Reporter #2: Golipapa, Mercy A.

Resurreccion, Ejhay
Bolante, Jerrimei

Title of Report: BUDGET MAKING IMPLEMENTATION

BUDGET is a formal plan that estimates expenditures and income.

BUDGETING is the process for preparing the budget.

Government budget is the financial plan of a govt. for a fiscal year.

Sources of Government funds: Revenue, Tax, Borrowing

Budget deficit
•A budget deficit occurs when a government's expenditures (spending) exceed its revenues
(income) in a specific fiscal year.
•This means that the government is spending more money than it is collecting through taxes,
fees, and other sources of income.
•To cover the deficit, the government may need to borrow money by issuing debt, such as
government bonds.
•Budget deficits can lead to an increase in the national debt over time if they persist.
Budget surplus
-A budget surplus, on the other hand, occurs when a government's revenues exceed its
expenditures during a fiscal year.
-This means the government is collecting more money than it is spending.
-Budget surpluses can be used to pay down debt, invest in infrastructure, or create a financial
reserve for future needs.

Balanced budget
-A balanced budget is achieved when a government's expenditures equal its revenues in a
given fiscal year.
-In other words, the government is not running a deficit or a surplus; it is living within its means.
-A balanced budget is often seen as a goal of fiscal responsibility, but it can be challenging to
maintain, especially during economic downturns or periods of increased spending on important
public programs.

•According to Prof. Philip Taylor, the budget is the master plan of the government. And national
budgeting is very essential because it enables the govt. to plan and manage its financial
resources to support the implementation of different programs & projects that best promotes the
development of the country.
GOVERNMENT BUDGET PROCESSING:
and here in Government budget process it consist of 4 phases:

1.Budget Preparation
During the preparation phase, the executive prepares the proposed national budget.

I.Budget call- The budget preparation process typically begins when the Department of Budget
and Management (DBM) issues a budget call to all government agencies and departments. The
budget call outlines the guidelines, instructions, and parameters that agencies should follow
when preparing their budget proposals for the upcoming fiscal year. It sets the deadlines for the
submission of budget proposals and provides information on revenue estimates, spending
priorities, and other key considerations.
II. Budget Hearings- Budget hearings are a significant part of the budget preparation process.
During these hearings, government agencies present their budget proposals to the DBM and, in
some cases, to the Development Budget Coordination Committee (DBCC). These hearings
provide an opportunity for agencies to explain and defend their budget requests, justify their
proposed expenditures, and address questions or concerns from the budget authorities.
III. Presentation to the office of the President: Once the NEP is prepared, it is presented to
the President of the Philippines for review and approval. The President has the opportunity to
review the budget proposal and provide input or revisions. After the President's review, the NEP
is submitted to the Philippine Congress for further consideration.

2. Budget Legislation
In this phase, the Congress authorizes the General Appropriations Act.

IV. House Deliberations In the House of Representatives, the budget proposal is referred to
the Committee on Appropriations. The committee reviews the proposed budget and holds
budget hearings. House members have the opportunity to review, debate, and make
amendments to the budget bill based on their assessment of government priorities.The House
of Representatives approves its version of the budget bill, known as the House Bill.
V. Senate Deliberations In the Senate, the budget proposal is referred to the Senate
Committee on Finance, which conducts its own review and budget hearings. Senators review
and may make further amendments to the budget bill based on their own assessment and
priorities. The Senate approves its version of the budget bill, known as the Senate Bill.
VI. Bicameral Deliberations The House Bill and the Senate Bill are often different due to
amendments made in both chambers. To reconcile these differences, a bicameral conference
committee, composed of members from both the House of Representatives and the Senate, is
convened. The bicameral conference committee works to resolve discrepancies between the
two versions of the budget bill and reach a consensus on the final content of the General
Appropriations Act (GAA).
VII. President's enactment Once the bicameral conference committee reaches an agreement
and both the House and the Senate approve the reconciled version of the budget bill, it is sent
to the President for enactment. The President has the authority to sign the GAA into law. Upon
the President's signature, the budget bill becomes the GAA, which authorizes government
expenditures for the fiscal year. The GAA may include line-item vetoes, where the President
may choose to veto specific provisions, but the rest of the budget remains in effect.

