REVIEWER-GOVACC in the form of outflows or consumption of

assets or incurrence of liabilities that result in

CHAPTER 1-4, GAM
decreases in net assets/equity, other than those
Definition of Terms. For the purpose of this Manual, the relating to distributions to owners.
terms used as stated below shall be construed to mean g. Government Accounting – encompasses the
as follows: processes of analyzing, recording, classifying,
summarizing and communicating all
a. Accrual basis – means a basis of accounting transactions involving the receipt and
under which transactions and other events are disposition of government funds and property,
recognized when they occur (and not only when and interpreting the results thereof. (Sec. 109,
cash or its equivalent is received or paid). Presidential Decree (P.D.) No. 1445)
Therefore, the transactions and events are h. Government Budget – is the financial plan of a
recognized in the accounting records and government for a given period, usually for a
recognized in the financial statements of the fiscal year, which shows what its resources are,
periods to which they relate. The elements and how they will be generated and used over
recognized under accrual accounting are assets, the fiscal period. The budget is the
liabilities, net assets/equity, revenue, and government's key instrument for promoting its
expenses. socio-economic objectives. The government
b. Assets – are resources controlled by an entity as budget also refers to the income, expenditures
a result of past events, and from which future and sources of borrowings of the National
economic benefits or service potential are Government (NG) that are used to achieve
expected to flow to the entity. national objectives, strategies and programs.
c. Contributions from owners – means future i. Liabilities – are firm obligations of the entity
economic benefits or service potential that have arising from past events, the settlement of
been contributed to the entity by parties which is expected to result in an outflow from
external to the entity, other than those that the entity of resources embodying economic
result in liabilities of the entity, that establish a benefits or service potential.
financial interest in the net assets/equity of the j. Net assets/equity – is the residual interest in
entity, which: the assets of the entity after deducting all its
1. conveys entitlement both to (i) liabilities.
distributions of future economic k. Revenue – is the gross inflow of economic
benefits or service potential by the benefits or service potential during the
entity during its life, such distributions reporting period when those inflows result in an
being at the discretion of the owners or increase in net assets/equity, other than
their representatives; and to (ii) increases relating to contributions from owners.
distributions of any excess of assets l. Revenue funds – comprise all funds derived
over liabilities in the event of the entity from the income of any agency of the
being wound up; and/or government and available for appropriation or
2. can be sold, exchanged, transferred, or expenditure in accordance with law. (Section 3,
redeemed. P.D. No. 1445)
d. Distributions to owners – means future
economic benefits or service potential Sec. 6. Basic Government Accounting and
distributed by the entity to all or some of its Budget Reporting Principles.
owners, either as a return on investment or as a Each entity shall recognize and present its
return of investment. financial transactions and operations
e. Entity – refers to a government agency, conformably to the following:
department or operating/field unit. It may be a. generally accepted government accounting
referred to in this GAM as an agency. principles in accordance with the PPSAS and
f. Expenses – are decreases in economic benefits pertinent laws, rules and regulations;
or service potential during the reporting period
 b. accrual basis of accounting in accordance 3. prepares other financial reports required by law for
with the PPSAS; submission to oversight agencies.
c. budget basis for presentation of budget
Sec. 9. Objectives of General-Purpose Financial
information in the financial statements (FSs)
Statements.
in accordance with PPSAS 24;
d. RCA prescribed by COA; The objectives of general purpose financial statements
e. double entry bookkeeping; (GPFSs) are to provide information about the financial
f. financial statements based on accounting position, financial performance, and cash flows of an
and budgetary records; and entity that is useful to a wide range of users in making
g. fund cluster accounting. and evaluating decisions about the allocation of
resources. Specifically, the objectives of general-
Sec. 7. Keeping of the General Accounts.
purpose financial reporting in the public sector are to
The COA shall keep the general accounts of the provide information useful for decision-making, and to
Government and, for such period as may be provided by demonstrate the accountability of the entity for the
law, preserve the vouchers and other supporting papers resources entrusted to it.
