25
Chaptert2
24
TheBudgetProcess
Chapter 2
"bottom-up"
Budget Preparation
uses
The Budget Process
The
in the
reparation
budget
Philippines
s
a
e
"bottom-up" budgeting
Under
parties
v
e
r
a
l
lowest
tot.h e
the
also
from
starting
agencies
the budget preparation,
the
citizen-stakeholdersin
the government.
of
is
highestlevels
the participation of
increas
to
tasked
The opposite of
aPproach.
are
in
p
a
r
t
i
c
i
p
a
t
Government
e
budgeting
Learning Objectives
1.
Enumerate the
"bottom-up"
steps in the budget process.
accounting,
the principles of responsibility
Describe briefly
accounting
primarily budgetary
Government accounting
not only aim to provide information
does
Government accounting
transactions but also
past events and
accordance with PPSAS 24
The
to
Philippine
Constitution
and
budget information
other laws
in
require
national
Philippine
budget is
year's
The current without regard
formulated
formulated based on the
previous
year's
budget,
any variances experienced
in the past. Presumably, the
programs
year's
justify
their
proposed
required
are
current
year's
programs
the
in
are
year
the current year.
Uses a "rol-over" approach.
Prone to abuse.
expenditures,
and
irrespective
of whether these
carried
over
are n e w or
from
previous year.
a
"back-to-zero
"clean slate" approach.
Uses
Promotes efficient
The Budget Cycle
The budget cycle has four phases, namely:
1. Budget Preparation
2. Budget Legislation
3. Budget Execution
4. Budget Accountability
to
and
automatically approved in
>
previous
Government
budget.
previous
objectives.
the
agencies
expenditures
key
to
which is just adjusted for
proposed
uses
The formulation and eventual utilization of the national
budget are summarized in the budget cycle.
(The
approach.
Zero-based budgeting
VS
Incremental budgeting
is
The currTen year's budget
of government funds within a
fiscal year. This forms the basis for expenditures and is the
instrument for promoting its socio-economic
government's
and
systenm
"incremental
a
of
Public
funds with the approved budget.
The national budget (government budget) is the government's
sources
start
a
attempted
old
by shifting from the
new tradition
"zero-based
budgeting"
to the
budgeting
January 11, 2011)
Transparency Keporting Project,
be utilized in accordance with a
government funds to
legislation. Government
budget that is duly approved by
with
concerned
providing information
accounting therefore, is
utilizations
of government
useful in assessing the conformance of
estimate of the
heads.
In2011, the Philippine Govern
is
on
budget
wherein the
budgeting
"top-down
agency
from the
The National Budget
starts
preparation
preparation.
budget
effective
utilization
the
or
an d
of
funds.
1. Budget call The budget preparation starts when the
Department
Budget
of
Call to all
and
Management (DBM) issuesa
government agencies. The budget call
Budget
Chapter
26
the next fiscal year's targets
and other guidelines in
budget ceiling,
budget proposals.
and submission of agency
contains, among other things,
27
The Budget Process
3 .
the
agency's
completion
the
P r e s e n t a t i o n
t o
t h e
O f f i c e
o f
t h e
P r e s i d e n t
Presentation
f the
and Cabinet memberso ew the
President approves the propo bbudget,
Balanced budget prepared
-
revenues
revenues
a
estimated
exceed
way that estimataa
ed
expenditures. If ach
in such
a
actual
the government ea
exceed actual expenditures,
exceed
If expenditures
surplus.
government
Annual
incurs a
budget
basis for the
-
deficit.
covers a
period of one year
annual apPpropriation.
for items
provides
Special budget
revenues,
and
not
ms
the
forms ththe
adequatel
act
in the general appropriations
covered or not included
focuses on specific expenditures such
Line item budget
travel expenses, freight, supplies
as salaries and wages,
-
materials and equipment.
of activities to be undertaken
a
Performance budget- plan
with the emphasis on
including their related costs,
The main focus is on
results.
desired
meeting targets and
to be rendered.
the work to be done or services
Obligations budget
-
focuses on
the current year which are to be
year or in the following year.
2.
Budget hearings
agencies
-
Budget hearings
submit their
P
A
r e
f t
s
e
i
r
d
u
e n t
President
After
Posed
the budget
documentsto
point, the
Budget."
proposed budget is
to
f i n a l i z e s
the
to the
referred
DBM
At this
Congress,
as
"Presidentf's
the
the
f
ollowing
following
The "President's udget" cco n t a i nnss
in
Budget
Congress
re
which aare
nents which
intended to assist the
documents
review and
a.
the
budget.
proposed
cumentsSubmitted
Relevant terms:
T h e
The
President
their
roposed national
national budget:
proposed
deliberationded
President's
e
Budget Message
explanation of the
President's
-
this
contains
the
countr/s fiscal policy
and
buage
priorities.
the
this contains
National Expenditure Program (NEP)
proposed
details of all the government entities
expenditures in the coming year.
(BES) this
C.
Buaget of Expenditures and Sources of Financing
Dy
contains the estimated expenditures accompanied
estimates of expected sources of
of
d. Other documents aimed to provide further explanation
selected items in the NEP (e.g., details of key programs
-
b.
