OVERVIEW OF GOVERNMENT ACCOUNTING Accountability over Government Funds and

Properties
Government Accounting - Encompasses the ● A government officer entrusted with the
processes of analyzing, recording, classifying, possession of government resources is
summarizing and communicating all transactions responsible for the safekeeping therefore in
involving the receipt and disposition of Government accordance with the Law
Funds and property, and interpreting the results ● The transfer of government funds from one
thereof (State Audit Code of the Philippines, P.D. No. officer to another shall, except as allowed by
1445, Sec. 109) the Law, be made only after authorization of
the COA
Objectives of Government Accounting
● To produce information concerning past Liability over Government Funds and Properties
operations and present conditions ● The unlawful use of government resources
● To provide a basis for guidance for future shall be the personal liability of the employee
operations found to be directly responsible therefor
● To provide control of the acts of public bodies ● Every accountable officer shall be liable for all
and officers in the receipt, disposition and losses resulting from the unlawful use or
utilization of funds and property negligence in the safekeeping of the
● To report on the financial position and the government resources
results of operations of government agencies ● No accountable officer shall be relieved from
for the information of all persons concerned liability merely because he has acted under
(P.D. No. 1445, Sec. 110) the direction of a superior officer in unlawfully
utilizing the government resources entrusted
Government Accounting places great emphasis to him, unless before that act, he has notified
on the following: the superior officer inwriting, that the
● Sources and utilization of government funds authorization is illegal
● Responsibility, accountability and liability of ● An accountable officer shall immediately
entities entrusted with government funds and notify the COA for any loss of government
properties funds from unforeseen events (force majeure)
within 30 days. Failure to do so will not
SOURCES AND UTILIZATION OF GOVERNMENT relieve the officer of liability.
FUNDS
The sources of government funds include receipts Government Offices Primarily Charged With
from taxes and other fees, borrowings, and grants Accounting Responsibility
from other governments and international bodies
Commission on Audit
The utilization of government funds includes ● Has the exclusive authority to promulgate
expenditures or programs, projects, unanticipated accounting and auditing rules and regulations
losses from calamities and the like. ● Keeps the general accounts of the
government, supporting vouchers, and other
RESPONSIBILITY, ACCOUNTABILITY AND documents.
LIABILITY OF ENTITIES ENTRUSTED WITH ● Submits financial reports to the President and
GOVERNMENT FUNDS AND PROPERTIES Congress
Department of Budget and Management (DBM)
Responsibility over Government Funds and ● Responsible for the formulation and
Properties implementation of the national budget with
● Government resources shall be utilized the goal of attaining the nation’s socio-
efficiently and effectively in accordance with economic objectives
the Law Bureau of Treasury (BTr)
● The Head of the Agency is directly ● Functions under Department of Finance and
responsible in implementing this policy and is is the cash custodian of the government.
primarily responsible for government ● Authorized to:
resources entrusted to his agency ○ Receive and keep national funds and
● All those who are exercising authority over a manage and control the
government agency shall share fiscal disbursements thereof
responsibility ○ Maintain accounts of financial
transactions of all national
Fiscal Responsibility - an agreed set of policies, government offices, agencies and
processes, or arrangements intended to improve instrumentalities
fiscal outcomes, discipline, transparency, and Government Agencies
accountability by requiring governments to commit to ● Refers to any departments, bureau or office
monitorable fiscal policy objectives and strategies. of the national government, or any of its
branches and instrumentalities, or any
political subdivision, as well as any
 government owned or controlled corporation ● PPSAS helps ensure that the government's
(GOCC), including its subsidiaries, or other financial activities are recorded and reported
self-governing board or commission of the accurately and transparently.
government ● PPSAS is used by National Government
● Responsible in directly implementing the Agencies (NGAs) to prepare financial
projects of, and performing the functions statements, budgets, and other financial
delegated by, the government. reports.
● Each agency (entity) shall maintain What are some related standards?
accounting books and budget registries ● International Financial Reporting Standards
whicch are reconciled with the cash records (IFRS): A set of standards that can be used
of the BTr and the budget records of the COA to harmonize with PPSAS
and DBM. ● Philippine Financial Reporting Standards
● Government agencies are required by law to (PFRS): A set of standards that govern the
have accounting units/divisions/departments preparation of financial statements

The GAM for NGAs PPSAS numbering

● Promulgated to harmonize the government ● The PPSAS is assigned the same number as
accounting standards with International the IPSAS to maintain the link. Where a
accounting standards particularly the PPSAS is developed and there is no IPSAS
International Public Sector Accounting equivalent, the standard will be assigned a
Standards (IPSAS) – based on IFRS number in a series of PPSAS starting with
● The Philippine Government has adopted 101. When IPSASB subsequently issues the
IPSAS through PPSAS equivalent standard as an IPSAS, the 100
● Legal Basis series PPSAS will be withdrawn and reissued
○ The GAM for NGAs is promulgated by as a PPSAS with the IPSAS number.
