Sei sulla pagina 1di 14

General Principles of Public

Fiscal Administration

Submitted By:
Jonathan A. Rivera

Overview of Public Fiscal Administration


Public Fiscal Administration - refers to the formulation,
implementation, and evaluation of the Policies and Decisions on taxation,

revenue administration, resource allocation, budgeting, public expenditure,


borrowing, debt management, accounting, and auditing.
It is also defined as the act of managing incoming and outgoing
monetary transactions and budgets for governments, educational
institutions, nonprofit organizations, and other public service entities.
Public administration has to do with the practical management and
direction of the various organs of the state and the execution of state policies
by the executive and administrative officers entrusted with such functions.
Public - mean the whole government sector the NGAs (National
Government Agencies), GOCCs (Government owned and Controlled
Corporations), GFIs (Government Financial Institutions), and LGUs (Local
Government Units). It also mean, the people whom the government serve
the beneficiaries, voters, taxpayers, youth, farmers, and the urban poor.
Fiscal refers to fiscal policies closely linked with other policy
instruments of the government such as monetary, price and trade policy,
investment and wage
Administration refers to the Formulation, Implementation,
and Evaluation of Government fiscal policies.
The principal agencies tasked with fiscal functions:
1.
2.
3.
4.

Congress, especially the Lower House,


Department of Finance
Department of Budget and management
Commission on Audit

Other agencies tasked with fiscal functions:

CONGRESS
DEPARTMENT OF FINANCE (DOF)
DEPARTMENT OF BUDGET AND
MANAGEMENT
COMMISSION ON AUDIT
DEPARTMENT OF INTERIOR AND
LOCAL GOVT
OFFICE OF THE PRESIDENT (OP
Bureaus:
Bureau of Internal Revenue (BIR)
Bureau of Customs (BOC)
Bureau of the Treasury (BTR)
Bureau of Local Government Finance
(BLGF)
Offices:
Privatization and Management Office
(PMO)

Agencies and Corporations


Insurance Commission (IC)
National Tax Research Center (NTRC)
Central Board of Assessment Appeal
(CBAA)
Philippine Deposit Insurance
Corporation (PDIC)
Philippine Export-Import Credit
Agency (PHILEXIM)
Government Service Insurance
System (GSIS)
Social Security System (SSS)
Public Estates Authority (PEA)
Cooperative Development Authority
(CDA)
Regional Offices

Meaning of Administrative Agency.


Administrative Agency - is the term used generally to describe an
agency exercising some significant combination of executive, legislative and
judicial powers. It is a government body charged with administering and
implementing particular legislation.
Under the Administrative Code of 1987, the term agency of the
government is used to refer to any of the various units of the government,
including a department, bureau, office, instrumentalities, or GOCCs, or LGUs.
PUBLIC FISCAL ADMINISTRATION AT A GLANCE
Also talks about government revenues and expenditures and their
impact in the economy
Concerned with the implementation and practicalities of these
concepts
Encompasses the practical aspects of fiscal governance such as:
> revenue collection
> preparation of budgets
> budget allocation and spending
> management of debt
> auditing of account
Deals with, but is not restricted to the more limited issues covered by
public fiscal
In recent times, however, with the emergence of the field of public
administration, much interest has been directed towards the political
administrative and management aspects of formulating,
implementing and evaluating fiscal policy-hence, the term public
fiscal administration

Is centered on the determination and analysis of fiscal policies


starting from their formulation to their implementation and
evaluation.
Fiscal Policy Functions
Allocation

Distributio
n

Stabilizati
on

It is the process by which total resource use is divided


between private and social goods and which the mix of
social goods is chosen.
In the performance of allocation function, fiscal policy
is expected to regulate the balance in making available
both private goods, merit goods, and social goods. The
government intervenes through subsidies, price
regulation, and direct provision of social goods.

The distribution of income and wealth is shaped by the


distribution of the factors of production.
Fiscal policy is directed toward correcting this income
and wealth.
ex. high tax for rich, and low tax for poor; favorable public
policies
on agrarian reform, wages, labor and employment,
among
others
instability may be due to changes in prices of major
imports, cost of foreign borrowings, and the availability
of foreign borrowings which lead to huge deficits in the
budget and balance of payments and trade.
Using expenditure and tax policies for stabilization in
developing countries may be more difficult. An
increase in expenditures may entail either additional
taxes or more borrowing. The low tax base and
inefficient tax administration makes a case of public
borrowing.
A country aspiring to achieve growth and
development may have to experience instabilities and
suffer chronic balance of payments deficit, severe
inflation, high levels of unemployment and
underemployment and the like.

