GOVERNMENT 2.2.

Accounting Responsibility
●​ The following offices are charged with
ACCOUNTING government accounting responsibility:
●​ Encompasses the processes of a.​ Commission on Audit (COA)
analyzing, recording, classifying, b.​ Department of Budget and
summarizing and communicating all Management (DBM)
transactions involving the receipt and c.​ Bureau of Treasury (BTr)
disposition of government funds and d.​ Government agencies
property, and interpreting the results
thereof." (State Audit Code of the 2.2.1 Responsibilities of each office
Philippines, P.D. No. 1445, Sec. 109) ●​ Responsibilities of COA
○​ Promulgate accounting and
1. Introduction auditing rules
1.1 Government vs. Business ○​ Keep the general accounts
○​ Submit financial reports
Accounting
●​ Responsibility of DBM
●​ Compared to the accounting for
○​ Implementation of the
business entities, government
national budget
accounting places greater emphasis on
●​ Responsibility of BTr
the following:
○​ Cash custody and control of
○​ Sources and utilization of
cash disbursements
government funds; and
●​ Responsibility of Government
○​ Responsibility, accountability
Agencies
and liability of entities
○​ Maintain accounting books
entrusted with government
and budget registries which
funds and properties.
are reconciled with the cash
records of the BTr and the
2. Government Accounting budget records of the COA
Framework and DBM.
2.1 Responsibility, Accountability, and
2.3. GAM for NGAS
Liability over Government Funds and
●​ The Government Accounting
Property
Manual for National Government
●​ Government resources must be
Agencies (GAM for NGAs) is
utilized efficiently and effectively in
promulgated by the COA under the
accordance with the law.
authority conferred to it by the
●​ The head of a government agency is
Philippine Constitution.
directly responsible for implementing
●​ The GAM for NGAs was promulgated
this policy.
primarily to harmonize the
●​ All other personnel entrusted with the
government accounting standards with
custody of government resources are
the International Public Sector
responsible to the head of the
Accounting Standards (IPSAS). The
government agency, are accountable
IPSASs are based on the IFRSS.
for the safeguarding thereof, and are
liable for any losses.
2.3.1 Objective of GAM for NGAs
●​ To update the following:
 ○​ Standards, policies, guidelines sufficient reason for failing to report
and procedures in accounting on a timely basis.
for government funds and 5.​ Reliability - Information must be free
property; from material error and bias, faithfully
○​ Coding structure and representing what it purports to show.
accounts; and -​ Trade-offs – Timeliness may
○​ Accounting books, registries, sometimes reduce reliability,
records, forms, reports and while delaying reporting for
financial statements. accuracy may reduce
relevance. The balance should
3. Accounting and Budget prioritize users' needs
6.​ Faithful representation - Information
Reporting Principles should reflect the economic substance
3.1 Basic Accounting and Budget of transactions, not just their legal
Reporting Principles form.
●​ Compliance with PPSAS and relevant 7.​ Substance over form - Transactions
laws, rules and regulations should be recorded based on their
●​ Accrual basis of accounting economic reality rather than just their
●​ Budget basis for presentation of legal form to ensure faithful
budget information in the financial representation.
statements 8.​ Neutrality - Financial information
●​ Revised Chart of Accounts must be unbiased, without
●​ Double entry bookkeeping manipulation to achieve a specific
●​ Financial statements based on outcome.
accounting and budgetary records 9.​ Prudence - is the exercise of a degree
●​ Fund cluster accounting of caution when making estimates
under conditions of uncertainty, such
3.2. Qualitative Characteristics as avoiding overstating assets or
1.​ Understandability - Information revenue and understating liabilities or
should be clear and comprehensible to expenses while avoiding excessive
users with reasonable knowledge of conservatism.
the entity’s activities and a willingness 10.​ Completeness - All necessary
to study the information. information must be included to
2.​ Relevance - Information must be ensure financial statements are not
capable of influencing users' misleading.
decisions. 11.​ Comparability - Users should be able
3.​ Materiality - Materiality affects the to compare financial statements across
relevance of information. Information different entities and time periods,
is material if its omission or with disclosures on policies and
misstatement affects decision-making, changes.
