ILLUSTRATIONS:

The Department and Budget Management, upon approval and issuance of

the Agency Budget Matrix (ABM) and the Special Allotment Release Order (SARO),
released the following for Agency X, including Notice of Cash Allocations:

TotaJ Released
General Appropriation Appropriation Allotments NCA
Personnel Services (PS) 200,000 50,000 30,000
Maintenance & Operating
Expenses (MOOE) 280,000 70,000 40,000
Capital Outlay (CO) 400,000 100,000 80,000
Financial Expenses (FE) 8,000 2,000 1,000

Special Purpose Fund

Capital Outlay (CO) 80,000 20,000 15,000

Books of the Department of Budget and Management

Appropriations and allotments are to be controlled and monitored by the

· . Department of Management through the registries it maintains such as: Registry of
Appropriations and Allotments (RAPAL), for the general appropriations; and
Registry of Special Purpose Fund Appropriation (RESPFA), special purpose funds.
In addition, the Department of Budget and Management shall also maintain the
50 Chapter 2- Accountingfor Budgetary Accounts

Registry of Allotments and Notice of Cash Allocations (RANCA) for its control and
monitoring of the Notice of Cash Allocations (NCA) releases.
Department of Budget and Management Registry of
Appropriations and Allotments (RAPAL) AGENCY
X

Capital Outlay Maintenance & OE. Financial Expenses Personnel Services

Appro ppro Appro ApprO
priation priation priation pration
Date Ref Allotment Balance Allotment Balance Allotment Balance Allotment Balance
400,000 280,000 8.000 200,0O0
100,000 300,000 70,000 210,000 2,000 6,000 50,000 150.000

The Registry of Appropriation and Allotments sha11 be maintained by the

Department of Budget and Management for each department of the National
Government in order to control approved appropriations and allotments released.

Department of Budget and Management

Registry of Special Purpose Fund Appropriation (RESPFA)

R E L E A s E s
Date Agency co MOOE PS FE Total Balance
x 20,000 20,000 80,000

The Registry of Special Purpose Fund Appropriation shall contain funds

appropriated for purposes other than those provided in the regular funds of
government agencies, like, Miscellaneous Personnel Benefits (Personnel Services);
Calamity Fund (Capital Outlay); and Organizational Adjustment Fund (Maintenance
and Other Operating Expenses and Financial Expenses).

Department of Budget and Management

Registry of Allotments and NCA (RANCA)
AGENCY X

A L L 0 T M E N T s Unfunded
Date Ref co MOOE PS FE Total NCA Allotment
120,000 70 000 50,000 2,000 242,000 166,000 76,000

,
The Registry of Allotments and NCA shall be maintained by the DBM to
control the funding of allotments. Columns are provided for each allotment class and
NCA released to the department/agency. A column for the unfunded allotment is
provided to determine the balance of a11otment without corresponding NCA.
 Chapter 2 -- Accountingfor Budgetary Accounts 51

Books of Bureau of Treasury

The Bureau of Treasury shall maintain the Registry of Notice of Cash
Allocations and Replenishments (RENREP) for the same purpose and for the
monitoring of bank transfers it makes in replenishing its Modified Disbursements
Scheme (MDS) accounts.

Bureau of Treasury
Registry of NCA and Replenishments (REN REP)
AGENCY X

Date Ref NCA Replenishment Balance

166,000 166,000 0
«

The Registry of NCA and Replenishment shall be used by the Bureau of

Treasury to record the NCA releases and the bank replenishments made to cover
MDS checks issued by the agencies.

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. It should be noted that the agency will not journalize the receipt
of its appropriation and allotments, but instead simply post it in the respective
registry, as shown below. 4

Accordingly, when the obligation is incurred, as evidenced by the approved

Allotments and Obligation Slips (ALOBS), the obligation is recognized and will be
entered in the appropriate Registry of Allotment and Obligations' obligation incurred
· column.
The following are the registries in the books of the agency:
1. Registry of Allotments and Obligations -- Personnel Services (RAOPS)
2. Registry of Allotments and Obligations - Maintenance and
Other
Operating Expenses (RAOMO)
3. Registry of Allotments and Obligations - Capital Outlay (RAOCO)
4. Registry of Allotments and Obligations - Financial Expenses (RAOFE)
52 Chapter 2- Accountingfor Budgetary Accounts

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

PERSONNEL SERVICES (RAOPS)
AGENCY X
Sheet No.

