This section focuses on the processes and concepts involved in managing budgetary accounts, including the relevant journal entries for government agencies under the New Government Accounting System (NGAS).
Concepts in Accounting for Budgetary Accounts
1. Appropriations ○ Authorization made by law or other legislative enactments directing payment of government funds for specific purposes. ○ Serves as the legal basis for agency expenditures. ○ Types of Appropriations: ■ General Appropriations Act (GAA): Annual budget approved by Congress. ■ Supplemental Appropriations: Additional funding approved for unforeseen needs. ■ Automatic Appropriations: Mandated by law, such as debt servicing and pensions. 2. Allotments ○ Issued by the Department of Budget and Management (DBM) to agencies, allowing them to incur obligations up to a specified amount within the legislative appropriation. ○ Allotments are categorized into: ■ Personal Services (PS): Salaries, wages, and benefits. ■ Maintenance and Other Operating Expenses (MOOE): Day-to-day operating costs. ■ Capital Outlay (CO): Infrastructure and equipment expenses. 3. Obligations ○ Commitments by a government agency that bind the government to future payments. Examples include purchase orders, contracts, and travel authorizations. ○ Obligation Slips are used to document and approve these commitments. 4. Notice of Cash Allocation (NCA) ○ Authorization issued by the DBM to government agencies to withdraw cash from the National Treasury for specific obligations. ○ Types of NCAs: ■ Comprehensive Release: Covers all appropriations. ■ For Later Release (FLR): Subject to compliance with conditions. 5. Registries Maintained ○ RAPAL: Registry of Appropriations and Allotments – Tracks appropriations and allotments. ○ RAOPS: Registry of Allotments and Obligations – Personal Services. ○ RAOMO: Registry of Allotments and Obligations – Maintenance and Other Operating Expenses. ○ RAOCO: Registry of Allotments and Obligations – Capital Outlay. ○ RAOFE: Registry of Allotments and Obligations – Financial Expenses.
Journal Entries for Budgetary Accounts
1. Recording the Receipt of Appropriations
○ Appropriations are not journalized but are tracked in the Registry of Appropriations and Allotments (RAPAL). 2. Recording the Receipt of Allotments ○ Allotments are tracked in the Registry of Allotments and Obligations (RAOs) for specific categories. 3. Recording the Notice of Cash Allocation (NCA)
Entry: Cash – National Treasury, MDS XXX
Subsidy Income from National Government XXX
4. Recording Obligations
Example: For a Purchase Order issued for Maintenance and Other Operating Expenses: Obligations – Maintenance and Other Operating Expenses XXX
Allotments – Maintenance and Other Operating Expenses XXX
5. Payment of Obligations
Entry: When an obligation is paid:
Accounts Payable XXX
Cash – National Treasury, MDS XXX
6. Tax Remittance Advice (TRA)
When recording taxes withheld: Due to BIR XXX
Cash – National Treasury, MDS XXX
7. Reversion of Unused Appropriations
At year-end, unused appropriations are reverted back: Subsidy Income from National Government XXX
Appropriations XXX
Key Processes in Budgetary Accounting
1. Preparation of Budget Plans ○ Timeline: Budget preparation begins in January and February with the issuance of the Budget Call by the Department of Budget and Management (DBM). ○ Agencies prepare Budget Execution Documents (BEDs), which outline their spending plans for the next fiscal year. ○ Submission Deadline: BEDs are submitted to the DBM by March or April. ○ The DBM consolidates these proposals and submits the National Expenditure Program (NEP) to the Office of the President by July. 2. Authorization and Allotment ○ Congressional Deliberation: Congress reviews and debates the proposed budget from August to October. ○ The General Appropriations Act (GAA) is passed by Congress and signed into law by the President in December. ○ DBM Role: Releases Special Allotment Release Orders (SAROs) and General Allotment Release Orders (GAROs) to agencies starting January of the fiscal year. 3. Obligation Monitoring ○ Obligations are recorded in the RAOs for tracking and control. Agencies use Approved Budget Utilization Requests (ABUR) or Approved Obligation Requests (AOR). ○ Obligations must be supported by documents such as contracts, purchase orders, or travel authorizations. 4. Cash Disbursement ○ Timeline: NCAs are issued monthly or quarterly, depending on the cash requirements of the agencies. ○ Disbursement Methods: Payments are made using: ■ Modified Disbursement System (MDS) checks. ■ Cash advances for small operating needs, which must be liquidated within a prescribed period. ○ Roles: ■ Agency Accounting Office: Verifies supporting documents. ■ Authorized Signatories: Approve disbursement vouchers (DVs). 5. Reporting ○ Agencies submit Budget Accountability Reports (BARs) to the DBM and COA. Key reports include: ■ Monthly Reports: Statement of Allotments, Obligations, and Balances (SAOB). ■ Quarterly Reports: Financial and physical performance reports. ○ Annual Reporting: Consolidated reports are submitted by March of the following fiscal year. Example of a Budgetary Process
Scenario: Agency X receives appropriations of PHP 1,000,000 for Maintenance and Other Operating Expenses (MOOE). The DBM releases an allotment of PHP 800,000, and the agency obligates PHP 500,000 for office supplies. The NCA issued is PHP 500,000, and the agency pays PHP 450,000 for delivered supplies. Taxes withheld amount to PHP 50,000.
