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Chapter 2
No money shall be paid out of the

Treasury except in pursuance of
an appropriation by law
Simply means that no public fund may be spent if there is no law
authorizing the payment of money and specifying the purpose for
which the same will be spent
Accounting for budgetary accounts formally commences upon

enactment of the General Appropriation Act (GAA), which contains
the legal authorization to use public money for the various
programs, activities and projects of the national government
The approved appropriations are the bases of the DBM for issuing
allotments or the authority of government agencies to incur
obligations or enter commitments to spend government funds
 The level of allotments defines the amount of cash allocations

which shall be released by the DBM
1. Budgetary Accounts System
2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System
A plan for financing the government activities for a fiscal
year prepared and submitted by responsible executive
to a representative body whose approval and
authorization are necessary before the plan can be
executed
As to Nature
a. Annual Budget – covers a period of one year and the basis of an
annual appropriation
b. Supplemental Budget – adjust a previous budget which is
deemed inadequate for the purpose it is intended. Basis for a
supplemental appropriation.
c. Special Budget – a budget of special nature and generally
submitted in special forms on account that itemizations are not
adequately provided in the Appropriation Act
As to Basis
a. Performance Budget – emphasizes the programs 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 the services to be rendered.
b. Line-item Budget – basis of which are the objects of
expenditures such as: salaries and wages, traveling expenses,
freight, supplies and materials
As to Approach and Technique
a. Zero-based Budgeting – a process which requires systematic
consideration of all programs, projects and activities with the
use of define ranking procedures. Activities are analyzed and
presented in “decision packages” or key budgetary inclusions
b. Incremental Approach – a budget where only additional
requirements need justifications. It focuses analysis on
incremental changes in the budget and maybe done within the
context of performance and program budgeting
1. Budget Preparation
2. Legislative Authorization ( Budget Legislation)
3. Budget Execution and Operation
4. Budget Accountability
✓Covers estimation of government revenues, the determination of budgetary
priorities and activities within constraints imposed by available revenues
and borrowing limits, and the translation of approved priorities and
activities into expenditure levels.
❖ Estimates are prepared by various government agencies , reviewed and finalized by the President
and then submitted to the Legislative Department as basis for the preparation of Annual
Appropriation Act
✓Begins with the issuance of “Budget Call” by the DBM. This document outlines the
priority areas of government activity applicable to the budget year.
✓DBM summarized the proposals, which are submitted to the President of the
Philippines before finalization and submission to Congress
➢ Second phase of budget process relative to the enactment of the General Appropriations Bills
based on the budget of receipts and expenditures submitted by the President of the Philippines
within 30 days from the opening of its regular session, as the basis of general appropriations
bill.
➢ Appropriations are approved by the legislative bodyin the form of:
1. A General Appropriation Law - covers most of the expenditures of government
2. Supplemental Appropriations Laws – passed from time to time, to augment or correct an already
existing appropriation
3. Certain automatic appropriations intended for fixed and specific purposes
✓ Covers the various operational aspects of budgeting, thus making budgeting as one of the
principal tools of management control to ensure that public funds are spent only for the specific
purpose for which they are intended.
✓ Serve as the medium through which plans for operation can be implemented using available
resources and funds
✓ Comprised ,among others, the following:
❑ Establishment of authority ceilings on obligations
❑ Evaluation of work and financial plans for individual activities
❑ Continuing review of government fiscal operation
❑ Regulation of fund releases
❑ Implementation of cash payment schedules
❑ Other related activities such as updating of planning and scheduling of activities
❖ The responsibility for monitoring budget execution and operation rest primarily with
the DBM and secondarily with the National Treasury
✓ Is concerned with the release of funds in the
form of allotments and corresponding cash
allocation, the continuing review of the budget
program in the light of revenue and borrowings,
prevailing economic conditions, as well as, the
review of proposed uses of agency savings and
other related activities
Consist of the following:
1. Periodic reporting by the government agencies of performances under their
approved budget
2. Top management review of government activities and the fiscal policy
implementations
3. The actions of COA in assuring the fidelity of officials and employees by
carrying out the intent of the legislative regarding the handling of receipts
and expenditures.
1. Appropriation
➢ an authorization made by law or other legislative enactment, directing
payment of goods and services out of government funds under specific
conditions or for special purpose
2. Allotment
➢An authorization issued by DBM to the government agency, which
allows it to incur obligations, for specific amounts, within the
legislative appropriation
3. Obligation
➢A commitment by a government agency arising from an act of duly
authorized official which binds the government to the immediate or
eventual payment of a sum of money.
The Department of Budget and Management, upon approval and issuance of
the General Appropriations and the Special Purpose Fund, released the
following for Agency X including Notice of Cash Allocation
Total Released
General Appropriation
Appropriation Allotments NCA
Personnel Services (PS) 200,000.00 50,000.00 30,000.00
Maintenance & Operating Expenses
(MOOE) 280,000.00 70,000.00 40,000.00
Capital Outlay 400,000.00 100,000.00 80,000.00
Financial Expenses (FE) 8,000.00 2,000.00 1,000.00
Special Purpose Fund

Capital Outlay 80,000.00 20,000.00 15,000.00
Appropriations are to be controlled and monitored by the Department of
Budget and Management through the registries it maintains such as
❑Registry of Appropriations and Allotments (RAPAL) – for the general
appropriation
❑Registry of Special Purpose Fund Appropriation (RESPFA) – a special
purpose funds
❑Registry of Allotments and Notice of Cash Allocation (RANCA) – for
control and monitoring of NCA releases
dbm format
❑Form and Contents of National Budget
❑Fundamental Principles of Fiscal Operations
❑Balanced Budget
❑Performance-Informed Budgeting
❑General Appropriation Act of 2014
❑Reporting Requirements

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Chapter 2

No money shall be paid out of the

Accounting for budgetary accounts formally commences upon

 The level of allotments defines the amount of cash allocations

Special Purpose Fund

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