Definition of Administrative Relationship.


1. Supervision and Control shall include authority to:
a. Act directly whenever a specific function is entrusted by law
or regulation to a subordinate;
b. Direct the performance of duty; restrain the commission of
acts;
c. Review, approve, reverse or modify acts and decisions of
subordinate officials and units;
d. Determine priorities in the execution of plans and programs;
and
e. Prescribe standards, guidelines, plans and programs.

2. Administrative Supervision It shall govern the administrative


relationship between a department or its equivalent and regulatory
agencies or other agencies.
a. To generally oversee the operations of such agencies and to
ensure that they are managed effectively, efficiently and
economically but without interference with day-to-day
activities;
b. To require the submission of reports and cause of conduct of
management audit, performance evaluation and inspection to
determine compliance with policies, standards and guidelines
of the department;
c. To take such action as may be necessary for the proper
performance of official function, including rectification of
violations, abuses and other form of maladministration; and
d. To review and pass upon budget proposal of such agencies but
may not increase or add to them.

Scope of Powers of Administrative Agencies.


1. Express and Implied Powers The Jurisdiction and powers of
administrative agencies are measured and limited by the
Constitution or law creating them or granting their powers.
2. Inherent powers An administrative agency has no inherent
powers, although implied powers may sometimes be spoken of as
inherent. Thus, in the absence of any provision of law,
administrative agencies do not possess the inherent power to
punish or contempt which has always been regarded as a necessary
incident and attribute of courts.
3. Quasi-Judicial Powers Official powers cannot be merely
assumed by administrative officers, nor they can be created by the
courts in the exercise of their judicial functions.
Powers of Administrative Agencies Classified
1. As to Nature. The powers of administrative agencies may be
classified into:
a. Investigatory power
b. Quasi-legislative or Rule-making powers; and
c. Quasi-judicial or adjudicatory powers.
2. As to the degree of subjective choice. According to the
degree of subjective choice involved in their exercise, the powers of
administrative agencies are, in general, classified either as
discretional or ministerial.
Fiscal Control Mechanisms
Prevent Misappropriation of Funds requires review and approval
by the administrative official of the line or operating agency, of
all requests for money releases and budgetary allotments,
vouchers and similar papers before payments are made so that
expenditures are in accordance with policy and law and not

irregular, unnecessary, excessive, extravagant and


unconscionable
Control to Implement Prospective Policy proactive administration
inhibits governmental units from directly transacting and
negotiating money matters since such kind of transaction is
officially channeled through the Department of Budget and
Management in the form of budget estimates as endorsed by the
President
Ensure the Wisdom and Propriety of Expenditure claims for
payment from public funds, legality, prudence, reasonableness,
the morality of the claim or charge should be established. A
review of existing contracts and transactions should be made.
Prevent Deficits Fiscal supervision and control may be useful but
should not unduly interfere with agency prerogative to carry out
programs mandated by the constitution and the laws.
Philippine Budgetary Process.
I. Budgetary Overview
First, we shall define the national budget which is the governments estimate
of its income and expenditures. It is what the government plans to spend for
its programs and projects, as well as the sources of funds. The budget
process involves budgeting and the budget. Budgeting refers to methods and
practices of government planning, adopting and executing financial policies
and programs. The budget refers to a plan of expressing in monetary terms
the operating program and means of financing of a government for a definite
period of time. The national budget is spent for the implementation of
various government programs and projects, the operations of government
offices such as the payment of salaries, construction of buildings.
II. The Budget Process
This involves four major steps namely:
1.
Budget Preparation
Budget Preparation involves the formulation of estimates of revenues and
expenditures by the Executive Departments and Agencies. In preparing the
annual budget proposal, the said department makes an estimation of
government revenues. It then determines the budget priorities within
available revenues and borrowing limits. Finally, it translates these approved
priorities into expenditures.
The main agency involved is the Development Budget Coordination
Committee (DBCC) composed of the following agencies:
a.
The Department of Budget and Management, the agency responsible
for resource allocation and management;
b.
The Department of Finance, the agency responsible for resource
generation and debt management;
c.
The National Economic and Development Authority, the agency
responsible for overall economic activity;
d.
The Bangko Sentral ng Pilipinas (Central Bank of the Philippines), the
agency responsible for monetary measures and policies;

