UNIVERSITY OF THE CORDILLERAS (UC-BCF) - COLLEGE OF ACCOUNTANCY

Notes on Government Accounting - Preliminaries

Blessie C. Ngeteg |Instructor

I. BASIC CONCEPTS IN GOVERNMENT ACCOUNTING

a. Government – is the agency or instrumentality through which the will of the State is
formulated, expressed and realized1

▪ Nature of Philippine Government: The Philippines is a democratic and republican State.

Sovereignty resides in the people and all government authority emanates from them.2

b. Responsibility, Accountability and Liability over Government Funds and Property

i. Responsibility: The head of any agency of the government is immediately and primarily
responsible for all government funds and property pertaining to his agency. Persons
entrusted with the possession or custody of the funds or property under the agency
head shall be immediately responsible to him, without prejudice to the liability of
either party to the government.

ii. Accountability: Every officer of any government agency whose duties permit or require
the possession or custody of government funds or property shall be accountable
therefor and for the safekeeping thereof in conformity with law. Every accountable
officer shall be properly bonded in accordance with the law.

iii. Liability: Expenditures of government funds or uses of government property in

violation of law or regulations shall be the personal liability of the official or employee
found to be directly responsible therefor. Every officer accountable for government
funds shall be liable for all losses resulting from the unlawful, use or application
thereof and for all losses attributable to negligence in the keeping of the funds.

c. Basic Government Accounting and Budget Reporting Principles – The financial records and
reports of government entities shall comply with the following:

i. International Public Sector Accounting Standards (IPSAS) as the generally accepted

government accounting principles3

ii. Accrual basis of accounting

1. Modified accrual method is used
2. Transactions and other events are recognized when they occur (and not when
cash or its equivalent is received or paid). Therefore, the transactions and
events are recorded in the accounting records and recognized in the financial
statements of the periods to which they relate.4

iii. Budget basis for presentation of budget information in the financial statement in
accordance with IPSAS 24

1 Poindexter vs. Greenhow, 114 U.S. 270

2 Section I, Article II, 1987 Philippine Constitution
3 Per COA Circular No. 2021-004 – Renaming the Philippine Public Sector Accounting Standards to International Public Sector Accounting

Standards (IPSAS) with Philippine Application Guidance (PAG)

4 IPSAS 1
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1. Requires comparison of the budget amounts for which it is held publicly

accountable and actual amounts, either as a separate additional financial
statement or as additional budget columns in the financial statements
2. Presentation in the financial statements of the original and final budget
amounts and actual amounts on a comparable basis with the budget that is
made publicly available

iv. Revised Chart of Accounts (RCA) as prescribed the Commission on Audit5

▪ Uniform accounts to be used in the government accounting and budget
systems to facilitate the preparation of harmonized financial and budget
accountability reports

v. Double Entry Bookkeeping

▪ Two accounting entries (debit, credit) are required to record each accounting
transaction

vi. Financial Statements based on accounting and budgetary records, to provide

information:
1. Useful in decision making
2. About the sources, allocation, and uses of financial resources
3. About how the entity financed activities and met its cash requirement
4. Useful in evaluating the entity's ability to finance its activities and meet its
liabilities and commitments
5. About the financial condition of the entity and changes in it
6. Useful in entity’s performance in terms of service costs, efficiency and
accomplishments
7. Whether resources were obtained and used in accordance with legally adopted
budget
8. Whether the resources were obtained and used in accordance with legal and
contractual requirements, including financial limits established by
appropriate legislative authorities

Section 112, (P.D. No. 1445). Recording of financial transactions. Each

government agency shall record its financial transactions and operations
conformably with generally accepted accounting principles and in
accordance with pertinent laws and regulations.

vii. Fund Cluster Accounting

▪ Fund Cluster – an accounting entity for recording expenditures and revenues
associated with specific activity for which accounting records are maintained
and periodic financial reports are prepared

Code Fund Clusters

01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account – Locally Funded/ Domestic Grants Fund
04 Special Account – Foreign Assisted/ Foreign Grants Fund
05 Internally Generated Funds

