GOVERNMENT ACCOUNTING -

General Fund

New Government Accounting System

Government Accounting (Sec 109 of PD 1445)
encompasses the processes of analyzing, recording,
classifying, summarizing and communicating all
transactions involving the receipt, disposition and utilization
of government funds and property and interpreting the
results thereof
Government Accounting (Sec 109 of PD 1445)
It puts together all activities pertaining to the gathering of
data which are to be used as the bases for management
decisions.
• bookkeeping
• posting
• preparation of financial reports
• analysis of reports to determine their accuracy and
adequacy as well as the efficiency and effectiveness of
agency operations
Government Accounting (Sec 109 of PD 1445)
• is an art and are based on fundamental concepts
regarding accounting functions and the rules governing
accounting practices
• these rules which are derived from experience and
reason, are flexible and in a constanct process of
evolution
PRIMARY PURPOSE OF GOVERNMENT
BUSINESS

to render service to the public

as distinguished from the
usual profit motive of the
private business
 CHARACTERISTICS OF GOVERNMENT
BUSINESS
• As to PURPOSE
– to render service to the public at the lowest cost possible
• As to OWNERSHIP
– no defined individual ownership interests that can be acquired,
sold, transferred or redeemed in the commercial sense
– every citizen has a share in the assets of the government but
no one may dispose of his share and realize profit from it
 CHARACTERISTICS OF GOVERNMENT
BUSINESS
• As to MANAGEMENT
– the officers and administrators of the government business who
are governed by specific laws and regulations
• As to INCOME
– the government derives most of its income from the collection
of taxes and fees
 BASIC OBJECTIVES OF GOVERNMENT
ACCOUNTING
1. To provide information concerning past operations and
present conditions
2. To provide as a basis for guidance for future
operations
3. To provide for control the acts of public bodies and
offices regarding the receipt, disposition, and utilization
of government funds and property
4. To report on the financial condition and the results of
operations of government agencies for the information
of all persons concerned
 OBJECTIVES OF NGAS
• simplify government accounting
• conform to international accounting
standards
• generate periodic and relevant
financial reports for better
monitoring of performance
SUBJECTS OF GOVERNMENT ACCOUNTING
1. National Government - consisting of departments,
bureaus, commissions, boards, state colleges and
universities
2. Local Government - provinces, chartered cities,
municipalities, and barangays
3. Government-owned or government controlled
corporations - created by law to manage specific type of
business
BASIC FEATURES AND POLICIES OF
NGAS
 ACCRUAL ACCOUNTING
• modified accrual basis of accounting shall be use
• all expenses shall be recognized when incurred
and reported in the financial statements in the
period to which they relate
• income shall also be on accrual basis except for
transactions where that basis is impractical or
when other methods are required by law
 ONE FUND CONCEPT
• it adopts the one fund concept and that is the
general fund
• separate fund accounting shall be done only when
specifically required by law or by a donor agency
or when otherwise necessitated by circumstances
aubject to prior approval of the Commission on
Audit (CoA)
 ONE FUND CONCEPT
• GENERAL FUND - funds which are generally available for
all functions of government or for any purpose that
Congress may choose to apply, and are composed of all
receipts or revenues that do not otherwise accrue to other
funds
• SPECIAL-PURPOSE FUND - fund appropriated for
purposes other than those provided in the regular funds of
government agencies
 NEW GENERAL APPROPRIATIONS
• annual authorizations for incurring obligations
during a specified budger year, as listed in the
General Appropriations Act (GAA).
• GAA - legislative authorization that identifies new
appropriations in terms of specific amounts for
salaries, wages and other personnel benefits
• Maintenance and Other Operating Expenses
(MOOE), Financial Expenses (FEx) and Capital
Outlays (CO)
 CONTINUING APPROPRIATIONS
• authorizations to support obligations for a
specified purpose or project, even when these
obligations are incurred beyond the budget year
• MOOE and CO are valid for two years therefore
unobligated and unreleased appropriations are
valid until the end of their second year and are
classified as continuing appropriations
SUPPLEMENTAL APPROPRIATIONS
• additional appropriations enacted by
Congress to augment original
