ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS (XADVACT3)

GOVERNMENT ACCOUNTING
THE ANGELITE PRAYER
DEFINITION (SECTION 109 OF PD 1445)

GOVERNMENT ACCOUNTING encompasses the processes of

analyzing, recording, classifying, summarizing and communicating
all transactions involving the receipt, disposition and utilization of
government funds and property and interpreting the results thereof.

GOVERNMENT ACCOUNTING
The SUBJECTS of government accounting includes:

1. NATIONAL GOVERNMENT - consisting of departments, bureaus,

commissions, boards, state colleges and universities.
2. LOCAL GOVERNMENT - provinces, chartered cities,
municipalities, and barangays.
3. GOVERNMENT-OWNED OR GOVERNMENT CONTROLLED
CORPORATIONS (GOCC) - which were created by law to
manage specific type of business.
• Ex: Land Bank, PDIC, GSIS, SSS, PhilHealth, Pag-IBIG, NFA,
CDC, PAGCOR, etc. see: GOCCs by SECTORS as of 06.28.2022
https://icrs.gcg.gov.ph/files/5WR9T5r1kwvDzbhcOeYm.pdf

SUBJECTS
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 Institutions (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 ACCOUNTING MANUAL (GAM) for National
Government Agencies (NGA).

COMMISSION ON AUDIT (COA)

This manual presents the basic accounting policies and principles
in accordance with Philippine Public Sectors Accounting
Standards (PPSAS) adopted through COA Resolution No. 2014-003
dated January 24, 2014, and other pertinent laws, rules and
regulations.

It is a revision of the New Government Accounting System (NGAS)

prescribed under COA Circular No. 2002-002 dated January 18,
2002; and it includes the Revised Chart of Accounts (RCA)
prescribed under COA Circular No. 2013-002 dated January 30, 2013,
as amended; the accounting procedures, books, registries, records,
forms, reports and financial statements.

GAM vs. NGAS

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.

DEPARTMENT OF BUDGET AND MANAGEMENT (DBM)

The Bureau of Treasury plays a pivotal role in the cash operations
of the national government.

Under the Revised Administrative Code, the Bureau of Treasury, as

one of the operating bureaus of the Department of Finance is
authorized to:
1. Receive and keep national funds, manage and control the
disbursements thereof; and
2. Maintain accounts of financial transactions of all national
government offices, agencies and instrumentalities.

BUREAU OF TREASURY (DOF-BT)

COA, DBM and DOF Joint Circular No. 2013-1 dated August 6, 2013

UACS = Government’s Chart of Accounts

COA – is responsible for the consistency of account classification

and coding structures with the Revised Chart of Accounts.

DBM - is responsible for the validation and assignment of new

codes for funding source, organization, sub-object codes for
expenditure items.

DOF-BT - is responsible for the consistency of account classification

and coding standards with the Government Finance Statistics.

UNIFIED ACCOUNTS CODE STRUCTURES (UACS)

Each NGAs shall recognize and present its financial transactions
and operations in conformity of the following:
1. Generally accepted government accounting principles in
accordance with the Philippine Public Sector Accounting
Standards (PPSAS) and pertinent laws, rules and regulations.
2.Accrual basis of accounting in accordance wit the PPSAS.
3.Budget basis for presentation of budget information in the
financial statements in accordance with PPSAS 24.
4.Revised chart of accounts prescribed under COA Circulars
5.Double entry bookkeeping.
6.Financial statements based on accounting and budgetary
records.

BASIC ACCOUNTING STANDARDS AND POLICIES

Each NGAs shall recognize and present its financial transactions
and operations in conformity of the following:
7.Fund cluster accounting for books and fund maintenance.
8.Moving average and specific identification methods for
inventory costing.
9.Impairment loss.
10.Registries.

BASIC ACCOUNTING STANDARDS AND POLICIES

1. Registry of Allotments, Obligations and Disbursements (RAOD)
2. Registry of Appropriations and Allotments (RAPAL)
3. Registry of Budget, Utilization and Disbursements(RBUD)
4. Registry of Revenue and Other Receipts (RROR)
5. Registry of Allotments and Notice of Cash Allocations (RANCA)
6. Registry of Allotments and Notice of Transfer of
Allocation(RANTA)

REGISTRIES
BUDGETARY ACCOUNTING is the system of prescribing the
procedures for recording appropriations, allotments and
obligations.

It 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.

BUDGETARY ACCOUNTING
DBM requires national government agencies to submit, on a regular
basis:
1. Budget Execution Documents (BEDs), which contain the
agencies’ targets and plans for the current year, and
2.Budget and Financial Accountability Reports (BFARs), which
contain information on the agencies' actual accomplishments
and performance for a given period.

BUDGETARY ACCOUNTING
BUDGETARY ACCOUNTS consist of the following:
1. APPROPRIATION - an authorization made by law or other
legislative enactment, directing payment of goods and services
out of government funds under specific conditions or for special
purpose.
2.ALLOTMENT - an authorization issued by the Department of
Budget and Management to the government agency, which
allows it to incur obligations, for specified amounts, within the
legislative appropriation.
3.OBLIGATION - 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.

BUDGETARY ACCOUNTS
AUTHORIZATION is the legislative consideration, review and
approval of the national budget.

AUTHORIZATION
BRANCHES OF PH GOVERNMENT
BRANCHES OF PH GOVERNMENT
The NATIONAL BUDGETARY SYSTEM is mainly concerned with the
availability and use of funds for public services.

