Automatic Appropriations – these funds are covered by outstanding Revenue- refers to income derived from the regular system
ar system of taxation
legislation which do not require periodic action by the Congress and
need not be included in the legislation of the annual budget.
New General Appropriations refer to the portion of National Budget
submitted annually every fiscal to congress for legislation and approval
Appropriation is an authorization made by law or other legislative
enactment directing the payment of goods and services out of
government funds under specified conditions or for a specified
purpose. An appropriation is always made by a legislative body. A fund
may be established by executive order, statutory requirements or
charter provisions. A fund requires an identification of the assets,
liabilities, reserves, surplus, revenues, and expenditures applicable to
it, while an appropriation merely authorizes an expenditure and does
not necessarily provide any particular revenue source for financing the
expenditures. An appropriation specifies in detail the exact purposes
for which expenditures may be made, the amount to be spent, and the
period of time during which the expenditures are to be made. These
detailed restrictions do not apply to funds. No expenditures may be
made out of certain funds, i.e., the general fund, without an
appropriation. A single appropriation may be made out of several
funds.
DISBURSMENTS - All cash paid out during a given period either in
currency (cash) or by check; the settlement of government
payables/obligations by cash or by check; the movement of cash either
from the BTr or AGDB or from an authorized disbursing officer to the
final recipient. It shall be covered by Disbursement Voucher (DV) Petty
Cash Voucher(PCV)or payroll.
Fiduciary Fund-a fund which the assets of the fund are administered by
the government in a trust or fiduciary capacity, often called a Trust
Fund.
Special Fund-refers to the fund created for a special purpose and used
to defray specifies expenditures or classes of expenditures.
General Fund-every local government unit shall maintain a general
fund which shall be used to account for such monies and resources as
may be received by and disbursed from the local treasury. The
general fund shall consist of monies and resources of the local
government, which are available for the payment of expenditures,
obligations or purposes not specifically declared by law as accruing
and chargeable to, or payable from, any other fund.
Fund- is a sum of money or resources set aside for the purpose of
carrying out specific activities or attaining certain objectives in
accordance with special regulations, restrictions or limitations, and
constitutes an independent fiscal and accounting entity.
Petty Cash Fund - Refers to the amount granted to duly designated
PCF Custodian for payment of authorized miscellaneous expenses
which cannot be conveniently paid through check or ADA
FINES AND PENALTIES are recognized as income in the year if they
are collected. An agency collecting fines in the capacity of an agent
shall not treat those fines as revenue
By Advice to Debit the Account (ADA). Advice to Debit Account is
issued by national government agencies (NGA) which serves as notice
to the bank to debit the agency’s MDS account for payments made for
accounts payable and retirement gratuity/terminal leave benefits.
Receipts – refers to all cash inflow whether actual or constructive
regardless of source or purpose and whether pertaining to the agency
or not. It includes not only income or revenue actually collected but
also trust receipts, fund deposits, inter agency fund and transfers and
equity contributions received by corporate agencies. In LGUs it refers
to all to all revenues and receipts collected or received forming the
gross funds. It refers to income realized from operations and activities
received by it in the exercise of its functions, consisting charges for
services rendered, price commodity sold as well as loans, contributions
or aids from mother entities., except provisional advances for
budgetary purposes.
enforced under the authority of law or ordinance and as such, accrue
more or less regularly every year.
SERVICE IN-KIND –this not recognized as revenue due to
uncertainties affecting the entity’s ability to control those services and
measure them at fair value such as technical assistance from foreign
bodies, community services rendered by persons convicted of
offenses, volunteer services.
New General Appropriation –are annual authorizations for incurring
obligations during a specified budget year, as listed in the General
Appropriations Act (GAA). The GAA is the legislative authorization that
identifies new appropriations in terms of specific amounts for salaries,
wages and other personnel benefits; Maintenance and Other Operating
Expenses (MOOE), Financial Expenses (FEx) and Capital Outlays
(CO) for the implementation of programs, projects and activities of all
departments, bureaus and offices of government for a given year.
Continuing Appropriations are authorizations to support obligations for
a specified purpose or project, even when these obligations are