-
financing
and projects and staffing summary).
expenditures incurred in
paid
either in the same
Relevant provision of law:
are
budget proposals.
conducted after the
Each agency
defends
its budget proposal before the DBM. The DBM deliberates on
the budget proposals, makes recommendations, and
consolidates the deliberated proposals into the National
Expenditure Program (NEP) and Budget of Expenditures and
Sources of Financing (BESF). The DBM then submits the
proposed budget to the President.
T h e President shall submit the proposed budget to the
Congress within 30 days from the opening of every regular
session. (Art. VII, Sec. 22,
Philippine Constitution)
29
28
Cnaptar
from
Illustration: Excerpts
President's
The Budget Process
Budget Mes.
of.
Budget Legislation
an
p u r s u a n c e
Government
Excerpt 1:
Fiscal Year 2017
a p p r o p r i a t i o n
u n d e r t a k e r n
funds shall only be
made by law.
legalize
to
the
Message of
Roa Duterte
Presldent Rodrigo
to the
Seventeenth
4.
Congress of the Phliopines
Budget
on the National
io
House
expenditures.
agenci
be
due
proposed budget
Deliberations Upon
the various
must
process
Therefore
the
receipt of
the House of Representatives
Fiscal Year 2017
in
spent
conducts
respective
Thereafter,
President's
Budget,
scrutinize
hearings
proposed
to
and
resentatives
Representatives
of
the House
prepares the General Appropriations Bill (GAB)
August 15, 2016
Senate
5,
Deliberations
deliberations
of the
Ladies and Gentlemen
Philippines:
17th Congress of the
on
the
conducts
The Senate
GAB. These normally
However, tor
Excerpt 2:
FiscalYear 2017
expediency,
own
after the
of Representatives.
start even as
hearinos in the Senate
Senate receives the GAB from
to you, tnrough the President of the
I have the honor to submit
the House of Representatives, the
Senate and the Speaker of
for Fiscal Year (FY) 2017,
Proposed National Budget
start
its
the House
Representatives deliberations are ongoing
6.
houses
Bicameral Deliberations After deliberations in both
Conferenc
are finished, a committee called the Bicameral
the
between
Committee is formed to harmonize any conflicts
Representatives and Senate versions of the GAB.
The harmonized
GAB ("'Bicam' version) is submitted
ratification, the final
back to both Houses for ratification. After
GAB is submitted to the President for enactment.
BUDGET PHILOSOPHY
Ladies and gentlemen, my commitment to implement real
change lies at the core of the P3.35 trillion proposed Budget for
FY 2017.
This ls my Administration's fist Budget. It is a Budget that gives
flesh and bone to the promise by which I won as President to
fight for soclal justice. t was designed to realize change in the
here and now.
This
Budget is for the people and by the people.
7. President's enactment The President enacts the budget,
which is now known as the General Appropriations Act (GAA).
Before enactment though, the President may exercise his veto
power as conferred to him under the Philippine Constitution.
Relevant provision of law:
When the proposed budget is not enacted before the fiscal
year starts, the last year's GAA is automatically reenacted.
The last year's GAA shall be used in the current
year until a
general appropriations bill is passed
(Art. VI, Sec. 25(7), Philippine Constitution)
new
In the last one and a half
months since
we
assumed office,
designed this Budget around the following principles:
we
by
the
Congress.
31
Chapter
30
TheBudgetProcess
rogrammned
The Approved Budget
is the expenditure authority derived
Approved Budget
ordinances, and other
appropriation laws, governn
revenue or receipts for the buc
related to the anticipated
budget
period. The approved
a u t h o r i z a t i o n sp r o g r a m m e d
erived fro4m .
ecisiong
5tay
sists of the following:
Supplemental Appropriations
03
Automatic Appropriations
04
05
06
07
Unprogrammed Funds
Retained Income/Funds
Revolving Funds
Unified Acounts Code Structure (UACS)
e
s
c
r
i
b
e
d
by
a u t h o r i z e d
appropriations
availed only
are standby
which may be
the annual GAA w h i c h may
ts in
in
when any of the
the following instances occur
targets
EUnprogrammed
5.
Funds
-
availed
by Congress in
followine:AA
O r
r e v e n u e
collections exceed the original
and
the Budget of
revenue
a.
of
Sources
Expenditures
collected
are
b.
new revenue
C.
newly-approve
Financing
Financing
Congress;
(BESF) submitted by the President to the from
not
not
sources
realized
or
originally considered in the BESF; or
loans for
a
r
are
projects
reign-assisted
sources
for other
for forelg
ured or when conditions are trigger
agreements
of funds such as
refers to the standard codino
of the National Government.
system used in financial reporting
perfected
loan
assisted projects.
(source:http://www.dbmgov.ph/?page id-7366)
6.
Retained Income/Funds
authorization made by a legislative bod
y
Appropriation is the
collections which
directly by agencies
operation or specific purposes.
law to be used
-
to allocate funds for purposes
r
law
w
C
08
Trust Receipts
The
p
01
02
Continuing Appropriations
w
hi
ic
ch
h
wh
prescribed
budgetary
UACS Code
New General Appropriations
do
do
Automatic.
Appropriations are the
Automatic Appropriation
Or for some other
annuallyor
period
annually
od
not require periodic action
action by Congress.
