NATURE AND SCOPE OF ACCOUNTING FOR GOVERNMENT AND NON-PROFIT

ORGANIZATION
This video presentation will help you distinguish between government accounting and commercial
accounting; attain awareness from existing laws, rules, and regulations; and the basic standards or
fundamental accounting principles for financial reporting by national government agencies as provided by
the government accounting manual in accordance with the Philippine Public Sector Accounting Standards
(PPSAS) adopted through COA Resolution No. 2014-003 dated January 24, 2014 and other pertinent law,
rules, and regulations.

Government Accounting: Its Definition

Before jumping into the actual definition of government accounting, let's define accounting through its
root word “account.” When we are to account for something, that means, we are keeping track of what's
going on. Let's put it simply by illustrating a situation wherein you are accountable for the funds of the
organization because you are the treasurer. You bear the responsibility because you hold the position. Or
perhaps, when we are asked by someone what are the exact things that happened in a certain day, we
could not elaborate the details. We can recall but only the important things that happened that day. We
may not be able to even tell anything at all by memory alone because one month has passed, let's say, for
example. But if we keep with us a record of everything or if we are into writing down everything that
happened each day, then it would be easier for us to tell the exact thing that happened. Another scenario
is when your employer would ask proof if you really reported for work. The documentary evidence will be
your daily time record. Thus, it is said that accounting is the language of business. It is a means of
reporting the financial facts of a business life whether in government or in the private sector. It is for this
reason that the users of the information must understand the financial reports which the accounting
system produces.

Government accounting refers to the process of recording and the management of all financial
transactions incurred by the government which includes its income and expenditures . Various
governmental account record[ing] and the management of all financial transactions incurred by
the government which includes its income and expenditure systems are used by various public
sector entities. Thus, government is important because it involves recording, analyzing,
classifying, and communicating of all government transactions involving government funds and
properties. Having a report, thereof, the people can have a clearer view on how the government
have been spending the funds from the taxes that we've been paying.
Government accounting is defined, pursuant to Section 109 of PD 1445, as one which
“encompasses the process of analyzing, recording, classifying, summarizing, and communicating
all transactions involving the receipt and disposition of government fund and property and
interpreting the results thereof.”
From my personal point of view or analysis, government accounting has the following features:

 it never deals with profit and loss of government organizations;

 it follows government rules and regulations;
 it follows rules of double entry system of bookkeeping;
 it records revenue and expenditures in accordance with the budget head;
 it also deals with banking transaction by opening separate bank account to operate different funds
of the government; and

 it audits revenues and expenditures of government to control misuse of money and power.

With the given features of government accounting, let's compare it with the features of commercial
accounting. Commercial accounting features are as follows:

 to calculate the profit or loss for a certain period and it is not usually based on budget;
 books of accounts are not classified into central level accounting and operating level accounting;
 it applies both cash basis and accrual basis;
 it follows the rules and regulation of generally accepted accounting principles or GAAP;
 it gives information of financial transaction to the concerned parties related to the business
organization; and

 any auditor license holder can audit the books of account.

With this, we could say that government accounting is the systematic recording analysis and
communication of financial transactions made by a government body. It helps to analyze the financial
information of government organizations. Government accounting is the process of recording, analyzing,
classifying, summarizing, communicating, and interpreting financial information about government in
aggregate and in detail reflecting all transactions involving the receipts, transfer, and disposition of
government fund and property.
Section 110, Presidential Decree 1445 sets down the following objectives of government
accounting:
1. To produce information concerning past operations and present conditions;
o Information of past operations and present conditions will facilitate the evaluation of
the performance of an agency from one period to another.
o On a hindsight, things that happened in the past contribute a lot to how you look at things
today. You may not apparently see it but the changes that happen to you are both by your past
experiences and that, through it, you become wiser in making your decisions unless you have a
foolish heart in bidding with your relationships, for an instance. Thus, this shows the importance
of keeping into account everything and remembering every detail to win an argument against
your boyfriend or defend your stan. When you will become parents, you will appreciate the
essence of keeping a list of costs and expenses to enable you to trace back what happened to
your family's budget for a certain period of time.

2. To provide a basis for guidance for future operations;

o The results of the evaluation may guide the manager on what course of action to take
as regards future operation, as well as come up with the proper analysis of the funds
needed for a project.
o Financial information and other relevant information do not only benefit the present time but it
is very useful in planning and preparing for future operations. Applying the quotable quote: “if
you fail to plan, you are planning to fail.”

3. To provide for control of the acts of public bodies and offices in the receipt, disposition and
utilization of funds and property.
o Public officers are accountable for the resources entrusted to them. The accounting
data will show whether or not the agency is achieving its mandates as well as its
operational objectives. Moreover, the financial reports will also show the extent of the
agency's financial and non-financial resources, which have useful lives. Evaluation of
said information will enable the users to determine the “service potential” of the
Agency's resources, as well as give an indication when additional resources need to be
injected into the operation.
o Public officers are usually the ones associated with theft and corruption for they are the
trustees of public fund. Hence, with this responsibility bestowed upon them comes suspicion
and therefore, they are held accountable. Just imagine a public officer declaring the acquisition
of 100 units of laptop intended for office use. There is a fund allotted to it and there is a
liquidation report but it never actually materialized. What happened then for the source
documents that are existing? Thus, as accountants in the future, you should see to it the
validity of the documents and not just its existence.

4. To report on financial position and the results of operations of government agencies for the
information and guidance of all persons concerned.
o The accounting data will also show the obligations of the agency and how such
obligations have been incurred. The information should tell its users the sources of
resources, which will meet these obligations. The information should show an analysis
of the inflow and outflow of resources, especially of financial resources. To achieve its
objectives, e.g., the adoption of a system that is in conformity with international
accounting standards, the Commission on Audit as a member of the International
Organization of Supreme Audit Institutions (INTOSAI) is encouraged to adopt relevant
international accounting standards.
Government accounting deals not just with how much is the updated balance of the existing resources of a
government agency but also deals with the sources of such resources. In simplest terms, we could
therefore say that the objectives of government accounting are as follows:

 it records financial transaction of a government office;

 it emphasizes on expenditures within the limit of the budget;
 it emphasizes on the legal expenditures according to the appropriate act;
 it supplies required and effective financial data and information for the operation of a public fund;
 it maintains proper records to prevent misuse of government properties;
 it facilitates the process of audit; and

 it helps to prepare properly an annual report.

Public Sector Accounting Standards Board
In order to formulate and implement public sector accounting standards and establish linkages
with international bodies, professional organizations, and academe on accounting related fields
on financial management, the Public Sector Accounting Standards Board (PSASB) was created in
2008 under COA Resolution No. 2008-12 dated October 10, 2008. In developing standards of the
Philippine Public Sector Accounting Standards (PPSAS), the PSASB considers and make use of,
among others, the existing laws, financial reporting accounting rules and regulations and
pronouncements issued by the International Public Sector Accounting Standards Board (IPSASB).
The PSASB shall assist the commission in formulating and implementing Philippine Public Sector
Accounting Standards (PPSAS).
So, we have here already a summary of the Public Sector Accounting Standards’ details. The purpose is
to assist in formulating and implementing the PPSAS, as I have mentioned a while ago. The basis is the
COA Resolution 2008-12. Remember that the resolution number is named after the date of the creation or
establishment of the said resolution which is October 10, 2008 (date established). The basis for this
resolution and as well as the basis of the Public Sector Accounting Standards Board is the IPSASB. In order
for the Public Sector Accounting Standards Board to achieve the said purpose and formulating and
implementing the PPSAS, it would base its development on the pronouncements, rules and regulations,
existing laws, provided or issued by the IPSASB or its counterpart, International Public Sector Accounting
Standards Board.

The PPSAS shall apply to all National Government Agencies (NGAs), Local Government Units
(LGUs) and Government-Owned and/or Controlled Corporations (GOCCs) not considered as
Government Business Enterprises (GBEs), in which case, the Philippine Financial Reporting
Standards (PFRS) and relevant standards issued by the Financial Reporting Standards Council
(FRSC), Board of Accountancy (BOA) and Professional Regulation Commission (PRC) shall apply. In
other words, GBE is covered by the accounting standards issued by IFRS/PFRS but not
IPSAS/PPSAS.
Thus, the inapplicability of the IFRS or PFRS is due to the fact that government accounting is far
different from commercial accounting or accounting for business transactions.
Government Business Enterprise
It is also important to define what a Government Business Enterprise is, since I have mentioned that the
PFRS or IFRS is also applicable to this organization or enterprises.

Government Business Enterprise is an entity that has the following characteristics:

 An entity with the power to contract 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 [to be a going concern] (other than
purchase of outputs at an arm's length); and
 Controlled by a public sector entity.
The following are the processes and other considerations in developing the Philippine Public
Sector Accounting Standards (PPSAS):
 Applicability of IPSAS
o COA Resolution No. 2014-003 dated January 24, 2014 provides that “after a study and
review of the provisions of the International Public Sector Accounting Standards
(IPSAS), the Public Sector Accounting Standards Board (PSASB) recommended the
adoption of the IPSAS, to be referred to as the Philippine Public Sector Accounting
Standards (PPSAS). The PPSAS, as aligned with the prevailing international standards,
provide quality accounting standards thereby enhancing the quality and uniformity in
financial reporting by Philippine Public Sector entities and ensuring accountability,
transparency, and comparability of financial information with other public sector
entities around the world.”
 Exposure draft of IPSAS
o The PSASB issues exposure drafts of all proposed PPSAS for comment by interested
parties including COA officials and auditors, agency finance personnel, oversight
 agencies, professional organizations, academe, and other stakeholders. The PSASB sets
a reasonable time to allow interested parties to consider and comment on its proposals.
The PSASB evaluates all comments received on exposure drafts and make such
modifications, where appropriate.
From here, you can obviously see that PSASB does not simply issue accounting standards to be
implemented or adopted in the government or public sector in just a blink of an eye. But rather, it provides
or it allows the voice of COA officials and auditors, agency finance personnel, oversight agencies,
professional organizations even at academia, and other stakeholders will be heard. So, their voices are
heard and considered in the implementation and or creation of the accounting standards through the
issuance of exposure drafts.

 Fundamental issues
o Where an accounting principle or a significant element of a disclosure requirements
contained in IPSAS is considered to be in conflict with the Philippine laws, rules and
regulations, this would be regarded as a fundamental issue and the accounting
principle or disclosure requirement may be changed.
 Statutory authority
o Where the international standard deviates from the Philippine regulatory or legislative
environment, Philippine application guidance shall be issued accordingly.
o In order to harmonize the existing accounting standards with international accounting
standards, the Commission on Audit, 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 (NGAs).
It is apparently seen that the accounting standards issued are usually in line with the international
accounting standards given that the COA is a member of INTOSAI. However, no matter how the COA wants
to achieve harmonization of the accounting standards applied in the Philippines with the International
Accounting Standards, in case there is deviation already from the Philippine Regulatory or Legislative
Environment, the Philippine Application Guidance will be issued accordingly. That means to say, it must not
conflict or vary with the Philippine regulatory standards. So, that is what we call the statutory authority. It
simply addresses the problems and concerns of the state in which the accounting standards are being
issued. The government accounting system may be linked internationally but it simply addresses the
concerns under the Philippine government and not concerns under international setting. So, the
Philippines statutory authority shall prevail if there is a deviation or conflict.

 Disclosure requirements
o Disclosure requirements may be amended when the amendments are regarded as
being significant for improving fair presentation of the matter.
Disclosure is necessary especially if the matter is significant. What is specified here in the process is the
amendment of the disclosure requirement. So, it is allowed as long as it is for the purpose of improving fair
presentation of the report or simply the matter being addressed here in (unintelligible).

 PPSAS numbering
o The PPSAS is assigned the same number as the IPSAS to maintain the link. Where a
PPSAS is developed and there is no IPSAS equivalent, the standard will be assigned a
number in a series of PPSAS starting with 101. When IPSASB subsequently issues the
equivalent standard as an IPSAS, the 100 series PPSAS will be withdrawn and reissued
as a PPSAS with the IPSAS number. Standards of PPSAS have equal authority regardless
of the numbering used (issued).
If there is a subsequent issuance, in order to maintain the link, the 100 series of PPSAS will simply be
withdrawn and reissued as a PPSAS with the IPSAS number. The numbering of PPSAS, in case there is no
IPSAS equivalent that starts with the 100 series, is simply used as a substitute in case there is no available
IPSAS equivalent. The purpose of numbering of PPSAS, that is, in line with the IPSAS, is simply to maintain
the link.

 Financial reporting issues not dealt with by IPSAS

 o Where issues related to financial reporting emerged, researches were done and a
discussion document prepared based on other relevant accounting standard not in
conflict with Philippine laws.
 Submission of draft to the PSASB for consideration of the COA
o Where there are significant changes or unresolved issues associated with an exposure
draft, the PSASB may decide to re- expose a proposed PPSAS.
In case the exposure draft of PPSAS issued here is not resolved at all, the PSASB may decide to simply re-
expose a proposed PPSAS subject for the consideration of the Commission on Audit.

 If considered appropriate, focus group discussions will be held to obtain further opinions on
issues identified by the exposure process.
ACCOUNTING RESPONSIBILITY
Accounting responsibility emanates from the Constitution, laws, policies, rules and regulations.
The Constitution of the Philippines, the fundamental law of the land, mandates the keeping of the
general accounts of the government, promulgation of accounting rules, and the submission of
reports covering the financial condition and operation of the government.
The offices charged with the accounting responsibility are the Commission on Audit (COA), the
Department of Budget and Management (DBM), the Bureau of Treasury (BTr), and the
government agencies discharging the functions of government to enable it to attain its
commitments to the Filipino people.
COMMISSION ON AUDIT
The Commission on Audit (COA) keeps the general accounts of the government, promulgates
accounting rules and regulations, and submits to the President and Congress, within the time
fixed by law (not later than the last day of September each year — Section 41, PD 1445), an
annual report of the government, its subdivisions, agencies and instrumentalities, including
government-owned or controlled corporations.
In the performance of its functions, as mandated by Article IX-D, Section 2 par. (2) of the
1987 Constitution of the Philippines, to wit: "The Commission on Audit shall have exclusive
authority, subject to the limitation in this Article, to define the scope of its audit and examination,
establish the techniques and methods required therefore, 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," the Commission on Audit revised the previous government accounting
system.
This is also the very legal basis of COA in introducing the government accounting manual.

Pursuant to the COA, DBM and DOF Joint Circular No. 2013-1 dated August 6, 2013,
Unified Accounts Code Structures (UACS), the consistency of account classification and coding
structures with the Revised Chart of Accounts shall be the responsibility of the COA. (UACS and
the Revised Chart of Accounts will be discussed in detail in the later chapter of this book.)
As mentioned in the preceding section, the Commission on Audit, pursuant to the 1987 Philippine
Constitution, Sec. 2(2), Art. IX-D, which vests the exclusive authority to promulgate accounting
rules and regulations, created the Public Sector Accounting Standards Board (PSASB) under COA
Resolution 2008-12 dated October 10, 2008.
The one who created PSASB is COA and it is under COA resolution 2008-12 dated October 10 2008. Do not
forget those fundamental dates because it is relevant to the creation or establishment of the government
accounting manual and continuous revision and improvement of the accounting system to be applied in
the government or public sector.

DEPARTMENT OF BUDGET AND MANAGEMENT

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."
BUREAU OF TREASURY
The Bureau of Treasury (BTr) plays a pivotal role in the cash operations of the national
government. Accounting rules and regulations pertaining to cash operations, collections,
remittances and disbursements, including public borrowings, are issued by the Commission on
Audit, jointly or with the concurrence of the Department of Finance and the Department of
Budget and Management.
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.
Thus, the Bureau of Treasury shall control and monitor the Notice of Cash Allocation (NCA)
released by the Department of Budget and Management; as well as the bank transfers it makes
in replenishing its Modified Disbursement System (MDS) accounts.
According to the Joint Circular No. 2013-1 dated August 6, 2013, Unified Accounts Code
Structures (UACS), the consistency of accounts classification and coding standards with the
Government Finance Statistics (GFS) shall be the responsibility of Department of Finance - BTr.
However, it should be noted that GFS coding will generally not be shown to be part of the UACS;
instead, GFS data will be obtained from reference table inside the system that will map GFS
function coding from MFO/PAP codes, as well as GFS economic classification coding from object
codes for non-financial assets, financial assets, liabilities, revenues and expenses.
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
Departments, bureaus, offices and other instrumentalities of the National Government, including
the Congress, the Judiciary, the Constitutional bodies, state colleges and universities, and other
self-contained institutions and hospitals are required by law to have accounting
units/divisions/departments, which are to be of the same level with other
units/divisions/departments in the agency and under the [direct] supervision of the Head of the
Agency.
Accounting personnel shall:
 maintain and keep current the accounts of the agency;
 provide advice on the financial condition and status of the appropriations and allotments
of the agency as its Head may require; and
 to develop and conduct procedures designed to meet the needs of management.
They shall perform the aforesaid 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 pound for dismissal from the government service.
THE REGISTRIES
Before the new government accounting system, the registries maintained by national
government agencies were as follows:
1. Registry of Appropriations and Allotments (RAPPAE)
2. Registry of Special Purpose Fund Appropriation (RESPFA)
3. Registry of Allotments and Notice of Cash Allocations (RANCA), which was introduced
under NGAS
Under the new accounting system, the government agencies shall maintain the following
registries:
1. Registry of Revenue and Other Receipts – Summary (RRORS)
 o The RROR shall be maintained by the Budget Division/Unit of NGA to monitor the
revenue and other receipts estimated/budgeted, collected and remitted/deposited.
This summary shall be kept by the Budget Division/Unit for each fund cluster
maintained by the entity. (See Appendix IA)
2. Registry of Revenue and Other Receipts — Regular Agency and Foreign Assisted
Projects Fund (RROR-RA&FAP)
o This registry shall be maintained by the Budget Division/Unit of the entity for the
following fund clusters: l.) Regular Agency Fund; and, 2.) Foreign Assisted Project
fund. (See Appendix 1B)
3. Registry of Revenue and Other Receipts – Special Account Locally
Funded/Domestic Grants Fund and Special Account Foreign Assisted/Foreign
Grants Fund (RROR-SADFGF)
o This registry shall be maintained by the Budget Division/Unit of the entity for the
following fund clusters: l.) Special Account – Locally Funded/Domestic Grants Fund;
and, 2.) Special Account – Foreign Assisted/Foreign Grants Fund. (See Appendix IC)
4. Registry of Revenue and Other Receipts – Internally Generated Funds (Off-
Budgetary Funds Retained Income Funds)/Business Related Funds (RROR-
IGF/BRF)
o This registry shall be maintained by the Budget Division/Unit of the entity for the
following fund clusters: 1.) Internally Generated Funds (Off-Budgetary Funds –
Retained Income Funds); and, 2.) Business Related Funds. (See Appendix ID)
5. Registry of Revenue and Other Receipts – Trust Receipts/Interagency
Transferred Funds (RROR-TR/IATF)
o This registry shall be maintained by the Budget Division/Unit of the entity for the
Trust Receipts/Interagency Transferred Funds. (See Appendix IE)
6. Registry of Appropriation and Allotments (RAPAL)
o The RAPAL 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 appropriation.
o This registry shall be maintained by fund cluster by the Budget Division/Unit of each
entity to ensure that allotment releases are within the authorized appropriation.
Separate registry shall be maintained for prior year's appropriations. (See Appendix
2)
7. Registry of Allotments, Obligations and Disbursements — Personnel Services
(RAOD-PS)
o The RAOD shall be maintained to record allotments, obligations and disbursements.
It shall show the allotment received for the year, obligations incurred, and the
actual disbursements made. The incurrence of obligations shall be made through
the issuance of Obligations Request and Status (ORS). Every time an entry is made,
the balance is determined to prevent incurrence of obligations in excess of
allotment and overdraft in disbursements against obligations incurred.
o This registry shall be maintained by the Budget Division/Unit by Appropriation Act,
fund cluster, by Major Final Output (MFO) or Program/Activity/Project (PAP) for
personnel services. (See Appendix 3A)
8. Registry of Allotments, Obligations and Disbursements – Maintenance and Other
Operating Expenses (RAOD-MOOE)
o This registry shall be maintained by the Budget Division/Unit by Appropriation Act,
fund cluster, by Major Final Output (MFO) or Program/Activity/Project (PAP) for
maintenance and other operating expenses. (See Appendix 3B)
9. Registry of Allotments, Obligations and Disbursements – Financial Expenses
(RAOD-FE)
 o This registry shall be maintained by the Budget Division/Unit by Appropriation Act,
fund cluster, by Major Final Output (MFO) or Program/Activity/Project (PAP) for
financial expenses. (See Appendix 3C)
10. Registry of Allotments, Obligations and Disbursements – Capital Outlays
(RAOD-CO)
o This registry shall be maintained by the Budget Division/Unit by Appropriation Act,
fund cluster, by Major Final Output (MFO) or Program/Activity/Project (PAP) for
capital outlays. (See Appendix 3D)
11. Registry of Budget, Utilization and Disbursements – Personnel Services
(RBUD-PS)
o The RBUD shall be used to record the approved special budget and the
corresponding utilizations and disbursements charged to retained income
authorized under RA 8292 for State Universities and Colleges (SUCs) and other
retained income collections of a NGA with similar authority.
o This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for personnel services.
(See Appendix 4M)
12. Registry of Budget, Utilization and Disbursements – Maintenance and
Other Operating Expenses (RBI-JD-MOOE)
o This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for maintenance and
other operating expenses. (See Appendix 4B)
13. Registry of Budget, Utilization and Disbursements – Financial Expenses
(RBUD-FE)
o This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for financial expenses.
(See Appendix 4C)
14. Registry of Budget, Utilization and Disbursements – Capital Outlays
(RBUD-CO)
o This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for capital outlays. (See
Appendix 4D)
15. Registry of Allotments and Notice of Cash Allocation (RANCA) – developed
under NGAS
o 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. (See
Appendix 5)
16. Registry of Allotments and Notice of Transfer of Allocation (RANTA)
o This registry shall be maintained by the Accounting Division/Unit to determine the
amount of allotments not covered by NTA and to monitor available NTA. (See
Appendix 6)
14 out of the 16 registries, specifically number 1 until 14 registries, are assigned or delegated to
the Budget Division/Unit or office of an agency or organization. For the last two, 15 and 16, these
registries are assigned to the Accounting Division/Unit or office of an organization or agency.
This is the very reason why the administration building exists under our academic institution.
Thus, in actuality, we have the budget and accounting offices at the admin building of UNP.
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)
Each of this registry have a separate registry designated for personal services (PS), maintenance
and other operating expenses (MOOE), financial expenses or (FE), and capital outlay (CO). The
Registry of Revenue and Other Receipts up to the Registry of Budget, Utilization and
Disbursements are assigned to Budget Unit/Division or office while for the RANCA and RANTA,
they are assigned to the Accounting Unit/Division or office.
OLD ACCOUNTING SYSTEM VS. NEW ACCOUNTING SYSTEM
Under the old accounting system, the agency shall journalize the Notice of Cash Allocations
(NCA) it receives, which in effect identifies the share of the agency in the income of the national
government.
For the new accounting system, the government agencies will no longer journalize its
appropriations and allotments. Instead, it shall maintain four registries for the allotments it
receives and the obligations it incurs. The government agencies will make use of the four
registries such as the following:
 Registry of Allotments and Obligations – Personnel Services (RAOPS)
 Registry of Allotments and Obligations – Maintenance and Other Operating Expenses
(RAOMO)
 Registry of Allotments and Obligations – Capital Outlay (RAOCO)
 Registry of Allotments and Obligations – Financial expenses (RAOFE)
BASIC ACCOUNTING AND BUDGETING REPORTING PRINCIPLES
The Government Accounting Manual provides general provisions from existing laws, rules and
regulations; and basic standards/fundamental accounting principles for financial reporting by
national government agencies. It requires each government entity to recognize and present its
financial transactions and operations in conformity with the following:
 Generally accepted government accounting principles in accordance with the PPSAS and
pertinent laws. rules and regulations.
o COA Resolution No. 2014-003 dated January 24, 2014 prescribed the adoption of
twenty-five (25) Philippine Public Sector Accounting Standards (PPSASs) effective
January l, 2014. These PPSASs were based on International Public Sector Accounting
Standards (IPSASs) which were published in the 2012 Handbook of International Public
Sector Accounting Pronouncements of the IPSASB.
o In adopting International Public Sector Accounting Standards (IPSAS), the PSASB
attempts, wherever possible, to maintain the accounting treatment and original
contents of the IPSASs and its approved amendments, unless there is a significant
accounting issues that warrants a departure. In so doing, the PPSAS is assigned the
same number as the IPSAS to maintain the link.
o In cases where a specific accounting issue is either not comprehensively dealt with in
an existing IPSAS or an IPSAS has not been developed by the IPSASB, a new standard
of PPSAS shall be developed. Accordingly, researches shall be conducted and a
discussion document shall be prepared based on other relevant accounting standards
not in conflict with Philippine laws. As discussed in the preceding section, where a new
PPSAS is developed and there is no equivalent IPSAS, the standard will be assigned a
number in a series of PPSAS starting with 101. When IPSASB subsequently issues the
equivalent standard as an IPSAS, the 100 series PPSAS will be withdrawn and reissued
as a PPSAS with the IPSAS number.
 Accrual basis of accounting in accordance with the PPSAS.
o Accrual basis means a basis of accounting under which transactions and other events
are recognized when they occur, and not when cash or its equivalent is received or
paid. Thus, the transaction and events are recognized in the accounting records and
recognized in the financial statements of the periods to which they relate. The
elements recognized under accrual accounting are assets, liabilities, net assets/equity,
revenue, and expenses.
 Budget basis for presentation of budget information in the financial statements in accordance
with PPSAS 24.
 o IPSAS 24, Presentation of Budget Information in Financial Statements, requires a
comparison of budget amounts and the actual amounts arising from execution of the
budget to be included in the financial statements of entities that are required to, or
elect to, make publicly available their approved budget/s, and for which they are,
therefore, held publicly accountable. It also requires disclosure of an explanation of the
reasons for material differences between the budget and actual amounts. Compliance
with the requirements of this standard will ensure that public sector entities discharge
their accountability obligations and enhance the transparency of their financial
statements by demonstrating:
a) Compliance with the approved budget/s for which they are held publicly
accountable; and,
b) Where the budget/s and the financial statements are prepared on the same
basis, their financial performance in achieving the budgeted results.
 Revised Chart of Accounts prescribed by Commission on Audit.
o The Commission on Audit as member of the International Organization of Supreme
Audit Institutions (INTOSAI) is encouraged to adopt relevant International Accounting
Standards. The IPSASB of the International Federation of Accountants which
promulgates the IPSASs, acknowledges the right of governments and national
standards-setters to establish their respective accounting standards and guidelines for
financial reporting in their jurisdictions. And to provide new accounts for the adoption
of the PPSAS which were harmonized with the IPSAS to enhance the accountability and
transparency of the financial reports, and ensure compatibility of financial information,
the COA recognizes the need to revise the New Government Accounting System (NGAS)
Chart of Accounts prescribed in COA Cir. No. 2004-008 dated September 20, 2004. The
Commission also recognizes the need for uniform accounts to be used in the national
government accounting and budget systems to facilitate the preparation of harmonized
financial and budget accountability reports.
o Accordingly, the COA revokes COA Cir. No. 2004-008 and the COA Circular No. 2013-
002 dated January 30, 2013, Adoption of the Revised Chart of Accounts for National
Government Agencies, is adopted. Along this line, COA Circular No. 2014-003, dated
April 15, 2014, Implementing Rules and Guidelines on the Conversion from the
Philippine Government Chart of Accounts under the NGAS to the Revised Chart of
Accounts for National Government Agencies; and COA Circular No 2015 007, dated
October 22, 2015, Prescribing the Government Accounting Manual for Use of All
National Government Agencies, were considered.
 Double entry bookkeeping
o Historically, one important breakthrough in the century is the introduction of double-
entry bookkeeping. The Messari (Treasurer's) accounts of Genoa, a city in Italy, is the
oldest record of a complete double-entry system that was discovered in 1340. It
contains debits and credits journalized in a bilateral form; thus, called double-entry
system.
o It is a system of bookkeeping where every journal entry to account requires a
corresponding and opposite entry to a different account. In the double-entry accounting
system, two accounting entries are required to record each accounting transactions.
Recording of a debit amount to one or more accounts and an equal credit amount to
one or more accounts results in total debits being equal to total credits for all accounts
in the general ledger.
 Financial statements based on accounting and budgetary records.
o The objectives of general-purpose financial reporting in the public sector should be to
provide information useful for decision making, and to demonstrate the accountability
of the entity for the resources entrusted to it, by:
a) Providing information about the sources, allocation, and uses of financial
resources;
b) Providing information about how the entity financed its activities and met its
cash requirements;
c) Providing information that is useful in evaluating the entity's ability to finance its
activities and to meet its liabilities and commitments;
 d) Providing information about the financial condition of the entity and changes in
it;
e) Providing aggregate information useful in evaluating the entity's performance in
terms of service costs, efficiency and accomplishments.
o Financial reporting may also provide users with information:
a) Indicating whether resources were obtained and used in accordance with the
legally adopted budget; and
b) Indicating whether resources were obtained and used in accordance with legal
and contractual requirements, including financial limits established by
appropriate legislative authorities.
 Fund cluster accounting.
o Fund cluster refers to an accounting entity for recording expenditures and revenues
associated with a specific activity for which accounting records are maintained and
periodic financial reports are prepared.
o COA Circular No. 2015-002 dated March 9, 2015, Supplementary guidelines on the
preparation of financial statements and other reports, the transitional provisions on the
implementation of the PPSAS, and other coding structures, provides that for the
purpose of preparing the Annual Financial Report and the Annual Audit Reports, all
National Government Agencies (NGAs) shall submit to the COA Auditors and the
Government Accountancy Sector (GAS), COA, the detailed financial statements and
trial balances consolidated by the fund cluster as follows:
a) Regular Agency Fund
b) Foreign Assisted Projects Fund
c) Special Accounts – Locally Funded/Domestic Grants Fund
d) Special Accounts – Foreign Assisted/Foreign Grants Fund
e) Internally Generated Funds
f) Business Related Funds Trust Receipt/Interagency Transferred Funds (IATF)
RESPONSIBILITY ACCOUNTING
Responsibility accounting is a system that relates the financial results to a responsibility center,
which provides access to cost and revenue information under the supervision of a manager
having direct responsibility for its performance. It is a system that measures the plans (by
budget) and actions (by actual results) of each responsibility center.
Responsibility center, on the other hand, is a part, segment, unit or function of a government
agency, headed by a manager, who is accountable for a specified set of activities. Except for
some, which derive most of their income from collection of taxes and fees, national government
agencies are basically cost centers, whose primary purpose is to render service to the public at
the lowest possible cost. Cost centers are established to provide each government agency's
accessibility to cost information and to facilitate cost monitoring at any given period. While the
use of subsidiary ledgers is sufficient to control cost, it requires considerable time to summarize
the cost incurred by the agency for its different programs, projects, activities and
offices/divisions, hence, responsibility accounting shall be done only under the computerized
accounting system.
Responsibility accounting aims to:
1. ensure that all costs and revenues are properly charged/credited to the correct
responsibility center so that deviations from the budget can be readily attributed to
managers accountable therefore;
2. provide a basis for making decisions for future operations; and
3. facilitate review monitoring the performance of each responsibility center and evaluation
of the effectiveness of agency's operations.
Responsibility accounting is a kind of management accounting that is accountable for all the
management, budgeting, and internal accounting of a company. The primary objective of this
accounting is to support all the Planning, costing, and responsibility centers of a company.
The accounting generally includes the preparation of a monthly and annual budget for an
individual responsibility center. It also accounts for the cost and revenue of a company, where
reports are accumulated monthly or annually and reported to the concerned manager for the
feedback. Responsibility accounting mainly focuses on responsibilities centers.
For instance, if Mr. X, the manager of a unit, plans the budget of his department, he is
responsible for keeping the budget under control. Mr. X will have all the required information
about the cost of his department. In case, if the expenditure is more than the allocated budget
than Mr. X will try to find the error and take necessary action and measures to correct it. Mr. X
will be personally accountable for the performance of his unit.
Here are some of the advantages when it comes to responsibility accounting:
 It urges the management to acknowledge the company structure and checks who is
accountable for what and fix the problems.
 It enhances attention and awareness of the managers as they have to explain the
variations for which they are responsible.
 It helps to compare the achievements between the pre-planned goals and actual results.
 It creates a sense of efficiency within individual employees as their work and
achievements will be reviewed.
 It guides the management to plan and structure the future expenditure and revenue of a
company.
 Being a cost control tool, it creates ‘cost consciousness’ among workers.
 Individual and company goals are established and communicated in the best way.
 It improves and controls the company’s operating activities for an effective and efficient
outcome.
 Simplifies the report structure and guides to prompt reporting.
Responsibility accounting is also one of the topics under Management Advisory Services, Cost
Accounting and if I am not mistaken, it is also part of the Strategic Cost Management under the
new curriculum.
CONCEPTS OF RESPONSIBILITY ACCOUNTING
Before proceeding to the discussion of the concepts under responsibility accounting, it is
important for you to have an insight on how responsibility accounting works in an organization
through this organizational chart.
A. Definition
The term accounting responsibility refers to an accounting system that collects, summarizes, and
reports accounting data relating to the responsibilities of individual managers.
A responsibility accounting system provides information to evaluate each manager on the
revenue and expense items over which that manager has primary control (authority to
influence).
A responsibility accounting report contains those items controllable by the responsible
[responsibility] manager. When both controllable and uncontrollable items are included in the
report, accountants should clearly separate the categories. The identification of controllable
items is a fundamental task in responsibility accounting and reporting.
B. Some basic requirements
To implement responsibility accounting in a company, the business entity must be organized so
that responsibility is assignable to individual managers. The various company managers and
their lines of authority (and the resulting levels of responsibility) should be fully defined. The
organization chart below demonstrates lines of authority and responsibility that could be used as
a basis for responsibility reporting.
To identify the items over
which each manager has
control, the lines of
authority should follow a
specified path. For
example, we show that a
department supervisor
may report to a store
manager and the store
manager may report to
the vice president of
operations and the vice
president of operations reports to the president. The president is ultimately the one responsible
to the stockholders or their elected representatives, the board of directors. In a sense, the
president is responsible for all revenue and expense items of the company, since at the
presidential level all items are controllable over some period. The president often carries the title
Chief Executive Officer (CEO) and usually delegates authority to the lower-level manager since
one person cannot keep fully informed of the day-to-day operating details of all the areas of the
business.
The manager’s level in the organization also affects those items over which the manager has
control. The president is usually considered as the first-level manager. Managers (usually vice
presidents) who report directly to the president are second-level managers. So, the vice
presidents here, for the second row, are usually the second-level manager so they are level two
when it comes to their level of responsibility. So, the vice president of finance, vice president of
operations, and vice president of marketing reports to the president and they are the second-
level managers. Notice on the organization chart that individuals at specific management level
are on a horizontal line across the chart. So, such as, for example, we have here the VP of
Finance, VP of Operations and VP of Marketing. Not all managers at that level, however,
necessarily have equal authority and responsibility. The degree of managers’ authority varies
from company to company. So, in our example or illustration available, the VP of finance and VP
of operations and VP of marketing share the same level of authority in the company.
While the president may delegate much decision-making power, some revenue and expense
items remain exclusively under the president's control. For example, in some companies, large
capital (plant and equipment) expenditures may be approved only by the president. Therefore,
depreciation, property taxes, and other related expenses should not be designated as a store
manager's responsibility since this cost are not primarily under that manager's control.
The controllability criterion is crucial to the content of performance reports for each manager. For
example, at the department supervisor level, perhaps only direct materials and direct labor cost
control are appropriate for measuring performance. A plant manager, however, has the authority
to make decisions regarding many other costs not controllable at the supervisory level, such as
the salaries of department supervisors. These other costs would be included in the performance
evaluation of the store manager, not the supervisor.
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 which the
following conditions exist:
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 with which they are
associated; and
c. Budget data can be developed for evaluating manager’s effectiveness in controlling
cost and revenues.
A and B is somewhat associated with management by exception. Management by exception is
the principle that upper-level management does not need to examine operating details at lower-
levels unless there appears to be a problem. As businesses become increasingly complex,
accountants have found it necessary to filter and condense accounting data so that this data
may be analyzed quickly. Most executives do not have time to study detailed accounting reports
and search for problem areas. Reporting only summary totals highlights any areas needing
attention and makes the most efficient use of the executive's time.
The condensation of data in successive levels of management reports is justified on the basis
that the appropriate manager will take the necessary corrective action. Thus, specific
performance details need not be reported to superiors.
For example, if sales personal costs have been excessively high in a particular department, that
departmental manager should find and correct the cause of the problem. When the store
manager questions the unfavorable budget variance of the department, the departmental
supervisor can inform the store manager that corrective action was taken. Hence, it is not
necessary to report to any higher authority that a particular department within one of the stores
is not operating satisfactorily because the matter has already been resolved. Alternatively, if a
manager's entire store has been performing poorly, vice president of operations discloses this
situation and an investigation of the store manager's problems may be indicated.
4. The reporting of cost and revenues under responsibility accounting differs from budgeting
in two aspects:
a. A distinction is made between controllable and noncontrollable costs.
It is presumed that you already know the definition or meaning of controllable and
noncontrollable cost and that we can move on on how we can distinguish the two.
In the realm of budget and cost, the budget should be carefully designated as to which
departments have authority over and are responsible for which cost. If a department has
authority and responsibility for certain costs, those costs are called controllable costs. The
noncontrollable costs are those costs that a department doesn't have authority over and can’t
change.
Because authority and accountability go together, you can only hold individuals and units in an
organization accountable for those things that they can control. If you don't give subordinates
authority to do something, how can you hold them accountable for doing it?
Suppose Eve asked Alfred to walk her dog for a week. However, she refused to give Alfred the
keys to her apartment, so he had no access to the dog. Because Eve didn't give Alfred the
authority to do his job, Eve can't possibly hold him accountable for not walking the dog (or for
the resulting mess in her apartment).
Given the organization’s goals and strategies, every required task and decision should be under
someone’s watch. Responsibility accounting allows you to hold subordinates responsible for all
tasks over which they have control.
Overhead allocations are usually inconsistent with the idea of controllable costs. Overhead
allocations use allocation rates to assign overhead costs based on the number of units, direct
labor hours, or other cost drivers to individual departments. Each department must then include
a portion of this overhead as a cost in its own budget, even though these departments usually
have little or no say over how money is spent for this overhead.
Even when one of these departments closes completely, its overhead costs often remain and get
assigned to other departments. In this way, arbitrary overhead allocations often result, forcing
departments to accept responsibility for overhead costs that they have little or no control over –
noncontrollable cost.
b. Performance reports either emphasize or include only items controllable by
individual manager.
In preparing responsibility accounting reports, companies use two basic methods to handle
revenue or expense items. In the first approach, only those items over which a manager has
direct control are included in the responsibility report for that management level. Any revenue
and expense items that cannot be directly controlled are not included. The second approach is to
include all revenue and expense items that can be traced directly or allocated indirectly to a
particular manager, whether or not they are controllable. This second method represents a full-
cost approach, which means all costs of a given area are disclosed in a single report. When this
approach is used, care must be taken to separate controllable from noncontrollable items to
differentiate those items for which a manager can and should be held responsible.
For accounting reports to be of maximum benefit, they must be timely. That is, accountants
should prepare reports as soon as possible after the end of the performance measurement
period. Timely reporting allows prompt corrective action to be taken. When reports are delayed
excessively, they lose their effectiveness as control devices. For example, a report on the
previous month’s operations that is not received until the end of the current month is virtually
useless for analyzing poor performance areas and taking corrective action.
Companies also should issue reports regularly so that managers can spot trends. Then,
appropriate management action can be initiated before major problems occur. Regular reporting
allows managers to rely on reports and become familiar with their contents.
We have here the controllable and uncontrollable cost
comparison table. So, the similarities between these two costs
are: that they are both relevant cost in a business, especially
when it comes to decision making process. However, they
have such differences. So, as to their characteristic, a
controllable cost is something that can be controlled and
uncontrollable cost is something that cannot be controlled by
the management. So, as to their definition, a controllable cost
is a cost that can be altered based on a business decision or
need. These costs have a direct relationship with a product
department or function. Examples include direct labor, direct
materials, donations, training costs, bonuses, subscriptions,
overhead cost, just to name a few. While as for uncontrollable
costs, this is a cost that cannot be altered based on personal
business decision or need. The costs are allocated by the top
management to several departments or branches. Examples
include depreciation, insurance, administrative overhead and
rent allocated, just to name a few. While controllable cost can
be altered in the short run, the uncontrollable cost can be
altered in the long run.
Costs in businesses are inevitable. Failure to manage the costs, however, can be detrimental for
a business. It is hence important for business owners and employees to differentiate between
controllable and uncontrollable costs, which enable them to make sound business decisions.
5. A responsibility reporting system involves the preparation of a report for each level of
responsibility. Responsibility reports usually compare actual cost with flexible budget data.
The reports show only controllable costs and no distinction is made between variable and
fixed costs.
Responsibility accounting provides reports to different levels of management. The amount of
detail varies depending on the manager’s level in the organization. A performance report to a
department manager of a retail store would include actual and budgeted dollar amounts of all
revenue and expense items under that supervisor’s control. The report issued to the store
manager would show only totals from all the department supervisors’ performance reports and
any additional items under the store manager’s control, such as the store’s administrative
expenses. The report to the company’s president includes summary totals of all the stores’
performance levels plus any additional items under the president’s control. In effect, the
president’s report should include all revenue and expense items in summary form because the
president is responsible for controlling the profitability of the entire company.
Firms should make the format of their responsibility reports relatively simple and easy to read.
Confusing terminology should be avoided. Where appropriate, expressing results in physical units
may be more familiar and understandable to some managers. To assist management in quickly
spotting budget variances, companies can report both budgeted (expected) and actual amounts.
A budget variance is the difference between the budgeted and actual amounts of an item.
Because variances highlight problem areas (exceptions), they are helpful in applying the
management-by-exception principle. To help management evaluate performance to date,
responsibility reports often include both a current period and year-to-date analysis.
6. Evaluation of manager’s performance for cost centers based on his ability to meet
budgeted goals for controllable costs.
One of the vital functions of a manager is to carry out the plans of the management and meet
the desired goals for a certain period of time under his direct supervision. His performance is
rated based on how well-versed he is in meeting organizational objectives and devising of ways
and strategies on how to achieve such. This is the very reason why managers are so strict,
especially in the conduct of business operations and it so depends also on the nature of the
organization's engagement.
In order to be effective in identifying the performance of a segment or unit of the agency under
the control and responsibility of the segment's manager, the coding structure has been
formulated. However, in order to provide a harmonized budgetary and accounting code
classification that will facilitate the efficient and accurate financial reporting, this coding
structure was modified and repealed lately by the Commission on Audit, Department of Budget
and Management, and Department of Finance through Joint Circular No. 2013-1 dated August 6,
2013: Unified Accounts Code Structure (UACS). (This joint circular was later enhanced amending
the Funding Source Code and MFO/PAP Code.) For the organization code that will be useful for
monitoring revenue and expenses, the Government Accounting Manual assigned each National
Government Agencies a responsibility center code defined as organization code in the UACS
Manual.
Illustration of Responsibility Report
Assume Macy’s has four management levels—the president, vice president of operations, store
manager, and department manager. In this section, we show that a responsibility report would be
prepared for each management level. We will begin with the lowest level, the Men’s department
manager and work our way up to the president. We start at the lowest level because the totals
from each level will be reported in the next highest level.
Only the individual manager’s controllable expenses are contained in these reports. For example,
the store manager’s report includes only totals from the Men’s Clothing Department manager’s
report. In turn, the report to the vice president includes only totals from the store manager’s
report, and so on. Detailed data from the lower levels are summarized or condensed and

reported at the next higher level.

