REVISITING THE ENVIRONMENTAL MANAGEMENT BUREAU’S

ORGANIZATIONAL MANAGEMENT: THE NEW PUBLIC

MANAGEMENT APPROACH

Polytechnic University of the Philippines

Graduate School

CESAR D. TOLENTINO, JR.

MPA OUS
 Chapter 1
The Problem and Its Setting
Introduction
Organizations operate by utilizing several resources including financial, human,

capital and others. One of the key elements in achieving the objectives and goals of an

organization is the financial resource. Nevertheless, organization’s objectives are

achieved if the budget is effectively prepared and adhered to.

A budget is an organizational tool used for planning and controlling within an

organization. Also, it is a formal written guideline for future plan of action, expressed in

financial terms within a set time period and the process of converting plans into budget is

known as budgeting. The budgeting process may be quite formal in a large institution

with committees set up to perform the tasks. On the other hand, in a very small firm the

owner may write down the budget on a piece of paper or just budget in his head about

the items he can remember easily.

Budgets perform an effective role in achieving organizational strategic goals, in

this sense budgets are ways through which one can reach the goals set. In budget

development process, one tries to foresee whether strategic goals can successfully be

achieved or not. Budgets set standards to achieve goals and can help in evaluating the

fluctuations that occur during the year and try to ascertain the reasons from deviating

from achieving the defined goals.

Different government organizations have different goals. Organization resources

are needed to be employed so as to enhance its achievement. Thus, budgeting is vital to

any government organization that needs to progress positively.

 Government budgeting is important because it enables the government to plan

and manage its financial resources to support the implementation of various programs

and projects that best promote the development of the country. Through the budget, the

government can prioritize and put into action its plans, programs and policies within the

constraints of its financial capability as dictated by economic conditions.

A sound budgeting system is one which engenders trust among citizens that

government, in the broad sense, is listening to their concerns, has a plan for achieving

worthwhile objectives, and will use the available resources effectively, efficiently and in a

sustainable manner in doing so “Budgetary governance” refers to the processes, laws

structures and institutions in place for ensuring that the budgeting system meets these

objectives in a sustainable, enduring manner. Budgeting is not simply the preserve of

central governments: it is a process that encompasses all levels of government, national

and subnational, where different mandates and levels of autonomy apply in different

countries. Budget systems and procedures should be coordinated, coherent and

consistent across levels of government. These budget principles are therefore relevant,

and should be applied as appropriate, to all levels of government.

The budgeting process is increasingly recognized as the key tool for

organizational effectiveness. On the other hand, effectively prepared budgeting process

can be measured in terms of achievement of its goal.

Despite budgeting process being in place in many organizations yet the goals

they set are not met or are met at some low level. Budget achievement was far from

reality and the gap between budget and organizational success are so wide range and

kept on point for many years ago. It is nevertheless also recognized that a country like

the Philippines can have a sound budget and financial system and still fail to achieve its

intended targets.
 Hence, the reason for this research work is to evaluate the effectiveness of

budgeting process in achieving organizational goal of an organization. This study will

make a critical analysis to obtain the possible factors that may observe the effectiveness

of budgeting process in achieving organizational goals.

Theoretical Framework

This study is anchored on Hirst’s Theory of Budgeting (1987) which explains that

an effective budgetary control solves an organization’s need to plan and consider how to

confront future potential risks and opportunities by establishing an efficient system of

control, a detector of variances between organizational objectives and performance

(Shields and Young, 1993). Budgets are considered to be the core element of an

efficient control process and consequently vital part to the umbrella concept of an

effective budgetary control. Budgets project future financial performance which enables

evaluating the financial viability of a chosen strategy. In most organizations this process

is formalized by preparing annual budgets and monitoring performance against budgets.

Budgets are therefore merely a collection of plans and forecasts (Silva and Jayamaha,

2012). Forrester and Adam state that successful budgetary reform requires attention to

the organizational context, in particular human behavioral dynamics. The objectives and

execution of budgetary reform must "match" the dynamic objectives and needs of the

organization. Moreover, the authors argue that successful implementation requires

planned organizational change, in which issues of behavioral change and organizational

culture are addressed, as the reform is planned and implemented.

This is also supported by Budgetary Control Model in reference to Robinson and

Last (2009), budgeting system is a tool used by the firm as a framework for their

spending and revenue allocation. To ensure the firm’s resources are not wasted, the

organization must be able to come out with an effective budgeting system. This is
important as it ensures that the outputs produced and services delivered achieve the

objectives. According to this theory, a good budgeting system must be able to addresses

the efficiency and effectiveness of the organization’s 11 expenditure. A good budget is

determined by the level of income of the organization (Robinson, 2009). The

organization has to put proper controls that ensure that the budget is properly

maintained and allocated. A firm that is able to run its operations efficiently is able to

allocate more revenues for the organization. This is achieved through cutting costs in

order to increase the quality and quality of goods and service offered by the

organization.

Conceptual Framework

The effective budget of any organization leads to the goals realization. The goals

realization in an organization is used to describe how successfully the organization is or

becoming. The failure of the same describes the opposite. Therefore, goal realization in

an organization supposed to be reflected by its growth of the organization through

attaining its goal example increasing of market share. One way of having an effective

budget is through the proper use of appropriate computer system to achieve the

process. Most budgets prepared in organizations aim at achieving organization goals.

