ACT 133

Government Accounting, Accounting for Non-Profit Organization

and Other Special Institutions

Nature and Scope of Government Accounting

Because of the need to make government accounting simple, effective and responsive, the New Government
Accounting System was promulgated for the use of all government agencies. This was developed to help the
different government agencies to hit its financial targets and at the same time be understood by all the users
of financial reports. These changes resulted to the harmonization of the existing accounting standards with the
International Accounting Standards.

Pursuant Article IX-D, Section 2 par. (2) of the 1987 Constitution, the Commission on Audit (COA) revise the
New Government Accounting System (NGAS) Manual it prescribe under COA Circular No. 2002-002 dated June
18, 2002 to make the system more responsive to the dynamic changes and modern technology.

In conformity with the International Accounting System, the COA, as member of the International
Organization of Supreme Audit Institutions (INTOSAI) is encouraged to adopt relevant international
accounting standards. In view of this, the Public Sector Accounting Standards Board (PSASB) was created under
COA Resolution No.2008-12 dated October 10, 2008 which was composed of professional bodies and the
academe. The Board is in charge with the formulation and implementation of Philippine Public Sector
Accounting Standards and establish linkages with international bodies. In formulating the standards, the PSASB
must consider and make use among others the existing laws, financial reporting, accounting rules and
regulations, and pronouncements issued by the International Public Sector Accounting Standards Board
(IPSASB).

Process and Other Considerations in Developing a Standard of PPSAS

1. Applicability of IPSAS
2. Exposure draft of PPSAS
3. Fundamental issues
4. Statutory authority
5. Disclosure requirements
6. PPSAS numbering
7. Financial reporting issues not dealt with by IPSAS
8. Submission of draft to PSASB for consideration of the COA
9. If considered appropriate, focus group discussion will be held to obtain further opinions on issued
identified by the exposure process.

The Shift to NGAS was made in Response to the following Need:

1. Adoption of an accounting system that is in conformity with International Accounting Standards.
2. Computerization of the accounting system to generate reports that will be easy to understand by the
general public.
3. Preparation of regular and routinary financial reports.
4. The use of the generated financial reports as tools of management in decision making.

Nature and Scope of Government Accounting

1. Safeguarding government resources against loss and wastage;
2. Adherence to the requirement of law and administrative policies and regulations;
3. Economy and efficiency in operation; and
4. Delivering the desired results of the government programs and activities.
Objectives of Government Accounting
1. To produce information about the past operation and present condition;
2. To provide a basis for guidance for future operations;
 3. To provide for control of the acts of public bodies and officers in the receipt, disposition and utilization
of funds and property; and
4. To report on the financial position and the results of operation of government agencies for the
information of all persons concerned.

The Government Accounting Manual (GAM) Adopted During Com Michael Aguinaldo

Legal Basis. The Government Accounting Manual (GAM) is prescribed by COA pursuant to Article IX-D, Section
2 par. (2) of the 1987 Constitution of the Republic of the Philippines which provides that:

“The Commission on Audit shall have exclusive authority, subject to the limitations in this Article, 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".

Coverage. This Manual presents the basic accounting policies and principles in accordance with the Philippine
Public Sector Accounting Standards (PPSAS) adopted thru COA Resolution No. 2014-003 dated January 24,
2014 and other pertinent laws, rules and regulations. It includes the Revised Chart of Accounts (RCA)
prescribed under COA Circular No. 2013-002 dated January 30, 2013, as amended; the accounting procedures,
books, registries, records, forms, reports, and financial statements; and illustrative accounting entries. It shall
be used by all National Government Agencies (NGAs) in the:
a. preparation of the general-purpose financial statements in accordance with the PPSAS and other
financial reports as may be required by laws, rules and regulations; and
b. reporting of budget, revenue and expenditure in accordance with laws, rules and regulations. Sec.
3. Objective of the Manual.

Objectives of Government Accounting Manual

The manual aims to update the following:
1. Standards, policies, guidelines, and procedures in accounting for government funds and property;
2. Coding structures and accounts;
3. Accounting books registries, records, forms, reports and financial statements.
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. (Sec. 109, Presidential Decree (P.D.) No. 1445)

Accounting Responsibilities

The government offices that are mandated to discharge the stated accounting responsibilities in consonance
with its commitment to the Filipino people are the Commission on Audit (COA), the Department of Budget and
Management (DBM), the Bureau of Treasury (BTr) and Government Agencies (GA).

1. Commission on Audit
It is composed of the chairman and two Commissioners to be known as Commission Proper. The
chairman acts as the presiding officer and the chief executive and is responsible for the general
administration of the commission. They could be removed from office through impeachment. The
chairman shall serve for seven years, the two commissioners for five and three years.
As mandated by the 1987 Constitution, the COA shall have the exclusive authority to: do audit and
examination, establish audit techniques, implement accounting rules and regulations that includes
disallowances on the use of government funds and properties.

2. Department of Budget and Management

Is the department responsible for the planning and implementation of the National Budget for the
sound utilization of government funds in achieving the national government’s agenda on reform and
growth.
 The DBM is tasked to monitor all government allotments and appropriations through maintenance of
registries for better control and monitoring.

3. Bureau of Treasury
The department is the keeper of national funds and disbursements. It is the lead agency in monitoring
transactions affecting the national government, agencies, and other instrumentalities. It maintains the
registry on the releases by the DBM, as well as the bank transfers between agencies.

4. Government Agencies
Includes government instrumentalities like bureaus, Congress, Judiciary, constitutional bodies and self-
contained institutions, among others, which are required to have an accounting division, which are of
equal level with that of other agencies that are tasked to do maintenance of accounts and submit
financial statements on a regular basis.

