Chapter 1: Introduction and regulations.

It includes the Revised

Chart of Accounts (RCA) prescribed
under COA Circular No. 2013-002 dated
Recent developments brought
January 30, 2013, as amended; the
about by the Philippine Public Financial
accounting procedures, books,
Management Reforms and significant
registries, records, forms, reports, and
changes in the field of accounting
financial statements; and illustrative
prompted the harmonization of the
accounting entries. It shall be used by all
existing accounting standards with the
National Government Agencies (NGAs)
international accounting standards. This in the:
Commission revised the New
Government Accounting System a. preparation of the general
(NGAS) Manual prescribed under purpose financial statements in
Commission on Audit (COA) Circular No. accordance with the PPSAS and other
2002-002 dated June 18, 2002 to make financial reports as may be required by
it responsive to dynamic changes and laws, rules and regulations; and
modern technology.
b. reporting of budget, revenue
Sec. 1. Legal Basis. The and expenditure in accordance with
Government Accounting Manual (GAM) laws, rules and regulations.
is prescribed by COA pursuant to Article
_______________________________
IX-D, Section 2 par. (2) of the 1987
Constitution of the Republic of the Sec. 3. Objective of the
Philippines which provides that: Manual. The Manual aims to update the
following:
“The Commission on Audit shall
have exclusive authority, subject to the a. standards, policies, guidelines
limitations in this Article, to define the and procedures in accounting for
scope of its audit and examination, government funds and property;
establish the techniques and methods
required therefor, and promulgate b. coding structure and accounts;
accounting and auditing rules and and
regulations, including those for the c. accounting books, registries,
prevention and disallowance of irregular, records, forms, reports and financial
unnecessary, excessive, extravagant, or statements.
unconscionable expenditures, or uses of
government funds and properties". _______________________________
(Underscoring supplied)
Chapter 2 GENERAL PROVISIONS,
_______________________________ BASIC STANDARDS AND POLICIES