5 Prescribed by COA in 2019

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Code Fund Clusters

06 Business Related Funds
07 Trust Receipts

d. Types of Government Organizations

i. National Government Agencies (NGAs) - are agencies that includes all departments,
bureaus, offices, boards, commissions, councils state colleges and universities

ii. Local Government Units (LGUs) – political subdivisions of the Philippines having
substantial control over local affairs, consisting of provinces, cities, municipalities and
barangays

iii. Government-Owned and Controlled Corporations (GOCCs) – are agencies organized by

law or pursuant to law, vested with functions relating to public needs whether
government or propriety in nature, owned by the government directly or through its
instrumentalities either wholly or, where applicable as in the case of stock corporation,
to the extent of at least fifty-one % of its capital stock

e. Government Accounting, Defined - Government accounting encompasses the processes of

analyzing, recording, classifying, summarizing, and communicating all transactions involving
the receipts and disposition of government funds and property and interpreting the results
thereof (Section 109, P.D. No. 1445)

i. A service activity: with the purpose of providing quantitative information, primarily

financial in nature about the government entity that is useful in:
1. Assessing the stewardship and the aspects of performance of public funds for
which they are accountable;
2. Planning, program selection and budgeting;
3. Making decision involving the effective and efficient allocation and control of
government resources

ii. A process: consolidates all activities pertaining to the gathering of data, which are to
be used as the basis for fiscal management decisions:
1. Bookkeeping, referring to as analysis and recording
2. Posting, grouping or classifying of similar items
3. Preparation of periodic financial reports
4. Analysis of the financial reports – determine their accuracy and adequacy as
well as the efficiency and effectiveness of agency operations

f. Objectives of Government Accounting

i. To provide quantitative information concerning past and present condition;
ii. To provide a basis for guidance for future operations;
iii. To provide for control of the acts of public bodies and officers in the receipt, disposition
and utilization of funds; and
iv. To report on the financial position and the results of operation of government agencies
for the information of all persons concerned (Section 110, P.D. No. 1445)

g. Salient Features of Government Accounting

i. Controls:

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1. Fund Accounting – A fund is a sum of money or other resources set aside for
the purpose of carrying out specific activities or attaining certain objectives in
accordance with specific regulations, restrictions and limitations

a. General Fund – one which is generally available for all functions of the
government
b. Special Fund – one which, by legislative action, segregates specified
revenues for limited purposes

2. Obligation Accounting – provides the ceiling of the maximum extent to which

an agency can incur obligations or commit the resources of the government in
the performance of its functions. With obligation accounting, an agency
operates only within the amount actually released to it by the DBM, which is
within the or covered by the amount approved appropriation

Obligation accounting refers to the accounting practice, procedures and

techniques for recording obligations in the government.

3. Cash Disbursement Ceiling (CDC) Accounting – The cash operations of the

government under the cash disbursement ceiling accounting are limited
within the boundaries of the appropriations release to government agencies in
the form of allotments, and any additional amount granted by the DBM to
liquidate or pay existing valid obligation

ii. Responsibility Accounting

▪ System that relates the financial results to a responsibility center, which
provides access to cost and revenue information under the supervision of a
manager having directly responsibility for its performance

▪ Under PD 1445, accounting responsibility for all government funds and

property is entrusted, immediately and primarily, to the head of the
government agency or office. It is the duty of the head of the agency to take
reasonable steps to minimize, if not to avoid the risk of losses, defalcations and
other types of irregularities in the utilization of all government resources (to
safeguard the resources of the government under his custody) and periodic
reporting to concern authorities. His responsibility, however, is supervised by
higher authorities and government bodies.

▪ The officer in possession or custody of government funds or property by

reason of his duties is accountable for the safekeeping thereof. As such, he shall
be properly bonded.

