Government Funds and Accounting

• Government accounting involves analyzing, recording, classifying, summarizing, and communicating government transactions, as well as interpreting the results.

Key Activities of Government Accounting

• Analyzing and recording involves examining and keeping records, like the Bureau of Internal Revenue (BIR).
• Transactions are classified and summarized through grouping and organizing.
• Financial information is communicated to entities such as the Department of Budget and Management (DBM).
• All money and property the government receives is recorded, including taxes and government-owned land.
• The disposition of funds and property involves how the government uses or allocates resources for public services like education and healthcare.
• The government prepares reports, such as surplus or deficit reports, with the Department of Budget and Management (DBM).

Objectives of Government Accounting

• To produce information regarding past operations and present conditions.
• To establish a foundation for guiding future operations.
• To control the actions of public bodies and officers in the proper receipt, disposition, and utilization of funds, ensuring accountability.
• To report on the financial position and operational results of government agencies to inform the public about financial health.

Sources of Government Funds

• Taxes collected by the BIR.
• Tax Reform for Acceleration and Inclusion (TRAIN) Law, which includes no taxes on annual incomes up to ₱200k and an 8% tax minimum.
• Value Added Tax (VAT), which is 12% from total on groceries/goods.
• Excise Tax, applied to sin products like alcohol, cigarettes, and soft drinks.

Loans

• Government loans come through two channels: domestic borrowing from Landbank, Development Bank of the Philippines, and the Government Service Insurance System, and external borrowing from the World Bank, Asian Development Bank, and International Monetary Fund.
• The President, Department of Finance, Bureau of the Treasury, Bangko Sentral ng Pilipinas, and National Economic and Development Authority are the entities that borrow on behalf of the Philippines.

Grants

• Government grants are non-repayable funds or resources given by a government or organization to another.
• These grants may be used for infrastructure development, education and training, healthcare, disaster response, and environmental protection.

Utilization

• Government funds can be utilized through programs, projects, and unanticipated losses from calamities.

Responsibilities with Government Funds and Property

• Government resources must be used efficiently and effectively, following the law.
• Specific employees or officers are answerable to the agency head for how resources are managed, like in the Department of Education (DepEd).
• Heads of government agencies are directly responsible for the government resources entrusted to the agency.
• All people involved share fiscal responsibility, indicating everyone with authority has a role in managing resources responsibly.

Accountability

• Any government officer given money, equipment, or property must care for it and use it according to the law.
• Accountable officers are directly responsible for the resources entrusted to them.

Liability

• Government employees who misuse government resources may face legal action, penalties, or be required to repay what was misused.
• Any government officer entrusted with funds or property is responsible for keeping them safe.
• If an officer unlawfully uses government resources because their superiors told them to do so, they cannot escape liability.
• Report any misuse to the Commission on Audit (COA) within 30 days.

Offices in Charge with Government Accounting

• The Commission on Audit (COA) has the exclusive authority to set accounting and auditing rules and regulations for the public sector.
• The Department of Budget and Management (DBM) plans and implements the national budget for the country's socio-civic progress.
• The Bureau of Treasury (BTr) acts as the cash custodian of the government, overseeing taxes and loans.
• Government agencies include any department, bureau, or office of the national government, or any of its branches and instrumentalities.

Main Responsibilities

• Carrying out government projects and maintaining accurate financial records.

Government Accounting System

• The Philippines transitioned from the Old Government Accounting System to the New Government Accounting System (NGAS) in 2002.
• The Government Accounting Manual for National Government Agencies (GAM for NGAS) harmonizes government accounting standards with international accounting standards.

Accounting Basis

• Accrual basis recognizes income when services are provided or goods delivered and records expenses when incurred or acquired.
• Cash basis records revenue when cash is received and expenses when cash is spent.