Responsibility, Accountability and Liability over Government Funds and Property

a. Responsibility over Government Funds and Property

1. It is the declared policy of the State that all resources of the government shall be managed,
expended or utilized in accordance with laws and regulations, and safeguarded against loss or
wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government. The responsibility to take care that such policy is
faithfully adhered to rests directly with the chief or head of the government agency concerned.
(Sec. 2, P.D. No. 1445).
2. 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. (Sec. 4(4), P.D. No.
1445).
3. 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. (Sec. 102, P.D. No. 1445).
b. Accountability over Government Funds and Property

1. 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. (Sec. 101, P.D. No.
1445; Section 50, Chapter 9, Subtitle B, Book V, Executive Order (E.O.) No. 292)

2. Transfer of government funds from one officer to another shall, except as allowed by law or
regulation, be made only upon prior direction or authorization of the Commission or its
representative. (Sec. 75, P.D. No. 1445)

3. When government funds or property are transferred from one AO to another, or from an outgoing
officer to his successor, it shall be done upon properly itemized invoice and receipt which shall
invariably support the clearance to be issued to the relieved or outgoing officer, subject to
regulations of the Commission. (Sec. 77, P.D. No. 1445)

c. Liability over Government Funds and Property

1. 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. (Sec. 103, P.D. No. 1445)

2. 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. (Sec. 105(2) P.D. No. 1445)

3. No AO shall be relieved from liability by reason of his having acted under the direction of a superior
officer in paying out, applying, or disposing of the funds or property with which he is chargeable,
 unless prior to that act, he notified the superior officer in writing of the illegality of the payment,
application, or disposition. The officer directing any illegal payment or disposition of the funds or
property shall be primarily liable for the loss, while the AO who fails to serve the required notice
shall be secondarily liable. (Sec. 106, P.D. No. 1445)

4. When a loss of government funds or property occurs while they are in transit or the loss is caused
by fire, theft, or other casualty or force majeure, the officer accountable therefor or having custody
thereof shall immediately notify the Commission or the auditor concerned and, within 30 days or
such longer period as the Commission or auditor may in the particular case allow, shall present his
application for relief, with the available supporting evidence. Whenever warranted by the
evidence, credit for the loss shall be allowed. An officer who fails to comply with this requirement
shall not be relieved of liability or allowed credit for any loss in the settlement of his accounts. (Sec.
73, P.D. No. 1445)

Basic Features of the New Government Accounting System (NGAS)

1. Accrual Accounting
Under this method, transactions and other events are recognized in the financial statements
when they occur and not when cash or its equivalent is received or paid. Therefore, the transactions
and events are recognized in the accounting records and recognized in the financial statements of the
periods to which they relate. The elements recognized under accrual accounting are assets, liabilities,
net assets/equity, revenue, and expenses. A modified accrual basis is used for transactions required by
law.

2. Fund Accounting
Uses Fund Clustering
01 – Regular Agency
02 – Foreign Assisted Project fund
03 –Special Account-Locally Funded Assisted/Domestic Grants Fund
04– Special Accounts-Foreign Assisted/Foreign Grants fund
05 – Internally Generated Fund – Retained Income Fund
06 – Business Related Fund/ Revolving Fund
07 – Trust Receipts
3. Chart of Accounts and Account Codes
List of account title to be used by NGAs, LGUs, GOCC and GFI A new coding structure and a new
chart of accounts with eight-digit account numbering system have been adopted.
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
4. Books of Accounts and Registries. The books of accounts and registries of the NG entities consist of:
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
5. Financial Statements
The FS shall present fairly the financial position, financial performance, statement of changes in
net assets/equity, statement of cash flows, statement of comparison of budget and actual amounts 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.

6. Two Money Column Trial Balance

7. Allotment and Obligation

Allotment - is the authorization issued by the DBM to the agency which allows it to incur obligations
for specified amounts within the legislative appropriation.

Obligations - are amount which are committed to be paid by the government which arises from acts of
a duly authorized administrative office and which binds the government to the immediate or eventual
payment of a sum of money.

The receipt of budgetary allotment from the DBM, as well as incurrence of obligation shall not be
recorded in the regular books of accounts. Instead, they shall be separately recorded in the Registry of
Allotment and Obligation (RAO). Separate registries shall be maintained for each of the four classes of
expenditures namely:

Registry of Allotment, Obligation and Disbursements - Personnel Services (RAOD-PS)

Registry of Allotment, Obligation and Disbursements - Maintenance and Other Operating
Expenses (RAOD-MOOE)
Registry of Allotment, Obligation and Disbursements-Financial expenses (RAOD-FE)
Registry of Allotment, Obligation and Disbursements - Capital Outlay (RAOD-CO)

8. Notice Cash Allocation (NCA)

NCA is an authorization issued by DBM to government agencies to withdraw cash from the National
Treasury through the issuance of Modified Disbursement System (MDS) checks or other authorize
mode of disbursement.
The receipt of NCA by the agency shall be recorded by a journal entry in the regular books of
accounts. This may be net of the amount of the taxes to be withheld by the agency

Cash-National Treasury-Modified Disbursement

Scheme (Regular) xxxxx
Subsidy from National Government (SNG) xxxxx

9. Financial Expenses
Financial expenses such as bank charges, interest expense, commitment fees, and other related
expenses shall be separately classified from maintenance and other operating expense (MOOE).

10. Method of Recording Supplies and Materials

Purchase of supplies and materials regardless of whether or not they are consumed within the
accounting period shall be recorded under Inventory account using perpetual method. Issuance
thereof shall be recorded based on the Report of Supplies and Materials Issued. Moving average
method of costing inventory shall be used. Purchase of supplies and materials using Petty Cash shall be
charged to appropriate expense account.

11. Maintenance of Supplies and Property, Plant and Equipment Ledger Cards
For appropriate check and balance, the accounting units of the agencies and the Property
Offices shall maintain Supplies Ledger Cards/Stock Cards by stock number, and Property, Plant and
Equipment Ledger Cards/Property Cards by category of property, plant and equipment respectively.
12. Construction in Progress Accounts
 For accounts under construction, construction period theory shall be applied for costing
purposes. Liability shall be recognized as bills as received, based on percentages of collection and/or
contract. Bonus is paid to contractor if project is finished ahead of time and shall be added to total cost
of the project. Liquidating damages shall be charged to contractor for not finishing the project on time
which shall be deducted from the total cost of the project. Related expenses incurred such as taxes,
interest, license fees, permit fees, clearance fee and the like shall be capitalized and those incurred
after the construction shall form part of operating expenses.

13. Registry of Public Infrastructures (RPI)

For agencies that construct public infrastructure, such as roads, bridges, plazas, monuments
and etc., a separate Registry of Public Infrastructure (RPI) shall be maintained for each category of
infrastructure.

Registry of Public Infrastructure – Bridges

- Roads
- Parks, Plazas, etc.

During construction, the above property shall be recorded in the regular books of the
concerned agency as Construction in Progress. However, upon completion, they shall be transferred to
the appropriate RPI and shall be recognized in the agency’s regular books of accounts, hence, subject
to depreciation.
14. Depreciation
The straight-line method of depreciation shall be used. Depreciation shall start on the second
month after the purchase of the property, plant and equipment and a residual value equivalent to 15%
of the purchase cost shall be set-up. The management has prerogative on the useful life of the PPE.
In case of leasehold improvements, it shall be depreciated over the period of the lease or the
life of the improvement whichever is shorter.
15. Reclassification Of Assets
Serviceable assets no longer used as well as obsolete and unserviceable assets awaiting
disposition shall be reclassified as Other Assets, hence, not subject to depreciation.
16. Recognition of Liabilities
Liabilities shall be recognized at the time goods and services are accepted or rendered and
supplier/creditor bills are received in accordance with the IAS.
17. Allowance for Impairment – Accounts Receivable
This is new accounts use to set up for estimated uncollectible trade accounts receivable to allow
fair presentation. The estimated uncollectible would be based on COA policies/standards. This is
debited if write-off is granted.

