reported in the RCI.
Cash MDS accounts
If the canceled checks pertain to :
• current period - the account to be used is
"Cash, MDS-Regular" (10104040-00)
• prior period - the account to be used is
"Accumulated Surplus/Deficit" (30101010-00)
Dishonored Checks by Non-Payment
• the check is duly presented for payment and
payment is refused due to insufficiency of
funds to cover the payment.
• dishonored by the AGDB due to “Drawn
Against Insufficient Fund (DAIF)” or “Drawn
Against Uncleared Deposits (DAUD).”
Dishonored checks by Non-
Acceptance
• the check is duly presented for acceptance, and
such an acceptance is refused due to physical
defects of the checks.
• examples are post-dated checks, errors in the
date, the amount in words in figures, erasures
on the face of the check.
When a check drawn in favor of the
government is not accepted by the drawee for
any reason, the drawer shall continue to be
liable for the sum due and all penalties
resulting from delayed payments. Where the
reason for non-acceptance by the drawee bank
is insufficiency of funds, the drawer shall be
criminally liable, therefore.
Responsibility for dishonored
checks:
• When a check is dishonored, the Collecting
Officer should:
1.
1. issue a Notice of Dishonored Checks
(NDC) to the drawer and to each endorser.
Any endorser or drawee not given notice
will be relieved from liability
2. cancel the OR covering the dishonored
check.
• If necessary, the head of the agency shall
promptly institute the corresponding action for
the collection of the amount involved.
• If the Collecting Officer neglects his duties, he
shall be personally answerable for the
resulting loss suffered by the government.
3.1.2 Petty Cash
Fund / Cash
Shortage
(Overage)
Petty Cash Fund (10101020-00)
refers to the amount granted to a duly
designated Petty Cash Fund
Custodian(PCFC) for payment of authorized
petty or miscellaneous expenses which cannot
be conveniently paid through checks/List of
Due and Demandable Accounts Payable-
Advice to Debit Accounts (LDDAP-ADA)
Guidelines:
• The Head of the Agency shall approve the
amount of the PCF to be established.
• The PCFC shall be properly "bonded" or
insured whenever the established amount of
PCF exceeds P5,000.
• The Petty Cash Fund (PCF) to be set up shall
be sufficient for the recurring petty operating
expenses of the agency for one (1) month; for
Regional Offices for three (3) months.
• It shall be maintained using the Imprest
System.
• All replenishments shall be directly charged to
the expense account and at all times, the PCF
shall be equal to the total cash on hand and the
unreplenished expenses.
• The PCF shall be replenished as soon as
disbursements reach at least 75% or as
needed.
Accounting Policies
• The fund shall be kept separately from the
regular cash advances/collections and shall
not be used to pay regular expenses such as
rentals, light and water bills, and the like.
• PCF payments, through a Petty Cash Voucher
(PCV), should not exceed P15,000 for each
transaction, except when a higher amount is
allowed by law and/or specific authority by the
COA.
• Splitting of transactions is not allowed. All
PCF disbursements with approved PCV must
be supported by cash invoices, ORs, or other
evidence of disbursements;
• The unused balance of the PCF shall not be
closed/refunded at the end of the year. The
fund shall be closed only upon termination,
separation, retirement, or dismissal of the Petty
Cash Fund Custodian (PCFC), who in turn shall
refund any balance to close his/her cash
accountability; and
• At the end of the year, the PCFC
shall submit to the Accounting Division/Unit
all unreplenished Petty Cash Vouchers
(PCVs) for recording in the books of accounts.
• There should be canvass from at least three
suppliers for purchases involving P1,000
and above, except for purchases made while
on official travel;
Cash Shortage/Overage of
Disbursing Officer
Cash Overage
• discovered by the Auditor that cannot be
satisfactorily explained by the Disbursing
Officer shall be forfeited in favor of the
government and an OR shall be issued by the
Collecting Officer/Cashier.
• The cash overage shall be taken up
as Miscellaneous Income (40609990-00)
Cash Shortage
• discovered by the Auditor which is not restituted
by the Disbursing Officer despite demand in
writing by the Auditor shall be taken up
as receivable from the Disbursing Officer.
(prima facie evidence of misuse under the
Revised Penal Code (RPC )Art. 217)
3.1.3 Impairment
of Financial Assets
• An entity shall assess at the end of each
reporting period whether there is any
objective evidence that a financial asset or
group of financial assets is impaired.
• If any such evidence exists, the entity shall
measure the amount of loss
o The amount of loss is the difference
between the carrying amount of the
asset and the present value of
estimated future cash flows discounted
at the financial asset’s original effective
interest rate.
o The amount of the loss shall
be recognized in surplus or deficit.
• The carrying amount of the asset shall
be reduced either directly or through the
use of an allowance account.
o Allowance for Impairment - Accounts
Receivable (10301011-00 )
o Allowance for Impairment - Notes
Receivable (10301021-00 )
o Allowance for Impairment - Loans
Receivable (GOCC- 10301031-00;
LGU- 10301041-00)
o Allowance for Impairment -
Interest Receivable (10301051-00 )
o Allowance for Impairment -
Loans Receivable-Others (10301991-
00 )
• In the case of Accounts Receivable, the
Allowance for Impairment shall be provided
in an amount based on the collectibility of
receivable balances, and evaluation of such
factors as :
o the aging of accounts,
o collection experiences of the agency,
o expected loss experiences and
o identified doubtful accounts.
3.2 PPSAS 12 -
Inventories
INVENTORIES are assets that include:
• material or supplies Held for sale
(1040101000-1040101099) in the ordinary
course of operations
(examples: merchandise purchased by an
entity and held for resale, or land and other
property held for sale, agricultural produce);
or
• materials or supplies Held for distribution
(1040201000-1040202990) examples:
goods purchased or produced for
distribution to other parties for no charge or
for a nominal charge like educational books
produced by a health authority for donation
to schools).
• materials or supplies Held for
manufacturing or production
process (1040301000-
1040303000) examples: materials and
supplies awaiting use in the production
process);
• materials or supplies Held for
consumption or distributed in the
rendering of services (1040401000-
10404990) examples: office supplies,
ammunitions, maintenance materials;
• Semi-expendable Property (1040501000-
1040519000) examples: tangible items that
can't be classified as PPE
Cost of Inventories
• includes all costs of purchase, costs of
conversion (materials, labor, and
overhead), and other costs incurred in
bringing the inventories to their present
location and condition,
• excludes abnormal amounts of wasted
materials, labor, other production and
selling costs, administrative overheads that
do not contribute to bringing inventories to
their present location and condition.
• Trade discounts, rebates, and other
similar items are deducted in determining
the costs of purchase. (Pars. 18, 19 & 25,
PPSAS 12)
3.2.1
Measurement
/Cost
Formulas/Recognit
ion as
Expense/Impairme
nt
Measurement
• At the lower of cost and NRV. However,
where inventories are acquired through a non-
exchange transaction, their costs shall
be measured at their fair value as at the date
of acquisition; (Pars. 15-16, PPSAS 12)
• At the lower of cost and Current
Replacement Cost where they are held for
•
distribution or for consumption in the production
process of goods to be distributed;
In accordance with PPSAS 27, inventories
comprising agricultural produce that an
entity has harvested from its biological
assets shall be measured on initial recognition
at their fair value less costs to sell at the
point of harvest. (Par. 29, PPSAS 12)
Cost Formulas
• specific identification - the cost of inventories
of items that are not ordinarily interchangeable,
and goods or services produced and
segregated for specific projects, shall be
assigned by using the of their individual costs.
Specific identification of costs means that
specific costs are attributed to identified items
of inventory.
• weighted average cost formula-for large
numbers of items of inventory that are ordinarily
interchangeable
The Accounting Division/Unit shall be
responsible in computing the cost of inventory
on a regular basis as shown in the following
sample Supplies Ledger Card (SLC) (Appendix
57).
Recognition as an Expense
• the carrying amount of inventories are
recognized as an expense in the period
that is sold, distributed, exchange, or
consumed.
• the write-down of inventory to its NRV or
CRC is also recognized as an expense.
3.2.2 Inventory
Method/Disclosure
and Presentation
Perpetual Inventory Method
• Supplies and materials purchased for
inventory purposes shall be recorded using
the perpetual inventory system.
• requires accounting records to show the
amount of inventory on hand at all times