You can see that at each level, more and more costs become controllable. Also, the company
introduces controllable costs not included on lower-level reports into the reports for levels 3, 2,
and 1. The only store cost not included at the store manager’s level is the store manager’s salary
because it is noncontrollable by that store manager. It is, however, controllable by the store
manager’s supervisor, the vice president of operations.
Based on an analysis of these reports, the Men’s Clothing Department manager probably would
take immediate action to see why supplies and overtime were significantly over budget this

month. The store manager may ask the department manager what the problems were and
whether they are now under control. The vice president may ask the same question of the store
manager. The president may ask each vice president why the budget was exceeded this month
and what corrective action has been taken.
We have already discussed how responsibility accounting works in a company. The business entity must be organized
so that responsibility is assignable to individual managers. The various company managers and their lines of authority
(and the resulting levels of responsibility) should be fully defined. The organization chart below demonstrates lines of
authority and responsibility that could be used as a basis for responsibility reporting.

The controllability criterion is crucial to the content of performance reports for each manager. For example, at the
department supervisor level, perhaps only direct materials and direct labor cost control are appropriate for measuring
performance. A plant manager, however, has the authority to make decisions regarding many other costs not
controllable at the supervisory level, such as the salaries of department supervisors. These other costs would be
included in the performance evaluation of the store manager, not the supervisor.

DECENTRALIZATION
Decentralization is the dispersion of decision-making authority among individuals at lower levels
of the organization. In other words, the extent of decentralization refers to the degree of control
that segment managers have over the revenues, expenses, and assets of their segments. When
a segment manager has control over these elements, the investment center concept can be
applied to the segment. Thus, the more decentralized the decision making is in an organization,
the more applicable is the investment center concept to the segments of the company. The more
centralized the decision-making is, the more likely responsibility centers are to be established as
expense centers.
Some advantages of decentralized decision making are:
 Managing segments trains managers for high-level positions in the company. The added
authority and responsibility also represent job enlargement and often increase job
satisfaction and motivation.
 Top management can be more removed from day-to-day decision making at lower levels of
the company and can manage by exception. When top management is not involved with
routine problem solving, it can devote more time to long-range planning and to the
company’s most significant problem areas.
 Decisions can be made at the point where problems arise. It is often difficult for top
managers to make appropriate decisions on a timely basis when they are not intimately
involved with the problem they are trying to solve.
 Since decentralization permits the use of the investment center concept, performance
evaluation criteria such as ROI and residual income can be used.
The Unified Accounts Code Structure
This video presentation talks about the Unified Accounts Code Structure that I’ve [???] from the
actual manual, its purpose and its key elements
According to Joint Circular No. 2013-1 dated August 6, 2013, the Department of Budget and
Management (DBM), Commission on Audit (COA), Department of Finance (DOF), and Bureau of
Treasury (BTr) jointly developed the Unified Accounts Code Structure (UACS), a government-wide
coding framework, to provide a harmonized budgetary and accounting code classification that
will facilitate the efficient and accurate financial reporting of actual revenue collections and
expenditures compared with programmed revenues and expenditures, respectively, starting
Fiscal Year (FY) 2014.
On November 7, 2014, through Joint Circular No. 2014-1, the UACS per Joint Circular No. 2013-1
dated August 6, 2013 was enhanced amending the Funding Source code and MFO/PAP Code.
Purpose of UACS
The objective of the government-wide Unified Accounts Code Structure UACS) is to establish the
accounts and codes needed in reporting the financial transactions of the National Government of
the Republic of the Philippines. The UACS provides a framework for identifying, aggregating and
reporting financial transactions in budget preparation, execution, accounting and auditing.
The key purpose of the UACS is to enable the timely and accurate reporting of actual revenue
collections and expenditures against budgeted programmed revenues and expenditures.
Reporting requirements that will be best served by the UACS include:
1. Financial reports as required by the Department of Budget and Management (DBM) and
the Commission on Audit (COA);
2. Financial Statements as required by the Public Sector Accounting Standards Board of the
Philippines;
3. Management reports as required by the executive officials/heads of departments and
agencies; and
4. Economic statistics consistent with the Government Finance Statistics (GFS) Manual 2001.
Application
The UACS will be used by all departments and agencies of the National Government and
Government-Owned and/or Controlled Corporations with Budgetary Support from National
Government including those maintaining Special Accounts in the General Fund.
The source of account descriptions and codes in the UACS object coding elements includes the
following:
1. The codes from the COA Revised Chart of Accounts prepared for accrual basis financial
reporting;
2. The addition of some sub-object codes; and
3. Additional expenditure accounts designed for cash basis budgeting, such as those for
capital outlays.
Responsibilities
I have already mentioned in my previous discussion on Chapter 1 that UACS or the Unified
Accounts Code Structure is a responsibility jointly shared by Department of Budget and
Management, Commission on Audit and Department of Finance – Bureau of Treasury. But in this
slide, I have already presented here a summary of the functionality of each agency and their
equivalent or proponent agency. Thus, the DBM, DOF-BTR, and COA are collectively responsible
for UACS.

Responsibility Agency
Validation and assignment of new codes Department of Budget and
for funding source, organization, sub- Management (DBM)
object codes for expenditure items.
Validation and assignment of new Department of Budget and
Program, Activity, and Project Codes Management (DBM) and proponent
(PAP). agency
Consistency of account classification Commission on Audit (COA)
 and coding structure with the Revised
Chart of Accounts.
Consistency of account classification Department of Finance-Bureau of
and coding standards with the Treasury (DOF-BTr)
Government Finance Statistics.

I hope you can see the parallelism or the pattern that we have here when it comes to their
functionality of each agency. The Unified Accounts Code Structures is collective the responsibility
of DBM, COA, and DOF-BTr. It is important to know specifically to whom or to which agency is it
being assigned to.

Elements
To facilitate the discussions of the UACS, its composition is being broken down into five key
elements. Just like in preparation of financial reports or financial statements, you have to identify
the elements of financial statement such as assets, liabilities, equity, revenues, and expenses
while for the UACS, we have here the five key elements in the coding framework.
The five key elements of the coding framework:
1. Funding source codes which consist of fund cluster, financing source, authorization code,
and fund category.
2. Organization codes which consist of department code, agency code, operating unit
classification code and lower-level operating units.
3. Location codes consist of region, province, city or municipality, [and barangay].
4. Major Final Output (MFO)/Program, Activity, and Project (PAP) Codes consist of
sector/horizontal outcomes, program/project[/purpose], MFO/Project category activity level
1 (project sub-category) and activity level 2 (project title).
5. Object codes for assets, liabilities, equity, income, and expenses which consists of revised
chart of accounts and sub-object code.
Additional insights for budgetary accounts, GFS coding and the business rules
applicable to all the codes in the UACS
I have mentioned a while ago regarding the GFS manual, as the term implies, it mainly contains
GFS coding.
Budgetary Accounts
The Revised Chart of Accounts does not include classification and codes for budgetary accounts.
Thus, the information system will need to provide—in response to the required input of any
expenditure account code—an amount with respect to Appropriations, Adjustment to
Appropriations, Adjusted Appropriations, Allotments, Transfers, Adjusted Allotments, Unreleased
Appropriations, Obligations, Unobligated Allotments, Disbursements and Unpaid Obligations.
GFS Coding
GFS coding will generally not be shown to be part of the UACS. Instead, GFS data will be obtained
from reference tables inside the system that will map GFS Function coding from MFO/PAP codes,
as well as GFS Economic Classification coding from Object Codes for Non-Financial Assets,
Financial Assets, Liabilities, Revenues and Expenses.
Business Rules Applicable to All the Codes in the UACS
Codes are classified under “Others” to describe the components of UACS key elements for items
pending identification, subject to the submission of a request for specific code assignments to

the UACS Administrator.

In this illustration, we have a summary of the key elements and their unified code digits. We
have a summary of the key elements and their unified code digits starting with funding source
(6), organization (12), location (9), MFO/PAP (9), and object code (10). UACS is required for
funding source, as well as organization, and location for region (province, city, and barangay is
optional). MFO/PAP code is usually unique for each department or agency because it depends on
what program or activity or project the agency, the proponent agency, would like to implement
or execute. Next, object code is uniform across government.

FUNDING SOURCE CODE

Funding Source Organization Location MFO/PAP Object
6 Digits 12 Digits 9 Digits 9 Digits 10 Digits

Program/Project/Purp
Financing Source Department Region COA Chart of Accounts
ose (SPF)
1st digit 1st and 2nd digits 1st and 2nd digits 1st to 8th digits
1st digit

MFO/Project
Authorization Agency Province Category/1st Level Sub-Object
2nd and 3rd digits 3rd to 5th digits 3rd and 4th digits Activity 9th to 10th digits
2nd and 3rd digits

1st Level
Lower-level Operating Activity/Project Sub-
Fund Category City/Municipality
Unit Category/2nd Level
4th to 6th digits 5th to 6th digits Activity
6th to 12th digits
4th and 5th digits

2nd Level
Barangay Activity/Project
7th to 9th digits Title/3rd Level Activity
6th to 9th digits

Six digits are available for the Funding Source code. The Funding Source code is composed of the
Financing Source, Authorization and Fund Category codes.

Funding Source
6 Digits
Financing Source Authorization Fund Category
1st digit 2nd and 3rd digits 4th to 6th digits

The first digit of the Funding Source indicates whether the expenditure is sourced inside or
outside the general fund, which is the case for all budgeted spending and continuing or
automatic appropriations. The next two digits are for the Authorization code, while the last three
digits are for the Fund Category code.
Ultimately it is a six-digit code to reflect the financing source authorization and fund category.
Funding source code is a six-digit code to reflect the financing source, authorization, and fund
category codes. The six-digit funding source code was enhanced by adding another two digits
code for the fund cluster for purposes of accounting, banking, and reporting. Thus, it becomes
eight digits.
You can see here now the evolution of the funding source code into fund cluster code values. The
fund cluster code consists of eight digits [code]. It is somehow the enhanced version of the
funding source code.
Fund Cluster Code Values
The Fund Cluster [Code Values], as provided by Joint Circular No. 2014-1, were as follows:

Fund Cluster Code Fund Cluster Description

01 Regular Agency Fund
02 Foreign Assisted Project Fund
03 Special Accounts – Locally Funded/Domestic
Grants Fund
04 Special Accounts – Foreign Assisted/Foreign
Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts

Financing Source Codes

Particulars UACS
General Funds 1
Off-Budgetary Funds 2
Custodial Funds 3

General Funds
General Funds are funds available for any purpose that Congress may choose to apply, and is
composed of all receipts or revenues that do not otherwise accrue to other funds.
Off-Budgetary Funds
Off-Budgetary Funds refer to receipts for expenditure items that are not part of the National
Expenditure Program, and which are authorized for depositing in government financial
institutions.
These are categorized into:
 Retained Income/Receipts, and
 Revolving Funds
Custodial Funds
Custodial Funds refer to receipts or cash received by any government agency—whether from a
private source or another government agency—to fulfill a specific purpose. Custodial receipts
include receipts collected as an agent for another entity. These include trust receipts—both from
an individual or corporation—that are required to be held by government until the outcome of a
court’s case or procurement activity is determined, as well as cases where a department or
agency holds receipts as a trustee for the fulfillment of some obligations.

Authorization Codes
Particulars UACS
New General Appropriations 01
Continuing Appropriations 02
Supplemental Appropriations 03
Automatic Appropriations 04
Unprogrammed Funds 05
Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08

New General Appropriations

New General Appropriations are annual authorizations for incurring obligations during a specified
budget year, as listed in the General Appropriations Act (GAA). The GAA is the legislative
authorization that identifies new appropriations in terms of specific amounts for salaries, wages
and other personnel benefits; Maintenance and Other Operating Expenses (MOOE), Financial
Expenses (FEx) and Capital Outlays (CO) for the implementation of programs, projects and
activities of all departments, bureaus and offices of government for a given year.
Continuing Appropriations
Continuing Appropriations are authorizations to support obligations for a specified purpose or
project, even when these obligations are incurred beyond the budget year. Because MOOE and
CO appropriations in the GAA are valid for two years, unobligated and unreleased appropriations
for these budget items are valid until the end of their second year and are classified as
Continuing Appropriations.
As I have mentioned, MOOE and CO may be valid for two years, even if they are being incurred
beyond the budget year.
Continuing Appropriations for MOOE may be approved for projects whose effective
implementation calls for multi-year expenditure commitments.
Starting CY 2013 until further amended, however, all appropriations for Personnel Services (PS),
MOOE and CO shall be valid only for one (1) fiscal year.
Both New General Appropriations and Continuing Appropriations will contain a mix of the
Department/Agency Specific Budget and realignments from Special Purpose Funds to the
relevant department/agency during budget execution once specific conditions and authorizations
are met.
Supplemental Appropriations
Supplemental Appropriations are additional appropriations enacted by Congress to augment
original appropriations that have proven insufficient for their intended purpose because of
economic, political or social conditions. Supplemental Appropriations must also be supported by
a certification of availability of funds by the BTr.
Automatic Appropriations
Automatic Appropriations are authorizations made annually or for some other period prescribed
by law, by virtue of standing legislation, which do not require periodic action by the Congress.
These are automatically and annually included in the National Expenditure Program of the
National Government.
All expenditures for the (i) National Government share for the Retirement and Life Insurance
Premiums of government personnel and other similar fixed expenditures; (ii) amortization of
principal and interest on public debt; and (iii) National Government guarantees of obligations
which are drawn upon are automatically appropriated as per Section 26, Chapter 4, Book VI of
Executive Order (E.O.) No. 292, the Administrative Code of 1987.
Examples of Automatic Appropriations:

Particulars UACS
Retirement and Life Insurance Premiums 104102
Pension under R.A. No. 2087, as amended by P.D. No. 1625 and R.A. No. 5059 104103
Domestic Grant Proceeds 104104
Customs duties and taxes, including tax expenditures 104105
Proceeds from sales of non-serviceable, obsolete and unnecessary equipment 104106
Military Camps Sales Proceeds 104107
Tax refunds 104108
Debt Principal Amortization 104109
Debt Interest Payments 104110
Internal Revenue Allotment 104251
Net Lending (GOCC Debt) 104280

Unprogrammed Funds
Unprogrammed Funds are standby appropriations for priority programs or projects of the
government. The utilization of Unprogrammed Funds may be approved if any of the following
conditions are met:
 Revenue collections for the year exceed targets;
  New revenues not included in the original revenue targets are successfully generated; or
 Foreign loan proceeds are generated for newly approved projects covered by perfected
loan agreements.
Retained Income/Funds
Retained Income/Funds are collections that are authorized by law to be used directly by agencies
for their operation or specific purposes. These include but are not limited to receipts from:
 State Universities and Colleges (SUCS) - tuition and matriculation fees and other internally
generated receipts
 Department of Health (DOH) - hospital income such as hospital fees; medical, dental and
laboratory fees; rent income derived from the use of hospital equipment and facilities;
proceeds from sale of hospital therapeutic products, prosthetic appliances and other
medical devices; diagnostic examination fees; donations in cash from individuals or
nongovernment organizations satisfied with hospital services.
Revolving Funds
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. These
funds shall be self-liquidating. All obligations and expenditures incurred because of these
business-type activities shall be charged against the Revolving Fund.
Trust Receipts
Trust Receipts are receipts that are officially in the possession of government agencies or a public
officer as trustee, agent, or administrator, or which have been received for the fulfillment of a
particular obligation.
These receipts may be classified as:
 Inter-Agency Transferred Funds (IATF), which are receipts or fund transfers from any
government-agency or Government Owned and/or Controlled Corporations (GOCC) to
another agency, and which are deposited in the National Treasury to facilitate project
implementation;
 Receipts deposited with the National Treasury other than IATF, which are receipts
from other sources—including private persons or foreign institutions—which are deposited
with the National Treasury, pursuant to E.O. No. 338, for the fulfillment of some
obligations; and,
 Receipts deposited with Authorized Government Depository Bank (AGDB), which
are receipts from other sources that should be deposited in the AGDB for the fulfillment of
some obligations.

Fund Category Code

The Fund Category Code identifies specific funds maintained by the agency for accounting
purposes, as well as for recording and reporting financial transactions.

Codes
Particulars
Old UACS
Specific Budgets of National Government Agencies 101 101 to 150
GoP Counterpart Funds and Loans/Grants from Development
102/171 151 to 250
Partners
Allocations to Local Government Units 103 251 to 275
Budgetary Support to Government Corporations 104 276 to 300
Financial Assistance to Metro Manila Development Authority 301 to 320
105,183,401,
Special Accounts in the General Fund 321 to 400
151 to 159
Special Purpose Funds 401 to 420
Unprogrammed Funds 421 to 440
Retained Income/Funds 441 to 500
Revolving Funds 161 to 164 501 to 600
Trust Receipts 101-184, 187 601 to 610
Others (Specify) 611 to 999

Specific Budgets of National Government Agencies

This refers to the budgets appropriated for a specific department or agency of the National
Government.
Thus, this simply means that it is not applicable to all departments under that certain agency but
only to a particular department or agency of the National Government.
GoP Counterpart Funds and Loans/Grants from Development Partners
(Multilateral/Bilateral Assistance)
The fund category code for counterpart funds, loan proceeds and grant proceeds will be selected
according to the name of the institution providing funds from the list [in Appendix A.5].
The authorization code—which precedes the fund category code—will vary depending on
whether funds were loans or grants, as well as if they were unprogrammed or included in the
regular budget. Appropriated loan proceeds will use authorization code 01, grant proceeds will
use authorization code 04 and unprogrammed loan proceeds will use authorization code 05.
Allocations to Local Government Units
Allocation to Local Government Units (ALGU) refers to the share of Local Government Units
(LGUs) from the revenue collections of the National Government. The total ALGU is based on a
sharing scheme computed for each LGU, as provided for under the Local Government Code and
other special laws.
Budgetary Support to Government Corporations
Budgetary Support to Government Corporations (BSGC) refers to either subsidies for operations
or projects, equity contributions, and net lending and/or advances to Government-Owned or
Controlled Corporations (GOCC) for loan repayments.
Financial Assistance to Metro Manila Development Authority
Financial Assistance to Metropolitan Manila Development Authority refers to national government
subsidy in the form of regular appropriations as provided in the GAA which shall only be used to
augment any deficiency in the consolidated funds of the MMDA to cover valid and authorized
expenditures.
Special Accounts in the General Fund
Notice how ironic it is that there are still special accounts under the general fund. So, the very
purpose for general fund is, of course, it has no specific or particular designations. However,
underlying this general fund is what we call special accounts.
A Special Account in the General Fund (SAGF) is a fund where proceeds from specific revenue
measures and grants earmarked by law for priority projects are recorded. These sources are
automatically appropriated.
For SAGFs used by more than one agency, only one funding source code shall be used. For
example, the funding source code 104328 assigned to Malampaya Gas Fund under the DOE-
OSEC shall be used by all agencies availing funds from that SAGF (i.e., DBM [for LGUs], DOE,
DND, DPWH).
Special Purpose Funds sun protection factor
Special Purpose Funds (SPF) are lump-sum funds included in the GAA which are not within the
approved appropriations of Departments/Agencies/Lower-Level Operating Units, and which are
available for allocation to any Department/Agency/Lower-Level Operating Unit or Local
Government Unit for a specific purpose, as may be duly approved in accordance with special
provisions on the use of these funds.

Examples of Funding Source Codes:

New General Appropriations
 Financing Authorization Fund Category
Specific Budgets of National
General Fund New General Appropriation
Government Agencies
1 01
101
General Fund New General Appropriation Pension and Gratuity Fund
1 01 407

Note: The assignment of fund codes under this Manual is based on representations by Agencies
concerned that the creation of funds, i.e., Special Accounts in the General Fund, Trust Receipts,
Revolving Funds, among others, as well as the use/s thereof are authorized by law. Accordingly,
the same shall be without prejudice to the eventual determination by the DBM that the creation
of said funds is without legal basis, or not in full compliance with law/s, rules and regulations. The
DBM is further authorized to deactivate the fund code previously assigned and delete the same
in the UACS Manual and its Appendices and such other actions necessary in the proper
administration of the funding source codes.

ORGANIZATION CODE
Funding Source Organization Location MFO/PAP Object
6 Digits 12 Digits 9 Digits 9 Digits 10 Digits

Program/Project/Purp
Financing Source Department Region COA Chart of Accounts
ose (SPF)
1st digit 1st and 2nd digits 1st and 2nd digits 1st to 8th digits
1st digit

MFO/Project
Authorization Agency Province Category/1st Level Sub-Object
2nd and 3rd digits 3rd to 5th digits 3rd and 4th digits Activity 9th to 10th digits
2nd and 3rd digits

1st Level
Lower-level Operating Activity/Project Sub-
Fund Category City/Municipality
Unit Category/2nd Level
4th to 6th digits 5th to 6th digits Activity
6th to 12th digits
4th and 5th digits

2nd Level
Barangay Activity/Project
7th to 9th digits Title/3rd Level Activity
6th to 9th digits

It is a twelve-digit code to reflect the Department, Agency, and Sub-Agency or Operating

Unit/Revenue Collecting Unit.
The Organization Code is structured into three segments: 1.) Department, 2.) Agency and 3.)
Lower-Level Operating Unit/Revenue Collecting Unit.

Organization Code
12 Digits
Department Agency Lower-Level Operating Unit
1st and 2nd digit 3rd to 5th digits 6th to 12th digits

Department Code
Department – the primary subdivision of the Executive Branch responsible for the overall
management of a sector or a permanent national concern with nationwide or international
impact. A department is headed by a Secretary or an official with an equivalent position level.
For purposes of the UACS, Constitutional Offices, the Judiciary and the Legislature are
categorized as department-level entities.
There are also department-level entities that are likewise considered as operating units, as in the
case of the Commission on Audit, Commission on Human Rights and other similarly situated
entities.
Moreover, a Department includes the summation of all the budgets of all its attached agencies
and sub-agencies, including the Office of the Secretary (Proper) and lower-level operating units
listed under it.
 Departments UACS
Congress of the Philippines 01
Office of the President (OP) 02
Office of the Vice-President (OVP) 03
Department of Agrarian Reform (DAR) 04
Department of Agriculture (DA) 05
Department of Budget and Management (DBM) 06
Department of Education (DepEd) 07
State Universities and Colleges (SUCs) 08
Department of Energy (DOE) 09
Department of Environment and Natural Resources (DENR) 10
Department of Finance (DOF) 11
Department of Foreign Affairs (DFA) 12
Department of Health (DOH) 13
Department of the Interior and Local Government (DILG) 14
Department of Justice (DOJ) 15
Department of Labor and Employment (DOLE) 16
Department of National Defense (DND) 17
Department of Public Works and Highways (DPWH) 18
Department of Science and Technology (DOST) 19
Department of Social Welfare and Development (DSWD) 20
Department of Tourism (DOT) 21
Department of Trade and Industry (DTI) 22
Department of Transportation and Communications (DOTC) 23
National Economic and Development Authority (NEDA) 24
Presidential Communications Operations Office (PCOO) 25
Other Executive Offices 26
Autonomous Region In Muslim Mindanao (ARMM) 27
Joint Legislative-Executive Councils 28
The Judiciary 29
Civil Service Commission (CSC) 30
Commission on Audit (COA) 31
Commission on Elections (COMELEC) 32
Office of the Ombudsman 33
Commission on Human Rights (CHR) 34
Budgetary Support to Government Corporations 35
Financial Assistance to Metropolitan Manila Development Authority 36

In addition to the regular departments (01-34), the Budgetary Support to Government

Corporations and Financial Assistance to Metropolitan Manila Development Authority are
assigned department codes 35 and 36, respectively. The grouping of GOCCs by department shall
be mapped in the system.
an end to this i have already mentioned while we were discussing the fund category code table
that the financial assistance to metro manila development authority existed or was established
as the UACS is being developed so it is somewhat an addition to the fund category code table, as
well as the recognized departments that we have in the Philippines.

Agency Code
Agency – refers to any of the various units of the government, including an office, instrumentality
or Government-Owned and/or Controlled Corporation (GOCC) that may not approximate the size
of a Department, but which nevertheless performs tasks that are equally important and whose
area of concern is nationwide in scope (e.g., Other Executive Offices [OEOs]).
For purposes of the UACS, an agency is an entity under a department whose budget is directly
released to the latter, and may include the summation of all budgets of sub-agencies listed
under it, if any.
There are also agency-level entities which are operating units themselves, as is the case of
agencies under Other Executive Offices, e.g., Film Development Council of the Philippines,
Presidential Management Staff and the like.

Operating Unit Classification Code

Operating Units – organizational entities charged with carrying out specific substantive functions
or with directly implementing programs/projects of a department or agency, such as line bureaus
and field units.
For the purposes of the UACS, these are organizational units under a Department or an Agency
which may be:
1. directly receiving budgets from DBM, including SUCs
2. recipients of fund transfers from higher level OUs, and/or
3. authorized to collect revenues
The first two digits of operating unit codes will be used to indicate the classification of an
operating unit, as follows:

Lower-Level Operating Units UACS

Central Office 01
Staff Bureaus 02
Department/Agency Regional Offices/Centers for Health Development/Regional
03
Field Units – DA
State Universities and Colleges – Campus 04
Provincial Offices – DAR and DENR 05
National Irrigation Administration Regional Offices – DA 06
Extension or Field Offices - CDA-DOF/Penal Colonies – BUCOR 07
Schools Division/District Offices – DEPED 08
Secondary Schools - DEPED/Campuses – PSHS 09
Collection Districts** – BOC 10
Revenue Regional Offices* – BIR 11
Revenue District Offices** – BIR 12
Embassies/Consulates General/Manila and Regional Consular Offices – DFA 13
Special/Retained Hospitals – DOH 14
Treatment and Rehabilitation Centers – DOH 15
Technical/Vocational Schools – TESDA 16
Key Budgetary Units – DND 17
District Engineering Offices and Sub District Engineering Offices – DPWH 18
Land Transportation Offices – DOTC 19
Land Transportation Franchising and Regulatory Board – DOTC 20
Regional Development Councils – NEDA 21
Autonomous Region in Muslim Mindanao 22

* An operating unit as well as a revenue collecting unit

**A revenue collecting unit, not an operating unit
Staff Bureau - a principal subdivision of a department which primarily performs policy, program
development, and advisory functions.
Regional Office (RO) - an organizational subdivision, headed by a Regional Director, that is
responsible for the performance of an entity’s functions within a region. In effect, an RO is a
miniature department or agency and is responsible for all activities in the area under its
jurisdiction.
CDA Extension Office - units established in each of the country’s regions or as may be
necessary, as well as financially viable for implementing integrated and comprehensive plans
and programs on cooperative development.
Schools Division (DepEd) - a unit established in each province or city with at least 750 public
elementary and secondary school teachers, including Head Teachers and Principals. A Schools
Division is headed by a School Superintendent.
DepEd Secondary School - a learning institution that offers a six-year secondary course and is
supervised by either a Teacher-in-Charge, a Head Teacher or a Principal.
You should know the difference between a lower-level operating units and department by this
time. You may have mistaken the TESDA as one of the departments. There is a specification or
segregation already that we have tackled so far. Comparing department or agency and the
lower-level operating units.
Technical Education and Skills Development Authority (TESDA) Technical/Vocational
School - units that offer non-degree programs at the post-secondary education level leading to
skills proficiency-oriented courses. These are usually one-, two-, or three-year certificate courses
on technical vocational education. Each TESDA Technical/Vocational School is headed by a
Vocational School Administrator.
DFA Consular Offices - units established locally and abroad, and which are responsible for
delivering front-line foreign affairs services, including those related to passports, visas and the
legalization of documents.
Customs Collection Districts (BOC) - units headed by a District Collector of Customs and are
composed of one Principal Port of Entry. A Customs Collection District shall have as many sub-
ports as necessary to maximize revenue collections and prevent smuggling and other forms of
customs fraud.
Revenue Regional Offices (RROs) [BIR] - units headed by a Regional Director. RROs
administer and enforce internal revenue laws in a region, including the assessment and
collection of all internal revenue taxes, charges and fees from taxpayers within the region’s
jurisdiction.
Revenue District Offices (RDOs) [BIR] - RRO implementing units that directly serve taxpayers
within its prescribed area of jurisdiction.
Hospital - a health facility for the diagnosis, treatment and care of individuals suffering from
deformity, disease, illness or injury, or those in need of surgical, obstetric, medical or nursing
care. A hospital is an institution installed with bassinets or beds for 24-hour use or longer by
patients in the management of deformities, diseases, injuries, abnormal physical and mental
conditions and maternity cases.
Treatment and Rehabilitation Centers (TRCs) - centers which undertake the treatment,
after-care and follow-up treatment of drug dependents. These centers include institutions,
agencies and the like with similar or related functions.
District Engineering Offices (DEOs) [DPWH] - established in each of the provinces and cities
throughout the country, a DEO may be divided into two (2) or more engineering districts upon
the determination and issuance of an Administrative Order by the Secretary. It is responsible for
all highways, flood-control and water resource development systems and other public works
within the district and is headed by a District Engineer.
Key Budgetary Units - organizational units under the Armed Forces of the Philippines with
distinct and separate budgetary allocations in the GAA. These are the AFP Medical Center,
Presidential Security Group and Philippine Military Academy.
Republic Act No. 9165 is all about “[an act] instituting the Comprehensive Dangerous Drugs Act
of 2002 repealing Republic Act No. 6425, otherwise known as the Dangerous Drugs Act of 1972,
as amended, providing funds therefor, and for other purposes” dated June 7, 2002 and its
implementing rules and regulations.

Business Rules for Organization Code

1. As a general rule, code 01 is assigned to a Lower-Level operating unit classified as Central
Office. As an exception, the DOTC-Office of the Secretary (OSEC), which has three central
offices, shall be assigned the following codes: DOTC-OSEC Central Office – 01, Land
Transportation Office - Central Office – 19 and Land Transportation Franchising and
Regulatory Board - Central Office – 20.
2. As a general rule, the last five digits of the Lower-Level Operating Unit Code refer to the
assigned code for the individual operating units without reference to the Region Code. An
exception to the rule, however, is made for the Department of Education (DepEd)
Secondary Schools and Division Offices, for which the first two digits refer to the regional
code and the last three digits refer to the assigned code for the individual secondary
school and division office.
3. If an agency has been moved from one department to another or if an operating unit has
been moved from one agency to another, all new coding numbers that apply shall be
used. The old codes shall never be assigned to any new agency/operating unit so as to
preserve the transaction history of each agency.
Example: In the event that the National Book Development Board (NBDB) is to be moved from
the DepEd to the DTI, the NBDB will assume department code 220070000000, which is the next
available code under DTI. However, the code 070020000000—originally set for the NBDB under
DepEd—will no longer be assigned to any new agency under the department. All information
systems should be able to track all transactions of the old and new NBDB.

Department Agency Lower-Level Operating

Unit
From:
Department of Education National Book Development
07 Board 0000000
002
To:
Department of Trade and National Book Development
Industry Board 0000000
22 007

Note: With the implementation of the Rationalization Program, some Agencies may have to be
assigned new codes. Thus, they have to submit a request to the DBM for the assignment of new
codes.
LOCATION CODE
Funding Source Organization Location MFO/PAP Object
6 Digits 12 Digits 9 Digits 9 Digits 10 Digits

Program/Project/Purp
Financing Source Department Region COA Chart of Accounts
ose (SPF)
1st digit 1st and 2nd digits 1st and 2nd digits 1st to 8th digits
1st digit

MFO/Project
Authorization Agency Province Category/1st Level Sub-Object
2nd and 3rd digits 3rd to 5th digits 3rd and 4th digits Activity 9th to 10th digits
2nd and 3rd digits

1st Level
Lower-level Operating Activity/Project Sub-
Fund Category City/Municipality
Unit Category/2nd Level
4th to 6th digits 5th to 6th digits Activity
6th to 12th digits
4th and 5th digits

2nd Level
Barangay Activity/Project
7th to 9th digits Title/3rd Level Activity
6th to 9th digits

To facilitate central agency analysis across the National Government, location coding should first
enable the analysis of data by region, and then by province, municipality/city and barangay. The
coding structure here relies upon the codes used by the National Statistical Coordination Board
(NSCB) only.
The structure utilized by the NSCB is illustrated below.

Technical Notes from National Statistical Coordination Board

Structure of the Philippine Standard Geographic Code (PSGC):
Inter-Level Codes
Region Code. This is a two-digit code that identifies a specific region. It ranges from 01 to 99.
Generally, the Region Code corresponds to the region number (e.g., Region Code 01 refers to
Region 1, 02 refers to Region 2, etc.)

Region UACS
Region I – Ilocos 01
Region II – Cagayan Valley 02
Region III – Central Luzon 03
Region IV-A – CALABARZON 04
Region IV-B – MIMAROPA 17
Region V – Bicol 05
Region VI – Western Visayas 06
Region VII – Central Visayas 07
Region VIII – Eastern Visayas 08
Region IX – Zamboanga Peninsula 09
Region X – Northern Mindanao 10
Region XI – Davao 11
Region XII – SOCCSKSARGEN 12
Region XIII – CARAGA 16
National Capital Region (NCR) 13
Cordillera Administrative Region (CAR) 14
Autonomous Region in Muslim Mindanao 15
(ARMM)

Province Code. This is a two-digit code that identifies the province. It ranges from 01 to 99,
generally defining the relative alphabetic sequence of all provinces in the country, except those
created after 1977, which were added to the list following the updating procedures.
A Province Code is independent of the Region Code. This means that even if a province is
transferred to another region, its Province Code remains the same.

Province UACS
CAR - Cordillera Administrative Region
Abra 01
Apayao 81
Benguet 11
Ifugao 27
Kalinga 32
Mountain Province 44

Region I - Ilocos Region

Ilocos Norte 28
Ilocos Sur 29
La Union 33
Pangasinan 55

Region II - Cagayan Valley

Batanes 09
Cagayan 15
Isabela 31
Quirino 57 57
Nueva Vizcaya 50 50

Region III - Central Luzon

Aurora 77
Bataan 08
Bulacan 14
Nueva Ecija 49
Pampanga 54
Tarlac 69
Zambales 71
Municipality Code. This is a two-digit code that generally defines the relative alphabetical
sequence of municipalities within the province. It ranges from 01 to 99. Therefore, Municipality
Code 01 is assigned to the first municipality in the alphabetical sequence within that province.
The Municipality Code is used to identify the municipalities, cities or municipal districts in a
particular province, and is dependent upon the Province Code to fully establish the identity of
municipality. In the case of the first regional district (City of Manila) of Metropolitan Manila Area
(National Capital Region), the fourteen city districts of the City of Manila are treated as
municipalities.
Barangay Code. This is a three-digit code which generally defines the relative alphabetical
sequence of the barangays within the municipality. The code ranges from 001 to 999. Barangay
Code 010 means it is the 10th barangay in alphabetical sequence within that municipality. The
Barangay Code is dependent upon the Municipality Identifier to fully establish the identity of a
given barangay.
Municipality Identifier. The Municipality Identifier is the core of the national standard
geographic classification system. This is composed of the Province Code, followed by the
Municipality Code. The Municipality Identifier is a four-digit number that defines the identity of
the municipality.
Municipality Identifier 7310. The first two-digits (73) is the Province Code for the province
of Zamboanga del Sur. The last two-digits (10) is the Municipality Code. This means that it
is the 10th municipality within the province of Zamboanga del Sur, which in this instance
is Kabasalan. The Municipality Identifier 7310 would therefore define Kabasalan,
Zamboanga del Sur.
Barangay Identifier 7310001. The first four digits (7310) is the Municipality Identifier. The
last three digits (001) is the Barangay Code, which refers to the first barangay within the
municipality with Municipality Identifier 7310. Barangay Code 001, in this case, refers to
Barangay Balongis. Thus, Barangay Identifier 7310001 means Barangay Balongis in
Kabasalan, Zamboanga del Sur.
Municipality Code Dependent on Province Code. It will be noted from the above illustration
that the Municipality Code only provides for the relative alphabetical sequence of the
municipality within the province (i.e., 1st, 2nd, 3rd). By itself, it is not sufficient to define the
municipality. However, when the same is attached to the Province Code, it acquires a unique
meaning.
For the Municipality Identifier 7310, there is only one municipality within Zamboanga del Sur
whose code is 10, and this is the municipality of Kabasalan. Hence, the Municipality Identifier
(Province Code and Municipality Code) defines the unique identity of the Municipality/City. City
Identifier of a Highly Urbanized City (HUC) or Independent Component City (ICC) does not mean
that the HUC or ICC is administratively under the province. It merely means that the HUC or the
ICC is geographically located within the boundary of the province.
Municipality Identifier Independent of Region Code. As has been pointed out, the
Municipality Identifier not only identifies the municipality but also the province to which it
belongs. An added feature of the Municipality Identifier is its independence from the Region
Code. Regardless of the region, the Municipality Identifier for Kabasalan will remain 7310 as long
as it is part of Zamboanga del Sur.
Barangay Code Dependent on Municipality Identifier. The Barangay Code only provides for
the relative alphabetical sequence of the barangays in the municipality. Barangay Code 001
means it is the first barangay in the alphabetical sequence. By itself, the Barangay Code is not
sufficient to define the identity of the barangay.
However, when the Barangay Code is attached to a Municipality Identifier, the result is a unique
code which fully establishes the identity of the barangay. In Barangay Identifier 7310001, there is
only one barangay in the entire Philippines with such a code number: Barangay Balongis in
Kabasalan, Zamboanga del Sur.
Municipality - a political corporate unit of government which consists of a group of barangays. It
serves primarily as a general-purpose government for the coordination and delivery of basic,
regular and direct services and effective governance of the inhabitants within its territorial
jurisdiction.
Barangay - the basic political unit of government. It serves as the primary planning and
implementing unit of government policies, plans, programs, projects and activities in the
community, and also as a forum where the collective views of its constituents may be expressed,
crystallized and considered, and where disputes may be amicably settled.
Business Rules - Location coding
1. For all transactions, the region code at the very least will be recorded.
2. For secondary schools, the region and province code, at the very least, will be recorded. A
separate reference table will be included in the information system to show the region and
division for each secondary school, which must be updated whenever a new secondary
school is recorded in the system.