Receipt of NCA Cash – National Treasury, MDS 500,000 Subsidy Income from National Government 500,000
Payment for Supplies
Accounts Payable 450,000 Cash – National Treasury, MDS 450,000
Recording Tax Withheld
Due to BIR 50,000 Cash – National Treasury, MDS 50,000 Unified Accounts Code Structure (UACS) and Disbursements
This document focuses on the Unified Accounts Code Structure (UACS) and its integration into disbursement processes under the New Government Accounting System (NGAS).
Unified Accounts Code Structure (UACS)
Definition
● The UACS is a harmonized budgetary and accounting code classification system
adopted by government agencies to ensure consistency in financial reporting. ● It links the appropriation, allotment, obligation, and disbursement processes for accurate and efficient tracking of government resources.
Structure and Components
● UACS is comprised of multiple segments that identify the source and usage of funds.
Segment Purpose Example
Funding Source Identifies funding origin 101 – General Fund
Organization Code Specifies the agency or unit 12 – Department of
Education
Function/Program Classifies function or 05 – Education Services
program
Project Code Identifies specific project 001 – Classroom Repairs
funding
Object Code Details the expense type 50203010 – Office Supplies
Purpose
1. Streamline budget preparation, execution, and accountability.
2. Enable detailed tracking of expenditures and revenues. 3. Ensure consistency and transparency in financial reporting.
Examples of UACS Usage
1. Purchase of Office Supplies:
○ UACS Code: 101-12-05-001-50203010 ○ Interpreted as: ■ General Fund (101) ■ Department of Education (12) ■ Education Services (05) ■ Classroom Repairs (001) ■ Office Supplies (50203010) 2. Payment for Professional Services: ○ UACS Code: 101-12-05-000-50215020
Disbursement Processes
Definition
Disbursements refer to the payment of obligations incurred by government agencies in the
course of operations. These payments are made from the National Treasury or other authorized funding sources.
Types of Disbursements
1. Modified Disbursement System (MDS) Checks
○ Used for payments charged against the National Treasury. ○ Examples: Salaries, utility bills, procurement of goods and services. 2. Commercial Checks ○ Issued for agency-specific accounts maintained in authorized government servicing banks. ○ Examples: Payments from trust funds or other internally generated income. 3. Cash Advances ○ Provided for small operating needs or special projects. ○ Examples: Petty cash for office supplies, travel advances for official trips.
Process of Disbursement
1. Obligation Validation
○ Ensures funds are obligated through valid contracts, purchase orders, or similar documents. ○ UACS codes are referenced to confirm the appropriate budgetary allocation. 2. Preparation of Disbursement Voucher (DV) ○ DVs are prepared by the requesting department. ○ Supporting documents such as invoices, purchase orders, or payrolls are attached. 3. Approval Process ○ The Accounting Office verifies the completeness and accuracy of the DV. ○ Authorized signatories approve the DV for payment. 4. Issuance of MDS or Commercial Checks ○ Payments are released through MDS or commercial checks. ○ For cash advances, funds are provided to the custodian, who must liquidate them after use. 5. Recording of Transactions ○ All disbursement transactions are recorded in the appropriate journals and registries: ■ Cash Disbursement Journal ■ Registry of Allotments and Obligations (RAOs) Journal Entries for Disbursements Payment of Salaries: Accounts Payable – Personal Services XXX Cash – National Treasury, MDS XXX