18. Interest Accrual

Whenever applicable and appropriate, interest income and/or expenses shall be accrued and
recognized in the books of accounts.

19. Prepayment of Expenses

Asset method are used for prepayments if used for more than one year otherwise expense method
is used.
20. Petty Cash Fund
Imprest system shall be used in maintaining Petty Cash Fund. As such, replenishment shall be
directly charge to appropriate expense account. It shall not be used to purchase regular inventory for
stock. Petty cash shall be equal to petty cash on hand plus unreplenished expenses.

21. Adjustment affecting Government Equity

Direct adjustment to Equity

22. Accounting for Donation

 with condition - recognized as Liability
 without condition - recognized as Revenue
  with restriction - recognized as Revenue
23. Accounting for Borrowings and Loans

Loans Payable – Long Term – Domestic is used to record long term indebtedness (cash or kind)
from domestic creditor evidence by a contract or an agreement
Loans Payable – Long Term – Foreign is used to record long term indebtedness (cash or kind)
from foreign government or international financial institutions evidence by a contract or an
agreement

24. Foreign Currency Adjustments

Cash deposit in foreign currency and outstanding foreign loans shall be computed at an
exchange rate prescribed by the Bangko Sentral ng Pilipinas (BSP) at the balance sheet. Total cash
deposits and foreign loans payable shall be adjusted at the end of each month and any gain or loss on
foreign exchange shall be recognized. The liability shall be expressed both in foreign and local
currency.
25. Elimination of Contingent Accounts
Contingent accounts shall no longer be used. All financial transactions shall be recorded using
appropriate accounts. Cash shortage and disallowances that becomes final and executory shall be
recorded under a receivable accounts “Due from Officers and Employees” and Receivables-
Disallowances Charge” as the case may be.
26. Corollary Entry/Negative Entry
Corollary/negative entry shall no longer be used in the new accounting system. Acquisition of
inventory, fixed assets and other assets shall be recognized as capital expenditures in the regular books
of accounts, negating the need for corollary journal entry.
Correction of erroneous entry shall not be effected by negative journal entry but by making the
necessary reversing or other adjusting entries, all in the positive amount.

OGAS NGAS
Acquisition:
Appropriation Allotted xx Fixed assets xx
Obligation Incurred xx Accounts Payable xx

Corollary Entry:
FA-Equipt-WA-BT xx
Invested Surplus-Purch xx
Payments:
Obligation Liquidated xx Accounts Payable xx
Cash-OtherBanks xx Cash-NT-MDS xx

Corollary Entry:
FA-Equipt-WA-BT-GPS xx
FA_Equipt-WA-BT xx

Negative Entry as Correcting Entry:

Entry Made:
Cash-Col. Officer xx
Cash-Col. Officer xx Income-Gov’t Service xx
Income-Gov’t Service xx
Reversing Entry:
Negative/Correcting Entry:
Income-Gov’t Service xx
Income-Gov’t Service (xx) Cash-Col. Officer xx
AR-Miscellaneous xx
 Correcting Entry:

Cash-Col. Officer xx
AR-Miscellaneous xx

Or if no reversing entry is made:

Income-Gov’t. Service xx
AR- Miscellaneous xx

Comparison Between NGAS and GAM

Particular NGAS GAM

1 Financial Statements Balance Sheet Statement of Financial Position
Statement of Income and Expenses Statement of Financial
Statement of Government Equity Performance
Cash Flow Statement Statement of changes in Net
Notes to Financial Statements Assets/Equity
Statement of Cash Flows
Statement of Comparison of
Budget and Actual Accounts
Notes to Financial Statements
2 Chart of Accounts COA Circular 2004-008, September COA Circular 2013-002, January 30,
20, 2004 3013;
COA Circular 2014-003, April 15,
2014
COA Circular 2015-007, October
22, 2015
3 Unified Account Code None Compliant
Structure (UACS)
4 Books Maintained Regular Agency Book By Fund Cluster
National Government Book
5 Estimated useful Lives of Prescribe by COA Management Prerogative
PPE
6 PPE Threshold None P15,000 and above
7 Inventory Costing Moving Weighted Average Method Moving Weighted Average Method
Specific Identification
8 Fund maintenance One Fund Concept Fund Clustering
01 – Regular Agency
02 – Foreign Assisted Project fund
03 –Special Account-Locally
Funded Assisted/Domestic
Grants Fund
04– Special Accounts-Foreign
Assisted/Foreign Grants fund
05 – Internally Generated Fund –
Retained Income Fund
06 – Business Related Fund/
Revolving Fund
07 – Trust Receipts
9 Cash Flows Direct method Direct method
 1 Completed Public Derecognized Recognized
0 Infrastructure
1 Statement of Financial
1 Position
 Assets
 Liabilities Without Distinction With Distinction (Current and Non-
Current)

1 Statement of Financial Form part of income Not part of revenue from current
2 Performance, Subsidies, operation
Transfer
1 Impairment of Loss None Recognized
3
1 Adjustment Affecting Uses prior year’s adjustment Direct Adjustment to Equity
4 Government Equity account
1 Income Collection Without Authority to Use – BTr
5 With Authority to Use - NGAs
1 Accounting for Donation
6  With conditionality
 Without Income
Conditionality Income Liability
 With Restriction Not Revenue
Revenue
1 Monitoring of None Section C of Obligation Request
7 Obligation/Payment and Status (ORS)
1 Residual Value 10% At least 15%
8
1 Maintenance of Registries RAOPS, RAOMO, RAOCO, RAO FE RAOD (PS, MO, CO, FE)
9 RBU RBUD (PS, MO, CO, FE)
RAPAL (COA only) RAPAL (COA< GAS and agencies)

Accounting for Budgetary Accounts

This section prescribes the guidelines in monitoring, accounting and reporting of the budget in the
financial statements. This also prescribes the records to be maintained by the national government agencies,
forms to be used and reports to be prepared to effectively monitor the budget as well as the required
information disclosure and presentation of budget information in the financial statements in accordance with
PPSAS 24.