MAJOR FINAL OUTPUT (MFO)/PROGRAM, ACTIVITY, PROJECT

Funding Source Organization Location MFO/PAP Object
6 Digits 12 Digits 9 Digits 9 Digits 10 Digits

Program/Project/Purp
Financing Source Department Region COA Chart of Accounts
ose (SPF)
1st digit 1st and 2nd digits 1st and 2nd digits 1st to 8th digits
1st digit

MFO/Project
Authorization Agency Province Category/1st Level Sub-Object
2nd and 3rd digits 3rd to 5th digits 3rd and 4th digits Activity 9th to 10th digits
2nd and 3rd digits

1st Level
Lower-level Operating Activity/Project Sub-
Fund Category City/Municipality
Unit Category/2nd Level
4th to 6th digits 5th to 6th digits Activity
6th to 12th digits
4th and 5th digits

2nd Level
Barangay Activity/Project
7th to 9th digits Title/3rd Level Activity
6th to 9th digits

(PAP) CODE
Code Segments
The first Code Segment shall indicate Program (General Administration and Support [GAS],
Support to Operations [STO], and Operations [O]), Project Type (Locally Funded or Foreign
Assisted) and Purpose in the case of Special Purpose Funds.
For Programs, the second segment of two digits shall be used for the first level of activities under
GAS and STO and Major Final Outputs (MFOs) under Operations. The third segment is composed
of six digits, the first two digits of which shall refer to the second level of activities for GAS and
STO. Meanwhile, under Operations, the next level of two digits shall refer to the first level of
activities under an MFO. The last four digits shall refer to the last level of activities (third level of
activities under GAS and STO, and second level for those under Operations/MFOs).
For Projects, the second segment of two digits shall be used for Project Category, the next two
digits for the Projects Sub-Category and the remaining four digits shall indicate the name of the
project or the project title.
In the case of Special Purpose Funds, the next segment refers to three levels of activities:
 1. Main activity – 2 digits
2. Sub-activity – 2 digits
3. Last level of activities – 4 digits
Major Final Output
An MFO is defined as a good or service that a department or agency is mandated to deliver to
external clients through the implementation of programs, activities and projects.
MFOs should be within the department or agency’s control and be measurable, manageable and
auditable. Examples of MFOs include regulatory services, health services, education services and
agricultural support services.
Program, Activity and Project
A program is an integrated group of activities that contributes to an agency or department’s
continuing objective. Examples include General Administration and Support, Support to
Operations, and Operations.
Acronyms under programs are GAS, STO, and O.
An activity is defined as a work process that contributes to the fulfillment of a program or project.
Each activity shall be attributed to only one MFO. Activities are to be assigned to General
Administration and Support, or Support to Operations if they benefit internal clients. On the other
hand, an activity that benefits external clients shall be attributed to an MFO.
Each activity shall be attributed to only one MFO. Activities are to be attributed to GAS and STO
only if they benefit internal clients. If activities benefit external clients, they should be attributed
to MFO. That’s why they are being combined under one key element line.
Projects are special department/agency undertakings carried out within a definite timeframe, and
which are designed to produce a pre-determined measure of goods or services (MFOs). A project
is considered an investment toward expanding the capacity of a department/agency to deliver
MFOs.
Business Rules – Major Final Output (MFO), Program and Activity
1. The first program is General Administration and Support (GAS), which consists of activities
involving the provision of overall administrative management support to the entire agency
operation. This includes general management and supervision, legislative liaison services,
human resource development and financial and administrative services, among other
related services. Funds provided for GAS are management overhead expenses and are
therefore indirect costs of delivering MFOs.
it is very important that you know the purpose and of course the concept with regards to the
program activity and project no matter how it may seem that they are interchangeably used in
the actual setting especially in organizing activities
2. The second program is Support to Operations (STO), which consists of activities that
provide technical and substantive support to the operations and projects of the
department/agency. These include planning and policy formulation, program monitoring
and evaluation, public information programs, research and development, statistical
services and information systems development, among other related functions. The types
of services included under STO are common across agencies, and are considered indirect
costs of delivering MFOs. Some agencies, however, do not have a program for STO.
similar with gas the cost related to to this two are classified as indirect so you have to take note
that they are not directly attributable to mfo or major final output
3. The third program is Operations, which consists of activities directed at fulfilling the
department and agency mandate.
4. There should be no activity stated similarly as the programs (GAS, STO) and MFOs under
Operations.
5. Any reference to location (such as Region or Division) or implementing unit (such as
schools) must not appear in the descriptions for PAP codes, as they do not comply with the
definitions in the OPIF Reference Guide for MFOs, programs, activities and projects. Coding
for Regional Offices or Department of Education’s Division Offices and Secondary Schools
is managed under the operating unit segment of organization coding.
 6. For presentation purposes in the NEP/GAA, projects and SPFs shall not be attributed to a
particular MFO.
The indicate rules from 1 to 5 shall only affect Major Final Output and Program and Activity.
These are the only ones affected because projects are a separate matter.

Project Category and Sub-Category Codes

Sector/Horizontal Outcomes
Sector Value

Code Description Type

Values
100 General public services Sector
120 Defense Sector
140 Public order and safety Sector
160 Economic Affairs Sector
180 Environmental Protection Sector
200 Housing and community amenities Sector
220 Health Sector
240 Recreation and culture Sector
260 Education Sector
280 School Protection Sector

Sub-Sector Values

Code Description Type

Values
100 General public services Sector
101 Executive and legislative organs, financial and fiscal affairs, Sub-Sector
external affairs
102 Foreign economic aid Sub-Sector
103 General services Sub-Sector
104 Basic research Sub-Sector
105 R&D General public services Sub-Sector
106 General public services n.e.c. (Not Elsewhere Classified) Sub-Sector
107 Public debt transactions Sub-Sector
108 Transfers of a general character between different levels of Sub-Sector
government
109 Governance / Government Institutions and Regulatory Regime Sub-Sector
110 - 119 Not yet assigned Sub-Sector

120 Defense Sector

121 Military Defense Sub-Sector
122 Civil Defense Sub-Sector
123 Foreign military aid Sub-Sector
124 R&D Defense Sub-Sector
125 Territorial integrity Sub-Sector
126 Defense against cybercrimes Sub-Sector
127 Defense n.e.c. Sub-Sector
128-139 Not yet assigned Sub-Sector

140 Public order and safety Sector

141 Police services Sub-Sector
142 Fire-protection services Sub-Sector
143 Law courts Sub-Sector
144 Prisons Sub-Sector
145 R&D Public order and safety Sub-Sector
146 Public order and safety n.e.c. Sub-Sector
147-159 Not yet assigned Sub-Sector

160 Economic Affairs Sector

161 General economic, commercial and labor affairs Sub-Sector
162 Agriculture, forestry, fishing and hunting Sub-Sector
163 Fuel and energy Sub-Sector
164 Mining, manufacturing and construction Sub-Sector
 165 Transport Sub-Sector
166 Communication Sub-Sector
167 Other industries Sub-Sector
168 R&D Economic affairs Sub-Sector
169 Economic affairs n.e.c. Sub-Sector
170-179 Not yet assigned Sub-Sector

Etc.

The sector code shall not be utilized, these are intended as headings. Only the sub-sector code
shall be utilized.
All MFO or PAPs are required to have subsector outcome code value.
The subsector value is a long list. Thus, to obtain the appropriate code for the remaining
subsectors, please access the UACS appendices at DBM website.
Horizontal Program Codes
To provide the tagging of the horizontal outcomes, another 2-digit code was added, for Horizontal
Outcomes, next to Sector Outcomes, as shown below:

Code Values Descriptions

01 Disaster Related
02 Climate Change – Mitigation
03 Climate Change - Adaption

The horizontal Outcome shall only be utilized for applicable Program, Activity, or Project (P/A/P). If
the PAP is not applicable to any Horizontal Outcome, the code value is 00.
Program/Project/Purpose

Programs, Projects or Purpose UACS

General Administration and Support (GAS) 1
Support to Operations (STO) 2
Operations (O) 3
Locally Funded Projects 4
Foreign-Assisted Projects 5
Purpose 6

The codes for Program, Project or Purpose are outlined in the following table. Code 4 will be
assigned to locally funded projects and code 5 will be used for foreign-assisted projects. The
Purpose code 6 will be used only in the case of Special Purpose Funds.
Project Category
Projects have been categorized and assigned codes as follows:

Particulars UACS
Physical Infrastructure
Buildings and Other Structures 01
Flood Control and Drainage 02
Non-Road Transport Infrastructure 03
Power and Communication Infrastructure 04
Roads and Bridges 05
Water Management 06

Project Sub-Category

Particulars UACS
Buildings and Other Structures 0100
School Buildings 0101
Health Facilities 0102
Multi-Purpose Facilities 0103
 Agriculture Facilities 0104
Government Buildings 0105
Housing 0106

Flood Control and Drainage 0200

Flood Control Structures/Facilities 0201
Drainage/Protection Works 0202

The Housing sub-category does appear under both Buildings and Other Structures and Social
Protection. Housing projects for Government employees should be categorized as Buildings and
Other Structures while housing projects for displaced persons should be categorized as Social
Protection.
Project Title
The list of projects by title is shown in the NEP/GAA. Although the project category and sub-
category may not be shown in the NEP/GAA, they can be aggregated in the system for purposes
of reporting.

OBJECT CODE
Funding Source Organization Location MFO/PAP Object
6 Digits 12 Digits 9 Digits 9 Digits 10 Digits

Program/Project/Purp
Financing Source Department Region COA Chart of Accounts
ose (SPF)
1st digit 1st and 2nd digits 1st and 2nd digits 1st to 8th digits
1st digit

MFO/Project
Authorization Agency Province Category/1st Level Sub-Object
2nd and 3rd digits 3rd to 5th digits 3rd and 4th digits Activity 9th to 10th digits
2nd and 3rd digits

1st Level
Lower-level Operating Activity/Project Sub-
Fund Category City/Municipality
Unit Category/2nd Level
4th to 6th digits 5th to 6th digits Activity
6th to 12th digits
4th and 5th digits

2nd Level
Barangay Activity/Project
7th to 9th digits Title/3rd Level Activity
6th to 9th digits
This chapter provides information on the object code classification for Assets, Liabilities, Equity,
Income and Expense accounts. The object classification covers all financial transactions of the
government such as, but not limited to, goods or services acquired, transfer payments made, the
source of revenue [and how expenses are being dispersed or consumed] or the cause of
increases or decreases in assets and liabilities [aside from gaining an income/revenue or
incurring expense].
The object information provides a method for classifying and coding transactions to enable the
reporting of information (including the impact of government revenues and expenditures on the
economy) as well as the nature and standard classification of transactions for internal
departmental analysis, as well as for decision-making purposes of oversight agencies.
In addition, the object coding in the information system provides a repository of government-
wide information, which can be used by oversight agencies without requiring departments and
agencies to respond to individual requests.
The basis for coding the object classification in the COA Revised Chart of Accounts is accrual
accounting, which requires transactions to be recorded in the period when they occur (and not
only when cash or its equivalent is received or paid). Therefore, the transactions and events are
recorded in the accounting records and recognized in the financial statements of the periods to
which they relate. The elements recognized under accrual accounting are assets, liabilities,
equity, income and expenses.

Object Code
10 Digits
COA
Chart of Accounts Object Sub-Object
1st to 8th digts 9 to 10th digits
th

The source of account descriptions and codes in the UACS object coding elements includes the
following:
1. The codes from the COA Revised Chart of Accounts prepared for accrual basis financial
reporting,
2. The addition of some sub-object codes, and
3. Additional expenditure accounts designed for cash basis budgeting, such as those for
capital outlays.
The classification coding framework is as follows for Object Coding, as provided for by COA in the
Revised Chart of Accounts.

PARTICULARS UACS
Assets 1
Liabilities 2
Equity 3
Income 4
Expenses 5

Assets refer to the economic resources of an agency that are recognized and measured in
conformity with generally accepted accounting principles. An asset is any owned physical object
(tangible) or right (intangibles) with economic value that is expressed, for accounting purposes,
in terms of its cost or some other value. These other values include revalued amounts, current
cost, net realizable value, fair value and recoverable amounts.
Liabilities refer to the economic obligations of an agency that are recognized and measured in
conformity with accounting principles. Liabilities include certain deferred credits that are not
obligations, but which are nonetheless recognized and measured according to accounting
principles as outlined in Philippines Public Sector Accounting Standards.
Equity refers to the residual interest of the government in an agency, which is the excess of the
agency assets over its liabilities.
Income refers to the gross inflow of economic benefits or service potential during the reporting
period, when those inflows result in an increase in net assets/equity, other than increases
relating to contributions from owners. The term “income” is broader than revenue and includes
gains in addition to revenue.
Expenses refers refer decreases in economic benefits or service potential during the reporting
period in the form of outflows or consumption of assets or incurrence of liabilities that result in
decreases in net assets/equity, other than those relating to distributions to owners
Expenditures shall be further categorized by allotment classes, as follows:

PARTICULARS UACS
Personnel Services 1
Maintenance and Other Operating 2
Expenses
Financial Expenses 3
Direct Costs (manufacturing and 4
trading)
Non-Cash Expenses 5
Capital Outlays 6

The categorization of expense descriptions and codes in the UACS involves an amalgamation (go
to 1:56:50) of all of the expenditure codes from the COA Revised Chart of Accounts prepared for
accrual basis financial reporting, the addition of some sub-object codes and the addition of
expenditure accounts designed for cash basis budgeting, such as all of the accounts for capital
outlays. Collectively, these provide the harmonized budgetary and accounting expenditure
classification codes.
OBJECT AND SUB-OBJECT CODES
For object coding, descriptions and codes are drawn from the COA Revised Chart of Accounts (8
digits). If disaggregation is necessary, sub-object codes of two (2) digits shall be used to show
the breakdown of selected assets, income and expenses. Otherwise, two zeros will be used. The
responsibility for disaggregation and sub-coding of the following accounts are as shown below.

ACCOUNTS AGENCY RESPONSIBLE FOR

DISAGGREGATION
Cash in Bank BTr
Taxes BIR
Import Duties BOC
Non-Tax Revenues DOF/BTr

ACCOUNTS AGENCY RESPONSIBLE FOR

DISAGGREGATION
Personnel Services DBM
MOOE DBM/COA
Financial Expenses DBM/COA
Capital Outlays DBM

Some examples of the application of object codes for Personnel Expenses follow in the table
below

PARTICULARS COA UACS

Salaries and Wages - Regular 50101010 50101010 00
Basic Salary - Civilian 50101010 01
Base Pay - Military/Uniformed Personnel 50101010 02
Salaries and Wages - Casual/Contractual 50101020 50101020 00

Some examples for Maintenance and Operating Expenses follow in the table below

PARTICULARS COA UACS

Rent/Lease Expenses 50299050 50299050 00
Rents - Buildings and Structures 50299050 01
Rents - Land 50299050 02
Rents - Motor Vehicles 50299050 03
Rents - Equipment 50299050 04
Rents - Living Quarters 50299050 05
Operating Lease 50299050 06
Financial Lease 50299050 07
HARMONIZATION OF CODING FOR CAPITAL OUTLAYS
From the time of budget appropriation until funds are disbursed, the relevant amounts of
allotment, cash release and obligations should be processed in capital outlay accounts, such as
one of the accounts for infrastructure capital outlays. The full list appears at the end of the
expenditure code listing in Appendix C.5.6.
In accordance with accrual accounting principles, the expenditure should be recognized as an
asset in the form of infrastructure construction in progress at the point of disbursement. This
process would most likely be automated in GIFMIS so that the spending is shown as capital
outlays in DBM management reports, and as capital outlays in the cash flow statement, but as an
asset in the Statement of Financial Position/Balance Sheet and not disclosed in the Operating
Statement/Profit and Loss Statement/Income and Expense Statement.
Once the project is completed, the infrastructure construction in progress account would be
cleared (i.e., credited) and a Public Infrastructure Asset recognized, such that, as an example, an
asset account like Road Networks is debited.
 The Revised Chart of Accounts
The Commission on Audit as member of the International Organization of Supreme Audit
Institutions (INTOSAI) is encouraged to adopt relevant International Accounting Standards. The
International Public Sector Accounting Standards Board (IPSASB) of the International Federation
of Accountants which promulgates the International Public Sector Accounting Standards (IPSAS),
acknowledges the right of governments and national standards-setters to establish their
respective accounting standards and guidelines for financial reporting in their jurisdictions. And
to provide new accounts for the adoption of the Philippine Public Sector Accounting Standards
(PPSAS) which were harmonized with the IPSAS to enhance the accountability and transparency
of the financial reports, and ensure compatibility of financial information, the COA recognizes the
need to revise the existing NGAS Chart of Accounts prescribed in COA Cir. No. 2004-008 dated
September 20, 2004.
As per Government Accounting Manual Volume III, The Chart of Accounts as Object Code in the
Unified Accounts Code Structure (UACS) is based, primarily, on the following:
a. COA Circular No. 2013-002 dated January 30, 2013 prescribing the adoption of the Revised
Chart of Accounts (RCA) for National Government Agencies (NGAs) effective January 1,
2014;
b. COA Resolution No. 2014-003 dated January 24, 2014 prescribing the adoption of the
Philippine Public Sector Accounting Standards (PPSAS);
c. COA Circular No. 2014-003 dated April 15, 2014 providing the implementing rules and
guidelines on the Conversion from the Philippine Government Chart of Accounts under the
New Government Accounting System per COA Circular No. 2004-008 dated September 20,
2004, as amended, to the Revised Chart of Accounts for NGAs;
d. COA-DBM-DOF Joint Circular No. 2013-1 dated August 6, 2013 prescribing the UACS, and
e. COA-DBM-DOF Joint Circular No. 2014-1 dated November 7, 2014 providing the
enhancement of the UACS prescribed under COA-DBM-DOF Joint Circular No. 2013-1.
During the initial implementation of the PPSAS and the UACS, and during the finalization of the
Government Accounting Manual (GAM) for NGAs, the need to provide additional accounts for
some financial transactions and to modify some existing account codes and description came
about. These revisions will enable the agencies to properly recognize and present their financial
transactions. This Chart of Accounts as Object Code in the UACS, Volume III of the GAM for NGAs,
includes additional and modified accounts.

ELEMENTS OF FINANCIAL STATEMENTS

Elements of Financial Statements of government agencies recognized under accrual accounting
are those elements that relate to the status or measurement of financial position and
measurement of performance of government agencies, which are relevant to decisions that
would require the commitment of resources. Those elements directly related to the measurement
of financial position as shown in the Balance Sheet are assets, liabilities and equity. The elements
directly related to the measurement of performance are shown in the Statement of Income and
Expenses as revenue/income and expenses. The codes, per COA Cir. No. 2013-002 dated January
30, 2013, and definitions of the different elements are as follows:
a complete set of financial statements shall comprise at least a statement of financial position or
balance sheet, income statement or statement of financial performance, statement of cash flows
and statement of changes in equity. the image shows the importance of every financial
statement in the decision making of statement users just like how a one missing piece will solve
the complexity of the puzzle. the statement of financial possession contains information about
the assets, liabilities, and equity of an entity. the statement of financial performance contains
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 information regarding the revenue and expenses of an entity. the statement of changes in net
assets or equity shows the movement of capital. the statement of cash flows identifies the
sources and uses of cash and separate additional statements for comparison of budget and
actual amounts.
FINANCIAL PERFORMANCE
The Statement of Financial Performance consists of items of income and expenses.
Income - the gross inflow of economic benefits or service potential during the reporting period,
when those inflows result in an increase in net assets/equity, other than increases relating to
contributions from owners. The term "income" is broader that revenue and includes gains in
addition to revenue.
Expenses - refer to decrease in economic benefits or service potential during the reporting period
in the form of outflows or consumption of assets or incurrence of liabilities that result in decrease
in net assets/equity, other than those relating to distributions to owners. (PPSAS 1 - Presentation
of Financial Statements)
deviating from its accounting definition, income is the fruit of all your collective efforts in studying hard, in choosing to read your
accounting books before anything else, and prioritizing your accounting course before pubg dota mobile legends among us valorant
or even to your boyfriend or girlfriends. Syempre, joke my boyfriend or girlfriend kaio prioritized

expenses though they decrease as profit but are indeed necessary to incur in order to gain income. no business would ever generate
profit if it would not even incur one peso in his business. for example, in choosing accountancy as your course, you will not be able to
pass your subjects and eventually graduate if you did not enroll in the program and you do not want to have your own resources such
as accounting books. counting patalastas actually i am not really used to explaining out topics and lessons in tagalog

ACCOUNT CODES AND ITS STRUCTURES

COA Cir. No. 2013-002 further provides that the account code structure consists of eight (8)
mandatory digits as follows:

0 00 00 00 0
Account Group Major Account Sub-Major General Ledger General Ledger
Group Account Group Accounts Contra-Accounts

The Account Group represents the accounts classification as to Assets, Liabilities Equity, Income
and Expenses.
The Major Account group represents classification within the account group; e.g. for asset major
accounts: Cash and Cash Equivalents, Investments, Receivables, Inventories, Investment
Property, etc.
In simplest terms, major account group consists of line items presented on the face of the
Financial Statement.
The Sub-Major Account group represents classification within the major account, e.g. for Cash
and Cash Equivalent: Cash on Hand, Cash in Bank-Local Currency, Cash in Bank-Foreign
Currency, etc.
It simply consists of items composing or consisting of a single line item presented on the face of
the financial statements. Commonly, these items are presented on the notes to financial
statements to simply show the supporting computation on the amount presented for that
specific line item. In our example, that is cash and cash equivalents.
The General Ledger accounts represent the accounts to be presented in the detailed financial
statements, e.g. Cash-Collecting Officer, Petty Cash, etc. This is composed of two segments. The
first two digits from the left is the general ledger code, and the last digit is reserved for contra
accounts like, Allowance for Impairment, Accumulated Depreciation, etc.
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 To distinguish the coding of assets with and without contra accounts, the following shall be
observed:

Asset with Contra Account (Ex: Allowance for Impairment – AR)

1 03 01 011
Asset Receivables Loans and Accounts Allowance for
Receivable Receivables Impairment - AR
Accounts

Asset without Contra Account (Ex: Cash Collecting Officer)

1 01 01 010
Asset Cash and Cash Cash on Hand Cash Collecting General Ledger
Equivalent Officer Contra-Account

Asset with Contra Account (Ex: Accounts Receivable)

1 03 01 010
Asset Receivables Loans and Accounts General Ledger
Receivable Receivable Contra-Account
Accounts
Let's compare asset with contra accounts presented here in our illustration.
As you can observe, Accounts Receivable has different set of codes depending on what contra-
asset account are we talking about. Apparently, you can see here (Table 1) that Accounts
Receivable has a code number represented by 011. While for the contra-account (Table 3), it has
a code number here which is 010. Take note that the Allowance for Impairment – Accounts
Receivable has no corresponding digit or code number indicated on top of it (Table 1).
So how can we identify?
We can identify it by simply looking at the code number specified or designated to Accounts
Receivable. I have made mention that the general ledger accounts are composed of two
segments. The first two digits from the left, which is 01, represents the general ledger code and
the last digit is reserved for contra-accounts, like Allowance for Impairment. So, Allowance for
Impairment – Accounts Receivable is already represented in this code number 011.
From here onwards, please go over on the accounts under the government and its codes. I will
attach a PDF file in our notes or resources channel for the development of the said accounts.
There are accounts that are newly introduced into the chart and there are those that are either
compressed into one account or eliminated. Please do take note of the major changes in the
chart of accounts.

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ACCOUNTING FOR BUDGETARY ACCOUNTS
This video presentation talks about accounting for budgetary accounts and aims to present the accounting
system in government, uphold fundamental principles of fiscal operations, shows the national budget, the
balance budget, and the different kinds of budget as to the nature, basis, approach, and technique as well
as the budget cycle. Budgetary accounts and its systems Monitoring of budget, fund release documents,
general guidelines on the release of funds, guidelines on the release of disbursement authorities, reporting
requirements, budget and financial accountability reports (BFAR), validity of appropriation, conduct of
agency performance review. Common fund system will also be discussed in this video presentation. ???
illustrations on recording to registry of appropriations and allotments and preparing obligation request will
also be integrated.

Before formally discussing the national budget and the process, let us first tackle about the set of
procedures pertaining to its manner of creation in the previous period covering the 8 th slide until to the 10th
slide. You will have to take a note on the old rules enveloping the budget process before knowing the
updated provisions. By doing so, you will somehow fully understand a particular topic by connecting the
dots.

Forms and Contents of the National Budget

Remember that this is only applicable to the previous periods. So, this is not the updated provision. But we
are the simply tackle this for purposes of additional lecture discussions.

Section 22, Article VII of the Constitution of the Philippines provides that “The President of the
Philippines shall submit to the Congress within 30 days from the opening of every regular session
as the basis of the general appropriation bill, a budget of expenditures and sources of financing,
including receipts from existing and proposed revenue measures.
The heads of departments may upon their own initiative, with the consent of the President, or
upon the request of either House, as the rules of each House shall provide, appear before and be
heard by such House on any matter pertaining to their departments.
So, I hope you know the branches of the government, as well as its sub-branches.

Written questions shall be submitted to the President of the Senate or the Speaker of the House
of Representatives at least three days before their scheduled appearance. Interpellations shall
not be limited to written questions, but may cover matters related thereto. When the security of
the State or the public interest so requires and the President so states in writing, the appearance
shall be conducted in executive session.”
The budget is presented to the Congress:
1. A budget message setting forth in brief the government’s budgetary thrusts for the budget
year, including their impact on development goals, monetary and fiscal objectives, and
generally on the implications of the revenue, expenditure and debt proposals; and
2. Summary financial statements setting forth:
a. Estimated expenditures and proposed appropriations necessary for the support of
the Government for the ensuing fiscal year, including those financed from operating
revenues and from domestic and foreign borrowings;
b. Estimated receipts during the ensuing fiscal year under laws existing at the time the
budget is transmitted and under the revenue proposals, if any, forming part of the
year’s financing program;
c. Actual appropriations, expenditures, and receipts and actual or proposed
appropriations during the fiscal year in progress;
d. Estimated receipts and expenditures and actual or proposed appropriations during
the fiscal year;
 e. Statements of the condition of the National Treasury at the end of the last
completed fiscal year, the estimated condition of the Treasury at the end of the
fiscal year in progress and the estimated condition of the Treasury at the end of the
ensuing fiscal year, taking into account the adoption of financial proposals
contained in the budget and showing, at the same time, the unencumbered and
unobligated cash resources;
Thus, in preparation of the proposed national budget for fiscal year 2014, the DBM pushed for the adoption
of a new approach – budgeting.

Through the National Budget Memorandum (NBM) 117, the DBM introduced Performance-
Informed Budgeting (PIB) which required the government agencies to strengthen the link
between planning and budgeting and to simplify the presentation of the budget.
With the adoption of the PIB as a budgeting scheme, the government is changing the face of the budget.
previously a must of numbers and line items without a clear story on where funds are going.

The National Expenditure Plan and the General Appropriations Act beginning FY 2014 will show
the link between the funds allocated for the government programs and the projected results and
outcomes of these.
Therefore, the new face of the budget represents the continuing shift away from the dominance of
patronage politics and clientelistic relationships towards a more responsive, transparent, and accountable
public expenditure management system.

Performance-Informed Budgeting (PIB)

It is a budgeting approach that uses performance information to assist in deciding where the
funds will go. Performance information, both financial and non-financial information, is presented
in the appropriations document, which provides the context for the programs, activities, and
projects (PAPs) pursued by the different agencies of government. It typically includes the
following:
1. The purpose of the funds required;
2. The outputs that would be produced or the services that would be rendered;
3. The outcomes that would be achieved by the outputs and/or services; and
4. The cost of programs and activities proposed to achieve the objectives.
take note of the definition of PIB which states that it is a budgeting approach that uses
performance information to assist in the decision making of where the funds will eventually go.
Performance information can be used as a signaling device. Low performance or a decline and
performance can serve as an alarm to consider a closer look in determining the cause. According
to the Organization for Economic Cooperation and Development (OECD), the most common
response to low performance is holding constant the level of future funding and/or subjecting
future allocations conditional to improve and conditions related to performance. As mentioned
earlier, this new approach to budgeting introduced by the DBM through the 2013 National
Budget Memorandum 117 requires the government agencies to strengthen the link between
planning and budgeting and to simplify the presentation of the budget. This budgeting approach
differs from the traditional line item-based budgeting in a way that it focuses more on outputs
and outcomes and places less emphasis on the inputs. that is what we call outcome-based. it
links funding to results and provides a framework for more informed resource allocation and
management. this new phase of the national budget will no longer contain an excessively
detailed line-item document but a budget that presents performance information aligned to
planned resources that promises to be understandable and accessible to the people because of
its simplicity.
Accordingly, the new General Appropriation Act (GAA) will present non-financial performance
information together with the allocated resources for the different programs, activities, and
projects which were used by the DBM to evaluate department and agency proposals during the
budget preparation process. Instead of being immediately confronted with line item after line
item, PAPs will be grouped according to the Major Final Output (MFO) that department or agents
seek to achieve. In this way, the budget that goes into a particular PAP is linked directly to the
output it intends to achieve. In other words, performance-informed budgeting is an integral
process whereby agency performance information, for example, major final output and their
corresponding performance indicators under the Organizational Performance Indicator
Framework (OPIF) is presented hand-in-hand with the agency budget to ensure that the outputs
and outcomes on agencies committing to deliver in exchange for its budget are clear to the
public and the legislators.
Balanced Budget
 It is a budget where the proposed expenditures are equal or less than the estimated
revenues.
Currently, the government is operating with a budget efficiency. as such, it is serving government
priorities to achieve a balanced budget by increasing revenues and cutting on expenditures. It is
intended to balance out revenues and expenditures.
Section 29, Par. 1, Article VI of the 1987 Constitution provides, “No money shall be paid out of
the Treasury except in pursuance of an appropriation by law.”

The aforecited lays down the

legal bedrock for government
accounting, particularly for
budgetary accounts. It simply
means that no public fund may
be spent if there is no law
authorizing the payment of
money and specifying the
purpose for which the same will
be spent.
The aforecited lays down the legal bedrock for government accounting, particularly for budgetary
accounts. It simply means that no public fund may be spent if there is no law authorizing the
payment of money and specifying the purpose for which the same will be spent.
"An appropriation made by law" under the contemplation of Section 29(1), Article VI of the 1987
Constitution exists when a provision of law (a) sets apart a determinate or determinable amount
of money and (b) allocates the same for a particular public purpose. These two minimum
designations of amount and purpose stem from the very definition of the word "appropriation,"
which means "to allot, assign, set apart or apply to a particular use or purpose," and hence, if
written into the law, demonstrate that the legislative intent to appropriate exists. As the
Constitution "does not provide or prescribe any particular form of words or religious recitals in
which an authorization or appropriation by Congress shall be made, except that it be 'made by
law,'" an appropriation law may – according to Philconsa – be "detailed and as broad as Congress
wants it to be" for as long as the intent to appropriate may be gleaned from the same. As held in
the case of Guingona, Jr.
There is no provision in our Constitution that provides or prescribes any particular form of words
or religious recitals in which an authorization or appropriation by Congress shall be made, except
that it be “made by law,” such as precisely the authorization or appropriation under the
questioned presidential decrees. In other words, in terms of time horizons, an appropriation may
be made impliedly (as by past but subsisting legislations) as well as expressly for the current
fiscal year (as by enactment of laws by the present Congress), just as said appropriation may be
made in general as well as in specific terms. The Congressional authorization may be embodied
in annual laws, such as general appropriations act or in special provisions of laws of general or
special application which appropriate public funds for specific public purposes, such as the
questioned decrees. An appropriation measure is sufficient if the legislative intention clearly and
certainly appears from the language employed (In re Continuing Appropriations, 32 P. 272),
whether in the past or in the present.
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave:
To constitute an appropriation there must be money placed in a fund applicable to the
designated purpose. The word appropriate means to allot, assign, set apart or apply to a
particular use or purpose. An appropriation in the sense of the constitution means the setting
apart a portion of the public funds for a public purpose. No particular form of words is necessary
for the purpose, if the intention to appropriate is plainly manifested.
Appropriation and allotment are usually used interchangeably so here is something that will clarify your
notion regarding appropriations and allotments. An appropriation in the sense of the constitution means
the setting apart a portion of the public funds for a public purpose. No particular form of words is
necessary for the purpose, if the intention to appropriate is plainly manifested.

Thus, based on the foregoing, the Court cannot sustain the argument that the appropriation must
be the "primary and specific" purpose of the law in order for a valid appropriation law to exist. To
reiterate, if a legal provision designates a determinate or determinable amount of money and
allocates the same for a particular public purpose, then the legislative intent to appropriate
becomes apparent and, hence, already sufficient to satisfy the requirement of an "appropriation
made by law" under contemplation of the Constitution.
Since we are already discussing the 1987 Constitution, particularly on Section 29 of Art. VI, Par. 1, we will
simply go over on the 2 sub-sections regarding how government money should be managed and for what
specific purpose it is being used.

Second is, we have here “No public money or property shall be appropriated, applied, paid, or
employed, directly or indirectly, for the use, benefit, or support of any sect, church,
denomination, sectarian institution, or system of religion, or of any priest, preacher, minister, or
other religious teacher, or dignitary as such, except when such priest, preacher, minister, or
dignitary is assigned to the armed forces, or to any penal institution, or government orphanage
or leprosarium.”
Third is, “All money collected on any tax levied for a special purpose shall be treated as a special
fund and paid out for such purpose only. If the purpose for which a special fund was created has
been fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.”
General Appropriations Act (GAA)
Accordingly, it may be said that accounting for budgetary accounts 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.
The approved appropriations are, in turn, the bases of the Department of Budget and
Management (DBM) for issuing allotments or the authority of government agencies to incur
obligations or enter into commitments to spend government funds. The level of allotments, on
the other hand defines the amount of cash allocations which shall be released by the DBM.
The General Appropriations Act (GAA) is one of the most important legislatio0ns that Congress
annually passes. It defines the annual expenditure program of the national government and all of
its instrumentalities.
In simplest terms, the GAA serves as the legal basis of the DBM for issuing allotments or authority to
government agencies to spend government funds.

General Accounting Plan (GAP)

The General Accounting Plan (GAP) shows the overall accounting system of a government
agency/unit. It includes the source documents, the flow of transactions and its accumulation in
the books of accounts and finally the conversion into financial information/data presented in the
financial reports. The following accounting systems are:
1. Budgetary Accounts System
2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System
This video presentation’s focus will be on Budgetary Accounts System which includes
appropriations, allotments, and cash allocations. These are the three things that mainly
constitute the budgetary accounts. The accounting of which will be discussed in detail through
this video presentation. However, I will give you an insight regarding each accounting system.
Budgetary Accounts System
The budgetary accounts system encompasses the processes of preparing the Agency Budget
Matrix (ABM), monitoring and recording of allotments received by the agency from the
Department of Budget and Management, releasing of Sub-Allotment Advices (SAAs) to Regional
Offices (RO) by the Central Office (CO), issuance of SAAs/LAAs to Operating Units (OU) by the
Regional Office, and recording and monitoring of obligations.
Observe that DBM usually has the main rule(?) when it comes to budgetary accounts system. This is so
because DBM is in charge with the release or appropriations, allotments, and authority to incur obligations
to government agencies or units.

Receipt/Income and Deposit System

This system covers the processes of acknowledging and reporting income/collections, deposits of
collections with Authorized Government Depository Bank (AGDB) or through the AGDB for the
account of Treasurer of the Philippines, and recording of collections and deposits in the books of
accounts of the agency.
All collecting officers shall deposit intact all their collections, as well as collections turned over to
them by sub-collectors/tellers, with authorized government depository bank (AGDB) daily or not
later than the next banking day.
They shall record all deposits made in the cash receipts record at the end of each business day.
The collecting officers shall accomplish the Report of Collections and Deposits (RCD).
Disbursement System
Disbursements constitute all cash paid out during a given period either in currency, cash, or by
check. It may also mean settlement of government payables or obligations by cash or by check.
It shall be covered by disbursement voucher (DV), or petty cash voucher (PCV), or payroll.
The disbursement system involves the preparation and processing of DV/Payroll; preparation and
issuance of checks; payment by cash; granting, utilization and liquidation/replenishment of cash
advances.
Financial Reporting System
Generally, there are eight steps in accounting cycle – analyzing the transactions; journalizing the
transactions; posting the journal entries; preparation of the trial balance; adjusting the accounts;
closing the accounts; preparation of the financial statements; and reversing the accounts.
Under the new accounting system, financial accounting includes the preparation and submission
of trial balances, financial statements, and other reports needed by fiscal and regulatory
agencies.
Fundamental Principles of Fiscal Operations
Budget activities are governed by legal provisions/fundamental principles relating to financial
transactions and operations of the government. The principles, as provided for by the law, are:
1. No money shall be paid out of the public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority;
This is almost similar with Section 29, Art. VI, Par. 1 of the 1987 Constitution. However, it is stated in more
detailed manner. Simply put, no money shall come out of the government fund if it is not intended for
public purpose and it is not just enough that it is intended for the public but it must be legally authorized
at the same time. Meaning, there should have been a legal basis for the issuance of funds out of the public
treasury or depository.

2. Government funds or property shall be spent or used solely for public purposes;
The only purpose on why the fund is created and established is for the public. It must have this sole
purpose only and not for any individual preference or interest.

3. Trust funds shall be available and may be spent only for the specific purpose for which the
trust was created;
Simply put, a trust fund is made available for specific purpose and is usually restricted for that purpose
only. It has no other purposes unless it is used only for the purpose in which it was created. The point of
emancipation of trust funds is the point of its end also.
 4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency;
A new concept of “fiscal responsibility” needs to be embraced—one in which full employment and
equitable distribution in the economy are primary goals of fiscal policy.

All those granted with exercising authority shall have an agreed set of policies, processes, or
arrangements intended to improve fiscal outcomes, discipline, transparency, and accountability by
requiring governments to commit to monitorable fiscal policy objectives and strategies.

5. Disbursements or disposition of government funds or property shall invariably bear the

approval of the proper officials;
Any amount to be disbursed out of the government fund must be approved by authorized officials.

6. Claims against government funds shall be supported with complete documentation;

A claim towards something will never be honored without concrete proof or evidence.

7. All laws and regulations applicable to financial transaction shall be faithfully adhered to;
and
Handling government fund is indeed a critical issue for it requires not just an adherence, but a faithful one.
No money shall flow out of the government without due observance of the law and regulations attaching
to the financial transactions. All laws and regulations applicable to financial transaction must be duly
observed and faithfully adhered to.

8. Generally accepted principles and practices of accounting, as well as, of sound

management and fiscal administration shall be observed, provided they do not contravene
existing laws and regulations.
GAAP of accounting is also considered in application as long as these are not in conflict with the existing
laws and regulations. However, we can derive here a different acronym which is GAPP in government
accounting which stands for generally accepted principles and practices. If you can recall in your basic
accounting, we have GAAP which stands for generally accepted accounting principles. While as for
government accounting, we have generally accepted principles and practices. Apparently, sound
management and fiscal administration are not only based on generally accepted principles of accounting
but also of practices in accounting. The fundamental principles of fiscal operations consider GAPP of
accounting.

The National Budget (commonly known as the Government Budget)

A 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. As such, it should present not only definite information regarding the
general character, purpose and amount of government expenditures, but also detailed data
regarding the cost entailed in maintaining particular units of organization and in performing
particular units of organization and in performing particular activities. In other words, it is the
financial blueprint of a country’s development plan.
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. As such, it should
present a detailed demonstration of the revenues and expenditures of the government for the past and ensuing years, and should
furnish not only definite information regarding the general character, purpose and amount of government expenditures, but also
detailed data regarding the cost entailed in maintaining particular units of organization and in performing particular units of
organization and in performing particular activities. In other words, it is the financial blueprint of a country's development plan.
Cognizant of its vital role in national development, the Department of Budget and Management
(DBM) has sought to ensure that public resources are managed more efficiently and with the
greatest degree of discipline. It is not only crucial to channel resources on programs that
accelerate economic growth, but more importantly, to redirect funds to programs that would be
responsive to the needs of the people especially those in regions beset by poverty.
May mga proyekto ang gobyerno na hindi nararamdaman ng mga taong mahihirap. So even if it’s really
beneficial, the progress or success of such project is hardly felt or realized by those people who are
experience or who are at the lowest of lows. Thus, its summative gist is that it is simply the financial
blueprint of the country’s development plan. Everything that is contained in this nation budget is intended
to give or provide benefits to help the people and its community.

In dealing with our daily lives, we normally devise a budget plan based on our means (?). It is undeniable
that we allot more of our money mainly on food and then again food.

We allot more of our money on the basic necessities. Aside from food, we have shelter and clothing and
other basic necessities we need in our daily lives. Hence, making a budget is somewhat a very strategic
way of handling finances. It is somewhat a tool of finance or wise or good financing. Creating a budget
plan is somewhat a very strategic tool or technique in handling finances in such a way that the money will
be used efficiently and at the same time, it is being spent in a way that it would suffice the purpose on
which it is being established. It is a practice of some or several people that they allot a certain portion of
their money in order to acquire a definite something. Just like for example, they provide or they simply
would allot Php. 10,000 for their clothing allowance or some, since they are KPop fanatics or they are so
into Korean dramas and they want to meet their idols or some Korean actors and actresses, they would
allot Php. 50,000 just to travel to Korea, China, or Thailand in order to meet their idol. That is only an
example.

