GOVERNMENT

ACCOUNTING
 GOVERNMENT ACCOUNTING -
encompasses the process of analyzing,
recording, classifying, summarizing and
communicating all transactions involving
the receipt and disposition of government
funds and property, and interpreting the
results thereof. (Sec.109, PD 1445)
OBJECTIVES OF GOVERNMENT ACCOUNTING

(Sec. 110, PD 1445)

1. produce information concerning past operations and
present conditions;

2. provide a basis for guidance for future operations;

3. provide for control of acts of public bodies and

officers in the receipt, disposition and utilization of
funds and property; and

4. report on the financial position and the results of

operation of government agencies for the
information of all persons concerned.
Accounting Responsibility

Emanates from the Constitution, laws, policies,

rules and regulations. The Constitution of the
Philippines, the fundamental law of the land,
mandates the keeping of the general accounts of
the government, promulgation of accounting
rules, and the submission of reports covering the
financial condition and operation of the
government
Accounting Responsibility

 The offices charged with the accounting

responsibility are:
✓COA
✓DBM
✓BTr
✓Government agencies discharging the functions
of government to enable it to attain its
commitments to the Filipino
Commission on Audit

➢ Keeps the general accounts of the government,

promulgates accounting rules and regulations,
and submits to the President and Congress,
within the time fixed by law (not later that the
last day of September of each year), an annual
report of the government, its subdivisions,
agencies and instrumentalities, including
government-owned or controlled corporations
In the performance of its functions, as
mandated by the Constitution of the
Philippines,
“The Commission of Audit shall have exclusive authority,
subject to the limitations in this Article, to define the scope
of its audit and examination, establish the techniques and
methods required therefor, and promulgate accounting and
auditing rules and regulations, including those for the
prevention and disallowance of irregular, unnecessary,
excessive, extravagant, or unconscionable expenditures, or
uses of government funds and properties”
The Commission on Audit created the Public
Sector Accounting Standards Board (PSASB).
PSASB shall assist the commission in
formulating and implementing Philippines Public
Sector Accounting Standards (PPSAS). - shall
apply to all NGAs, LGUs and GOCCs not
considered as Government Business
Enterprises(GBEs), in which case the PFRS and
relevant standards issued by Financial Reporting
Standards Council, Board of Accountancy, and
Professional Regulation Commission shall apply
Government Business Enterprise (GBE) is an
entity that has all the following characteristics
1. An entity with the power to contract in its own name;
2. Has been assigned the financial and operational
authority to carry on a business
3. Sells goods and services, in the normal course of its
business, to other entities at a profit or full cost
recovery
4. Not reliant on continuing government funding to be a
going concern; and
5. Controlled by a public sector entity
 Department of Budget and
Management
Pursuant to the Administrative Code of the
Philippines,
“The Department of Budget and
Management shall be responsible for the
formulation and implementation of National
Budget with the goal of attaining our national
socio-economic plans and objectives. The
Department shall be responsible for the efficient
and sound utilization of government funds and
revenues to effectively achieve the country’s
development objectives”
 Department of Budget and
Management
Tasked to control and monitor appropriations and
allotments through the registers it shall maintain:
❑ Registry of Appropriations and Allotments (RAPAL)
❑ Registry of Special Purpose Fund Appropriation
(RESPFA)
❑ Under NGAS, it shall also maintain te Registry of
Allotments and Notice of Cash Allocation (RANCA) for
its control and monitoring of Notice of Cash Allocation
releases
The Bureau of Treasury

➢ Playsa pivotal role in the cash operations of

the national government.
Accounting rules and regulations pertaining to
cash operations, collections, remittances and
disbursements, including public borrowings, are
issued by the COA, jointly or with the
concurrence of the DOF and DBM
The Bureau of Treasury
As one of the bureaus of DOF is authorized to:
1. Receive and keep national funds, manage and
control the disbursements thereof; and
2. Maintain accounts of financial transactions of
all national government offices, agencies and
instrumentalities.