One of the approach is involving staff from development department in budgeting

process. However, the organization may decide to adopt or not to adopt. As such,

adoption of the involvement of all staff in budgeting is influenced transparence in

organization. In situation where staff are involved there will be transparency hence will

reduce mismanagement of organization fund. The combination of which contribute

effective budget hence goal realization (Jacobs J. F 2003).

 DENR EMB

Optimizing Budget

utilization

Growth of
Goal Attainment
organization

Realization of Goals

Statement of the Problem

The purpose of the study is to explore and understand how the Environmental
Management Bureau (EMB) implements organizational management practices through
the lens of New Public Management (NPM) and the impacts of these practices on its
efficiency and effectiveness. Specifically, it addresses the following research questions:
Specifically, it addresses the following research questions:
 1. How does the Environmental Management Bureau (EMB) implement

organizational management practices based on New Public Management (NPM)

principles?

2. What specific New Public Management principles are adopted by the EMB?

3. What are the perceived benefits and challenges of implementing NPM in the

EMB according to its employees and stakeholders?

4. How do these NPM principles influence the overall performance and service

delivery of the EMB?

Significance of the Study

This study is significant as it provides an in-depth understanding of how the

Environmental Management Bureau (EMB) implements New Public Management (NPM)

principles in its organizational practices. By examining the application and impact of

these principles, the study offers valuable insights into the effectiveness and efficiency of

public management reforms within environmental regulatory bodies. The following are

the beneficiaries of the Study:

Environmental Management Bureau (EMB). The study will offer the EMB a

comprehensive analysis of its current management practices and highlight areas of

strength as well as opportunities for improvement. This feedback can help the bureau

refine its strategies, leading to enhanced operational efficiency and effectiveness in

environmental governance.

Policy Makers. For policy makers, the findings provide empirical evidence on the

application of NPM principles in a public agency. This can guide future policy decisions
and reforms aimed at improving public sector management and environmental policies,

ensuring more effective and accountable governance.

Public Administration Scholars and Researchers. The study adds to the academic

literature on New Public Management and its practical implications. Researchers can

use the findings as a basis for further studies, helping to expand the theoretical and

empirical understanding of NPM in different contexts and sectors.

EMB Employees and Stakeholders. Employees and stakeholders will gain insights into

the perceived benefits and challenges of NPM practices from within their organization.

This understanding can foster a more collaborative and informed approach to

implementing management reforms and addressing internal challenges.

General Public. As the ultimate beneficiaries of improved environmental management,

the general public stands to benefit from more efficient and effective service delivery by

the EMB. Enhanced environmental governance can lead to better protection and

management of natural resources, contributing to overall public health and sustainability.

Definition of Terms

Environmental Management Bureau (EMB)A government agency responsible for

implementing environmental laws, regulations, and policies. For this study, it refers to

the specific bureau under investigation, focusing on its internal organizational

management practices.

Organizational Management Practices. The strategies, processes, and routines

employed by the EMB to manage its resources, personnel, and operations. This includes
decision-making processes, performance management systems, and administrative

procedures.

New Public Management (NPM). A set of administrative practices and principles aimed

at improving efficiency, accountability, and service delivery in public sector

organizations. In this study, NPM includes practices such as performance measurement,

managerial autonomy, customer orientation, and results-based management.

Efficiency. The ability of the EMB to achieve its goals with the least amount of

resources, time, and effort. This study measures efficiency by examining the resource

utilization, time management, and cost-effectiveness of the EMB’s operations under

NPM principles.

Effectiveness. The degree to which the EMB successfully meets its objectives and

fulfills its mandate. This study assesses effectiveness by evaluating the quality of service

delivery, achievement of environmental targets, and overall impact of the EMB’s

initiatives.

Perceived Benefits. The positive outcomes and advantages identified by EMB

employees and stakeholders as a result of implementing NPM principles. These may

include improved service delivery, better resource management, and increased

accountability.

Perceived Challenges. difficulties and obstacles encountered by the EMB and its

employees in the implementation of NPM principles. This includes issues related to

resistance to change, resource limitations, and administrative hurdles.

Performance. measurable outputs and outcomes of the EMB’s activities and initiatives.

In this study, performance is evaluated through key performance indicators (KPIs) such
as environmental compliance rates, project completion rates, and stakeholder

satisfaction.

Service Delivery. The provision of environmental management services to the public by

the EMB. This includes activities such as pollution control, environmental monitoring,

and regulatory enforcement. The study examines how NPM principles affect the

efficiency and quality of these services.

Stakeholders. Individuals or groups who have an interest in or are affected by the

EMB’s activities. This includes employees, government officials, environmental

advocates, and the general public. The study considers their perspectives on the

implementation of NPM principles within the EMB.

Chapter 2

Review of Related Literature

Budget and Budgeting Process

 The process of creating, gathering, and overseeing financial budgets is known as

budgeting. Planning and managing a department inside an organization requires the use

of this crucial management tool. Budgeting establishes a framework for the operation of

groups, divisions, and entire organizations. Budgets encourage people and

organizations to look forward and plan using a set agenda that might improve effective

communication of their goals (Brookson, 2000). Additionally, budgets offer a regulated

framework for assessing the numerous facets of a business.

An organization's financial management framework should include generating

and maintaining budgets, according to the Australian Audit Office Better Practice Guide

from 2008.

