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.
Sources of government funds include receipts from taxes and other fees, borrowings, and grants from
other governments and international bodies.
Utilization of government funds includes expenditures on programs, projects, unanticipated losses from
calamities and the like.
Responsibility over Government Funds and Property- Government resources shall be utilized
efficiently and effectively in accordance with the law. The head of a government agency is directly
responsible in implementing this policy and is primarily responsible for government resources entrusted to
his agency. Those who are entrusted with the possession of government resources are directly
responsible to the head of the agency•
Accountability over Government Funds and Property- A government officer entrusted with the
possession of. government resources is responsible for the safekeeping therefor in accordance with the
law. Every accountable officer shall be properly bonded.
Liability over Government Funds and Property- The unlawful use of government resources shall be
the personal liability of the employee found to be directly responsible.

Accounting responsibility

The 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.
The 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 secio economie objectives.
The Bureau of Treasury (BTr) functions under the Department of Finance and is the cash custodian of
the government. The BTr is authorized to: Receive and keep national funds and manage and control the
disbursements thereof; and Maintain accounts of financial transactions of all national government offices,
agencies and instrumentalities.
Government agency 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.
Entity - refers to a government agency, department or operating/field unit.
Financial Reporting - is the process of preparation, presentation and submission of general purpose
financial statements and other reports.

01 Regular Agency Fund

02 Foreign Assisted Projects Fund
03 Special Account-Locally Funded/Domestic Grants Fund
04 Special Account-Foreign Assisted/Foreign Grants Fund.
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts

Qualitative characteristics are the attributes that make information useful to users.
Understandability - information is understandable when users can reasonably be expected to
comprehend its meaning.
Relevance - Information is relevant if it can assist users in
evaluating past ni, present or future events or in confirming or correcting past evaluations.
Materiality - Materiality affects the relevance of information.
Information is material if its omission or misstatement could influence the decisions of users.
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.
Reliability - reliable 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.
Faithful representation - For information to represent faithfully transactions and other events, it should
be presented in accordance with the substance of the transactions and other events, and not merely their
legal form.
Substance one or transactions or other events is not always consistent with their legal form.
Neutrality - Information is neutral if it is free from bias. IInformation 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.
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.
Completeness - Information should be complete within the bounds of materiality and cost.
Comparability - Information is comparable when asers able to identify similarities and differences
between that information and information in other reports.

Gereral 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. (PPSAS 13)
The complete set of general purpose financial statements consists of:
Statement of Financial Position;
Statement of Financial Performance;
Statement of Changes in Net Assets/Equity;
Statement of Cash Flows;
Statement of Comparison of Budget and Actual Amounts; and
Notes to the Financial Statements, comprising a summary of significant accounting policies and other
explanatory notes.

Elements of the financial statements

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.
Control means the ability to benefit from an asset or prevent others from benefitting from that asset.
Benefit means the ability to use, exchange, lease, seil, or use the asset to settle liabilities, or distribute it
to owners.
Past event - A transaction or event giving rise to control of future economic benefits must have occurred.
Liabilities-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.
Net assetslequity - is the residual interest in the assets of the entity after deducting all its liabilities.
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.
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
Revenue funds - comprise all funds derived from the income of any agency of the government and
available for appropriation of expenditure in accordance with law.
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.
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.

The National Budget

Government accounting does not only aim to provide information on past events and transactions but
also budget information in accordance with PPSAS 24.The government s estimate of the sources and
uses of government funds within a fiscal year.
Fiscal Year- July 1- June 30

The Budget Cycle

The budget preparation in the Philippines uses a "bottom-up" approach. Under "bottom-up" budgeting,
several parties participate in the budget preparation, starting from the lowest to the highest levels of the
government. Government agencies are also tasked to increase the participation of citizen-stakeholders in
the budget preparation.
1.Budget call - The budget preparation starts when the Department of Budget and Management (DBM)
issues a Budget Call to all government agencies.
Balanced budget - prepared in such a way that estimated revenues exceed estimated expenditures." If
actual revenues exceed actual expenditures, the government earns a surplus.
If expenditures exceed revenues, the government incurs a deficit.
Annual budget - covers a period of one year and forms the basis for the annual appropriation.
Special budget - provides for items not adequately covered or not included in the general appropriations
act.
Line item budget - focuses on specific expenditures such as salaries and wages, travel expenses,
freight, supplies, materials and equipment.
Performance budget - a plan of activities to be undertaken, including their related costs, with the
emphasis on meeting targets and desired results. The main focus is on the work to be done or services to
be rendered.
Obligations budget - focuses on expenditures incurred in the current year which are to be paid either in
the same year or in the following year.
2.Budget hearings - Budget hearings are conducted after the agencies submit their budget proposals.
3.Presentation to the Office of the President, - The President and Cabinet members review the
proposed budget.
"President's Budget" contains the following documents which are intended to assist the Congress in
their review and deliberation of the proposed national budget:
President's Budget Message - this contains the President's explanation of the country's fiscal policy and
budget priorities.
National Expenditure Program (NEP) - this contains the details of all the government entities proposed
expenditures in the coming year.
Budget of Expenditures and Sources of Financing (BESF) – this contains the estimated expenditures
accompanied by estimates of expected sources of financing. Other documents aimed to provide further
explanation of selected items in the NEP

