ADAMSON

UNIVERSITY

BUDGET AND OPERATING PROCEDURES OF BARANGAY 66 ZONE 8 PASAY CITY, METRO MANILA

A Consultancy Paper Presented to The College of Business Administration Adamson University Manila

In Partial Fulfillment of the Requirements for the Degree BACHELOR OF SCINCE IN ACCOUNTANCY

Submitted by: Caron, Joan Bernadette C. Condol, Marcel Jan M. Esguerra, John Mark F. Noceda, Jennica Eloise F. Rodulfa, Maricris R.

MARCH 2011

ACCOUNTANCY DEPARTMENT

ADAMSON
INTRODUCTION Barangay is the

UNIVERSITY

smallest

unit

of

local

government

in

the

Philippines. Each city or municipality contains numerous barangays and each barangay is administered by a Barangay Captain and a community council whose members are elected by the residents of the barangay. It serves as the primary planning and implementing unit of government policies, plans, programs, projects, and activities in the community, and as a forum wherein collective views of the people may be expressed, crystallized, and considered, and where disputes may be amicably settled. (Sec 384) Barangays are composed of a Punong Barangay or Barangay Captain, seven (7) Barangay Councilors or Barangay Kagawad, and a Youth Council or Sangguniang Kabataan (SK) Chairman which is considered as a member of the Council. A barangay is given an annual budget by the national government. Aside from being a financial plan, the barangay budget serves as an instrument for barangay officials to effectively manage the development of the barangay. A well-prepared barangay budget serves as basis for planning and policy adaption, program and project implementation, financial control and management information. A barangay budget consist of estimates of income and total appropriations covering current expenditures and capital outlays. In implementing or executing the barangay budget, barangay officials shall ensure that the revenues as estimated are realized, that the approved programs and projects in the barangay development plan and in the annual budget are implemented, that barangay funds are disbursed in accordance with the appropriation ordinance and reviewed annual budget, that all financial transactions of the barangay follow accounting and auditing rules. Barangay records and reports of budgetary transactions must be prepared and kept to provide

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

information on the status of project implementation and serve as basis for the necessary corrective action for identified deviations, to ensure that obligations are incurred within the limits of the approved appropriations, to record unpaid obligations, both current and those certified to as accounts payable at the end of the year, to make transactions transparent and the financial status of the barangay a matter of public knowledge, to serve as basic input into the next budget preparation. The barangay officials must report to the general public the income actually realized for the quarter, expenditures actually spent for the quarter and accomplishments for the quarter. In connection to this, a study was conducted regarding the flow of operations in a barangay. The barangay that we visited to conduct our study was Barangay 66 Zone 8 Pasay, City Metro Manila situated within the heart of Pasay City, whose boundaries were North Lakandula, East Dolores, West Tramo Lane South Arnaiz Avenue. The said community was headed by Barangay Captain Eduardo Balanova. Residential, commercial and industrial establishments are erected within the area, having a total land area of 0.0281 square kilometres. Most of the people living in Zone 8 are employees and do have sari-sari store as their major source of livelihood. Like any organization, entity or local government unit, funds are indispensable to the barangay for payment of its operational expenses and to successfully perform its powers, functions and duties vested upon by law. The said barangay has a total allotted annual budget for 2011 of P2, 142,317.91 to be allocated to theirs programs and projects. Disbursements of funds are made in compliance with the existing rules and regulations

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

and the Barangay Chairman is held primarily responsible for its execution of and accountability. This study of the operations of a barangay aims to provide a better understanding to the community of the said barangay regarding the utilization of financial resources of their barangay. This study will also give them awareness and eventually help their barangay in its functions and operations. In this study, the researchers gained knowledge of how a barangay, the smallest unit of the local government, conduct its operations and handle their financial resources efficiently for the whole year in a manner that will benefit the whole community. The future researchers can also make use of this study as a basis or reference for further investigation and analysis of the subject or situation.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

DESCRIPTION OF THE PROCESS THE BUDGET CYCLE

The

Punong

Barangay,

with

the

assistance

of

the

Barangay treasurer, prepares the barangay budget.

A Barangay budget consist of the following: o Estimates of income; and, o Total appropriations covering current operating

expenditures and capital outlays.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

The Barangay Treasure is responsible for determining the estimated income to be used as a source of fund in the budget.

The Barangay Treasurer should submit to the Punong Barangay on or before September 15 of each year the detailed Statements of Income and Expenditures as a basis for the preparation of the Budget for the next fiscal year.

