Government Accounting: Accounting For Non-Profit Organizations

Government Accounting
&
Accounting for non-profit organizations
Prof. Jherome G. Ng, CPA, CEA, MBA

Lesson One: Overview of Government
Accounting
Learning Objectives
• Differentiate government accounting from
the accounting for business entities.
• State the government entities charged with
accounting responsibility.
• Describe briefly the GAM for NGAs.
• State the basic principles used in
government accounting.
• State the recognition criteria for assets.
Definition of Government
Accounting
“Government accounting encompasses the
processes of analyzing, recording, classifying,
summarizing and communicating all
transactions involving the receipt and
disposition of government funds and
property, and interpreting the results
thereof.” (State Audit Code of the Philippines,
P.D. No. 1445, Sec. 109)
Government Accounting vs. Business Accounting
Compared to the accounting for business

entities, government accounting places
greater emphasis on the following:
• Sources and utilization of government
funds; and
• Responsibility, accountability and liability of
entities entrusted with government funds
and properties.
Responsibility, Accountability and
Liability over Government
Funds and Property
• Government resources must be utilized
efficiently and effectively in accordance with
the law.
• The head of a government agency is directly
responsible in implementing this policy.
• All other personnel entrusted with the custody
of government resources are responsible to
the head of the government agency, are
accountable for the safeguarding thereof, and
are liable for any losses.
Accounting
responsibility
The following offices are charged with
government accounting responsibility:
1. Commission on Audit (COA)
2. Department of Budget and Management
(DBM)
3. Bureau of Treasury (BTr)
4. Government agencies
Commission On Audit
(COA)
Responsibilities of COA
• Examine, audit and settle all accounts pertaining to
the revenue and receipts of, and expenditures or
uses of funds and property owned or held in trust
by, or pertaining to, the government
• Promulgate accounting and auditing rules
• Keep the general accounts
• Submit financial reports
Department of Budget and
Management
(DBM)
Responsibility of DBM
• To promote the sound, efficient and
effective management and utilization of
government resources as instrument in the
achievement of national socioeconomic
and political development goals
• Implementation of the national budget
Bureau of Treasury
(BTr)
Responsibility of BTr
• Keepers of funds
• Cash custody and control of disbursements
Mandates:
• Assist in the formulation of policies on borrowing,
investment and capital market development
• Formulate adequate operations guidelines for fiscal
and financial policies
• Maintain books of accounts of the cash transactions
• Manage the cash resources, collect taxes made by
the National Government (NG), control and service
its public debt, both foreign and domestic
Government Agencies
• Responsibility of government agencies

• 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.
The GAM for NGAs
• The Government Accounting Manual for
National Government Agencies (GAM for
NGAs) is promulgated by the COA under
the authority conferred to it by the
Philippine Constitution.
• The GAM for NGAs was promulgated
primarily to harmonize the government
accounting standards with the
International Public Sector Accounting
Standards (IPSAS). The IPSASs are based on
the IFRSs.
The GAM for NGAs
INTOSAI COA
IPSASB PPSASB
IPSAS PPSAS
The GAM for NGAs
What if a government
agency departs from PPSAS?
Is it allowed?
The GAM for NGAs
Coverage:
– Consists of three manuals
• 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
Basic Accounting and Budget
reporting
Principles
• Generally accepted government accounting
principles in accordance with the PPSAS and
pertinent laws, rules and regulations
• Accrual basis of accounting
• Budget basis for presentation of budget
information in the financial statements
• Revised Chart of Accounts
• Double entry bookkeeping
• Financial statements based on accounting and
budgetary records
• Fund cluster accounting
Fund clusters
Qualitative Characteristics
• Understandability
• Neutrality
• Relevance
• Prudence
• Materiality • Completeness
• Reliability
• Comparability
• Timeliness
• Faithful
representation
• Substance over form
Government Accounting Concepts
and Principles
• Fair Presentation
• Going Concern
• Consistency of Presentation
• Materiality and Aggregation
• Offsetting
• Comparative Information
Components of General Purpose
Financial Statements
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; and
6. Notes to the Financial Statements
Books of Accounts and Registries
Journals Ledger
• General Journal • General Ledger
• Special Journals • Subsidiary Ledgers
– Cash Receipts
Journals Registries
– Cash • Revenue and Other
Receipts
Disbursements
• Appropriation and
Journal Allotments
– Check • Allotments,
Disbursements Obligations and
Journal Disbursements
• Budget, Utilization and
Disbursements
Key Features of an Recognition of an
Asset Asset
• the benefits must a. it is probable that
be controlled by the the future
entity; economic benefits
• the benefits must will flow to the
have arisen from a entity; the benefits
past event; and must have arisen
• future economic from a past event;
benefits or service and
potential must be b. the asset has a
expected to flow to cost or value that
the entity. can be measured
reliably.
Government Accounting
&
Accounting for non-profit organizations
Sec. 29.6 of 1987 constitution - No money shall be paid out of the

