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UNIFIED ACCOUNTS CODE STRUCTURES

According to Joint Circular No. 2013-1 dated August 6, 2013, the Department of Budget
and Management (DBM), Commission on Audit (COA), Department of Finance (DOF),
and Bureau of the Treasury (BTr) jointly developed the Unified Accounts Code
Structure (UACS), a government wide coding framework, to provide a harmonized
budgetary and accounting code classification that will facilitate the efficient and
accurate financial reporting of actual revenue collections and expenditures compared
with programmed revenues and expenditures, respectively, starting Fiscal Year (FY)
2014.

On November 7, 2014, through Joint Circular No. 2014-1, the UACS per Joint Circular
No. 2013-1 dated August 6, 2013 was enhanced amending the Funding Source Code and
MFO/PAP Code.

The UACS is a government-wide harmonized budgetary, treasury and accounting code

classification framework jointly developed by the DBM, the COA, the DOF and the BTr
to facilitate reporting of all financial transactions of agencies including those for
revenue generation. The UACS provides a framework for identifying, aggregating and
reporting financial transactions in budget preparation, execution, accounting and
auditing. The UACS will be used by all departments and agencies of the National
Government and Government-Owned and/or Controlled Corporations with Budgetary
Support from National Government including those maintaining Special Accounts in
the General Fund. When this object coding is combined with budget classification
coding for funding source, organization, location and program, this framework
collectively provides the harmonized budgetary and accounting classification codes
known as the UACS.

The key purpose of the UACS is to enable the timely and accurate reporting of actual
revenue collections and expenditures against budgeted programmed revenues and
expenditures.

Reporting requirements that will be best served by the UACS include:

1. Financial reports as required by the Department of Budget and Management
(DBM) and the Commission on Audit (COA);
2. Financial Statements as required by the Public Sector Accounting Standards
Board of the Philippines;
3. Management reports as required by the executive officials/heads of departments
and agencies; and
4. Economic statistics consistent with the Government Finance Statistics (GFS)
Manual 2001.

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KEY ELEMENTS OF UACS

Fund Source Organization Location MFO/PAP Object

1. Financing Source Code (8 digits) - consists of financial resources of the government

set aside for specific purposes to finance specific programs and projects of the
government. This includes General Fund, Off-Budgetary Funds (Retained
Income/Receipts and Revolving Funds) and Custodial Funds (Trust Receipts). It is
composed of the following:

Fund Cluster 2-digit code

Financing Source 1-digit code
Authorization Code 2-digit code
Fund Category 3-digit code

 Fund Cluster is an aggregation of Funding Sources for the purpose of recording

transactions and preparing report in the Budget, Treasury and Accounting
processes [See discussion of Fund Accounting in Chapter 1].

Fund Cluster Description UACS Code

Regular Agency Fund 01
Foreign Assisted Projects Fund 02
Special Account-Locally Funded/Domestic Grants Fund 03
Special Account-Foreign Assisted/Foreign Grants Fund 04
Internally Generated Funds 05
Business Related Funds 06
Trust Receipts 07

 Financing Source indicates the basis of funds to which the expenditures shall be
charged, identifying whether the source is within or outside the General Fund.

Financing Source Description UACS Code

General Funds 1
Off-Budgetary Funds 2
Custodial Funds 3
o General Funds are funds available for any purpose that Congress may choose
to apply, and is composed of all receipts or revenues that do not otherwise
accrue to other funds.

o Off-Budgetary Funds refer to receipts for expenditure items that are not part
of the National Expenditure Program, and which are authorized for
depositing in government financial institutions. These are categorized into:
Retained Income/Receipts, and Revolving Funds.

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o Custodial Funds refer to receipts or cash received by any government

agency—whether from a private source or another government agency—to
fulfill a specific purpose. Custodial receipts include receipts collected as an
agent for another entity. These include trust receipts—both from an
individual or corporation—that are required to be held by government until
the outcome of a court’s case or procurement activity is determined, as well
as cases where a department or agency holds receipts as a trustee for the
fulfillment of some obligations.

 Authorization Code provides the legal basis of the appropriation or funds.

Authorization Description Parent UACS Code UACS Code

New General Appropriations General Funds 01
Continuing Appropriations General Funds 02
Automatic Appropriations General Funds 03
Unprogrammed Funds General Funds 04
Retained Income/Funds Off-Budgetary Funds 05
Revolving Funds Off-Budgetary Funds 06
Trust Receipts Custodial Funds 07

o New General Appropriations are annual authorizations for incurring

obligations during a specified budget year, as listed in the General
Appropriations Act (GAA). The GAA is the legislative authorization that
identifies new appropriations in terms of specific amounts for salaries, wages
and other personnel benefits; Maintenance and Other Operating Expenses
(MOOE), Financial Expenses (FEx) and Capital Outlays (CO) for the
implementation of programs, projects and activities of all departments,
bureaus and offices of government for a given year.

