Overview of Government Accounting

• Government accounting


  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
• Objectives of government accounting


  • To produce information concerning past operations and present conditions
  • To provide a basis for guidance for future operations
  • To provide for control of the acts of public bodies and officers in the receipt, disposition and utilization of funds and property
  • To report 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 sources and utilization of government funds
  • Places greater emphasis on the responsibility, accountability and liability of entities entrusted with government funds and properties
• Sources of government funds


  • Receipts from taxes and other fees
  • Borrowings
  • Grants from other governments and international bodies
• Utilization of government funds


  • Expenditures on programs
  • Expenditures on 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
  • All those who are exercising authority over a government agency shall share fiscal responsibility
• 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
  • 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
• 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 therefor
  • Every accountable officer shall be liable for all losses resulting from the unlawful use or negligence in the safekeeping of government resources
  • No accountable officer shall be relieved from liability merely because he has acted under the direction of a superior officer in unlawfully utilizing the government resources entrusted to him, unless before that act, he has notified the superior officer, in writing, that the utilization is illegal
  • An accountable officer shall immediately notify the COA for any loss of government funds from unforeseen events (force majeure) within 30 days
• Government resources must be utilized efficiently and effectively in accordance with the law. Government officials are responsible in implementing this policy, are accountable for the government resources in their custody, and are liable for any loss.
• Overseas workers' remittances greatly increase the spending in our country, and the more money is spent, the more taxes the government collects
• Accounting, as a tool for planning and control, contributes to the achievement of efficient and effective utilization of government funds by providing information that is useful in planning the sources and uses of government funds and comparing actual results with expected results
• Offices charged with government accounting responsibility

  • Commission on Audit (COA)
  • Department of Budget and Management (DBM)
  • Bureau of Treasury (BTr)
  • Government agencies
• 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
• Department of Budget and Management (DBM)


  Responsible for the formulation and implementation of the national budget with the goal of attaining the nation's socio-economic objectives
• 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 thereof
  • Authorized to maintain accounts of financial transactions of all national government offices, agencies and instrumentalities
• Government agencies


  • Directly implementing the projects of, and performing the functions delegated by, the government
  • Required by law to have accounting units/divisions/departments
• Entity


  A government agency, department or operating/field unit
• Financial reporting


  • The process of preparation, presentation and submission of general purpose financial statements and other reports
  • The objective is to provide information about the entity that is useful to users for accountability purposes and decision-making
• The GAM for NGAs was promulgated primarily to harmonize the government accounting standards with international accounting standards, particularly the International Public Sector Accounting Standards (IPSAS)
• The Philippine Government has adopted the IPSAS through the Philippine Public Sector Accounting Standards (PPSAS)
• The GAM for NGAs is promulgated by the Commission on Audit (COA) based on the authority conferred to it by the Philippine Constitution
• Coverage of the GAM for NGAs


  • 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
• Objectives of the GAM for NGAs


  • Update standards, policies, guidelines and procedures in accounting for government funds and property
  • Update coding structure and accounts
  • Update accounting books, registries, records, forms, reports and financial statements
• Basic accounting and budget reporting principles


  • Comply with Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules and regulations
  • Accrual basis of accounting
  • Budget basis for presentation of budget information in the financial statements
  • Revised Chart of Accounts prescribed by COA
  • Double entry bookkeeping
  • Financial statements based on accounting and budgetary records
  • Fund cluster accounting
• Fund clusters


  • Regular Agency Fund
  • Foreign Assisted Projects Fund
  • Special Account-Locally Funded/Domestic Grants Fund
  • Special Account-Foreign Assisted/Foreign Grants Fund
  • Internally Generated Funds
  • Business Related Funds
• Accounting standards and requirements

  • Philippine Public Sector Accounting Standards (PPSAS)
  • Relevant laws, rules and regulations
  • Accrual basis of accounting
  • Budget basis for presentation of budget information in the financial statements
  • Revised Chart of Accounts prescribed by COA
  • Double entry bookkeeping
  • Financial statements based on accounting and budgetary records
  • Fund cluster accounting
• 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.
• Fund clusters


  • Regular Agency Fund
  • Foreign Assisted Projects Fund
  • Special Account-Locally Funded/Domestic Grants Fund
  • Special Account-Foreign Assisted/Foreign Grants Fund
  • Internally Generated Funds
  • Business Related Funds
  • Trust Receipts
• Qualitative characteristics of financial reporting information


  • Understandability
  • Relevance
  • Materiality
  • Timeliness
  • Reliability
  • Faithful representation
  • Substance over form
  • Neutrality
  • Prudence
  • Completeness
  • Comparability
• Understandability


  Information is understandable when users can reasonably be expected to comprehend its meaning. Users are assumed to have reasonable knowledge of the entity's activities and willingness to study the information.
• Relevance


  Information is relevant if it can assist users in evaluating past, present or future events or in confirming or correcting past evaluations. Information must also be timely.
• 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 over form


  The substance of transactions or other events is not always consistent with their legal form. If information is to represent faithfully the transactions and other events that it purports to represent, it is necessary that they be accounted for and presented in accordance with their substance and economic reality, and not merely their legal form.
• 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.
• Prudence


  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. However, prudence 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.
• Completeness


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


  Information is comparable when users are able to identify similarities and differences between that information and information in other reports. Comparability applies to the comparison of financial statements of different entities and comparison of the financial statements of the same entity over different periods.