❖ Under NGAS, the BTr shall maintain the

Registry of NCA and Replenishments
(RENREP)
Government Agencies

Department, bureaus, offices and other

instrumentalities of the National Government,
including the Congress, the Judiciary, the
Constitutional bodies, state colleges and
universities, and other self-contained
institutions and hospitals are required by law
to have accounting units / divisions /
departments.
Government Agencies
Accounting personnel shall:
1. Maintain and keep current the account of the
agency
2. Provide advice on the financial condition and
status of the appropriations and allotments of
the agency as its Head my require, and
3. To develop and conduct procedures designed
to meet the needs of management
Government Agencies
Shall maintain the following four registries for allotments
it receives and for the obligation it incurs:
1. Registry of Allotments and Obligations – Personal
Services (RAOPS)
2. Registry of Allotments and Obligations – Maintenance
and Other Operating Expenses (RAOMO)
3. Registry of Allotments and Obligations – Capital
Outlay (RAOCO)
4. Registry of Allotments and Obligations – Financial
Expenses ( RAOFE)
Under the old government accounting system,
accounting entries were made manually,
thereby, necessitating the maintenance of
numerous special journals complete with
several wide columns
To expedite the process of recording
transactions and to ensure the generation of
functional and user-friendly financial reports,
a shift to a simplified and updated accounting
system was made
 NEW GOVERNMENT
ACCOUNTING SYSTEM (NGAS)
Specifically, the shift to the New Government Accounting
System was made in order to respond to the need of the
following

1. The adoption of a system that is in conformity with

International Accounting Standards
2. Pursuit of eventual computerization, which will
include responsibility accounting, thereby ensuring the
generation of various reports that are useful to
management, lawmakers and the general public
3. Generation of relevant and periodic financial
statements; and
4. Effective tool for managers and executives in effective
and efficient monitoring of Agency performance
NEW GOVERNMENT ACCOUNTING SYSTEM

Pursuant to the Commission on Audit Circular No.

2001-004 dated October 30, 2001, all government
agencies were prescribed to use the New
Government Accounting System (NGAS) effective
January 1, 2002. The NGAs is a simplified set of
accounting concepts, guidelines and procedures
designed to ensure correct, complete and timely
recording of government financial transactions,
and productions of accurate and relevant financial
reports.
Government Accounting Manual
The Government Accounting Manual(GAM) is prescribed
by COA pursuant to Article IX-D, Section 2 par, (2) of the
1987 Constitution of the Republic of the Philippines
provides:
“The Commission of Audit shall have exclusive
authority, subject to the limitations in this Article, to define
the scope of its audit and examination, establish the
techniques and methods required therefor, and promulgate
accounting and auditing rules and regulations, including
those for the prevention and disallowance of irregular,
unnecessary, excessive, extravagant, or unconscionable
expenditures, or uses of government funds and properties”
Government Accounting Manual

This manual presents the basic accounting

policies and principles in accordance with the
Philippine Public Sector Accounting
Standards (PPSAS) adopted thru COA
Resolution No. 2014-003 dated January 24,
2014 and other pertinent laws, rules and
regulations.
Government Accounting Manual
Shall be used by all National Government Agencies
(NGAs) in the:
a. Preparations of the general purpose financial
statements in accordance with the PPSAS and other
financial reports as may be required by laws, rules
and regulations; and
b. Reporting of budget, revenue and expenditures in
accordance with laws, rules and regulations
Objectives of the Manual

a. standards, policies, guidelines and

procedures in accounting for government
funds and property;
b. Coding structure and accounts; and
c. Accounting books, registers, records
forms, reports and financial statements
 BASIC FEATURES AND
POLICIES OF NGAS
❑ Accounting Methods
The International Public Sector Accounting
Standards Board (IPSASB) develops
International Public Sector Accounting Standards
(IPSASs) which apply to the accrual basis of
accounting and cash basis of accounting. IPSASs
set out requirements dealing with transactions and
events in general purpose financial reports of all
public sector entities other than GBEs
IPSASB develops accrual IPSASs that:
1. Are converged with IFRS issued by the
IASB by adapting them to a public sector
context where appropriate.
2. Deal with public sector financial reporting
issues that are either not addressed by the
adapting IFRS or for which IFRS have not
been developed by the IASB
 BASIC FEATURES AND
POLICIES OF NGAS
1. Accrual Accounting. A modified accrual
basis of accounting shall be used. Under this
method, all expenses shall be recognized
when incurred and reported in the financial
statements in the period to which they relate.
Income shall be on accrual basis except for
transactions where accrual basis is impractical
or when other methods are required by law.
 BASIC FEATURES AND
POLICIES OF NGAS
2. One Fund Concept. This system adopts
the one fund concept. Separate fund
accounting shall be done only when
specifically required by law or by a donor
agency or when otherwise necessitated by
circumstances subject to prior approval of the
Commission on Audit (COA).
One Fund Concept
✓ In government accounting, fund is both a sum of money
set aside for a specific purpose, and an independent
fiscal and accounting entity.
✓ Created by the Constitution and by legislative
enactments, which direct that certain receipts be
collected or collections generated and accounted for a
special resource to carry out specific activities or attain
certain objectives
One Fund Concept
✓ Under the old government accounting system, all
income accruing to the agencies shall accrue in the
General Fund of the government and all money
collected on any tax levied for a special purpose shall be
treated as a Special Fund
✓ NGAS adopts the one fund concept – general fund
which is generally available for all functions of
government.
 The NGAS adopts the fund concept, and that is
the general fund

a. General Fund.
General Funds are funds which are generally
available for all functions of government or
for any purpose that Congress may choose to
apply, and are composed of all receipts or
revenues that do not otherwise accrue to other
funds.
 The NGAS adopts the fund concept, and that is
the general fund

