ACCOUNTING FOR BUDGETARY ACCOUNTS ( Chapter 4 by

Punzalan)

 Art. VI, Section 29 of the 1987 Constitution

 ACCOUNTING SYSTEMS
1. Budgetary Accounts System
2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System

 BUDGETARY ACCOUNTS
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.

BUDGET CYCLE:

BUDGET
PREPARATION

(Agency)

OP

BUDGET Budget
ACCOUNTA- Legislation
BILITY (Congress)
House of
(Agency, DBM,
Representative
COA) & the Senate

Budget
Execution &
Operation

(DBM)

NATIONAL GOVERNMENT AGENCIES

DEPARTMENT OF BUDGET AND MANAGEMENT

(OP)
HR AND SENATE

EXECUTIVE - PRESIDENT

PROPOSED NATIONAL BUDGET = APPROVED =

GENERAL APPROPRIATION ACT (GAA)
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.

The approved budget consists of the following:

1. New General Appropriations - are annual
authorizations for incurring obligations during a
specified year, as listed in the GAA.

2. Continuing Appropriations - 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.

3. Supplemental Appropriations = 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 (CAF) from
the BTr

4. Automatic Appropriations - are the

authorizations programmed annually or for some
other period prescribed by law, by virtue of
outstanding legislation which does not require
periodic action by the Congress.
5. Unprogrammed Funds = are standby
appropriations for priority program or project of
the government. The utilization of these funds
may be approved if any of the following conditions
are met:

1. Revenue collections for the year exceeds

targets

2. New revenues not included in the original

revenue targets are successfully generated; or

3. Foreign loan proceeds are generated for

newly approved projects covered by perfected loan
agreements.

6. Retained Income/ Funds = are collections that

are authorized by law to be used directly by
agencies for their operations or specific purpose.
These include but not limited to receipts of the
following:
a. State Universities and Colleges -
tuition and matriculation fees and other internally
generated receipts.

b. Department of Health - hospital

income

7. Revolving Funds = are receipts derived from

business type activities of departments/agencies as
authorized by law, and which are deposited in an
Authorized Government Depository Bank (AGDB).
These funds shall be self-liquidating. All obligations
and expenditures incurred, due to these business-
type activities, shall be charged against revolving
funds.
8. Trust Receipts = are receipts that are officially in
the possession of the government agencies or a
public officer as trustee, agent, or administrator, or
which have been received for the fulfillment of a
particular obligations.

2. ALLOTMENT = is an authorization issued by the

Department of Budget and Management (DBM) to
government agency, which allow it to incur
obligations, for specified amounts, within
legislative appropriation.

CLASS OF ALLOTMENT/OBJECT OF ALLOTMENT

1. PERSONNEL SERVICES (PS) -500M - 550M

2. MAINTENANCE AND OTHER OPERATING

EXPENSES (MOOE)
3. CAPITAL OUTLAY (CO)
4. FINANCIAL EXPENSES

REGISTRY OF APPROPRIATION AND ALLOTMENT

(RAPAL)
 This registry shall be maintained to
monitor appropriations and allotments
charged thereto. It shall show the original,
supplemental and final budget for the year
and all allotments received charged against
the corresponding appropriations.
 This registry is maintained by Fund Cluster
by the BUDGET DIVISION/UNIT of each
entity to ensure that allotment releases are
within authorized appropriation.
 Appro = 500M ALLOTMENT = EQUAL TO THE
APPROPRIATION OR LESS THAN BUT NOT OVER
THE AMOUNT OF APPROPRIATION.

Advice of Allotment + nca =

3. OBLIGATION

 NOTICE OF CASH ALLOCATION (NCA) is

an authority issued by the DBM to
CENTRAL, REGIONAL, AND PROVINCIAL
OFFICES and operating units to pay
operating expenses, purchase of supplies
and materials , acquisition of PPE,
accounts payable, and other authorized
disbursements through the issue of
Modified Disbursements System(MDS)
Checks, Authority to debit account(ADA)
or other modes of disbursements.