A company's goals and objectives will be substantially more likely to be met with

effective budgeting. Budgeting is a tool used by organizations to implement financial

controls, monitor and report financial performance, and establish and convey financing

priorities. Organizations are better equipped to recognize and react to changes in

external conditions and organizational priorities when their budget processes, which

support the efficient allocation of resources, are effective. The expected financial

performance, financial status, and cash flows of an organization are also displayed in the

budget, broken down by area of accountability. Creating a budget entails making choices

about how resources will be allocated, used, and managed to forward the goals of the

business.

Organizational planning, financial responsibility, accountability, and authority,

budgeting and reporting, resource allocation, and the monitoring and assessment of

budgeting performance are frequently included in effective budgeting procedures.

Budgets have long been used as financial plans that include expected revenues and

planned expenses for a specific time period. Budgets are at the center of every
organization's planning and control system. Budgeting makes it possible to coordinate

resource allocation through internal communication while also acting as a mechanism for

expenditure permission and an evaluation base, making it the most crucial instrument for

improving performance when managing a company. Processes for planning, budgeting,

and reporting cascade throughout a business as strategic objectives. An organization's

budgeting, planning, and reporting procedures cascade as strategic goals and priorities

are transferred to operational divisions. Budgets must be distributed in a way that is both

in accordance with the organization's financial management framework and the unique

duties of the managers.

The budgeting process gives managements at all levels and in many

departments a chance to get together, talk about, and relate their goals to one another.

Instead of each manager acting alone to create their own empires, organizations are

most effective when everyone works together to achieve shared goals. In order for

managers to accomplish organizational goals, they need to have a clear awareness of

how each activity fits into the overall picture.

It is necessary to organize the many activities within an organization by creating

action plans for future times. Lucey (2002) emphasizes the value of budgeting to an

organization and claims that without planning, no goal can be attained by an

organization. Top managers set the organization's strategic orientation and choose the

strategic course that have the best chance of attaining the goals of the organization. To

put the strategies into practice, long-term plans should be created, and predictions are of

course used to determine the financial implications.

In general, a budget converts an organization's long-term plans into annual

operating plans. Therefore, examining the long-term plans' estimates is a step in the

budgeting process. Drury (2006) updates them in light of more recent facts. According to
Drury, the budgeting process cannot be seen as being solely focused on the current

year but rather as being an essential component of the long-term planning process

because it is influenced by past decisions and has an impact on programs that will be

implemented in the future. The entire budget cycle process, including the philosophies

used to direct budget creation, the approval process, and the mandate for

implementation, is included in the budgeting practice.

According to Lewis (2012)'s Financial Management Essentials Handbook, which

provides useful financial data for non-governmental organizations, the cornerstones to a

successful budgeting process are that first evaluate the financial resources required and

accessible to fulfill program goals, clearly define the programming objectives that are in

line with the mission and strategic plan, incorporate Staff and board members participate

in the process to enhance information accuracy and adherence to the plan, record

identifying the underlying assumptions and formulas, and lastly adapt the process to suit

your business.

The budget section of a proposal lists the total project costs and makes

projections for how much money will be spent on each stage of the project. Budget

development is only possible following the plans, projects and activities.

To accomplish the project's objectives, a thorough plan of each activity has been

created for the proposed project. Additionally, it calls for the proposal writer to have a

solid grasp of the guidelines and the proposal will be filed in accordance with the funding

agency's regulations. How the budget is created relies on the project's complexity and

the funding agency's guidelines.

Funding organizations care about more than just the overall amount requested;

they also want to know if the request is reasonable and well-founded. Respect for the
Project manager can be gained from the funding agency by properly presenting the

budget. The goals and narrative of the proposal as stated in the specific activities plan

must match the budget.

Philippine National budget is a financial plan to pursue priority programs and

projects of the government in line with its economic growth and human development

thrusts. It is an instrument for good governance, as government agencies are

accountable for the delivery of measurable results through their respective budgets.

Moreover, it is a continuing cycle – that is, while the current year’s budget is being spent

(and accounted for) by implementing agencies, the budget for the ensuing year is

simultaneously being prepared by the Executive then passed on to Congress for review

and approval.

Section 22, Article VII of the 1987 Constitution sets the tone for the budgetary

process. The procedure in the preparation of the national budget is regulated by law. On

or before October 20 of each year, each department secretary submits to Department of

Budget the estimated income and expenditures of the bureaus and offices under his

department for the next fiscal year. Upon receipt of all budget estimates of income and

expenditures, the Department of Budget and Management prepares the national budget.

Prior to this, however, the Budget secretary can investigate, revise, examine, assemble,

coordinate, and reduce or increase the budget estimates of the different departments,

bureaus and offices of the government.

After preparing the budget, the Budget secretary submits it to the President, who

in turn submits it to Congress within 30 days before the opening of the regular session.

The 1987 Constitution specifically provides that the President "shall submit to the

Congress within thirty days from the opening of every regular session, as the basis of

the general appropriations bill, budget of expenditures and sources of financing,

including receipts from existing and proposed revenue measures" ( Sec. 22, Art. VI).

Congress uses the budget submitted by the president as the basis for the annual

appropriation. According to the 1987 Philippine Constitution, Congress "may not

increase the appropriation recommended by the President for the operation of the

Government as specified in the budget" (Sec. 25(1), Art. VI).

Here is how the government budget is crafted and approved. There are four

phases in managing the National Budget: Budget Preparation, Budget Legislation,

Budget Execution and Budget Accountability. The 1987 Philippine Constitution outlines

the government’s framework for the budget process. As elaborated by the Department of

Budget and Management (DBM), the budget process involves four distinct phases:

Budget preparation, Budget authorization, Budget execution and Budget accountability

While distinctly separate, these processes overlap in the implementation during a budget

year. Budget preparation for the next budget year proceeds while government agencies

are executing the budget for the current year and at the same time engaged in budget

accountability and review of the past year’s budget.