▪ The Head of the agency is made immediately and primarily responsible for all
government funds and property to his agency. Secondarily responsibility is
made to rest on the persons entrusted with the actual possession or custody of
the funds or property. They are the accountable officers and are immediately
responsible to the agency head.

iii. Government agencies charged with accounting responsibilities

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1. Commission on Audit6
The authority and powers of the COA shall extend to and comprehend all
matters relating to:
▪ Auditing procedures;
▪ Systems and controls
▪ Keeping of the general accounts of the Government
▪ Preservation of vouchers pertaining thereto for a period of ten years
▪ Examination and inspection of the books, records, and papers relating
to those accounts
▪ Audit and settlement of the accounts of all persons respecting funds or
property received or held by them in an accountable capacity
▪ Examination, audit and settlement of all debts and claims of any sort
due from or owing to the Government or any of its subdivisions,
agencies and instrumentalities

COA’s jurisdiction extends to:

▪ All government-owned or controlled corporations, including their
subsidiaries, and other self-governing boards, commissions, or
agencies of the Government
▪ Non-government entities subsidized by the government:
o Those funded by donations through the government
o Those required to pay levies or government shares
o Those for which the government fund has to put up a
counterpart fund or those partly funded by the government

2. Department of Budget and Management7

The DBM shall assist the President in the:
▪ Preparation of a national resources and expenditures budget,
preparation, execution and control of the National Budget
▪ preparation and maintenance of accounting systems essential to the
budgetary process
▪ achievement of more economy and efficiency in the management of
government operations, administration of compensation and position
classification systems
▪ assessment of organizational effectiveness and review and evaluation
of legislative proposals having budgetary or organizational
implications

3. Bureau of Treasury (BTr)8

The BTr, under the Department of Finance:
▪ Act as the principal custodian of all national government funds;
▪ Assist in the formulation of, and execute, policies on financial
management, public borrowings and capital market development;
▪ Formulate, in coordination with government agencies concerned,
annual projections of revenue needs, cash position and borrowing
capacity of the government;

6 1987 Philippine Constitution

7 Section 3, Chapter 1, Title XVII, E.O. No. 292 or the Administrative Code of 1987
8 Section 29, Chapter IV, Title II, E.O. No. 292 or the Administrative Code of 1987

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▪ Maintain accounts of the financial transactions of all national

secretaries, bureaus, agencies and instrumentalities;
▪ Manage the cash resources of the Government and perform banking
functions in relation to receipts and disbursements of national funds;
▪ Manage, control and service public debts from domestic or foreign
sources;
▪ Exercise line supervision over its Regional Offices/field units within
Department Regional Administrative Coordination Offices; and
▪ Perform such other appropriate functions as may be assigned by the
Secretary or Undersecretary for Domestic Operations

4. Government Agencies – “Government agency” or “agency of the government,”

or “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,
including its subsidiaries, or other self-governing board or commission of the
government.9

5. Local Government Units10

▪ Fiscal responsibility shall be shared by all those exercising authority
over the financial affairs, transactions, and operations of the local
government units11
▪ The vesting of duty, responsibility, and accountability in local
government units shall be accompanied with provision for reasonably
adequate resources to discharge their powers and effectively carry out
their functions: hence, they shall have the power to create and broaden
their own sources of revenue and the right to a just share in national
taxes and an equitable share in the proceeds of the utilization and
development of the national wealth within their respective areas;12

II. GOVERNMENT BUDGET PROCESS

a. Constitutional Policies on the Budget13

i. All appropriations, revenue or tariff bills, bills authorizing increase of the public debt,
bills of local application, and private bills shall originate exclusively in the House of
Representatives but the Senate may propose or concur with amendments.

ii. The Congress may not increase the appropriations recommended by the President for
the operation of the Government as specified in the budget. The form, content and
manner of preparation of the budget shall be prescribed by law.

iii. No provision or enactment shall be embraced in the general appropriations bill unless
it relates specifically to some particular appropriation to which it relates.

9 Section 3(8), P.D. No. 1445 or the Government Auditing Code of the Philippines
10 R.A. No. 7160 or The Local Government Code (LGC) of 1991
11 Section 305(l), Chapter 1, Title V, LGC
12 Section 3(d), Chapter 1, Title 1, Book 1, LGC
13 Section 1, Chapter 1, Book VI, E.O. No. 292 or the Administrative Code of 1987

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iv. The procedures in approving appropriations for the Congress shall strictly follow the
procedure for approving appropriations for other departments and agencies.

v. A special appropriations bill shall specify the purpose for which it is intended, and
shall be supported by funds actually available as certified by the National Treasurer or
to be raised by a corresponding revenue proposal therein.

