ACCOUNTING FOR BUDGETARY ACCOUNTS

ACCOUNTING FOR BUDGETARY

ACCOUNTS

• Section 29 (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”
ACCOUNTING SYSTEMS
The General Accounting Plan, shows the overall accounting system of a
government agency. All transaction of the shall bare with complete
documentations, and all transaction shall be recorded in the books of accounts
and such complete recording in the books, it shall be prepare financial reports.

1. Budgetary Accounts System

2. Receipts/Income and Deposit System
3. Disbursement System
4. Financial Reporting System
NATIONAL (GOVERNMENT) BUDGET
The financial plan of a government for a given period, usually for
a fiscal year, which shows what its resources are, and how they
will be generated and used over the fiscal period. The budget is
the government's key instrument for promoting its socio-
economic objectives.
Also refers to the income, expenditures and sources of
borrowings of the National Government (NG) that are used to
achieve national objectives, strategies and programs.
BALANCE BUDGET
In the context of government budgeting, a budget is said to
be balanced when revenues match expenditures or
disbursements.
When expenditures exceed revenues, the government incurs
a deficit which may result in the following situations:
The government borrows money either from foreign sources or from the
domestic capital market which increases the debt stock of the NG and its
debt servicing requirements;
The government borrows money from the Bangko Sentral ng Pilipinas; or,
The government withdraws funds from its cash balances in the Treasury
PERFORMANCE-INFORMED BUDGETING
(PIB)
PIB is the new budgeting approach that uses performance
information in the appropriations documents to link funding to
results and to provide a framework for more informed resource
allocation and management.
PERFORMANCE-INFORMED BUDGETING
(PIB)
POURPOSE:
The Government of the Philippines adopted the Performance-
Informed Budgeting (PIB) Structure through the National Budget
Memorandum (NBM) No. 117 in crafting the 2014 National
Budget as a new approach for a more responsive, transparent
and accountable public expenditure management system.
PERFORMANCE-INFORMED BUDGETING
(PIB)
STATUS:
The PIB Structure is already adopted in the National Expenditure Plan
and General Appropriations Act of FY2014. To fully support the
performance-informed budgeting system, the Government of the
Philippines adopted the Budget Priorities Framework (BPF) through NBM
No. 118 following NBM No. 117. The BPF sets the budget priorities for
FY2014 in line with the five Priority Areas of President Aquino’s Social
Contract with the Filipino People. This will guide departments and
agencies in strategically planning their respective activities for the year
2014. With this mechanism, strategic planning will be integrated with
performance information.
KINDS OF BUDGET
As to Nature
a. Annual Budget-
b. Supplemental Budget-
c. Special Budget-
As to Basis
a. Performance Budget-
b. Line-Item Budge-
c. Special Budget-
KINDS OF BUDGET

As to Approach and Technique

a. Zero-Based Budgeting-
b. b. Incremental Approach-
BUDGET CYCLE
• Budgeting for the national government involves four (4) distinct processes or
phases:
1. Budget Preparation
2. Budget Authorization
3. Budget Execution
4. Budget Accountability
• While distinctly separate, these processes overlap in the implementation
during a budget year.
• Budget preparation for the next budget year proceeds while government
agencies are executing the budget for the current year and at the same time
engaged in budget accountability and review of the past year's budget.
BUDGET CYCLE
• The budget and management reforms implemented since 2010
have strengthened the manner by which the government
prepares, authorizes, implements, and accounts for the use of
the National Budget.
• The four phases of the Budget Cycle overlap in continuing cycles.
While the Executive implements the Budget for the current year,
it also prepares the Budget for the next fiscal year or defends it
before Congress. At the same time, the government monitors,
evaluates, and reports on actual performance year-round.
HOW IS THE ANNUAL NATIONAL BUDGET PREPARED?

