Chapter 4:Accounting for BudgetaryAccounts

Government Accounting
ACCOUNTING SYSTEMS
1. Budgetary Account System
2. Receipt/Income and Deposit System Section 29(1), Article VI of the 1987 Constitution

3. Disbursement System
4. Financial Reporting System “ No money shall be paid out of the Treasury
except in pursuance of an appropriation by
law.”

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The principles as provided by law, are:
1. No money shall be paid out of the public treasury or
depository except in pursuance of an appropriation law or
other specific statutory authority;
2. Government funds or property shall be spent or used solely for
public purposes;
3. Trust funds shall be available and may be spent only for the
specific purpose which the trust was created;
4. Fiscal responsibility shall, to the greatest extent, be shared by
all those exercising authority over the financial affairs,
transactions, and operations of the government agency;
5. Disbursements or disposition of government funds or property
shall invariably bear the approval of the proper officials; Fundamental Principles
6. Claims against government funds shall be supported with
complete documentations;
of Fiscal Operations
7. All laws and regulations applicable to financial transactions
shall be faithfully adhered to; and
8. Generally accepted principles and practices of accounting, as
well as, of sound management and fiscal administration shall
be observed, provided they do not contravene existing laws
and regualtions.
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The National Budget
The National (Government) Budget is a plan for
financing the government activities for fiscal year
prepared and submitted by responsible executive
to a representative body whose approval and
authorization are necessary before the plan can be
executed.

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 Balanced Budget
It is a budget where the proposed expenditures are
equal to or less than the estimated revenues.

Performance-Informed Budget

It is a budgeting approach that uses performance

information to assist in deciding where the funds will go.

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 Performance-Informed Budgeting (PIB)
Performance information typically includes the following:
1. The purpose for the funds required.
2. The outputs that would be produced or the services
that would be rendered.
3. The outcomes that would be achieved by the outputs
and/or services.
4. The cost of the programs and activities proposed to
achieved the objectives.

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 Kinds of Budget
1. As to Nature
a. Annual Budget
b. Supplemental Budget
c. Special Budget
2. As to Basis
a. Performance Budget
b. Line-Item Budget
3. As to Approach and Technique
a. Zero-Based Budgeting
b. Incremental Approach

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 The Budget Cycle
1. Budget preparation
This covers estimation of government
revenues, the determination of
budgetary priorities and activities within
the constraints imposed by available
revenues and by borrowing limits, and
the translation of approved priorities
and activities into expenditure levels.

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 1. Budget Preparation
The President’s Budget consist of the ff. documents:
• President’s Budget Message(PBM) – This is where the President
explains the policy framework and priorities in the budget.
• Budget of Expenditure and Sources of Financing(BESF) – Mandate by
the Constitution, this contains the macroeconomic assumptions,
public sector context (including overviews of LGU and GOCC financial
positions), breakdown of the expenditures and funding sources for
the fiscal year and the two previous years.
• National Expenditure Program(NEP) – This contains the details
spending for each department and agency by program, activity or
project and is submitted in the form of a proposed General
Appropriations Act.
• Details of Selected Programs and Projects – This contains a more
detailed disaggregation of key programs, projects and activities in the
NEP, especially those in line with the national government’s
development plan.
• Staffing Summary – This contains a summary of the staffing
complement of each department and agency, including number of
positions and amounts allocated for the same.

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 2. Legislative Authorization
(Budget Legislation)
It is the second phase of the budget
process relative to the enactment of the
General Appropriation Bill based on the
budget of receipts and expenditures,
generally submitted by the President of
the Philippines within 30 days from the
opening its regular session, as the basis of
the general appropriation bill.

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 3. Budget Execution andOperation
The third phase of the budget process covers the
various operational aspects of budgeting, thus
making budgeting as one of the principal tools of
management control to ensure that public funds are
spent only for the specific purposes for which they
are intended.

