Government Accounting Ch1

GENERAL
PROVISIONS,
BASIC
STANDARDS
AND POLICIES
In order to harmonize the existing accounting
standards with the international accounting
standards, the Commission on Audit (COA), as a
member of the International Organization of
Supreme Audit Institution (INTOSAI), through its
authority under Article IX-D, Sec. 2, par. 2 of the
1987 Philippine Constitution (to promulgate
accounting and auditing rules and regulations)
prescribed the Government Agencies (NGAs)
GOVERNMENT ACCOUNTING
Even under the new accounting system government

accounting is defined, pursuant to Section 109 of PD
1445, as one which “encompasses the process of
analyzing, recording, classifying, summarizing, and
communicating all transaction involving the receipts
and disposition of government fund and property and
interpreting the result thereof”
The Main Feature of Government Accounting are as follow:
1. Based on the Double-Entry System
2. Government Regulation
3. Profit and Loss
4. Banking Transactions
5. Budget Heads
6. Budgetary Control
7. Auditing
Section 110 Presidential Decree 1445 sets down the following
objectives of government accounting:
1. To produce information concerning past operations and present

conditions;
2. To provide a basis for guidance for future operations;
3. To provide for control of the acts of public bodies and offices in

the receipt, disposition and utilization of funds and property; and
4. To report on the financial position and the results of operations

of government agencies for the information and guidance of all
persons concerned.
PUBLIC SECTOR ACCOUNTING STANDARDS BOARD
The Public Sector Accounting Standard Board

(PSASB) was created in 2008 under COA Resolution
No. 2008-12 dated October 10,2008. In developing
standards of the Philippine Public Sector Accounting
Standards (PPSAS), the PSASB considers and make
use of among others, the existing laws, financial
reporting, accounting rules and regulations,
pronouncements issued by the International Public
Sector Accounting Standards Board (IPSASB).
The PSASB shall assist the commission in formulating
and implementing Philippine Public Sector Accounting
Standards (PPSAS). The PPSAS shall apply to all
National Government Agencies (NGAs), Local
Government Units (LGUs) and Government-Owned
and/or Controlled Corporations (GOCCs) not
considered as Government Business Enterprises
(GBEs), in which case, the Philippine Financial
Reporting Standards Council, Board of Accounting, and
Professional Regulation Commission shall apply.
What is a Government Business Entity (GBE)
A GBE is an entity that has ALL the following characteristics:
A.Is an entity with the power to contract in its own name;
B. Has been assigned the financial and operational authority to carry

on a business;
C. Sells goods and services, in the normal course of its business, to

other entities at a profit or full cost recovery;
D. Is not reliant on continuing government funding to be a going

concern (other than purchases of outputs at arm's length); and
E. Is controlled by a public sector entity.

The following are the process and other considerations in developing
the Philippine Public sector Accounting Standards (PPSAS) .
1. Applicability of IPSAS COA Resolution No. 2014-003 dated January

24, 2014 provides that "after a study and review of the provisions of
the international Public Sector Accounting Standards (IPSAS), The
Public sector Accounting standards Board (PSAcSB) recommended
the adoption of the IPSAs, to be referrer to as the Philippine Public
Sector Accounting standards (PPSAS). To align accounting standards
in the public sector (PPSAS) with the prevailing international standards
(IPSAS), provide quality accounting standards thereby enhancing the
quality and uniformity in financial reporting by Philippine public sector
entities, and ensuring accountability, transparency and comparability of
financial information with other public sector entities around the world.
2. Exposure draft of PPSAS.
3.Fundamental issues
4.statutory authority
5. Disclosure Requirements
6. PPSAS numbering
7. Financial reporting issues not dealt with by IPSAS.
8. Submission of draft to PSASB for consideration of the COA.
9. If considered appropriate, focus group discussions will be held to

obtain further opinions on issues identified by the exposure process.
ACCOUNTING RESPONSIBILITY
- is a central to any effective profit planning and control
system.
-emanates from the Constitution, laws, policies, rules and
regulations.
Advantages of Accounting Responsibility

1. It facilitates delegation of decision-making
2. It helps management promote the concept of management
by objective
3. It aids in establishing standard of performance.
4. It permits effective use of management exception.
TYPES OF ACCOUNTING
RESPONSIBILITY CENTER
Cost Center
Profit Center
Investment Center
Revenue Center
Three types of variance
Sales price variance

