CHAPTER 1

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OVERVIEW OF
GOVERNMENT
ACCOUNTING
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GOVERNMENT ACCOUNTING

 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.
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OBJECTIVES

 Produce information concerning past operations and present

conditions

 Provide a basis for guidance for future operations

 Provide for control of the acts of public bodies and officers in the
receipt, disposition, and utilization of funds and property

 Report on the financial position and the results of operations of

government agencies for the information of all persons
concerned
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EMPHASIS OF GOVERNMENT
ACCOUNTING

 SOURCES OF GOVERNMENT FUNDS

 UTILIZATION OF GOVERNMENT FUNDS

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RESPONSIBILITY OVER GOVERNMENT
FUNDS AND PROPERTY

 HEAD OF A GOVERNMENT AGENCY – IMPLEMENT POLICY

AND PRIMARILY RESPONSIBLE OFR GOVERNMENT
RESOURCES

 ALL THOSE WHO ARE EXERCISING AUTHORITY OVER A

GOVERNMENT AGENCY SHALL SHARE FISCAL
RESPONSIBILITY
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ACCOUNTABILITY OVER GOVERNMENT
FUNDS AND PROPERTY

 GOVERNMENT OFFICER ENTRUSTED WITH POSSESSION

OF GOVERNMENT RESOURCES

 TRANSFER OF GOVERNMENT FUNDS FROM ONE OFFICER

TO ANOTHER SHALL, EXCEPT AS ALLOWED BY LAW, BE
MADE ONLY AFTER THE AUTHORIZATION OF THE COA.
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LIABILITY OVER FUNDS AND
PROPERTY
 UNLAWFUL USE OF GOVERNMENT RESOURCES SHALL BE
THE PERONSAL LIABILITY OF THE EMPLOYEES FOUND TO BE
DIRECTLY RESPONSIBLE THEREFOR

 EVERY ACCOUNTABLE OFFICER SHALL BE LIABLE FOR ALL

LOSSES RESULTING FROM UNLAWFUL USE OR NEGLIGENCE

 NO ACCOUNTABLE OFFICER SHALL BE RELIEVED FORM

LIABILITY MERELY BECAUSE HE HAS ACTED UNDER THE
DIRECTION OF A SUPERIOR OFFICER

 AN ACCOUTNABLE OFFICR SHALL IMMEDIATELY NOTIFY COA

FOR ANY LOSS OF GOVERNMENT FUNDS FROM
UNFORESEEN EVENTS WITHIN 30 DAYS.
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ACCOUNTING RESPONSIBITLIY
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COMMISSION ON AUDIT

 PROMULGATE ACCOUNTING AND AUDITING RULES AND

REGULATIONS

 KEEPS THE GENERAL ACCOUNTS, SUPPORTING

VOUCHERS, AND OTHER DOCUMENTS

 SUBMITS FINANCIAL REPORTS TO THE PRESIDENT AND

CONGRESS
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DEPARTMENT OF BUDGET AND
MANAGEMENT

 FORMULATION AND IMPLEMENTATION OF THE NATIONAL

BUDGET
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BUREAU OF TREASURY

 CASH CUSTODIAN OF THE GOVERNMENT

 RECEIVE AND KEEP NATIONAL FUNDS AND CONTROL THE

DISBURSEMENTS

 MAINTAIN ACCOUNTS OF FINANCIAL TRANSACTIONS

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GOVERNMENT AGENCY

 ANY DEPARTMENT, BUREAU, OR OFFICE OF THE

NATIONAL GOVERNMENT, OR ANY OF ITS BRANCHES AND
INSTRUMENTALITIES, OR ANY POLITICAL SUBDIVISION

 RESPONSIBLE IN DIRECTLY IMPLEMENTING THE PROJETS

OF AND PERFORING THE FUNCTIONS AS DELEGATED BY
THE GOVERNMENT
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GOVERNMENT ACCOUNTING MANUAL
FOR NATIONAL GOVERNMENT
AGENCIES (GAM for NGAs)

 to harmonize the government accounting standards with

international accounting standards, particularly the International
Public Sector Accounting Standards.

 Promulgated by the COA

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Coverage of GAM for NGAs

 Preparing general purpose financial statements in accordance

with the Philippine Public Sector Accounting Standards

 Reporting of budget, revenue and expenditure

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Objectives

To update:

• Standards, policies, guidelines, and procedures in accounting for

government funds and property

• Coding structure and accounts

• Accounting books, registries, records, forms, reports, and

financial statements
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The financial records and reports shall
comply with the following:
 Philippine Public Sector Accounting Standards and relevant laws,
rules, and regulations

 Accrual basis of accounting

 Budget basis

 Revised chart of accounts prescribed by COA

 Double entry bookkeeping

 Financial statements based on accounting and budgetary records

 Fund cluster accounting

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Code Fund Clusters

01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account-Locally
Funded/Domestic Grants Fund
04 Special Account – Foreign
Assisted/Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts
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QUALITATIVE CHARACTERISTICS OF
FINANCIAL REPORTING

QUALITATIVE CHARACTERISTICS – attributes that make

information useful to users.

