GOVERNMENT ACCOUNTING MANUAL FOR NATIONAL GOVERNMENT AGENCIES

Government Accounting
 Encompasses the process of analyzing, recording, classifying, summarizing and
communicating all transactions involving the receipt and disposition of government
funds and property, and interpreting the results thereof.

The COMMISSION ON AUDIT shall have exclusive authority to define the scope of its audit and
examination, establish the techniques and methods required therefor, and promulgate
accounting and auditing rules and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures,
or uses of government funds and properties.

GOVERNMENT ACCOUNTING MANUAL

 Supersede the New Government Accounting System (NGAS) Manual that national
government agencies have been using since 2002.
 The revision of the NGAS was prompted by the implementation of the Philippine Public
Financial Management Reform Roadmap, which includes the development of the
Philippine Public Sector Accounting Standards (PPSAS) that are harmonized with the
International Public Sector Accounting Standards (IPSAS).
 Legal Basis: Article IX-D, Section 2 par. (2) of the 1987 Constitution of the Republic of
the Philippines.

Volume I- Accounting Policies, Guidelines and Procedures, and Illustrative Accounting Entries
Volume II- Accounting Books, Registries, Records, Forms and Reports
Volume III- The Revised Chart of Accounts prescribed under COA Circular No. 2013-002

RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OVER GOVERNMENT FUNDS & PROPERTY

a. Responsibility over Government Funds and Property
The head of any agency of the government is immediately and primarily responsible for
all government funds and property pertaining to his agency. Persons entrusted with the
possession or custody of the funds or property under the agency head shall be immediately
responsible to him, without prejudice to the liability of either party to the government.

b. Accountability over Government Funds and Property

Every officer of any government agency whose duties permit or require the possession
or custody of government funds or property shall be accountable therefor and for the
safekeeping thereof in conformity with law. Every AO shall be properly bonded in accordance
with law.

c. Liability over Government Funds and Property

Expenditures of government funds or uses of government property in violation of law or
regulations shall be a personal liability of the official or employee found to be directly
responsible therefor. Every officer accountable for government funds shall be liable for all
losses resulting from the unlawful deposit, use, or application thereof and for all losses
attributable to negligence in the keeping of the funds.

FUNDAMENTAL PRINCIPLES FOR REVENUE

a. Unless otherwise specifically provided by law, all revenues accruing to an entity by
virtue of the provisions of existing law, orders and regulations shall be deposited/
remitted in the National Treasury (NT) or in any duly authorized government depository,
and shall accrue to the General Fund (GF) of the NG.
b. Amounts received in trust and from business-type activities of government may be
separately recorded and disbursed in accordance with such rules and regulations as may
be determined by a Permanent Committee composed of the Secretary of Finance as
Chairman, and the Secretary of Budget and Management and the Chairman, COA, as
members.
c. Receipts shall be recorded as revenue of Special, Fiduciary or Trust Funds or Funds other
than the GF, only when authorized by law as implemented by rules and regulations
issued by the Permanent Committee.
d. No payment of any nature shall be received by a collecting officer without immediately
issuing an official receipt in acknowledgement thereof.

FUNDAMENTAL PRINCIPLES FOR DISBURSEMENT OF PUBLIC FUNDS

a. No money shall be paid out of any public treasury or depository except in pursuance of
an appropriation law or other specific statutory authority.
b. Government funds or property shall be spent or used solely for public purposes.
c. Trust funds shall be available and may be spent only for the specific purpose for which
the trust was created or the funds received.
d. Claims against government funds shall be supported with complete documentation.

BASIC GOVERNMENT ACCOUNTING AND BUDGET REPORTING PRINCIPLES

a. Generally accepted government accounting principles in accordance with the PPSAS and
pertinent laws, rules and regulations;
b. Accrual basis of accounting in accordance with the PPSAS;
 c. Budget basis for presentation of budget information in the financial statements (FSs) in
accordance with PPSAS 24;
d. Revised Chart of Accounts prescribed by COA;
e. Double entry bookkeeping;
f. Financial statements based on accounting and budgetary records; and
g. Fund cluster accounting.