e.
The Office of the President of the Philippines, the agency responsible
for the approval and oversight of the budget
In the preparation of the budget, the DBCC approves the parameters, makes
a budget call, conducts budget hearings, makes a budget review then
consolidates the budget. It then validates and confirms the budget, which is
finally approved by the President of the Philippines and his Cabinet. The
President thereby submits the budget to Congress for approval.
2.Budget Legislation/Authorization
a.
Overview
This pertains to the whole range of legislative action on the budget, leading
to the enactment of a General Appropriations Law for the year. The Philippine
House of Representatives first conducts hearings/debates on the budget.
The House then approves the budget, for submission to the Senate of the
Philippines. Senate hearings and debates are conducted on the budget,
which is finally approved. A Bicameral Conference Committee composed of
representatives of the Philippine House of Representatives and the Senate is
convened. After approval by the Bicameral Conference Committee, the
President enacts the budget which is known as the General Appropriations
Act.
b.The Legislative Budget Process
The main unit of the Philippine House of Representatives involved in the
budget process is the Committee Affairs Department (CAD) composed of the
Standing Committees and Sub-Committees. The CADs activities during
budget legislation are:
i.Committee Budget Hearings
Standing Committees (sometimes referred to as the Mother
Committee/Committee Proper) are responsible for conducting budget
hearings. During these hearings, macroeconomic assumptions/plans are
presented during the Committee budget hearings on a department wide
level. All the heads of the Executive Departments are invited to these
hearings.
Sub-Committees are also responsible for conducting these budget hearings.
Budget hearings are conducted by the Sub-Committees on an agency by
agency level. Bureaus and other offices under the various departments of
the national government are invited to these hearings.
ii.Printing of General Appropriations Bill (GAB) on 1st Reading
A National Expenditure Program is formulated, and a copy of the GAB on 1st
Reading is printed by the Committee Technical Staff, based on the National
Expenditure Program. The GAB is filed in the plenary session for 1st Reading.
iii. Executive Meeting of the Committee
The Committee meets in executive session to discuss and approve proposed
committee amendments to the GAB. Committee Reports are prepared and
filed to the Bills and Index Division.
iv.Sponsorship and Plenary Deliberations
General principles and macroeconomic assumptions are sponsored and
debated in the plenary session. Deliberations on the budgets of each

department, agency, office, including Government Owned and Controlled


Corporations.
v. Approval on 2nd Reading of the GAB
Turno en contra speeches are delivered on the Floor. The turno en contra is a
legislative tradition allowing opponents of a bill an opportunity to explain at
length their position, in the same manner that a bills sponsor delivers a
sponsorship speech. After the Turno en Contra, the Philippine House
Members vote on the approval of the GAB on 2nd Reading.
vi.Amendments, Finalization & Printing of the GAB for 3rd Reading
Inclusion of possible amendments to the GAB for 3rd Reading are submitted
to the Floor. Amendments are approved for inclusion in the proposed copy of
the GAB on 3rd Reading, which is subsequently printed for deliberation.
vii. Approval of the GAB on 3rd Reading
The GAB is distributed to the Philippine House Members who vote on the
approval of the bill on 3rd Reading. The GAB is then approved on 3rd
Reading.
viii. Transmittal of the 3rd Reading Copy of the GAB to the Philippine
Senate
The GAB, as approved on 3rd Reading, is transmitted to the Senate for
consideration in a similar manner as deliberated upon by the House.
ix.Bicameral (Bicam for short) Conference Committee
The Conferees or representatives from both the Philippine House and Senate
convene as a Conference Committee in order to settle and reconcile differing
provisions of each Chambers version of the bill.
x. Approval of the Bicam Report
During this stage of the budget process, the Conference Committee Report is
ratified by each Chamber.

xi. Finalization and Printing of the Enrolled Copy of the GAB


All amendments as approved in the Committee Report is incorporated into
the enrolled copy of the GAB. The enrolled copy is finally printed.
xii. Signing of the Enrolled Copy of the GAB
The enrolled copy of the GAB is forwarded to the President for signing. Veto
powers of the President are exercised in the enactment of the GAB. The
signed appropriations bill is finally enacted into a law which is termed as the
General Appropriations Act.
3.

Budget Execution/Implementation

Budget execution covers the allotment of appropriations by the central


budget authority to, and the incurrence of obligations by, the spending
departments and agencies of government. The steps in the execution of the
budget are:
a. Release of the funds by the Department of Budget and Management
(DBM)

b. Implementation of the various programs and activities by the different


government agencies
i.Involves the formulation of allotment and cash programs
ii.An Agency Budget Matrix (ABM) is prepared
iii.The ABM is validated/Confirmed for correctness and accuracy
iv.The General Allotment Release Order (GARO)/Special Allotment Release
Order (SARO)/Notice of Cash Allotment is Released (NCA)
v.Government Programs/Projects/Activities can now be implemented due to
fund release
4.

