Abante, Jane Angela

Ginez, Vanessa Joy

Herezo, Nicole
Tagupa, Engelica
Talledo Jessa
CHAPTER 2
ACCOUNTING FOR BUDGETARY ACCOUNTS

Section 29 (1), Article VI of the 1987 Constitution provides, No money shall be paid out of the
Treasury except in pursuance of an appropriation by law. It simply means that no public fund
may be spent if there is no law authorizing the payment of money and specifying the urpose for
which the same will be spent.
General Appropriations Act (GAA)-contains the legal authorization to use public money for the
various programs, activities and projects of the national government
Department of Budget and Management (DBM)- the approved appropriations are the bases of
the DBM for issuing allotments or the authority of government agencies to incur obligations or
enter into commitments to spent government funds.

Accounting Systems
General Accounting Plan-overall system of a government agency/unit
1. Budgetary Accounts System
2. Receipt/Income and Deposit System
3. Disbursement System
4. Financial Reporting System

The National Budget

Budgeting-basically planning and control
Planning- the development of future objectives and the preparation of various budgets to achieve
these objectives
Control-ensures that the objectives set down at the planning stage are attained

Government Budget-plan for financing the government activities for a fiscal year prepared and
submitted by responsible executive to a representative body whose approval and authorization
are necessary before the plan can be executed
Budget-an estimate of the proposed expenditures for specified purposes and periods, and
embodies the means of financing them during the same timeframes

Form and Contents of the National Budget

Budget proposal of the President shall include current operating expenditures and capital outlays.
Section 22, Article VII of the Constitution of the Philippines provides that The President of the
Philippines shall submit to Congress within 30 days from the opening of every regular session, as
the basis of the general appropriation bill, a budget of expenditures and sources of financing ,
including receipts from existing and proposed revenue measures.
Budget presented to Congress may include the following:
1. Budget message setting forth in brief the governments budgetary thrust for the budget
year
2. Summary Financial Statements

Fundamental Principles of Fiscal Operations

The Principles, as provided by the law, are:
1. No Money shall be paid out of the public treasury or depository except in pursuance of an
appropriation law or other specific statutory authority;
2. Government funds or property shall be spent or used solely for public purposes;
3. Trust funds shall be available and may be spent only for specific purpose for which the
trust was created;
4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising
authority over the financial affairs, transactions, and operations of the government
agency;
5. Disbursement or disposition of government funds or property shall invariably bear the
approval of the proper officials;
6. Claims against government funds shall be supported with complete documentation;
7. All laws and regulations applicable to financial transaction shall be faithfully adhered to;
and
8. Generally accepted principles and practices of accounting, as well as, of sound
management and fiscal administration shall be observed, provided they do not contravene
existing laws and regulations.
Kinds of Budget

1. As to Nature
a. Annual Budget-budget which covers a period of one year
b. Supplemental budget-budget which supplement or adjust a previous budget which is
deemed inadequate for the purpose it intended
c. Special Budget-budget of special nature and generally submitted in special forms on
account that itemizations are not adequately provided in appropriation act
2. As to Basis
a. Performance Budget-Budget emphasizing the program or services conducted based
on functions, activities, and projects
b. Line-Item Budget-budget the basis of which are the objects of expenditures
3. As to Approach and Technique
a. Zero-Based Budgeting-systematic consideration of all programs, projects and
activities
b. Incremental Approach-only additional requirements need justification

Balanced Budget
It is a budget where the proposed expenditures are equal or less than the estimate revenues.

The Budget Process

1. Budget Preparation-estimation of government revenues, the determination of budgetary
properties and activities, and the translation of approved priorities and activities into
expenditure levels. It is reviewed and finalized by the President of the Philippines, then
submitted to the Legislative Department as basis for preparation of the annual
Appropriation Act.
Process on passing budget of proposal:
1.
2.
3.
4.

Budget proposals submitted to Central Office of agencies

Collated and received by Department of budget and management
Submits the analysis and recommendation of budget proposals to the President
Finalization of the Congress

2. Legislative Authorization -Second phase which involves the legislative review and
approval of the budget.
*submission must be within 30 days from the opening of Congress
General Appropriation Bill- presents the new general appropriations in the coming year.
a
b

Special provision- Conditions regarding agency expenditures; Amount intended for

agencys activities.
General Provision-Rules and conditions to agencies

*Budget briefing- heads of the agencies presents the details of the budget proposals to the
Congress.
Appropriations are approved by the legislative body in the form of:
1
2
3

General Appropriation Law

Supplemental Appropriations Law
Certain automatic appropriations intended for fixed and specific purposes

3. Budget Execution and Operation-This phase serve as the medium through which plans for
operations be implemented using the available resources and funds.
Activities made during this phase:
-Release of funds (allotments) and corresponding allocations
-Continuous review of the budget program (revenue and borrowings)
-Review of proposed uses of agency and other related activities
4. Budget Accountability
Activities made during this phase:
1
2
3

Periodic reporting by the government agencies

Top management review of government activities and the fiscal implementation thereof
The actions of COA in assuring fidelity of officials and employees with regards to
handling of receipts and expenditures.

