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Introduction TO GAM - Camarador, Cassanova, Dela Cruz,
Paraiso
Education (Zamboanga State College of Marine Sciences and Technology)
Studocu is not sponsored or endorsed by any college or university
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Group 1 – BSA 3B
Camarador, Anne A.
Cassanova, Kimberly Joy
Dela Cruz, Cristine Kyle
Paraiso, Trisha Kate Y.
INTRODUCTION TO GOVERNMENT ACCOUNTING MANUAL
Fundamental Principles for Revenue
Revenue
- Gross inflow of economic benefits or service potential during the reporting period
when those inflows result in an increase in equity, other than increases relating to contributions from
owners
- Can be transactions deemed Received or Receivable
Receipts
- Actual Cash Collections from all sources during a period
- All receipts can be revenue but NOT all receipts are revenue
1. All revenues of an entity shall be remitted to the National Treasury and included in the General
Fund of the National Government, unless another law specifically allows otherwise.
- General rule states that all collections made by collecting officers/entity should be remitted
immediately to NT
2.Except as may otherwise be specifically provided by law or competent authority, all money and
property officially received by a public officer in any capacity or upon any occasion must be
accounted for as government funds and government property.
- Some government staff/officials dwell into thinking that as soon as they collect tax, it goes
straight into their pockets. This principle states that ALL COLLECTIONS = GOVERNMENT FUNDS
AND
GOVERNMENT
PROPERTY.
3. Amounts received in trust and from business type activities of government may be separately
recorded and disbursed in accordance with such rules and regulations.
- There are 7 clusters of Funds, this principle puts an emphasis on the last two clusters which are
trust and business type, if a trust fund is specifically designed for a certain purpose, then you
cannot disburse the fund for any other purpose.
4. Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds or Funds other than
the GF, only when authorized by law.
- This principle recalls principle 1, these are the exceptions when the collection does not fall
under the General Fund.
5. No payment of any nature shall be received by a collecting officer without
immediately issuing an official receipt in acknowledgement thereof.
- Under this principle all payments made by payor SHOULD have an appropriate official
receipt, otherwise, NO RECEIPT = NO PAYMENT
- This principle hinders the start of corruption and makes sure that all payment made by payor is
transferred to government funds with evidence of the receipt.
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6. Where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash
receipts, the COA may approve, upon request, exemption from the use of accountable forms.
- There are cases when taxpayers are paying on 3rd party services such as banks or mall
establishments. There are printing machines that have pre-designated reference numbers that
are deemed accountable if they are created by the national printing office and approved by
COA. These receipts are serial and must be complete.
7. At no instance shall temporary receipts be issued to acknowledge the receipt of public funds.
- Similar to principle 5, ONLY OFFICIAL RECEIPTS are considered proof of payments,
temporary receipts are in no way allowed and cannot be considered as accountable .
8. Pre-numbered ORs 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.
- All government receipts are required to have 3 copies for payor, COA (audit purposes), and
Government agency itself. All these 3 copies must contain the same elements of information
and serial number.
9. A collecting officer shall accept payments to the government in the form of checks, upon proper
endorsement and identification of the payee or endorsee. The collecting officer shall not use
government funds to encash private checks.
- Taxpayers are allowed to pay in form of checks as long as they provide correct information
regarding the payor and payee. In addition to this, no collecting officer is allowed to encash the
checks privately.
10.Receipts of government funds shall be acknowledged in accordance with the law - indicating the
date of receipt, from whom and on what account the fund was received.
- When collecting officers remit collections to AGDB or Authorized Government Depository
Bank they must ensure that they would provide an acknowledgement receipt.
Fundamental Principles for Disbursement of Public Funds
1.
No money shall be paid out of any public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority.
- All disbursements are subjected to budgets that are pre-approved in accordance with the GAA
or General Appropriations Act. If there is an instance where there is a realignment of budget,
there should be an approval, in cases where budget is not exhausted, the DBM will assess the
situation if there is a standard that is not met.
2. Government funds or property shall be spent or used solely for public purposes.
- No officer even high rank government official can use the public fund for any private matter.