Budget preparation

Trade-offs and program prioritization must be done during budget preparation to

ensure the budget's alignment with government aims and policies. The next step is to

choose the varieties that are the most affordable.

This section focuses on the fundamental procedures for creating a budget, as

well as the systems for managing overall spending and allocating resources
strategically. Performance and efficiency concerns are highlighted. The provisions for

budget planning are discussed along with issues of operational efficiency.

Benefits of budgeting to an organization

Every organization whether small, medium or large is expected to prepare a

budget that guides their day to day operations. The need for preparation and

maintenance of budgets is based on some importance, some of the benefits includes: 1.

it provides clear guiding principle for managers and supervisors and is the major way in

which organizational objectives are translated into specific tasks and objectives related

to individual managers. 2. Large organizations consist of many people and parts. These

components need to be coordinated to work together in a cohesive fashion. The budget

is the tool that communicates the expected outcome and provides a detailed script to

coordinate all of the individual parts to work in performance. 3. It helps managers in

identifying constraints and bottlenecks before they become major problems to the

organization Jackson & Sawyers, (2001). For instance, in electricity production efficient

operation of the power plant can be limited by supply of natural gas. Thus, a well-

developed a budget will always consider capacity constraints this means managers can

learn well in advance of threatening production and distribution bottlenecks. Moreover,

budgeting assist managers to have better understanding of their business and it

provides a yardstick by which business performance can be measured. If negative

deviations are discovered, it permits timely corrective action to be implemented (Borja &

Lombeida, 2002).

Furthermore, according to Jackson and Swyers (2001) budgeting has to do with

forecasting and estimating the future profitability of the company, due do that reason the

budgeting process forces management to focus on the future and not to be disturbed by
daily crisis in the organization.

Human aspects in budgetary process

The success of organizational control depends upon the actions of top

management and their appreciation of the importance of sound interpersonal

relationships between different levels of the hierarchy. Management accountants

through the budget process can motivate employees and improve attitudes amongst

managers towards budgetary control; this is possible through having a sound and

effective budgetary process. A sound budgetary process communicates organizational

goals, allocates funds, motivates employees, encompasses participation and provides

feedback. It establishes goals and policies, examine definite requirements, incorporate

assumptions and provide flexibility (Lucey, 2009). That is a comprehensive budget

usually involves all segments of an organization as a result representatives from each

unit need to be included throughout the process of budget preparation. The process is

likely to be led by budget committee mainly consisting of senior-level personnel. In large

organizations, budgeting is a collective process in which operating units prepare their

plans in conformity with corporate goals published by top management. Each unit plan is

intended to contribute to the achievement of corporate goals. The principal stages

involved in the budget process include: 1. Communicate the details of objectives and

strategy to those liable for preparation of budgets. 2. Communicate the details of budget

preparation procedures to those liable for preparation of budgets. 3. Discover the limiting

factor which restricts overall budget flexibility and forms the focus of the budget cascade.

4. Prepare preliminary set of budget. 5. Discuss budgets with line managers. 6. Organize

and review budgets. 7. Accept budgets in absolute form; 8. Carry out ongoing appraisal

of budgets as they are implanted Weetman, (1996). The budget construction process will
normally depend on the organization chart. Some entities follow a top-down or mandated

approach others follow a bottom-up or participative approach.

Top-Down Budget

This approach begins with upper-level management establishing parameters

under which the budget is to be prepared. Lower-level personnel have little input in

setting the overall budget objectives of an organization. The approach has a major

disadvantage that; lower-level managers may view the process as dictatorial standard

because they may find themselves put in a position of ever-reaching to attain targets for

their units and as a result may create goal divergence. On the positive side: it provides

effective communication device within an organization. Moreover, top down approach

assists managers to maintain financial control over the budget of which is difficult when

bottom-up approach is used. Participation in budgeting (Bottom-up Budget)

Responsibility accounting assumes that manager‘ influence costs and that the best way

of controlling these costs is to hold these managers responsible for the costs they

influence (Garrison, Noreen & Seal, 2003). This means that bottom line or are required

to develop their own budgets and are then held responsible for meeting their targets.

Bottom-up budget is most useful when lower-level managers Actively are involved or

engaged in the budgeting process. Participation adds reliability to the budgeting process

and creates greater commitment and accountability toward the budget, as budgets are

set by management but the people to realize the budget standards are the staff. Prior

studies on the relationship between participative budgeting and performance have

provided diverse results. Covaleski et al. (2003) found that, there exists a positive

relationship between budget participation and performance while other scholars found

negative relationship. All in all, the key to successful performance necessitate the

involvement of managers and personnel at all levels as it helps to ensure departments

will attain targets and operate within the budget. Controller must be able to negotiate and

communicate effectively with people in all levels of an organization. Issues relating to

participation in budget process have been well discussed by Sullu (1991) in his paper on

―Behavioral Dimension of Budgetary Planning & Control‖ He emphasized that

budgeting is not mechanistic technical procedure; its success is totally dependent upon

the goodwill and co-operation of the participants. Without this, budgeting will become a

mere paper exercise with no real impact on the operations of the organization. In the

process he added that; it is quite wrong to ignore human factor. If human factor and its

elements

The Philippine Constitution requires the submission of the President’s budget 30

days from the opening of each regular session of Congress. The first step of the annual

budget preparation begins with the determination of the overall economic targets,

expenditure levels, revenue projection, and the financing plan by the Development

Budget Coordinating Committee (DBCC). Following this, the DBM will issue a Budget

Call, which defines the budget framework; sets economic and fiscal targets; prescribes

the priority thrusts and budget levels; and spells out the guidelines and procedures,

technical instructions, and the timetable for budget preparation.

