Government Accounting Process -​ maintained by the Budget Division/Unit

-​ encompasses the processes of analyzing, of NGAs to monitor the revenue and

recording, classifying, summarizing and other receipts estimated/budgeted,
communicating all transactions involving the collected and remitted/deposited.
receipt and disposition of government funds
and property, and interpreting the results 2.​ 2. Registry of Appropriations and Allotments
thereof. (Sec. 109, Presidential Decree (P.D.) (RAPAL)
No. 1445) -​ maintained by NGAs to monitor
-​ appropriations and allotments charged
Books of Account of Government Accounting thereto. It shall show the original,
1.​ Journals supplemental and final budget for the
Cash Receipt Journal year and all allotments received
-​ used to record the Report of Collection charged against the corresponding
and Deposit and Cash Receipt Register appropriation. The balance is extracted
of collecting officers. every time an entry is made to prevent
-​ Report of Collection and Deposit (RCD) incurrence of overdraft in
– prepared by a collecting officer to appropriations. Separate RAPAL shall
report his/her collections and deposits be maintained by fund cluster and by
to an Authorized Government Major Final Output
Depository Bank (AGDB). (MFO)/PAP/Appropriation Acts.
-​ Cash Receipts Register (CRReg) – 3.​ Registries of Budget, Utilization and
used by field offices without a complete Disbursements (RBUD)
set of books to record their cash -​ used to record the approved special
collections and deposits in the book of budget and the corresponding
their mother unit utilizations and disbursements charged
(central/regional/division office). to retained income authorized under
R.A. 8292 for SUCs and other retained
Cash Disbursement Journal income collection of a national
-​ used to record the cash disbursements government agency with similar
of the Disbursing Officer. authority, Revolving Funds and Trust
Receipts/Custodial Funds. It shall be
Check Disbursement Journal maintained by legal/authority, fund
-​ used to record the check cluster, MFO/PAP and budget
disbursements of the Disbursing classification.
Officer. 4.​ Registries of Allotments, Obligations and
-​ Disbursements (RAOD)
General Journal -​ maintained by the Budget Division/Unit
-​ used to record transaction not recorded of agencies to record allotments,
in the Special Journals. obligations and disbursements. It shall
2.​ Ledgers show the allotments received for the
General Ledgers year, obligations incurred against the
-​ summarizes all transactions recorded in corresponding allotment and the actual
the journals. disbursements made. The balance is
extracted every time an entry is made
Subsidiary Ledger to prevent incurrence of obligations in
-​ show details of each control account in excess of allotment and overdraft in
the general ledger. disbursements against obligations
incurred. The RAODs shall be
Registries maintained by appropriation act, fund
1.​ Registries of Revenue and Other Receipts cluster, MFO/PAP, and allotment class
“Technically, only the journals and ledgers are Budget Information
considered accounting records. The registries are -​ the budgetary information consists of, among
budget records. Registries are used to monitor the others, data on appropriations or the approved
budget ” budget, allotments, obligations, revenues and
other receipts, and disbursements.
“The accounting unit of the agency maintains the
journal and ledgers. While the budget division of the Continuing Appropriations
agency maintains the registries” -​ are the authorizations to support obligations for
a specific purpose or project, such as
Who keeps the General Accounts? multi-year construction projects which require
-​ The Commission on Audit (COA) shall keep the incurrence of obligations even beyond the
the general accounts of the government and budget year.
preserve the vouchers and other supporting -​
documents. Disbursements
-​ are the actual amounts spent or paid out of the
Definition of Terms budgeted amounts
Allotment -​
-​ is an authorization issued by the DBM to NGAs Final Budget
to incur obligations for specified amounts -​ is the original budget adjusted for all reserves,
contained in a legislative appropriation in the carry-over amounts, transfers, allocations and
form of budget release documents. It is also other authorized legislative or similar authority
referred to as Obligational Authority. changes applicable to the budget period.

Appropriations New General Appropriations

-​ is the authorization made by a legislative body -​ are annual authorizations for incurring
to allocate funds for purposes specified by the obligations during a specified budget year, as
legislative or similar authority. listed in the GAA.