depending on the nature or size of the
item. 4. Components of General
4.​ Timeliness - Information should be
reported without undue delay to
Purpose Financials Statements
maintain its relevance. The complexity 1.​ Statement of Financial Position;
of an entity's operations is not a 2.​ Statement of Financial Performance;
 3.​ Statement of Changes in Net 6.1.1 Approaches
Assets/Equity; 6.1.1.1 Incremental budgeting
4.​ Statement of Cash Flows; ●​ The current year's budget is
5.​ Statement of Comparison of Budget formulated based on the previous
and Actual Amounts; and year's budget, which is just adjusted
6.​ Notes to the Financial Statements for any variances experienced in the
past. Presumably, the proposed
4.1. Asset recognition programs and expenditures in the
●​ An item is recognized as asset if it previous year are automatically
meets all of the following criteria: approved in the current year.
○​ It meets the definition of an ●​ Uses a "roll-over" approach.
asset; ●​ Prone to abuse.
○​ Probable inflow of future
economic benefits; and 6.1.1.2 Zero-based budgeting
○​ Reliable measurement of cost ●​ The current year’s budget is
or other value (e.g., fair formulated without regard to the
value). previous year's budget. Government
agencies are required to justify their
current year's proposed programs and
5. National Budget expenditures, irrespective of whether
●​ The national budget (government these are new or carried over from the
budget) is the government's estimate previous year.
of the sources and uses of government ●​ Uses a "back-to-zero" or "clean slate"
funds within a fiscal year. This forms approach.
the basis for expenditures and is the ●​ Promotes efficient and effective
government's key instrument for utilization of funds.
promoting its socio-economic
objectives. Note: The budget preparation in the
●​ Budget life cycle (PLEA): Philippines uses a “bottom-up” approach.
○​ Budget Preparation Under “bottom-up budgeting, participate in the
○​ Budget Legislation budget preparation, starting from the lowest to
○​ Budget Execution the highest levels of the government.
○​ Budget Accountability
6.1.2 Steps
6. Government Budgeting 6.1.2.1 Budget call
●​ The budget preparation starts when the
Process Department of Budget and
6.1 Budget Preparation Management (DBM) issues Budget
●​ Bottom-up approach Call to all government agencies. The
●​ Zero-based budgeting budget call contains, among other
1.​ Budget Call things, the next fiscal year's targets,
2.​ Budget Hearings the agency's budget ceiling, and other
3.​ Presentation to the Office of the guidelines in the completion and
President submission of agency budget
proposals.
6.1.2.2 Budget hearings - this contains the estimated
●​ Budget hearings are conducted after expenditures accompanied by
the agencies submit their budget estimates of expected sources
proposals. Each agency defends its of financing
budget proposal before the DBM. The ○​ Other documents aimed to
DBM deliberates on the budget provide further explanation of
proposals, makes recommendations, selected items in the NEP (e.g,
and consolidates the deliberated details of key programs and
proposals into the National projects and staffing
Expenditure Program (NEP) and summary).
Budget of Expenditures and Sources
of Financing (BESF). The DBM then 6.2 Budget Legislation
submits the proposed budget to the ●​ Government funds shall only be spent
President. in pursuance of an appropriation made
●​ The President shall submit the by law. Therefore, due process must
proposed budget to the Congress be undertaken to legalize the proposed
within 30 days from the opening of budget.
every regular session. (Art. VII, Sec. 1.​ House Deliberations
22. Philippine Constitution) 2.​ Senate Deliberations
3.​ Bicameral Deliberations
6.1.2.3 Presentation to the Office of the 4.​ President’s Enactment
President
●​ The President and Cabinet members
6.2.1 Types
review the proposed budget. After the
6.2.1.1 House Deliberations
President approves the proposed ●​ Upon receipt of the President's
budget, the DBM finalizes the budget Budget, the House of Representatives
documents to be submitted to the conducts hearings to scrutinize the
COngress. At this point, the proposed various agencies' respective proposed
budget is referred to as the "President's programs and expenditures.