Components of General Purpose Financial Statements

• The statement of financial position includes assets, liabilities, and net assets/equity, calculated as total assets minus total liabilities.
• The statement of financial performance includes income and expenses.
• The statement of changes in net assets/equity shows how the government's net worth changes, indicating a deficit or surplus.
• The statement of cash flow tracks the government's cash movements, including inflow and outflow.
• The statement of comparison of budget and actual amount is unique to government entities to see if there are illegal disbursements
• Notes to the financial statements offer additional details and explanations about the numbers in the financial statements.

Alignment with Standards

• International Financial Reporting Standards (IFRS) are globally relevant accounting standards.
• Philippine Public Sector Accounting Standards (PPSAS) are accounting principles for public sector practices in the Philippines.
• International Public Sector Accounting Standards (IPSAS) are used by private businesses globally.

Basic Accounting and Budget Reporting Principles

• Philippine Public Sector Accounting Standards (PPSAS).
• Accrual Basis.
• Budget basis for presenting budget information in the financial statements.
• Revised Chart of Accounts (RCA) prescribed by COA.
• Double-entry bookkeeping.
• Fund cluster accounting system, where separate accounting records are maintained for each type of fund source of financing.

Elements of Financial Statements

• Assets must be controlled by the government and arise from past events.
• Liabilities are debts or obligations that a government owes to others.
• Net Asset/Equity is left over after a government has paid off all its debts.
• Revenue is income of government agencies in rendering goods or services.
• Expenses include employee salaries, buying supplies, or paying off debts.

Budget Process

• Budget preparation, legislation, execution, and accountability.

Budgeting Approach

• Incremental budgeting looks at last year's budget and makes small changes. Roll-over approach involves past pending plans.
• Zero-based budgeting requires a fresh start every year.

Budget Preparation

• The Development Budget Coordination Committee (DBCC) sets parameters, including fiscal deficit targets set by the government.
• The National Budget Call is where different government agencies determine their budget expectations.
• Stakeholder consultation includes DPWH organizing consolation meetings with Local Government Officials (LGUs), Transport Groups, Urban Planning Organizations and affected citizens
• Government agencies prepare their agency budget proposal, which is the governments plan of action.
• Technical budget hearing involves government agencies presenting and defending their budget proposals to the DBM.
• There is an executive review which is the approval of the budget proposal by senior personel.

Budget Legislation

• There must be a house deliberation, where the House Appropriations Committee manages the budget process and balances estimated expenditure.
• COmmittee Hearings, where they examine all budget departments and agenicies.
• Committee hearings prepare the General Appropriations Bill (GAB) that reflect any changes made.
• There is a House Approval of the budget, where they must vote from the 2nd reading.
• Afterwards there is a transmission to the senate where there will be further reviews.
• There are Senate deliberations, where thr senate recieves the GAB from the House.
• The Senate finance committee is responsible for reviewing the GAB.
• Bicameral deliberations is where the senate and HOR harmonize the official version of the GAB.
• GAB Ratification, is where the harmonized version of the GAB is submitted to both HOR and Senate.
• All processes need the presidents enactment, which is the General Appropriation Act (GAA)
• If the GAA is not enacted, then it is reenacted.

Budget Execution

• Allotment is official documents to comit an item.
• Disbursement is when money is being spent.

Documents used in releasing allotments

• General Appropriations Act Release Document (GAA - RD), whicg allows agencies to use funds immediately.

• Special Allotment Release Order (SARO), which is used for budget items that are not released immediately

• General Allotment Release Order (GARO), a general authorization for agencies to spend money on routine or automoatic expenses.

• The budget committee reviews, and is the main party that can ammend or recommend for senate approval

• The final senate approvals are the second reading and third reading.

• The senate may speed up the process, to avoid delays.

Other topics

• Notice of Cash Allocation (NCA) is issued by the DBM to government agencies to withdraw a specific amount of cash immediately.
• Notice of Transfer of Allocation (NTA) is issued by an agency's central office to its regional or operating offices.
• Cash Disbursement Ceiling (CDC) is used by goverment offices operating aborad
• The funds are released monthly or quarterly

Explore government accounting principles, fund sources, and fiscal responsibility. Understand the disposition of funds, tax reforms, and the roles of accountable officers. Test your knowledge of government resource management.