Allotment Obligation
Date Ref PP.A. Account Code Received Incurred Balance
50,000 50,300

The Registry of Allotments and Obligations -- Personnel Services shall be

used to record allotments received and obligations incurred for expenses classified
under Personnel Services, such as: basic pay, all authorized al1owances, bonuses,
cash gifts, etc.

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

MAINTENANCE AND OTHER OPERATING EXPENSES (RAOMO
AGENCY X
Sheet No
'
Allotment Obligation
Date Ref P.P.A. Account Code Received Incurred Balance
70,000 70,000

The Registry of Allotments and Obligations -- Maintenance and Other

Operating Expenses shall be used to record a11otments received and obligations
incurred for expenses classified under Maintenance and Other Operating Expenses,
such as: travelling expenses, supplies and materials, repairs and maintenance of
property, plant and equipment, representation expenses, training and seminar
expenses, etc.

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

CAPITAL OUTLAY (RAOCO)
AGENCY X
Sheet No.

Allotment Obligation
Date Ref P.P.A Account Code Received incurred Balance
120,000 120.000

The Registry of Allotments and Obligations - Capital Outlay shall be used to

record allotments received and obligations incurred for Capital Outlay, such as:
purchase and construction of property, plant and equipment.
Chapter 2 - Accounting for Budgetary Accounts 53

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

FINANCIAL EXPENSES (RAOFE) AGENCY X

Sheet No.
-
Allotment Obligation
Date Ref PP.A. Account Code Received Incurred Balance
2,000 2,000
. .

The Registry of Allotments and Obligation - Financial Expenses shall be

used to record allotments received and obligations incurred for Financial Expenses,
such as, commitment fees, bank charges, interest expenses, documentary stamps
expenses, etc., to distinguish them from the regular maintenance and other operating
expenses.

Upon receipt of Notice of Cash Allocation (NCA), the agency shall

journalize the NCA it receives as a debit to "Cash - Modified Disbursement Scheme,
Regular (if for operating requirements)" and a credit to "Subsidy from National
Government" in the Regular Books of the Agency, as shown below. This journal
entry will show that the NCA received is the share of the agency in the income of the
National Government and a proof that there is cash allocated for the agency by the
National Treasurer. The amount of NCA received by the agency may be net of the
amount of taxes to be withheld by the agency under the Tax Remittance Advice
{TRA) System, which will be discussed in the later part of this chapter.

The agency shall credit "Cash --MDS, Regular" each time a payment is made
charged against the NCA and debit the specific account being paid for, either asset or
expense account. The NCA may be used for the payment of the following types of
transactions
1. Personnel Services
2. Maintenance and Other Operating Expenses
3. Financial Expenses
4. Purchase and/or Construction of Fixed Assets (e.g. building and
structures, land, land improvements, equipment, etc., charged against the
capital outlay.)
5. Miscellaneous Transactions (e.g. Cash to another agency to implement a
project of the agency, Guaranty Deposit, Cash Advances, etc.)
54 Chapter 2- Accounting for Budgetary Accounts

Regular Agency Books Source

Documents and
Account Books of
Transactions Account Title Code Debit Credit Original Entry
Cash Transactions:
L. Receipt of NCA. Cash - National Treasury, MDS 166,000
Subsidy Income from NG 166,000 NCA!JEV/GJ

The Regular Agency Books shall be used to record the regular transactions of
the agency like the receipt and utilization of NCA, as well as, collections of income
and other receipts, which the agency can use. Likewise, income collected and
deposited under the agencies' accounts with Authorized Government Depository
Banks (AGDB), as authorized, shall be recorded in the Regular Agency Books.

However, those income realized/collected for the National Government and

for which the agency is not authorized to use shall be recorded under the National
Government Books maintained by the agency.

Accounting for Obligations

As defined earlier, 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 sum of money. The agency is authorized
to incur obligations only in the performance of activities, which are in pursuits of its
functions and programs authorized in appropriation acts/laws within the limit of the
Allotment Release Order (ARO). •

Examples of actions or documents, which commit the government and which

can be classified as obligations are: Purchase Orders, Contracts, Travel
Authorizations, Request for Installation or Provision of Public Utilities such as water,
electricity, telephone, etc.