Budget.” Thereafter, the House of
●​ The "President's Budget" contains the Representatives prepares the General
following documents which are Appropriations Bill (GAB).
intended to assist the Congress in their
review and deliberation of the 6.2.1.2 Senate Deliberations
proposed national budget: ●​ The Senate conducts its own
○​ President's Budget Message deliberations on the GAB. These
- this contains the President's normally start after the Senate receives
explanation of the country's the GAB from the House of
fiscal policy and budget Representatives. However, for
priorities expediency, hearings in the Senate
○​ National Expenditure start even as Representatives
Program (NEP) - this deliberations are ongoing.
contains the details of all the
government entities' proposed 6.2.1.3 Bicameral Deliberations
expenditures in the coming ●​ After deliberations in both houses are
year. finished, a committee called the
○​ Budget of Expenditures and Bicameral Conference Committee is
Sources of Financing (BESF) formed to harmonize any conflicts
 between the Representatives and 1.​ New General Appropriations -
Senate versions of the GAB. The annual authorizations for incurring
harmonized GAB ('Bicam' version) is obligations, as listed in the GAA.
submitted back to both Houses for 2.​ Continuing Appropriations -
ratification. After ratification, the final authorizations to support the
GAB is submitted to the President for incurrence of obligations beyond the
enactment. budget year (e.g., multi-year
construction projects).
6.2.1.4 President's enactment 3.​ Supplemental Appropriations -
●​ The President enacts the budget,
additional appropriations to augment
which is now known as the General
the original appropriations which
Appropriations Act (GAA). Before
proved to be insufficient.
enactment though, the President may
4.​ Automatic Appropriations -
exercise his veto power as conferred to
authorizations programmed annually
him under the Philippine Constitution.
which do not require periodic action
●​ When the proposed budget is not
by Congress.
enacted before the fiscal year starts,
5.​ Unprogrammed Funds - standby
the last year's GAA is automatically
reenacted. The last year's GAA shall appropriations which may be availed
be used in the current year until a new only upon the occurrence of certain
general appropriations bill is passed instances.
by the Congress. (Art. VI, Sec. 25(7). 6.​ Retained Income/Funds - collections
Philippine Constitution) which the agencies can use directly in
their operations.
6.2.2 The Approved Budget 7.​ Revolving Funds - receipts from
●​ Approved Budget - is the expenditure business-type activities of agencies
authority derived from appropriation which are authorized to be constituted
laws, government ordinances, and as such. These are self-liquidating and
other decisions related to the all obligations and expenditures
anticipated revenue or receipts for the incurred by virtue of said
budgetary period. business-type activity shall be charged
●​ The approved budget consists of the against the fund.
following: 8.​ Trust Receipts - receipts by a
1.​ New General Appropriations government agency acting as agent.
2.​ Continuing Appropriations
3.​ Supplemental Appropriations 6.3 Budget Execution
4.​ Automatic Appropriations ●​ Release Guidelines and Budget
5.​ Unprogrammed Funds Execution Documents
6.​ Retained Income/Funds ○​ Major recipients of budget:
7.​ Revolving Funds ■​ NGAs
8.​ Trust Receipts ■​ LGUs
■​ GOCCs
6.2.2.1 Appropriation ●​ Allotment
●​ Appropriation - is the authorization ●​ Incurrence of Obligations
made by a legislative body to allocate ●​ Disbursement Authority
funds for purposes specified by the
legislative or similar authority.
6.3.1 Allotment 4.​ Cash Disbursement Ceiling -
●​ Allotment - is an authorization issued authority issued by the DBM to
by the DBM to government agencies agencies with foreign operations
to incur obligations for specified allowing them to use the income
amounts contained in a legislative collected by their Foreign Service
appropriation in the form of budget Posts to cover their operating
release documents. It is also referred requirements.
to as Obligational Authority.
●​ The DBM formulates the Allotment Various terms
Release Program (ARP) to set the ●​ Appropriation - authorization by a
limit for allotment releases during the legislative body to allocate funds for
upcoming year. This is used as a specified purposes.
control device to ensure that releases ●​ Allotment - authorization to agencies
conform to the national budget. to incur obligations (i.e., obligational
Alongside, is a Cash Release authority).
