Module II

CHART OF ACCOUNTS AND BUDGETARY ACCOUNTS

INTRODUCTION

This module presents the Chart of Accounts for the government as prescribed in COA
Cir. No. 2004-008 dated September 20, 2004 to enhance accountability and transparency of
financial reports and ensure compatibility of financial information. Likewise, this module shall
discuss Accounting for Budgetary Accounts which generally commences upon enactment of the
General Appropriations Act (GAA) which contains the legal authorization to use public money
by the national government.

This module contains the following lessons:

Lesson 1. Chart of Accounts: Elements of the Balance Sheet

Lesson 2. Chart of Accounts: Elements of the Statement of Income and Expenses
Lesson 3. Accounting for Budgetary Accounts
Lesson 4. Reporting System

OBJECTIVES

At the end of the module the student should be able to:

1. Identify the accounts and account codes of the different elements in the Balance Sheet.
2. Identify the accounts and account codes of the different elements in the Statement of
Income and Expenses.
3. Explain the different approaches to and processes in the national government
budgeting.
4. Enumerate and explain the budgetary accounts.

DIRECTIONS/MODULE ORGANIZER

There are four (4) lessons in this module which discuss the Revised Chart of Accounts
that provides the accounts and account codes of the different elements in the Statement of
Financial Position and the Statement of Income and Expenses. Likewise, it discusses the systems
and processes in Accounting for Budgetary Accounts. Read and understand the text and be able
to answer the self-activities correctly. For additional information/knowledge on the topics you
may read books or manuals on government accounting.
Lesson 1. Chart of Accounts: Elements of the Balance Sheet

The Revised Chart of Accounts

As per Government Accounting Manual Vol. III, The Chart of Accounts as Object Code in the
Unified Accounts Code Structure (UACS) is based primarily on the following:

a. COA Circular No. 2013-002 dated January 30, 2013 prescribing the adoption of the
Revised Chart of Accounts (RCA) for National Government Agencies (NGAs) effective
January 1, 2014.

b. COA Resolution No. 2014-003 dated January 24, 2014 prescribing the adoption of the
Philippine

c. COA Circular No. 2014-003 dated April 15, 2014 providing the implementing rules and
guidelines on the Conversion from the Philippine Government Chart of Accounts under
the new Government Accounting System per COA Circular No. 2004-008 dated
September 20, 2004 as amended, to the Revised Chart of Accounts for NGAs.

d. COA-DBM-DOF Joint Circular No. 2013-1 dated August 6, 2013 prescribing the UACS.

e. COA-DBM-DOF joint Circular No. 2014-1 dated November 7, 2014 providing the
enhancement of UACS prescribed under COA-DBM-DOF Joint Circular No. 2013-1.

Elements of Financial Statements

The elements directly related to the measurement of financial position are shown in the
Balance Sheet. These are assets, liabilities and equity while those related to the measurement
of performance are shown in the Statement of Income and Expenses. These are items of
revenue/income and expenses.

Code Account Groups

1 Assets – any owned physical object (tangible) or right (intangible)

with economic
value that is expressed, for accounting purposes, in terms of its cost or some
other value.

2 Liabilities – economic obligations of an agency which also include

certain deferred credits that are not obligations.

3 Equity – residual interest of the government agency which is the

excess of the assets over liabilities.
 4 Income – the gross inflow of economic benefits or service potential
during the reporting period, when those inflows result in an increase
in net assets/equity.

5 Expenses – refer to decrease in economic benefits or service potential

during the reporting period in the form of outflows or consumption of
assets or incurrence of liabilities that result in decrease in net
assets/equity.

COA Cir. No. 2013-002 further provides that the account code structure consists of eight (8)
mandatory digits as follows

Account Group

Major Account Group

Sub-Major Account Group

General Ledger Accounts

General Ledger Contra-Accounts

The account group represents the accounts classification as to Assets, Liabilities, Equity, Income
and Expenses.

The Major Account represents classification within the account group; e. g. for asset major
accounts: Cash and Cash Equivalents, Investments, Receivables, Inventories etc.

The Sub-Major Account group represents classification within the major account, e.g. for Cash
and Cash Equivalents: Cash on hand, Cash in Bank-Local Currency, Cash in Bank- Foreign
Currency, etc.