On a personal note, however, I actually do not like to share this to you but for purposes of discussion, I
would simply share that I have established a bank account at BPI, Land Bank of the Philippines, BDO, and
also at China Bank. My colleagues are actually saying that I am somewhat collecting bank accounts. The
reason for doing so is that I would like to simply set or try managing my bank accounts at different banks
or financial institutions because I would like to also study their interest charges – the movement of the
interest. And in case if I have enough money, I would like to really invest. But actually, I haven't tried
investing yet. The reason is I do not have enough knowledge yet and time to monitor my investment
because I know that entering into investments is very risky. But, I am encouraging you to invest when you
have enough money or you have idle cash or exist cash that are not being used in a proper way. In a
proper way in a sense that it is only being stocked or being kept at your own place. I find it very effective
when it comes to saving because if you have many different bank accounts and you are not only relying
on one bank account, you are somewhat fooling yourself that you only have a very little amount of
savings. That is one strategic way in order to save because you are convincing yourself that you do not
have enough savings yet because you are looking at a portion only. At the end of the year, that is only the
time in which I would add up all the amounts in order to really find out the ending balance of my savings.
That is my very purpose or the reason why I enter or I have created many bank accounts. This personal
technique, I think, is very commendable for those who want to achieve their temporary and long-term
goals. Just imagine having many different or separate piggy banks wherein you would drop your money in
a piggy bank and that piggy bank is intended for your temporary goal while the other is for your long-term
goals. Your temporary goals may be clothing, food, or travel. Long-term goal would be your building your
home or house, acquiring car, and many other personal goals that you have.

Setting aside those personal notes or sharing, let us now discuss the kinds of budget that we have when it
comes to accounting for the government and mainly this topic's focus is on accounting for budgetary
accounts.

Kinds of Budget
The kinds of budget is classified or categorized into three: as to nature, as to basis, and as to
approach and technique.
As to Nature
 Annual budget
o A budget which covers a period of one year and it is the basis of an annual
appropriation. As the term implies it covers a period of one year. Annual equates to
one year or a period of 12 months.
 Supplemental budget
o A budget which supplements or adjust a previous budget which has deemed
inadequate for the purpose it is intended. It is the basis for a supplemental
appropriation. As the term implies, it simply is a budget that supplements or intends
to adjust a previous budget.
 Special budget
o A budget of special nature and generally submitted in special forms on account that
itemizations are not adequately provided in the Appropriation Act or that the
amounts are not at all included in the Appropriation Act.
As to Basis
 Performance budget
o 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 to be done, or upon the services to be rendered.
 Line-Item budget
o A budget of basis of which is the objects of expenditures such as salaries and
wages, traveling expenses, freight, supplies and materials, equipment, etc.
As to Approach and Technique
 Zero-Based budgeting
o A process which requires systematic consideration of all programs, projects, and
activities (PAPs) with the use of defined ranking procedures. In this approach,
activities are analyzed and presented in “decision packages” or key budgetary
inclusions.
 Incremental approach
o A budget where only additional requirements need justifications. It focuses analysis
of incremental changes in the budget and may be done within the context of
performance and program budgeting.
THE BUDGET PROCESS/CYCLE
If we have an accounting cycle in the basic accounting or fundamentals of accounting, we also
have the budget cycle for accounting for budgetary accounts. The budget cycle consists of the
budget preparation, legislative authorization, budget accountability, and budget execution and
operation.
They are being stated in a manner in which there is no particular order. These four phases of the
budget 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
defense it before the congress. Meanwhile, the execution and accountability phases are
implemented simultaneously year-round. Meaning, the budget execution and operation, as well
as budget accountability, are being implemented during the budget period simultaneously.
BUDGET PREPARATION
Budget preparation covers estimation of government revenues, the determination of budgetary
priorities and activities within the constraints imposed by available revenues and by borrowing
limits, and the translation of approved priorities and activities into expenditure levels. Meaning,
the approved priorities and activities are being converted or translated into amounts – monetary
amounts, which we can call as estimates.
Estimates are prepared by the various government agencies reviewed and finalized by the
president of the Philippines and then submitted to the legislative department as a basis for the
preparation of the annual Appropriation Act. It is not yet the final budget or annual budget but
only the preparation of the annual Appropriation Act. What the president will provide at the start
of budget preparation will only be estimates. The president would simply determine the revenue
estimates, as well as expenditure levels.
Most importantly in this budget preparation, the activities, programs, and projects are being
prioritized in the budget. The president therefore has the power and authority to set budget
priorities, in line with the vision, the president has for the Philippines of what it wants to achieve.
The support will be concentrated on this budget priorities identified or selected by the president.
We have here the following steps or key points in budget preparation.

Issuance of budget call by the DBM

It is not simply a phone call that you will receive from your messenger or from your contact number or
phone’s viber or even in instagram. The budget preparation begins but the budget call contains the
budget parameters as set beforehand by the Development of Budget Coordination Committee (DBCC) and
policy guidelines and procedures in the preparation and submission of agency budget proposals.

The budget preparation begins with the issuance of a budget call by the Department of Budget
and Management. the budget call contains the budget parameters (this include macroeconomic
and fiscal targets and agency budget sittings which are set beforehand by the DBCC). To ensure
that the national budget is enacted on time, the DBM, under the Aquino administration, has
established a new tradition of beginning the budget preparation phase earlier.
I guess under Aquino administration, if I could have a personal note on this, this one is indeed very useful.
I guess, as I go through readings, this is only the noteworthy or notable work by the Aquino administration.
This is only a personal note for me. I hope you will respect my opinion. My comment may be harsh but this
is my personal opinion regarding Aquino administration. I somehow like this provision or update or change
they made in the budget preparation because when you make or plan a budget, it must be created or
devised ahead of time or even before the activity will be conducted. Just like for example, the budget
period is 2021. There must have been a budget preparation that is being conducted on year 2020. That is
the point of conducting or issuing budget call earlier or ahead of time.

Under the new budget preparation calendar, the budget call is issued in December unlike in the
past where it was issued in April and the submission of the president's budget would happen a
day after the State of the Nation Address in contrast to earlier practice where it is submitted to
congress within 30 days from the opening of every regular session.
Take note here the submission period when it comes to president's budget. Earlier practice states that the
submission of the president's budget would only happen 30 days or simply within 30 days after the
opening of every regular session in the congress. The new update requires the president to submit his or
her budget after delivering his or her SONA.

Another new feature in budget preparations which seeks to increase citizen participation in the
budget process, departments and agencies are tasked to partner with Civil Society Organization
(CSOs) and other cities and stakeholders as they prepare their agency budget proposal. This new
process, which was piloted in the preparation of the 2012 national budget, is now being
expanded towards institutionalization.
Another breakthrough in budgeting as opposed to the conventional way of allocating resources
from top to bottom, grassroots communities will be engaged in designing the national budget
through the bottom-up budgeting approach. this bottom-up budgeting will focus on rural
development programs and the conditional cash transfer program (CTP) of the poorest
municipalities and will also involve Department of Agriculture, Department of Agrarian Reform,
Department of Environment and Natural Resources, Department of Social Welfare and
Development, Department of Education, and Department of Health. This government agencies
will then include the community plans in their proposed budgets.
After submitting their respective agency budget proposals to the DBM, government agencies
will have to defend their proposed budget before the technical panel of the DBM. The
DBM will then review the agency proposals and prepare recommendations based on performance
indicators on output targets and absorptive capacity. These recommendations are presented
before an executive review board composed of the DBM secretary and senior officials.
Deliberations entail a careful prioritization of programs and corresponding support through the
priority agenda of the national government. Implementation issues are also discussed and
resolved. The DBM then consolidates the recommended agency budgets and recommendations
into a national expenditure program and a Budget of Expenditures and Source of Financing
(BESF).
I forgot to mention or indicate that at the start of budget preparation, the president is usually the starting
point. What do we mean by that? The president has the power and authority to select activities, projects,
or programs that need to be prioritized. I forgot to mention also that through the existence of this budget
priorities made by the president, it is where the support will be concentrated upon. The president would
have to devise or make estimates on revenues and expenditures. That is how estimates are usually being
conducted. And then prioritize as the budget preparation will go through. However, you have to take note
that the budget or the estimate presented by the president is not yet the final budget. It is not yet the
annual or final budget in which projects, activities, and programs would be outlined .

After which, the DBM would have to consolidate the recommended agency budgets and
recommendation into a National Expenditures Program and a Budget of Expenditures
and Sources of Financing (BESF).
Afterwards, the proposed budget is presented by the DBM, together with the DBCC, to
the president and cabinet for further refinements or reprioritization and subsequent
approval of the NEP.
NEP stands for National Expenditures Program in which this program is were recommendations
and proposals made by different government agencies are being consolidated. This one is indeed
very important in the budget process.
Last but not the least is the submission of the proposed national budget, the President's
Budget, to the congress.
When is it submitted? if you can recall, I have made mention that it would be submitted, the updated
revision or submission period would indicate the submission of the president's budget a day after the
SONA being delivered by the president himself/herself.

The President’s Budget

1. President’s Budget Message (PBM)
 This is where the president explains the policy, framework, and priorities in the
budget. As I have mentioned also, the president has the authority and power to set
priorities in the budget process.
2. Budget of Expenditures and Sources of Financing (BESF)
 This budget is mandated by the constitution. It contains the macroeconomic
assumptions, public sector context, including overviews of LGU and GOCC financial
positions, breakdown of the expenditures, and funding sources for the fiscal year
 and the two previous years. In the budget of expenditures and sources of financing,
there is a need to consider for the two previous periods prior to the budget period.
3. National Expenditure Program (NEP)
 Also an important document. This contains details of spending of each department
and agency by program, activity, or project and is submitted in the form of a
proposed general appropriation act.
4. Detailed of Selected Programs and Projects
 This contains a more detailed disaggregation of key programs, projects, and
activities in the NEP. What is only being stated or presented in the NEP are only the
key PAP especially those in line with the national government's development plan.
What you can see on the next file or document are the details of selected programs
and projects or what we call key programs, projects, and activities or key PAPs in a
detailed manner. As the term implies, it is very detailed and it is where we can find
complete information regarding any program, activity, or project that needs to be
conducted or executed within the budget period.
5. Staffing Summary
 This contains a summary of the staffing complement of each department and
agency including member of positions and amounts allocated for the same.
LEGISLATIVE AUTHORIZATION
It is the second phase of the budget process relative to the enactment of the general appropriation bill
based on the budget of receipts and expenditures generally submitted by the president of the Philippines
within 30 days from the opening of its regular session as the basis of the general appropriation bill.
However, as I have mentioned earlier, in contrast, the submission of the president's budget is a day after
the SONA. This is to ensure that the national budget is enacted on time. This phase starts upon the receipt
of the president's budget by the house speaker and ends with the president's enactment of the general
appropriation act, commonly known GAA. Thus, the legislative authorization will be divided into three
parts.

House of Representatives assigns the president's budget to the House Appropriations Committee,
which conduct hearing and scrutinize their respective programs and projects.
It then crafts the General Appropriation Bill (GAB) and in plenary session, the GAB is sponsored,
presented and defended by the appropriations committee and subcommittee chairmen.
As in all other laws, the GAB is approved on the second and third reading before transmission to the
senate. Note, however, that in the first reading, the president's budget is assigned to the appropriations
committee because it would then conduct hearing and scrutinization of the respective programs and
projects indicated in the president's budget is conducted.

Normally, after receiving the GAB from the House of Representatives, the senate conducts its own
committee hearings and plenary deliberations on the GAB. For expediency, however the, senate finance
committee and subcommittee usually start hearings on the GAB even as house deliberations are ongoing.
The committee submits its proposed amendments to the GAB to plenary only after it has been formally
transmitted by the HR or House of Representatives.

Once both houses of congress have finished their deliberations, they will each constitute a panel
to the bicameral conference committee. This committee will then discuss and harmonize the
conflicting provisions of the house and senate versions of the GAB. A harmonized version of the
GAB is thus produced. The harmonized or “bicam” version is then submitted to both houses
which will then vote to ratify the final GAB for submission to the president. Once submitted to the
president for his approval, the GAB is considered enrolled.
It is called “bicam” because both houses will conduct simultaneous deliberations or will
contribute to the simultaneous deliberations of the GAB and would have to vote to ratify the final
GAB version. Ee can call now the final GAB for submission to the president as harmonized or
“bicam” version.”
Who will conduct the deliberations? We have the House of Representatives and the house of the
congress. They are the one who would contribute to the simultaneous deliberations and would
then vote to ratify the bicam version.
the president and the DBM then review the GAB and prepare a veto message were budget items
subjected to direct veto or conditional implementation are identified and where general
observations are made. Under the constitution, the GAB is the only legislative measure where
the president can impose a line veto in all other cases. A law is either approved or vetoed in full.
You can see the power of the president here under the constitution.
You may probably be wondering what will happen if there is delay as to the budget preparation
and its eventual execution and operation. When the GAA is not enacted before the fiscal year
starts, the previous year's GAA is automatically re-enacted. This means that agency budgets for
programs, activities, and projects remain the same. Funding for programs or projects that have
already been terminated is realigned for other expenditures. That would be the scenario that
could possibly happen if there is failure to enact the GAA before the fiscal year ends.
In case there are programs, activities, or projects that are terminated, I mean the funding for this
PAPs are being terminated, they are simply realigned. They are not eliminated from the budget
but are simply realigned for other expenditures or necessities of the government agencies or
local units. That is simply what we call realignment of expenditures.
Appropriations are approved by the legislative body in the form of:
1. A General Appropriation Law which covers most of the expenditures of the government;
2. Supplemental Appropriations laws that are passed from time to time, to augment or
correct an already existing appropriation; and
3. Certain automatic appropriations intended for fixed and specific purposes.
BUDGET EXECUTION AND OPERATION
The third phase of the budget process covers the various operational aspects of budgeting. Thus,
making budgeting as one of the principal tools of management control to ensure that public
funds are spent only for specific purposes for which they are intended. It includes the
development of the operating budget which indicates the program of work to be done or
undertaken, the time within which it should be done, the manpower and other resources needed
to carry out the work, and finally the peso amounts required to accomplish the proposed
programs. Thus, budget execution and operations serve as the medium through which plans for
operation can be implemented using available resources and funds.
This phase of the budget cycle begins with the DBM's issuance of guidelines on the release and
utilization of funds.
Agencies are required to submit BEDs or Budget Execution Documents at the start of budget
execution. These documents outline agency plans and performance targets.
BED is fully discussed in the succeeding sections of our chapter. We will discuss later the budget execution
documents.

The DBM will set a limit for allotments issued to an agency and on the aggregate by preparing an
Allotment Release Program or ARP. The ARP of each agency corresponds to the total amount of
the agency's specific budget under the GAA as well as automatic appropriations. A cash release
program is also formulated alongside to set a guide for disbursement levels for the year and for
every month and quarter.
Allotments which authorize an agency to enter into an obligation are originally released by DBM
to all agencies comprehensively through the agency budget matrix and Special Allotment
Release Orders or SAROs. However, as provided by government accounting manual or GAM, the
new obligational authority includes General Appropriation Act Release Document (GAARD),
Special Allotment Release Order (SARO), and General Allotment Release Order (GARO) which will
also be discussed on the latter parts of this video presentation.
You have to take note of the new obligational authority that we have – we have the GAARD,
SARO, and GARO. Previously we have only the ABM which stands for Agency Budget Matrix and
Special Allotment Disorders only. But now, the ABM is somehow eliminated and it is being
replaced by GAARD and GARO.
The purpose of these documents and release orders are to really intensify the number one or
simply, overall, the fiscal operations principles that we have when it comes to budgeting. These
documents intensify the fundamental principles of fiscal operations in a sense that no amount of
government fund would be released to government agencies without the release orders and
without any legal basis and without any intended public purpose for the release.
At the same time, if it has no legal authority or the government agency in which a fund is being
released to have no legal authority to a certain amount of that fund, therefore, there will be no
government fund to be released.
We have three things to consider here: we have the GAARD, the SARO, and the GARO. The
budget execution and operation focuses more on the release, as well as the authority for the
release or issuance of the funds, as well as the usage and the purpose for which the fund is being
used upon.
BUDGET ACCOUNTABILITY
The budget process, of course, does not end when the government agencies spend the public
funds but the privilege to spend the public funds is also accompanied with accountability. Each
and every peso must be accounted for to ensure that it is used properly contributing to the
achievement of social economic goals. This phase happens alongside the budget execution
phase. I have made mention as I introduced to you the budget cycle wherein budget execution
and operation and budget accountability are implemented simultaneously all year round.
Through budget accountability, the DBM monitors efficiency of fund utilization, assesses agency
performance and provides a vital basis for reforms and new policies.
Performance and Target Outcomes

Agencies are held accountable not only for how they use public funds ethically but also on how
this attain performance targets and outcomes using available resources. These performance
measures are set alongside the preparation of the national budget and this are indicated.
Organizational Performance Indicator Framework (OPIF) book of outputs. Prior to the execution of
the enacted national budget, this performance targets are firmed up during the preparation of
the Budget Execution Documents (BEDs).
Budget Accountability Reports

Submitted by agencies on a monthly and quarterly basis, budget and financial accountability
reports are required reports that show how agencies use their funds and identify the
corresponding physical accomplishments.
For failing to submit their BFARs, the DBM will have the power to penalize the agencies by
withholding certain fund releases. In particular, this will be funds from the Miscellaneous Personal
Benefits Fund for compensation adjustments under the Salary Standardization Law, provisions for
unfilled positions and employee clothing allowances. These funds to be withheld are only limited
to agencies’ MPBF allotments so that only the agencies are penalized and that the
implementation of critical programs and projects will not be disrupted. Errant and compliant
agencies will also be posted online for public scrutiny.
The DBM regularly reviews the financial and physical performance of agencies. Actual utilization
of funds and physical accomplishments, as indicated in the agencies’ BFARs, are evaluated
[against their targets] as identified via Organizational Performance Indicator Framework and in
the agencies’ budget execution documents. Agency performance reviews are conducted
quarterly or every semester as the case may be. An annual Budget Performance Assessment
Review (BPAR) is conducted to determine each agency’s accomplishments and performance by
the year-end. The DBM regularly reports results to the President.
Auditing is not within the DBM's jurisdiction, and is instead lodged under the Commission on
Audit (COA). Nonetheless, auditing is critical in ensuring agency accountability in the use of
public funds. The DBM uses COA's audit reports in confirming agency performance, determining
budgetary levels for agencies and addressing issues in fund usage.
The DBM is also in the process of establishing a performance-based incentive system - which will
recognize and reward good performance among government employees - to help improve the
efficiency of service delivery across all government institutions.
Budgetary Accounts System
According to National Budget Circular (NBC), the Allotment Release Program (ARP) shall serve as
the ceiling for the aggregate allotment releases during the year from all sources. The ARP of
each national government agency shall be an amount equal to its appropriations from the
following sources:
1. New Appropriations, such as: agency specific budget and allocations or additional releases
from Special Purpose Funds (SPFs); and
2. Automatic appropriations for Retirement and Life Insurance Premiums (RLIP), Special
Accounts in the General Fund (SAGFs), and other items classified as such.
3. Continuing appropriations, i.e., allotments chargeable against the unreleased
appropriations for the MOOE and CO in the prior year's GAA.
ARP would be the ceiling for aggregate allotment releases during the year but it would be based on the
following sources such as New Appropriations, Automatic Appropriations, and Continuing Appropriations.

Budgetary Accounts
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.
Monitoring of the Budget
The budget shall be monitored by the Budget Department of National Government Agencies
through the maintenance of registries for that purpose, such as:
 1. Registry of Revenue and Other Receipts (RROR)
 In order to monitor the revenue and other receipts budgeted, collected, and
deposited, this registry shall be maintained for different fund clusters in accordance
with the Unified Accounts Code Structure (UACS). A separate registry for the
summary for each fund cluster shall also be maintained. (See appendix 1)
2. Registry of Appropriations and Allotments (RAPAL)
 This registry shall be maintained by National Government Agencies to monitor
appropriations and allotments charged thereto. The balance is extracted every time
an entry is made to prevent incurrence of overdraft in appropriations. Separate
registry shall be maintained by fund cluster and by Major Final Output
(MFO)/PAP/Appropriation Acts.
3. Registry of Allotments, Obligations and Disbursements (RAOD)
 This registry shall be maintained to record allotments, obligations and
disbursements. It shows the allotments received for the year, obligations incurred
and the actual disbursements made. The balance is extracted every time an entry is
made to prevent incurrence of obligations in excess of allotments and overdraft in
disbursements against obligations incurred. It shall be maintained separately
according to objects of expenditures, such as: Personnel Services, Maintenance and
Other Operating Expenses, Financial Expenses, and Capital Outlays. (See appendix
3)
The obligations incurred by a certain government agency/unit shall not exceed the allotments received for
a certain year or budget period. As such, as overdraft shall not exceed when it comes to actual
disbursements made versus or against the obligations incurred by the government agency/unit.

4. Obligation Request and Status (ORS)

 The incurrence of obligations shall be made through the issuance of ORS. (See
detailed discussions in the succeeding section of this chapter.)
The counterpart of ORS in commerce accounting is Purchase Requisition Slips. A purchase would never
happen or emanate without a purchase requisition slip being filled up by the production department which
will then be submitted/provided to the purchasing department. The purchasing department, after receiving
the purchase requisition slip, shall then immediately make/create a purchase order to be submitted to the
accounts payable department. This manner of acquisition of items and materials needed for production of
goods and services would never happen without a purchase requisition slip which would come from the
production department because the department truly in need of the items and materials are the
persons/individuals working at the production of these goods and services and the purchase requisition
slip would simply be an initial document only in order to make way for an obligation. I made mention of the
accounts payable department because that department is simply the one in charge for recording the
incurrence of obligations. But before pushing through with the accounts payable department, the purchase
order shall be, of course, served/sent to the supplier which is allowing credit purchases. Supplier, which is
somehow a partner of a certain entity or company that allows credit purchases. Upon sending an invoice
for that purchase, that is only the time in which the accounts payable department would recognize/record
that an obligation has been incurred. But the very source of the incurrence of the obligation then is the
purchase requisition slip.

Just like here, in the monitoring of the budget, wherein the issuance of ORS is deemed important for the
incurrence of an obligation. Without it, it will no longer be recognized by the DBM and the proponent
agencies. Even COA would question the presence of such obligation without ORS.

11:42 to 18:33 – personal experience daw nya

5. Registry of Budget, Utilization and Disbursements (RBUD)

 This registry shall be used to record the approved special budget and the
corresponding utilizations and disbursements charged to retained income
authorized under RA 8292 for State Universities and Colleges (SUCs) and other
 retained income collections of a National Government Agencies with similar
authority. It shall be maintained separately according to objects of expenditures,
such as: personnel Services, Maintenance and Other Operating Expenses, Financial
Expenses, and Capital Outlays. (See appendix 4)
Take note that RAOD and RBUD shall be maintained separately according to the objects of expenditures
such as PS(?), MOOE, FE, and CO. They are the two registries requiring the observance of these four
objects of expenditures.

Fund Release Documents

According to Government Accounting Manual, 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 - the following are the documents which authorize
the entity to incur obligations:
a. General Appropriation Act Release Document (GAARD)
 This serves as the obligational authority for the comprehensive release
of budgetary items appropriated in the General Appropriation Act (GAA),
categorized as For Comprehensive Release (FCR). This will abolish the lengthy
process of releasing allotments to departments and agencies; thereby,
enhancing the operational efficiency of all agencies across the bureaucracy,
allowing the DBM to speed up government disbursements and fast-track the
implementation of programs and projects set for the year.
b. Special Allotment Release Order (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) (e.g., Calamity Fund, Contingent Fund, E-
Government Fund, Feasibility Studies Fund, International Commitments Fund,
Miscellaneous Personnel Benefits Fund, and Pension and Gratuity Fund) are
also covered by SAROs.
Anything that is under the special fund ???. And if GAARD is For Comprehensive Release, SARO is
For Later Release.
c. General Allotment Release Order (GARO)
 This is a comprehensive authority issued to all national 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, agencies
without need of special clearance or approval from competent authority.
These three release orders and documents are very important to signify that an obligation can
be incurred with proper and legal authorization.
2. Disbursement Authority – the following documents authorize the entity to pay
obligations and payables:
When we use the term entity in government accounting, it refers to the government agencies (national or
local), and also the local government units and offices.

a. Notice of Cash Allocation (NCA)

 This is the authority issued by the DBM to central, regional, and
provincial offices and operating units to pay operating expenses, purchases 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.
This NCA will be authorized for issue by the DBM so it will somehow be distributed to central, regional, and
provincial offices and operation units in order to pay operating expenses. This simply means that there has
been a cash allocated for those certain expenses up to a limited amount depending on the portion of fund
allocated to certain central, regional, and provincial offices.

b. Non-Cash Availment Authority (NCAA)

 This is the 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.
The same set up with NCA. However, what is the purpose? This is to cover the liquidation of their actual
obligations incurred. NCA and NCAA are the same in a sense that the one who will authorize the issue of
such will be the DBM. But, they are different as to the purpose.

c. Cash Disbursements Ceiling (CDC)

 This is the 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)
 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
disbursements through the issue of MDS checks, ADA or other modes of
disbursements
You can see here the manner of the issuance of authority under NTA. The issuance would come from the
central office to its regional and operating units. There is simply a transfer of allocation within a certain
government agency/unit from central to regional or local offices.

These fund release documents are really important in order to execute the budget and also in order for the
PAPs of different government agencies to proceed. Thus, we can therefore say that fund release
documents belong to the budget execution and operation phase of the budget cycle.

Objects of Expenditures
Expenditures of National Government Agencies shall be classified into categories as may be
determined by the Department of Budget and Management. These include the four major objects
of expenditures, such as:
1. Personnel Services (PS) (e.g., salaries and wages, other compensation/personnel benefits,
etc.)
By the term itself, without any idea or background in government accounting, you may somehow think of
it as if it is related, when it comes to commercial accounting, it is somewhat related to employee benefits.
If that is your idea regarding personnel services, you are right. Because personnel services, as an object of
expenditure, includes salaries and wages, other compensation/personnel benefits. It pertains to the
compensation and other benefits a personnel or a government employee may have or may receive.
Thus, we can therefore say that personnel services pertains to income, compensation, or benefits a
government personnel could receive or could have working in the government agency or a local
government unit.

2. Maintenance and Other Operating Expenses (MOOE) (e.g., travelling expenses, supplies
and materials expenses, training and scholarship expenses, utility expenses,
communication expenses, rent expenses, repairs and maintenance expenses, general
services, etc.)
In a commercial point of view, it is somewhat likened or its counterpart will be repairs and maintenance in
commerce accounting. However, when it comes to government accounting, it includes or it pertains to
traveling expenses, supplies and materials expenses, training and scholarship expenses, utility expenses,
communication expenses, rent expenses, repairs and maintenance expenses, general services, and
others.

However, when it comes to government accounting based on the cited examples of maintenance and
other operating expenses, the repairs and maintenance in commerce accounting is somewhat combined
with other operating expenses of the company. This is how the government would maintain an object of
expenditure. The government had it combined the maintenance expense and the other operating
expenses of the government.

3. Financial Expenses (FE) (e.g., interest expenses, bank charges, guarantee expenses,
commitment fees, other financial charges, etc.)
Financial expenses pertains to expenses that would affect acquisition or disbursement or outflow of money
from a certain unit to another unit or from and entity to another entity. Therefore, it includes interest
expenses, bank charges, guarantee expenses, commitment fees, and other financial charges.

4. Capital Outlays (CO) (e.g., Property, Plant and Equipment, Investments, etc.)
It pertains to property, plant, and equipment and investments. The concept that we have here on capital
outlays is that is pertains to major acquisitions of the government for the betterment and improvement of
its operations. Just like for example, acquisition of land, of property, and engagement of the government
unit or agency and to investments.

General Guidelines on the Release of Funds

Pending the effective date of the new General Appropriation Act (GAA), national government
agencies are authorized to incur overdraft in allotment for obligations corresponding to the
actual requirement of their regular operations chargeable against the GAA, as re-enacted.
A re-enacted budget pertains to the budget of the preceding year which, by operation of laws,
becomes re-enacted and shall remain in force in effect until the general appropriation bill for the
current year is passed by Congress. The re-enactment of the budget is a mechanism sanctioned
by the constitution to allow the use of public funds for regular operations pending the approval of
the GAA. All unutilized allotments of agencies immediately before the effective date of the new
GAA out of the SAROs issued chargeable against the re-enacted GAA shall no longer be available
for obligation.
Upon the GAA's effective date, which is after fifteen days following the completion of its
publication in the Official Gazette or in a newspaper of general circulation, the Allotment Release
Program (ARP) may already be established.
The Allotment Release Program (ARP), which determines the level of allotment releases for a
given fiscal year, is composed of the following:
1. Obligations incurred,
2. Obligations authorized as overdraft,
 3. Special allotment release order (SAROs) issued from the beginning of current fiscal year to
the effectivity date of the current General Appropriation Act, and
4. Releases from the unprogrammed fund (UF). Allotment releases from the multi-user
Special Purpose Funds (SPFs) such as: Calamity Fund, Contingent Fund, E-Government
Fund, International Commitment Fund, Miscellaneous Personnel Benefit Fund, National
Unification Fund, Priority Development Assistance Fund, and Pension and Gratuity Fund
shall be over and above the agency Allotment Release Program.
Guidelines on the Release of Disbursement Authorities
1. Release of Notice of Cash Allocation (NCA)
 The National Budget Circular provides that an initial comprehensive NCA shall be
issued directly to the Operating Units (OUs) covering the first semester requirement
(i.e., January to June) chargeable against the current year budget. This shall be
based on the submitted Monthly Disbursement Program (MDP), which shall include
current year requirements and prior years' accounts payables.
Chapter 1

Commission on Audit
1. COA – member of INTOSAI – International Organization of Supreme Audit
Institutions
2. Authority of COA – Article IX-D, Sec. 2 par. 2 of the 1987 Ph Constitution
3. COA – prescribed GAM for NGAS to harmonize existing and international
accounting standards

Government Accounting Manual

 presents basic accounting policies and principles in accordance to PPSAS –
adopted through COA Resolution No. 2014-003 dated January 24,2014 –
and other pertinent laws, rules and regulations
 revision of NGAS
 New Government Accounting System – prescribed under COA
Circular No. 2002-002 dated January 18,2002
 includes RCA
 Revised Chart of Accounts – prescribed under COA Circular
No. 2013-002 dated January 30,2013
 includes accounting procedures, books, registries, records, forms, reports
and financial statements

GAM aims to update the following

 standards, policies, guidelines and procedures in accounting for
government funds and property
 coding structure and accounts
 accounting books, registries, records, forms, reports and financial
statements
Use of GAM
 by all NGAs in the:
 preparation of GPFS in accordance to PPSAS and other financial reports as
may be required by laws, rules and regulations
 reporting of budget, revenue and expenditure in accordance with laws, rules
and regulations
Nature and Scope of Accounting for Government and
Non-profit Organizations

Objectives of CH1:
 will help you distinguish between government accounting and
commercial accounting
 attain awareness from existing laws, rules and regulations and the
basic standards or fundamental accounting principles for financial
reporting by National Government Agencies as provided by the
government accounting manual in accordance with the Philippine
Public Sector Accounting Standards (PPSAS)
 adopted through COA resolution number 2014-003
 dated January 24 2014 and other pertinent law rules and
regulations

Account
Before jumping into the actual definition of government accounting
let's define accounting through its root word account
 when we are to account for something that means we are keeping
track of what's going on

 Illustration 1: You are accountable for the funds of the organization

because you are the treasurer. You bear the responsibility because
you hold the position
 Perhaps when we are asked by someone what are the exact
things that happened in a certain day we could not
elaborately tell the details. We can recall but only the
important things that happened that day
  We may not be able to even tell anything at all by memory
alone because one month has passed, let's say for example,
but if we keep with us a record of everything or if we are into
writing down everything that happened each day, then it
would be easier for us to tell the exact thing that happened

 Illustration 2(another scenario): when your employer would ask

proof if you really reported for work. The documentary evidence
will be your daily time record thus, it is said that accounting is the
language of business

Accounting as a language of business

 it is a means of reporting the financial facts of a business life
whether in government or in the private sector
 it is for this reason that the users of the information must
understand the financial reports which the accounting
system produces

Government Accounting: Definition

 refers to the process of recording and the management of all financial
transactions incurred by the government which includes its income and
expenditures
 various governmental account recording and the management of all
financial transactions incurred by the government which includes its income
and expenditure systems are used by various public sector entities
 thus, government is important as it involves analyzing, recording,
classifying, summarizing and communicating of all government
transactions involving government funds and properties
  having a report thereof, the people can have a clearer view on how
the government have been spending the funds from the taxes that
we've been paying

Definition pursuant to Sec. 109 of P.D. 1445

 encompasses the process of analyzing, recording, classifying, summarizing
and communicating all government transactions involving the receipt and
disposition of government fund and property and interpreting the result
thereof.
Features (from teacher’s personal point of view or analysis)
 never deals with profit and loss of government organizations
 follows government rules and regulations
 follows rules of double-entry system of bookkeeping
 records revenue and expenditures in accordance with budget head
 deals with banking transaction by opening separate bank account to
operate different funds of the government
 audits revenue and expenditures of government to control misuse of
money and power
Commercial Accounting Features, in comparison
 calculate profit and loss for a period
 not usually based on budgets
 books of accounts are not classified into central level of accounting and
operating level accounting
 applies both accrual and cash basis
 follows the rules and regulation of generally accepted accounting principles
or GAAP
 gives information of financial transactions to the concerned parties related
to the business org
 any auditor or license holder can audit the books of account

Government Accounting
 systematic recording analysis and communication of financial transactions
made by a government body
  helps to analyze the financial information of government organizations
 process of recording, analyzing, classifying, summarizing communicating
and interpreting financial info about government in aggregate and in detail,
reflecting all transactions involving the receipts, transfer and disposition of
government fund and property
Sec. 110 PD 1445 – Objectives of Government Accounting
1. to provide information concerning past operations and present conditions
 Information of past operations and present conditions will facilitate
the evaluation of the performance of an agency from one period to
another
 on a hindsight, things that happened in the past contribute a lot to
how you look at things today. You may not apparently see it but the
changes that happen to you are both by your past experiences and
that through it you become wiser in making your decisions unless you
have a foolish heart in bidding with your relationships
 thus this shows the importance of keeping into account everything
and remembering every detail to win an argument against your
boyfriend or defend your stand.
 when you will become parents you will appreciate the essence of
keeping a list of costs and expenses to enable you to trace back what
happened to your family's budget for a certain period of time

2. to provide basis for guidance for future operations

 the results of the evaluation may guide the manager on what course
of action to take, as regards future operation, as well as come up with
the proper analysis of the funds needed for a project
 financial information and other relevant information do not only
benefit the present time but it is very useful in planning and
preparing for future operations
 applying the quotable quote, “if you fail to plan, you are planning
to fail”

3. to provide for control the acts of public bodies and offices in the receipt,
disposition and utilization of funds and property
  public officers are accountable for the resources entrusted to them
 the accounting data will show whether or not the agencies achieving
its mandates as well as its operational objectives
 moreover the financial reports will also show the extent of the
agency's financial and non-financial resources which have useful lives
 evaluation of said information will enable the users to determine the
“service potential” of the Agency's resources, as well as give an
indication when additional resources need to be injected into the
operation
 public officers are usually the ones associated with thief and
corruption for they are the trustees of public fund. Hence with this
responsibility bestowed upon them comes suspicion and therefore
they are held accountable
 just imagine a public officer declaring the acquisition of 100 units of
laptop intended for office use. There is a fund allotted to it and there
is a liquidation report but it never actually materialized. What
happened then for the source documents that are existing?
 Thus as accountants in the future you should situate the validity of
the documents and not just its existence

4. to report on the financial position and the results of operations of

government agencies for the information and guidance of all persons
concerned
 the accounting data will also show the obligations of the agency and
how such obligations have been incurred
 the information should tell its users the sources of resources which
will meet these obligations
 the information should show an analysis of the inflow and outflow of
resources, especially of financial resources
 the adoption of a system that is in conformity with international
accounting standards, the Commission on Audit as a member of the
International Organization of Supreme Audit Institutions (INTOSAI) is
encouraged to adopt relevant international accounting standards
 dito, mapapatanong ka na lang kung saan nangnggaling ang pera na
nailaan para sa ahensya, galling ba to sa nakaw? O baka naman isa ito
 sa mga nakolektang parapernalya sa mga nahuling drug users. Sana
nasasagot din ng government accounting kung sino ba ang
nagnanakaw sa kaban ng bayan.
Government Accounting – deals not just with how much is the updated balance
of the existing resources of a government agency, but also deals with the sources
of such resources.
In simplest terms we could therefore say that the objectives of government
accounting are as follows:
a)  it records financial transaction of a government office
b)  it emphasizes on expenditures within the limit of the budget
c)  it emphasizes on the legal expenditures according to the appropriate
act
d)  it supplies required and effective financial data and information for
the operation of a public fund
e)  it maintains proper records to prevent misuse of government
properties
f)  it facilitates the process of audit
g)  it helps to prepare properly and annual report

Public Sector Accounting Standards Board (PSASB)

 In order to formulate and implement public sector accounting standards and

established linkages with international bodies, professional organizations and
academe on accounting related fields on financial management,
 The Public Sector Accounting Standards Board (PSASB) was created
in 2008 under COA resolution no. 2008-12, dated October 10 2008.

 In developing standards of the Philippine Public Sector Accounting Standards

(PPSAS), the PSASB considers and make use of, among others, the existing
laws, financial reporting, accounting rules and regulations, and
pronouncements issued by the International Public Sector Accounting
Standards Board (IPSAISB).
 The PSASB shall assist the Commission in formulating and implementing
Philippine Public Sector Accounting Standards (PPSAS).
Summary of the public sector accounting standards details
 date established: October 10, 2008
 purpose: assist the commission in formulating and implementing PPSAS
– Philippine Public Sector Accounting Standards
 basis: COA resolution No.2008-12

 The purpose is to assist in formulating and implementing the PPSAS

 The basis is the COA resolution no. 2008-12
 remember that the resolution number is named after the date of
the creation or establishment of the said resolution which is
October 10, 2008.
 The basis for this resolution is the IPSASB and as the basis of the
Public Sector Accounting Standards Board is also the IPSASB
In order for the Public Sector Accounting Standards Board to achieve the said
purpose and formulating and implementing the PPSAS, it would base its
development on the pronouncements, rules and regulations, existing laws
provided or issued by the IPSASB or its counterpart International Public Sector
Accounting Standards Board
Philippine Public Sector Accounting Standards (PPSAS)
shall apply to
 all National Government Agencies (NGAs)
 Local Government Units (LGU)
 Government owned and/or controlled corporations GOCC not considered
GBEs
 GBE – under PFRS and relevant standards issue by FRSC, BOA AND PRC;
covered by PFRS, not PPSAS
  in which case, the Philippine financial reporting standards (PFRS) and
relevant standards issued by the Financial Reporting Standards Council
(FRSC), Board Of Accountancy (BOA) and Professional Regulation
Commission (PRC) shall apply
   in other words, GBE is covered by the accounting standards issued by
IFRS/PFRS but not IPSAS/PPSAS
  thus the inapplicability of the IFRS/PFRS due to the fact that
government accounting is far different from commercial accounting or
accounting for business transactions
Government Business Enterprise characteristics
It is also important to define what is a government business enterprise since I
mentioned that the PFRS/IFRS is also applicable to this organization or enterprises
Government Business Enterprise is an entity that has the following characteristics:
 it is an entity with the power to contract its own name
 it has been assigned the financial audit and operational authority to carry
on a business
 it 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 to be a going concern “other
than purchase of outputs at an arm's length” and
 controlled by a public sector entity
Processes and Considerations in developing PPSAS
1. Applicability of IPSAS
COA Resolution no. 2014-003 dated Jan 24, 2014 provides that, “after a
study and review of the provisions of the International Public Sector
Accounting Standards (IPSAS), the Public Sector Accounting Standards
Board (PSASB) recommended the adoption of the IPSAS, to be referred to
as the Philippine Public Sector Accounting Standard (PPSAS). The PPSAS, as
aligned with the prevailing international standards, provide quality
accounting standards thereby enhancing the quality and uniformity in
financial reporting by Philippine Public Sector entities, and ensuring
accountability, transparency and comparability of financial information
with other public sector entities around the world.”
2. Exposure drafts of PPSAS
The PSASB issues exposure drafts of all proposed PPSAS for comment by
interested parties including COA officials and auditors, agency finance
 personnel, oversight agencies, professional organizations, academe and
other stakeholders. The PSASB sets a reasonable time to allow interested
parties to consider and comment on its proposal. The PSASB evaluates all
comments received on exposure drafts and makes such modifications,
where appropriate.
 PSASB does not simply issue accounting standards to be implanted
and adopted in the government or public sector in just a blink of an
eye, rather it provides or allows the voice of COA officials and
auditors, agency finance personnel, oversight agencies, professional
organizations, academe and other stakeholders to be heard. Their
voices are heard and considered in the implementation or creation of
the accounting standards through the issuance of exposure drafts.

3. Fundamental issues
When an accounting principle or a significant element of a disclosure
requirement contained in IPSAS is considered to be in conflict with the
Philippine Laws, rules and regulations, this would be regarded as a
fundamental issue and the accounting principle or disclosure requirement
may be changed.

4. Statutory authority
Where the international standards deviates from the Philippine regulatory
or legislative environment, Philippine application guidance shall be issued
accordingly.