Program (CRP), which sets the ●​ Obligation - amount contracted by an
disbursement limits for the year, for authorized officer for which the
each quarter and for each month. government is held liable.
●​ It is illegal for a government entity to ●​ Disbursement - actual amount paid out
incur obligations without having first of the budgeted amount.
received the "Allotment." Moreover,
the type and amount of obligations to 6.4 Budget Accountability
be incurred must conform to those that
are specified in the "Allotment." 6.4.1 Budget Accountability Reports
●​ Monthly Report of Disbursements -
6.3.2 Disbursement Authority shows the disbursements of the entity
1.​ Notice of Cash Allocation (NCA) - during the month, classified according
authority issued by the DBM to to the type of disbursement authority.
central, regional and provincial offices This report is submitted to the COA
and operating units to cover their cash and DBM within 30 days after the. end
requirements. The NCA specifies the of each month.
maximum amount of cash that can be ●​ Quarterly Physical Report of
withdrawn from a government Operation - shows the agency's
servicing bank in a certain period. physical accomplishments in a given
2.​ Notice of Transfer of Allocation - quarter vis-à-vis its physical targets.
authority issued by an agency's ●​ Statement of Appropriations,
Central Office to its regional and Allotments, Obligations,
operating units to cover the latter's Disbursements and Balances - shows
cash requirements. the agency's authorized appropriations,
3.​ Non-Cash Availment Authority - allotments received, obligations
authority issued by the DBM to incurred, disbursements made and the
agencies to cover the liquidation of balances of unreleased appropriations,
their actual obligations incurred unobligated allotments, and unpaid
against available allotments for obligations.
availment of proceeds from ●​ Summary of Appropriations,
loans/grants through supplier's Allotments, Obligations,
credit/constructive cash. Disbursements and Balances by
 Object of Expenditures - similar to 'c'
above but provides details of
expenditures (e.g, salaries and wages,
traveling expenses, etc.).
●​ List of Allotments and
Sub-Allotments - shows the allotments
received by the agency from the DBM
and the sub allotments issued by the
agency's Central Office or Regional
Office to lower operating units.
●​ Statement of Approved Budget, 7. Government Accounting
Utilizations, Disbursements and Process
Balances - this report is prepared by
7.1 Responsibility Accounting
agencies that have authority to use
●​ Responsibility accounting is a system
their revenue. It shows the budgeted
of providing cost and revenue
and revenue, the utilizations and
information over which a manager has
disbursements thereof, and the
direct control of.
unutilized amount.
●​ It requires the identification of
●​ Summary of Approved Budget,
responsibility centers and the
Utilizations, Disbursements and
distinction between controllable and
Balances by Object of Expenditures -
non-controllable costs.
similar to 'f above but provides details
of expenditures. and
7.2 Journals and Ledgers
●​ Quarterly Report of Revenue and
1.​ Journals
Other Receipts - shows the actual
a.​ General Journal
revenues and other receipts remitted to
b.​ Cash Receipts Journal
the BTr and deposited in authorized
c.​ Cash Disbursements Journal
government depository banks in a
d.​ Check Disbursements Journal
given quarter.
2.​ Ledgers
Note: Reports b' to 'h' above are prepared on a
a.​ General Ledgers
quarterly basis and are submitted to the COA
b.​ Subsidiary Ledgers
and DBM within 30 days after the end of each
3.​ Registries
quarter
a.​ Registries of Revenue and
Other Receipts (RROR)
6.4.2 Performance Reviews
b.​ Registry of Appropriations
●​ The DBM and COA perform periodic
and Allotments (RAPAL)
reviews of the agencies' performance
c.​ Registries of Allotments,
and budget accountability and report
Obligations and
to the President.
Disbursements (RAOD)
d.​ Registries of Budget,
6.4.3 Audit
Utilization and Disbursements
●​ The COA audits the agencies.