4.
specified by the legislative
are
authorized
concerned for
by
their
( h t t p : / / w w w . d b m . g o v . p h / w p - c o n t e n t / u p l o a d s / B E S F / B E S F 2 0 1 6 / G L O S S A R Y . p d i )
similarauthority.
1.
New
are
General Appropriations
annual authorizations
incurring obligations during specified budget year,
a
as
for
listed
construction
a
virtue of said
or
.
business-type
are authorized
in
by
an authorized
as such and deposited
funds shall be selfgovernment depository bank. These
incurred by
liquidating and all obligations and expenditures
are the authorizations to support
specific purpose project, such as multi-year
projects which require the incurrence of
obligations for
Funds
law to be constituted
in the GAA.
2. Continuing Appropriations
from
receipts derived
which
of
departments/agencies
activities
7. Revolving
business-type activity
shall be charged
against
. said fund.:
(http://www.dbm.gov.ph/wp-content/uploads/BESF/BESF2016/GLOSSARY.pdf)
obligations even beyond the budget year.
8.
3. Supplemental Appropriations
are additional appropriations
authorized by law to augment the original appropriations
which proved to be insufficient for their intended purpose due
to economic, political or social conditions supported by a
Certification of Availability of Funds from the BTr.
Trust
Receipts receipts by any government agency acting as
trustee, agent
obligations
(Adapted
from
the
or
administrator for the fulfilment of
some
conditions.
definition
of "Trust Fund" in
content/uploads/BESF/BESF2016/GLOSSARY.pdf)
http://www.dbm.gov.ph/wp-
Chapter
32
Relevant provisions of law:
2.
the purpose fo
for
A special appropriations bill shall specify
be supported by funda
shall
and
which it is intended,
actually
National Ireasurer,
available as certified by the
revenue
by a
t
be authorized to
for their
may, by
augment any item the
Irom savings in other items of their
respective offices
(Art. VI, Sec. 25(5). Philippine
respective appropriations.
Constitution)
provi
U
nn
cie
ts
s
L
aG
n dUc
si)
tie
in
s ci
ln
ud
de
ep(
e
a
n
)d
a
e
u
n
tt
on
fr
o
o
m
m
ou
as
(cities
which
are
part
of
a
province) and municipalities, and (d) barangays.
proposal therein.
law,
Constitutional Commissions
law
in
general appropriations
r
L
e
o
g
cia
o
ln
G
s,
o v(
eb
rn
)
province, ()%component cities
or
corresponding
Sec.
25(4). Philippine Constitutlon)
(Art. VI,
any transfer of
be passed authorizing
shall
No law
President of the
the
however, the President,
appropriations;
Representatives,
the
ot the House of
Senate, the Speaker
the heads o
and
Court,
Chief Justice of the Supreme
be raised
33
The Budget Process
3. Government
(GOCCs)
Corporations (GOCC5
Comalled Corporations
Owned and Ontrolled
corporations
indirectly,
that
that are
by the
owned
government
relatingto
public needs.
relating to public
The
members
of the
needent
Congress (Senators
and
or
controlled,
directly
with
and vested
Congressmen)
f
fu
un
nc
ct
ti
io
on
ns
s
and the Judiciary
Branch are also reciplents of a portion of the budget.
1.
-
or
The portion received by members of the Congress is referred to
Assistance Fund (pnAF) a.k.a. "Pork Barrel.
Priority Development
he
his
intended to fund priority development programs of the govemine
The portion recerved by members of the Judiciary is referred to as tne
2.
Judiciary Development Fund (JDF). At least 80% of the fund is intended
for the cost of living allowances of the members and personnel or t e
and
the remainder, not
exceeding 209%, is for the acquisition
maintenance of office equipment and facilities. (PD NO. 1949)
Judiciary,
Budget Execution
This is the phase where government
funds
are
spent.
In 2014, the Aquino Administration introduced the Disbursement
Acceleration Program (DAP) which aims to speed-up public spending The
issuesguidelines DAP
is not afund but a funds
mechanism
Savingsand
DBM
on
Release quidelines end BEDs-The
various
the
while
agencies
funds
the release and utilization of
Execution Documents (BEDs). A BED
submit their
Budget
agency's
of
unprogrammed
releasing funds, particulary
from
Savings are available portions or balances of items under the General
Appropriations Act (GAA) which result from: a) the completion or final
a. Physical and financial plan,
of program. activity, or project: b)
discontinuance or abandonment
unpaid compensation for vacant or unfilled positions and leaves of
absencewithout
pay: or c) the implementation of efficiency measures that
enable agencies to deliver services at lower cost. Such savings may then be
b. Monthly cash program,
c. Estimate of monthly income, and
included in the GAA (i.e. nonexistent budget items cannot be funded).
summarizes
an
fiscal year
plans
and
performange
targets. It includes the following:
a
used to augment funds for programs, activities, or projects which are
Unprogrammed funds (see previous definition).
d. List of obligations that are not yet due and demandable.
