Government Accounting

• Government accounting


  Primarily budgetary accounting, aims to provide information on past events and transactions as well as budget information in accordance with PPSAS 24
• The Philippine Constitution and other laws require government funds to be utilized in accordance with a national budget that is duly approved by legislation
• National budget (government budget)


  The government's estimate of the sources and uses of government funds within a fiscal year, forms the basis for expenditures and is the government's key instrument for promoting its socio-economic objectives
• Budget cycle


  1. Budget preparation

  2. Budget legislation

  3. Budget execution

  4. Budget accountability
• Bottom-up budgeting


  Several parties participate in the budget preparation, starting from the lowest to the highest levels of the government
• Top-down budgeting


  The budget preparation starts from the agency heads
• Incremental budgeting


  The current year's budget is formulated based on the previous year's budget, which is just adjusted for any variances experienced in the past
• Zero-based budgeting


  The current year's budget is formulated without regard to the previous year's budget, government agencies are required to justify their current year's proposed programs and expenditures
• Budget preparation


  1. Budget call

  2. Budget hearings

  3. Presentation to the Office of the President
• Balanced budget


  Prepared in such a way that estimated revenues exceed estimated expenditures
• 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
• 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
• Budget legislation


  1. House deliberations

  2. Senate deliberations

  3. Bicameral deliberations

  4. President's enactment
• 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
• Components of approved budget

  • New general appropriations
  • Continuing appropriations
  • Supplemental appropriations
  • Automatic appropriations
  • Unprogrammed funds
  • Retained income/funds
  • Revolving funds
  • Trust receipts
• Appropriation


  The authorization made by a legislative body to allocate funds for purposes specified by the legislative similar authority
• Budget execution


  1. Release guidelines and BEDs

  2. Major recipients of the budget
• The portion received by members of the Congress is referred to as the Priority Development Assistance Fund (PDAF) a.k.a. "Pork Barrel"
• The portion received by members of the Judiciary is referred to as the Judiciary Development Fund (JDF)
• The Aquino Administration introduced the Disbursement Acceleration Program (DAP) which aims to speed-up public spending
• Priority Development Assistance Fund (PDAF)

  Intended to fund priority development programs of the government
• Judiciary Development Fund (JDF)

  At least 80% of the fund is intended for the cost-of-living allowances of the members and personnel of the Judiciary, the remainder, not exceeding 20%, is for the acquisition and maintenance of office equipment and facilities
• Disbursement Acceleration Program (DAP)

  Aims to speed-up public spending, not a fund but a mechanism of releasing funds, particularly from savings and unprogrammed funds
• Savings


  Available portions or balances of items under the General Appropriations Act (GAA) which result from: a) the completion or final discontinuance or abandonment of a program, activity, or project; b) unpaid compensation for vacant or unfilled positions and leaves of absence without pay; or c) the implementation of efficiency measures that enable agencies to deliver services at lower cost
• Unprogrammed funds


  Funds not included in the General Appropriations Act
• The PDAF and the DAP received various criticisms from the public in 2013 and 2014, following the Janet Lim-Napoles alleged pork scam
• The PDAF and DAP was later on thought to have been abolished by the Supreme Court
• The 2015 budget is still filled with pork barrel funds despite the Supreme Court decision declaring the Disbursement Acceleration Program (DAP) and the Priority Development Assistance Fund (PDAF) as unconstitutional, according to a budget watchdog
• Allotment


  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, also referred to as Obligational Authority
• It is illegal for a government entity to incur obligations without having first received the "Allotment"
• Obligation


  Act of a duly authorized official which binds the government to the immediate or eventual payment of a sum of money, encompasses possible future liabilities based on current contractual agreement
• Documents used in releasing allotments to government agencies

  • General Appropriations Act Release Document (GAARD)
  • Special Allotment Release Order (SARO)
  • General Allotment Release Order (GARO)
• Government agencies incur obligations which will be paid by the government, e.g., entering into contracts, hiring of personnel, purchase of supplies, etc.
• Documents used in releasing disbursement authority to government agencies

  • Notice of Cash Allocation (NCA)
  • Notice of Transfer of Allocation
  • Non-Cash Availment Authority
  • Cash Disbursement Ceiling
• Disbursements are most commonly made through checks that are chargeable against the account of the Treasurer of the Philippines (i.e., Treasury Single Account), called "Modified Disbursement System (MDS) Checks"
• Key budget terms


  • Appropriation
  • Allotment
  • Obligation
  • Disbursement
• Budget Accountability


  Concurrently with the Budget Execution phase, the budget is regularly monitored to determine the conformance of actual results with planned targets