3. Trust funds shall be available and may be spent only for the specific purpose for which the
trust was created or the funds received.
- Trust funds only belong to what purpose it aims to serve, if in cases where the trust fund is
reinvested (e.g. to stocks), then the income still belongs to the original purpose.
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4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority
over the financial affairs, transactions, and operations of the government agency.
- A disbursement is a responsibility that must always be shared, if it is exercised only by one
official then the disbursement is inadmissible.
5. Disbursement or disposition of government funds or property shall invariably bear the approval of
the proper officials.
- All proper officials are required to approve/sign a disbursement, if a disbursement lacks even a
single official signature then the disbursement is not valid.
6. Claims against government funds shall be supported with complete documentation.
- All disbursements can only be made if there is proper documentation depending on what type
of claims it is associated with.
7. All laws and regulations applicable to financial transactions shall be faithfully adhered to.
- Before any other practice of accounting, the law must remain followed.
8. Generally accepted principles and practices of accounting as well as of sound management
and fiscal administration shall be observed, provided that they do not contravene existing laws
and regulations.
- If an accounting principle or practice contradicts any law or regulation, then the law should
withstand and take effect.
Basic Government Accounting and Budget Reporting Principles.
1. Generally accepted government accounting principles in accordance with the PPSAS and
pertinent laws, rules and regulations.
- All practices must adhere and emulate the laws, regulations, and standards in order to priority.
2. Accrual basis of accounting in accordance with the PPSAS
- All government income is recorded when earned and all expenses when incurred.
- Exception: Taxes, most tax income are recorded when earned because of their highly
inaccessible nature. However, in cases where a payor files an ITR assessed by BIR then there is
a record of Tax Receivable.
3. Budget basis for presentation of budget information in the financial statements (FSs)in accordance
with PPSAS 24
- While private companies only provide 5 types of financial statements, this principle states that
the government must have an additional type of FS which is Statement of Comparison of
Budget and Actual Amounts which makes the total type of required financial statement equals
to 6.
4.RCA prescribed by COA
- The Revised Chart of accounts is based on PPSAS adapted from IPSAS.
5. Double Entry Bookkeeping
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-
All transactions should be recorded with its designated Debit and Credit entry.
All balances must be true to the equation Asset = Liabilities + Equity
6. Financial statements based on accounting and budgetary records
- Similar concept to principle number 3, government financial statements require all the 6 types
7. Fund cluster accounting
- All types of fund cluster require 6 individual financial statements which totals to 42 FS.
Keeping of the General Accounts
The COA shall keep the general accounts of the Government and preserve the vouchers and
other
supporting
documents
Financial Reporting System for the National Government
Government Agency - maintains all accounting books and budget registries
- Accounting books with cash records are to be reconciled with Bureau of Treasury
- Budget Registries with budget records are to be reconciled with Department of Budget and
Management
COA - maintains all accounting book and budget registries (for audit purposes) of GA
- Consolidates financial report for submission to the President and Congress
Objectives of General Purpose Financial Statements
Are those intended to meet the needs of users who are not in a position to demand reports
tailored to meet their particular information needs.
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 the Financial Statements
Responsibility for Financial Statements
Must be managed by the individual/department head jointly with the head of the finance unit.
Components of General Purpose Financial Statements are those financial statements made
available to a large user base.
* They are intended for a variety of uses, including stock valuations and credit analysis.
The complete set of GPFSs consists of:
a. Statement of Financial Position -is often known as balance sheet. An organization's assets,
liabilities, and equity as of the report date are listed in the statement.
*it offers the snapshot of company’s condition as of a particular date and also this
information from the statement of financial position can be used to do many financial
analysis, such as comparing debt to equity or current assets to current liabilities.
b. Statement of Financial Performance- is an accounting summary that lists the revenues,
expenses, and net profit of a company.
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*A statement of financial performance is typically crucial to determining whether your
company is successful and, if not, where to make the necessary adjustments. It displays your
company's present financial situation, how cash is used, and where unnecessary expenses are.