Definition of Terms

1. Government Budget – is the financial plan of a government for a given period, usually for a fiscal year,
which shows what its resources are, and how they will be generated and used over the fiscal period. The
budget is the government's key instrument for promoting its socio-economic objectives. The government
budget also refers to the income, expenditures and sources of borrowings of the National Government
(NG) that are used to achieve national objectives, strategies and programs.

2. Budget Information – the budgetary information consists of, among others, data on appropriations or the
approved budget, allotments, obligations, revenues and other receipts, and disbursements.
3. Original Budget – is the initial approved budget for the budget period usually the General Appropriations
Act (GAA). The original budget may include residual appropriated amounts automatically carried over
from prior years by law such as prior year commitments or possible future liabilities based on a current
contractual.
4. Final Budget – is the original budget adjusted for all reserves, carry-over amounts, transfers, allocations
and other authorized legislative or similar authority changes applicable to the budget period.
5. Approved Budget – is the expenditure authority derived from appropriation laws, government
ordinances, and other decisions related to the anticipated revenue or receipts for the budgetary period.
The approved budget consists of the following:

UACS Code
New General Appropriations 01
Continuing Appropriations 02
Supplemental Appropriations 03
Automatic Appropriations 04
Unprogrammed Funds 05
Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08

6. Balance Budget – budget where proposed expenditures are equal to or less then the estimated revenue.
If the government is operating under budget deficiency, the government must increase its revenue and
trim down expenditures.
7. Appropriation – is the authorization made by a legislative body to allocate funds for purposes specified by
the legislative or similar authority.
8. New General Appropriations – are annual authorizations for incurring obligations during a specified budget year, as
listed in the GAA.
9. Automatic Appropriations – are the authorizations programmed annually or for some other period
prescribed by law, by virtue of outstanding legislation which does not require periodic action by Congress.
10. Continuing Appropriations – are the authorizations to support obligations for a specific purpose or
project, such as multi-year construction projects which require the incurrence of obligations even beyond
the budget year.
11. 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 (CAF) from the BTr.
12. 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. b. Appropriation – is the authorization made by a legislative body to allocate funds
for purposes specified by the legislative or similar authority
13. 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.
Budget Process

1. Budget Preparation
This starts with the Budget Call and ends with the President’s submission of the proposed
budget to Congress.
This involves the formulation of estimates of revenues and expenditures by the Executive
Departments and Agencies. In preparing the annual budget proposal, the said department makes an
estimation of government revenues. It then determines the budget priorities within available
revenues and borrowing limits. Finally, it translates these approved priorities into expenditures. The
main agency involved Development Budget Coordinating Committee (DBCC). The DBCC is an inter-
agency body composed of the DBM Secretary as Chairman and the Bangko Sentral Governor, the
Secretary of the Department of Finance, the Director General of the National Economic and
Development Authority and a representative of the Office of the President as members.

In the preparation of the budget, the DBCC approves the parameters, makes a budget call,
conducts budget hearings, makes a budget review then consolidates the budget. It then validates
and confirms the budget, which is finally approved by the President of the Philippines and his
Cabinet. The President thereby submits the budget to Congress for approval.
1. The Budget Call
At the beginning of the budget preparation year, the Department of Budget and Management
(DBM) issues the National Budget Call to all agencies (including state universities and colleges)
and a separate Corporate Budget Call to all GOCCs and GFIs.
The Budget Call contains budget parameters (including macroeconomic and fiscal targets and
agency budget ceilings) as set beforehand by the Development Budget Coordination Committee
(DBCC); and policy guidelines and procedures in the preparation and submission of agency
budget proposals.

Early Preparation
Under the Aquino Administration, the DBM has established a new tradition of beginning the
Budget Preparation phase earlier, to ensure that the National Budget is enacted on time. Under
the new Budget Preparation Calendar, the Budget Call is issued in December (versus around
April in the past); and the submission of the President’s budget a day after the State of the
Nation Address (in contrast to earlier practice where it is submitted during the late in the 30-
day window that the Constitution prescribes).
2. Stakeholder’s Engagement
A new feature in budget preparations which seeks to increase citizen participation in the
budget process, departments and agencies are tasked to partner with civil society organizations
(CSOs) and other citizen- stakeholders as they prepare their agency budget proposals. This new
process, which was piloted in the preparation of the 2012 National Budget, is now being
expanded towards institutionalization.
Bottom – Up Budgeting
For the first time in history, the National Budget for 2013 will be prepared using a breakthrough
“bottom-up” approach. As opposed to the conventional way of allocating resources from top to
bottom, grassroots communities will be engaged in designing the National Budget. The Aquino
government, through the Cabinet Cluster on Human Development and Poverty Reduction, has
identified 300 to 400 of the poorest municipalities and will engage these in crafting community-
level poverty reduction and empowerment plans. This initial salvo of “bottom-up” budgeting
will focus on rural development programs and the conditional cash transfer program, and will
thus involve DA, DAR, DENR, DSWD, DepEd and DoH. These agencies will then include the
community plans in their proposed budgets.

3. Technical Budget Hearing

These are conducted after departments and agencies submit their Agency Budget Proposals to
the DBM. Here, agencies defend their proposed budgets before a technical panel of DBM,
based on performance indicators on output targets and absorptive capacity. DBM bureaus then
review the agency proposals and prepare recommendations.
4. Executive Review
The recommendations are presented before an Executive Review Board which is composed of
the DBM Secretary and senior officials. Deliberations here entail a careful prioritization of
programs and corresponding support, vis-à-vis the priority agenda of the national government.
Implementation issues are also discussed and resolved.
5. Consolidation, Validation and Confirmation
 DBM then consolidates the recommended agency budgets and recommendations into a
National Expenditure Program and a Budget of Expenditures and Sources of Financing (BESF).
As part of the consolidating process, the deliberations by the DBCC will determine the agency
and sectoral allocation of the approved total expenditure ceiling, in line with the
macroeconomic and fiscal program. Heads of major departments are invited to this meeting.
6. Presentation to President and Cabinet
The proposed budget is presented by DBM, together with the DBCC, to the President and
Cabinet for further refinements or reprioritization. After the President and Cabinet approve
the proposed National Expenditure Plan, the DBM prepares and finalizes the budget
documents to be submitted to Congress.
7. The President’s Budget
The budget preparation phase ends with the submission of the proposed national budget —
the “President’s Budget” — to Congress. • The President’s Budget consists of the following
documents, which help legislators analyze the contents of the proposed budget:
• President’s Budget Message (PBM). This is where the President explains the policy
framework and priorities in the budget.