appropriations that have proven
insufficient for their intended purpose
because of economic, political or social
conditions
• must be supported by a certification of
availability of funds by the Bureau of
Treasury (BTr)
Automatic Appropriations
authorizations made annually or for some other period prescribed
by law, by virtue of standing legislation, which do not require
periodic action by the Congress
Unprogrammed Funds
standby appropriations for priority programs or projects of the
government
Retained Income/Funds
collections that are quthorized by law to be used directly by
agencies for their operation or specific purpose
 REVOLVING FUNDS
• receipts derived from business-type activities of
departments/agencies as authorized by law, and which are
deposited in an authorized government depository banks
• these shall be self-liquidating
• all obligations and expenditures incurred because of these
business type activities shall be charged against this
Trust Receipts
• receipts that are officially in the possession of government
agencies or a public officer as trustee, agent, or administrator,
or which have been received for the fulfillment of a particular
obligation
Chart of Accounts and Unified Accounts Code Structure
(UACS)
• provide the framework within which the accounting records are
constructed
• list of general ledger accounts consisting of real and nominal
accounts
 CODING SCHEME
Assigned 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 reports
Code Account GroupsCode Account Groups
1 Assets 4 Income
2 Liabilities 5 Expenses
3 Equity
 Account Code Structure
0 00 00 000
Account Group
Major Account Group
Sub-major Account Group
General Ledger Accounts
General Ledger Contra-Accounts
 Account Code Structure
• Account Group - represents the accounts classification as
to assets, liabilities, equity, income and expenses
• Major account group - classification within the account
group (ex. for assets major accounts: cash and cash
equivalents, investements, receivables)
• Sub-major account group - classification within the major
account (ex. Cash on Hand, Cash in Bank-Local
Currency)
 Account Code Structure
• General Ledger - accounts to be presented in the detailed
financial statements, (ex. Cash Collecting Officer, Petty
Cash, etc.)
– composed of two segments
– first to digits from left is the GL code
– the last digit is reserved for contra accounts like Allowance for
Doubtful Accounts, Accumulated Depreciation
 Asset without Contra Account
1 01 01 010
Asset
Cash and Cash Equivalents
Cash on Hand
Cash Collecting Officer
General Ledger Contra-Accounts
 Asset without Contra Account
1 01 01 011
Asset
Receivables
Loans and Receivable Accounts
Accounts Receivable
Allowance for Doubtful Accounts
 Account titles
• some have been changed, some have been added
• expenditures charged to Capital Outlay are no longer
expenses
• Financial expenses are caregorized as separate expense
items
• Income accounts have been categorized into general
income accounts
Unified Accounts Code Structure (UACS)
established when a COA Circular No. 2014-003
was issued to provide guidelines and procedures
on the conversion of the Philippine Government
Chart of Accounts (PGCA) per Commission on
Audit Circular No. 2004-008 dated September 20,
2004 as amended, to the Revised Chart of
Accounts (RCA) as required in paragraph 2.0 of
COA Circular No. 2013-002 dated January 30,
2013.
Unified Accounts Code Structure (UACS)
• provides a framework for identifying, aggregating and
reporting financial transactions in budget preparation,
execution, accounting and auditing
• key purpose - to enable the timely and accurate
reporting of actual revenue collections and expenditures
against budgeted programmed revenues and
expenditures
 Unified Accounts Code Structure (UACS)
Reporting requirements
1. Financial reports as required by the Department of
Budget and Management and the Commission on Audit
2. Financial statements as required by the Public Sector
Accounting Standards Board of the Philippines
3. Management reports as required by the executive
officials/heads of departments and agencies, and
4. Economic statistic consistent with the Government
Finance Statistics Manual 2001
 Unified Accounts Code Structure (UACS)
• will be used by all departments and agencies of the
National Government and Government-Owned and/or
Controlled Corporations with Budgetary Support from
National Government
• the source of account descriptions and codes include
– The codes from the COA Revised Chart of Accounts prepared
for accrual basis financial reporting
– The addition of some sub-object codes, and
– Additional expenditure accounts designed for cash basis
