Barangay Budgeting

The Barangay Budget and the Budget Process

POWER TO ALLOCATE
RESOURCES
What is the legal basis for barangay
budgeting?

Sections 329-334 (Barangay Budget) of the

Local Government Code of 1991 (RA No. 7160)
provide the basis for the collection, safekeeping
and use of barangay funds. The aforesaid
provisions govern the preparation, effectivity,
and review of the barangay budget, including
the financial procedures that the barangay
shall observe.
 The Budget Cycle
Preparation
Punong
Barangay

Accountability Authorization
Sangguniang
Punong Barangay
Barangay

Execution Review
Sangguniang
Punong
Panlungsod /
Barangay
Bayan
BUDGET PREPARATION
 BUDGET PREPARATION

Who Prepares the Budget?

The Punong Barangay (PB) with the assistance of the

Barangay Treasurer and in consultation with the
Sangguniang Barangay (SB) and Barangay
Development Council (BDC) prepare the
barangay budget consisting of the following:
1. Estimates of Income
2. Total Appropriations as Proposed by
the Punong Barangay (PB)
 BUDGET PREPARATION

When is the Budget Prepared?

The PB shall prepare the barangay budget for the coming
Fiscal Year upon receipt of the detailed Statement of
Income and Expenditures from the Barangay Treasurer on
or before September 15 of each year.
What are the contents of the Barangay Budget?
• Budget Message
• Barangay Expenditures Program (BEP) or “Proposed General
Barangay Appropriations Bill”
• Summary of Financial Statements
• Summary of Actual and Estimated Output.
 BUDGET PREPARATION
How is the Barangay Budget Prepared?

Step 1 • Issuance of Budget Call (Sept. 20)

Step 2 • Preparation of Budget Proposal (Sept. 25)

• Budget Forum w/ Brgy Officials & Stakeholders

Step 3
(Sept. 26)
• Submission of Executive Budget to the
Step 4
Sangguniang Barangay (Oct. 16)

Step 5 • Preparation of Budget Message (Oct. 10)

Step 6 • Finalization of BEP/ Appropriations Bill (Sept. 30)

Indicative Budget Calendar

 BUDGET PREPARATION

Mandatory Allocations

Internal Revenue Allocation (IRA) share shall be used for basic

services delivery including administrative and legislative
services:

§ 20% of the IRA shall be used for priority development projects

§ 10% of the General Fund shall be allocated for the
Sangguniang Kabataan (SK)
§ 5% of Regular Income shall be used for unforeseen
calamities.
 BUDGET PREPARATION

Mandatory Allocations

Internal Revenue Allocation (IRA) share shall be used for basic

services delivery including administrative and legislative
services:

§ 20% of the IRA shall be used for priority development

projects
§ 10% of the General Fund shall be allocated for the
Sangguniang Kabataan (SK)
§ 5% GF of Regular Income shall be used for
unforeseen calamities based on RA 10121;
& 5% for Gender and Development;
& 2% of RPT (next preceding fiscal year) for discretionary
fund;
& 1% of IRA for BCPC;
& 1% of GF for PWD and Elderly
 BUDGET PREPARATION

Mandatory Allocations

55% of Total Regular Income of Next

Preceding Year
For Example: Regular Income is…

Budget Year 2008………1,000,000.00

Preceding Year 2007…. 900,000.00
Next Preceding Year….. 700,000.00

For purposes of computing the PS cap during the

preparation of the budget for CY 2018, we use the next
preceding year as the basis.

Therefore, 700,000.00 x 55% is P385,000.

BUDGET AUTHORIZATION
 BUDGET AUTHORIZATION

THE STAGE WHERE THE BARANGAY

BUDGET IS SUBMITTED FOR
AUTHORIZATION TO THE
SANGGUNIANG BARANGAY
“No money shall be paid out of
the local treasury except in
pursuance of an
appropriations ordinance or
law.”
Section 305 of Republic Act No. 7160
Functions of the Sanggunian

POLICY MAKING
REVENUE GENERATION
APPROPRIATION
OVERSIGHT
 PROCESS FLOW
BUDGET AUTHORIZATION
Executive Budget
Budget Message

submits on or before Oct. 16

of the current budget year

Punong Barangay

Appropriations
Ordinance
enacts the budget on or before the Sangguniang Barangay
end of the current FY
 STEPS IN BUDGET AUTHORIZATION

Presentation Of The Executive

Budget to the SB

Deliberation by the SB on the

Executive Budget

Enactment of the General

Appropriations Ordinance
(GAO)

Approval of the GAO by the

Punong Barangay
 GUIDELINES ON BUDGET
SUBMISSION

DUE DATE OF Not later than the16th of

SUBMISSION: October of the current
fiscal year
Section 318 of R.A. 7160

PUNONG BARANGAY
 n gg uni an
What if Sa ct the
i l s t o e na
fa
Budget?