REGISTRY OF ALLOTMENT and NOTICE OF

CASH ALLOCATION (RANCA)
 This registry shall be maintained by the
Accounting Division/Unit to determine
the amount of allotments not covered
by NCA and to monitor available NCA.

AGENCY
DBM ALLOTMENT BTr
NBI
NCA

LBP

UPON RECEIPT OF NCA:

CASH-MODIFIED DISBURSEMENT SYSTEM (MDS)-Regular XX

Subsidy from National Government (SuNG) xx
 ACCOUNTING RESPONSIBILITY
 Keeping the general accounts of the government
 Promulgation of accounting and auditing rules and
regulations
 Submission of reports covering the financial condition
and operation of the government

 OFFICES CHARGED WITH THE ACCOUNTING

RESPONSIBILITY
1. COMMISSION ON AUDIT
 Keeps the general accounts of the
government.
 Promulgates accounting and auditing rules
and regulations, including those for the
prevention of and disallowance of irregular,
unnecessary, excessive, extravagant, or
unconscionable expenditures, or uses of
government funds and properties.

 Submits to the President and Congress,

within the time fixed by law ( not later than
the last day of September each year-Sec.
41, PD 1445, Government Auditing Code of
the Philippines) an annual report of the
government, its sub-divisions, agencies and
instrumentalities, including government-
owned or controlled corporations.

 Has an exclusive authority to define the

scope of its audit and examination,
 establish the techniques and methods
required therefor.

 Pursuant to the COA, DBM and DOF Joint

Circular No. 2013-1 dated August 6, 2013:
o Unified Account Code Structures
(UACS)
o Revised Chart of Accounts - NGA’s

2. DEPARTMENT OF BUDGET AND

MANAGEMENT
 Responsible for the formulation and
implementation of the National Budget with
the goal of attaining our national socio-
economic plans and objectives.

 Responsible for the efficient and sound

utilization of government fund and
revenues to effectively achieve the
country’s development objectives.

 Responsible for the validation and

assignment of new codes for funding source
organization, sub-object codes for
expenditures items, program, project,
activity codes shall be decided jointly by the
proponent agency and DBM.

3. BUREAU OF TREASURY
 Receive and keep national funds, manage
and control the disbursements thereof; and
Maintain accounts of financial transactions
of all national government offices, agencies
and instrumentalities.

 Controls and monitors the Notice of Cash

Allocation released by the DBM as well as
the bank transfer it makes in replenishing
 its Modified Disbursement System (MDS)
accounts.

4. NATIONAL GOVERNMENT AGENCIES

 Maintain and keep current the accounts of

NBI
the agency
COA

 Provide advice on the financial condition

and status of the appropriations and
allotments of the agency as its Head may
require.

 Develop and conduct procedures designed

to meet the needs of management.

 They shall perform the above duties in accordance with

existing laws, rules, regulations, procedures and comply
with the reporting requirements of the Commission on
Audit, the Department of finance and the Department
of Budget and Management.

 Failure to comply with these requirements is sufficient

ground for dismissal from government service.

REGISTRIES TO BE MAINTAINED BY GOVERNMENT AGENCIES

(16)

 FUNDAMENTAL PRINCIPLES OF FISCAL OPERATIONS

 THE NATIONAL BUDGET

 Plan for financing the government activities for a

fiscal year
 Approval and authorization are necessary before it
can be executed
  Proposal of estimate or statement of receipts and
expenditures that may be approved or rejected
 Blueprint of a country’s development plan.

 BALANCED BUDGET

 PERFORMANCE-INFORMED BUDGETING (PIB)

 KINDS OF BUDGET

1. AS TO NATURE
A. ANNUAL BUDGET - a budget which covers a
period of one year. It is the basis of annual appropriation
B. SUPPLEMENTAL BUDGET - a budget which
supplement or adjust a previous budget which is deemed
inadequate for the purpose it is intended. It is the basis
for a supplemental appropriation.