Keeping of the General Accounts

The COA shall keep the general accounts of the Government and, for such period as may
be provided by law, preserve the vouchers and other supporting papers pertaining thereto

Financial Reporting System for the National Government

a. Each entity of the National Government (NG) maintains complete set of accounting
books by fund cluster which is reconciled with the records of cash transactions
maintained by the BTr.
b. Each entity maintains budget registries which are reconciled with the budget records
maintained by the DBM and the Government Accountancy Sector (GAS), COA.
c. The COA, through the GAS:
1. Maintains budget records showing the overall approved budget of the NG and its
execution/implementation;
2. Consolidates the FSs and budget accountability reports of all NGAs and the BTr
with COA’s records to come up with an Annual Financial Report (AFR) for the NG
as required in Section 4, Article IX-D of the 1987 Philippine Constitution; and
3. prepares other financial reports required by law for submission to oversight
agencies.

Components of General Purpose Financial Statements

a. Statement of Financial Position
b. Statement of Financial Performance
c. Statement of Changes in Net Assets/Equity
d. Statement of Cash Flows
e. Statement of Comparison of Budget and Actual Amounts
f. Notes to the Financial Statements, comprising a summary of significant accounting
policies and other explanatory notes

Books of Accounts and Registries

a. Journals
1. General Journal
 2. Cash Receipts Journal
3. Cash Disbursements Journal
4. Check Disbursements Journal

b. Ledgers
1. General Ledgers
2. Subsidiary Ledgers

c. Registries
1. Registries of Revenue and Other Receipts
2. Registry of Appropriations and Allotments
3. Registries of Allotments, Obligations and Disbursements
4. Registries of Budget, Utilization and Disbursements

FUND ACCOUNTING: FUND CLUSTERS

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

OTHER PROVISIONS
a. Fair Presentation
b. Compliance with PPSASs. Explicit and unreserved statement of such compliance
c. Departure with PPSASs. If compliance with the requirement of PPSAS would result in
misleading presentation that it would contradict the objective of the FSs set forth in
PPSAS.
d. Going Concern. Unless there is an intention to discontinue the entity operation, or if
there is no realistic alternative but to do so.
e. Consistency of Presentation. Retained from one period to the next unless laws, rules
and regulations, and PPSAS require a change in presentation.
f. 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.
 g. Comparative Information. 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.

Inclusions in the Statement of Changes in Net Assets/ Equity

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 with PPSAS 3-
Accounting Policies, Changes in Accounting Estimates and Errors.

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).

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

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;
d. Availability of cash certified by the Chief Accountant;
e. Legality of the transactions and conformity with existing rules and regulations.
f. Submission of proper evidence to establish validity of the claim.
g. Approval of the disbursement by the Head of Agency or by his duly authorized
representative.
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). 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.

BUDGET EXECUTION, MONITORING AND REPORTING

Allotment – is an authorization issued by the DBM to NGAs to incur obligations for specified
amounts contained in a legislative appropriation in the form of budget release documents. It is
also referred to as Obligational Authority.

Appropriation – is the authorization made by a legislative body to allocate funds for purposes
specified by the legislative or similar authority.

Disbursements – are the actual amounts spent or paid out of the budgeted amounts.

Obligation – is an act of a duly authorized official which binds the government to the
immediate or eventual payment of a sum of money. Obligation maybe referred to as a
commitment that encompasses possible future liabilities based on current contractual
agreement.

FUND RELEASE DOCUMENTS

a. Obligational Authority or Allotment
1. General Appropriations Act Release Document (GAARD) – serves as the
obligational authority for the comprehensive release of budgetary items
appropriated in the GAA, categorized as For Comprehensive Release (FCR).

2. Special Allotment Release Order (SARO) – covers budgetary items under For Later
Release (FLR) (negative list) in the entity submitted Budget Execution Documents
(BEDs), subject to compliance of required documents/clearances. Releases of
allotments for Special Purpose Funds (SPFs) (e.g., Calamity Fund, Contingent
Fund, E-Government Fund, Feasibility Studies Fund, International Commitments
Fund, Miscellaneous Personnel Benefits Fund and Pension and Gratuity Fund)
are also covered by SAROs.

