CHAPTER 1

OVERVIEW OF GOVERNMENT ACCOUNTING

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." (State Audit Code of the
Philippines, P.D. No. 1445, Sec. 109)

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. (P.D. No. 1445, Sec 110)

Like the accounting for business entities, government accounting is also a process of producing
information that is useful in making economic decisions. 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

a. 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.

b. All those who are exercising authority over a government agency shall share fiscal
responsibility. (Stutt Audit Code of the Philippines, P.D. No. 1445)
Accountability over Government Funds and Property

a. 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. P.D. No. 1445 and EO No. 292)
b. 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. (P.D. No. 1445)

Liability over Government Funds and Property

a. The unlawful use of government resources shall be the personal liability of the employee
found to be directly responsible therefor.

b. Every accountable officer shall be liable for all losses resulting from the unlawful use or
negligence in the safekeeping of government resources.

c. 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. The superior officer shall be primarily liable while the
accountable officer who fails to serve the required notice shall be secondarily liable.

d. An accountable officer shall immediately notify the COA for any loss of government
funds from unforeseen events (force majeure) within 30 days. Failure to do so will not
relieve the officer of liability (P.D. No. 1445)

Main concept: Government resources must be utilized efficiently and effectively in accordance with the
law. Government officials are responsible in implementing this policy, are accountable for the
government resources in their custody, and are liable for any loss.

The Unsung Heroes

The number of Filipinos going abroad to seek employment is increasing every year. In 2012, it was
estimated that about 10.4 million Filipinos worked abroad. Almost all Filipinos know at least one other
Filipino - a family member, a relative, or a friend. who is working abroad. We refer to our overseas
workers as unsung heroes. How so?

This is mainly because overseas worker’s remittances greatly increase the spending in our country, and
the more money is spent, the more taxes the government collects. A portion of the money we spend on
almost everything (food, clothing. bills, entertainment. medicine, rentals, etc.) represents payment for tax.
Taxes are the main source of government funds used in developing our country.

Working abroad entails great sacrifices, not only for the overseas worker but also for family members left
at home. We need efficient and effective utilization of our government resources so that someday our
countrymen can have better options of finding a livelihood in our country,

Accounting, as a tool for planning and control, contributes to the achievement of this goal by providing
information that is useful in planning the sources and uses of government funds and comparing actual
results with expected results to promote the efficient and effective utilization of government funds. (CNN)
Accounting Responsibility

The following offices are charged with government accounting responsibility:

a. Commission on Audit (COA)
b. Department of Budget and Management (DBM)
c. Bureau of Treasury (BTr)
d. Government agencies

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. (P.D. No. 1445)

The government agencies are responsible in directly implementing the projects of, and
performing the functions delegated by the government. Each agency (entity) shall maintain
accounting books and budget registries which are reconciled with the cash records of BTr and
the budget records of the COA and DBM. Government agencies are required by law to have
accounting units/divisions/departments.
Even a barangay (the smallest administrative division in the Philippines) is required to have an
accounting unit, e.g. the barangay's "bookkeeper."

Financial Reporting System of the National Government (Picture)