For instance, to comprehend and compare sales revenue levels and which expense items rise in
response to seasonal business demands, you can look at your company's statement of financial
performance for the months of June, September, and November.
c. Statement of Changes in Net Assets/Equity- The statement of changes in equity is a
reconciliation of the equity balances at the beginning and end of a reporting period for a
company.
* Equity is the difference from one period to the next in assets and liabilities. For
example, the balance sheet shows Mr. X the changes in equity from one year to the next,
but it doesn't give him the specifics of those changes. This is why a statement of
changes in equity is helpful. It also has the highest chance of not being publicly
disclosed of any financial statement because it is not regarded as a necessary part of
the monthly financial statements. However, it does usually appear in the yearly
financial records.
d. Statement of Cash Flows- One of a company's financial accounts, the statement of cash
flows, describes the flow of money into and out of the business. Its emphasis is particularly on
the types of operations, investments, and financing that generate and spend cash.
* A smaller company might merely publish an income statement and balance sheet instead of a
statement of cash flows for internal usage. But it must be included in the audited financial
statements that are made available to investors, creditors, regulators, and lenders.
e. Statement of Comparison of Budget and Actual Amounts- means a comparative analysis of
original budget, revised budget and the actual budget as part of government annual financial
statements;
* Here, we'll examine how the budgets have changed and whether they still reflect the
government's plans.
f. Notes to the Financial Statements, comprising a summary of significant accounting policies
and other explanatory notes.
*provide narrative descriptions or disaggregation of items disclosed in those financial
statements and information about items that do not qualify for recognition in those statements.
Books of Accounts and Registries.
a. Journals (Accounting Records)
1. General Journal- use to record transactions not recorded in the Special Journals.
*The general journal is used for adjusting entries, closing entries, correcting
entries, and all transactions that do not belong in one of the special journals.
2. Cash Receipts Journal- used to record the Report of Collection and Deposit and Cash
Receipts Register of Collecting Officers.
Report of Collection and Deposit- prepared by a collecting officer to
report his/her collections and deposits to an Authorized Government
Depository Bank
Cash Receipts Register- used by the field offices without a complete set
of books to record their cash collections and deposits in the books of
their mother unit (central/regional/division office)
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* The cash receipts journal follows the golden rule of accounting, which states
that you should debit what comes in and credit what goes out, and is the sole type of
accounting journal that is used to record all cash received during a given accounting
period.
3. Cash Disbursements Journal- used to record the disbursements of the Disbursing
Officer
* A cash disbursement journal is a record of a company's internal accounts that
itemizes all financial expenditures made with cash or cash equivalents. It is done
before payments are posted to the general ledger and is used in creating a general
ledger.
4. Check Disbursements Journal- used to record the check disbursements of the
Disbursing Officer
* It is a record of a company's internal accounts that itemizes all financial expenditures
made with checks.
b. Ledgers (Accounting Records)
1. General Ledgers- summarizes all transactions recorded in the journals. Accounts in
the general ledger are according to their sequence in the Revised Chart of Accounts.
2. Subsidiary Ledgers- shows details of each control account in the general ledger.
* The key difference between General Ledger and Sub Ledger is that the General
ledger prepared by the company is the set of the different master accounts in which the
transactions of the business are recorded from the related subsidiary ledgers, whereas,
Sub ledger act as an intermediary account set that is linked with the general ledger.
c. Registries (Budget Records)
1. Registries of Revenue and Other Receipts
*used to monitor the budgeted amounts, actual collections and remittances of
revenue and other receipts.
2. Registry of Appropriations and Allotments
*used to monitor appropriations and allotments. This is to ensure that
allotments will not exceed appropriations.
3. Registries of Allotments, Obligations and Disbursements
*used to monitor the allotments received, obligations incurred against the
corresponding allotment, and the actual disbursements made.
4. Registries of Budget, Utilization and Disbursements
*used to record the approved special budget and corresponding utilizations and
disbursements charged to retained income.
Fund Accounting. A non-profit organization's use of fund accounting is to keep track of the amount of
money that is allocated to various uses and how it is used.