pertaining thereto, pursuant to Section 2, par. (1),
Sec. 10. Responsibility for Financial Statements. The
Article IX-D of the 1987 Philippine Constitution.
responsibility for the preparation of the FSs rests with
Sec. 8. Financial Reporting System for the National the following:
Government.
a. for individual entity/department FSs – the head of the
The financial reporting system of the Philippine entity/department central office (COf) or regional office
government consists of accounting system on accrual (RO) or operating unit (OU) or his/her authorized
basis and budget reporting system on budget basis representative jointly with the head of the
under the statutory responsibility of the NGAs, Bureau finance/accounting division/unit; and
of the Treasury (BTr), Department of Budget and
b. for department/entity FSs as a single entity – the
Management (DBM), and the COA, as follows:
head of the entity/department COf jointly with the head
a. Each entity of the National Government (NG) of the finance unit.
maintains complete set of accounting books by fund
Sec. 11. Components of General-Purpose Financial
cluster which is reconciled with the records of cash
Statements. The complete set of GPFSs consists of:
transactions maintained by the BTr.
a. Statement of Financial Position
b. The BTr accounts for the cash, public debt
b. Statement of Financial Performance
and related transactions of the NG.
c. Statement of Changes in Net Assets/Equity
c. Each entity maintains budget registries which d. Statement of Cash Flows
are reconciled with the budget records maintained by e. Statement of Comparison of Budget and
the DBM and the Government Accountancy Sector Actual Amounts; and
(GAS), COA. f. Notes to the Financial Statements, comprising
a summary of significant accounting policies
d. The COA, through the GAS:
and other explanatory notes.
1. maintains budget records showing the overall
Sec. 12. Books of Accounts and Registries. The books of
approved budget of the NG and its
accounts and registries of the NG entities consist of:
execution/implementation;
a. Journals
2. consolidates the FSs and budget accountability
1. General Journal
reports of all NGAs and the BTr with COA’s records to
2. Cash Receipts Journal
come up with an Annual Financial Report (AFR) for the
3. Cash Disbursements Journal
NG as required in Section 4, Article IX-D of the 1987
4. Check Disbursements Journal
Philippine Constitution; and
 b. Ledgers Expenditures (SABUDBOE) – FAR No. 2-A (for
1. General Ledgers Off-Budget Fund)
2. Subsidiary Ledgers g. Aging of Due and Demandable Obligations
c. Registries (ADDO) – FAR No. 3
1. Registries of Revenue and Other h. Monthly Report of Disbursements (MRD) – FAR
Receipts No. 4
2. Registry of Appropriations and i. Quarterly Report of Revenue and Other
Allotments Receipts (QRROR) – FAR No. 5
3. Registries of Allotments, Obligations
Sec. 15. Fair Presentation. The FSs shall present fairly
and Disbursements
the financial position, financial performance, and cash
4. Registries of Budget, Utilization and
flows of an entity. Fair presentation requires the faithful
Disbursements
representation of the effects of transactions, other
Sec. 13. Fund Accounting. The books of accounts shall events, and conditions in accordance with the
be maintained by fund clusteras follows: definitions and recognition criteria for assets, liabilities,
revenue, and expenses set out in PPSAS. The application
COD DESCRIPTION
of PPSAS, with appropriate disclosures, if necessary,
E
01 Regular Agency Fund
would result in fair presentation of the FS.
02 Foreign Assisted Projects Fund
03 Special Account-Locally Funded/Domestic Grants Fund Sec. 16. Compliance with PPSASs.
04 Special Account-Foreign Assisted/Foreign Grants Fund
05 Internally Generated Funds An entity whose financial statements comply with
06 Business Related Funds PPSASs shall make an explicit and unreserved statement
07 Trust Receipts of such compliance in the notes. Financial statements
shall not be described as complying with PPSASs unless
they comply with all the requirements of PPSASs.
