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Government Budgeting
• Is the critical exercise of allocating revenuesand borrowed funds to attain the economicand social goals of the country.
• It also entails the management of
government expenditures in such a way thatwill create the most economic impact fromthe production and delivery of goods andservices while supporting a healthy fiscal
position.
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Important of Government Budgeting
• Government budgeting is important becauseit enables the government to plan andmanage its financial resources to support theimplementation of various programs and
projects that best promote the developmentof the country.
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Major Processes involved in National
Government Budgeting
• Budget preparation• Budget authorization
• Budget execution
• Accountability
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Budgetary Process
Function Participants Schedule Planning andEstimation
Budget Division
Departments and
Agencies
July-September
Planning and
Estimation Budget Division October-January
LegisltiveDeliberation
General Assembly January-May
BudgetExecution
Budget Division
Legislative
Committees
Departments and
Agencies
June-July
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Planning and Estimation
• During this preparation period, the staffof the Division of Budget continuallymeets with the agencies' fiscal andprogram personnel to answerquestions and provide assistance indeveloping their budget requests.
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Preparation of the Budget
• Following analysis of the requests by theDivision of Budget, detailed recommendationsare made to the Commissioner of Finance andAdministration.
• Meetings are convened with commissioners anddirectors of the departments and agencies bythe Commissioner of Finance andAdministration.
• A consensus is sought with the agencies as tothe appropriate funding level for the upcomingyear.
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Preparation of the Budget
• The Governor and the Commissionerof Finance and Administration reviewthe recommendations resulting fromthese hearings and consider necessaryalterations to fit within the scope of theAdministration's initiatives.
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Legislative Deliberation
• After the Budget Document and Budget Messagehave been presented, the appropriation process isinitiated.
• The Appropriations Bill, prepared by the Departmentof Finance and Administration, is introduced and
referred to the Finance, Ways, and MeansCommittees of both houses of the Legislature.
• The Senate and House of Representatives mustultimately pass the exact version of the
Appropriations Bill for it to be enacted into law.
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Budget Execution
• Budget execution is a process that continuesthroughout the fiscal year. In addition to thedaily review of numerous operational andpersonnel transaction requests, the budgetanalysts must assure that legislative intentionsof the Appropriations Act are being compliedwith and carried out by the various departmentsand agencies.
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Annual National Budget
• The preparation of the annual budgetinvolves a series of steps that begins withthe determination of the overall economictargets, expenditure levels, revenue
projection and the financing plan by theDevelopment Budget CoordinatingCommittee (DBCC).
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Annual National Budget
• The DBCC is an inter-agency bodycomposed of the DBM Secretary asChairman and the Bangko Sentral Governor,the Secretary of the Department of Finance,
the Director General of the NationalEconomic and Development Authority and arepresentative of the Office of the Presidentas members.
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Department of Budget and Management (DBM)
• Filipino: Kagawaran ng Pagbabadyet atPamamahala
• Is an executive body under the Office of thePresident of the Philippines.
• It is responsible for the sound and efficientuse of government resources for nationaldevelopment and also as an instrument forthe meeting of national socio-economic andpolitical development goals.
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• The current Secretary of Budget andManagement appointed by PresidentBenigno Aquino III is FlorencioAbad.
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Six Characteristics in the Philippine Budget Process
• A commitment to fiscal discipline.
• Tax compliance and corruption.
• Subsidies: government-owned andcontrolled corporations.
• The Development Budget CoordinatingCommittee.
• The national planning function.
• Unprogrammed funds and special purposefunds.
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Key Constitutional Restrictions
• The President can impose restrictions on thedisbursement of funds appropriated byCongress.
• The President can augment any
appropriations from savings in otherappropriations.
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Step 1. Issue the budget call
• A local budget call is the issuance of adirective from the LCE to mark the beginningof the budget preparation period for the localgovernment.
• It shall contain the general objectives,specific sectoral objectives, policy decisions,strategies and prioritized P/A/Ps bysector/office as reflected in the AIP.
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• It shall provide specific guidelines in thepreparation of individual budget proposals.
• This directive shall be issued between June15 to June 30 to allow more time for the
department heads to formulate reasonableproposals for the budget year.
• The period for the budget preparationprocess starts July 1 and winds up on
October 16 for each fiscal year.
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The budget guidelines shall include thefollowing:
• Expenditure ceiling by office/sector
• Allocation scheme by major final out and
P/P/A• Budget calendar and budget preparation
forms
• Other administrative guidelines
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b. Guidelines in Preparing the Budget Message.
• Present the objectives, policies, strategies and priorityprograms/activities/projects of the LGU for the budgetyear and relate their consistency with the proposedrevenue and expenditure structure.
