Lesson 11 and 12_merged (1) PDF - Public Procurement RA 9184

PUBLIC PROCUREMENT RA 9184  PROCUREMENT DEFINED: Public procurement refers to the purchase by governments and state-owned enterprises of goods, services and works. As public procurement accounts for a substantial portion of the taxpayers’ money, governments are expected to...

PUBLIC PROCUREMENT RA 9184  PROCUREMENT DEFINED: Public procurement refers to the purchase by governments and state-owned enterprises of goods, services and works. As public procurement accounts for a substantial portion of the taxpayers’ money, governments are expected to carry it out efficiently and with high standards of conduct in order to ensure high quality of service delivery and safeguard the public interest. PROCUREMENT PROCESS: The procurement process formally starts from the point where the need to make a purchase to deliver an objective has been identified; its process ends when the product has been used up or sold on, or the service contract has been delivered completely and the supplier or contractor is paid in full. PROCUREMENT: In contemporary business parlance, the term procurement is an “umbrella” term which includes in its sphere concepts such as logistics and inventory management, online transactions, sourcing and outsourcing, supply chain management and operations, and eBidding.  All organizations aim for good procurement practices and that means value for money – that is, buying something that is fit for purpose, taking into account the overall cost. A good procurement process should also be delivered efficiently, to limit the time and expense for the parties involved.  Procurement is also a major activity in government. In the Philippines, hundreds of billions of pesos is spent by the government to buy the goods and services it needs to operate the bureaucracy, carry out projects and deliver services to its citizens.  The Government Procurement Reform Act (Republic Act No.9184 s. 2003) With the passage in January 2003 of the Government Procurement Reform Act (GPRA) or Republic Act No. 9184 (RA 9184), the Philippine procurement system was rationalized and harmonized with international standards and best practices.  The GPPB acts as the oversight authority in all government procurement. It is headed by the Secretary of the Department of Budget and Management as Chairman and the Director-General of NEDA as Alternate Chairman.  The Members of the Board are comprised of the Secretaries or the authorized representatives of the Departments of Public Works and Highways, Finance, Trade and Industry, Health, National Defense, Education, Interior and Local Government, Science and Technology, Transportation and Communications, and Energy.  A representative from the private sector appointed by the President also sits as a Member of the Board. Representatives from the Commission on Audit and from relevant government agencies and professional organizations from the private sector are invited in GPPB Meetings to serve as Resource Persons.  An important breakthrough in the Government Procurement Reform Act is the provision mandating all government agencies to utilize the Government Electronic Procurement System (now the PhilGEPS http://philgeps.gov.ph) as the single portal that shall serve as the primary source of information on all government procurement.  The 2016 Revised Implementing Rules And Regulations (IRR) Of REPUBLIC Republic Act (RA) No. ACT (RA) 9184 9184, OTHERWISE KNOWN – Government AS THE GOVERNMENT Procurement PROCUREMENT REFORM ACT Reform Act (Updated as of 15 April 2023) PROCUREMENT Refers to the acquisition of goods, consulting services, and the contracting for infrastructure projects by the PROCURING ENTITY. In case of projects involving mixed procurements, the nature of the procurement, i.e., Goods, Infrastructure Projects or Consulting Services, shall be determined based on the primary purpose of the contract. Procurement shall also include the lease of goods and real estate. With respect to real property, its procurement shall be governed by the provisions of R.A. 10752 and other applicable laws, rules and regulations. PROCURING ENTITY Refers to any branch, constitutional commission or office, agency, department, bureau, office, or instrumentality of the GoP (NGA), including GOCC, GFI, SUC and LGU procuring goods, infrastructure projects and consulting services. SECTION 2. DECLARATION OF POLICY The provisions of this IRR are in line with the commitment of the GoP to: ✓ Promote good governance and its effort to adhere to the principles of transparency, accountability, equity, efficiency, and economy in its procurement process. It is the policy of the GoP that procurement of Goods, Infrastructure Projects and Consulting Services shall be competitive and transparent, and therefore shall undergo COMPETITIVE BIDDING, except as provided in Rule XVI of this IRR.  