CHAPTER 4:
REVENUE AND OTHER RECEIPTS
CHRISTINE H. LEAL
LEARNING OBJECTIVES
• Discuss the Fundamental Principles
LO.1 for Revenue.
• State the sources of revenue of a
LO.2 government entity.
• State the recognition and
LO.3 measurement of revenue.
REVENUE vs. RECEIPT
• Gross inflow of economic benefits or service
potential during the reporting period when
Revenue
those inflows result in and increase in
equity, other than increases relating to
contribution from owners.
• Received and Receivable.
Receipt • Actual cash collection from all
resources during a period.
FUNDAMENTAL PRINCIPLES OF
REVENUE
• All revenue accruing to an entity by the virtue of the provisions of existing law,
orders and regulations shall be deposited/remitted in the National Treasury (NT)
or in any duly authorized government depository and shall accrue to the
1. General Fund (GF) of the National Government.
• Except as may otherwise be specifically provided by law or competent authority,
all moneys and property officially received by a public officer in any capacity or
upon any occasion must be accounted for as government funds and government
2. property.
• Amount received in trust and from business-type activities of government may
be separately recorded and disbursed in accordance with such rules and
3. regulations.
FUNDAMENTAL PRINCIPLES OF
REVENUE
• Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds
or Funds other than the GF, only when authorized by law as implemented
4. by rules and regulations issued by the Permanent Committee.
• No payment of any nature shall be received by a collecting officer without
immediately issuing an official receipt in acknowledgement thereof.
5.
• Where mechanical devices (e.g. electronic official receipt) are used to
acknowledgement cash receipts, the COA may approve, upon request,
6. exemption from the use of accountable forms.
FUNDAMENTAL PRINCIPLES OF
REVENUE
• At no instance shall temporary receipts be issued to acknowledge the receipt of public
funds.
7.
• Pre-numbered OR’s shall be issued in strict numerical sequence. All copies of each
receipt shall be exact copies or carbon reproduction in all respects of the original.
8.
• An officer charged with the collection of revenue or the receiving of moneys payable
to the government shall accept payment for taxes, dues or other indebtedness to the
government in the form of checks issued in payment of government obligations, upon
9. proper endorsement and identification of the payee or endorse.
FUNDAMENTAL PRINCIPLES OF
REVENUE
• At no instance should money in the hands of the CO be utilized for the
purposes of cashing private checks.
10
• Under such rules and regulations as the COA and the Department of
Finance (DOF) may prescribe, the Treasurer of the Philippines and all AGDB
shall acknowledge receipt of all funds received by them, the
acknowledgement bearing the date of actual remittance or deposit and
11 indicating from whom and on what account it was received.
TYPE OF FUNDS
• A fund which is available for any purpose other than
those which other funds have been designated to
General
• A fund designated for special purposes.
Special
• Or Fiduciary fund, fund held by a government agency of
public office acting as trustee, agent or administrator for
Trust the fulfilment of condition.
TYPE OF FUNDS
• Comprises all funds derived from the income of any
government agency and available for appropriation or
Revenue expenditure in accordance of law
• Fund held in an authorized depository bank over which
the recipient agency retains control for the lawful
Depository purposes for which the fund was receive.
• Established to facilitate the funding of priority activities of
Special Account in the government
the General Fund
TYPE OF FUNDS
• Are “funds that the president allocates for special program and
projects. Unlike for other funds, SPFs are not under the
Special accountability of any particular government agency/office or unit
purpose funds
Relevant to the Provision of Law:
• All money collected on any tax levied for special
purpose shall be treated as SPECIAL FUND and paid
out for such purpose only. If the purpose for which a
special fund was created has been fulfilled or
abandoned, the balance, if any, shall be transferred
to the GENERAL FUND of the Government.
SOURCES OF REVENUE
Revenues may arise from exchange and non-
exchange transactions.
Exchange transactions- examples: sale of goods and
rendering of services.
Non-exchange transactions- examples: tax revenue,
fines and penalties and donations.