*Since a non-profit does not exist to make a profit, the goal of fund accounting is not to
monitor whether an entity has done so. As a result, accountability rather than profitability is the main
focus of fund accounting. In order to make decisions about how to use limited resources and to report
to outside parties on how effectively they are doing so, those in charge of a non-profit need adequate
information. For example, a city government might have separate funds for street repairs, police,
sewage treatment, and schools.
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The aggregation of Funding Source codes into Fund Cluster is necessary, otherwise, each
Funding Source code will have its own separate books of accounts.
The books of accounts shall be maintained by fund cluster as follows:
Code
Description
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
* Fund Cluster is an aggregation of Funding Sources for the purpose of recording transactions
and preparing report in the Budget, Treasury and Accounting processes.
Components of Budget and Financial Accountability Reports.
The budget reports consist of the following Budget and Financial Accountability Reports
(COA-DBM-DOF Joint Circular No. 2013-1, as amended by COA and DBM Joint Circular No. 20141 dated July 2, 2014):
a. Quarterly Physical Report of Operation (QPRO) – BAR No. 1
b. Statement of Appropriations, Allotments, Obligations, Disbursements and Balances
(SAAODB) – FAR No. 1
c. Summary of Appropriations, Allotments, Obligations, Disbursements and Balances
by Object of Expenditures (SAAODBOE) – FAR No. 1-A
d. List of Allotments and Sub-Allotments (LASA) – FAR No. 1-B
e. Statement of Approved Budget, Utilizations, Disbursements and Balances
(SABUDB) – FAR No. 2 (for Off-Budget Fund)
f. Summary of Approved Budget, Utilizations, Disbursements and Balances by Object
of Expenditures (SABUDBOE) – FAR No. 2-A (for Off-Budget Fund)
g. Aging of Due and Demandable Obligations (ADDO) – FAR No. 3
h. Monthly Report of Disbursements (MRD) – FAR No. 4
i. Quarterly Report of Revenue and Other Receipts (QRROR) – FAR No. 5
Departments/Agencies/OUs shall accomplish and submit BFARs to COA,
DBM, and to BTr, as applicable through the URS, in accordance with the timelines
prescribed in the pertinent section of the GP of the GAA for the Budget Year, to :
 Within 30 days after the end of each quarter
BAR No. 1
FAR No. 1
FAR No. 1-A
FAR No. 1-B
FAR No. 1-C
FAR No. 2
FAR No. 2-A
FAR No. 5
FAR No. 6
 On or before 30th day following the end of the year
FAR No. 3
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
On or before the 10th day of the month following the last month of the covered
reporting period.
FAR No. 4
Fair Presentation.
The FSs shall present fairly the financial position, financial performance and cash flows of an
entity.
*Fair presentation requires the faithful representation of the effects of transactions, other
events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities,
revenue, and expenses set out in PPSAS. The application of PPSAS, with appropriate disclosures, if
necessary, would result in fair presentation of the FS.
Compliance with PPSASs.
An entity whose financial statements comply with PPSASs shall make an explicit and
unreserved statement of such compliance in the notes.
*Financial statements shall not be described as complying with PPSASs unless they comply
with all the requirements of PPSASs. Inappropriate accounting policies that do not comply with
PPSAS are not rectified either by disclosure of the accounting policies used, or by notes or
explanatory material.
Departure from PPSAS.
In the event that Management strongly believes that compliance with the requirement of
PPSAS would result in misleading presentation that it would contradict the objective of the FSs set
forth in PPSAS, the entity may depart from that requirement if the relevant regulatory framework
allows, or otherwise does not prohibit, such a departure.
Going Concern.
The FSs shall be prepared on a going concern basis unless there is an intention to discontinue
the entity operation, or if there is no realistic alternative but to do so.
Consistency of Presentation.
The presentation and classification of items in the FSs shall be retained from one period to the
next unless laws, rules and regulations, and PPSAS require a change in presentation.
Materiality and Aggregation.
Each material class of similar items shall be presented separately in the financial statements.