• Understandability – understandable when users can reasonably

be expected to comprehend its meaning. Users are assumed to
have:
• Reasonable knowledge of the entity’s activities, and

• Willingness to study the information

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QUALITATIVE CHARACTERISTICS OF
FINANCIAL REPORTING
• Relevance – can assist user in evaluation past, present, or future
events or in confirming or correcting past evaluations.

• Materiality – Information is material if its omission or misstatement

could influence the decisions of users

• Timeliness – Information loses its relevance if there is undue delay

in its reporting

• Reliability – reliable information is free from material error and bias

and can be depended on by users.

• Faithful representation – to represent faithfully transactions and

other events
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QUALITATIVE CHARACTERISTICS OF
FINANCIAL REPORTING
• Substance over form – substance of transactions is not always
consistent with their legal form

• Neutrality – free from bias

• Prudence – exercise of degree of caution when making estimates

under conditions of uncertainty

• Completeness – complete within the bound of materiality and cost

• Comparability – comparable when users are able to identify

similarities and differences between that information and
information in other reports
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General Purpose Financial Statements

 Intended to meet the needs of users who are not in a position to

demand reports tailored to meet their particular needs
 STATEMENT OF FINANCIAL POSITION

 STATEMENT OF FINANCIAL PERFORMANCE

 STATEMENT OF CHANGES IN NET ASSETS/EQUITY

 STATEMENT OF CASH FLOWS

 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL

AMOUNTS

 NOTES TO FINANCIAL STATEMENTS

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ELEMENTS

 ASSETS

 LIABILITIES

 REVENUE

 EXPENSES
 CHAPTER 2
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BUDGET
PROCESS
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NATIONAL BUDGET

 THE GOVERNMENT’S ESTIMATE OF THE SOURCES AND

USES OF GOVERNMENT FUNDS WITHIN A FISCAL YEAR
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BUDGET CYCLE

 BUDGET PREPARATION

 BUDGET LEGISLATION

 BUDGET EXECUTION

 BUDGET ACCOUNTABILITY
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BUDGET PREPARATION
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 BOTTOM UP APPROACH – several parties participate in the

budget preparation, starting from the lowest to the highest level
of the government
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BUDGETING SYSTEM
INCREMENTAL BUDGETING
 BASED ON THE PREVIOUS
YEAR’S BUDGET, WHICH IS
JUST ADJUSTED FOR ANY
VARIANCES
 ROLL-OVER APPROACH
 PRONE TO ABUSE
ZERO BASED BUDGETING
 WITHOUT REGARD TO THE
PREVIOUS YEAR’S BUDGET
 BACK TO ZERO/CLEAN
SLATE APPROACH
 PROMOTES EFFICIENT AND
EFFECTIVE UTILIZATION OF
FUNDS
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1. BUDGET CALL

 Issued by DBM

 Contains the next fiscal year’s targets, budget ceiling, and other
guidelines
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1. BUDGET CALL

Relevant Terms:

• Balanced budget – estimated revenues exceed estimated expenditures

• Annual Budget – covers a period of 1 year

• Special budget – provides for items not adequately covered or not included
in the general appropriations

• Line item budget – focuses on specific expenditures

• Performance budget – plant of activities to be undertaken with the

emphasis on meeting targets and desired results.

• Obligations budget – focuses on expenditures incurred in the current year

which are to be paid either in the same year or in the following year
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2. BUDGET HEARINGS

 Conducted after agencies submit their budget proposals

 Each agency defends its budget proposal before the DBM

 DBM consolidates in National Expenditure Program and Budget

of Expenditures and Sources of Financing

 DBM submits to President

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3. PRESENTATION TO THE OFFICE
OF THE PRESIDENT
 President and cabinet reviews the proposed budget

 Once approve, DBM finalizes the document to be submitted to Congress.

 President’s Budget = Proposed budget

 Contains the following:
 President’s Budget Message

 National Expenditure Program – details of all govt entities’ proposed

expenditures

 Budget of Expenditures and Sources of Financing – estimated expenditures

 Other documents – aimed to provide further explanation of selected items in the

NEP
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BUDGET LEGISLATION
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4. House Deliberations

 House of Representatives scrutinize the President’s Budget

 Prepares the General Appropriation Bill

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5. Senate Deliberations

 Senate conducts deliberation on the GAB

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6. Bicameral Deliberations

 Bicameral Conference Committee is formed to harmonize any

conflicts between the Representatives and Senate versions of
the GAB

 Bicam version of GAB is submitted back to HOP for ratification

 Final GAB is submitted to President for enactment

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7. President’s Enactment

 Enacts the budget, now known as General Appropriations Act.