The General Ledger Accounts represent the accounts presented in the 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.
To distinguish the coding of assets with and without contra accounts, the following shall be
observed:

Asset with Contra Account (Ex: Accounts Receivable)

10301 010

Asset

Receivable

Loans and Receivable Account

Accounts Receivable

General Ledger- Contra Account

Asset with Contra Account (Ex: Allowance for Impairment-AR)

10301011

Asset

Receivables

Loans and Receivable Accounts

Accounts Receivable

Allowance for Impairment-

Accounts Receivable
Assets without Contra Account (Ex: Cash Collecting Officer)

10101010

Asset

Cash and Cash Equivalent

Cash on Hand

Cash Collecting Officer

General Ledger Contra Accounts

The Revised Chart of Accounts

UACS Sub- UACS

RCA Code Object Object
Account Title
Code Code

ASSETS
Cash and Cash Equivalents
Cash on Hand
Cash-Collecting Officers1010101000 1010101000
Petty Cash 10101020 00 1010102000

Cash in Bank- Local Currency

Cash in Bank-Local Currency,
BangkoSentral ng Pilipinas 10102010 00 1010201000

Cash in Bank-Foreign Currency

Cash in Bank-Foreign Currency,
BangkoSentral ng Pilipinas 10103010 00 1010301000

Treasury/Agency Cash Accounts

Cash-Treasury/Agency Deposit, Regular 10104010 00 1010401000

Cash Equivalents
Treasury Bills 10105010 00 1010501000

Investments
Financial Assets at Fair Value Through
Surplus or Deficit
Financial Assets Held for Trading 10201010 00 1020101000

Financial Assets Held to Maturity

Investments in Treasury Bills-Local 10201010 00 1020101000
Allowance for Impairment-Investments
In Treasury Bills-Local 10202011 00 1020201100
LIABILITIES
Financial Liabilities
Payables
Accounts Payable 20101010 00 2010101000

Bills/Bonds/Loans Payable
Treasury Bills Payable 20102010 00 2010201000

NET ASSETS/EQUITY
Equity
Government Equity
Accumulated Surplus (Deficit) 30101010 00 3010101000

Note: The foregoing are just some examples of assets, liabilities and equity accounts. There
are more or less five hundred forty accounts for the three elements.

Lesson 1. Self – Activity

Answer the following questions:

1. Discuss the underlying reasons why a Chart of Accounts is prescribed in government

accounting.

2. What are Contra – Accounts? Give five examples of accounts with their corresponding
contra accounts.
Lesson 2. Chart of Accounts: Elements of the Statement of Income & Expenses

Elements of the Statement of Income and Expenses

The Revised Chart of Accounts

RCA UACS UACS

Account Title Code Sub-Object Object
Code Code

REVENUE AND EXPENSES

Revenue
Tax Revenue-Individual and Corporation
Income tax 40101010 00 4010101000

Tax Revenue-Property
Estate Tax 40102020 00 4010201000

Tax Revenue-Goods & Services

Import Duties 40103010 00 4010301000

Tax Revenue-Others
Documentary Stamp Tax 40104010 00 4010401000

Tax revenue-Fines & Penalties

Tax Revenue-Fines & Penalties-Taxes
on Individual and Corporation 40105010 00 4010501000

Service and Business Income

Service Income
Permit Fees 40201010 00 4020101000

Business Income
School Fees 40202010 00 4020201000
Tuition Fees 40202010 00 4020201001
Assistance and Subsidy
Assistance and Subsidy
Subsidy from National Government 40301010 00 4030101000

Shares, Grants and Donations

Shares
Share from National Wealth 40401010 00 4040101000

Grants and Donations

Income from Grants and Donations
In Cash 40402010 00 4040201000

Gains
Gains
Gains on Foreign Exchange (FOREX) 40501010 00 4050101000

Other Non-Operating Income

Sale of Assets
Sale of Garnished/Confiscated/Abandoned
Seized Goods and Property 40601010 00 4060101000

Reversal of Impairment Loss

Reversal of Impairment Loss 40602010 00 4060101000

Miscellaneous Income
Proceeds from Insurance/indemnities 40609010 00 4060901000

EXPENSES
Personnel Services
Salaries and Wages
Salaries and Wages-Regular 50101010 00 5010101000
Basic Salary-Civilian 50101010 01 5010101001