vi. No law shall be passed authorizing any transfer of appropriations. However, the
President, the President of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court and the heads of Constitutional Commissions
may, by law, be authorized to augment any item in the general appropriations laws for
their respective offices from savings in other items of their respective appropriations.

vii. Discretionary funds appropriated for particular official shall be disbursed only for
public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law.

viii. If, by the end of any fiscal year, the Congress shall have failed to pass the general
appropriations bill for the ensuing fiscal year, the general appropriations law for the
preceding fiscal year shall be deemed reenacted and shall remain in force and effect
until the general appropriations bill is passed by the Congress.

ix. Fiscal autonomy shall be enjoyed by the Judiciary, Constitutional Commissions, Office
of the Ombudsman, Local Government and Commission on Human Rights.

b. Budget Process
i. National Government Agency14
Please click this object below for further reference:

Budget Terms/ Accounts:

▪ Government budgeting is the critical exercise of allocating revenues and

borrowed funds to attain the economic and socia l goals of the country. It also
entails the management of government expenditures in such a way that will
create the most economic impact from the production and delivery of goods and
services while supporting a healthy fiscal position.

▪ The General Appropriations Act (GAA) is the legislative authorization that

contains the new appropriations in terms of specific amounts for salaries, wages
and other personnel benefits; maintenance and other operating expenses; and
capital outlays authorized to be spent for the implementation of various
programs/projects and activities of all departments, bureaus and offices of the
government for a given year.

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https://www.dbm.gov.ph/wp-content/uploads/Executive%20Summary/2016/Budget%20Cycle.pdf

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▪ “Appropriation” refers to an authorization made by law or other legislative

enactment, directing payment out of government funds under specified
conditions or for specified purposes.

▪ “Allotment” refers to an authorization issued by the Department of the Budget

to an agency, which allows it to incur obligations for specified amounts
contained in a legislative appropriation.

▪ “Budget” refers to a financial plan required to be prepared pursuant to Section

16(1), Article VIII of the Constitution, reflective of national objectives, strategies
and programs.

▪ “Current operating expenditures” refers to appropriations for the purchase of

goods and services for current consumption or for benefits expected to
terminate within the fiscal year.

▪ “Capital outlay” or “capital expenditures” refers to an appropriation for the

purchase of goods and services, the benefits of which extend beyond the fiscal
year and which add to the assets of the Government, including investments in
the capital of government-owned or controlled corporations and their
subsidiaries.

▪ “Continuing appropriation” refers to an appropriation available to support

obligations for a specified purpose or project, even when these obligations are
incurred beyond the budget year.

▪ “Obligation” refers to an amount committed to be paid by the Government for

any lawful act made by an authorized officer for and in behalf of the government.

1. Budget Preparation and Presentation - a government budgetary process

wherein the President, through the assistance of the Department of Budget and
Management (DBM), shall prepare and submit to the Congress a budget of
expenditures and sources of financing, including receipts from existing and
proposed revenue measures. It starts with the issuance of a budget call by the
DBM. Each department secretary (including state universities and colleges) of
the government submits the agency estimated budget for the next fiscal year
to DBM.

Upon receipt of DBM of all budget estimates of different agencies, the DBM
bureaus then review the agency proposals and prepare recommendations. The
recommendations are then presented to an Executive Review Board which is
composed of DBM Secretary and senior officials. Then it will be deliberated to
entail a careful prioritization of program and corresponding support, vis-a-vis
the priority agenda of the national government. The deliberation investigates,
revise, examine assemble, coordinate and reduce or increase the budget
estimates prepared by each agency. Then, the DBM will consolidate all the
budgets to form the proposed government wide budget to be submitted to the
President of the Philippines and Cabinet for further refinements or
prioritization. After the President and Cabinet approve the propose National
Expenditure Plan, the DBM prepares and finalizes the budget documents to be

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submitted to the Congress within 30 days before the opening of the regular
session. The budget preparation ends with the submission of the proposed
national budget (The President’s Budget) to Congress.

2. Budget Legislation or Authorization (Approval) - a government budgetary

process that involves the enactment by the Congress of the General
Appropriations Act (GAA) based on the budget submitted by the President
which cannot be increased by the Congress. The initiative for the enactment of
the appropriation law shall come from the House of Representatives.