Sec. 2. Coverage. This Manual

presents the basic accounting policies
Sec. 1. Scope. This chapter
and principles in accordance with the
covers the general provisions from
Philippine Public Sector Accounting
existing laws, rules and regulations; and
Standards (PPSAS) adopted thru COA
the basic standards/fundamental
Resolution No. 2014-003 dated January
accounting principles for financial
24, 2014 and other pertinent laws, rules
reporting by national government 2. can be sold, exchanged, transferred,
agencies. or redeemed.
_______________________________
Sec. 2. Definition of Terms. For d. Distributions to owners – means
the purpose of this Manual, the terms future economic benefits or service
used as stated below shall be construed potential distributed by the entity to all or
to mean as follows: some of its owners, either as a return on
investment or as a return of investment.
a. Accrual basis – means a basis of
accounting under which transactions e. Entity – refers to a government
and other events are recognized when agency, department or operating/field
they occur (and not only when cash or its unit. It may be referred to in this GAM as
equivalent is received or paid). an agency.
Therefore, the transactions and events
f. Expenses – are decreases in
are recognized in the accounting records
economic benefits or service potential
and recognized in the financial
during the reporting period in the form of
statements of the periods to which they
outflows or consumption of assets or
relate. The elements recognized under
incurrence ofliabilities that result in
accrual accounting are assets, liabilities,
decreases in net assets/equity, other
net assets/equity, revenue, and
expenses. than those relating to distributions to
owners.
b. Assets – are resources controlled by
g. Government Accounting –
an entity as a result of past events, and
encompasses the processes of
from which future economic benefits or
analyzing, recording, classifying,
service potential are expected to flow to
the entity. summarizing and communicating all
transactions involving the receipt and
c. Contributions from owners – means disposition of government funds and
future economic benefits or service property, and interpreting the results
potential that have been contributed to thereof. (Sec. 109, Presidential Decree
the entity by parties external to the entity, (P.D.) No. 1445)
other than those that result in liabilities of
h. Government Budget – is the
the entity, that establish a financial
financial plan of a government for a
interest in the net assets/equity of the
entity, which: given period, usually for a fiscal year,
which shows what its resources are, and
1. conveys entitlement both to (i) how they will be generated and used
distributions of future economic benefits over the fiscal period. The budget is the
or service potential by the entity during government's key instrument for
its life, such distributions being at the promoting its socio-economic objectives.
discretion of the owners or their The government budget also refers to
representatives; and to (ii) distributions the income, expenditures and sources of
of any excess of assets over liabilities in borrowings of the National Government
the event of the entity being wound up; (NG) that are used to achieve national
and/or objectives, strategies and programs.
i. Liabilities – are firm obligations of the government agency concerned. (Sec. 2,
entity arising from past events, the P.D. No. 1445)
settlement of which is expected to result
2. Fiscal responsibility shall, to the
in an outflow from the entity of resources
greatest extent, be shared by all those
embodying economic benefits or service
potential. exercisingauthority over the financial
affairs, transactions, and operations of
j. Net assets/equity – is the residual the government agency. (Sec. 4(4), P.D.
interest in the assets of the entity after No. 1445)
deducting all its liabilities.
3. The head of any agency of the
k. Revenue – is the gross inflow of government is immediately and primarily
economic benefits or service potential responsible for all government funds and
during the reporting period when those property pertaining to his agency.
inflows result in an increase in net Persons entrusted with the possession
assets/equity, other than increases or custody of the funds or property under
relating to contributions from owners. the agency head shall be immediately
responsible to him, without prejudice to
l. Revenue funds – comprise all funds
theliability of either party to the
derived from the income of any agency government. (Sec. 102, P.D. No. 1445)
of the government and available for
appropriation or expenditure in
accordance with law. (Section 3, P.D.
No. 1445)
_______________________________ b. Accountability over Government
Funds and Property
1. Every officer of any government
Sec. 3. Responsibility, Accountability agency whose duties permit or require
and Liability over Government Funds the possession or custody of
and Property government funds or property shall be
accountable therefor and for the
safekeeping thereof in conformity with
a. Responsibility over Government law. Every AO shall be properly bonded
Funds and Property in accordance with law. (Sec. 101, P.D.
No. 1445; Section 50, Chapter 9, Subtitle
1. It is the declared policy of the State B, Book V, Executive Order (E.O.) No.
that all resources of the government 292)
shall be managed, expended or utilized
in accordance with laws and regulations, 2. Transfer of government funds from
and safeguarded against loss or one officer to another shall, except as
wastage through illegal or improper allowed by law or regulation, be made
disposition, with a view to ensuring only upon prior direction or authorization
efficiency, economy and effectiveness in of the Commission or its representative.
the operations of government. The (Sec. 75, P.D. No. 1445)
responsibility to take care that such
3. When government funds or property
policy is faithfully adhered to rests
are transferred from one AO to another,
directly with the chief or head of the
orfrom an outgoing officer to his
successor, it shall be done upon properly the Commission or the auditor
itemized invoice and receipt which shall concerned and, within 30 days or such
invariably support the clearance to be longer period as the Commission or
issued to the relieved or outgoing officer, auditor may in the particular case allow,
subject to regulations of the shall present his application for relief,
Commission. (Sec. 77, P.D. No. 1445) with the available supporting evidence.
Whenever warranted by the evidence,
credit for the loss shall be allowed. An
c. Liability over Government Funds officer who fails to comply with this
and Property requirement shall not be relieved of
liability or allowed credit for any loss in
1. Expenditures of government funds or the settlement of his accounts. (Sec. 73,
uses of government property in violation P.D. No. 1445)
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)
Sec. 4. Fundamental Principles for
2. Every officer accountable for
Revenue. All revenues accruing to the
government funds shall be liable for all
NGAs shall be governed by the
losses resulting from the unlawful
following fundamental principles:
deposit, use, or application thereof and
for all losses attributable to negligence in a. Unless otherwise specifically provided
the keeping of the funds. (Sec. 105(2), by law, all revenues accruing to an entity
P.D. No. 1445) by virtue of the provisions of existing law,
orders and regulations shall be
3. No AO shall be relieved from liability
deposited/remitted in the National
by reason of his having acted under the
Treasury (NT) or in any duly authorized
direction of a superior officer in paying
government depository, and shall accrue
out, applying, or disposing of the funds
to the General Fund (GF) of the NG.
or property with which he is chargeable, (Sec. 65(1), P.D. No. 1445)
unless prior to that act, he notified the
superior officer in writing of the illegality b. Except as may otherwise be
of the payment, application, or specifically provided by law or
disposition. The officer directing any competent authority, all moneys and
illegal payment or disposition of the property officially received by a public
funds or property shall be primarily liable officer in any capacity or upon any
for the loss, while the AO who fails to occasion must be accounted for as
serve the required notice shall be government funds and government
secondarily liable. (Sec. 106, P.D. No. property. (Sec. 42, Chapter 7, Title I(B),
1445) Book V, E.O. No. 292)
4. When a loss of government funds or c. Amounts received in trust and from
property occurs while they are in transit business-type activities of government
or the loss is caused by fire, theft, or may be separately recorded and
other casualty or force majeure, the disbursed in accordance with such rules
officer accountable therefor or having and regulations as may be determined
custody thereof shall immediately notify by a Permanent Committee composed
of the Secretary of Finance as endorsement and identification of the
Chairman, and the Secretary of Budget payee or endorsee. Checks drawn in