3. General Allotment Release Order (GARO) – is a comprehensive authority issued

to all national government agencies, in general, to incur obligations not
exceeding an authorized amount during a specified period for the purpose
indicated therein.
 b. Disbursement Authority
1. Notice of Cash Allocation (NCA) – authority issued by the DBM to central,
regional and provincial offices and operating units to cover the cash
requirements of the agencies;

2. Non-Cash Availment Authority (NCAA) – authority issued by the DBM to

agencies to cover the liquidation of their actual obligations incurred against
available allotments for availment of proceeds from loans/grants through
supplier’s credit/constructive cash;

3. Cash Disbursement Ceiling (CDC) – authority issued by DBM to the Department

of Foreign Affairs and Department of Labor and Employment to utilize their
income collected/retained by their Foreign Service Posts (FSPs) to cover their
operating requirements, but not to exceed the released allotment to the said
post; and

4. Notice of Transfer of Allocation – authority issued by the Central Office to its

regional and operating units to cover the latter’s cash requirements.

Registry of Appropriations and Allotments

 Shall be maintained by NGAs to monitor appropriations and allotments charged
thereto. It shall show the original, supplemental and final budget for the year and all
allotments received charged against the corresponding appropriation.

Registries of Budget, Utilization and Disbursements

 Shall be used to record the approved special budget and the corresponding utilizations
and disbursements charged to retained income authorized under R.A. 8292 for SUCs
and other retained income collection of a national government agency with similar
authority, Revolving Funds and Trust Receipts/Custodial Funds.

a. Registry of Budget, Utilization and Disbursements-Personnel Services (RBUD-PS)

shall be used to record the budget utilizations and disbursements classified under
PS.
b. Registry of Budget, Utilization and Disbursements-Maintenance and Other
Operating Expenses (RBUD-MOOE) shall be used to record the budget utilizations
and disbursements classified under MOOE.
c. Registry of Budget, Utilization and Disbursements-Financial Expenses (RBUD-FE)
shall be used to record the budget utilizations and disbursements classified under
FE.
d. Registry of Budget, Utilization and Disbursements-Capital Outlays (RBUD-CO) shall
be used to record the budget utilizations and disbursements classified under CO.
Budget Utilization Request and Status. The incurrence of budget utilization shall be made
through the issuance of Budget Utilization Request and Status (BURS). The BURS shall be
prepared by the Requesting/Originating Office supported by valid claim documents like DV,
payroll, purchase/job order, itinerary of travel, etc.

Presentation of Budget Information in the Financial Statements on a Comparable Basis. An

entity shall prepare a comparison of the budget and actual amounts spent as a separate
statement since the budget and the financial statements are not prepared on a comparable
basis in accordance with PPSAS

Responsibility Center Code Structure. Each NGA shall be assigned a responsibility center code
defined as organization code in the UACS Manual. For monitoring revenue and expenses,
additional three digit codes for the agency’s major offices/departments shall be appended to
the organization code. The organization code and the agency’s major offices/departments’
code shall consist of 15 digits as follows:
 REVENUE AND OTHER RECEIPTS

Unless otherwise specifically provided by law, all revenue (income) accruing to the
departments, offices and agencies by virtue of the provisions of existing laws, orders and
regulations shall be deposited in the NT or in the duly authorized depository of the Government
and shall accrue to the General Fund of the Government: Provided, that amounts received in
trust and from business-type activities of government may be separately recorded and
disbursed in accordance with such rules and regulations as may be determined by the
Permanent Committee.

Revenue from Exchange Transactions

1. Rendering of services
2. Sale of goods
3. Interests
4. Royalties
5. Dividends or similar distributions

Revenue from Non-Exchange Transactions

a. Tax Revenue- Individual and Corporation, Property, Goods and Services, Others
b. Fines and Penalties- Tax Revenue, Service Income, Business Income
c. Shares, Grants and Donations- Share from National Wealth, Share from Philippine
Amusement and Gaming Corporation (PAGCOR)/ Philippine Charity Sweepstakes Office
(PCSO), Share from Earnings of GOCCs, Income from Grants and Donations in Cash,
Income from Grants and Donations in Kind
d. Revenues arising from Trust Liabilities, Deferred Credits, Unearned Revenue

GRANT WITH CONDITION

If conditions are attached to a grant, a liability is recognized. If the government is
required to recognize a liability in respect of any conditions relating to assets recognized as a
consequence of specific purposes, it does not recognize revenue until the condition is satisfied
and the liability is reduced. As an entity satisfies a present obligation, it shall reduce the
carrying amount of the liability recognized and recognize an amount of revenue equal to that
reduction.

