GOVERNMENT

is a system or group of people governing an organized community, often a

state.

GOVERNMENT ACCOUNTING
encompasses the processes of analyzing, recording, classifying, summarizing,
and communicating all transactions involving the receipt and disposition of
government funds and property, and interpreting the results thereof. (State
Audit Code of the Philippines, PD. NO. 1445, Sec. 109)
Like the accounting for business entities, government accounting is also a process
of producing information that is useful in making economic decisions.

Government accounting places greater emphasis on the following:

➢ SOURCES AND UTILIZATION OF GOVERNMENT FUNDS
• SOURCES OF FUNDS- receipts from taxes and other fees, borrowings, and
grants from other governments and international bodies.
• UTILIZATION OF FUNDS- includes expenditures on programs, projects,
unanticipated losses from calamities and the like.

➢ RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OF ENTITIES ENTRUSTED

WITH GOVERNMENT FUNDS AND PROPERTIES.
• Government resources must be utilized efficiently and effectively in
accordance with the law. Government officials are responsible in
implementing this policy, are accountable for the government in their
custody, and are liable for any loss
• It must be emphasized, that government officials are only mere agents of
the government funds and does not own them. They are given the
responsibility to utilize the funds to promote growth in the country/state.
Government Accounting helps in identifying whether or not government
funds are utilized effectively and efficiently.

OBJECTIVES OF GOVERNMENT ACCOUNTING

➢ To produce information concerning past operations and present conditions;
➢ To provide a basis guidance for future operations;
➢ To provide for control of the acts of public bodies and officers in the receipt,
disposition and utilization of funds and property.
➢ To report on the financial position and the results of operations of
government agencies for the information of all persons concerned
ACCOUNTING RESPONSIBILITY

➢ COMMISSION ON AUDIT (COA)

• has the exclusive authority to promulgate accounting and auditing rules and
regulations, keeps the general accounts of the government, supporting
vouchers, and other documents and submits financial to the President and
Congress.
➢ DEPARTMENT OF BUDGET AND MANAGEMENT (DBM)
• responsible for the formulation and implementation of the national budget
with the goal of attaining the nation’s socio-economic objectives.
➢ BUREAU OF TREASURY (BTr)
• functions under the Department of Finance is the cash custodian of the
government authorized to receive and keep national funds and manage and
control the disbursements thereof and maintain accounts of financial
transactions of all national government offices, agencies and
instrumentalities.
➢ GOVERNMENT AGENCIES
• any department, bureau or offices of the national government, or any of its
branches and instrumentalities, or any political subdivision, as well as any
government owned or controlled corporation (GOCC), including its
subsidiaries, or other self-governing board or commission of the
government.

GOVERNMENT ACCOUNTING MANUAL FOR NATIONAL GOVERNMENT AGENCIES

➢ was promulgated primarily to harmonize the government accounting
standards with international accounting standards, particularly the
International Public Sector Accounting Standards (IPSAS). The IPSASs are
based on the International Financial Reporting Standards (IFRS)
The GAM of NGAs provides the basic concepts to be used in:
• Preparing general purpose financial statements in accordance with the
Philippine Public Sector Accounting Standards (PPSAS) and other financial
reports as may be required by laws, rules, and regulations.
• Reporting of budget, revenue, and expenditure in accordance with laws,
rules and regulations.

OBJECTIVE OF GOVERNMENT ACCOUNTING MANUAL FOR NATIONAL GOVERNMENT

AGENCIES
1. Update standards, policies, guidelines, and procedures in accounting for
government funds and property
2. Update Coding Structure and accounts
3. Update Accounting registries, records, forms, reports, and financial
statements.

BASIC ACCOUNTING AND BUDGET REPORTING PRINCIPLES

The financial records and reports of government entities comply with the
following;
• Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules
and regulations.
• Accrual basis of accounting
• Budget basis for presentation of budget information in the financial
statements
• Revised Chart of Accounts prescribed by COA
• Double entry bookkeeping
• Financial statements based on accounting and budgetary records
• Fund cluster accounting- The books of accounts are maintained by fund
cluster

CODE FUND CLUSTER

01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account- Locally Funded/ Domestic Grants Fund
04 Special Account- Foreign Assisted/Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts
 QUALITATIVE CHARACTERISTICS OF COMPONENTS OF GENERAL-PURPOSE
FINANCIAL REPORTING FINANCIAL STATEMENTS
a) Understandability a) Statement of Financial Position
b) Relevance b) Statement of Financial Performance
c) Materiality c) Statement of Changes in Net
d) Timeliness Assets/Equity
e) Reliability d) Statement of Cash Flows
f) Faithful Representation e) Statement of Comparison of Budget
g) Substance over form and Actual Amounts
h) Neutrality f) Notes to Financial Statements
i) Prudence
j) Completeness
k) Comparability