*Sec 63, PD 1177 provides that failure of agencies to submit reports shall automatically be
suspended on the payment of their salaries until they have complied with the needed
requirements.

Budgetary Accounts
1
2
3

Appropriation- An authorization made by the law or other enactment on using of

government funds to pay goods and services for a specific purpose or conditions
Allotment- An authorization issued by DBM which allows the government agency to
incur obligations within the legislative appropriation
Obligation- The government eventual payment of a sum of money to the government
agency

Budgetary Accounts System

a. Allotment Release Order- Formal document issued by DBM containing the authorization,
conditions and amount of agency allocation.
b. Special Allotment Release Order- Subject to comply to specific laws or regulations

Reporting Requirements
a. Budget Execution Documents (BEDs)- contains targets and plans of the agency for the current
year.
The following are the Budget Execution Documents:
1

Physical and Financial Plan (PFP)

-overall plan of the national government and agencies encompassing the targeted outputs
and estimates obligations/expenditures

2. Monthly Cash Program (MCP)

-Monthly disbursement requirements of the national government agencies.
3. Estimate of Monthly Income
-The estimated income of the national government agencies for the current year
4. List of Not yet Due and Demandable Obligations
-Claims against the government for goods which were already delivered or services which
were rendered in favor of the government
b. Budget Accountability Reports (BARs)- contain the information of the actual output of the
agencies for the current period.

Budgetary Accountability Reports include the following:

1
2
3
4

Quarterly Physical Reports of Operations- reflect national government agencies actual

physical accomplishments
Quarterly Financial Report of Operations- reflect national government agencies actual
obligations/ expenditures incurred in projects, programs and activities
Quarterly Report of Actual Income- reflect national government agencies actual income
collections from all sources
Statement of Allotment, Obligations and Balances- reflect national government agencies
summary report of allotments received and corresponding obligations or expenditures
from all sources
Monthly Report of Disbursements(in lieu of Summary of list of Checks Received and
Cancelled)
-reflect all disbursements of the national government agencies

Procedure for call up letters:

First call up letter- non-compliance

Second call up letter- non-action

Third call up letter- two previous call up letters sent
No report- no release

General Guidelines on the Release of Funds

*Re-enacted budget- budget of the preceding year shall remain in force in effect until the general
appropriation bill for the current year is passed by the Congress
*(ARP) Allotment Release Program- determines the level of allotment releases for a given fiscal
year
*Allotments are released either through Agency Budget Matrix or issuance of SARO

Guidelines on the Release of Disbursement Authorities

1. Release of Notice of Cash Allocation (NCA)
Personnel Service- provides all filled positions of fixed expenditures
Maintenance and Other Operating Expenses
Capital Outlay- Scheduled work targets

Foreign Assisted Projects

Cash shall be released only upon the receipt of the Bureau of Treasury
certification regarding the availability of the loan proceeds from the foreign lending
institution.
Per Circular Letter No. 2011 15, dated December 26, 2011
Agencies shall ensure optimum utilization of their available NCA
releases within the scheduled program/project/activity implementation period
as reflected in their submitted Monthly Cash Programs. All NCAs shall be valid
only until the last working day of the said month. Thus, unutilized NCAs shall
become void.
A Tentative Cash Program will be prepared if there would be pending
GAA (General Appropriation Act) for the year.
2. Release of Non-Cash Availment Authority (NCAA)
Agencies that avail foreign loan proceeds should submit a request for
issuance of NCAA. This will be used to cover the obligations incurred by the agency
within their available allotments in pursuant of DBM-COA-DOF Joint circular 2-97 and
CL No. 2003-12 which is about the Guidelines on the Release of Funds.

3. Release of Cash Disbursement Ceiling (CDC)

DBM issued the CDC to the Department of Foreign Affairs (DFA) and
Department of Labor and Employment (DOLE) to use their income from Foreign
Service posts. This is to cover operating requirements of the said posts without
going beyond the released allotment.

Conduct of the Agency Performance Review

Quarterly Evaluations of the agencys performance shall be conducted to see
if it has attained its plans. If not, remedial actions shall be taken to resolve the
issues. The DBM will be monitoring the action programs.

Common Fund System

The common fund system policy shall continue to be used. However, the
Common Fund Scheme will not apply to the current year Accounts Payables (A/Ps) to
external creditors of the DPWH, DepEd, DOH, CHED, and State Universities and
Colleges (SUCs) covered by the Direct payment Scheme; thus, NCAs shall be issued
through their special MDS accounts through Circular Letter 2005-2 which is the
schedule of NCA releases for Accounts Payable (A/P).
Cash Allocation from MDS accounts may be used to cover payment to
obligations against current and prior years budget.

