Government Accounting

Chapter 1 OVERVIEW OF GOV’T ACCOUNTING

2) The responsibility to take care that such

Government Accounting policy is faithfully adhered to rests directly

with the chief or head of the government
- Encompasses the process of analyzing, recording, agency concerned.
classifying, summarizing, and communicating all
transactions (receipt and disposition of 2 FUNDAMENTAL PRINCIPLES
government funds and property and interpreting
results)
1) No money shall be paid out of any public
- Process of producing information that is useful in
treasury or depository except in pursuance of
making economic decisions.
an appropriation law or other specific
- Primarily budgetary accounting
statutory authority.
- Also aims budget information in accordance with
2) Government funds or property shall be spent
PPSAS 24
or used solely for public purposes.
3) Trust Funds shall be available and may be
OBJECTIVES
spent only for the specific purpose for which
1. Produce information concerning past operations the trust was created or the funds received.
and present conditions 4) Fiscal responsibility shall, to the greatest
2. Provide a basis for guidance for future operations extent, be shared by all those exercising
3. Provide control of the acts of public bodies and authority over the financial affairs,
officers in the receipt, disposition and utilization of transactions, and operations of the
funds and property government agency.
4. Report on the financial position and the results of
5) Disbursements or disposition of government
operations of government agencies for the
funds or property shall invariably bear the
information of all persons concerned
approval of the proper officials.
6) Claims against government funds shall be
Greater emphasis on:
supported with complete documentation.
1. Sources and utilization of government funds
7) All laws and regulations applicable to financial
 Sources (taxes, borrowing, grants, and other
transactions shall be faithfully adhered to.
fees)
8) Generally accepted principles and practices
 Utilization (expenditures, programs, projects,
etc.) of accounting as well as of sound
2. Responsibility, accountability and liability of management and fiscal administration shall
entities entrusted with government funds and be observed, provided that they do not
properties contravene existing laws and regulations.

1 DECLARATION OF POLICY 3 ACCOUNTABILITY AND

1) Government resources shall be managed, RESPONSIBILITY FOR GOVERNMENT
expended or utilized in accordance with law FUNDS AND PROPERTY
and regulations, and safeguard against loss
or waste through illegal or improper Accountable Officers; Bond Requirements
disposition, with a view to ensuring efficiency,
economy and effectiveness in the operations 1. Every officer of any government agency
of the gov’t. whose duties permit or require the

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Government Accounting
Chapter 1 OVERVIEW OF GOV’T ACCOUNTING

possession or custody of government funds solidarily liable with the person primarily
or property shall be accountable thereof and accountable therefor.
for the safekeeping thereof in conformity - The treasurer of the local government unit
with law. shall likewise exercise the same degree of
2. Every accountable officers shall be properly supervision over accountable officers under
bonded in accordance with law. his supervision, otherwise he shall be jointly
and solidarily liable with them for the loss of
PRIMARY & SECONDARY RESPONSIBILITY government funds or property under their
control.
1) The head of the agency of the government is
immediately and primarily responsible for all Measure of Liability of Accountable
government funds and property pertaining Officers
to his agency.
2) Persons entrusted with the possession or 1) Every officer accountable for government
custody of the funds or property under the property shall be liable for its money value in
agency head shall be immediately case of improper or unauthorized use or
responsible to him without prejudice to the misapplication thereof, by himself or any
liability of either party to the government. person for whose acts he may be
responsible. We shall likewise be liable for all
GENERAL LIABILITY FOR UNLAWFUL losses, damages, or deterioration
EXPENDITURES occasioned by negligence in the keeping or
use of the property, whether or not it be at
- Expenditures of government funds or uses of the time in his actual custody.
government property in violation of law or 2) Every officer accountable for government
regulations shall be a personal liability of the funds shall be liable for all losses resulting
official or employee found to be directly from the unlawful deposit, use, or application
responsible thereof. thereof and for all losses attributable to
negligence in the keeping of the funds.
Records & Reports Required by Primarily
Responsible Officers 4 LIABILITY FOR ACTS DONE BY
DIRECTION OF SUPERIOR OFFICERS
- The head of the agency or instrumentality of
the national government or any - No accountable officer shall be relieved
government-owned or controlled from liability by reason of his having acted
corporation and any other self-governing under the direction of a superior officer in
board or commission of the government paying out, applying, or disposing of the
shall exercise the diligence of a good father funds or property with which he is
of a family in supervising accountable chargeable, unless prior to that act, he
officers under his control to prevent the notified the superior officer in writing of the
incurrence of loss of government funds or illegality of the payment, application, or
property, otherwise he shall be jointly and disposition. The officer directing any illegal
payment or disposition of the funds or