 In order to harmonize the existing accounting standard with the

international accounting standards, the COA as a member of the
International Organization of Supreme Audit Institutions (INTOSAI)
through its authority under Art 9-D Sec. 2 Par 2 of 1987 Philippine
Constitution to promulgate accounting and auditing rules and
regulations prescribes the Government Accounting Manual for
National Government Agencies.
  It is apparently seen that the accounting standards issued are usually
in line with international accounting standards given the COA is a
member of what we called INTOSAI. However, no matter how the
COA wants to achieve harmonization of the accounting standards
applied in the Philippines with the international accounting
standards, in case there is a deviation already from the Philippine
Regulatory or legislative environment, the Philippine application
guidance will be issued accordingly. That means to say that it must
not conflict or vary with the Philippine Regulatory Standard.

 That is what we called Statutory Authority. It simply addresses the

problems and concerns of the state in which the accounting
standards are being issued.

 The government accounting system may be linked internationally but

it simply addresses the concerns under the Philippine Government
and not concerns under international setting.

 The Philippine Statutory Authority shall prevail in case there is

deviation or conflict.

5. Disclosure requirement
Disclosure requirements may be amended when the amendments are
regarded as being significant for improving fair presentation of the matter.

 Here, disclosure is necessary especially if the matter is significant

 what is specified here in the process is the amendment of the
disclosure requirement. It is allowed as long as it is for the purpose of
improving fair presentation of the reports or simply the matter being
address here into.

6. PPSAS numbering
The PPSAS is assigned the same number as the IPSAS to maintain the link.
Where a PPSAS is developed and there is no IPSAS equivalent, the standard
will be assigned a number in a series of PPSAS starting with 101. When
 IPSASB subsequently issues the equivalent standard as an IPSAS, the 100
series PPSAS will be withdrawn and reissued as a PPSAS with the IPSAS
number. Standard of PPSAS have equal authority regardless of the
numbering used.

 If there is a subsequent issuance, in order to maintain the link, the

100 series of PPSAS would simply be withdrawn and reissued as a
PPSAS with the IPSAS number. The numbering of PPSAS, in case
where there is no IPSAS equivalent, that starts with the 100 series is
simply used as a substitute in case there is no available equivalent
 The purpose of numbering that is in line with IPSAS is simply to
maintain the link

7. Financial reporting issues not dealt by IPSAS

When issues related to financial reporting engaged, researches were done
and a discussion document prepared based on other relevant accounting
standards not in conflict with Philippine laws.

8. Submission of draft to PSASB for consideration of the COA

Where there are significant changes or unresolved issues associated with an
exposure draft, the PSASB may decide to re-expose a proposed PPSAS.

In case the exposure draft of PPSAS issued here is not resolved at all, the
PSASB may decide to simply re-expose a proposed PPSAS subject for the
consideration of the COA.

9. If considered appropriate, focus group discussions will be held to obtain

further opinions on issues identified by the exposure process

Accounting Responsibility
 Accounting responsibility emanates from the constitution, laws, policies,
rules and regulations.
 The Constitution of the Philippines, the fundamental law of the land,
mandates the keeping of the general accounts of the government,
 promulgation of accounting rules, and the submission of reports covering
the financial condition and operation of the government.
The offices charged with accounting responsibility are the:
 Commission on Audit (COA),
 the Department of Budget and Management (DBM),
 the Bureau of Treasury (BTr), and
 the government agencies discharging the functions of government to
enable it to attain its commitments to the Filipino people.

 Do not forget the three agencies charge with accounting responsibility which
are COA, DBM, and BTr.

Commission on Audit
 The Commission on Audit or COA keeps the general accounts of the
government, promulgate rules and regulations, and submits to the
president and the Congress, within the time fixed by the law (not later than
the last day of September each year -section 41, PD 1445), an annual report
of the government its, subdivisions agencies and instrumentalities,
including government-owned and controlled corporations
 In the performance of its functions, as mandated by article IX-D, section 2
paragraph 2 of the 1987 Constitution 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 therefore, and promulgate
accounting and auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary, excessive,
extravagant, or uncontrollable expenditures, or uses of government funds
and properties”
 take note class that this is also the very legal basis of COA in introducing the
Government Accounting Manual

 Pursuant to the COA, DBM and DOF joint circular no. 2013-1 dated
august 6, 2013, Unified Accounts Code Structures (UACS), the
 consistency of account classification and coding structures with the
Revised Chart of Accounts shall be the responsibility of the COA

 As mentioned in the preceding section, the Commission on Audit,

pursuant to the 1987 Philippine Constitution, Sec. 2 par 2, Article IX-D,
which vests the exclusive authority to promulgate accounting rules and
regulations, created the Public Sector Accounting Standards Board
(PSASB) under COA Resolution 2008-12 dated October 10, 2008.

 Remember the one who created PSASB is COA and it is under COA resolution
2008-12 dated October 10, 2008. Do not forget those fundamental dates
because it is relevant to the creation or establishment of the Government
Accounting Manual and continuous revision and improvement of the
accounting system to be applied in the government or public sector.

Department of Budget and Management

 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 of Budget and
Management shall be responsible for the efficient and sound utilization of
the government funds and revenues to effectively achieve the country's
development objectives."

 Furthermore, as provided by the Joint Circular No. 2013-1 dated August 6,

2013, Unified Accounts Code Structures (UACS), the validation and
assignment of new codes for funding source organization, sub-object codes
for expenditure items shall be the responsibility of the DBM.

 In addition, the validation and assignment of new program, activity, project

codes shall be decided jointly by the proponent agency and DBM.
Bureau of Treasury
 The Bureau of Treasury (BTr) plays a pivotal role in the cash operation of
the National Government. Accounting rules and regulations pertaining
to cash operations, collections, remittances and disbursements,
including public borrowings, are issued by the Commission on Audit,
jointly or with the concurrence of the Department of Finance and the
Department of Budget and Management.

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.

 Thus, the Bureau of Treasury shall control and monitor the Notice of
Cash Allocation (NCA) released by the Department of Budget and
Management; as well as the bank transfers it makes in replenishing its
Modified Disbursement System (MDS) accounts.
 According to the Joint Circular No. 2013-1 dated August 6, 2013, Unified
Accounts Code Structures (UACS), the consistency of accounts
classification and coding standards with the Government Finance
Statistics (GFS) shall be the responsibility of Department of Finance -
BTr.
 However, it should be noted that GFS coding will generally not be shown to
be part of the UACS; instead, GFS data will be obtained from reference table
inside the system that will map GFS function coding from MFO/PAP codes, as
well as GFS economic classification coding from object codes for non-
financial assets, financial assets, liabilities, revenues and expenses.
 Simply put, under the new accounting system, 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 MDS
accounts.
National Government Agencies
 Department bureaus offices and other instrumentalities of the national
government including the Congress, the Judiciary, the Constitutional bodies
state colleges and universities and other self-contained institutions and
hospitals are required by law to have accounting units or divisions or
departments which are to be of the same level with other units or divisions
departments in the agency and under direct supervision of the head of the
agency.

The accounting personnel shall

• 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

Accounting personnels shall perform the offers at duties in accordance with

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

Failure to comply with this requirements is sufficient ground for dismissal from
the government service

THE REGISTRIES
Before the new government accounting system, the registries maintained by
national government agencies were as follows
• Registry of Appropriations and Allotments (RAPAE)
• Registry of Special Purpose Fund Appropriation (RESPFA)
• Registry of Allotments and Notice of Cash Allocation (RANCA)- which was
introduced under NGAS
 Under the new accounting system, the government agencies shall maintain
the following registries:

1. Registry of Revenue and Other Receipts Summary (RRORS)

The RROR shall be maintained by the Budget Division/Unit of NGA to monitor

the revenue and other receipts estimated/budgeted, collected and
remitted/deposited.

This summary shall be kept by the Budget Division/Unit for each fund cluster
maintained by the entity. (See Appendix 14)

2. Registry of Revenue and Other Receipts-Regular Agency

and ForeignAssisted Projects Fund (RROR-RA&FAP)

This registry shall be maintained by the Budget Division/Unit of the entity

for the following fund clusters:
1) Regular Agency Fund; and,
2) ForeignAssisted Project fund. (See Appendix 1B)

3. Registry of Revenue and Other Receipts Special Account

Locally Funded/Domestic Grants Fund and Special Account
Foreign Assisted/ Foreign Grants Fund (RROR-SADFGF)

This registry shall be maintained by the Budget Division/Unit of the entity

for the following fund clusters .
1) Special Account Locallly Funded/Domestic Grants Fund; and,
2) Special Account ForeignAssisted Foreign Grants Fund. (See Appendix
1C)
4. Registry of Revenue and Other Receipts Internally
Generated Funds (Off-Budgetary Funds Retained Income
Funds)/Business Related Funds (RROR-IGF/BRF)

This registry shall be maintained by the Budget Division/Unit of the entity

for the following fund clusters:
1.) Internally Generated Funds (Off-Budgetary- Retained Income Funds); and,
2.) Business Related Funds. (See Appendix 1D)

5. Registry of Revenue and Other Receipts-Trust

Receipts/Inter-agency Transferred Funds (RROR-TR/IATF)

This registry shall be maintained by the Budget Division/Unit of the entity

for the Trust Receipts/Inter-agency Transferred Funds. (See Appendix 1EB)

6. Registry of Appropriation and Allotments (RAPAL)

The RAPAL 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
appropriation.

This registry shall be maintained by fund cluster by the Budget Division/Unit

of each entity to ensure that allotment releases are within the authorized
appropriation. Separate registry shall be maintained for prior year's
appropriations. (See Appendix 2)

7. Registry of Allotments, Obligations and Disbursements-

Personnel Services (RAOD-PS)

 The RAOD shall be maintained to record allotments, obligations and

disbursements.
  It shall show the allotment received for the year, obligations incurred, and
the actual disbursements made.
 The incurrence of obligations shall be made through the issuance of
Obligations Request and Status (ORS).
 Every time an entry is made, the balance is determined to prevent
incurrence of obligations in excess of allotment and overdraft in
disbursements against obligations incurred.

This registry shall be maintained by the Budget Division/Unit by Appropriation

Act, fund cluster, by Major Final Output (MFO) or Program/Activity/Project
(PAP) for personnel services. (See Appendix 3A

8. Registry of Allotments, Obligations and Disbursements-

Maintenance and Other Operating Expenses (RAOD-MOOE)

This registry shall be maintained by the Budget DiviSion/Unit by

Appropriation Act, fund cluster, by Major Fmal Output (MFO) or
Program/AActivity/Project (PAP) tor maintenance and Oner perating
expenses. (See Appendix 3B)

9. Registry of Allotments, Obligations and Disbursements-

Financial Expenses (RAOD-FE)

This registry shall be maintained by the Budget Division/Unit by Appropriation

Act, fund cluster, by Major Final Output (MFO0) or Program/Activity/Project
(PAP) for financial expenses.

10. Registry of Allotments, Obligations and Disbursements-

Capital Outlays (RAOD-CO)

This registry shall be maintained by the Budget Division/Unit by Appropriation

Act, fund cluster, by Major Final Output (MFO) or Program/Activity/Project
(PAP) for capital outlays. (See Appendix 31D)
11. Registry of Budget, Utilization and Disbursements-
Personnel Services (RBUD-PS)

The RBUD shall be used to record the approved special budget and the
corresponding utilizations and disbursements charged to retained income
authorized under RA 8292 for State Universities and Colleges (SUCs) and other
retained income collections of a NGA with similar authority.

This registry shall be maintained by the Budget Division/Unit by fund cluster, by

Major Final Output (MFO) or Program Activity/Project (PAP) for personnel
services. (See Appendix 4A)

12. Registry of Budget, Utilization and Disbursements-

Maintenance and Other Operating Expenses (RBUD-MOOE)
This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for maintenance
and other operating expenses. (See Appendix 4B)

13. Registry of Budget, Utilization and Disbursements-

Financial Expenses (RBUD-FE)
This registry shall be maintained by the Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program Activity/Project (PAP) for financial
expenses. (See Appendix 4C)

14. Registry of Budget, Utilization and Disbursements Capital

Outlay (RBUD-CO)

This registry shall be maintained by the Budget Division/Unit by fund cluster, by

Major Final Output (MFO) or Program Activity/Project (PAP) for
capital outlays. (See Appendix 4D)
15. Registry of Allotments 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.
(See Appendix 5)

16. Registry of Allotments and Notice of Transfer of Allocation

(RANTA)

This registry shall be maintained by the Accounting Division/Unit to determine

the amount of allotments not covered by NTA and to monitor available NTA.
(See Appendix 6)

 Take note: 14 out of the 16 registries are assigned or delegated to the budget
division or unit or office of an agency or organization so namely or specifically
number 1 until number 14 registries
 while for the last two, 15 and 16 – these registries are assigned to the
accounting division or unit or office of an organization or agency
 this is the very reason why the administration building exists under our
academic institution. Thus in actuality we have the budget and
accounting offices at the admin building of UNP

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)

Each of these registry have a separate registry designated for

o Personal Services (PS)
 o Maintenance and Other Operating Expenses (MOOE)
o Financial Expenses (FE)
o Capital Outlay (CO)

The Registry of Revenue and Other Receipts

up to the Registry of Budget, Utilization and Disbursements are assigned to
budget unit or division or office while for the RANCA and RANTA they are
assigned to the accounting unit division or office .

Recap of the old accounting system and compare it with

the new accounting system

Old accounting system New accounting system

The agency shall journalize The government agencies will no
the Notice of Cash Allocations longer journalize its appropriations
(NCA) it receives, which in and allotments instead it shall
effect identifies the share of maintain four registries for the
the agency in the income of allotments it receives and the
the national government obligations it incurs the government
agencies will make use of the four
registries such as the
following:
1. Registry of Allotments and
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 BUDGET REPORTING PRINCIPES
The Government Accounting Manual provides general provisions from existing
laws, rules and regulations; and basic standards/fundamental accounting
principles for financial reporting by national government agencies. It requires each
government entity to recognize and present its financial transactions and
operations in conformity with the following:
1. GAAP in accordance with PPSAS and pertinent laws, rules and regulations
 COA Resolution No. 2014-003 dated January 24, 2014 prescribed the
adoption of twenty five (25) Philippine Public Sector Accounting
Standards (PPSASS) effective January 1, 2014.
 These PPSASs were based on International Public Sector Accounting
Standards (IPSASs) which were published in the 2012 Handbook of
International Public Sector Accounting Pronouncements of the
IPSASB. In adopting International Public Sector Accounting Standards
(IPSAS), the PSASB attempts, wherever possible, to maintain the
accounting treatment and original contents of the IPSASs and its
aPproved amendments, unlee
 there is a Significant accounting issues that warrants a departure. In
so doin
 the PPSAS 1s assigned the same number as tne lFSAS tO maintain the
link.

 In cases where a specific accounting issue is ether not
comprehensively dealt
 with in an existing 1PSAS or an IPSAS has not been developed by the
 IPSASB, a new standard of PPSAS shall be developed. Accordingly,
 researches shall be conducted and a discussion document shall be
prepared
 based on other relevant accOunting standards not in contlict with
Philippine
 laws. As discussed in the preceding section, where a new PPSAS is
 developed and there is no equivalent IPSAS, the standard will be
assigned a
  number in a series of PPSAS starting with 101. When IPSASB
subsequently
 issues the equivalent standard as an IPSAS, the 100 series PPSAS will
be
 withdrawn and reissued as a PPSAS with the IPSAS number.
2. Accrual basis of accounting in accordance with the PPSAS
Accrual basis means a basis of accounting under which transactions and
other events are recognized when they occur, and not when cash or its equivalent
is received or paid. Thus the transaction and events are recognized in the
accounting records and recognized in the financial statements of the periods to
which they relate. The elements recognized under accrual accounting are assets,
liabilities, net assets or equity, revenue and expenses
3. Budget basis for presentation of budget information in the financial
statements in accordance with PPSAS 24
IPSAS 24, presentation of budget Information in financial statements
requires a comparison of budget amounts and the actual amounts arising from
execution of the budget to be included in the financial statements of entities that
are required to, or elect to, make publicly available their approved budget and for
which they are therefore held publicly accountable. It also requires disclosure of
an explanation of the reasons for material differences between the budget and
the actual amounts. Compliance with requirements of this standard will ensure
that public sector entities discharge their accountability obligations and enhance
the transparency of their financial statements by demonstrating:
 Compliance with the approved budget for which they are held publicly
accountable and
 Where the budget and the financial statements are prepared on the
same basis their financial performance in achieving the budgeted results

4. Revised chart of accounts prescribed by commission on audit

The commission on audit as a member of the international organization of
supreme audit institutions or intosai is encouraged to adopt relevant international
accounting standards. The ipsasb of the international federation of accountants
which promulgates the ipsas acknowledges the right of governments and national
standard setters to establish their respective accounting standards and guidelines
for financial reporting in their jurisdictions. And to provide new accounts for the
adoption of the ppsas which were harmonized with the ipsas to enhance the
accountability and transparency of the financial reports and ensure compatibility
of financial information, the COA recognizes the need to revise the new
government accounting system (NGAS) chart of accounts prescribed in COA
circular number 2004-008 dated september 20 2004.
The commission also recognizes the need for uniform accounts to be used in the
national government accounting and budget systems to facilitate the preparation
of harmonized financial and budget accountability reports.
Accordingly the COA revokes circular number 2004-008 and the COA
circular number 2013-002 dated january 30 2013, adoption of the revised chart of
accounts for national government agencies, is adopted. Along this line COA
circular number 2014-003 dated april 15 2014, implementing rules and guidelines
on the conversion from the philippine government chart of accounts under the
ngas to the revised chart of accounts for national government agencies and COA
circular number 2015-007 dated october 22 2015 prescribing the government
accounting manual for use of all national government agencies, were considered.

5. Double entry bookkeeping

Historically, one important breakthrough in the 13th century as the
introduction of double entry bookkeeping. The Messari (Treasurer's) account of
genoa, a city in italy is the oldest record of a complete double entry system that
was discovered in 1340. It contains debits and credits journalized in a bilateral
form thus called double entry system.
It is a system of bookkeeping where every journal entry to account requires a
corresponding and opposite entry to a different account. In the double entry
accounting system two accounting entries are required to record each accounting
transaction. Recording of a debit amount to one or more accounts and an equal
credit amount to one or more accounts results in total debits being equal to total
credits for all accounts in the general ledger.
 You have already earned the double entry bookkeeping and the double
entry system in your basic accounting or accounting fundamentals part one
 6. Financial statements based on accounting and budgetary records
The objectives of general purpose financial reporting in the public sector
should be to provide information useful for decision making and to demonstrate
the accountability of the entity for the resources entrusted to it by
a. providing information about the sources allocation and uses of financial
resources
b. providing information about how the entity financed its activities and met
its cash requirements
c. providing information that is useful in evaluating the entity's ability to
finance its activities and to meet its liabilities and commitments
d. providing information about the financial condition of the entity and the
changes in it
e. providing aggregate information useful in evaluating the entity's
performance terms of service cost, efficiency and accomplishments.

Financial reporting may also provide users with information:

a. indicating whether resources were obtained and used in accordance with
the legally adopted budget
b. indicating whether resources were obtained and used in accordance with
legal and contractual requirements including financial limits established by
appropriate legislative authorities.

7. Fund cluster accounting

Fund cluster refers to an accounting entity for recording expenditures and
revenues associated with a specific activity for which accounting records are
maintained and periodic financial reports are .prepared
COA circular number 2015-002 dated march 9 2015, supplementary guidelines
on the preparation of financial statements and other reports, the transitional
provisions on the implementation of the ppsas and other coding structures
provides that for the purpose of preparing the annual financial report and the
annual audit reports, all national government agencies shall submit to the COA
auditors and the government accountancy sector or GAS, the detailed financial
statements and trial balances consolidated by the fund clusters as follows:
a. Regular agency fund
b. foreign assisted projects fund
c. special accounts - locally funded/domestic grants fund
d. special accounts - foreign assisted/foreign grants fund
e. internally generated funds
f. business related funds
g. trust receipt/inter-agency transferred funds (IATF)

Responsibility Accounting
 Responsibility accounting is a system that relates the financial results to
responsibility center, which provides access to cost and revenue
information under the supervision of a manager having direct responsibility
for its performance.
 It is a system that measures the plans (by budget) and actions (by actual
results) of each responsibility center.
Responsibility center, on the other hand,
 is a part, segment, unit or function of a government agency, headed by a
manager, who is accountable for a specified set of activities.
 Except for some, which derive most of their income from collection of taxes
and fees, national government agencies are basically cost centers, whose
primary purpose is to render service to the public at the lowest possible
cost.
 Cost centers are established to provide each government agency's
accessibility to cost information and to facilitate cost monitoring at any
given period.
 While the use of subsidiary ledgers is sufficient to control cost, it requires
considerable time to summarize the cost incurred by the agency for its
different programs, projects, activities and offices/divisions, hence,
 responsibility accounting shall be done only under the computerized
accounting system.

Responsibility accounting aims to:

1. ensure that all costs and revenues are properly charged/credited to the
correct responsibility center so that deviations from the 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.

Responsibility accounting
 kind of management accounting that is accountable for all the
management, budgeting and internal accounting of the company
 primary objective: support all the planning, costing and responsibility
centers of a company
 the accounting generally includes the preparation of monthly and annual
budget for an individual responsibility center
 accounts for the cost and revenue of a company where reports are
accumulated monthly or annually and reported to the concerned manager
for the feedback
 mainly focuses on responsibility centers
 Example: For instance, if Mr. X, the manager of a unit, lands the budget of his
department, he is responsible for keeping the budget under control Mr. X will
have all the required information about the cost of his department. In case if
the expenditure is more than the allocated budget, then Mr. X will try to find
the error and take necessary action and measures to correct it Mr. X will be
personally accountable for the performance of his unit
Advantages of responsibility accounting
 it urges the management to acknowledge the company structure and
checks who is accountable for what and fix the problems
  it enhances attention and awareness of the managers as they have to
explain the variation for which they are responsible
 helps to compare the achievement between the pre-planned goals and
actual results
 creates a sense of efficiency within individual employees as their work and
achievements will be reviewed
 it guides the management to plan and structure the future expenditure and
revenue of a company
 being a cost control tool, it creates cost consciousness among workers
individual and company goals are established and communicated in the
best way
 it improves and controls the company's operating activities for an effective
and efficient outcome
 simplifies the report structure and guides to prompt reporting

Responsibility accounting
 is also one of the topics under management advisory services, cost
accounting and (if i am not mistaken) it is also part of the strategic cost
management under the new curriculum

Concepts of responsibility accounting

Before proceeding to the discussion of the concepts and the responsibility
accounting, it is important for you to have an insight on how responsibility
accounting works in an organization through this organizational chart
responsibility accounting
 The term responsibility accounting refers to an accounting system that
collects, summarizes and reports accounting data relating to the
responsibilities of individual managers
responsibility accounting system
 A responsibility accounting system provides information to evaluate each
manager on the revenue and expense items over which that manager
has primary control or, simply what we call, authority to influence
 primary control – authority to influence
responsibility accounting report
 a responsibility accounting report contains those items controllable by
the responsible manager
 when both controllable and uncontrollable items are included in the
report, accountants should clearly separate the categories
 the identification of controllable items is a fundamental task in
responsibility accounting and reporting

 To implement responsibility accounting in a company, the business entity

must be organized so that responsibility is assignable to individual
managers
 the various company managers and their lines of authority and the resulting
levels of responsibility should be fully defined
 to identify the items over which each manager has control, the lines of
authority should follow a specified path

For example in the picture, we show that:

 a department supervisor may report to a store manager and the store
manager may report to the vice president of operations and the vice
president of operations reports to the president
 The president is ultimately the one responsible to the stockholders or their
elected representatives which are the board of directors
 in a sense the president is the one responsible for all the revenue and
expense items of the company since at the presidential level, all items are
controllable over some period
 the president often carries the title, Chief Executive Officer (CEO) and
usually delegates authority to the lower level manager since one person
cannot keep fully informed of the day-to-day operating details of all the
areas of the business
Teacher’s note: I guess you already know how the board of directors functions
in a company since you are probably watching the Korean drama series, start
up.
 The manager’s level in the organization also affects those items over
which the manager has control
 the president is usually considered as the first manager so we have here
the legend, Level 1, under the row of the president
 managers are usually the vice presidents who report directly to the
president. so the vice presidents here for the second row are usually the
second level manager so they are Level 2 when it comes to their level of
responsibility
 so the vice president of finance, vice president of operations, vice
president of marketing reports to the president and they are the second
level managers
 notice on the organization chart that individuals at specific management
level are on a horizontal line across the chart so such as for example we
have here the VP of finance, VP of operations and VP of marketing
 not all managers at that level, however, necessarily have equal
authority and responsibility. so the degree of managers authority
varies from company to company
 in our example or illustration available the VP of finance, VP of
operations and VP of marketing share the same level of authority
in the company
  while the president may delegate much decision making power some
revenue and expense items remain exclusively under the president's
control
 For example, in some companies, large capital plant and equipment
expenditures may be approved only by the president therefore depreciation,
property taxes, and other related expenses should not be designated as a store
manager's responsibility since this cost are not primarily under that manager's
control

 The controllability criterion is crucial to the content of performance

reports for each manager
 For example, at the department supervisor level perhaps only direct materials
and direct labor cost control are appropriate for measuring performance.
 A plant manager, however, has the authority to make decisions regarding
many other costs not controllable at the supervisory level such as the
salaries of department supervisors.
 This other cost should be included in the performance evaluation of the
store manager and not the supervisor

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
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
c) budget data can be developed for evaluating managers effectiveness
in controlling cost and revenues

 A and B is somewhat associated with management by exception

Management by exception
 It is the principle that upper level management does not need to examine
operating details at lower levels under there appears to be a problem
 As businesses become increasingly complex, accountants have found it
necessary to filter and condense accounting data so that this data may be
analyzed quickly
 most executives do not have time to study detailed accounting reports
and search for problem areas reporting only summary totals highlights
any areas needing attention and makes the most efficient use of the
executive's time
 the condensation of data in successive levels of management reports is
justified on the basis that the appropriate manager will take the
necessary corrective action
 thus specific performance details need not be reported to superiors

 For example if sales personal costs have been excessively high in a particular
department that departmental manager should find and correct the cause of
the problem
 when the store manager questions the unfavorable budget variants of
the department, the departmental supervisor can inform the store
manager that corrective action was taken
 hence it is not necessary to report to any higher authority that a
particular department within one of the stores is not operating
satisfactorily because the matter has already been resolved
 alternatively if a manager's entire store has been performing poorly, vice
president of operations discloses this situation and an investigation of
the store manager's problems may be indicated

4. The reporting of cost and revenues under responsibility accounting differs

from budgeting in two aspects:
a) a distinction is made between controllable and uncontrollable costs
b) Performance reports either emphasize or include only items
controllable by individual manager.
Controllable and uncontrollable costs
it is presumed that you already know the definition or meaning of controllable
and non-controllable cost and that we can move on on how we can distinguish the
two.
1. A cost is considered controllable at a given level of managerial
responsibility if that manager has the power to incur it within a given
period of time. It follows that all costs are controllable by top management
because of the broad range of its activity, and fewer costs are controllable
as one moves down to lower level of management responsibility because
of the manager's decreasing authority.
2. Non-controllable costs are costs incurred indirectly and allocated to a
responsibility level.

In the realm of budget and cost, the budget should be carefully designated as to
which departments have authority over and are responsible for which cost
 if a department has authority and responsibility for certain costs those costs
are called controllable costs
 uncontrollable costs are those costs that a department doesn't have
authority over and can change

 because authority and accountability go together, you can only hold

individuals and units in an organization accountable for those things
that they can control
 if you don't give subordinates authority to do something how can you
hold them accountable for doing it

Example: suppose Eve asked Alfred to walk her dog for a week however, she
refused to give Alfred the keys to her apartment so he had no access to the
dog. Because Eve didn't give Alfred the authority to do his job eve can't
possibly hold him accountable for not walking the dog or for the resulting mess
in her apartment
 Given the organization's goals and strategies, every required task and decision
should be under someone's watch
 Responsibility accounting allows you to hold subordinates responsible
for all tasks over which they have control
Overhead allocations
 Overhead allocations are usually inconsistent with the idea of
controllable cost
 overhead allocations use allocation rates to assign overhead cost based
on the number of units, direct labor hours or other cost drivers to
individual departments
 each department must then include a portion of this overhead as a cost
in its own budget, even though these departments usually have little or
no say over how money is spent for this overhead
 even when one of these departments closes completely, its overhead
costs often remain and get assigned to other departments – in this way
arbitrary overhead allocations often result forcing departments to
accept responsibility for overhead costs that they have little or no
control over
 so this is what we call an uncontrollable cost

Performance reports either emphasize or include only items

controllable by individual manager.
In preparing responsibility accounting reports, companies use two basic
methods to handle revenue or expense items
 In the first approach, only those items over which a manager has direct
control are included in the responsibility report for that management level.
Any revenue and expense items that cannot be directly controlled are not
included
 The second approach is to include all revenue and expense items that can
be traced directly or allocated indirectly to a particular manager, whether or
not they are controllable. This second method represents a full cost
approach which means all costs of a given area are disclosed in a single
 report. When this approach is used, care must be taken to separate
controllable from non-controllable items to differentiate those items for
which a manager can and should be held responsible
Timeliness
 For accounting reports to be of maximum benefit, they must be timely, that
is accountants should prepare reports as soon as possible after the end of
the performance measurement period
 Timely reporting allows prompt corrective action to be taken
 When reports are delayed excessively, they lost their effectiveness as control
devices
 For example, a report on previous month's operation that is not received until
the end of the current month is virtually useless for analyzing for performance
areas and taking corrective action

 Companies also should issue reports regularly so that managers can spot
trends then appropriate management action can be initiated before
major problems occur
 Regular reporting allows managers to rely on reports and become
familiar with their contents
Controllable and Uncontrollable Cost Comparison Table

 The similarities between these two costs are that they are both relevant
cost in a business especially when it comes to decision making process
 However they have such differences so
As to their characteristic
 a controllable cost is something that can be controlled
 uncontrollable cost is something that cannot be controlled by the
management
As to their definition
 a controllable cost is a cost that can be altered based on a business
decision or need. These costs have a direct relationship with a product,
department or function. Examples include direct labor, direct materials
donations training cost, bonuses subscriptions, overhead cost, just to
name a few
 as for uncontrollable costs, this is a cost that cannot be altered based on
personal business decision or need the costs are allocated by the top
management to several departments or branches. Examples include
depreciation, insurance, administrative overhead and rent allocated just
to name a few
As to the time span
While controllable cost can be altered in the short run, the uncontrollable cost
can be altered in the long run
As per conclusion
Costs in businesses are inevitable. Failure to manage cost however can be
detrimental for a business
It is hence important for business owners and employees to differentiate
between controllable and uncontrollable cost which enables them to make
sound decisions
5. A responsibility reporting system involves the preparation of a report for each
level of responsibility. Responsibility reports usually compare actual cost with
the flexible budget data
 Responsibility accounting provides reports to different levels of
management. the amount of detail varies depending on the manager's level
in an organization
a) a performance report to a department manager of a retail store
would include actual and budgeted dollar amounts of all revenue and
expense items under that supervisor's control
b) the report issued to the store manager would show only totals from
all the department supervisors’ performance reports and any
additional items under the store manager's control such as the
store's administrative expenses
c) the report to the company's president includes summary totals of all
the stores performance levels plus any additional items under the
president's control.
d) in effect, the president's report should include all revenue and
expense items in a summary form because the president is
responsible for controlling the profitability of the entire company

 Firms should make the format of their responsibility reports relatively

simple and easy to read
  Confusing terminology should be avoided where appropriate expressing
results in physical units may be more familiar and understandable to some
managers

Budget Variance
To assist management and quickly spotting budget variances, companies report
both budgeted and actual amounts.
 A budget variance is the difference between the budgeted and actual
amounts of the item
 Because variances highlight problem areas or what we call exceptions, they
are helpful in applying the management by exception principle to help
management evaluate performance to date

Responsibility reports often include both a current period and a year-to-date

analysis.

6. Evaluation of managers performance for cost centers based on his ability to

meet budgeted goals for controllable cost
 One of the vital functions of a manager is to carry out the plans of the
management and meet the desired goals for a certain period of time
under his direct supervision. His performance is rated based on how
well-versed he is in meeting organizational objectives and devising of
ways and strategies on how to achieve such.
 This is the very reason why managers are so strict especially in the
conduct of business operations and it so depends also on the nature of
the organization's engagement

In order to be effective in identifying the performance of a segment or unit of

the agency under the control and responsibility of the segment's manager, the
coding structure has been formulated.
  however, in order to provide the harmonized budgetary and
accounting code classification that will facilitate the efficient and
accurate financial reporting, this coding structure was modified
and repealed lately by Commission on Audit, Department of
Budget and Management and Department of Finance through
Joint Circular Number 2013-1 dated august 6 2013: Unified
Accounts Code Structure (UACS). (This Joint Circular was later
enhanced amending the Funding Source Code and MFO/PAP Code
For the organization code that will be usetul for monitoring revenue and
expenses, the Government Accounting Manual assigned each National
Government Agencies a responsibility center code defined as organization
code in the UACS Manual.

Illustration Regarding Responsibility Reports

Assume Macy's has four management levels –
1. the president
2. vice president of operations
3. store manager and
4. department manager
In this section, we show that a responsibility report would be prepared for
each management level
We will begin with the lowest level - the Men's department manager and work
our way up to the president. We start at the lowest level because the totals
from each level will be reported in the next highest level
Macy's Corporation Manager Men's Clothing Department
Responsibility Report

 The responsibility report contains columns for controllable expenses, actual

amount, budget amount and over or under the budget.
 Under each column for actual and budget or over or under the budget
columns, there is a separate pair of columns provided for each column for the
actual budget or over or under the budget which will contain the this month
details and the year-to-date details
 As for the controllable expenses, we have the inventory losses and the actual
amount incurred for the month is $2000 and the year to date is $10,000. For
the budgeted amount for this month it contains, $1900 and year-to-date is
$9600 and the over or under the budget. So comparing the balance for the
actual and budget for this month, there arise a difference of 100 dollars, so
that means there is already an excess of the actual amount incurred so
inventory losses exceed the amount budgeted which equates to $100 and the
year to date is $400.
 Only the individual managers controllable expenses are contained in these
reports
 for example:
 the store manager’s report includes only totals from the men's clothing
department managers report
 in turn, the report to the vice president includes only totals from the
store managers report and so on

Detailed data from the lower levels are summarized or condensed and reported at
the next higher level.
 you can see that at each level more and more costs become controllable
 also, the company introduces controllable cost not included on the
lower level reports into the reports for levels 3, 2, and 1.
 the only store cost not included in the store manager's level is the store
manager's salary because it is not controllable by that store manager. it
is however controllable by the store manager supervisor, the vice
president of operations.

DECENTRALIZATION
 The business entity must be organized so that responsibility is assignable to
individual managers. The various company managers and their lines of
authority and the resulting levels of responsibility should be fully defined.
 The controllability criterion is crucial to the content of performance reports
for each manager.
For example: At the department supervisor level, perhaps only direct
materials and direct labor cost control are appropriate for measuring
performance. A plant manager, however, has the authority to make
decisions regarding many other costs not controllable at the supervisory
level such as the salaries of department supervisors. This other cost
would be included in the performance evaluation of the store manager
and not the supervisor.
Decentralization is the dispersion of decision-making authority among
individuals at lower levels of the organization.
In other words, the extent of decentralization refers to the degree of control
that segment managers have over the revenues, expenses and assets of their
segments.
When a segment manager has control over this elements the investment
center concept can be applied to the segment thus the more decentralized the
decision making is in an organization the more applicable is the investment
center concept to the segments of the company.
The more centralized the decision making is in an organization the more
applicable is the investment center concept to the segment of the company
The more centralized the decision making is the more likely responsibility
centers are to be established as expense centers

Some advantages of decentralized decision making

1. managing segments trains managers for high level positions in the
company. The added authority and responsibility also represent job
enlargement and often increase job satisfaction and motivation
2. top management can be more removed from day to day decision
making at lower levels of the company and can manage by
exceptionwhen the top management is not involved with the routine
problem solving it can devote more time to long-range planning and
to the company's most significant problem areas.
3. decisions can be made at the point where the problems arise it is
often difficult for top managers to make appropriate decisions on a
timely basis when they are not intimately involved with the problem
they are trying to solve
4. since the centralization permits the use of the investment center
concept, performance evaluation criteria such as return on
investment or commonly known as roi and residual income can be
used
Chapter 2 UACS

Unified Accounts Code Structure

 according to Joint Circular No. 2013-1 dated August 6, 2013
– jointly developed by DBM, COA, DOF and BTr
 government-wide coding framework
 to provide a harmonize budgetary and accounting code classification that
will facilitate the efficient and accurate financial reporting of actual revenue
collections and expenditures compared with programmed revenues and
expenditures, respectively
 starts Fiscal Year 2014

Joint Circular No. 2014-1

 on November 7,2014, Joint Circular No. 2014 -1 amended UACS
 UACS per Joint Circular No. 2013-1 dated August 6, 2013 was enhanced
amending the Funding Source Code and MFO/PAP Code (Major Final
Output or Program/Activity/Project)

Purpose of UACS
UACS – government-wide harmonized budgetary, treasury and accounting code
classification that will facilitate reporting of all financial transactions of
government agencies.

Objective of government-wide UACS

 to establish the accounts and codes needed in reporting the financial
transactions of the National Government (NG)of the Rep. of Philippines
 provides a framework for identifying aggregating and reporting financial
transactions in budget preparation, execution, accounting and auditing
 When this object coding is combined with budget classification coding for
funding source, organization, location and program, this framework
 collectively provides the harmonized budgetary and accounting
classification codes know as UACS.

KEY PURPOSE OF UACS

 to enable the timely and accurate reporting of actual revenue collections
and expenditures against budgeted programmed revenues and
expenditures

Reporting requirements that will be best served by the UACS

include
1. Financial reports as required by DBM and COA
2. Financial statements as required by PSASB of the Philippines
3. Management reports as required by the executive officials/heads of
departments and agencies; and
4. Economic statistics consistent with the Government Finance Statistics (GF$)
Manual 2001.

Application of UACS
 used by all National Government Agencies – all departments and agencies
of the National Government and Government-Owned and/or Controlled
Corporations (GOCC) with Budgetary Support from NG including those
maintaining Special Accounts in the General Fund

Source of account descriptions and codes in the UACS object

coding elements includes the following:
1. the codes from the COA Revised Chart of Accounts prepared for accrual
basis financial reporting
2. the addition of some sub-object codes
3. additional expenditure accounts designed for cash basis budgeting, such as
those for capital outlays
UACS – RESPONSIBILITIES
Unified Accounts Codes structure – responsibility jointly shared by DBM, COA,
DOF-BTR
 DBM, COA, DOF-BTR collectively
responsible for UACS
SUMMARY OF THE FUNCTIONALITY OF EACH AGENCY AND EQUIVALENT
PROPONENT AGENCY
FUNCTIONALITY AGENCY
Validation and assignment of new Department of Budget and
codes for funding source, organization, Management (DBM)
sub-object codes for expenditure
items.
Validation and assignment of new Department of Budget and
Program, Activity, Project (PAP) Codes Management (DBM) and proponent
shall be decided jointly by the agency
proponent agency and DBM
Consistency of account classification Commission on Audit (COA)
and coding structures with the Revised
chart of accounts
Consistency of account classification Department of Finance- Bureau of
and coding standards with the Treasury (DOF-BTr)
Government Finance Statistics (GFS)
 see the parallelism or the pattern of functionality of each agency
 UACS – collective responsibility of DBM, COA, DOF-BTR – you should still
know specifically to which agency it is being assigned to
Elements
Composition of UACS is being broken down into five key elements of coding
framework
 like in preparation of financial reports and
financial statements, identify of elements
of FS – assets, liabilities, equity, revenues
and expenses
Five key elements of coding framework
1. Funding Source (8 digits)
a) Fund Cluster (2-digit code)
b) Financing Source (1-digit code)
c) Authorization Code (2-digit code)
d) Fund Category (3-digit code)

2. Organization Code (12 digits)

a) Department Code (2-digit code)
b) Agency Code (3-digit code)
c) Operating Unit Classification (2-digit code)
d) Lower Level Operating Unit (5-digit code)

3. Location Code (9 digits)

a) Region (2-digit code)
b) Province (2-digit code)
c) City/Municipality (2-digit code)
d) Barangay (3-digit code)

4. MFO/Program, Activity and Project Codes (15 digits)

a) Sector/Horizontal Outcomes (5-digit code)
b) Program/Project (1-digit code)
c) MFO/Project Category (2-digitcode)
d) Activity Level 1/Project Sub-Category (2-digit code)
e) Activity Level 2/Project Title (5-digit code)
5. Object Codes for Assets, Liabilities, Equity, Income and Expenses (10 digits)
a) Revised Chart of Accounts (8-digit code)
b) Sub-Object Code(2-digitcode)

Additional insights for budgetary accounts, GFS coding and

business rules applicable to all the all the codes in UACS

Government Finance Statistics (GFS) Manual – mainly contains GFS coding

Budgetary Accounts
 Revised Chart of Accounts does not include classification and codes for
budgetary accounts (should be remembered)
 Information system will need to provide —in response to the required
input of any expenditure account code—an amount with respect to
 Appropriations
 Adjustment to
pAppropriations
 Adjusted
Appropriations
 Allotments
 Transfers
 Adjusted Allotments
 Unreleased
Appropriations
 Obligations
 Unobligated
Allotments
 Disbursements; and
 Unpaid Obligations
GFS Coding
 GFS coding will generally not be shown to be part of the UACS.
 Instead, GFS data will be obtained from reference tables inside the system
that will map GFS Function coding from MFO/PAP codes, as well as GFS
Economic Classification coding from Object Codes for Non-Financial Assets,
Financial Assets, Liabilities, Revenues and Expenses

Business Rules Applicable to All the Codes in the UACS

 Codes are classified under “Others” to describe the components of UACS key
elements for items pending identification, subject to the submission of a
request for specific code assignments to the UACS Administrator.