incurred beyond the budget year. Because MOOE and CO
appropriations in the GAA are valid for two years, unobligated and
unreleased appropriations for these budget items are valid until the end
of their second year and are classified as Continuing Appropriations.
Supplemental Appropriations are additional appropriations enacted by
Congress to augment original appropriations that have proven
insufficient for their intended purpose because of economic, political or
social conditions. Supplemental Appropriations must also be supported
by a certification of availability of funds by the BTr.
Automatic Appropriations are authorizations made annually or for some
other period prescribed by law, by virtue of standing legislation, which
do not require periodic action by the Congress. These are
automatically and annually included in the National Expenditure
Program of the National Government.
Allotment is an authorization issued by authorities (the DBM for
national government agencies or the Local Chief Executive (LCE) for
LGUs) to an agency/LGU which allows it to incur obligations within a
specified amount that is, within a legislative appropriation.
Obligations are commitments by a government agency arising from an
act of a duly authorized government officer binding the government to
incur expenses, purchases and other operational requirements of the
agency and the immediate or eventual payment of a sum of money.
Obligations are made within the limit of the Allotment (ABM or SARO)
issued by the DBM
Tax Remittance Advice refers to the accountable document issued by
NGAS to record the remittance of all taxes withheld to the BIR. The
same document shall be the basis for the BIR and the BTr to record
the tax collection and deposit in their respective books of accounts.
GENERAL CLASSIFICATION OF FUNDS
1. National Government Agencies (NGAs)
a. General Fund-includes cash and other resources of the government,
which are generally available for all functions of the government and
from which are, segregated any amounts not specifically designated to
another account.
b. Special Fund-refers to the fund created for a special purpose
and used to defray specifies expenditures or classes of expenditures.
c. Fiduciary Fund-a fund which the assets of the fund are
administered by the government in a trust or fiduciary capacity, often
called a Trust Fund.
2. Local Government Units (LGUs)
1. General Fund-every local government unit shall maintain a
general fund which shall be used to account for such monies and
resources as may be received by and disbursed from the local
treasury. The general fund shall consist of monies and resources of
the local government, which are available for the payment of
expenditures, obligations or purposes not specifically declared by law
as accruing and chargeable to, or payable from, any other fund.
Special accounts shall be maintained in the general fund for the
following:
a. Public utilities and other economic enterprises;
b. Loans, interest, bond issues and other contributions for
specific purposes; and
c. Development projects funded from the share of the local
government unit concerned in the internal revenue allotment and such
other special accounts, which may be created by law or ordinance.
2.Special Funds-There shall be maintained in every provincial, city, or
municipal treasury of the following special funds:
2.1 Special Education Fund - shall consist of the respective shares of
the provinces, cities, municipalities and barangays in the proceeds of
the additional tax on real property to be appropriated for purposes
prescribe in the Local Government Code.
2.2 Trust Funds-shall consist of private and public monies which
officially come into the possession of the local government or of a local
government official as trustee, administrator or which have been
received as a guaranty for the fulfillment of some obligation.
Learning Objectives
After this lesson, the student should be able to:
- State the sources of revenue of a government entity
- State the recognition and measurement of revenue
Revenue is the gross inflow of economic benefits or service potential
during the reporting period whose inflows result in an increase in
equity, other than increase relating to contribution from owners. It
includes those that are received by the entity in its own account. It
comprises all funds derived from the income of any government
agency and available for appropriation or expenditure in accordance
with the law.
RECEIPTS – refer to actual cash collections from all sources during
the period.
TAX REVENUE is recognized at a gross amount and not reduced for
expenses paid through tax system which should be paid irrespective of
whether the taxpayer pay taxes.
Types of Taxes:
(i) INCOME TAX – earning of taxable income
(ii) VALUE ADDED TAX – undertaking of a taxable activity
(iii) GOODS AND SERVICE TAX – purchase or sale of
taxable goods and services
(iv) PROPERTY TAX – passage of the time for which the
tax is levied
FINES AND PENALTIES are recognized as income in the year if they
are collected. An agency collecting fines in the capacity of an agent
shall not treat those fines as revenue