The various government agencies will then prepare their respective detailed

budget estimates that rank programs, projects, and activities using the capital budgeting

approach and submit these to the DBM. Budget hearings are then conducted, where

agencies justify their proposed budgets before the DBM technical panels.

After the submission of proposed expenditure programs by the respective

agencies, and the subsequent approval by the DBCC, the proposed budget is reviewed

and approved by the President and the Cabinet. Finally, the President submits the

proposed budget to Congress.

BUDGET UTILIZATION

Budget utilization defines the means by which all planned activities will be

delivered and responsiveness in the activities will create the outcome for reporting by the

end of the implementation period.

Concept of under and over utilization of budget

Performance-Based Budgeting?

Performance-based budgeting aims to improve the efficiency and effectiveness

of public Expenditure by linking the funding of public sector organizations to the results

they deliver, making systematic use of performance information. There are a number of

models of performance based budgeting that use different mechanisms to link funding to

results. Some have very sophisticated features and require the support of

correspondingly sophisticated public management systems, while others focus more on

the basics. Performance-based budgeting should not be seen as an isolated initiative. It

should be viewed, rather, as part of a set of broader reforms often referred to as an

aging for results designed to focus public management more on results delivered and

less on internal processes. The most basic form of performance based budgeting is that

which aims to ensure that, when formulating the government budget, key decision

makers systematically take into account the results to be achieved by expenditure. The

essential requirements for this most basic form of performance-based budgeting are

information about the objectives and results of government expenditure, in the form of

key performance indicators and a simple form of program evaluation and a budget

preparation process designed to facilitate the use of this information in budget funding

decisions, including simple expenditure review processes and spending ministry budget

decisions. A program classification of expenditure in the budget is also highly

recommended. By classifying expenditure into groups of similar services with similar

objectives, a program budget helps budget decision makers compare the costs and

benefits of expenditure options. Systematic consideration of results in the budget

preparation process has the potential to improve expenditure prioritization (the capacity

to allocate limited resources to where they will do the most good) and encourage line

ministries to spend more efficiently and effectively by making them aware that their

performance will influence their level of funding and by reducing or streamlining the

controls that impede good performance.

Budget Processes to Use Performance Information

The availability of the right performance information is a necessary but not a

sufficient condition for the success of performance-based budgeting. The performance

information also has to be actually used in the budget process. There have been a

number of examples of countries that have made great efforts to develop the necessary

performance information—and have also placed the budget on a program basis but have

then failed to make any significant use of this information when deciding the budget.

Experience shows that, in order for performance-based budgeting to work,

reconsideration of spending priorities and program performance need to be formally

integrated into the budget process. These routines need to be designed so as to make

maximum use of available information on program performance. The precise form such

routines 22 should take should be country-specific, depending in part on national

specifics such as the characteristics of the political and administrative systems.

However, some key common elements are a ―strategic phase‖ early on in the budget

cycle, which incorporates a preliminary consideration of the government‘s broad

expenditure priorities.

Budget Legislation
 Meanwhile in the Philippines, The President submits his proposed annual budget

to Congress in the following documents: Budget of Expenditure and Sources of

Financing (BESF), National Expenditure Program (NEP), containing the details of

proposed expenditures, and the President’s Budget Message, summarizing the budget

policy thrusts and priorities for the year

Article VI, Section 24, of the 1987 Philippine Constitutions provides for Congress’

authority for “all appropriation, revenue or tariff bills, bills authorizing increase of the

public debt, bills of local application, and private bills,” which is why Congress is often

considered as having the “power of the purse.”

The House of Representatives is first to review the proposed budget. Budget

hearings for each department or agency are held by the appropriations committee

together with the respective House subcommittees to scrutinize the details of the

proposed programs and projects. The House’s amendments are reflected in its General

Appropriations Bill approved by the House body.

While these hearings are taking place in the House, the Senate finance

committee, along with its different subcommittees, will simultaneously conduct its own

hearings on the proposed budget and submit its own amendments as well. The role of

the Senate is to propose or concur with amendments to the General Appropriations Bill

passed by the House. A Senate General Appropriations Bill reflecting amendments is

approved by the Senate body.

Any differences in the respective bills are threshed out by a bicameral conference

committee, which is composed of members from both the House and the Senate. A

common, harmonized version is finalized as the General Appropriations Bill (GAB).

 Once the GAB is finalized and approved by Congress, the President signs and

enacts it into law as the General Appropriations Act for that fiscal year. The 1987

Constitution provides that “If, by the end of any fiscal year, the Congress shall have

failed to pass the general appropriations bill for the ensuing fiscal year, the general

appropriations law for the preceding fiscal year shall be deemed reenacted and shall

remain in force and effect until the general appropriations bill is passed by the Congress”

(Rappler, 2022).