• Budget of Expenditures and Sources of Financing (BESF). Mandated by the

Constitution, this contains the macroeconomic assumptions, public sector context
(including overviews of LGU and GOCC financial positions), breakdown of the
expenditures and funding sources for the fiscal year and the two previous years.
• National Expenditure Program (NEP). This contains the details of spending for each
department and agency by program, activity or project, and is submitted in the form of a
proposed General Appropriations Act.
• Details of Selected Programs and Projects. This contains a more detailed
disaggregation of key programs, projects and activities in the NEP, especially those in line
with the national government’s development plan.
• Staffing Summary. This contains a summary of the staffing complement of each
department and agency, including number of positions and amounts allocated for the
same.
2. Budget (Legislative) Authorization
This starts upon the House Speaker’s receipt of the President’s Budget and ends with the President’s
enactment of the General Appropriations Act.
This pertains to the whole range of legislative action on the budget, leading to the enactment of a
General Appropriations Law for the year. In accordance with the requirements of the Constitution, the
President submits his/her proposed annual budget in the form of Budget of Expenditure and Sources of
Financing (BESF) supported by details of proposed expenditures in the form of a National Expenditure
Program (NEP) and the President's Budget Message which summarizes the budget policy thrust and
priorities for the year.

1. House Deliberation
The House of Representatives, in plenary, assigns the President’s Budget to the House
Appropriations Committee. The Committee and its Sub-Committees then schedule and conduct
hearings on the budgets of the departments and agencies and scrutinize their respective
programs and projects. It then crafts the General Appropriations Bill (GAB).
In plenary session, the GAB is sponsored, presented and defended by the Appropriations
Committee and Sub- Committee Chairmen. As in all other laws, the GAB is approved on Second
and Third Reading before transmission to the Senate. (Note: In the First Reading, the
President’s Budget is assigned to the Appropriations Committee).

2. Senate Deliberation
 As in the House process, the Senate conducts its own committee hearings and plenary
deliberations on the GAB. Budget deliberations in the Senate formally start after the House of
Representatives transmits the GAB. For expediency, however, the Senate Finance Committee
and Sub-Committees usually start hearings on the GAB even as House deliberations are on-
going.
The Committee submits its proposed amendments to the GAB to plenary only after it has been
formally transmitted by the House.
3. Bicameral Deliberations
Once both Houses of Congress have finished their deliberations, they will each constitute a
panel to the Bicameral Conference Committee. This committee will then discuss and harmonize
the conflicting provisions of the House and Senate Versions of the GAB. A Harmonized Version
of the GAB is thus produced.
4. Ratification and Enrolment
The Harmonized or “Bicam” Version is then submitted to both Houses, which will then vote to
ratify the final GAB for submission to the President. Once submitted to the President for his
approval, the GAB is considered enrolled.
5. The Veto Message

The President and DBM then review the GAB and prepare a Veto Message, where budget items
subjected to direct veto or conditional implementation are identified, and where general
observations are made. Under the Constitution, the GAB is the only legislative measure where
the President can impose a line-veto (in all other cases, a law is either approved or vetoed in
full).
6. Enactment
When budget is approved, the President will signed the GAA. This will be the basis for the use
of funds necessary for the implementation of government programs, projects and activities.
7. Re-enacted Budget
When the GAA is not enacted before the fiscal year starts, the previous year’s GAA is
automatically re-enacted. This means that agency budgets for programs, activities and projects
remain the same. • Funding for programs or projects that have already been terminated is
realigned for other expenditures. Because re-enactments are tedious and prone to abuse, the
Aquino Administration—with the support of Congress— has committed to ensure the timely
enactment of a new GAA every year.
3. Budget Execution
This is where the people’s money is actually spent. As soon as the GAA is enacted, the government
can implement its priority programs and projects.
Budget execution starts with the release of funds to the agencies. To accelerate the implementation
of government programs and projects and ensure the judicious use of budgeted government funds,
the government adopted the Simplified Fund Release System (SFRS) beginning 1995. In contrast to
the previous system of releasing funds based on individual agency requests, the SFRS is a policy-
driven system which standardized the release of funds across agencies which are similarly situated in
line with specific policy initiatives of the government.
a. Release Guidelines and Program
The budget execution phase begins with DBM’s issuance of guidelines on the release and
utilization of funds.
b. Budget Execution Documents (BEDs)
Agencies are required to submit their BEDs at the start of budget execution. These documents
outline agency plans and performance targets. These BEDs include the physical and financial
plan, monthly cash program, estimate of monthly income, and list of obligations that are not
yet due and demandable.
c. Allotment and Cash Release Programming
To ensure that releases fit the approved Fiscal Program, the DBM prepares an Allotment
Release Program (ARP) to set a limit for allotments issued to an agency and on the aggregate.
 The ARP of each agency corresponds to the total amount of the agency- specific budget
under the GAA, as well as Automatic Appropriations.
 A Cash Release Program (CRP) is also formulated alongside that to set a guide for
disbursement levels for the year and for every month.
d. Allotment Release
Allotments, which authorize an agency to enter into an obligation, are either released by DBM
to all agencies comprehensively through the Agency Budget Matrix (ABM) and individually via
Special Allotment Release Orders (SAROs).
Agency Budget Matrix (ABM)  This document disaggregates all programmed appropriations
for each agency into two main expenditure categories: “not needing clearance” and “needing
clearance.”
The ABM is the comprehensive allotment release document for appropriations which do not
need clearance, or those which have already been itemized and fleshed out in the GAA.

Allotment Release Orders (AROs)  Items identified as “needing clearance” are those which
require the approval of the DBM or the President, as the case may be (for instance, lump sum
funds and confidential and intelligence funds).  For such items, an agency needs to submit a
Special Budget Request to the DBM with supporting documents. Once approved, a SARO is
issued.
e. Incurring Obligations
In implementing programs, activities and projects, agencies incur liabilities on behalf of the
government. Obligations are liabilities legally incurred, which the government will pay for.
There are various ways that an agency “obligates:” for example, when it hires staff (an
obligation to pay salaries), receives billings for the use of utilities, or enters into a contract with
an entity for the supply of goods or services.
f. GAA as Allotment Release
The Aquino Administration plans to design the annual General Appropriations Act as the
comprehensive allotment release document itself. This is being pursued in order to significantly
speed-up the process of releasing the Budget and implementing the programs and projects that
it funds.