Summary of Key elements and their Unified Code Digits

 UACS is required for Funding source, Organization, Location for Region (while
for Province, City and Barangay is optional)
 MFO/PAP Code is usually unique for each Department or Agency because it
depends on what program or activity or project the proponent agency would
like to implement or execute
 Object Code is uniform across Government Code.
1. Funding source code

 Six digits are available for the Funding Source code.

 The Funding Source code is composed of the Financing Source, Authorization
and Fund Category codes.

A. 1. Funding Source Code

Funding Source
6 Digits
Financing Source Authorization Fund Category
1st digit 2nd and 3rd digits 4th to 6th digits

 The first digit of the Funding Source indicates whether the expenditure is
sourced inside or outside the general fund, which is the case for all budgeted
spending and continuing or automatic appropriations.
 The next two digits are for the Authorization code, while the last three digits
are for the Fund Category code.
 Funding source code is ultimately a six-digit code to reflect Financing Source,
Authorization and Fund Category codes.

Per Joint Circular No. 2014-1

 dated November 7, 2014
  the 6-digit Funding Source Code was enhanced by adding another two digits
code for the Fund Cluster for purposes of accounting, banking, and reporting;
thus, it becomes eight digits

A. 2. Fund Cluster Code Values

Evolution of funding source codes into fund cluster code values.
 Enhanced version of the funding source
code
Fund Cluster Fund Cluster Description
Code
01 Regular Agency Fund
02 Foreign Assisted Project Fund
03 Special Accounts – Locally Funded/Domestic Grants Fund
04 Special Accounts — Foreign Assisted/Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts

B. Financing Source Code

PARTICULARS UACS
General Fund 1
Off-Budgetary Funds 2
Custodial Funds 3

1. General Fund
 General Funds are funds available for any purpose that Congress may
choose to apply,
 and is composed of all receipts or revenues that do not otherwise accrue to
other funds.

2. Off -Budgetary Funds

 Off-Budgetary Funds, as the term implies, refer to receipts for expenditure
items that are not part of the National Expenditure Program,
  and which are authorized for depositing in government financial institutions.
 These are categorized into:
a) Retained Income/Receipts, and
b) Revolving Funds

3. Custodial Funds
 Custodial Funds refer to receipts or cash received by any government agency
—whether from a private source or another government agency—to fulfill a
specific purpose.

 Custodial receipts include receipts collected as an agent for another

entity.
 These include trust receipts—both from an individual or corporation—
that are required to be held by government until the outcome of a court’s
case or procurement activity is determined, as well as cases where a
department or agency holds receipts as a trustee for the fulfillment of
some obligations.
C. Authorization Code

PARTICULARS UACS
New General Appropriations 01
Continuing Appropriations 02
Supplemental Appropriations 03
Automatic Appropriations 04
Unprogrammed Funds 05
Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08

1. New General Appropriations

 New General Appropriations are annual authorizations for incurring
obligations during a specified budget year, as listed in the General
Appropriations Act (GAA).
General Appropriations Act (GAA
 The GAA is the legislative authorization that identifies new appropriations in
terms of specific amounts for salaries, wages and other personnel benefits;
Maintenance and Other Operating Expenses (MOOE), Financial Expenses
(FEx) and Capital Outlays (CO) for the implementation of programs, projects
and activities of all departments, bureaus and offices of government for a
given year.

2. Continuing Appropriations
 Continuing Appropriations are authorizations to support obligations for a
specified purpose or project, even when these obligations are incurred
beyond the budget year.
 Because MOOE and CO appropriations in the GAA are valid for two
years, unobligated and unreleased appropriations for these budget
items are valid until the end of their second year and are classified as
Continuing Appropriations. (MOOE and CO may be valid after two
years even if they are being incurred beyond budget year)
 Continuing Appropriations for MOOE may be approved for projects whose
effective implementation calls for multi-year expenditure commitments.
  Starting Calendar Year 2013 until further amended, however, all
appropriations for Personnel Services (PS), MOOE and CO shall be valid
only for one (1) fiscal year.
 Both New General Appropriations and Continuing Appropriations will contain
a mix of the Department/Agency Specific Budget and realignments from
Special Purpose Funds to the relevant department/agency during budget
execution once specific conditions and authorizations are met.
3. Supplemental Appropriations
 Supplemental Appropriations are additional appropriations enacted by
Congress to augment original appropriations that have proven insufficient for
their intended purpose because of economic, political or social conditions.
 Supplemental Appropriations must also be supported by a certification of
availability of funds by the BTr.

4. Automatic Appropriations
 Automatic Appropriations are authorizations made annually or for some
other period prescribed by law, by virtue of standing legislation, which do not
require periodic action by the Congress.
 These are automatically and annually included in the National Expenditure
Program of the National Government.
 All expenditures for the:
a) National Government share for the Retirement and Life Insurance
Premiums of government personnel and other similar fixed
expenditures;
b) amortization of principal and interest on public debt;
c) National Government guarantees of obligations which are drawn upon
 all these expenditures are automatically appropriated as per Section 26,
Chapter 4, Book VI of Executive Order (E.O.) No. 292, the Administrative Code
of 1987.

Examples of Automatic Appropriations

PARTICULARS UACS
Retirement and Life Insurance Premiums 104102
Pension under R.A. No. 2087, as amended by P.D. No. 1625 and R.A. 104103
No. 5059
Domestic Grant Proceeds 104104
Customs duties and taxes, including tax expenditures 104105
Proceeds from sales of non-serviceable, obsolete and unnecessary 104106
equipment
Military Camps Sales Proceeds 104107
Tax refunds 104108
Debt Principal Amortization 104109
Debt Interest Payments 104110
Internal Revenue Allotment* 104251
Net Lending (GOCC Debt)** 104280
* Appendix A.6 shows UACS code 251 for IRA
** Appendix A.7 shows UACS code 280 for Net Lending

5. Unprogrammed Funds
 Unprogrammed Funds are standby appropriations for priority programs or
projects of the government.
Conditions for approval
 The utilization of Unprogrammed Funds may be approved if any of the
following conditions are met: (take note of these)
a. Revenue collections for the year exceed targets
b. New revenues not included in the original revenue targets are
successfully generated, or
c. Foreign loan proceeds are generated for newly approved projects
covered by perfected loan agreements

6. Retained Income/Funds
 Retained Income/Funds are collections that are authorized by law to be used
directly by agencies for their operation or specific purposes.

 These include but are not limited to receipts from:

1. State Universities and Colleges (SUCS) - tuition and matriculation fees and other
internally generated receipts

2. Department of Health (DOH) - hospital income

 (such as hospital fees; medical, dental and laboratory fees; rent income
derived from the use of hospital equipment and facilities; proceeds from sale
of hospital therapeutic products, prosthetic appliances and other medical
devices; diagnostic examination fees; donations in cash from individuals or
nongovernment organizations satisfied with hospital services.)
7. Revolving Funds
 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.
 These funds shall be self-liquidating.
 All obligations and expenditures incurred because of these business type
activities shall be charged against the Revolving Fund.

8. Trust Receipts
 Trust Receipts are receipts that are officially in the possession of government
agencies or a public officer as trustee, agent, or administrator, or which have
been received for the fulfillment of a particular obligation.
Classification of trust receipts
These receipts may be classified as:
a. Inter-Agency Transferred Funds (IATF)
 which are receipts or fund transfers from any government-agency or
Government Owned and/or Controlled Corporations (GOCC) to another
agency, and which are deposited in the National Treasury to facilitate project
implementation;
b. Receipts deposited with the National Treasury other than IATF
 which are receipts from other sources—including private persons or foreign
institutions—which are deposited with the National Treasury, pursuant to
E.O. No. 338, for the fulfillment of some obligations; and,
c. Receipts deposited with Authorized Government Depository Bank (AGDB)
 which are receipts from other sources that should be deposited in the AGDB
for the fulfillment of some obligations.
See Appendix A.4 for Trust Receipts account codes.
See Appendix A.4.1 for Receipts Deposited with the National Treasury other than IATF.
See Appendix A.4.2 for Receipts Deposited with AGDB.
C. Fund Category Code
The Fund Category Code identifies specific funds maintained by the agency for
accounting purposes, as well as for recording and reporting financial transactions.

C.1. Specific Budgets of National Government Agencies

This refers to the budgets appropriated for a specific department or agency of the
National Government.
 This is not applicable to all departments under the agency but only to a
particular agency or department of the NG
C.2. Multilateral/Bilateral Assistance (GoP Counterpart Funds
and Loans/Grants from Development Partners)
The fund category code for counterpart funds, loan proceeds and grant proceeds
will be selected according to the name of the institution providing funds from the
list in Appendix A.5.
  The authorization code—which precedes the fund category code—will vary
depending on whether funds were loans or grants, as well as if they were
unprogrammed or included in the regular budget.
 Appropriated loan proceeds will use authorization code 01 – New General
Appropriations
 Grant proceeds will use authorization code 04 – Automatic Appropriations
 Unprogrammed loan proceeds will use authorization code 05 –
Unprogrammed Funds

C.3. Allocation to Local Government Units (ALGU)

Allocation to Local Government Units (ALGU) refers to the share of Local
Government Units (LGUs) from the revenue collections of the National
Government.
 The total ALGU is based on a sharing scheme computed for each LGU, as
provided for under the Local Government Code and other special laws.
See Appendix A.6 for ALGU and their codes.

C.4 Budgetary Support to Government Corporations

Budgetary Support to Government Corporations (BSGC) refers to either subsidies
for operations or projects, equity contributions, and net lending and/or advances
to Government-Owned or Controlled Corporations (GOCC) for loan repayments.
See Appendix A.7 for BSGC and their codes.

C.5 Financial Assistance to Metro Manila Development

Authority
Financial Assistance to Metro Manila Development Authority refers to national
government subsidy in the form of regular appropriations as provided in the GAA
which shall only be used to augment any deficiency in the consolidated funds of
the MMDA to cover valid and authorized expenditures.
 This was previously not included in the Fund Category Table so there was no
code in the table.
See Appendix A.8 for Financial Assistance to Metropolitan Manila Development Authority.
C.6 Special Account in the General Fund (SAGF)
A Special Account in the General Fund (SAGF) is a fund where proceeds from
specific revenue measures and grants earmarked by law for priority projects are
recorded.
 These sources are automatically appropriated. (There will be automatic
appropriations for these special accounts)
For SAGFs used by more than one agency, only one funding source code shall be
used. For example, the funding source code 104328 assigned to Malampaya Gas
Fund under the DOE-OSEC shall be used by all agencies availing funds from that
SAGF (i.e. DBM [for LGUs], DOE, DND, DPWH).
 Ironic – there are still special accounts in the general fund
 the very purpose of the general fund is that it has no particular or specific
designation
 however, underlying the general fund are special accounts
See Appendix A.9 for Special Accounts in the General Fund and their codes.

C.7 Special Purpose Funds

Special Purpose Funds (SPF) are lump-sum funds included in the GAA which are not
within the approved appropriations of Departments/Agencies/Lower Level
Operating Units, and which are available for allocation to any
Department/Agency/Lower Level Operating Unit or Local Government Unit for a
specific purpose, as may be duly approved in accordance with special provisions on
the use of these funds.
See Appendix A.10 for a list of SPF and their codes.

FUND CATEGORY CODE TABLE

PARTICULARS CODES
OLD UACS
Specific Budgets of National Government 101 101 to 150
Agencies
GoP Counterpart Funds and Loans 102/171 151 to 250
(102)/Grants from Development Partners
(171)
Allocations to Local Government Units 103 251 to 275
Budgetary Support to Government 104 276 to 300
Corporations
Financial Assistance to Metro Manila 301 to 320
Development Authority
Special Accounts in the General Fund 105,183,401, 151 321 to 400
to 159
Special Purpose Funds 401 to 420
Unprogrammed Funds 421 to 440
Retained Income/Funds 441 to 500
Revolving Funds 161 to 164 501-600
Trust Receipts 101-184, 187 601-610
Others (Specify) 611 to 999
 Both old and new UACS follows the same sequence.
 Unprogrammed Funds, Retained Income/Funds, Revolving Funds, Trust
Receipts are under the Authorization Code
 Special Purpose Funds, Unprogrammed Funds, Retained Income/Funds and
Others Fund categories are left blank under the old code. They are only
established during the development of new UACS
 Others need to be specified. The UACS code for Others, compared to other
fund categories, contains mostly of the UACS Code
Examples of Funding Source Codes: New General Appropriations
Financing Authorization Fund Category
Specific Budgets of
New General
General Fund National Government
Appropriation
1 Agencies
01
101
New General Pension and Gratuity
General Fund
Appropriation Fund
1
01 407

 In order to create a Funding Source Code, you will be needing Financing,

Authorization and Fund Category. Combine the three codes.

 Note: The assignment of fund codes under this Manual is based on

representations by Agencies concerned that the creation of funds, i.e.,
Special Accounts in the General Fund, Trust Receipts, Revolving Funds, among
others, as well as the use/s thereof are authorized by law.
 Accordingly, the same shall be without prejudice to the eventual
determination by the DBM that the creation of said funds is without legal
basis, or not in full compliance with law/s, rules and regulations.

 The DBM is further authorized to deactivate the fund code previously

assigned and delete the same in the UACS Manual and its Appendices and
such other actions necessary in the proper administration of the funding
source codes.
2. ORGANIZATION CODE

 It is a twelve-digit code to reflect the Department, Agency and Sub-Agency or

Operating Unit/Revenue Collecting Unit
 The Organization Code is structured into three segments: 1.) Department, 2.)
Agency and 3.) Lower Level Operating Unit/Revenue Collecting Unit.
Organization Code
12 Digits
Lower Level Operating
Department Agency
Unit
1st and 2nd digits 3rd to 5th digits
6th to 12th digits

2.A. Department Code

Department – the primary subdivision of the Executive Branch responsible for the
overall management of a sector or a permanent national concern with nationwide
or international impact.
 A department is headed by a Secretary or an official with an equivalent position
level.
 For purposes of the UACS, Constitutional Offices, the Judiciary and the
Legislature are categorized as department-level entities.
 There are also department-level entities that are likewise considered as
operating units, as in the case of the Commission on Audit, Commission on
Human Rights and other similarly situated entities.
 Moreover, a Department includes the summation of all the budgets of all its
attached agencies and sub-agencies, including the Office of the Secretary
(Proper) and lower-level operating units listed under it.
DEPARTMENT UACS
Congress of the Philippines 01
Office of the President (OP) 02
Office of the Vice-President (OVP) 03
Department of Agrarian Reform (DAR) 04
Department of Agriculture (DA) 05
Department of Budget and Management (DBM) 06
Department of Education (DepEd) 07
State Universities and Colleges (SUCs) 08
Department of Energy (DOE) 09
Department of Environment and Natural Resources (DENR) 10
Department of Finance (DOF) 11
Department of Foreign Affairs (DFA) 12
Department of Health (DOH) 13
Department of the Interior and Local Government (DILG) 14
Department of Justice (DOJ) 15
Department of Labor and Employment (DOLE) 16
Department of National Defense (DND) 17
Department of Public Works and Highways (DPWH) 18
Department of Science and Technology (DOST) 19
Department of Social Welfare and Development (DSWD) 20
Department of Tourism (DOT) 21
Department of Trade and Industry (DTI) 22
Department of Transportation and Communications (DOTC) 23
National Economic and Development Authority (NEDA) 24
Presidential Communications Operations Office (PCOO) 25
Other Executive Offices 26
Autonomous Region In Muslim Mindanao (ARMM) 27
Joint Legislative-Executive Councils 28
The Judiciary 29
Civil Service Commission (CSC) 30
Commission on Audit (COA) 31
Commission on Elections (COMELEC) 32
Office of the Ombudsman 33
Commission on Human Rights (CHR) 34
Budgetary Support to Government Corporations 35
Financial Assistance to Metropolitan Manila Development Authority 36

In addition to the regular departments (01-34), the Budgetary Support to

Government Corporations and Financial Assistance to Metropolitan Manila
Development Authority are assigned department codes 35 and 36,
respectively.
The grouping of GOCCs by department shall be mapped in the system.
Fund Category Code - Financial Assistance to Metropolitan Manila
Development Authority existed or established while the UACS is being
developed, therefore, it is an addition to the Fund Category Code table as well
as the recognized departments in the Philippines.
2.B Agency Code

Agency – refers to any of the various units of the government, including an office,
instrumentality or Government-Owned and/or Controlled Corporation (GOCC)
 that may not approximate the size of a Department, but which nevertheless
performs tasks that are equally important and whose area of concern is
nationwide in scope (e.g., Other Executive Offices [OEOs]).
For purposes of the UACS, an AGENCY is an entity under a department
 whose budget is directly released to the latter, and may include the
summation of all budgets of sub-agencies listed under it, if any.
 There are also agency-level entities which are operating units themselves, as is
the case of agencies under Other Executive Offices, e.g., Film Development
Council of the Philippines, Presidential Management Staff and the like.
See Appendix B.1 for the Agency Codes

2.C Operating Unit Classification Code

Operating Units – organizational entities charged with carrying out specific
substantive functions or with directly implementing programs/projects of a
department or agency, such as line bureaus and field units.
For the purposes of the UACS, these are organizational units under a Department
or an Agency which may be:
1. directly receiving budgets from DBM, including SUCs
 2. recipients of fund transfers from higher level OUs, and/or
3. authorized to collect revenues

The first two digits of operating unit codes will be used to indicate the classification
of an operating unit, as follows:

LOWER-LEVEL OPERATING UNITS UACS

Central Office 01
Staff Bureaus 02
Department/Agency Regional Offices/Centers for Health
03
Development/Regional Field Units – DA
State Universities and Colleges – Campuses 04
Provincial Offices – DAR and DENR 05
National Irrigation Administration Regional Offices – DA 06
Extension or Field Offices - CDA-DOF/Penal Colonies – BUCOR 07
Schools Division/District Offices – DEPED 08
Secondary Schools - DEPED/Campuses – PSHS 09
Collection Districts** – BOC 10
Revenue Regional Offices* – BIR 11
Revenue District Offices** – BIR 12
Embassies/Consulates General/Manila and Regional Consular Offices –
13
DFA
Special/Retained Hospitals – DOH 14
Treatment and Rehabilitation Centers – DOH 15
Technical/Vocational Schools – TESDA 16
Key Budgetary Units – DND 17
District Engineering Offices and Sub District Engineering Offices –
18
DPWH
Land Transportation Offices – DOTC 19
Land Transportation Franchising and Regulatory Board – DOTC 20
Regional Development Councils – NEDA 21
Autonomous Region in Muslim Mindanao 22
 * An operating unit as well as a revenue collecting unit (Revenue Regional Offices*
– BIR)
**A revenue collecting unit, not an operating unit (Collection Districts** – BOC and
Revenue District Offices** – BIR)

 The next five digits refer to the assigned code for the individual lower-level
operating units.

See Appendix B for the list of departments, agencies, lower-level operating units and GOCCs and their
respective codes.

Staff Bureau
 a principal subdivision of a department which primarily performs policy,
program development, and advisory functions.

Regional Office (RO)

 an organizational subdivision, headed by a Regional Director, that is
responsible for the performance of an entity’s functions within a region.
 In effect, an RO is a miniature department or agency and is responsible for all
activities in the area under its jurisdiction.

CDA Extension Office

 units established in each of the country’s regions or as may be necessary, as
well as financially viable for implementing integrated and comprehensive
plans and programs on cooperative development.

Schools Division (DepEd)

 a unit established in each province or city with at least 750 public elementary
and secondary school teachers, including Head Teachers and Principals.
 A Schools Division is headed by a School Superintendent.
DepEd Secondary School
 a learning institution that offers a six-year secondary course and is supervised
by either a Teacher-in-Charge, a Head Teacher or a Principal.

Technical Education and Skills Development Authority (TESDA)

Technical/Vocational School
 units that offer non-degree programs at the post-secondary education level
leading to skills proficiency-oriented courses.
 These are usually one-, two-, or three-year certificate courses on technical-
vocational education.
 Each TESDA Technical/Vocational School is headed by a Vocational School
Administrator.

DFA Consular Offices

 units established locally and abroad, and which are responsible for delivering
front-line foreign affairs services, including those related to passports, visas
and the legalization of documents.

Customs Collection Districts (BOC)

 units headed by a District Collector of Customs and are composed of one
Principal Port of Entry.
 A Customs Collection District shall have as many sub-ports as necessary to
maximize revenue collections and prevent smuggling and other forms of
customs fraud.

Revenue Regional Offices (RROs) [BIR]

 units headed by a Regional Director.
 RROs administer and enforce internal revenue laws in a region, including the
assessment and collection of all internal revenue taxes, charges and fees
from taxpayers within the region’s jurisdiction.
Revenue District Offices (RDOs) [BIR]
 RRO implementing units that directly serve taxpayers within its prescribed
area of jurisdiction.

 a health facility for the diagnosis, treatment and care of individuals suffering
from deformity, disease, illness or injury, or those in need of surgical,
obstetric, medical or nursing care.
 A hospital is an institution installed with bassinets or beds for 24-hour use or
longer by patients in the management of deformities, diseases, injuries,
abnormal physical and mental conditions and maternity cases.

Treatment and Rehabilitation Centers (TRCs) of DOH

 centers which undertake the treatment, after-care and follow-up treatment
of drug dependents.
 These centers include institutions, agencies and the like with similar or
related functions.
Teacher’s note: No one should be drug dependent out of depression.

District Engineering Offices (DEOs) [DPWH]

 established in each of the provinces and cities throughout the country, a DEO
may be divided into two (2) or more engineering districts upon the
determination and issuance of an Administrative Order by the Secretary.
 It is responsible for all highways, flood-control and water resource
development systems and other public works within the district
 is headed by a District Engineer.
Key Budgetary Units
 organizational units under the Armed Forces of the Philippines with distinct
and separate budgetary allocations in the GAA.
 These are the AFP Medical Center, Presidential Security Group and
Philippine Military Academy.

RA 9165 – instituting the Comprehensive Dangerous Drugs Act of 2002, repealing

RA 6425 otherwise known as Dangerous Drug Act of 1972, as amended providing
funds therefor and for other purposes dated June 7, 2002 and its implementing
rules and regulation

Business Rules for Organization Code

1. As a general rule, code 01 is assigned to a Lower-Level operating unit classified
as Central Office.
 As an exception, the DOTC-Office of the Secretary (OSEC), which has three
central offices, shall be assigned the following codes: DOTC-OSEC Central
Office – 01, Land Transportation Office - Central Office – 19 and Land
Transportation Franchising and Regulatory Board - Central Office – 20.

2. As a general rule, the last five digits of the Lower-Level Operating Unit Code
refer to the assigned code for the individual operating units without reference
to the Region Code.
 An exception to the rule, however, is made for the Department of
Education (DepEd) Secondary Schools and Division Offices, for which the
first two digits refer to the regional code and the last three digits refer to
the assigned code for the individual secondary school and division office.

3. If an agency has been moved from one department to another or if an

operating unit has been moved from one agency to another, all new coding
numbers that apply shall be used. The old codes shall never be assigned to any
new agency/operating unit so as to preserve the transaction history of each
agency.
 Example: In the event that the National Book Development Board (NBDB) is to be
moved from the DepEd to the DTI, the NBDB will assume department code
220070000000, which is the next available code under DTI. However, the code
070020000000—originally set for the NBDB under DepEd—will no longer be
assigned to any new agency under the department. All information systems
should be able to track all transactions of the old and new NBDB.
DEPARTMENT AGENCY LOWER LEVEL
OPERATING UNIT
FROM: Department of National Book 0000000
Education 07 Development Board 002
TO: Department Trade National Book 0000000
& Industry 22 Development Board 007

 Note: With the implementation of the Rationalization Program, some Agencies

may have to be assigned new codes. Thus, they have to submit a request to the
DBM for the assignment of new codes.
3. Location Code
To facilitate central agency analysis across the National Government, location coding
should first enable the analysis of data by region, and then by province,
municipality/city and barangay. The coding structure here relies upon the codes
used by the National Statistical Coordination Board (NSCB) only.
The structure utilized by the NSCB is illustrated below.

Inter-levels
1st level – Region code
2nd level – Provincial code
3rd level – Municipality/City Code
4th level – Barangay code
Technical Notes From National Statistical Coordination Board –
Structure of the Philippine Standard Geographic Code (PSGC):

Inter-Level Codes

1. Region Code
 This is a two-digit code that identifies a specific region.
 It ranges from 01 to 99.
 Generally, the Region Code corresponds to the region number (e.g.,
Region Code 01 refers to Region 1, 02 refers to Region 2, etc.)

2. Province Code
 This is a two-digit code that identifies the province.
 It ranges from 01 to 99
 generally defining the relative alphabetic sequence of all provinces in the
country, except those created after 1977, which were added to the list
following the updating procedures.

 A Province Code is independent of the Region Code. This means that even if a
province is transferred to another region, its Province Code remains the
same.

3. Municipality Code.
 This is a two-digit code that generally defines the relative alphabetical
sequence of municipalities within the province.
 It ranges from 01 to 99.
 Therefore, Municipality Code 01 is assigned to the first municipality in the
alphabetical sequence within that province.

 The Municipality Code is used to identify the municipalities, cities or

municipal districts in a particular province, and is dependent upon the
Province Code to fully establish the identity of municipality. In the case of the
first regional district (City of Manila) of Metropolitan Manila Area (National
 Capital Region), the fourteen city districts of the City of Manila are treated as
municipalities.

4. Barangay Code
 This is a three-digit code which generally defines the relative alphabetical
sequence of the barangays within the municipality.
 The code ranges from 001 to 999. Barangay Code 010 means it is the 10th
barangay in alphabetical sequence within that municipality.
 The Barangay Code is dependent upon the Municipality Identifier to fully
establish the identity of a given barangay.

5. Municipality Identifier
 The Municipality Identifier is the core of the national standard geographic
classification system.
 This is composed of the Province Code, followed by the Municipality
Code. The Municipality Identifier is a four-digit number that defines the
identity of the municipality.

 Example: Municipality Identifier 7310. The first two-digits (73) is the

Province Code for the province of Zamboanga del Sur. The last two-digits (10)
is the Municipality Code. This means that it is the 10th municipality within the
province of Zamboanga del Sur, which in this instance is Kabasalan. The
Municipality Identifier 7310 would therefore define Kabasalan, Zamboanga
del Sur.

 The continuous addition of newly created barangays as a result of periodic

updating resulted in the discontinuous alphabetical arrangement of
barangays in the latter portion of the list.

 Municipality Code Dependent on Province Code.

 It will be noted from the above illustration that the Municipality Code
only provides for the relative alphabetical sequence of the municipality
within the province (i.e., 1st, 2nd, 3rd).
  By itself, it is not sufficient to define the municipality. However, when the
same is attached to the Province Code, it acquires a unique meaning.
 For the Municipality Identifier 7310, there is only one municipality within
Zamboanga del Sur whose code is 10, and this is the municipality of
Kabasalan.
 Hence, the Municipality Identifier (Province Code and Municipality Code)
defines the unique identity of the Municipality/City.
 City Identifier of a Highly Urbanized City (HUC) or Independent Component
City (ICC) does not mean that the HUC or ICC is administratively under the
province. It merely means that the HUC or the ICC is geographically located
within the boundary of the province.

 Municipality Identifier Independent of Region Code

 As has been pointed out, the Municipality Identifier not only identifies the
municipality but also the province to which it belongs.
 An added feature of the Municipality Identifier is its independence from
the Region Code. Regardless of the region, the Municipality Identifier for
Kabasalan will remain 7310 as long as it is part of Zamboanga del Sur.

6. Barangay Identifier:
 Example: Barangay Identifier 7310001. The first four digits (7310) is the
Municipality Identifier. The last three digits (001) is the Barangay Code, which
refers to the first barangay within the municipality with Municipality Identifier
7310. Barangay Code 001, in this case, refers to Barangay Balongis. Thus,
Barangay Identifier 7310001 means Barangay Balongis in Kabasalan,
Zamboanga del Sur.

 Barangay Code Dependent on Municipality Identifier.

 The Barangay Code only provides for the relative alphabetical sequence of the
barangays in the municipality. Barangay Code 001 means it is the first
barangay in the alphabetical sequence.
 By itself, the Barangay Code is not sufficient to define the identity of the
barangay. However, when the Barangay Code is attached to a Municipality
Identifier, the result is a unique code which fully establishes the identity of
the barangay. In Barangay Identifier 7310001, there is only one barangay in
 the entire Philippines with such a code number: Barangay Balongis in
Kabasalan, Zamboanga del Sur.

 Municipality
 political corporate unit of government which consists of a group of
barangays.
 It serves primarily as a general-purpose government for the coordination
and delivery of basic, regular and direct services and effective governance
of the inhabitants within its territorial jurisdiction

 Barangay
 the basic political unit of government.
 It serves as the primary planning and implementing unit of government
policies, plans, programs, projects and activities in the community, and
also as a forum where the collective views of its constituents may be
expressed, crystallized and considered, and where disputes may be
amicably settled.
• Agency Unique Requirement. The Philippine Standard Geographic Code
establishes standardization for the following: region, province, municipality and
barangay. This however, does not preclude an agency from devising more sub-
categories, particularly for geographic area units designed to carry out specific
operational functions to meet the agency’s unique requirements.
A good example is the unique requirement of the National Statistics Office (NSO) in
fulfilling its statistical surveying functions. In addition to the Region, Province,
Municipality and Barangay codes, the NSO needs additional coding for the
Enumeration District (ED) as well as for its rural and urban classification. This is a
unique requirement by the NSO in monitoring and enhancing its survey operations.
Other agencies may have similar unique requirements.
To effect standardization and, at the same time, be responsive to the unique
operational requirements of an agency, the following guidance was established: o
The whole string of digits representing the Region Code, the Province Code, the
Municipality Code, and the Barangay Code shall remain standardized for all agencies
in the government. The sequence in the code structure must be maintained as
prescribed. o Any other unique code that may be devised by an agency could be
added to the basic standard geographic code, provided the structure of the
standard geographic code is not altered. o The concerned agency should inform the
Code Administrator of the PSGC of any unique code application.
Location Coding

Business Rules - Location coding

1. For all transactions, the region code at the very least will be recorded.
2. For secondary schools, the region and province code, at the very least, will be
recorded. A separate reference table will be included in the information system
to show the region and division for each secondary school, which must be
updated whenever a new secondary school is recorded in the system.

a. Region Code
Region
 It is a sub-national administrative unit composed off several provinces having
more or less homogenous characteristics, such as ethnic origin of inhabitants,
dialect spoken, agricultural produce, etc.
b. Province Code
Province is a political corporate unit of government which consists of a cluster of
municipalities, or municipalities and component cities. A province serves as a
dynamic mechanism for developmental processes and effective governance of local
government units within its territorial jurisdiction.
Province code is a two-digit code (3 and 4") that identifies the province. It ranges
from 01 to 99 and generally defining the relative alphabetic sequence of all
provinces in the Philippines, except those created after 1977, which are added to
the list following the updating procedures.
For example
 Cordillera Administrative Region
4. Major Final Output (MFO)/Program, Activity, Project (PAP)
Code

Code Segments (heads up to know more about MFO/PAP)

 MFO/PAP is somewhat combined already
The first Code Segment shall indicate Program (General Administration and Support
[GAS], Support to Operations [STO], and Operations [O]), Project Type (Locally
Funded or Foreign Assisted) and Purpose in the case of Special Purpose Funds.
For Programs, the second segment of two digits shall be used for the first level of
activities under GAS and STO and Major Final Outputs (MFOs) under Operations.
The third segment is composed of six digits, the first two digits of which shall refer
to the second level of activities for GAS and STO. Meanwhile, under Operations, the
next level of two digits shall refer to the first level of activities under an MFO. The
last four digits shall refer to the last level of activities (third level of activities under
GAS and STO, and second level for those under Operations/MFOs).
For Projects, the second segment of two digits shall be used for Project Category,
the next two digits for the Projects Sub-Category and the remaining four digits shall
indicate the name of the project or the project title.
In the case of Special Purpose Funds, the next segment refers to three levels of
activities:
3. Main activity – 2 digits
4. Sub-activity – 2 digits
5. Last level of activities – 4 digits

Major Final Output

 An MFO is defined as a good or service that a department or agency is
mandated to deliver to external clients through the implementation of
programs, activities and projects.
 MFOs should be within the department or agency’s control and be
measurable, manageable and auditable.
 Examples of MFOs include:
a) regulatory services
b) health services
c) education services
d) Agricultural support services.

Program, Activity and Project

 does not have only one definition but actually separate definition (self-
explanatory)
Program
 A program is an integrated group of activities that contributes to an agency
or department’s continuing objective.

 Examples include: (GAS, STO an O)

a) General Administration and Support,
b) Support to Operations, and
c) Operations.

Activity
 An activity is defined as a work process that contributes to the fulfillment of
a program or project.
 Each activity shall be attributed to only one MFO.
 Activities are to be assigned to General Administration and Support, or
Support to Operations if they benefit internal clients.
 On the other hand, an activity that benefits external clients shall be
attributed to an MFO.
 internal – GAS or STO
 external – MFO
 that is why they are being combined to one key element line

Projects
 Projects are special department/agency undertakings carried out within a
definite timeframe, and which are designed to produce a pre-determined
measure of goods or services (MFOs).
 A project is considered an investment toward expanding the capacity of a
department/agency to deliver MFOs.

Business Rules - Major Final Output (MFO), Program and

Activity
1. The first program is General Administration and Support (GAS), which
consists of activities involving the provision of overall administrative
management support to the entire agency operation.
  This includes general management and supervision, legislative liaison
services, human resource development and financial and
administrative services, among other related services.
 Funds provided for GAS are management overhead expenses and are
therefore indirect costs of delivering MFOs.
2. The second program is Support to Operations (STO), which consists of
activities that provide technical and substantive support to the operations
and projects of the department/agency.
 These include planning and policy formulation, program monitoring
and evaluation, public information programs, research and
development, statistical services and information systems
development, among other related functions.
 The types of services included under STO are common across agencies,
and are considered indirect costs of delivering MFOs.
 Some agencies, however, do not have a program for STO.

3. The third program is Operations, which consists of activities directed at

fulfilling the department and agency mandate.

4. There should be no activity stated similarly as the programs (GAS, STO) and
MFOs under Operations.

5. Any reference to location (such as Region or Division) or implementing unit

(such as schools) must not appear in the descriptions for PAP codes, as they
do not comply with the definitions in the OPIF Reference Guide for MFOs,
programs, activities and projects. Coding for Regional Offices or Department
of Education’s Division Offices and Secondary Schools is managed under the
operating unit segment of organization coding.

6. For presentation purposes in the NEP/GAA, projects and SPFs shall not be
attributed to a particular MFO.
 SPFs refers to Special Purpose funds – that means that projects and SPFs
shall not be attributed to a particular MFO
 Integrated rules from 1-5 shall only affect Major Final Output and
Program and Activity – projects are a separate matter
Sector/Horizontal Outcomes
 In order to provide the ability to track budgets to the sector outcomes, a 3-
digit code for the Sector Outcomes was added as a prefix of the MFO/PAP
Codes, as shown below:
Sector Values
Code Descriptions Type
Values
100 General Public Service Sector
120 Defense Sector
140 Public Order and Safety Sector
160 Economic Affairs Sector
180 Environmental Protection Sector
200 Housing and Community Amenities Sector
220 Health Sector
240 Recreation, Culture and Religion Sector
260 Education Sector
280 Social Protection Sector

Sub-sector Values

 The Sector Code shall not be utilized; these are intended as headings.
  Only the Sub-Sector Code shall be utilized.
 All MFO/PAPs are required to have Sub-Sector Outcome Code Value.
 (Note: The Sub-Sector Values is a long list; thus, to obtain the appropriate code
for the remaining sub-sectors, please access the UACS Appendices at DBM
website.)
Horizontal Outcomes
To provide the tagging of the horizontal outcomes, another 2-digit code was added,
for Horizontal Outcomes, next to Sector Outcomes, as shown below:
Code Values Descriptions
01 Disaster Related
02 Climate Change — Mitigation
03 Climate Change — Adaptation
 The horizontal Outcome shall only be utilized for applicable Program, Activity,
or Project (P/A/P).
 If the P/A/P is not applicable to any Horizontal Outcome, the code valueis 00.
Teacher’s Experience: The teacher is disappointed and upset because her recording
was not saved or processed at all. She tried FOUR TIMES just to record a certain
portion of her presentation but unfortunately, she could not find the ultimate cause
as to why it was not saved at all. It consumed 2 HOURS of her time and all her
efforts were gone to waste. She did know if there has been a traffic jam in the
application she is using or if the use of the app is not supported by strong internet
connection. This is actually the 5th TIME recording a certain portion of her
presentation. Painstakingly, she has given up to her dismay and indeed she was
really depressed because that time was too precious for us to finish one chapter. As
much as she wants to discuss the provinces and their respective UACS codes under
location coding in detail, her circumstances have forbidden her in doing so.
Nevertheless, to solve this fiasco, she now relay the responsibility for us to go over
all those portions in order for us to be familiarized about it. She is sharing this to us
to break the monotony of our subject’s technicality. As depressing as it may be, she
will now sing “Paubaya” ni Moira, thus, we need to move on with our discussion
Chapter 3 RCA

Revised Chart of Accounts

Quote that is real in this world filled with ugly truth and harsh realities:
”Any fact facing us is not as important as our attitude towards it, which determine
our success or failure.”
 to have an idea as to how to cope up with such setbacks
The Commission on Audit as member of the International Organization of Supreme
Audit Institutions (INTOSAI) is encouraged to adopt relevant International
Accounting Standards.
The International Public Sector Accounting Standards Board (IPSASB) of the
International Federation of Accountants which promulgates the International Public
Sector Accounting Standards (IPSAS), acknowledges the right of governments and
national standard-setters to establish their respective accounting standards and
guidelines for financial reporting in their jurisdictions.
And to provide new accounts for the adoption for the Philippine Public Sector
Accounting Standards (PPSAS) which were harmonized with the IPSAS to enhance
the accountability and transparency of the financial reports, and ensure
compatibility of financial information, the COA recognizes the need to revise the
existing NGAS Chart of Accounts prescribed in COA Cir. No. 2004-008 dated
September 20, 2004.

Basis
AS per GAM Volume III, the Chart of Accounts as Object Code in the UACS is based
primarily on the following rules and regulations:
 Adoption of Revised Chart of Accounts (RCA) for NGAS by COA Circular No.
2013-002 dated January 30, 2013 ( adoption effective on January 1 2014)
 Adoption of 25 Philippine Public Sector Accounting Standards (PPSAS) byCOA
Resolution No. 2014-003 dated January 24, 2014
  Implementing rules and guidelines on the Conversion from the Philippine
Government Chart of Accounts under the New Government Accounting
System prescribed through COA Circular No. 2004-008 dated September 20,
2004, as amended, to the RCA for NGAs
 Commission On Audit (COA) Department of Budget and Management (DBM)
Department Of Finance (DOF) Joint Circular No. 2013-1 dated August 6, 2013
prescribing the UACS, as amended/updated;
 COA-DBM-DOF Joint Circular No. 2014-1 dated November 7, 2014 providing
the enhancement of UACS prescribed under COA-DBM-DOF Joint Circular No.
2013-1
 f. COA Circular No. 2015-007 dated October 22, 2015 prescribing the
Government Accounting Manual (GAM) for NGAs; and
 g. COA Resolution No. 2017-006 dated April 26, 2017 prescribing the
adoption of additional six (6) PPSAS and updates on the PPSAS prescribed
through COA Resolution No. 2014-003 dated January 24, 2014 in accordance
with the 2016 Edition of the Handbook of International Public Sector
Accounting Pronouncements (HIPSAP) published by the International
Federation of Accountants (IFAC).
Revisions
During the initial implementation of the PPSAS and the UACS and during the
finalization GAM for NGAs, the need to provide additional accounts for some
financial transactions and to modify some existing account titles, codes and
descriptions emerged. These revisions will enable the agencies to properly
recognize and present their financial transactions. This Chart of Accounts as Object
Code in the UACS, Volume III of the GAM for NGAS includes additional and modified
accounts.

Elements of Financial Statements

Elements of financial statements of government agencies recognized under accrual
accounting are those elements that relate to the status or measurement of financial
position and measurement of performance of government agencies, which are
relevant to decisions that would require the commitment of resources.
Those elements directly related to the measurement of financial position as shown
in the Balance Sheet are assets, liabilities and equity.
The elements directly related to the measurement of financial performance are
shown in the Statement of Income and Expenses as revenue/income and expenses.
The codes, per COA Cir. No. 2013-002 dated January 30 2014 and definitions of the
different elements are as follows
Financial Statements
The complete set of financial statements shall comprise atleast a
1. statement of financial position or balance sheet
2. income statement or statement of financial performance
3. statement of cash flows
4. statement of changes in equity

 The image shows the importance of every financial statement in the decision-
making of statement users. Just like how a one missing piece will solve the
complexity of puzzle, the statement of financial position contains information
about the assets, liabilities and equity of the entity, the statement of financial
performance contains information regarding the revenue and expenses of an
entity, the statement of changes in net assets or equity shows the movement of
capital, the statement of cash flows identify the sources and uses of cash and
separate additional statements for comparisons of budgets and actual amounts.