(RBUD)
●​ Technically, only the Journals and
Budget Cycle
Ledgers are considered accounting
records. These are similar to the
accounting records of a business
entity. The Registries are budget
 records. These are used to monitor the 7.4 Object of Expenditures
budget. You may think of the registries ●​ Personnel Services (PS) - pertain to
like logbooks" or something, rather all types of employee benefits.
than accounting books with debit and ●​ Maintenance and Other Operating
credit columns. Expenses (MOOE) - pertain to
●​ The accounting unit of the agency various operating expenses other than
maintains the Journals and Ledgers employee benefits and financial
while the budget division of the expenses.
agency maintains the Registries. ●​ Financial Expenses (FE) - pertain to
Recall that separate accounting finance costs.
records and budget registries are ●​ Capital Outlays (CO) - pertain to
maintained for each fund cluster capitalizable expenditures.

7.3 Budget Registries Example:

1.​ Registries of Revenue and Other Allotment
Receipts (RROR) - used to monitor Entity A receives its allotment from the DBM
the budgeted amounts, actual consisting of the following
collections and remittances of revenue ​ Personnel Services (PS) ​
and other receipts. ​ ​ ​ ​ 90,000
2.​ Registry of Appropriations and ​ Maintenance and Other Operating
Allotments (RAPAL) - used to Expenses (MOOE) ​ 40,000
monitor appropriations and allotments. ​ Financial Expenses (FE) ​
This is to ensure that allotments will ​ ​ ​ ​ -
not exceed appropriations. ​ Capital Outlays (CO) ​ ​
3.​ Registries of Allotments, ​ ​ ​ ​ 170,000
Obligations and Disbursements ​ Total allotment ​​ \​
(RAOD) - used to monitor the ​ ​ ​ 300,000
allotments received, obligations
incurred against the corresponding The receipt of the allotment is posted
disbursements made. This is to ensure (recorded) in the Registry of Appropriations
that obligations allotment, and the and Allotments (RAPAL) and Registries of
actual incurred will not exceed Allotments, Obligations and Disbursements
allotments while actual disbursements (RAOD) as follows:
will not exceed the obligations
incurred
4.​ Registries of Budget, Utilization and
Disbursements (RBUD) - used to
record the approved special budget
and the corresponding utilizations and
disbursements charged to retained
income. Separate RBUDs are also
maintained for each object of
expenditure, i.e., (a) RBUD-PS; (b)
RBUD-MOOE; (¢) RBUD-FE; and
(d) RBUD-CO.
7.5 Incurrence of Obligation 7.5.2 Notice of Obligation Request and
7.5.1 Obligation Request and Status (ORS) Status Adjustment (NORSA)
●​ Obligations shall be incurred through
●​ If the obligations recorded in the
the issuance of Obligation Request
RAOD and ORS above need to be
and Status (ORS). The Requesting
adjusted, the subsequent adjustment
Office shall prepare this document,
shall be made through the use of the
supported by valid claim documents
Notice of Obligation Request and
like disbursement vouchers, payrolls,
Status Adjustment (NORSA). The
purchase/job orders, itinerary of travel,
adjustment shall be effected through a
etc.
positive entry (addition) or a negative
●​ The Head of the Requesting Office
entry (reduction), as appropriate.
shall certify the necessity and legality
●​ Up to this point, nothing is recorded
of the obligation and the validity of
yet in the accounting books. The
the supporting documents. The Head
recordings above are made on the
of the Budget Division shall certify the
budget registries entries shall be made
availability of the allotment.
only after: the employees have
rendered services b. the office supplies
Example:
are delivered and received; and C.the
Entity A enters into the following contracts:
office equipment is delivered and
Personnel Services- Employment contracts
received.
(Job Order) amounting to P70,000.
Maintenance and Other Operating Services-
7.5.3 Disbursement Authority Notice of
Purchase contract for office supplies worth
Cash Allocation (NCA)
P25,000.
●​ Entity A receives Notice of Cash
Capital Outlays - Purchase contract for office
Allocation (NCA) from the DBM
equipment worth P160,000.
amounting to P200,000, net of tax.
●​ This time a journal entry shall be
made in the accounting books because
the financial statement elements of the
entity are now affected, i.e., increase
in cash and increase in revenue.