• Identify the “flagship projects” by sector and by programand relate how they are envisioned to carry out thedevelopment goals for the next 3 to 5 years.
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• Review past 5 years revenue and expenditure patternand disclose what basic services and facilities wereprovided.
• Discuss the current year’s income and expenditure
performance and disclose any improvements in the
production of results compare with the past 5 years.
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c. The Local Expenditure Program (LEP)
• The first part of the LEP is the estimates of income. The incomestructure that is composed of 3 components shall have informationon the immediate past year, current year and budget year estimates.
• The second part of the LEP is the expenditure program. The detailsof the expenditure program shall be presented by sector, office or
department, special purpose appropriations, byprogram/activity/project, and by expense class for a 3-year period,namely, the past year, current year and budget year.
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• The fourth part of the LEP is the general provisions for receipts,income and expenditure policies of the local government.
• The last part of the LEP is a summary of the FY-New Appropriationby Office/Department and Special Purpose Appropriations. It reflectsthe total proposed budget for the budget year.
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d. The Budget of Expenditures and Sources of
Financing (BESF) • The BESF is a detailed and graphical presentation of the
expenditure program of an LGU covering actualobligations for the past year, actual and estimated
expenditure for the current year and the proposedbudget program for the ensuing year.
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B. Budget Authorization
• The second phase in the local governmentbudget process, it starts from the time theLCE submits the budget to the sanggunianfor legislative deliberation and ends with the
corresponding enactment of theappropriations ordinance.
St 4 P t th ti b d t t th l l
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Step 4. Present the executive budget to the local
sanggunian.
a. State of the LGU Address.
• On the first day of the session of the local sanggunian, theLCE shall address and present to the members of thesanggunian and the general public the highlights, thrusts,programs and priorities of the budget under consideration onthe basis of the past and current situation of the LGU.
• The LCE shall likewise brief the sanggunian on the level ofthe proposed expenditures, how these are allocated amongthe 3 mandated sectoral services, namely: economic, social,and general services and the sources of financing that willsupport the budget.
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Step 5. Deliberate on the executive budget.
• The deliberation on the budget shall be within the
current fiscal year, which may commence onOctober 16, or upon receipt of the sanggunian, ofthe executive budget.
• The sanggunian shall see to it that the executive
budget is development or results-oriented, poverty-focused and promotes economic growth.
• The sanggunian shall be guided by fiscalrequirements and administrative regulations
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Step 6. Enact the appropriations ordinance.
• On or before the end of the current fiscal year, the
sanggunian shall approve through the enactment ofan ordinance the annual budget of the LGU for theensuing fiscal year on the basis of the estimates ofincome and expenditures submitted by the LCE.
• The legislative instrument authorizing the budget isknown as an Appropriation Ordinance.
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Step 7. Veto and override the budget.
• The LCE shall have the power to veto any particular
item/s of the appropriation ordinance or resolutiondirecting the payment of money or creating liability,on the ground that it is ultra vires or prejudicial to thepublic welfare.
• Changes in the annual budget may be authorized byway of supplemental budgets and the appropriationordinance authorizing it shall be enacted by thesanggunian in the same manner as that of the
annual budget.
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C. Budget Review
• Its primary purpose is to determine the compliance
of the enacted appropriation ordinance with therequirements set forth in the Local GovernmentCode.
• The DBM reviews the appropriation ordinance. The
Sangguniang Panlungsod reviews the appropriationordinances of their respective barangays.
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Step 8. Prepare the Budget Review Matrix (BRM).
• The BRM will allow the reviewing agency orbody to go over, in a single document, thewhole budget submitted by the localgovernment for review.
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Step 9. Check provision for budgetary requirements.
• The aggregate amount appropriated shall not
exceed the estimates of income.
• Full provision shall be made for all statutory andcontractual obligations of the LGU concerned,provided however, that the amount of appropriation
for debt servicing shall not exceed 20% of theregular income of the LGU concerned,
Step 10 Check consistency of Annual/Supplemental
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Step 10. Check consistency of Annual/Supplemental
Budget with AIP and ELA.
• The reviewing authority shallascertain/check, in addition to the Code’s
compliance, the consistency ofAnnual/Supplemental Budget with the
approved AIP and the ELA which issubsumed in the approved AIP.
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Step 11. Issue the review action.
• The review action may be in the form of a review
letter and all the findings must be disclosed.
- Before the appropriation ordinance is officiallyreturned to the concerned LGU, the stamp of reviewof the reviewing agency or body must be stamped in
every page of the reviewed appropriation ordinanceand duly signed by the Regional Director of DBM orattested to by the Secretary of the Sanggunian, asthe case may be.