o Continuing Appropriations are authorizations to support obligations for a

specified purpose or project, even when these obligations are incurred
beyond the budget year. Because MOOE and CO appropriations in the GAA
are valid for two years, unobligated and unreleased appropriations for these
budget items are valid until the end of their second year and are classified as
Continuing Appropriations.

o Supplemental Appropriations are additional appropriations enacted by

Congress to augment original appropriations that have proven insufficient
for their intended purpose because of economic, political or social conditions.
Supplemental Appropriations must also be supported by a certification of
availability of funds by the BTr.

o Automatic Appropriations are authorizations made annually or for some

other period prescribed by law, by virtue of standing legislation, which do
not require periodic action by the Congress. These are automatically and
annually included in the National Expenditure Program of the National
Government. All expenditures for the (i) National Government share for the
Retirement and Life Insurance Premiums of government personnel and other
similar fixed expenditures; (ii) amortization of principal and interest on
public debt; and (iii) National Government guarantees of obligations which
are drawn upon are automatically appropriated as per Section 26, Chapter 4,
Book VI of Executive Order (E.O.) No. 292, the Administrative Code of 1987.

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o Unprogrammed Funds are standby appropriations for priority programs or

projects of the government. The utilization of Unprogrammed Funds may be
approved if any of the following conditions are met: (1) Revenue collections
for the year exceed targets; (2) New revenues not included in the original
revenue targets are successfully generated; or (3) Foreign loan proceeds are
generated for newly approved projects covered by perfected loan
agreements.

o Retained Income/Funds are collections that are authorized by law to be used

directly by agencies for their operation or specific purposes. These include
but are not limited to receipts from:
• State Universities and Colleges (SUCS) - tuition and matriculation fees
and other internally generated receipts
• Department of Health (DOH) - hospital income such as hospital fees;
medical, dental and laboratory fees; rent income derived from the use of
hospital equipment and facilities; proceeds from sale of hospital
therapeutic products, prosthetic appliances and other medical devices;
diagnostic examination fees; donations in cash from individuals or
nongovernment organizations satisfied with hospital services.

o Revolving Funds are receipts derived from business-type activities of

departments/agencies as authorized by law, and which are deposited in an
authorized government depository bank. These funds shall be self-
liquidating. All obligations and expenditures incurred because of these
businesstype activities shall be charged against the Revolving Fund.

o Trust Receipts are receipts that are officially in the possession of government
agencies or a public officer as trustee, agent, or administrator, or which have
been received for the fulfillment of a particular obligation.

 Fund Category identifies specific funds maintained by the agency for accounting
purposes, as well as for recording and reporting financial transactions.

Fund Category Description UACS Code

Specific Budgets of National Government Agencies 101-150
GoP Counterpart Funds and Loans/Grants from Development 151-250
Partners
Allocations to Local Government Units 251-275
Budgetary Support to Government Corporations 276-300
Financial Assistance to Metro Manila Development Authority 301-320
Special Accounts in the General Fund 321-400
Special Purpose Funds 401-420
Unprogrammed Funds 421-440
Retained Income/Funds 441-500
Revolving Funds 501-600
Trust Receipts 601-610
Others (Specify) 611-999

o Specific Budgets of National Government Agencies refer to the budgets

appropriated for a specific department or agency of the National
Government.

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o GoP Counterpart Funds and Loans/Grants from Development Partners

refer to Multilateral/Bilateral Assistance. The fund category code for
counterpart funds, loan proceeds and grant proceeds will be selected
according to the name of the institution providing. However, the
authorization code which precedes the fund category code will vary
depending on whether funds were loans or grants, as well as if they were
unprogrammed or included in the regular budget. Appropriated loan
proceeds will use authorization code 01, grant proceeds will use
authorization code 04 and unprogrammed loan proceeds will use
authorization code 05.

o Allocation to Local Government Units (ALGU) refers to the share of

Local Government Units (LGUs) from the revenue collections of the
National Government. The total ALGU is based on a sharing scheme
computed for each LGU, as provided for under the Local Government
Code and other special laws.

o Budgetary Support to Government Corporations (BSGC) refers to either

subsidies for operations or projects, equity contributions, and net lending
and/or advances to Government-Owned or Controlled Corporations
(GOCC) for loan repayments.

o Financial Assistance to Metropolitan Manila Development Authority

refers to national government subsidy in the form of regular
appropriations as provided in the GAA which shall only be used to
augment any deficiency in the consolidated funds of the MMDA to cover
valid and authorized expenditures.

o Special Account in the General Fund (SAGF) is a fund where proceeds

from specific revenue measures and grants earmarked by law for priority
projects are recorded. These sources are automatically appropriated.

o Special Purpose Funds (SPF) are lump-sum funds included in the GAA
which are not within the approved appropriations of
Departments/Agencies/Lower Level Operating Units, and which are
available for allocation to any Department/Agency/Lower Level
Operating Unit or Local Government Unit for a specific purpose, as may
be duly approved in accordance with special provisions on the use of
these funds.

