ACCT303-Accounting for Government-1 2.pdf

Overview of Government Accounting 1 Government Accounting Uses Provide info in making economic decisions Demonstrate the accountability of the entity for the resources entrusted to it 2 Government Account...

Overview of Government Accounting 1 Government Accounting Uses Provide info in making economic decisions Demonstrate the accountability of the entity for the resources entrusted to it 2 Government Accounting – Responsibility of: COA DBM BTr Other Government Agencies 3 Government Accounting Manual (GAM) The GAMs for National Government Agencies (NGAs) promulgated by COA to harmonize the standards (government acctg standards with the international standards)  provides the basic principles and procedures in the financial reporting of government entities 4 Basic Principles of Gov’t Accounting 1. Compliance with Philippine Public Sector Accounting Standards (PPSAS) and other relevant laws 2. Accrual basis 3. Budget basis 4. Revised Chart of Accounts (RCA) 5. Double Entry 6. FS based on Acctg and Budgetary Records 7. Fund Cluster Accounting 5 1. Compliance with Philippine Public Sector Accounting Standards (PPSAS) and other relevant laws preparation of the general purpose financial statements in accordance with the PPSAS and other financial reports as may be required by laws, rules and regulations 6 2. Accrual basis Accrual basis- means a basis of accounting under which transactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid). 7 3. Budget basis Government Budget-is the financial plan of a government for a given period The budget is the government's key instrument for promoting its socio-economic objectives also refers to the income, expenditures and sources of borrowings of the National Government (NG) that are used to achieve national objectives, strategies and programs 8 4. Revised Chart of Accounts (RCA) prescribed under COA Circular Contents. This Volume consists of the following: a. Chapter 1 – Introduction b. Chapter 2 – List of Accounts c. Chapter 3 – Description of Accounts 9 4. Revised Chart of Accounts (RCA) 10 4. Revised Chart of Accounts (RCA) 11 12 5. Double Entry 13 6. FS based on Acctg and Budgetary Records a. Statement of Financial Position b. Statement of Financial Performance c. Statement of Changes in Net Assets/Equity d. Statement of Cash Flows e. Statement of Comparison of Budget and Actual Amounts f. Notes to the Financial Statements, comprising a summary of significant accounting policies and other explanatory notes 14 7. Fund Cluster Accounting The books of accounts shall be maintained by fund cluster 15 Qualitative Characteristics 1. Understandability 2. Relevance 3. Materiality 4. Timeliness 5. Reliability 6. Faithful representation 7. Substance over form 8. Neutrality 9. Prudence 10. Completeness 11. Comparability 16 Criteria for Asset Recognition 1. Meets the definition; 2. Probable inflow of future economic benefits; and 3. Reliable measurement of cost or other value (e.g., fair value). 17 Budgetary Process 18 Budget Cycle 1. Preparation 2. Legislation 3. Execution 4. Accountability 19 https://www.slideshare.net/MariaAmeliaPangilina/budgetary-system-budget-process-of-the-philippine-government 20 Budget Preparation 1. Budget Call 2. Stakeholder Engagement 3. Technical Budget Hearing 4. Executive Review 5. Consolidation, Validation and Confirmation 6. Presentation to President and Cabinet 7. The President’s Budget 21 Budget Legislation 1. House Deliberations 2. Senate Deliberations 3. Bicameral Deliberations 4. President Ratification and Enrollment The Veto Message Reenactment 22 Budget Execution 1. RELEASE GUIDELINES & PROGRAM 2. BUDGET EXECUTION DOCUMENTS (BEDs) 3. ALLOTMENT & CASH RELEASE PROGRAMMING 4. ALLOTMENT RELEASE 5. INCURRING OBLIGATIONS 6. GAA as Allotment Release 7. CASH ALLOCATION 8. DISBURSEMENT 23 Budget Accountability 1. PERFORMANCE & TARGET OUTCOMES 2. BUDGET ACCOUNTABILITY REPORTS (BARs) 3. NO REPORT , NO RELEASE 4. REVIEW OF AGENCY PERFORMANCE 5. AUDIT 6. Performance-Based Incentive System 24 Bottom-up v. Zero-based Budgeting Bottom-up Zero-based Prepared with the Without regard to the participation of several previous year parties starting from the Required to justify the lowest to the highest levels current year’s proposed of government programs and expenditures 25 Terms to remember: 1. Appropriation – is the authorization made by a legislative body to allocate funds for purposes specified by the legislative or similar authority 2. Allotment – is an authorization issued by the DBM to NGAs 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. 3. Obligation – is 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. 4. Disbursements – are the actual amounts spent or paid out of the budgeted amounts 26 Responsibility Accounting It is a system that measures the plans (by budgets) and actions (by actual results) of each responsibility center. provides access to cost and revenue information under the supervision of a manager having a direct responsibility for its performance. 27 Responsibility Center Code Structure 28 Responsibility Center Code Structure 29 Concepts of Responsibility Accounting can be used at every level of management in which the following conditions exist: 1. Cost and revenues can be directly associated with the specific level of management responsibility; 2. Costs and revenues are controllable at the level of responsibility with which they are associated; and 3. Budget data can be developed for evaluating the manager’s effectiveness in controlling the costs and revenues. 30.. 31 Government Accounting Process 32 Books of Accounts and Registries a. Journals 1. General Journal 2. Cash Receipts Journal 3. Cash Disbursements Journal 4. Check Disbursements Journal b. Ledgers 1. General Ledgers 2. Subsidiary Ledgers c. Registries 1. Registries of Revenue and Other Receipts (RRORs) 2. Registry of Appropriations and Allotments (RAPAL) 3. Registries of Allotments, Obligations and Disbursements (RAOD) 4. Registries of Budget, Utilization and Disbursements (RBUD) 33 Classification of Expenditures - NGAs classified into categories as may be determined by the DBM including, but not limited to the following: a. Entity incurring the obligation; b. Program, Activity and Project (PAP); c. Object of expenditures, including personnel services (PS), maintenance and other operating expenditures (MOOE), financial expenses (FE), and capital outlays (CO); d. Region or locality of use; e. Economic or functional classification of the expenditures; f. Obligational authority and cash transactions arising from fund releases; and g. Such other classifications as may be necessary for the budget process. 34