Both the PDAF and the DAP received various criticisms from the
public in
2013 and 2014, following the Janet Lim-Napoles
alleged pork scam. The PDAF
The
are the major
of the
and DAP was later on thought to have been abolished
by the Supreme Court
1. National GovernmentAgencies (NGAs) - include all agencies However, "The 2015 budget is still flled with pork barrel funds despite
the
following
recipients
budget
within the executive, legislative and judicial branches of Supreme Cout dedsion decdaring the Disbursement Aceleration Program
(DAP) and the Priority Development Assistance Fund (PDAF) as
government, e.g, commissions, departments, Land bas unconstitutional, according to a budget watchdog." (Source: The Philippine
Star.
December 21, 2014)
of the Philippines, Social Security System, etc.
Chapter 2
35
The Budget Process
34
Miscellaneous
Relense
DBM
releases
allotment
during th
the limit for
the Allotment
formulates
The
9. Allotment
to set
(ARP)
Program
as a
to ensure
control device
ffor
Program (CRP),
month.
and for each
each
quarter
for
the year,
Release
authorization
is
Allotment
contained in a
form of budget
release
legislative
documents.
obligations
referred to
a
having
act
of
a
duly authorized
official
immediate
be
in the
to
or
which
following are the documents
allotments to government agencies:
The
Appropriations
used in
2.
not
incur
a
na
at
ti
io
on
na
al
l
n
all
to
obligations
specified
period
automatically
covers
if
to most,
clearance
not
all,
o r approval
and Life
Act Release Document
Insurance Premium.
government
10. Incurrence of Obligations
agencies
incur
govermment, eg
obligations which will be paid by the
purchase
entering into contracts, hiring of personnel,
or
supplies, etc.
the DBM issues disbursement
11. Disbursement Authority
the point where
the
government agencies. This is
authority to
-
government agencies obtain access to the government
releasing
The following
are
funds.
the documents used in releasing
disbursement authority to government agencies:
(GAARD)
serves as the obligational authority for the comprehensive
release of budgetary items appropriated in the GAA,
categorized
all
eventual
maybe referred to
possible future
commitment that encompasses
as a
contractual
agreement.
liabilities based on current
as
to
indi
indicated therein. It
appropriated expenditures
agencies withou need of special
from competent authority. ie.
a
payment
General
authority
agencies y
the purpose
for
purpose
for the
incur
government entity
the "Allotment
received
first
to the
binds the government
of a sum of money. Obligation
1.
Order
to
c o m m o n
"Allotment"
an
(GARO)(GARO0)
issued
ment agencies, general,
5ovemment
specifie
in the
incurred must
is
Release
Order
during
exceeding an authorized amount
mount
to
for
illegal
without
-
3. General Allotment
appropriation
It is also
a
is
the DBM to
by
Fund)
Gratuity
are also covered by SAROs
aease
obligations
and amount of
Moreover, the type
are
specified
that
conform to those
Obligatjon
Benefits Fund and
and
Pension
Retirement
Obligational Authority.
It is
issued
Fund,
Commitments
comprehensive
for
to incur obligations
agencies
govemment
amounts
an
International
Personnel
th
This is used
upcoming year.
Alongside, is a Cask
sh
the national budget.
d i s b u r s e m e n t limits
releases conform to
the
which sets
Fund,
For Comprehensive Release.
Special Alotment Release Order (SARO) - covers budgetary
items under For Later Release (negative list) in the entity's
submitted Budget Execution Documents (BEDs), subject to
compliance of required documents/clearances. Releases o
allotments for Special Purpose Funds (e-g, Calamity Fund,
Contingent Fund, E-Covernment Fund, Feasibility Studies
1.
Notice of Cash Allocation (NCA) authority issued by the
DBM to central, regional and provincial offices and
operating units to cover their cash requirements.
The NCA specifies the maximum amount of cash
that can be withdrawn from a government servicing bank
in a certain period. The NCA is based on the agency's
submitted Monthly Cash Program.
ChapterT2
37
The Budget Process
issued bu
an
Allocation authority
of
Transfer
and operating
2. Notice of
to
regional
units
Office its
Central
agency's
cash requirements,
latter's
to c o v e r the
Execution
This phase occurs
As the
authority issued by he
of their actna
-
Availment Authority
3. Non-Cash
to cover the liquidation
DBM to
Budget Accountability
agencies
obligations
incured
availment
of
against
from
proceeds
fo
or
loans/grants through
available
allotments
determine
12.
required to
the DBM to
Posts to
their Foreign Service
cover
are
government
government
Portssubmit the fo Owing accountability reports:
-
submitted
made
commonly
account of the
the
against
most
through
7reasurer
Acount). Checks
issued
(i.e., Treasury Single
ofthe Philippines
Disbursement System
scheme are called "Modified
to
month.
their
operating requirements.
checks that are chargeable
targets.
is
of disbursement
type of
each
authority. This report end of
of each
the COA and DBM within 30 days after the
operations (eg, Department of
agencies with foreign
them to use the income
Foreign Affairs 'DFA) allowing
Disbursements are
with planned
agencies
Reports
to
disbursements
-
by
regularly
results
phase,
monitored
s h o w s the
of the entity duringusements
the month, -classified
accor
rdingo
todthe
to
issued by
Cash Disbursement Ceiling authority
collected
is being
Budget Accountability
supplier's credit/constructive cash.