Service Income – Permit Fees, Registration Fees, Franchising Fees,
Licensing Fees, Legal Fees, Passport and Visa Fees, Processing
Fees, and the like.
Business Income – School Fees, Examination Fees, Rent and Lease
Income, Communication Network Fee, Income from Hotels, Sales
Revenue, Hospital Fees, and the like.
DONATIONS/GIFTS and GOODS IN-KIND this gifts, donations and
goods in-kind are recognized as revenue when it is probable the future
economic benefits or services. Those that received without condition
are recognized immediately as revenue while those with conditions are
initially recognized as liability and recognized as revenue only when
the conditions are satisfied.
SERVICE IN-KIND –this not recognized as revenue due to
uncertainties affecting the entity’s ability to control those services and
measure them at fair value such as technical assistance from foreign
bodies, community services rendered by persons convicted of
offenses, volunteer services.
GRANTS WITH CONDITION – an asset received under a grant with
condition is initially recognized as liability and recognized as revenue
only when the condition is satisfied.
RECOGNITION OF REVENUE
1. Taxation revenue shall be determined at a gross amount
2. Gifts and donations, other than services in kind shall be
recognized as asset and revenue
3. Goods-in-kind received without conditions shall be
recognized as revenue immediately
4. Donation in cash or in kind shall be recognized as revenue.
RECOGNITION OF ASSETS THROUGH TRANSFER – an entity shall
recognize an asset in respect of transfers when the transferred
resources meet the definition of an asset and satisfy the criteria for
recognition of an asset.
RECOGNITION AND MEASUREMENT OF FINES- fines recognized
as revenue when the receivables meets the definition of asset, when
an entity collects fines in the capacity of an agent not recognized as
revenue and asset arising from fines are measured at the best
estimate of the entity.
RECOGNITION AND MEASUREMENT OF BEQUEST- bequest
satisfy the definition of an assets and revenue when it is probable that
the future economic benefit or services will flow to the entity and when
the fair value of bequeathed asset is determined in the same manner
as for gifts and donations.
RECOGNITION AND MEASUREMENT OF GIFTS, DONATIONS AND
GOODS IN-KIND- recognized asset and revenue when it is probable in
economic benefits or service potential, tangible assets transferred to
an entity in a non-exchange of transactions without charge, when
goods are received without condition attached revenue is recognized
immediately, measure at fair value as at the date of acquisition.
RECOGNITION AND MEASUREMENT OF SERVICE IN-KIND –
these services meet the definition of an asset because the entity
controls a resources from future economic benefits or services
potential is expected to flow to the entity.
RECOGNITION AND DISCLOSURE OF PLEDGES- pledges do not
meet the definition of an asset because the recipient entity is unable to
control the access of the transfer to the future economic benefits or
service or service embodied in the item pledged. Agencies do not
recognize pledged items as assets or revenue. If the pledge is
subsequently transferred to the recipient entity. It is recognized as a
gift or donation. Pledges may warrant disclosure as contingent assets.
RECOGNITION AND MEASUREMENT OF CONCESSIONARY
LOANS- when the portion of the loan that is repayable, along with any
interest payment is an exchange transaction and an entity consider
whether any difference between the transaction price and the fair value
of the loan on initial recognition is non-exchange transaction.
RECEIPTS – refer to actual cash collections from all sources during
the period.
Other receipts include:
(i) Receipt of subsidy from the National Governments such
as
- Notice of Cash Allocation
- Tax Remittance Advice
- Non Cash Availment Authority
- Cash Disbursement Ceiling
 (ii) Receipt of subsidy from other government agencies should be avoided. There should be no evidence of “accounting for
including LGUs and GOCCs. accounting’s sake.”
b. Timely, accurate, reliable and meaningful data in relation to an
identified need. All transactions that occur within an accounting period
should be recorded in accounts and reflected in reports which are
available shortly after the close of the period. Recorded data should
accurately describe the financial transactions and results that will avoid
OTHER RECEIPTS misleading reports.
NATIONAL LOCAL c. Usefulness of financial data. The data can be used for the purposes
Refund of cash advances Borrowings of accountability or management. To serve these purposes, the data
Receipts of performance/bidders/bail Sale of Property, Plant and must be promptly presented, properly organized, clearly reported,
bonds Equipment impartial and its significance and usefulness clearly understood by all
Refund for overpayment of expenses Refund of Cash Advances stakeholders, so that they are effectively utilized for management
Collections made on behalf of another Receipt of Performance/Bidders’ purposes.
agency or private companies
Inter-agency transferred funds Bonds THE REVISED CHART OF ACCOUNTS