Separate fund accounting shall be done

only when specifically required by law or
by a donor agency or when otherwise
necessitated by circumstances subject to.
prior approval of the Commission on Audit
(COA), in which case, a Special Purpose
Fund may be created.
The NGAS adopts the fund concept, and that is
the general fund

b. Special-purpose Fund.

Special-purpose Fund is a fund

appropriated for purposes other than
those provided in the regular funds of
government agencies, such as:
Separate fund accounting shall be done only when
specifically required by law or by a donor agency or when
otherwise necessitated by circumstances subject to prior
approval of the Commission, in which case, a Special
Purpose Fund may be created
1. Miscellaneous Personnel Fund
- Use to cover personnel benefits which are not provided for in the
regular budget of the agency
2. Calamity Fund
- Use to cover relief, rehabilitation, reconstruction and other
services in connection with calamities that may occur during the
budget year
3. Organizational Adjustment Fund
- Use to cover budgetary requirements of a newly created
organization, program/project/activity within an agency
 The NGAS adopts the fund concept, and that is
the general fund

c. Off-Budgetary Funds.
Off-Budgetary Funds refer to receipts for
expenditure items that are not part of the
National Expenditure Program, and which
are authorized for depositing in
government financial institutions. These
are categorized into:
❑ Retained Income/Receipts, and
❑ Revolving Funds
 The NGAS adopts the fund concept, and that is
the general fund
d. Custodial Funds.
Custodial Funds refer to receipts or cash received by any
government agency—whether from a private source or
another government agency—to fulfill a specific purpose.
Custodial receipts include receipts collected as an agent for
another entity. These include trust receipts—both from an
individual or corporation—that are required to be held by
government until the outcome of a court's case or
procurement activity is determined, as well as Cases where
a department or agency holds receipt; as a trustee for the
fulfillment of some obligations.
 The NGAS adopts the fund concept, and that is
the general fund
d. Custodial Funds.
Custodial Funds refer to receipts or cash received by any
government agency—whether from a private source or
another government agency—to fulfill a specific purpose.
Custodial receipts include receipts collected as an agent for
another entity. These include trust receipts—both from an
individual or corporation—that are required to be held by
government until the outcome of a court's case or
procurement activity is determined, as well as Cases where
a department or agency holds receipt; as a trustee for the
fulfillment of some obligations.
New General Appropriations
New General Appropriations are annual authorizations for
incurring Obligations during a specified budget year, as
listed in the General Appropriations Act (CAA). The CAA
is the legislative authorization that identifies new
appropriations in terms of specific amounts for salaries,
wages and other personnel benefits; Maintenance and
Other Operating Expenses (MOOE), Financial Expenses
(FEx) and Capital Outlays (CO) for the implementation of
programs, projects and activities of all departments, bureau
and offices of government for a given year.
Retained Income/Funds
Retained Income/Funds are collections that are authorized by
law to be used directly by agencies for their operation or
specific purposes. These include but are not limited to
receipts from:
▪ state Universities and Colleges (SUCS) - tuition and
matriculation fees and other internally generated receipts
▪ Department of Health (DOH) - hospital income such as
hospital fees; medical, dental and laboratory fees; rent
income derived from the use of hospital equipment and
facilities: proceeds from sale of hospital therapeutic
products, prosthetic, appliances and other medical devices;
diagnostic examination fees: donations in cash from
individuals or nongovernment organizations satisfied with
hospital services
Revolving Funds
Revolving Funds are receipts derived from
business-type activities of departments/agencies as
authorized by law, and which are deposited in an
authorized government depository bank. These
funds shall be self-liquidating. All obligations and
expenditures incurred because of these business
type activities shall be charged against the
Revolving Fund.
Trust Receipts
Trust Receipts are receipts that are officially in the
possession of government agencies or a public officer as
trustee, agent, or administrator, or which have been
received for the fulfillment of a particular obligation.
These receipts may be classified as:
a. Inter-Agency Transferred Funds (IATF), which are receipts or fund
transfers from any government-agency or Government Owned and/or
Controlled Corporations (GOCC) to another agency, and which are
deposited in the National Treasury to facilitate project implementation;
b. Receipts deposited with the National Treasury other than IATF, which
are receipts from other sources—including private persons or foreign
institutions—which are deposited with the National Treasury, pursuant
to E.O. No. 338, for the fulfillment of some obligations; and,
c. c. Receipts deposited with Authorized Government Depository Bank
(AGDB), which are receipts from other sources that should be
deposited in the ACDB for the fulfillment of some obligations
 Chart of Accounts and Unified Accounts Code
Structure (UACS)