C. SPECIAL BUDGET - a budget of special nature

and generally submitted in special forms on account that
itemizations are not adequately provided in the in the
appropriation Act or that the amounts are not at all
included in the Appropriation Act.

2. AS TO BASIS

A. PERFORMANCE BUDGET - a budget emphasizing

the program or services conducted and based on
functions, activities, and projects, which focus attention
upon the general character and nature of work done, or
upon the services rendered.

PROGRAMS - is an integral group of activities that

contributes to an agency or department’s continuing
objective. Examples: General Administration and Support,
support to Operations, etc.
 ACTIVITIES = are a work process that contributes to
the fulfillment of a program or project.

PROJECT = is a special department/agency

undertakings carried out within a definite timeframe and
which are designed to produce a predetermined measures
of goods or services. It is considered an investment toward
expanding the capacity of a department/agency to deliver
Major Final Output (MFOs).

MFO – is a good or service that a department or agency

mandated to deliver to external clients through the
implementation of program, activities and projects. It
should be within the department or agency’s control and
be measurable, manageable and auditable. Examples:
Regulatory Services; Health Services; Education Services
and agricultural support services.

B. LINE-ITEM BUDGET = a budget the basis of

which is the objects of expenditures such as : salaries and
wages, traveling expenses, freight, supplies and materials,
equipment, etc.

3. AS TO APPROACH AND TECHNIQUE

A. ZERO-BASED BUDGETING (ZBB)- a process which
requires systematic consideration of all programs, project
and activities with the use of define ranking procedures.
In this approach, activities are analyzed and presented in
“decision packages” or key budgetary inclusions.
 As the name indicates, the basic concept of ZBB
is that the very existence of each activity as well
as The amounts of resources requested to be
allocated to each year activity be justified each
year.
 All expenses must be justified for each new
period. It starts from “zero base, and every
 functions within the organization is analyze for
its needs and costs. Budgets are then built
around what is needed for the upcoming period
regardless of whether each budget is higher or
lower than the previous one.

b. INCREMENTAL APPROACH- a budget where only

additional requirements need justification. it focuses
analysis of incremental changes in the budget and maybe
done within the context of performance and program
budgeting.

FUND RELEASE DOCUMENTS:

A. OBLIGATIONAL AUTHORITY or ALLOTMENT =

documents which authorize the entity to incur obligations:

1. GENERAL APPROPRIATION ACT RELEASE

DOCUMENT (GAARD) - serves as the obligational
authority for comprehensive release of budgetary items
appropriated in the GAA, categorized as FOR
COMPREHENSIVE RELEASE(FCR).

2. SPECIAL ALLOTMENT RELEASE ODER (SARO)

 This covers budgetary items under For Later
Release (FLR) (NEGATIVE LIST) in the entity
submitted Budget Execution Documents (BEDs),
subject to compliance of required
documents/clearances. Releases of Allotments
for Special Purpose Funds (SPFs) The following
are covered by SAROs: Examples
 a. Calamity Fund
b. Contingent Fund
c. E-Government Fund
d. Feasibility Studies Fund
e. International Commitments Fund
d. Miscellaneous Personnel Benefits Fund
e. Pension and Gratuity Fund

3. GENERAL ALLOTMENT RELEASE ORDER (GARO)

 Is a comprehensive authority issued to
all government agencies, in general, to
incur obligations not exceeding an
authorized amount during a specified
period for the purpose indicated
therein.

 It covers automatically appropriated

expenditures common to most, if not
all, i.e. RETIREMENT and LIFE
INSURANCE PREMIUM

PERSONAL SHARE GOVERNMENT SHARE

5,000 6,000

350 350

B. DISBURSEMENT AUTHORITY - documents authorize

the entity to pay obligations and payables:

1. Notice of Cash Allocation (NCA)

 Authority issued by the DBM to
agencies to cover their cash
requirements
  Monthly Disbursement Program
( include current year requirements
and prior years’ accounts payable).