through the maintenance of the Supplies
Ledger Card (SLC) by the Accounting
Division/Unit and
• the Stock Card (SC) by the Supply and/or
Property Division/Unit for each item in
stock.
• Regular purchases shall be coursed
through the inventory account and issues
shall be recorded as they take place
(except for supplies and materials
purchased out of PCF for immediate use or
on emergency cases which shall be
charged directly to the appropriate expense
accounts.)
Semi-expendable Property.
• Tangible items below the capitalization
threshold of P15,000 shall be accounted
as semi -expendable property.
• Semi-expendable property that was
recognized as PPE shall be reclassified to
the
affected accounts. These tangible items
shall be recognized as expenses upon
issue to the end-user.
Accountability over Semi-expendable
Property
• Inventory Custodian Slip (ICS) shall be
issued to end-user of Semi-expendable
Property to establish accountability over
them.
• Accountability shall be extinguished upon
return of the item to the Property and
Supply Division/Unit or in case of loss,
upon approval of the relief from property
accountability.
3.2.3 Inventory
System / Receipt
and Disposition of
Inventories
Inventory System / Receip
Inventory Accounting System
• consists of the system of monitoring,
controlling, and recording of acquisition and
disposal of inventory.
• starts with the receipt of the purchased
inventory items.
• the requesting office in need of the inventory
items, after the Property and Supply
Division/Unit has determined that the items are
not available in stock, shall prepare and
cause the approval of the Purchase Request
(PR)
• based on the approved PR and after
accomplishing all the required procedures
adopting a particular mode of procurement, the
agency shall issue a duly approved
contract or Purchase Order (PO) physical
count/inventory, which is required semi-
annually, is an indispensable procedure for
checking the integrity of property custodianship.
Inventory Accounting Sub-Systems
• Receipt, Inspection, Acceptance, and
Recording Deliveries of Inventory Items
(RIARDI)
• Disposition of Inventories -Requisition and
Issue of Inventory Items-(RIII)
• Transfer and/or Disposal of Inventory Items
(TDII)
Record and Report Forms
• Supplies Ledger Card (SLC)
• Stock Card(SC)
• Inventory Custodian Slip(ICS)
• Purchase Request(PR)
•
•
•
Purchase Order (PO)
Inspection and Acceptance Report (IAR)
Requisition and Issue Slip (RIS)
• Report of Supplies and Materials
Issued (RSMI)
• Waste Materials Report (WMR)
• Report on the Physical Count of
Inventories (RPC)
• Report of Accountability for Accountable
Forms (RAAF)

3.2.4 Illustrative
Accounting Entries
for Inventories
Illustrative Journal Entries: 3. Inventory Held for Consumption

1. Inventory Held for Sale

4. Semi-Expendable Property

2. Inventory Held for Distribution

5. Inventory Held for Manufacturing

MODULE 4: PROPERTY, PLANT AND EQUIPMENT AND THE FINANCIAL STATEMENTS

At the end of the module, the students should be able to:

Cognitive
 explain the fundamental concepts/principles in
o accounting for Property, Plant, and Equipment
o the presentation of Financial Statements
Affective
 follow procedures in the preparation of financial statements
Psychomotor
 prepare the
o journal entry for PPE transactions in the JEV using the for UACS object codes.
o FS of a government entity

4.1 PPSAS 17 - Property, Plant and Equipment

PROPERTY, PLANT, AND EQUIPMENT (PPSAS 17)

Criteria for Recognition of PPE

 it has service potential associated with the inflow of economic benefits to the entity;
 the cost or fair value of the item can be measured reliably;
 beneficial ownership and control clearly rest with the government;
 the asset is used to achieve government objectives; and
 it meets the capitalization threshold of P15,000.

An entity shall evaluate all its PPE costs at the time they are incurred.

 costs include cost incurred initially to acquire or construct an item of PPE

 and costs incurred subsequently to add to, replace part of, or service the PPE.
Capitalization Threshold of P 15,000

 represents the minimum cost of an individual asset recognized as a PPE.

 this threshold shall be applied on an individual asset or per-item basis.
 Items that work together in the form of a group of network assets whose total value exceeds the
threshold shall be recognized as part of the primary PPE. (Example: computer network, PABX
system, sewerage system).
 Expenditures incurred on purchasing, developing, and operating hardware of a website is
accounted for as PPE if the total value of the primary asset (communications networks) and these
items is within the threshold of P15,000 and above.
 Bulk acquisition with an aggregate or total value of PPE, such as library books, computer
peripherals, and small items of equipment, will need to meet the capitalization threshold to be
recognized as PPE.

The acquisition of PPE through purchase is classified as Capital Outlays (CO) in the Budget
Registries.

4.1.1 Recognition , Measurement and Modes of Acquisition of PPE

Recognition , Measurement and Modes of Acquisition of PPE

Measurement at Recognition

 PPE shall be measured at Cost.

 However, where the PPE is acquired through a non-exchange transaction, its cost shall be
measured at its fair value as at the date of acquisition.
 Cost of PPE includes:
o The purchase price, including import duties and non-refundable purchase taxes, after
deducting trade discounts and rebates;
o Costs directly attributable to bringing the asset to the location and operating condition.
o The present value of decommissioning (uninstalling, dismantling the PPE) and restoration
cost(restoring the site where the PPE was installed) -this is with a corresponding credit to a
Liability account (e.g. Other Provisions)
o all other costs shall be expensed.

Modes of Acquisition of PPE

1. Purchase of PPE

 purchases are charged against Appropriations/Allotments or Special budget for Capital Outlay.
 PPE can be purchased on a cash basis, on account, on an installment basis, with promotional items,
and at a lump sum price.
 Cost is recognized in the books of accounts as PPE after inspection and acceptance of delivery.
2. Construction of PPE

 The" Construction in Progress"- a type of asset account that shall be used for all expenses incurred
during the construction period.
 As soon as the construction is completed, the “Construction in Progress” account shall
be reclassified to the proper asset account.
 Likewise, all expenses such as interests, license fees, etc., during the construction period shall
be capitalized.
 For loans, the interest on loans shall be recognized as expenses in the NG books of the BTr.
 At the end of the project, any PPE acquired and used in the construction shall be reclassified to
the appropriate PPE account based on the depreciated cost.
 Such cost shall be deducted from the cost of completed/constructed PPE.
 Construction is awarded to Contractors, the cost of the PPE is the contract price
 Constructed by Administration, the procurement of labor and materials shall be in compliance
with the provisions of R.A. No. 9184 and its Revised Implementing Rules and Regulations.

3. Acquisition through Exchange Transactions

 If with commercial substance fair value of assets 1) given-up 2) received 3) carrying amount of asset
given up, plus any cash paid or minus any cash received.
 If no commercial substance - carrying amount of asset given up

4. Acquisition through Non-exchange Transaction.

 its cost shall be measured at its fair value as at the date of acquisition.
 If the fair value can not be determined, the asset shall be recorded at a nominal value (the value
that is stated on currency or face value).

5.Donation with or without Condition

 Cost of PPE acquired through donation without condition shall be taken up at its fair value at the
date it is acquired. The fair value of the PPE shall be recognized as “Income from Grants and
Donations in Kind.”
 Donation with conditions or restrictions, a liability account shall be recognized until the conditions
or restrictions have been fulfilled.

6. Transfers

 Intra-agency transfers of PPE

o Transfers within the agency shall be recognized at the carrying amount of the asset received.
The receiving department or office shall recognize the asset at its original historical cost less
accumulated depreciation and accumulated impairment loss.