BUDGET AUTHORIZATION
 EFFECTS OF FAILURE TO
ENACT BUDGET

The ordinance authorizing the

appropriations of the preceding year shall
be deemed REENACTED.
The SB shall, however, continue to
hold sessions until the ordinance
authorizing the annual budget is
approved. Without
additional
renumeration
Sec. 323 of Republic Act No. 7160
 EFFECTS OF FAILURE TO
ENACT BUDGET

If the sanggunian still fails to enact

such ordinance after ninety (90)
days from the beginning of the
fiscal year, the reenacted budget
shall remain in force and effect
until the ordinance authorizing the
proposed appropriations is passed.

Sec. 323 of Republic Act No. 7160

 EFFECTS OF FAILURE TO
ENACT BUDGET

ITEMS DEEMED REENACTED

Honoraria of Barangay Officials

Salaries and Wages of Existing Positions

Statutory and Contractual Obligations

Essential Operating Expenses

BUDGET
AUTHORIZATION
 EFFECTS OF FAILURE TO
ENACT BUDGET
PROHIBITED ACTS
Undertaking of NON-
Implementation of
RECURRING ACTIVITIES
NEW PROJECTS
(no matter how vital)

er FILLING up of
d
n un YS POSITIONS
si t io TLA
q ui L OU
Ac PITA
CA
 Changes on the Annual Budget

Through SUPPLEMENTAL BUDGET/S

When supported by funds actually
available as certified by the Treasurer
❑ actual collections exceed
estimated income
❑ when there are savings
 Changes on the Annual Budget

Through SUPPLEMENTAL BUDGET/S

When covered by new revenue
sources
In times of public calamity by
way of budgetary realignment
BUDGET REVIEW
 What is REVIEWED?

GAO within
10 DAYS
ANNUAL after
BUDGET enactment
SUPPLEMENTAL
BUDGET
 Purpose

Compliance
budgetary requirements and
general limitations
budget shall not exceed the
estimated receipts/income
item of appropriations
are not more than those
provided by law
 Who reviews Barangay Budgets?

SANGGUNIANG
BAYAN
SANGGUNIANG
PANLUNGSOD Thru

SEC. 333 OF REPUBLIC ACT NO. 7160 BUDGET REVIEW

 Duration of Review

DAY 1 60th DAY

starts upon official last day budget
receipt of the can be reviewed
budget
Effects of Failure to Review Budget

If the sanggunian fails to review

the Barangay Budget within the
sixty (60)-day period, the budget
is deemed in full force and effect.

Sec. 333 of Republic Act No. 7160

BUDGET REVIEW
 Conflict in Budget Review

Where to APPEAL FOR RECONSIDERATION

❑ City/Municipal Legal Officer
- assigned to review and submit
recommendation on approved
ordinances and executive
orders issued

BUDGET REVIEW
 Conflict in Budget Review

Where to APPEAL FOR RECONSIDERATION

❑ DBM Regional Office

- for technical assistance

BUDGET REVIEW
BUDGET EXECUTION
 BUDGET EXECUTION
(Jan. 1 – Dec. 31)

What does the Local Gov’t Code say?

Effectivity of Barangay Budgets. Section 332

provides that “the ordinance enacting the
annual budget shall take effect at the beginning
of the ensuing calendar year. An ordinance
enacting a supplemental budget, however, shall
take effect upon its approval or on the date fixed
therein.
 BUDGET EXECUTION

Who is responsible for the execution of the

barangay budget?

The PUNONG
BARANGAY
is responsible for the
execution of
Barangay Budget
 BUDGET EXECUTION
The PUNONG BARANGAY shall ensure that:
• Revenues as estimated are realized;
• Approved development projects and basic
services are implemented and delivered;
• Barangay funds are disbursed in accordance
with the appropriation ordinance(GAO) and
reviewed annual budget; and thru the SARO
• All financial transactions of the barangay
follow accounting and auditing rules.
 BUDGET EXECUTION
Process Flow

GAO and
Prepare Cash
reviewed Prepare SARO
Program
annual budget

Prepare
Prepare Prepare
Quarterly
Disbursement Obligation
Performance
Voucher Request
Targets

Pay obligations/ issue

checks
 What are the Basic Consideration in
Cash Programming

• The Cash Program for PS should FULLY

PROVIDE the compensation benefits of
barangay officials;