*Items of a dissimilar nature or function shall be presented separately unless they are
immaterial. If a line item is not material, it is aggregated with other items either on the face of FSs or
in the Notes to the FSs. A specific disclosure requirement in a PPSAS need not be satisfied if the
information is not material.
Offsetting.
Assets and liabilities, and revenue and expenses shall not be allowed to offset unless required
or permitted by a PPSAS except when offsetting reflects the substance of the transaction or other
event.
Comparative Information.
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Comparative information shall be disclosed with respect to the previous period for all amounts
reported in the FSs.
*Comparative information shall be included for narrative and descriptive information when it
is relevant to an understanding of the current period’s FSs.
Structure and Content.
The FSs and each component shall be identified clearly and distinguished from other information in
the same published document.
Statement of Financial Position.
An entity shall present current and noncurrent assets, as well as current and non-current liabilities, as
separate classifications on the face of the Statement of Financial Position (SFP).
*The format of the statement of financial position follows the basic accounting
equation, which states that:
Assets = Liabilities + Equity
This means that all asset line items are presented first, with a total that matches the totals
for liabilities and equity, which are presented next.
Statement of Financial Performance.
The Statement of Financial Performance (SFPer) shall include line items that present the revenue,
expenses and net surplus or deficit for the period.
* The financial performance statement also assists management in determining which business
units or products are worth investing more money in and which ones the organization may
need to stop doing so. Based on the knowledge you gain from the statement of financial
performance; you can decide what is best for your business if you are investing a lot of money
in a product that traditionally costs more to create than it generates profit. An organization's
total profitability can be significantly determined from a statement of financial performance. It
aids in determining the financial health of a firm for lenders, investors, or regulators. This is
relevant when, for example, applying for a bank loan. The bank's credit officer may examine
your five-year statement of financial performance to assess profitability levels and sales trends
and make sure you will have enough money on hand to repay the loan.
Statement of Changes in Net Assets/Equity.
An entity shall present in the Statement of Changes in Net Assets/Equity (SCNA/E) the following:
a. Net Income or Deficit for the period;
b. Each item of revenue and expenses for the period that, as required by Standards, is
recognized directly in net assets/equity, and the total of these items;
c. Total revenue and expenses for the period; and
d. For each component of net assets/equity separately disclosed, the effects of changes
in accounting policies and corrections of errors recognized in accordance withPPSAS 3Accounting Policies, Changes in Accounting Estimates and Errors.
*Presentation of the Statement of Changes in Equity
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The statement of changes in equity is most commonly presented as a separate statement,
but can also be added to another financial statement. It is also possible to provide a greatly
expanded version of the statement that discloses the various elements of equity.
Preparation of the Statement of Changes in Equity
To prepare the statement, follow these steps:
-
Create separate accounts in the general ledger for each type of equity.
-
Transfer every transaction within each equity account to a spreadsheet, and identify
it in the spreadsheet.
-
Aggregate the transactions within the spreadsheet into similar types, and transfer
them to separate line items in the statement of changes in equity.
-
Complete the statement, and verify that the beginning and ending balances in it
match the general ledger, and that the aggregated line items within it add up to the
ending balances for all columns.
Statement of Cash Flows.
The Statement of Cash Flows (SCF) provides information to users of FSs a basis to assess the
ability of the entity to generate cash and cash equivalents and to determine the entity’s utilization of
funds. This also provides information on how the entity generates income authorized to be used in
their operation and its utilization.
* The statement of cash flows can be used to identify performance trends in the business that
are difficult to spot in the other financial statements. It is particularly helpful when there is a
discrepancy between the reported earnings and the net cash flow from operations. As a result
of the fact that many investors believe the statement of cash flows to be the most transparent
financial statement (i.e., the one that is hardest to falsify), they frequently depend on it more
than the other financial statements to assess an organization's actual performance. They can
use it to ascertain where money comes from and how it is used.
Statement of Comparison of Budget and Actual Amounts.
A comparison of budget and actual amounts will enhance the transparency of financial
reporting in government. This shall be presented by government agencies as a separate additional
financial statement referred in this Manual as the Statement of Comparison of Budget and Actual
Amounts
(SCBAA).
