Government Accounting

1. Government accounting

- encompasses the processes of analyzing, recording, classifying, summarizing and communicating all
transactions involving the receipt and disposition of government funds and property, and interpreting
the results thereof." (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109)

- a process of producing information that is useful in making economic decisions

2. sources of government funds

- include receipts from taxes and other fees, borrowings, and grants from other governments and
international bodies.

3. utilization of government funds

- includes expenditures on programs, projects, unanticipated losses from calamities and the like.

4. Government resources

- shall be utilized efficiently and effectively in accordance with the law.

5. Head of a government agency

- is directly responsible in implementing this policy and is primarily responsible for government
resources entrusted to his agency.

- This is where those who are entrusted with the possession of government resources are directly
responsible. .

6. Accountability over Government Funds and Property

- A government officer entrusted with the possession of government resources is responsible for the
safekeeping

7. The transfer of government funds from one officer to another shall, except as allowed by law, be
made only after the authorization of the COA. The transfer shall be properly documented in an invoice
and receipt. (P.D. No. 1445)

Liability over Government Eunds and Property

8. . The unlawful use of government resources shall be the personal liability of the employee found to be
directly responsible therefor.

9. Every accountable officer

10. No accountable officer

- shall be relieved from liability merely because he has acted under the direction of a superior officer.
unless before that act, he has notified the superior officer, in writing, that the utilization is illegal.

11. Superior officer

- shall be primarily liable while the accountable officer who fails to serve the required notice shall be
secondarily liable

12. accountable officer

- shall immediately notify the COA for any loss of government funds from unforeseen events (force
majeure) within 30 days. Failure to do so will not relieve the officer of liability

13. accountable officer shall immediately notify the COA for any loss of government funds from
unforeseen events (force majeure) within 30 days. Failure to do so will not relieve the officer of liability.

14. Government officials

- are responsible in implementing this policy, are accountable for the government resources in their
custody, and are liable for any loss

15. Entity

- refers to a government agency, department or operating/field unit

16. Financial Reporting

- is the process of preparation, presentation and submission of general purpose financial statements and
other reports.

- The objective of this is to provide information about the entity that is useful to users for accountability
purposes and decision-making.

17. "old" government accounting system had been used for about five decades before it was replaced by
the New Government Accounting System (NGAS) in 2002.

18. January 1, 2016

19. GAM for NGAs

- was promulgated primarily. to Charmonize the government accounting standards with international
accounting standards, particularly the International Public Sector Accounting Standards (IPSAS).

20. IPSAS

- International Public Sector Accounting Standards

- The IPSASs are based on the International Financial Reporting Standards (IFRS)

21. GAM for NGAs

-is promulgated by the Commission on Audit (COA) based on the authority conferred to it by the
Philippine Constitution:

- Preparing general purpose financial statements in accordance with the Philippine Public Sector
Accounting Standards (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.

22. Books of accounts

- are maintained by fund cluster (i.e., according to the types of funds being accounted for

23. Accrual basis of accounting

-transactions are recognized when they occur (and not only when cash is received or paid). Therefore,
transactions are recognized in.the periods to which they relate

24. Qualitative characteristic

- are the attributes that make information useful to users.

25. General Purpose Financial Statements

- are those intended to meet the needs of users who are not in a position to demand reports tailored to
meet their particular information needs.

26. Control

- means the ability to benefit from an asset or prevent others from benefitting from that asset.
- Possession or ownership normally the evidences of it.

27. Benefit

- means the ability toduse, exchange, lease, sell or use the asset to settle liabilities, or distribute it to
owners.

28. Past event

-A transaction or event giving rise to control of future economic, benefits must have occurred.

- A mere intention to acquire assets in the future does not result to the recognition of assets in the
present.

29. Contributions from owners

- are future economic benefits that have been contributed to the entity by external parties which do not
result to liabilities of the entity and for which the contributor obtains interest in the net assets of the
entity

30. Revenue funds

- comprise all funds derived from the income of any agency of the government and available for
appropriation or expenditure in accordance with law.

31. Expenses

- are 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.

32. Distributions to owners

- are future economic benefits distributed by the entity to its owners, either as a return on investment
or as a return of investment.

Liability over Government. Funds and Property...

* The objectives of government accounting are:

a) To produce information concerning past operations and present conditions

b) To provide a basis for guidance for future operations;

c) To provide for control of the acts of public bodies and officers in the receipt, disposition and utilization
of funds and property; and
d) To teport on the financial position and the results of operations of government agencies for the
information of all persons concerned

*Government accounting, places greater emphasis on the following:

a. Sources and utilization of government funds; and

b. Responsibility, accountability and liability of entities entrusted with government funds and properties

* offices charged with government accounting responsibility:

a. Commission on Audit (COA)

- Has the exclusive authority to promulgate accounting and auditing rules and regulations.

