accounting

ACCOUNTING FOR

BUDGETARY ACCOUNTS

BUDGETARY ACCOUNTS SYSTEM

RECEIPT/INCOME AND DEPOSIT SYSTEM

DISBURSEMENT SYSTEMFINANCIAL REPORTINGG SYSTEM

ACCOUNTING SYSTEM

SPANISH REGIME* Governor-General* Council

AMERICAN OCCUPATION* Executive Secretary* Philippine Commission* Department of Finance* Philippine Legislation

HISTORICAL BACKGROUND OF PHILIPPINE BUDGETING

• 1935 Philippine Constitution prescribed the legislation policies.

• April 25, 1936- Budget Commission was created.

• December 17, 1937- Commonwealth Act No. 246 or the Budget Act was passed.

• June 4, 1954- RA No. 992 or the Revised Budget Act was passed.

• March 3, 1976 – the Budget Commission was reorganized when the President issued PD 899.

• September 16, 1976 – PD 999 was signed by the President amending RA 992.

HISTORICAL BACKGROUND OF PHILIPPINE BUDGETING

Referred to the money bag or public purse used as the receptacle for all revenue collections of the government from which government expenditures were withdrawn.

DEFINITION OF BUDGET

• Commonly understood as the document which consists of plans for government finances submitted to the legislative body for approval.

A statement of estimated receipts based on the existing and proposed revenue and expenditure which the Constitution requires the President to submit within thirty days from the opening of each regular session of Congress.

NATIONAL BUDGET

estimate of the proposed expenditures for specific purposes and periods

National Budget

o It is allocated for the implementation of various programs and projects and programs, operation of government offices, payment of salaries, payment of debts.

FILIPINO FAMILY BUDGET

NATIONAL BUDGET

- Food , bills, and daily needs -Salaries of staffs, maintenance costs, and other expenses.

- education, health insurance, house’s mortgage

- Basic education, public healthcare, infrastructure and other priority investments

- Plans ahead to pursue dreams

- dreams: vision for the country, wherein people can pursue their individual and collective dreams

NATIONAL BUDGET COMPARED TO THE BUDGET OF A FILIPINO FAMILY

EXPENDITURES BY EXPENSE CLASS* Current Operating Expenditures* Capital Outlay* Net Lending* Debt Amortization

EXPENDITURES

EXPENDITURES BY SECTOR

* General Public Services* National Defense* Education, Culture and Sports/Manpower Development* Health, Nutrition and Population Control* Labor and Employment* Housing and Community Development* Social Security, Social Services and Welfare* Economic Services* Other Purposes

A budget message setting forth in brief the significance of the appropriations proposed.

Summary financial statements setting forth: - Estimated expenditures and proposed

appropriations necessary for the support of the government for the ensuing fiscal year, including those financed from revenues, domestic or foreign borrowings and donations.

FORM AND CONTENT

- Estimated receipts during the ensuing fiscal year under laws existing at the time the Budget is transmitted, and under the revenue proposals, if any, contained in the Budget.

- Actual appropriations, expenditures and receipts during the last completed fiscal year.

FORM AND CONTENT

-Estimated expenditures and receipts and actual or proposed appropriations during the fiscal year in progress- Statement of the condition of the National Treasury at the last completed fiscal year, the estimated condition of the Treasury at the end of the fiscal year in progress and the estimated condition of the Treasury at the end of ensuing fiscal year.

FORM AND CONTENT

The legal basis of the current national budget system is the Budget Reform Decree or Presidential Decree No. 1177, approved on June 30, 1977. It is entitled “ Revising the Budget Process in order to Institutionalize the Budgetary Innovations of the New Society”.

LEGAL BASIS OF THE BUDGET SYSTEM

AS TO NATURE

*ANNUAL BUDGET – a budget which covers a period of one year.

*SUPPLEMENTAL BUDGET – a budget which purports or supplement or adjust a previous budget which is deemed inadequate for the purpose it is intended.

*SPECIAL BUDGET- a budget of special in nature on items not adequately provided for in the appropriation act.

KINDS OF BUDGET

AS TO BASIS

*PERFORMANCE BUDGET – emphasize the program & services conducted and based on functions, activities and projects which focus attention upon the general character and nature of the work to be done or upon the services to rendered, rather than upon the things to be acquired.

KINDS OF BUDGET

AS TO BASIS

*LINE-ITEM BUDGET - a budget the basis of which are the objects of expenditure such as:

- Personal Services (PS)-Maintenance and Other Operating

Expenses ( MOOE)-Financial Expenses-Capital Outlay

KINDS OF BUDGET

AS TO APPROACH AND TECHNIQUE

*ZERO-BASED BUDGETING (ZBB) - a process which requires systematic consideration of all programs, projects and activities with the use of defined ranking procedures.

*INCREMENTAL APPROACH- a budget where only additional requirements need justification.

KINDS OF BUDGET

*REGIONAL BUDGET – a budget prepared of the national government, wherein the DBM identifies by region the expenditures of government agencies and releases funds also on a regional basis.

*LONG-TERM BUDGET – a budget prepare for a four or five-year period or longer; long range estimate of revenue and expenditure requirements.

