disposition of government fund and property

and interpreting the results thereof.”

CHAPTER 1:

NATURE AND SCOPE OF THE NEW

GOVERNMENT ACCOUNTING SYSTEM OBJECTIVES

NGAS – NEW GOVERNMENT ACCOUNTING 1. To provide information concerning past

SYSTEM operations and present conditions;

•Introduced the basic policies and 2. To provide a basis for guidance for future
procedures, the new coding system, the operations
accounting systems, books, registries,
3. To provide for control of the acts of public
records, forms, reports and financial
bodies and offices in the receipt, disposition
statements to be adopted by all national
and utilization of funds and property.
government agencies effective January 1,
2002 4. To report on the financial position and the
results of operations of government agencies
THE NGAS WAS MADE IN ORDER TO
for the information and guidance of all
RESPOND TO THE NEED FOR THE
persons concerned
FOLLOWING:

• The adoption of a system that is in

conformity with the International Accounting ACCOUNTING RESPONSIBILITY
Standards.
This was emnates from the Constitution,
• Pursuit of eventual computerization, which Laws, Policies, Rules and Regulations.
will include responsibility accounting,
Offices charged with the accounting
thereby ensuring the generation of various responsibility are:
reports that are useful to the management,
lawmakers and the general public. 1. Commission on Audit (COA)

• Generation of relevant and periodic 2. Department of Budget and Management

financial statements (DBM)

• Effective tool for managers and executives 3. The Bureau of Treasury (BTr)
in effective and efficient monitoring of 4. Government Agencies discharging the
Agency Performance. functions of government.

GOVERNMENT ACCOUNTING COMMISSION ON AUDIT

•It is defined, pursuant to Section 109 of PD COAs was mandated by Article IX-D, Section
1445, as one which “encompasses the 2 par. 2 of the 1987 Constitution of the
process of analysing, recording, classifying, Philippines.
summarizing and communicating all
transactions involving the receipt and
Functions are: • purpose, and an independent fiscal and
accounting
1. Keeps the general accounts of the
government 2. Promulgates accounting rules 3. Chart of Accounts and Account Codes
and regulations
• The implementation of Unified Account
3. Submission of Annual Report to the Code Structure system from Old GAS of 6
President and Congress. digits, then NGAS of 3 digits

4. Responsibility Accounting – is a part,

segment, unit or function of a government
DEPARTMENT OF BUDGET AND
agency.
MANAGEMENT

The DBM shall be responsible for the

formulation and implementation of the ACCOUNTING METHODS
National Budget with goal of attaining our
Accrual accounting is used on most of the
national socio-economic plans and objectives
transaction. Then Cash Accounting for
Under the NGAS, it shall also maintain transaction in which Accrual Accounting is
impractical.
the Registry of Allotments and Notice of
Cash Allocation for its control and Accrual Accounting – Income is recognized
monitoring of NCA releases. when earned and expenses when incurred.

Cash Accounting – Income and Expenses are

recognized upon cash receipt and cash
BUREAU OF TREASURY
payment.
Deals with the cash operations of the
national
ONE FUND CONCEPT
Under the Revised Administrative Code, the
Bureau of Fund is both a sum of and an independent
money set aside for a specific purpose, fiscal
Department of Finance is authorized to:
and accounting entity.
1. Receive and i keep national funds, manage
The NGAs adopts on fund concept.
and 2. Maintain accounts of financial
transactions of all instrumentalities. General Fund – is a fund appropriated for the
general purpose (101101).

Special Fund – is a fund appropriated for

BASIC FEATURES AND POLICIES OF NGAS
purposes other than those provided in the
1. Accounting Methods regular funds of the NGAs.

• A modified accrual basis of accounting shall

be used.
EXAMPLES OF SPECIAL FUNDS
2. One Fund Concept
 It is a uniform coding system for the whole
government that
• Contingent Fund

• DepEd – School Building

Program/Educational Facilities Fund RESPONSIBILITY ACCOUNTING

• Miscellaneous Personnel Benefits Fund It is a system that relates the financial results
to responsibility center, which provides
• Pension and Gratuity Fund
access to cost and revenue information
• Priority Development Assistance Fund under the supervision of a manager having
direct responsibility for its performance.
• Calamity Fund
It aims to:
• Retirement Life Insurance Premium
1. Cost and revenues are properly charged to
• Comprehensive Agrarian Reform Program a specific budget.