Approved Budget Obligation

-​ is the expenditure authority derived from -​ is an act of a duly authorized official which
appropriation laws, government ordinances, binds the government to the immediate or
and other decisions related to the anticipated eventual payment of a sum of money.
revenue or receipts for the budgetary period. Obligation maybe referred to as a commitment
The approved budget consists of the following: that encompasses possible future liabilities
-​ UACS Code based on current contractual agreement.
-​ New General Appropriations 01 -​
-​ Continuing Appropriations 02 General Appropriations Act (GAA)
-​ Supplemental Appropriations 03 -​ is the legislative authorization that contains the
-​ Automatic Appropriations 04 new appropriations in terms of specific
-​ Unprogrammed Funds 05 amounts for salaries, wages and other
-​ Retained Income/Funds 06 personnel benefits; maintenance and other
-​ Revolving Funds 07 operating expenses; and capital outlays
-​ Trust Receipts 08 authorized to be spent for the implementation
of various programs/projects and activities of
Automatic Appropriations all departments, bureaus and offices of the
-​ are the authorizations programmed annually or government for a given year.
for some other period prescribed by law, by
virtue of outstanding legislation which does not Notice of Cash Collections/Notice of Cash Allocations
require periodic action by Congress. -​ authority issued by the DBM to central,
regional and provincial offices and operating
 units to cover the cash requirements of the Budgetary Accounts systems
agencies. -​ The Budgetary Accounts System
-​ The receipt of NCA by the agency shall be encompasses the processes of preparing
recorded in the books as debit to account Agency Budget Matrix (ABM), monitoring and
“Cash-National Treasury, Modified recording of allotments received by the agency
Disbursement System (MDS)” and credit to from the DBM, releasing of Sub-Allotment
account “Subsidy Income from National Release Order (Sub-SARO) to Regional
Government” Offices (RO) by the Central Office (CO);
-​ issuance of Sub-SARO to Operating Units
Legal Basis of the New Government Accounting (OU) by the RO; and recording and monitoring
System of obligation
-​ This Manual is prescribed by COA pursuant to Fund
Article IX-D, Section 2 par. (2) of the 1987 -​ as a fiscal and accounting entity with a
Constitution of the Republic of the Philippines self-balancing set of accounts recording cash
which provides that: and other financial resources, together with all
-​ “The Commission on Audit shall have related liabilities and residual equities or
exclusive authority, subject to the limitations in balances, and changes therein, which are
this Article, to define the scope of its audit and segregated for the purpose of carrying on
examination, establish the techniques and specific activities or attaining certain objectives in
methods required therefor, and promulgate accordance with special regulations, restrictions,
accounting and auditing rules and regulations, or limitations.
including those for the prevention and
Performance Informed Budgeting
disallowance of irregular, unnecessary,
-​ PIB is the new budgeting approach that uses
excessive, extravagant, or unconscionable
performance information in the appropriations
expenditures, or uses of government funds and
documents to link funding to results and to
properties". (underscoring supplied)
provide a framework for more informed
resource allocation and management. It is a
One Fund Concept
set of integrated processes that aims to
-​ This system adopts the one fund concept.
improve the efficiency and effectiveness of
Separate fund accounting shall be done only
public expenditure by linking funding to results
when specifically required by law or by a donor
by the systematic use of performance
agency or when otherwise necessitated by
information in resource allocation and
circumstances subject to prior approval of the
management.
Commission
-​
Output
Perpetual Inventory of Supplies and Materials
-​ the direct, measurable products or services
-​ Supplies and materials purchased for inventory
delivered as a result of those inputs (like
purpose shall be recorded using the perpetual
number of trainings conducted, reports
inventory system. Regular purchases shall be
generated)
coursed thru the inventory account and
Input
issuances thereof shall be recorded as they
-​ refers to the resources allocated to a program
take place except those purchased out of Petty
or project (like funding, staff, materials)
Cash Fund which shall be charged directly to
Outcome
the appropriate
-​ signifies the broader, long-term impact or
change achieved due to those outputs (like
Valuation of Inventory
improved skills, policy changes)
-​ Cost of ending inventory of supplies and
materials shall be computed using the moving
Activities of the Government
average method.
-​ Personal Services
-​ are the provisions for the payment of
salaries, wages, honoraria and other
 types of compensation of the personnel construction of capital facilities and other
who will be working for the research capital assets (other than those financed by
project or program. proprietary and fiduciary funds).