Other Compensation
Personal Economic Relief Allowance(PERA) 50102010 00 5010201000
Personnel Benefit Contributions
Retirement & Life Insurance Premiums 50103010 00 5010301000

Other Personnel Benefit

Pension Benefits 50104010 00 5010401000

Maintenance and Other Operating Expenses

Traveling Expenses
Traveling Expenses-Local 50201010 00 5020101000

Training and Scholarship Expenses

Training Expenses 50202010 00 5020201000

Supplies and Materials Expenses

Office Supplies Expenses 50203010 00 5020301000

Utility Expenses
Water Expenses 50204010 00 5020401000

Communication Expenses
Postage and Courier Expenses 50205010 00 5020501000

Awards/Rewards, Prizes and Indemnities

Awards/rewards Expenses 50206010 00 5020601000

Survey, Research, Exploration and

Development Expenses
Survey Expenses 50207010 00 5020701000

Generation, Transmission and

Distribution Expenses
Generation, Transmission and
Distribution Expenses 50209010 00 5020901000

Confidential, Intelligence and

Extraordinary Expenses
Confidential Expenses 50210010 00 5021001000
Professional Services
Legal Services 50211010 00 5021101000

General Services
Environment/Sanitary Services 50212010 00 5021201000

Repairs and Maintenance

Repairs & Maintenance-Investment
Property 50213010 00 5021301000

Financial Assistance/Subsidy
Subsidy to NGAs 50214010 00 5021401000

Taxes, Insurance Premiums & Other Fees

Taxes, Duties and Licenses 50215010 00 5021501000

Labor and Wages

Labor and Wages 50216010 00 5021601000

Other Maintenance & Operating Expenses

Advertising Expenses 50299010 00 5029901000

Financial Expenses
Financial Expenses
Management Supervision/Trusteeship
Fees 50301010 00 5030101000

Direct Costs
Cost of Goods Manufactured
Direct Labor 50401010 00 5040101000

Cost of Sales
Cost of Sales 50402010 00 5040201000

Non-Cash Expenses
Depreciation
Depreciation-Investment Property 50501010 00 5050101000

Amortization
Amortization-Intangible Assets 50502010 00 5050201000

Impairment Loss
Impairment Loss- Financial Assets
Held to Maturity 50503010 00 5050301000

Losses
Loss on Foreign Exchange (FOREX) 50504010 00 5050401000

Note: The accounts presented are just some examples of Revenue and Expenses accounts
with their corresponding codes. There are more or less 600 accounts for revenue and
expenses.

Lesson 2. Self-Activity

Answer the following:

1. Define Income Statement and describe the elements it contains.

2. What are the five classifications of expenses? Describe each and give 3 examples of each
except those with just one or two accounts.
Lesson 3. Accounting for Budgetary Accounts

Section 29 (I ), Article VI of the 1987 Constitution provides, “No money shall be paid out
of the Treasury except in pursuance of an appropriation law.”

The above stated constitutional provision is the primary legal basis for government
accounting particularly for budgetary accounts. It means that no public fund may be spent if
there is no law authorizing the payment of money and specifying the purpose for which the
same shall be spent.

Accounting for Budgetary Accounts formally upon enactment of the General

Appropriations Act (GAA), which contains the legal authorization to use public money for the
various programs of the National Government.

Accounting Systems

The General Accounting Plan (GAP) shows the overall accounting system of a
government agency/unit. It includes the source documents, the flow of transactions and its
accumulation in the books of accounts and finally the conversion into financial
information/data presented in the financial reports. The accounting systems are the following:

1. Budgetary accounts System

2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System

Fundamental Principles of Fiscal Operations

Fundamental principles as provided for by law:

1. No money shall be paid out of the public treasury or depository except in pursuance
of an appropriation law or other specific statutory authority;
2. Government funds or property shall be spent or used solely for public purposes;
3. Trust funds shall be available and may be spent only for the specific purpose for
which the trust was created;
 4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency;
5. Disbursements or disposition of government funds or property shall invariably bear
the approval of the proper officials;
6. Claims against government funds shall be supported with complete documentation;
7. All laws and regulations applicable to financial transaction shall be faithfully adhered
to;
8. Generally accepted principles and practices of accounting, as well as, of sound
management and fiscal administration shall be observed, provided they do not
contravene existing laws and regulations.