2. Basis for making decisions for future

EXAMPLES OF SPECIAL FUNDS operations

• Malampaya Gas Fund 3. Facilitate review activities, monitoring the

performance and evaluation of effectiveness
• Special Education Fund of operations.
• Special Road Support Fund

• Special Local Road Fund BOOKS OF ACCOUNTS

• Special Road Safety Fund The basis for recording in the journals shall
• Special Vehicle Pollution Control Fund be the Journal Entry Voucher (JEV):

• Support for Infrastructure Projects and Before the implementation of UACS, NGAs
Social Programs shall maintain to sets of accounting books:

• Regular Agency (RA) Books

CHART OF ACCOUNT AND ACCOUNT CODES • National Government (NG) Books

The implementation of Unified Account Code After the implementation of UACS, NG Books
Structure, UACS was effected on January 1, was no longer maintained.
2014.

UACS incorporates the Agency, location, BOOKS OF ACCOUNTS

fund source,
Journals:

• General Journal (GJ)

Ledgers: OBLIGATION ACCOUNTING

• General Ledger (GL) Procedures in the incurrence and liquidation

of obligations and the recording of budgetary
• Specific Subsidiary Ledgers (SL)
accounts.

Four Classes of Allotments

FINANCIAL STATEMENTS
•Personnel Services (PS) – pertains to
Under Philippine Public Sector Accounting personnel benefits. •Maintenance and Other
Standard (PPSAS), the Operating Expenses (MOOE) •Capital Outlay
(CO) – for capital expenditures.
1. Statement of Financial Position (Balance
Sheet) – show the •Financial Expenses (FE) – for payment of
interest and other financial cost.
2. Statement of Financial Performance
(Income Statement) – Note: all allotment class required by the rule
to have a separate registry.
3. Statement of Cash Flows – show the
receipt and disposition of

4. Statement of Changes on Net Assets or NOTICE OF CASH ALLOCATION

Equity – show the
Is an authorization issued by the DBM to
5. show the relationship between allotments Gov. Agencies to withdraw cash from the
and utilizations as of National Treasury through Modified
Disbursement System (MDS).

Entry for the receipt of NCA:

ALLOTMENT AND OBLIGATIONS

Appropriation – this a legislative

authorization for a specific budget. One Cash – Modified Disbursement System (MDS)
example is General Appropriations Act – Regular------xx,xxx.xx
(GAA).
Subsidy from National
Allotment – is the authorization issued by Government----------------------------xx,xxx.xx
the Department of Budget and Management
(DBM) to an NGA thereby enabling the
Agency to incur obligations up to a specified The NCA released by DBM was net of tax
amount that is within the appropriation. that is expected to be remitted by the
Agency to BIR. In effect, remittance of taxes
Obligation – it is commitment by gov. agency
is thru a cashless method, Tax Remittance
arising from an act of a duly authorized
Advice.
official.
ACCOUNTING METHOD ADAPTED BY THE • This is granted to Regular or special
NGAS disbursing officer, the

•Perpetual Inventory System – an inventory liquidation and replenishment of which is the

control current basis. responsibility of the said bonded official.

•costing the materials and supplies. d

average is used in •Construction of assets –
•Foreign Currency Adjustment – Foreign
all construction related cost capitalized.
currency loan balances shall valued using the
•completed construction projects shall I prescribed exchange rate by BSP.
removed from PPE on the books of the Gov.
Agency in which the
Chapter 2:

ACCOUNTING FOR BUDGETARY ACCOUNTS

ACCOUNTING METHOD ADAPTED BY THE
NGAS Section 29 (I) Article VI of the 1987
Constitution Provides
•Depreciation – straight-line method of
depreciation shall be used for government “No money shall be paid out of the Treasury
PPE, except in pursuance of an appropriation by
law.”
• the computation of depreciation will
commence on the 2nd month after
acquisition.
ACCOUNTING SYSTEMS
• Salvage value is equivalent to 10% of
acquisition cost • Under NGA, Infrastructure 1. BUDGETARY ACCOUNT SYSTEM
assets is not subject to 2. RECEIPT/INCOME AND DEPOSIT SYSTEM
depreciation. Under PPSAS, it is subject to 3. DISBURSEMENT SYSTEM
depreciation. • Life of the PPE is provided
under COA Circular# 2003-007 4. FINANCIAL REPORTING SYSTEM.

dated 12/11/03.