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 Government Accounting
Chapter 1 OVERVIEW OF GOV’T ACCOUNTING

property shall be primarily liable for the  Maintain accounts of financial

loss, while the accountable officer who fails transactions of all national government
to serve the required notice shall be officers, agencies and instrumentalities.
secondarily liable.
Government Agencies
5 ACCOUNTING RESPONSIBILITY
- Government Agency refers to any
The following officers are charged with department, bureau or office of the
government accounting responsibility: national government, or any of its
branches and instrumentalities, or any
1. Commission on Audit (COA) political subdivision,
2. Department of Budget and Management - as well as any government owned or
(DBM) controlled corporation (GOCC), including
3. Bureau of Treasury (BTr) its subsidiaries, or other self-governing
4. Government agencies board or commission of the government.
- The government agencies are responsible
Commission on Audit in directly implementing the projects of,
and performing the functions delegated
- Has the exclusive authority to promulgate by, the government.
accounting and auditing rules and - Each agency (entity) shall maintain
regulations; accounting books and budget registries
- Keep the general accounts of the which are reconciled with the cash records
government, supporting vouchers, and of the BTr and budget records of the COA
other documents; and and DBM.
- Submit financial reports to the President - Government agencies are required by law
and Congress to have accounting
units/divisions/departments.
Department of Budget and Management - Even a barangay (the smallest
administrative division in the Philippines) is
- The DBM is responsible for the formulation required to have an accounting unit e.g,
and implementation of the national the barangay's "bookkeeper."
budget with the goal of attaining the
nation's socio-economic objectives. 6 GAM for NGAs

Bureau of Treasury - The Philippine government incorporated

Philippine Public Sector Accounting
- The BTr functions under the Department of Standards (PPSAS) in the GAM for NGAs
Finance and is the cash custodian of the
a) The Government Accounting Manual for
government.
National Government Agencies (GAM for
- The BTr is authorized to:
NGAs) is promulgated by the COA under
 Receive and keep national funds and
the authority conferred to it by the
manage and control the disbursement
thereof; and

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 Government Accounting
Chapter 1 OVERVIEW OF GOV’T ACCOUNTING

Philippine Constitution (Art. IX-D, Sec.2(2)

Philippine Constitution)
b) The Gam for NGAs was promulgated to Fund Clusters
harmonize the government accounting 01 Regular Agency Fund
standards with the International Public
02 Foreign Assisted Project Fund
Sector Accounting Standards (IPSAS). The
03 Special Account - Locally
IPSASs are based on the IFRS
Funded/Domestic Grants Fund

Coverage 04 Special Account - Foreign

Assisted/Foreign Grants Fund
a) Preparation of general-purpose financial 05 Internally Generated Funds
statements in accordance with PPSAS and 06 Business Related Funds
other financial reports required by law 07 Trust Receipts
b) Reporting budget, revenue, and expenditure
in accordance with law, rules and
regulations
8 Qualitative Characteristics of
Financial Reporting
Objective of the GAM for NGAs (TURRM FSN PCC)

- To update the following:

TABLE TOPIC
a) Standards, policies, guidelines and
Timeliness - loss of relevance if there is
procedures in accounting for
undue delay
government funds and property
b) Coding structure and accounts; and Understanda - Easy to comprehend
c) Accounting books, registries, records, bility - Also users is expected to have
forms, reports and financial statements reasonable knowledge and
have willingness to study

7 Basic Accounting and Budget Relevance - Information must be timely

and can assist evaluating
Reporting Principles
past, present, or future events.

1. PPSAS and relevant laws, rules, and regulations Reliability - Free from material error and
2. Accrual Basis of accounting not bias (can be depended by
3. Budget Basis (presentation of budget users)
information in the financial statements) Materiality - Material information if omitted
4. Revised chart of accounts prescribed by COA or misstated can influence
5. Double entry bookkeeping decisions of users (Depends
6. Financial statements (based on accounting on nature and size of item or
and budgetary records error)
7. Fund cluster accounting - types of funds being Faithful - Must be presented in
accounted for (ex. Regular agency fund, Representati accordance with substance
foreign assisted project fund, etc.) on - Produced accurately and
reflect the condition of a

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 Government Accounting
Chapter 1 OVERVIEW OF GOV’T ACCOUNTING

business LIABILITIES
Substance - Accounted for and presented - Present obligations of the entity arising
over form in accordance with their from past events, the settlement of which
substance and economic is expected to result in an outflow from the
reality and not merely their entity of resources embodying economic
legal form. benefits or service potential

Neutrality - Free from bias

EQUITY
Prudence - Exercise a degree of caution - Residual interest in the assets of the entity
when making estimates after deducting all its liabilities
Completene - Information should be
ss complete within the bounds of Revenue
materiality and cost - Gross inflow of economic benefits or
Comparabilit - Information is comparable if it service potential during the reporting
y help users identify similarities period when those inflows results in an
and differences (inter and increase in net assets/equity, other than
intra comparability) increases relating to contributions from
owners (future economic benefits that
have been contributed to the entity by
external parties)
9 General Purpose Financial
- Revenue funds: all funds derived from the
Statements
income of any agency of the government
and available for appropriation or
a) Statement of Financial Position
expenditure in accordance with law
b) Statement of Financial Performance
c) Statement of Changes in Net Assets/Equity EXPENSES
d) Statement of Cash flows - Decrease in economic benefits or service
e) Statement of Comparison of Budget and potential during the reporting period in the
Actual Amounts form of outflows or consumption of assets
f) Notes to Financial Statements or incurrence of liabilities that result in
decrease in net asset/equity, other than
10 Elements of the Financial Statements those relating to distribution to owners
(future economic benefits distributed by
ASSETS the entity to its owners; return on
- Controlled by an entity as a result of past investment or return of investment)
events, and from which future economic
benefits or service potential are expected
to flow the entity
- Recognition:
 Future economic benefits are
probable (greater than 50%)
 Assets has a cost or value that can
be measured reliably

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