The National Budget

The National (Government) Budget is a plan for financing the government activities for a
fiscal year prepared and submitted by responsible executive to a representative body whose
approval and authorization are necessary before the plan can be executed.

It is a definite proposal of estimate or statement of receipts and expenditures that may

be approved or rejected.

Balanced Budget

It is a budget where the proposed expenditures are equal to or less than the estimated
revenues. Currently, the government is operating with a budget deficiency. As such, it is serving
government priorities to achieve a balanced budget by increasing revenues and cutting on
expenditures.

Performance-Informed Budgeting (PIB)

It is a budgeting approach that uses performance information to assist in deciding where

the funds will go. Performance information, both financial and non-financial information is
presented in the appropriations document, which provides the context for the programs,
activities and projects pursued by the different agencies of government. Performance
information typically includes the following:
1. The purpose for the funds required.
2. The outputs that would be produced or the services that would be rendered.
3. The outcomes that would be achieved by the outputs and/or services.
 4. The cost of the programs and activities proposed to achieve the objectives.

This new approach to budgeting was introduced by DBM through the 2013 National
Budget Memo No. 117, that requires government agencies to strengthen the link between
planning and budgeting and to simplify the presentation of the budget.

Kinds of Budget

1. As to Nature
a. Annual Budget – a budget which covers a period of one year. It is the basis of an
annual appropriation.
b. Supplemental Budget – a budget which supplements or adjusts a previous budget
which is deemed inadequate for the purpose it is intended. It is the basis for a
supplemental appropriation.
c. Special Budget – a budget of special nature and generally submitted in special forms
on account that itemizations are not adequately provided the Appropriations Act or
that the amounts are not at all included in the Appropriation Act.

2. As to Basis
a. Performance Budget – a budget emphasizing the program or services conducted and
based on functions, activities, and projects which focus attention upon the general
character and nature of work to be done, or upon the services to be rendered.
b. Line-Item Budget – a budget the basis of which is the objects of expenditures such
as: salaries and wages, traveling expenses, freight, supplies and materials, etc.

3. As to Approach and Technique

a. Zero-based Budgeting – a process which requires systematic consideration of all
programs, projects and activities with the use of define ranking procedures. In this
approach, activities are analyzed and presented in “decision packages” or key
budgetary inclusions.
b. Incremental Approach – budget done where only additional requirements need
justifications. It focuses analysis of incremental changes in the budget and may be
done within the context of performance and program budgeting.

THE BUDGET PROCESS

1. Budget Preparation. This covers estimation of government revenues, the determination

of budgetary priorities and activities within the constraints imposed by available
 revenues and by borrowing limits, and the translation of approved priorities and
activities into expenditure levels. Estimates are prepared by the various government
agencies, reviewed and finalized by the President of the Philippines and then submitted
to the Legislative Department as basis for the preparation of the Annual Appropriation
Act.

The budget preparation begins with the issuance of a “budget call” issued by
DBM in December. The Budget Call contains budget parameters.

The budget preparation phase ends with the submission of the proposed
national budget – the President’s Budget” to Congress. The President’s Budget consists
of the following documents:

 President’s Budget Message (PBM). This is where the President explains the
policy framework and priorities in the budget.
 Budget of Expenditures and Sources of Financing (BESF). Contains the
breakdown of the expenditures and funding sources for the fiscal year and the
two previous years.
 National Expenditure Program (NEP). This contains the details of spending for
each department and agency by program, activity or project and is submitted in
the form of a proposed GAA.
 Details of Selected Programs and Projects. This contains a more detailed
disaggregation of key programs, projects and activities in the NEP, especially
those in line with the national government’s development plan.
 Staffing Summary. This contains a summary of the staffing complement of each
department and agency, including number of positions and amounts allocated
for the same.

2. Legislative Authorization (Budget Legislation). This phase starts upon the receipt of the
President’s Budget by the House Speaker a day after the State of the Nation Address
and ends with the President’s enactment of the GAA.
The House of Representatives, in plenary, assigns the President’s Budget to the
House Appropriations Committee, which conducts hearing and scrutinize the programs
and projects. It then crafts the GAB. In plenary session, the GAB is sponsored, presented
and defended by the Appropriations Committee and Sub-Committee Chairmen. The GAB
is approved on Second and Third Reading before transmission to the Senate.
 Note: In the First Reading, the President’s Budget is assigned to the Appropriations
Committee.