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 a definite proposal of estimate or statement of receipts and

expenditures that may be approved or rejected. This will also serve
as basis for a General Appropriation Act.

NATIONAL BUDGET
It is a budgeting approach that uses performance information to
assist in deciding where the funds will go.

This new approach to budgeting introduced by the DBM through the

2013 National Budget Memorandum No. 117, requires government
agencies to strengthen the link between planning and budgeting
and to simplify the presentation of budget.

PERFORMANCE-INFORMED BUDGETING (PIB)

With the adoption of the Unified Accounts Code Structures (UACS)
and the Performance-Informed Budgeting (PIB), the following are
the fund release documents:
1. Obligational Authority or Allotment
A. General Appropriations Act Release Document (GAARD)
B. Special Allotment Release Order (SARO)
C. General Allotment Release Order (GARO)
2.Disbursement Authority
A. Notice of Cash Allocation (NCA)
B. Non-Cash Availment Authority (NCAA)
C. Cash Disbursement Ceiling (CDC)
D. Notice of Transfer of Allocation (NTA)

FUND RELEASE DOCUMENTS

A. General Appropriations Act Release Document (GAARD) - serves as
the obligational authority for the comprehensive release of budgetary
items appropriated in the General Appropriations Act, known as “For
Comprehensive Release” (FCR).
B. Special Allotment Release Order (SARO) - covers budgetary items
under “For Later Release” (FLR) in the entity submitted Budget Execution
Documents (BEDs), subject to compliance of required
documents/clearances; and releases of allotments for Special Purpose
Funds (SPFs).
C. General Allotment Release Order (GARO) - a comprehensive
authority issued to all national government agencies to incur
obligations not exceeding an authorized amount during a specified
period for the purpose indicated therein. It covers automatically
appropriated expenditures to agencies without need of special
clearance or approval from competent authority.

OBLIGATIONAL AUTHORITY OR ALLOTMENT

A. Notice of Cash Allocation (NCA) - authority issued by the DBM to cover
the cash requirements of the agencies.
B. Non-Cash Availment Authority (NCAA) - authority issued by the DBM
to cover the liquidation of agencies' actual obligations incurred against
available allotments for availment of proceeds from loans/grants
through supplier's credit/constructive cash.
C. Cash Disbursement Ceiling (CDC) - authority issued by the DBM to the
Department of Foreign Affairs (DFA) and Department of Labor and
Employment (DOLE) to utilize their income collected/retained by their
Foreign Service Posts (FSPs) to cover their operating requirements, but
not to exceed the released allotment to the said post.
D. Notice of Transfer of Allocation (NTA) - authority issued by the Central
Office to its regional and operating units to cover the latter's cash
requirements.

DISBURSEMENT AUTHORITY
1. As to Nature
A. Annual Budget
B. Supplemental Budget
C. Special Budget
2. As to Basis
A. Performance Budget
B. Line-Item Budget
3. As to Approach and Technique
A. Zero-Based Budgeting
B. Incremental Approach

KINDS OF BUDGET
BALANCED BUDGET is a budget where the proposed expenditures are
equal to or less than the estimated revenues.

Currently, the government is operating with a budget deficiency.

As such, it is serving government priorities to achieve a balanced budget by

increasing revenues and cutting on expenditures.

BALANCED BUDGET
Four phases of the BUDGET PROCESS:
1. BUDGET PREPARATION - begins with the issuance of a “budget call” by
the DBM. The Budget Call contains budget parameters (including
macroeconomic and fiscal targets and agency budget ceilings) and
policy guidelines and procedures in the preparation and submission of
agency budget proposals.
2. BUDGET LEGISLATION (LEGISLATIVE AUTHORIZATION) - is a phase of
budget cycle that starts upon the receipt of the President's budget by
the House Speaker and ends with the President's enactment of the
GENERAL APPROPRIATIONS ACT.
3. BUDGET EXECUTION AND OPERATION - is the implementation of the
national budget by different departments and release of allotments.
4. BUDGET ACCOUNTABILITY - DBM monitors the efficiency of fund
utilization, assesses agency performance and provides a vital basis for
reforms and new policies.

THE BUDGET PROCESS

These four phases of the budget process/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.

THE BUDGET PROCESS

Government agencies regularly receive cash in form of NOTICE OF CASH
ALLOCATION (NCA), which is the authority issued by the DBM to central
offices, regional offices, and operating units to cover the cash requirements
of the agencies.

Note that the authority issued by the central office to its regional and
operating units to cover the latter's cash requirements is called NOTICE OF
TRANSFER OF ALLOCATION (NTA).

DISBURSEMENTS AND RELATED TRANSACTIONS

The NCA may be used for the payment of the following types of
transactions:
1. PERSONAL SERVICES (PS) - for payment of salaries, wages and other
compensation of permanent, temporary, contractual and casual
employees of the government.
2. MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE) - expenditures
to support the operations of government agencies, such as: expenses for
supplies, utilities, etc.
3. FINANCIAL EXPENSES (FE) - a new expense category: this is for interest
expense, bank charges, and other financial charges.
4. CAPITAL OUTLAY (CO) - for the purchase of goods and services, the
benefits of which extend beyond the fiscal year and which add to the
asset of the government.
5. OTHER MISCELLANEOUS TRANSACTIONS - e.g., Cash to another agency to
implement a project of the agency, Guaranty deposit, Cash advances, etc.

USE OF NCA