Sales volume variance
Sales mix varuance
COMMISSION ON AUDIT (COA)
The Commission On Audit (COA) keeps the general

accounts of the government promulgates accounting rules
and regulations, and submits to the President and
Congress, within the time fixed by law (not later than the
last day of September each year, Section 41, PD 1445), an
annual report of the government, its subdivision, agencies
and instrumentalities, including government-owned of
controlled corporations.
DEPARTMENT OF BUDGET AND MANAGEMENT
Pursuant to Section 2, Chapter 1, Title XVII, Book IV of the
Administrative Code of the Philippines (EO 292), “The
Department of Budget and Management shall be responsible
for the formulation and implementation of the National
Budget with the goal of attaining our national socio-economic
plans and objectives. The Department shall be responsible for
the efficient and sound utilization of government funds and
revenues to effectively achieve the country’s development
objectives.”
MISSION STATEMENT
To efficiently and effectively managed

the financial resources of the government
by maximizing revenues from available
funds and minimizing costs of financing
whenever possible.
VISION STATEMENT
To be pro-active manager of the

public funds characterized by active
duration management,
minimization of interest rate risks
and hedging of financial risks.
BUREAU OF TREASURY
The Bureau of Treasury (BTr) plays a

pivotal role in the cash operations of the
national government.
NATIONAL GOVERNMENT AGENCIES
Departments, bureaus, offices and other instrumentalities

of the national government, including the Congress, the
judiciary, the Constitutional bodies, state colleges and
universities, and other self-contained institutions and hospitals
are required by the law to have accounting
units/divisions/departments, which are to be of the same level
with other units/divisions/departments in the agencies and
under the direct supervision pf the Head of the Agency.
Under the New Accounting System, the government agencies
shall maintain the following registries:
1. Registry of Revenue and Other Receipts-Summary (RRORS)
2. Register Of Revenue and Other Receipts- Regular Agency and

Foreign Assisted Projects Fund (RROR-RA&FAP)
3. Registry of Revenue and Other Receipts- Special Account

Locally Funded/Domestic Grants Fund and Special Account
Foreign Assisted/ Foreign Grants Fund (RROR-SADFGF)
4. Registry of Revenue and Other Receipts- Internally Generated Funds (Off
Budget funds- Retained Income Funds) Business Related Funds (RROR-
IGF/BRF)
5. Registry of Revenue and Other Receipts- Trust Receipts/Inter-agency

Transferred Funds (RROR-TR/IATF)
6. Registry of Appropriation and Allotments (RAPAL)
7. Registry of Allotments, Obligations and Disbursements- Personnel

Services (RAOD-PS)
8. Registry of Allotments, Obligations, and Disbursement- Maintenance and

Other Operating Expenses (RAOD-MOOE)
9. Registry of Allotments, Obligations, and Disbursements-
Financial Expenses (RAOD-FE)
10. Registry of Allotments, Obligations, and Disbursements-

Capital Outlays (RAOD-CO)
11. Registry of Budget, Utilization and Disbursements- Personnel

Services (RBUD-PS)
12. Registry of Budget, Utilization, and Disbursements-

Maintenance and Other Operating Expenses (RBUD-MOOE)
13. Registry of Budget, Utilization and Disbursements-
Financial Expenses (RBUD-FE)
14. Registry of Budget, Utilization and Disbursements-

Capital Outlays (RBUD-CO)
15. Registry of Allotments and Notice of Cash Allocation

(RANCA)
16. Registry of Allotments and Notice of Transfer of

Allocation (RANTA)
BASIC ACCOUNTING AND BUDGET REPORTING
PRINCIPLES
The Government Accounting Manual provides general

provisions from existing laws, rules, and regulations; and
basic standards/fundamental accounting principles for
financial reporting by national government agencies. It
requires each government entity to recognize and
present its financial transactions and operations in
conformity with the following:
1. Generally Accepted Accounting Principles in accordance with the
PPSAS and pertinent laws, rules, and regulations.
2. Accrual Basis of accounting in accordance with the PPSAS
3. Budget Basis for presentation of budget information in the

statements in accordance with PPSAS 24.
4. Revised Chart of Accounts prescribed by Commission on Audit.
5. Double Entry Bookkeeping.
6. Financial Statements based on accounting and budgetary records.