the Commission on Audit based on Standards of PPSAS have equal authority
the authority conferred to it by the regardless of the numbering used
Philippine Constitution
● Coverage Basic Accounting and Budget reporting
○ Preparing general purpose financial Principles
statements in accordance with the PPSAS and relevant laws, rules and regulations
PPSAS and other financial reports as ● PPSAS and relevant laws, rules and
may be required by laws, rules and regulations;
regulations ● Accrual basis of accounting
○ Reporting of budget, revenue and ● Budget basis for presentation of budget
expenditure in accordance with laws, information in the financial statements
rules and regulations ● Revised Chart of Accounts prescribed by
● Objective COA
○ The GAM for NGA’s aims to update ● Double entry bookkeeping
the following: ● Financial Statements based on accounting
■ Standards, policies, guidelines and budgetary records
and procedure in accounting ● Fund cluster accounting
for government funds and
property Fund Cluster Accounting
■ Code structuring and accounts ● accounting procedure for recording
■ Accounting books, registries, expenditures and revenues associated with a
records, forms, reports and specific activity for which accounting records
financial statements are maintained and periodic financial reports
are prepared
ABOUT PPSAS
01 Regular Agency Fund
Philippine Public Sector Accounting Standards. 02 Foreign Assisted Projects Fund
It's a set of accounting standards that govern how 03 Special Accounts – Locally Funded/Domestic
the Philippine government records and reports its Grants Fund
financial activities 04 Special Accounts – Foreign Assisted/Foreign
Grants Fund
HOW WAS THE PPSAS ADOPTED? 05 Internally Generated Funds
● The Commission on Audit (COA) adopted 06 Business Related Funds
PPSAS through Resolution No. 2014-003 on 07 Trust Receipt/Inter-agency Transferred Funds
January 24, 2014. (IATF)
● The standards were based on the
International Public Sector Accounting Qualitative Characteristics of Financial
Standards (IPSAS). Reportingg
What does PPSAS do?
 a. Understandability - users can reasonably be ○ Providing information about the
expected to coprehend its meaning. sources, allocation, and uses of
Accordingly, users are assumed to have: financial resources;
i. Reasonable knnowledge of the ○ Providing information about how the
entity’s activities; and entity financed its activities and met its
ii. Willingness to study information cash requirements
b. Relevance - can assist users in evaluationg ○ Providing information that is useful in
past, present or future events or in confirming evaluating the entity’s ability to
or correcting past evals. Information must finance its activities and to meet its
also be timely. liabilities and commitments;
c. Materiality - affects relevance of information. ○ Providing information about the
Material of its omission or misstatement could financial condition of the entity and
influence decision of users. Depends on the changes in it;
nature or size of the item or error ○ Providing aggregate information
d. Timeliness - loses relevance if there is useful in evaluating the entity’s
undue delay in its reporting. performance in terms of service costs,
e. Reliability - free from material error and bias, efficiency and accomplishments.
and can be depended on by users to
represent faithfully that which it purports to Responsibility Accounting
represent. ● accumulating and reporting data on revenues
f. Faithful Representation - presented in and costs on the basis of the manager’s
accordance with the substance of the action, who has authority to make the day-to-
transactions and other events, and not merely day decisions about the items
their legal form. ● It is the basis for performance evaluation
g. Substance over form - information be ● Evaluation of a manager’s performance for
accounted for and presented in accordance cost centers is based on his ability to meet
with their substance and economic reality budgeted goals for controllable costs
h. Neutrality - free from bias.
i. Prudence - exercise of a degree of caution Unified Accounts Code Structure (UACS)
when making estimates ● government wide coding framework to
j. Completeness - complete within the bounds harmonized budgetary and accounting code
of materiality and cost. classification, that will facilitate efficient and
k. Comparability - when users are able to accurate financial reporting of actual revenue
identify similarities and differences between collections and expenditures compared with
that information and information in other programmed revenue and expenditures
reports. respectively starting FY 2014.
● Its legal basis is Joint Circular (COA, DBM,
Components of general Purpose Financial BTr) 2014 – 1 which amended Joint Circular
Statements 2013-1
● Those intended to meet the needs of users
who are not in a position to demand reports KEY ELEMENTS OF UACS
tailored to meet their particular information 1. Funding Source Code - It is a six-digit code to
needs. reflect the Financing Source, Authorization, and
○ Statement of Financial Position Fund Category. However, per Joint Circular No.