The preparation of the annual budget involves a series of steps

that begins with the determination of the overall economic
targets, expenditure levels, revenue projection and the
financing plan by the Development Budget Coordinating
Committee (DBCC). The DBCC is an inter-agency body
composed of the DBM Secretary as Chairman and the Bangko
Sentral Governor, the Secretary of the Department of Finance,
the Director General of the National Economic and
Development Authority and a representative of the Office of
the President as members.
HOW IS THE ANNUAL NATIONAL BUDGET PREPARED?

The major activities involved in the preparation of the annual

national budget include the following:
a. Determination of overall economic targets, expenditure levels
and budget framework by the DBCC;
b. Issuance by the DBM of the Budget Call which defines the
budget framework; sets economic and fiscal targets; prescribe
the priority thrusts and budget levels; and spells out the
guidelines and procedures, technical instructions and the
timetable for budget preparation;
HOW IS THE ANNUAL NATIONAL BUDGET PREPARED?

c. Preparation by various government agencies of their detailed budget

estimates ranking programs, projects and activities using the
capitalbudgeting approach and submission of the same to DBM;
d. Conduct a budget hearings were agencies are called to justify their
proposed budgets before DBM technical panels;
e. Submission of the proposed expenditure program of
department/agencies/special for confirmation by department/agency
heads.
HOW IS THE ANNUAL NATIONAL BUDGET PREPARED?
f. Presentation of the proposed budget levels of
department/agencies/special purpose funds to the DBCC for
approval.
g. Review and approval of the proposed budget by the
President and the Cabinet;
h. Submission by the President of proposed budget to
To meet the Constitutional requirement for the submission of the
Congress.
President's budget with 30 days from the opening of each regular session
of Congress, the budget preparation phase is guided by a budget calendar.
HOW DOES THE BUDGET BECOME A LAW?
In accordance with the requirements of the Constitution, the President
submits his/her proposed annual budget in the form of Budget of
Expenditure and Sources of Financing (BESF) supported by details of
proposed expenditures in the form of a National Expenditure Program
(NEP) and the President's Budget Message which summarizes the
budget policy thrusts and priorities for the year.
In accordance with the requirements of the Constitution, the
President submits his/her proposed annual budget in the form
of Budget of Expenditure
HOW DOES THE BUDGET BECOME A LAW?
The Appropriation Committee together with the other House
Sub-Committee conduct hearings on the budgets of
departments/agencies and scrutinize their respective
programs/projects. Consequently, the amended budget
proposal is presented to the House body as the General
While budget hearings are on-going in the House of Representatives, the
Appropriations
Senate Bill.
Finance Committee, through its different subcommittees also
starts to conduct its own review and scrutiny of the proposed budget and
proposes amendments to the House Budget Bill to the Senate body for
approval.
HOW DOES THE BUDGET BECOME A LAW?
To thresh out differences and arrive at a common version of
the General Appropriations Bill, the House and the Senate
creates a Bicameral Conference Committee that finalizes the
General Appropriations Bill.
WHAT IS THE GENERAL APPROPRIATIONS
ACT?
The General Appropriations Act (GAA) is the legislative
authorization that contains the new appropriations in terms of
specific amounts for salaries, wages and other personnel
benefits; maintenance and other operating expenses; and
capital outlays authorized to be spent for the implementation
of various programs/projects and activities of all departments,
bureaus and offices of the government for a given year.
HOW IS THE BUDGET IMPLEMENTED?
Budget implementation starts with the release of funds to the agencies. To
accelerate the implementation of government programs and projects and
ensure the judicious use of budgeted government funds, the government
adopted the Simplified Fund Release System (SFRS) beginning 1995.