The Chart of Accounts provides the

framework within which the accounting
records are constructed. It is defined as a list
of general {edger accounts consisting of real
and nominal accounts prepared for the use of
national and local government units.
Coding Scheme

Codes are assigned to account groups to

facilitate location Of accounts in the
general and subsidiary ledgers, to provide
systematic arrangement and classification
of accounts and facilitate preparation of
the consolidated financial reports as
follows:
Coding Scheme

Code Account Groups

1 Assets
2 Liabilities
3 Equity
4 Income
5 Expenses
Coding Scheme
Coding Scheme
Coding Scheme
Account Group represents the accounts classification as to
assets, liabilities, equity, income and expenses.
Major account group represents classification within the
account group, e.g. for assets major accounts: cash and
cash equivalents, investment receivables, inventories,
investment property, etc
Sub-major account group represents classification within
the major account e.g. for cash and cash equivalents: Cash
on Hand, Cash in Bank-Local Currency, Cash in Bank-
Foreign Currency, etc.
General ledger (GL) accounts represent the accounts to
be presented in the detailed financial statements, e.g. Cash
Collecting Officer, Petty Cash etc. This is composed of two
(2) segments. The first two digits from left is the GL code
and the last digit is reserved for contra accounts like,
Allowance for Impairment, Accumulated Depreciation.
The key purpose of the UACS is to enable the
timely and accurate reporting of actual revenue
collections and expenditures against budgeted
programmed revenues and expenditures.
Reporting requirements that will be best served by the
UACS include:
a. Financial reports as required by the Department of
Budget and Management (DBM) and the Commission
on Audit (COA),
b. Financial Statements as required by the Public Sector
Accounting Standards Board of the Philippines,
c. Management reports as required by the executive
officials/heads of departments and agencies, and
d. Economic statistics consistent with the Government
Finance Statistics (CFS) Manual 2001.
Responsibility Accounting

➢A system that relates the financial

results to a responsibility center, which
provides access to cost and revenue
information under the supervision of a
manager having direct responsibility for
its performance
➢ A system that measures the plan and
action of each responsibility center.
Responsibility Accounting
AIM:
1. Ensure that all costs and revenues are properly
charged/credited to the correct responsibility center so
that deviations from the budget can be readily
attributed to manager accountable therefor
2. Provide a basis for making decisions for future
operations; and
3. Facilitate review activities, monitoring the
performance of each responsibility center and
evaluation of the effectiveness of agency’s operations
Assignment

What are the concepts of

responsibility Accounting?
Books of Accounts

❑ Only the General Journal shall be used

❑ The books of original entry or journals,
shall be used to record in time sequence,
financial transactions and information
presented in duly certified and approve
accounting documents
❑ Basis for recording in the journals shall be
the Journal Entry Voucher (JEV)
While waiting for the implementation of
Accounting system, three special journals,
in addition to the General Journal, shall
be used
➢ Cash Receipt Journal
➢ Check Disbursement Journal
➢ Cash Disbursement Journal
NGAS introduced two sets of accounting books for NGAs
Regular Agency Books
- shall be used to record the receipts and utilization
of Notice of Cash Allocation (NCA) and other
income/receipts, which the agencies are authorized to use
and to deposit with Authorized Government Depository
Bank (AGDB) and the national Treasury

National Government Books

- shall be used to record income, which the agencies
are not authorized to use and are required to be remitted to
the National Treasury
COA Circular no. 201-003 provides that all
NGA shall discontinue the maintenance of the
NG books. A separate set of books shall be
maintained by fund
Financial Statements

1. Statement of Financial Position

2. Statement of Changes in Net Asets/Equity
3. Statement of Financial Performance
4. Statement of Cash Flows
5. Presentation of Comparison of Budget and
Actual Amounts
6. Notes, comprising a summary of significant
accounting policies and explanatory notes
Two-Money Column Trial
Balance
Allotment and Obligations
Allotment
is the authorization issued by the DBM to an agency
thereby enabling the Agency to incur obligation up to a
specified amount that is within a legislative appropriation

