BUDGET EXECUTION, MONITORING AND REPORTING OF GOVERNMENT

ACCOUNTING

Metalanguage

a. Allotment – is an authorization issued by the DBM to NGAs 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.

b. Appropriation – is the authorization made by a legislative body to

allocate funds for purposes specified by the legislative or similar authority.

c. Approved Budget – is the expenditure authority derived from appropriation

laws, government ordinances, and other decisions related to the anticipated
revenue or receipts for the budgetary period. The approved budget consists of
the following:

UACS Code
New General Appropriations 01
Continuing Appropriations 02
Supplemental Appropriations 03
Automatic Appropriations 04
Unprogrammed Funds 05
Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08

d. Automatic Appropriations – are the authorizations programmed annually or for

some other period prescribed by law, by virtue of outstanding legislation which
does not require periodic action by Congress.

e. Budget Information – the budgetary information consists of, among others,

data on appropriations or the approved budget, allotments, obligations,
revenues and
 other receipts, and disbursements.
f. Continuing Appropriations – are the authorizations to support obligations for a
specific purpose or project, such as multi-year construction projects which require the
incurrence of obligations even beyond the budget year.

g. Disbursements – are the actual amounts spent or paid out of the budgeted
amounts.

h. Final Budget – is the original budget adjusted for all reserves, carry-over
amounts, transfers, allocations and other authorized legislative or similar authority
changes applicable to the budget period.

i. New General Appropriations – are annual authorizations for incurring

obligations during a specified budget year, as listed in the GAA.

j. Obligation – is an act of a duly authorized official which binds the government

to the immediate or eventual payment of a sum of money. Obligation maybe referred to
as a commitment that encompasses possible future liabilities based on current
contractual agreement.

k. Original Budget – is the initial approved budget for the budget period usually
the General Appropriations Act (GAA). The original budget may include residual
appropriated amounts automatically carried over from prior years by law such as prior
year commitments or possible future liabilities based on a current contractual
agreement.

l. Revenues – are increases in economic benefits or service potential during the

accounting period in the form of inflows or increases of assets or decreases of liabilities
that result in increases in net assets/equity, other than those relating to contributions
from owners.

m. Supplemental Appropriations – are additional appropriations authorized by

law to augment the original appropriations which proved to be insufficient for their
intended purpose due to economic, political or social conditions supported by a
Certification of Availability of Funds (CAF) from the BTr.

Essential Knowledge

Before we proceed further with the study of government accounting, it is

highly important that we pay attention to the budget execution, monitoring, and
reporting of each transaction.

BUDGET EXECUTION, MONITORING AND REPORTING

Sec. 1. Scope. This Chapter prescribes the guidelines in monitoring, accounting and
reporting of the budget in the financial statements. This also prescribes the records to be
maintained by the national government agencies, forms to be used and reports to be
prepared to effectively monitor the budget as well as the required information disclosure
and presentation of budget information in the financial statements in accordance with
PPSAS 24.

Sec. 3. Fund Release Documents. With the adoption of the UACS and the Performance-
Informed Budgeting (PIB), the following are the fund release documents:

a. Obligational Authority or Allotment – the following are the documents which

authorize the entity to incur obligations:

1. General Appropriations Act Release Document (GAARD) – serves as

the obligational authority for the comprehensive release of budgetary items
appropriated in the GAA, categorized as For Comprehensive Release
(FCR).

2. Special Allotment Release Order (SARO) – covers budgetary items under

For Later Release (FLR) (negative list) in the entity submitted Budget
Execution Documents (BEDs), subject to compliance of required
documents/clearances. Releases of allotments for Special Purpose Funds
(SPFs) (e.g., Calamity Fund, Contingent Fund, E-Government Fund,
Feasibility Studies Fund, International Commitments Fund, Miscellaneous
Personnel Benefits Fund and Pension and Gratuity Fund) are also covered
by SAROs.