In contrast to the previous system of releasing funds based on

individual agency requests, the SFRS is a policy-driven system which
standardized the release of funds across agencies which are similarly
situated in line with specific policy initiatives of the government.
HOW IS THE BUDGET IMPLEMENTED?
Following the SFRS, the agency budget matrix (ABM) is
prepared by the DBM in consultation with the agencies at the
beginning of each budget year, upon approval of the annual
General Appropriations Act. The ABM is a disaggregation of
all the programmed appropriations for each agency into
various expenditure categories. As such, the ABM serves as a
blueprint which provides the basis for determining the timing,
composition and magnitude of the release of the budget.
HOW IS THE BUDGET IMPLEMENTED?
Based on updated resources and economic development
thrusts and consistent with the cash budget program, the
Allotment Release Program (ARP) which prescribes the
guidelines in the prioritization of fund releases is prepared.
The ARP serves as basis for the issuance of either a General
Allotment Release Order (GARO) or a Special Allotment
Release Order (SARO), as the case maybe, to authorize
agencies to incur obligations.
HOW IS THE BUDGET IMPLEMENTED?
Subsequently, the DBM releases the Notice of Cash Allocation (NCA) on
a monthly or quarterly basis. The NCA specifies the maximum amount
of withdrawal that an agency can make from a government bank for
the period indicated. The Bureau of the Treasury (BTr), replenishes daily
the government servicing banks with funds equivalent to the amount of
negotiated checks presented to the government servicing banks by
implementing agencies.
The release of NCAs by the DBM is based on: 1) the financial
requirements of agencies as indicated in their ABMs, cash plans and
reports such as the Summary List of Checks Issued (SLCI); and 2) the
cash budget program of government and updates on projected
resources.
HOW IS THE BUDGET IMPLEMENTED?
Agencies utilize the released NCAs following the "Common
Fund" concept. Under this concept of fund release, agencies
are given a maximum flexibility in the use of their cash
allocations provided that the authorized allotment for a
specific purpose is not exceeded. Project implementation is
thus made faster.
WHY ARE ADJUSTMENTS MADE ON THE BUDGET PROGRAM?
Adjustments are made on the budget even during implementation primarily
because of the following:
 Enactment of new laws - Within the fiscal year, new legislations with
corresponding identified new revenue sources are passed which necessitate
adjustments in the budget program.
 Adjustments in macroeconomic parameters - The macroeconomic targets
considered in the budget are periodically reviewed and updated to reflect the
impact of recent developments in the projected performance of the national
economy and on the set fiscal program for the year. The relevant indicators
affecting the budget aggregates include the following: the Gross Nationa
Product (GNP), inflation rate, interest rate, foreign exchange rate, oil prices,
and the level of imports. Thus, a sensitivity measure on the impact of these
parameters on the budget will determine whether recent macroeconomic
developments have a negative or favorable effect on thebudget.
WHY ARE ADJUSTMENTS MADE ON THE BUDGET PROGRAM?
 Change in resources availabilities - Budget adjustments are
undertaken when additional resources becomes available
such as new grants, proceeds from newly negotiated loans
and grants. Corresponding budget adjustments are also
made when resources generation falls below the targets.
WHAT MECHANISM ENSURE THAT FUNDS HAVE
BEEN PROPERLY ALLOCATED AND SPENT?

 Cognizant of the fact that no propitious results can be obtained, even

with maximum funding, if agency efficiency is low and funds are
wastefully spent, systems and procedures are set in place to monitor
and evaluate the performance and cost effectiveness of agencies.
These activities are subsumed within the fourth and the last phase of
the budget process-the budget accountability phase. At the agency
level, budget accountability takes the form of management's review
of actual performance or work accomplishment in relation to the
work targets of the agency vis-à-vis the financial resources made
available.
WHAT MECHANISM ENSURE THAT FUNDS HAVE
BEEN PROPERLY ALLOCATED AND SPENT?

