FIN102: PUBLIC FINANCE citizens participation in the budget process; departments and agencies are tasked to partner

MODULE 3: GOVERNMENT BUDGETING AND EXPENDITURES with CSO (Civil Society Organization) and other citizen-stakeholders as they prepare their
agency budget proposal.
Government Budgeting
Step 3: Technical Budget Hearings – conducted after the departments and agencies submit
critical exercise of allocating revenue and borrowed funds to attain the economic and
their Agency Budget Proposals to DBM.
social goals of the country.
Step 4: Executive Review – recommendations are presented before an Executive Review
entails the management of government expenditures in such a way that will create the
Board which is composed the DBM Secretary and senior officials.
most economic impact from the production and delivery of goods and services while
Step 5: Consolidation, Validation and, Confirmation – DBM consolidates the recommended
supporting healthy fiscal position.
agency budgets and recommendation into a National Expenditures Program and a Budget of
Why Government Budgeting is important?
Expenditures and Source of Financing
it is important because it enables the government to plan and manage its financial
Step 6: Presentation to President and Cabinet – the proposed budget is presented by the
resources to support the implementation of various programs and projects that best
DBM together with the DBCC to the president and cabinet for further refinement or
promotes the development of the country.
reprioritization. After the president and cabinets approved the proposed Nation Expenditure
Through the budget, the government can prioritize and put into action its plans, programs
Plan, the DBM prepares and finalize the budget documents to be submitted to he Congress.
and, policies within the constrains of its financial capability as dictated by economic
Step 7: The President’s Budget – budget preparation ends with the submission of the
conditions.
proposed national budget -- the “President’s Budget”—to congress.
4 Major Processes Involved in National Government Budgeting
The President’s Budget consist the ff documents which helps the legislator to analyze the
1. Budget Preparation
contents of the proposed budget:
2. Budget Authorization or Budget Legislation
1. President’s Budget Message (PBM)
3. Budget Execution and Control
2. Budget Expenditures and Source of Financing (BESF)
4. Accountability
3. National Expenditure Program (NEP)
Budget Preparation
4. Details of Selected Programs and Projects
preparation for the next budget year proceeds while the government agencies are
5. Staffing Summary
executing the budget for the current year and at the same time engaged in budget
BUDGET BECOME LAW
accountability and review of the past year’s budget.
The budget legislation starts upon the House Speaker’s receipt of the President’s Budget and
Who really holds the “power of the purse”? (Budget Cycle)
ends with the President’s enactment of the General Appropriations Act.
- Preparation (May-July)
Step 1: House Deliberations – House representatives, in plenary, assigns the President’s
- Legislation (Aug-Dec)
Budget to the House Appropriations Committee. Committee and its sub-committee schedule
- Execution
and conduct hearings on the budgets of the departments ang agencies and scrutinize their
- Accountability (Quarterly; audit by succeeding April)
respective programs and projects.
ANNUAL NATIONAL BUDGET PREPARATION
Step 2: Senate Deliberation – as in the house process, senate conducts its own committee
The budget preparation starts with the budget call and ends with the President’s submission
hearings and plenary deliberations on the GAB. Budget deliberation (Senate) formally starts
of the proposed budget to Congress.
after the House of Representatives transmits the GAB. However, Senate Finance Committee
Step 1: The Budget Call – at the beginning of the year DBM issues National Budget Call to all
and sub-commi-ttees usually start hearings on GAB even House Deliberations are going.
agencies (including states & universities) and separate Corporate Budget Call to all GOCCs and
Step 3: Bicameral Deliberations – once both House Representatives have finished their
GFIs.
deliberations, they will each constitute a panel to the Bicameral Conference Committee; this
Step 2: Stakeholder Engagement – new feature in budget preparation which seeks to increase
committee discuss and harmonize conflicting provisions of the House and Senate Versions of
GAB.
Step 4: Ratification and Enrollment – Harmonized or Bicam version are submitted to both
Houses and the vote to ratify the final GAB for submission to the President. Once submitted
to the President for approval, the GAB is considered enrolled.
Step 5: The Veto Message – President and DBM review the GAB and prepare a veto message
where the budget items subjected to direct veto or conditional implementation are identified
and general observation are made.