The President’s Budget is then assigned to the House of Appropriation

Committee. Then, the Committee will advise schedules and conduct hearings
on the budgets of different departments and agencies and scrutinize their
respective programs and projects. After that, it will then craft the General
Appropriation Bill (GAB). The Appropriation Committee will then sponsor,
present, and defend the GAB in the plenary session. After the GAB is approved
in the second and third reading, it will be forwarded to the Senate. The Senate
conducts its own committee hearings and plenary deliberations on the GAB.
After both the House of Representatives and Senate have finished their
deliberations, they will each constitute a panel of the Bicameral Conference
Committee whose task is to discuss and harmonize the conflicting provisions
of the House and Senate versions of the GAB to produce a harmonized version
of the GAB.

The Harmonized version of GAB is submitted to both Houses, which will then
vote to ratify the GAB for submission to the President.

3. Budget Execution or Implementation - a government budgetary process which

involves the implementation of the General Appropriations Act (GAA) which
includes the release of revenue allotment under the supervision of Department
of Budget and Management (DBM). It commences with the issuance of DBM’s
guidelines on the release and utilization of funds.

Each government agencies and departments are required to submit their

Budget Execution Documents (BEDs). The BEDs outline the agency plan and
performance targets which include physical and financial plan, monthly cash
program, estimate of monthly income, and list of obligations that are not yet
due.

The DBM prepares an Allotment Release Program (ARP) to set limits for
allotments issued to an agency to ensure that releases fit the approved Fiscal
Program of the government. The DBM also issues a Notice of Cash Allocation
(NCA) to different agencies to cover their cash requirements for their projects
and obligations. After expending the government funds of different agencies,
they are required to account for all the funds to ensure that are used properly.

4. Budget Accountability - a government budgetary process that involves the

submission of proper documentary reports by a responsible officer, liquidation
of expenditures, and audit conducted by the Commission on Audit to ensure

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the public funds are spent in accordance with the appropriation act. This
procedure happens together with the Budget Execution or Implementation.
The DBM monitors the efficiency and fund utilization, assesses the agencies’
performance, and provides evaluation and recommendations which is used to
set reforms and new policies.

Each government agency submits Budget Accountability Reports (BARs) on a

monthly and quarterly basis to show how their funds are utilized and the
corresponding physical accomplishments of the project. The DBM then
reviews the actual utilization of funds and physical accomplishments shown in
the BARs and compared it with the predetermined plans.

The Commission on Audit (COA) audits the agencies used of government funds.
The DBM then uses the COA audit reports in confirming the agencies’
performance.

ii. Local Government Units15

1. Budget Terms and Accounts:

▪ Program - an integrated group of activities that contribute to a

particular continuing objective of a department/ agency

▪ Project - a special undertaking carried out within a definite time frame

and intended to result in some predetermined measure of goods and
services

▪ Activity - work process that contributes to the implementation of a

program, sub-program or project

2. Fundamental Principles - The financial affairs, transactions, and operations of

local government units shall be governed by the following fundamental
principles:
a. No money shall be paid out of the local treasury except in pursuance of
an appropriations ordinance or law;
b. Local government funds and monies shall be spent solely for public
purposes;
c. Local revenue is generated only from sources expressly authorized by
law or ordinance, and collection thereof shall at all times be
acknowledged properly;
d. All monies officially received by a local government officer in any
capacity or on any occasion shall be accounted for as local funds, unless
otherwise provided by law;
e. Trust funds in the local treasury shall not be paid out except in
fulfillment of the purpose for which the trust was created or the funds
received;
f. Every officer of the local government unit whose duties permit or
require the possession or custody of local funds shall be properly

15
DBM Local Budget Circular No. 152 dated August 2, 202 or the Budget Operations Manual for Local Government Units (BOM for LGUs), 2023
Edition