 Inter-agency transfer of PPE

o Transfer from one government entity to another shall be recognized by the recipient entity at net
carrying value. The transferor shall derecognize the PPE account upon transfer.
4.1.2 Receipt ,Disposition and Subsequent Expenditures of PPE

Receipt ,Disposition and Subsequent Expenditures of PPE

Receipt, Inspection, and Acceptance of PPE

 Receipt of items purchased by the agency/entity shall be inspected by the Inspection

Officer/Committee before acceptance by the Supply and/or Property Custodian.
 Acceptance shall be made only if the PPE delivered conform to the standards and specifications in
the Purchase Order (PO)

 Inspection and acceptance shall be made using the Inspection Acceptance Report (IAR)

Recording of Deliveries

 Deliveries of PPE shall be recorded immediately in the Property Card (PC) by the Supply and/or
Property Division/Unit on the basis of the IAR and other supporting documents.
 The IAR and other supporting documents shall be forwarded to the Accounting Division/Unit for the
recording of deliveries in the books of accounts through JEV and in the Property, Plant, and
Equipment Ledger Card (PPELC)
 Based on the IAR and other supporting documents, the Supply and/or Property Division/Unit
shall prepare the DV and submit it to the Accounting Division/Unit for the processing of payment.

Issuance of PPE

 Based on approved RIS, the Supply and/or Property Custodian shall prepare the Property
Acknowledgement Receipt (PAR) to support the issue of property to the end-user.
 The PAR shall be renewed at least every three years or every time there is a change in
accountability or custodianship of the property.

Subsequent Cost of PPE

It refers to the costs of the day-to-day servicing of an item of PPE which are recognized as
an expense when incurred. Classified as:

1. Repairs and Maintenance- primarily maintain or improve the functionality and capacity of the PPE;
Classified as:

o Minor repairs -charged to expense account “Repairs and Maintenance” of the specific
PPE
o Major repairs shall be added to the carrying amount of the PPE (capitalize). If the cost
cannot easily be differentiated between a minor or major repair, treat it as an expense.

2. Spare Parts and Servicing Equipment

 if carried as inventory -recognized in surplus or deficit as consumed.

 major spare parts -capitalize
 minor spare parts -expense
3. Replacement Cost

 the new part -capitalize

 old part - carrying amount treat as loss

4. Betterments.-enhancements to the future economic benefits or service potential of a PPE,

 If it meets the threshold of a PPE they are capitalized. Otherwise, they are expensed.
 if it does not increase the estimated useful life of the capital asset - same depreciation period.
 If it increases the estimated useful life of a capital asset, its useful life shall be changed.

5. Additions and Rearrangements

 Additions -are modifications that increase the physical size or function of the PPE.

o The cost of addition which is a new unit is depreciated over its useful life.
o But the cost of an expansion shall be depreciated over its useful life or remaining life of the PPE
of which it is part, whichever is shorter.

 Rearrangements -cost incurred in moving an asset from one location to another that will benefit
future periods but do not represent additions, replacements, or improvements.
o capitalized and amortized over the remaining life of the asset for which it pertains.
o The undepreciated amount of the original installation cost shall be expensed and the pertinent
accumulated depreciation accordingly derecognized.

4.1.3 Subsequent Measurement, Depreciation, Impairment and Reversal of Impairment

Subsequent Measurement and Depreciation

Subsequent Measurement of PPE

 the cost model shall be applied to an entire class of PPE.

Depreciation

 The straight-line method of depreciation shall be adopted and applied consistently from period
to period.
 The estimation of the useful life of the asset is a matter of judgment based on the experience of
the entity with similar assets.
 Residual Value is generally 5% of the cost (except for Infrastructure projects with zero residual
value)

Guidelines in the computation depreciation (after purchase or receipt of PPE)

 Depreciation shall be for one month if the PPE is available for use on or before the 15th of the
month.
 if the PPE is available for use after the 15th of the month, depreciation shall be for the succeeding
month.
Depreciation Guide

 Based on the said lifespans, the entity shall prepare the specific estimated useful life for each
asset based on its experience on the life of its PPE, copy furnished the Resident Auditor and the
Government Accountancy Sector of COA.
 The estimated useful life of the undepreciated portion of a PPE shall be reviewed on a regular
basis and revised when the appropriateness of a change can be clearly demonstrated.

Impairment and Reversal of Impairment

 At each reporting date, the PPE shall be assessed for impairment based on external and
internal sources of information. The recoverable amount shall be determined and an impairment
loss is recognized.
 Likewise, The entity shall also assess if the impairment loss recognized in prior periods may
no longer exist and shall estimate the recoverable amount. The necessary reversal of
impairment shall be recognized in surplus or deficit (3010101000)
4.1.4 Heritage Assets, Infra-Structure Assets, Reforestation Projects and Derecognition of PPE

Heritage Assets, Infra-Structure Assets, Reforestation Projects and Derecognition

Heritage Assets

 Assets which have historical, cultural and environmental significance, and are intended to be
preserved in trust for future generations.
 Examples of heritage assets include historical buildings and monuments, statues, museum and
gallery collections, archeological sites, national archives, ruins, conservation areas, nature
reserves, and works of art.

Characteristics of Heritage Assets :

 value in cultural, environmental, educational, and historical terms is unlikely to be fully

reflected in a financial value based purely on a market price;
 Legal and/or statutory obligations may impose prohibitions or severe restrictions
on the disposal by sale;
 irreplaceable and their value may increase over time, even if their physical condition
deteriorates; and
 difficult to estimate their useful lives, which in some cases could be several hundred years.

Heritage Assets Measurement

 Measured at Cost
 If acquired through a non-exchange transaction, its cost is its fair value at the date of acquisition.
 Depreciation shall not be recognized but these shall be subject to impairment.
 Fair value, if measurable, shall be disclosed.
 Heritage assets with future economic benefits or service potential other than their heritage
value, for example, a historic building being used for office accommodation. In these cases, they
may be recognized and measured on the same basis as other items of PPE. (Par. 11, PPSAS
17)

For accountability purposes:

 a Registry of Heritage Assets (RHA) shall be maintained for heritage assets not recognized in the
books of accounts, by the Accounting Division/Unit, and appropriate PAR shall be issued to the
end-user/accountable officer.
 At the end of each month, the total amount shall be posted in the Registry of Heritage Asset-
Summary (RHAS).

Infrastructure Assets:

 part of a system or network; specialized in nature and do not have alternative uses; Immovable,
and may be subject to constraints on disposal.
 In accordance with PPSAS 17, public infrastructures shall be recognized as PPE in the entity’s
financial statements.
 These shall be recorded in the books of accounts as Infrastructure Assets such as road
networks, sewer systems, water, and power supply systems, communication networks, etc.
Reforestation Projects

 Reforestation projects are recognized as Land Improvements, Reforestation Projects in the

books of accounts of the DENR or other entity concerned.
 Reforestation projects are not depreciated.
 When reforestation projects are destroyed/impaired by force majeure (fortuitous event beyond
the control of man e.g., typhoon, flood, landslides, earthquakes, and the like), an impairment loss
shall be taken up for the trees as soon as it is discovered that the trees in the area have been
destroyed.

A Physical count of PPE

 The entity shall have a periodic physical count of PPE, which shall be done annually
 It is presented on the Report on the Physical Count of Property, Plant, and
Equipment (RPCPPE) as of December 31 of each year.
 This shall be submitted to the Auditor concerned not later than January 31 of the following year.
 Equipment found at the station and losses discovered during the physical count shall be
reported to the Accounting Division/Unit for proper accounting/recording.

Derecognition of PPE

 The cost of the PPE together with the related accumulated depreciation and accumulated
impairment loss shall be removed from the accounts.
 The carrying amount of an item of PPE shall be derecognized on disposal or when no future
economic benefits or service potential is expected from its use or disposal.
 A JEV shall be prepared by the Accounting Division/Unit to derecognize the asset
from the books of accounts only after its disposal
 Disposal procedures of unserviceable property shall be in accordance with applicable rules and
regulations on Supply and Property Management Manual, and Sec. 79 of P.D. No. 1445.
 All unserviceable property shall be reported in the Inventory and Inspection Report of
Unserviceable Property (IIRUP) .
 A PPE reported in the IIRUP shall be dropped from the books by debiting Impairment Loss-
Property, Plant, and Equipment (cost of the PPE less Accumulated Depreciation).