Likewise, the Senate conducts its own committee hearings and plenary
deliberations on the GAB. The Committee submits its proposed amendments to the GAB
only after it has been formally transmitted by the House of Representatives.

Once both Houses of Congress have finished their deliberations, they will each
constitute a panel to the Bicameral Conference Committee. This committee will discuss
and harmonize the conflicting provisions of the House and Senate versions of the GAB.

The Harmonized or “Bicam Version” is then submitted to both Houses, which will
then vote to ratify the final GAB for submission to the President. Once submitted to the
President for his approval, the GAB is considered enrolled.

The President and DBM then review the GAB and prepare a Veto Message,
where budget items subjected to direct veto or conditional implementation are
identified, and where general observations are made. Under the Constitution, the GAB is
the only legislative measure where the President can impose a line-veto.

When the GAA is not enacted before the fiscal year starts, the previous year’s
GAA is automatically reenacted. This means that agency budgets for programs, activities
and projects remain the same. Funding for programs or projects that have already been
terminated is realigned for other expenditures.

Appropriations are approved by the legislative body in the form of:

1. A General appropriations Law which covers most of the expenditures of government
2. Supplemental appropriations laws that are passed from time to time to augment or
correct an already existing appropriation; and
3. Certain automatic appropriations intended for fixed and specific purposes.

3.Budget Execution and Operation. This phase of the budget process begins with DBM’s
issuance of guidelines on the release and utilization of funds. Agencies are required to submit
their Budget Execution Documents (BEDs).

Note: BED is discussed in Lesson 4.

 The DBM sets a limit for allotments issued to an agency and on the aggregate by
preparing an Allotment Release Program (ARP). ARP of each agency corresponds to the total
amount of the agency-specific budget under the GAA, as well as Automatic Appropriations. A
Cash Release Program is also formulated alongside to set a guide for disbursement levels for
the year and for every month and quarter.

Allotments which authorize an agency to enter into an obligation are originally released
by DBM to all agencies comprehensively through the Agency Budget Matrix (ABM) and Special
Allotment Release Orders (SARO’s). However, as provided by the government Accounting
Manual (GAM), the new obligational authority includes: General Appropriation Act Release
Document (GAARD), Special Allotment Release Order (SARO), and General Release Order
(GARO).

4.Budget Accountability

Every peso that a government agency has spent must be accounted for to ensure that it
is used properly contributing to the of socio-economic goals. Through budget accountability
DBM monitors the efficiency of fund utilization, assess agency performance and provides a vital
basis for reforms and new policies.

Government agencies are required to submit on a monthly and quarterly basis Budget
and Financial Accountability Reports (BFARs) that show how funds are used and identify
corresponding physical accomplishments. Failure to submit BFARs, DBM penalizes the agencies
by withholding certain fund releases to them. These funds to be withheld are limited to
agencies’ Miscellaneous Personnel Benefits Fund (MPBF) allotments so that only the agencies
are penalized and that the implementation of critical programs and projects will not be
disrupted.

The DBM regularly reviews the financial and physical performance of agencies. Actual
utilization of funds and physical accomplishments as indicated in the agencies’ BFARs are
evaluated against their targets.

Budgetary Accounts System

According to National Budget Circular (NBC), the Allotment Release Program (ARP) shall
serve as the ceiling for the aggregate allotment releases during the year from all sources. The
ARP of each national government agency shall be an amount equal to its appropriations from
the following sources:
 1. New Appropriations, such as: agency specific budget and allocations or additional
releases from Special Purpose Funds (SPFs);
2. Automatic appropriations for Retirement and Life Insurance Premiums (RLIP),
Special Accounts in the General Fund (SAGFs) and other items classified as such;
3. Continuing Appropriations, i.e., allotments chargeable against unreleased
appropriations for MOOE and CO in the prior year’s GAA.