4
concurrently with
being executed, it is
the
conformance of actual1
budget
the Budget
shows
b. Quarterly Physical Report of Onerationphysical accomplishments in a given quarter
the
agency S
vis-a-Vis its
physical targets.
C.
Statement
of
Appropriations,
shows
Obligations,
agency's
received,
the
under this
Disbursements
MDS) Checks."
authorized
include payments
Other modes. of disbursements
transfer/bank
bank
debit, or
through cash, commercial check,
in Chapter 5.
credit card. We will elaborate on these later
obligations incurred, disbursements made
balances of unreleased appropriatiorns unobligated
the
allotments, and unpaid obligations.
Summary of Appropriations, Allotments, Obligations,
Disbursements and Balances by Object of Expendihures
authorization to agencies to incur
similar to 'c above but provides details of expenditures
(e.g, salaries and wages, traveling expenses, etc.).
obligations
4. Disbursement
allotments
and
d
legislative body
a
allocatefunds for specified purposes.
3. Obligation
Balances
appropriations,
to
Remember the following:
authorization by
1. Appropriation
2. Allotment
and
Allotments,
(i.e.,
obligational
e. List of Allotments and Sub-Allotments -shows the allotments
authority).
amount contracted
by
an
authorized
received by the agency from the DBM and the sub-
officer for which the government is
allotments issued by the agency's Central Office or
held liable.
Regional Office to lower operating units.
actual
amount
budgeted amount.
paid
out
of
the
39
Chapter
38
TheBudget Process
r
f.
Statement
of ApproDen
Uilizations,
Budget,
and Balances this report
is
Disbursemes
their
authority to use
and
utilizations
revenue, the
It shows the
revenue.
disbursements
budoo
thereof
with
reports, n e t h e r with
budget
I n f o r m a t i otogether
information in preparing
aring
The
provide
and
financial
Budget, Uilizations, Disbursements oand
Expenditures similar to 'f above b
of a
discuss this
they
they
depository banks in a
similar estimate.
However,
the
amounts
the
are outstanding.
number of days these obligations
and DBM within 30
submitted to the COA
report is
after the end of the year.
You
to make
submitted
them that
of giving
to
in
Budget
consulted
Papa
the
order
Lolo (a
estimate
better
old
estimate,
current
reflect
to
Papa
President).
your
retired Lawyer) to review
This(House Deliberations).
estimate
estimate to Lola
the
reviewing the estimate, Lolo gave
Deliberations.
for further study (Senate
(a
After
days
and Balances
reports 'c' and 'd
ear,
hearing
estimate with Mama (Budgetfor approva
Oice of the
Il. Budget Legislation
Legislation
retired CPA)
Lolo and
Lola
had
some
disagreements,
so
they
asked
(Bicameral
harmonize the conflicts
your dog, to
the
Umpong submitted
Deliberations). After harmonizing the conflicts,
for
Lola
Lolo and
version of the estimate back to both
Umpong,
Summary of Appropriations (based
14 of the
on or before February
above) shall be submitted
per
a
instead
new one
defended your
Mama
Obligations,
A Consolidated Statement of Allotments,
on
need
circumstances ( zero-based budgeting).
(Presentation to the
owed to them, and
while
budgeting).
Mama
Papa and
end of each quarter.
shows
shows
a,
you
Same
you decided
Obligations
asked
estimate
quarterly basis and
above are prepared
Reports 'b' to h'
within 30 days after the
the COA and DBM
are submitted to
following yeár.
"Bicam
ratification.
estimate to Papa for
Lolo and Lola submitted the ratified
for the
Your approved budget
enactment (President's enactment).
month is P100 (Appropriation).
13. Performance reviews
of
statements
later.
statements
of
of
money
on a
reviews
on
o
ne
e
trip
are leaving for a 1
nth trip
1-month
Mama are
will
leaving
first
you
Mamato make
Papa and
and sister
Papa
asking
an estimate
of
the
little
by
your
last year
time
(BudgetCall). You started y o u r
made
they arè gone
Sane
her needs( bottom-up budgeting).
had you
Little Sister of also
and they
went for a l-month trip
a
of creditors, the
is
Story: The Budget Cycle
given quarter.
names
,
later.
s
o
so
in authorized government
Demandable
s
and
Revenue and Other Receipts shows tha
h. Quarterly Report of
BTr and
other receipts remitted to the
actual revenues and
and
We will
d
statement
I. Budget Preparation
-
Aging of Due
ch
h
whic
A m o u n t s ,
governmententity.
by Object of
of expenditures.
provides details
i
the
Amounts,
of Budget and Actual
components of a complete set of
the
r
Statement of
Comparison
Approved
g. Summary of
deposited
o
provide
the unutilized amount.
Balances
c
Statement
ot
th
he
er
r
o
prepared by agencies that ha
e
recor
bu
ud
dg
ge
et
t
b
The
DBM and COA
the agencies
perform periodic
performance
accountability and report to the President.
and
budget .
Execution
on how the
left the money to Uncle. Unde gave you guidelines
the timing
of
based on your estimates
money will be released to you,
disbursements (Release guidelines and BED5).