RELEASE OF NCA

1. Initial Comprehensive NCA

 Based on the submitted Monthly
Disbursement Plan
 Current year requirements and prior
year’s accounts payable.
 Quarterly release

2. Additional NCA
 For allotments charged against Continuing
Appropriations under RA 10633

 PERSONNEL SERVICES = 50 BILLION

APPROPRIATION
40 BILLION - RELEASED
ALLOTMENT 10 billion
40 BILLION - RELEASED
NCA
 5 BILLION - UNUSED
NCA AT YEAR END

 Supplemental appropriations under RA 10652

 Prior year’s obligations which becomes accounts
payable in the current year.

3. Succeeding comprehensive NCA

 Subject to the submission of Financial
Accountability Reports(FARs)/Budget
Accountability Reports (BARs) and consistent
with the DBCC approved Monthly
Disbursement Program.
 2. Non-Cash Availment Authority (NCAA)
 Authority issued by the DBM to
agencies to cover the liquidation of
their actual obligations incurred
against available allotments for
availment of proceeds from
loans/grants through supplier’s
credit/constructive cash.

AGENCY
LENDER SUPPLIER
dpwh

RELEASE OF NON-CASH AVAILMENT AUTHORITY

(NCAA)
 Agencies of the government availing of foreign loan
proceeds through direct payment chargeable against
availment allotment shall submit a request for the
issuance of NCAA supported by the following
requirements:
1. Photocopy of the application for withdrawal
or equivalent document covering the amount
requested.

2. List of Allotments and corresponding

obligations incurred for the specific foreign loan
assisted project against which the disbursement shall
be applied;

3. Details of disbursements expressed in peso

and equivalent foreign currency as indicated in the
application.
  Request of NCAA shall be used to cover the liquidation
of actual obligations incurred by the agency within their
available allotments. (DBM-COA-DOF, JC 2-97 and CL No.
2003-12).

 It is emphasized that non-issuance of NCAAs for the

availments of proceeds from loan/grants THROUGH direct
payments (already taken up as constructive payments per BTr
report) results to accounts payable build up in the agency.

3. CASH DISBURSEMENT CEILING (CDC) – authority

issued to DFA and DOLE (Overseas Workers and Welfare
Administration) 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.

 Non-issuance of CDCs for actual utilization of retained

income (already taken up as revenue and
disbursement per BTr report) results to
UNRECONCILED ACCOUNTS between BTr and agency
books.

 Request for CDC shall be supported by the following

accountability reports:
1. Monthly report of income
2. BTr Certification on actual income collected
as consolidated by DFA and DOLE home office.

4. Notice of Transfer of Allocation (NTA) - this is the

authority issued by the Central Office to its regional and
operating units to pay their operating expenses, purchases of
supplies and materials, acquisition of PPE, Accounts Payable,
and other authorized disbursement through the issue of MDS
checks, ADA or other modes of disbursement.
 The total MDS CHECKS issued shall not exceed
the total NTA received. It shall be monitored
through the maintenance of Registry of
 Allotment and Notice of Transfer Allocation
(RANTA)

REPORTING RQUIREMENTS:

1. Budget Execution Documents (BEDs) (4)

 Agencies’ targets and plans

2. Budget and Financial Accountability Reports(BFARs)

 Agencies’ actual accomplishments for a given period.
 For monitoring and providing the necessary
information to the President and fiscal agencies for
the purpose of crafting sound policy decisions.

BUDGET EXECUTION DOCUMENTS

1. BED No. 1 : Financial Plan (FP)

2. BED No. 2: Physical Plan (PP)

3. BED No. 3: Monthly Disbursement Program (MDP)

4. BED No. 4: Annual Procurement Plan for Common-Use

Supplies and Equipment (APP-CSE)

Chapter 3 Sec. 10 of GAM dated Oct. 22, 2015 pertains to REGISTRIES

OF ALLOTMENTS, OBLIGATIONS and DISBURSEMENTS (RAOD) –
 this shall be maintained by the Budget Division/Unit of agencies
to record the allotments, obligations and disbursements.