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bonded, and such officer shall be accountable and responsible for said
funds and for the safekeeping thereof in conformity with the provisions
of law;
g. Local governments shall formulate sound financial plans, and the local
budgets shall be based on functions, activities, and projects, in terms of
expected results;
h. Local budget plans and goals shall, as far as practicable, be harmonized
with national development plans, goals, and strategies in order to
optimize the utilization of resources and to avoid duplication in the use
of fiscal and physical resources;
i. Local budgets shall operationalize approved local development plans;
j. Local government units shall ensure that their respective budgets
incorporate the requirements of their component units and provide for
equitable allocation of resources among these component units;
k. National planning shall be based on local planning to ensure that the
needs and aspirations of the people as articulated by the local
government units in their respective local development plans are
considered in the formulation of budgets of national line agencies or
offices;
l. Fiscal responsibility shall be shared by all those exercising authority
over the financial affairs, transactions, and operations of the local
government units; and
m. The local government unit shall endeavor to have a balanced budget in
each fiscal year of operation.

3. Local Budget Process16

16
DBM Local Budget Circular No. 152 dated August 2, 202 or the Budget Operations Manual for Local Government Units (BOM for LGUs), 2023
Edition

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a. Budget Preparation - Budget preparation is the first phase of the local

budget process. It involves cost estimation per PPA, preparation of
budget proposals, executive review of budget proposals, and
preparation of the LEP and the Budget Message. This phase starts with
the issuance of the Budget Call, and ends with submission of the
Executive Budget to the Sanggunian on or before October 16 of each
year

b. Budget Authorization - This phase starts from the time the Sanggunian
receives the Local Expenditure Program (LEP) submitted by the LCE,
and ends with the enactment of the Appropriation Ordinance and
approval thereof by the LCE.

Authorization of the budget is done through an Appropriation

Ordinance enacted by the Local Sanggunian in accordance with the
fundamental principle that, “No money shall be paid out of the local
treasury except in pursuance of an Appropriation Ordinance or law”
(Section 305 (a), RA No. 7160).

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c. Budget Review is the third phase in the local budget process. Its
primary purpose is to determine whether the Appropriation
Ordinance has complied with the budgetary requirements and general
limitations set forth in the Local Government Code of 1991, as well as
provisions of other applicable laws. It starts from the time the
reviewing authority receives the Appropriation Ordinance for review
and ends with the issuance of the review action.

The Department of Budget and Management shall review ordinances

authorizing the annual or supplemental appropriations of provinces,
highly-urbanized cities, independent component cities, and
municipalities within the Metropolitan Manila Area in accordance with
Section 327 of RA No. 7160 (Section 326 of RA No. 7160).

The Sangguniang Panlalawigan shall review the ordinance authorizing

annual or supplemental appropriations of component cities and
municipalities in the same manner and within the same period
prescribed for the review of other ordinances (Section 327, RA
No.7160).

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d. Budget Execution The execution of the budget in accordance with

existing rules, laws and regulations is the fourth phase of the budget
process in local governments. After the usual recording of
appropriations in the proper registries, the execution of the budget
involves the release of allotments, the certification of available
appropriations and cash, the recording of actual obligations and
disbursements of funds for approved PPAs and the delivery of goods
and services to target clients in the most efficient, effective, economical
and ethical way.

A critical aspect of this phase is the collection of funds to ensure that

cash is available for payment of obligations and further ensuring that
disbursements do not exceed appropriations. While seemingly a
separate activity, the collection and/or receipt of revenues are
considered an integral part of Budget Execution.

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e. Budget Accountability is the last and final phase of the budget process.
Budget Accountability, in simple terms, is accounting for the budget. It
involves the use of a management control techniques to assist in
tracking receipts of income/revenues and controlling expenditures.
The five (5) phases of the budget is incomplete without accountability.

This mechanism provides a venue for the LCE, Local Sanggunian and
stakeholders to be continuously informed of the status of
implementation of PPAs being funded by public funds. It covers the
monitoring and analysis of all financial transactions, the recording of
budgetary accounts in the registries, recording in the books of
accounts of all receipts and expenditures and financial reporting of
their current status. An integral part of accountability is the evaluation
of the financial and physical performance of the LGU. This review and
assessment of performance is necessary to introduce improvements
and reforms to make the budget more transparent to the people and
stakeholders.