The 2013 National Budget, currently being prepared, is being designed in such way. This entails
the disaggregation of all budget items into full detail, as well as the elimination of all lump-sum
funds, save for a few exceptions such as the Calamity Fund. In other words, this reform
significantly reduces the need for SAROs.
g. Cash Allocation
To authorize an agency to pay the obligations it incurs, DBM issues a disbursement authority.
 Most of the time, it takes the form of a Notice of Cash Allocation (NCA); and in special
cases, the Non-Cash Availment Authority (NCAA) and Cash Disbursement Ceiling (CDC).
Notice of Cash Allocation (NCA)  This is a cash authority issued periodically by the DBM to the
operating units of agencies to cover their cash requirements.  The NCA specifies the maximum
amount of cash that can be withdrawn from a government servicing bank for the period
indicated.  The release of NCAs by DBM is based on an agency’s submission of its Monthly
Cash Program and other required documents.
Others Disbursement Authorities  In contrast to NCAs, Non-Cash Availment Authority
(NCAA) are issued to authorize non- cash disbursements. Cash Disbursement Ceiling (CDC) is
 meanwhile issued to departments with overseas operations, allowing them to use income
collected by their foreign posts for their operating requirements.
h. Disbursement
This is the final step of the budget execution phase, where government monies are actually
spent. The Modified Disbursement Scheme is mostly used, where disbursements of national
government agencies chargeable against the Treasury are made through government servicing
banks, such as the Land Bank of the Philippines.

The budget process, of course, does not end when government agencies spend public funds:
each and every peso must be accounted for to ensure that is used properly, contributing to the
achievement of socio-economic goals.
4. Budget Accountability
This phase happens alongside the Budget Execution phase. Through Budget Accountability, the DBM
monitors the efficiency of fund utilization, assesses agency performance and provides a vital basis for
reforms and new policies.
 What are Performance Targets and Outcomes?
 What are Budget Accountability Reports (BARs)?
 What does No Report, No Release mean?
 What does Review of Agency Performance mean?
 What is an Audit?
 What is the Performance-Based Incentive System?
This involved the reporting of actual performance against plans or targets. This is done
alongside Budget Execution.
a. Performance Targets and Outcomes
Agencies are held accountable not only for how these use public funds ethically, but also on
how these attain performance targets and outcomes using available resources. These
performance measures are set alongside the preparation of the National Budget; and these are
indicated in the Organization Performance Indicator Framework (OPIF) Book of Outputs. Prior
to the execution of the enacted National Budget, these performance targets are firmed up
during the preparation of BEDs.
b. Budget Accountability Reports (BARs)
Submitted by agencies on a monthly and quarterly basis, BARs are required reports that show
how agencies used their funds and identify their corresponding physical accomplishments.
These include quarterly physical and financial reports of operations; quarterly income reports, a
monthly statement of allotments, obligations and balances; and monthly report of
disbursements.
c. No Report, No Release
Starting 2012, the DBM will be withholding certain fund releases to agencies if these fail to
submit their Budget Accountability Reports. In particular, these will be funds from the
Miscellaneous Personnel Benefits Fund (MPBF) for compensation adjustments under the Salary
Standardization Law, provisions for unfilled positions and employee clothing allowances.

These funds to be withheld are only limited to agencies’ MPBF allotments so that only the
agencies are penalized and that the implementation of critical programs and projects will not
be disrupted. Errant and compliant agencies will also be posted online for public scrutiny.
d. Review of Agency Performance
The DBM regularly reviews the financial and physical performance of agencies. Actual utilization
of funds and physical accomplishments, as indicated in the agencies’ BARs, are evaluated
against their targets as identified via OPIF and in the agencies’ BEDs. Agency Performance
Reviews (APRs) are conducted quarterly or every semester, as the case may be. An annual
 Budget Performance Assessment Review (BPAR) is conducted to determine each agency’s
accomplishments and performance by the year-end. The DBM regularly reports results to the
President.
e. Audit
Auditing is not within the DBM’s jurisdiction, and is instead lodged under the Commission on
Audit (COA). Nonetheless, auditing is critical in ensuring agency accountability in the use of
public funds. The DBM uses COA’s audit reports in confirming agency performance, determining
budgetary levels for agencies and addressing issues in fund usage.
f. Performance-Based Incentive System

The Department of Budget and Management (DBM) is also in the process of establishing a
performance-based incentive system — which will recognize and reward good performance
among government employees — to help improve the efficiency of service delivery across all
government institutions.
Kinds of Budget

1. As to Nature
 Annual Budget - budget which covers a period of one year. It is the basis of an annual
appropriation.
 Supplemental Budget - budget which supplement or adjust previous budget which is deemed
inadequate for the purpose it is intended. It is the basis for supplemental appropriation.
2. As to Basis
 Performance Budget - budget emphasizing the program or services conducted and based on
functions, activities, and projects which focus attention upon the general character and nature
of work to be done or upon services to be rendered.
 Line - Item Budget - budget the basis of which are the object of expenditures such as salaries
and wages, traveling expenses, freight, supplies and materials, equipment etc.
 Special Budget - budget of special nature and generally submitted in special forms on account
that itemizations are not adequately provided in Appropriation Act or the amounts are not at all
included in the Appropriation Act.
3. As to Approach and Techniques
 Zero-Based Budgeting - a process which requires systematic consideration of all programs,
projects and activities with the used of define ranking procedure.
 Incremental approach - budget where only additional requirements need justifications. It
focuses analysis of incremental changes in the budget and maybe done within the context of
performance and program budgeting.
Kinds of Appropriation
1. Annual Appropriation – is an appropriation available for incurring obligations only for specified fiscal
year or for one year appropriation.
2. Automatic Appropriations – are the authorizations programmed annually or for some other period
prescribed by law, by virtue of outstanding legislation which does not require periodic action by
Congress.
3. Continuing Appropriations – are the authorizations to support obligations for a specific purpose or
project, such as multi-year construction projects which require the incurrence of obligations even
beyond the budget year.
4. 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 (CAF) from the BTr.
5. Standing Appropriation – is an appropriation made annually or for some other period prescribed by
law, by virtue of standing legislation, which does not requires periodic action by legislative body
sometimes called automatic appropriation.
6. Special Appropriation – is an appropriation for a particular purpose which has not been included in the
annual appropriation act on account of lack of material time, or on account of its importance the
legislative body and the President deem it wise to consider it separately or independently.
 7. Contingent Appropriation – is an appropriation to supplement appropriation or meet emergency
expenditures.

Accounting System (General Accounting Plan)

The GAP shows the over-all accounting system of a government agency/unit. This includes source
documents, the flow of transactions and its accumulation in the books of accounts and the conversion of this
financial information into financial reports. The following are the accounting system:

 Budgetary Account System (Appropriation, Allotment and Obligation)

 Receipts/Income and Deposit System
 Disbursement System
 Financial Reporting System
Accounting for Appropriation, Allotment, and Obligation

Pursuant to Section 29 (1), article IV of the 1998 constitution, “No public money shall be paid out of the
treasury except in pursuance of an appropriation by law”. Paragraph 2 of the same section state “No public
money or property shall be appropriated, applied, paid, or employed directly or indirectly for the use, benefit,
or support of any sect, church, denomination, sect6arian institution, or system of religion, or any priest,
preacher, minister, or other religious teacher, or dignitary as such, except when such priest, preacher, minister
or dignitary is assigned to the armed forces, ,or to any penal institution or government orphanage or
leprosarium”.