 Also, detailed examinations of each agency's book of

accounts are undertaken by a resident representative of the
Commission on Audit (COA) to ensure that all expenses have
been disbursed in accordance with accounting regulations
and the purpose(s) for which the funds have been authorized.
IS THE ROLE OF THE DBM IN THE BUDGETING
PROCESS LIMITED TO NATIONAL GOVERNMENT
AGENCIES?
No, the role of the DBM in the budgeting process is not limited
to national government agencies. It coordinates all three levels
of government-national government department/agencies,
government-owned and controlled corporations (GOCCs) and
local government units (LGUs) - in the preparation, execution
and control of expenditures of their corresponding components
entities.
IS THE ROLE OF THE DBM IN THE BUDGETING PROCESS
LIMITED TO NATIONAL GOVERNMENT AGENCIES?

 The DBM reviews the corporate operating budgets of GOCCs

and ensures the proper allocation of cash. The DBM likewise
formulates and recommends the budget policy covering the
allowable deficit and the criteria for th determination of the
appropriate subsidy and equity of GOCCs.
 For LGUs, the DBM reviews the annual and supplemental
budgets of provinces, and highly urbanized cities and manages
the proper allocation and release of the Internal Revenue
Allotment (IRA) of LGUs and their share in the utilization of
national wealth.
BUDGETARY ACCOUNTS SYSTEM
• Through the issuance of National Budget Circular during the year, 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
appropriation from: New Appropriation under the fiscal GAA and Automatic
appropriation for retirement and life Insurance Premiums (RLIP) Special
Accounts in the General Fund (SAGFs), and other items classified.
• Alsoinclude Continuing appropriation, i.e., allotment chargeable against the
unreleased appropriation for the MOOE and CO in Fiscal Year GAA
BUDGETARY ACCOUNTS CONSIST OF:
Appropriation
Allotment
Obligation
 ALLOTMENT

an authorization issued by the DBM to NGAs

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.
 APPROPRIATION

the authorization made by a legislative body to

allocate funds for purposes specified by the
legislative or similar authority.
 APPROVED BUDGET

the expenditure authority derived from

appropriation laws, government ordinances,
and other decisions related to the anticipated
revenue or receipts for the budgetary period.
 AUTOMATIC APPROPRIATIONS

are the authorizations programmed annually or

for some other period prescribed by law, by
virtue of outstanding legislation which does not
require periodic action by Congress.
 BUDGET INFORMATION

the budgetary information consists of, among

others, data on appropriations or the approved
budget, allotments, obligations, revenues and
other receipts, and disbursements.
 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.
 DISBURSEMENTS

are the actual amounts spent or paid out of the

budgeted amounts.
 FINAL BUDGET

is the original budget adjusted for all reserves,

carry-over amounts, transfers, allocations and
other authorized legislative or similar authority
changes applicable to the budget period.
 NEW GENERAL APPROPRIATIONS

are annual authorizations for incurring

obligations during a specified budget year, as
listed in the GAA.
 OBLIGATION

is an act of a duly authorized official which

binds the government to the immediate or
eventual payment of a sum of money.
Obligation maybe referred to as a commitment
that encompasses possible future liabilities
based on current contractual agreement.
 ORIGINAL BUDGET

is the initial approved budget for the budget

period usually the General Appropriations Act
(GAA). The original budget may include
residual appropriated amounts automatically
carried over from prior years by law such as
prior year commitments or possible future
liabilities based on a current contractual
agreement.
 REVENUES

are increases in economic benefits or service

potential during the accounting period in the
form of inflows or increases of assets or
decreases of liabilities that result in increases
in net assets/equity, other than those relating
to contributions from owners.
 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 (CAF) from the BTr.
FUND RELEASE DOCUMENTS
A. Obligational Authority or Allotment
1. 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 (FCR).
OBLIGATIONAL AUTHORITY OR
ALLOTMENT
2. Special Allotment Release Order (SARO) – 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 StudiesFund, International
Commitments Fund, Miscellaneous Personnel
Benefits Fund and Pension and Gratuity Fund) are
also covered by SAROs.
OBLIGATIONAL AUTHORITY OR
ALLOTMENT
3. 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. It covers automatically appropriated
expenditures common to most, if not all, agencies without
need of special clearance or approval from competent
authority, i.e. Retirement and Life Insurance Premium.
FUND RELEASE DOCUMENTS