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C. Budget Execution
• It is the fourth phase of the local government budget
process. It involves the release and actualdisbursements of funds appropriated for theperformance of functions and undertaking ofprojects and activities.
• The critical aspect of this phase is the collection offunds such that disbursements do not exceedappropriation.
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• Actual funding requirements of programs/ projects/
activities can only be determined through budgetexecution.
• Accounting for local government funds has alsobeen simplified and made more understandable with
the institution of the New Government AccountingSystem (NGAS).
Step 12 Prepare the Local Budget Matrix (LBM)
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Step 12. Prepare the Local Budget Matrix (LBM),
Cash Program and performance targets.
• The LBM is the yearly overall financial plan of theLGU equivalent to its approved appropriationdisaggregated into components or categories.
Budgetary item are categorized in the LBM
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Budgetary item are categorized in the LBM
into the following:
1. By source of appropriation
2. By fund
3. By program/project or by department/office
4. By allotment class
5. By need for clearance
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Step 13. Obligate and disburse funds.
• Obligations shall be limited to the available allotment
for the purpose. The requesting department/officeshall:
• (1) prepare the (Allotment and Obligation Slip/ALOBS)Obligation Request (ObR) based on disbursementvouchers/purchase requests and other supportingdocuments;
• (2) have the ObR signed by its respective head asrequesting official; and
• (3) forward the same to the Budget Officer, together withthe supporting documents.
Step 14 Procure goods and services under the New
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Step 14. Procure goods and services under the New
Government Procurement System.
• It is the policy of the Government that
procurement of infrastructure projects, goodsand consulting services through publicbidding, except as otherwise provided by
law.
E B d A bili
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E. Budget Accountability
• It involves the accurate recording and
reporting of LGU’s income and expenditures
and the evaluation of LGU’s physical and
financial performance.
S S b i bili
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Step 15. Submit accountability reports.
• All departments and offices are required to submitaccountability reports to the Local Finance Committeethrough the Budget Officer in order to effectively monitorthe efficiency of the LGU’s fund utilization as well as
assess performance in attaining prescribed goals and
objectives.
Step 16. Evaluate the physical, financial and
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Step 16. Evaluate the physical, financial and
income performance.
• A mid-year or semi-annual review and
examination of cost and accomplishmentsagainst performance standards shall beconducted.
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CALENDAR OF ACTIVITIES
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FY2012 BUDGET PREPARATION
DATE ACTIVITIES RESPONSIBLE UNITS On or Before 15 July 2011 Budget Call The Mayor 21 – 22 July 2011 Budget Orientation TWG & Admin Officers of All
Budget Units 15 August 2011 Deadline of Submission of
Budget Proposals All Budget Units 16 Aug – 16 Sep 2011 Review and Evaluation of
Budget Proposals Technical Working Group 20 – 27 Sep 2011 Preliminary Budget Hearing City Finance Committee & All
Budget Units
28 – 30 Sep 2011 Finalization of Budget
Proposals City Finance Committee 03 – 04 October 2011 Submission/Presentation to
the Mayor for Approval City Finance Committee 05 – 07 October 2011 Printing, Reproduction &
Binding City Budget Department 10 October 2011 Submission to the City
CouncilCity Finance Committee
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Proprietary
Equations
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BUDGETARY ACCOUNTS
APPROPRIATION
ALLOTMENT
OBLIGATIONS
Authorization made by ordinance, directingthe payment of goods and services from localgovernment funds under specified conditionsor for specific purposes
Authorization issued by the Local ChiefExecutive (LCE) to a department/officeof the LGU, which allows it to incurobligations, for specified amounts,within the appropriation ordinance
Amounts committed to be paid bythe LGU for any lawful act made byan accountable officer for and inbehalf of the local government unit
concerned
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EQUITY
Interest of the government in an agency which is theexcess of an agency’s assets over its liabilities
LIABILITIES Economic obligations of an agency that are recognized
and measured in conformity with generally acceptedaccounting principles.
ASSETS Economic resources of an agency that
are recognized and measured inconformity with generally acceptedaccounting principles.
PROPRIETARY ACCOUNTS
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PROPRIETARY ACCOUNTS
Decrease in economic benefitsduring an accounting period in the
form of outflow or depletions ofassets or incurrence of liabilitiesthat results in decrease in equity
REVENUE/INCOME
Increase in economic benefits during theaccounting period in the form of inflows orenhancements of assets or decreases ofliabilities that results in increases in equity
EXPENSES
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Types of Proprietary Funds
Enterprise Funds
Internal Service Funds
PROPRIETARY ACCOUNTS
account for and report business-type activities that serve the publicat large
account for and report goods andservices provided to departments ofthe same government
BUDGETARY AND PROPRIETARY ACCOUNTING RELATIONSHIP
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