Government Accounting

&
Accounting for non-profit organizations

by: ZEUS VERNON B. MILLAN

 Chapter 2
The Budget Process

Learning Objectives
• Enumerate the steps in the budget process.
• Describe briefly the principles of
responsibility accounting.

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 The National Budget

The national budget (government budget) is

the government’s estimate of the sources and
uses of government funds within a fiscal year.
This forms the basis for expenditures and is
the government’s key instrument for
promoting its socio-economic objectives.

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 The Budget Cycle
1. Budget Preparation
2. Budget Legislation
3. Budget Execution
4. Budget Accountability

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 Budget Preparation

• Bottom-up approach
• Zero-based budgeting

1. Budget Call
2. Budget Hearings
3. Presentation to the Office of the President

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 Budget Legislation

4. House Deliberations
5. Senate Deliberations
6. Bicameral Deliberations
7. President’s Enactment

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 The Approved Budget
The approved budget consists of the following:
1. New General Appropriations
2. Continuing Appropriations
3. Supplemental Appropriations
4. Automatic Appropriations
5. Unprogrammed Funds
6. Retained Income/Funds
7. Revolving Funds
8. Trust Receipts

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 Appropriation
• Appropriation – is the authorization made by a
legislative body to allocate funds for purposes
specified by the legislative or similar authority.

1. New General Appropriations – annual

authorizations for incurring obligations, as listed in
the GAA.
2. Continuing Appropriations – authorizations to
support the incurrence of obligations beyond the
budget year (e.g., multi-year construction projects).
3. Supplemental Appropriations – additional
appropriations to augment the original
appropriations which proved to be insufficient.
4. Automatic Appropriations – authorizations
programmed annually which do not require periodic
action by Congress.
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Appropriation (continuation)
5. Unprogrammed Funds – standby
appropriations which may be availed only upon
the occurrence of certain instances.
6. Retained Income/Funds – collections which the
agencies can use directly in their operations.
7. Revolving Funds – receipts from business-type
activities of agencies which are authorized to be
constituted as such. These are self-liquidating
and all obligations and expenditures incurred by
virtue of said business-type activity shall be
charged against the fund.
8. Trust Receipts – receipts by a government
agency acting as agent.
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 Budget Execution
8. Release Guidelines and BEDs

Major recipients of budget:

a. NGAs
b. LGUs
c. GOCCs

9. Allotment
10. Incurrence of Obligations
11. Disbursement Authority

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 Allotment
• Allotment – is an authorization issued by
the DBM to government agencies to incur
obligations for specified amounts contained
in a legislative appropriation in the form of
budget release documents. It is also
referred to as Obligational Authority.

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 Disbursement Authority
1. Notice of Cash Allocation (NCA) – authority issued by
the DBM to central, regional and provincial offices and
operating units to cover their cash requirements. The
NCA specifies the maximum amount of cash that can be
withdrawn from a government servicing bank in a
certain period.
2. Notice of Transfer of Allocation – authority issued by an
agency’s Central Office to its regional and operating
units to cover the latter’s cash requirements.
3. Non-Cash Availment Authority – authority issued by the
DBM to agencies to cover the liquidation of their actual
obligations incurred against available allotments for
availment of proceeds from loans/grants through
supplier’s credit/constructive cash.
4. Cash Disbursement Ceiling – authority issued by the
DBM to agencies with foreign operations allowing them
to use the income collected by their Foreign Service
Posts to cover their operating requirements.
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GOVT ACCTG & ACCTG FOR NPOs by:
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 Budget Accountability

12. Budget Accountability Reports

13. Performance Reviews
14. Audit

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The Budget
Cycle

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 Responsibility Accounting
• Responsibility accounting is a system of
providing cost and revenue information
over which a manager has direct control of.
• It requires the identification of
responsibility centers and the distinction
between controllable and non-controllable
costs.

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 APPLICATION OF
CONCEPTS
PROBLEM 2-4: FOR CLASSROOM DISCUSSION

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 QUESTIONS????
 REACTIONS!!!!!

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 END

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