3. General Allotment Release Order (GARO) – is a comprehensive authority

issued to all national government agencies, in general, to incur obligations
not exceeding an authorized amount during a specified period for the
purpose indicated therein. It covers automatically appropriated expenditures
common to most, if not all, agencies without need of special clearance or
approval from competent authority, i.e. Retirement and Life Insurance
Premium.

b. Disbursement Authority – the following documents authorize the entity to pay

obligations and payables:

1. Notice of Cash Allocation (NCA) – authority issued by the DBM to central,

 regional and provincial offices and operating units to cover the cash
requirements of the agencies;

2. Non-Cash Availment Authority (NCAA) – 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;

3. Cash Disbursement Ceiling (CDC) – authority issued by DBM to the

Department of Foreign Affairs (DFA) and Department of Labor and
Employment (DOLE) to utilize their income collected/retained by their Foreign
Service Posts (FSPs) to cover their operating requirements, but not to exceed
the released allotment to the said post; and

4. Notice of Transfer of Allocation – authority issued by the Central Office to

its regional and operating units to cover the latter’s cash requirements.

Sec. 4. Classification of Expenditures. Expenditures of NGAs shall be classified into

categories as may be determined by the DBM including, but not limited to the following:

a. Entity incurring the obligation;

b. Program, Activity and Project (PAP);
c. Object of expenditures, including personnel services (PS), maintenance and
other operating expenditures (MOOE), financial expenses (FE), and capital
outlays (CO);
d. Region or locality of use;
e. Economic or functional classification of the expenditures;
f. Obligational authority and cash transactions arising from fund releases; and
g. Such other classifications as may be necessary for the budget process.

Sec. 5. Monitoring of the Budget. The budget shall be monitored by the Budget

a. Division/Units of NGAs through the maintenance of registries for that purpose.

b. Sec. 6. Registries of Revenue and Other Receipts. The Registries of Revenue and
c. Other Receipts (Appendices 7, 7A, 7B, 7C and 7D) shall be maintained by the
Budget
d. Division/Unit of NGAs to monitor the revenue and other receipts
estimated/budgeted, collected
e. and remitted/deposited.

Sec. 6. Registries of Revenue and Other Receipts. The Registries of Revenue and
Other Receipts (Appendices 7, 7A, 7B, 7C and 7D) shall be maintained by the Budget
Division/Unit of NGAs to monitor the revenue and other receipts estimated/budgeted,
collected and remitted/deposited.

Sec. 7. Procedures in Monitoring and Recognizing Revenue and Other Receipts

a. Recognizing Estimated Revenue/Other Receipts.

1. Budget Division/Unit Staff Concerned receives from the Cash/Treasury Unit or

other unit concerned of the entity the copy of the Report of Collections and
Deposits (RCD), TRA (Note 1), Cash Receipts Register (CRReg) (Note 2)
and Credit Memo/Abstract of Deposits (Note 3) Records the same in the
logbook and forwards the documents to the Budget Staff.
2. Budget Staff records the estimated revenue/other receipts in the appropriate
column of the RROR. Files the RROR and the copy of ERABA for reference.

b. Recognizing Revenue/Other Receipts Collected and Deposited

1. Budget Division/Unit Staff Concerned receives from the Cash/Treasury Unit or

other unit concerned of the entity the copy of the Report of Collections and
Deposits (RCD), TRA (Note 1), Cash Receipts Register (CRReg) (Note 2)
and Credit Memo/Abstract of Deposits (Note 3). Records the same in the
logbook and forwards the documents to the Budget Staff.
2. Budget Staff records the collections of revenue/other receipts/constructive
receipts of revenue under the appropriate column of the RROR. Files the
RROR and the copy of RCD and supporting documents for reference.

Sec. 8. Registry of Appropriations and Allotments. The Registry of Appropriations

and Allotments (RAPAL) (Appendix 8) shall be maintained by NGAs to monitor
appropriations and allotments charged thereto. It shall show the original, supplemental
and final budget for the year and all allotments received charged against the
corresponding appropriation. The balance is extracted every time an entry is made to
prevent incurrence of overdraft in appropriations. Separate RAPAL shall be maintained
by fund cluster and by Major Final Output (MFO)/PAP/Appropriation Acts.