•Recognition of Liability – at are accepted or THE NATIONAL BUDGET

rendered are received. the time goods and BUDGETING – is basically planning and
services and supplier/creditor bills control.

PLANNING – development of future

ACCOUNTING METHOD ADAPTED BY THE preparation of various budgets to objectives.
NGAS objectives and the achieve these

•Petty Cash Fund – the imprest system. All CONTROL – steps to ensure that organization
replenishment function are in a the organization policies.
All parts of the manner consistent with
shall be directly charged to the expense
account.
GOVERNMENT BUDGET – It is a plan for appropriations during fiscal year in
financing the government activities for a progress.
fiscal year prepared and submitted by  Statement of the condition of the
responsible executive to a representative National Treasury at the end of the
body whose approval and authorization are last completed fiscal year, the
necessary before the plan can be executed. estimated condition at the end of
the fiscal year in progress and the
estimated condition at the end of
FORM AND CONTENT OF THE NATIONAL ensuing fiscal year.
BUDGET

Sec. 22, Article VII of the Constitution of the

FUNDAMENTAL PRINCIPLES OF FISCAL
Philippines provides that “The President of OPERATIONS
the Phil. Shall submit to Congress within 30
1. No money shall be paid out of the
days from the opening of every regular
depository except in pursuance of other
session, as the basis of the General
statutory authority public treasury or an
Appropriations Bill, a budget of expenditures
appropriation law or
and sources of financing, including receipts
from existing and proposed revenue 2. Government funds or property shall be
measures.” spent solely for public purpose.

3. Trust funds shall be available and may be

spent only for the specific purpose for which
CONTENTS OF GENERAL APPROPRIATIONS
the trust was created.
BILL
4. Fiscal responsibility shall, to be greatest
1. A budget message setting forth in brief the
extent, be shared by all those exercising
government’s budgetary thrust for the
authority over the financial affairs,
budget year, including their impact on
transaction, and operations of the
development goals, monetary and fiscal
government agency.
objectives and generally on the implications
of the revenue, expenditure and debt 5. Disbursement or disposition of
proposals government property shall invariably bear
the approval officials funds or of the proper
2. Summary of financial statements setting
forth: 6. Claims against government funds shall be
supported with complete documentation
 Estimated expenditures and
proposed appropriations. 7. All law and regulations applicable to
 Estimated receipt during the ensuing financial transaction shall be faithfully
fiscal year. adhered to.
 Actual appropriations, expenditures
8. Generally Accepted principles and
and receipts during the last
practices of accounting, as well as, of sound
completed fiscal year.
management and fiscal administration shall
 Estimated expenditures and receipts
be observed, provided they do not
and actual or proposed
contravene existing laws and regulations.
 1. BUDGET PREPARATION

KINDS OF BUDGET 1. Budget Call – the issuance of budget call

by the DBM outlines the priority areas of
1. As to Nature
government activity applicable to the budget
a) Annual Budget – It is based on annual year.
appropriation
This reiterates the fiscal limits and
b) Supplemental Budget – supplement or approximate rate of increase in government
adjust a previous budget which deemed ceiling applicable to the budget year and
inadequate for the purpose it is intended. appearing in the developing plan.
Based on supplemental appropriation
The budget proposal shall be based on their
c) Special budget - special a nature and merits and not on statistical basis.
generally submitted in special forms on
2. BUDGET AUTHORIZATION
account that itemization are not adequately
provide in the Appropriation Act. It is the enactment of General
Appropriations Bill based on the budget of
2. As to Basis
receipts and expenditures submitted by the
a) Performance Budget – emphasizing the President of the Philippines within 30 days
program or services conducted and based on from the opening of its regular session.
functions, activities, and projects, which
GENERAL APPROPRIATIONS BILL – it is the
focus attention upon the general character
proposal made by the executive branch of
and nature of work to be done, or upon the
the government for the general
services rendered.
appropriations for the coming year. GAB
b) Line-Item Budget – the basis of which are contains various provisions such as:
the objects of expenditures such as: salaries
SPECIAL PROVISIONS - Any conditions
and wages, traveling expenses and etc.
governing expenditures that are applicable
to certain agency

BALANCE BUDGET GENERAL PROVISIONS – Representing

expenditure rules and conditions applicable
A budget where the proposed expenditures to all agencies or to group of agencies.
are equal to or less than the estimated
revenues.

