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ELECTRONIC STATEMENT OF RECEIPTS & EXPENDITURES OF MUNICIPALITY OF SAN JOSE, DINAGAT ISLANDS

CHAPTER 1 INTRODUCTION The Electronic Statement of Receipts and Expenditures was created by the Department Of Finance in compliance to the provisions of R.A 7160 and Executive Order 127 Series of 1987 which provide respectively that 1. The Department of Finance has the authority to monitor and regulate the financial performance of LGUs; 2. The Department of Finance is responsible in the fiscal and financial management of the government including Local Government Units. The Bureau of Local Government of Finance being the arm of DOF is responsible in the administration and technical supervision of LGUs. The BLGF is specifically directed to supervised the revenue operations of all Local Government Units, with the objective of making this entities less dependent on funding from the National Government.

The eSRE System was primarily established to provide the DOF with sufficient detailed financial information in order to monitor LGUs financial performance in terms of receipts and expenditures and to cater the various needs of the users of the report. However, eSRE was not the first system created by the DOF. Since then, Statement of Income and Expenditure (SIE) has been a significant financial report in terms of its uses and influence in the decision-making process of its users and stakeholders. It was used as the key source of data for financial statistics which became part of the total public sector financial position in determining overall surplus or deficit.

It was noted, however, by the different government oversight agencies and private institution users that some amounts and classification of accounts reported in the SIE did not agree with the Commission on Audits New Government Accounting System (NGAS) financial reports. Thus, a Technical Working Group (TWG) was commissioned in 2005 to study the harmonization of the said reports. Among the areas of concern were differences in reported amounts, classification and grouping of accounts; use of technologies; and timing in recording of transactions. The work of TWG, however was temporarily suspended in early 2006 because the harmonization process was made one of the components of the grant under Asian Development Bank Technical Assistance (ADB-TA) 4556 entitled Local Government Finance and Budget Reform Project.

After a comprehensive study and the need to update the existing reporting system, ADB TA 4556 recommended improving the SIE format. The new format was designed not only to be in harmony with the Commission on Audits New Government Accounting Systems (COA-NGAS) reports but also includes additional data required in determining the LGUs fiscal capacity, monitoring LGU debts, certifying LGUs debt capacities, rating the LGUs creditworthiness, and computing LGU financial performance indicators. It likewise partially conforms to the Internal Financial Reporting Standards (IFRS) and serves as an accountability report for the local treasurer where flow of funds and fund balance are shown at any specified period of time

GENERAL PROBLEM STATEMENT At the end of the fiscal year it is a mandate to have a generated report of the transaction occurred in a certain entity. Thus, recording process is highly needed. It is very inefficient for a particular department like in the Treasury office to have a manual recording of all the collections and disbursements through the year. It cannot also be avoided that when doing a manual recording, errors mat rise and inaccuracy may occur. To that concern, the DOF being the legal authority responsible in monitoring and regulating financial performance of LGUs, they created an electronic system that would be used by the Government units to generate yearly reports. The system was called the eSRE system.

SPECIFIC PROBLEM STATEMENT The following are the specific problems encountered by the system users while using the system. Poor uploading of reports generated by the eSRE to BLGF website. Difficulty to reconcile ending balances generated by the eSRE with the ending balances of NGAS. Different interpretations of transactions by the Accounting Office and Treasury Office.

SCOPE AND LIMITATION The system study provides information about the system flow of data collected and disbursed during the normal operating cycle. It includes Basic Financial Statement, Supplemental Statements, and other reports. The system study is only applicable particularly in the office of Treasury. The output is within the limit of its area and does not include any other generated reports of the other offices.

DEFINITION OF TERMS Receipts- refer to all revenues and income realized from operations and activities of the local government or is received by it in the exercise of its corporate functions, consisting of fees and charges for services rendered, conveniences furnished, or the price of a commodity sold, as well as loans, contributions or aids from other entities, except provisional advances for budgetary purposes, forming the gross accretions of funds of the local government. Income- refers to amount of money or its equivalent received during the period in exchange of services, sale of goods, or as profit from financial operations. Expenses- include cash outlays related to current operating cost during the period and treated as an outright expense.