Basic Government Accounting and Budget Reporting Principles.

Each entity shall recognize and present its financial transactions and operations conformably to the following:

1. Generally accepted government accounting principles in accordance with the PPSAS and pertinent
laws, rules and regulations;
2. Accrual basis of accounting in accordance with the PPSAS;
3. Budget basis for presentation of budget information in the financial statements (FSs) in accordance
with PPSAS 24;
 PPSA 24 Presentation of Budget Information in Financial Statement
 PPSAS 24 requires:
o Presentation of budget information in the financial statements when the
reporting entity is publicly accountable for its budget.
o Disclosure of an explanation of the reasons for the material differences
between the budget and actual amounts.
To ensure that the public sector entities discharge their accountability obligation and enhance
transparency of their financial statements

4. RCA prescribed by COA; e. double entry bookkeeping;

5. Financial statements based on accounting and budgetary records; and
6. 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,
pursuant to Section 2, par. (1), Article IX-D of the 1987 Philippine Constitution.

Registries/Books Maintained By DBM

1. Registry of Appropriation and Allotments (RAPAL) use for general appropriation
2. Registry for Special Purpose Fund Appropriation (RESPFA) use for special purpose funds
3. Registry of Allotments and Notice of Cash Allocations (RANCA) for control and monitoring of NCA
releases.

Registries/Books Maintained by BTr

 1. Registry of Notice of Cash Allocations and Replenishment (RENREP) use for monitoring bank transfer
it makes in replenishing its MDS checks issued by the agencies.

Registries Use by the Budget Division

1. Registries of Revenue and Other Receipts. Monitors the revenue and other receipts
estimated/budgeted, collected and remitted/deposited.

 Regular Agency and Foreign Assisted Projects Fund

 Special Account Locally Funded/Domestic Grants Fund and Special Account Foreign
Assisted/Foreign Grants Fund
 Trust Receipts/Inter-Agency Transferred Funds
2. Registries of Allotments, Obligations and Disbursements. Records allotment, obligations and
disbursements. It shall show allotments received for the year, obligation incurred against the
corresponding allotment and the actual disbursement made.
 Registries of Allotments, Obligations and Disbursements-Personnel Services (RAOD – PS).
Records the allotment received, obligation incurred and disbursement classified under PS
 Registries of Allotments, Obligations and Disbursements-Maintenance and Other Operating
Expenses (RAOD – MOOE). Records the allotment received, obligation incurred and
disbursement classified under MOOE
 Registries of Allotments, Obligations and Disbursements-Financial Expenses (RAOD – FE).
Records the allotment received, obligation incurred and disbursement classified under FE
 Registries of Allotments, Obligations and Disbursements-Capital Outlay (RAOD – CO). Records
the allotment received, obligation incurred and disbursement classified under CO
3. Registry of Appropriations and Allotments
 Ensure that allotment releases are within the authorized appropriation. Separate registry shall
be maintained for prior year’s appropriations.
4. Registries of Budget, Utilization and Disbursements (RBUD). Used to record approved special budget
and the corresponding utilization and disbursement charged to retained income authorized under RA
8292 for SUCs and other retained income collection of a national government agency with similar
authority, Revolving Funds and Trust Receipts/Custodial Funds.
 Registries of Budget, Utilization and Disbursements-Personnel Services (PBUD-PS). Used to
record the budget utilization and disbursement classified under PS.
 Registries of Budget, Utilization and Disbursements-Personnel Services (RBUD – MOOE). Used
to record the budget utilization and disbursement classified under MOOE.
 Registries of Budget, Utilization and Disbursements-Financial Expenses (RBUD – FE). Used to
record the budget utilization and disbursement classified under FE.
 Registries of Budget, Utilization and Disbursements-Personnel Services (RBUD – CO). Used to
record the budget utilization and disbursement classified under CO.
5. Obligation Request Status (ORS). The incurrence of obligation shall be made through the issuance of
ORS. This is prepared by the Requesting/Originating office supported by valid claim documents like
Disbursement Vouchers (DVs), payrolls, purchase/job orders, itinerary of travers and etc.
Illustration
Upon approval and issuance of ABM and SARO, the DBM released the following to University of
Benguet including the Notice of Cash Allocation for the current year. (Shown also is the obligation incurred by
the University)

Total Releases Obligation

General Appropriation Appropriation Incurred
Allotment NCA
Personal Services (PS) 144,000,000 30,000,000 25,000,000 24,850,000
Maintenance and Other Operating
Expenses (MOOE) 28,000,000 6,000,000 5,500,000 5,600,000
 Capital Outlay (CO) 240,000,000 50,000,000 45,000,000 44,000,000
Financial Expenses 100,000 24,000 10,000 -
Special Appropriation
Capital Outlay 5,000,000 1,200,000 1,000,000 1,000,000

Records of DBM
Department of Budget and Management
Registry of Appropriation and Allotment (RAPAL)
University of Benguet
Capital Outlay MOOE Financial Expenses Personal Services
Da R Allotm Appropria Allotm Appropria Allotm Appropria Allotm Appropria
te ef ent tion ent tion ent tion ent tion
(Balance) (Balance)
240,000,000 28,000,000 100,000 144,000,000

50,000,00 190,000,000 6,000,000 22,000,000 24,000 76,000 30,000,00 114,000,000

0 0

Department of Budget and Management

Registry of Special Purpose Fund Appropriation (RESPFA)

Date Agency Capital MOOE Personal Financial Total Balance

Outlay Services Expenses
University of 1,200,000 1,200,000 3,800,000
Benguet

Department of Budget and Management

Registry of Allotment and NCA (RANCA)
University of the Benguet
A L L O T M E N T
Date Ref Capital MOOE Personal Financial Total NCA Unfunded
Outlay Services Expenses Allotment
50,000,000 6,000,000 30,000,000 24,000 82,024,000 76,510,000 5,514,000

Records of the BTr

Bureau of Treasury
Registry of NCA and Replenishment (RENREP)
University of Benguet
Date Ref NCA Replenishment Balance
76,510,000 76,510,000 -
Records of the University of the Benguet Budget Office
University of Benguet
Registry of Allotment, Obligations and Disbursement
Personal Services (RAOD-PS)
Sheet No._____
Date Ref PPA Account Code Allotment Received Obligation Incurred Balance
30,000,000 30,000,000
24,850,000 150,000

University of Benguet
Registry of Allotment, Obligations and Disbursement
Maintenance and Other Operating Expenses (RAOD-MOOE)
Sheet No._____
Date Ref PPA Account Code Allotment Received Obligation Incurred Balance
6,000,000 6,000,000
5,600,000 400,000

University of Benguet
Registry of Allotment, Obligations and Disbursement
Capital Outlay (RAOD-CO)
Sheet No._____
Date Ref PPA Account Code Allotment Received Obligation Incurred Balance
51,200,000 51,200,000
45,000,000 6,200,000

University of the Benguet

Registry of Allotment, Obligations and Disbursement
Financial Expenses (RAOD-FE)
Sheet No._____
Date Ref PPA Account Code Allotment Received Obligation Incurred Balance
24,000 24 ,000

Fund Release Documents.