2. Organization (12 codes) - is structured into three segments: 1.) Department, 2.)
Agency and 3.) Lower Level Operating Unit/Revenue Collecting Unit. This consists
of:

Department 2-digit code

Agency 3-digit code
Operating Unit Classification 2-digit code
Lower Level Operating Unit 5-digit code

 Department – the primary subdivision of the Executive Branch responsible for

the overall management of a sector or a permanent national concern with

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nationwide or international impact1. A department is headed by a Secretary or

an official with an equivalent position level. For purposes of the UACS,
Constitutional Offices, the Judiciary and the Legislature are categorized as
department-level entities. There are also department-level entities that are
likewise considered as operating units, as in the case of the Commission on
Audit, Commission on Human Rights and other similarly situated entities.

Moreover, a Department includes the summation of all the budgets of all its
attached agencies and sub-agencies, including the Office of the Secretary (Proper)
and lower-level operating units listed under it.

In addition to the regular departments (01-34), the Budgetary Support to

Government Corporations and Financial Assistance to Metropolitan Manila
Development Authority are assigned department codes 35 and 36, respectively.
The grouping of GOCCs by department shall be mapped in the system.

 Agency – refers to any of the various units of the government, including an

office, instrumentality or Government-Owned and/or Controlled Corporation
(GOCC) that may not approximate the size of a Department, but which
nevertheless performs tasks that are equally important and whose area of
concern is nationwide in scope (e.g., Other Executive Offices [OEOs]). For
purposes of the UACS, an agency is an entity under a department whose budget
is directly released to the latter, and may include the summation of all budgets of
sub-agencies listed under it, if any.

There are also agency-level entities which are operating units themselves, as is
the case of agencies under Other Executive Offices, e.g., Film Development
Council of the Philippines, Presidential Management Staff and the like.

 Operating Units – organizational entities charged with carrying out specific

substantive functions or with directly implementing programs/projects of a
department or agency, such as line bureaus and field units. For the purposes of
the UACS, these are organizational units under a Department or an Agency
which may be: (1) directly receiving budgets from DBM, including SUCs; (2)
recipients of fund transfers from higher level OUs; and/or (3) authorized to
collect revenues.

3. Location Code (9 digits) - To facilitate central agency analysis across the National
Government, location coding should first enable the analysis of data by region, and
then by province, municipality/city and barangay. The coding structure here relies
upon the codes used by the National Statistical Coordination Board (NSCB) only
[now Philippine Statistics Authority]. This consists of:

Region 2-digit code

Province 2-digit code
Municipality/City 2-digit code
Barangay 3-digit code

 Region Code. This is a two-digit code that identifies a specific region. It ranges
from 01 to 99. Generally, the Region Code corresponds to the region number
(e.g., Region Code 01 refers to Region 1, 02 refers to Region 2, etc.)

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 Province Code. This is a two-digit code that identifies the province. It ranges
from 01 to 99, generally defining the relative alphabetic sequence of all provinces
in the country, except those created after 1977, which were added to the list
following the updating procedures. A Province Code is independent of the
Region Code. This means that even if a province is transferred to another region,
its Province Code remains the same.

 Municipality Code. This is a two-digit code that generally defines the relative
alphabetical sequence of municipalities within the province. It ranges from 01 to
99. Therefore, Municipality Code 01 is assigned to the first municipality in the
alphabetical sequence within that province. The Municipality Code is used to
identify the municipalities, cities or municipal districts in a particular province,
and is dependent upon the Province Code to fully establish the identity of
municipality. In the case of the first regional district (City of Manila) of
Metropolitan Manila Area (National Capital Region), the fourteen city districts of
the City of Manila are treated as municipalities.

 Barangay Code. This is a three-digit code which generally defines the relative
alphabetical sequence of the barangays within the municipality. The code ranges
from 001 to 999. Barangay Code 010 means it is the 10th barangay in alphabetical
sequence within that municipality. The Barangay Code is dependent upon the
Municipality Identifier to fully establish the identity of a given barangay.

4. MFO/PAP Code (15 digits) – This consists of:

Sector/horizontal outcomes 5-digit code

program/project 1-digit code
MFO/Project Category 2-digit code
Activity Level 1/ Project Sub-category 2-digit code
Activity Level 2/Project Title 5-digit code

 Major Final Output (MFO) is defined as a good or service that a department or

agency is mandated to deliver to external clients through the implementation of
programs, activities and projects. MFOs should be within the department or
agency’s control and be measurable, manageable and auditable. Examples of
MFOs include regulatory services, health services, education services and
agricultural support services.

 Program is an integrated group of activities that contributes to an agency or

department’s continuing objective. Examples include General Administration
and Support, Support to Operations, and Operations.

 Activity is defined as a work process that contributes to the fulfillment of a

program or project. Each activity shall be attributed to only one MFO. Activities
are to be assigned to General Administration and Support, or Support to
Operations if they benefit internal clients. On the other hand, an activity that
benefits external clients shall be attributed to an MFO.