Budget
Papa
of
14. Audit-the COA audits the agencies
Chapter
40
Uncle told you
that you
can now
incur
obligation
ions
41
The Budget Process
up to
(Allotment
P80 went to Aling Masing's Store to purchase groce
ofthen
You
maximum
of Oblio
on redIt
credit (incurrence
(lncurrence of
worth P50 n
month,
I
for
vOu 25 cash to cover your cash disburse
goodfor t
Obligatio
ions).
needs
week
for the 1
(Disbursement Authority
Allocation). You gave Little
-
bursemen
Notice o
of e
Cas
SIster her share of P5 (Notice
sfe
of Allocation).
BUDGET PREPARATIONN
4. Housse
D e l i b e r a t i o n s
2. Budget
Hearings
1iset
3. Presentation
Offce of the
ent
the
Pres1a
week were as follows:
in the
Your disbursements
-You:P5
installment paymen to Alng Masing and P12 on perso
5.S e n a t e
Deliberations
needs
needs
Litte Sister: P5 on personal
in Ist week
Total disbursements
P22
14. A u d i t
N. Budget Acountability
reports after the 1 week will show
Your budget accountabiliy
information (6uager Accountability Reports):
the
following
THE
APpropriation: PI00
Allotment received: P80
13. Performance
P20
Unreleased appropriation: (P100- P80)
+ P12 on vo
Obligations incurred: (P50 to Aling Masing
personal needs +5 on Little Sister's personal needs) P67
Unobligated allotment: (P80 allotment P67)
-
=
Reviews
BUDGET
6.
Bicameral
Deliberationns
CYCLE
P13
Disbursements:P22
Unpaid Obligations: (P67 obligations incurred
disbursements) = P45 (payable to Aling Masing)
P22
Unused NCA = (25 NCA - P22 disbursements) = P3
12. Budget
Accountability
7. President's
Reports
Enactment
REPORT
Unde periodically updates Papa and Mama regarding your
budget execution through cal and text (Performance Review).
Papa and Mama will audit you when they return (Audit).
-TheEnd
11. Disbursement 10. Incurrence o
Authority
9.
Allotment
Notice that appropriation, allotments and disbursement
authorities are systems of
budgetary controls. Instead of releasing
the allocated funds of P100 to
you all at once, it is released on a
piecemeal basis, based on your estimate of the
(Budget Execution Documents 'BEDs'). This timing of needs
is to prevent the
incurrence of overdraft
(i.e., obligations exceeding the
appropriated funds).
8. Release
& BEDS
Guidelines
BUDGET EXECUTION
42
Chaptert
43
The Budget Process
Responsibility Accounting
To better evaluate the
Audit
budget
government accounting adheres
accountability
to the
accounting.
concept
of
of
an
Commission
entit
tity,
responsibili
ility
Responsibility accounting is a system ot providing cost ana
revenue
information
over which
This enables the evaluation
of
a
manager has direct control n
manager's performance based
only on matters that are directly under his control.
budget deviations can be readily attributed to the Therefore
managerss
accountable therefor.
a
Responsibility accounting requires the identification o
centers and the distinction between
controllable and
responsibility
non-controllable costs.
Responsibility center is a part, segment, unit or function of
government agency, headed by a manager, who is accountable
-
a
>
for a specified set of activities.
Controllable costs a cost is considered controllable at a
given
level of managerial responsibility if the
manager has the
power to incur it within a given period of time
Non-controllable costs
are costs
incurred indirectly and
-
allocated to a responsibility level.
Except
derive most of their income from
collection of taxes and fees, government
agencies are basically cost
centers whose
primary purpose is to render service to the public at
for
some
the lowest
possible cost.
Each of the
evaluated
based
which
managers
on
his
of
an
ability
agency
that is
a
cost center is
to meet
budgeted goals for
controllable costs. All costs are controllable
by top management
because of the high extent of its
Fewer costs are
authority.
controllable in lower management levels because of
the decreased
scope of authority.
Each government
agency is
center code as follows:
Responsibility
o
Center
Code Stru
ture
on
Example:
otoeo
Can
Agenc
0
Agency ( o o n
LowerLev
Ceel Oia
Opentng
efikeldepartmest
AdAeal code for jar
oicedepartueat
A4atad
cede for
majer
Major Oice
Dp run
Netiooel Gve
Chapter 2 Summary:
Cycle: (1) Budget Preparation, (2) Budget
tability
Legislation, (3) Budget Execution. (4 Budget Accountabily
The Budget
"bottom-up" budgeting, several parties participate in tne
budget preparation, starting from the lowest to the highest levels
Under
of the government.
Under zero-based" budgeting, the current year's budget 1s
formulated
without regard to the
previous year's budget.
Government agencies are required to justify their current
year s proposed programs and
expenditures,
irrespecuve
o
whether these are new or carried over from the
previous year.
Appropriation -is the authorization made by a legislative body
to allocate funds for
or
the
purposes
specified by
similar authority.
Allotment
is
an
legislative
authorization issued by the DBM
government agencies
to
incur
obligations
for
to
specified
amounts contained in a
legislative appropriation in the form
of budget release documents.
It is also referred to as
Obligational Authority.