and Management and the Chairman, favor of the government in payment of
COA, as members. (Sec. 65(2), P.D. No. any such indebtedness shall likewise be
1445) accepted by the officer concerned. At no
instance should money in the hands of
d. Receipts shall be recorded as revenue
the CO be utilized for the purpose of
of Special, Fiduciary or Trust Funds or
cashing private checks. (Sec. 67(1) and
Funds other than the GF, only when
(3), P.D. No. 1445)
authorized by law as implemented by
rules and regulations issued by the j. Under such rules and regulations as
Permanent Committee. (Sec. 66, P.D. the COA and the Department of Finance
No. 1445) (DOF)may prescribe, the Treasurer of
the Philippines and all AGDB shall
e. No payment of any nature shall be
acknowledge receipt of all funds
received by a collecting officer without
received by them, the acknowledgement
immediately issuing an official receipt in
bearing the date of actual remittance or
acknowledgement thereof. The receipt
deposit and indicating from whom and
may be in the form of postage, internal
on what account it was received. (Sec.
revenue or documentary stamps and the 70, P.D. No. 1445)
like, officially numbered receipts, subject
to proper custody, accountability, and _______________________________
audit. (Sec. 68(1), P.D. No. 1445)
f. Where mechanical devices (e.g.
Sec. 5. Fundamental Principles for
electronic official receipt) are used to
Disbursement of Public Funds.
acknowledge cash receipts, the COA
Section 4 of P.D. No. 1445, the
may approve, upon request, exemption
Government Auditing Code of the
from the use of accountable forms. (Sec.
Philippines, provides that all financial
68 (2), P.D. No. 1445)
transactions and operations of any
g. At no instance shall temporary government entity shall be governed by
receipts be issued to acknowledge the the following fundamental principles:
receipt of public funds. (Sec. 72, GAAM
Volume I) a. No money shall be paid out of any
public treasury or depository except in
h. Pre-numbered ORs shall be issued in pursuance of an appropriation law or
strict numerical sequence. All copies of other specific statutory authority.
each receipt shall be exact copies or
b. Government funds or property shall be
carbon reproduction in all respects of the
spent or used solely for public purposes.
original. (Sec. 73, GAAM Volume I)
c. Trust funds shall be available and may
i. An officer charged with the collection of
be spent only for the specific purpose for
revenue or the receiving of moneys
which the trust was created or the funds
payable to the government shall accept
received.
payment for taxes, dues or other
indebtedness to the government in the d. Fiscal responsibility shall, to the
form of checks issued in payment of greatest extent, be shared by all those
government obligations, upon proper exercising authority over the financial
affairs, transactions, and operations of f. financial statements based on
the government agency accounting and budgetary records; and
e. Disbursement or disposition of g. fund cluster accounting.
government funds or property shall
invariably bear the _______________________________
__________
approval of the proper officials.
f. Claims against government funds shall
Sec. 7. Keeping of the General
be supported with complete
Accounts. The COA shall keep the
documentation.
general accounts of the Government
g. All laws and regulations applicable to and, for such period as may be provided
financial transactions shall be faithfully by law, preserve the vouchers and other
adhered to. supporting papers pertaining thereto,
pursuant to Section 2, par. (1), Article IX-
h. Generally accepted principles and
D of the 1987 Philippine Constitution.
practices of accounting as well as of
sound management and fiscal _______________________________
administration shall be observed,
provided that they do not contravene
existing laws and regulations. Sec. 8. Financial Reporting System
for the National Government. The
_______________________________
financial reporting system of the
Philippine government consists of
accounting system on accrual basis and
Sec. 6. Basic Government Accounting
budget reporting system on budget basis
and Budget Reporting Principles.
under the statutory responsibility of the
Each entity shall recognize and present
NGAs, Bureauof the Treasury (BTr),
its financial transactions and operations
Department of Budget and Management
conformably to the following:
(DBM), and the COA, as follows:
a. generally accepted government
a. Each entity of the National
accounting principles in accordance with
Government (NG) maintains complete
the PPSAS and pertinent laws, rules and
set of accounting books by fund cluster
regulations;
which is reconciled with the records of
b. accrual basis of accounting in cash transactions maintained by the BTr.
accordance with the PPSAS;
b. The BTr accounts for the cash, public
c. budget basis for presentation of debt and related transactions of the NG.
budget information in the financial
c. Each entity maintains budget
statements (FSs) in accordance with
registries which are reconciled with the
PPSAS 24;
budget records maintained by the DBM
d. RCA prescribed by COA; and the Government Accountancy
Sector (GAS), COA.
e. double entry bookkeeping;
d. The COA, through the GAS:
 1. maintains budget records b. for department/entity FSs as a single
showing the overall approved budget of entity – the head of the entity/department
the NG and its COf jointly with the head of the finance
execution/implementation; unit.
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 Sec. 11. Components of General
(AFR) for the NG as required in Section Purpose Financial Statements. The
4, Article IX-D of the 1987 Philippine complete set of GPFSs consists of:
Constitution; and
a. Statement of Financial Position
3. prepares other financial (Annex A);
reports required by law for submission to
oversight agencies. b. Statement of Financial Performance
(Annex B);
_______________________________
c. Statement of Changes in Net
Sec. 9. Objectives of General Purpose Assets/Equity (Annex C);
Financial Statements. The objectives
of general purpose financial statements d. Statement of Cash Flows (Annex D);
(GPFSs) are to provide information e. Statement of Comparison of Budget
about the financial position, financial and Actual Amounts (Annex E); and
performance, and cash flows of an entity
that is useful to a wide range of users in f. Notes to the Financial Statements,
making and evaluating decisions about comprising a summary of significant
the allocation of resources. Specifically, accounting policies and other
the objectives of general purpose explanatory notes. (Annex F)
financial reporting in the public sector
_______________________________
are to provide information useful for
decision-making, and to demonstrate the
accountability of the entity for the
resources entrusted to it. Sec. 12. Books of Accounts and
Registries. The books of accounts and
_______________________________ registries of theNG entities consist of:
a. Journals
Sec. 10. Responsibility for Financial 1. General Journal (Appendix 1)
Statements. The responsibility for the 2. Cash Receipts Journal
preparation of the FSs rests with the (Appendix 2)
following: 3. Cash Disbursements Journal
(Appendix 3)
a. for individual entity/department FSs –
4. Check Disbursements Journal
the head of the entity/department central
(Appendix 4)
office (COf) or regional office (RO) or
operating unit (OU) or his/her authorized b. Ledgers
representative jointly with the head of the
finance/accounting division/unit; and 1. General Ledgers (Appendix 5)
 2. Subsidiary Ledgers (Appendix Sec. 14. Components of Budget and
Financial Accountability Reports. The
c. Registries
budget reports consist of the following
1. Registries of Revenue and Other Budget and Financial Accountability
Receipts (Appendices 7, 7A, 7B, Reports (COA-DBM-DOF Joint Circular
7C and 7D) No. 2013-1, as amended by COA and
2. Registry of Appropriations and DBM Joint Circular No. 2014-1 dated
Allotments (Appendix 8) July 2, 2014):
3. Registries of Allotments,
a. Quarterly Physical Report of
Obligations and Disbursements
Operation (QPRO) – BAR No. 1
(Appendices 9A, 9B, 9C and 9D)
4. Registries of Budget, Utilization b. Statement of Appropriations,
and Disbursements (Appendices Allotments, Obligations, Disbursements
10A, 10B, 10C and 10D) and Balances (SAAODB) – FAR No. 1
c. Summary of Appropriations,
Allotments, Obligations, Disbursements
Sec. 13. Fund Accounting. The books
and Balances by Object of Expenditures
of accounts shall be maintained by fund
(SAAODBOE) – FAR No. 1-A
cluster as follows:
d. List of Allotments and Sub-Allotments
(LASA) – FAR No. 1-B
Code Description
e. Statement of Approved Budget,
01 Regular Agency Fund Utilizations, Disbursements and
Balances (SABUDB) – FAR No. 2 (for
02 Foreign Assisted Projects Off-Budget Fund)
Fund
f. Summary of Approved Budget,
03 Special Account-Locally Utilizations, Disbursements and
Funded/Domestic Grants Fund Balances by Object of Expenditures
04 Special Account-Foreign (SABUDBOE) – FAR No. 2-A (for Off-
Assisted/Foreign Grants Fund Budget Fund)