Statement of Financial Performance

The statement of financial performance contains items of income and expenses

Income
 refers to the gross inflow of economic benefits or service potential during the
reporting period, when those inflows result in an increase in net
assets/equity, other than increases relating to contributions from owners. The
term “income” is broader than revenue and includes gains in addition to
revenue.

Expenses
 refer to decrease in economic benefits or service potential during the
reporting period in the form of outflows or consumption of assets or
incurrence of liabilities that result in decrease in net assets/equity, other than
those relating to distributions to owners.
Teacher’s note 1:
Deviating from its accounting definition, income is the fruit of all your collective
efforts in studying hard in choosing to read your accounting books before anything
else and prioritizing your accounting course before your PUBG, DOTA, Mobile
Legends, Among Us, Valorant or even to your boyfriend or girlfriend.
 “Syempre joke lang. Kapag may boyfriend or girlfriend, prioritize niyo pa rin sila
but to a point na mapapabayaan na studies.”
Expenses, though they decreases profit, but are indeed necessary to incur in order
to gain income. No business would ever generate profit if it would not even incur 1
peso in its business.
 For example, in choosing Accountancy as your course, you will not be able to
pass your subjects and eventually graduate if you did not enroll in the
program, and you do not want to have your own resources such as accounting
books.
Teacher’s note 2:
Kaunting patalastas
 Actually I am not really used to explaining our topics and lessos in Tagalog so
sorry if mejo bulol kapag nagtatagalog na ako.

Account Codes and its Structure

Teachers Note 3 (Friendly Reminder)
“Hustle in silence and let your success make the noise”
COA Cir. No. 2013-002 further provides that the account code structure consists of
eight (8) mandatory digits as follows
1. Account Group
2. Major Account Group
3. Sub-Major Account Group
4. General Ledger Accounts
5. General Ledger Contra-Accounts

Codes are assigned to account groups to facilitate location of accounts in the

general and subsidiary ledgers, provide systematic arrangement and
classification of accounts, and facilitate preparation of consolidated financial
statements/reports

Account Group
Account Group represents the accounts classification as to assets, liabilities, equity,
revenue/income, and expenses, as follows:
Code Account Group
1 Assets 2 Liabilities 3 Equity 4 Revenue/Income 5 Expenses

Major Account Group

Major Account Group represents the classification within an account group,
 e.g. for asset major accounts: cash and cash equivalents, investments,
receivables, inventories, investment property, etc.
 In simplest terms, Major Account Group consists of line items presented on
the face of financial statement.

Sub-Major Account Group

Sub-Major Account Group represents the classification within the major account
group,
 e.g. for cash and cash equivalents: Cash on Hand, Cash in Bank-Local Currency,
Cash in Bank-Foreign Currency, etc.
 It simply consists of items composing or consisting of a single line item
presented on the face of financial statement. Commonly, these items are
presented on the notes to financial statements to show supporting
computations on the amount presented for that specific line item (CCE in our
example).

General Ledger (GL) account

General Ledger (GL) account represents the account to be presented in the detailed
financial statements, e.g. Cash-Collecting Officers, Petty Cash, etc.
This is composed of two (2) segments.
General Ledger Accounts
 The first two digits from left is the GL account code.
General Ledger Contra Accounts
 the last digit is reserved to indicate whether it is a contra account
 Represents account like Allowance for Impairment, Accumulated
Depreciation, etc.

UACS Sub-Object Code

UACS Sub-Object Code represents disaggregation of selected assets, liabilities,
revenue/income, and expenses
To distinguish the coding of assets without or with contra accounts, the following
shall be observed:

Asset without Contra Account

Asset with Contra Account

Asset code number is represented by number 1 so it follows the order in the ledger
such as what is listed first or in a trial balance, for example, assets are always listed
first before any element of financial statement

Comparison with or without (check illus in the books)

Accounts Receivable has different set of codes depending on what contra asset
account we are talking about. Apparently, you can see that Accounts Receivable has
a code number represented by 011 while for the contra account, example Accounts
Receivable, it has a code number here which is 010/
Take note that the Allowance for Impairment- Accounts Receivable has no
corresponding digit or code number indicated. We can identify it by simply looking
at the code number specified or designated to Accounts Receivable
General Ledger Accounts is composed of two (2) segments. The first two digits from
left which is 01 is the General Ledger account code and the last digit is reserved to
indicate whether it is a contra account like Allowance for Impairment. Thus,
Allowance for Impairment- Accounts Receivable is already represented in this code
number 011.

Major Changes
There are accounts that are newly introduced in the chart. There are those that are
either compressed into one account or eliminated. (Take note of major changes in
the RCA)
Chapter 4 budgetary

Accounting for Budgetary Accounts

Set of procedures pertaining to manner of creation of National Budget in the
previous period (covering the 8th slide until 10th slide.
Take note of old rules enveloping the budget process before knowing the updated
provisions. By doing so you will somehow fully understand a particular topic by
connecting the dots

Forms and contents of the national budget

 Remember that this is only applicable to the previous period so this is not the
updated provision but we are to simply tackle this for purposes of additional
lecture discussions.
Section 22, Article VII of the Constitution of the Philippines provides that “The
President of the Philippines shall submit to the Congress within 30 days from the
opening of every regular session as the basis of the general appropriation bill, a
budget of expenditures and sources of financing including receipts from existing and
proposed revenue measures. The heads of the departments may, upon their own
initiative with the consent of the President or upon the request of either house as
the rules of each house shall provide, appear before and be heard by such house on
any matter pertaining to their departments.”

 I hope you know the branches of the government as well as its sub-branches

 Written questions shall be submitted to the President of the Senate or the

Speaker of the House or Representatives at least three (3) days before their
scheduled appearance
 Interpellations shall not be limited to written questions but may cover matters
related thereto.
 When the security of the state or the public interest requires and the president
so states in writing, the appearance shall be conducted in executive session

The budget is presented to the Congress

1. A budget message setting forth in brief the government's budgetary thrust for
the budget year, including their impact on development goals, monetary and
fiscal objectives and generally on the implications of the revenue, expenditure
and debt proposals
2. Summary financial statements setting forth
a. Estimated expenditures and proposed appropriations
 b. Estimated receipts during the ensuing fiscal year
c. Actual appropriations expenditures and receipts and actual or proposed
appropriations during the fiscal year in progress
d. Estimated receipts and expenditures and actual or proposed appropriations
during the fiscal year
e. Statements of the condition of the National Treasury at the end of the last
completed year, estimated condition of the Treasury at the end of fiscal year
in progress, and estimated condition at the end of ensuing fiscal year

Thus, in preparation of the proposed national budget for fiscal year 2014, the DBM
pushed for the adoption of a new approach to budgeting:

Through National Budget Memorandum (NBM) 117, the DBM introduced

Performance-Informed Budgeting (PIB) which required government agencies to
strengthen the link between planning and budgeting and to simplify the
presentation of the budget.
With the adoption of the PIB as a budgeting scheme, the government is changing
the phase of the budget. Previously, a mass of numbers and line items without a
clear story on where funds are going, the National Expenditure Plan and the General
Appropriations Act beginning and the Fiscal Year 2014 will show the link between
the funds allocated for the government programs and the projected results and
outcomes of this

Therefore, the new phase of the budget represents the continuing shift away from
the dominance of patronage politics and clientelistic relationships towards a more
responsive transparent and accountable public expenditure management system

Performance-Informed Budgeting (PIB)

It is a budgeting approach that uses performance information to assist in deciding
where the funds will go. Performance information, both financial and non-financial
information, is presented in the appropriations document which provides the
context for the Programs, Activities and Projects or simply PAPs pursued by the
different agencies of the government, it typically includes the following:
a. The purpose of the funds required
b. The outputs that would be produced or the services that would be rendered
c. The outcomes that would be achieved by the outputs and or services
d. The cost of programs and activities proposed to achieve the objectives
 Take note of the definition of PIB which states that it is a budgeting approach
that uses performance information to assist in the decision-making of where the
funds will eventually go
 Performance information can be used as a signaling device. Low performance or
a decline and performance can serve as an alarm to consider a closer look in
determining the cause
 According to the Organization For Economic Cooperation And Development
(OECD), the most common response to low performance is holding constant the
level of future funding and/or subjecting future allocations conditional to
improve IN conditions related to performance
 As mentioned earlier this new approach to budgeting introduced by the DBM
through the 2013 National Budget Memorandum No. 117 requires the
government agencies to strengthen the link between planning and budgeting
and to simplify the presentation of the budget
 This budgeting approach differs from the traditional line item-based budgeting in
a way that it focuses more on outputs and outcomes and places less emphasis
on the inputs. That is what we call outcome base. It links funding to results and
provides a framework for more informed resource allocation and management.
 This new phase of the national budget will no longer contain an excessively
detailed line item document but a budget that presents performance
information aligned to planned resources that promises to be understandable
and accessible to the people because of its simplicity
 Accordingly, the new General Appropriation Act (GAA) will present non-financial
performance information together with the allocated resources for the different
programs, activities and projects which were used by the DBM to evaluate
department and agency proposals during the budget preparation process
 Instead of being immediately confronted with line-item after line-item, PAPs will
be grouped according to the Major Final Output (MFOs) that department or
agents seek to achieve
 Under UACS, in this way the budget that goes into a particular PAP is linked
directly to the output it intends to achieve.
 In other words, Performance-Informed Budgeting is an integral process whereby
agency performance information, for example, Major Final Output and their
corresponding performance indicators under the Organizational Performance
Indicator Framework (OPIF) is presented hand in hand with the agency budget to
ensure that the outputs and outcomes and agencies committing to deliver in
exchange for its budget are clear to the public and the legislators.
Balanced Budget
While, balanced budget on the other hand, is a budget where proposed
expenditures are equal 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 so it is intended to balance
out revenues and expenditures

Section 29 (1), Article VII of the 1987 Constitution

Section 29 (1), Article VII of the 1987 Constitution provides “No money shall be paid
out of the Treasury except in pursuance of an appropriation by law.”
 The afore-cited lays down the legal bedrock for government accounting,
particularly for budgetary accounts
 It simply means that no public fund may be spent if there is no law
authorizing the payment of money and specifying the purpose for which this
same will be spent

Context of an appropriation made by law

An appropriation made by law under the contemplation of Section 29 (1), Article VII
exists when a provision of law sets apart at the determinate or determinable
amount of money and second allocates the same for a particular public purpose

Remember this 2
1. The provision of law sets apart a determinate or determinable amount of
2. The amount determined shall be allocated for a particular public purpose

This two minimum designations of amount and purpose stem from the very
definition of the word appropriation, which means to allot, assign, set apart or
apply to a particular use or purpose
 Hence, if written into the law, it demonstrates that the legislative intent to
appropriate exist

As the constitution does not provide or prescribe any particular form of words or
religious recitals in which an authorization or appropriation by congress shall be
made except that it be made by law
 An appropriation law – according to Philconsa – be "detailed and as broad as
Congress wants it to be" for as long as the intent to appropriate may be
gleaned from the same. As held in the case of Guingona, Jr.
 There is no provision in our Constitution that provides or prescribes any
particular form of words or religious recitals in which an authorization or
 appropriation by Congress shall be made, except that it be “made by law,”
such as precisely the authorization or appropriation under the questioned
presidential decrees.
 In other words, in terms of time horizons, an appropriation may be made
impliedly (as by past but subsisting legislations) as well as expressly for the
current fiscal year (as by enactment of laws by the present Congress), just as
said appropriation may be made in general as well as in specific terms.
 The Congressional authorization may be embodied in annual laws, such as a
general appropriations act or in special provisions of laws of general or special
application which appropriate public funds for specific public purposes, such
as the questioned decrees.
 An appropriation measure is sufficient if the legislative intention clearly and
certainly appears from the language employed (In re Continuing
Appropriations, 32 P. 272), whether in the past or in the present.
Likewise, as ruled by the US Supreme Court in State of Nevada v. La Grave:
 To constitute an appropriation, there must be money placed in a fund
applicable to the designated purpose. The word appropriate means to allot,
assign, set apart or apply to a particular use or purpose.
 An appropriation in the sense of the constitution means the setting apart a
portion of the public funds for a public purpose. No particular form of words
is necessary for the purpose, if the intention to appropriate is plainly
manifested.

 Thus, based on the foregoing, the Court cannot sustain the argument that the
appropriation must be the "primary and specific" purpose of the law in order
for a valid appropriation law to exist. To reiterate, if a legal provision
designates a determinate or determinable amount of money and allocates
the same for a particular public purpose, then the legislative intent to
appropriate becomes apparent and, hence, already sufficient to satisfy the
requirement of an "appropriation made by law" under contemplation of the
Constitution.

Appropriation and allotment are usually used interchangeably so here is something

that will clarify your notion regarding appropriation and allotments
 An appropriation in the sense of the constitution means setting apart a
portion of the public funds for a public purpose. No particular form of words
is necessary for the purpose if the intention to appropriate is plainly
manifested
  Thus, based on the foregoing, the Court cannot sustain the argument that the
appropriation must be the "primary and specific" purpose of the law in order
for a valid appropriation law to exist.
 To reiterate, if a legal provision designates a determinate or determinable
amount of money and allocates the same for a particular public purpose, then
the legislative intent to appropriate becomes apparent and, hence, already
sufficient to satisfy the requirement of an "appropriation made by law" under
contemplation of the Constitution.

Since we are already discussing the 1987 constitution particularly on Section 29 (1),
Article VII of the 1987 Constitution, we will simply go over on the two subsections
regarding how government money should be managed and for what specific
purpose it is being used

Section 29 (2)
No public money or property shall be appropriated, applied, paid, or employed,
directly or indirectly, for the use, benefit, or support of any sect, church,
denomination, sectarian institution, or system of religion, or of any priest, preacher,
minister, or other religious teacher, or dignitary as such, except when such priest,
preacher, minister, or dignitary is assigned to the armed forces, or to any penal
institution, or government orphanage or leprosarium.

Section 29 (3)
All money collected on any tax levied for a special purpose shall be treated as a
special fund and paid out for such purpose only. If the purpose for which a special
fund was created has been fulfilled or abandoned, the balance, if any, shall be
transferred to the general funds of the Government.

General Appropriations Act (GAA)

 Accordingly, it may be said that accounting for budgetary accounts formally
commences upon enactment of the General Appropriations Act (GAA) which
contains legal authorization to use public money for the various programs,
projects and activities of the national government
 The General Appropriations Act (GAA) is one of the most important
legislations that Congress annually passes. It defines the annual expenditure
program of the national government and all of its instrumentalities.
 The approved appropriations are in turn, the bases of Department Of Budget
and Management for issuing allotments or the authority of government
 agencies to incur obligations or to enter into commitments to spend
government funds the level of allotments on the other hand defines the
amount of cash allocations which shall be released by the Department of
Budget and Management (DBM).
 In simplest terms the GAA serves as the legal basis of the DBM for issuing
allotments or authority to government agencies to spend government funds.

General Accounting Plan (GAP)

 The General Accounting Plan shows the overall accounting system of a
government agency or unit
 It includes source documents, the flow of transactions and its accumulation in
the books of accounts and finally the conversion into financial information or
data presented in the financial reports
 The following accounting systems are:
o budgetary accounts system
o receipt or income and deposit system
o disbursement system
o financial reporting system

And this video presentations focus will be on budgetary accounts system which
includes appropriations allotments and cash allocations.
These are the three things that mainly constitute the budgetary accounts.
The accounting of which will be discussed in detail through this video presentation.

1. The budgetary accounts system encompasses:

o the processes of preparing the agency budget matrix or ABM,
o monitoring and recording of allotments received by the agency from
the department of budget and management,
o releasing of sub-allotment advices commonly known as SAAS to
regional offices abbreviated as RO by the central office abbreviated as
CO,
o issuance of SAAS and LAAS to operating units abbreviated as OUS by
the regional office and
o recording and monitoring of obligations
So observe that DBM usually has the main rule when it comes to budgetary
accounts system
This is so because DBM is in charge with the release of upper patients allotments
and authority to incur obligations to government agencies or units.

2. Receipt/Income and Deposit system

 This system covers the processes of acknowledging and reporting income or
collections deposits of collections with Authorized Government Depository Bank or
AJDB or through the AJDB for the account of treasurer of the Philippines and
recording of collections and deposits in the books of accounts of the agency.
COLLECTING OFFICERS
o All collecting officers shall deposit intact all their collections as well as
collections turned over to them by sub collectors or tellers with their
AJDB daily or not later than the next banking day.
o They shall record all deposits made in the cash receipts record at the
end of each business day.
o The collecting officers shall accomplish the report of collections and
deposits or RCD.

3. Disbursement System
Disbursements constitute all cash paid out during a given period either in
currency, cash or by cheque. It may also mean settlement of government payables
or obligations by cash or by check. It shall be covered by disbursement voucher
abbreviated as DV or petty cash voucher abbreviated as PCV or payroll.
The disbursement system involves:
 The preparation and processing of disbursement voucher
 preparation and issuance of check
 payment by cash
 granting utilization and
 liquidation or replenishment of cash advances

4. Financial Reporting System

Generally there are eight steps In accounting cycle analyzing the transactions this
is the compressed version so do not be misled when it comes to the 10 steps or
what you have learned in your basic financial accounting and reporting or before.
1. analyzing the transactions
2. journalizing the transactions
3. posting the journal entries
4. preparation of the trial balance
5. adjusting the accounts
6. closing the accounts
7. preparation of the financial statements and
8. reversing the accounts
Under the new government accounting system, financial reporting includes
the preparation and submission of trial balances, financial statements and other
reports needed by fiscal and regulatory agencies.
Fundamental Principles of Fiscal Operations
Budget activities are governed by legal provisions or fundamental principles relating
to financial transactions and operations of the government. The principles, as
provided for by the law are:
1. No money shall be paid out of the public treasury or depository except in
pursuance of an appropriation law or the specific statutory authority
 So this is almost similar with Section 29 Article 6 Paragraph 1 of the
1987 Constitution, however it is stated in a more detailed manner. So
simply put, no money shall come out of the government fund if it is not
intended for public purpose and it is not just enough that it is intended
for the public but it must be legally authorized at the same time.
Meaning there should have been a legal basis for the issue ones of
funds out of the public treasury or depository.
2. Government funds shall be spent or used solely for public purposes
 The only purpose why the fund is created and established is for the
public so it must have the sole purpose only and not for any individual
preference or interest.
3. Trust funds shall be available and may be spent only for a specific purpose for
which the trust was created
 Simply put again a trust fund is made available for specific purpose and
is usually restricted for that purpose only. So it has no other purposes
unless it is made use only for purpose in which it was created. So the
point of emancipation of trust funds is the point of its end also
4. Fiscal responsibility shall, to the great extent, be shared by all those exercising
authority over financial affairs transactions and operations of government
agency
 A new concept of fiscal responsibility needs to be embraced. One in
which full employment and equitable distribution in the economy our
primary goals of fiscal policy. All those granted with exercising authority
shall have an agreed set of policies, processes or arrangements
intended to improve fiscal outcomes, discipline, transparency and
accountability by requiring governments to commit to monitoring fiscal
policy objectives and strategies.
5. Disbursements or dispositions of government funds and property shall
invariably bear the approval of proper officials
 So this simply means that any amount to be disbursed out of the
government fund must be approved by authorized officials.
6. Claims against government funds shall be supported with complete
documentation
 This simply means that a claim towards something will never be
honored without concrete proof or evidence.
 7. All laws and regulations applicable to financial transactions shall be faithfully
adhered to
 Government fund is indeed a critical issue for it requires not just an
adherence but a faithful one. No money shall flow out of the
government without true observance of the law and regulations
attaching to the financial transactions. So it must be duly observed all
laws and regulations applicable to financial transactions shall be duly
observed and faithfully adhered to.
And last but not the least fundamental principle of fiscal operation which is
applicable to commerce accounting also which is GAAP:
8. Generally accepted principles and practices of accounting as well as, of sound
management and fiscal administration shall be observed, provided they do
not contravene with existing laws and regulations.
 GAAP of accounting is also considered in application as long as this are
not in conflict with the existing laws and regulations however we can
derive here a different acronym which is GAPP in government
accounting which stands for Generally Accepted Principles and
Practices. So if you can recall in your basic accounting we have GAAP
which stands for Generally Accepted Accounting Principles while as for
government accounting we have Generally Accepted Principles and
Practices. Apparently sound management and fiscal administration are
not only based on generally accepted principles of accounting but also
of practices in accounting. So the fundamental principle of fiscal
operations consider GAPP of accounting.

The National Budget

Which is commonly known as the Government Budget, is a plan of financing
the government activities for a fiscal year prepared or submitted by responsible
executive to a representative body. It is a definite proposal of estimate or statement
of receipts and expenditures that may be approved or rejected. It should present
not only of the general character, purpose and amount of government expenditures,
but also detailed data regarding the costs entailed in maintaining particular units of
organization and also in performing particular units of organization and in
performing particular activities. In other words, it is the financial blueprint of a
country's development plan.
Cognizant of its vital role in national development, the Department of Budget
and Management has sought to ensure that public resources are managed more
efficiently and with the greatest degree of discipline. It is not only crucial to channel
resources on programs that accelerate economic growth, but more importantly, to
redirect funds to programs that would be responsive to the needs of the people
especially those in regions beset by poverty. “Mga proyekto ng gobyerno na hindi
nararamdaman ng mga taong mahihirap.” So even if it's really beneficial, the
progress or success of such project is hardly felt or realized by those people who are
experiencing or who are at the lowest of lows
Thus its summative gist is that it is simply the financial blueprint of the
country's development plan. So everything that is contained in this national budget
is intended to give or provide benefits to help the people and its community.
INTRODUCTION
In dealing with our daily lives, we normally devise a budget plan based on our
means. It is undeniable that we allot more of our money mainly on food and then
again food, however kidding aside, we allot more of our money on the basic
necessities. Aside from food, we have shelter and clothing and other basic
necessities we need in our daily lives. Hence making a budget is somewhat a very
strategic way of handling finances so it is somewhat a tool of finance or wise or
good financing. Creating a budget plan is somewhat very strategic tool or technique
in handling finances so in such a way that the money will be used efficiently and at
the same time, it is being spent in a way that it would suffice the purpose on which
it is being established.
It is a practice of some or several people that they allot a certain portion of
their money in order to acquire a definite something. so just like for example, they
provide or they simply would allot 10 000 pesos for their clothing allowance or
some since they are kpop fanatics or they are so into Korean dramas and they want
to meet their idols or some Korean actors and actresses they would allot 50 000
pesos just to travel to Korea, China or Thailand in order to meet their idol
On a personal note however, I actually do not like to share this to you but for
purposes of discussion, I would simply share that I have established accounts, a
bank account at BPI, LBP or Land Bank of the Philippines, BDO and also at China
Bank. So my colleagues are actually saying that I am somewhat collecting bank
accounts. So the reason for doing so is that I would like to simply set
or try managing my bank accounts at different banks or financial institutions
because I would like to also study their interest charges, the movement of the
interest and in case if I have enough money, I would like to really invest but actually I
haven't tried investing yet. The reason is I do not have enough knowledge yet and
time to monitor my investment because I know that entering into investments is
very risky but I am encouraging you to invest when you have enough money or you
have idle cash or excess cash that are not being used in a proper way. So in a proper
way in a sense that, it is only being stocked or being kept at your own place. I find it
very effective when it comes to saving because if you have many different bank
accounts and you are not only relying on one bank account, you are somewhat
fooling yourself that you only have a very little amount of savings. So that is one
strategic way in order to save because you are convincing yourself that you do not
have enough savings yet because you are looking at a portion only. At the end of the
year that is only the time in which I would add up all the amounts in order to really
find out the ending balance of my savings. So that is my very purpose or the reason
why I enter or I have created many bank accounts.
This personal technique I think is very commendable for those who want to
achieve their temporary and long-term goals. So just imagine having many different
or separate piggy banks wherein you would drop your money in a piggy bank and
that piggy bank is intended for your temporary goal while the other is for your long-
term goals. So your temporary goals may be clothing food or travel. Song-term goal
would be your building your home or house acquiring car and many other personal
goals that you have.

Kinds Of Budget
So setting aside those personal notes or sharings, let us now discuss the kinds
of budget that we have when it comes to accounting for the government and mainly
this topic's focus is on accounting for budgetary accounts.
The kinds of budget is classified or categorized into three we have:
1. As to nature
2. As to bases and
3. As to approach and technique
So these are the three categories of budget or kinds of budget.

I. As to nature

1. Annual Budget
 It is a budget which covers a period of one year and it is the basis of an
annual appropriation. So as the term implies it covers a period of one
year so annual equates to one year or a period of 12 months.
2. Supplemental Budget
 It is a budget which supplements or adjusts a previous budget which
has deemed inadequate for the purpose it is intended. It is the basis for
a supplemental appropriation. So, again as the term implies, it simply
is a budget that supplements or intends to adjust a previous budget.
3. Special Budget
 It is a budget of special nature and generally submitted in special forms
on account that itemizations are not adequately provided in the
Appropriation Act or that the amounts are not at all included in the
Appropriation Act

II. As to basis
1. Performance Budget
 It is a budget emphasizing the programs or services conducted and
based on functions, activities and projects which focus attention upon
the general character and nature of work to be done or, upon the
services to be rendered.
 2. Line-Item Budget
 It is a budget of basis of which is the objects of expenditures such as
salaries and wages, traveling expenses freight supplies and materials
equipment and others.

III. As to approach and technique

1. Zero-Based Budgeting
 It is a process which requires systematic consideration of all programs,
projects and activities or simply PAPS with the use of defined ranking
procedures. In this approach, activities are analyzed and presented in
“decision packages” or key budgetary inclusions.
2. Incremental Approach
 It is a budget where only additional requirements need justifications. It
focuses analysis of incremental changes in the budget and may be done
within the context of performance and program budgeting.

The Budget Cycle

If we have an accounting cycle in the basic accounting or fundamentals of
accounting, we also have the budget cycle for accounting for budgetary accounts.
The budget cycle consists of:
 The budget Preparation
 Legislative Authorization
 Budget Accountability
 Budget Execution and Operation
So they are being stated in a manner in which there is no particular order.
These four phases of the budget 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 the Congress.
Meanwhile, the execution and accountability phases are implemented
simultaneously year-round, meaning the budget execution and operation as well as
budget accountability are being implemented during the budget period
simultaneously.
I. Budget Preparation
 Budget preparation covers estimation of government revenues, the
determination of budgetary priorities and activities within the constraints
imposed by available revenues and by borrowing limits, and the
translation of approved priorities and activities into expenditure levels
 Meaning the approved priorities and activities are being converted or
translated into amounts, monetary amounts which we can call as
estimates. So estimates are prepared by the various government agencies
reviewed and finalized by the President of the Philippines and then
submitted to the legislative department as a basis for the preparation of
the annual appropriation act so it is not yet the final budget or annual
budget but only the preparation of the annual appropriation act. What the
president will provide at the start of budget preparation will only be
estimates so it would simply or the president would simply determine the
revenue estimates as well as expenditure levels.
 Most importantly in this budget preparation the activities programs and
projects are being prioritized in the budget. The president therefore has
the power and authority to set budget priorities in line with the vision the
president has for the Philippines of what it wants to achieve.
 The support will be concentrated on these budget priorities identified or
selected by the president
 So we have here the following steps or key points in budget preparation
1. The issuance of a budget call by the DBM
 It is not simply a phone call that you will receive from your
messenger or
from your contact number or phones viber or even in Instagram.
The budget call contains the budget parameters as set
beforehand by the Development of Budget Coordination
Committee (DBCC) and policy guidelines and procedures in the
preparation and submission of agency budget proposals.
 Okay so let's discuss this step in the budget preparation phase
intensively. So the budget preparation begins with the
issuance of a budget call by the Department of Budget and
Management. The budget call contains the budget
parameters. And what are budget parameters? So this include
macroeconomic and fiscal targets and agency budget settings
which are set beforehand by the DBCC.
 To ensure that the national budget is enacted on time, the
DBM under the Aquino administration has established a new
tradition of beginning the budget preparation phase earlier. So
I guess under Aquino administration, if I could have a personal
 note on this, this one is indeed very useful so I guess as I go
through readings, this is only the note-worthy or notable work
by the Aquino administration. So this is only a personal note
for me so I hope that wala akong kakontrang dilawan sa inyo.
So I hope you will respect my opinion. My comment may be
harsh but this is my personal opinion regarding Aquino
administration so I somehow like this provision or update or
change they made in the budget preparation because when
you make or plan a budget it must be created or devised
ahead of time or even before the activity will be conducted. So
just like for example, the budget period is 2021, there must
have been a budget preparation that is being conducted on
year 2020. Okay so that is the point of conducting or issuing
budget call earlier or ahead of time
 Under the new budget preparation calendar the budget call is
issued in December unlike in the past where it was issued in
April and the submission of the president's budget would
happen a day after the state of the nation address (SONA). In
contrast to earlier practice where it is submitted to congress
within 30 days from the opening of every regular session.
Take note here class the submission period when it comes to
president's budget. So earlier practice, it states that the
submission of the president's budget would only happen 30
days or something within 30 days after the opening of every
regular session in the congress and the new update requires
the president to submit his or her budget after delivering his
or her SONA or state of the nation address.
 Another new feature in budget preparations which seeks to
increase citizen participation in the budget process,
departments and agencies are tasked to partner with Civil
Society Organization (CSOs) and other cities and stakeholders
as they prepare their agency budget proposal. This new
process, which was piloted in the preparation of the 2012
national budget, is now being expanded towards
institutionalization.
 Another breakthrough in budgeting, as opposed to the
conventional way of allocating resources from top to bottom,
grassroots communities will be engaged in designing the
national budget, through the Bottom-Up budgeting approach.
This Bottom-Up budgeting will focus on rural development
programs and the conditional cash transfer program or CTP of
 the poorest municipalities and will also involve Department of
Agriculture, Department of Agrarian Reform, Department of
Environment and Natural Resources, Department of Social
Welfare and Development, Department of Education and
Department of Health. These government agencies will then
include the community plans in their proposed budgets.
2. After submitting their respective Agency Budget Proposals to the
DBM, government agencies will have to defend their proposed
budget before the technical panel of the DBM. The DBM will then
review the agency proposals and prepare recommendations based
on performance indicators on output targets and absorptive capacity.
These recommendations are presented before an Executive Review
Board composed of the DBM secretary and senior officials.
Deliberations entail a careful prioritization of programs and
corresponding support through the priority agenda of the national
government. Implementation issues are also discussed and resolved.
The DBM then consolidates the recommended agency budgets and
recommendations into a National Expenditure Program and a Budget
of Expenditures and Source of Financing (BESF).
 I forgot to mention or indicate that at the start of budget
preparation, the president is usually the starting point. So
what do we mean by that? The president has the power and
authority to select activities projects or programs that need to
be prioritized.
 I forgot to mention also that, through the existence of this
budget priorities made by the president, it is where the
support will be concentrated upon. So the president would
have to devise or make estimates on revenues and
expenditures so that is how estimates are usually being
conducted and then prioritize as the budget preparation will
go through.
 However, you have to take note that the budget or the
estimate presented by the president is not yet the final
budget. Okay so it is not yet the annual or final budget in
which projects activities and programs would be outlined.
3. The DBM would have to consolidate the recommended agency
budgets and recommendation into a National Expenditures Program
and a Budget of Expenditures and Sources of Financing (BESF)
4. The proposed budget is presented by the DBM, together with the
DBCC, to the president and cabinet for further refinements or
reprioritization and subsequent approval of the NEP.
  NEP stands for National Expenditures Program, in which this
program is were recommendations and proposals made by
different government agencies are being consolidated. So this
one is indeed very important in the budget process.
 On the next slide the content of the proposed budget which is
presented by the DBM to the president and cabinet.
5. Submission Of proposed national budget – the “President’s Budget”
– to Congress.

 So when is it submitted? If you can recall I have made mention that it

would be submitted, the updated derivation or submission period
would indicate the submission of the president's budget a day after
the State of the Nation Addresses being delivered by the president
himself or herself.
The President’s Budget
The president's budget contains:
1. President’s Budget Message (PBM)
- This is where the President explains the policy framework and
priorities in the budget.
- So as I have mentioned also, the president has the authority
and power to set priorities in the budget process
2. Budget of Expenditures and Sources of Financing (BESF)
- This budget is mandated by the Constitution.
- It contains the macroeconomic assumptions, public sector
context (including overviews of LGU and GOCC financial
positions), breakdown of the expenditures and funding sources
for the fiscal year and the two previous years.
- So in the budget of expenditures and sources of financing,
there is a need to consider for the two periods, previous
periods prior to the budget period. So kailangang
magthrowback dito, sa budget of expenditures and sources of
financing.
3. National Expenditures Program (NEP)
- It is also an important document. This contains details of
spending of each department and agency by program, activity
or project and is submitted in the form of a proposed General
Appropriation Act.
4. Details of Selected Programs and Projects
- This contains a more detailed disaggregation of key programs,
projects and activities in the NEP, especially those in line with
the national government's development plan.
 - So what is only being stated or presented in the NEP are only
the key PAP. So hindi KPOP fans ha? So ano yung PAP natin
dito? wWe have program, activity or projects, key components
only.
- What you can see on the next file or document are the details
of selected programs, and projects or what we call key
programs, projects, and activities or key PAPS in a detailed
manner. So as the term implies, it is very detailed and it is
where we can find complete information regarding any
program, activity or project that needs to be conducted or
executed within the budget period.
5. Staffing Summary
- This contains a summary of the staffing complement of each
department and agency, including member of positions and
amounts allocated for the same.

II. Legislative Authorization

 It is the second phase of the budget process relative to the
enactment of the General Appropriation Bill based on the budget of
receipts and expenditures generally submitted by the president of
the Philippines within 30 days from the opening of its regular session
as the basis of the general appropriation bill.
 However as I have mentioned earlier, in contrast, the submission of
the President's Budget is a day after the state of the nation address.
This is to ensure that the national budget is enacted on time.
 This phase starts upon the receipt of the president's budget by the
House Speaker and ends with the president's enactment of the
general appropriation act, commonly known as GAA
 Thus the legislative authorization will be divided into three parts:
1. House of Representatives assigns the President's Budget to the
House Appropriations Committee, which conduct hearing and
scrutinize their respective programs and projects.
 It then crafts the General Appropriation Bill (GAB) and
conduct simultaneous deliberations.
2. It then crafts the General Appropriation Bill (GAB). In plenary
session the GAB is sponsored, presented and defended by the
Appropriations Committee and Sub-Committee Chairmen. As in
all other laws, the GAB is approved on the Second and Third
Reading before transmission to the Senate.
 Note however that in the First Reading, the president's
budget is assigned to the Appropriations Committee
 because it would then conduct hearing and scrutinization
of the respective programs and projects indicated in the
president's budget is conducted.
 Normally, after receiving the GAB from the House of
Representatives, the Senate conducts its own committee
hearings and plenary deliberations on the GAB. For
expediency, however, the Senate Finance Committee and
Sub-Committee usually start hearings on the GAB even as
House deliberations are ongoing. The committee submits
its proposed amendments to the GAB to plenary only
after it has been formally transmitted by the HR or House
of Representatives.
 Once both Houses of Congress have finished their
deliberations, they will each constitute a panel to the
Bicameral Conference Committee. This committee will
then discuss and harmonize the conflicting provisions of
the House and Senate Versions of the GAB. A Harmonized
Version of the GAB is thus produced.
3. The Harmonized or “Bicam” version is then submitted to both
Houses, which will then vote to ratify the final GAB for
submission to the President. Once submitted to the president
for his approval, the GAB is considered enrolled.
 Okay so it is called Bicam because both houses will
conduct simultaneous deliberations or will contribute to
the simultaneous deliberations of the GAB and would
have to vote to ratify the final GAB version.
 So we can call now the final gob for submission to the
president as harmonized or Bicam version.
 So who will conduct the deliberations?
o We have the House of Representatives and the
House of the Congress. So they are the one who
would contribute to the simultaneous deliberations
and would then vote to ratify the Bicam Version.
 The President and the DBM then review the GAB and
prepare a Veto Message, where budget items subjected
to direct veto or conditional implementation are
identified, and where general observations are made.
Under the Constitution, the GAB is the only legislative
measure where the President can impose a line-veto (in
all other cases, a law is either approved or vetoed in full).
 o So you can see the power of the president here
under the Constitution. You may probably be
wondering what will happen if there is delay as to
the budget preparation and its eventual execution
and operation.
 When the GAA is not enacted before the fiscal year starts,
the previous year's GAA is automatically re-enacted. This
means that agency budgets for programs, activities and
projects remain the same. Funding for programs or
projects that have already been terminated is realigned
for other expenditures.
o Okay so that would be the scenario that could
possibly happen if there is failure to enact before
the fiscal year ends. In case there are programs
activities or projects that are terminated, I mean
the funding for this PAPs are being terminated, they
are simply realigned, they are not eliminated from
the budget but are simply realigned for other
expenditures or necessities of the government
agencies or local units. So that is simply what we
call realignment of expenditures.
 Appropriations are approved by the legislative body in the
form of
1. A General Appropriation Law which covers most
of the expenditures of the government
2. Supplemental Appropriations Laws that are
passed from time to time, to augment or correct
an already existing appropriation; and
3. Certain automatic appropriations intended for
fix and specific purposes.

III. Budget Execution and Operation

 The third phase of the budget process covers the various operational
aspects of budgeting, thus making budgeting as one of the principal tools
of management control to ensure that public funds are spent only for
specific purposes for which they are intended. It includes the development
of the operating budget, which indicates the program of work to be done
or undertaken, the time within which it should be done, the manpower
and other resources needed to carry out the work and finally, the peso
amounts required to accomplish the proposed programs. Thus, budget
 execution and operations serve as the medium through which plans for
operation can be implemented using available resources and funds.
 This phase of the budget cycle begins with the DBM’s issuance of
guidelines on the release and utilization of funds. Agencies are required to
submit their Budget Execution Documents (BEDs) at the start of budget
execution. These documents outline agency plans and performance
targets. (BED is fully discussed in the succeeding sections of our chapter)
 The DBM will set a limit for allotments issued to an agency and on the
aggregate by preparing an Allotment Release Program (ARP). The ARP of
each agency corresponds to the total amount of the agency-specific
budget under the GAA as well as Automatic Appropriations. A Cash
Release Program (CRP) is also formulated alongside to set a guide for
disbursement levels for the year and for every month and quarter.
 Allotments, which authorize an agency to enter into an obligation, are
originally released by DBM to all agencies comprehensively through the
Agency Budget Matrix (ABM) and Special Allotment Release Orders
(SAROs). However, as provided by Government Accounting Manual (GAM),
the new obligational authority includes: General Appropriation Act Release
Document (GAARD), Special Allotment Release Order (SARO) and General
Allotment Release Order (GARO), which will also be discussed on the latter
parts of this video presentation.
o So you have to take note of the new obligational authority that we
have we have, the GAARD, SARO and GARO. So previously, we have
only the ABM which stands for Agency Budget Matrix and Special
Allotment Release Orders (SARO) only. Now, the ABM is somehow
eliminated and it is being replaced by GAARD, General
Appropriation Act Release Document and GARO, General Allotment
Release Order.
o The purpose of these documents and release orders are to really
intensify the number one or simply overall the fiscal operations
principles that we have when it comes to budgeting. These
documents intensify the fundamental principles of fiscal operations
in a sense that no amount of government fund would be released to
government agencies without the release orders and without any
legal basis and without any intended public purpose. For the release
at the same time, if it has no legal authority or the government
agency in which a fund is being released to have no legal authority
to a certain amount of that fund therefore there will be no
government fund to be released.
o So we have three things to consider here we have the GAARD, the
SARO and the GARO. The budget execution and operation focuses
 more on the release, as well as, the authority for the release or
issuance of the funds, as well as, the usage and the purpose for
which the fund is being used upon.

IV. Budget Accountability

 The budget process, of course, does not end when the government
agencies spend public funds but the privilege to spend the public funds
is also accompanied with accountability so each and every peso must
be accounted for to ensure that it is used properly, contributing to the
achievement of socio-economic goals. This phase happens alongside
the Budget Execution phase.
o So I have made mention as I introduced to you the budget cycle
wherein budget execution and operation and budget
accountability are implemented simultaneously all year round.
 Through Budget Accountability, the DBM monitors the efficiency of
utilization, assesses agency performance and provides a vital basis for
reforms and new policies.
 Agencies are held accountable not only for how they use public funds
ethically, but also on how these attain performance targets and
outcomes using available resources. These performance measures are
set alongside the preparation of the National Budget and these are
indicated Organizational Performance Indicator Framework (OPIF) Book
of Outputs. Prior to the execution of the enacted National Budget,
these performance targets are firmed up during the preparation of the
BEDs or Budget Execution Documents.
 Submitted by agencies on a monthly and quarterly basis, Budget and
Financial Accountability Reports (BFARs), not basic financial
accounting and reporting, are required reports that show how agencies
use their funds and identify the corresponding physical
accomplishments.
 For failing to submit their BFARs, the DBM will have the power to
penalize the agencies by withholding certain fund releases to them. In
particular, this will be funds from the Miscellaneous Personal Benefits
Fund (MPBF) for compensation adjustments under the Salary
Standardization Law, provisions for unfilled positions and employee
closing allowances. These funds to be withheld are only limited to
agencies’ MPBF allotments so that only the agencies are penalized and
that the implementation of critical programs and projects will not be
disrupted. Both errant and compliant agencies will also be posted
online for public scrutiny.
  The DBM regularly reviews the financial and physical performance of
agencies. Actual utilization of funds and physical accomplishments, as
indicated in the agencies’ BFARs are evaluated as identified via
Organizational Performance Indicator Framework (OPIF) and in the
agencies’ Budget Execution Documents (BEDS). Agency Performance
Reviews (APRs) are conducted quarterly or every semester, as the case
may be.