ILLUSTRATIONS:
General Appropriation
Personnel Services (PS)
Maintenance
&
Operating
Expenses
(MOOE)
Capital Outlay (CO)
Financial Expenses (FE)

Total
Appropriation
200, 000

Released
Allotments
50, 000

NCA
30, 000

280, 000

70, 000

40, 000

400, 000
8, 000

100, 000
2, 000

80, 000
1, 000

Books of the Department of Budget and Management

Appropriations and allotments are to be controlled and monitored by DBM
through registries which are:

Registry of Appropriations and Allotments (RAPAL)

This is for the general appropriations in order to control approved
appropriations and allotments released.
Department of Budget and Management
Registry of Appropriations and Allotments (RAPAL)
Agency X
Capital Outlay

Dat
e

Allotm
ent

Ref

100,
000
2

Appro
priatio
n
Balanc
e
400,
000
300,
000

Maintenance &
O.E.
Appro
priatio
Allotm
n
ent
Balanc
e
280,
000
70,
210,
000
000

Financial
Expenses
Appro
priatio
Allotm
n
ent
Balanc
e
8, 000
2, 000

6, 000

Personnel
Services
Appro
priatio
Allotm
n
ent
Balanc
e
200,
000
50,
150,
000
000

Registry of Special Purpose Fund Appropriation (RESPFA)

This is for special purpose funds. (E.g. Miscellaneous Personnel
Benefits, Calamity Fund, and Organizational Adjustment Fund)
Department of Budget and Management
Registry of Special Purpose Fund Appropriation (RESPFA)
RELEASES

Date

Agency

CO

20, 000

MOOE

PS

FE

Total
20, 000

Balance
s
80, 000

Registry of Allotments and Notice of Cash Allocations (RANCA)

This is for the control and monitoring of the Notice of Cash Allocations
releases.
Department of Budget and Management
Registry of Allotments and Notice of Cash Allocations (RANCA)
ALLOTMENTS

Dat
e

Ref

CO

MOOE

PS

FE

Total

NCA

Unfunded
Allotment

120,
000

70,
000

50,
000

2,
000

242,
000

166,
000

76, 000

Books of Bureau of Treasury

The Bureau of Treasury shall maintain the Registry of Notice of Cash
Allocations and Replenishments (RENREP) to record the NCA releases and bank
replenishments made to cover Modified Disbursements Scheme (MDS) checks
issued by the agencies.
Bureau of Treasury
Registry of Notice of Cash Allocations and Replenishments (RENREP)
Agency X

Date

Ref

Replenishmen
ts
166, 000

NCA
166, 000

Balances
0

Books of the Agency

The government agency shall maintain different Registry of Allocations and
Obligations for the control and monitoring of the allotments it receives and the
obligations it incurs in the following books:
1
2
3
4

Registry of Allotments and Obligations

Registry of Allotments and Obligations
Expenses (RAOMO)
Registry of Allotments and Obligations
Registry of Allotments and Obligations

Personnel Services (RAOPS)

Maintenance and Other Operating
Capital Outlay (RAOCO)
Financial Expenses (RAOFE)

Upon receipt of Notice of Cash Allocation (NCA), the agency shall journalize the NCA
with the following entry:

Cash Modified Disbursement Scheme, Regular

Subsidy from National Government

xx
xx

And when each time a payment is made, this entry must be made:

Specific Amount paid for

xx

Cash MDS, Regular

xx

The NCA may be used for the payment of the following:

1.
2.
3.
4.
5.

Personal Services
Maintenance And Other Operating Expenses
Financial Expenses
Purchase and/or Construction of Fixed Assets
Miscellaneous Transactions

Accounting for Obligations

Obligation refers to a commitment by a government agency arising from an
act of a duly authorized official, which binds the government to the immediate or
eventual payment of a su, of money.

ILLUSTRATION:
Agency X incurred the following obligations:

General Appropriation
Personal Services
Maintenance and Operating Expense
Capital Outlay
Financial Expenses

Obligations Incurred
20,000
30,000
50,000
500

Special Purpose Fund

Capital Outlay

25,000

To record the foregoing obligations incurred in the respective Registries of Allotments and
Obligations are as follows: (Example)

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

PERSONAL SERVICES (RAOPS)
AGENCY X

Date

Ref

P.P.A.

Account
Code

Allotment
Received
50,000

Obligations
Incurred
20,000

It reduced the total allotment received to 30,000

Tax Remittance Advice

Pursuant to the Tax Remittance Advice (TRA) System the NCA released to the
government agency is reduced through the Tax Remittance Advice.
Estimated Taxes are computed based on the following percentages:
Personnel Services 8%
Maintenance and Other Operating Expenses 5%
Capital Outlay 5%

Balance
50,000
30,000