Expenditures- include all cash outlays during the period which are capital in nature and expected to benefit future periods.
BLGF- Bureau of Local Government Finance Real property tax- basic tax imposed on real properties and their improvements. Real property includes land, building, machinery and other improvements affixed or attached to the real property. Debt services- cover sector expenditures of activities directed in promotion enhancement and the attachment of desired economic growth.

GENERAL OBJECTIVES The eSRE System was established to: provide the BLGF with sufficient detailed information. monitor LGUs financial performance in terms of receipts and expenditures. cater the various needs of the potential users of the reports.

SPECIFIC OBJECTIVES The following are the specific objectives of the system. To generate derived values and calculate automatically from different entry forms so that the user only needs to input raw SRE data. To handle large transaction efficiently. To provide real-time database read access on the BLGF client server network. To allow users to access and generate key information and statistics for reporting purposes.

Introduction This chapter presents the details of operation of the eSRE System. The system concepts, the flow of processes and how to input preparation and how to generate reports will be discussed accordingly.

CHAPTER 2

The eSRE System


The report generated by the eSRE is a state of the art document which is the vital tool of the Municipality of San Jose in terms of fiscal management. The report can be used by the committee of Finance of the LGU as basis for giving recommendations to the municipal mayor relevant to financial issues.

The system was developed using JAVA SERVER pages and was incorporated with the BLGF website for easy accessibility. The built-in portability, stability and other powerful features for the primary considerations in the selection of this software. The system was developed as an online operation with the following advantages and disadvantages;

Easy access.

Advantages:

Faster transaction Transparency

Internet accessibility

Disadvantage:

As mandated by the BLGF, reports should be submitted quarterly. Failure to submit the identified SRE reports on time and or submission of incorrect and misleading reports shall constitute sufficient ground for administrative disciplinary action. The SRE is the basic financial report prescribed by the BLGF to monitor the LGUs financial performance. It captures the fiscal capacity, level of borrowings, and the creditworthiness of the LGU. The report could also be a source of Financial information to the local Chief Executive for decision making.

The SRE is divided into 3 segments.

1st Segment of eSRE is the current operating segment which is identical to the Commission on Audits Statement of Income and Expenses. It shows the operating income from Internal (local) and External sources and the Operating Expenses that include Personal Services (PS), Maintenance and Other Operating Expenses (MOOE), and Financial Expenses (FE). 2nd Segment of eSRE is the non-operating receipts and expenditures equivalent to investing and financing activities in the COAs cash flow statement that include receipts from sale of assets, investment, loan proceeds and expenditure such as purchase of assets, investment and payment of loans.

Supplemental Statements The following supplemental statements shall serve as the supporting documents in the preparation of SRE report:(a)Statement of Receipts Sources(SRS);(b)Statement of Expenditure(SOE);(c)Statement of Financial Operations of Economic Enterprises(SFOEE);and (d)Statement of Indebtedness,Payments,and Balances(SIPB).This statement reports the detailed income items reported in the SRE prepared in both cash basis and modified accrual accounting basis. For SRE report prepared on Cash basis, the source of data for SRS shall be record of general collections and the record of real property tax collection.On the other hand,for SRE report shall be taken from the pre-closing trial balance from the Accounting Office.The flowchart in the preparation of the Statement of Receipts Sources is presented in the figures 3 and 3-A.

3rd Segment of eSRE is the fund balance segments which show the details of cash balances. The ending fund balance for the cash basis eSRE is the same with the ending cash balance of the COAs cash flow statement, while the ending fund balance for the modified accrual basis eSRE is considered as the calculated ending fund balance.

Statement of Expenditures The Statement of Expenditures prepared on cash basis presents the various expenses paid during the period,which are grouped into:(1)Personal Services(PS);(2)Maintenance and Other Operating Expenses(MOOE);(3)Financial Expenses(FE);and(4) Capital Outlay(CO).Further,the SOE classifies expenditures by sector and by function where reference is made to the nature of expenditures as it relates to the purpose for which such expenditures were made.