THE BUDGET PROCESS 2. BUDGET AUTHORIZATION Forms of

Approved Appropriations:
1.Budget Preparation
1. General Appropriations Law – cover most
2.Budget Legislation or Legislative of the expenditures of the government.
Authorization
2. Supplemental Appropriations Laws –
3.Budget Execution and Operation passed from time to time, to augment or
4.Budget Accountability correct an already existing appropriations
3. Automatic Appropriations – Intended for a 2. Top management review of government
fixed and specific purposes. activities and the fiscal policy
implementations.
Continuing Appropriations pertain to
authorized amounts for MOOE and Capital 3. The actions of Commission of Audit is
Outlay (CO), the validity of which extend to assuring the fidelity of officials and
one year for the following year in which they employees by carrying out the intent of the
were appropriated. legislative regarding the handling of receipts
and expenditures.

4. BUDGET ACCOUNTABILITY
3. BUDGET EXECUTION AND OPERATIONS

The 3RD Phase of budget process consider

the budget as a management tool to control Sec. 63, P.D. 1177
and ensure that public funds are spent only
“Agency officials are held liable for failure to
for the purpose for which the are intended.
submit reports and shall automatically cause
It is more concerned with the release of the suspension of payment of their salaries
funds in the form of allotments and until they have complied with the
corresponding cash allocations information requirements.

COMPOSITION OF BUDGET EXECUTION AND BUDGETARY ACCOUNTS

OPERATION:

1. Establishment of authority ceiling on

obligations

2. Evaluation of work and financial plans for

individual activities.

3. Continued review of government fiscal

position

4. Regulation of funds releases

5. Implementation of cash payment

schedules DEFINITION OF TERMS

6. Updating of planning and scheduling of GAA – General Appropriations Act, it is the

activities. legislative authorization for a specific year.

ABM – Agency Budget Matrix, it is the basis

of the comprehensive release of allotment
4. BUDGET ACCOUNTABILITY Budget chargeable against the current year GAA.
Accountability includes the following:
SARO – Special Allotment Release Order,
1. Periodic reporting by the government issued subject to compliance with specific
agencies of performances under their laws or regulations or is subject to separate
approved budget.
approval or clearance by competent aspect, quarter.
authority.
3. BED 3 – MONTHLY CASH PROGRAM -
SAA – Sub-Allotment Advice – it is Reflects the monthly disbursement
decentralization of previously released requirements of the NGAs and the basis of
ABM/SARO. DBN for issuance of NCA, Cash Disbursement
Ceiling and other disbursement authorities.
LAA – Letter of Advice of Allotments, it is
decentralization of previously released fund. 4. BED 4 – ESTIMATE OF MONTHLY INCOME -
Reflect the estimated income of the NGAs
for the current year broken down by month.
REPORTING REQUIREMENTS
5. BED 5 – LIST OF NOT YET DUE AND
Per National Budget Circular No. 507 dated DEMANDABLE OBLIGATIONS - Represents
January 31, 2007, the DBM requires NGAs to claims against the NGAs for goods which
submit the following, on a regular basis (on were already delivered or services which
or before April 15 of the current year): already rendered. Deadline is on January 31
each year.
1. BEDs, Budget Execution Documents – this
contains NGAs’ targets and plans for the
current year.
BUDGET ACCOUNTABILITY REPORTS (BARs)
2. BARs, Budget Accountability Reports –
The following BARs shall be submitted on or
contains information on the NGAs’ actual
before the 10th day of the after the quarter
accomplishments and performance for a
given period. 1. BAR 1 – QUARTERLY PHYSICAL REPORT OF
OPERATIONS - Reflect NGAs actual physical
accomplishments for a given quarter
BUDGET EXECUTION DOCUMENTS (BEDs) (compared with BED 1)