SALES OF GOODS
Revenue from the sale of goods shall be recognized when all
of the following conditions are satisfied:
a) Significant risks and rewards of ownership of the goods
are transferred to the buyer;
b) The entity does not retain continuing managerial
involvement or effective control over the goods and sold;
c) It is probable that economic benefits will flow to the
entity;
d) Revenue can be measured reliably; and
e) Cost relating to the transaction can be measured reliably.
RENDERING OF SERVICES
Revenue from rendering of services is recognized on a straight line basis over the contract term.
However revenue is recognized by reference to the stage of completion of the outcome of the
transaction can be estimated reliably, such as when all of the following conditions are satisfied
The stage of completion It is probably that economic Revenue can be Costs relating to the
can be measured reliably; benefits will flow to the measured reliably; and transaction can be
entity. measured reliably.
When the outcome cannot be estimated reliably, revenue is recognized only to the extent of
recoverable costs.
INTEREST, ROYALTIES &
DIVIDENDS
• Interest is recognized on a time proportion
basis that takes into account the effective
yield on the asset;
• Royalties is recognized as they are earned
in accordance with the substance of the
relevant agreement; and
• Dividends are recognized when the entity’s
right to receive payment is established.
MEASUREMENT OF REVENUE
FROM EXCHANGE TRANSACTIONS
Revenue from exchange transactions are measures at fair value of the
consideration received or receivable.
Any trade discounts and volume rebates shall be taken into account.
When cash flows are deferred, the fair value of the consideration is the
present value of the consideration receivable.
MEASUREMENT OF REVENUE FROM
EXCHANGE TRANSACTIONS
Revenue from exchange transactions are measures at fair value of the
consideration received or receivable.
Any trade discounts and volume rebates shall be taken into account.
When cash flows are deferred, the fair value of the consideration is the
present value of the consideration receivable.
Similar – no revenue is recognized.
Dissimilar – revenue is recognized, measured using the
following order of priority
• Fair value of the goods or services
received, adjusted by the amount of any
cash transferred.
• Fair value of the goods or services, given
up, adjusted by the amount of any cash
transferred.
NON-EXCHANGE TRANSACTIONS
• Revenue from non-exchange
transactions are derived mostly from,
taxes, fines and penalties, gifts,
donations and good in-kind.
TAX REVENUE
TYPE OF TAX TAXABLE EVENT
Income Tax Earning of taxable income
Value added tax Undertaking of taxable activity
Goods and Services tax Purchase or sale of taxable goods
or services
Customs duty Movement of dutiable goods and
services across the customs
boundary
Death duty Death of owner of the taxable
property
Property tax Passage of the time period for
which the tax is levied
GIFTS, DONATIONS AND
GOODS IN-KIND
Recognized as revenue measured at fair
value when it is probable that future
economic benefits will flow from the entity.
If without condition, recognized
immediately as revenue.
If with condition, initially recognized as
liability and recognized as revenue only
when the condition is satisfied.
OTHERS
• Service in-kind – not recognized as revenue.
• Debt Forgiveness – carrying amount of debt forgiven recognized as
revenue.
• Bequests – transfer made according to the provisions of a deceased
person’s will) recognized as revenue measured as fair value, if asset
recognition criteria are met.
• Grant with Condition – initially recognized as liability until condition is
satisfied.
• Pledges – (unenforceable promises to give) not recognized as revenue.
• Concessionary Loans – (loans with below-market rate) difference b/w
fair value and transaction price is recognized as revenue, if non-
exchange transaction.
IMPAIRMENT LOSSES AND
ALLOWANCE FOR IMPAIRMENT
LOSS
• When an amount already recognized
as revenue becomes uncollectible, it
is recognized as expense (i.e,
impairment loss) rather than as an
adjustment to the revenue originally
recognized.
OTHER RECEIPTS
SUBSIDIY FROM NG and • Recognized as revenue
other NGAS from assistance and
subsidy
Receipt from : • Not recognized as revenue
a. Excess cash advance
b. Overpayment of expenses
c. Performance bonds and
security deposits
d. Collection on behalf of
other entities and
e. Inter-intra-agency fund
transfer
RECEIPTS FROM NCA
RECEIPTS OF NCAA
RECEIPT OF CDC
RECEIPT OF SUBSIDY /ASSISTANCE FROM
OTHER NGAs, LGUs, GOCCs and other
Funds.
The End!
