Chapter 3

The Revised Chart of Accounts

INTRODUCTION
The Commission on Audit as member of the International Organization of Supreme Audit Institutions
(INTOSAI) is encouraged to adopt relevant International Accounting Standards. Thus, to provide new
accounts for the adoption of the Philippine Public Accounting Standards (PPSAS) which were harmonized
with the IPSAS to enhance the accountability and transparency of the financial reports, and ensure
compatibility of financial information, the COA recognizes the need to revise the existing NGAS Chart of
Accounts prescribed in COA Cir. No, 2004-008 dated September 20, 2004.

1. Define and discuss the underlying reason why chart of accounts is prescribed in new accounting
system.
To enhance the accountability and transparency of the financial reports, and ensure
compatibility of financial information.
2. Where is the Revised Chart of Accounts As per Government Accounting Manual Volume Ill,
and the Chart of Accounts as Object Code in the Unified Accounts Code Structure (UACS)
based:
a. COA Circular No. 2013-002 dated January 30, 2013 prescribing the adoption of the Revised
Chart of Accounts (RCA) for National Government Agencies (NGAs) effective January l,
2014;
b. COA Resolution No. 2014-003 dated January 24, 2014 prescribing the adoption of the
Philippine Public Sector Accounting Standards (PPSAS);
c. COA Circular No. 2014-003 dated April 15, 2014 providing the implementing rules and
guidelines on the Conversion from the Philippine Government Chart of Accounts under the
New Government Accounting System per COA Circular No. 2004-098 dated September 20,
2004, as amended, to the Revised Chart of Accounts for NGAs;
d. COA-DBM-DOF Joint Circular No. 2013-1 dated August 6, 2013 prescribing the UACS, and
e. COA-DBM-DOF Joint Circular No. 2014-1 dated November 7, 2014 providing the
enhancement of UACS prescribed under COA-DBM-DOF Joint Circular No. 2013-
3. What are the elements of financial statements?
• Assets — economic resources of an agency that are recognized and measured in conformity
with generally accepted accounting principles. Any owned physical object (tangible) or right
(intangible) with economic value that is expressed, for accounting purposes, in terms of its cost
or some other value. These other values include revalued amounts, current cost, net realizable
value, fair value and recoverable amounts.
• Liabilities --- economic obligations of an agency that are recognized and measured in
conformity with accounting principles. Also include certain deferred credits that are not
obligations, but which are nonetheless recognized and measured according to accounting
principles as outlined in Philippine Public Sector Accounting Standards.
• Equity ---- residual interest of the government in an agency which is the excess of the agency's
assets over its liabilities.
• Income---- 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. The term "income" is broader that revenue and includes
gains in addition to revenue.
• Expenses —refer to decrease in economic benefits or service potential during the reporting
period in the form of outflows or consumption of assets or incurrence of liabilities that result
in decrease in net assets/equity, other than those relating to distributions to owners.
4. (PPSAS 1 — Presentation of Financial Statements) COA Cir. No. 2013-002
It provides that the account code structure consists of eight (8) mandatory digits as follows: Account
Group, Major Account Group, Sub-Major Account Group, General Ledger Accounts, General Ledger
Contra-Accounts
• The Account Group represents the accounts classification as to Assets, Liabilities Equity
Income and Expenses.
 • The Major Account group represents classification within the account group; example: for
Asset major accounts- Cash and Cash Equivalents, Investments, Receivables, etc.
• Sub-Major Account group represents classification within the major e.g. for Cash and Cash
Equivalent: Cash on Hand, Cash in Bank-Local Currency, Cash in Bank-Foreign Currency,
etc.
• The General Ledger accounts represent the accounts to be presented in the detailed financial
statements, e.g. Cash-Collecting Officer, Petty Cash, etc. This is Composed of segments. The
first two digits from the left is the general ledger code, and the last digit is reserved for contra
accounts like, Allowance for Impairment, Accumulated Depreciation, etc.
5. Classifications of expenses + sub major groups
1. Personnel services
i. Salaries and wages
ii. Other compensation
iii. Personnel benefit contributions
iv. Other personal benefits
2. Maintenance and other expenses
i. Traveling expenses
ii. Training and scholarship expenses
iii. Supplies and material expenses
iv. Utility expenses
v. Communication expenses
vi. Awards/rewards, prizes and indemnities
vii. Survey, research, exploration, and development expenses
viii. Generation, transmission, and distribution expenses
ix. Confidential, intelligence, and extraordinary expenses
x. Professional services
xi. General services
xii. Repairs and maintenance
xiii. Financial assistance/subsidy
xiv. Taxes, insurance premiums, and other fees
xv. Labor and wages
xvi. Other maintenance and operating expenses
3. Financial expenses
i. Financial expenses
4. Direct costs
i. COGM
ii. Cost of sales
5. Non-cash expenses
i. Depreciation
ii. Amortization
iii. Impairment loss
iv. Losses
Questions:
Present your answers in a hand-written form. Take a picture of your answers through the CamScanner (CS)
application and convert it in PDF file. Once converted, upload this to our google classroom and mark as done.
Limit your answers to 2-5 sentences per question.