Loss of Property

 When a loss of government funds or property occurs while they are in transit or the loss is
caused by fire, theft, or other casualty or “force majeure.” The officer accountable shall
immediately notify the COA within thirty days or such longer as may be allowed, file for
relief, with the available supporting evidence.
 Whenever warranted by the evidence credit for the loss shall be allowed. An officer who fails to
comply with this requirement shall not be relieved of liability or allowed credit for any loss in the
settlement of his accounts.
 Lost property and the related accumulated depreciation and impairment loss shall be derecognized
in the books upon receipt of the Report of Lost, Stolen, Damaged, Destroyed
Property (RLSDDP) . It is supported by a Notice of Loss prepared and submitted by the
Accountable Officer.
 The loss shall be charged to account “Loss of Assets” at an amount equal to its carrying
amount.
 The accountability of the accountable officer over the loss of depreciable asset shall be based
on Depreciated Replacement Cost (DRC) PPSAS 21 par. 45. DRC is replacement cost less
accumulated depreciation calculated on the basis of the replacement cost.
 A receivable account shall be set up to record the accountability of the accountable
officer simultaneous with the derecognition of the lost PPE.
 Compensation from third parties for items of PPE that were impaired, lost, or given up shall
be recognized as income when the compensation becomes receivable.
 In case of partial destruction/loss of PPE, the amount to be derecognized shall be its carrying
value less the fair value of the remaining serviceable portion.

4.1.5 Accounting for Property Records, Property Accounting System and Disclosures

Accounting for Property Records

 The Chief Accountant shall maintain the PPELC for each category of PPE including work and
other animals, livestock, etc.
 The PPELC shall be kept to record promptly the acquisition, description, custody, estimated useful
life, depreciation, impairment loss, disposal, and other information about the asset.
 For check and balance, the Property and Supply Office/Unit shall likewise maintain PC for
PPE in their custody to account for the receipt and disposition of the same.
 The balance per PC shall be reconciled with PPELC maintained by the Accounting Division/Unit.
They shall also be reconciled with other property records like PAR.

PPE Forms and Reports

 Purchase Request (PR)

 Purchase Order (PO)
 Inspection and Acceptance Report (IAR)
 Property Card (PC)
 PPE Ledger Card (PPELC)
 Property Acknowledgement Receipt (PAR)
 Report on the Physical Count of PPE (RPCPPE)
 Inventory and Inspection Report of Unserviceable Property (IIRUP)
 Report of Lost, Stolen, Damaged, Destroyed Property (RLSDDP)
 Property Transfer Report (PTR)

PPE Forms and Reports

PPE Forms and Reports

Purchase Request (PR)

 this form shall be used by the requisitioner to request for the purchase of PPEs items not available
on stock. It shall be the basis of preparing the Purchase Order (PO).

Purchase Order (PO)

 this form shall be prepared by the Supply and/or Property Division/Unit to support the purchase of
PPE, supplies and materials, etc. It serves as the contract between the entity and the supplier for
 the delivery of specified items based on the stipulations stated which was agreed upon during the
procurement process.

Inspection and Acceptance Report (IAR)

 this form shall be used to report the result of the inspection made by the Authorized Inspector on
the deliveries and the status of the accepted items by the Supply and/or Property Custodian. This
form shall also be used for the inspection of repairs, infrastructures and reforestation project.

Property Card (PC)

 this card shall be used by the Supply and/or Property Division/Unit to record the description,
acquisition, transfer, disposal, and other information about the PPE.It shall be kept for each class
of PPE.

PPE Ledger Card (PPELC)

 this card shall be used for each class of PPE to record the acquisition, description, custody,
estimated life, depreciation, impairment, disposal, transfer/adjustment, repair history and other
information about the property.It shall be kept and maintained by the Accounting Office/Unit.

Property Acknowledgement Receipt (PAR)

 This form shall be used by the Supply and/or Property Division/Unit to report the issuance of PPE
and the acknowledgment of the end-user.

Report on the Physical Count of PPE (RPCPPE)

 this form shall be used to report the physical count and condition of PPE by type as at a given date,
including those which are unrecorded and those which could not be accounted for. It shows the
balance of PPE per Property Cards and per count and the shortage/overage, if any. It shall be
rendered by the Inventory Committee, on its yearly physical count of properties owned by the entity.

Inventory and Inspection Report of Unserviceable Property (IIRUP)

 this report shall be used to account for all unserviceable property of an entity which is subject to
disposal. It also serves as the basis for derecognizing the unserviceable properties carried in the
PPE accounts.

Report of Lost, Stolen, Damaged, Destroyed Property (RLSDDP)

 this form shall be used by the accountable officer/employee to report or notify the concerned officials
of the lost, stolen, damaged or destroyed property.

Property Transfer Report (PTR)

 this form shall be used every time there will be a transfer of property from an outgoing officer to his
successor or from one accountable officer/employee to another of the same or another entity.
Property Accounting System

1. Recording of Receipt, Inspection, and Acceptance of PPE (RRIAP)

2. Recording of Requisition and Issue of PPE (RRIP)
3. Construction of PPE by administration
4. Construction of PPE by contract

Procedures

 The requesting office in need of the PPE item/s, after the Supply and/or Property Division/Unit, has
determined that the items are not available in stock, shall prepare and cause the approval of the
PR (Appendix 60).
 Based on the approved PR and after accomplishing all the required procedures adopting a particular
mode of procurement/acquisition, the agency/entity shall issue a duly approved Contract/PO
(Appendix 61).
 Procedures relative to the obligation of allotment to cover the funding requirement of the
Contract/PO and payment of the inspected and accepted deliveries.
 Physical count/inventory, which is required annually, is an indispensable procedure for checking
the integrity of property custodianship.

Disclosure

 Agencies are encouraged to disclose the PPE using the data in the IIRUP.

4.1.6 Illustrative Accounting Entries

Illustrative Journal Entries:

Cash Purchase of PPE with dismantling Cost

Account Title and Explanation UACS Object Code Debit Credit

Medical Equipment 1060502000 P52,500

Cash-MDS, Regular 1010404000 P47,460

Other Provisions (dismantling cost) 2060199000 00222

Due BIR 2020101000 001,2

Cash purchase of medical equipment

Purchase of PPE in Cash without dismantling cost

Account Title and Explanation UACS Object Code Debit Credit

Office Equipment 1060502000 P50,500

Cash-MDS, Regular 1010404000 P47,460

Due BIR 2020101000 001,2

Cash purchase of office equipment

Depreciation

Account Title and Explanation UACS Object Code Debit Credit

Depreciation-Buildings and Other Structure 5050104000 XXXXX

Accumulated Depreciation-School Buildings 1060402100 XXXXX

Depreciation for the month of May

Purchase of PPE on account with downpayment

Account Title and Explanation UACS Object Code Debit Credit

Construction and Heavy Equipment 1060508000 P2,700,000

Accounts Payable 2010101000 P2,200,000

Cash-MDS, Regular 1010404000 P355,359

Due BIR 2020101000 1,,04,1

Purchase and initial payment for the bulldozer

acquired on installment
Construction of PPE by Contractor (including advances to the contractor)

UACS
Account Title and Explanation Debit Credit
Object Code

Construction in Progress-Buildings 1069903000 P400,000

Accounts Payable 2010101000 P340,000

Advances to Contractors 1990201000 P60,000

Recognize the payable to the contractor based on the final

billing on the construction-building

Construction of PPE by Administration

UACS
Account Title and Explanation Debit Credit
Object Code

Construction in Progress-Buildings 1069903000 P400,000

Construction Material - Inventory 1040413000 P240,000

Accounts Payable (labor) 2010101000 160,000

Recognize Issue of construction materials and labor cost

incurred

Reclassification of Account for Completed Project

UACS
Account Title and Explanation Debit Credit
Object Code

Buildings 1060401000 P400,000

Construction in Progress- Building 1069903000 P400,000

Recognize completion of the project

*For the accounts payable (payment is always less withholding tax)

For other related journal entries, visit GAM 1
4.2 Financial Statements of a Government Entity

Financial Statement of a Government Entity

Responsibility for Financial Statements

 The responsibility for financial statements rests with the entity’s management, particularly the Head
of Finance/Accounting (Comptroller) and the Head of the Entity or his Authorized
Representative.
 A Statement of Management Responsibility for Financial Statements shall be attached to the
financial statements as a cover letter.

