Overview of NGAS
The New Government Accounting System (NGAS) was established to streamline and
improve the government’s accounting framework. It ensures compliance with International
Accounting Standards (IAS) and supports effective financial management, transparency, and
accountability.
Authority
● Prescribed by the Commission on Audit (COA) under Section 2(2), Article IX-D of the
1987 Constitution.
● Effective starting January 1, 2002.
Objectives
1. Conformity with International Accounting Standards (IAS).
2. Facilitation of eventual computerization, including responsibility accounting.
3. Generation of relevant and timely financial reports.
4. Effective tool for monitoring agency performance.
Key Features of NGAS
1. Accounting Methods
● Modified Accrual Basis:
○ Expenses are recognized when incurred and reported in the corresponding
financial period.
○ Revenue is recognized on an accrual basis except when impractical (e.g.,
taxes recognized on cash basis).
● Tax Revenue:
○ Estimated taxes are recognized at the start of the fiscal year but only
considered realized upon actual collection.
2. One Fund Concept
● Centralized under the General Fund.
● Special Purpose Funds created for specific needs (e.g., calamity fund,
miscellaneous personnel fund).
3. Chart of Accounts and Coding Structure
● Introduced a new three-digit coding structure.
○ Updated account titles.
○ Separate expense classifications for Maintenance and Other Operating
Expenses (MOOE), Capital Outlay (CO), and Financial Expenses (FE).
● Contingent accounts eliminated.
4. Books of Accounts
● General Journal: Main record for all transactions.
● Special Journals: For agencies awaiting computerization, the following are used:
○ Cash Receipts Journal
○ Cash Disbursement Journal
○ Check Disbursement Journal
● Ledgers:
○ General Ledger (GL): Comprehensive account summary.
○ Subsidiary Ledger (SL): Details accounts like cash, receivables, inventories,
etc.
5. Responsibility Accounting
● Links financial results to responsibility centers (departments or units).
● Key Aims:
○ Ensure proper charging of costs/revenues.
○ Facilitate decision-making.
○ Simplify performance reviews.
● Coding structure includes codes for departments, responsibility areas, and
programs/projects.
6. Depreciation and Asset Reclassification
● Depreciation:
○ Straight-line method.
○ Starts on the 2nd month after purchase.
○ Residual value set at 10% of purchase cost.
○ Public infrastructures are excluded from depreciation.
● Reclassification:
○ Serviceable but unused assets moved to “Other Assets.”
○ Obsolete assets are also classified under “Other Assets.”
7. Allowance for Doubtful Accounts
● An account for estimated uncollectible receivables to reflect fair valuation.
● Adjusted based on COA standards.
Government Accounting and Budgeting
Definition
Government accounting encompasses the process of analyzing, recording, summarizing,
and interpreting all financial transactions involving government funds and properties, as per
Section 109 of PD 1445.
Objectives
1. Provide information on past operations and current conditions.
2. Guide future operations.
3. Control the use of funds and properties.
4. Ensure transparency in financial reporting.
Budget Process
The budget process is divided into four key phases:
1. Preparation
○ Estimation of revenues and determination of priorities.
○ Agencies submit proposals reviewed by the President and Congress.
○ Begins with the Budget Call outlining fiscal limits and priority areas.
2. Authorization
○ Approval through the General Appropriations Act (GAA).
○ Includes special and supplemental appropriations.
3. Execution
○ Involves fund releases, monitoring, and adjustments.
○ Key activities:
■ Establishing ceilings for obligations.
■ Regulating fund releases.
■ Preparing operating budgets.
4. Accountability
○ Agencies submit periodic reports to COA and DBM.
○ Ensures adherence to the legislative intent.
○ COA audits the use of funds.
Budget Types
● Annual: Covers one fiscal year.
● Supplemental: Adjusts previous budgets.
● Special: Created for specific purposes or events.
Registries Maintained by Agencies
● Registry of Appropriations and Allotments (RAPAL): Tracks appropriations and
allotments.
● Registry of Allotments and Obligations (RAOs): Monitors obligations by category
(e.g., RAOPS, RAOMO).
● Registry of Notice of Cash Allocation (RANCA): Tracks NCAs and corresponding
allotments.
Accounting for Disbursements
Types of Disbursements
1. By Check
○ Modified Disbursement System (MDS) Checks: Charged against the
National Treasury.
○ Commercial Checks: Issued from agency accounts with government
servicing banks.
2. By Cash
○ Petty cash funds or advances for specific purposes like travel.
Basic Requirements for Disbursements
● Valid allotment and obligation.
● Proper approvals and documentation.
● Compliance with laws and regulations.
Tax Remittance Advice (TRA)
● Reduces NCAs by withholding tax liabilities.
● Rates:
○ Personal Services: 8%
○ MOOE: 5%
○ Capital Outlay: 5%
Financial Reporting
Key Financial Statements
1. Balance Sheet: Financial position (assets, liabilities, equity).
2. Statement of Income and Expenses: Operational results.
3. Statement of Cash Flows: Summarizes cash activities.
4. Notes to Financial Statements: Additional explanations.
Reporting Requirements
● Budget Execution Documents (BEDs): Contain plans and targets.
● Budget Accountability Reports (BARs): Reflect actual performance.
○ Submitted quarterly or monthly, depending on the type.
Additional Policies and Guidelines
Foreign Currency Adjustments
● Computed based on Bangko Sentral ng Pilipinas (BSP) rates.
● Gains/losses from foreign exchange recognized monthly.
Elimination of Contingent Accounts
● All transactions recorded directly in relevant accounts.
● Negative journal entries eliminated; corrections made through reversing entries.
Common Fund System
● Allows flexibility in using funds for Personal Services (PS), MOOE, and CO without
realignment.