Sec. 14. Components of Budget and Financial Inappropriate accounting policies that do not comply
Accountability Reports. with PPSAS are not rectified either by disclosure of the
accounting policies used, or by notes or explanatory
The budget reports consist of the following Budget and
material.
Financial Accountability Reports (COA-DBM-DOF Joint
Circular No. 2013-1, as amended by COA and DBM Joint Sec. 17. Departure from PPSAS. In the event that
Circular No. 2014-1 dated July 2, 2014): Management strongly believes that compliance with the
requirement of PPSAS would result in misleading
a. Quarterly Physical Report of Operation (QPRO)
presentation that it would contradict the objective of
– BAR No. 1
the FSs set forth in PPSAS, the entity may depart from
b. Statement of Appropriations, Allotments,
that requirement if the relevant regulatory framework
Obligations, Disbursements and Balances
allows, or otherwise does not prohibit, such a
(SAAODB) – FAR No. 1
departure.
c. Summary of Appropriations, Allotments,
Obligations, Disbursements and Balances by Sec. 18. Going Concern. The FSs shall be prepared on a
Object of Expenditures (SAAODBOE) – FAR No. going concern basis unless there is an intention to
1-A discontinue the entity operation, or if there is no
d. List of Allotments and Sub-Allotments (LASA) – realistic alternative but to do so.
FAR No. 1-B
Sec. 19. Consistency of Presentation. The presentation
e. Statement of Approved Budget, Utilizations,
and classification of items in the FSs shall be retained
Disbursements and Balances (SABUDB) – FAR
from one period to the next unless laws, rules and
No. 2 (for Off-Budget Fund)
regulations, and PPSAS require a change in
f. Summary of Approved Budget, Utilizations,
presentation.
Disbursements and Balances by Object of
Sec. 20. Materiality and Aggregation. Each material recognized in accordance with PPSAS 3-
class of similar items shall be presented separately in Accounting Policies, Changes in Accounting
the financial statements. Items of a dissimilar nature or Estimates and Errors.
function shall be presented separately unless they are
Sec. 27. Statement of Cash Flows. The Statement of
immaterial. If a line item is not material, it is aggregated
Cash Flows (SCF) provides information to users of FSs a
with other items either on the face of FSs or in the
basis to assess the ability of the entity to generate cash
Notes to the FSs. A specific disclosure requirement in a
and cash equivalents and to determine the entity’s
PPSAS need not be satisfied if the information is not
utilization of funds. This also provides information on
material.
how the entity generates income authorized to be used
Sec. 21. Offsetting. Assets and liabilities, and revenue in their operation and its utilization.
and expenses shall not be allowed to offset unless
Sec. 28. Statement of Comparison of Budget and
required or permitted by a PPSAS except when
Actual Amounts. A comparison of budget and actual
offsetting reflects the substance of the transaction or
amounts will enhance the transparency of financial
other event.
reporting in government. This shall be presented by
Sec. 22. Comparative Information. Comparative government agencies as a separate additional financial
information shall be disclosed with respect to the statement referred in this Manual as the Statement of
previous period for all amounts reported in the FSs. Comparison of Budget and Actual Amounts (SCBAA).
Comparative information shall be included for narrative
Sec. 29. Notes to Financial Statements. The Notes to
and descriptive information when it is relevant to an
FSs contain information in addition to that presented in
understanding of the current period’s FSs.
the SFP, SFPer, SCNA/E, SCF and SCBAA. Notes provide
Sec. 23. Structure and Content. The FSs and each narrative descriptions or disaggregation of items
component shall be identified clearly and distinguished disclosed in those FSs and information about items that
from other information in the same published do not qualify for recognition in those statements.
document.
Sec. 30. Qualitative Characteristics of Financial
Sec. 24. Statement of Financial Position. An entity shall Reporting. An entity shall present information including
present current and noncurrent assets, as well as accounting policies in a manner that meets a number of
current and non-current liabilities, as separate qualitative characteristics such as understandability,
classifications on the face of the Statement of Financial relevance, materiality, reliability and comparability.