OTHER FORMS OF BUDGET

* KEY BUDGETARY INCLUSIONS (KBI) – refer to the financial commitments of agencies pertaining to a budget year.

OTHER FORMS OF BUDGET

A budget where the proposed expenditures are equal to or less than the estimated revenues.

BALANCED BUDGET

+NEDA +BSP+GOVERNMENT AGENCIES+PRESIDENT+DEPARTMENT OF FINANCE

Budget

Preparation

The Budget

Process

+NEDA +BSP+GOVERNMENT AGENCIES+PRESIDENT+DEPARTMENT OF FINANCE

Budget

Preparation

+GOVERNMENT AGENCIES

Budget

Execution

The Budget

Process

GAA

CRP

Release of Guidelines

ARPBEDs

Incurring Obligations

Allotment Release

ABM

BUDGET EXECUTION

Settlement of Obligations NCAA

CDC

NCA

SARO


+COMMISSION ON AUDIT

Budget

Accou

ntabi

lity +NEDA

+BSP+GOVERNMENT AGENCIES+PRESIDENT+DEPARTMENT OF FINANCE

Budget

Preparation


Budget

Execution

The Budget

Process

Budget Accountability

Periodic Reporting

Top Management

ReviewAction of COA

BUDGETARY ACCOUNTS

Appropriation

Allotment

Obligation

• To understand the Budgetary Accounts System• To determine the general guidelines on the:

Release of Funds

Release of Disbursement Authorities • To prepare the Books of the DBM

Objectives of the study

Allotment Release Order(ARO) is a formal document issued by the DBM to the agency containing the authorization, conditions, and amount of agency allocation. It could be the ABM.

Agency Budget Matrix(ABM) is a document which is the basis of the comprehensive release of the allotment chargeable against current year GAA.

Special Allotment Release Order(SARO) is issued subject to compliance with specific laws or regulations or s subject to separate approval or clearance by competent authority,

Accounting for Budgetary Accounts

Sub-allotment Advices(SAAs)/Letters of Advice of Allotments (LAAs) are being issued or released in case of agencies with decentralized accounting procedures.

General Appropriation Act(GAA) is an act containing several provisions that serves as a guideline in the release of funds and disbursements.


Flows and procedures of Budgetary Accounts


Preparation of the Agency

Budget Matrix

Monitoring and recording of allotments

Releasing of SAAs to the

Regional Offices by the Central Office

Issuance of the SAAs/LAAs to the Operating Units by the

Regional Office

Recording and monitoring of

obligations

The Agency Budget Matrix(ABM)- refers to document showing the disaggregation of agency expenditures by

source of appropriation

allotment class

Personal services

Maintenance and other Operating Expenses

Capital Outlay

Financial Expenses

need of clearance

Needing Clearance

Not Needing Clearance


Objects of Expenditures1. Personal Services2. Capital Outlay3. Maintenance and other Operating

Expenses4. Financial Expenses


BOOKS of DBM3 Registries

RAPAL (Registry of Appropriations and Allotments)-for general appropriations

RESPFA (Registry of Special Purpose Fund Appropriation)-special purpose funds

RANCA (Registry of Allotment and NCA)-controls funding of allotments

BOOKS of BOT

RENREP (Registry of NCA and Replenishments)

- for monitoring of bank transfer it makes in replenishing its Modified Disbursements Scheme (MDS) accounts

-use to record the NCA releases and the bank replenishments made to cover MDS checks issued by the agencies

Registries in the Books of Agency

1. Registry of Allotments and Obligations- Personal Services (RAOPS)

2. Registry of Allotments and Obligations- Maintenance and Other Operating Expenses (RAOMO)

-use to record allotments received and obligations incurred for expenses classified under personal Services such as: basic pay, all authorized, bonuses, cash gifts..

- Record allotments received and obligations incurred for expenses classified under MOOE

-travelling expenses, supplies and materials, repairs and maintenance of PPE, representation expenses, training and seminar expenses

3. Registry of Allotments and Obligations- Capital Outlay (RAOCO)

4. Registry of Allotments and Obligations- Financial Expenses (RAOFE)

-to record allotments received and obligations incurred for CA

- Purchase and construction of property, plant and equipment

-to record allotments received and obligations incurred for FE

- Commitment fees, bank charges, interest expenses, documentary stamps, expenses

Cash – National Treasury, Modified Disbursement Scheme xx Subsidy Income from the national Government xx

-entry made by agency upon the receipt of NCA

PAYMENTS for:1. personal services2. Maintenance and other operating expenses3. Financial expenses4. Purchase and/or construction of fixed assets5. Miscellaneous transactions

Cash- National Treasury, MDS xx

Transactins Account TitleAccount Code Debit Credit

Cash Transactions1. Receipt of NCA Cash- National Treasury, MDS

Subsidy Income from NG

Regular Agency Books Source Documents and Books of Original Entry

Personal Services- 8% Maintenance and other Operating Expenses-

5% Capital Outlay- 5%

Taxes are computed based on the following percentages:

accounting

Documents

ensuing fiscal

completed

record allotments

agency budget

fiscal year

government

national government

capital outlay