GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING

Katrine Celine C. Gutierrez, CPA

Module No – Title : MO1 – Overview of Government Accounting

1. Overview
This learning material provides an overview of the basics of government
accounting, explain the responsibility and accountability over government
property and funds and identify which government agencies are in charge with
accounting responsibility.

2.Desired Learning Outcomes

At the end of the learning session, you should be able to:
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 GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING
Katrine Celine C. Gutierrez, CPA

a) Differentiate government accounting from the accounting for business

entities.
b) State the government entities charged with accounting responsibility.
c) Describe briefly the GAM for NGAs.
d) State the basic principles used in government accounting

3. Content/Discussion

Definition of Government Accounting

“Government accounting encompasses the processes of analyzing, recording,

classifying, summarizing and communicating all transactions involving the receipt
and disposition of government funds and property, and interpreting the results
thereof.” (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109)

Section 110, Presidential Decree 1445 sets down the following objectives of
government accounting:
1) To produce information concerning past operations & present conditions;
2) To provide a basis for guidance for future operations
3) To provide for control of the acts of public bodies and offices in the receipt,
disposition, and utilization of funds and property; and,
4) To report on the financial position and the results of operations of
government agencies for the information and guidance of all persons
concerned.

Government Accounting vs. Business Accounting

Compared to the accounting for business entities, government accounting places

greater emphasis on the following:
 Sources and utilization of government funds; and
 Responsibility, accountability and liability of entities entrusted with
government funds and properties.
 Responsibility, Accountability and Liability over Government Funds and
Property Government resources must be utilized efficiently and effectively
in accordance with the law.
 GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING
Katrine Celine C. Gutierrez, CPA

 The head of a government agency is directly responsible in implementing

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

Accounting responsibility
Accounting responsibility emanates from the Constitution, laws, policies,
rules and regulations. The Constitution of the Philippines, the fundamental law of
the land, mandates the keeping of the general accounts of the government,
promulgation of accounting rules, and the submission of reports covering the
financial condition and operation of the government.

The following offices are charged with government accounting responsibility:

1) Commission on Audit (COA)
2) Department of Budget and Management (DBM)
3) Bureau of Treasury (BTr)
4) Government agencies

COMMISSION ON AUDIT (COA)

“The Commission on Audit shall have exclusive authority, subject to the
limitation in this Article, to define the scope of its audit and examination, establish
the techniques and methods required therefore, and promulgate accounting and
auditing rules and regulations, including those for the prevention and
disallowance of IRREGULAR, UNNECCESSARY, EXCESSIVE, EXTRAVAGANT
or UNCONSCIONABLE expenditures or uses of government funds and
properties.” (Article IX-D Section 2, par. 2 of the 1987 Philippine Constitution)

Responsibilities of COA:
 Promulgate accounting and auditing rules
 Keep the general accounts
 Submit financial reports

Department of Budget and Management (DBM)

Responsibilities of DBM:
 Implementation of the national budget
 Efficient and sound utilization of government funds and revenues
 Validation and assignment of program, activity and project codes
 GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING
Katrine Celine C. Gutierrez, CPA

Bureau of Treasury (BTr)

Responsibilities of BTr:
 Cash custody and control of disbursements
 Maintain accounts of financial transactions of all national government offices

Government agencies

Responsibility of government agencies:

 Maintain accounting books and budget registries which are reconciled with the
cash records of the BTr and the budget records of the COA and DBM.
 Provide advice on the financial condition and status of the appropriations and
allotments of the agency as its Head may require
 Develop and conduct procedures designed to meet the needs of management

The GAM for NGAs

 The Government Accounting Manual for National Government Agencies (GAM for
NGAs) is promulgated by the COA under the authority conferred to it by the
Philippine Constitution.
 The GAM for NGAs was promulgated primarily to harmonize the government
accounting standards with the International Public Sector Accounting Standards
(IPSAS). The IPSASs are based on the IFRSs.

Objectives of the GAM for NGAs

To update the following:

 Standards, policies, guidelines and procedures in accounting for government funds
and property;
 Coding structure and accounts; and
 Accounting books, registries, records, forms, reports and financial statements.
 Basic Accounting and Budget reporting Principles

Basic Accounting and Budget reporting Principles

 Compliance with PPSAS and relevant laws, rules and regulations
 GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING
Katrine Celine C. Gutierrez, CPA

 Accrual basis of accounting

 Budget basis for presentation of budget information in the financial statements
 Revised Chart of Accounts
 Double entry bookkeeping
 Financial statements based on accounting and budgetary records
 Fund cluster accounting

QUALITATIVE CHARACTERISTICS
 Understandability
 Relevance
 Materiality
 Timeliness
 Reliability
 Faithful representation
 Substance over form
 Neutrality
 Prudence
 Completeness
 Comparability

Components of General-Purpose Financial Statements

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

4. Learning Resources:

Punzalan, A.R & Cardona, M.M. (2019). Government Accounting

Millan, Z.V B. (2018). Government Accounting and Accounting for Non-Profit
Organizations
Government Accounting Manual, Volumes I, II & III

5. Evaluation:

a) How does government accounting differ from the accounting for business
entities?
 GOVACC_OVERVIEW OF GOVERNMENT ACOUNTING
Katrine Celine C. Gutierrez, CPA

b) What are the sources of revenue for the government?

c) Which agencies are charged of the government accounting responsibility?
d) What are the objectives of the GAM for NGAs?
e) What are the components of general-purpose financial statements?

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