- Keeps the general accounts of the government, supporting vouchers, and other documents.

- Submits financial reports to the President and Congress

b. Department of Budget and Management (DBM)

- is responsible for the formulation and implementation of the national budget with the goal of attaining
the nation's socio-economic objectives.

c. Bureau of Treasury (BTr)

- functions under the Department of Finance and is the cash custodian of the government

- authorized to receive and keep national funds and manage and control the disbursements

- authorized to maintain accounts of financial transactions of all national government offices, agencies
and instrumentalities.

d. Government agencies

- refers to any department, bureau or office of the national government, or any of its branches and
instrumentalities, or any political subdivision, as well as any government owned or controlled
corporation (GOCC), including its subsidiaries, or other self-governing board or commission of the
government.

- are responsible in directly implementing the projects of, and performing the functions delegated by,
the government

- are required by law to have accounting units/divisions/departments.

The GAM for NGAs aims to update the following:

a. Standards, policies, guidelines and procedures in accounting for government funds and property;

b. Coding structure and accounts; and

c. Accounting books, registries, records, forms, reports and financial statements

* Basic Accounting and Budget reporting Principles The financial records and reports of government
entities shall comply with the following:

1. Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules and regulations;

2. Accrual basis of accounting:

- Under the accrual basis of accounting, transactions are recognized when they occur (and not only
when cash is received or paid). Therefore, transactions are recognized in.the periods to which they
relate.

3. Budget basis for presentation of budget information in the financial statements;

4. Revised Chart of Accounts prescribed by COA;

5. Double entry bookkeeping;

6. Financial statements based on accounting and budgetary records; and

7. Fund cluster accounting.

- The books of accounts are maintained by fund cluster (i.e., according to the types of funds being
accounted for

*Qualitative Characteristics of Financial Reporting

1. Understandability

- . Accordingly, users are assumed to have

i. reasonable knowledge of the entity's activities; and

ii. willingness to study the information.

- Information can assist users in evaluating past, present or future events or in confirming or correcting
past evaluations.

- information must also be timely

3. Materiality -

- affects the relevance of information.

- Information is material if its omission or misstatement could influence the decisions of users. - It
depends on the nature or size of the item or error, judged in the particular circumstances of its omission
or misstatement

4. Timeliness

- Information loses its relevance if there is undue delay in its reporting. The complexity of an entity's
operations is not a sufficient reason for failing to report on a timely basis

5. Reliability

- information is free from material error and bias, and can be depended on by users to represent
faithfully that which it purports to represent or could reasonably be expected to represent.

7. Faithful representation

- Information to represent faithfully transactions and other events, it should be presented in accordance
with the substance of the transactions and other events, and rot merely their legal form

8. Substance over form

- The substance of transactions or other events is not always consistent with their legal form

9. Neutrality

- Information is neutral if it is free from bias.

- Information shall not be selected or presented in a manner that is designed to influence the user's
decision in order to achieve a predetermined outcome.

10. Prudence

-is the exercise of a degree of caution when making estimates under conditions of uncertainty, such that
assets or revenue are not overstated and liabilities or expenses are not understated.
- does not allow the creation of hidden reserves or excessive provisions, the deliberate, understatement
of assets or revenue, or the deliberate overstatement of liabilities or expenses, because the financial
statements would not be neutral and, therefore, not reliable.

11. Completeness

- Information should be complete within the bounds of materiality and cost.

12. Comparability

- This is when users are able to identify similarities and differences between that information and
information in other reports.

- It applies to the comparison of financial statements of different entities and comparison of the
financial statements of the same entity over different periods.

- It requires that users must be informed of the entity's policies, changes to those policies, and the
effects of those changes and that financial statements show corresponding information for preceding
periods.

* Components of General Purpose Financial Statements

a. Statement of Financial Position;

b. Statement of Financial Performance;

c. Statement of Changes in Net Assets/Equity;

d. Statement of Cash Flows;

e. Statement of Comparison of Budget and Actual Amounts; and 1. Notes to the Financial Statements,
comprising a summary of significant accounting policies and other explanatory notes.

*Elements of the financial statements

1. ASSETS

- are resources controlled by an entity as a result of past events, and from which future economic
benefits or service potential are expected to flow to the entity.

- It is recognized when it is probable that the future economic benefits will flow to the entity

- It is recognized when it cost or value (e.g., fair value) that can be measured reliably.

* The key features of an asset are:

a. The benefits must be controlled by the entity;

c. Future economic benefits or service potential must be expected to flow to the entity.

2. Liabilities

- are present obligations of the entity arising from past events, the settlement of which is expected to
result in an outflow from the entity of resources embodying economic benefits or service potential.

3. EQUITY/ Net assets

- is the residual interest in the assets of the entity after deducting all its liabilities.

4. Revenue

- is 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.