○ Statement of Financial Performance 2014-1 dated November 7, 2014, the 6-digit Funding
○ Statement of Changes in Net Source Code was enhanced by adding another two
Assets/Equity digits code for the Fund Cluster for purposes of
○ Statement of Cash Flows accounting, banking, and reporting; thus, it becomes
○ Statement of Comparison of Budget eight digits.
and Actual Amounts 2. Organization Codes - It is a twelve-digit code to
○ Notes to the Financial Statements, reflect the Department, Agency and Sub-Agency or
comprising a summary of significant Operating Unit/Revenue Collecting Unit. The first two
accountin policies and other digits (1st and 2nd) represent the Department Code.
explanatory notes. The next three digits (3rd to 5th) are for the Agency
Code. The next seven digits (6th to 12th) are for
How would the FS demonstrate the accountability of Operating Unit Classification Code.
the government agency? 3. Location Codes. Location code is a nine-digit
● The objectives of general purpose financial code composed of Region, Province,
reporting in the public sector should be to City/Municipality, and Barangay. Region code is a
provide information useful for decision two-digit code (1st and 2nd) that identifies a specific
making, and to demonstrate the region. Province code is a two-digit code (3rd and
accountability of the entity for the resources 4th) that identifies the province. Municipality code is
entrusted to it, by: a two-digit code (5th and 6th)
4. Major Final Output (MFO)/Program, Activity WHY A CHART OF ACCOUNTS IS PRESCRIBED
and Project (PAP) Codes. now composed of 15 IN NEW ACCOUNTING SYSTEM.
digits. ● The chart of accounts provides the framework
5. Object Codes. It is a ten-digit code composed of within which the accounting records are
the first eight digits (1st to 8th) are for COA Chart of constructed. It is defined as a list of general
Accounts Object, and the next two digits (9th and ledger accounts consisting of real and
10th) are for Sub-Object. If disaggregation is nominal accounts.
necessary, sub-object codes shall be used to show ● The chart of accounts is prescribed for use by
the breakdown of selected assets, income and all national government agencies and local
expenses. Otherwise, two zeros will be used. government units. The description of all the
accounts and the instructions as to when
PURPOSE OF UACS these are to be debited and credited are
● to establish the accounts and codes needed provided to achieve uniformity in the
in reporting the financial transactions of the recording of government financial
National Government Agencies. It provides a transactions.
framework for identifying, aggregating and WHY THE REVISED CHART OF ACCOUNTS IN
reporting financial transactions in budget COA CIRCULAR NO. 2013-002 DATED JANUARY
preparation, execution, accounting and 30, 2013, WAS CREATED
auditing. ● The Commission on Audit as member of the
● The key purpose of the UACS is to enable International Organization of Supreme Audit
the timely and accurate reporting of actual Institutions (INTOSAI) is encouraged
revenue collections and expenditures against ○ to adopt relevant International
budgeted programmed revenues and Accounting Standards. And,
expenditures ○ to provide new accounts for the
adoption of the Philippine Public
REPORTING REQUIREMENTS THAT WILL BE Sector Accounting Standards
BEST SERVED BY UACS (PPSAS) which were harmonized with
1. Financial reports as required by the DBM and the IPSAS to enhance the
COA. accountability and transparency of the
2. Financial statements as required by the financial reports and ensure
Public Sector Accounting Standards Board of compatibility of financial information.
the Philippines. ○ The Commission also recognizes the
3. Management reports as required by the need for uniform accounts to be used
executive officials/heads of departments and in the national government accounting
agencies; and and budget systems to facilitate the
4. Economic statistics consistent with the preparation of harmonized financial
Government Finance Statistics (GFS) Manual and budget accountability reports.
2001.
FIVE (5) CLASSIFICATIONS OF EXPENSES IN
SOURCES OF ACCOUNT DESCRIPTIONS AND THE RCA
CODES IN THE UACS OBJECT CODING 1. Personnel Services (PS): a. Salaries and
ELEMENTS wages b. Other Compensation c. Personnel
1. The codes from the COA Revised Chart of Benefit Contributions d. Other Personnel
Accounts prepared for accrual basis financial Benefits
reporting. 2. Maintenance and Other Operating
2. The addition of some sub-object codes; and Expenses: a. Traveling Expenses b. Training
3. Additional expenditure accounts designed for and Scholarship Expenses c. Supplies and
cash basis budgeting, such as those of Materials Expenses d. Utility Expenses e.
capital outlays. Communication Expenses
3. Financial Expenses: Interest, Bank Charges
SIGNIFICANCE OF THE ENHANCEMENT OF 4. Direct Costs: a. Cost of Goods
SECTOR AND HORIZONTAL OUTCOMES AS Manufactured b. Cost of Sales
PROVIDED BY JOINT CIRCULAR NO. 2014-1 5. Non-Cash Expenses: a. Depreciation b.