B. Disbursement Authority
1. Notice of Cash Allocation (NCA) – authority issued by the DBM to
central, regional and provincial offices and operating units to
cover the cash requirements of the agencies;

2. Non-Cash Availment Authority (NCAA) – 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;
B. DISBURSEMENT AUTHORITY

3. Cash Disbursement Ceiling (CDC) – authority issued

by 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; and
B. DISBURSEMENT AUTHORITY

4. Notice of Transfer of Allocation (NTA)– authority

issued by the Central Office to its regional and
operating units to cover the latter’s cash
requirements.
GENERAL GUIDELINES ON THE RELEASE
OF FUND

• The Department of Budget and Management

will issue through National Budget Circular (NBC) for
the guidelines on the release of funds for fiscal year.
In the NBC contains its Purpose, Coverage, General
Guidelines, Specific Guidelines, and Other
procedures guidelines.
SECTION 25 (7), ARTICLE VI OF THE 1987
CONSTITUTION

“If by the end of any fiscal year, Congress failed

to pass the General Appropriations Bill (GAB) for
the ensuing year, the General Appropriations
Act (GAA) for the preceding year shall be
deemed reenacted and shall remain in force and
in effect until the GAB is passed by Congress.”
MONITORING OF THE BUDGET

• The budget shall be monitored by the

Budget Division/Units of NGAs through the
maintenance of registries for that purpose
REPORTING REQUIREMENTS
All departments/agencies/operating units are mandated to prepare the
BEDs based on the fiscal year National Expenditure Program (NEP)
without waiting for the approval of the GAA and submit to the DBM not
later than November 30 of the fiscal year.

Budget Execution Documents (BEDs)

o Financial Plan (FP), BED No.1
o Physical Plan (PP), BED No. 2
o Monthly Disbursement Program (MDP), BED No.3
REPORTING REQUIREMENTS
Through the issuance of COA DBM Joint Circular No. 2014-1 provides Guidelines
Prescribing the Use of Modified Formats of the Budget and Financial
Accountability Reports (BFARs).
Budget and Financial Accountability Reports (BFARs)

1. QUARTERLY PHYSICAL REPORT OF OPERATION (QPRO) BAR No. 1

2. STATEMENT OF APPROPRIATIONS, ALLOTMENTS, OBLIGATIONS,
DISBURSEMENTS AND BALANCES (SAAODB) FAR No. 1
3. SUMMARY OF APPROPRIATIONS, ALLOTMENTS, OBLIGATIONS,
DISBURSEMENTS AND BALANCES BY OBJECT OF EXPENDITURES
(SAAODBOE) FAR No. 1-A
4. List of Allotments and Sub-Allotments (LASA) FAR No. 1-B
BUDGET AND FINANCIAL ACCOUNTABILITY REPORTS (BFARS)

5. STATEMENT OF APPROVED BUDGET, UTILIZATIONS,

DISBURSEMENTS AND BALANCES (SABUDB) FAR No. 2
6. SUMMARY OF APPROVED BUDGET, UTILIZATIONS,
DISBURSEMENTS AND BALANCES BY OBJECT OF
EXPENDITURES (SABUDBOE) FAR No. 2-A
7. AGING OF DUE AND DEMANDABLE OBLIGATIONS (ADDO)
FAR No. 3
8. MONTHLY REPORT OF DISBURSEMENTS (MRD) FAR No. 4
9. QUARTERLY REPORT OF REVENUE AND OTHER RECEIPTS
(QRRO) FAR No. 5
STUDY THE FOLLOWING:

• Validity of Appropriation
• Tax Remittances
• Conduct of Agency Performance Review
• Common System Fund
THANK YOU…