NATURE AND SCOPE OF
ACCOUNTING FOR
GOVERNMENT AND NON-
PROFIT ORGANIZATIONS
AN INTRODUCTION
Government Accounting: Its Definition
Government Accounting: Its Definition
Government Accounting: Its Objectives
• Section 110, Presidential Decree 1445 sets down the following
objectives of government accounting:
1. To provide the information concerning past operations and
present conditions.
2. To provide a basis for guidance for future operations.
3. To provide for control of the acts of public bodies and offices in
the receipt, disposition, and utilization of funds and property.
4. To report on financial position and the results of operations of
government agencies for the information and guidance of all
persons concerned.
Public Sector Accounting Standards (PSASB)
PURPOSE BASIS DATE
ESTABLISHED
Public Assist in COA October 10.
Sector formulating Resolution 2008
Accounting and 2008-12
Standards implementin
(PSASB) g the PPSAS *IPSASB
Philippine
Public Sector Accounting Standards (PPSAS)
• It shall apply to all National Government
Agencies (NGAs), Local Government
Units (LGUs) and Government Owned
and Controlled Corporations (GOCCs)
not considered as Government Business
Enterprise (GBEs).
Government Business Enterprise
is an entity that has the following characteristics:
An entity with the power to contact its own name.
Has been assigned the financial audit and operational
authority to carry on a business.
Sells goods and services, in the normal course of
business, to other entities at a profit or full cost recovery.
Not reliant on continuing government funding (other
than purchase of outputs at an arm’s length; and
Controlled by a public sector entity.
Processes and considerations:
Applicability of IPSAS. Submission of draft to
Exposure draft of PPSAS PSASB for consideration of
Fundamental issues the COA.
Statutory authority If considered appropriate,
focus group discussions
Disclosure Requirements will be held.
PPSAS Numbering
Financial reporting issues
not dealt with by IPSAS.
Accounting Responsibility
.
Commission on Audit
• In the performance of its functions, as mandated by Article IX-D,
Section 2 par. (2) of the 1987 Constitution of the Republic of the
Philippines to wit:
“The Commission on Audit shall have exclusive authority,
subject to the limitations in this Article, to define the scope
of its audit and examination, establish the techniques and
methods required therefor, and promulgate accounting and
auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures, or
uses of government funds and properties“.
• Pursuant to the COA, DBM and DOF Joint
Circular No. 2013-1 dated August 6,2013,
Unified Accounts Code Structure (UACS), the
consistency of account classification and
coding structures with the Revised Chart of
Accounts shall be the responsibility of COA.
Department of Budget and
Management
Bureau of Treasury
Bureau of Treasury
Under the new accounting system, the Bureau of Treasury
shall maintain the Registry of NCA and Replenishments
(RENREP) for control and monitoring of NCA released by
the Department of Budget and Management. In addition it
shall monitor bank transfers it makes in replenishing its
MDS accounts.
NATIONAL GOVERNMENT AGENCIES
.
Accounting personnel
Maintain and keep the
current accounts of the
agency.
Provide advice on the
financial condition and
status of the
appropriations and the
allotments of the agency
as its Head may require.
Develop and conduct
procedures designed to
meet the needs of the
management.
The Registries
BEFORE:
Registry of Appropriations and Allotments (RAPAE)
Registry of Special Purpose Fund Appropriation (RESPFA)
Registry of Allotments and Notice of Cash Allocations
(RANCA) – under NGAS
The Registries
Registry of Revenue and Other Receipts-Summary (RRORS)
Registry of Revenue and Other Receipts-Regular Agency
and Foreign Assisted Projects Fund (RROR-RA&FAP)
Registry of Revenue and Other Receipts-Special Account
Locally Funded/Domestic Grants Fund and Special Account
Foreign Assisted/Foreign Grants Fund (RROR-SADFGF)
Registry of Revenue and Other Receipts-Internally
Generated Funds (Off Budgetary Funds-Retained Income
Funds)/Business Related Funds (RROR-IGF/BRF)
The Registries
Registry of Revenue and Other Receipts-Trust Receipts/Inter-
agency Funds (Off Budgetary-Transferred Funds (RROR-TR/IATF)
Registry of Appropriations and Allotments (RAPAL)
Registry of Allotments, Obligations and Disbursements-
Personnel Services (RAOD-PS)
Registry of Allotments, Obligations and Disbursements-
Maintenance and Operating Expenses (RAOD-MOOE)
Registry of Allotments, Obligations and Disbursements-Financial
Expenses (RAOD-FE)
Registry of Allotments, Obligations and Disbursements-Capital
Outlays (RAOD-CO)
The Registries
Registry of Budget, Utilization and Disbursements-Personnel
Services (RBUD-PS)
Registry of Budget, Utilization and Disbursements-Maintenance
and Other Operating Expenses (RBUD-MOOE)
Registry of Budget, Utilization and Disbursements-Financial
Expenses (RBUD-FE)
Registry of Budget, Utilization and Disbursements-Capital Outlays
(RBUD-CO)
Registry of Allotments and Notice of Cash Allocations (RANCA) –
under NGAS
Registry of Allotments and Notice of Transfer Allocations (RANTA)
The Registries-A Summary
Registry of Revenue and Other Receipts
Registry of Appropriations and Allotments
Registry of Allotments, Obligations and Disbursements
Registry of Budget, Utilization and Disbursements
Registry of Allotments and Notice of Cash Allocations
(RANCA)
Registry of Allotments and Notice of Transfer Allocations
(RANTA)
Old Accounting System New Accounting System
The agency shall now journalize The government agencies will no longer
the Notice of Cash Allocations journalize its appropriations and
allotments, instead it shall maintain
(NCA) it receives, which in effect four registries for the allotments its
identifies the share of the agency receives and the obligations it incurs:
in the income of the national 1. Registry of Allotments and
government. Obligations-Personnel
Services(RAOPS)
2. Registry of Allotments and
Obligations-Maintenance and Other
Operating Expenses (RAOMO)
3. Registry of Allotments and
Obligations-Capital Outlay(RAOCO)
4. Registry of Allotments and
Obligations-Financial
Expenses(RAOFE)
Basic Accounting and Budgeting Principles
Generally accepted government accounting principles in
accordance with the PPSAS and pertinent, laws, rules and
regulations.