3. Budget Execution
This is the phase where government funds are spent.

VIII. Release Guidelines and Budget Execution Documents

The Department of Budget and Management (DBM) issues release guidelines to government
agencies. These guidelines specify the conditions and procedures for releasing funds to the
agencies. Government agencies receive budget execution documents, such as notices of cash
allocation (NCA), which inform them of the amount of funds they are allowed to spend.
IX. Allotment the process of breaking down the budget allocation further. It involves distributing
funds to specific units or departments within government agencies. Allotment is often done by
quarter, meaning funds are allocated for each three-month period of the fiscal year.
X. Incurrence of Obligations
The incurrence of obligations is a critical step in budget execution. It refers to the commitment
by government agencies to spend a portion of their allocated funds for a specific purpose. When
agencies decide to undertake projects, enter into contracts, or make purchases, they incur
obligations to allocate funds for those activities. This commitment ensures that the funds are
earmarked for those expenditures.
XI. Disbursement Authority refers to the permission given to government agencies to make
actual payments for the obligations they have incurred. Before payments are made, the
agencies must verify that the obligations meet legal requirements and that there are available
funds to cover the expenditures.

4. Budget Accountability
The executive monitors and evaluates the use of budget.
XII. Budget Accountability Reports Government agencies are required to provide regular
reports on their budget execution and financial activities. These reports include:
-Financial Statements: These statements provide a comprehensive overview of an agency's
financial position, including assets, liabilities, revenues, and expenditures.
-Annual Budget Reports: These reports compare budgeted figures to actual spending and
performance, helping to assess the effectiveness of budget execution.
-Budget Accountability Reports: These documents often include explanations and justifications
for budgetary variances and performance against targets.
XIII. Performance Reviews Budget accountability includes evaluating the performance of
government programs and projects funded by the budget. Performance reviews assess whether
budgeted funds are being used effectively to achieve desired outcomes. These reviews may
include performance audits and evaluations.
XIV. Audit The Commission on Audit (COA) plays a key role in ensuring budget accountability
in the Philippines. COA conducts financial audits and examinations of government agencies and
local government units. These audits assess the compliance of agencies with budgetary and
financial regulations, the accuracy of financial transactions, and the proper documentation of
public funds. COA's audits aim to provide an independent and impartial assessment of
government agencies' financial practices and promote transparency and accountability.

BUDGETING AND AUDITING

Budgeting is done by individuals, families, groups, companies, and the government—to plan,
monitor, and control finances. It is everywhere; homemakers use it to manage their monthly
expenses and savings; the government relies on it to run the nation.
Anticipated revenue and estimated expenditure are the two crucial components. Anticipated
revenue is the potential cash inflow that a person, business entity, or government might
generate. On the other hand, estimated expenditure is the cash outflow that an individual, firm,
or government expects to make in the upcoming period.
It can be approached top-down or bottom-up. In the top-down approach, top-level management
estimates costs and gradually moves down levels. Ultimately, the top management prepares the
breakdown of spending and passes it down for implementation. In contrast, in the bottom-up
approach, managers prepare department-wise reports based on team inputs and past
experiences. They then send it to top management for approval.