Statement of Management Responsibility

Statement of Management Responsibility

 shall be submitted together with the Audited Financial Statements

 states that management is responsible for the presentation and preparation of the Financial
Statements

Complete set of General Purpose Financial Statements (GPFS)

based on PPSAS1 (Presentation of Financial Statements) and the applicable Philippine Application
Guidance (PAG)

 Statement of Financial Position

 Statement of Financial Performance
 Statement of Changes in Net Assets/ Equity
 Statement of Cash Flows
 Statement of Comparison of Budget and Actual Amounts
 Notes to the Financial Statements

The objective of the GPFS

 provide information useful for decision making and to demonstrate accountability of the entity for
the resources entrusted to it.

Qualitative Characteristics of Financial Reporting

 Understandability
 Relevance
 Materiality
 Timeliness
 Reliability
 Faithful Representation
 Substance over form
 Neutrality
 Prudence
 Completeness
 Comparability
4.2.1 General Principles for Financial Reporting

General Principles for Financial Reporting

 Fair Presentation
 Compliance with PPSAS - explicit and unreserved statement of compliance in the notes
 Going Concern
 Materiality and Aggregation
 Offsetting
 Comparative Information
 Identification of the Financial Statements

Identification of the Financial Statements

The following information shall be displayed prominently, and repeatedly:

1. The name of the reporting entity or other means of identification, and any change in that
information from the preceding reporting date;
2. Whether the financial statements cover the individual entity or a group of entities;
3. The reporting date or the period covered by the financial statements, whichever is appropriate
to that component of the financial statements;
4. Name of fund cluster;
5. The reporting currency; and
6. The level of rounding used in presenting amounts in the financial statements.( 63, PPSAS 1)

Reporting Period

 Financial statements shall be presented at least annually.

 When an entity’s reporting date changes and the annual financial statements are presented for a
period longer or shorter than one year, an entity shall disclose :

1. The reason for using a longer or shorter period; and

2. The fact that comparative amounts for certain statements and related notes are not entirely
comparable. ( 66, PPSAS 1)

4.2.2 Statement of Financial Position

Statement of Financial Position

 A formal statement that shows the financial condition of the entity as of a certain date
 shall be presented in the following formats:
o comparative-detailed and
o comparative-condensed
Condensed Statement of Financial Position

 presents only the major sub-classification of Statement of Financial Position accounts in the
Revised Chart of Accounts.
 Condensed Statement of Financial Position shall be submitted at year-end to the concerned
Auditor.
 Its breakdown and other relevant information shall be disclosed in the Notes to Financial
Statements.
 as a minimum, the face of the Statement of Financial Position shall include line items that present
the following amounts:

a. Cash and cash equivalents

b. Receivables
c. Recoverable from non-exchange transactions (taxes and transfers)
d. Financial assets (excluding amounts shown under (a), (b) and (c));
e. Inventories;
f. Investment Property;
g. Property, Plant, and Equipment;
h. Intangible assets;
I. Taxes and Transfers Payable;
j. Payables under exchange transactions;
k. Provisions;
l. Financial liabilities (excluding amounts shown under (h), (i) and (j)); and
m. Net assets/equity.

 Additional line items, headings, and sub-totals shall be presented on the face of the
Statement of Financial Position when such presentation is relevant to an understanding of the
entity’s financial position. (Par. 89, PPSAS 1)

Detailed Statement of Financial Position

 presents all Statement of Financial Position accounts in the Revised Chart of Accounts as a line
item in the financial report.
 shall be submitted at year-end to the Government Accountancy Sector, COA, as part of the year-
end financial statements
 An entity shall present current and non-current assets /liabilities, as separate classifications on
the face of its Statement of Financial Position.
 An entity shall disclose, either on the face of the Statement of Financial Position or in the notes,
further sub-classifications of the line items presented, classified in a manner appropriate to the
entity’s operations. (Par. 93, PPSAS
Comparative Statement of Financial Position

4.2.3 Statement of Financial Performance

Statement of Financial Performance

 shows the results of operation/performance of the entity at the end of a particular period. All items
of revenue and expense recognized in a period shall be included in surplus or deficit unless a
PPSAS requires otherwise.
 shall be presented in the following formats:
o comparative-detailed and
o comparative-condensed

 Normally, all items of revenue and expense recognized in a period are included in surplus or deficit.
This includes the effects of changes in accounting estimates.
 But, there are particular items that may be excluded from surplus or deficit for the current
period which includes the following :
o The correction of prior period errors (PPSAS 3);
o The effect of changes in accounting policies (PPSAS 3); and
o Gains or losses on remeasuring available-for-sale financial assets. (PPSAS 29)

 As a minimum, the face of the statement of financial performance shall include line items that
present the following amounts for the period
o Revenue;
o Finance costs;
o Share of the surplus or deficit of associates and joint ventures accounted for using the equity
method;
o Gain or loss recognized on the disposal of assets or settlement of liabilities attributable to
discontinuing operations; and
o Surplus or deficit. (Par. 102, PPSAS 1)

 Additional line items, headings, and subtotals shall be presented on the face of the statement of
financial performance when such presentation is relevant to an understanding of the entity’s
financial performance. (Par. 104, PPSAS 1)

 When items of revenue and expense are material, their nature and amount shall be disclosed
separately. (Par. 105, PPSAS 1) which includes the following:
o Write-downs of inventories and PPE as well as reversals
o Restructurings of provisions and reversals
o Disposals of items of property, plant, and equipment;
o Privatizations or other disposals of investments;
o Discontinuing operations;
o Litigation settlements; and
o Other reversals of provisions. (Par. 107, PPSAS 1)

 Expenses may be presented based on either the nature of expenses or their function within the
entity, whichever provides information that is reliable and more relevant. (Par. 109, PPSAS 1)
 Entities classifying expenses by function shall disclose additional information on the nature of
expenses, including depreciation and amortization expense and employee benefits expense. (Par.
115, PPSAS 1)
Comparative Statement of Financial Performance

4.2.4 Statement of Changes in Net Assets/Equity

Statement of Changes in Net Assets/Equity

 shows the changes in equity between two accounting periods reflecting the increase or
decrease in the entity’s net assets during the year.
An entity shall present a statement of changes in net assets/equity showing on the face of the
statement:

 Surplus or deficit for the period;

 Each item of revenue and expense for the period that, as required by other Standards is recognized
directly in net assets/equity, and the total of these items (example: unrealized gain/(loss) from
changes in the fair value of financial assets);
 Total revenue and expense for the period
 The effects of changes in accounting policies and corrections of errors for each component of net
asset/equity disclosed; and
 the balance of accumulated surpluses or deficits at the beginning of the period and at the reporting
date, and the changes during the period.