Step 6: Enactment – when the GAA is not enacted before the fiscal year starts, the previous
year’s GAA is automatically reenacted: this means that agency budget for programs, activities
and projects remain the same. Funding for programs or projects that have already been
terminated is realigned for other expenditures.
General Appropriation Act (GAA)
legislative authorization that contains new appropriation in terms of specific amounts for
salaries, wages and other personal benefits; maintenance and other operating expenses; and
capital outlays for implementation of various programs/projects and activities of all
departments, bureaus and offices of government for a given year.
BUDGET EXECUTION AND CONTROL
This is where the people’s money actually spent.
Step 1: Release Guidelines and Program – budget execution begins with DBM’S issuance of
guidelines on the release and utilization of funds.
Step 2: Budget Execution Documents (BEDs) – agencies are required to submit BEDs upon the
start of budget execution. These documents outline agency plans and performance targets.
Step 3: Allotment and Cash Release programming – to ensure that releases fit the approved
Fiscal Program DBM prepares Allotment Release Program to set limits for allotments issued to
an agency and on the aggregate. A cash release program is also formulated alongside that to
a set guide for disbursement levels for the year and for every month and quarter.
Step 4: Allotment Release – allotments which authorize an agency to enter into an obligation,
are either release by the DBM to all agencies through Agency Budget Matrix (ABM) and
individually via Special Allotment Release Orders (SARO).
ABM - do not need clearance or those which have already itemized and fleshed out in the
GAA.
SARO – needing clearance, which require the approval of the DBM or the President.
Step 5: Incurring Obligations – in implementing programs, activities and projects agencies
incur liabilities on behalf of the government. Obligations are liabilities incurred which the
government will pay for.
Step 6: Cash Allocation – to authorize and agency to pay the obligations it incurs, DBM issues
a disbursement authority. Most of the time, it takes form of a Notice of Cash Allocation (NCA),
and Non-Cash Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC)
NCA – cash authority issued periodically by the DBA to the operating units of agencies to
cover their cash requirements.
Other Cash Disbursement Authorities – contrast to NCAs, issues non-cash disbursement
Step 7: Disbursement – final step of budget execution phase, where government monies
actually spent. The budget process does not end when the government agencies spend public
funds; each and every peso must be accounted for to ensure that it is used properly.
Adjustments are made on the Budget Program because of:
Enactment of new Laws
Adjustment in macroeconomics parameters
Change in resources availabilities
BUDGET ACCOUNTABILITY
Step 1: Performance and Target Outcomes – agencies are held accountable not only for how
they use public funds ethically but also on how they attain performance targets and outcomes
using available resources. These performance measures are set alongside the preparation of
the National Bu
Step 2: Budget Accountability Reports (BARs) – submitted by agencies on monthly or
quarterly basis, it is required reports because it shows how agencies used their funds and
identify their corresponding physical accomplishment.
Step 3: Review of Agency Performance – the DBM regularly reviews the financial and physical
performance of agencies.
Step 4: Audit – auditing is not within the DBMs jurisdiction and instead lodges under the COA.
The DBM uses COAs audit reports in confirming agency performance, determining budgetary
levels for agencies and addressing issues in fund usage.
Step 5: Performance-Based Incentive System – DBM is also in the process of establishing
performance based incentive system which will recognize and reward good performances
among government employees to improve the efficiency of service delivery across all
government institutions.
Role of DBM
The role of DBM in the budgeting process is not limited to national government agencies. It
coordinates three levels of government:
National Government Department/Agency
Government Owned and Controlled Corporation (GOCC)
Local Government Unit (LGU)
FIN102: PUBLIC FINANCE Without tax, the government would be unable to meet the demands of their
MODULE 2: PUBLIC FISCAL ADMINISTRATION “THE CONSTITUTIONAL AND LEGAL BASIS OF societies
PUBLIC FINANCE IN THE PHILIPPINES “ It is crucial because the government collect it and use it to finance social projects
Source of Taxation
The Philippine Fiscal Framework
 Constitution
embodied in the constitution and laws enacted by the legislative branch which is
 Laws or Statutes (Republic Acts, Presidential Decree, Batas Pambansa,
composed of the House of Representative and Senate of the Philippines.