Accrual basis of accounting in accordance with PPSAS.
Budget basis for presentation of budget information in the
financial statements in accordance with PPSAS 24.
Revised chart of accounts prescribed by Commission on Audit.
Double entry-bookkeeping.
Financial statements based on accounting and budgetary records.
Fund cluster accounting.
Objectives:
1) Ensure that all costs
and revenues are
properly
charged/credited to the
correct responsibility
center so that
deviations budget can
be readily attributed to
managers accountable
therefor;
2) Provide a basis for
making decisions for
future operations; and
3) Facilitate review
activities, monitoring
the performance of
each responsibility
center and evaluation
of the effectiveness of
agency’s operations.
Concepts of Responsibility Accounting:
Concepts of Responsibility Accounting:
1) Responsibility accounting involves accumulating and
reporting data on revenues and costs on the basis of the
manager’s action, who has authority to make day to day
decisions about the items;
2) Evaluation of manager’s performance is based on the
matters directly under his control;
3) Responsibility accounting can be used at every level of
management in the following conditions:
Concepts of Responsibility Accounting:
a) Cost and revenues can be directly associated with
the specific level of management responsibility.
b) Costs and revenues are controllable at the level of
responsibility in which they are associated; and
c) Budget data can be developed for evaluating
manager’s effectiveness in controlling costs and
revenues.
Concepts of Responsibility Accounting:
4) The reporting of costs and revenues under
responsibility accounting differs from budgeting in
two aspects:
a) A distinction is made between controllable and
non controllable costs.
b) Performance reports either emphasize or include
only items controllable by individual manager.
Concepts of Responsibility Accounting:
5) A responsibility reporting system involves the
preparation of a report for each level of responsibility.
Responsibility reports usually compare actual costs
with the flexible budget data.
6) Evaluation of manager’s performance for cost
centers based on his ability to meet budgeted goals
for controllable costs.
Responsibility reports— Macy’s Corporation
An illustration Manger, Men’s Clothing Department
Responsibility Report
Assume Macy’s has four
management levels—the Actual Amount Budget Amount Over or (Under) Budget
president, vice president of
operations, store manager,
and department manager. In Controllable
this section, we show that a Expenses This Month Year to Date This Month Year to Date This Month Year to Date
responsibility report would
be prepared for each
Inventory
management level. We will losses
$2,000 $10,000 $1,900 $9,600 $100 $400
begin with the lowest level,
the Men’s department Supplies 1,800 8,500 $1,000 $7,550 800 950
manager and work our way
up to the president. We start Salaries 11,000 53,000 $11,100 $52,190 (100) 810
at the lowest level because
the totals from each level will Overtime 2,000 14,500 $1,200 $14,360 800 140
be reported in the next Totals $16,800 $86,000 $15,200 $83,700 $1,600 $2,300
highest level.
Macy’s Corporation
Store Manager
Responsibility Report
Actual Amount Budget Amount Over or (Under) Budget
Controllable
This Month Year to Date This Month Year to Date This Month Year to Date
Expenses
Children’s Clothing
$23,500 $150,450 $24,000 $151,000 ($500) ($550)
Department
Women’s Clothing
$31,000 $157,700 $32,500 $158,000 ($1,500) ($300)
Department
Men’s Clothing
$16,800 $86,000 $15,200 $83,700 $1,600 $2,300
Department
Shoe Department $11,750 $64,350 $9,600 $62,000 $2,150 $2,350
Accessories
$5,750 $31,500 $5,000 $30,300 $750 $1,200
Department
Totals 88,800 490,000 $86,300 $485,000 2,500 5,000
Macy’s Corporation Macy’s Corporation
Vice President of Operations Responsibility Report President’s Responsibility Report
Over or (Under)
Actual Amount Budget Amount Actual Amount Budget Amount Over or (Under) Budget
Budget
Controlla
ble This Year to This Year to This Year to Controllable Year to Year to Year to
This Month This Month This Month
Expenses Month Date Month Date Month Date Expenses Date Date Date
President’s
Vice
office $11,000 $55,000 $10,000 $53,000 $1,000 $2,000
president
$2,840 $9,500 $3,340 $17,500 ($500) ($8,000) expense
’s office
expense Vice
Store president of 128,640 700,000 122,640 692,000 6,000 8,000
88,800 490,000 $86,300 $485,000 2,500 5,000 operations
manager
Purchasin
5,300 32,500 $4,300 $30,500 1,000 2,000
g Vice
president of 18,700 119,000 $14,700 $111,000 4,000 8,000
Receiving 4,700 33,000 $1,700 $24,000 3,000 9,000
marketing
Salaries
of store Vice
managers president of 14,000 115,000 $6,000 $106,000 8,000 9,000
and $135,00 finance
27,000 135,000 $27,000 -0- -0-
heads of 0
Vice
purchasin
presidents’ 29,000 145,000 $29,000 $145,000 -0- -0-
g and salaries
receiving
Totals $128,640 $700,000 $122,640 $692,000 $6,000 $8,000 Totals $201,340 $1,134,000 $182,340 $1,107,000 $19,000 $27,000
DECENTRALIZATION
