General Accounting Plan Overview

General Accounting Plan

• The General Accounting Plan (GAP) outlines the overall accounting system of a government agency.
• It encompasses the flow of transactions, from source documents to financial information presented in financial reports.

Accounting Systems

• Budgetary Accounts System: Includes the preparation of the Agency Budget Matrix (ABM), monitoring allotments, releasing Sub-Allotment Release Orders (SARO), and recording obligations.
• Receipts/Income and Deposits System: Responsible for handling income and deposits.
• Disbursement System: Handles payment-related processes.
• Financial Reporting System: Generates financial reports for information dissemination.

Budgetary Accounts

• Budgeted funds are categorized as appropriations, allotments, and obligations.
• Appropriations are legal authorizations for government spending under specific conditions or purposes.
• The DBM and COA monitor and control appropriations through registries and control worksheets.
• The ABM breaks down agency expenditures by factors such as source of appropriation, allotment class, and need for clearance.

Government Budgets

• A government budget is a financial plan for a fiscal year, submitted by the executive branch for approval by a representative body.
• It involves planning and controlling government activities.
• Purposes of Budgeting:
  • Establish budget period objectives.
  • Coordinate activities of government departments.
  • Prioritize programs and projects.

Types of Budgets

• Regional Budgeting: Allocates funds by region, aligning with the national government's regional organization.
• Long-term Budget: Projects revenue and expenditure requirements over an extended period (4-5 years).

Key Budgetary Inclusions (KBIs)

• Financial commitments of agencies for a specific budget year.
• Used for:
  • Controlling major financial commitments to prevent misappropriation.
  • Transparency in expenditures.
  • Tracking mandatory obligations and prioritizing projects.

National Budget System

• Consists of planning, programming, and budgeting practices of the government.
• Aims to ensure efficient use of resources for providing government services.

Legal Basis

• The Budget Reform Decree (PD No. 1177) establishes the framework for the national budget system.
• Emphasizes development as a key objective, emphasizing careful design and implementation throughout the budget process.

National Budget

• Government's estimate of income and expenditures.
• Represents a financial translation of development-promoting programs and projects.
• Defines planned government spending and revenue sources.

Budget Spending

• Expense Class: Categorizes expenditures by type:
  • Current Operating Expenditures: Funds for regular government operations (salaries, maintenance, interest payments).
  • Capital Outlays: Investment in long-term assets (infrastructure, equipment).
  • Net Lending: Government loans to corporations.
  • Debt Amortization: Payments towards loan principal.

Budget's Impact on the Country

• Stabilization Role:
  • Government spending can stimulate the economy during recessions.
  • Conservative spending is adopted during economic booms to prevent overheating.
• Redistribution of Resources:
  • Funding for social services aims to improve human capital, provide relief to the needy, and promote self-help initiatives.

Budget Legislation

• The President submits the budget proposal to Congress.
• The House of Representatives and Senate review the budget and propose amendments.
• A bicameral committee resolves differences between the houses.
• Once approved by both houses, the budget is submitted to the President for signing into law as a General Appropriations Act (GAA).

Budget Execution

• The DBM implements the GAA, requiring agencies to prepare the ABM and Annual Cash Program.
• Allotments authorize agencies to incur obligations and enter contracts.
• Agencies receive Notices of Cash Allocation (NCAs) for funding.
• The Budget Unit monitors allotments and obligations.

Obligations

• Obligations are incurred when contracts are signed or goods are received.
• ALOBS (Allotment Release Order-Based Obligations Slip) documents obligations.
• The Budget Officer verifies the availability of allotments and completeness of documents.
• The Head of the Accounting Unit certifies the availability of funds and cash for payment.

Adjustment of Obligations

• Negative entries in the Obligation Incurred column are made for:
  • Refunds of cash advances.
  • Overpayments.
  • Disallowances.

Accounting Entries

• Receipt of Allotment: Posted to the respective registries.
• Payment:
  • Cash-National Treasury-MDS is credited.
  • The relevant asset or expense account is debited.