A separate additional financial statement for comparison of budget and actual amounts shall be
prepared since the financial statements and budget of NGAs are not on the same accounting basis.
(PAG4, PPSAS 1)

Comparative Statement of Changes in Net Assets/Equity

4.2.5 Statement of Cash Flows

The Statement of Cash Flows

 summarizes the cash flows from operating, investing and financing activities of an entity during
a given period.
 cash flow information allows users to ascertain how a public sector entity raised the cash required
to fund its activities and the manner in which the cash was used. (PPSAS 2)
Operating Activities

 Cash receipt of assistance and subsidy from other NGAs, LGUs and GOCC
 Receipt of NCA and reversion of unused NCA
 Collection of income and receivables
 payment of expenses, cash advances and payable
 inter/ intra transfer of fund

Investing Activities

 acquisition and disposal of PPE, intangibles, investment property and other long-term assets;

 acquisition and diaposal of investment securities and derivatives

other investments;
 Collection and provision of long-term loans

Financing Activities

 issuing debentures, loans, notes, bonds, mortgages and other short or long-term borrowings and
repayments
 finance lease payments

Presentation of Cashflows

 Only the direct method of reporting Cash Flows from Operating Activities is allowed.
 The entity shall report separately major classes of gross cash receipts and gross cash payments
arising from investing and financing activities, .
 Cash flows may be reported on a net basis for:


o Cash receipts collected and payments made on behalf of customers, taxpayers or beneficiaries
when the cash flows reflect the activities of the other party rather than those of the entity; and
o Cash receipts and payments for items in which the turnover is quick, the amounts are large, and
the maturities are short. (Par. 32, PPSAS 2)
 Foreign Currency Cashflows shall be translated using the spot exchange rate at the date of cash
flow. Exchange differences are reported in the statement of cash flows separately from the
operating, investing, and financing activities.
Statement of Cash Flows

4.2.6 Statement of Comparison of Budget and Actual Amounts

Statement of Comparison of Budget and Actual Amounts (SCBAA)

 shows the difference between the budgeted and actual results for a given period
 shall be presented by government agencies as a separate additional financial statement referred
to in the GAM
 shall be prepared based on the various registries maintained by the Budget Division/Unit.
 data on Actual Amounts shall be verified by the Accounting Division/Unit in the Statement of Cash
Flows (SCF).
 is unique to government entities because business entities are not required to prepare this as part
of their complete set of GFS (they may prepare this for internal purposes only).
The Statement shall present the following:

 Original Budget-the initial approved budget for the budget period usually the General
Appropriations Act (GAA).
 Final Budget-the original budget adjusted for all reserves, carry-over amounts, transfers,
allocations and other authorized legislative or similar authority changes applicable to the budget
period.
 Actual Amounts on a comparable basis-actual disbursements made during the period

Material differences between the budget and actual amounts

 shall be explained by way of note disclosure.

Changes from Original to Final Budget

 Entity shall present an explanation of whether the changes between the original and final budget
are a consequence of re-allocations within the budget by way of note disclosure in the FSs.

Reconciliation of Budgeted and Actual Amounts in the Financial Statements

Classified as follows:

 Basis Differences -which occur when the approved budget is prepared on a basis other than the
accounting basis;
 Timing Differences-which occur when the budget period differs from the reporting period reflected
in the FSs; and
 Entity Differences-which occur when the budget omits program or entities that are part of the entity
for which the FSs are prepared.

The reconciliation shall be disclosed as part of the Notes to the FSs.

Disclosures of Budgetary Basis, Period and Scope

An entity shall explain in the notes to the FSs the :

 Budgetary basis- (cash or accrual, or some modification thereof) used in the preparation and
presentation of the budget ;
 Accounting basis- used in the financial statements
 The period and the entities included in the approved budget shall also be identified in the notes
to financial statements
Statement of Comparison of Budget and Actual amounts

4.2.7 Notes to Financial Statements

Notes to Financial Statements

 are integral parts of the financial statements

 provide additional information and help clarify the items presented in the financial statements.
 provide narrative description or disaggregation of items in the financial statements and information
about them that do not qualify for recognition.
 Notes shall be presented in a systematic manner. Each item on the face of Financial Statements
shall be cross-referenced to any related information in the notes. (Par. 128, PPSAS 1)

Structure of the Notes to Financial Statements

The notes shall:

 present information about the basis of preparation of the financial statements and the specific
accounting policies used, in accordance with paragraphs 132-139;
 disclose the information required by PPSASs that is not presented on the face of the Financial
Statements
 provide additional information that is not presented on the face of the FSs but that is relevant to an
understanding of any of them. (Par. 127, PPSAS 1)
Contents of Notes to FS

 Statement of Compliance with PPSASs;

 Summary of Significant Accounting Policies adopted and followed by :

1. the measurement basis (or bases) used in preparing the financial statements;
2. the extent to which the entity has applied any transitional provisions in any PPSAS; and
3. the other accounting policies used that are relevant to an understanding of the financial
statements;

 Supporting Information for items presented on the face of the Financial Statements in the order
in which each statement and each line item is presented; and
 Additional Information required by PPSAS that is not shown on the face of the financial
statements but is relevant to an understanding of any of them which includes the following:

1. a disclosure that the budgeted amounts have not been exceeded. If any budgeted amounts
or appropriations have been exceeded or expenses incurred without appropriation/allotment,
then details shall be disclosed; (Par. 24 (b) PPSAS 1)
2. nature and extent of prior period errors; (PPSAS 3)
3. events after the reporting date that have a material effect on the financial statements; (PPSAS
14)
4. contingent liabilities (PPSAS 19), and unrecognized contractual commitments;
5. related party disclosure (PPSAS 20); and non-financial disclosures, e.g., the entity’s financial
risk management objectives and policies. (PPSAS 15)
Notes to the Financial Statements

(Refer to GAM 1 to see more details )

4.2.8 Events after the Reporting Period

Events After the Reporting Date

 events, both favorable and unfavorable, that occur between the reporting date and the date when
the financial statements are authorized for issue.

Two types of events after the reporting date:

 Adjusting events - those that provide evidence of conditions that existed at the reporting date; and
 Non-adjusting events – those that are indicative of conditions that arose after the reporting date.
(Par. 5, PPSAS 14)

Reporting date -set every end of the calendar year

The date on which the financial statements are authorized for issue

 the date when the Statement of Management’s Responsibility is approved by the Chief
Executive or his authorized representative and the Head of Finance Department. (PAG2, PPSAS
14)

The Chief Accountant or the Official in Charge of keeping the accounts shall :

 submit to the Commission year-end trial balances and such other supporting or subsidiary
statements as may be required by the Commission
 submit not later than February 14 after the reporting period.
 shall resubmit within three days after the date of receipt by the official concerned, Trial balances
returned by the Commission for revision due to non-compliance with accounting rules and
regulations,

Adjusting Events After the Reporting Date

 court case settlement after the reporting date

 bankruptcy after the reporting date
 cost of assets purchased, or the proceeds from assets sold, before the reporting date, and the
amount determined after the reporting date
 revenue collected during the reporting period to be shared with another government entity under a
revenue-sharing agreement in place during the reporting period, amount determined after the
reporting period
 performance bonus payments if the entity had a present legal or constructive obligation at the
reporting date to make such payments as a result of events before that date,
 The discovery of fraud or errors that show that the financial statements were
incorrect. (Par 10-11, PPSAS 14).
Non-adjusting events after the reporting date, if material, shall be disclosed.

 an acquisition or disposal of a major controlled entity;

 announcement of a plan to discontinue an operation or a major program;
 major purchases and disposal of asset; and
 the destruction of a major building by a fire after the reporting date.

Addendum :
Changes in Accounting Policy

 Generally, change in accounting policy is not allowed for government agencies under PPSAS,
unless the change is required by PPSAS or results in the financial statements thus
providing reliable and more relevant information about the effects of transactions, other
events, and conditions on the entity’s financial position, financial performance, or cash flows.