Notes to Financial Statements.
The Notes to FSs contain information in addition to that presented in the SFP, SFPer, SCNA/E,
SCF and SCBAA. Notes provide narrative descriptions or disaggregation of items disclosed in those
FSs and information about items that do not qualify for recognition in those statements.
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Qualitative Characteristics of Financial Reporting.
An entity shall present information including accounting policies in a manner that meets a
number of qualitative characteristics such as understandability, relevance, materiality, reliability and
comparability.
These qualitative characteristics are the attributes that make the information provided in the FSs
useful to users.
* Understandability
The information must be readily understandable to users of the financial statements. This
means that information must be clearly presented, with additional information supplied in the
supporting footnotes as needed to assist in clarification.
Relevance
The information must be relevant to the needs of the users, which is the case when the
information influences their economic decisions. This may involve reporting particularly
relevant information, or information whose omission or misstatement could influence the
economic decisions of users.
Materiality
Materiality is an aspect of relevance which is entity-specific. It means that what is material to
one entity may not be material to another. It is relative. Information is material if it is
significant enough to influence the decision of users.
Reliability
The information must be free of material error and bias, and not misleading. Thus, the
information should faithfully represent transactions and other events, reflect the underlying
substance of events, and prudently represent estimates and uncertainties through proper
disclosure.
Comparability
The information must be comparable to the financial information presented for other
accounting periods, so that users can identify trends in the performance and financial position
of the reporting entity.
*An asset is a resource controlled by the entity as a result of past events and from which future
economic benefits are expected to flow to the entity.
Key Features of Assets. The key features of an asset are:
a. the benefits must be controlled by the entity;
* There are indicators of benefits controlled by the entity that includes:
- the ability of an entity to benefit from the asset and to deny or regulate the access of others to
that benefit;
-an entity can, depending on the nature of the asset, exchange it, use it to provide goods or
services, exact a price for others’ use of it, use it to settle liabilities, hold
it, or perhaps even distribute it to owners. ;
-an entity can, depending on the nature of the asset, exchange it, use it to provide
goods or services, exact a price for others’ use of it, use it to settle liabilities, hold
it, or perhaps even distribute it to owners.
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However, there are instances when an entity may possess an object or right but not expect to enjoy the
benefits embodied in it. One example of it is under a finance lease agreement where the control over
the leased property owned by the lessor is transferred to the lessee.
b. the benefits must have arisen from a past event; and
* The following are indicators of past event:
- the specification of a past event differentiates assets from intentions to acquire
assets, which are not to be recognized.
- a transaction or event giving rise to control of the future economic benefits must
have occurred.
c. future economic benefits or service potential must be expected to flow to the entity.
*The following are indicators of future economic benefits:
-distinguishable from the source of the benefit i.e. the particular physical resource
or legal right;
( Asset that has physical form is property, plant and equipment However, physical form
is not essential to the existence of an asset; hence patents and copyrights, for example,
are assets if future economic benefits are expected to flow from them to the entity and if
they are controlled by the entity. While, assets associated with legal right are
receivables and property, including the right of ownership. In determining the existence
of an asset, the right of ownership is not essential; thus, for example, property held on
a lease is an asset if the entity controls the benefits which are expected to flow from the
property)
- does not imply that assets necessarily generate cash flows, the benefits can also
be in the form of ‘service potential’;
- in determining whether a resource or right needs to be accounted for as an asset,
the potential to contribute to the objectives of the entity should be the prime
consideration;
- capacity to contribute to activities/objectives/programs
-the fact that an asset cannot be sold does not preclude it from providing future
economic benefits.
Recognition of an Asset. An asset shall be recognized in the financial position
when and only when
(a) it is probable that the future economic benefits will flow to the entity;
*The following are indicators of probable inflow of future economic benefits:
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a. the chance of benefits arising is more likely rather than less likely (e.g. greater
than 50%).
b. benefits can be expected on the basis of available evidence or logic.
(b) the asset has a cost or value that can be measured reliably.