Flowchart of the Barangay Budget Process Estimated savings at the end of the current year forms paart of the Beginning balance for the budget year.

It includes projected balances of any appropriation which remain freeof any obligation or encumbrances and which are still available at the end of the current year after the satisfactory completion, or the unavailable of the discontinuance or abandonment of the work, activity or purpose for which the funds where authorized.

The

barangay

annual

budget

must

include

the

following:

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

o Appropriation for development projects of not less than 20% of the total IRA of the barangay for the budget year (Development Fund); o Appropriation for Sangguniang Kabataan (SK) programs, projects and activities equivalent to 10% of the general fund of the barangay for the budget year (SK Fund); o Appropriations for unforeseen expenditures

arising from the occurrence of calamities at 5% of regular incomefor the budget year; and o Provision for the delivery of basic services and

pursuant to Section !& of RA No.7160, effective local governance.

I. Disbursement By Check a. All disbursement shall coverd with duly processed and approved DVs/payroll;

b.The DVs/Payroll shall be prepared by the BRK;

c. The BT shall be responsible for paying claims against the barangay. All disbursements shall be in accordance with existing rukes and regulations;

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

d.All claims shall be approved by the PB and certified as to the validity, propriety and legality of the claim. In case of claimchargeable against Sangguniang Kabataan Funds (SKF), The Chairman Sangguniang

Kabataan (SK) shall initial under the name of the PB;

e. Payment shall be drawn against the depository account maintained with depository bank by the barangay.

f. The check shall be issued in the name of the payee as indicated in the DV/payroll.

g.The chekh shall be signed by the BT and countersigned by the PB;

h.All disbursement by check shall be reported in the summary of Checks Issued (SCKI); and

i. In case checks are waylaid, lost through theft or force majeure, etc. the BT shall immediately notify and issue a Stoppage of Payment notice to the banks; and j. Stale check shall be replaced only when the original is submitted to the BT for replacement. II. Disbursement out of Cash Advance for Payroll

ACCOUNTANCY DEPARTMENT

ADAMSON
a. Cah payment

UNIVERSITY
shall be made out of the cah

advance given to the BT/AO;

b.

The cash advance shall be used solely for payment

of salaries, honoraria, and other allowances due to the barangay officials and employees;

c.

The

cash

advance

shall

not

be

used

for

the

encashment of checks or for liquidation of previous cash advance;

d.

The

cash

advance

shall

be

equal

to

the

net

amount of the payroll corresponding to the pay period;

e.

The cash shall be liquiodated within 5 days after

the end of the pay period.

f.

Any unclaimed Honoraria/salaries/allowances shall

be refunded to close the account;

g.

All

paid

DVs/Payrolls

shall

be recorede

in

the

Summary of Cash Payments (SCP);

h.

The SCP supported by paid DVs/Payroll shall be

accomplished to support the liquidation of the cash advance for payroll. In case the cash advance is more

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

than the disbursement, the excess shall be refunded and an OR shall be issued. i. Succeeding cash advance shall be granted only

after full liquidation of the previous cash advance.

III. Disbursements out of Cash Advance for Travel and Special Purpose/Time-bound Undertaking a. For local/foreign travel, liquidation shall be done within a period of 30/60 days upon return to the personnels workstation; b. Cash advance for special purpose/time-bound

undertaking shall be liquidated upon accomplishment of the purpose for which it was granted; c. Excess cash advance shall be refunded and an OR

shall be issued by the BT; d. who The in liquidation turn shall report it to with the appropriate City/Municipal

supporting documents shall be submitted to the BRK, submit Accountant for recording in the books on or before the fifth day of the following month.

IV. Disbursement out of the Petty Cash Fund

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

a) The Petty Cash Fund (PCF) shall be maintained using the Imprest system. The balance of the PCF shall not closed at the end of the year. b) The fund shall be kept separately from the regular collections expenses; c) The amount of the PCF shall be determined by the SB but not to exceed twenty percent (20%) of the funds available and to the credit of the barangay treasury d) All disbursements out of PCF shall be covered by duly approved and accomplished Petty Cash Vouchers supported by cash invoices, ORs or other evidence of disbursements required undeper applicable accounting and auditing rules and regulations; e) All paid Petty Cash Vouchers (PCVs) shall be reported in the summary of paid PCVs (SPPCV) to be certified by the Petty Cash fund Custodian (PCFC). f) The PCF shall be replenished as soon as disbursements reach seventy five percent (75%) or as needed; g) Replenishment of the PCF shall be made by submitting a DV for the purpose supported by duly certified SPPCV, paid PCVs and supporting documents; h) In case the PCFC resigns or ceased as custodian of the Fund, full accounting/liquidation of the Fund shall be and advances granted for a particular purpose and shall not be used for payment of regular

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

made. any remaining cash shall be refunded to close the account; and i) In no case shall the remaining cash of the former PCFC be transferred to the incoming PCFC. For a complete accounting, the account of the former PCFC shall be closed and a new account shall be opened for the incoming PCFC.

