Budget 101 (PFB) 022422

Public Finance & Budgeting Module
Budgeting 101
28 February 2022
1
This learning material was developed by the Development Academy of the Philippines for the Public Management Development Program and shall be used
solely for academic purposes. Any form of reproduction and distribution is prohibited without the approval of the author/s of the learning material and PMDP.
Common Issues in Budget Preparation
1. Poorly prepared budget proposals.

2. Lack of alignment of timelines (e.g.
Budget Call, RDCs, internal planning)
3. Incomplete submissions
4. Lack of prioritization / resource
constrain
5. Distance of budget preparation from
budget execution
solely for academic purposes. Any form of reproduction and distribution is prohibited without the approval of the author/s of the learning material and PMDP. 3
What Makes a Good Budget Proposal?
1. Aligned with mandate & priorities;

2. Maximizes value-for-money;
3. Comprehensive;
4. Transparent & participatory; and
5. Implementation-ready.
Alignment with Priorities
 Sustainable Development Goals
 Philippine Development Plan
 Sectoral Master Plans
 Budget Priorities Framework
 Presidential Directives
Value-for-Money
 Does the proposal have a clear logic
framework?
 Is this the best strategy to deliver the
mandate or solve a pressing societal
problem?
 Did the program managers and end-
users conduct market studies to
determine what best fits the
requirements of the program design?
Value-for-Money
 How are the agencies maximizing the
ceiling provided by the DBM in Tier 1?
Tier 1 Tier 2
+ =
Cost of on-going activities New Spending
and projects
Comprehensive
 Does the proposal include all possible

costs of the project?
– Current
– Future costs
Example: Building Construction
 Base Year: Cost of Construction of a Building
Year 1: Cost of furniture, equipment, security, utilities
Year 2: + Maintenance Costs
Year 3: + Renovation Costs
 The hiring of additional personnel (if the project is

part of a bigger organizational expansion initiative)
should also be considered
Transparent & Participatory Process
 Was there an internal budgeting

process?
 Was there clear management directive
on what the priorities are?
 Were the regional & field offices
consulted?
 How are the external stakeholders
included in the budgeting process?
Implementation-Readiness:
Plan before Budget
AGENCY
GAS STO Operations
OO1 OO2
Program
Expenditure
Classification
Program
Sub-Program
Activity / Projects
Understanding the Budget
Structure
 Department of Trade and Industry FY 2

021 General Appropriations Act
Common Issues in Budget Legislation
1. Legislature’s “power of the purse” vs.

Executive’s planning
 Congress-induced Increases
 Lump-sum funds
2. Is budget legislation too long?
Common Issues in Budget Execution
1. Some agencies change plans during

the start of the fiscal year
2. How rigid / flexible are the budgeting
rules?
3. How to increase absorptive capacity of
agencies?
Budget Release Documents
 Obligation Authorities:
– GAA-as-Allotment-Order (GAAAO)
– General Allotment Release Order (GARO)
– Special Allotment Release Order (SARO)
 Disbursement Authorities:
– Cash Disbursement Ceiling (CDC)
– Notice of Cash Allocation (NCA)
– Non-Cash Availment Authority (NCAA)
– Tax Remittance Advice (TRA)
Role of End-Users in Budget Execution
 Plan and participate in procurement activities

– Defining the TORs
– Preparing the PPMPs
 Prepare Budget Execution Documents (BEDs)
 Trigger the processing of obligating funds through

the Obligation Request and Status (ORS)
Role of End-Users in Budget Execution
 Manage the implementation of the contracts,

including the delivery of milestones
 Inspection and acceptance of contract milestones
 Preparation of the Disbursement Vouchers,

including supporting documents
Why are BEDs Important?
 It’s an overview of the financial and
physical plan of agencies.
 Cash planning is important because it is
the basis of the Bureau of the Treasury
for it cash borrowing program
 DBM releases the NCA in accordance
with the submitted Monthly
Disbursement Program of Agencies
How do you financial planning?
1. Know what you will implement and
when.
2. Know when you will procure and for
how much.
3. Plot the procurement timelines.
4. Structure the contract to fit with the
availability of the cash as planned.
5. Actively manage your cash resources.
Flexibilities in Budget Execution
Modification of Allotment
Within the same item of appropriation (PAP)
1. Across different Objects of Expenditure
within the same allotment class
2. From one allotment class to another
3. From one operating unit to another
Declaration of Savings
Savings refer to portions of any release
appropriations which have not been
obligated as a result of:
a. Completion, final discontinuance, or
abandonment of the PAP, or
b. Cost saving measures
Savings may be used to augment an

existing item of appropriation.
Obligation-based Budget
January December
Contracting (Obligations)
Implementation & Payment

(Disbursements)
Disbursement < Obligation
2011 2012 2013 2014 2015 2016 2017 2018
Unfinished
Contracts
2018
Obligation-based Budget
January December
Contracting (Obligations)
Implementation & Payment

(Disbursements)
Cash-based Budget
Contracting & Implementation
January December March
Extended
Payment Period
Payment
(Disbursements)
What happens at the end of the
validity of the GAA?
 Unreleased appropriations shall lapse

 Undisbursed funds shall revert to the
General Fund
– Recipient agencies shall be responsible
for reverting undisbursed funds transferred
to them
Multi-Year Contracting
1. Cannot be completed within the FY
2. Cost savings will be generated
3. Delivery of timely services would be
hampered if annual bidding will be
conducted
4. This will be advantageous to the
government
NGA: Multi-Year Contracting
Authority (DBM)
GOCC: Certificate of Budget

Inclusion (Board)
LGU: Approval of the Sanggunian
1. Total project cost
2. Annual breakdown of the project
3. Commitment to include
funding requirements in the
annual budget proposal
EXPENSE IMPLEMENTATION
FY OBLIGATION
CLASS & PAYMENT
PS 31 Dec 2021
MOOE & Non-

2021 31 Dec 2022
Infra CO
Infra CO (RA 11640)
PS 31 Dec 2022
2022 MOOE & Non-

Infra CO
31 Dec 2023
Infra CO
Common Issues in Budget Accountability
1. How can the public understand where

public funds are spent?
2. Are agencies complying with reportorial
requirements?
3. Is accountability part of an agency’s
core function or is it seen as mere
additional work / compliance exercise?

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Public Finance & Budgeting Module

1. Poorly prepared budget proposals.

1. Aligned with mandate & priorities;

 Does the proposal include all possible

 The hiring of additional personnel (if the project is

 Was there an internal budgeting

GAS STO Operations

 Department of Trade and Industry FY 2

1. Legislature’s “power of the purse” vs.

1. Some agencies change plans during

 Plan and participate in procurement activities

 Prepare Budget Execution Documents (BEDs)

 Trigger the processing of obligating funds through

 Manage the implementation of the contracts,

 Inspection and acceptance of contract milestones

 Preparation of the Disbursement Vouchers,

Savings may be used to augment an

Implementation & Payment

2011 2012 2013 2014 2015 2016 2017 2018

Implementation & Payment

January December March

 Unreleased appropriations shall lapse

GOCC: Certificate of Budget

LGU: Approval of the Sanggunian

2. Annual breakdown of the project

MOOE & Non-

Infra CO (RA 11640)

2022 MOOE & Non-

1. How can the public understand where

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