The budget process in LGUs is composed of 5 phases: (1) Budget Preparation; (2)

Budget Authorization; (3) Budget Review; (4) Budget Execution; (5) Budget
Accountability. These phases are linked and in sequence. The first phase of the local
budget process is budget preparation. It encompasses cost estimation per PPA,
budget proposal preparation, executive review of budget proposals, and LEP and
Budget Message development. Under the provisions, the local chief executive shall
prepare the executive budget for the ensuing year. The Key Players in Budget
Preparation are the Local Chief Executive (LCE), Local Finance Committee (LFC),
Local Treasurer, Local Budget Officer (LBO), Local Planning and Development
Coordinator (LPDC), Local Accountant, Heads of Departments and Offices/Heads of
LEEs/PUs, and CSOs and the Private Sector Group. The Budget Preparation Phase
includes the following steps: issuing the Budget Call, preparing and submitting
budget proposals, conducting budget hearings and evaluating budget proposals,
preparing the Local Expenditure Program (LEP), preparing the Budget Message, and
submitting the Local Expenditure Program, together with the following documents, to
the Sanggunian not later than October 16th of the current year (Section 318, RA No.
7160). The second phase of the local budget process is budget authorization. This
phase starts when the time the Sanggunian receives the Local Expenditure Program
(LEP) submitted by the LCE and ended with the enactment of the Appropriation
Ordinance and approval thereof by the LCE. Authorization of the budget is done
through an Appropriation Ordinance enacted by the Local Sanggunian in accordance
with the fundamental principle that, “No money shall be paid out of the local treasury
except in pursuance of an Appropriation Ordinance or law” (Section 305 (a), RA No.
7160). The Sanggunian concerned shall enact, by an ordinance, the annual budget
of the local government unit for the next fiscal year based on the estimates of
revenue and expenditures given by the local chief executive on or before the end of
the current fiscal year (Section 319, RA No. 7160). The Key Players in Budget
Authorization are the Local Chief Executive (LCE), Sanggunian, Committee on
Appropriations/Finance, Secretary to the Sanggunian, Local Finance Committee,
Heads of Departments and Offices, CSOs and Private Sector Groups. There are
only four (4) main steps to follow in Budget Authorization: Enact the Appropriation
Ordinance, Approve the Appropriation Ordinance, Post the Appropriation Ordinance,
and Forward copies of the approved Appropriation Ordinance to the reviewing
authority. The third phase of the local budget process is budget review. Its primary
objective is to see whether Appropriation Ordinance adheres to the fiscal standards
and general constraints set out in the Local Government Code of 1991 and other
applicable laws. It begins when the reviewing authority receives the Appropriation
Ordinance for evaluation and concludes when the review action is issued. The
Department of Budget and Management shall review ordinances authorizing the
annual or supplemental appropriations of provinces, highly-urbanized cities,
independent component cities, and municipalities within the Metropolitan Manila
Area following Section 327 of RA No. 7160 (Section 326 of RA No. 7160). The
Sangguniang Panlalawigan shall review the ordinance authorizing annual or
supplemental appropriations of component cities and municipalities in the same
manner and within the same period prescribed for the review of other ordinances.
The Key Players in Budget Review are the Secretary to the Sanggunian,
Sangguniang Panlalawigan, Provincial Finance Committee, Department of Budget
and Management Regional Office, CSOs and Private Sector. The Steps in the
Budget Review Phase are to check the Appropriation Ordinance with the Appended
Budget Documents, Review the Appropriation Ordinance, and Issue the Review
Action. The fourth phase of the local budget process is budget execution. The
collection of money is a vital part of this phase, as it assures that cash is available for
the fulfillment of obligations and those disbursements do not exceed allocations.
While seemingly a separate activity, the collection and/or receipt of revenues are
considered an integral part of Budget Execution. The responsibility, however, for the
execution of authorized annual and supplemental budgets shall be vested upon the
Local Chief Executive. Another legal basis in Budget Execution is the Certification
requirement before local funds are utilized. Section 344 of R.A. No.7160 provides
that “No money shall be disbursed unless the local budget officer certifies to the
existence of appropriation that has been legally made for the purpose, the local
accountant has obligated said appropriation, and the local treasurer certifies to the
availability of funds for the purpose. Finally, disbursements of local funds shall be
made in accordance with the ordinance authorizing the annual or supplemental
appropriations even without the prior approval of the Sanggunian concerned. The
Key Players in Budget Execution are the Local Chief Executive (LCE), Vice
Governor/ Vice Mayor, Local Budget Officer (LBO), Local Treasurer, Local
Accountant, Local Planning and Development Coordinator (LPDC), Department
Head, Civil Society Organizations (CSOs)/Private Sector Groups. The Steps in the
Budget Execution Phase are the Release of Allotments on the Basis of the
Authorized and Approved Appropriation Ordinance, Preparing the Summary of
Financial and Physical Performance Targets and Cash Program, Obligate and
Disburse Funds, Adjust cash program for shortages and overages, and Implement
corrective measures as proposed by the Local Finance Committee and approved by
the Local Chief Executive. The last and final phase of the local budget process is
budget accountability. Merely said, budget accountability is accounting for the
budget. It entails the application of management control strategies to aid in the
tracking of income/revenues and the control of expenditures. Without accountability,
the budget's five (5) phases are incomplete. This mechanism allows the LCE, Local
Sanggunian, and stakeholders to stay current on the status of PPAs funded by public
funds. It includes the tracking and analysis of all financial activities, the entry of
budgetary accounts in the registries, the entry of all revenues and expenditures in
the books of accounts, and financial reporting of their present condition. The LGU
financial and physical performance review of the LGU's financial and physical
performance is an essential aspect of accountability. This review and evaluation are
all to implement adjustments and reforms that make the budget visible to the public
and stakeholders. On Section 340 of RA No. 7160 provides that “any officer of the
LGU whose duty permits or requires the possession or custody of local government
funds shall be accountable and responsible for the safekeeping thereof in conformity
with the provisions of this Title. Other local officers, who, though not accountable by
the nature of their duties, may likewise be held accountable and responsible for local
government funds through their participation in the use or application thereof. On
Section 305 of RA No. 7160 also provides that “Fiscal responsibility shall be shared
by all those exercising authority over the financial affairs, transactions, and
operations of the local government unit. The Key Players in Budget Accountability
are Local Chief Executive, Local Treasurer, Local Accountant, Local Budget Officer,
Planning and Development Coordinator, Heads of Departments/Offices, Local
Finance Committee, CSOs and Private Sector Organizations. The Budget
accountability is accounting for the local budget, which involves three (3) steps:
Monitor receipts and expenditures, Submit Accountability Reports, and Evaluate
Performance of each Department/Office.