Position (SFP). These qualitative characteristics are the attributes that
make the information provided in the FSs useful to
Sec. 25. Statement of Financial Performance. The
users.
Statement of Financial Performance (SFPer) shall
include line items that present the revenue, expenses Sec. 31. Key Features of Assets. The key features of an
and net surplus or deficit for the period. asset are:

Sec. 26. Statement of Changes in Net Assets/Equity. An a. the benefits must be controlled by the entity;
entity shall present in the Statement of Changes in Net b. the benefits must have arisen from a past
Assets/Equity (SCNA/E) the following: event; and
c. future economic benefits or service potential
a. Net Income or Deficit for the period;
must be expected to flow to the entity.
b. Each item of revenue and expenses for the
period that, as required by Standards, is *The following are indicators of control of the benefits
recognized directly in net assets/equity, and the by the entity:
total of these items;
a. the ability of an entity to benefit from the asset
c. Total revenue and expenses for the period; and
and to deny or regulate the access of others to
d. For each component of net assets/equity
that benefit.
separately disclosed, the effects of changes in
b. an entity can, depending on the nature of the
accounting policies and corrections of errors
asset, exchange it, use it to provide goods or
 services, exact a price for others’ use of it, use it a. the chance of benefits arising is more likely rather
to settle liabilities, hold it, or perhaps even than less likely (e.g. greater than 50%).
distribute it to owners.
b. benefits can be expected on the basis of available
c. possession or ownership of an object or right
evidence or logic.
would normally be synonymous with control
over the future economic benefits embodied in *The following are indicators of reliable measurement:
the right or object.
a. valuation method is free from material error or
However, there are instances when an entity may bias.
possess an object or right but not expect to enjoy the b. faithful representation of the asset’s benefits.
benefits embodied in it, e.g. under a finance lease c. reliable information will, without bias or undue
agreement, control over the leased property owned by error, faithfully represent those transactions
the lessor is transferred to the lessee. and events.
*The following are indicators of past event: Sec. 34. Use of Appropriated Funds. All moneys
appropriated for functions, activities, projects and
a. the specification of a past event differentiates
programs shall be available solely for the specific
assets from intentions to acquire assets, which
purposes for which these are appropriated.
are not to be recognized.
b. a transaction or event giving rise to control of Sec. 35. Appropriation for Loan Proceeds.
the future economic benefits must have Expenditures funded by foreign and domestic
occurred. borrowings shall be included within the expenditure
program of the entity concerned. Loan proceeds,
*The following are indicators of future economic
whether in cash or in kind, shall not be used without
benefits:
the corresponding release of funds through a
a. distinguishable from the source of the benefit Special Budget.
i.e. the particular physical resource or legal
Sec. 36. Basic Requirements for Disbursements and the
right;
Required Certifications. Disbursements of government
b. does not imply that assets necessarily generate
funds shall comply with the following basic
cash flows, the benefits can also be in the form
requirements and certifications:
of ‘service potential’;
c. in determining whether a resource or right a. Availability of allotment/budget for
needs to be accounted for as an asset, the obligation/utilization certified by the Budget
potential to contribute to the objectives of the Officer/Head of Budget Unit;
entity should be the prime consideration; b. Obligations/Utilizations properly charged
d. capacity to contribute to against available allotment/budget by the
activities/objectives/programs; and Chief Accountant/Head of Accounting Unit;
e. the fact that an asset cannot be sold does not c. Availability of funds certified by the Chief
preclude it from providing future economic Accountant. The Head of the Accounting Unit
benefits. shall certify the availability of funds before
an Agency Head or his duly authorized
Sec. 32. Recognition of an Asset. An asset shall be
representative enter into any contract that
recognized in the financial position when and only
involves the expenditure of public funds
when:
based on the copy of budget release
(a) it is probable that the future economic benefits will documents;
flow to the entity; and d. Availability of cash certified by the Chief
(b) the asset has a cost or value that can be measured Accountant. The Head of the Accounting Unit
reliably. shall certify the availability of cash and
completeness of the supporting documents
*The following are indicators of probable inflow of
in the disbursement voucher and payroll
future economic benefits:
 based on the Registry of Allotments and valid claim that is properly supported by
Notice of Cash Allocation/Registry of sufficient evidence and unless there is proper
Allotment and Notice of Transfer of authority for its incurrence. Any certification for
Allocation; a non-existent or fictitious obligation and/or
e. Legality of the transactions and conformity creditor shall be considered void. The certifying
with existing rules and regulations. The official shall be dismissed from the service,
requesting and approving officials shall without prejudice to criminal prosecution under
ensure that the disbursements of the provisions of the Revised Penal Code.