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III. GOVERNMENT ACCOUNTING PROCESS

a. Government Accounting Manual
i. Legal Basis - The Government Accounting Manual (GAM) is prescribed by COA
pursuant to Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of
the Philippines which provides that:

“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 therefor, 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".

ii. Coverage - This Manual presents the basic accounting policies and principles in
accordance with the Philippine Public Sector Accounting Standards (PPSAS) adopted
thru COA Resolution No. 2014- 003 dated January 24, 2014, but later renamed to
International Public Sector Accounting Standards (IPSAS) per COA Resolution No.
2021-004 and other pertinent laws, rules and regulations. It includes the Revised
Chart of Accounts (RCA) prescribed under COA Circular No. 2013-002 dated January
30, 2013, as amended; the accounting procedures, books, registries, records, forms,
reports, and financial statements; and illustrative accounting entries. It shall be used
by all National Government Agencies (NGAs) in the:
1. preparation of the general-purpose financial statements in accordance with
the PPSAS and other financial reports as may be required by laws, rules and
regulations; and
2. reporting of budget, revenue and expenditure in accordance with laws, rules
and regulations

iii. Objective of the Manual - The Manual aims to update the following:
1. standards, policies, guidelines and procedures in accounting for government
funds and property;
2. coding structure and accounts; and
3. accounting books, registries, records, forms, reports and financial statements

iv. Comparison of the New Government Accounting System (NGAS) and GAM
Features NGAS GAM

1. Statement of Financial Position

1. Balance Sheet 2. Statement of Financial
2. Statement of Performance
Income and 3. Statement of Changes in Net
Expenses Assets/ Equity
1. Financial Statement
3. Statement of 4. Statement of Cash Flow
(FS) Title
Government
Equity Plus:
4. Cash Flow 5. Statement of Comparison of
Statement Budget and Actual Amounts
6. Notes to Financial Statements

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Features NGAS GAM

COA Circular 2013-002, January
COA Circular 2004-
30, 2013; COA Circular 2014-003,
2. Chart of Accounts 008, September 20,
April 15, 2014; COA Circular
2004
2015-007, October 22, 2015
3. Unified Account
Code Structure None Compliant
(UACS)
Regular Agency
4. Books Maintained Book and National By Fund Cluster
Government Book
5. Estimated Useful
Lives of Property, Management Prerogative; COA
Prescribed by COA
Plant and prescribes the ranges
Equipment (PPE)
₱50,000.0017 and above (per
6. PPE Threshold None
unit)
Moving Weighted Moving Weighted Average;
7. Inventory Costing
Average Specific Identification
Fund Clustering (prescribed in
8. Fund Maintenance One Fund Concept UACS Manual)
*see above clusters
9. Cash Flow Direct Method Direct Method
10. Completed Public
Derecognized Derecognized
Infrastructure
11. Statement of
Financial Position: With distinction (Current and
Without distinction
▪ Assets Non-Current)
▪ Liabilities
12. Statement of Form part of income Form part of income Not part of
Financial Not part of Revenue Revenue from Current Operation
Performance from Current
Subsidies, Transfers Operation
13. Impairment Loss None Recognized
14. Adjustments Uses Prior Years’
Direct adjustment to Equity; no
Affecting Adjustment (PYA)
more PYA Account
Government Equity Account
* Without Authority
to use – recognized
by BTr Recognized by the NGAs
15. Income Collection
* With Authority to concerned
use – recognized by
NGAs
16. Accounting for
Donation ▪ Income
▪ With ▪ Liability
conditionality ▪ Income
▪ Without ▪ Revenue
conditionality ▪ None

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COA Circular No. 2022-004, May 31, 2022

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 UC-BCF – College of Accountancy |Notes on Government Accounting |NGETEG, BC

Features NGAS GAM

▪ With restriction ▪ Revenue

17. Monitoring of Section C of Obligation Request

None
Obligation/Payment and Status (ORS)
18. Residual Value of At least 5% of the cost, rates
10% of the cost
PPE determined by Management
RAOPS, RAOMO, RAOD-PS, RAOD-MO, RAOD-CO,
19. Maintenance of RAOCO, RAOFE RAOD-FE
Registries
RBU RAPAL, RBUD
PPSAS Non-
20. New Standards IPSAS Compliant
compliant
21. Registry of
Revenue and Other None New
Receipts

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