Definition of Terms A. Act. Refers to R.A. 9184, entitled “An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for other Purposes,” otherwise known as the Government Procurement Reform Act. Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Definition of Terms Thank you!  Lesson 9 & 10 ✓ Financial Statements – tools in decision making process ✓ Ratio Analysis  Financial Statements ❑ Are structured financial representation of the financial policies and of the transactions undertaken by an enterprise. ❑ To provide information about the financial position, performance and cash flow of an enterprise that is useful to a wide range of users in making decisions. ❑ Show the results of management’s stewardship of the resources invested to it. These financial statements more vital source of information concerning the history of its activities relative to its financial condition and results of operation and become effective tools in decision making. The accountant displays his analytical abilities, skills and expertise in the field of accounting by analyzing and interpreting the data found in the financial statements. It is by so doing that Accounting as a “service activity” justifies its importance in the world of business. Aside from the proprietor or management, there are other parties who are interested on the financial statements and that the kind of analysis they are to make depends upon their respective needs. Some of the users are the investors, employees, lenders, suppliers and other trade creditors, customers and government and the public.  Objective of the Analysis The main purpose of the statement analysis is to evaluate the progress made by the business in the past as a guide to future. operations. There are five aspects of the business enterprise worth analyzing: ❑ Liquidity ❑Solvency ❑Profitability ❑Financial Structure ❑Capacity for Adaptation  Liquidity: Is the ability of the enterprise to meet currently maturing obligations. Solvency: Is the availability of cash over longer- term to meet maturing obligations. Five aspects of Profitability: the Business The ability of the business to generate more profit. enterprise Financial Structure: Is the source of financing for the assets of the enterprise. It indicates how much is borrowed capital and how much is equity capital. Capacity for Adaptation: Is the financial flexibility of the enterprise to use its available cash for unexpected requirements and investments opportunities.  Methods Used in Statement Analysis By using trends Using ratio to establish Presentation of by means of the relationship between certain item in the statement percentages; statement of financial showing the position ad statement of component comprehensive income. percentage. Component Percentages Component Percentage: The ratio of the peso amount of each item as related to the total of which it is a part. Common Size: A statement showing the component percentage. Vertical Analysis: Converts amounts of components of financial statements within a given date or period or the relative importance of an item in relation to the other or to a total.  Horizontal or Dynamic Analysis Trends by the financial statements become more meaningful to the users when the financial means of condition and the results of operations of one period as compared with the other, showing percentage the changes in peso amount and the relative changes percentages.  Ratio Analysis  Is a method of financial evaluation whereby the relationship between the items found in the Statement of Ratio Analysis Financial Position, Statement of Comprehensive Income or both are being established. 1. Liquidity Ratio a. Current Ratio - this measures the ability of the business to pay its current obligations arising from operations. b. Acid-Test or Quick Ratio - this is a very strict test or measurement of the liability of the business to convert its non-cash current assets into cash in payment of its obligations. The inventories are excluded because it takes time to convert these to cash. Likewise, prepaid expenses are excluded because it is not intended for conversion to cash. 2. Inventory Ratio a. Rate of Inventory Turn-over – a high rate on turn-over indicates a great demand of the commodities and a low rate indicates a poor demand. With this, the business should be able to determine what commodities are sold fast and which are sold slow to avoid loss due to obsolescence. The number of times merchandise replaced is represented by the rate of the inventory turn-over. b. Number of days sales in inventory – the number of days sale in inventory indicates the length of time it takes to acquire, sell and replace the merchandise inventory. In this, the analyst must consider the nature of commodities sold by the business. Basic commodities are sold in shorter length of time compared to machineries for obvious reasons. c. Accounts Receivable Turn-over – the accounts receivable turn-over indicates the number of times the Accounts Receivable were collected during the period. A high rate indicates efficiency in collecting the customer’s account. d. Average Collection Period – the average collection period indicates the number of days it takes to collect the customer’s accounts. 