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 4. BudgetAccountability
This phase happens alongside the Budget
Execution phase. Through Budget Accountability,
the DBM monitors the efficiency of funds
utilization, assesses agency performance and
provides a vital basis for reforms and new policies.

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Budgetary Account System According to National Budget Circular(NBC) No.561
dated January 4, 2016, the Allotment Release
Program(ARP) shall serve as the ceiling for the
aggregate allotment releases during the year from
all sources.

The ARP of each national government agency shall

be an amount equal to its appropriation from the
following sources:
1. New Appropriation under FY 2016 GAA, such
as: agency specific budget and allocations or
additional releases from Special Purpose Funds
(SPF); and
2. Automatic appropriations for Retirement and
Life Insurance Premiums(RLIP), Special
Accounts in the General Funds(SAGFs), and
other items classified as such.
3. Continuing appropriations, i.e., allotments
chargeable against the unreleased
appropriations for the MOOE and CO in the FY
2015 GAA.
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 Budgetary Accounts
Budgetary accounts consist of the following:
1. Appropriation – an authorization made by law or order legislative
enactment, directing payment of goods and services out of
government funds under specific conditions or for special
purposes.
2. Allotment – an authorization issued by the Department of
Budget and Management to the government agency, which
allows it to incur obligations, for specified amounts, within the
legislative appropriation.
3. Obligation – a commitment by a government agency arising
from an act of duly authorized officials which binds the
government to the immediate or eventual payment of a sum of
money.

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 Fund Release Documents
1. Obligational Authority or Allotment - the following are the
documents which authorize the entity to incur obligations:
a) General Appropriation Act Release Document (GAARD)
This serves as the obligational authority for the comprehensive
release of budgetary items appropriated in General Appropriation
Act (GAA), categorized as For Comprehensive Release (FCR)
b) Special Allotment Release Order (SARO)
This covers budgetary items under For Later Release (FLR),
(negative list) in the entity submitted Budget Execution Documents
(BEDs), subject to compliance of required documents/clearances.
c) General Allotment Release Order (GARO)
This is a comprehensive authority issued to all national government
agencies, in general, to incur obligations not exceeding an
authorized amount during a specified period for the purpose
indicated therein.

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 Fund Release Documents
c. Cash Disbursements Ceiling (CDC)
This is the authority issued by the DBM to DFA and DOLE
to utilize their income collected/retained by their Foreign
Service Posts (FSPs) to cover their operating
requirements, but not to exceed the released allotment
to the said post.
d. Notice of Transfer of Allocation (NTA)
This is the authority issue by the Central Office to its
regional and operating units to pay their operating
expenses, purchases of supplies and materials,
acquisition of PPE, accounts payable, and other authorize
disbursements through the issue of MDS checks, ADA or
other modes of disbursements.

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 Fund Release Documents
2. Disbursement Authority – the following documents
authorize the entity to pay obligations and payables:
a) Notice of Cash Allocation (NCA)
This is the authority issued by the DBM to central,
regional, and provincial offices and operating units to pay
operating expenses, purchases of supplies and materials,
acquisition of PPE, accounts payable, and other
authorized disbursement through the issue of Modified
Disbursements Systems (MDS) checks, Authority to Debit
Accounts (ADA) or other modes of disbursements.
b) Non-cash Availment Authority (NCCA)
This is the authority issued by the DBM to agencies to
cover the liquidation of their actual obligation incurred
against available allotments for availment of proceeds
for loans/grants through supplier’s credit/constructive
cash.

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 General Guidelines on the
Release of Funds
Pending the effective date of the new General
Appropriation Act (GAA), national government agencies
are authorized to incur overdraft in allotment for
obligations corresponding the actual requirement of
their regular operations chargeable against the GAA, as
re-enacted.