ELEMENTS OF FINANCIAL STATEMENTS

• ASSETS
• LIABILITIES
• EQUITY
• REVENUE
o Revenue Funds-comprise all funds derived from the income of any agency of
the government and available for appropriation or expenditure in
accordance with law.
• EXPENSES

NATIONAL BUDGET
(or government budget) the government’s estimate of sources and uses of
government funds within a fiscal year. This forms the basis for expenditures and
is the governments

BUDGET CYCLE
1. Budget Preparation
• Bottom- up approach
The Philippine Government uses “bottom-up” approach in budget
preparation.
Under “bottom -up” budgeting, several parties participate in the budget
preparation, starting from the lowest to the highest levels of the
government. Government agencies are also tasked to increase the
participation of citizen-stakeholders in the budget preparation.
 The Philippine Government also started to shift from
Incremental budgeting- current year budget is formulated based on
previous years budget, adjusted for variances experienced in the past.
Zero-based budgeting- current year budget is formulated without regard
to the previous year’s budget. Government agencies are required to justify
their current years
2. Budget Legislation
3. Budget Execution
4. Budget Accountability

STEPS IN BUDGET PREPARATION

1. Budget Call
this start the budget preparation when budget call is issued by the
Department of Budget and Management (DBM) to all government agencies
containing the next fiscal year’s targets, agency budget ceiling, and other
guidelines in the completion and submission of agency budget proposals.
2. Budget Hearings
comes after submission of agencies of their budget proposals where they will
defend their budget proposal before the DBM. The DBM deliberates on the
budget proposals, makes recommendations, and consolidates the deliberated
proposals into the National Expenditure Program (NEP) and Budget of
Expenditures and Sources of Financing (BESP). The DBM then submits the
proposed budget to the president.
3. Presentation to the Office of the President
The President and Cabinet members review the proposed budget. Upon the
president’s approval, the DBM finalizes the budget documents to be
submitted to the Congress. At this point, the proposed budget is referred to
as the “President’s Budget”.

BUDGET LEGISLATION Government funds shall only be spent in pursuance of an

appropriation made by law. Therefore, due process must be undertaken to legalize
the proposed budget.
1. House Deliberations upon receipt of the President’s Budget, the House of
Representatives conducts hearings to scrutinize the various agencies’
respective proposed programs and expenditures. thereafter, the House of
Representatives prepares the General Appropriation Bill (GAB).
2. Senate Deliberation
3. Bicameral Deliberations
4. President’s enactment
THE APPROVED BUDGET is the expenditure authority derived from appropriation
laws, government ordinances, and other decisions related to the anticipated
revenue or receipts for the budgetary period.
Appropriation is the authorization made by a legislative body to allocate funds for
purposes specified by the legislative or similar authority.

The Approved Budget Consist of the following:

New General Appropriations (UACS Code: 01)
1. are annual authorizations for incurring obligations during a specified budget
year, as listed in the GAA.
Continuing Appropriations (UACS Code: 02)
2. are the authorizations to support obligations for a specific purpose or project,
such as multi-year construction projects which require the incurrence of
obligations even beyond the budget year.
Supplemental Appropriations (UACS Code: 03)
3. are additional appropriations authorized by law to augment the original
appropriations which proved to be insufficient for their intended purpose due
to economic, political or social conditions supported by a Certification of
Availability of Funds from the BTr.
Automatic Appropriations (UACS Code: 04)
4. are the authorizations programmed annually or for some other period
prescribed by law which do not require periodic action by Congress.
Unprogrammed Funds (UACS Code: 05)
5. are
Retained Income/Funds (UACS Code: 06)
6. are
Revolving Funds (UACS Code: 07)
7. are
Trust Receipts (UACS Code: 08)
8. are

Steps in Budget Execution this is the phase where government funds are spent.
1. Release guidelines and Budget Execution Documents (BEDs)
2. Allotment
3. Incurrence of Obligations
4. Disbursement Authority
Budget Accountability
this phase occurs concurrently with the Budget Execution phase. As the budget is
being executed, it is regularly monitored to determine the conformance of actual
results with planned targets.

STEPS IN BUDGET ACCOUNTABILITY

1. Budget Accountability Reports
government agencies are required to submit the following accountability
reports:
2. Performance Reviews
The DBM and COA perform periodic reviews of the agencies’ performance and
budget accountability and report to the President.
3. Audit
COA audits the agencies

THE GOVERNMENT ACCOUNTING CYCLE

1. Appropriation
2. Allotment
3. Incurrence of Obligations
4. Disbursement of Authority- NCA
5. Disbursements
6. Billings, Collections and Remittances
7. Unadjusted Trial Balance
8. Adjusting Entries
9. Closing Entries
10. Preparation of Financial Statements