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Questions and Answers
The Government Accounting Manual (GAM) is intended solely for private sector entities.
The Government Accounting Manual (GAM) is intended solely for private sector entities.
False
Fund Cluster Accounting is one of the basic principles of Government Accounting.
Fund Cluster Accounting is one of the basic principles of Government Accounting.
True
The Revised Chart of Accounts (RCA) is composed entirely of financial statements.
The Revised Chart of Accounts (RCA) is composed entirely of financial statements.
False
Accrual basis accounting recognizes transactions only when cash is exchanged.
Accrual basis accounting recognizes transactions only when cash is exchanged.
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The financial plan of a government for a specific period is termed as the government budget.
The financial plan of a government for a specific period is termed as the government budget.
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Double Entry is not a principle applied in Government Accounting.
Double Entry is not a principle applied in Government Accounting.
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Compliance with Philippine Public Sector Accounting Standards (PPSAS) is optional for government entities.
Compliance with Philippine Public Sector Accounting Standards (PPSAS) is optional for government entities.
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The budget is only concerned with current expenditures and does not account for sources of borrowing.
The budget is only concerned with current expenditures and does not account for sources of borrowing.
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The qualitative characteristic of financial information known as 'substance over form' emphasizes the importance of the legal form of transactions.
The qualitative characteristic of financial information known as 'substance over form' emphasizes the importance of the legal form of transactions.
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For an asset to be recognized, it must meet the definition of an asset and provide probable inflow of future economic benefits.
For an asset to be recognized, it must meet the definition of an asset and provide probable inflow of future economic benefits.
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The budget cycle consists of five stages, including preparation, execution, and accountability.
The budget cycle consists of five stages, including preparation, execution, and accountability.
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Budget execution includes processes such as allotment release and cash allocation.
Budget execution includes processes such as allotment release and cash allocation.
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Financial statements should provide a summary of significant accounting policies in the notes section.
Financial statements should provide a summary of significant accounting policies in the notes section.
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The 'GAA as Allotment Release' is a term commonly used in the budget preparation phase.
The 'GAA as Allotment Release' is a term commonly used in the budget preparation phase.
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Timeliness is considered one of the qualitative characteristics of financial information.
Timeliness is considered one of the qualitative characteristics of financial information.
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Budget accountability does not require performance reviews of agency outcomes.
Budget accountability does not require performance reviews of agency outcomes.
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Zero-based budgeting requires participation from several parties starting from the highest to the lowest levels of government.
Zero-based budgeting requires participation from several parties starting from the highest to the lowest levels of government.
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Obligations in government accounting are only concerned with immediate payments, not potential future liabilities.
Obligations in government accounting are only concerned with immediate payments, not potential future liabilities.
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Responsibility accounting can be utilized at every level of management, provided costs and revenues can be controllable at their respective levels.
Responsibility accounting can be utilized at every level of management, provided costs and revenues can be controllable at their respective levels.
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Disbursements refer to amounts that are budgeted but not yet spent or paid out.
Disbursements refer to amounts that are budgeted but not yet spent or paid out.
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An appropriation is an authorization made by a legislative body to allocate funds for unspecified purposes.
An appropriation is an authorization made by a legislative body to allocate funds for unspecified purposes.
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Under responsibility accounting, the performance of each responsibility center is evaluated based on budgeted plans and actual results.
Under responsibility accounting, the performance of each responsibility center is evaluated based on budgeted plans and actual results.
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The General Ledger is not part of the books of accounts in government accounting.
The General Ledger is not part of the books of accounts in government accounting.
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Cost and revenues in responsibility accounting are always uncontrollable at the management level.
Cost and revenues in responsibility accounting are always uncontrollable at the management level.
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Study Notes
Government Accounting Uses
- Provides information for economic decision-making.
- Demonstrates accountability for entrusted resources.
Government Accounting Responsibility
- Commission on Audit (COA)
- Department of Budget and Management (DBM)
- Bureau of the Treasury (BTr)
- Other government agencies
Government Accounting Manual (GAM)
- Promulgated by COA to standardize government accounting with international standards.