1. MFO/PAP Codes is now a 15-digit code due to Amortization c. Impairment Loss d. Losses
enhancement. The significance of this enhancement
is to provide the ability to track budgets to the sector FIVE (5) ACCOUNT CODE STRUCTURE OF THE
outcomes, thus, a 3-digit code for the Sector RCA CONSISTING OF EIGHT (8) MANDATORY
Outcomes was added as a prefix of the MFO/PAP DIGITS
Codes. And to provide the tagging of the horizontal 1. Account Group – This represents the
outcomes, another 2-digit code was added, for accounts classification as to Assets,
Horizontal Outcomes, next to Sector Outcomes. Liabilities, Equity, Income and Expenses.
2. Major Account Group – This represents
The Revised Chart of Accounts classification within the account group; e.g.,
 for asset major accounts: Cash and Cash
Equivalent, Investment, Receivables, etc.
3. Sub-Major Account Group – This
represents classification within the major
account group; e.g., for Cash and Cash
Equivalent: Cash on Hand, Cash in Bank –
Local Currency, Cash in Bank – Foreign
Currency, etc.
4. General Ledger Accounts – This represents
the accounts to be presented in detailed
financial statements; e.g., Cash-Collecting
Officer, Petty Cash, etc. This is composed of
two segments: the first two digits from the left
is the general ledger code, and the last digit
is reserved for contra accounts, like:
Allowance for Impairment, Accumulated
Depreciation, etc.
5. General Ledger Contra-Accounts – Contra-
accounts are shown as reduction from the
related accounts, and this includes, among
others, Allowance for Impairment,
Accumulated Depreciation, etc. as shown in
the preceding item (General Ledger
Accounts).
ACCOUNTING FOR BUDGETARY ACCOUNTS payment by cash; granting, utilization, and
liquidation/replenishment of cash advances.
The National Budget 4. Financial Reporting System. Generally, there
● The government’s estimate of sources and are eight steps in the accounting cycle: analyzing the
uses of government funds withina fiscal year. transactions, journalizing the transactions, posting
● Forms basis for expenditures and is the key the journal entries, preparation of trial balance,
instrument for promoting its socio-economic adjusting the accounts, closing the accounts,
objectives. preparation of the financial statements, and reversing
● Formulation and utilization are summarized in the accounts. Under NGAS, financial reporting
the budget cycle includes the preparation and submission of trial
balances, financial statements and other reports
Government Accounting needed by fiscal and regulatory agencies.
● Primarily budgetary accounting
● Does not only aim to provide info on past The National Budget
events but also budget information in ● The National (Government) Budget is a
accordance with PPSAS 24 plan for financing the government activities
● Concerned with providing information useful for a fiscal year prepared and submitted by a
in assessing the conformance of utilizations responsible executive to a representative
of government funds with approved budget. body whose approval and authorization are
necessary before the plan can be executed. It
GENERAL ACCOUNTING PLAN OF is a definite proposal of estimate or statement
GOVERNMENT AGENCIES/UNITS of receipts and expenditures that may be
The General Accounting Plan (GAP) shows the approved or rejected.
overall accounting system of a government ● It is the financial blueprint of a country’s
agency/unit. It includes; development plan.
a) the source documents,
b) the flow of transactions and its accumulation Kinds Of Budget
in the books of accounts and
c) finally the conversion into financial AS TO NATURE
information/data presented in the financial ● Annual Budget – a budget which covers a
reports. period of one year. It is the basis of an annual
appropriation.