budgeting, such as those for capital outlays
 Unified Accounts Code Structure (UACS)
• collective responsibility of the DBM, Department of
Finance-Bureau of Treasury (DOF-BTr) and COA
• validation and assignment of new codes for funding
source, organization, sub-object codes for expenditure
items shall be the responsibility of the DBM
 Unified Accounts Code Structure (UACS)
Budgetary Accounts - the information will need to provide
an amount with respect to Appropriations, Adjustment to
Appropriations, Adjusted Appropriations, Allotments,
Transfers, Adjusted Allotments, Unreleased Appropriations,
Obligations, Unobligated Allotments, Disbursements and
Unpaid Obligations
Unified Accounts Code Structure (UACS)
Business Rules Applicable to
All the Codes in the UACS -
codes are classified under
“Others” to describe the
components of UACS key
elements for items pending
identification
 Unified Accounts Code Structure (UACS)
Authorization Code
New General Appropriations 01
Continuing Appropriation 02
Supplemental Appropriations 03
Automatic Appropriations 04
Unprogrammed Funds 05
Retained Income/Funds 06
Revolving Funds 07
Trust Receipts 08
 BOOKS OF ACCOUNTS
• Regular Agency (RA) Books - used to record the receipt
and utilization of Notice of Cash Allocation (NCA) and
other income/receipts which the agencies are authorized
to use and to deposit with Authorized Government
Depository Bank (AGDB) and the National treasury
• National Government (NG) Books - used to record
income which the agencies are not authorized to use and
are required to be remitted to the National Treasury
 REGULAR AGENCY (RA) BOOKS
• Cash recipts journal (CRJ)
• Cash Disbursements Journal (CDJ)
• Check Disbursement Journal (CkDJ)
• General Journal (GJ)
• General Ledger (GL)
• Subsidiary Ledgers (SL) for Cash, Receivables,
Inventories, Investments, Property, Plant and Equipment,
Costruction in Progress, Liabilities, Income, Expenses
 NATIONAL GOVERNMENT (NG) BOOKS
• Cash Journal (CJ)
• General Journal (GJ)
• General Ledger (GL)
• Subsidiary Ledger (SL)
 FINANCIAL STATEMENTS
• Balance Sheet
• Statement of Government Equity - similar to Statement of
Equity
• Statement of Income and Expenses
• Statement of Cash Flows
• Notes to Financial Statements
TWO-MONEY COLUMN TRIAL BALANCE
• shows the acccount balances
• similar to the trial balance in
commercial accounting
 ALLOTMENT AND OBLIGATION
• Obligation accounting is modified to simplify procedures in the
incurrence and liquidation of obligations and the recording of
the budgetary accounts
• Separate registries shall be maintained to control the
allotments and obligations for each of the 4 classes
– Registry of Allotments and Obligations - Caputal Outlay (RAOCO)
– Registry of Allotments and Obligations - Maintenance and Other
Operating Expenses (RAOMO)
– Registry of Allotments and Obligations - Personal Service (RAOPS)
– Registry of Allotments and Obligations - Financial Expenses (RAOFE)
NOTICE OF CASH ALLOCATION (NCA)
The receipt of NCA by the agency
shall be recorded in the books as
debit to account “Cash-National
Treasury, Modified Disbursement
System (MDS)” and credit account
“Subsidy Income from National
Government”.
 FINANCIAL EXPENSES
• bank charges, interest expenses, commitment charges
and other related expenses shall be separately classified
from Maintenance and Other Operating Expenses
• also includes losses incurred relative to foreign exchange
transactions and debt services subsidy to GOCC
 PERPETUAL INVENTORY
• supplies and materials purchased for inventory purposes
shall be recorded using the perpetual inventory system
• Regular puchases shall be coursed thru the inventory
account and issuances shall be recorded as they take
place except those purchased out of Petty Cash Fund
which shall be charged directly to the appropriate
expense account.
VALUATION OF INVENTORY
Cost of ending inventory of
supplies and materials shall
be computed using the
moving average method
MAINTENANCE OF SUPPLIES AND PPE
LEDGER CARDS
• Supplies Ledger Cards/Stock
Cards - by stock number
• Property, Plant and Equipment
Ledger Cards/Property Cards - by
category of PPE
 CONSTRUCTION OF ASSETS
• the Construction Period Theory shall be applied for costing
purposes
• bonus paid to the contractor for completing the work ahead of
time shall be added to the total cost of the project
• liquidated damages charged and paid for by the contractor shall
be deducted from the total cost of the project
• Any related expenses incurred during the construction of the
project (taxes, unterest, license fees) shall be capitalized and
those incurred after the construction shall form part of operating
cost