Government Accounting

&
Accounting for non-profit organizations

by: ZEUS VERNON B. MILLAN

 Chapter 2
The Budget Process
 

Learning Objectives
• Enumerate the steps in the budget process.
• Describe briefly the principles of
responsibility accounting.

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 The National Budget

The national budget (government budget) is

the government’s estimate of the sources and
uses of government funds within a fiscal year.
This forms the basis for expenditures and is
the government’s key instrument for
promoting its socio-economic objectives.

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 The Budget Cycle

1. Budget Preparation  

2. Budget Legislation
3. Budget Execution
4. Budget Accountability
 

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 Budget Preparation

• Bottom-up approach  

• Zero-based budgeting

1. Budget Call
2. Budget Hearings
3. Presentation to the Office of the President

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 Budget Legislation

4. House Deliberations
 
5. Senate Deliberations
6. Bicameral Deliberations
7. President’s Enactment

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The approved budget consists of the following:
The Approved Budget

1. New General Appropriations  

2. Continuing Appropriations
3. Supplemental Appropriations
4. Automatic Appropriations
5. Unprogrammed Funds
6. Retained Income/Funds
7. Revolving Funds
8. Trust Receipts

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 Appropriation 
• Appropriation – is the authorization made by a legislative
body to allocate funds for purposes specified by the
legislative or similar authority.
 
1. New General Appropriations – annual authorizations for
incurring obligations, as listed in the GAA.
2. Continuing Appropriations – authorizations to support the
incurrence of obligations beyond the budget year (e.g.,
multi-year construction projects).
3. Supplemental Appropriations – additional appropriations to
augment the original appropriations which proved to be
insufficient. 
4. Automatic Appropriations – authorizations programmed
annually which do not require periodic action by Congress.

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Appropriation (continuation) 
5. Unprogrammed Funds – standby
appropriations which may be availed only upon
the occurrence of certain instances.
6. Retained Income/Funds – collections which the
agencies can use directly in their operations.
7. Revolving Funds – receipts from business-type
activities of agencies which are authorized to be
constituted as such. These are self-liquidating and
all obligations and expenditures incurred by virtue
of said business-type activity shall be charged
against the fund.
8. Trust Receipts – receipts by a government agency
acting as agent.
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 Budget Execution
 
8. Release Guidelines and BEDs

Major recipients of budget:

a. NGAs
b. LGUs
c. GOCCs

9. Allotment
10. Incurrence of Obligations
11. Disbursement Authority
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 Allotment 
• Allotment – is an authorization issued by
the DBM to government agencies to incur
obligations for specified amounts contained
in a legislative appropriation in the form of
budget release documents. It is also
referred to as Obligational Authority.

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 Disbursement Authority  
1. Notice of Cash Allocation (NCA) – authority issued by the DBM
to central, regional and provincial offices and operating units to
cover their cash requirements. The NCA specifies the maximum
amount of cash that can be withdrawn from a government
servicing bank in a certain period.
2. Notice of Transfer of Allocation – authority issued by an
agency’s Central Office to its regional and operating units to
cover the latter’s cash requirements.
3. Non-Cash Availment Authority – authority issued by the DBM
to agencies to cover the liquidation of their actual obligations
incurred against available allotments for availment of proceeds
from loans/grants through supplier’s credit/constructive cash.
4. Cash Disbursement Ceiling – authority issued by the DBM to
agencies with foreign operations allowing them to use the
income collected by their Foreign Service Posts to cover their
operating requirements.

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GOVT ACCTG & ACCTG FOR NPOs by:
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 Budget Accountability

 
12. Budget Accountability Reports
13. Performance Reviews
14. Audit

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The Budget
Cycle

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 Responsibility Accounting

• Responsibility accounting
 
is a system of
providing cost and revenue information
over which a manager has direct control of.
• It requires the identification of
responsibility centers and the distinction
between controllable and non-controllable
costs.

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 APPLICATION OF CONCEPTS
 

PROBLEM 2-4: FOR CLASSROOM DISCUSSION

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OPEN FORUM
QUESTIONS????
REACTIONS!!!!!

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 END

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