ACCOUNTANCY DEPARTMENT

ADAMSON
Legend:

UNIVERSITY

DV - Disbursement Voucher P - Payroll I - Invoices DTR - Daily Time Record OSD - Other Supporting Documents CCC - Carbon Copy of the Check OR - Official Receipt AP - Approved Payroll CA - Certificate of Appearance RIT - Revised Itenirary of Travel I/T - Invoices/Tickets SEP - Summary of Expenses Paid LR - Liquidation Report LB - Log Book BT/AO- Barangay Treasurer/ Accountable Officer SBR - Sanggunian Barangay Resolution PCV - Petty Cash Fund SPPVC- Summary of paid petty cash fund Symbols: Flow of Documents Records file Document

Check Process Book

ACCOUNTANCY DEPARTMENT

ADAMSON
-

UNIVERSITY

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

Area of Responsibility/Person Responsible Barangay Treasurer

Sequence 1 2 3

Activity Receives the approved DV/Payroll. Verifies completeness of signatures on the DV/Payroll. Prepares the check in the name of the payee for the amount indicated in the DV/Payroll. Note 1. The check shall be prepared eith a carbon copy, to be distributed as follows: Original Payee Carbon Copy attached to the DV/Payroll

4 5

Signs the check. Forwards the check together with the DV/Payroll and supporting documents to the PB for countersignature on the check. Countersigns the check and returns it to the BT together with the supporting documents for release. Receives and releases the check to the payee. Attaches the carbon copy of the check to the paid DV/Payroll. Acknowledges the receipt of payment by signing in Box D of the DV, and retains 3 r d copy for his file.

Punong Barangay

Barangay Treasurer

Payee/Supplier

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

Issues an OR, if applicable, to acknowledge the payment received. Returned the signed DV to the BT with the OR to the BT. Note 2. The Or (if applicable) shall be made as an additional supporting document to the disbursements.

10

Barangay Treasurer

11

Attaches the OR issued by the payee/supplier to the original DV together with the carbon copy of the check. Retains the 2 n d copy of the Dv for file.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

ACCOUNTANCY DEPARTMENT

ADAMSON
Area of Responsibility/Person Responsible Barangay Treasurer

UNIVERSITY
Sequence 1 2 3 Activity Receives the check for the cash advance. Encashes the check. Pays the officers/employees listed in the payroll. Note 1. The officers/employees shall be required to sign in the column of the payroll to acknowledge the receipt of payment from the BT. 4 5 6 Refunds any unclaimed salaries/wages/honoraria. Issues OR for the refund. Files the paid DV/payroll temporarily to support SCP.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

ACCOUNTANCY DEPARTMENT

ADAMSON
Area of Responsibility/Person Responsible Barangay Treasurer/Accountable Officer

UNIVERSITY
Sequence 1 Activity Prepares the LR based on the certificate of Travel completed/Revised Itinerary of Travel, Ors, Invoices, tickets, etc. and summary of expenses paid. Note 1. The LR shall be prepared in three copies to br distributed as follows: Original City/Municipal Accountant 2 n d Copy BRK 3 r d Copy BT/AO 2 3 Check supporting documents against the LR. Signs Box A certified portion of the LR as to the correctedness of the data. Submits the duly signed LR together with all supporting documents to the PB. Receives LR together with supporting documents. Signs Box B portion of LR as to the purpose of travel/cash advance duly accomplished. Forwards LR and supporting documents to BRK. Receives the LR and records in the log book. Signs Box C of LR as to completeness of supporting documents.

Punong Barangay

6 Barangay Record Keeper 7 8

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

Submits the original LR to the City/Municipal Accountant on or before the 5 t h day of the following month. forwards the 3 r d copy to BT/AO and retains the 2 n d copy together with the supporting documents.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

Area of Responsibility/Person Responsible

Sequence A

Activity Receipt of the authority as PCFC and establishment of PCF. Receives the approved SB Resolution designating the BT or an official as PCFC. Forwards the documents to the BRK for the preparation of the DV for the establishment of PCF. Note 1. subject to Certification and Approval of Payment.