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APPROVED BUDGET

UACS Code
 Expenditure authority New General Appropriations 01
derived from Continuing Appropriations 02
appropriations of laws,
Supplemental Appropriations 03
govt ordinances, and
Automatic Appropriations 04
other decisions
Unprogrammed Funds 05
 Consist of Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08
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Appropriations

 Authorization made by a legislative body to allocate funds for

purposes specified by the legislative or similar authority
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Appropriations

 New General Appropriations – annual authorizations for

incurring obligations during a specified budget year

 Continuing Appropriations – support obligations for a specific

purpose or project

 Supplemental Appropriations – additional appropriations

authorized by law to augment the original appropriations which
proved to be insufficient

 Automatic Appropriations – programmed annualy

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Appropriations

 Unprogrammed Funds – standby approp. Authorized by

Congress but can only be availed through any of the
circumstance below:
 Revenue collections exceed original revenue targets

 New revenues are collected or realized from sources not originally

considered in BESF

 Newly approved loans for foreign assisted projects are secured or

when conditions are triggered for others sources of funds
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Appropriations

 Retained Income/Funds – collections which are authorized by

law to be used directly by agencies concerned for their specific
operations

 Revolving Funds – receipts derived from business type activities

of department/agencies which are authorized by law

 Trust Receipts – receipts by any govt agency acting as trustee,

agent or administrator for the fulfillment of some obligations or
conditions.
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BUDGET EXECUTION
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8. Release guidelines and BEDs

 DBM issues guidelines on the release and utilization of funds

while various agencies submit their Budget Execution
Documents.
 Physical and financial plan

 Monthly cash program

 Estimate of monthly income

 List of obligation that are not yet due and demandable

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Major Recipients

 National Government Agencies

 Local Government Units

 Government Owned and Controlled Corporations

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9. Allotment

 Authorization to incur obligations for specified amounts.

Obligational Authority.

 DBM formulates Allotment Release Program to set the limit for

allotment releases.

 Cash Release Program set the disbursement limits for the year,
for each quarter, and month

Obligations – an act of a duly authorized official which bindsthe

govt to the immediate or eventual payment of a sum of money.
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Documents used In releasing allotments

 General Appropriations Act Release Document – obligational

authority fo the comprehensive release of budgetary items

 Special Allotment Release Order – covers budgetary items

under For Later Release in the entity’s submitted BED

 General Allotment Release Order – authority to incur obligations

not exceeding an authorized amount during a specified period
for the purpose indicate therein.
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10. Incurrent of Obligations

 Govt agencies incur obligations which will be paid by the govt

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11. Disbursement Authority

 Govt agencies obtain access to government funds

 Notice of Cash Allocation – issued by DBM to central, regional and
provincial offices

 Notice of Transfer of Allocation – issued by a Central Office to the

regional and Operating Units

 Non-Cash Availment Authority – issued by the DBM to agencies to

cover the liquidation of their actual obligations.

 Cash Disbursement Ceiling – issued by the DBM to agencies with

foreign operatios
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DISBURSEMENTS

 MADE THROUGH CHECKS AGAINST THE ACCOUNT OF

Treasurer of the Philippines

 Issued under the Modified Disbursement System Checks

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BUDGET ACCOUNTABILITY
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 OCCURS CONCURRENTLY WITH THE BUDGET EXECUTION

PHASE.
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12. Budget accountability Reports

 Monthly Reports of Disbursements

 Quarterly Physical Report of Operations

 Statement of Appropriations, Allotments, Obligations, Disbursements and Balances

 Summary of Appropriations Allotments, Obligations, Disbursements and Balances by Object of

Expenditures

 List of Allotmetns and Sub Allotments

 Statement of Approved Budget, Utilizations, Disbursements, and Balances

 Summar of Approved Budget, Utilitzations, Disbursements, an Balances by Object of Expenditures

 Quarterly Report of Revenue and Other Reports

 Aging of Due and Demandable Obligations

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13. Performance Reviews

 DBM and COA perform periodic revies

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14. Audit

 COA audits th agencies

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RESPONSIBILITY ACCOUNTING

 System of providing cost and revenue information over which a

manager has direct control of.
 Responsibility center – part/segment/unit who is accountable for a
specified set of activities

 Controllable costs – cost is considered controllable at a given level

of managerial responsibility

 Non-controllable cost – incurred directly and allocated to a

responisblity level