Budgetary accounts consist of the following:

1. Appropriation – an authorization made by law or other legislative enactment,
directing payment of goods and services out of government funds under specific
conditions or for special purpose.
2. Allotment – an authorization issued by DBM to the government agency, which
allows it to incur obligations, for specified amounts within the legislative
appropriation.
3. Obligation – a commitment by a government agency arising from an act of dulu
authorized official which binds the government to the immediate or eventual
payment of a sum of money.

Fund Release Documents

1. Obligational Authority or Allotment

a. General Appropriation Act release Document (GAARD). This serves as the
obligational authority for the comprehensive release of budgetary items
appropriated in the GAA, categorized as For Comprehensive Release (FCR)
b. Special Allotment Release Order (SARO). This covers budgetary items For Later
Release (FLR) in the entity submitted Budget Execution Documents (BEDs), subject to
compliance of required documents/clearances.
c. General Allotment Release Order (GARO). This 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.

2. Disbursement Authority. The following documents authorize the entity to pay

obligations and payables:
a. Notice of Cash allocation (NCA). This is the authority issued by the DBM to central,
regional, and provincial offices and operating units to pay through the issuance of
Modified Disbursement System (MDS) checks, Authority to Debit Account (ADA) or
other modes of disbursements.
 b. Non-Cash Availment Authority (NCAA). This is the authority issued by the DBM to
agencies to cover the liquidation of their actual obligations incurred against available
allotments for availment or proceeds from loans/grants through supplier’s
credit/constructive cash.
c. Cash Disbursement Ceiling (CDC). This is the authority issued by the 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.
d. Notice of Transfer of Allocation (NTA). This is the authority issued by the Central
Office to its regional and operating units to pay through the issuance of MDS checks,
ADA or other modes of disbursements.

General Guidelines in the Release of Funds

Upon the GAA’s effective date, which determines the level of allotment releases for a
given fiscal year, is composed of the following:
1. Obligations incurred
2. Obligations authorized as overdraft
3. Special allotment release order (SAROs) issued from the beginning of current fiscal year
to the effectivity date of the Current Appropriations Act
4. Releases from the unprogrammed fund (UF). Allotment releases from the multi-user
Special Purpose Funds (SPFs) such as Calamity Fund, Contingent Fund etc.

Guidelines in the Release of Disbursement Authorities

1. Release of Notice of Cash allocation (NCA)

The National Budget Circular provides that an initial comprehensive NCA shall be
issued directly to the Operating Units (OUs) covering the first semester requirement
(January-June) chargeable against the current year budget.

Succeeding comprehensive CAN shall be issued to cover the 2 ndsemester

requirements for regular budget shall be subject to the submission of financial
Accountability Reports (FARs)/ Budget Accountability Reports (BARs) as of end of June
30.

2. Release of Non-Cash Availment Authority (NCAA).

 Departments/Agencies/Operating Units availing of foreign loan proceeds
through direct payment chargeable against availment allotment, shall submit a request
for the issuance of NCAA

3. Release of Cash Disbursement Ceiling (CDC). Non issuance of CDCs for actual utilization
of retained income by Foreign Service Posts (FSPs) results to unreconciled accounts
between Bureau of Treasury and agency accounts.

4. Release of Notice of Transfer of Allocation (NTA). Similar with NCA, no MDS check/ADA
shall be issued by the Regional Offices/Operating Units without the covering NTA.
Hence, the total MDS checks issued shall not exceed the total NTA received. It shall be
monitored through the maintenance of the Registry of Allotment and Notice of Transfer
of Allocation (RANTA).

Lesson 3. Self-Activity

Answer the following:

1. Discuss the relationship between and among the budgetary accounts.

2. What is the remedy instituted by the national government if the National Budget is
not approved in time for the budget year? Explain.
Lesson 4. Reporting System

Reporting Requirements

Budget Execution Documents (BEDs)

1. BED No. 1: Financial Plan (FP). This document shall include the comparative
obligation levels for the budget year and the current year, such as: the targeted
commitments/obligations per National Expenditure Program (NEP) for the budget
year broken down by quarter; and the actual obligations for the remaining quarter
( October 1 to December 31).

2. BED No. 2: Physical Plan (PP). This document shall consist the performance
indicators and targets of department/agency, such as:
 For Operations, the performance indicators by Major Final Outputs
(MFOs)
 For Major Programs and Projects committed to the President and
closely monitored by the Presidential Management Staff
 For other projects, consider those milestones indicated in the
approved project profile.

