CHAPTER 3 : The Government

Accounting Process
LEARNING OBJECTIVES

 Record the basic transactions of a government

entity.
 Prepare a worksheet
 Introduction

The government accounting process comprises the activities of

analyzing, recording, classifying, summarizing and communicating
transactions involving the receipt and disposition of government funds
and property, and interpreting the results thereof. This process is similar
to that of a business entity, except that it incorporates budgetary
controls, such as recording in the budget registries and preparing
periodic budget accountability reports.
 Books of Accounts and Registries
The books of accounts and registries of government entities consist of:

I. Journal III. Registries

a) General Journal a) Registries of Revenue and Other
Receipts (RROR)
b) Cash Receipts Journal
b) Registry of Appropriations and
c) Cash Disbursements Journal
Allotments (RAPAL)
d) Check Disbursements Journal
c) Registries of Allotments,
II. Ledgers Obligations and Disbursements
(RAOD)
a) General Ledgers
d) Registries of Budget, Utilization
b) Subsidiary Ledgers
and Disbursements (RBUD)
Budget Registries
 Registries of Revenue and Other Receipts (RROR) – used to monitor the budgeted
amounts, actual collections and remittances of revenue and other receipts.
 Registry of Appropriations and Allotments (RAPAL) – used to monitor appropriations and
allotments. This is to ensure that allotments will not exceed appropriations.
 Registries of Allotments, Obligations and Disbursements (RAOD) – used to monitor the
allotments received, obligations incurred against the corresponding allotment, and the
actual disbursements made. This is to ensure that obligations incurred will not exceed
allotments while actual disbursements will not exceed the obligations incurred.
Separate RAOD shall be maintained for each object of expenditure
 Regitries of Budget, Utilization and Disbursements (RBUD) – used to record the approved
special budget and the corresponding utilizations and disbursements charged to
retained income. Separate RBUDs are also maintained for each object of expenditure
 Object of Expenditures
a. Personnel Service (PS) – pertain to
all types of employee benefits,
e.g., salaries, bonuses,
allowances, cash gifts, etc.
b. Maintenance and Other
Operating Expense (MOOE) –
pertain to various operating
expenses other than employee
benefits and financial expenses,
e.g., travel, utilities, supplies, etc.
c. Financial Expenses (FE) – pertain
to finance costs, e.g., interest
expense, bank charges, etc.
Financial expenses also include
losses on foreign exchange
transactions.
d. Capital Outlays (CO) – pertain to
capitalizable expenditures e.g.,
expenditure on the construction
of public infrastructures,
acquisition costs of equipment,
etc.
 BASIC
RECORDING !!!!!
Incurrence of Obligation

Obligation Request and Status (ORS)

Obligations shall be incurred through the issuance of Obligation

Request and Status (ORS). The Requesting office shall prepare this
document, supported by valid claim documents like disbursement,
vouchers, payrolls, purchase/job orders, itinerary of travel, etc.

The Head of the Requesting Office shall certify the necessity and
legality of the obligation and the validity of the supporting documents. The
Head of the Budget Division shall certify the availability of the allotment.
Notice of Obligation Request and Status Adjustment
(NORSA)
If the obligations recorded in the RAOD and ORS above
need to be adjusted, the subsequent adjustment shall be
made through the use of NORSA. The adjustment shall be
effected through a positive entry (ADDITION) or negative
entry (REDUCTION), as appropriate.

Journal entries shall be made only after:

a. The employees have rendered services
b. The office supplies are delivered and received; and
c. The office equipment is delivered and received.
 I. JOURNALS
a. General Journal – used to record transactions not recorded in the Special Journals.

Special Journals:
b. Cash Receipts Journal – used to record the Report of Collection and Deposit and Cash Receipts
Register of collecting officers.
 Report of Collection and Deposit (RCD) – prepared by a collecting officer to report his/her collections and
deposits to an Authorized Government Depository Bank (AGDB).
 Cash Receipts Register (CRReg) – used by field officers without a complete set of books to record their
cash collections and deposits in the books of their mother unit (central/regional/division office.
c. Cash Disbursements Journal – used to record the cash disbursements of the Disbursing Office.
d. Check Disbursements Journal – used to record the check disbursements of the Disbursing Officer.
II. LEDGERS
a. General Ledger – summarizes all transactions recorded in the journals. Accounts in
the general ledger are arranged according to their sequence in the Revised Chart
of Accounts.
b. Subsidiary Ledgers – show details of each control account in the general ledger.
Remittance of amounts withheld

Entity A remains the 15,000 withheld to the other government

agencies. The breakdown is re-provided below:
Withholding Tax 10,000
GSIS 2,000
Pag-ibig 2,000
Phil Health 1,000
Total Deductions 15,000
TAX REMITTANCE ADVICE (TRA)
The Tax Remittance Advice (TRA) - is used to recognized:
a. In the books of government agencies, the constructive remittance of
taxes withheld to the Bureau of Internal Revenue (BIR) or customs duties
withheld to the Bureau of Customs (BOC), and the constructive receipt
of NCA for those taxes and customs duties;
b. In the books of the BIR and BOC, the constructive receipt of tax revenue
and customs duties; and
c. In the books of BTr, the constructive receipt of the taxes and customs
duties remitted.
The remittance of the Tax withheld is recorded as follows:

DATE Cash-Tax Remittance Advice 10,000

Subsidy from National Gov. 10,000

NCA for TRA

DATE Due to BIR 10,000

Cash-Tax Remittance Advice 10,000

To recognize the constructive remittance of

taxes withheld to the BIR through TRA

The TRA is recorded by the other government agencies as follows:

BOOKS OF BIR BOOKS OF BTr
Cash-TRA 10,000 Subsidy to NGAs 10,000
Income Tax 10,000 Cash-TRA 10,000

To recognize constructive receipt of taxes remitted by To recognize constructive receipt of remittance of taxes by NGAs
NGAs through TRA through TRA
SUMMARY OF BASIC
RECORDINGS
Discussion
THE GOVERNMENT ACCOUNTING CYCLE
 APPROPRIATION
 ALLOTMENT
 INCURRENCE OF OBLIGATION
 DISBURSEMENT AUTHORITY –NCA
 DISBURSEMENTS
 BILLINGS, COLLECTIONS & REMITTANCE
 UNADJUSTED TRIAL BALANCE
 ADJUSTING ENTRIES
 CLOSING ENTRIES
 PREPARATION OF FINANCIAL STATEMENTS
The trial balance of Entity A (a government entity) at
the beginning of the period is shown below.

Accounts Debit Credit

Cash-Collecting Officers 5000
Account Receivable 45,000
Buildings 500,000
Acc. Dep’n – Buildings 150,000
Office Equipment 150,000
Acc. Dep’n – Equipment 60,000
Accounts Payable 20,000
Acc. Surplus (Deficit) 470,000
TOTALS 700,000 700,000
Notes:

 The 20,000 accounts payable pertains to office supplies

purchased in the prior year that were already delivered
but not yet paid.
 An additional purchase of office supplies worth 5,000 is
not yet recorded in the accounting books because they
are not yet delivered. The prior year “obligation” is
describe in the registries as “Not yet due and
demandable obligation”
1. Appropriation

Entity A receives its GAA amounting to 1,000,000

 The appropriation is posted (recorded) in the

Registry of Appropriation and Allotments
(RAPAL)
2. Allotment
Entity A receives its allotment amounting to
960,000 form the DBM.

 The allotment is posted (recorded) in the Registry

of Appropriations and Allotments (RAPAL) and
Registries of Allotments, Obligations and
Disbursements (RAOD)
3. Incurrence of Obligation

Entity A incurs obligations amounting 700,000.

 The obligations are recorded in the Obligation

Request and Status (ORS) documents and
Registries of Allotments, Obligations and
Disbursements (RAOD)
 4. Disbursement Authority - NCA
Entity A receives the following Notice of Cash Allocations
(NCA), net of tax:

a. For current year’s operation 600,000

b. For prior year’s accounts payable and
not yet due and demandable obligations 25,000
The journal entries are as follows:
Date Cash-Modified Disbursement 60,000
system (MDS), Regular
Subsidy from National Gov. 60,000

To recognize receipt of NCA from the DBM

Date Cash-Modified Disbursement 25,000

system (MDS), Regular
Subsidy from National Gov. 25,000

To recognize receipt of NCA from the DBM

 THE NCA IS POSTED (RECORDED) IN THE “RANCA”

5. Disbursements
I. PERSONAL SERVICE
a. Set up of payable and employment upon approval of payroll.

Salaries and Wages 200,000

Personal Economic Relief Allowance (PERA) 50,000
Gross Compensation 250,000
Withholding Tax (20,000)
GSIS (9,000)
Pag- Ibig (2,000)
PhilHealth (1,000)
Total Deduction (32,000)
NET 218,000
Date Salaries & Wages, Reg. 200,000
PERA 50,000
Due to BIR 20,000
Due to GSIS 9,000
Due to Pag-ibig 2,000
Due to PhilHealth 1,000
Due to Officers and Employment 218,000

To recognize payable to officers and employment upon

approval payroll

b. The payable is recorded in the ORS

C. Grant of Cash Advance for payroll

Date Advance for Payroll 218,000

Cash-Modified 218,000
Disbursement system (MDS),
Regular

To recognize grant of cash advance for payroll

d. The disbursement is recorded in the ORS and RAOD

e. Liquidation of Payroll Fund

DATE Due to officers and Employees 218,000

Advances for Payroll 218,000

To recognize liquidation of Payroll Fund

QUIZ
 Multiple Choice
1. The receipt of an allotment is recorded by a government entity in the
a. RAOD b. ORS c. RAPAL d. a and c
2. The incurrence of obligation for future delivery or performance by the oblige is
recorded by a government entity in the
a. RAOD b. ORS c. RAPAL d. a and b
3. The receipt of an appropriation is recorded by a government entity in the.
a. RAOD b. ORS c. RAPAL d. a and b
4. The entity to record the receipt of NCA by a government entity is.
a. (Dr) Cash-Modified Disbursement System, (MDS), Regular
(Cr) Accumulated Surplus Deficit
b. (Dr) Cash-Modified Disbursement System, (MDS), Regular
(Cr) Subsidy From National Government
c. (Dr) Cash-Collecting Officer; (Cr) Subsidy from National Government
d. No entry
 5. According to the Revised Chart of Accounts (RCA) issued by the
COA, the “Subsidy from National Government” account is a(an)
a. Asset account
b. Liability account
c. Revenue account
d. Equity account
TRUE OR FALSE
1. Technically, only the journals and Ledgers are considered
accounting records; the Registries are budget records.
2. Separate Accounting records and budget registries are
maintained for each fund cluster.
3. Government entities and business use the term “obligation” or the
phrase “incurrence og obligation” similarly

ENUMERATION
2 BUDGET REGISTRIES.