Module 2: Accounting for National Government Agencies (NGAs)
Overview
The New Government Accounting System (NGAS) Manual underwent revision following the
implementation of the Government Accounting Manual (GAM) for National Government Agencies. This
revision was prompted by the Philippine Public Financial Management Reform Roadmap, which
includes the development of Philippine Public Sector Accounting Standards (PPSAS) harmonized with
International Public Sector Accounting Standards (IPSAS). It also introduced the Revised Chart of
Accounts (RCA) and the adoption of the Unified Account Code Structure (UACS) to enable national
government agencies to accurately record financial transactions and prepare fundamental financial
statements.
Module Objectives
Upon successful completion of this module, you should be able to:
- Understand the budgetary procedures for NGAs.
- Describe the Chart of Accounts used by NGAs.
- Prepare journal entries for basic government transactions.
- Prepare basic financial statements for NGAs.
Revenue and Other Receipts
Unless specified by law, all revenue generated by departments, offices, and agencies under existing
laws, orders, and regulations shall be deposited in the National Treasury or an authorized government
depository and accrue to the General Fund of the Government. However, amounts received in trust
and from business-type activities of the government may be separately recorded and disbursed
following established rules and regulations.
NGAs may receive revenue from exchange and non-exchange transactions. In cases where an entity
provides some consideration for resources received, but that consideration does not closely match
the fair value of the resources, the entity must determine if it involves a combination of exchange and
non-exchange transactions, recognizing each component separately.
Certain transactions may not immediately indicate whether they are exchange or non-exchange
transactions. An examination of the transaction's substance determines its classification. For
example, the sale of goods is typically an exchange transaction, but if conducted at a subsidized price
significantly below fair value, it falls under non-exchange transactions.
Agencies may receive discounts or reductions in asset prices for various reasons, which does not
necessarily categorize the transaction as non-exchange.
Revenue from exchange transactions for NGAs comes from:
a. Selling goods or providing services to third parties or other NGAs.
b. Use of assets by other entities, resulting in interest, royalties, dividends, or similar distributions.
Revenue from exchange transactions is measured at the fair value of the consideration received or
receivable. If goods or services are exchanged for items of similar nature and value, it is not considered
revenue-generating. However, when dissimilar goods or services are exchanged, revenue is generated,
measured at the fair value of the goods or services received, adjusted by any cash or cash equivalents
transferred. If the fair value of goods or services received cannot be reliably measured, revenue is
measured at the fair value of the goods given up, adjusted by any cash or cash equivalents
transferred.
Other receipts for NGAs include, but are not limited to:
a. Notice of Cash Allocation (NCA), which authorizes agency expenses, acquisitions, and
disbursements. MDS checks, ADA, or other disbursement methods require NCA coverage.
b. NCA usage policies may allow for the covering of current year's accounts payable after fulfilling
regular operating requirements.
c. Special MDS Accounts receive NCAs for retirement gratuity/terminal leave benefits and prior years'
accounts payable.
d. Foreign-assisted projects may have separate MDS accounts with specific purposes for issuing MDS
checks/ADA until project implementation is complete, following DBM regulations on NCA validity.
(Note: This paraphrased content maintains the structure and essential information from the original
text while using different wording and sentence structures.)