3. BED No. 3 : Monthly Disbursement Program (MDP). This shall be used by DBM as
basis for determining the monthly level of NCAs/other disbursement authorities to
be used by national government agencies. It shall reflect the total cash and non-cash
program for the budget year by type of fund category, by allotment class and by
type of disbursement authority such as:
 Notice of Cash Allocation (NCA) for cash disbursements of the national
government agencies
 Cash Disbursement Ceiling (CDC) for authorized disbursements charged
against income collected by Foreign Posts of DFA and DOLE
  Non Cash Availment Authority (NCAA) for the cost and services paid
directly by lending institutions to creditors of NGA/GCOCCs implementing
a foreign assisted project
 Tax Remittance Advice (TRA) for the remittance of withheld taxes
computed or estimated as follows: For Personnel Services (PS) 8%, and
for Maintenance and Other Operating Expenses (MOOE) and Capital
Outlay (CO) 5%
 Others for tax expenditures, such as: Custom Duties and taxes, BTr
Documentary Stamps, etc.

4. BED No. 4: Annual Procurement Plan for Common-Use Supplies and Equipment
(APP-CSE). This shall reflect the monthly quantity and cash requirements by items.
The quarterly cash requirements as reflected in the APP-CSE shall serve as guide of
the agency for payment of purchase made.

Budget and Financial Accountability Reports (BFARs)

According to COA and DBM Joint Circular No. 2014-1, Guideline Prescribing the Use of
Modified Formats of the Budget and Financial Accountability Reports (BFARs), dated July 2,
2014, the following reports/documents are required for submission to the DBM and COA:

1. Quarterly Physical Report of Operation (QPRO)- BAR No. 1. This report shall report the
department’s/agency’s actual physical accomplishments as of a given quarter in terms
of performance measures indicated in its Physical Plan in BED No. 2. This shall be
submitted to COA and DBM within 30 days after the end of each quarter.

2. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances

(SAAODB) – FAR No. 1. This report shall reflect the authorized appropriations and
adjustments, total allotments received including transfers/ adjustments, total
obligations, total disbursements and the balances of unreleased appropriations,
unobligated allotments and unpaid obligations of an agency.

3. Summary of Appropriations, Allotments, Obligations, Disbursements and Balances by

Object Expenditures (SAAODBOE) – FAR No. 1-A. This report shall be prepared by Fund
Cluster and shall reflect the summary of appropriations, allotments, obligations,
disbursements and balances detailed by object of expenditure.
 4. List of Allotments and Sub-Allotments (LASA) – FAR No. 1-B. This report shall reflect
the allotments released by the DBM and the sub-allotments issued by the Agency
Central Office (ACO)/Regional Office (RO).

5. Statement of Approved Budget, Utilization, Disbursements and balances (SABUDB) –

FAR No. 2 (for Off-Budget fund). This report shall reflect the approved budget, reflect
utilization, disbursements and balances of the agency authorized by law to use their
income.

6. Summary of Approved Budget, Utilizations, Disbursements and Balances by Object of

Expenditures (SABUDBOE) – FAR No. 2-A (for Off-Budget Fund).

7. Aging of Due and Demandable Obligations (ADDO)-FAR No. 3. This report shall reflect
the balance of unpaid obligations as indicated in the Obligation Request and the aging of
due and demandable obligations as of year end.

8. Monthly Report of Disbursement (MRD)-FAR No. 4 This report shall track the actual
disbursement of the departments/agencies against their Disbursement Program, and
the reason for over or under spending shall be indicated.

9. Quarterly Report of Revenue and Other Receipts (QRROR)- FAR No. 5. This shall reflect
the actual revenue and other receipts of the agency for the current year.

Validity of Appropriations

Per National Budget Circular, the authorized appropriations shall be available for release and
obligation for the specified purposes as follows:

 Personnel Services (PS) until the end of the current year

 Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO) until end
of the following year
 Continuing Appropriation of the previous year MOOE and CO under RA 10633 until end
of the current year
 Supplemental Budget for MOOE and CO appropriation under RA 10652 until the end of
the current year.
 All programmed Automatic Appropriations for PS, MOOE, and CO shall be available for
release and obligation up to the end of the current year only.
Tax Remittance Advice

Pursuant to the Tax Remittance Advice (TRA) System, as provided for in Joint Circular No. 1-
2000 dated January 3, 2000, as amended by JC No. 1-2MOA dated July 31, 2001 of the
Department of Finance, the Department of Budget and Management and the Commission on
Audit, the Notice of Cash Allocation (NCA) released to the government agency is reduced by the
amount of the estimated taxes expected to be remitted by the agency through the Tax
Remittance Advice.