1. Discuss Why the Revised Chart of Accounts in COA Circular No. 2013.002 dated January 30, 2013
was created.

2. What are the five (5) classifications of expenses in the Revised Chart Of Accounts in COA Circular
No 2013-002 dated January 30, 2013? Give the Sub-major account group classifications.
 a. Personnel services extraordinary
i. Salaries and wages expenses
ii. Other compensation x. Professional services
iii. Personnel benefit xi. General services
contributions xii. Repairs and
iv. Other personal maintenance
benefits xiii. Financial
b. Maintenance and other assistance/subsidy
expenses xiv. Taxes, insurance
i. Traveling expenses premiums, and other
ii. Training and fees
scholarship expenses xv. Labor and wages
iii. Supplies and material xvi. Other maintenance
expenses and operating
iv. Utility expenses expenses
v. Communication c. Financial expenses
expenses i. Financial expenses
vi. Awards/rewards, d. Direct costs
prizes and indemnities i. COGM
vii. Survey, research, ii. Cost of sales
exploration, and e. Non-cash expenses
development expenses i. Depreciation
viii. Generation, ii. Amortization
transmission, and iii. Impairment loss
distribution expenses iv. Losses
ix. Confidential,
intelligence, and

3. Enumerate the five (5) account code structure of the Revised Chart of Accounts
consisting of eight (8) mandatory digits. Explain briefly.
It provides that the account code structure consists of eight (8) mandatory digits as follows:
Account Group, Major Account Group, Sub-Major Account Group, General Ledger
Accounts, General Ledger Contra-Accounts

• The Account Group represents the accounts classification as to Assets, Liabilities

Equity Income and Expenses.
• The Major Account group represents classification within the account group;
example: for Asset major accounts- Cash and Cash Equivalents, Investments,
Receivables, etc.
• Sub-Major Account group represents classification within the major e.g. for Cash
and Cash Equivalent: Cash on Hand, Cash in Bank-Local Currency, Cash in Bank-
Foreign Currency, etc.
• The General Ledger accounts represent the accounts to be presented in the detailed
financial statements, e.g. Cash-Collecting Officer, Petty Cash, etc. This is
Composed of segments. The first two digits from the left is the general ledger code,
 and the last digit is reserved for contra accounts like, Allowance for Impairment,
Accumulated Depreciation, etc.

4. Enumerate and explain briefly the elements of Financial Statements. per COA Circular
No.2013-002.
Assets — economic resources of an agency that are recognized and measured in conformity
with generally accepted accounting principles. Any owned physical object (tangible) or
right (intangible) with economic value that is expressed, for accounting purposes, in terms
of its cost or some other value. These other values include revalued amounts, current cost,
net realizable value, fair value and recoverable amounts.

Liabilities --- economic obligations of an agency that are recognized and measured in
conformity with accounting principles. Also include certain deferred credits that are not
obligations, but which are nonetheless recognized and measured according to accounting
principles as outlined in Philippine Public Sector Accounting Standards.

Equity ---- residual interest of the government in an agency which is the excess of the
agency's assets over its liabilities.

Income---- 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. The term "income" is broader that revenue and
includes gains in addition to revenue.

Expenses —refer to decrease in economic benefits or service potential during the reporting
period in the form of outflows or consumption of assets or incurrence of liabilities that
result in decrease in net assets/equity, other than those relating to distributions to owners.