-​ Maintenance and other operating expenses Debt Service Funds: Used to account for and
-​ refers to the expenditures to support report financial resources that are restricted,
the operations of the research project committed, or assigned to expenditures for
or program, such as, but not limited to principal and interest. Debt service funds
supplies and materials, transportation, should also report financial resources being
travel, utilities, repair, etc. accumulated for principal and interest maturing
in future years (other than those financed by
-​ Capital Outlays proprietary and fiduciary funds).
-​ refer to appropriations for the purchase
of goods and services, the benefits of Permanent Funds: Used to account for and
which extend beyond the fiscal year report resources legally restricted to the extent
and which adds to the assets of the that only earnings, and not principal, may be
University. used to support the reporting government’s
-​ programs.
“Role of Commission on Audit
-​ To define the scope of the examination -​ Proprietary
-​ Establish the techniques and methods -​ Proprietary funds are used to track and report
-​ Promulgate Accounting and auditing rules and government-owned business-like activities,
regulations such as utilities and transportation systems.
They follow accounting principles similar to
Three Types of Government Fund those used in the private sector, focusing on
-​ Governmental the measurement of revenues, expenses,
Governmental funds track the basic activities assets, and liabilities associated with these
of a government and serve as a catch-all for business-type activities. Proprietary funds are
any fund type or function not recorded within used to account for activities that receive
fiduciary or proprietary funds. Governmental significant support from fees and charges, and
funds use a modified accrual basis of are accounted for using the economic
accounting, reporting mostly readily available resources measurement focus. Funds in this
assets and liabilities expected to be used and group are classified into two fund types:
paid back within a year. Funds in this group are -​ Enterprise Funds: Used to account for any
classified into five fund types: activity for which a fee is charged to external
users for goods or services.
General Fund: This is the main operating fund
of the state. It is used to account for all Internal Service Funds: Used to account for
financial resources not accounted for and goods or services provided to other agencies,
reported in another fund. departments, or governments on a
cost-reimbursement basis.
Special Revenue Funds: Used to account for
and report the proceeds of specific revenue -​ Fiduciary
sources that are restricted or committed to -​ Fiduciary funds are those held by the
expenditure for specified purposes, other than government as trustees or custodians of
debt service or capital projects. resources for citizens, organizations, or other
governmental entities. These funds are not
Capital Project Funds: Used to account for and used by the government but are held for
report financial resources that are restricted, specific groups or activities. They are reported
committed, or assigned to expenditure for under the full accrual basis of accounting and
capital outlays, including the acquisition or are treated as separate entities with
 self-balancing accounts. Funds in this group time, they are unable to sell their products or services
are classified into four fund types: for more than it costs to produce them.