Budget implementation

Budget implementation starts with the release of funds to the agencies. To

accelerate the implementation of government programs and projects and ensure the

judicious use of budgeted government funds, the government adopted the Simplified

Fund Release System (SFRS) beginning 1995. In contrast to the previous system of

releasing funds based on individual agency requests, the SFRS is a policy-driven

system which standardized the release of funds across agencies which are similarly

situated in line with specific policy initiatives of the government. Following the SFRS, the

agency budget matrix (ABM) is prepared by the DBM in consultation with the agencies at

the beginning of each budget year, upon approval of the annual General Appropriations

Act. The ABM is a disaggregation of all the programmed appropriations for each agency

into various expenditure categories. As such, the ABM serves as a blueprint which

provides the basis for determining the timing, composition and magnitude of the release

of the budget. Based on updated resources and economic development thrusts and

consistent with the cash budget program, the Allotment Release Program (ARP) which

prescribes the guidelines in the prioritization of fund releases is prepared. The ARP

serves as basis for the issuance of either a General Allotment Release Order (GARO) or

a Special Allotment Release Order (SARO), as the case maybe, to authorize agencies to
incur obligations. Subsequently, the DBM releases the Notice of Cash Allocation (NCA)

on a monthly or quarterly basis. The NCA specifies the maximum amount of withdrawal

that an agency can make from a government bank for the period indicated. The Bureau

of the Treasury (BTr), replenishes daily the government servicing banks with funds

equivalent to the amount of negotiated checks presented to the government servicing

banks by implementing agencies. The release of NCAs by the DBM is based on: the

financial requirements of agencies as indicated in their ABMs, cash plans and reports

such as the Summary List of Checks Issued (SLCI); and the cash budget program of

government and updates on projected resources. Agencies utilize the released NCAs

following the "Common Fund" concept. Under this concept of fund release, agencies are

given a maximum flexibility in the use of their cash allocations provided that the

authorized allotment for a specific purpose is not exceeded. Project implementation is

thus made faster (COA.gov.ph).

Budget Accountability

The accountability phase is the final phase of the budget process. This is when

the agencies report their actual physical and financial performance. The assessment of

the physical achievements of an agency is aided by performance indicators. These are

yardsticks for determining how well an agency has accomplished its objectives. They

measure outcome, output, process efficiency and client satisfaction. They may be

quantitative or qualitative in nature. At this phase, the Commission on Audit (COA)

figures prominently in the assessment of agency performance. The COA is the

government body tasked with looking at the legality, propriety and accuracy of

government financial transactions. The COA has auditors assigned to each government

agency and it has regional offices to review these transactions. Those that are

considered excessive, inappropriate or illegal are not passed in audit. COA can
recommend means for setting them right, if such is still possible. Trial balances of

agencies, which are submitted to DBM and COA on a quarterly and annual basis, report

how agencies use up their allotments and cash allocations (ombusdman.gov.ph).

Management at all levels within the public, private and third sector have used the

term “budget” as their shield or excuse when confronted or challenged about any

decisions. It’s not uncommon to hear variations of the phrases “the budget doesn’t

permit us to”, or it is not in our budget”.

Traditionally, budgeting has always been viewed as a way of limiting expenditure,

hence a great part of management’s time is devoted to the allocation of fund. However,

empirical evidences in today’s globalized world, suggest that budgeting goes beyond

merely showing expected revenue and project expenditure. Rather, a budget protects

and controls the way management reacts to proposals brought before it, while also

examining the present and future cost as well as benefits associated with such a

proposal. In achieving this though, it must not lose sight of the environment in which it

operates. This same principle goes with the preparation of a budget, such that in

preparing a budget, management of businesses must realize that it is indeed a part of

the economic system and as such, can influence as well as be influenced by activities

within the economic system.

Lambe (2012) writing on Budgeting and Planning aptly defines budgeting as a

comprehensive and coordinated plan which is packaged by the management of an

organization, and expressed in financial terms for the operations and resources of an

enterprise for some specific period in the future. Lucey (2002), defined budget as a

quantitative statement, for a defined period of time, which may include planned

revenues, expenses, assets, liabilities and cash flows. A budget provides a focus for the

organization, aids the co-ordination of activities and facilities control. Planning is 8

achieved by means of a fixed master budget, whereas control is generally exercised

through the comparison of actual costs with a flexible budget.

According to Saleemi (1990), budget is defined as a financial or quantitative

statement prepared and approved and approved prior to a defined period of time. It may

include income, expenditure and the employment of capital. Drury (1996), defined

budget as a detailed plan that coordinates various activities within the company for

further actions. Hongreen (1981), defined budget as a quantitative expression of plan of

action and an aid to the implementation of this plan.

Budgeting is not a standalone process, removed from the other channels of

government action. Good budgeting is supported by, and in turn supports, the various

pillars of modern public governance: integrity, openness, participation, accountability and

a strategic approach to planning and achieving national objectives. Budgeting is thus an

essential keystone in the architecture of trust between states and their citizens.

Budgeting for the national government involves four (4) distinct processes or phases:

budget preparation, budget authorization, budget execution and accountability. While

distinctly separate, these processes overlap in the implementation during a budget year.

Budget preparation for the next budget year proceeds while government agencies are

executing the budget for the current year and at the same time engaged in budget

accountability and review of the past year's budget.