 It shall show the allotment received for the year, obligations

incurred against corresponding allotment and the actual
disbursements made.
  The balance is extracted every time an entry is made to prevent
incurrence of obligations in excess of allotment and overdraft in
disbursement against obligations incurred.

 It shall be maintained by appropriation act, fund cluster,

MFO/PAP, and allotment class.
PS,MOOE,FE,CO

1. Registry of Allotments, Obligations and Disbursements –

Personnel Services (RAOD-PS) ( Appendix 3-A of Mr. Punzalan; and
Appendix 9A of the GAM.
 This shall be used to record the allotment received,
obligations incurred and disbursements classified under PS.
==========================================
2. Registry of Allotments, Obligations and Disbursements –
Maintenance and Other Operating Expenses (RAOD-MOOE)
( Appendix 9B of the GAM)( Appendix 3B of Mr. Punzalan)
 This shall be used to record the allotments received,
obligations incurred and disbursements classified under
MOOE.
=======================================================
3. Registry of Allotments, Obligations and Disbursements –
Financial Expenses (RAOD-FE) ( Appendix 9C of the GAM and
appendix 3C of Mr. Punzalan)

 This shall be used to record the allotments received,

obligations incurred and disbursements classified under
FE.
================================================
4. Registry of Allotments, Obligations and Disbursements (RAOD-
CO)

Section 11 . OBLIGATION REQUEST and STATUS

 The incurrence of obligations shall be made through the

issuance of Obligation Request and Status (ORS) (Appendix
11, GAM).
 This is being prepared by the Requesting/ Originating
Office supported by valid claims documents like
Disbursement Vouchers (DVs) payroll, purchase/job orders,
itinerary of travel, etc. The head of the requesting/
Originating Office or his authorized representative shall
 certify in the section A of the ORS as to the necessity and
legality of charges to the budget under his supervision, and
validity, propriety and legality of supporting documents
(SDs).
 The head of the Budget Division/Unit shall certify to the
availability of allotment and such is duly obligated by
signing in Section B of the ORS.

Section 31 . PREPARATION OF THE BUDGET REPORTS

The following budget reports/documents as required by
DBM and COA shall be submitted:

1. Quarterly Physical Report of Operations(QPRO) - Budget

Accountability Report (BAR ) No. 1
 This report shall reflect the Agency’s actual physical
accomplishments as at a given quarter, in terms of the
performance measures indicated in its Physical Plan.
2. Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances – Financial Accountability Report (FAR)
No.1
 This report shall reflect the authorized appropriations
and adjustments, total allotments received including
transfer, total obligations, total disbursements and the
balances of unreleased appropriations, unobligated
allotments, and unpaid obligations of
department/office/entity by source and by allotment
class. It shall be presented By:
1. Fund Authorization
2. Major final Output
3. Program/Activity/Project
4. Major Programs/Project

3. Summary of Appropriations, Allotments, Obligations,

disbursements and Balances by Object of Expenditures-FAR No.1.A
(SAAODBOE) ( Appendix 18)
 This shall be prepared by Funding Source Code(FSC) as
clustered and shall reflect the summary of
appropriations, allotments, obligations, disbursements
and balances detailed by object of expenditures
 consistent with the COA Revised Chart of Accounts per
COA Circular NO. 2013-002 dated January 24, 2014

4. List of Allotments and Sub-Allotments _FAR No. 1.B (Appendix

19)
 This report shall reflect the allotments released by the
DBM and the sub-allotments issued by the Entity Central
Office/RO, their corresponding numbers, date of
issuance, and amounts by allotment class and FSC
 The total allotments per this report should be equal to
the total allotments appearing in the SAAODB(far No.1)

5. Statement of Approved Budget, Utilizations, Disbursements and

Balances-FAR no.2 (Appendix 20)
 This report shall reflect the approved budget, the
utilizations, disbursements and balance of the entity’s
income authorized by law to use, such as OWWA/SUCs,
duly approved by their Board of Trustee/Regents and
shall be prepared by FSC as clustered.