The entry is as follows:

Cash-MDS, Regular​ ​ 200,000
Incurre
​ Subsidy from National Government ORS and
nce of
200,000 appropriate None
Obligati
RAODs
​ To recognize receipt of NCA from ons
DBM
Cash-MDS,
Regular xx
The NCA is posted (recorded) in the RANCA NCA RANCA
Subsidy from
as follows: NG xx

Expense/Asset
xx
Payable
Updating of
xx
Disburs ORS and
ements appropriate
Payable
RAODs
xx
Cash-MDS,
"The NCA specifies the maximum amount of Regular xx
withdrawal that an entity can make from a
government bank for the period indicated. The Tax Cash TRA
Collecting Officer shall not issue an official Remitta xx
receipt (OR) for the receipt of NCA." Since nce Subsidy from
Updating of
Advice NG xx
the receipt of the NCA does not constitute a ORS and
collection that is recordable in the Cash (TRA) appropriate
* Used for Due to BIR
Receipts Journal RAODs
remittance xx
of taxes
Cash TRA
withheld
Example: xx

AR
xx
Cash-CO
xx
Billings
, Cash-CO
RROR,
Collecti xx
RCD/CRRe
on, & AR
g (not illustrated)
Remitta xx
nces
7.6 Basic Recording Cash treasury/agency
deposit, regular xx
Recording In Cash-CO
Transa xx
Registries
ction Journal &
& Other Reversi Subsidy from NG
Ledger
Records on of xx
RANCA
Unused Cash-MDS,
Approp NCA Regular xx
RAPAL None
riation

RAPAL and
Allotme
appropriate None
nt
RAODs
8. Government Revenue and b.​ It is probable that economic
benefits will flow to the
Disbursement entity;
8.1 Accounting for Revenues c.​ Revenue can be measured
●​ All revenues shall be remitted to the reliably; and
BTr and included in the General Fund, d.​ Costs relating to the
unless another law specifically allows transaction can be measured
otherwise. Recording in other types of reliably.
funds (e.g., Special Fund) shall be ●​ When the outcome cannot be
made only when authorized by law. estimated reliably, revenue is
●​ Receipts shall be properly recognized only to the extent of
acknowledged through pre-numbered recoverable costs.
ORS. Receipts can be in the form of ●​ Interest is recognized on a time
checks. proportion basis that takes into
●​ Revenues may arise from exchange account the effective yield on the
and non-exchange transactions. asset;
Exchange transaction - examples: sale of ●​ Royalties is recognized as they are
goods and rendering of services. earned in accordance with the
Non-exchange transactions - examples: tax substance of the relevant agreement;
revenue, fines and penalties and donations. and
■​ Revenue from non-exchange ●​ Dividends are recognized when the
transactions are derived mostly from entity’s right to receive payment is
taxes, fines and penalties, gifts, established.
donations and goods in-kind. ●​ When an amount already recognized
●​ Gifts, donations, and as revenue becomes uncollectible, it is
goods-in-kind: recognized as recognized as expense (i.e.,
revenue measured at fair impairment loss) rather than as an
value when it is probable that adjustment to the revenue originally
future economic benefits will recognized.
flow to the entity.
-​ If without condition, 8.1.1 Measurement of Revenue from
recognized immediately as Exchange Transactions
revenue. ●​ Revenue from exchange transactions
-​ If with condition, initially are measured at the fair value of the
recognized as liability and consideration received or receivable
recognized as revenue only ●​ Any trade discounts and volume
when the condition is rebates shall be taken into account.
satisfied.
●​ Revenue from rendering of services is 8.1.2 Others
recognized on a straight line basis over ●​ Services in-kind — not recognized as
the contact term. revenue.
●​ However, revenue is recognized by ●​ Debt Forgiveness — carrying amount
reference to the stage of completion if of debt forgiven is recognized as
the outcome of the transaction can be revenue.
estimated reliably, such as when all of ●​ Bequests — (transfers made according
the following conditions are satisfied: to the provisions of a deceased
a.​ The stage of completion can person's will) recognized as revenue
be measured reliably
 measured at fair value, if asset constructive remittance to BIR
recognition criteria are met. and BOC of taxes and
●​ Grant with Condition — initially customs' duties withheld, and
recognized as liability until condition the constructive receipt of
is satisfied. NCA for those taxes and
●​ Pledges — (unenforceable promises to customs duties;
give) not recognized as revenue. (2)​ in the books of the BIR and
●​ Concessionary Loans — (loans w/ BOC, the constructive receipt
below-market rate) difference b/w fair of tax revenue and customs
value and transaction price is duties; and
recognized as revenue, if (3)​ in the books of the BTr, the
non-exchange transaction. constructive receipt of the
●​ When an amount already recognized taxes and customs duties
as revenue becomes uncollectible, it is remitted.