 Projects are special department/agency undertakings carried out within a

definite timeframe, and which are designed to produce a pre-determined
measure of goods or services (MFOs). A project is considered an investment
toward expanding the capacity of a department/agency to deliver MFOs.

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5. Object Code (10 digits) – provides information on the object code classification for
Assets, Liabilities, Equity, Income and Expense accounts. The object classification
covers all financial transactions of the government such as, but not limited to, goods
or services acquired, transfer payments made, the source of revenue or the cause of
increases or decreases in assets and liabilities. This consists of:

Revised Chart of Accounts 8-digit code

Sub-object Code 2-digit code

The object information provides a method for classifying and coding transactions to
enable the reporting of information (including the impact of government revenues
and expenditures on the economy) as well as the nature and standard classification
of transactions for internal departmental analysis, as well as for decision-making
purposes of oversight agencies.

In addition, the object coding in the information system provides a repository of

government-wide information, which can be used by oversight agencies without
requiring departments and agencies to respond to individual requests.

The basis for coding the object classification in the COA Revised Chart of Accounts
is accrual accounting, which requires transactions to be recorded in the period when
they occur (and not only 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. The elements
recognized under accrual accounting are assets, liabilities, equity, income and
expenses.

*For illustration, refer to the powerpoint presentation of UACS*

ACCOUNTING FOR BUDGETARY ACCOUNTS

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

The aforecited lays down the legal bedrock for government accounting, particularly for
budgetary accounts. It simply 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
will be spent.

Accordingly, it may be said that accounting for budgetary accounts formally

commences upon enactment of the General Appropriations Act (GAA), which contains
the legal authorization to use public money for the various programs, activities and
projects of the national government. The approved appropriations are, in turn, the
bases of the Department of Budget and Management (DBM) for issuing allotments or
the authority of government agencies to incur obligations or enter into commitments to
spend government funds. The level of allotments, on the other hand, defines the
amount of cash allocations which shall be released by the DBM.

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

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the government’s estimate of the sources and uses of government funds within a fiscal
year. This forms the basis for expenditures and is the government’s key instrument for
promoting its socio-economic objectives.

The DBM has sought to ensure that public resources are managed more efficiently and
with the degree of discipline. Thus, in the preparation of prosed National Budget
starting FY 2014, the DBM has pushed for the adoption of a new approach to budgeting.
Through National Budget Memorandum (NBM) No. 117, the DBM has introduced
Performance-informed budgeting (PIB) which require the following:

 National Expenditure Plan and the General Appropriations Act beginning in FY

2014
 GAA will present non-financial performance information together with the allocated
resources for different programs, activities and projects (PAPs)
 PAPs will be grouped according to the Major Final Output (MFO) that the NGAs
seek to achieve
 The budget that goes into a particular PAP is linked directly to the output it intends
to achieve

Performance-Informed Budgeting (PIB)

It is a budgeting approach that uses performance 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 output and/or services
4. The cost of the programs and activities proposed to achieve the objectives

Performance information can be used as a signalling device. Low performance or a

decline in performance can serve as an alarm to consider a closer look in determining
the cause. According to the Organisation for Economic Cooperation and Development
(OECD), the most common response to low performance is holding constant level of
future funding and/or subjecting future allocations conditional to improve in
conditions related to performance.

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

Performance-informed budgeting differs from the traditional line item-based budgeting

in a way that it focuses more on outputs and outcomes and places less emphasis on the
inputs. It links funding to results, and provides a framework for more informed
resource allocation and management. This new face of the National Budget will no
longer contain an excessively detailed line item document, but a budget that presents
performance information aligned to planned resources that promises to be
understandable and accessible to the people because of its simplicity.

Accordingly, the new General Appropriation Act (GAA) will present non-performance
information together with the allocated resources for the different Programs, Activities,
and Projects (PAPs), which were used by the DBM to evaluate department and agency

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proposals during the budget preparation process. Instead of being immediately

confronted with line-item, PAPs will be grouped according to Major Final Outputs
(MFOs) that the department/agencies seek to achieve. In this way, the budget that goes
into a particular PAP is linked directly to the output it intends to achieve.

Thus, PIB is an integral process whereby agency performance information, i.e., MFOs
and their corresponding performance indicators under the Organizational Performance
Indicator Framework (OPIF) is presented hand-in-hand with the agency budget to
ensure that the outputs and outcomes an agency is committing to deliver in exchange
for its budget are clear to the public and the legislators.

Program Expenditure Classification-Based Performance-Informed Budgeting (PREXC-PIB)

The government continues to explore measures that would improve accountability and
integrity in the use of public resources by ensuring transparency, fiscal responsibility,
results-orientation, efficiency, and effectiveness. To strengthen the integration of
planning, budgeting, and performance management, the government will continue to
use performance information as one of the bases to inform resource allocation and
management through the Performance-Informed Budgeting (PIB).