government funds are legal and in  Any payment made under such certification
conformity with applicable rules and shall be illegal and every official authorizing or
regulations; making such payment, or taking part therein or
f. Submission of proper evidence to establish receiving such payment, shall be jointly and
validity of the claim. The Head of the severally liable to the government for the full
Requesting Unit shall certify on the necessity amount so paid or received. (Book VI, Section
and legality of charges to allotments under 41 of EO No. 292)
his/her supervision as well as the validity,
Sec. 38. Prohibition against the Incurrence of
propriety and legality of supporting
Overdraft. Heads of departments, bureaus, offices and
documents. All payments of government
agencies shall not incur nor authorize the incurrence of
obligations and payables shall be covered by
expenditures or obligations in excess of allotments
Disbursement Vouchers (DV)/Payrolls
released by the DBM Secretary for their respective
together with the original copy of the
departments, offices and agencies. Parties responsible
supporting documents which will serve as
for the incurrence of overdrafts shall be held personally
basis in the evaluation of authenticity and
liable therefor. (Book VI, Chapter 5, Section 41 of EO No.
authority of the claim. It should be cleared,
292)
however, that the submission of the
supporting documents does not preclude Sec. 39. Mode of Disbursements.
reasonable questions on the funding, Payments/Disbursements by NGAs may be effected
legality, regularity, necessity and/or through the Treasury Single Account (TSA), by issuing
economy of the expenditures or Modified Disbursements System (MDS) check or
transactions; and commercial check, cash through cash advance, Advice
g. Approval of the disbursement by the Head of to Debit Account (ADA), or Non-Cash Availment
Agency or by his duly authorized Authority (NCAA).
representative. Disbursement or disposition
of government funds or property shall Sec. 40. Authority to Disburse/Pay. NGAs are
invariably bear the approval of the proper authorized to disburse/pay based on theNotice of Cash
officials. The DVs/Payrolls shall be signed and Allocation ( NCA), Notice of Transfer of Allocation (NTA),
approved by the head of the agencies or his Cash Disbursement Ceiling (CDC) or other authority that
duly authorized representatives. may be provided by law.

Sec. 37. Certification of Availability of Funds. No funds Sec. 41. Disbursement Voucher/Payroll. Checks/ADA
shall be disbursed, and no expenditures or obligations shall be drawn based on duly approved disbursement
chargeable against any authorized allotment shall be voucher or payroll.
incurred or authorized in any department, office or Sec. 42. Maintenance of Records. All checks/ADA
agency without first securing the certification of its drawn during the day, whether released or unreleased
Chief Accountant or head of accounting unit as to the including cancelled checks shall be recognized
availability of funds and the allotment to which the chronologically in the Checks/ADA Disbursement Record
expenditure or obligation may be properly charged. maintained by the Cash/Treasury Unit.
 No obligation shall be certified to accounts
payable unless the obligation is founded on a
Sec. 43. Reporting of Disbursements. All
payments/disbursements shall be reported using the
prescribed forms for recording in the books of accounts.