ACCOUNTING SYSTEMS IN THE NGAS - ● Supplemental Budget – a budget which
NATIONAL supplement or adjust a previous budget
1. Budgetary Accounts System. It encompasses which is deemed inadequate for the purpose
the processes of preparing the budget released it is intended. It is the basis for a
document (formerly known as Agency Budget Matrix) supplemental appropriation.
monitoring and recording of allotments received by ● Special Budget – a budget of special nature
the agency from the Department of Budget and and generally submitted in special forms on
Management, releasing of Sub-Allotment Advices account that itemizations are not adequately
(SAAs) to Regional Offices (RO) by the Central provided in the Appropriation Act or that the
Office (CO), issuance of SAAs/LAAs to Operating amounts are not at all included in the
Units (OU) by the Regional Office, and recording and Appropriation Act.
monitoring of obligations. AS TO BASIS
2. Receipts/Income and Depository System. This ● Performance Budget – a budget
system covers the processes of acknowledging and emphasizing the program or services
reporting income/collections, deposits of collections conducted and based on functions, activities,
with Authorized Government Depository Bank and projects, which focus attention upon the
(AGDB) or through the AGDB for the account of general character and nature of work to be
Treasurer of the Philippines and recording of done, or upon the services to be rendered.
collections and deposits in the books of accounts of ● Line-Item Budget – a budget the basis of
the agency. All collecting officers shall deposit intact which are the objects of expenditures such
all their collections, as well as collections turned over as: salaries and wages, traveling expenses,
to them by sub collectors/tellers, with their AGDB freight, supplies and materials, equipment,
daily or not later than the next banking day. etc.
3. Disbursement System. Disbursements constitute AS TO APPROACH AND TECHNIQUE
all cash paid out during a given period either in ● Zero-Based Budgeting – a process which
currency (cash) or by check. It may also mean the requires systematic consideration of all
settlement of government payables/obligations by programs, projects and activities with the use
cash or by check. It shall be covered by of define ranking procedures. In this
Disbursement Voucher (DV)/Petty Cash Voucher approach, activities are analyzed and
(PCV) or Payroll. The Disbursement System involves presented in “decision packages” or key
the preparation and processing of disbursement budgetary inclusions. (The Philippine Public
voucher, preparation and issuance of check;
 Transparency Reporting Project , January 11, ○ Contains the following:
2011) ■ President’s Budget
○ Back to zero/clean slate approach Message
○ Promotes efficient and efffective ■ National Expenditure
utilization of funds Program – details of all
● Incremental Approach – a budget where govt entities’ proposed
only additional requirements need expenditures
justifications. It focuses analysis of ■ Budget of Expenditures
incremental changes in the budget and may and Sources of
be done within the context of performance Financing – estimated
and program budgeting. expenditures
○ Roll-over approach ■ Other documents –
○ Prone to abuse aimed to provide
● BALANCED BUDGET – prepared in such a further explanation of
way that estimated revenue exceeds selected items in the
estimated expenditures. If actual revenues NEP
exceed actual expenditures. If expenditures DBCC approves budget parameters → Budget
exceed revenues, the government incurs a Hearings → Cut-off for Inclusions of Items in
deficit. Budget Proposal → Budget Consolidation →
● OBLIGATIONS BUDGET – focuses on Approval by President and Cabinet →
expenditures incurred in the current year President Submits Budget Proposal to
which are to be paid either in the same year Congress
or in the following year.
Development Budget Coordination Committee
Four Phases of the Budget Process ● DBM
➔ Budget Preparation (Jan - July) ○ Resource alocation and management
➔ Budget Legislation (Aug - Dec) ● DOF
➔ Budget Execution (Jan - Dec) ○ Resource generation and debt
➔ Budget Accountability (Jan - Dec) management
● NEDA
BUDGET PREPARATION ○ Overall economic policy
Bottom Up Approach - several parties participate ● BSP
in the budget preparation, starting from the lowest to ○ Monetary measures and policies
the highest level of the government ● OP
● Starting form the lowest to the highest levels ○ Presidential oversight
of the government
● Opposite id top-down budgeting - wherein the BUDGET LEGISLATION
budget prepatation starts from the agency ● Government funds must inly be spent in
heads. pursuance of an appropriation made by law.
1. BUDGET CALL Therefore, due process must be undertaken
● Issued by DBM to legalize the proposed budget.
● Contains the next fiscal year’s targets, 4. HOUSE DELIBERATIONS
budget ceiling, and other guidelines ● Scrutinize the various agencies’
2. BUDGET HEARINGS respective proposed programs and
● Conducted after agencies submit their expenditures
budget proposals ● House of Representatives scrutinize
● Each agency defends its budget the President’s Budget
proposal before the DBM ● Prepares the General Appropriation
● DBM consolidates in National Bill
Expenditure Program (NEP) and 5. Senate Deliberations
Budget of Expenditures and Sources ● Senate conducts its own deliberation
of Financing on the General Appropriations Bill
● DBM submits to President (GAB).