05 Internally Generated g. Aging of Due and Demandable

Funds Obligations (ADDO) – FAR No. 3

06 Business Related Funds h. Monthly Report of Disbursements

(MRD) – FAR No. 4
07 Trust Receipts
i. Quarterly Report of Revenue and
The composition of fund clusters is Other Receipts (QRROR) – FAR No. 5
enumerated in Annex P.
_______________________________
_______________________________

Sec. 15. Fair Presentation. The FSs

shall present fairly the financial position,
financial
performance and cash flows of an entity. Sec. 18. Going Concern. The FSs shall
Fair presentation requires the faithful be prepared on a going concern basis
representation of the effects of unless there is an intention to
transactions, other events, and discontinue the entity operation, or if
conditions in accordance with the there is no realistic alternative but to do
definitions andrecognition criteria for so.
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. Sec. 19. Consistency of Presentation.
The presentation and classification of
_______________________________ items in the FSs shall be retained from
one period to the next unless laws, rules
and regulations, and PPSAS require a
Sec. 16. Compliance with PPSASs. An change in presentation.
entity whose financial statements
_______________________________
comply with PPSASs shall make an
explicit and unreserved statement of
such compliance in the notes.Financial
statements shall not be described as Sec. 20. Materiality and Aggregation.
complying with PPSASs unless they Each material class of similar items shall
comply with all the requirements of be presented separately in the financial
PPSASs. Inappropriate accounting statements. Items of a dissimilar nature
policies that do not comply with PPSAS or function shall be presented separately
are not rectified either by disclosure of unless they are immaterial. If a line item
the accounting policies used, or by notes is not material, it is aggregated with other
or explanatory material. items either on the face of FSs or in the
Notes to the FSs. A specific disclosure
_______________________________ requirement in a PPSAS need not be
satisfied if the information is not material.
_______________________________
Sec. 17. Departure from PPSAS. In the
event that Management strongly
believes that compliance with the
requirement of PPSAS would result in Sec. 21. Offsetting. Assets and
misleading presentation that it would liabilities, and revenue and expenses
contradict the objective of the FSs set shall not be allowed to offset unless
forth in PPSAS, the entity may depart required or permitted by a PPSAS
from that requirement if the relevant except when offsetting reflects the
regulatory framework allows, or substance of the transaction or other
otherwise does not prohibit, such a event.
departure. _______________________________
_______________________________
Sec. 22. Comparative Information. a. Net Income or Deficit for the period;
Comparative information shall be
b. Each item of revenue and expenses
disclosed with respect to the previous
for the period that, as required by
period for all amounts reported in the
Standards, is recognized directly in net
FSs. Comparative information shall be
assets/equity, and the total of these
included for narrative and descriptive
items;
information when it is relevant to an
understanding of the current period’s c. Total revenue and expenses for the
FSs. period; and
_______________________________ d. For each component of net
assets/equity separately disclosed, the
effects of changes in accounting policies
Sec. 23. Structure and Content. The and corrections of errors recognized in
FSs and each component shall be accordance with PPSAS 3-Accounting
identified clearly and distinguished from Policies, Changes in Accounting
other information in the same published Estimates and Errors.
document. _______________________________
_______________________________
Sec. 27. Statement of Cash Flows. The
Statement of Cash Flows (SCF)
Sec. 24. Statement of Financial
provides information to users of FSs a
Position. An entity shall present current
basis to assess the ability of the entity to
and non-current assets, as well as
generate cash and cash equivalents and
current and non-current liabilities, as
to determine the entity’s utilization of
separate classifications on the face of
funds. This also provides information on
the Statement of Financial Position
how the entity generates income
(SFP).
authorized to be used in their operation
_______________________________ and its utilization.
_______________________________