Introduction

CHAPTER 3

In this chapter documents diagrams and screen shoots with corresponding narratives to describe the flow of the eSRE report generator.
Figure 3.1 Gantt Chart

ACTIVITY LIST 1. Identifying existing system 2. Creating questionnaires 3. Conducting research 4. Writing drafts 5. Reviewing drafts 6. Printing final output

October,2012 2 3 4 5

Bureau of Local Government Finance (BLGF)

Verify reports

Statement of Receipts and Expenditures Report

sends data Local Government Unit (LGU) (Treasury Office) Input data Electronic Statement of Receipts and Expenditures System (eSRE)

Generate report

Used in decision making


HEAD OFFICE (Mayors Office)

Events List: LGU- inputs data that has been collected and disbursed to the eSRE system. eSRE System- generates report from the data inputted and sends data to the website of BLGF. BLGF- verify the reports submitted by the LGU.

Figure 3.2 Context Flow Diagram of eSRE System

SRE

SRS

SOE

Record of real property tax collection

Record of General collections

Record of expenditures

Record of Prior Years Accounts Payable

Records of Debt Service

Events List: Statement of Receipts and Expenditures is divided into two namely; Statement of Receipt Sources and Statement of Expenditures. SRS is sub classified into two; Record of Real Property Tax and Record of General Collection. SOE is sub classified into three; Record of Expenditures, Record of Prior Years Accounts Payable and Record of Debt Service.

Figure 3.3 System Flow Diagram of eSRE

Figure 3.4a Data Flow Diagram of SRE Events list: LGU inputs data to the system and stores in the SRS and SOE sub-system. Data from SRS and SOE serves as partial output to generate SRE summary report. Ending balances of SRS and SOE is summarized in the SRE report. The generated report is submitted to the BLGF and reviews the report for verification.

Events List: The treasury office collects and receives payment from its source of collection which comes from the General Collection and Real Property Tax Collection of the municipality. The treasury office analysis the transaction and stores the data to the General Collection and Real Property Tax Collection file, which will be needed to generate SRS.

Figure 3.4b Data Flow Diagram of SRS

Events List: Expenditures of the municipality, including its expenses, accounts payable and debt service is paid by the treasury office and the datas are stored in order to come up with SOE.

Figure 3.4c Data Flow Diagram of SOE

Figure 3.5a Entity Relationship Diagram of SRE Event List: One or more user inputs data to exactly one eSRE system which generates report which will be submitted to exactly one BLGF office.

Events List: Exactly one treasury office receives payment from one or more collection of transactions. The data received generates to exactly one SRS which will go to exactly one SRE report, this will then be submitted to exactly one BLGF.

Figure 3.5b Entity Relationship Diagram of SRS

Figure 3.5c Entity Relationship Diagram for SOE Events List: Exactly one Treasury Office paid voucher of one or more expenditures which will generate exactly one SOE. Data generated goes to exactly one SRE report, which will be sent to exactly one BLGF office.

SUMMARY

CHAPTER 4

Electronic Statement Of Receipts and Expenditure is a system created by the BLGF of DOF to generate reports about the amount collected and discussed in a normal operating cycle of the Local Government Unit. This is composed of the statement of Receipts and Statement of Expenditures which includes the record of real property taxes,records of general collection,record of expenditure ,record of prior years accounts payable and record of debt service.

Conclusion
ESRE system therefore resolves the problem of the LGU in recording transactions and making years and reports. The system provides convenience to the users and as well as fast transfer of data from the Local to the national. This helps for the national sectors to the monitor the flow of financial performance of the LGUs even they are at the farthest area of the Philippines. In contrast since the ESRE is an online operation, it is hard for some locality that has a poor internet accessibility due to lack of availability in their place. This affects the over all point of view of the system because not all local government unit is supported with a good connection.

Recommendation: Since of the problem of the ESRE system is that it does not matches to the Galances of NGAS produced by the accounting office,the two must reconcile as to what is their basis.They must be the same in order to have the same output .

Every locality should improve their communication signal so that they can early adopt to every changes especially when it comes to technology-based system of operations.

the end!!!!!

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