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 The Allotment Release Program (ARP), which determines the
level of allotment releases for a given fiscal year, is composed
of the following:

1. Obligation incurred.
2. Obligation authorized as overdraft.
3. Special allotment release order (SAROs) issued from the
beginning of current fiscal year to the effectivity date of the
current General Appropriation Act, and
4. Releases from the unprogrammed fund (UF). Allotment
releases from the multi-user Special Purpose Funds (SPFs)
such as: Calamity Fund, Miscellaneous Personnel Benefit
Funds, National Unification Fund, Priority Development
Assistance Fund, and Pension and Gratuity Fund shall be
over and above the agency Allotment Release Program.

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 Guidelines on the Release of Disbursement
Authorities

1. Release of Notice of Cash Allocation (NCA)

• NBC No. 561 dated January 4, 2016 provides that an initial
comprehensive NCA shall be issued directly to the Operating
Units (OUs) covering the first semester requirement (i.e.,
January to June) chargeable against the current year budget.
• Additional NCAs may be issued for allotments charged
against Continuing Appropriations under RA No. 10633 and
Supplemental Appropriation under RA No. 10652, as well as
prior year’s obligation which become accounts payable in the
current year.
• Succeeding comprehensive NCA shall be issued to cover the
2nd semester requirements for regular budget shall be
subject to the submission of Financial Accountability Reports
(FARs)/Budget Accountability Reports (BARs) as of end June
30 and consistent with the DBCC-approved Monthly
Disbursement Program.

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 Guidelines on the Release of Disbursement
Authorities
• To maximize the use of the available NCA’s under the Regular MDS
account, the Common Fund system shall be adhered to. Under this
system, cash allocations released to NGAs/OUs under the Regular
MDS sub-account shall be used also to cover payment of current
year and prior year’s accounts payable of all creditors/payees
(external and internal) consistent with the Monthly Disbursement
Program.
• NBC No. 551, further provides that NCA issued and credited to
Regular MDS Sub-Accounts of agencies/operating units for their
regular operation, shall be valid until the last working day of 3rd
month of that quarter pursuant to the DBM Circular Letter No.
2013-12. NCA to the Special MDS Accounts of agencies shall be valid
until the last working day of the following month when the NCA
was issued for trust receipts and credited to the Trust MDS
Account of agencies shall be valid until the last working day of the
year.

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 Guidelines on the Release of Disbursement
Authorities
2. Release of Non-Cash Availment Authority (NCAA)
• Departments/Agencies/Operating Units availing of foreign loan
proceeds through direct payment chargeable against availment
allotment, shall submit a request for the issuance of NCAA
supported by the following requirements: Photocopy of the
application for withdrawal or equivalent document covering the
amount requested; List of Allotments and corresponding
obligations incurred for the specific foreign loan assisted project
against which the disbursements shall be applied; and Details of
Disbursement expressed both in peso and equivalent foreign
currency as indicated in the application.
• Request of NCAA shall be use to cover the liquidation of actual
obligation incurred by the agency within their available allotments,
pursuant to DBM-COA-DOF. Joint circular 2-97 and CL No.2003-12. It
is emphasized that non-issuance of NCAAs for availment of
proceeds from loans/grants through direct payments (already
taken up as constructive payment per BTr report) results to
accounts payable build up in the agency books.

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 Guidelines on the Release of Disbursement
Authorities
3. Release of Cash Disbursement Ceiling (CDC)
• CDC is an authority issued by DBM to DFA and DOLE to utilize their
income collected and retained by their Foreign Service Posts (FSPs)
to cover its operating requirements but not to exceed the release
allotment for the said post.
• Request of CDC shall be supported by the following accountability
reports as consolidated by DFA and DOLE home office: Monthly
Report of Income and BTr and agency books
4. Release of Notice of Transfer and Allocation (NTA)
• Similar with NCA, no MDS check/ADA shall be issued by the
Regional Offices/Operating Units without the covering NTA. Hence
the total MDS checks issued shall not exceed the total NTA
received. It shall be monitored through the maintenance of the
Registry of Allotment and Notice of Transfer of Allocation (RANTA).