Personal Budget: An individual or family plans their monthly earnings and expenses to ensure
that they don’t run out of cash before the next paycheck.
Corporate Budget: It is a plan to maintain cash flow, operating cash, and emergency funds
efficiently. It comprises sales, material, production, and factory overheads.
Government Budget: A financial plan prepared by the federal government accounts for the
estimated national revenue for a particular financial or fiscal year. The revenue comes from
taxes, fees, and grants. It also considers the anticipated expenditure over public services and
infrastructure. There are two types of federal budgets—capital and revenue.
Master Budget: It is a culmination of various lower-level budgets prepared for different areas of
business operations. It is a consolidated business plan.
Operating Budget: It is created at the beginning of a given period. It reflects the profit and loss
accounting—accounts for fixed, non-operating, variable, and capital expenditures.
Static Budget: It is mostly formulated by the government and non-profit organizations. It is rigid
and does not allow variations depending on the activity of the institution. It is a prediction of
revenue and expenses—based on anticipated values. The actual results may vary from the
predicted values.
Flexible Budget: It is a realistic approach adopted by businesses. A flexible plan considers
changes in expenses and costs over the period and adjusts accordingly.
Financial Budget: It incorporates assets, liabilities, and shareholders equity. It charts a
company’s short-term and long-term financial goals.
Cash Budget: It is simply a cash flow prepared in advance. It documents anticipated payables
and receivables for an upcoming period. It is prepared to ensure that the business has enough
money to run the organization effortlessly.
Labor Budget: It is tailor-made for labor-intensive firms. Businesses that are heavily reliant on
employees need a systematic plan balancing revenue and wages.
Importance of Auditing
Audit is an important term used in accounting that describes the examination and verification of
a company’s financial records. It is to ensure that financial information is represented fairly and
accurately.

Also, audits are performed to ensure that financial statements are prepared in accordance with
the relevant accounting standards. The three primary financial statements are:

Income statement
Balance sheet
Cash flow statement
Financial statements are prepared internally by management utilizing relevant accounting
standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted
Accounting Principles (GAAP). They are developed to provide useful information to the following
users:

Shareholders
Creditors
Government entities
Customers
Suppliers
Partners
Financial statements capture the operating, investing, and financing activities of a company
through various recorded transactions. Because the financial statements are developed
internally, there is a high risk of fraudulent behavior by the preparers of the statements.

Without proper regulations and standards, preparers can easily misrepresent their financial
positioning to make the company appear more profitable or successful than they actually are.

Auditing is crucial to ensure that companies represent their financial positioning fairly and
accurately and in accordance with accounting standards.

Types of Audits
There are three main types of audits:

1. Internal audits
Internal audits are performed by the employees of a company or organization. These audits are
not distributed outside the company. Instead, they are prepared for the use of management and
other internal stakeholders.
Internal audits are used to improve decision-making within a company by providing managers
with actionable items to improve internal controls. They also ensure compliance with laws and
regulations and maintain timely, fair, and accurate financial reporting.

Management teams can also utilize internal audits to identify flaws or inefficiencies within the
company before allowing external auditors to review the financial statements.

2. External audits
Performed by external organizations and third parties, external audits provide an unbiased
opinion that internal auditors might not be able to give. External financial audits are utilized to
determine any material misstatements or errors in a company’s financial statements.

When an auditor provides an unqualified opinion or clean opinion, it reflects that the auditor
provides confidence that the financial statements are represented with accuracy and
completeness.

External audits are important for allowing various stakeholders to confidently make decisions
surrounding the company being audited.

The key difference between an external auditor and an internal auditor is that an external auditor
is independent. It means that they are able to provide a more unbiased opinion rather than an
internal auditor, whose independence may be compromised due to the employer-employee
relationship.

There are many well-established accounting firms that typically complete external audits for
various corporations. The most well-known are the Big Four – Deloitte, KPMG, Ernst & Young
(EY), and PricewaterhouseCoopers (PwC).

3. Government audits
Government audits are performed to ensure that financial statements have been prepared
accurately to not misrepresent the amount of taxable income of a company.

Within the U.S., the Internal Revenue Services (IRS) performs audits that verify the accuracy of
a taxpayer’s tax returns and transactions. The IRS’s Canadian counterpart is known as the
Canada Revenue Agency (CRA).

Audit selections are made to ensure that companies are not misrepresenting their taxable
income. Misstating taxable income, whether intentional or not, is considered tax fraud. The IRS
and CRA now use statistical formulas and machine learning to find taxpayers at high risk of
committing tax fraud.
Commission on Audit
The Commission on Audit is an independent constitutional commission established by the
Constitution of the Philippines. It has the primary function to examine, audit and settle all
accounts and expenditures of the funds and properties of the Philippine government.

The members of the commission can only be removed from office via death, resignation or
impeachment.