Conduct of the Agency Performance Review

Consistent with performance-based budgeting, a quarterly evaluation of the agency

performance shall be conducted by DBM by comparing agency plans and targets per BEDs vis-à-
vis actual accomplishments reflected in its BFARs

Common Fund System

The common fund system policy (for use of personnel services, maintenance and other
operating expenses, capital outlays and financial expenses without realignment) shall continue
to be used.

Registry of Appropriations and Allotments (RAPAL)

The Registry of Appropriations and Allotments shall be maintained by National Government

Agencies 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 Registry of Appropriations and Allotments contains the following information:

 Total appropriations- the sum of the appropriations per allotment class, such as:
Personnel Services (PS), Maintenance and Other Operating Expenses (MOOE), Financial
Expenses (FE) and Capital Outlay (CO)
 Total Adjustment/s on Appropriations- the amount of adjustments on the
appropriations, per allotment class, like realignment, transfer (to and from)
withdrawals, and other adjustments based on SARO, and other authorities.
 Total Adjusted Appropriations- the sum of the adjusted appropriations per allotment
class
 Total Allotments- The sum of allotments received per allotment class
  Total Adjustments on Allotments- the sum of the adjustments on allotments per
allotment class
 Total Adjusted Allotments- the sum of the adjusted allotments per allotment class
 Unreleased Appropriations- the running balance of appropriations or the unalloted
appropriation balance per allotment class. (Adjusted appropriation less adjusted
allotment)
Registry of Allotments and Notice of Cash Allocation

The RANCA shall be maintained by the Accounting Division/Unit to determine the amount
of allotments not covered by NCA and to monitor available NCA.

This form shall be accomplished as follows:

 Fund Cluster –name/code in accordance with the UACS in which the allotments and
NCA are attributable to.
 Date – date of the reference document
 Reference – such as: GAARD/SARO/GARO/NCA/JEV/DV/Payroll number
 Allotment Received – amount of allotment received per GAARD/SARO/GARO
 NCA Received- amountNCA received
 Balance Unutilized NCA- running balance of unutilized NCA
 Balance Allotment – running balance of allotment not covered by NCA

Obligation Request and Status (ORS)

The incurrence of obligation shall be made through the issuance of ORS. A subsidiary record to
monitor a particular obligation shall be maintained by the Budget Division/Unit. It shall contain
the original amount of obligation, payable, and the actual amount paid. Adjustment of
obligation incurred after the processing of the claim shall be made through the use of Notice of
Obligation Request and Status Adjustment (NORSA).

Registry of Allotments, Obligations, and Disbursement

The Registries of Allotments, Obligations and Disbursements (RAOD) shall be maintained by the
Budget Division/Unit of agencies to record allotments received for the year, obligations
incurred against the corresponding allotment, and actual disbursements made. The balance is
extracted every time an entry is made to prevent incurrence of obligations incurred.

To accomplish the above RAODS for different allotment class (PS, MOOE, CO), note the
following information:
  UACS Object Code/Expenditures – this is the object code based on the UACS
 Obligations – the amount of obligation incurred based on the approved ORS and
adjustments based on NORSA supported by pertinent documents.
 Unobligated Allotments – the balance of available allotment that can still be obligated
 Disbursements – the actual amounts paid based on Report of Checks Issued (RCI)/
Report of Authority to Debit Account Issued (RADAI)/Tax Remittance Advice
(TRA)/Journal Entry Voucher (JEV)
 Unpaid Obligations-Due and Demandable – the balance of obligation for services
rendered but not yet paid. (Payable less disbursement)
 Unpaid Obligations-Not Yet Due and Demandable – the amount of obligations without
services rendered.

Lesson 4. Self-Activity

Answer the following:

1. What are the different Budget and Financial Accountability Reports? Briefly
describe the purpose each report serves.

2. Describe in 3 sentences the policy on common fund system.