Program Expenditure Classification (PREXC) is a form of structuring the budget into

programs and outcomes. In comparison to the MFO-based budget, classifying
expenditures by program has two benefits: (1) clarifying the objectives of government
spending and the programs and strategies used by the agencies to accomplish them;
and (2) allowing the monitoring of operational performance through performance
indicators, which may relate to the inputs, outputs, or outcomes of a particular program
providing a way to assess the success of the program and make adjustments during
implementation, if necessary. An expenditure classification by program will contribute
to improved transparency and accountability, and help better link inputs to objectives
or outcomes.

The Proposed National Budget, starting in fiscal year 2018 onwards, will also adopt a
budget structure based on a program expenditure classification (PREXC) per National
Budget Circular No. 569 dated February 8, 2017. Recurring activities and projects, that
contribute to a common particular organizational objective or outcome shall be grouped
into a program under that outcome. The PREXC will replace Major Final Outputs
(MFOs) as the means of structuring the National Budget.

Adopting a PREXC-based PIB (PREXC-PIB) therefore, aims to facilitate the evaluation

of the impact of agency strategies or interventions and provide better information for
planning, prioritization, and the organizational management of agencies.

KINDS OF BUDGET
As to nature
 Annual Budget – a budget to which covers a period of one year. It is the basis of
an annual appropriation
 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
 Special Budget – a budget of special nature and generally submitted in special
forms on account that itemizations are not adequately provided in the
Appropriation Act or that amounts are not at all included in the Appropriation
Act

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As to Basis
 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
 Line-Item Budget – a budget of which is the object of expenditures such as:
salaries and wages, travelling expenses, freight, supplies and materials,
equipment

As to Approach and Technique

 Zero-based Budgeting – a process which requires systematic consideration of all
PAPs with the use of define ranking procedures.
 Incremental Approach – a budget where only additional requirements need
justifications. It focuses analysis of incremental changes in the budget and
maybe done within the context of performance and program budgeting
 Program-based budgeting structure through Program Expenditure
Classification (PREXC) approach – restructures an agency’s budget to group all
recurring activities as well as projects under appropriate programs or key
strategies replacing the alignment by MFO. Activities and Projects that
contribute to the same outcome are part of the same Program. A large program
may be broken down to sub-programs.
 Program Convergence Budgeting – a budgeting approach to facilitate and
incentivize coordination between agencies on priority inter-Agency programs.
The lead Agency for each program has the responsibility to ensure collaboration
and coordination among all the agencies participating in the program.
 Bottom-Up Budgeting – institutionalizes people’s participation in the budget
process to gain a better understanding of their needs and requirements and
ensure that these are met.
 Two-Tier Budgeting Approach (2TBA) - separates discussion and deliberation
about existing activities and projects from consideration of entirely new
spending proposals, including proposals for the expansion of existing activities.
Tier 1 (Cabinet-approved Department/Agency ceiling) + Tier 2 (New Spending
Proposal = NEP (total President’s Budget Proposal to Congress).

As to Basis Appropriation [implementation]

 Annual cash-based budgeting – limit incurring obligations and disbursing
payments for goods delivered and services rendered, inspected, and accepted
within the fiscal year. Payments for contractual obligations delivered until the
end of the fiscal year may be settled until the end of the Extended Payment
Period (EPP) - the three-month period following the end of the fiscal year
 Obligation-based budgeting – gives the rights to make commitments, without
pre-determined time limit. Contracts awarded within the fiscal year can be
delivered even after the end of the year. Inspection, verification, and payment is
done within and beyond the end of the fiscal year.

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THE BUDGET CYCLE

The budget cycle presents four phases:
1. Budget Preparation
2. Budget Legislation
3. Budget Execution
4. Budget Accountability

These four phases of the budget cycle

overlap in continuing cycles every
year. For instance, while the
Executive implements the budget for
the current year, it also prepares the
budget for the next fiscal year or
defends it before Congress.
Meanwhile, the execution and
accountability phases are
implemented simultaneously year-
round.

BUDGET PREPARATION – 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 as basis for the preparation of the annual
Appropriation Act.

1. Budget Call
 Begins with issuance of “budget call” by the DBM
 contains parameters (including macroeconomic and fiscal targets and agency
budget ceilings) as set beforehand by the Department Budget Coordination
Committee and policy guidelines and procedures in the preparation and
submission of agency budget proposals
o 2020 – NB Memorandum No. 131
o 2021 – NB Memorandum No. 133
o 2022 – NB Memorandum No. 138

2. Budget Hearings
 After submitting their respective Agency Budget Proposals to the DBM, the
NGAs defend their proposed budgets before the technical panel of DBM
which:
o will review the agency proposals;
o prepare recommendations based on performance indicators on output
targets and absorptive capacity; and
o present before an Executive Review Board composed of DBM Secretary
and senior officials
 DBM consolidates the recommended agency budgets and recommendations
into a National Expenditure Program and a Budget of Expenditures and
Source of Financing

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3. Presentation to the Office of the President

 Proposed budget is presented by DBM, together with the DBCC, to the
President for further refinements or reprioritization.
 After the President and Cabinet approve the proposed NEP, the DBM
prepares and finalizes the budget documents to be submitted to the Congress.