● Normally starts after receipt of the
BUDGET PRESENTATION GAB form the HOR, however, for
3. PRESENTATION TO THE OFFICE OF THE expediency, hearings in the senate
PRESIDENT start even as representatives
● President and cabinet reviews the deliberations are ongoing.
proposed budget 6. Bicameral Deliberations
● Once approved, DBM finalizes the ● Bicameral Conference Committee is
document to be submitted to formed to harmonize any conflicts
Congress. between the Representatives and
● President’s Budget = Proposed Senate versions of the GAB
budget
 ●Bicam version of GAB is submitted raised by a corresponding revenue proposal
back to HOP for ratification therein.
● Final GAB is submitted to President ARTICLE VI, SECTION 25(5), PHILIPPINE
for enactment CONSTITUTION
7. President’s Enactment ● No law shall be passed authorizing any
● Enacts the budget, now known as transfer of appropriations; however, the
General Appropriations Act. President, the President of the Senate, the
● Before enactment, the President may Speaker of the House of Representatives, the
exercise his veto power. Chief Justice of the Supreme Court, and the
heads of Constitutional Commissions may, by
APPROPRIATIONS. Authorization made by a law, be authorized to augment any item in
legislative body to allocate funds for purposes general appropriations law for their respective
specified by the legislative or similar authority offices from savins in other items of their
1. (01) New General Appropriations – annual respective appropriations.
authorizations for incurring obligations during
a specified budget year BUDGET LEGISLATION
2. (02) Continuing Appropriations – support House Hearings/Debate → House Approval &
obligations for a specific purpose or project Submission to Senate → Senate
3. (03) Supplemental Appropriations – Hearings/Debate → Senat Approval →
additional appropriations authorized by law to Bicameral Conference Committee → President
augment the original appropriations which Signs into Law
proved to be insufficient
4. (04) Automatic Appropriations – NEP → GAB → GAA
programmed annually
5. (05) Unprogrammed Funds - standby ARTICLE VI, SECTION 25 of the Constitution
appropriations authorized by Congress in the “ If, by the end of any fiscal year, the Congress shall
annual GAA which may be availed only when have failed to pass the general appropriations bill for
any of the ff instances occurL the ensuing fiscal year, the general appropriations
a. Revenue collections exceed the law for the preceding fiscal year shall be deemed
original revenue targets in the BESF reenacted and shall remain in force and effect until
b. New revenues are collected or the general appropriations bill is passed by the
realized from sources not originally Congress.”
considered in the BESF
c. Newly-approved loans for foreign- Presidents Veto Power
assisted projects are secured or when Section 27(2), Article VI Philippine Constitution
conditions are triggered for other “The President shall have the power to veto any
sources of funds such as perfected particular item or items in an appropriation, revenue
loan agreements for foreign assisted or tariff bill, but the veto shall not affect the item or
projects. items to which he does not object to.”
6. (06) Retained Income/Funds - collections
which are authorized by law to be used BUDGET EXECUTION
direclty by agencies concerned for their ➔ DBM releases funds
operations or specific purposes. ➔ Agencies implement project/activity
7. (07) Revolving Funds - receipts derived
from business-type activities of BUDGETARY ACCOUNTS
department/agencies which are authorized by ● Appropriation – an authorization made by
law to be constituted as such and deposited law or other legislative enactment, directing
in an authorized government depository bank. payment of goods and services out of
These funds shall be self-liquidating and all government funds under specific conditions
obligations and expenditures incurred by or for special purpose.
virtue of said business-type activity shall be ● Allotment – an authorization issued by the
charged againsst said fund. Department of Budget and Management to
8. (08) Trust Receipts - receipts by any the government agency, which allows it to
government agency acting as trustee, agent incur obligations, for specified amounts,
or administrator for the fulfillment of some within the legislative appropriation
obligations or conditions. ● Obligation – a commitment by a government
agency arising from an act of duly authorized
ARTICLE VI, SECTION 25 (4), PHILIPPINE official which binds the government to the
CONSTITUTION immediate or eventual payment of a sum of
● A special appropriations bill shall specify the money.
purpose for which it is intended, and shall be
supported by funds actually available as 8. Release guidelines and BEDs
certified by the National treasurer, or to be ● DBM issues guidelines on the release
and utilization of funds while various
 ● Summarizes an agenciy’s fiscal year ● Help with early procurement activities
plans and peformance targets. It BEDs and the General Appropriations Act (GAA)
includes the ff: ● Agencies must submit BEDs within seven
○ Physical and financial plan working days after the GAA is approved
○ Monthly cash program ● The GAA is considered a release document,
○ Estimate of monthly income meaning that agency budgets are released as
○ List of obligation that are not allotments when the GAA takes effect
yet due and demandable BED types
Major recipients of the budget: ● BED-1: The financial plan
1. National Government Agencies (NGAs) - ● BED-2: The physical plan
include all agencies within the executive, ● BED-3: The monthly disbursement program
legislative, and judicial branches of
government
2. Local Government Units (LGUs) - include:
a. Autonomous regions 9. Allotment
b. Provinces and cities independent form ● Authorization to incur obligations for
a province specified amounts. Obligational
c. Component cities and municipalities Authority.