Sec. 9. Procedures in Recording Appropriations and Allotments. The procedures for

recording appropriations and allotments are as follows:
a. Staff concerned receives the GAA and the allotment release documents from
the DBM. Records the same in the logbook and forwards these documents to
the Budget Staff for recording in the RAPAL and RAOD.
b. Budget Staff Records the appropriations and allotments in the appropriate
columns of the RAPAL and the RAOD. Forwards a copy of the allotment
release documents to the Accounting Division/Unit for reference.
Sec. 10. Registries of Allotments, Obligations and Disbursements. The Registries
of Allotments, Obligations and Disbursements (RAOD) shall be maintained by the
Budget Division/Unit of agencies to record allotments, obligations and disbursements. It
shall show the allotments received for the year, obligations incurred against the
corresponding allotment and the actual disbursements made. The balance is extracted
every time an entry is made to prevent incurrence of obligations in excess of allotment
and overdraft in disbursements against obligations incurred. The RAODs shall be
maintained by appropriation act, fund cluster, MFO/PAP, and allotment class.

a. Registry of Allotments, Obligations and Disbursements-Personnel

Services
(RAOD-PS) shall be used to record the allotments received, obligations incurred,
and disbursements classified under PS.

b. Registry of Allotments, Obligations and Disbursements-Maintenance

and Other Operating Expenses (RAOD-MOOE) shall be used to record the
allotments received, obligations incurred and disbursements classified under
MOOE.

c. Registry of Allotments, Obligations and Disbursements-Financial

Expenses
(RAOD-FE) shall be used to record the allotments received, obligations incurred
and disbursements classified under FE.

d. Registry of Allotments, Obligations and Disbursements-Capital Outlays

(RAOD-CO) shall be used to record the allotments received, obligations
incurred and disbursements classified under CO.

Sec. 11. Obligation Request and Status. The incurrence of obligations shall be made
through the issuance of Obligation Request and Status (ORS) (Appendix 11). The ORS
shall be prepared by the Requesting/Originating Office supported by valid claim
documents like DVs, payrolls, purchase/job orders, itinerary of travel, etc. The Head of
the Requesting/Originating Office or his/her authorized representative shall certify in the
Section A of the ORS as to the necessity and legality of charges to the budget under
his/her supervision, and validity, propriety and legality of SDs. The Head of the Budget
Division/Unit shall certify to the availability of allotment and such is duly obligated by
signing in Section B of the ORS.

Sec. 12. Subsidiary Record for Obligation. A subsidiary record to monitor a particular
obligation shall be maintained by the Budget Division/Unit in Section C of the ORS. It
shall contain the original amount of obligation, payable (goods delivered and services
rendered) and the actual amount paid.

Sec. 13. Adjustment of Obligation. Adjustment of obligation incurred after the

processing of the claim by the Accounting Division/Unit shall be made through the use
of Notice of Obligation Request and Status Adjustment (NORSA) (Appendix 12). The
adjustment shall be effected through a positive entry (if additional obligation is
necessary) or a negative entry (if reduction is necessary) in the ‘Obligation’ column of
the ORS and RAOD.

Sec. 14. Notice of Obligation Request and Status Adjustment. The NORSA shall be
prepared by the Accounting Division/Unit after the processing of the claim which shall
be used in adjusting the original amount obligated to the actual obligations incurred in
the RAOD. It shall be forwarded by the Accounting Division/Unit to the Budget
Division/Unit to take up the adjustments of obligation in the RAOD.

Sec. 16. Recording of Disbursement in the RAOD. The disbursements shall be

posted under the ‘Payment’ column of Section C of the ORS based on the Reports of
Checks Issued (RCI)/Report of ADA Issued (RADAI) (Appendix 13)/TRA and JEV and
recorded in the appropriate RAOD by the Budget Division/Unit.