The following are indicators of reliable measurement:
a. valuation method is free from material error or bias.
b. faithful representation of the asset’s benefits.
c. reliable information will, without bias or undue error, faithfully represent those
transactions and events.
Accounting Standards for Revenue. The following accounting standards shall
apply for revenue and receipts of government entities:
a. Revenue
- includes only the gross inflows of economic benefits or service potential
received and receivable by the entity in its own account.
b. Receipts/Collections
- shall refer to all cash actually received from all sources during a
given accounting period.
c. Fines
- shall include economic benefits or service potential received or receivable by a
public sector agency, as determined by a court or other law enforcement body, as a
consequence of the breach of laws or regulations. Fines and penalties, either on tax
revenue or other specific income account, shall be recognized as income of the year
these were collected.
d. Gifts and donations
- shall consist of voluntary transfers of assets including cash or
other monetary assets, goods in-kind and services in-kind that one agency makes to
another, normally free from stipulations.
e. Goods in-kind
-are tangible assets transferred to an agency in a non-exchange
transaction, without charge, but may be subject to stipulations. External assistance
provided by multilateral or bilateral development organizations often includes a
component of goods in-kind.
f. Taxes
- are economic benefits or service potentials compulsory paid or payable to
public sector agencies, in accordance with laws and or regulations, established to
provide revenue to the government. Taxes do not include fines or other penalties
imposed for breaches of the law.
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g. Transfers
-are inflows of future economic benefits or service potential from non
exchange transactions, other than taxes.
Use of Appropriated Funds.
*All moneys appropriated for functions, activities, projects and programs shall be available solely for
the specific purposes for which these are appropriated.
Appropriation for Loan Proceeds.
* Expenditures funded by foreign and domestic borrowings shall be included within the expenditure
program of the entity concerned. Loan proceeds, whether in cash or in kind, shall not be used without
the corresponding release of funds through a Special Budget.
Basic Requirements for Disbursements and the Required Certifications.
Disbursements of government funds shall comply with the following basic requirements and
certifications:
a. Availability of allotment/budget for obligation/utilization certified by the Budget Officer/Head of
Budget Unit;
b. Obligations/Utilizations properly charged against available allotment/budget by the Chief
Accountant/Head of Accounting Unit;
c. Availability of funds certified by the Chief Accountant. The Head of the Accounting Unit shall
certify the availability of funds before an Agency Head or his duly authorized representative enter into
any contract that involves the expenditure of public funds based on the copy of budget release
documents;
d. Availability of cash certified by the Chief Accountant. The Head of the Accounting Unit shall certify
the availability of cash and completeness of the supporting documents in the disbursement voucher
and payroll based on the Registry of Allotments and Notice of Cash Allocation/Registry of Allotment
and Notice of Transfer of Allocation;
e. Legality of the transactions and conformity with existing rules and regulations. The requesting and
approving officials shall ensure that the disbursements of government funds are legal and in
conformity with applicable rules and regulations;
f. Submission of proper evidence to establish validity of the claim. The Head of the Requesting Unit
shall certify on the necessity and legality of charges to allotments under his/her supervision as well as
the validity, propriety and legality of supporting documents. All payments of government obligations
and payables shall be covered by Disbursement Vouchers (DV)/Payrolls together with the original
copy of the supporting documents which will serve as basis in the evaluation of authenticity and
authority of the claim. It should be cleared, however, that the submission of the supporting documents
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does not preclude reasonable questions on the funding, legality, regularity, necessity and/or economy
of the expenditures or transactions; and
g. Approval of the disbursement by the Head of Agency or by his duly authorized representative.
Disbursement or disposition of government funds or property shall invariably bear the approval of the
proper officials. The DVs/Payrolls shall be signed and approved by the head of the agencies or his
duly authorized representatives.
Certification of Availability of Funds.
No funds shall be disbursed, and no expenditures or obligations chargeable against any authorized
allotment shall be incurred or authorized in any department, office or agency without first securing the
certification of its Chief Accountant or head of accounting unit as to the availability of funds and the
allotment to which the expenditure or obligation may be properly charged.