-​ Pension Trust Funds: Used to account for Relationship with Stakeholders. Governments should
resources that are required to be held in trust meet a broader benchmark of accountability than
for the members and beneficiaries of defined businesses, as individual taxes paid do not directly
benefit pension plans, defined contribution correlate with services received. Citizens are
plans, other post-employment benefit plans, or interested in evaluating interperiod equity by
other employee benefit plans. determining whether current taxpayers and users fully
-​ financed the costs of providing current-period
-​ Investment Trust Funds: Used to account for services. Government financial reporting should
the external portion of investment pools and provide systematic and rational cost-of-service
individual investment accounts held in trust. information. In contrast, because business enterprises
-​ focus primarily on increasing shareholders’ equity,
-​ Private-Purpose Trust Funds: Used to account their financial reports show changes in equity of the
for all other trust arrangements under which enterprise during the current period.
principal and income benefit individuals,
private organizations, or other governments. Role of the Budget. For governments, a budget has
-​ special legal significance. Governmental budgets are
-​ Custodial Funds (Agency Funds): Used to expressions of public policy priorities and legally
account for money held by the government as authorize the raising of public resources and the
a custodian until distributed to the legal purposes for which public resources may be spent. In
owner/beneficiary. fact, governmental budgets can be the primary
-​ method by which citizens and their elected
Major Differences between Government and representatives hold the government’s management
Corporate Accounting financially accountable. For business enterprises, the
Organizational Purposes. The purpose of budget represents an internal financial management
governments is to enhance or maintain tool that is controlled entirely by management and is
the well-being of citizens by providing public services considered proprietary in nature.
in accordance with public policy goals. In contrast,
business enterprises focus primarily on wealth Construction Period theory
creation, interacting only with those segments of -​ For assets under construction, the
society that fulfill their mission of generating a financial Construction Period Theory shall be applied for
return on investment costing purposes. Bonus paid to the contractor
for shareholders. for completing the work ahead of time shall be
added to the total cost of the project.
Sources of Revenue. The principal source of revenue Liquidated damages charged and paid for by
for governments is taxation, which is a legally the contractor shall be deducted from the total
mandated involuntary nonexchange transaction cost of the project. Any related expenses
between individual citizens and businesses and their incurred during the construction of the project,
government. The principal source of revenue of such as taxes, interest, license fees, permit
business enterprises is voluntary exchange fees, clearance fee, etc. shall be capitalized,
transactions between willing buyers and sellers. and those incurred after the construction shall
form part of operating cost.
Potential for Longevity. Because of their ongoing
power to tax and because of the ongoing need for Moving average method
public services, governments rarely liquidate. The -​ The moving average method of costing shall
possibility of achieving longevity, however, is not as be used for costing inventories. This is a
likely for business enterprises. Business enterprises method of calculating cost of inventory on the
will go out of existence if, for an extended period of basis of weighted average on the date of issue.
The Accounting Unit shall be responsible in
 computing the cost of inventory on a regular -​ Modified Accrual Method
basis. -​ Under the modified accrual basis,
income of an agency is recorded as
Sources of National Income “Deferred Credits to Income” and the
-​ The income of the National Government are appropriate receivable account is
classified into general income accounts and debited. The income account is
specific income accounts. The following recognized upon receipt of collection
comprise the general income accounts, among and the “Deferred Credits to Income”
others: account is adjusted accordingly.
-​ 1. Subsidy Income from National Government
-​ 2. Subsidy from Central Office -​ Cash Basis
-​ 3. Subsidy from Regional Office/Staff Bureaus -​ Cash basis of accounting shall be used
-​ 4. Income from Government Services for all other taxes, fees, charges and
-​ 5. Income from Government Business other revenues where accrual method
Operations is impractical. The income account is
-​ 6. Sales Revenue credited upon collection of the cash or
-​ 7. Rent Income its equivalent.
-​ 8. Insurance Income -​
-​ 9. Dividend Income When do you recognize income for fines and
-​ 10. Interest Income penalties?
-​ 11. Sale of Confiscated Goods and Properties -​ Fines and penalties, either on tax revenues or
-​ 12. Foreign Exchange (FOREX) Gains other specific income accounts, shall be
-​ 13. Miscellaneous Operating and Service recognized as income of the year these were
Income collected
-​ 14. Fines and Penalties-Government Services
and Business The Manual presents the basic policies and principles
-​ Operations in accordance with the (PPSAS)
-​ 15. Income from Grants and Donations
Who is responsible over Government funds and
The specific income accounts of national government Property?
agencies are classified as follows: -​ Head of the Government Agency
-​ 1. Income Taxes
-​ 2. Property Taxes “To establish accountability, every agency officer shall
-​ 3. Taxes on Goods and Services be properly bonded in accordance with the law”
-​ 4. Taxes on International Trade and
Transactions ______ is a government-wide, harmonized budgetary
-​ 5. Other Taxes treasury and accounting code classification framework
-​ 6. Fines and Penalties-Tax Revenue (UACS) United Accounts Code Structure
-​ 7. Other Specific Incom
-​ Classification of Expenditures according to object of
Methods of Accounting of Income expenditures
-​ Accrual Method -​ Personal Services
-​ Accrual method of accounting shall be -​ pertain to all types of employee
used by national government agencies benefits, for example, salaries,
when income is realized (earned) bonuses, allowances, cash gifts, etc.
during the accounting period regardless
of cash receipt. Accounts receivable is -​ Maintenance and Other Operating Expenses
set up and the general or specific -​ pertain to various operating expenses
income accounts according to nature other than employee benefits and
and classification are credited. financial expenses, for example, travel,
utilities, supplies, etc.
-​ Financial Expenses
-​ pertain to finance costs, for example,
interest expense, bank charges, losses
on foreign exchange transactions.

-​ Capital Outlays
-​ pertains to capitalizable expenditures,
for example, expenditures on the
construction of public infrastructure,
acquisition costs of equipment, etc.