4. President’s Budget
The budget preparation phase ends with the submission of the proposed national
budget – the President’s Budget to the Congress. It consists of:
 President’s Budget Message – where the President explains the policy
framework and priorities in the budget
 Budget of Expenditures and Sources of Financing (BESF) – mandated by the
Constitution which contains the macroeconomic assumptions, public sector
context (including overviews of LGU and GOCC financial positions),
breakdown of the expenditures and funding sources for the fiscal year and
the two previous years.
 National Expenditure Program (NEP) – details of spending for each
department and agency by PAPs and submitted in the form of a proposed
GAA
 Details of Selected Programs and Projects – detailed disaggregation of key
PAPs in the NEP, especially those in the line with national government’s
development plan
 Staffing summary – summary of the staffing complement of each department
and agency, including number of positions and amounts allocated for the
same.

BUDGET LEGISLATION – the second phase of the budget process relative to the
enactment of the General Appropriation Bill based on the budget of receipts and
expenditures, generally, submitted by the President of the Philippines within 30 days
from the opening of its regular session, as the basis of the general appropriation bill.
However, the submission of the President’s Budget is a day after the State of the Nation
Address. This is to ensure that the National Budget is enacted on time. This phase
starts upon the receipt of the President’s Budget by the House Speaker and ends with
the President’s enactment of the General Appropriation Act.

1. House Deliberations – crafting of General Appropriation Bill in the House of

Representative
 HoR, in plenary, assigns the President’s budget to the House Appropriations
Committee, which conduct hearing and scrutinize their respective programs
and projects. [First reading]
 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

2. Senate Deliberations – committee hearings and plenary deliberations on the

GAB at Senate
 The Senate Finance Committee and Sub-Committees usually start hearing on
the GAB even as House deliberations are on-going
 The Committee submits its proposed amendments to the GAB to plenary

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only after it has been formally transmitted by the HoR

3. Bicameral Deliberations – discussion and harmonization of provisions of the

HoR and Senate
 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.

4. President’s Enactment – General Appropriations Act is enacted into law

 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.
o Republic Act No. 11465 – General Appropriations Act for FY 2020
o Republic Act No. 11518 - General Appropriations Act for FY 2021
o Republic Act No. 11520 – Extension of availability of 2020 GAA to
December 31, 2021
o President’s Veto Message on FY 2021 GAA dated December 28, 2020
 The approved budget/ Appropriations consist of the following:
o General Appropriation Law – covers most of the expenditures of the
government
o Supplemental Appropriations Laws –are passed from time to time, to
augment or correct and already existing appropriations
o Automatic Appropriations – intended for fixed and specific purposes

BUDGET EXECUTION – third phase of the budget process covers the various
operational aspects of budgeting; thereby, making budgeting as one of the priciopal
tools of management control to ensure that public funds are spent only for the specific
purposes for which they are intended. It includes the development of the operating
budget, which indicates the program of work to be done or undertaken, the time within
which it should be done, the manpower and other resources needed to carry out the
work, and finally, the peso amounts required accomplishing the proposed programs.
Thus, budget execution and operation serve as the medium through which plans for
operation can be implemented using available resources and funds.

1. Issuance of guidelines on the release and utilization of funds by the DBM

 FY 2020 - NBC No. 578 dated January 6, 2020
 FY 2021 - NBC No. 583 dated January 4, 2021
2. Submission of Budget Execution Documents (BEDs) of NGAs
3. Allotment
4. Incurrence of Obligations
5. Disbursement Authority

*detailed discussion in Budgetary Accounts System*

BUDGET ACCOUNTABILITY – the budget process does not end when government
agencies spend public funds. Each and every peso must be accounted for to ensure that
is used properly, contributing to the achievement of socio-economic goals. This phase
happens alongside the Budget Execution phase. Through Budget Accountability, the
DBM monitors the efficiency of fund utilization, assesses agency performance and
provides a vital basis for reforms and new policies.

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 Budget Accountability Reports – submitted by agencies on a monthly and

quarterly basis that show how agencies used their funds and identify their
corresponding physical accomplishments.
 Performance Reviews –conducted quarterly or every semester as the case
maybe. Budget Performance Review is conducted to determine each agency’s
accomplishments and performance by the year-end.
 Audit – critical in ensuring accountability in the use of public funds

BUDGETARY ACCOUNTS SYSTEM

According to National Budget Circular (NBC) No. 583 dated January 4, 2021, the
Allotment Release Program of each NGA shall be an equal amount to the aggregate of
the following:
 Its Build-in Appropriation under the FY 2016 GAA
 The programmed level of its automatic appropriations, i.e., Retirement and Life
Insurance Premium (RLIP), Special Accounts in the General Fund (SAGF),
among others.