Sec. 25. Statement of Financial

Performance. The Statement of
Sec. 28. Statement of Comparison of
Financial Performance (SFPer) shall
Budget and Actual Amounts. A
include line items that present the
comparison of budget and actual
revenue, expenses and net surplus or
amounts will enhance the transparency
deficit for the period.
of financial reporting in government.
_______________________________
This shall be presented by government
agencies as a separate additional
financial statement referred in this
Sec. 26. Statement of Changes in Net Manual as the Statement of Comparison
Assets/Equity. An entity shall present in of Budget and Actual Amount (SCBAA).
the Statement of Changes in Net
Assets/Equity (SCNA/E) the following: _______________________________
Sec. 29. Notes to Financial b. an entity can, depending
Statements. The Notes to FSs contain on the nature of the
information in addition to that presented asset, exchange it, use it
in the SFP, SFPer, SCNA/E, SCF and to providegoods or
SCBAA. Notes provide narrative services, exact a price for
descriptions or disaggregation of items others’ use of it, use it to
disclosed in those FSs and information settle liabilities, hold it, or
about items that do not qualify for perhaps even distribute it
recognition in those statements. to owners.
c. possession or ownership
_______________________________
of an object or right would
normally be synonymous
with control over the
Sec. 30. Qualitative Characteristics of future economic benefits
Financial Reporting. An entity shall embodied in the right or
present information including accounting object. However, there
policies in a manner that meets a are instances when an
number of qualitative characteristics entity may possess an
such as understandability, relevance, object or right but not
materiality, reliability and comparability. expect to enjoy the
These qualitative characteristics are the benefits embodied in it,
attributes that make the information e.g. under a finance lease
provided in the FSs useful to users. agreement, control over
the leased property
_______________________________ owned by the lessor is
transferred to the lessee.