Obligation
refers to the commitment by a government agency
arising from an act of a duly authorized official which
binds the government to the immediate or eventual
payments of a sum of money
Allotment and Obligations
Separate registers shall be maintained to control the
allotments and obligations for each of the four class of
allotments:
1. Registry of Allotments and Obligations – Capital
Outlay (RAOCO)
2. Registry of Allotments and Obligations – Maintenance
and Other Operating Expenses (RAOMO)
3. Registry of Allotments and Obligations – Personnel
Services (RAOPS)
4. Registry of Allotments and Obligations Financial
Expenses ( RAOFE)
Notice of Cash Allocation
❑ An authorization issued by the Department of Budget
and Management to government agencies to withdraw
cash from the National Treasury through the issuance of
Modified Disbursement System (MDS) checks or other
authorized mode of disbursements
❑ The receipt of NCA shall be recorded as

Account title Debit Credit

Cash-Modified Disbursement System(MDS), Regular xx
Subsidy from National Government xx
Notice of Cash Allocation

Pursuant to Tax Remittance Advice (TRA)

system, the NCA released by the DBM to the
agency is reduced by the estimated taxes
expected to be remitted by the agency to the
BIR through the TRA.
Financial Expenses

Bank charges, interest expenses,

commitment charges, documentary stamp
expenses and other related expenses
shall be separately classified from
Maintenance and Other Operating
Expenses (MOOE)
Perpetual Inventory Supplies and
Materials
Purchase of supplies and materials for stock,
regardless whether or not they are consumed
within the accounting period, shall be
recorded under the Inventory account.

The moving average method of costing shall

be used for costing inventories
Maintenance of Supplies and Property,
Plant and Equipment Ledger Cards

For check and balance, the accounting units of

agencies, as well as the Property Offices shall
maintain supplies ledger Cards/Stock cards by
stock number, and Property, Plant and
Equipment Ledger Cards/ Property Cards by
category of property, plant and equipment
Construction of Assets

Construction Period Theory shall be applied

for costing purposes
Any related expenses incurred during the construction of the
project such as taxes, interest, license fees, permits shall be
capitalized and those incurred after the construction shall form
part of operating costs
Registry of Public Infrastructures/Registry of
Reforestation Projects
A registry of Public infrastructures shall be
maintained for each classification of projects,
Examples are:
1. Registry of Public Infrastructures – Bridges
2. Registry of Public Infrastructures – Roads
3. Registry of Public Infrastructures – Parks

A Schedule of Public Infrastructures/Reforestation Projects

shall be prepared at year-end included in the Notes to FS
Depreciation
Per PPSAS No. 17, depreciation is recognized
even if the fair value of the asset exceeds its
carrying amount, as long as the its residual value
does not exceed its carrying amount. The
residual value and the useful life of an asset shall
be reviewed at least at each annual reporting date
and if expectations differ from previous
estimates, the change/s shall be accounted for as
a change in accounting estimate to be treated
currently and prospectively
Depreciation

For uniformity in the application of useful life

and simplification in its computations, the
estimated useful life government property,
plant and equipment by classification shall be
in accordance with COA circular No. 2003-
007 dated December 11, 2003
Reclassification of Assets

Serviceable assets no longer being used shall

be reclassified to the “Other Assets” account
and shall not be subject to depreciation. Also
includes obsolete and unserviceable assets
awaiting final disposition
* Allowance for Impairment –
Accounts Receivables
Shall be set-up for estimated uncollectible trade
receivables to allow for their fair valuation

* Recognition of Liability

* Interest Accrual
Accounting for Borrowings and
Loans
All borrowing and loans incurred shall be
recorded under the appropriate liability
accounts, which include among others the
following:
1. Loan Payable – Domestic
2. Loans Payable – Foreign
Debited for settlement/payment of matured portion of
the loan and decrease liability due to FOREX gain upon
revaluation, credited for the proceeds and increase in
Liability due to FOREX loss upon revaluation
Petty Cash Fund

✓ Shall be maintained under the imprest

system
✓ Shall not be used to purchase regular
inventory/items for stock
✓ Shall only be used for payment of petty or
miscellaneous authorized expenditures
which cannot be conveniently paid by check
Foreign Currency Adjustments

Cash deposits in foreign currency and

outstanding foreign loan shall be computed at
the exchange rate prescribed by BSP at the
balance sheet date
END