Budgetary Accounts
1. Appropriations – an authorization made by law or other legislative enactment,
directing payment of goods and services out of government’s funds under
specific conditions or for special purposes
 New General Appropriations – annual authorizations for incurring
obligations, as listed in the GAA.
 Continuing Appropriations – authorizations to support the incurrence of
obligations beyond the budget year (e.g., multi-year construction projects).
 Supplemental Appropriations – additional appropriations to augment the
original appropriations which proved to be insufficient.
 Automatic Appropriations – authorizations programmed annually which
do not require periodic action by Congress.
 Unprogrammed Funds – standby appropriations which may be availed
only upon the occurrence of certain instances.
 Retained Income/Funds – collections which the agencies can use directly
in their operations.
 Revolving Funds – receipts from business-type activities of agencies which
are authorized to be constituted as such. These are self-liquidating and all
obligations and expenditures incurred by virtue of said business-type
activity shall be charged against the fund.
 Trust Receipts – receipts by a government agency acting as agent.

2. Allotment – an authorization issued by the DBM to the government agency,

which allows it to incur obligations, for specified amounts, within the legislative
appropriations in the form of budget release documents. The fund release
documents are:
a. Obligatory Authority - documents authorize to incur obligations:
 General Appropriation Act Release Document (GAARD) – serves as the
obligational authority for the comprehensive release of budgetary items
appropriated in the GAA, categorized as For Comprehensive Release (FCR).
Majority of funds are comprehensively released to agencies as soon as the
budget is passed into law.
 Special Allotment Release Order (SARO) – covers budgetary items under For
Later Release (FLR) or negative list in the entity submitted BEDs subject to

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compliance of required documentations/ clearances.

 General Allotment Release Order (GARO) – 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.

b. Disbursement Authority – documents authorize to entity to pay obligations

and payables:
 Notice of Cash Allocation (NCA) – authority issued by the DBM to central,
regional and provincial offices and operating units to cover their cash
requirements. The NCA specifies the maximum amount of cash that can be
withdrawn from a government servicing bank in a certain period.
 Notice of Transfer of Allocation – authority issued by an agency’s Central
Office to its regional and operating units to cover the latter’s cash
requirements.
 Non-Cash Availment Authority – authority issued by the DBM to agencies to
cover the liquidation of their actual obligations incurred against available
allotments for availment of proceeds from loans/grants through supplier’s
credit/constructive cash.
 Cash Disbursement Ceiling – authority issued by the DBM to agencies with
foreign operations allowing them to use the income collected by their Foreign
Service Posts to cover their operating requirements.

3. Obligations – a commitment by a government agency arising from an act of duly

authorized official which binds the government to the immediate or eventual
payment of a sum of money.

REPORTING REQUIREMENTS
National Budget Circular No. 550 dated October 29, 2013 prescribes the submission of
Budget Execution Plans and Targets for 2014 and subsequent years. The DBM requires
NGAs to submit, on a regular basis, Budget Execution Documents (BEDs), which
contain the agencies’ targets and plans for a financial year, and Budget and Financial
Accountability Reports (BFARs), which contain information on the agencies’ actual
accomplishments and performance for a given period. Data from these reports are used
for monitoring and providing the necessary information to the President and fiscal
agencies for the purpose of crafting sound policy decisions.

Budget Execution Documents (BEDs)

NBC No. 555 dated October 8, 2014 prescribes the submission of Budget Execution
Plans and Targets for 2015. All departments/agencies/OUs are mandated to prepare
the BEDs based on the 2015 NEP, without waiting for the approval of the GAA, and
submit them to DBM not later November 30, 2014.

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Departments/agencies/OUs shall submit the following BEDs to DBM not later than
November 30, 2014 as follows:

BEDs Purpose
BED No. 1 Financial Plan (FP) Serves as the overall plan of the
BED No. 2 Physical Plan (PP) department/agency/OU.
BED No. 3 Monthly Disbursement Basis of the issuance of disbursement
Program (MDP) authorities
BED No. 4 Annual Procurement Plan  Basis of the PS in projecting inventory
for Common Use Supplies and requirements, scheduling of procurement
Equipment (APP-CSE) activities, and overall management of the
central procurement of common-use goods.
 Serves as Agency Procurement Request
(APR), subject to issuance of guidelines

The BEDs 1, 2, and 3 are to be accomplished and shall be submitted to DBM through the
Unified Reporting System (URS) which is already available starting October 1, 2014
while BED No. 4 which is an additional BED shall be prepared and submitted through
e-mail to DBM-PS and Philippine Government Electronic Procurement System
(PhilGEPS).

Budget and Financial Accountability Reports (BFARs)

The budget reports consist of the following Budget and Financial Accountability
Reports (COA-DBM-DOF Joint Circular No. 2013-1, as amended by COA and DBM
Joint Circular No. 2014-1 dated July 2, 2014):

 Quarterly Physical Report of Operation (QPRO) - Budget Accountability

Report (BAR) No. 1 (Appendix 16). This report shall reflect the
Department’s/Agency’s actual physical accomplishments as at a given quarter,
in terms of the performance measures indicated in its Physical Plan.

