State Accounting Rules and Regulations

Government Accounting Principles

• Government accounting is strictly anchored on specific laws, standards, rules, and regulations.
• In the absence of specific laws or rules, government accountants follow Generally Accepted Accounting Principles (GAAP).
• In case of conflict between GAAP and legal provisions, the latter prevails.

Commission on Audit (COA)

• The Commission on Audit (COA) is empowered by the Constitution to have the exclusive authority to promulgate accounting rules and regulations.
• COA issues rules and regulations, including State Accounting Standards, to be implemented by all government accountants.

Government Auditing

• Government auditing is defined as the analytical and systematic examination and verification of financial transactions, operations, accounts, and reports of government agencies.
• The purpose of government auditing is to determine the accuracy, integrity, and authenticity of financial transactions, and to classify the requirements of the law, rules, and regulations.

Accounting Systems

• Accounting systems are developed by different government agencies and approved by the Department of Budget and Management.
• The systems are based on COA issuances, including Circular No. 80-6-2-6-3 dated 16 October 1986.

State Accounting Rules and Regulations

• All transactions must be supported by sufficient, formal written documents, with a complete and accurate description of the transactions, its peso amount, authorization, and other substantiating information.

Standard Chart of Accounts

• The three systems of State accounting use a common Standard Government Chart of Accounts (SGCA) to effect uniformity in accounting and reporting, facility in the consolidation of financial reports, and adaptability to computerization.

Constitutional Provisions on Accounting and Auditing

• The Constitution provides for the need of an accounting system that will generate financial reports that reflect a more realistic picture of government operations.
• The Commission on Audit has the exclusive authority to define the scope of its audit and examination, established the techniques and methods required, and promulgate accounting and auditing rules and regulations.

Commercial Accounting

• Commercial accounting is used by the private sector, but applied by government-owned or controlled corporations (GOCCs) with proprietary functions.

General Principles of Government Accounting

• Appropriations, allotments, and obligations are governed by specific principles, including:

  • No money should be paid out of the treasury except in pursuance of an appropriation law or other specific statutory authority.
  • Government funds shall be spent only for public purposes.
  • Allotments are to be released to the agencies on a comprehensive basis allocated on a quarterly requirement.
  • The accrual basis of accounting for expenditures should be followed.
  • Expenses whether paid in cash or on account must pass the obligation accounts.
  • Obligations should be properly recorded in the pertinent books of accounts.

• Disbursement is governed by specific principles, including:

  • All disbursements shall be made only for duly authorized expenditures and on the basis of duly approved and supported disbursement vouchers.
  • All disbursements made from the national treasury shall only be on the basis of the notice of cash allocation issued by the DBM, except when it is otherwise provided by law.
  • Cash, checks, and accountable forms must be kept in safe custody.
  • Cash books of disbursing officers should be kept up-to-date, footed, balanced, and ruled at the end of each month.