Treasury except in pursuance of an appropriation made by law.
Basis ng process ng budget for public interest
The Budget Process
Learning Objectives
• Describe the general accounting plan
• Enumerate the steps in the budget process.
• Describe briefly the principles of
responsibility accounting.
Accounting system
Accounting for budget
General Accounting Plan
process 1. Budgetary Accounts System
Accounting for 2. Receipt/Income and Deposit System
revenues or inflows of
the government 3. Disbursement System
Expenditures and
4. Financial System expenses
Construction,
presentation and
preparation of the
components of the
financial statement of
government agency
The National Budget
➢ The national budget (government budget) is the government’s estimate of
the sources and uses of government funds within a fiscal year. This forms
the basis for expenditures and is the government’s key instrument for
promoting its socio-economic objectives.
• Plan for financing activities for a fiscal year. Prepare and submitted by responsible executive which is the
president of the Philippines to a representative both congress and senate and their approval are necessary.
• Definite proposal of estimates or statement of revenues or receipt and statement of disbursement and
expenditure that may be approve or rejected.
• Financial blueprint of a country’s development plan
• Bottom-up budgeting system – starts at the bottom to the top
For one year. Planned services for Types of Government Budget
the public, comprehensive
Kapag enacted na as law
programs as well as planned
services. Lahat ng planong gawin According to the law
ng gobyerno created the budget: Budget Laws:
a. Annual/General a. General
Supplements or adjusts kapag may Appropriation Act
Budget
gusto syang iadd. Kumbaga kulang b. Supplemental
lang yung budget na nahingi mo sa b. Supplemental Appropriation Act
general budget. Example. DOH this Budget
year c. Special
c. Special Budget Appropriation Act
Budget of special nature and generally
submitted in special forms on account that
itemization adequately provided in a May special explanation which is
appropriation act. Hindi pa to included sa SARO
general appropriation act.
Based on the function
Types of Government Budget
of the expenses, May corresponding amount per object . As
nirarank mo based on According to basis: long as all the items recorded as
the importance expenditure has specific amount
a. Line – item Budget
b. Performance Budget
Magsisimula ka sa 0 dahil
gagawa ka ng bagong additional budget needs
budget. According to Approach and Technique: justification. Yung dinagdag mo
a. Incremental Budgeting lang yung ijujustify mo. Roll
over
b. Zero – based Budget
Balanced Budget The goal of the government is to have a balanced budget.

Expenditures is equal or less to estimated revenues
• Physical and Financial Plan
• Monthly Cash Program
• Estimate of Monthly Income
• List of Obligations that are not yet due
and demandable
Allotment Release Order Documents:
1. General Appropriations Act Release Order (GAARD)
2. Special Allotment Release Order (SARO)
3. General Allotment Release Order (GARO)
Disbursement Authorities:
1.Notice of Cash Allocation (NCA)
2.Non – Cash Availment Authority (NCAA)
3.Cash Disbursement Ceiling (CDC)
4.Notice of Transfer of Allocation (NTA)
Responsibility Accounting
• Responsibility accounting is a system of providing cost and revenue
information over which a manager has direct control of.
• It requires the identification of responsibility centers and the
distinction between controllable and non-controllable costs.
CHAPTER 3 LEARNING OBJECTIVES
THE 1. RECORD THE BASIC
GOVERNMENT
TRANSACTIONS OF A
ACCOUNTING
PROCESS GOVERNMENT ENTITY.
2. PREPARE A WORKSHEET.
GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

1. JOURNALS
a. GENERAL JOURNAL
b. CASH RECEIPTS JOURNAL
c. CASH DISBURSEMENTS JOURNAL
d. CHECK DISBURSEMENTS JOURNAL
2. LEDGERS
a. GENERAL LEDGERS
b. SUBSIDIARY LEDGERS
BOOKS OF
ACCOUNTS 3. REGISTRIES
AND a. REGISTRIES OF REVENUE AND OTHER RECEIPTS (RROR)
REGISTRIES b. REGISTRY OF APPROPRIATIONS AND ALLOTMENTS

(RAPAL)
c. REGISTRIES OF ALLOTMENTS, OBLIGATIONS AND
DISBURSEMENTS (RAOD)
d. REGISTRIES OF BUDGET, UTILIZATION AND
DISBURSEMENTS (RBUD)
1. PERSONNEL SERVICES (PS) – PERTAIN TO
ALL TYPES OF EMPLOYEE BENEFITS.
2. MAINTENANCE AND OTHER OPERATING
EXPENSES (MOOE) – PERTAIN TO VARIOUS
OBJECT OF OPERATING EXPENSES OTHER THAN
EXPENDITURES EMPLOYEE BENEFITS AND FINANCIAL
EXPENSES.
3. FINANCIAL EXPENSES (FE) – PERTAIN TO
FINANCE COSTS.
4. CAPITAL OUTLAYS (CO) – PERTAIN TO
CAPITALIZABLE EXPENDITURES.

BASIC RECORDINGS
LNYDDO

BASIC OF RECORDINGS
CONCEPT OF OBLIGATION
Government Entity Private Entity

BASIC RECORDINGS
LNYDDO

BASIC RECORDINGS (CONTINUATION)

BASIC RECORDINGS (CONTINUATION)

THE REVISED CHART OF ACCOUNTS
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Government Accounting

Prof. Jherome G. Ng, CPA, CEA, MBA

Compared to the accounting for business

• Responsibility of government agencies

Sec. 29.6 of 1987 constitution - No money shall be paid out of the

Balanced Budget The goal of the government is to have a balanced budget.

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

REGISTRIES b. REGISTRY OF APPROPRIATIONS AND ALLOTMENTS

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

Government Entity Private Entity

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

GOVT ACCTG & ACCTG FOR NPOs by: Z.B.Millan

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