MPA Quiz No. 3

FRANKLIN G.
PEÑANO
MPA
Public Finance & Fiscal Administration & Revenue Management
Quiz No. 3: State Budgeting
Differentiate the major process involved in National Government Budgeting versus the
Local Budgeting. Draw the graphical difference of the budget cycle.
There are FOUR (4) Phases in Managing the National Budget:
1. BUDGET PREPARTION
2. BUDGET LEGISLATION
3. BUDGET EXECUTION
4. BUDGET ACCOUNTABILITY
During the Preparation Phase, the Executive prepares the proposed National Budget. This
is followed by the Legislation Phase where the Congress authorize the General
Appropriations Act. In the Execution Phase, agencies utilize their approved budgets and
during the Accountability Phase the Executive Phase, Agencies utilized their approved,
the executive monitor and evaluate the use of the budget.
BUDGET
PREPARATION
(DBCC, agencies)
BUDGET BUDGET
ACCOUNTABILITY BUDGET APPROVAL
PROCESS
(agencies, COA) (Congress)
(DBCC,
BUDGET
agencies)
EXECUTION
(agencies)
There are Five (5) Phases in managing the Local Budget: (These phases are interrelated
and sequential, as can be seen from Figure below:
1. BUDGET PREPARTION
2. BUDGET AUTHORIZATION
3. BUDGET REVIEW
4. BUDGET EXECUTION
5. BUDGET ACCOUNTABILITY
ACCOUNTABILITY PREPARATION
EXECUTION AUTHORIZATION
REVIEW
1. 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.
2. Budget Authorization is the second phase in the local budget process. 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).
3. 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.
4. 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.
5. 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
Among the different types of budgeting, i.e., line item, performance, program, zero-
based, BUB, what do you think is the most appropriate type the Philippine government
shall adapt. Justify by explaining the difference then conclude.
The Philippine experience in applying various approaches to budgeting has been

described, these were adopted from approaches developed in the united states -
starting with the line item budget, then the performance budget, on to the PPBS, and
ZBB.
Presently, the Philippine government at the agency level, we are actually subjected to
all these approaches.
- In budget preparation, we are enjoined to use ZBB
- In budget authorization and accountability, it is performance budgeting which
sets the standards.
- In actual implementation, it is still the good old line-item budget.
Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be

justified for each new period. Program budgeting is a method of allocating budgets for
a specific program or event. The event can be a commercial project or a non-
commercial event. In comparison, Performance-based budgeting is the practice of
developing budgets based on the relationship between program funding levels and
expected results from that program. A line-item budget is a form of budget presentation
that clusters proposed expenses by department or cost center. This aggregation method
more easily shows which departments and cost centers are absorbing the bulk of an
entity's funds.
I believe performance budgeting is the most excellent option for the Philippine
government. For each unit of an organization, the performance budget represents both
the intake of resources and the output of services. Government groups and agencies
frequently utilize this budget to show the relationship between public funding and the
outcomes of services delivered by federal, state, and municipal governments. Budget
planning may be made more transparent using performance-based budgeting.

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FRANKLIN G.

Public Finance & Fiscal Administration & Revenue Management

Quiz No. 3: State Budgeting

There are FOUR (4) Phases in Managing the National Budget:

The Philippine experience in applying various approaches to budgeting has been

Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be

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