6. Summary of Approved Budget, Utilizations, Disbursements and

Balances by Object of Expenditures _FAR No. 2A (Appendix 21)
 This report shall reflect the details of approved budget,
utilizations, disbursements and balance of the entity’s
income authorized by law to use presented by object of
expenditures consistent with the COA Revised Chart of
Accounts and shall be prepared by Funding Source Code
as clustered.

7. Aging of Due and Demandable Obligations -FAR NO.3 ( Appendix

22)
 This report shall be prepared by FSC as clustered and
shall reflect the balance of unpaid obligations as
indicated in the Obligation Request (ObR) and the
ADDOs as at year-end.

8. Monthly Report of disbursements -FAR No. 4 (Appendix 23). This

report shall reflect the total disbursements made by department,
office or entity and operating unit from the following disbursement
authorities:

1. Notice of Cash Allocation

 2. NCA for Working Fund issued to BTR as an advance
funding from loan/grant proceeds in favor of an entity
3. Tax Remittance Advice (TRA) Issued
4. CDC issued by departments with foreign-based
agencies or units
5. Non-Cash Availment Authority; and
6. Others, e.g. Customs, Duties and Taxes(CDT), BTr
Documentary Stamps.

The report shall track the actual disbursement of the

departments/agencies against their disbursement program

9. Quarterly Report of Revenue and Other Receipts -FAR No.5

( Appendix 24)
 This report shall reflect the actual revenue and other
receipts/collections from all sources remitted with the
BTr and deposited in other AGDB for the current year
presented by quarter, and by specific sources consistent
with COA Revised Chart of Accounts.

Sec. 32 = SUBMISSION OF BUDGET and FINANCIAL ACCOUNTABILITY

REPORTS.
 All departments/agencies shall observe the following
timeline in submitting the required FARs to COA-
Government Accounting Sector(GAS) and DBM.

a. Within thirty (30) days after the end of each quarter

1. SAAODB - FAR NO. 1

2. SAAODBOE-FAR No. 1.A
3. List of Allotments/Sub- Allotments – FAR No. 1.B
4. SABUDB -FAR No.2
5. SABUDBOE – FAR No.2A
6. QRROR – far NO. 5

B. On or before 30th day following the end of the year -

ADDO - FAR No. 3

C. On or before 30th day of the following month covered

– MRD-FAR No.4

D. On or February 14 of the following calendar year

o Consolidated Statement of Allotments,
Obligations, and Balances per Summary of
 Appropriations under For Comprehensive Release
(FCR) under GAA, GARO, and SARO.

TAX REMITTANCE ADVICE (TRA)

JC NO. 1-2000 dated January 3, 2000, as amended by JC
no.1-2MOA dated July 31, 2001 of DOF, DBM and the COA.

The NCA released to government agency is reduced by the

amount of the ESTIMATED TAXES EXPECTED to be remitted by
the agency through Tax Remittance Advice.

Estimated taxes are computed based on the following

percentages:
Personnel Services - 8%
MOOE - 5%
CO - 5%

The NCA RECEIVED BY THE GOVERNMENT AGENCY FROM DBM

IS NET OF THE applicable percentage of Tax Remittance Advice
based on the NCA received.

Journal entry to record receipt of NCA , NET OF TRA

500---490
Cash-MDS, Regular xx490
SuNG xx490
( Note: TRA IS NOT RECOGNIZED)

ALTERNATIVE APPROACH:

Pro-forma entries:

Cash- Tax Remittance Advice xx10

 Subsidy from National Government xx10
To recognize constructive receipt of NCA for
TRA.

Due to BIR xx10

Cash-Tax Remittance Advice xx10
To recognize constructive remittance to BIR of
taxes withheld through TRA.

UNIFIED ACCOUNT CODE STRUCTURE (UACS)

To record the remittance to BIR

Due to BIR xx
SuNG xx