4.2.9 Changes in Accounting Policies/Estimates and Errors

Changes in Accounting Policies/Estimates and Errors

Changes in Accounting Policies

 In choosing an accounting policy to be applied to a transaction, the entity shall consider the relevant
PPSAS to be applied and any relevant application guidance issued by the Commission.
 An entity shall select and apply accounting policies consistently for similar transactions, other
events and conditions, unless PPSAS specifically requires specific accounting policies.
 Changes in Accounting policy are allowed if it is required by PPSAS; or results in more reliable
and relevant information about the effects of transactions, other events, and conditions on the
entity’s financial position, financial performance, or cash flows. (Par. 17, PPSAS 3)
 includes the following:

1. Change from one basis of accounting to another basis of accounting; and

2. Change in the accounting treatment, recognition, or measurement of a transaction, event, or
condition within a basis of accounting.

 shall be recognized using specific transitional provisions, if any (Par. 24, PPSAS 3). In the
absence of specific transitional provisions, apply the change retrospectively. If a retrospective
application is impracticable apply prospectively.

Note: When it is difficult to distinguish a change in an accounting policy from a change in an accounting
estimate, the change is treated as a change in an accounting estimate. (Par. 40, PPSAS 3)
Changes in Accounting Estimates

 Examples of Accounting estimates :

1. tax revenue due to government;

2. bad debts arising from uncollected receivables;
3. inventory obsolescence;
4. the fair value of financial assets or financial liabilities;
5. the useful lives of, or expected pattern of consumption of future economic
benefits or service potential embodied in depreciable assets; and
6. warranty obligations. (Par. 37, PPSAS 3)

 shall be recognized prospectively by including it in surplus or deficit in:

1. the period of the change, if the change affects the period only; or
2. the period of the change and future periods, if the change affects both.

 shall be recognized by adjusting the carrying amount of the related asset, liability or
net assets/equity item in the period of change. (Par. 42, PPSAS 3)
 Disclosures for Changes in Accounting Estimates should be made on the nature and amount of a
change in an accounting estimate that has an effect in the current period or is expected to have an
effect on future periods, (Par. 45, PPSAS 3)

Errors

 Current period errors – shall be corrected by an adjusting entry, within the same year before the
financial statements are authorized for issue.
 Prior period errors – material prior period errors are corrected retrospectively in the first set
of financial statements authorized for issue after their discovery by retrospective restatement.
 Retrospective restatement – is correcting the recognition, measurement, and disclosure of
amounts of elements of financial statements as if a prior period error had never occurred. (Par. 7,
PPSAS 3). It should be applied as far back as possible, if not practicable , correct prospectively.
 The correction of a prior period error is excluded from the computation of income and expense for
the period in which the error is discovered. (Par. PPSAS 3)
4.2.10 Interim Financial Statements and Other Reports

Interim Financial Statements

 are financial statements that are required to be prepared at any given period or at a financial
reporting period without closing the books of accounts.

Interim financial statements shall be prepared whenever needed and shall include the ff:

1. Statement of Financial Position;

2. Statement of Financial Performance;
3. Statement of Cash Flows;
4. Statement of Changes in Net Assets/Equity;
5. Statement of Comparison of Budget and Actual Amount; and
6. Notes to Financial Statements.

 The interim financial statements shall be prepared to employ the same accounting principles used
for annual reports.
 Adjusting and closing journal entries shall be prepared.
 However, only the adjusting journal entries are recognized in the books of accounts. To
facilitate the preparation of the interim financial statements, the use of the worksheet is
recommended.

Preparation and Submission of Other Reports

The following reports/ schedules/statements shall also be submitted

1. Pre-Closing Trial Balances

2. Post-Closing Trial Balances
3. Other schedules

o Regional Breakdown of Income

o Regional Breakdown of Expenses

Deadline for Submission of Reports

Legend:
TBs - Trial Balances
SSs -Supporting Schedules
FSs- Financial Statements
SDs- Supporting Documents

Summary: PPSAS for PPE and Financial Statements

Summary of Module 4:
PPSAS – Property, Plant and Equipment and the Financial Statements

4.1 Property, Plant, and Equipment

 For government entities, the capitalization threshold for PPE is ₱15,000.

 PPE is initially measured at cost.
 Acquisition by Construction can be
o by Construction Contract – cost is contract price or
o by Administration – cost is the sum of Direct Materials, Direct Labor, and Overhead
 Construction costs are initially recorded in the “Construction in Progress” account.
 Acquisition through Exchange:
o With commercial substance – GRG (plus cash paid)
o No commercial substance – CA of given up (pp)
 Acquisition through Non-Exchange Transaction – the asset received is measured at fair value at
the acquisition date.
o No condition recognized immediately as income.
o With condition, initially recognized as a liability.
 Acquisition through Intra-agency or Inter-agency Transfer – measured at the carrying amount of
the asset received.
 Repairs and Maintenance – minor, expensed; major, capitalized. If not clear, treat as minor.
 Replacement costs – charge carrying amount of old part as loss; capitalize new part. If the carrying
amount of the old part is not determinable, use the cost of a new part as a basis.
 Spare parts and servicing equipment – minor, expensed; major capitalized. Those that can only
be used in conjunction worth an item of PPE are accounted for as PPE
 Betterments are capitalized (if they meet the recognition criteria for PPE) and are subsequently
depreciated: Over the extended useful life if betterment does not extend useful life.
 Additions are modifications that increase the physical size or function of the PPE. If the addition is
a (an):
o New unit – depreciate over its own useful life
o Expansion – depreciate over the useful life of the original asset.
 PPE is subsequently measured using the cost model. The revaluation model is not applicable to
government entities.
 The straight-line method of depreciation is used unless another method is more appropriate.
 Residual value is generally 5% of the cost.

4.2 Financial Statements (PPSAS 1)

 The responsibility for financial statements rests with the entity’s management, particularly
the Head of the Entity jointly with the Head of Finance/Accounting.
 Statement of Comparison of Budget and Actual Amounts. This statement shows the differences
between budgeted amounts and actual results for a given reporting period.
 The Statements of Financial Position and Financial Performance are presented in comparative,
condensed, and detailed formats.
 The following are recognized directly in equity, rather than through surplus or deficit:
o (a) correcting of prior period errors;
 o (b) effect of changes in accounting policies; and
o (c) gains or losses on remeasuring available-for-sale financial assets.
 Government entities present cash flows from operating activities using the direct method.
 Adjusting events are those that provide evidence of conditions that existed at the reporting date.
Adjusting events are recognized.
 Non-adjusting events are those events that are indicative of conditions that arose after the
reporting date. Non-adjusting events are disclosed only if material.
 A change in accounting policy is accounted for using the following order of priority:
o (1) transitional provision;
o (2) retrospective application;
o (3) prospective application.
 A change in accounting estimate is accounted for by prospective application.
 The correction of a prior period error is accounted for by retrospective restatement.
 Annex G
________________________________
Agency/Entity Letterhead

STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL

STATEMENTS

The management of ____________ (Name of Department/Agency/Entity)_____________ is

responsible for all information and representations contained in the accompanying Statement of
Financial Position as at ____________________ and the related Statement of Financial
Performance, Statement of Cash Flows, Statement of Comparison of Budget and Actual Amounts,
Statement of Changes in Net Assets/Equity and the Notes to Financial Statements for the year
then ended. The financial statements have been prepared in conformity with the Philippine Public
Sector Accounting Standards and generally accepted state accounting principles, and reflect
amounts that are based on the best estimates and informed judgment of management with an
appropriate consideration to materiality.

In this regard, management maintains a system of accounting and reporting which provides for
the necessary internal controls to ensure that transactions are properly authorized and recorded,
assets are safeguarded against unauthorized use or disposition and liabilities are recognized.

___________________________________ ___________________________________
Chief, Financial and Management Office/ Head of Agency/
Comptroller Authorized Representative

_____________________ ___________________
Date Signed Date Signed

405
 Appendix 60

PURCHASE REQUEST

Entity Name: _______________________ Fund Cluster: __________________

Office/Section : _____________ PR No.: ______________ Date: ____________
_________________________ Responsibility Center Code : ___________
Stock/ Property
Unit Item Description Quantity Unit Cost Total Cost
No.