Sec. 18. Registries of Budget, Utilization and Disbursements. The Registries of

Budget, Utilization and Disbursements (RBUD) shall be used to record the approved
special budget and the corresponding utilizations and disbursements charged to
retained income authorized under R.A. 8292 for SUCs and other retained income
collection of a national government agency with similar authority, Revolving Funds and
Trust Receipts/Custodial Funds. It shall be maintained by legal/authority, fund cluster,
MFO/PAP and budget classification.

a. Registry of Budget, Utilization and Disbursements-Personnel Services

(RBUD-PS) shall be used to record the budget utilizations and disbursements
classified under PS.

b. Registry of Budget, Utilization and Disbursements-Maintenance and

Other Operating Expenses (RBUD-MOOE) shall be used to record the
budget utilizations and disbursements classified under MOOE.

c. Registry of Budget, Utilization and Disbursements-Financial Expenses

(RBUD-FE) shall be used to record the budget utilizations and disbursements
classified under FE.
 d. Registry of Budget, Utilization and Disbursements-Capital Outlays
(RBUD-CO) shall be used to record the budget utilizations and disbursements
classified under CO.

Sec. 19. Budget Utilization Request and Status. The incurrence of budget utilization
shall be made through the issuance of Budget Utilization Request and Status (BURS).
The BURS shall be prepared by the Requesting/Originating Office supported by valid
claim documents like DV, payroll, purchase/job order, itinerary of travel, etc. The Head
of Requesting/Originating Office or his/her authorized representative shall certify in
Section A of the BURS as to the necessity and legality of charges to the budget under
his/her supervision, and validity and propriety of SDs. The Head of Budget Division/Unit
shall certify to the availability of budget and its utilization in accordance with its purpose
by signing in Section B of the BURS.

Sec. 20. Subsidiary Record for Budget Utilization. The Section C of the BURS shall
serve as the subsidiary record to monitor budget utilization to be maintained by the
Budget Division/Unit. It shall contain the original amount of utilization, payable (goods
delivered, and services rendered) and the actual amount paid after the processing of the
claim.

Sec. 21. Adjustment of Budget Utilization. Adjustment of budget utilization after the
processing of the claim by the Accounting Division/Unit shall be made through the use
of Notice of Budget Utilization Request and Status Adjustment (NBURSA) (Appendix
15). The adjustment shall be effected thru a positive entry (if additional utilization is
necessary) or a negative entry (if reduction is necessary) in the ‘Utilization’ column of
the BURS and RBUD.

Sec. 22. Notice of Budget Utilization Request and Status Adjustment. The
NBURSA shall be prepared by the Accounting Division/Unit after the processing of the
claim which shall be used in adjusting the original amount utilized to the actual
utilizations in the RBUD. It shall be forwarded by the Accounting Division/Unit to Budget
Division/Unit to take up the adjustments of utilization in the RBUD.

Sec. 23. Recording of Disbursement in the RBUD. The disbursement shall be posted
in Section C of the BURS and recorded in the appropriate RBUD based on the RCI,
RADAI, TRA and JEV furnished by the Cashier/Accounting Units to Budget Division/Unit.

Sec. 25. Presentation of Budget Information in the Financial Statements on a

Comparable Basis. An entity shall prepare a comparison of the budget and actual
amounts spent as a separate statement since the budget and the financial statements
are not prepared on a comparable basis in accordance with PPSAS (Par. 23, PPSAS
Sec. 26. Statement of Comparison of Budget and Actual Amounts. This shall be
24).

Sec. 26. Statement of Comparison of Budget and Actual Amounts. This shall be
prepared based on the various registries maintained by the Budget Division/Unit such as
the RRORs, RAPAL, RAOD/RBUD and other SDs. The data on Actual Amounts shall be
verified by the Accounting Division/Unit in the Statement of Cash Flows (SCF). The
statement shall present the following:

a. The original (approved appropriations, prior year’s not yet due and
demandable obligations) and final budget (continuing appropriations, transfers,
realignments and
withdrawals) amounts;

b. The actual amounts on a comparable basis; and

c. By way of note disclosure, an explanation of the material differences between

the budget and actual amounts, which are not included in the financial
statements.

Sec. 27. Changes from Original to Final Budget. An entity shall present an
explanation of whether the changes between the original and final budget consequence
of reallocations within the budget by way of note disclosure in the FSs.