Current composition

Chairman: Gamaliel Cordoba, Tenure started (Oct.21 2022) – Tenure Schedule to end February
2, 2029 Appointed by: Bongbong Marcos

Commissioner: Mario G. Lipana, Tenure started (January 26, 2022) - Tenure Schedule to end
February 2, 2027. Appointed by: Rodrigo Duterte

Commissioner: Roland C. Pondoc, Tenure started (February 6, 2018) - Tenure Schedule to end
February 2, 2025. Appointed by: Rodrigo Duterte

The Commission on Audit (COA) in the Philippines is a constitutional body with specific
functions and responsibilities related to the auditing of government funds and resources. Its
primary function is to promote transparency, accountability, and efficient use of public funds.

Here are the different types of audits include:

Financial Audit: COA is responsible for conducting financial audits of all government agencies,
including national government departments and agencies, local government units (LGUs),
government-owned and controlled corporations (GOCCs), and government financial institutions.
These audits aim to ensure the proper and legal use of public funds.

•Corporation
An audit in a corporation, often referred to as a financial audit, is a systematic examination of
the company's financial records, transactions, and financial statements to ensure accuracy,
compliance with accounting standards, and financial transparency. The primary goals of a
corporation audit are to provide an independent assessment of the company's financial health,
detect any material misstatements, and ensure that the financial statements fairly represent the
company's financial position.

Key aspects of a corporation audit include:

•Financial Statements: The audit examines the corporation's balance sheet, income statement,
cash flow statement, and statement of equity to ensure they are prepared in accordance with
accounting standards (e.g., Generally Accepted Accounting Principles or International Financial
Reporting Standards).
•International Audit
An international audit, often referred to as an audit of international financial statements, is an
examination of a company's financial statements that are prepared in accordance with
international accounting standards. The most widely recognized international accounting
standards are the International Financial Reporting Standards (IFRS) developed by the
International Accounting Standards Board (IASB).

When conducting an international audit, auditors follow the specific standards and guidelines
outlined by IFRS. This ensures that the financial statements are presented fairly and in
compliance with internationally accepted accounting principles. The audit process for
international financial statements is similar to a standard financial audit, including the review of
financial records, internal controls, and testing procedures.

Local audit

A local audit typically refers to an audit conducted at the regional or local level, usually within a
specific geographic area or municipality. These audits can have various purposes and can be
performed by government agencies, local authorities, or private auditing firms. Here are a few
common types of local audits:

1.Municipal Audit: Local governments, such as cities or counties, often conduct municipal audits
to ensure financial transparency and compliance with budgetary regulations. These audits
examine the financial records and expenditures of the local government.

2. School District Audit: School districts conduct audits to evaluate their financial management,
ensure funds are used appropriately, and maintain accountability in educational spending.

3. Nonprofit Organization Audit: Local nonprofit organizations may undergo audits to

demonstrate their financial responsibility to donors and grantors, as well as to maintain
tax-exempt status.

4. Small Business Audit: Small businesses at the local level may choose to have financial audits
conducted for various reasons, including obtaining loans or demonstrating financial health to s.

5. Authority Audit: Housing authorities conduct audits to ensure the proper management of
public housing programs and compliance with regulations.

•GOCC
The Government-Owned and Controlled Corporations (GOCC) Audit is a crucial process that
ensures transparency, accountability, and good governance in the public sector. It involves the
examination and evaluation of financial statements, management practices, and compliance
with laws and regulations.
The primary objective of the GOCC Audit is to safeguard public funds by detecting any
irregularities or mismanagement within government-owned corporations. This audit provides an
independent assessment of their financial performance, internal controls, and adherence to
legal requirements. By conducting regular audits, the government can identify areas for
improvement and take necessary actions to enhance efficiency and eeffectiveness.

Internal Controls: Auditors evaluate the corporation's internal control systems to identify
weaknesses or potential fraud risks. This is crucial for preventing financial irregularities.

Audit Procedures: Auditors perform various audit procedures, including substantive tests and
analytical procedures, to verify the accuracy of financial data.