Sec. 31. Key Features of Assets. The

key features of an asset are: The following are indicators of past
event:
a. the benefits must be controlled by the
entity; a. the specification of a past
event differentiates
b. the benefits must have arisen from a
assets from intentions to
past event; and
acquire assets, which are
c. future economic benefits or service not to be recognized.
potential must be expected to flow to the b. a transaction or event
entity. giving rise to control of
the future economic
The following are indicators of control of benefits must have
the benefits by the entity: occurred.
a. the ability of an entity to
benefit from the asset
and to deny or regulate The following are indicators of future
the access of others to economic benefits:
that benefit.
 a. distinguishable from the source b. faithful representation of
of the benefit i.e. the particular the asset’s benefits.
physical resource or legal right; c. reliable information will,
b. does not imply that assets without bias or undue
necessarily generate cash flows, error, faithfully represent
the benefits can also be in the those transactions and
form of ‘service potential’; events.
c. in determining whether a
_______________________________
resource or right needs to be
accounted for as an asset,the
potential to contribute to the
objectives of the entity should be Sec. 33. Accounting Standards for
the prime consideration; Revenue. The following accounting
d. capacity to contribute to standards shall apply for revenue and
activities/objectives/programs; receipts of government entities:
and a. Revenue includes only the gross
e. the fact that an asset cannot be inflows of economic benefits or service
sold does not preclude it from potential
providing future economic
benefits. received and receivable by the entity in
its own account. (PPSAS 9)
_______________________________
b. Receipts/Collections shall refer to all
cash actually received from all sources
Sec. 32. Recognition of an Asset. An during a given accounting period.
asset shall be recognized in the financial c. Fines shall include economic benefits
position when and only when (a) it is or service potential received or
probable that the future economic receivable by a public sector agency, as
benefits will flow to the entity; and (b) the determined by a court or other law
asset has a cost or value that can be enforcement body, as a consequence of
measured reliably. The following are the breach of laws or regulations. Fines
indicators of probable inflow of future and penalties, either on tax revenue or
economic benefits: other specific income account, shall be
a. the chance of benefits arising is more recognized as income of the year these
likely rather than less likely (e.g. greater were collected.
than 50%). d. Gifts and donations shall consist of
b. benefits can be expected on the basis voluntary transfers of assets including
of available evidence or logic. cash or other monetary assets, goods in-
kind and services in-kind that one
agency makes to another, normally free
from stipulations. (PPSAS 23)
The following are indicators of reliable
measurement: e. Goods in-kind are tangible assets
transferred to an agency in a non-
a. valuation method is free
exchange transaction, without charge,
from material error or
but may be subject to stipulations.
bias.
External assistance provided by following basic requirements and
multilateral or bilateral development certifications:
organizations often includes a
a. Availability of allotment/budget for
component of goods in-kind. (PPSAS
obligation/utilization certified by the
23)
Budget Officer/Head of Budget Unit;
f. Taxes are economic benefits or service
b. Obligations/Utilizations properly
potentials compulsory paid or payable to
charged against available
public sector agencies, in accordance
allotment/budget by the Chief
with laws and or regulations, established
Accountant/Head of Accounting Unit;
to provide revenue to the government.
Taxes do not include fines or other c. Availability of funds certified by the
penalties imposed for breaches of the Chief Accountant. The Head of the
law. (PPSAS 23) Accounting Unit shall certify the
availability of funds before an Agency
g. Transfers are inflows of future
Head or his duly authorized
economic benefits or service potential
representative enter into any contract
from non-exchange transactions, other
than taxes. (PPSAS 23) that involves the expenditure of public
funds based on the copy of budget
_______________________________ release documents;
d. Availability of cash certified by the
Chief Accountant. The Head of the
Sec. 34. Use of Appropriated Funds.
Accounting Unit shall certify the
All moneys appropriated for functions,
availability of cash and completeness of
activities, projects and programs shall be
the supporting documents in the
available solely for the specific purposes
disbursement voucher and payroll based
for which these are appropriated.
on the Registry of Allotments and Notice
_______________________________ of Cash Allocation/Registry of Allotment
and Notice of Transfer of Allocation;
e. Legality of the transactions and
Sec. 35. Appropriation for Loan conformity with existing rules and
Proceeds. Expenditures funded by regulations. The requesting and
foreign and domestic borrowings shall approving officials shall ensure that the
be included within the expenditure disbursements of government funds are
program of the entity concerned. Loan legal and in conformity with applicable
proceeds, whether in cash or in kind, rules and regulations;
shall not be used without the
corresponding release of funds through f. Submission of proper evidence to
a Special Budget. establish validity of the claim. The Head
of the Requesting Unit shall certify on the
_______________________________ necessity and legality of charges to
Sec. 36. Basic Requirements for allotments under his/her supervision as
Disbursements and the Required well as the validity, propriety and legality
Certifications. Disbursements of of supporting documents. All payments
government funds shall comply with the of government obligations and payables
shall be covered by Disbursement
Vouchers (DV)/Payrolls together with the shall be dismissed from the service,
original copy of the supporting without prejudice to criminal prosecution
documents which will serve as basis in under the provisions of the Revised
the evaluation of authenticity Penal Code. Any payment made under
andauthority of the claim. It should be such certification shall be illegal and
cleared, however, that the submission of every official authorizing or making such
the supporting documents does not payment, or taking part therein or
preclude reasonable questions on the receiving such payment, shall be jointly
funding, legality, regularity, necessity and severally liable to the government
and/or economy of the expenditures or for the full amount so paid or received.
transactions; and (Book VI, Section 41 of EO No. 292)
g. Approval of the disbursement by the _______________________________
Head of Agency or by his duly authorized
representative. Disbursement or
disposition of government funds or Sec. 38. Prohibition against the
property shall invariably bear the Incurrence of Overdraft. Heads of
approval of the proper officials. The departments, bureaus, offices and
DVs/Payrolls shall be signed and agencies shall not incur nor authorize
approved by the head of the agencies or the incurrence of expenditures or
his duly authorized representatives. obligations in excess of allotments
_______________________________ released by the DBM Secretary for their
respective departments, offices and
agencies. Parties responsible for the
incurrence of overdrafts shall be held
Sec. 37. Certification of Availability of
personally liable therefor. (Book VI,
Funds. No funds shall be disbursed, and Chapter 5, Section 41 of EO No. 292)
no expenditures or obligations
chargeable against any authorized _______________________________
allotment shall be incurred or authorized
in any department, office or agency
without first securing the certification of Sec. 39. Mode of Disbursements.
its Chief Accountant or head of Payments/Disbursements by NGAs may
accounting unit as to the availability of be effected through the Treasury Single
funds and the allotment to which the Account (TSA), by issuing Modified
expenditure or obligation may be Disbursements System (MDS) check or
properly charged. commercial check, cash through cash
advance, Advice to Debit Account
No obligation shall be certified to
(ADA), or Non-Cash Availment Authority
accounts payable unless the obligation
(NCAA).
is founded on a valid claim that is
properly supported by sufficient _______________________________
evidence and unless there is proper
authority for its incurrence. Any
certification for a non-existent or fictitious Sec. 40. Authority to Disburse/Pay.
obligation and/or creditor shall be NGAs are authorized to disburse/pay
considered void. The certifying official based on the Notice of Cash Allocation
(NCA), Notice of Transfer of Allocation to be prepared to effectively monitor the
(NTA), Cash Disbursement Ceiling budget as well as the required
(CDC) or other authority that may be information disclosure and presentation
provided by law. of budget information in the financial
statements in accordance with PPSAS
_______________________________
24.
_______________________________
Sec. 41. Disbursement
Voucher/Payroll. Checks/ADA shall be
drawn based on duly approved Sec. 2. Definition of Terms. For the
disbursement voucher or payroll. purpose of this Manual, the terms stated
below shall be construed to mean as
_______________________________
follows:
a. Allotment – is an authorization issued
Sec. 42. Maintenance of Records. All by the DBM to NGAs to incur obligations
checks/ADA drawn during the day, for specified amounts contained in a
whether released or unreleased legislative appropriation in the form of
including cancelled checks shall be budget release documents. It is also
recognized chronologically in the referred to as Obligational Authority.
Checks/ADA Disbursement Record
b. Appropriation – is the authorization
maintained by the Cash/Treasury Unit.
made by a legislative body to allocate
_______________________________ funds for purposes specified by the
legislative or similar authority.
c. Approved Budget – is the expenditure
Sec. 43. Reporting of Disbursements. authority derived from appropriation
All payments/disbursements shall be laws, government ordinances, and other
reported using the prescribed forms for decisions related to the anticipated
recording in the books of accounts. revenue or receipts for the budgetary
_______________________________ period. The approved budget consists of
the following:

