Overview of Government

Accounting
CHAPTER 1
Introduction

‘’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
there of.’’
The objectives of government accounting are:

a) To produce information
concerning past operations and
present conditions;
b) To provide a basis for guidance
for future operations;
c) To provide for control of the acts
of public bodies and officers in the
receipt, disposition and utilization of
funds and property; and
d) To report on the financial
position and the result of operation
of government agencies for the
information of all persons
concerned.
 Like the accounting for business entities,
government accounting is also a process of
producing information that is useful in making
economic decisions. Government accounting,
however, places greater emphasis on the
following:

a. Sources and utilization of government funds;

and
b. Responsibility, accountability and liability of
entities entrusted with government funds and
properties.
 The sources of government funds
include receipts from taxes and
other fees, borrowings, and grants
from other government and
international bodies.
> The utilization of government
funds includes expenditures on
programs, projects, unanticipated
losses from calamities and the like.
Responsibility. Accountability and
Liability over Government Funds
and Property.
Responsibility over Government Fund and
Property
1. Government resources shall be utilized
efficiently and effectively in accordance
with the law. The head of a government agency
is directly responsible in implementing this
policy and is primarily responsible for
government resources entrusted to his
agency.
Those who are entrusted with the
possession of government resources
are directly responsible to the head
of the agency.

2. All those who are exercising

authority over a government agency
shall share fiscal responsibility.
Accountability over Government Funds and
Property.

1. A government officer entrusted

with the possession of government
resources is responsible for the
safekeeping there for in accordance
with the law. Every accountable
officer shall be properly bonded .
2. The transfer of government funds
from one officer to another shall,
except as allowed by the law, be
made only after the authorization of
the COA. The transfer shall be
properly documented in an invoice
and receipt.
Liability over Government Funds and Property

1. The unlawful use of government

resources shall be the personal liability
of the employee found to be directly
responsible there for.
2. Every accountable officer shall be
liable for all losses resulting from the
unlawful use or negligence in the
safekeeping of government resources.
3. No accountable officer shall be
relieved from liability merely
because he has acted under the
direction of a superior officer in
unlawfully utilizing the government
resources entrusted to him, unless
before that act, he has notified the
superior officer, in writing, that the
utilization is illegal.
The superior officer shall be primarily
liable while the accountable officer who
fails to serve the required notice shall be
secondarily liable.

4. An accountable officer shall

immediately notify the COA for any loss
of government funds unforeseen events
(force majeure) within 30 days. Failure to
do so will relieve the officer of liability.
Accounting responsibility
the following offices are charged
with government accounting
responsibility:
a. Commission on Audit (COA)
b. Department of Budget and
Management (DBM)
c. Bureau of Treasury (BTr)
d. Government agencies
Commission on Audit (COA)
The Commission on Audit (COA)
a. Has the exclusive authority to
promulgate accounting and auditing rules
and regulations.
b. Keeps the general accounts if the
government, supporting vouchers, financial
report to the president and congress.
c. Submits financial reports to the President
and Congress.
Department of Budget and
Management (DBM)

The Department of Budget and

Management (DBM) is responsible
for the formulation and implementation of
the national budget with the goal of
attaining the nation’s socio-
economic objectives.
Bureau of Treasury (BTr)
the Bureau of Treasury (BTr) functions
under the Department of Finance and is the
cash custodian of the government. the BTr
is authorized to:
a. Receive and keep national funds and
manage and control the disbursements there
of: and
b. Maintain accounts of financial
transactions of all national government
officer, agencies and instrumentalities.
Government Agencies
Government agency refers to any
department, bureau or office of the
national government, or any of its
branches and instrumentalities, or any
political subdivision, as well as any
government owned or controlled
corporation (GOCC), including its
subsidiaries, or other self-governing
board or commission of the government.
The government agencies are responsible
in directly implementing the projects of,
and performing the functions delegated
by, the government.
Each agency (entity) shall maintain
accounting books and budget registries
which of the COA and DBM.
Government agencies are required by law to
have accounting units/ divisions/ departments.
Financial Reporting System of the National
Government
> Entity – refers to a government agency,
department or operating/field unit.
> Financial Reporting – Is the process of preparation,
presentation and submission of general purpose
financial statement and other reports. The
objective of financial reporting is to provide
information about the entity that is useful to users
for accountability purposes and decision-making.
The GAM for NGAs
An ‘’old’’ government accounting
system had been used for about five
decades before it was replaced by the
New Government Accounting System
(NGAS) in 2002. However, on January
1, 2016, the NGAS was replaced by
the Government Accounting manual
for National Government Agencies
( GAM for NGAs).
Legal basis

The GAM for NGAs is promulgated

by the Commission on Audit (COA)
based on the authority conferred to
it by the Philippine Constitution:
Coverage
The GAM for NGAs provides the basis
concepts to be used in:
a. Preparing general purpose financial statement
in accordance with the Philippine Public
Sector Accounting Standards (PPSAA)
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.
Objective
The GAM for NGAs aims to update
the following:
a. Standards, policies, guidelines and
procedures in accounting for
government funds and property;
b. Coding structure and accounts; and
c. Accounting books, registries,
records, forms, reports and financial
statements.
Basic Accounting and Budget reporting
Principles

The financial record and reports of government

entities shall comply with the following.

1. Philippine Public Sector Accounting

Standards
2. Accrual basis of accounting
3. Budget basis
4.Revised Chart of Accounts
5. Double entry bookkeeping
6. Financial statements based on accounting and
budgetary records
Qualitative Characteristics of
Financial Reporting

Information reported shall meet

qualitative characteristics.
Qualitative characteristics are the
attributes that makes information
useful to users.
Components of General Purpose
Financial Statements

General Purpose Financial Statement

are those intended to meet the needs
of users who are not in a position to
demand reports tailored to meet their
particular information needs.
The complete set of general purpose financial
statements consists of:

a. Statement of Financial Position

b. Statements of Financial Performance
c. Statements Changes in Net Assets/Equity
d. Statements of Cash Flows
e. Statements of Comparison of Budget and
Actual Amounts; and
f. Note to the financial Statements, comprising
a summary of significant accounting policies
and other explanatory notes.
Recognition of Asset
An asset is recognized when:
a. it is probable that future economic
benefits will flow to the entity; and
b. the asset has a cost or value (e.g.,
fair value) that can be measured
reliably.
Liabilities – are present obligation of
the entity arising from past events, the
settlement of which is expected to
result in an outflow from the entity of
resources embodying economic
benefits or service potential.

Equity – is the residual interest in the

assets of the entity after deducting all
its liabilities.
Revenue – is the gross inflow of economic
benefits or service potential during the
reporting period when those inflows result
in an increase in net asset/equity, other than
increases relating to contributions from
owners.
Expenses – are decreases in economic
benefits or service potential during the
reporting period in the form of outflows or
consumption of assets or incurrence of
liabilities that result in decreases in net
assets/equity, other than relating to