Chapter 2

• 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
• New general appropriations


  Annual authorizations for incurring obligations during a specified budget year, as listed in the GAA
• Continuing appropriations


  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


  Additional appropriations authorized by law to augment the original appropriations which proved to be insufficient for their intended purpose
• Automatic appropriation


  Authorizations programmed annually or for some other period prescribed by law which do not require periodic action by Congress
• Unprogrammed funds


  Standby appropriations authorized by Congress in the annual GAA which may be availed only when certain conditions are met
• Retained income/funds


  Collections which are authorized by law to be used directly by agencies concerned for their operation or specific purposes
• Revolving funds


  Receipts derived from business-type activities of departments/agencies which are authorized by law to be constituted as such and deposited in an authorized government depository bank
• Trust receipts


  Receipts by any government agency acting as trustee, agent or administrator for the fulfilment of some obligations or conditions
• A special appropriations bill shall specify the purpose for which it is intended, and shall be supported by funds actually available as certified by the National Treasurer, or to be raised by a corresponding revenue proposal therein
• No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations
• Budget execution


  1. Release guidelines and BEDs

  2. Major recipients of the budget
• Budget Execution Documents (BEDs)


  Summarize an agency's fiscal year plans and performance targets, including physical and financial plan, monthly cash program, estimate of monthly income, and list of obligations that are not yet due and demandable
• Major recipients of the budget

  • National Government Agencies (NGAs)
  • Local Government Units (LGUs)
  • Government Owned and Controlled Corporations (GOCCs)
  • Members of the Congress (Senators and Congressmen)
  • Judiciary Branch
• Priority Development Assistance Fund (PDAF) a.k.a. "Pork Barrel"


  Portion of the budget received by members of the Congress, intended to fund priority development programs of the government
• Judiciary Development Fund (JDF)

  Portion of the budget received by members of the Judiciary, at least 80% 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)

  Mechanism introduced by the Aquino Administration to speed-up public spending, not a fund but a mechanism of releasing funds, particularly from savings and unprogrammed funds
• Savings are 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
• 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