Overview of

Government
Accounting
TOPIC 1
Introduction
“Government accounting” encompasses 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.
The objectives of government accounting are:
a) To produce information concerning past operations and present conditions;
b) To provide a basis for guidance for future operations;
c) To provide for control of the acts of public bodies and officers in the receipt, disposition, and
utilization of funds and property; and
d) To report on the financial position and the results of operations of government agencies
for the information of all persons concerned.
Introduction
Government accounting, however, places greater emphasis on the following:
a. Sources and utilization of government funds; and
b. Responsibility, accountability, and liability of entities entrusted with government funds and
properties.

The sources of government funds include receipts from taxes and other fees, borrowings, and
grants from other governments and international bodies.
The utilization of government funds includes expenditures on programs, projects,
unanticipated losses from calamities and the like.
Responsibility, Accountability, and Liability
over Government Funds and Property
Responsibility over Government Funds and Property
1. Government resources shall be utilized efficiently and effectively
in accordance with the law. The head of a government agency is
directly responsible in implementing this policy and is primarily
responsible for government resources entrusted to his agency.
Those who are entrusted with the possession of government
resources are directly responsible to the head of the agency.
2. All those who are exercising authority over a government agency
shall share fiscal responsibility.
Responsibility, Accountability, and Liability
over Government Funds and Property
Accountability over Government Funds and Property
1. A government officer entrusted with the possession of
government resources is responsible for the safekeeping therefore
in accordance with the law. Every accountable officer shall be
properly bonded.
2. The transfer of government funds from one officer to another
shall, except as allowed by law, be made only after the
authorization of the COA. The transfer shall be properly
documented in an invoice and receipt.
Responsibility, Accountability, and Liability
over Government Funds and Property
Liability over Government Funds and Property
1. The unlawful use of government resources shall be the personal liability of the employee
found to be directly responsible therefore.
2. Every accountable officer shall be liable for all losses resulting from the unlawful use or
negligence in the safekeeping of government resources.
3. No accountable officer shall be relieved from liability merely because he has acted under the
direction of a superior officer in unlawfully utilizing the government resources entrusted to
him, unless before that act, he has notified the superior officer in writing, that the utilization
is illegal.
4. An accountable officer shall immediately notify the COA for any loss of government funds
from unforeseen events within 30 days. Failure to do so will not relieve the officer of liability.
Commission on Audit (COA)
The Commission on Audit (COA):
a. Has the exclusive authority to promulgate
accounting and auditing rules and regulations.
b. Keeps the general accounts of the government,
supporting vouchers, and other documents.
c. Submits financial reports to the President and
Congress.
Department of Budget and
Management (DBM)
The Department of Budget and
Management (DBM) is responsible for
the formulation and implementation of
the national budget with the goal of
attaining the nation’s socio-economic
objectives.
Bureau of Treasury (BTr)
The Bureau of Treasury (BTr) functions under the
Department of Finance and is the cash custodian of the
government. The BTr is authorized to:
a. Receive and keep national funds and manage and control
the disbursements thereof; and
b. Maintain accounts of financial transactions of all national
government offices, agencies, and instrumentalities.
Government Agencies
Government agency refers to any department, bureau or office of the national
government, or any of its branches and instrumentalities, or any political subdivision,
as well as any government owned or controlled corporation (GOCC), including its
subsidiaries, or other self-governing board or commission of the government.
Each agency (entity) shall maintain accounting books and budget registries which are
reconciled with the cash records of the BTr and the budget records of the COA and
DBM.
Entity – refers to a government agency, department or operating/field unit.
Financial Reporting – the process of preparation, presentation, and submission of
general purpose financial statements and other reports.
The GAM for NGAs
Government Accounting Manual for National Government Agencies (GAM for NGAs). The GAM
for NGAs was promulgated primarily to harmonize the government accounting standards,
particularly the International Public Sector Accounting Standards (IPSAS).
The IPSASs are based on the International Financial Reporting Standards (IFRS). The Philippine
Government has adopted the IPSAS through the Philippine Public Sector Accounting Standards
(PPSAS). The provisions of the PPSAS are incorporated in the GAM for NGAs.
The Commission (on Audit) shall have exclusive authority, subject to the limitations in this
Article, to define the scope of its audit and examination, establish the techniques and methods
required therefore, and promulgate accounting and auditing rules and regulations including
those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of government funds and properties.
 The GAM for NGAs
Coverage
a. Preparing general purpose financial statements in accordance with the Philippine Public
Sector Accounting Standards (PPSAS) and other financial reports as may be required by laws,
rules and regulations; and
b. Reporting of budget, revenue & expenditure in accordance with laws, rules & regulations.
Objective
a. Standards, policies, guidelines & procedures in accounting for government funds & property;
b. Coding structure and accounts; and
c. Accounting books, registries, records, forms, reports and financial statements.
Basic Accounting and
Budget Reporting Principles
1. Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules & regulations;
2. Accrual basis of accounting;
3. Budget basis for presentation of budget information in the financial statements;
4. Revised Chart of Accounts prescribed by COA;
5. Double-entry bookkeeping;
6. Financial statements based on accounting and budgetary records; and
7. Fund cluster accounting. Separate accounting books and budget registries shall be
maintained for Regular Agency Fund. Another separate accounting books and budget
registries shall be maintained for Foreign Assisted Projects Funds, and so on.
Qualitative Characteristics of
Financial Reporting
a. Understandability
b. Relevance
c. Materiality
d. Timeliness
e. Reliability
f. Faithful representation
g. Substance over form
h. Neutrality
i. Prudence
j. Completeness
k. Comparability
 Components of General Purpose
Financial Statements
General Purpose Financial Statements are those intended to meet the needs of users who are
not in a position to demand reports tailored to meet their particular information needs.
a. Statement of Financial Position;
b. Statement of Financial Performance;
c. Statement of Changes in Net Assets/Equity;
d. Statement of Cash Flows;
e. Statement of Comparison of Budget and Actual Amounts; and
f. Notes to the Financial Statements, comprising a summary of significant accounting policies
and other explanatory notes.
 Assets
The key features of an asset are:
a. The benefits must be controlled by the entity;
b. The benefits must have arisen from a past event; and
c. Future economic benefits or service potential must be expected to flow to the entity.

An asset is recognized when:

d. It is probable that the future economic benefits will flow to the entity; and
e. The asset has a cost or value (e.g. fair value) that can be measured reliably.
Liabilities / Equity
Liabilities
•Present obligations of the entity arising from past events, the
settlement of which is expected to result in an outflow from the entity
of resources embodying economic benefits or service potential.

Equity
•Net assets/equity – the residual interest in the assets of the entity after
deducting all its liabilities
Revenue / Expenses
Revenue – 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.
Revenue funds – income of any agency of the government and available for appropriation or
expenditure in accordance with law.
Contributions from owners

Expenses – decreases 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 decreases
in net assets/equity, other than those relating to owners.
Distributions to owners