Moreover, the government agency shall maintain four registries to monitor

and control its use of the allotments: the Registry of Allotment and Obligations -
Personnel Services (RAOPS); Registry of Allotment and Obligations - Maintenance
and Other Operating Expenses (RAOMO); Registry of Allotment and Obligations -
Capital Outlay (RAOCO); and Registry of Allotment and Obligations -- Financial
Expenses (RAOFE). Only obligations/expenditures supported by appropriate
documents, such as: Purchase Orders, Contracts, Travel Authorizations, etc., showing
a commitment made by the agency shal I be recorded in these registries by use of the
Chapter 2- Accountingfor Budgetary Accounts 55

approved Obligation Slip (OS). The Budget Officer shall certify to the availability of
allotmept and such is duly obligated. On the other hand, the Accountant shall certify
to the correctness and validity of obligations, and availability of funds

To illustrate, using the same information that of Agency X in the preceding

pages, Agency X incurred the following obligations:
Obligations
General Appropriation Incurred
Personnel Services 20,000
Maint. & Operating Exps. 30,000
Capital Outlay 50,000
Financial Expenses 500

Special Purpose Fund

Capital Outlay 25,000

To record the foregoing obligations incurred in the respective Registries of

Allotments and Obligations are as fol1ows:
REGISTRY OF ALLOTMENTS AND OBLIGATIONS
PERSONNEL SER VICES (RAOPS) AGENCYX
. .
Allotment Obligation Sheet No
Date Ref P.P.A. Account Code Received Incurred Balance
50 000 50,000
20,000 30,000

Note that the obligation incurred of P20,000 reduced the total allotment
received to P30,000.

REGlSTRY OF ALLOTMENTS AND OBLIGATIONS

MAINTENANCE AND OTHER OPERATING EXPENSES (RAOMO)
AGENCY X
Sheet No
Allotment Obligation
Date Ref P.P.A. Account Code Received Incurred Balance
70,000 70,000
30,000 40,000

Note that the obligation incurred of P30,000 reduced the total allotment
received te P40,000.
56 . Chapter 2- Accountingfor Budgetary Accounts

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

CAPITAL OUTLAY (RAOCO)
AGENCY X
- Sheet No.
I Allotment Obligation
I Date Ref PP.A. Account Code Received Incurred Balance
I -
120,000 120.000
I . 75,000 45,000

Note that the obligation incurred of P75,000 reduced the total allotment
received to P45,000.

REGISTRY OF ALLOTMENTS AND OBLIGATIONS

FINANCIAL EXPENSES (RAOFE) AGENCY X
Allotment Obligation Sheet No
Date Ref P.P.A. Account Code Received Incurred Balance
2,000 2,000
500 1,500

Note that the obligation incurred of PSOO reduced the total allotment received
to P1,500.

Tax Remittance Advice

Pursuant to the Tax Remittance Advice (TRA) System, as provided for in

Joint Circular No. 1-2000 dated January 3, 2000, as amended by JC No. 1-2MOA
dated July 31, 200 I of the Department of Finance, the Department of Budget and
Management and the Commission on Audit, the Notice of Cash Allocation (NCA)
released to the government agency is reduced by the amount of the estimated taxes
expected to be remitted by the agency through the Tax Remittance Advice. Estimated
taxes are computed based on the fol1owing percentages : Personnel Services -- 8%;
Maintenance and Other Operating Expenses - 5%; and Capital Outlay -- 5%. The
Notice of Cash Allocation received by the government agency from the Department
of Budget and Management is net of the applicable percentage of Tax Remittance
Advice based on the Notice of Cash Allocations received.
'
Using the same illustration for Agency X, the journal entry to record receipt
of Notice of Cash Allocation, net of TRA, in the amount of Pl 66,000 is debited to
"Cash-MDS, Regular" and.credited to "Subsidy from National Government" as
shown in the Regular Agency Books in the preceding page. (Note that the TRA is not
recognized.) Assume that Agency X established payroll fund.

-"
Chapter 2 -- Accountingfor Budgetary Accounts 57

The journal entry to record the establishment of payrol I fund, with the
assumed payments and deductions, is as fol1ows:

Regular Agency Books

Account
Account Title Code Debit Credit
Salaries and Wages - Regular Pay 701 20,000
Due to BIR 412 2,000
Due to GSIS 413 1,000
Due to Officers and Employees 106 17,000

Assume further that the above shown withholding taxes pay.able in the
amount of P2,000 was remitted to the Bureau of Internal Revenue. The journal entry
to record the remittance is shown below.
.
Regular Agency Books
Account
Account Title Code Debit Credit
Due to BIR 412 2,000
Subsidy Income from National Government 651 2,000

Note that no amount of cash was involved in the recording of the above
remittance to Bureau of Internal Revenue. It is only at this point, the applicable
Notice of Cash Allocation for the Tax Remittance Advice was recognized.

4 +