Mcalpine (2000) opines that it is important to ensure that the budgeting scheme

is comprehensive and effective and that the members of the organization know their

responsibilities under the scheme; what is needed to be done, how it should be done

and how performance will be measured. He further stated that these requirements are

fulfilled through comprehensive matter procedures. According to him, some of the

questions that have to be considered in drafting a procedure (among several others)

include: what budgets are in the scheme?, Who is responsible for preparing and

coordinating them?, What decision has to be made in the preparation of each budget?,

What information will be required to guide these decisions?, What are the sources of this

information? How will it be collected, analyses an interpreted to establish the

facts?.These procedures will be based on a factual approach to decision making and in

this connection, it has to be appreciated that decisions based on incomplete information

can be misleading as those based on wrong information.

Owler and Brown (1965), puts the concept of budget within the theoretical

perspective when they opined that budgets are expected to be viewed from a humanistic

approach. This is because human aspect of budgeting is much more important than the

accounting techniques. The success of any budgetary system depends on its

acceptance by those saddled with the responsibilities of managing the budget and the

company members who are affected by the budgets. It is not enough to prepare budgets

and assign responsibility for them; the behavioral aspect must be appraised. This fact

was rightly and succinctly pointed out by Owler and Brown (1965) when they stated that:

“It is nevertheless necessary to consider also the behavioral aspects of a system. The

system will be ineffective if the people who are operating the system have not been

considered and are not asked to participate in it”. To fully appreciate the theoretical

framework of budgeting and budgetary control, the types of budgets, budget

administrations and periods (as discussed below) needs to be closely examined.

According to C. Adams et al. (2003) the budget process and review are

discussed as follows: (i) The budgeting activity shall be rolled out by a budget guidance

letter issued by the Chief Executive at least six months before the close of the year

outlining the Government policies, general economic conditions, guidelines on how to

budget and budget time–table. (ii) It is the responsibility of each head of department to
prepare an appropriate budget for the divisions in an accepted format approved by the

Agency. (iii) Economist and Marketing Manager and Chief Accountant shall obtain

forecasts and estimates for the annual budget from each department and then

consolidate them into the Agency’s annual budget. 12 (iv) Economist and Marketing

Manager and Chief Accountant shall make monthly review of the revenue budget and

capital budget by comparing actual performance with estimates, obtaining reasons for

variances and recommending appropriate corrective action. (v) Under no circumstances

shall a deficit annual budget be operated by the Agency. (vi) All the Agency’s employees

responsible for expenditure are expected to exercise due economy and thrift. Money

must be spent only if it is absolutely necessary, and not merely because it has been

provided for in the budget.

Jensen (2001), in his paper entitled “Paying People to Lie: The Truth about the

Budgeting Process”, he analyzed the counterproductive effects associated with using

budgets or targets in an organization's performance measurement and compensation

systems. He pointed out that paying people on the basis of how their performance

relates to a budget or target causes people (both managers and employees) to game the

system and in doing so to destroy value. To stop this highly counterproductive behavior

people must stop using budgets or targets in the compensation formulas and promotion

systems for employees and managers.

Katiti (2005) concluded that:-In achieving organizational goals there is a need to

plan on how to arrive at targeted positions. These plans have to be made by making

comparison on the benefit to be attained at low possible costs. King’ori (2005) concluded

that:the program accountant is not involved in preparation of program annual work plan

and budget; therefore it is recommended that the program accountant should be

involved in process because of an important role an accountant plays as a key person

on the financial matters and planning.

Chapter 3

METHODOLOGY

Method of Research

This study will use descriptive quantitative research design in determining the

practices of the respondents in optimizing the utilization of the budgeting process for

goal attainment. This design is a Non-Experimental type of research whereby the

variables are measured using numerical terms although the variables under interrogation

are not manipulated by the researcher.

Population Sample Size and Sampling Technique

The target population of this study are the division chiefs, section chiefs, unit

heads of the department. The researcher expects the population to be forty-eight (48)

people who are working in a particular area of the Department of Environment and

Natural Resources -EMB. The respondents are 48 tenured employees who are assigned

in a specific department of the agency under study. They were chosen because they do

not only have broad knowledge of understanding the whole concept of budgeting and its

importance in the organization but also they are directly involved in the budgeting

process. The researcher will use the purposive sampling method in selecting the

respondents who shall be part of the study. The purposive selection is based on the

assumption that these people have broad knowledge of understanding the whole

concept of budget and its importance in an organization.

Description of Respondents

The respondents are 48 tenured employee who holds the position of division

chiefs, section chiefs, unit heads of the department. They have had experience with the

budget process of the Philippine government. They are not only deeply knowledgeable

about the budgeting process and its significance to the achieving the goal of the agency,

but they are also actively participating in it.

Research Instrument

To determine the effective and efficient budget utilization practices among the

stakeholders of a Philippine government agency in achieving the goals of the

organization, this study will use a 35-item researcher-made questionnaire for the

respondents to answer. The questionnaire has three sections. The first section will

contain the demographic profile of the respondents in terms of age, gender, years in

service, position and their assigned department. The second and third section will gather

the respondents’ practices and involvement in the budget process.

Data Gathering Procedure

In gathering data, the researcher will seek the permission of the department head

where the study will be conducted. Once permission is granted, the researcher will then

orient the respondents about the questionnaire that they will be answering. The

questionnaire is written in a very simple and understandable way so that respondents

can bring the questionnaire with them if they wish to answer it at home. After a couple of
days, the researcher will then collect the questionnaires for the data treatment and

analysis.

Statistical Treatment

The compilation and processing of the quantitative data which will be collected

will start immediately after the field work. The quantitative data that will be collected on

the study will be sorted, edited, coded and then it will be processed with help of the

computer using the Statistical Package for Social Sciences (SPSS). Tables and bar

graphs will also be employed to analyze the data the study.