Executive Order, NIRC, TCC
House of Representatives
 Administrative Rules and Regulations
 Decides on all questions of order, subject to appeal by any Member
 Administrative Rulings and Tax Lax Opinions
 Signs all acts, resolutions, memorials, writs, warrants and subpoenas issued by or
 Judicial Decisions
upon order of the House
Limitation on Power of Taxation
 Appoints, suspends, dismisses or disciplines House personnel
 Inherent Limitations - they are not embodied in the law nor in the Constitution
 Exercises administrative functions o Public Purpose
Senate of the Philippines o Non-delegation of taxing power
 Upper chamber of the Congress of the Philippines, the country's legislature.
 Delegating to the President
 It exists to create and promote a national perspective on national policy in order to
 Delegating to LGU's
build a prosperous, secure, honest and democratic nation.
 Delegating to Autonomous Regions
Constitutional
 Administrative Agencies
relating to an established set of principles governing a state. o Exemption of government entities from taxation
In accordance with or allowed by an established set of principles governing a state. o Limitation of Territorial Jurisdiction
- Relating to someone's physical or mental condition. o International comity
Legal Basis
 Constitutional Limitations - Are those contained in the constitution, including the
something that is legal- accepted by the law.
bill of rights.
Decision relating to a case matter have basis of the law that govern to a country. o Due process of Law
Legal Basis and Constitutional Basis of each major component of Philippine public o Equal Protection of Law
Finance o Uniformity and Equality
1. Taxation
 Uniformity of operation Throughout the Tax UnitDelegating to
2. Budgeting
LGU's
3. Accounting and Budgeting
 Equality of Burden
Taxation o Non-imprisonment of Debt
The most important revenue generation measure of the government o Non- Impairment of Contractual Obligation
Aptly considered one of the three fundamental powers of the state o Non- Infringement of Religious Freedom
Is deemed bestowed to the State upon creation o Non- Appropriation for Religious Purposes
It is inherit in every state, it need not expressly conferred by the Constitution o Non- Taxation of religious or Charitable Entities and Properties
It is where the government levies or impose financial obligation on an individual o Non- Taxation of Non- Stock, Non- Profit Educational Institutions
Every citizens and residents are responsible to pay a right amount of money based o Other Constitutional Limitations
on their earnings and properties as a payment for public service
 Legal Process of Taxation gives meaning to financial reports by explaining the results of transactions in terms of profit
1. First Reading and loss and current financial positions.
2. Committee on Ways and Means Auditing
3. Second Reading the examination of information by a third party than the preparer or user with the
4. Public Hearing intention of establishing its reliability, and the reporting of the results of this examination with
5. Difference the expectations of increasing the usefulness of the information of the user. Justification of
6. Senate second Reading Accounting and Auditing (COA) The commission has the power, authority and duty to
7. Bicameral examine, audit and settle all accounts and expenditures of the funds and properties of the
8. Reconciliation Philippine government. Toward at the end, it has the exclusive authority to define the scope,
9. Senate third Hearing
techniques and methods of its auditing and examination procedures. It also may prevent and
10. Senate Approval
disallow irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or
11. Tax Law
uses of gov't funds and properties.
Budgeting
Constitutional Provision and Legal Basis
 a government budget is the financial plan of a government for a given period, usually for a
fiscal year, which shows what its resources are, and how they will be generated and used over 1. Article IX(D), Section 2 of the 1987 Constitution is the prime basis of accounting and
the fiscal period. auditing of public finance
The budget is the government's key instrument for promoting its socio- economic objectives. 2. The Audit Code of the Philippines (P.D 1445
A. Nature of Budgeting
Defined as the financial plan of the government
It specifies the programs, projects, services and activities for which specific amounts of the
public funds are allocated.
Translates the program of the government into the monetary terms.
B. Budget Formulation
1. Budget Preparation (DBCC, agencies)
2. Budget Approval (Congress)
3. Budget Execution (Agencies)
4. Budget Accountability (Agencies, COA)
C. Constitutional Provisions
a. Section 24, Article VI
b. Section 25, Article VI
c. Section 25 (2), Article VI
D. Budgeting
ACCOUNTING AND AUDITING
Accounting
the art of recording, classifying and summarizing, in a significant manner and in terms of
money, transactions and events which are, in part at least of a financial character and
interpreting the results thereof.