Example: The NG received a foreign grant amounting to P10 million for the construction
of a railroad system. Under the terms of the grant, the construction project shall be completed
within a period of two years from the receipt of the grant, otherwise, the money shall be
returned to the grantor. The money can only be used as stipulated and the NG is required to
include a note in the financial statement detailing how the money was spent. The Department
of Public Works and Highways (DPWH) will be the implementing entity.
a. Receipt of the Grant
Books of the NG - BTr
Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas P10,000,000
Other Deferred Credits P10,000,000
To recognize receipt of grant

Books of the Implementing NGA – DPWH

Cash-Modified Disbursement System (MDS), Special Account P10,000,000
Subsidy from National Government P10,000,000
To recognize receipt of the NCA for a railroad system

b. Purchase of construction materials and payment for labor for the construction of a railroad
system amounting to P10,000,000.

Books of the Implementing NGA-DPWH

Construction in Progress- Infrastructure Assets P10,000,000
Cash-Modified Disbursement System, Special Account P10,000,000
To recognize payment for the materials and labor

Books of the NG-BTr

Subsidy from National Government P10,000,000
Cash in Bank-Local Currency, Bangko Sentral ng Pilipinas P10,000,000
To recognize replenishment of MDS checks

c. Receipt of the report from DPWH for the completion of the construction of a railroad
system amounting to P10,000,000.

Books of the NG - BTr

Other Deferred Credits P10,000,000
Income from Grants and Donations in Cash P10,000,000
To recognize the income from grants and donations

d. Turnover and Acceptance of Completed Infrastructure Asset

Books of the Implementing NGA - DPWH

Railway System P10,000,000
Construction in Progress- Infrastructure Assets P10,000,000
To recognize the turnover and acceptance

RECEIPT OF NOTICE OF CASH ALLOCATION

Regular: Cash-Modified Disbursement System (MDS), Regular XX
Subsidy from National Government XX
To recognize receipt of NCA for Regular Agency Fund
Special Account: Cash-Modified Disbursement System (MDS), Special Account XX
Cash-Treasury/Agency Deposit, Special Account XX
To recognize receipt of NCA for Special Acct in the General Fund

NON-CASH AVAILMENT AUTHORITY

Accounts Payable XX
Subsidy from National Government XX
To recognize the receipt of NCAA

TAX WITHHELD BY NGAS

NGAs’ (withholding agency) Books
Cash-Tax Remittance Advice XX
Subsidy from National Government XX
To recognize constructive receipt of NCA for TRA

Due to BIR XX
Cash-Tax Remittance Advice XX
To recognize constructive remittance to BIR of taxes withheld through TRA

BIR Books
Cash-Tax Remittance Advice XX
Income Tax XX
To recognize constructive receipt of taxes remitted by NGAs through TRA

BTr Books
Subsidy to NGAs XX
Cash-Tax Remittance Advice XX
To recognize constructive receipt of remittance of taxes by NGAs through TRA

COLLECTIONS MADE ON BEHALF OF ANOTHER ENTITY/ NON-GOVERNMENT/ PRIVATE ORG

NGAs Books (Collecting Agency)
Cash-Collecting Officers XX
Due to NGAs XX
To recognize collection of fees

Due to NGAs XX
Cash-Collecting Officers XX
To recognize remittance of collections to BTr

BTr Books
Cash in Bank-Local Currency, Savings Account XX
Cash-Treasury/Agency Deposit, Trust XX
To recognize receipt of remitted collections for UP-LRF
Another Entity Books
Cash-Treasury/Agency Deposit, Trust XX
Trust Liabilities XX
To recognize remitted collections by other NGAs