 Statement of Appropriations, Allotments, Obligations, Disbursements and

Balances (SAAODB) – Financial Accountability Report (FAR) No. 1 (SAAODB)
(Appendix 17). This report shall reflect the authorized appropriations and
adjustments, total allotments received including transfers, total obligations, total
disbursements and the balances of unreleased appropriations, unobligated
allotments, and unpaid obligations of a department/office/entity by source and
by allotment class. It shall be presented by: 1. Fund Authorization; 2. Major Final
Output; 3. Program/Activity/Project; and 4. Major Programs/Projects -
identified by Key Result area (KRA)

 Summary of Appropriations, Allotments, Obligations, Disbursements and

Balances by Object of Expenditures (SAAODBOE) – FAR No. 1.A (SAAODBOE)
(Appendix 18). This report shall be prepared by Funding Source Code (FSC) as
clustered and shall reflect the summary of appropriations, allotments,
obligations, disbursements and balances detailed by object of expenditures
consistent with the COA Revised Chart of Accounts per COA Circular No. 2013-
002 dated January 30, 2013 and the Adoption of the PPSAS per COA Resolution
No. 2014-003 dated January 24, 2014 ( COA Circular No. 2021-004 dated July 21,

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2021 renamed PPSAS to International Public Sector Accounting Standards

(IPSAS).

 List of Allotments and Sub-Allotments (LASA) – FAR No. 1.B (Appendix 19).
This report shall reflect the allotments released by the DBM and the sub-
allotments issued by the Entity Central Office/RO, their corresponding numbers,
date of issuance, and amounts by allotment class and FSC. The total allotments
per this report should be equal to the total allotments appearing in the SAAODB
(FAR No. 1).

 Statement of Approved Budget, Utilizations, Disbursements and Balances

(SABUDB) – FAR No. 2 (Appendix 20). This report shall reflect the approved
budget, the utilizations, disbursements and balance of the entity’s income
authorized by law to use, such as OWWA/SUCs, duly approved by their Board
of Trustee/Regents and shall be prepared by FSC as clustered.

 Summary of Approved Budget, Utilizations, Disbursements and Balances by

Object of Expenditures (SABUDBOE) – FAR No. 2.A (Appendix 21). This report
shall reflect the details of the approved budget, utilizations, disbursements and
balance of the entity’s income authorized by law to use presented by object of
expenditures consistent with the COA.

Revised Chart of Accounts and shall be prepared by Funding Source Code as

clustered.

 Aging of Due and Demandable Obligations (ADDO) – FAR No. 3 (Appendix 22).
This report shall be prepared by FSC as clustered and shall reflect the balance of
unpaid obligations as indicated in the Obligation Request (ObR) and the ADDOs
as at year-end.

 Monthly Report of Disbursements (MRD) – FAR No. 4 (Appendix 23). The report
shall reflect the total disbursements made by department, office or entity and
operating unit from the following disbursement authorities:
 Notice of Cash Allocation;
 NCA for Working Fund issued to BTr as an advance funding from
loan/grant proceeds in favor of an entity;
 Tax Remittance Advice issued;
 CDC issued by departments with foreign-based agencies or units;
 Non-Cash Availment Authority; and 6. Others, e.g. Customs, Duties and
Taxes (CDT), BTr Documentary Stamps.

The report shall track the actual disbursement of the departments/agencies

against their Disbursement Program. The reasons for over or under spending
shall be indicated.

 Quarterly Report of Revenue and Other Receipts (QRROR) – FAR No. 5

(Appendix 24). This report shall reflect the actual revenue and other
receipts/collections from all sources remitted with the BTr and deposited in
other AGDB for the current year presented by quarter, and by specific sources
consistent with the COA Revised Chart of Accounts.

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REFERENCES
Government Accounting Manual for National Government Agencies
 Chapter 2 - General Provisions, Basic Standards and Policies
 Chapter 3 - Budget Execution, Monitoring and Reporting

Joint Circulars
 DBM, COA, DOF, and BTr Joint Circular No. 2013-1 dated August 6, 2013, the
 DBM, COA, DOF, and BTr Joint Circular No. 2014-1 dated November 7, 2014

National Budget Memoranda and Circulars

 National Budget Memorandum No. 131 dated February 26, 2019
 National Budget Memorandum No. 133 dated November 29, 2019
 National Budget Memorandum No. 138 dated January 6, 2021
 National Budget Circular No. 550 dated October 29, 2013
 National Budget Circular No. 555 dated October 8, 2014
 National Budget Circular No. 578 dated January 6, 2020
 National Budget Circular No. 583 dated January 4, 2021

General Appropriations Acts

 Republic Act No. 11465 – General Appropriations Act for FY 2020
 Republic Act No. 11518 - General Appropriations Act for FY 2021
 Republic Act No. 11520 – Extension of availability of 2020 GAA to December 31,
2021
 President’s Veto Message on FY 2021 GAA dated December 28, 2020

Websites
 https://www.uacs.gov.ph/
 https://www.dbm.gov.ph/

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