Budget Legislation
Government funds shall only be spent in pursuance of an appropriation made by law. Therefore, due
process must be undertaken to legalize the proposed budget.
4.House Deliberations - Upon receipt of the President's Budget, the House of Representatives conducts
hearings to scrutinize the various agencies' respective proposed programs and expenditures.
5.Senate Deliberations. - The Senate conducts its own deliberations on the GAB. These normally start
after the Senate receives the GAB from the House of Representatives.However, for expediency, hearings
in the Senate start even as Representatives deliberations are ongoing.
6.Bicameral Deliberations - After deliberations in both houses are finished, a committee called the
Bicameral Conference Committee is formed to harmonize any conflicts between the.
Representatives and Senate versions of the GAB.
President's enactment - The President enacts the budget, which is now known as the General
Appropriations Act (GAA). Before enactment though, the President may exercise his veto power as
conferred to him under the Philippine Constitution.
7.Approved Budget - is the expenditure authority derived from appropriation laws, government
ordinances, and other decisions related to the anticipated revenue or receipts for the budgetary period.
The approved budget consists of the following:
Appropriation - is the authorization made by a legislative body to allocate funds for purposes specified
by the legislative er similar authority.
New General Appropriations - are annual authorizations for incurring obligations during a specified
budget yeal, as listed in the GAA.
Continuing Appropriations - are the authorizations to support obligations for a specific purpose or project,
such as multi-year construction projects which require the incurrence of obligations even beyond the
budget year.
Supplemental Appropriations - are additional appropriations authorized by law to augment the original
appropriations which proved to be insufficient for their intended purpose due to economic, political or
social conditions supported by a Certification of Availability of Funds from the BTr.
Automatic Appropriations - aperiod prescribetions programmed annually or for some other period
prescribed by law which do not require periodic action by Congress.
Unprogrammed Funds - are standby appropriations authorized by Congress in the annual GAA which
may be availed
Retained Income/Funds - collections which are authorized by law to be used directly by agencies
concerned for their operation or specific purposes.
Revolving Fund- receipts derived from business-type activities of departments/agencies which are
autherized by law to be constituted as such and deposited in an authorized government depository bank.

Budget Execution

8.Release guidelines and BEDs - The DBM issues guidelines on the release and utilization of funds
while the various agencies submit their Budget Execution Documents (BEDs).
National Government Agencies (NGAs) - include all agencies within the executive, legislative and
judicial branches of govemment, e.g, commissions, departments, Land Bank of the Philippines, Social
Security System, etc.
Local Government Units (LGUs) - include (a) autonomous regions, (b) provinces and cities independent
from a province, (c) component cities (cities which are part of a province) and municipalities, and (d)
barangays.
Government Owned and Controlled Corporations (GOCCs) - corporations that are owned or
controlled, directly or indirectly, by the government and vested with functions relating to public needs.
9.Allotment - The DBM formulates the Allotment Release Program (ARP) to set the limit for allotment
releases during the upcoming year. This is used as a control device to ensure that releases conform to
the national budget. Alongside, is a Cash Release Program (CRP), which sets the disbursement limits for
the year, for each quarter and for each month.
Allotment - is an authorization issued by the DBM to government agencies to incur obligations for
specified amounts contained in a legislative appropriation in the form of budget release documents. It is
also referred to as Obligational Authority.
Obligation - is an act of a duly authorized official which binds the government to the immediate or
eventual payment of a sum of money.
General Appropriations Act Release Document (GAARD) - serves as the obligational authority for the
comprehensive release of budgetary items appropriated in the GAA, categorized as For Comprehensive
Release.
Special Allotment Release Order (SARO) - covers budgetary items under For Later Release (negative
list) in the entity's submitted Budget Execution Documents (BEDs), subject to compliance of required
documents/clearances. Releases of allotments for Special Purpose Funds (e.g., Calamity Fund,
Contingent Fund, E-Government Fund, Feasibility Studies
General Allotment Release Order (GARO) - 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.
10.Incurrence of Obligations - government agencies incur obligations which will be paid by the
government, e.g., entering into contracts, hiring of personnel, purchase of supplies, etc.
11.Disbursement Authority - the DBM issues disbursement authority to the government agencies. This
is the point where government agencies obtain access to the government funds.
Notice of Cash Allocation (NCA) - authority issued by the
DBM to central, regional and provincial offices and operating units to cover their cash requirements.
Notice of Transfer of Allocation - authority issued by an agency's Central Office to its regional and
operating units to cover the latter's cash requirements.
Non-Cash Availment Authority - 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.
Cash Disbursement Ceiling - authority issued by the DBM to agencies with foreign operations,allowing
them to use
the income collected by their Foreign Service Posts to cover their operating requirements.

Budget Accountability
As the budget is being executed, it is regularly monitored to determine the conformance of actual results
with planned

12.Budget Accountability Reports - government agencies are required to submit the following
accountability reports:
Monthly Report of Disbursements - shows the disbursements of the entity during the month, classified
according to the type of disbursement authority. This report is submitted to the COA and DBM within 30
days after the end of each month.
Quarterly Physical Report of Operation - shows the agency's physical accomplishments in a given quarter
vis-a-vis its physical targets.
Statement of Appropriations, Allotments, Obligations, Disbursements and Balances - shows the agency's
authorized appropriations, allotments received, obligations incurred, disbursements made and the
balances of unreleased appropriations, unobligated allotments, and unpaid obligations.
Summary of Appropriations, Allotments, Obligations, 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
13.Performance reviews - The DBM and COA perform periodic reviews of the agencies'
performance and budget
accountability and report to the President
14.Audit - the COA audits the agencies.