Sec. 28. Reconciliation of Actual Amounts on a Comparable Basis (Budget) and

Actual Amounts in the Financial Statements. The actual amounts presented on a
comparable basis to the budget shall be reconciled with the actual amounts presented
in the FSs identifying separately the differences classified as follows:

a. Basis Differences, which occur when the approved budget is prepared on a

basis other than the accounting basis;

b. Timing Differences, which occur when the budget period differs from the
reporting period reflected in the FSs; and

c. Entity Differences, which occur when the budget omits program or entities
that are part of the entity for which the FSs are prepared. The reconciliation
shall be disclosed as part of the Notes to the FSs.

Sec. 29. Disclosures of Budgetary Basis, Period and Scope. An entity shall explain
in the notes to the FSs the budgetary basis (cash or accrual, or some modification
thereof) used in the preparation and presentation of the budget and the accounting
basis used in the financial statements. The period and the entities included in the
approved budget shall also be identified in the notes to financial statements.

Sec. 31. Preparation of the Budget Reports. The following budget reports/documents
as required by DBM and COA shall be submitted:

a. Quarterly Physical Report of Operation (QPRO) – Budget Accountability

Report (BAR) No. 1. This report shall reflect the Department’s/Agency’s actual
physical accomplishments as at a given quarter, in terms of the performance
measures indicated in its Physical Plan.

b. Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances – Financial Accountability Report (FAR) No. 1 (SAAODB). This
report shall reflect the authorized appropriations and adjustments, total
allotments received including transfers, total obligations, total disbursements
and the balances of unreleased appropriations, unobligated allotments, and
unpaid obligations of a department/office/entity by source and by allotment
class. It shall be presented by:

1. Fund Authorizations
2. Major Final Output;
3. Program/Activity/Project; and
4. Major Programs/Projects - identified by Key Result area (KRA)

c. Summary of Appropriations, Allotments, Obligations, Disbursements

and Balances by Object of Expenditures – FAR No. 1.A (SAAODBOE).
This report shall be prepared by Funding Source Code (FSC) as clustered
and shall reflect the summary of appropriations, allotments, obligations,
disbursements and balances detailed by object of expenditures consistent
with the COA Revised Chart of Accounts per COA Circular No. 2013-002.

d. List of Allotments and Sub-Allotments – This report shall reflect the

allotments released by the DBM and the sub-allotments issued by the Entity
Central Office/RO, their corresponding numbers, date of issuance, and
amounts by allotment class and FSC. The total allotments per this report
should be equal to the total allotments appearing in the SAAODB (FAR No.
1).

e. Statement of Approved Budget, Utilizations, Disbursements and

Balances – This report shall reflect the approved budget, the utilizations,
disbursements and balance of the entity’s income authorized by law to use,
such as OWWA/SUCs, duly approved by their Board of Trustee/Regents and
shall be prepared by FSC as clustered.

f. Summary of Approved Budget, Utilizations, Disbursements and

Balances by Object of Expenditures – This report shall reflect the details of
income authorized by law to use presented by object of expenditures
consistent
the approved budget, utilizations, disbursements and balance of the entity’s

income authorized by law to use presented by object of expenditures

consistent
 with the COA Revised Chart of Accounts and shall be prepared by
Funding Source Code as clustered.

g. Aging of Due and Demandable Obligations – This report shall

be prepared by FSC as clustered and shall reflect the balance of
unpaid obligations as indicated in the Obligation Request (ObR)
and the ADDOs as at yearend.

h. Monthly Report of Disbursements – The report shall reflect the

total disbursements made by department, office or entity and
operating unit from the following disbursement authorities:

1. Notice of Cash Allocation;

2. NCA for Working Fund issued to BTr as an advance
funding from loan/grant proceeds in favor of an entity;
3. Tax Remittance Advice issued;
4. CDC issued by departments with foreign-based agencies or
units;
5. Non-Cash Availment Authority; and
6. Others, e.g. Customs, Duties and Taxes (CDT), BTr
Documentary Stamps. The report shall track the actual
disbursement of the departments/agencies against their
Disbursement Program. The reasons for over or under
spending shall be indicated.

i. Quarterly Report of Revenue and Other Receipts – This

report shall reflect the actual revenue and other
receipts/collections from all sources remitted with the BTr and
deposited in other AGDB for the current year presented by
quarter, and by specific sources consistent with the COA
Revised Chart of Accounts.

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