INTRODUCTION
Books of Accounts and Registries

(1)Journals Chart of Accounts

Cash Receipt Journal (CRJ) The chart of accounts provides the framework within which
the accounting records are constructed. It is a list of general ledger
Cash Disbursement Journal (CDJ) accounts consisting of the real and nominal accounts. It contains the
account's name, a brief description of the account, and an account
General Journal (GJ) number assigned to aid in recording and tracking transactions to
achieve uniformity in the recording of government financial
Check Disbursement Journal transactions.

(2) Legders The chief purpose of the Chart of Accounts is to serve as an

aid or reference for looking up accounts and their associated account
General Ledgers (GL) numbers.

Subsidiary Ledger (SL) To permit effective budgetary control and to establish

uniformity in financial reports, accounts shall be classified in balanced
(3) Registries (Budget Records) fund groups. The group for each fund shall include all accounts
necessary to set forth its operations and conditions. All financial
(i) Registries of Revenue and Other Receipts (RROR) – used to statements shall follow this classification.
monitor the budgeted amounts, actual collections and remittances of
revenue and other receipts.
What is it
(ii) Registries of Appropriation and Allotments (RAPAL) – used to
monitor appropriations and allotments will not exceed appropriations.
Account
(iii) Registries of Allotments, Obligations and Disbursement (RAOD) –
used to monitor allotments received, obligations incurred against the The name or label used for recording or reporting a transaction. The
corresponding allotment, and the actual disbursement made. This is to types of accounts are:
ensure that obligations incurred will not exceed allotments while actual
disbursements will not exceed the obligations incurred. · Asset accounts
· Liability accounts
(iv)Registries of Budget Utilization and Disbursements (RBUD) – use to · Equity accounts
record the approved special budget and the corresponding utilizations · Revenue or income accounts · Expense accounts
and disbursement charged to retained income. · Contra-accounts

Criteria in Keeping the Accounts of Government
The following are the criteria in keeping the accounts of the
government:
a. The accounts of an agency shall be kept in such detail as is
necessary to meet the needs of the agency and at the same time be
adequate to furnish the information needed by fiscal or control
agencies of the government.
b. The highest standards of honesty, objectivity and consistency shall
be observed in the keeping of accounts to safeguard against
inaccurate or misleading information.
In all countries, regardless of the overall approach, the accounting
practices used and the data developed should satisfy the following
criteria:
a. Simplicity. The accounting system should include those records that
serve significant purpose. Excessive details and unnecessary records
All Accounts:
· can be debited and credited
· have an increase side (column) and a decrease side (column)
· have a debit side (column) and a credit side (column)
· debit side is the left side (left column)
· credit side is the right side (right column)
· are classified as an asset, liability, equity, revenue, expense
· are either a real (balance sheet) or nominal (income statement)
account
· have a normal balance amount that is normally a debit balance or a
credit balance
Real Accounts. - These are the balance sheet accounts for assets,
liabilities and equity accounts.
Nominal Accounts. - These are the income and expense accounts.
Normal Balance. - The debit or credit balance that an
account is expected to have. It is the side of the account that increases
the balance of the account. Since the increase side of assets and
expense accounts is the left (debit) side, these accounts normally have
a debit balance. Likewise, since the increase side of liabilities, revenue,
and equity accounts is the right (credit) side these accounts normally · Expenses Personal Services. These accounts include basic pay, all
have a credit balance. In other words, since debits increase asset and authorized allowances, bonus, cash gifts, incentives and other
expense accounts, they normally have a debit (left side balance). personnel benefits of officials and employees of the government.
Conversely, because credits increase liability, equity, and revenue Maintenance and Other Operating Expenses. These accounts include
accounts, they normally have a credit (right side) balance expenses necessary for the regular operations of an agency like,
among others, traveling expenses, training and seminar expenses,
water, electricity, supplies expense, maintenance of property, plant and
equipment, and other maintenance and operating expenses.
Account Classification Normal Balance
Asset Debit Financial Expenses. These accounts include bank charges, interest
Contra Asset Credit expense, commitment charges, documentary stamp expense and other
Liabilities Credit financial charges. It also includes losses incurred relative to foreign
Contra Liabilities Debit exchange transactions and debt service subsidy to GOCCs.
Owner’s Equity Credit
Owner’s Drawing Debit · Intermediate Accounts. These are accounts which are closed
ultimately to the Government Equity account at the end of the
Revenue Credit
accounting period. These include Cost of Goods Sold, Income and
Expense Debit
Expense Summary, Prior Years’ Adjustments, Retained Operating
Gain Credit
Surplus, Subsidy to Regional Offices/Staff Bureaus, and Subsidy to
Losses Debit Operating Units, among others.

Assets. These are properties used in the operation or investment
activities of an entity. Cash, accounts receivable, notes receivable,
inventory, marketable securities, land, and equipment are some
examples.
Liabilities. These are claims by creditors to the property (assets) of an
entity until they are paid. Also, these are amounts the business owes to
others.
Equity. Assets minus liabilities.
Income. The gross increase in equity resulting from the operations and
other activities of the entity.
DISBURSEMENTS
DISBURSMENTS
All cash paid out during a given period either in currency
(cash) or by check; the settlement of government payables/obligations
by cash or by check; the movement of cash either from the BTr or
AGDB or from an authorized disbursing officer to the final recipient. It
shall be covered by Disbursement Voucher (DV) Petty
CashVoucher(PCV)orpayroll.
Basic Requirements Applicable to All Types of Disbursements