It is a primary function is to measure and communicate financial and business data as it
FIN102: PUBLIC FINANCE Budget Allocation
MODULE 1: PUBLIC FISCAL ADMINISTRATION “LOCAL FISCAL ADMINISTRATION” 1. DEPED (Department of Education)
big/huge part of the budget
Local Fiscal Administration
2. DPWH (Department of Public Works and High-ways)
refers to a conduct and management of financial affairs and operations of the provinces,
3. DOH (Department of Health)
municipalities, cities, and barangays. (Ursal 1984:1)
In the government:
PHILIPPINE FINANCIAL SYSTEM
Laws  Congress  Senators Presidents; it not signed it will go back to Congress
Fiscal Policy Monetary Policy
SOGIE BILL
“Government” “Central Government (BSP)”
all about LGBTQ; to end the discrimination
it is all about the money of the it is all about how to money is being
government process
budget allocation set by the government set by the central bank
changes in government expenditures and changes in interest rates/money supply
tax rates
it has no specific target target inflation
side effects on government side effects on exchange rate and housing
budget/borrowing markets
strong political dimension on changing the mostly independent from the political
tax rates process
Local Fiscal Administration (LFA)
Scope of Fiscal Administration
House of Representatives; they are the one in charge of laws in our country
1. Revenue Generation
(1) Upper House – they are the senators
- aspects of local taxation
(2) Lower House – they are the congress
- borrowing and its management  monetary policy reduce inflation
- operation of public enterprise
- revenue enhancement measures
- revenue planning, forecasting and accounting
TAXES  REMITS TO BIR  NGO (National Government Office)
Source of Fund/Money in Olongapo City
James L. Gordon Hospital (Public Hospital)
Public Market
Gordon College (CBA – almost 2,000 students, total of 6k students (tuition fees)
2. Revenue Allocation and Utilization
Government are Divided into three: - Budgeting process and system; linkage of planning and budgeting, expenditure planning,
1. Executives – final column; administrations, LGUs (Local Government Unit). Ex. Mayor; ruler expenditure allocation and expenditure monitoring
2. Legislatives – in charge in the laws. Ex. Congressman, Senators - accounting and auditing expenditures
3. Judiciary – implementation of the laws. Ex. Judge, Hall of Justice 3. Other Aspects
- property supply management
- internal control, cut across all fiscal function NGAs with Supervisory Power over LGU
- central grant and allotment 1. Department of Finance (DOF) – formulate revenue policies; ensure funding of the
Legal Basis of LFA government programs that promotes welfare, accelerate economic development and stability.
LGU by: 1973 Constitutions and 1987 Constitutions
: RA 7160 or Local Government Code of 1991 2. Department of Budget and Management (DBM) – efficient and effective management and
: Laws from National Agency with supervisory power over the LGUs grant power and utilization of government resources.
______authority to exercise the function of fiscal administration. 3. Commission on Audit (COA) – audits; settle all accounts, properties and expenditures.
Big Budget 4. Department of Interior and Local Government (DILG) – strengthen local government
1. Custom Brokers capability; effective delivery of basic service to the citizenry.
2. BIR 5. Office of the President – administrative, advisory, consultative, and support service to
3. DPWH (Department of Public Works and High-ways) President.
4. DBM (Department of Budget Management) 6. Congress – influence direction of local autonomy through legislation.
7. Department of Justice (DOJ) – constitutionality and legality of tax ordinance and other
revenue.
8. Court of Tax Appeal (COTA) – tax appeals; all administrative remedies had been exhausted
tax payer.
9. Supreme Court - constitutionality and legality of tax ordinance and other revenue.
Province
first level of hierarchical structure of the local government; consist cluster of municipalities
and components of cities. Ex. Elected Governor – as head/chief
City
general purpose of government for coordination and delivery of basic.
1. Independent Component City
2. Highly Urbanized Component City
Municipality
second tier in the structure of local government; cluster of barangay.
Barangay
basic political unit of the state
planning, implementing unit of government policies, plans, programs projects and activities
in community.
POLICIES
Fiscal Policy
use of government
revenue collection and expenditures to influence the economy
Monetary Policy
control the cost of very short term borrowing (monetary base)
targeting inflation rate or interest rate to ensure price stability and trust in currency.
FIN102: PUBLIC FINANCE THE MUNICIPALITY
MODULE 1: ADDITIONAL INFORMATION

THE PROVINCES

THE BARANGAY

THE CITY