Budget Accountability & Review

This involved the reporting of actual performance against plans or targets,


and it involves the following process:
a. Monitoring of agency budgetary performance
b. Comparison and evaluation of actual performance with the initiallyapproved work targets
c. A summary list of checks issued is submitted on a monthly basis
d. Physical & Financial Report of Operations is submitted on a quarterly
basis in the form of a trial balance

10

History of Philippine Public Administration: A Revisit A) Pre-Colonial


Period (before 1521)
Like the other island groups of southeast Asia, the Philippines have
very early human inhabitants - perhaps even as long as 60,000 years ago. In
more recent history the main outside influences are Chinese, Hindu and from the 15th century - Muslim. But no external power tries to dominate or
unify the scattered islands (more than 7000 in the archipelago) until the
arrival of the Spanish in the 16th century.
It is somewhat difficult today to account for the influences of the pre-colonial
period but it cannot however be denied that some of the political, economic,

11

cultural, social or communal organization existed and served to regulate


conduct of the people in the l oose sense of the term.
The Philippines did not exist as a single entity but rather lived as selfgoverning groups called Barangays , each ruled by a datu who assumed the
position of a territorial chief, administrator of community life, and was the
galvanizing center of various spheres of activities in the community.
Barangays in the earlier days were not governed with hard and fast rules but
in all friendly relations. Cohesion among barangay members was part and
parcel of a common tradition of a settler group. This pattern of familial
relationships of personalized loyalties and leadership-centered community
activities would persist even
today and would find itself reflected in the dynamics of contemporary
administrative organizations in the Philippines.
A) Spanish Colonial Period (Mid-16th Century -1902)
Much of what Philippine bureaucracy is today can be traced to the Spanish
colonization which span more than three hundred years beginning 1521
when the Portuguese explorer, Ferdinand Magellan, in the employ of the
Spanish king, Charles I, landed in Homonhon Island, south of province of
Samar.
Characteristics/ features of the Spanish colonial period:
Began the tradition of Centralization
The administrative system introduced by Spain when it colonized the
Philippine archipelago began the tradition of centralization for purposes of
consolidating its empire. The institutions and rules which had evolved in
Spain and other colonized territories were exported to the country.
Jurisdictional boundaries between the state and religion were never clearly
defined
The colonization of the Philippines under Spain is carried out as much
by Roman Catholic friars as by any state administration. Members of the
clergy claimed much influence on the civilian and military authorities on
secular affairs which perhaps, regarded as one of the outstanding features of
the Spanish colonial bureaucracy.
Introduced the system of public revenue and public expenditure
It was established to consolidate the islands and strengthen the
government against pockets of rebellion of which there had been many.
Public offices were regarded as a grant or favor
A special and privileged class of bureaucrats, predominantly Spanish,
were maintained to administer the affairs of the colonial population. These
public offices were then regarded as grant or favor, called merced from the
king who disposed of them as he pleased and based on those who
participated in the conquest and pacification of the colonies including their
descendants. Belonging to this group were usually those that assumed
judicial functions.

12

Practice of filling up positions by appointment or purchase


A remarkable feature of the civil service system designed by the
Spanish colonial administration was the practice of filling appointments on
the basis of purchase where offices were sold to the highest bidders. The
practice was adopted to help augment the repository of the royal treasury.
Due to the distance, monitoring and supervision by the central government
was almost impossible.
Major reforms under the Spanish Colonial Period:
Creation of three (3) distinct branches of government
In response to the rampant graft and corruption, financial
administration was separated from that of the government proper and
centralized under one superior office resulting in the official organization
where the Governor General exercised political, governmental and military
powers, the Audiencia for judicial matters and the Royal officials for the
management of resources.
Introduced merit and fitness, careerism and principles of accountability in
the civilian bureaucracy
In 1866, the need for technical knowledge in the various phases of
work such as accounting and auditing led to the promulgation of system of
examination and promotion, establishing conditions for the
professionalization of the civil service. Although reforms were either not
implemented or unsuccessful in the face of engrained traditions, they set the
grounds for the acceptance among the learned elites of the need for merit
rather than patronage in entering and moving up the bureaucracy.
B) American Colonial Period (1900-1946)
The American colonial period shattered the early aspirations of nationhood,
and instead introduced a superior and systematic system of colonial
administration in the country. It retained the centralized features of the
Spanish era, but installed a political system of governance that sought to
approximate the republican and democratic character of the American
government within the bounds of a colonial set up.
Characteristics of the American colonial period:

All high officials of the central government with exception of the


Filipino delegates elected to the Philippine assembly was appointed by the
Pres. of the US with the consent of the American Senate

The Phil. Assembly and local governments were under close


supervision of the Philippine Commission which until 1901 was entirely
composed of Americans

Graft and corruption remained a big problem

Reforms/ Significant Developments under the American colonial period:

Establishment of the Philippine Civil Service system under the


Schurman Commission

13

- The administration of the colony was placed under a nonpolitical civil


service constituted in 1900 under Act No. 5 of the First Philippine
Commission which provided for the establishment and maintenance of an
efficient and honest civil
service in the Philippines. The administrative system that emerged under this
enactment provided for a setup whose philosophy and principles
represented a compllete change from that of the Spanish period."
Filipinization of the civil service became a basic administrative policy
- Filipinization was clearly embodied in President McKinley's instructions
made as early as 1900, where the Philippine Commission was directed to
devote itself to the establishment of an educational system and an efficient
civil service system, where natives of the islands are to be preferred, and if
they can be found competent and willing to perform the duties shall be
preferred over others.
C) Commonwealth Period (1935-1945)
By the time Philippine Commonwealth was established in 1935, the civil
service had been completely Filipinized. The Commonwealth government,
conceived under the Tydings-McDuffie Law of the American Congress, is a 10year transitory government which gave Filipinos a chance to prove to the
Americans their capability readiness in handling their own government. It
adopted a government " republican in form, Filipino in personnel, and
autonomy in domestic affairs. In fact, the assumption of Filipino political
leaders did not disrupt the civil service system built by Americans, instead,
the momentum was continued and even to some extent, strengthened or
reinforced.
With the adoption of the 1935 Constitution, a full blown provision on the civil
service (Article XI) was adopted which embraced all branches of the
government and emphasized careerism, political neutrality and security of
tenure.
Under this Constitution, the Civil Service Bureau was also elevated to a
Commission status and was given increased powers, full and exclusive
authority to conduct formal investigations against civil service personnel.
When President Manuel L. Quezon assumed office, he repealed Section 683
of the Administrative Code through Executive Order No. 8 and made all
branches and subdivisions of the government covered by the civil service
precisely in pursuit of the constitutional provision. He also took steps in
fighting nepotism, issuing an executive order prohibiting appointing
authorities from making appointments of their relatives. President Quezon's
social justice program was also conceived as the chief implementer of
economic development and the promotion of the well-being and the
economic security of the people. He laid out that state leadership, as
against private dominance in the economy, was to be the keynote of
governmental activities."
D) Japanese Occupation (1941-1945)

14

Just about the time when policies of the Commonwealth government were to
be put to test, the Pacific War started with Japanese bombing of American
Military installations in Pearl Harbor in Hawaii. On December 8, 1941, ten
hours after the attach in Hawaii, Japanese invaded the Philippines. As such,
preparatory period towards independence was abruptly shorten.
Meanwhile, the Japanese military organized a new government in the
Philippines known as the Second Philippine Republic, which was headed by
President Jose P. Laurel . It attempted to secure Filipino cooperation by
setting up a facade of a Filipino civil administration but this government
ended up being very unpopular.
The Philippines suffered destruction, dislocation and demoralization. While it
is true that the Japanese administration did not entirely change the existing
civil service structure, it also created a trauma to the extent that
behaviorally, it eroded the very foundations of merit and fitness built during
the American and Commonwealth Period.

References:

De Leon, H & De Leon Jr., H. (2010) Administrative Law: Text and


Cases. Rex Book store. Manila Philippines.

Public Administration in the Philippines Running a Bureaucracy


retrieved on August 18, 2016 retrieved from
http://www.scribd.com/doc/37770745/Local-Fiscal-Administration

Department of Budget and Management Retrieved on August 18,


2016 from http://www.dbm.gov.ph/?page_id=8959.

Pilar, Nestor N., Philippine Public Administration: From Classical


to New Public Administration to New Public Management',
Philippine Journal of Public Administration, Vol. LII
The House of Representatives House of Librarian retrieved on
August 20, 2016 from
https://hrepreflibrarian.wordpress.com/2013/03/07/the-budgetprocess-the-philippine-congress/
The Philippine Star., (2016). Duterte magic': 10-point

socioeconomic agenda retrieved on August 20, 2016 From


http://www.philstar.com/business/2016/06/20/1594827/dutertemagic-10-point-socioeconomic-agenda