Obligation is an act of a duly authorized official which
binds
the government to the immediate
or eventual
payment ofa
-
sum of money.
assigned
a
responsibility
Under
responsibility accounting a manager's performance is
evaluated only in terms of the costs that he controls.
hapte
45
The Budget Process
PROBLEMS:
greatly
PROBLEM2-1:
10. Responsibility
TRUE OR FALSE
accounting
accountability because
managers
of the costs or other variables that they
e
in the
Philippines uses a
"b
1. The budget
this approach, the
Under
approach.
levels of the government down to t
from the highest
preparation
bottom-stanuy
2 An entity prepar
budget in the
its budget by simply rolling-over
previous year
and
budget deviations
adjusting each line
item
aily
readily
Which
1.
of the
zero-based budgeting
a. Bottom-up budgeting
b. Top-down budgeting
the
Budget deliberations
Arrange
2.
in the
Congress
start in
government entity
the
following steps
terms
attributed
and
to the
describe
managers
the budget
the sequence
tnat
Budget accountability reports
President's enactment of the GAA
Budget hearings with the DBM
V.
allotment beforei
make disbursements
even
d. V, LI, IV and III
Arrange the following steps according
3.
they appear in the budget cycle.
Allotment
(NCA) is an authority issued by
regional and
offices
operating units to cover their cash provincial
requirements.
c,I, V, I,I and II
before i
Appropriation is also called obligational authority.
9. The Notice of Cash
Allocation
the DBM to central,
in
I Allotment
Bicameral deliberations
I.
the House dt
receives a disbursement authority.
8.
only
t h e r e t o r e ,
control,
according to
a. V,IV, L, I and II
b. V,IL, IV, I and II
can
d
they appear in the budget cycle.
can incur obligations.
7. A
e
of it
TV.
an
t
of
Senate.
6. A government entity must first receive
a
d. Non-incremental budgeting
President for review.
notice
u
C. Zero-based budgeting
the DBM, the proposed
An entity can incur obligations after receiving
appropriation but before receiving the allotment
l
following does not properly
process used in the Philippines?
budget call from
a
PROBLEM 2-2: MULTIPLE CHOICE
udget
various agencies are:submitted immediately to the Offic
5.
be
10% increment to reflect inflation, This process is descrih
3. After the
4
can
accountable therefor.
owes
levels.
v
are
budget preparation ty
budget
budget
enhances
and
Disbursement authority
IL Disbursement
V.
V.
Appropriation
Incurrence of obligation
to the
sequence that
46
Chapter
a. IV,L I, V and III
b. IV,I V, II and II
4
c. IV, I, V, II and III
is
d. IV, V, L, II and IlI
cash
d. It is a notice
This type of budget is prepared in such a way that estimas.
revenues exceed estimated expenditures.
a. Balanced budget
c. Obligations budget
nated
b. Excess budget
4
The Budget Process
allocated
9.
Disbursements
a.
b.
5. This summarizes an agency's fiscal year plans
and
performance targets. It shows the agency's physical an
n
financial plan, monthly cash program, estimate of
income, and list of obligations that are not yet due an
month,
7.
Budget Execution Documents (BEDs)
b. Special Allotment Release Order
of
Approved
C. Statement
Budget,
C.
a.
b.
d.
Utilizationg
It refers to the amount contracted by a auy authorized
administrative officer for which the government is held liable.
Appropriation
c. Obligation
Allotment
d. Disbursement
8. Which of the following best describes the Notice of Cash
c o m m o n l y
most
are
" e n t i t i e s
Fund
MDS Checks
Cash
c. Petty
d. Credit Card
Cash
except
following
accounts to
to sef
segregate
non-controllable costs
a.
aan authorization issued by the
ncu
DB tO IuA
obligations. It is also referred to as Obligational Authority.
C. Budget call
a. Appropriation
d.
Budget hearings
b. Allotment
Congress
nnedexpenditures.
accounting rrequires
of the
all of
e s all
b.
I t is
by
10. Responsibility
a. separate books of
demandable.
Disbursements and Balances
d. Aging of Due and Demandable Obligations
received from
th
the
payment of plan
govermment enti
for the
made through
d. Budget meal
that
identification of
responsibility centers
distinction between
controllable and
costs
controlla
and
controllable
non-controllable
coding structure for responsibility center
PROBLEM 2-3: MULTIPLE CHOICE
A
legislation
approves the allocation of e10OB funds to suPp o r t
rrent
the operations of Entity A (a
government agency) in the cuuc
year. At the start of first quarter, Entity A
authorization to
incur obligations for a maximum
of 45B in that quarter.
Entity A extends half of that authorization to its lower operating
receives
amount
units.
to
During the quarter, Entify A receives monthly authorizauo
not to exceed pP15B per month. Entity A extends
disburse funds
half of those monthly authorizations to its lower
operating unit
At the end of the quarter, totaB obligations incurred amounted to
P40B while total disbursements amounted to P35B.
Allocation (NCA)?
1. The allocation of the P100B funds to Entity A is referred to as
It is a form of legislative authorization in the allocation of
a. Allotment
c. Obligation
funds for specified purposes.
b. Appropriation
d. Sub-allotment
b. It is a form of authorization to a
to.
government agency
incur obligations on behalf of the
2. The allocation of the P100B funds to Entity A is authorized
government.
by
C.