Petty Cash Fund Custodian 1

3 B Requesting Official/Staff 4

Receives and encashes the check. Request for cash from PCF. Prepares the PCV and signs the requested by portion of Box A. Note 2. The PCV shall be prepared in two copies to be distributed as follows: Original to support the SPPCV 2 n d Copy Requesting Official

5 Punong Barangay 6

Forwards the signed PCV to the PB for approval. Signs the approved by portion of PCV.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY
7 Forwards the PCV to the PCFC for payment. Pays the amount and signs the paid by portion of Box B. Receives the amount and signs the paid by portion of Box B. Returns the signed PCV to PCFC and retains 2 n d copy for file. Liquidation of the cash received. Submit to the PCFC the Invoice/Official Receipt and othr evidence supporting the disbursements. Receives documents and other evidence of payments/disbursement. Retrieves the original PCV and computed the amount due to/form the recipient of the fund. Reimburses the requesting official/staff for the advances made, if any and signs Box C. Note 3. In case the PCF received exceeds the disbursements made, the requesting officials shall return the excess to the PCFC and signs Box C.

Petty Cash Fund Custodian Requesting Official/Staff

8 9 10

C 11

Petty Cash Fund Custodian

12

13

14

Requesting officials

15

Signs Box D for the reimbursement received or liquidation made and returns

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY
the original of PCV to PCFC.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

ACCOUNTANCY DEPARTMENT

ADAMSON
Area of Responsibility/Person Responsible Barangay Record Keeper

UNIVERSITY
Sequence 1 2 Activity Retrieves paid PCVs and SPPCV on file. Preapres the DV for the replenishment of the PCF. Note 1. The replenishment shall be equal to the amount disburse per SPPCV. 3 Attaches the original SPPCV with paid PCVs to the DV for replenishment of the PCF.

ACCOUNTANCY DEPARTMENT

ADAMSON
FINDINGS Based on the

UNIVERSITY

thorough

examinations,

analysis

and

data

gatherings, the researchers come up with the following findings: 1. The barangay officials did not adhere to the prescribed policies and procedures outlined by Department of Budget and Management, but instead they made simple procedures for practicality rather than the provided procedures above which is a bit complex compare to their current procedures they usually used. According to them, if they will follow the step-by-step

procedures provided above, it will take them like 2-3 days of processing. But still, the procedures are the same. Documents needed to be sign also went through the inspection of the punong barangay, barangay treasurer. 2. The procedures made by the barangay officials were still legal and signed by authorized persons. In terms of disbursements and receipts, eventhough they do not adhere to the step by step procedures as prescribed, they make sure that all signatures needed are authorized.

3. There was a proper segregation of duties among the barangay officials. In the course of data gatherings, a well structured division of labor was observed in the brangay in such a way that there is a respective chairman for each projects and functions such as Administration, Programs like Liga, Environmental and the like. With this, the community may be assured that all of their respective functions are carried at their best.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

RECOMMENDATION Based on the findings formulated, the researchers strongly recommend the following: 1. There must be a better definition of liabilities of the barangay officials to the community and to the national government. Through this systematic process, lesser chance for corruption may be gained in all aspects of the process.

2. Transparency and accountability in all transactions should observe at all times. Through the process of transparency and accountability, the public will have the capability to examine and review the full performance and reports of the public sector which will leads to confidence and trust in the government entities.

3. The Local Government specifically the Barangay should be participatory to improve public engagements that will enhance the Governments effectiveness and the quality of its decisions . Knowledge is widely dispersed in society, and public officials benefit from having access to that dispersed knowledge. Local agencies should offer its community increased opportunities to participate in policymaking and to provide their Government with the benefits of their collective expertise and information. They should also solicit public input on how they can increase and improve opportunities for public participation in Government.

ACCOUNTANCY DEPARTMENT

ADAMSON

UNIVERSITY

4. There must be also participation from the community . They must be well informed of the activities and projects of the barangay because people themselves should be a part of the system. Active participation of the community will promote social awareness among its members that might increase its public participation and increase opportunities.

5. Local work of

government their

agencies The and

should local systems

be

collaborative. shall use

Collaboration actively engages its local community members in the Government. methods, government to innovative tools, cooperate among

themselves, across all levels of Government, and with nonprofit organizations, businesses, and individuals in the private sector. They should emanate public feedback to assess and improve their level of collaboration and to identify new opportunities for cooperation.

ACCOUNTANCY DEPARTMENT