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 Reporting Requirements
Budget Execution Document (BEDs)
- Contains the agencies targets and plans
for a financial year.
Budget and Financial Accountability
Reports (BFAR) – contains information on
the agencies actual accomplishments and
performance for a given period.

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 Budget Execution Documents (BEDs)
1. BED No. 1: Financial Plan (FP)
This document shall include the comparative obligation levels for the
budget year and current year.
2. BED No. 2: Physical Plan (PP)
This document shall consist the performance indicators and targets of
department/agency.
3. BED No. 3: Monthly Disbursement Program (MDP)
This shall be used by DBM as basis for determining the monthly level of
NCAs/other disbursement authorities to be used to national government
agencies. It shall reflect the total cash and non-cash program for the
budget year by type of fund category, by allotment class and by type of
disbursement authority.
4. BED N. 4: Annual Procurement Plan for Common-Use Supplies and
Equipment (APP-CSE)
This shall reflect the monthly quantity and cash requirements by items
categorized into: Available at Procurement Service Stores, and other
items not available at Procurement Service but regularly purchased from
other sources. The quarterly cash requirements as reflected in the APP-
CSE shall serve as guide of the agency for payment of purchase made.

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 Budget and Financial Accountability Reports (BFARs)
1. Quarterly Physical Report of Operation (QPRO) – BAR No. 1
This report shall reflect the department’s/agency’s actual physical
accomplishments as of a given quarter in terms of performance
measures indicated in its Physical Plan in BED No. 2.
2. Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances (SAAODB) – FAR No. 1
This report shall reflect the authorized appropriation and
adjustments, total allotments received including
transfers/adjustments, total obligations, total disbursements and the
balances of unreleased appropriations, unobligated allotments, and
unpaid obligation of a department/office/agency by fund cluster and
by allotment class.
3. Summary of Appropriation, Allotment, Obligation, Disbursement
and Balances by Object of Expenditures (SAAODBOE) – FAR No. 1-A
This report shall be prepared by Fund Cluster and shall reflect the
summary of appropriations, allotments, obligations, disbursements
and balances detailed by object of expenditures consistent with the
COA Revised Chart of Accounts.

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 Budget and Financial Accountability Reports (BFARs)
4. List of Allotments and Sub-Allotments (LASA) – FAR No. 1-B
This report shall reflect the allotments released by the DBM and the
sub allotments issued by the Agency Central Office (ACO)/ Regional
Office (RO) and their corresponding numbers, date of issuance, and
amounts by allotment class and by Fund Cluster.
5. Statement of Approved Budget, Utilizations, Disbursements and
Balances (SABUDB) – FAR No. 2 (for Off-Budget Funds)
This report shall reflect the approved budget, utilizations,
disbursements, and balances of the agency authorized by law to use
their income.
6. Summary of Approved Budget, Utilizations, Disbursements and
Balances by Object of Expenditures (SABUDBOE) – FAR No. 2-A (for
Off-Budget Fund)
This report shall reflect the details of the approved budget,
utilizations, disbursements and balances of the agency authorized by
law to use their income presented by object of expenditures
consistent with the COA Revised Chart of Accounts.

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 Budget and Financial Accountability Reports (BFARs)
7. Aging of Due and Demandable Obligation (ADDO) – FAR No. 3
This report shall be prepared by Fund Cluster and shall reflect the
balances of unpaid obligations as indicated in the Obligation Request
and the aging of due and demandable obligations as of year-end.
8. Monthly Report of Disbursement (MRD) – FAR No. 4
This report shall reflect the total disbursement made by department,
office or agency and operating unit by Fund Cluster from the
disbursement authorities.
9. Quarterly Report of Revenue and Other Receipts (QRROR) – FAR
No.5
This shall reflect the report on actual revenue and other receipts of
the agency/operating units for the current year presented by
quarter, and by specific sources consistent with the COA Revised
Chart of Accounts.