It is a form of authorization to a
a.
and
of
to
Department
Budget
Management
(DBM)
government agency
make disbursements out of government furnds.
a.
Chapter
48
49
The Budget Process
(COA)
(BTr)
Bureau of Treasury
Commission on
b.
C.
Audit
d. Notice of Transfer of
d. Congress
Allocation(NTA)
A p p r o p r i a t i o n s ,
The 45B
3.
a.
Allotment
The P45B authorization
a.
1s
received
as
a. P65B
A's
first
Obligations,
(Central Office) to
a.
its
10. In Entity
Allotments,
Allotment
6.
authorization externded by Entity
c.Obligation
s 2
b. P60B
d . P45B
c.P55B
A's first
Obligations,
quarter
Disbursements
b. P5B
much
atement
how
Balances,
and
allotments?"
d.P15B
c. P10B
Appropriatio1s,
A 11. In Entity A's first quarter Statement of
how much
Allotments, Obligations, Disbursements and Balances,
is shown as "unpaid obligations?
d. Sub-allotment
a. P6B
b. P5B
d. P15B
c. P10B
Which of the following best describes the P15B monthi
authorizations?
a.
PROBLEM 2-4: FOR CLASSROOM DISCUSSION
Allotment
c
Disbursement
NCA)
authority (e.g,
Notice
of
Cash
Allocatio
b. COA audit findings
d. Disbursement authority
d. PFRSs
(eg, Notice of Transfer of Allocation
NTA)
7. The P15B
from
a.
DBM
b. COA
in
of govermment entities must be
conformance with the law and the
a. National budget
c.PPSASs
1 All disbursements
b. Obligation authority (eg. Notice of Cash Allocation 'NCA
8.
how
Balances,
and
is shown as "unobligated
lower operating units is referred to
as
b. Appropriation
Statement of
Disbursements
unreleased appropriations
a. P6B
5. The half of the P45B
quat
fAppropriations,
by Entity A from
d. Congress
b. COA
Entity
is shown
C. BTr
DBM
In
Allotments,
d. Sub-allotment
b. Appropriation
4
9.
referred to as
c. Obligation
authorization is
2. An
entity prepares its budget for the upcoming year trom
scratch. It scrutinizes each item in the budget irrespective of
monthly authorizations
are
received
by Entity
A
c. BTr
d. Congress
whether the item was incuded in the previous budget. This
process is called
a. zero budgeting
b. incremental budgeting
c. scratch budgeting
d. zero-based budgeting
3. Under this approach to budgeting, several parties particip e
in the budget preparation
from the lowest levels of
Entity A (Central Office) to its lower operating units is
govermment to the highest levels, and sometimes even citizenreferred to as
stakeholders participate in the budget preparation.
a. Cash
The half of the 15B
b.
c.
monthly authorizations extended by
Disbursement Ceiling
Non-Cash Availment Authority
Notice of Cash Allocation
(NCA)
51
Chapter
50
C. top-down budgeting
a. bottoms-up budgetng
d. bottom-up budgeting
b. zero-based budgeting
The Budget Process
disbursements.
correct sequence before
8.
Entity A, a government entity, wants tto
o
m
a
k
e
edquence
ants
sequence of the
4. What is the correct
following steps in th
L
Budget Legislatiorn
Budget Accountability
II.
Budget Preparation
V.
Budget Execution
Entity
I.
budget process?
.
Arrange the
I.
Il.
IV.
Allotment
IL, II, I and IV
b. I, I,IV and II
5.
a.
APPropriation
Incurrence of obligation
IL, IIL, I, and IV
C.
II, 1, I, and IV
d. IIl, IV, I, and
into
d. II1, IV, I and II
en
nt
te
er
r
e
ca n
c
This committeeis called the
Adjudication Conference Committee
9. This is necessary before government
enment
bind
nat
bind the
contracts that
entities
entities
government
into
e v e n t u a l
the
for
disbursement of government funds
a.
Disbursement authority
C.Allotment
obligation
b. Notice of cash allocation
I n c u r r e n c e
of
d.
is
performance
10. Under
b. Bicaramel Conference Committee
c
disbursements
b. IIL, I, IV, and II
the Congress
After deliberations in both houses in
at
is formed to harmonize any conflis
committee
a
finished,
versions of th
between the Representatives and Senate
General Appropriations Bill.
events in the
Disbursement Authority
a.
c. IT, I, I and IV
a.
llowing
A can make valid
responsibility accounting, a
manager's
evaluated
a. based on all resources under his custody
Referee Conference Committee
d. Bicameral Conference Committee
b.
only
C.
on
in terms
of
the costs,
or
other
variables,
that he
controls.
6. It is the authorization made by
a
legislative body
to
allocat
funds for purposes specified by the legislative or simil
authority.
a. Appropriation
b. Allotment
7.
c.Obligation
d. Disbursement
These are the authorizations programmed annually or fo
legislation which does not require periodic action b
Congress.
b. New General Appropriations
C. Continuing Appropriations
d. Supplemental Appropriations
costs.
d. only at year-end.
some other period prescribed by law, by virtue of outstanding
a. Automatic Appropriations
the basis of both
controllable
and non-controllade