d. Barangays ● DBM formulates Allotment Release
3. Government Owned and Controlled Program to set the limit for allotment
Corporations (GOCCs) - corporations that releases.
are owned and controlled, directly or ● Cash Release Program set the
indirectly, by the government and vested with disbursement limits for the year, for
functions relating to public needs. each quarter, and month
Priority Development Assistance Fund (PDAF) - Obligations – an act of a duly authorized official
a.k.a. “Pork Barrel.” portion received by the which binds the govt to the immediate or eventual
congress. [abolished in 2013] payment of a sum of money.
Judiciary Development Fund (JDF) - portion
received by members of the judiciary. At least 80% is DOCUMENTS USED IN RELEASING
intended for the cost of living allowances of the ALLOTMENTS
members and personnel of the Judiciary, the ● General Appropriations Act Release
remainder, not exceeding 20%, is for the acquisition Document – obligational authority for the
and maintenance of office equipment and facilities. comprehensive release of budgetary items
Disbursement Acceleration Program (DAP) - For Comprehensive Release
introduced by the Aquino Administration in 2014, ● Special Allotment Release Order – covers
which aims to speed-up public spending. budgetary items under For Later Release in
● Not a fund but a mechanism of releasing the entity’s submitted BED
funds, particularly from savings and ● General Allotment Release Order –
unprogrammed funds. authority to incur obligations not exceeding
● Savings. Available portions or balances of an authorized amount during a specified
items under the GAA which result from: period for the purpose indicate therein.
○ The completion or final
discontinuance or abandonment of a 10. Incurrence of Obligations
program, activity, or project ● Govt agencies incur obligations which
○ Unpaid compensation for vacant or will be paid by the govt.
unfilled positions and leaves of ● An obligation incurred is a legal
absence without pay commitment to pay for goods or
○ Implementation of efficiency services that have been contracted
measures that enable agencies to for. It can also refer to a liability that a
deliver services at lower cost. government has committed to pay.

BEDs. Budget Execution Documents (BEDs) are 11. Disbursement Authority

used to guide the release of funds to government ● Govt agencies obtain access to
agencies. The BEDs are submitted to the government funds
Department of Budget and Management (DBM) by
government agencies. The DBM uses the BEDs to Notice of Cash Allocation (NCA) is a document
help the Development Budget Coordination that authorizes the amount of cash an agency can
Committee (DBCC) create the quarterly withdraw from a government bank. The Department
disbursement program for the national government. of Budget and Management (DBM) issues NCAs to
● Contain agency plans, spending schedules, government agencies to cover their cash needs.
and physical targets
● Are used to measure agency performance What NCAs are used for?
● Help facilitate the release of funds for ● Paying for operating expenses
programs and projects ● Buying supplies and materials
 ● Acquiring property, plant, and equipment cannot exceed the released allotment to the
(PPE) FSP.
● Paying accounts payable
● Paying retirement gratuity and terminal leave DISBURSEMENTS
benefits ● MADE THROUGH CHECKS AGAINST THE
ACCOUNT OF Treasurer of the Philippines
How are NCAs used? ● Issued under the Modified Disbursement
● Agencies use NCAs to issue Modified System Checks
Disbursement Scheme (MDS) checks and ● EMDS stands for Electronic Modified
Advance Disbursement Authority (ADA) Disbursement System, a secure internet
checks banking service offered by Land Bank of the
● The total amount of MDS checks and ADAs Philippines (LBP). It allows National
issued cannot exceed the total NCA received Government Agencies (NGAs) to perform
● The Accounting Division/Unit monitors NCAs Modified Disbursement System (MDS)
through the Registry of Allotments and Notice transactions online.
