Comprehensive Reviewer in Government Accounting
ACCOUNTING POLICIES, GUIDELINES AND PROCEDURES
FOLLOWED IN GOVERNMENT ACCOUNTING
According to the State Audit Code of the Philippines (Presidential Decree No. 1445, Section 109),
Government Accounting encompasses the processes of analyzing, recording, classifying, summarizing,
and communicating all transactions involving the receipt and disposition of government funds and
property, and interpreting the results thereof. Like accounting for business entities, government
accounting also involves producing information useful for economic decisions. However, government
accounting places greater emphasis on: - The sources and utilization of government funds, and - The
responsibility, accountability, and liability of entities entrusted with such funds and properties.
Objectives of Government Accounting
a) To produce information concerning past operations and present financial conditions; b) To provide a
basis for guidance in future operations; c) To ensure control over the acts of public officers and bodies
in the receipt, disposition, and utilization of government funds and property; d) To report on the financial
position and results of operations of government agencies for the information of all concerned.
Sources and Utilization of Government Funds
- Sources of Funds – Revenues collected through taxes and other fees, borrowings, and grants from
other governments or international bodies. - Utilization of Funds – Includes expenditures on programs,
projects, services, and unanticipated losses from calamities or disasters. Government resources must
be utilized efficiently, effectively, and in accordance with the law. Government officials are responsible,
accountable, and liable for the resources under their custody. It is emphasized that public officials are
mere agents of government funds and do not own them; they are tasked to use these funds for the
nation’s welfare and development.
Financial Reporting and Reconciliation
Each government entity performs the following: - Reconciles accounting books with the cash records of
the Bureau of the Treasury (BTr). - Reconciles budget registries with the budget records of the
Department of Budget and Management (DBM). - Submits reports to the Commission on Audit (COA)
for review, reconciliation, and consolidation. - COA consolidates national financial reports and submits
them to the President and Congress.
Government Accounting Responsibility
a) Commission on Audit (COA) – Has exclusive authority to promulgate accounting and auditing rules
and regulations. Maintains the general accounts of the government and supporting vouchers. Submits
consolidated financial reports to the President and Congress. b) Department of Budget and
Management (DBM) – Responsible for the formulation and implementation of the national budget.
Ensures that expenditures align with socio-economic goals. c) Bureau of the Treasury (BTr) –
Functions under the Department of Finance. Serves as the cash custodian of the government.
Receives, keeps, manages, and disburses national funds. Maintains accounts of financial transactions
for all national government offices and agencies. d) Government Agencies – Includes all national
government departments, bureaus, offices, and government-owned or controlled corporations
(GOCCs). Maintain accounting books, budget registries, and financial reports for submission to COA.
Government Accounting Manual (GAM) for National Government Agencies
(NGAs)
The GAM for NGAs was promulgated to harmonize government accounting standards with international
accounting standards, specifically the International Public Sector Accounting Standards (IPSAS), which
are based on the International Financial Reporting Standards (IFRS). Objectives of the GAM for NGAs:
a) To prescribe standards, policies, and procedures for accounting government funds and property; b)
To establish a uniform coding structure and chart of accounts; c) To standardize accounting registries,
forms, reports, and financial statements across all government agencies.
Basic Accounting and Budget Reporting Principles
Government financial records and reports must comply with: 1. PPSAS and relevant laws, rules, and
regulations. 2. Accrual basis of accounting. 3. Budget basis for presenting budget information in
financial statements. 4. Revised Chart of Accounts prescribed by COA. 5. Double-entry bookkeeping.
6. Financial statements must be based on both accounting and budgetary records. 7. Fund Cluster
Accounting – Separate books of accounts are maintained for each fund cluster.
Code Fund Cluster
01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account – Locally Funded/Domestic Grants Fund
04 Special Account – Foreign Assisted/Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts
Qualitative Characteristics of Financial Reporting
Financial reports should exhibit the following characteristics: Understandability, Relevance, Materiality,
Timeliness, Reliability, Faithful Representation, Substance over Form, Neutrality, Prudence,
Completeness, and Comparability.
Components of General-Purpose Financial Statements
1. Statement of Financial Position 2. Statement of Financial Performance 3. Statement of Changes in
Net Assets/Equity 4. Statement of Cash Flows 5. Statement of Comparison of Budget and Actual
Amounts 6. Notes to Financial Statements
Elements of Financial Statements
- Assets – resources controlled by the entity expected to provide future benefits. - Liabilities – present
obligations arising from past events that will result in an outflow of resources. - Equity – residual interest
in the assets after deducting liabilities. - Revenue Funds – funds derived from the income of any
agency available for appropriation or expenditure in accordance with the law. - Expenses – decreases
in economic benefits during the accounting period in the form of outflows or depletions of assets or
incurrences of liabilities.
