GOVERNMENT CHAP. 2

• Budget process


  The formulation and eventual utilization of the national budget
• Phases of the budget cycle

  • Budget Preparation
  • Budget Legislation
  • Budget Execution
  • 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, irrespective of whether these are new or carried over from the previous year
• 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
• Components of the 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 or similar authority
• Budget execution

  1. Release guidelines and BEDS - Recipients of the budget (NGAs, LGUs, GOCCs)

  4. Allotment
• Priority Development Assistance Fund (PDAF)


  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 of releasing funds, particularly from savings and unprogrammed funds, to speed-up public spending
• The PDAF and 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. However, "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."
• Lapse


  1. 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
• Such savings may then be used to augment funds for programs, activities, or projects which are included in the GAA (i.e. nonexistent budget items cannot be funded)
• Unprogrammed funds


  See previous definition
• Both 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


  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
• It is illegal for a government entity to incur obligations without having first received the "Allotment"
• The type and amount of obligations to be incurred must conform to those that are specified in the "Allotment"
• Obligation


  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
• 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.
• Disbursement Authority


  The DBM issues disbursement authority to the government agencies. This is the point where government agencies obtain access to the government funds
• 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). Checks issued under this scheme are called "Modified Disbursement System (MDS) Checks"
• Other modes of disbursements

  • Cash
  • Commercial check
  • Bank transfer/bank debit
  • Credit card
• Key budget terms

  • Appropriation
  • Allotment
  • Obligation
  • Disbursement
• Budget Accountability Reports


  • Monthly Report of Disbursements
  • Quarterly Physical Report of Operation
  • Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
  • Summary of Appropriations, Allotments, Obligations, Disbursements and Balances by Object of Expenditures
  • List of Allotments and Sub-Allotments
  • Statement of Approved Budget, Utilizations, Disbursements and Balances
  • Summary of Approved Budget, Utilizations, Disbursements and Balances by Object of Expenditures
  • Quarterly Report of Revenue and Other Receipts
  • Aging of Due and Demandable Obligations
• A Consolidated Statement of Allotments, Obligations, and Balances per Summary of Appropriations (based on reports 'c' and 'd' above) shall be submitted on or before February 14 of the following year