7. Fund Cluster Accounting.
The detailed financial statements and trial balances

consolidated by the fund cluster as follows:
a. Regular Agency Fund

b. Foreign Assisted Projects Fund
c. Special Accounts- Locally Funded/Domestic Grants Fund
d. Special Accounts- Foreign Assisted/Foreign Grants Fund
e. Internally Generated Funds
f. Business Related Funds
g. Trust Receipts/Inter-agency Transferred Funds (IATF)
Responsibility Accounting
Responsibility accounting is a system that relates the financial results to

a responsibility center, which provides access to cost and revenue
information under the supervision of a manager having direct
responsibility for its performance. It is a system that measures the plans
(by budget) and actions (by actual results) of each responsibility center.
Responsibility center, on the other hand, is a part, segment, unit or
function of a government agency, headed by a manager, who is
accountable for a specified set of activities.
The types of responsibility center are cost center, profit center, investment center,
and revenue center.
Cost center- unit within the organization wherein the manager is responsible for
minimizing costs subject to some output constraints.
Profit center- unit or segment within the organization wherein the manager is
responsible for the generation of revenues and control of costs incurred in that center.
Investment center- unit or segment within the organization where the manager is
responsible for the control of revenues , costs and investments made in that center.
Revenue center- unit or segment within an organization where the manager is

responsible for selling budgeted quantities of various products or services at budgeted
price.
Responsibility accounting aims to:
1. Ensure that all costs and revenues are properly
charged/credited to the correct responsibility center so
that deviations from the budget can be readily attributed
to managers accountable therefor
2. Provide a basis for making decisions for future
operations
3. Facilitate review activities, monitoring the performance
of each responsibility center and evaluation of the
effectiveness of agency’s operation
Concepts of Responsibility Accounting
1. Responsibility accounting involves accumulating and reporting

data on revenues and costs on the basis of the manager’s action,
who has authority to make day-to-day decisions about the items;
2. Evaluation of a manager’s performance is based on the matters
directly under his control;
3. Responsibility accounting can be used at every level of
management in which the following conditions exist:
4. The reporting of costs and revenues under responsibility
accounting differs from budgeting in two aspects:
a) Distinction between controllable and non-contrallable cost
1. a cost is considered controllable at a given level of
managerial responsibility if that manager has the power
to incur it within a given period of time
2. non-controllable costs are costs incurred indirectly and
allocated to a responsibility level.
b) Performance reports either emphasize or include only items
controllable by individual manager.
5. A responsibility reporting system involves the preparation of
a report for each level of responsibility.
6. Evaluation of a manager’s performance for cost centers is
based on his ability to meet budgeted goals for controllable
costs.

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GENERAL

Even under the new accounting system government

1. Based on the Double-Entry System

3. Profit and Loss

1. To produce information concerning past operations and present

2. To provide a basis for guidance for future operations;

3. To provide for control of the acts of public bodies and offices in

4. To report on the financial position and the results of operations

The Public Sector Accounting Standard Board

A.Is an entity with the power to contract in its own name;

B. Has been assigned the financial and operational authority to carry

C. Sells goods and services, in the normal course of its business, to

D. Is not reliant on continuing government funding to be a going

E. Is controlled by a public sector entity.

1. Applicability of IPSAS COA Resolution No. 2014-003 dated January

7. Financial reporting issues not dealt with by IPSAS.

8. Submission of draft to PSASB for consideration of the COA.

9. If considered appropriate, focus group discussions will be held to

Advantages of Accounting Responsibility

Three types of variance

Sales price variance

The Commission On Audit (COA) keeps the general

To efficiently and effectively managed

To be pro-active manager of the

The Bureau of Treasury (BTr) plays a

Departments, bureaus, offices and other instrumentalities

1. Registry of Revenue and Other Receipts-Summary (RRORS)

2. Register Of Revenue and Other Receipts- Regular Agency and

3. Registry of Revenue and Other Receipts- Special Account

5. Registry of Revenue and Other Receipts- Trust Receipts/Inter-agency

6. Registry of Appropriation and Allotments (RAPAL)

7. Registry of Allotments, Obligations and Disbursements- Personnel

8. Registry of Allotments, Obligations, and Disbursement- Maintenance and

10. Registry of Allotments, Obligations, and Disbursements-

11. Registry of Budget, Utilization and Disbursements- Personnel

12. Registry of Budget, Utilization, and Disbursements-

14. Registry of Budget, Utilization and Disbursements-

15. Registry of Allotments and Notice of Cash Allocation

16. Registry of Allotments and Notice of Transfer of

The Government Accounting Manual provides general

2. Accrual Basis of accounting in accordance with the PPSAS

3. Budget Basis for presentation of budget information in the

4. Revised Chart of Accounts prescribed by Commission on Audit.

5. Double Entry Bookkeeping.

6. Financial Statements based on accounting and budgetary records.

The detailed financial statements and trial balances

a. Regular Agency Fund

Responsibility accounting is a system that relates the financial results to

Revenue center- unit or segment within an organization where the manager is

1. Responsibility accounting involves accumulating and reporting

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