*Any department, office, or agency must first obtain the Chief Accountant's or head of
accounting unit's certification regarding the availability of funds and the authorized allotment
to which the expenditure or obligation may be properly charged before any money is disbursed
or expenditures or obligations chargeable against any authorized allotment are incurred or
authorized.
No obligation shall be certified to accounts payable unless the obligation is founded on a valid claim
that is properly supported by sufficient evidence and unless there is proper authority for its incurrence.
Any certification for a non-existent or fictitious obligation and/or creditor shall be considered void.
The certifying official shall be dismissed from the service, without prejudice to criminal prosecution
under the provisions of the Revised Penal Code.
* No obligation may be certified to accounts payable unless it is legally authorized and is
based on a claim that is true with sufficient proof. Any certification for a false obligation or
creditor is void, regardless of whether they are real or not. Without affecting criminal
prosecution under the provisions of the Revised Penal Code, the certifying official shall be
discharged from the service.
Any payment made under such certification shall be illegal and every official authorizing or making
such payment, or taking part therein or receiving such payment, shall be jointly and severally liable to
the government for the full amount so paid or received. (Book VI, Section 41 of EO No. 292)
Prohibition against the Incurrence of Overdraft.
Heads of departments, bureaus, offices and agencies shall not incur nor authorize the incurrence of
expenditures or obligations in excess of allotments released by the DBM Secretary for their respective
departments, offices and agencies. Parties responsible for the incurrence of overdrafts shall be held
personally liable therefore. (Book VI, Chapter 5, Section 41 of EO No. 292)
*The allocations provided by the DBM Secretary for each department, office, and agency are
the only expenses that the heads of such departments, bureaus, offices, and agencies may
spend, and they may not permit others to do so. Therefore, anyone accountable for the
occurrence of overdrafts will be held personally accountable.
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Mode of Disbursements.
*Payments/Disbursements by NGAs may be effected through the Treasury Single Account (TSA), by
issuing Modified Disbursements System (MDS) check or commercial check, cash through cash
advance, Advice to Debit Account (ADA), or Non-Cash Availment Authority (NCAA).
Authority to Disburse/Pay.
*NGAs are authorized to disburse/pay based on the Notice of Cash Allocation (NCA), Notice of
Transfer of Allocation (NTA), Cash Disbursement Ceiling (CDC) or other authority that may be
provided by law.
Disbursement Voucher/Payroll.
*Checks/ADA shall be drawn based on duly approved disbursement voucher or payroll.
Maintenance of Records.
*All checks/ADA drawn during the day, whether released or unreleased including cancelled checks
shall be recognized chronologically in the Checks/ADA Disbursement Record maintained by the
Cash/Treasury Unit.
Reporting of Disbursements.
*All payments/disbursements shall be reported using the prescribed forms for recording in the books
of accounts.
References:
Bragg, S. (2022, May 16). General purpose financial statements definition. AccountingTools.
Retrieved September 4, 2022, from https://www.accountingtools.com/articles/general-purposefinancial-statements.html
Bragg, S. (2022, June 22). Statement of financial position definition. AccountingTools. Retrieved
September 4, 2022, from https://www.accountingtools.com/articles/what-is-the-statement-offinancial-position.html#:~:text=The%20statement%20of%20financial%20position%20is
%20another%20term%20for%20the,as%20of%20a%20specific%20date
Bloom, L. (2021, November 20). Definition of a statement of financial performance. Bizfluent.
Retrieved September 4, 2022, from https://bizfluent.com/about-6627481-definition-statementfinancial-performance.html
Bragg, S. (2022, May 4). Statement of cash flows definition. AccountingTools. Retrieved September 4,
2022, from https://www.accountingtools.com/articles/statement-of-cash-flows-overview
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Bragg, S. (2022, March 27). Statement of changes in equity. AccountingTools. Retrieved September 4,
2022, from https://www.accountingtools.com/articles/statement-of-changes-in-equity.html
Millan, Zeus Vernon. Government Accounting and Accounting for Non-Profit Organizations
Government Accounting Manual for National Government Agencies (GAM for NGAs)
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