Questionnaire

Part 1 RESPONDENTS’ GENERAL INFORMATION (PROFILE)

Instructions: Just tick where appropriate.

1. Gender Male [ ] Female [ ]

5. Age of respondents

Above 50 yrs [ ]

46-50 [ ]

41-45 [ ]

35-40 [ ]

34 and below [ ]

3. Years working with the Agency?

 Less than 5 years [ ]

5 to 10 years [ ]

10 to 15 years [ ]

16 plus years [ ]

4. What is your position in the agency?

Division chief [ ]

section chief [ ]

unit head [ ]

Other(Specify)……………………………………………………………

4. In which department in your agency are you working with?

Finance and Administrative Division [ ] Clearance and Permitting Division [ ]

Enforcement and Monitoring Division [ ]

Others

………………………………………………………………………………………………………

Part 1 QUESTIONNAIRE

5- always it means that this budget process is constantly practiced

4 -often- it means that this budget process is frequently practiced

3- sometimes- it means that this budget process is occasionally practiced

2- rarely - it means that this budget process is seldom practiced

1- Never it means that this budget process is not ever practiced

5 4 3 2 1

1. The Development Budget

Coordination Committee's budget

guidelines were included in the

national budget call that DBM

released (DBCC)

2. The agency included the policy

guidelines and procedures in the

budget call to help the agency

prepare and submit its budget

proposals.

3. The agency collaborated with a civil

society in the preparation of budget

proposals.

4. At a scheduled hearing with the

DBM's technical panel, the agency

proposed, presented, and defended

its proposal.

5. The President and the Cabinet

examined and approved the proposed

 budget.

6. The President submitted the proposed

budget to Congress.

7. The house of representatives

reviewed the proposed budget of the

agency.

8. The budget hearings were held by the

appropriations committee and the

respective House subcommittees to

examine the details of the agency's

planned programs and projects.

9. The Senate finance committee and its

several subcommittees held their own

hearings on the budget proposal at

the same time they handed in their

own changes.

10. The congress finalized and approved

the General Appropriation Bill.

11. The President signed and enacted

into law as the General Appropriations

Act for that fiscal year.

12. The DBM distributed the programs

 and guidelines for the release of

funds.

13. The agency submitted the Budget

Execution Documents (BED) to

outline their plans and performance

targets.

14. DBM prepared an Allotment Release

Program (ARP) that set a limit for

allotments issued in general to the

agency.

15. DBM set up the Cash Release

Program (CRP) which fixes the

monthly, quarterly and annual

disbursement levels.

16. DBM dispensed allotments which

authorizes the agency to enter into

obligations.

17. DBM issued a disbursement authority

so that cash may be allocated in

payment of the obligations.

18. The agency submitted its Monthly

Cash Program and other required

documents.
 19. The issuance of Notice of Cash

Allocation was based upon an

agency’s submission of its Monthly

Cash Program and other required

documents.

20. DBM assessed the agency’s

performance targets and outcomes.

21. The agency’s accountability was

examined and evaluated through

budget accountability reports.

22. The agency’s accountability was

examined and evaluated through a

review of agency performance.

23. The agency’s accountability was

examined and evaluated though audit

conducted by the Commission on

Audit (COA).

Part 2: QUESTIONAIRE

Instructions: Kindly tick the appropriate place for the answer you consider to be

reasonable.

5- always it means that what is in the statement is constantly practiced

4 -often- it means that this budget process is frequently practiced

3- sometimes- it means that this budget process is occasionally practiced

2- rarely - it means that this budget process is seldom practiced

1- Never it means that this budget process is not ever practiced

5 4 3 2 1

6. I am normally involved in the

preparation of budget.

7. I have knowledge of the procedures

that the agency follows in preparing a

budget

8. I understand what the sources of

funds are so as to attain targeted

budget

9. I am highly involved in implementing

the budget.

10. Each year’s budget reaches the 100%

intended goals of the agency

24. I recognize the goals to be achieved

in the current budget?

25. I know that budgeting's primary

function is to ensure an organization

has enough resources to meet its

goals.
26. Several measures are taken to

ensure that the budget prepared is

adhered to by

the agency.

27. The agency has methods in

measuring organization performance

against budget.

28. Budget makes planning how revenue

can be increased or distributed

efficiently at the same time where

expenses can be reduced across all

the agency activities.

29. I am aware that there may be some

factors that affect budget preparation

and its effective use in attaining

organizational goals.

30. Some actions if put into practice may

lead to effective use of budget in

reaching organizational goals

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APT

Financial Consultants (2009). Management Accounting and Control (CPA Reviews), Dar

es

salaam, Tanzania. Arora, M. N (2000). Cost Accounting, 7 th Edition, Viscas Publishing

House.

Drury, C. (2004). Management and Cost Accounting, 6th edition, Thomson Learning,

London.

Gordon, P.N (1999). Budgeting, Profit and Control, Prentice Hall, New Delhi.

Horngren C, et al, (1981). Cost Accounting, 3rd Edition, Practice Hall of India,

NewDelhi.

Horngren, C, et al, (1991). Cost Accounting, 7 th Edition, Practice Hall of India,

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Hornoren, C.T (1999). Management Accounting, 11th edition USA. Kothari, C.R (2004).

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(16), 12 - 26

Lucey T. (2003). Management Accounting, 4th edition, Great Britain Continuum,

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S.K (2003). Management Accounting, 9 th Edition, Kalyani.