recognized as expense (i.e.,
impairment loss) rather than as an d.​ Non-Cash Availment Authority (NCAA)
adjustment to the revenue originally The NCAA is the authority issued by
recognized. the DBM to agencies to cover the
liquidation of their actual obligations
8.2 Accounting for Disbursements incurred against available allotments
●​ Constitute all payments in cash, in for availment of proceeds from
whatever manner, i.e., cash, check or loans/grants through supplier's
cashless payment. credit/constructive cash.
●​ Shall be supported by Disbursement
Vouchers (including Petty Cash e.​ Cash Disbursement Ceiling (CDC)
Vouchers) or Payroll. The CDC is the disbursement
authority issued by the DBM to
8.2.1 Disbursement Authority agencies with foreign operations
a.​ Notice of Cash Allocation (NCA) allowing them to use the income
The NCA is an authority issued by the collected by their Foreign Service
DBM to central, regional and Posts to cover their operating
provincial offices and operating units requirements.
to cover their cash requirements. The
NCA specifies the maximum amount 8.2.2 Basic Requirements & Certification
of cash that can be withdrawn from a for Disbursement
government servicing bank in a certain ●​ Budget Officer - certifies the
period. availability of allotment.
●​ Chief Accountant - certifies the
b.​ Notice of Transfer of Allocation (NTA) availability of funds and the
The NTA is an authority issued by an completeness of the supporting
agency's Central Office to its regional documents.
and operating units to cover the latter's ●​ Head of the Requesting Unit -
cash requirements. certifies the necessity and legality of
disbursements.
c.​ Tax Remittance Advice (TRA) ●​ Head of Agency - approves all
The TRA is used to recognize: Disbursement Vouchers (DVs) and
(1)​ in the books of national Payroll.
government agencies, the
8.3 Modes of Disbursements Elect
●​ Check roni
●​ Cash c The eMDS is like the ADA except
●​ Cashless payments: Mod that disbursements are made directly
○​ Advice to Debit Account ified from the accounts of the BTr that are
(ADA) Disb maintained with the Land Bank of
urse the Philippines (LBP). Agencies
○​ Electronic Modified
ment subscribed under LBP's eMDS can
Disbursement System (eMDS) Syste make online disbursements for
○​ Cashless Purchase Card m selected transactions.
System (Credit Card) (eM
○​ Non-Cash Availment DS)
Authority (NCAA)
Disbursements under the CPC
○​ Tax Remittance Advice (TRA) System are made through the use of
an
Disb Cash electronic card (i.e., credit card).
urse less
men Purc Office Supplies Inventory xx
t hase Accounts Payable xx
Card To recognize purchase of office supplies
thro through CPC
ugh (CP
C)
Accounts Payable xx
Asset/Expense/Liability xx Cash MDS, Regular xx
Cash MDS, regular xx To recognize settlement of CPC billing
Chec MDS ⇒ modified disbursement system statement
k
Asset/Expense/Liability xx Non-
CIB, local, current acc xx Cash
CIB ⇒ Cash in Bank
Avail
ment
Auth
●​ To record the grant of cash ority
advances (NC
Cash AA)
●​ To record the liquidation of
cash advances
Tax
Rem
ittan
The ADA is an accountable form ce
used as an authorization issued by a Advi
government agency to the ce
Advi MDS-GSB instructing the bank to (TR
ce to debit a specified amount from its A)
Debi available NCA to pay the
t creditors/payees listed in the
Acco LDDAP-ADA. 8.4 Disallowances
unt ●​ Disallowances - expenditures made by
(AD Accounts Payable xx an agency that are subsequently
A) Cash MDS, Regular xx invalidated or disallowed by the COA
To recognize payment of payables to
suppliers/contractors through ADA because they are found to be irregular,
unnecessary, excessive, extravagant or
unconscionable. Disallowances are
 recorded in the books of accounts only
when they become final and 9.1.4 Statement of changes in net
executory. assets/equity
Shows the increase or decrease in the entity's
9. Financial Statements and net assets during the period resulting from the
following:
Reporting
a.​ Surplus or deficit for the period;
9.1 Components of General Purpose b.​ Items of revenue and expense that are
Financial Statements recognized directly in equity;
1.​ Statement of Financial Position; c.​ Effects of changes in accounting
2.​ Statement of Financial Performance; policies and corrections of errors; and
3.​ Statement of Changes in Net d.​ The balance of accumulated surpluses
Assets/Equity;
or deficits at the beginning of the
4.​ Statement of Cash Flows;
period and at the reporting date, and
5.​ Statement of Comparison of Budget and
Actual Amounts the changes during the period.