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 Validity of Appropriation
Per National Budget Circular No. 556, dated January5,
2015, the authorized appropriations shall be available for
release and obligation for the specified purposes as
follows:
• Personal services (PS) until the end of the current year.
• Maintenance and Other Operating Expenses (MOOE)
and Capital Outlays (CO) until end of the following year.
• Continuing Appropriation of the previous year (i.e., FY
2014) for MOOE and CO RA 10633 until the end of the
current year (i.e., December 31, 2015)
• Supplemental Budget for MOOE and CO appropriation
under RA 10652 until the end of the current year.
• All programmed Automatic Appropriation for PS,
MOOE, and CO shall be available for release and
obligation up to the end of the current year only.

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 Tax Remittance Advice
The Tax Remittance Advice (TRA) System, as provided
for in Joint Circular No. 1-2000 dated January 3, 2000, as
amended by JC No. 1-2MOA dated July 31, 2001 of the
Department of Finance, the DBM and COA, the Notice of
Cash Allocation (NCA) released to the government
agency is reduced by the amount of the estimated taxes
expected to be remitted by the agency through the Tax
Remittance Advice.

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 Conduct of the Agency Performance
Review
According to NBC No. 556, dated January 5, 2015,
departments/agencies/operating units shall
regularly submit their quarterly BFARs in a timely
manner through the Unified Reporting System
(URS) and the DBM shall regularly monitor their
compliance with the quarterly BFARs.

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 Common Fund System
The common fund system policy (for use of PS,
MOOE, Co, and financial expenses without
realignment) shall continue to be used. However, the
CFS will not apply to current year Account Payables
to external creditors of the five departments (i.e.,
DPWH, DepEd, DOH, CHED, and State Universities
and College (SUCs) covered by the Direct System
Payment Scheme.

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 Registry of Appropriation and
Allocation (RAPAL)
RAPAL shall be maintained by National
government Agencies to monitor appropriations
and allotment charged thereto. It shall show the
original, supplemental and final budget for the
year and all allotments received charged against
the corresponding appropriation. The balance is
extracted every time an entry is made to prevent
incurrence of overdraft in appropriations.

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 Registry of
Allotments and
Notice of Cash
Allocation
(RANCA)
The RANCA shall be
maintained by the
Accounting Division/
Unit to determine
the amount
allotments not
covered by NCA and
to monitor available
NCA.

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 A. Serial No. (01-01101101-2016-01-00001)
• First 2 digits (01) – for allotment class PS.
• Next 8 digits (01101101) for UACS Funding
Source Code. Obligation
• Next 4 digits (2016) – for the year. Request
• Next 2 digits (01) – for the month
January. and Status
• Next 5 digits (00001) – for the serial
number per fund cluster per year.
(ORS)
B. MFO/PAP (103-00-1-00-00000) A subsidiary record
to monitor a
• First 3 digits (103) – for the Sector particular obligation
Outcome Code Values including the Sub-
Sector Values.
shall be maintained
by the Budget
• Next 2 digits (00) – for the horizontal Division/Unit
Outcome Code Values.
• Next 9 digits (1-00-00-00000) – first (1)
digit for the program, next 2 digits (00)
MFO, next 2 digits (00) activity code 1st
level, next 4 digits (00000) activity code
2nd level.
C. UACS Object Code (5-01-02-040) – this
represents the account code structure per
COA. This account code represent PS –
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 Registry of Allotments,
Obligations, and
Disbursement (RAOD)

RAOD shall be maintained by the Budget

Division/Unit of agencies to record allotments
received for the year, obligations incurred against
the corresponding allotments, and actual
disbursement made. The balance is extracted every
time an entry is made to prevent incurrence of
obligations in excess of allotment and overdraft in
disbursements against obligation incurred.

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ThankYou
Daisy Marie Mailom
John Kenneth Ereso
Kamille Aldover
Lady Quirubin De Luna
Milcah Cabrera
Roan Lumacang

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