of Cash Allocation (RANCA) ● Auto Debit Arrangement (ADA) - is an
automatic debit from your LANDBANK
How are NCAs released? savings/ current deposit account to be
● The DBM and Land Bank of the Philippines credited to your LANDBANK Mastercard
(LANDBANK) have partnered to release credit card on your payment due date
NCAs online through the Action Document
Releasing System (ADRS) Government funds are released to agencies
through the Department of Budget and Management
Notice of Transfer of Allocation (NTA) is a (DBM) which issues a General Allotment Release
document that gives regional and operating units the Order (GARO) or a Special Allotment Release Order
authority to pay for various expenses. The NTA can (SARO), authorizing agencies to incur obligations,
be used to pay for operating expenses, supplies, followed by a Notice of Cash Allocation (NCA)
accounts payable, and more. specifying the maximum amount they can withdraw
from a government bank for a specific period;
What is an NTA used for? essentially, funds are released based on the
● Paying for operating expenses, approved budget and are distributed to agencies
● Paying for supplies and materials, based on their financial requirements and project
● Paying for accounts payable, and needs as outlined in their budget execution
● Paying for other authorized disbursements. documents.
How is an NTA issued?
● An NTA can be issued through MDS checks BUDGET ACCOUNTABILITY
● An NTA can be issued through Advice to ● The process of assessing whether a
Debit Account (ADA) government agency's performance matches
● An NTA can be issued through other modes its budget plans. It's the final stage of the
of disbursements budget process.

Disbursements Authority How it works:

● A NON-CASH AVAILMENT AUTHORITY Performance indicators
(NCAA) is a permit issued by the Department ● Agencies use performance indicators to
of Budget and Management (DBM) to measure how well they've met their goals.
government agencies. It allows agencies to These indicators can be quantitative or
account for the cash equivalent of loan qualitative.
proceeds. ● Commission on Audit (COA)
● The COA audits government agencies to
How it works: ensure that funds are spent legally, properly,
● The NCAA is used to cover obligations and accurately. The COA also recommends
incurred by agencies against available ways to fix any issues found.
allotments.
● The NCAA allows agencies to use proceeds 12. Budget accountability reports
from loans or grants through supplier's credit ● Agencies submit budget accountability
or constructive cash. reports to the DBM and COA. These
● Cash Disbursement Ceiling – issued by the reports show how agencies have used
DBM to agencies with foreign operations (e.g. their allotments and cash allocations.
Department of Foreign Affairs) allowing them ● Management review
to use the income collected by their Foreign ● Agency management reviews their
Service Post to cover the operating actual performance against their work
requirements. targets.
● The CDC allows departments to use their ● Monthly Reports of Disbursements
income to cover operating costs, but they
 ● Quarterly Physical Report of ● Requires the identification of responsibility
Operations centers and distinction between controllable
● Statement of Appropriations, and non-controllable costs.
Allotments, Obligations,
Disbursements and Balances Responsibility Center
● Summary of Appropriations ● Part, segment, unit or function of a
Allotments, Obligations, government agency, headed by a manager,
Disbursements and Balances by who is accountable for a specified set of
Object of Expenditures activities.
● List of Allotments and Sub Allotments Controllable Costs
● Statement of Approved Budget, ● considered controllable at a given level of
Utilizations, Disbursements, and managerial responsibility of the manager has
Balances the power to incur it within a given period of
● Summary of Approved Budget, time.
Utilizations, Disbursements, an Non-controllable Costs
Balances by Object of Expenditures ● are costs incurred indirectly and allocated to
● Quarterly Report of Revenue and a responsibility level.
Other Reports Cost Centers
● Aging of Due and Demandable ● Primary purpose is to render service to the
Obligations public at the lowest possible cost

13. Performance Reviews All costs are controllable by top management

● DBM and COA perform periodic reviews because of high extent of its authority. Fewer costs
are controllable in lower management levels
14. Audit because of the decreased scope of authority.
● COA audits the agencies
Responsibility Center Code Structure
RATIONALE/PURPOSE Organizations
● Monitor the effiency of government’s fund Department → 00
utilization - GDP Agency → 000
● Assess agency peformance Lower Level Operating Unit →
● Provide a vital basis for sound decision and 0000000
policy making for rational allocation of scarce Additional Code for Major office/department
resources Major office/department → 000

SUMMARY
1. Budget Preparation
a. Budget Call
b. Budget Hearings
c. Presentation to the Office of the
President
2. Budget Legislation
a. House Deliberation
b. Senate Deliberation
c. Bicameral Deliberation
d. Presidents Enactment
3. Budget Execution
a. Release of Guideline and (Budget
Execution Documents) BEDs
b. Allotment
c. Incurrence of Obligations
d. Disbursement Authority
4. Budget Accountability
a. Budget Accountability Reports
b. Performance Reviewa
c. Audit

Responsibility Accounting
● System of providing cost and revenue
information over which a manager has direct
control of.
● Enables the evaluation of a manager’s
performance based only on matters that are
directly under his control.