6.​ Notes to the Financial Statements
9.2 Statement of Comparison of Budget
9.1.1 Statement of financial position and Actual Amounts
The statement of financial position is ●​ The statement of comparison of budget
presented in comparative, condensed and and actual amounts shows the
detailed formats. differences (variances) between
1.​ Condensed Statement of Financial budgeted amounts and actual results
Position – presents only line items. for a one reporting period.
2.​ Detailed Statement of Financial ●​ Original Budget — is the initially
Position – presents all the asset, approved budget for the period,
liability and equity accounts in the usuallv the GAA.
Revised Chart of Accounts ●​ Final Budget — the original budget
adjusted for all reserves, carry-over
9.1.2 Statement of financial performance amounts, realignments transfers
Generally, revenue and expenses are "cations and other authorized
recognized in surplus or deficit, except for the legislative or similar authority changes
following which are recognized directly in applicable the period.
equity: ●​ Actual amounts on a comparable basis
a.​ Correction of prior period errors; — represent the Actual disbursements
b.​ Effect of changes in accounting made during the perdd. Since the
policies; and 'actual amounts on a comparable basis'
c.​ Gains or losses on remeasuring to the budgeted amounts are on a
available-for-sale financial assets. “Cash Basis”, they may not be equal
to the amounts presented in the other
9.1.3 Statement of cash flows FS, which are on “Accrual Basis”.
Shows the sources and utilizations of cash and
cash equivalents during the period according 9.3 Changes in Accounting Policies and
to the following activities: Estimates
1.​ Operating activities — presented using 9.3.1 Changes in Accounting Policies
the Direct Method only. A change in accounting policy is accounted for
2.​ Investing activities as follows:
3.​ Financing activities
 1.​ Using the transitional provision, if ●​ The following are the three forms of
any; joint ventures:
2.​ In the absence of a transitional 1.​ Jointly controlled operations -
provision, by retrospective each venturer uses and
application; or recognizes its own assets,
3.​ If retrospective application is incurs its own liabilities and
impracticable, by prospective expenses, but each will share
application. in the income from sales by
the joint venture. (KKB)
9.3.2 Changes in Accounting Estimates 2.​ Jointly controlled assets - each
A change in accounting estimate is accounted venturer recognizes its share
for by prospective application. in the assets, liabilities,
income and expenses of the
9.3.3 Errors joint venture, classified
Material prior period errors are corrected by according to the nature of
retrospective restatement. those items, rather than
through an investment
account. (chip-in)
10. Special Topics in
3.​ Jointly controlled entities - a
Government Accounting separate entity is established.
10.1 Service Concession Arrangements
●​ Is a binding arrangement between a
grantor and an operator in which:
a.​ The operator uses the service
concession asset to provide a
public service on behalf of the
grantor for a specified period
of time; and
b.​ The operator is compensated
for its services over the period
of the service concession
arrangement.
●​ Grantor — is the public sector entity
(government entity) that grants the
right to use the service concession
asset to the operator.
●​ Operator — is the private entity that
uses the service concession asset to
provide public services subject to the
grantor's control of the asset.

10.2 Joint Venture

●​ Binding arrangement whereby two or
more parties are committed to
undertake an activity that is subject to
joint control.