In a audit procedures, we have a process, which are the:

,1.Pre-Audit - A "pre-audit" typically refers to an examination or review that occurs before an

event, process, or transaction takes place. The purpose of a pre-audit is to assess and plan for
potential risks, compliance with regulations, or other relevant factors before they occur. This is
often done to prevent issues or ensure that everything is in order prior to an event.

For example, in the context of financial accounting, a pre-audit may involve reviewing financial
documents and processes to ensure they meet accounting standards and regulations before the
official financial audit takes place.

In project management, a pre-audit might involve evaluating the project plan, budget, and risk
factors before the project begins to identify potential challenges and mitigate them in advance.

2. Post audit - A "post-audit" typically refers to an examination or review that occurs after an
event or process has been completed. It's often used in the context of project management,
financial transactions, or operational procedures to assess what happened and identify areas for
improvement or compliance.

For example, in project management, a post-audit may be conducted after a project is finished
to evaluate its success, analyze the budget, and identify lessons learned for future projects.

In financial terms, a post-audit can refer to a review of financial transactions or accounts after
they have been recorded to ensure accuracy and compliance with accounting standards and
regulations.

•Audit Report: At the end of the audit, auditors issue an audit report that includes their opinion
on the fairness of the financial statements. This report is typically addressed to the corporation's
shareholders or stakeholders.
•Compliance: In addition to financial accuracy, auditors may assess the corporation's
compliance with relevant laws and regulations.

•Recommendations: Auditors may provide recommendations for improving financial controls or

operational efficiency based on their findings.

Internal Audit
As the name suggests, it is an audit of internal affairs; the Audit is carried out to decide if the
internal part of the organization as per the rules and regulations.

The internal Audit can be done by anyone, even by the organization’s employees.

In this type of Audit, the auditors check if the organization follows proper norms and rules and
whether it complies with all the internal regulatory standards.

External Audit
External Audit can be compulsory for some organizations as per some rules and requirements
of shareholders.

The external audit report shall also be shown to the entire shareholder in annual general and
board of directors meetings.

Some independent professionals do external Audit with the qualification mentioned in the rule.
External Audits can be done annually, half-yearly or quarterly. If some organizations feel
something needs to be correctly visible to seniors, they can also conduct an external audit. The
organization can also appoint a third party to conduct an audit.

Information Technology Audit

An information Technology Audit (IT Audit) is carried out to assess the organization’s IT
infrastructure and know its system. It is done to inform the stakeholders that the organization’s
IT structure is up to date and can meet the goals and objectives.

Statutory Audit
The organization conducts this Statutory Audit to see if the organization is in complying with all
Government regulations. It is verified by the external auditor while doing the external Audit and
also demonstrates some of the financial reports, which include the following:

•Statements of bank
•Number of clients
•Earning on investment

The Audit improves the transparency and trust among all the public and stakeholders of the
organization.
Performance Audit
Performance audits cover a variety of assessments. A firm may request a performance audit to
evaluate any of the following objectives:

•Program effectiveness and results

•Internal controls
•Compliance with certain requirements
•Prospective analysis

Operational Audits
Operational audits review an organization’s activities with specific aims. An auditor will analyze
the process, procedure, and system; and evaluate operational effectiveness, efficiency, and
productivity.

Employee Benefit Plan Audits

An employee benefit plan audit analyzes and evaluates an employee benefit plan’s financial
statements.

Compliance Audits
A compliance audit is conducted to determine if it complies with a Government’s standards,
rules, and requirements. A Government sets the conditions and hires an auditor to evaluate the
entity’s compliance.

Payroll Audits
Payroll audits review the payroll processes and reports of a firm. This Audit will identify errors,
improve compliance, and protect the company from fraud. An internal auditor or a third-party
auditor can perform this Audit.

Forensic Audit
A forensic audit examines a company’s financial records to identify illegal finance activity. The
auditor(a forensic accountant) will look for evidence that may be used in court or for conflict
resolution among shareholders.
An organization may need a forensic audit if individuals suspect fraud, theft, or inaccuracies
(both positive and negative) in account balances.

The Commission on Audit plays a significant role in the Philippines' system of checks and
balances, helping to safeguard public funds and ensure that they are used for the benefit of the
Filipino people.