With the adoption of the UACS and the Performance-Informed Budgeting (PIB), the following are the fund
release documents:
1. Obligational Authority or Allotment – the following are the documents which authorize the entity to
incur obligations:
1.1 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).
1.2 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.
 1.3. 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. It covers automatically appropriated
expenditures common to most, if not all, agencies without need of special clearance or approval
from competent authority, i.e. Retirement and Life Insurance Premium.
2. Disbursement Authority – the following documents authorize the entity to pay obligations and
payables:
2.1 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;

2.2 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;
2.3 Cash Disbursement Ceiling (CDC) – authority issued by DBM to the Department of Foreign Affairs
(DFA) and Department of Labor and Employment (DOLE) 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
2.4 Notice of Transfer of Allocation – authority issued by the Central Office to its regional and
operating units to cover the latter’s cash requirements

The Revised Chart of Account

The Government Auditing Code of the Philippines provides that the recording of financial transactions and operations
shall be in conformity with the GAAP. It also directs the COA to prescribe a chart of accounts that will permit a simpler
and more orderly process of national consideration to enable the public officers to review their activities according to
selected areas of responsibility and accountability.

The Chart of Accounts provides a framework within which the accounting records are constructed.

The Unified Accounts Code Structure or UACS is a government-wide harmonized budgetary, treasury and accounting
code classification framework jointly developed by the Department of Budget and Management (DBM), the Commission
on Audit (COA), the Department of Finance (DOF) and the Bureau of the Treasury (BTr) to facilitate reporting of all
financial transactions of agencies including those for revenue generation.

As a coding framework for financial transactions, the UACS ensures that all processes, from budgeting and cash
management to accounting and audit will follow a single classification system or common language. The new codes will
make it easier to collect, aggregate, consolidate and report financial transactions across government.

The UACS is the heart of the Government Integrated Financial Management Information System or GIFMIS that
will collect and organize financial information in a central database to support budget preparation, management,
execution and financial reporting or accounting and audit in a timely, accurate and efficient manner.

More popularly known as FOLMO, the 5 key elements of the UACS with specified number of digits are the
following: Funding Source (8), Organization (12), Location (9), Major Final Output/Program, Activity and Project (15),
and Object (10). Each element is composed of segments. All in all, the UACS has 54 digits.

Responsibilities of the Oversight Agencies in the Adoption of UACS

 DBM – validation and assignment of new codes for funding source, organization, sub-object codes for
expenditure items
 COA – consistency of account classification and coding structure with the RCA
 DOF-BTr – consistency of account classification and coding standards with
 the Government Finance Statistics
 DBM and Proponent Agency – validation and assignment of new Program, Activity, Project codes

All heads of department/agencies and chiefs of financial and management services shall ensure the proper adoption of
all account’s classification and coding in the UACS manual.
Objectives
3. To provide new accounts for the adoption of} the Philippine Public Sector Accounting Standards
(harmonized with IPSAS)
4. To provide uniform accounts for national} government accounting and budget systems to facilitate the
preparation of harmonized financial and budgetary accountability reports
5. To expand the account code from three (3) digits in the NGAS Chart of Accounts to eight (8) digits, to
allow expansion or creation of new accounts as may be necessary to implement new standards or
policies and provide up to four levels of consolidation depending on the users’ information needs.
Major Changes

1. Coverage is limited only to all national government agencies and GOCCs receiving funds constituted as Special
Accounts in the General Fund (SAGF) from the National Government

2. Expanded account code structure - from three (3) digits to eight (8) digits

Codes are assigned to account groups to facilitate location of accounts in the general and subsidiary ledgers, to provide
systematic arrangement and classification of accounts and facilitate preparation of the consolidated financial reports as
follows:

Code Account Groups

1 Assets
2 Liabilities
3 Equity
4 Income
5 Expenses

COA Revised Chart of Accounts (Account Code Structure)

0 00 00 00 0

Account Group

Major Account Group

Sub-Major Account Group

General Ledger Accounts

General Ledger Contra-Account

Account Groups - represents the account classification as to Assets, Liabilities, Equity, Income and Expenses

Major Account Group – represents classification within the account group

Major Assets Accounts (Cash and Cash Equivalent, Investments, Receivables, Inventories, and Investment
Property)

Major Liabilities Accounts (Financial Liabilities, Inter-Agency Payables, Intra-Agency Payables, Trust Liabilities,
Deferred/Unearned Income, Provision, and Other Payables)

Major Equity Accounts (Government Equity, Revaluation Surplus, Intermediate Accounts, and Equity in Joint
Venture)

Major Income Account (Tax Revenue, Service and Business Income, Assistance and Subsidy, Shares, Grants and
Donation, Gains, and Other Non-Operating Income)
 Major Expenses Accounts (Personnel Services, Maintenance and Other Operating Expenses, Financial Expenses,
Direct Cost and Non-Cash Expenses)

Sub-Major Account Group represents classification within the major accounts (Cash and Cash Equivalent: Cash on Hand,
Cash in Bank-Local Currency, Cash in Bank-Foreign Currency etc.)

General Ledger Account represents the account to be presented in the detailed financial statements (Cash-Collecting
Officer, Petty Cash and etc.). The first two digit from the left is the general ledger code and the last digit is for the contra-
account.

Intermediate Accounts – are closed to Government Equity account at the end of the accounting period. This includes
Income and Expense Summary.

Asset Without Contra Account

Example: Cash-Collecting Officer

1 01 01 01 0

Asset

Cash and Cash Equivalents

Cash on Hand

Cash Collecting Officer

GL Contra-Account

Assets with Contra Account

Example: Accounts Receivable

1 03 01 01 1

Asset

Receivable

Loans and Receivable Accounts

Accounts Receivable

Allowance for Impairment - AR