INTRA-AGENCY AND INTER-AGENCY FUND TRANSFERS

1. Intra-entity Fund Transfer
Cash-Collecting Officers XX
Due to Central Office/ Bureaus/ Offices XX
To recognize receipt of intra-entity fund transfer

Cash-Treasury/Agency Deposit, Trust XX

Cash-Collecting Officers XX
To recognize remittance of collections to BTr

2. Inter-agency Fund Transfer

Cash-Collecting Officers XX
Due to NGAs/ LGUs/ GOCCs XX
To recognize receipt of inter-entity fund transfer

Cash-Treasury/Agency Deposit, Trust XX

Cash-Collecting Officers XX
To recognize remittance of collections to BTr

DISBURSEMENTS

Notice of Cash Allocation. The NCA shall be the authority of an agency to pay operating
expenses, purchases of supplies and materials, acquisition of PPE, accounts payable, and other
authorized disbursements through the issue of MDS checks, ADA or other modes of
disbursements.

Notice of Transfer of Allocation. The NTA shall be the authority of the regional and operating
units to pay their operating expenses, purchases of supplies and materials, acquisition of PPE,
accounts payable, and other authorized disbursements through the issue of MDS checks, ADA
or other modes of disbursements.

Disbursements by Check. Checks shall be drawn only on duly approved Disbursement Voucher
(DV) or Payroll. These shall be used for payment of regular expenses which cannot be
conveniently nor practically paid using the ADA or not authorized to be paid using the Petty
Cash Fund or advances for operating expenses.
a. Modified Disbursement System Checks – are checks issued by government agencies
chargeable against the account of the Treasurer of the Philippines, which are
maintained with different MDS-GSBs.
 b. Commercial Checks – are checks issued by NGAs chargeable against the Agency
Checking Account with GSBs. These shall be covered by income/receipts authorized to
be deposited with AGDBs.

Illustrative Accounting Entries for Disbursements By Check

1. Payment of the following utility bills:

Meralco Bill P1,200
PLDT Bill 500
Maynilad Bill 200
Total P 1,900

Water Expenses 200

Electricity Expenses 1,200
Telephone Expenses 500
Cash-Modified Disbursement System (MDS), Regular P 1,900
To recognize payment of bills from utility companies

2. Grant of cash advance for travel

Advances to Officers and Employees P 1,000
Cash-Modified Disbursement System (MDS), Regular P 1,000
To recognize granting of travel allowance to employees

3. Advance payment to Procurement Service

Due from NGAs P 2,500
Cash-Modified Disbursement System (MDS), Regular P 2,500
To recognize advance payment to Procurement Service
for the purchase of Office Equipment

4. Establishment of Petty Cash Fund (PCF) – P 20,000

Petty Cash Fund P 20,000
Cash-Modified Disbursement System (MDS), Regular P 20,000
To recognize establishment of PCF to cover petty expenses

5. Replenishment of PCF Expenses charged to the PCF:

Bond paper P 14,000
Postage stamps 2,000
Total P 16,000

Office Supplies Expenses P 14,000

Postage and Courier Expenses 2,000
Cash-Modified Disbursement System (MDS), Regular P 16,000
To recognize replenishment of PCF
6. Remittance of Government’s share
Retirement and Life Insurance Premium P 3,300
Pag-IBIG Contributions 500
PhilHealth Contributions 300
Total P 4,100

Retirement and Life Insurance Premiums P 3,300

Pag-IBIG Contributions 500
PhilHealth Contributions 300
Cash-Modified Disbursement System (MDS), Regular P 4,100
To recognize remittance of government’s share

7. Remittance of salary deductions

Retirement and Life Insurance Premium P 3,300
Pag-IBIG Contributions 500
PhilHealth Contributions 300
GSIS-Salary Loan 200
Employees' Association 100
Total P 4,400

Due to GSIS P 3,500

Due to Pag-IBIG 500
Due to PhilHealth 300
Other Payables 2 100
Cash-Modified Disbursement System (MDS), Regular P 4,400
To recognize remittance of salary deductions