Expenses. Decrease in equity (capital) resulting from assets, and a. existence of a lawful and sufficient allotment and amount duly
services and supplies consumed in the operations of an entity. The obligated and certified by the Budget Officer
cost of doing business. b. availability of cash certified by the Chief Accountant
c. legality of the transactions and conformity with existing rules and
Balance Sheet Accounts. The balance sheet accounts consist of regulations
assets, liabilities and equity. d. submission of proper evidence to establish the claim
e. approval of the disbursement by the Chief of Office or by his duly
authorized representative
Assets
The Disbursements System involves the following:
Current Assets Cash, Receivables, Marketable Securities, Inventories,
Prepaid Expenses, Other Current Assets a. preparation and processing of disbursement voucher (DV)
b. preparation and issuance of check
Long-Term Investments c. payment by cash
d. granting
Property, Plant and Equipment e. utilization
f. liquidation/replenishment of cash advances
Other Asset Expenditures

Liabilities
Current Liabilities, Long-Term Liabilities, Other Liabilities
Equity
Government Equity
Revenue/Income and Expenses Accounts. The revenue/income and
expenses accounts consist of the following:
· Revenue/Income General Income Accounts. Encompasses all types
of revenue/income generated by government agencies in the exercise
of their administrative and regulatory function, income from public
enterprises/investments, and income from grants and donations
including subsidies.
Specific Income Accounts. Encompasses all taxes imposed on taxable
income, properties, and use or sale of goods and services, taxes on
international trade and transactions and other taxes including fines and
penalties. Also included under these accounts are income generated
from local government, schools and hospital operations.
Government expenditures include all charges against the fund of the
agency for personal services, maintenance and other operating
expenses, financial expenses and property, plant, and equipment and
provisions for retirement of long-term obligations.
Certification on Disbursements
Disbursements from government funds shall require the following
certifications on the disbursement voucher (DV):
a. certification and approval of vouchers and payrolls as to validity,
propriety and legality of the claim by head of the department or office
who has administrative control of the fund concerned and shall certify
by the Budget Officer for the availability of allotment;
b. necessary documents supporting the DV and payrolls as certified
and reviewed by the Accountant/Head of Accounting Unit shall charge
obligations against available allotment;
c. certification that funds are available for the purpose by the
Accountant/Head of Accounting Unit shall certify the availability of
fund /cash and the completeness of the supporting documents before
the Head of the Agency or authorized representative can enter any
contract involving the expenditures of public funds.

Modes of Disbursements

(I) By Check
a. Modified Disbursement System (MDS) checks. Issued by national
government agencies chargeable against the account of the Treasurer
of the Philippines maintained with different MDS - Government
Servicing Banks (GSBs). These are covered by Notice of Cash
Allocation, an authorization issued by the DBM to government
agencies to withdraw cash from the National Treasury through the
issuance of MDS checks or other authorized modes of disbursements.

b. Commercial checks. Issued by government agencies chargeable

against the Agency Checking Account with GSBs. These are covered
by income/receipts authorized to be deposited with AGDBs and
funding checks received by Regional Offices/Operating Units from
Central Offices/Regional Offices, respectively.

(iii) By Cash (thru Disbursing Officers). Cash

disbursements out of cash advances of regular and
special disbursing officers for personal services, petty
expenses and MOOE for field operating requirements.

(iv) Cashless Payments

a. Through Petty Cash Fund (PCF), maintained
under the imprest system, shall be sufficient for
the non-recurring, emergency and petty expenses
of the agency.

b. NCAA Disbursements – Non-cash disbursements

through JEV by the availing/implementing agency.
Non-Cash Availment Authority Disbursements was
adopted to account for the cash equivalent of the
loan proceeds availed of through supplier’s
credit/constructive cash.

c. By Advice to Debit the Account (ADA). Advice to

Debit Account is issued by national government
agencies (NGA) which serves as notice to the
bank to debit the agency’s MDS account for
payments made for accounts payable and
retirement gratuity/terminal leave benefits.

d. By Tax Remittance Advice (TRA). Tax Remittance

Advice refers to the accountable document issued
by NGAS to record the remittance of all taxes
withheld to the BIR. The same document shall be
the basis for the BIR and the BTr to record the tax
collection and deposit in their respective books of
accounts.

ACCUNTING FOR DISALLOWANCES

This refer to the expenditures made by an agency that are

subsequently disallowed by the Commission on Audit (COA) because
they found to be irregular, unnecessary, excessive, extravagant or
unconscionable.

ACCOUNTING FOR OVERPAYMENTS

Sometimes overpayments or even double payment of

expenditures do happen due to avoidable controls prepared by an
employee. Example are payment of payrolls in advance due to some
absences or without pay for the period