3. Profitability Ratio a. Rate of Return on Total Assets – it is a measurement of enterprise’s efficiency in using its assets to earn profits. b. Rate of Return on Sales – it indicates the enterprise’s ability to effectively utilize its advantage in shaping the pricing policy. c. Gross Profit Ratio – it is a measurement of the profitability of a company’s product. d. Rate of Return on Investment – it measures the percentage of profit generated by investment. 4. Solvency or Stability Ratio a. Debt to Total Assets Ratio – it indicates the claims of various creditors from the assets of the enterprise. b. Owners’ Equity to Total Assets Ratio – it indicates the claim of owner’s from the total assets of the enterprise. THANK YOU Lesson 7: Principles and importance of Cash Management Cash Management ✓ Cash Management is the strategy and associated processes for managing cost-effectively the government’s short-term cash flows and cash balances, both within government and between government and other sectors. ✓ Cash Management in the public sector is an important aspect because it concerned with the management of cash inflow and cash outflow of the business concern, cash flows within the business concern, and cash balance held by the business concern at any point of time. ✓ Cash management is the stewardship or proper use of an entity’s cash resources. It serves as the means to keep an organization functioning by making the best use of cash or liquid resources of the organization.  PRINCIPLES OF CASH MANAGEMENT 1.Speed up collection of receivables 2.Timely payment of liabilities 3.Invest idle cash 4.Prepare cash plan of forecast  Notice of Cash Allocation (NCA) Cash Management Objective Cash Management Objective Cash Management Objectives (National Level) (Agency Level) Ensure that adequate cash Economizing cash within Ensure line agency can available to pay for government. prepare forecast of its cash expenditures when they are Managing efficiently the flows. due. government’s aggregate short Accomplish accurately the Minimize government term cash flows. monitoring templates. borrowing costs. Ensuring that debt Coordinate with subunits Maximize returns on idle cash. management is aligned with under the department for Manage risks by investing in monetary policies. accurate forecasting. temporary surpluses.  1.Increase the certainty that payments are made by the due date. 2.Minimize volume of idle cash to Importance of Good reduce risk of financial Cash Management exposure. 3.Give greater flexibility in managing financing needs. 4.Make policy intervention less problematic. 5.Develop efficient short-term securities market. Lesson 9: Cash Management Cycle  Uses of Cash ▪ Personal services ▪ Maintenance and Other Operating Expenses ▪ Financial expense (interest and loan principal payment) Steps in Releasing Cash Annual Expenditure Profile All spending agencies are required to submit expected monthly expenditure for the whole year. ▪ DBM compiles a monthly disbursement program approved by the DBCC. ▪ DBM, based on Medium Term Development Plan, issues NCAs to agencies. Bureau of Treasury (BTr) Function ▪ BTr produces a statement of expected daily cash flows using historical patterns, growth assumptions and scenarios. ▪ BTr uses monthly targets in the MDP. Estimates are replaced with actual results everyday. ▪ BTr updates over-all forecast at least semi- annually or with new releases from the DBCC. Treasury Single Account (TSA) Centralization of government cash balances and establishment of TSA Treasury Single Account is a unified structure of government bank accounts enabling consolidation and optimum utilization of National Government’s Cash Resources. Features of Treasury Single Account (TSA) Government banking should be unified to allow treasury oversight and control of government cash flow and allow complete fungibility of all cash resources (preferably on a real-time basis if the technological infrastructure is in place). No government agency should operate bank accounts outside the oversight (and ultimate control) of the treasury. Should have comprehensive coverage it should ideally include cash balances of all government entities, both budgetary and extra-budgetary. Benefits of Treasury Single Account (TSA) Complete and timely information on government cash resources. Improved appropriation control and strengthening the authority of budget appropriation. Improved operational control during budget execution. Reduced bank fees and transaction costs. Facilitation of efficient payment mechanisms. Improved bank reconciliation and better-quality fiscal data. Lower volatility of treasury cash flows and reduced liquidity reserve needs. Revenue Collection Flow THANK YOU!!!