An annual Budget Performance Assessment Review (BPAR) is conducted to

determine each agency's accomplishments and performance by the year-end. The
DBM regularly reports results to the President.
Auditing is not within the DBM's jurisdiction, and is instead lodged under the
Commission on Audit (COA). Nonetheless, auditing is critical in ensuring agency
accountability in the use of public funds. The DBM uses COA's audit reports in
confirming agency performance, determining budgetary levels for agencies and
addressing issues in fund usage.
The DBM is also in the process of establishing a performance-based incentive
system which will recognize and reward good performance among government
employees to help improve the efficiency of service delivery across all government
institutions.

Budgetary Accounts System

According to National Budget Circular (NBC), the Allotment Release Program (ARP)
shall serve as the ceiling for the aggregate allotment releases during the year from
all sources. The ARP of each national government agency shall be an amount equal
to its appropriations from the following sources:
1. New Appropriations, such as: agency specific budget and allocations or additional
releases from Special Purpose Funds (SPFs); and
2. Automatic appropriations for Retirement and Life Insurance Premiums (RLIP),
Special Accounts in the General Fund (SAGFs), and other items classified as such.
3. Continuing appropriations, i.e., allotments chargeable against the unreleased
appropriations for the MOOE and CO in the prior year's GAA.

Budgetary Accounts
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.
Monitoring of the Budget
The budget shall be monitored by the Budget Department of National Government
Agencies through the maintenance of registries for that purpose, such as:
1. Registry of Revenue and Other Receipts (RROR)
 In order to monitor the revenue and other receipts budgeted, collected, and
deposited, this registry shall be maintained for different fund clusters in
accordance with the Unified Accounts Code Structure (UACS). A separate
registry for the summary for each fund cluster shall also be maintained.
2. Registry of Appropriations and Allotments (RAPAL)
 This registry shall be maintained by National Government Agencies to
monitor appropriations and allotments charged thereto. The balance is
extracted every time an entry is made to prevent incurrence of overdraft in
appropriations. Separate registry shall be maintained by fund cluster and by
Major Final Output (MFO)/PAP/Appropriation Acts.
3. Registry of Allotments, Obligations and Disbursements (RAOD)
 This registry shall be maintained to record allotments, obligations and
disbursements. It shows the allotments received for the year, obligations
incurred and the actual disbursements made. The balance is extracted every
time an entry is made to prevent incurrence of obligations in excess of
allotments and overdraft in disbursements against obligations incurred. It
shall be maintained separately according to objects of expenditures, such as:
Personnel Services, Maintenance and Other Operating Expenses, Financial
Expenses, and Capital Outlays.
4. Obligation Request and Status (ORS)
 The incurrence of obligations shall be made through the issuance of ORS.
 Counterpart of ORS in Commerce Accounting is Purchase Requisition Slips.
A purchase would never happen or emanate without a purchase requisition
slip being filled up by the Production Department which will then be
submitted or provided to the Purchasing Department. The Purchasing
Department after receiving the purchase requisition slip shall then
immediately make or create a purchase order to be submitted to the
Accounts Payable Department. This manner of acquisition of items and
 materials needed for production of goods and services would never happen
without a purchase requisition slip which would come from the Production
Department because the department truly in need of the items and materials
are the persons or individuals working at the Production of this goods and
services. And the Purchase Requisition Slip would simply be an initial
document only in order to make way for an Obligation.

So I made mention on the accounts payable department because that

department is simply the one in charge for recording the incurrence of
obligations. But before pushing through with the accounts payable
department, the purchase order shall be of course serve or sent to the
supplier which is allowing credit purchases. So supplier which somehow a
partner of a certain entity or company that allows credit purchases. Upon
sending an invoice for that purchase that is only the time in which the
accounts payable department would recognize or record that an obligation
has been incurred. But the very source of the incurrence of the obligation
then is the purchase requisition slip.
Just like here in the monitoring of the budget wherein the issuance of ORS
obligation request and status is deemed important for incurrence of an
obligation. Without it, will no longer be recognized by the DBM and the
proponent agency. Even COA would question the presence of such obligation
without obligation request and status.

 Regarding obligation request and status I would like to share a personal

experience of mine when it comes to handling tutorial services. So I for one
would never handle a tutorial service or provide tutorial services to these
students who did not even made a request letter. So just like for example,
there is a necessity for them to make request letter even if we already have
an initial agreement that is unwritten that I will handle their subject and serve
as their instructor for this tutorial setting. The request letter would somehow
serve as a formal document that they are somewhat hiring me or demanding
my services for them to finish or accomplish that subject which is not usually
offered regularly every semester. So most of the time I’m the one requested
by the students to handle tutorial services.
The tragic part of handling tutorial services based on my experience alone the
very first time I handled tutorial services without knowing the legal process
 especially in securing my pay for my tutorial services is that I handled tutorial
services for free and UNP simply would say thank you because my pay was
not obligated at all because the proper or necessary documents were not
submitted on time. The tutorial services was I think if I am not mistaken I
handled my first tutorial services when I was still new to the university, I think
it's around 2015 to 2016 if I am not mistaken then I was only able to find it
out that there are documents and papers that have yet to be submitted after
the semester right after conducting that tutorial services. So I was only able
to find it out a year later I think which is 2018. But the thing is I was not
informed as to the process and as to the documents that I must keep and
provide in order to support my claim for my tutorial service fee. What
happened then to the supposed payment for my tutorial services was that it
would become part of the other income of the University of Northern
Philippines. So it would become hard or it had become part I should say of
the other income of the University of Northern Philippines because that
payment for me was not obligated at all. I know no one is to blame but that
certain personnel handling my papers because I had initially submitted the
request letter of the students as well as my faculty load or workload I had my
official time was also provided initially to the certain personnel at HR handling
my documents. So I think the process would simply end there. Only to find
out that I still have to provide at the end of the semester my grade sheet, my
DTR from let's say for example first semester following the calendar year now
January to June. Okay so I have to provide my DTR as well and other
documents necessary for the processing of my service fee. At first I almost
cried out of mishap but eventually I was able to accept because ignorance
excuses no one from law and I learned to let bygones be bygones.

5. Registry of Budget, Utilization and Disbursements (RBUD)

 This registry shall be used to record the approved special budget and the
corresponding utilizations and disbursements charged to retained income
authorized under RA 8292 for State Universities and Colleges (SUCs) and
other retained income collections of a National Government Agencies with
similar authority. It shall be maintained separately according to objects of
 expenditures, such as: personnel Services, Maintenance and Other Operating
Expenses, Financial Expenses, and Capital Outlays.

 Note: RAOD and RBUD shall be maintained separately according to the

objects of expenditures such as PS, MOOE, FE and CO. They are the two
registries requiring the observance of these four objects expenditures.

FUND RELEASE DOCUMENTS

Obligation Authority or Allotment
Fund release documents, according to the government accounting manual, where if
the adoption of the unified account code structure or UACs and the performance
informed budgeting or a PIB, the following are the fund release documents, under
the obligational authority or allotment We have the general appropriation act
release document, special allotment release, order, general allotment release order.
And under disbursement authority, we have notice of cash allocations, non-cash
availment authority, cash, disbursements ceiling, and notice of transfer of allocation
or NTA. Obligational authority or allotment consists of the documents, which
authorized the entity to incur obligations.
1. Let's discuss the first one, the GAARD, which stands for GENERAL
APPROPRIATION ACT RELEASE DOCUMENT. This serves as the obligational of
authority for the comprehensive release of budgetary items appropriated in the
general appropriation act or GAA categorized as for comprehensive release or F C R.
This will abolish the lengthy process of releasing allotments to departments and
agencies, thereby enhancing the operational efficiency of all agencies across the
bureaucracy, allowing the DBM to speed up government disbursements and fast
track the implementation of programs and projects set for the year.
2. Next is a SPECIAL ALLOTMENT RELEASE order, or SARO. This covers budgetary
items, under For Later Release or FLR, which implies negative list in the entity
submitted Budget Execution Documents or BEDs subject to compliance of required
documents or clearances. Releases of allotments for a special purpose funds such as
calamity fund contingent fund e-government fund feasibility studies fund
international commitments fund miscellaneous personal benefits fund And pension
and gratuity fund are also covered by SAROs anything that is under the special fund
type. And if GAARD is for comprehensive release or FCR, SARO is for later release or
FLR,
3. And last but not the least is the GARO, which stands for GENERAL ALLOTMENT
RELEASE ORDER. This is a comprehensive authority, issued to all national
government agencies in general, to incur obligations, not exceeding an authorized
amount during a specified period for the purpose, indicate therein .it covers
automatically appropriated expenditures common to most, if not all agencies
without need of a special clearance or approval from competent authority. So these
three release orders and documents are very important to signify that an obligation
can be incurred with proper and legal authorization. On the other hand, the
disbursement authority consists of the following documents, which will authorize
the entity to pay obligations and payables. Let us recall the term entity here.
Disbursement Authority
So when we use the term entity in government accounting, it refers to the
government agencies, national or local, and also the local government units and
offices. Okay. So here are the following documents, which will authorize the entity
to pay obligations and payables.
1. So, first one is NOTICE OF CASH ALLOCATIONS or simply NCA. So this is the
authority issued by the DBM to central, regional and provincial offices and operating
units to pay operating expenses, purchases of supplies and materials, acquisition of
PPE, accounts payable and other authorized disbursements through the issue of
modified disbursements system or MDS checks Authority to Debit Account, ADA or
other modes of disbursement also. Notice of Cash Allocations is already very
common to you and no longer new to you so there is no need to explain it anymore.
This NCA will be authorized for issue by the department of budget and
management. So it will somehow be distributed to central, regional and provincial
offices and operating units in order to pay operating expenses. So this simply means
that there has been a cash, allocated for those certain expenses up to a limited
amount, depending on the portion of fund allocated to certain central regional and
provincial offices.
2. Next is NCAA, which stands for NON-CASH AVAILMENT AUTHORITY. So this is the
authority issued by the DBM to agencies to cover the liquidation of their actual
obligations incurred against available allotments for availment of proceed from
loans, grants through suppliers credit, or constructive cash. Okay, so that is NCAA.
So the same set up with the, notice of cash allocations. However, what is the
purpose? This is to cover the liquidation of their actual obligations incurred. NCA
and NCAA are the same in a sense that the one who will authorize the issue of such
will be the department of budget and management, but they are different as to the
purpose.
3. Third one is CDC, which stands for CASH DISBURSEMENTS CEILING. This is the
authority issued by the department of budget and management, the department of
foreign affairs or the DFA and department of labor and employment, or DOLE to
utilize their income collected or retained by their foreign service posts, or simply
known as FSPs to cover their operating requirements, but not to exceed the
released allotment to the said post.
4. And fourth, is the NOTICE OF TRANSFER OF ALLOCATION or 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 disbursements. You can see here, the manner of the
issuance of authority, under notice of transfer of allocation, the issuance would
come from the central office to its regional and operating units. So there is simply a
transfer of allocation within a certain government agency or a unit from central
regional or local offices.
These fund release documents are really important in order to execute the budget.
And also in order for the programs, projects, and activity of different government
agencies to proceed, thus, we can therefore say that fund release documents
belong to the budget execution and operation fees of the budget cycle.
Objects of Expenditures.
Expenditures of the national government agencies shall be classified into categories
as maybe determined by the department of budget and management. This include
the four major objects of expenditures such as personnel services, or a PS,
maintenance and other operating expenses, or MOOE financial expenses or FE,
and capital outlays, or CO.
1. PERSONNEL SERVICES by the term itself, without any idea or background in
government accounting. You may somehow think of it as if it is related to, when it
comes to commercial accounting, it is somewhat related to employee benefits. So if
that is your idea regarding personnel services, you are right because personnel
services, as an object of expenditure includes salaries and wages, other
compensation or personnel benefits, it pertains to the compensation and other
benefits a personnel or a government employee may have, or may receive. Thus We
can therefore see that personnel services pertains to income, compensation, or
benefits a government personnel could receive or could have working in the
government agency or in a local government unit. Next are maintenance and other
operating expenses.
2. In a commercial point of view, it is somewhat like, and, or its counterpart will be
repairs and maintenance in commerce accounting. However, when it comes to
government accounting, it includes, or it pertains to traveling expenses, supplies,
materials, expenses, training, and scholarship expenses, utility expenses,
communication expenses, rent expenses, repairs, and maintenance expenses,
general services, and others. However, when it comes to government accounting,
based on the cited examples of MAINTENANCE AND OTHER OPERATING EXPENSES,
the repairs and maintenance in commerce accounting is somewhat combined with
other operating expenses of a company. So this is how the government would
maintain an object of expenditure. So the government had it combined, the
maintenance expense and the other operating expenses of the government.
3. Next is FINANCIAL EXPENSES or commonly known as FE so financial expenses
pertains to expenses that would affect acquisition or disbursements or outflow of
money from a certain unit to another unit or from an entity to another entity.
Therefore it includes interest expenses, bank charges, Guarantee expenses,
commitment fees, and other financial charges.
4. Next is CAPITAL OUTLAYS. It pertains to property plant and equipment and
investments. The concept that we have here on capital outlays is that it pertains to
major acquisitions of the government for the betterment and improvement of its
operations. Just like for example, acquisition of land of property and engagement of
the government unit or agency into investments. Okay. So please take note of the
following objects of expenditures.

We have PS, MOOE, FE, and CO. General guidelines on the release of funds. Pending
the effective date of the new general appropriation act or GAA national government
agencies are authorized to incur overdraft in allotment for obligations
corresponding to the actual requirement of the regular operations chargeable
against the GAA as reenacted. A reenacted budget pertains to the budget of the
preceding year, which by operation of laws becomes reenacted. Reenacted budget
pertains to the budget of the preceding year, which by operation of laws becomes
reenacted and shall remain in force in effect until the general appropriation bill for
the current year is passed by the Congress. The reenactment of the budget is a
mechanism sanction by the constitution to allow the use of public funds for regular
operations and being the approval of the GAA all unutilized allotments of agencies
immediately before the effective date of the new GAA out of the SAROs, issued
chargeable against the reenacted GAA shall no longer be available for obligation.
Upon the GAAs effective date, which is after 15 days following the completion of its
publication in the official Gazette or in a newspaper of general circulation, the
allotment release program, or ARP may already be established.

General Guidelines on the Release of Funds

The allotment release program or ARP, which determines the level of allotment
releases for a given fiscal year is composed of the following
 obligations incurred

 obligations authorized as over draft

 special allotment release, order, or SAROs issued from the beginning of the
current fiscal year to the effective date of the current general appropriation
act or GAA and

 releases from the unprogrammed fund or UF allotment releases from the

multi-user special purpose funds SPFs, such as calamity fund contingent fund
e-government fund international commitment fund miscellaneous personnel
benefit fund national unification fund priority development assistance fund,
and pension and gratuity fund shall be over and above the agency allotment
release program.

Guidelines on the Release of Disbursement Authorities

So this is very important because if the guidelines are not being followed, therefore
the disbursements will not be recognized by the DBM and the proponent agencies.
First thing to note here is the release of the notice of cash allocation or NCA. So the
national budget circular provides that an initial comprehensive NCA shall be issued
directly to the operating units or OUs covering the first semester requirement first
semester includes months, starting from January to June chargeable against the
current year budget. This shall be based on the submitted monthly disbursement
program, MDP, which shall include current year requirements. And prior years
accounts payables.

1. Release of Non-Cash Availment Authority (NCAA)

 Departments/Agencies/Operating Units 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: Photocopy of the
application for withdrawal or equivalent document covering the amount
requested; List of Allotments and corresponding obligations incurred for the
specific foreign loan assisted project against which the disbursements shall be
applied; and Details of Disbursements expressed both 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, pursuant to DBM-COA-
DOF Joint circular 2-97 and CL No. 200312. It is emphasized that non-issuance of
NCAAs for availments of proceeds from loans/grants through direct payments
(already taken up as constructive payments per BTr report) results to accounts
payable build up in the agency books.

2. Release of Cash Disbursement Ceiling (CDC)

 CDC is an authority issued by DBM to Department of Foreign Affairs (DFA) and

Department of Labor and Employment (DOLE) to utilize their income collected
and retained by their Foreign Service Posts (FSPs) to cover its operating
requirements but not to exceed the released allotment for the said post. Non-
issuance of CDCs for actual utilization of retained income by FSPs (already taken
up as revenue and disbursements per BTr report) results to unreconciled accounts
between BTr and agency books.
 Request of CDC shall be supported by the following accountability reports as
 consolidated by DFA and DOLE home office: Monthly Report of Income and BTr
certification on actual income collected.

3. Release of Notice of Transfer of Allocation (NTA)

 Similar with NCA, no MDS check/ADA shall be issued by the Regional
Offices/Operating Units without the covering NTA. Hence the total MDS checks
issued shall not exceed the total NTA received. It shall be monitored through the
maintenance of the Registry of Allotment and Notice of Transfer of Allocation
(RANTA). (See Appendix 1)
REPORTING REQUIREMENTS
Per National Budget Circular, the Department of Budget and Management requires
national government agencies to submit, on a regular basis, Budget Execution
Documents (BEDs), which contain the agencies' targets and plans for a financial year,
and Budget and Financial Accountability Reports (BFARs), which contain information on
the agencies' actual accomplishments and performance for a given period. Data from
these reports are used for monitoring and providing the necessary information to the
President and fiscal agencies for the purpose of crafting sound policy decisions.

Budget Execution Documents (BEDs)

According to National Budget Circular regarding the Submission of Budget Execution
Plans and Targets, all departments/agencies/operating units are mandated to prepare
the BEDs based on the National Expenditure Program (NEP), without waiting for the
approval of the General Appropriation Act and submit them to DBM no later than
November 30. This means that BEDs for a particular financial year shall be submitted to
DBM every November 30 before that financial year. The plans, targets and schedules to
be reflected in the annual BEDs will guide agencies in the early implementation of
priority programs and projects. If upon approval of the General Appropriation Act (GAA)
there are changes made by Congress from the NEP (i.e ., decrease, increase or
modifications for existing programs and projects or introduction of new items), the
agencies/operating units shall identify affected PAPs, MFOs, and targets to be adjusted.
Accordingly, department/agencies concerned shall submit their revised plans
highlighting the adjustments using the same BED forms on or before January 7 of the
year.

As prescribed in this circular, the following BEDs shall be submitted:

1. BED No. 1: Financial Plan (FP)
This document shall include the comparative obligation levels for the budget year
and current year, such as: the targeted commitments/obligations per NEP for the
budget year broken down by quarter; and the actual obligations for the current
year as of September 30 and the emerging level of obligations for the remaining
quarter (October 1 to December 31). The budget year's total targeted
commitments/obligations under the Current Year's Budget should equal the
amount indicated in the NEP, which is segregated into "Comprehensive Release"
and "For Later Release" (Negative Release), as discussed earlier.
2. BED No. 2: Physical Plan (PP)
This document shall consist the performance indicators and targets of
department/agency, such as:
 For Operations, the performance indicators by Major Final Outputs (MFOs).
 For Major Programs and Projects committed to the President and closely
monitored by the Presidential Management Staff.
 For other projects, consider those milestones indicated in the approved
project profile.
 For the budget year, it is emphasized that MFOs and major programs and
projects shall be the same as those appearing in the Financial Plan.

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

This shall be used by DBM as basis for determining the monthly level of
NCAs/other disbursement authorities to be used to national government
agencies. It shall reflect the total cash and non-cash program for the budget year
by type of fund category, by allotment class and by type of disbursement
authority, such as:

 Notice of Cash Allocation (NCA) for cash requirements of the national

government agencies through the authorized government servicing banks of the
Modified Disbursement System (MDS).
 Cash Disbursement Ceiling (CDC) for authorized disbursements charged against
income collected and retained by the Foreign Service Posts of DFA and DOLE.
 Non-Cash Availment Authority (NCAA) for the cost of goods and services paid
directly by lending institutions to creditors of the NGAs/GOCCs implementing a
foreign assisted project.
 Tax Remittance Advice (TRA) for the remittance of withheld taxes computed or
estimated as follows: For Personnel Services (PS) 8%, and for Maintenance and
Other Operating Expenses (MOOE) 5% and Capital Outlay (CO) 5%.
 Others for tax expenditures, such as: Custom Duties and Taxes, BTr Documentary
Stamps, etc.
 4. BED No. 4: Annual Procurement Plan for Common-Use Supplies and Equipment
(APP-CSE)
This shall reflect the monthly quantity and cash requirements by items
categorized into: Available at Procurement Service Stores, and other items not
available at Procurement Service but regularly purchased from other sources. The
quarterly cash requirements as reflected in the APPCSE shall serve as guide of the
agency for payment of purchase made.

BEDs 1, 2, and 3 are to be accomplished using the forms prescribed in this circular and
shall be submitted to DBM through the Unified Reporting System (URS) which is already
available starting October 1, 2014. While, BED No. 4, which is an additional BED, shall be
prepared and submitted through e-mail to DBM-PS and Philippine Government
Electronic Procurement System (PhilGEPS).

Budget and Financial Accountability Reports (BFARs)

With the implementation of several structural reforms in 2014, such as: the adoption of
the General Appropriation Act as a Release Document (GAARD), the Unified Accounts
Code Structure (UACS), the Philippine Public Sector Accounting Standards (PPSAS), and
the integration of the Performance-Informed Budget (PIB), there is a growing need to
adapt to these innovations vis-a-vis the harmonized Budget and Financial Accountability
Reports (BFARs), as prescribed by the DBM and COA, to effectively report, monitor
and/or evaluate agency performance versus plans and targets which shall serve as basis
for sound policy decisions.
According to COA and DBM Joint Circular No. 2014-1, Guidelines Prescribing the Use of
Modified Formats of the Budget and Financial Accountability Reports (BFARs), dated July
2, 2014, the following reports/documents are required for submission to the DBM and
COA:
1. Quarterly Physical Report of Operation (QPRO) - BAR No. 1
This report shall reflect the department's/agency's actual physical
accomplishments as of a given quarter in terms of performance measures
indicated in its Physical Plan in BED No. 2. This shall be submitted to COA and
DBM within 30 days after the end of each quarter.
2. Statement of Appropriations, Allotments, Obligations, Disbursements and
Balances (SAAODB) - FAR No. 1
This report shall reflect the authorized appropriations and adjustments, total
allotments received including transfers/adjustments, total obligations, total
disbursements and the balances of unreleased appropriations, unobligated
allotments, and unpaid obligations of a department/office/agency by fund cluster
(i.e ., equivalent to old codes for Fund 101, 102, 151, etc.) and by allotment class.
It is presented by the following:
o Fund authorization
o Major Final Output (MFO) Program/Activity/Project (PAP)
o Major Programs/Projects
Note that the Funding Source Code under the UACS will be clustered to capture
the financial transactions for recording in the books of accounts maintained by
the agencies. This shall be submitted to COA and DBM within 30 days after the
end of each quarter.

3. Summary of Appropriations, Allotments, Obligations, Disbursements and

Balances by Object of Expenditures (SAAODBOE) - FAR NO. 1-A
This report shall be prepared by Fund Cluster 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 30, 2013 and the Conversion from the
Philippine Government Chart of Accounts to the Revised Chart of Accounts,
additional accounts/revised description/title of accounts per COA Circular No.
2014-003 dated April 15, 2014. This shall be submitted to COA and DBM within 30
days after the end of each quarter.

4. List of Allotments and Sub-Allotments (LASA) - FAR No. 1-B

This report shall reflect the allotments released by the DBM and the sub-
allotments issued by the Agency Central Office (ACO)/Regional Office (RO), and
their corresponding numbers, date of issuance, and amounts by allotment class
and by Fund Cluster. The total allotments per this report should be equal to the
total allotments appearing in the SAAODB (FAR No. 1). This shall be submitted to
COA and DBM within 30 days after the end of each quarter.
5. Statement of Approved Budget, Utilizations, Disbursements and Balances
(SABUDB) - FAR No. 2 (for Off-Budget Fund)
This report shall reflect the approved budget, utilizations, disbursements, and
balances of the agency authorized by law to use their income, such as:
OWWA/SUCs, and approved by the Board of Trustee/Regents. This shall be
submitted to COA and DBM within 30 days after the end of each quarter
6. Summary of Approved Budget, Utilizations, Disbursements and Balances by
Object of Expenditures (SABUDBOE) - FAR No. 2-A (for Off-Budget Fund)
This report shall reflect the details of the approved budget, utilizations,
disbursements and balances of the agency authorized by law to use their income
presented by object of expenditures consistent with the COA Revised Chart of
Accounts. This shall be submitted to COA and DBM within 30 days after the end of
each quarter.
7. Aging of Due and Demandable Obligations (ADDO) - FAR No. 3
This report shall be prepared by Fund Cluster and shall reflect the balance of
unpaid obligations as indicated in the Obligation Request and the aging of due
and demandable obligations as of year-end. This shall be submitted to COA and
DBM on or before the 30th day of the following end of the year.
8. Monthly Report of Disbursements (MRD) - FAR NO. 4
This report shall reflect the total disbursements made by department, office or
agency and operating unit by Fund Cluster from the following disbursement
authorities:
o Notice of Cash Allocation (NCA)
o NCA for Working fund issued by Bureau of Treasury as an advance funding
from loan/grant proceeds in favor of an agency
o Tax Remittance Advice (TRA) issued
o Cash Disbursement Ceiling (CDC) issued by departments with foreign-
based agencies or units
o Non-Cash Availment Authority (NCAA)
o Others, e.g ., Customs Duties and Taxes, Bureau of Treasury Documentary
Stamps
This report shall track the actual disbursement of the departments/agencies
against their Disbursement Program, and the reason for over or under spending
 shall be indicated. This shall be submitted to COA and DBM on or before the 30th
day of the following month covered by the report.
9. Quarterly Report of Revenue and Other Receipts (QRROR) - FAR No. 5
This shall reflect the report on actual revenue and other receipts of the
agency/operating units for the current year presented by quarter, and by specific
sources consistent with the COA Revised Chart of Accounts. This shall be
submitted to COA and DBM within 30 days after the end of each quarter.

To allow sufficient time in the consolidation of quarterly reports, the following

procedures shall be observed:
 The Lower Operating Units (i.e ., field offices, district offices, provincial offices)
shall submit directly their reports to their COA Audit Team Leader and DBM
Regional Office concerned (in the case of DPWH, DOH, SUCs, DepEd, TESDA, and
CHED). However, for consolidation purposes, they shall likewise furnish their
Regional Office and Agency Central Office copies of their reports within 5 days
after the end of each quarter.
 The Regional Office shall prepare a consolidated report covering the report of the
region and its lower operating units, then submit the same to the Agency Central
Office (ACO) and COA-GAS within 10 days after the end of each quarter.
 The Agency Central Office shall prepare an overall consolidated report of the
department/agency and submit the report to the Central Office of DBM and COA-
GAS within 30 days after the end of each quarter.

In case of non-submission of the said reports, payment of salaries of the concerned

Budget Officer/Head of Budget Unit and the Chief Accountant/Head of Accounting Unit,
or their authorized representatives shall be automatically suspended from the time the
reports are due until they are received by COA and DBM. In addition to suspension of
salary, as provided above, any violation of this joint circular without justifiable cause for
three consecutive times during the calendar year by the officials concerned shall be a
ground for administrative disciplinary action, subject to pertinent civil service rules and
regulations.
Validity of Appropriations
Per National Budget Circular, the authorized appropriations shall be available for release
and obligation for the specified purposes as follows:
 Personnel Services (PS) until the end of the current year.
 Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO)
until end of the following year.
 Continuing Appropriation of the previous year for MOOE and CO under RA 10633
until the end of the current year.
 Supplemental Budget for MOOE and CO appropriation under RA 10652 until the
end of the current year. The deadline for submission of Special Budget Request
(SBR) for release chargeable against this source shall be on February 13.
 All programmed Automatic Appropriations for PS, MOOE, and CO shall be
available for release and obligation up to the end of the current year only.

Conduct of the Agency Performance Review

Consistent with performance-based budgeting, a quarterly evaluation of the agency
performance shall be conducted by DBM by comparing agency plans and targets per
BEDs vis-a-vis actual accomplishments reflected in its BFARs. According to National
Budget Circular, departments/agencies/operating units shall regularly submit their
quarterly BFARs in a timely manner through the Unified Reporting System (URS) and the
DBM shall regularly monitor their compliance with the quarterly BFARs.
In case of delays in programs/project implementation, the agency shall develop a
detailed cat-up plan/remedial action to reflect the specific measures to be implemented
that will lessen the impact, if not resolve, the identified budget execution
problems/issues and to ensure attainment of their physical and financial targets. The
action program can also include the identification of risk bottlenecks, the timetable of
the measures, and reflect the indicators that will show if the agency is succeeding. The
action programs shall be discussed with and monitored by DBM.
National Budget Circular provides that timely implementation of programs and projects
as a result of good planning will improve public spending and the quality of service
delivery to the public. Efficient spending and program implementation of agencies shall
be included as part of the performance assessment for the grant of the Performance-
Based Bonus (PBB).
Common Fund System
The common fund system policy (for use of personnel services, maintenance and other
operating expenses, capital outlays, and financial expenses without realignment) shall
continue to be used. However, the Common Fund Scheme will not apply to current year
Account Payables to external creditors of the five departments (i.e ., DPWH, DepEd,
DOH, CHED, and State Universities and Colleges (SUCs) covered by the Direct Payment
Scheme. In such cases, specific NCAs shall be issued for the purpose through their
special MDS accounts, consistent with Circular Letter 2005-2.
Cash allocation released to agencies under the regular MDS sub-account may be used to
cover payment to obligations charged against their current and prior years' budget, for
which goods and services have been delivered during the year after satisfying their
regular operating requirements as reflected in their Monthly Disbursement Program.
The policyof having separate MDS sub-account for retirement gratuity/terminal leave
benefits and prior years' accounts payable, as well as trust liability account, shall be
maintained.

Registry of Appropriations and Allotments (RAPAL)

The Registry of Appropriations and Allotments shall be maintained by National
government Agencies 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 appropriation. The balance is extracted every time an
entry is made to prevent incurrence of overdraft in appropriations. Separate RAPAL shall
be maintained by fund cluster (Regular Agency Fund, Foreign Assisted Projects Fund,
Special Account - Locally Funded/Domestic Grants Fund, and Special Account - Foreign
Assisted/Foreign Grants Fund), and by Major Final Output
(MFO)/Program/Activity/Project (PAP)/Appropriation Acts (the code for MFO and PAP of
the entity per GAA/SA/SARO/GARO).
To accomplish the above-mentioned Registry of Appropriations and Allotments, note the
following selected information for purposes of this illustration:
 Total Appropriations - the sum of the appropriations per allotment class, such as:
Personnel Services (PS), Maintenance and Other Operating Expenses (MOOE),
Financial Expenses (FE), and Capital Outlay (CO).
 Total Adjustment/s on Appropriations - the amount of adjustment/s on the
appropriations, per allotment class, like realignment, transfer (to and from),
withdrawals, and other adjustments based on SARO, and other authorities
  Total Adjusted Appropriations - the sum of the adjusted appropriations, per
allotment class.
 Total Allotments - the sum of allotments received per allotment class.
 Total Adjustment/s on Allotments - the sum of the Adjustment/s on Allotments
per allotment class.
 Total Adjusted Allotments - the sum of the adjusted allotments per allotment
class.
 Unreleased Appropriations - the running balance of appropriations or the
unallotted appropriation balance per allotment class. (Adjusted appropriation less
adjusted allotment)
 Total Unreleased Appropriation - the sum of the Unreleased Appropriations.
The RANCA shall be maintained by the Accounting Division/Unit to determine the
amount of allotments not covered by NCA and to monitor available NCA.
This form shall be accomplished as follows:
 Fund Cluster - name/code in accordance with the UACS in which the allotments
and NCA are attributable to.
 Date - date of the reference document.
 Reference - such as: GAARD/SARO/GARO/NCA/JEV/DV/Payroll Number.
 Allotment Received amount of allotment received per GAARD/SARO/GARO.
 NCA Received - amount of NCA received.
 NCA Utilized - amount of NCA utilized (based on processed DV/Payroll)
 Balance Unutilized NCA - running balance of unutilized NCA.
 Balance Allotment - running balance of allotment not covered by NCA.

Obligation Request and Status (ORS)

The incurrence of obligation shall be made through the issuance of ORS. A subsidiary
record to monitor a particular obligation shall be maintained by the Budget Division/Unit
(see Section C of the ORS form). It shall contain the original amount of obligation,
payable, and the actual amount paid. Adjustment of obligation incurred after the
processing of the claim shall be made through the use of Notice of Obligation Request
and Status Adjustment (NORSA). The adjustment shall be made through a positive entry
(if additional obligation is necessary) or a negative entry (if reduction is necessary) in the
"Obligation" column of the ORS and RAOD.
To accomplish the above Obligation Request and Status (ORS) for Supplier - A, note the
following information for purposes of this illustration:
a. Serial Number (01-01101101-2016-01-00001)
 First 2 digits (01) - for allotment class Personnel Services.
 Next 8 digits (01101101) - for UACS Funding Source Code. The 6 digits
Funding Source Code per Joint Circular No. 2013-1 was enhanced to add
another two-digit code for the Fund Cluster for purposes of accounting,
banking and reporting, thus it becomes 8 digits. This 8-digit code
represents the Regular Agency Fund in General Fund - New General
Appropriation for Specific Budgets of National Government Agencies.
(Refer to Chapter 2 - The Unified Accounts Code Structure, Fund Cluster
Code Values)
 Next 4 digits (2016) - for the year.
 Next 2 digits (01) - for the month of January.
 Next 5 digits (00001) - for the serial number per fund cluster per year.
Therefore, based on the above illustration, the Serial No. 01-011011012016-01-00001
represents personnel services for Regular Agency Fund cluster in the General Fund -
New General Appropriations for Specific Budgets of National Government Agencies in
2016, January, series 00001.

b. MFO/FAP (103-00-1-00-00-00000)
 First 3 digits (103) - for the Sector Outcome Code Values including the Sub-
Sector Values. This 3-digit code is a result of the enhancement of the UACS
per Joint Circular No. 2014-1 dated November 7, 2014. It serves as a prefix
of the MFO/PAP Code per Joint Circular No. 2013-1. (Refer to Chapter 2 -
The Unified Accounts Code Structure, Sector/Horizontal Outcomes)
 Next 2 digits (00) - for the Horizontal Outcome Code Values. This 2 digit
code is a result of the enhancement of the UACS per Joint Circular No.
2014-1 dated November 7, 2014. It serves as a prefix of the MFO/PAP Code
per Joint Circular No. 2013-1. (Refer to Chapter 2 - The Unified Accounts
Code Structure, Sector/Horizontal Outcomes)
 Next 9 digits (1-00-00-00000) - for the following data: This last 5 digit code
is the result of the enhancement of the UACS per Joint Circular No. 2014-1
dated November 7, 2014 as expansion of the last segment (Activity Code -
2nd level) to ensure that there is sufficient number of Code Values
available for New MFO/PAP; thus the 4 digit code before enhancement for
the Activity Code - 2nd level becomes 5 digits. (Refer to Chapter 2 - The
Unified
 Accounts Code Structure, Program/Project/Purpose, MFO/Project Category
Code)
o First digit (1) - for the program.
o Next 2 digits (00) - for the MFO.
o Next 2 digits (00) - for the Activity Code - 1st level
o Next 5 digits (00000) - for the Activity Code - 2nd level

c. UACS Object Code (5-01-02-040)

This represents the account code structure per COA Circular No. 2013-002 dated
January 30, 2013 as amended by COA Circular No. 2014-003 dated April 15, 2014.
From the Revised Chart of Accounts, this account code represents Personnel
Services - Clothing/Uniform Allowance.
To accomplish the above Obligation Request and Status (ORS) for Supplier - B, note the
following information for purposes of this illustration:
a. Serial No. (02-01101101-2016-01-00002)
 First 2 digits (02) - for allotment class Maintenance and Other Operating
Expenses (MOOE).
 Next 8 digits (01101101) - for UACS Fund Source Code. The 6 digits Funding
Source Code per Joint Circular No. 2013-1 was enhanced to add another
two digit code for the Fund Cluster for purposes of accounting, banking
and reporting, thus it becomes 8 digits. This 8 digit code represents the
Regular Agency Fund in General Fund - New General Appropriation for
Specific Budgets of
 National Government Agencies. (Refer to the information in ORS for
Supplier A in the preceding section)
 Next 4 digits (2016) - for the year.
 Next 2 digits (01) - for the month of January.
 Next 5 digits (00002) - for the serial number per fund cluster per year.
Therefore, based on the above illustration, the Serial No. 02-011011012016-01-
00002 represents MOOE for the Regular Agency Fund cluster in the General Fund
- New General Appropriations for Specific Budgets of National Government
Agencies in 2016, January, series 00002.
 b. MFO/PAP (103-00-1-00-00-00000)
(Refer to Obligation Request and Status of Supplies - A with the same MFO/PAP
number.)

c. UACS Object Code (5-02-03-010)

This represents the account code structure per COA Circular No. 2013-002 dated
January 30, 2013 as amended by COA Circular No. 2014-003 dated April 15, 2014.
From the Revised Chart of Accounts, this account code represents Maintenance
and Other Operating Expenses - Office Supplies.

To accomplish the above Obligation Request and Status (ORS) for Supplier -B, note the
following information for purposes of this illustration:
a. Serial No. (06-01101101-2016-01-00003)
 First 2 digits (06) - for allotment class Capital Outlay.
 Next 8 digits (01101101) - for UACS Funding Source Code. The 6 digits
Funding Source Code per Joint Circular No. 2013-1 was enhanced to add
another two digit code for the Fund Cluster for purposes of accounting,
banking and reporting, thus it becomes 8 digits. This 8 digit code
represents the Regular Agency Fund in General Fund - New General
Appropriation for Specific Budgets of
 National Government Agencies. (Refer to the information in ORS for
Supplier A in the preceding section)
 Next 4 digits (2016) - for the year.
 Next 2 digits (01) - for the month of January.
 Next 5 digits (00003) - for the serial number per fund cluster per year.
Therefore, based on the above illustration, the Serial No. 06-011011012016-01-
00003 represents Capital Outlay for the Regular Agency Fund cluster in the
General Fund - New General Appropriations for Specific Budgets of National
Government Agencies in 2016, January, series 00002.
 b. MFO/PAP (103-00-1-00-00-00000)
(Refer to Obligation Request and Status of Supplies - A with the same MFO/PAP
number.)

c. UACS Object Code (1-06-05-020)

This represents the account code structure per COA Circular No. 2013-002 dated
January 30, 2013 as amended by COA Circular No. 2014-003 dated April 15, 2014.
From the Revised Chart of Accounts, this account code represents Capital Outlay -
Office Equipment.

Registry of Allotments, Obligations, and Disbursements

(RAOD)
The Registries of Allotments, Obligations, and Disbursements (RAOD) shall be
maintained by the Budget Division/Unit of agencies to record allotments received for the
year, obligations incurred against the corresponding allotment, and 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 disbursements against
obligations incurred. The RAOD shall be maintained by appropriation act, fund cluster
(e.g ., Regular Agency Fund, Foreign Assisted Fund, Special Account Locally
Funded/Domestic Grants Fund, and Special Account - Foreign
Assisted/Foreign Grants Fund), MFO/PAP (the code per MFO/PAP as shown in the
(GAA/SARO/GARO), and allotment class (e.g ., Personnel Services (PS), Maintenance and
Other Operating Expenses (MOOE), Financial Expenses (FE), and Capital Outlay (CO), as
shown in the preceding illustrations.
To accomplish the above RAODs for different allotment class (Personnel Services,
Maintenance and Other Operating Expenses, and Capital Outlay), note the following
information for purposes of this illustration:
 UACS Object Code/Expenditures - this is the object code based on the UACS.
 Obligations - the amount of obligation incurred based on the approved ORS and
adjustments based on NORSA supported by pertinent documents.
 Unobligated Allotments - the balance of available allotment that can still be
obligated.
  Disbursements - the actual amounts paid based on Report of Checks Issued
(RCI)/Report of Authority to Debit Account Issued (RADAI)/Tax Remittance
Advice (TRA)/Journal Entry Voucher (JEV).
 Unpaid Obligations - Due and Demandable - the balance of obligation for
services rendered but not yet paid. (Payable less disbursement)
 Unpaid Obligations - Not Yet Due and Demandable - the amount of obligations
without services rendered. (Obligations less payable)

NOTE: For other registries not mentioned in the preceding illustrations, refer to
appendices at the later part of this book.