The following BEDs shall be submitted to the 2. BAR 2 – QUARTERLY FINANCIAL REPORT
concerned DBM on or before Feb. 15 of each OF OPERATIONS - Reflect NGAs actual
year. obligations/expenditures incurred by
program/activities/projects (PAPs) and
allotment class for a given quarter
1. BED 1 – PHYSICAL PLAN - Serves as the 3. BAR 3 – QUARTERLY REPORT OF ACTUAL
overall plan of the NGA encompassing the INCOME - Reflect NGAs actual income
targeted output broken down by quarter. collections from all sources for a given
This indicates the major final output to be quarter broken down by month
delivered by the NGA.
4. BAR 4 – STATEMENT OF ALLOTMENT,
2. BED 2 – FINANCIAL PLAN - Contains OBLIGATIONS AND BALANCES (SAOB) -Serves
estimated obligations/expenditures as summary of report of allotments received
consistent with the approved budget level and corresponding obligations/expenditures
for the year, broken down by incurred during the month from all sources
by object of expenditures.
5. BAR 5 – MONTHLY REPORT OF loan from the foreign lending
DISBURSEMENTS – Reflect all the institution.
disbursements of the NGAs during the
month, arising from: NCA, Non-cash
Availment Authority (NCAA), Cash 2. Release of Non-Cash Availment Authority
Disbursement Ceiling (CDC) and Tax (NCAA)
Remittance Advice (TRA)
 NGAs availing of foreign loan
proceeds through direct payment
chargeable against availment
GUIDELINES ON THE RELEASE OF
allotment, shall submit a request for
DISBURSEMENT AUTHORITIES 1. Release of
the issuance of NCAA prior to
Notice of Cash Allocation
submission of availment application
 PS – provide for all filled-up positions to Foreign Lending Institution.
inclusive of fixed expenditures (Gross
salary, clothing allowance, PERA,
Cash gift, Mid-year/Year-end bonus GUIDELINES ON THE RELEASE OF
and other fixed bonuses) and should DISBURSEMENT AUTHORITIES 3. Release of
consider the timing of the grant of Cash Disbursement Ceiling (CDC)
those benefits.
 MOOE – should consider the  It is an authority issued by DBM to
seasonal periods or peak and slack Department of Foreign Affairs (DFA)
times. and Department of Labor and
 CO – must be programmed in Employment (DOLE) to utilize their
accordance with the scheduled work income collected and retained by
targets. Initial construction activities their foreign service post to cover its
will only entail fifteen 15% operating requirements but not to
mobilization and balance shall be in exceed the released allotment for
accordance with the work program. the purpose.
For equipment and supplies schedule
will be after the delivery of goods
and service and not on the bidding COMMON FUND SYSTEM
process. The fund is available for use for PS, MOOE,
CO & FE without realignment

GUIDELINES ON THE RELEASE OF

DISBURSEMENT AUTHORITIES 1. Release of Exemption to Common Fund System
Notice of Cash Allocation
 Current year Accounts Payable to
 Foreign Assisted Projects – Cash external creditors of the following
portion of the loan proceeds agencies:
component shall be released only  DPWH
upon receipt of the Btr the
certification of the availability of the
  DEPED Specific NCAs shall be issued REGISTRIES TO MAINTAIN BY NGAs
for the
o Registry of Allotment and Obligations –
Personnel Services (RAOPS)
 DOH purpose through their special
MDS o Registry of Allotment and Obligations –
Maintenance and Other Operating Expenses
 CHED accounts (RAOMO)

 SUCs o Registry of Allotment and Obligations –

Capital Outlay (RAOCO)

o Registry of Allotment and Obligations –

ILLUSTRATIONS Financial Expenses (RAOFE)
The Department of Budget of Management,
upon the approval and issuance of the
Agency Budget Matrix (ABM) and the Special TAX REMITTANCE ADVICE
Allotment Release Order (SARO), released of As per MOA of the DOF, DBM and COA, the
the following for Department of Health, NCA Released to NGAs is reduced by the
including NCA: amount of the estimated taxes expected to
be remitted by the agency through TRA.

The estimated taxes are computed as

follows:

PS – 8%

MOOE – 5%
ACCOUNTING FOR OBLIGATIONS
CO – 5%
The NGA is authorizes to incur obligations
only in the performance of activities, which Upon payment of disbursement with
are in pursuit of its function and programs withholding of related taxes
authorized in appropriation acts/laws.
Appropriate account-----------xxx,xxx.xx
Examples of actions or documents, which
Due to BIR-------------------xx,xxx.xx
commit the government and can be
Cash – Nat. Treasury – MDS---------xxx,xxx.xx
classified as obligations:
Upon remittance of taxes to BIR
 Purchase orders
 Contracts Due to BIR----------------------xxx,xxx.xx
 Travel authorizations
Subsidy from National Government---xx,xx.xx
 Request for installation or Provision
of public utilities