Purpose: ____________________________________________________________
_______________________________________________________________
_______________________________________________________________

Requested by: Approved by:

Signature : _________________________ ___________________________
Printed Name : _________________________ ___________________________
Designation : _________________________ ___________________________

151
 Appendix 61

PURCHASE ORDER
______________________
Entity Name

Supplier : _____________________________________________ P.O. No. : ____________________________

Address : _____________________________________________ Date : _______________________________
TIN : ________________________________________________ Mode of Procurement : _________________
Gentlemen:
Please furnish this Office the following articles subject to the terms and conditions contained herein:

Place of Delivery : ___________________________________ Delivery Term : ________________________

Date of Delivery : ____________________________________ Payment Term : ________________________
Stock/
Unit Description Quantity Unit Cost Amount
Property No.

(Total Amount in Words)

In case of failure to make the full delivery within the time specified above, a penalty of one-tenth (1/10) of one percent for
every day of delay shall be imposed on the undelivered item/s.

Conforme: Very truly yours,

__________________________ ________________________________
Signature over Printed Name of Supplier Signature over Printed Name of Authorized Official

___________________________ _____________________________
Date Designation

Fund Cluster : ___________________________________ ORS/BURS No. : ______________________

Funds Available : _________________________________ Date of the ORS/BURS: _______________
Amount : ____________________________
________________________________________
Signature over Printed Name of Chief Accountant/Head of
Accounting Division/Unit

153
 Appendix 62

INSPECTION AND ACCEPTANCE REPORT

Entity Name : ______________________________ Fund Cluster : ___________

Supplier : ______________________________________________ IAR No. : _______________

PO No./Date : ___________________________________________ Date : _________________
Requisitioning Office/Dept. : _______________________________ Invoice No. : ____________
Responsibility Center Code : _______________________________ Date : _________________

Stock/
Description Unit Quantity
Property No.

INSPECTION ACCEPTANCE

Date Inspected : ________________________ Date Received : _____________________

Inspected, verified and found in order as to Complete

quantity and specifications
Partial (pls. specify quantity)

____________________________________________ ___________________________________
155
Inspection Officer/Inspection Committee Supply and/or Property Custodian

155
 Appendix 69

PROPERTY CARD

Entity Name : ________________________________________ Fund Cluster: ______________________

Property, Plant and Equipment :

Property Number:_____________________
Description :
Reference/ Receipt Issue/Transfer/ Disposal Balance
Date Amount Remarks
PAR No. Qty. Qty. Office/Officer Qty.
169
 Appendix 70

PROPERTY, PLANT AND EQUIPMENT LEDGER CARD

Entity Name : ________________________________________ Fund Cluster : _____________________

Property, Plant and Equipment: Object Account Code: ___________________________________

Estimated Useful Life: __________________________________
Description: Rate of Depreciation: __________________________________

Receipt Repair History

Accumulated Accumulated Issues/Transfers/ Adjusted
Date Reference Unit Total Nature of
Qty. Depreciation Impairment Losses Adjustment/s Cost Amount
Cost Cost Repair
171
 Appendix 71

PROPERTY ACKNOWLEDGMENT RECEIPT

Entity Name : ______________________________________

Fund Cluster: ______________________________________ PAR No.: _________________

Property Date
Quantity Unit Description Amount
Number Acquired

Received by: Issued by:

_________________________________________
Signatue over Printed Name of End User
__________________________________
Position/Office
_________________________
Date
__________________________________________
Signatue over Printed Name of Supply and/or
Property Custodian
_______________________________
Position/Office
_________________________
Date

173
 Appendix 72

REGISTRY OF HERITAGE ASSET

Entity Name : _________________________________ Nature of Heritage Asset : __________________________

Fund Cluster : ________________________________ Sheet No. : ______________________________________

Impairment Restoration and

Date Reference Description Location Cost Depreciation Disposals Balance
Loss Maintenance
175
 Appendix 72A

REGISTRY OF HERITAGE ASSET - SUMMARY

Entity Name
Entity Name : ________________________________________
Fund Cluster : ________________________________________ Sheet No.:________________________
Amount of Heritage Assets

Works of Arts and

Date Particulars Total Amount Other Heritage Depreciation and
Historical Building Archaeological
Assets Impairment
Specimens
177
 Appendix 73

REPORT ON THE PHYSICAL COUNT OF PROPERTY, PLANT AND EQUIPMENT

________________________________
(Type of Property, Plant and Equipment)
As at ________________________________

Fund Cluster : ________________________________

For which ___(Name of Accountable Officer )__, _ (Official Designation )___, _______(Entity Name )________ is accountable, having assumed such accountability on _(Date of Assumption) .

QUANTITY QUANTITY
PROPERTY UNIT OF UNIT SHORTAGE/OVERAGE
ARTICLE DESCRIPTION per per REMAKS
NUMBER MEASURE VALUE
PROPERTY CARD PHYSICAL COUNT Quantity Value
179

Certified Correct by: Approved by: Verified by:

_______________________________
Signature over Printed Name of Signature over Printed Name of Head of Signature over Printed Name of COA
Inventory Committee Chair and Agency/Entity or Authorized Representative Representative
Members
 Appendix 74
INVENTORY AND INSPECTION REPORT OF UNSERVICEABLE PROPERTY
As at _________________________________

Entity Name: _______________________________________ Fund Cluster : _____________________

______________________________ ______________________________ ______________________________
(Name of Accountable Officer) (Designation) (Station)

INVENTORY INSPECTION and DISPOSAL

DISPOSAL RECORD OF SALES

Accumulated
Date Particulars/ Property Unit Total Accumulated Carrying Appraised
Qty Impairment Remarks
Acquired Articles No. Cost Cost Depreciation Amount Others Value
Losses Sale Transfer Destruction Total OR No. Amount
(Specify)

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
181

I CERTIFY that I have inspected each I CERTIFY that I have

I HEREBY request inspection and disposition, pursuant to Section 79 of PD 1445, of the property enumerated above. and every article enumerated in this report, witnessed the disposition of the
and that the disposition made thereof was, articles enumerated on this
in my judgment, the best for the public report this ____day of
interest. _____________, _____.
Requested by: Approved by:

(Signature over Printed Name of (Signature over Printed Name of (Signature over Printed Name of (Signature over Printed Name of
Accountable Officer) Authorized Official) Inspection Officer) Witness)

(Designation of Accountable Officer) (Designation of Authorized Official)

 Appendix 75

REPORT OF LOST, STOLEN, DAMAGED OR DESTROYED PROPERTY

Entity Name : __________________________ Fund Cluster: ______________

Department/Office : ___________________________________________ RLSDDP No. : ______________
Accountable Officer : _________________________________________ RLSDDP Date : _____________
Designation : ________________________________________________ PAR No. : _________________
Police Notified : Yes Police Station : ____________________ PAR Date : ________________
Date : ___________________________
No

Status of Property : (check applicable box)

Lost Damaged
Stolen Destroyed

Property No. Description Acquisition Cost

Circumstances:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

I hereby certify that the item/s and circumstances stated above are true
and correct. Noted by:

__________________________________________ __________________________________
Signature over Printed Name of the Accountable Officer Signature over Printed Name of the Immediate
Supervisor
________________ ________________
Date Date

Government Issued ID : __________________

ID No. : _____________________________
Date Issued : _________________________

SUBSCRIBED AND SWORN to before me this ______day of _____________, affiant exhibiting the above
government issued identification card.

Doc. No. _________

Page No. _________ Notary Public
Book No. _________
Series of _________

184
 Appendix 76

PROPERTY TRANSFER REPORT

Entity Name : _______________________________ Fund Cluster : _____________

From Accountable Officer/Agency/Fund Cluster : __________________________ PTR No. : ______________

To Accountable Officer/Agency/Fund Cluster : ____________________________ Date : _________________
Transfer Type: (check only one)
Donation Relocate
Reassignment Others (Specify) _________________
Condition of
Date Acquired Property No. Description Amount
PPE

Reason for Transfer:

___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________

Approved by: Released/Issued by: Received by:

Signature :
Printed Name :
Designation :
Date :

187