Chapter 3
UACS Code
BUDGET EXECUTION, MONITORING
AND REPORTING New General Appropriations 01

Sec. 1. Scope. This Chapter prescribes Continuing Appropriations 02

the guidelines in monitoring, accounting Supplemental Appropriations 03
and reporting of the budget in the
financial statements. This also Automatic Appropriations 04
prescribes the records to be
Unprogrammed Funds 05
maintained by the national government
Retained Income/Funds 06
agencies, forms to be used and reports
Revolving Funds 07 k. Original Budget – is the initial
approved budget for the budget period
Trust Receipts 08
usually the General Appropriations Act
d. Automatic Appropriations – are the (GAA). The original budget may include
authorizations programmed annually or residual appropriated amounts
for some other period prescribed by law, automatically carried over from prior
by virtue of outstanding legislation which years by law such as prior year
does not require periodic action by commitments or possible future liabilities
Congress. based on a current contractual
agreement.
e. Budget Information – the budgetary
information consists of, among others, l. Revenues – are increases in economic
data on appropriations or the approved benefits or service potential during the
budget, allotments, obligations, accounting period in the form of inflows
revenues and other receipts, and or increases of assets or decreases of
disbursements. liabilities that result in increases in net
assets/equity, other than those relating
f. Continuing Appropriations – are the to contributions from owners.
authorizations to support obligations for
a specific purpose or project, such as m. Supplemental Appropriations – are
multi-year construction projects which additional appropriations authorized by
require the incurrence of obligations law to augment the original
even beyond the budget year. appropriations which proved to be
insufficient for their intended purpose
g. Disbursements – are the actual due to economic, political or social
amounts spent or paid out of the conditions supported by a Certification of
budgeted amounts. Availability of Funds (CAF) from the BTr.
h. Final Budget – is the original budget _______________________________
adjusted for all reserves, carry-over
amounts, transfers, allocations and other
authorized legislative or similar authority
Sec. 3. Fund Release Documents.
changes applicable to the budget period.
With the adoption of the UACS and the
i. New General Appropriations – are Performance-Informed Budgeting (PIB),
annual authorizations for incurring the following are the fund release
obligations during a specified budget documents:
year, as listed in the GAA.
j. Obligation – is an act of a duly
a. Obligational Authority or Allotment –
authorized official which binds the
the following are the documents which
government to the immediate or authorize the entity to incur obligations:
eventual payment of a sum of money.
Obligation maybe referred to as a 1. General Appropriations Act Release
commitment that encompasses possible Document (GAARD) – serves as the
future liabilities based on current obligational authority for the
contractual agreement. comprehensive release of budgetary
items appropriated in the GAA,
categorized as For Comprehensive proceeds from loans/grants through
Release (FCR). supplier’s credit/constructive cash;
2. Special Allotment Release Order 3. Cash Disbursement Ceiling (CDC) –
(SARO) – covers budgetary items under authority issued by DBM to the
For Later Release (FLR) (negative list) in Department of Foreign Affairs (DFA) and
the entity submitted Budget Execution Department of Labor and Employment
Documents (BEDs), subject to (DOLE) to
compliance of required
utilize their income collected/retained by
documents/clearances. Releases of
their Foreign Service Posts (FSPs) to
allotments for Special Purpose Funds
cover their operating requirements, but
(SPFs) (e.g., Calamity Fund, Contingent
not to exceed the released allotment to
Fund, E-Government Fund, Feasibility
the said post; and
Studies Fund, International
Commitments Fund, Miscellaneous 4. Notice of Transfer of Allocation –
Personnel Benefits Fund and Pension authority issued by the Central Office to
and Gratuity Fund) are also covered by its regional and operating units to cover
SAROs. the latter’s cash requirements.
3. General Allotment Release Order _______________________________
(GARO) – is a comprehensive authority
issued to all national government
agencies, in general, to incur obligations Sec. 4. Classification of Expenditures.
not exceeding an authorized amount Expenditures of NGAs shall be classified
during a specified period for the purpose into categories as may be determined by
indicated therein. It covers automatically the DBM including, but not limited to the
appropriated expenditures common to following:
most, if not all, agencies without need of
special clearance or approval from a. Entity incurring the obligation;
competent authority, i.e. Retirement and
b. Program, Activity and Project (PAP);
Life Insurance Premium.
c. Object of expenditures, including
personnel services (PS), maintenance
b. Disbursement Authority – the following and other operating expenditures
documents authorize the entity to pay (MOOE), financial expenses (FE), and
obligations and payables: capital outlays (CO);