• Must take into consideration the TIMING of the

Grant of Mid-Year & YEB, PIB & other similar
items of expenditures;

• SEASONAL /PEAK PERIODS or SLACK times in the

provision of MOOE
 BUDGET EXECUTION

Basic Policies
FINANCIAL RECORDS
To be kept in the custody of the Barangay
Treasurer and Municipal Accountant
▪ Books of Accounts
▪ Statement of Income and
Expenditures
▪ Balance Sheets
▪ Trial Balances
 BUDGET EXECUTION
Basic Policies
UNEXPENDED BALANCES of APPROPRIATIONS

PS
Revert to the General Fund
MOOE

MOOE Form part of Continuing

CO Appropriations

10% SK Add to the 10% share of the SK

Fund for next year
 BUDGET EXECUTION

Basic Policies
UNEXPENDED BALANCES OF APPROPRIATIONS
Revert to the General Fund;
Re-appropriate for other development projects

20% Dev’t
Fund

from
completed or
discontinued
projects
 BUDGET EXECUTION

Basic Policies
PETTY CASH FUND
A small amount of cash given to a BT or DO for
direct purchase or for payment of ordinary and
essential needs of the barangay

➢ Replenishments shall be directly charged to the

expense account;
➢ At all times, PCF shall equal to the total cash on
hand and the unreplenished expenses;
 BUDGET EXECUTION

Basic Policies
PETTY CASH FUND
➢ Shall not exceed 20% of the funds available
to the credit of the barangays;
➢ Replenished when disbursements reach at
least 75% of the PCF or as needed;
➢ Only a maximum of P1,000.00 can be
charged against the PCF at any one time;
 BUDGET EXECUTION

Basic Policies
PETTY CASH FUND
➢ Disbursements are to be documented
by cash invoices, credit invoices with
OR and other evidences of
disbursement and required supporting
papers.
 BUDGET EXECUTION

Basic Policies

Barangay CASH ADVANCE

➢ A bigger amount of money, as compared

to petty cash, given to regular or special
disbursing officers (D.O.) for specific
public purposes.

➢ Regular cash advance includes expenses

for honoraria and other similar payments.
 BUDGET EXECUTION

Basic Policies
Barangay CASH ADVANCE

➢ Only duly permanently appointed officials/

employees shall be granted cash advance;
➢ Only duly appointed or designated D.O.
who are bonded may perform disbursing
functions;
➢ Only one disbursing officer shall be assigned/
designated for a specific purpose;
 BUDGET EXECUTION

Basic Policies
Barangay CASH ADVANCE
➢ Transfer of accountability for cash advance
shall not be allowed;
➢ A cash advance for a particular year shall not
be used to pay for expenses made in other
years;
➢ All cash advances shall be fully liquidated at
the end of each year.
➢ ….take note…..
 BUDGET
ACCOUNTABILITY
 LEGAL BASIS

• SECTION 332 OF R.A. 7160

“THE RESPONSIBILITY FOR THE

EXECUTION OF THE ANNUAL AND
SUPPLEMENTAL BUDGETS AND
THE ACCOUNTABILITY THEREFORE
SHALL BE VESTED PRIMARILY IN
THE PUNONG BARANGAY
CONCERNED”
BUDGET ACCOUNTABILITY DEFINED

• Last stage - whereby financial and

physical performance are recorded,
monitored, validated and evaluated
purposely to assess whether
performance is in accordance with
targets or budget plans

• Any negative deviations from planned

targets are provided with corrective
actions
PROCESS FLOW IN ACCOUNTABILITY

RECORD DEPOSIT ALL

COLLECTIONS ISSUE ORs COLLECTIONS

SEGREGATE RECORD ALL COLLECT RPT

EXPENDITURE OBLIGATIONS/ AND OTHER
LEVELS DISBURSEMENTS TAXES

POST INCOME POST BAF MONITOR &

FOR THE QTR 1-3 EVALUATE
PERFORMANCE
PERSONS RESPONSIBLE FOR REPORTING

• Punong Barangay;
• Chairman, Appropriations
Committee of Sangguniang
Barangay;
• Barangay Treasurer; and,
• City/Municipal Treasurer/
Accountant
REASONS FOR RECORDING AND REPORTING

• To provide information on status of

service delivery/project
implementation and serve as basis for
necessary corrective action for
identified deviations;

• To ensure that obligations are incurred

within the limits of the approved
appropriations;
REASONS FOR RECORDING AND REPORTING

• To record unpaid obligations, both

current and those certified to as
accounts payable at yearend;

• To make brgy transactions and financial

status transparent and a matter of
public knowledge;

• To serve as basic input into the next

budget preparation