- Outlines principles and procedures for government financial reporting.
Basic Principles of Government Accounting
- Compliance with Philippine Public Sector Accounting Standards (PPSAS) and relevant laws.
- Accrual basis accounting (transactions recognized when they occur).
- Budget basis accounting (financial plan as a key instrument).
- Use of the Revised Chart of Accounts (RCA).
- Double-entry bookkeeping.
- Financial statements based on accounting and budgetary records.
- Fund cluster accounting (books maintained by fund cluster).
Accrual Basis Accounting
- Recognizes transactions when they occur, not just when cash changes hands.
Budget Basis Accounting
- Government budget is the financial plan for a given period.
- Serves as the key instrument for achieving socio-economic objectives.
- Includes income, expenditures, and borrowing sources for national objectives.
Revised Chart of Accounts (RCA)
- Prescribed under COA Circular.
- Contains an introduction, list of accounts, and account descriptions.
Financial Statements
- Statement of Financial Position
- Statement of Financial Performance
- Statement of Changes in Net Assets/Equity
- Statement of Cash Flows
- Statement of Comparison of Budget and Actual Amounts
- Notes to the Financial Statements (accounting policies and explanatory notes)
Fund Cluster Accounting
- Government accounts are maintained by fund cluster.
Qualitative Characteristics of Financial Information
- Understandability
- Relevance
- Materiality
- Timeliness
- Reliability
- Faithful Representation
- Substance over Form
- Neutrality
- Prudence
- Completeness
- Comparability
Asset Recognition Criteria
- Meets the definition of an asset.
- Probable inflow of future economic benefits.
- Reliable measurement of cost or other value (e.g., fair value).
Budget Cycle
- Preparation
- Legislation
- Execution
- Accountability
Budget Preparation Stages
- Budget Call
- Stakeholder Engagement
- Technical Budget Hearing
- Executive Review
- Consolidation, Validation, and Confirmation
- Presentation to President and Cabinet
- The President’s Budget
Budget Legislation Stages
- House Deliberations
- Senate Deliberations
- Bicameral Deliberations
- Presidential Ratification/Enrollment, Veto Message, Reenactment
Budget Execution Stages
- Release Guidelines & Program
- Budget Execution Documents (BEDs)
- Allotment & Cash Release Programming
- Allotment Release
- Incurring Obligations
- GAA as Allotment Release
- Cash Allocation
- Disbursement
Budget Accountability Stages
- Performance & Target Outcomes
- Budget Accountability Reports (BARs)
- "No Report, No Release" policy
- Review of Agency Performance
- Audit
- Performance-Based Incentive System
Bottom-up vs. Zero-based Budgeting
- Bottom-up: Participatory, from lowest to highest levels.
- Zero-based: Requires justification for all proposed programs and expenditures regardless of previous years.
Key Terms
- Appropriation: Legislative authorization to allocate funds.
- Allotment: DBM authorization to NGAs to incur obligations. Also known as Obligational Authority.
- Obligation: Act binding the government to payment.
- Disbursements: Amounts actually spent or paid.
Responsibility Accounting
- Measures plans (budgets) and actions (actual results) of each responsibility center.
- Provides cost and revenue information to managers responsible for performance.
Concepts of Responsibility Accounting
- Costs and revenues associated with specific management levels.
- Costs and revenues are controllable at the responsible level.
- Budget data is used to evaluate manager effectiveness.
Books of Accounts and Registries
- Journals: General Journal, Cash Receipts Journal, Cash Disbursements Journal, Check Disbursements Journal
- Ledgers: General Ledgers, Subsidiary Ledgers
- Registries: Registries of Revenue and Other Receipts (RRORs) (and others)
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Description
Test your knowledge on the fundamental principles of government accounting, including its responsibilities and uses. Explore key agencies involved in government financial management and the standardized manual that guides accounting practices.