1. Notice of Cash Allocation (NCA) – d. Region or locality of use;

authority issued by the DBM to central,
e. Economic or functional classification
regional and provincial offices and
of the expenditures;
operating units to cover the cash
requirements of the agencies; f. Obligational authority and cash
transactions arising from fund releases;
2. Non-Cash Availment Authority
and
(NCAA) – authority issued by the DBM to
agencies to cover the liquidation of their g. Such other classifications as may be
actual obligations incurred against necessary for the budget process.
available allotments for availment of
_______________________________ _______________________________

Sec. 5. Monitoring of the Budget. The Sec. 8. Registry of Appropriations and

budget shall be monitored by the Budget Allotments. The Registry of
Division/Units of NGAs through the Appropriations and Allotments (RAPAL)
maintenance of registries for that (Appendix 8) shall be maintained by
purpose. NGAs to monitor appropriations and
allotments charged thereto. It shall show
_______________________________
the original, supplemental and final
Sec. 6. Registries of Revenue and budget for the year and all allotments
Other Receipts. The Registries of received charged against the
Revenue and Other Receipts corresponding appropriation. The
(Appendices 7, 7A, 7B, 7C and 7D) shall balance is extracted every time an entry
be maintained by the Budget is made to prevent incurrence of
Division/Unit of NGAs to monitor the overdraft in appropriations. Separate
revenue and other receipts RAPAL shall be maintained by fund
estimated/budgeted, collected and cluster and by Major Final Output
remitted/deposited. (MFO)/PAP/Appropriation Acts.

Sec. 10. Registries of Allotments,

Obligations and Disbursements. The
Registries of Allotments, Obligations and
Disbursements (RAOD) shall be
maintained by the Budget Division/Unit
of agencies to record allotments,
obligations and disbursements. It shall
show the allotments received for the
year, obligations incurred against the
corresponding allotment and the actual
disbursements made. The balance is
extracted every time an entry is made to
prevent incurrence of obligations in
excess of allotment and overdraft in
disbursements against obligations authorized representative shall certify in
incurred. The RAODs shall be the Section A of the ORS as to the
maintained by appropriation act, fund necessity and legality of charges to the
cluster, MFO/PAP, and allotment class. budget under his/her supervision, and
validity, propriety and legality of SDs.
a. Registry of Allotments, Obligations
The Head of the Budget Division/Unit
and Disbursements-Personnel Services
shall certify to the availability of allotment
(RAOD-PS) (Appendix 9A) shall be used
and such is duly obligated by signing in
to record the allotments received,
Section B of the ORS.
obligations incurred and disbursements
classified under PS. _______________________________
b. Registry of Allotments, Obligations
and Disbursements-Maintenance and
Sec. 12. Subsidiary Record for
Other Operating Expenses (RAOD-
Obligation. A subsidiary record to
MOOE) (Appendix 9B) shall be used to
monitor a particular obligation shall be
record the allotments received,
maintained by the Budget Division/Unit
obligations incurred and disbursements
classified under MOOE. in Section C of the ORS. It shall contain
the original amount of obligation,
c. Registry of Allotments, Obligations payable (goods delivered and services
and Disbursements-Financial Expenses rendered) and the actual amount paid.
(RAOD-FE) (Appendix 9C) shall be used
_______________________________
to record the allotments received,
obligations incurred and disbursements
classified under FE.
Sec. 13. Adjustment of Obligation.
d. Registry of Allotments, Obligations Adjustment of obligation incurred after
and Disbursements-Capital Outlays the processing of the claim by the
(RAOD-CO) (Appendix 9D) shall be Accounting Division/Unit shall be made
used to record the allotments received, through the use of Notice of Obligation
obligations incurred and disbursements Request and Status Adjustment
classified under CO. (NORSA) (Appendix 12). The
_______________________________ adjustment shall be effected through a
positive entry (if additional obligation is
necessary) or a negative entry (if
reduction is necessary) in the
Sec. 11. Obligation Request and
‘Obligation’ column of the ORS and
Status. The incurrence of obligations
RAOD.
shall be made through the issuance of
Obligation Request and Status (ORS) _______________________________
(Appendix 11). The ORS shall be
prepared by the Requesting/Originating
Office supported by valid claim Sec. 14. Notice of Obligation Request
documents like DVs,payrolls, and Status Adjustment. The NORSA
purchase/job orders, itinerary of travel, shall be prepared by the Accounting
etc. The Head of the Division/Unit after the processing of the
Requesting/Originating Office or his/her claim which shall be used in adjusting
the original amount obligated to the
actual obligations incurred in the RAOD.
It shall be forwarded by the Accounting
Division/Unit to the Budget Division/Unit
to take up the adjustments of obligation
in the RAOD. The following transactions
shall also need adjustments of
obligations:

_______________________________
Sec. 15. Procedures in Recording
Obligation. Obligation shall be recorded
in the appropriate RAOD through ORS
with the following procedures: