Accounting

Public Management Development Program
Public Finance and Budgeting Module:
FINANCIAL ACCOUNTING
OUTLINE
I. Framework of Accounting
- Definition
- Basic Purpose of Accounting
- Accounting vs Auditing
- Financial accounting vs Managerial
(Management Accounting)
- Generally Accepted Accounting
Principles
- Financial Reporting Standards Council
- International Accounting Standards
o Committee
o Board
Public Finance and Budgeting Module
OUTLINE
- Conceptual Framework
-
Objective of Financial Statements

Accounting Concepts
Notes to Financial Statements
Elements of Financial Statements
Definition of Accounting:
Accounting Standards Council
- is a service activity. Its function is to
provide quantitative information,
primarily financial in nature, about
economic entities, that is intended to be
useful in making economic decision.
Committee on Accounting Terminology of

the American Institute of Certified Public
Accountants
- is the art of recording, classifying and
summarizing in a significant manner and
in terms of money, transactions and
events which are in part at least of a
financial character and interpreting the
results thereof.
American Accounting Association
- is the process of identifying, measuring
and communicating economic
information to permit informed judgment
and decision by users of the information.
Components of Accounting
1. Identifying analytical component; event
is accountable or quantifiable when it
has an effect on assets, liabilities and
equity (economic activity or transactions )
2. Measuring - technical component;
assigning of peso amounts to the
accountable economic transactions and
events
Components of Accounting
3. Communicating - formal component;

process of preparing and distributing
accounting reports to potential users of
accounting information
Basic Purpose of Accounting

- Accounting identifies, measures and
communicates information about entities for
use in making informed judgment and
decision.
- An accountants primary task therefore is to
supply financial information to statement users
so that they could make informed judgment
and better decision.
Accounting vs Auditing
Accounting embraces auditing.
Auditing is one of the areas of accounting
specialization.
Accounting ceases when financial statements
are already prepared.
Auditing is analytical. The work of an auditor
begins when the work of the accountant ends.
Financial Accounting vs
Managerial Accounting (Management)
Financial accounting is primarily concerned
with the recording of business transactions and the
eventual preparation of financial statements (FS). It
focuses on general purpose reports known as FS
intended for internal and external users.
Managerial Accounting (Management) is the
accumulation and preparation of financial reports

for internal users only.
Generally Accepted Accounting Principles

(GAAP) encompass the conventions, rules and
procedures necessary to define what is
accepted accounting practice.
GAAP are conventional, ie, they become

generally accepted by agreement often tacit
agreement rather than by formal derivation.
The principles have developed on the basis of
experience, reason, custom, usage, and
practical necessity.
Accounting Principles relate to three

principal areas:
1. Recognition relates to the time or period
when a financial transaction is recorded
and incorporated in the FS.
2. Measurement the monetary unit used in
recording transactions is the peso.
3. Reporting the manner that the assets,
liabilities, equity, income and expenses are
shown on the FS, with what information is
provided, where and how such information
should be reported.
Financial Reporting Standards Council (FRSC)
- the accounting standard setting body

created by the Professional Regulation
Commission upon recommendation of
the Board of Accountancy, composed
of 15 members (BOA, SEC, BSP, BIR, COA,
major organization of preparers and
users of FS, and accredited national
professional organizations of CPAs - 2 @
Public Practice, Commerce & Industry,
Academe or Education and Government)
Conceptual Framework
a summary of the terms and concepts
that underlie the preparation and
presentation of financial statements.
provides an overall theoretical foundation
for accounting which will guide standardsetters, preparers and users of financial
information in the preparation and
presentation of statements.
concerned with general-purpose FS,
including consolidated FS, prepared at
least annually and are directed toward the
common needs of a wide range of users.
Objective of Financial Statements (FS)
- to provide information about the

financial position, performance and
cash flows of an entity that is useful to a
wide range of users in making
economic decisions.
- FS also show the results of the
stewardship of management or the
accountability of management for the
resources entrusted to it.
Financial Position (Balance Sheet)

comprises the entitys assets, liabilities and
equity. It pertains to the economic
resources, liquidity, solvency, financial
structure and capacity for adaptation of an
entity.
Performance (Income Statement)
comprises the entitys revenue, expenses
and net income or loss for a period of time. It
is previously known as results of operations. It
is useful in predicting the capacity of the
entity to generate cash flows from its
operations.
Cash Flows information about cash

flows is useful in order to assess the
operating, investing and financing
activities of the entity during a period.
It is found in the Cash Flow Statement.
Accounting Concepts
1. Entity theory the objective is geared
toward proper income determination, and
proper matching of cost against revenue.
This is explained by the equation:
Assets = Liabilities + Capital (Equity)

Ex.: P2,000 = P1,200 + P800
Accounting Concepts
2. Proprietary theory the objective is
directed toward proper valuation of assets.
It is illustrated by the equation:
Assets Liabilities = Capital (Equity) Ex.:
P2,000 - P1,200 = P800
Accounting Concepts (Cont.)

3. Residual equity theory the objective is
also proper valuation of assets. Thus, the
equation is:
Assets Liabilities Preferred Shareholders
Equity = Ordinary Shareholders Equity
Accounting Concepts (Cont.)

4. Fund theory the objective is neither
proper income determination nor proper
valuation of assets but the custody and
administration of funds.
In Government accounting, this theory is

applicable.
The equation is:
Fund = cash inflows cash outflows
- provide the necessary disclosures

required by Phil. Financial Reporting
Standards
- narrative description or disaggregation of
the items presented in the FS and
information about items that do not
qualify for recognition

1. Assets resources controlled by the entity and
from which future economic benefits are
expected to flow to the entity
2. Liabilities present obligations of the entity

arising from past transactions/events the
settlement of which is expected to result in an
outflow from the entity of resources embodying
economic benefits
3. Equity residual interest in the assets of the entity
after deducting all of its liabilities

4. Income (Revenue) increase in economic
benefit during the accounting period in the
form of inflow or increase in asset or decrease
in liability that results in increase in equity, other
than contribution from equity participants.
5. Expense is decrease in economic benefit

during the accounting period in the form of an
outflow or decrease in asset or increase in
liability that results in decrease in equity, other
than distribution to equity participants.
Illustration
Agency A
Agency B
Assets
P300,000.00
P400,000.00
Liabilities
250,000.00
420,000.00
Equity
P 50,000.00
(P 20,000.00)
P180,000.00
P230,000.00
165,000.00
250,000.00
P 15,000.00
(P20,000.00)
Income
Expenses
Net Income
(Loss)
Workshop/Exercise:
1. Agency C shows its financial position as of
Dec. 31, 2012 has a Net Equity of P40,000 and
total Liabilities of P85,000. Liquid and other
current assets amounted to P70,000, thus, its
PPE aggregated to how much?
Workshop/Exercise:
2. Agency D realized an income totaling P220,000,
and incurred expenses of P148,000, out of
which P120,000 was paid during CY 2012. How
much is the increase of its Equity as of the end
of the year? How much is its Net Income or
Excess of Income over expenses? How much
is the increase in liabilities of the agency?
Public Finance and Budgeting Module:
GOVERNMENT ACCOUNTING
OUTLINE
II. Government Accounting
COAs Mandate Limited Accounting Function
Linkage of Oversight Agencies and NGAs
Definition
New Government Accounting System (NGAS)
NGAS Policies
Accounting for Typical Transactions
- Income/Revenue and Receipts
- Budget/Appropriations, Allotments and
Obligations
- Disbursements
Financial Reporting
a. Agency level
b. Whole of Government level
OUTLINE
III. Public Financial Management (PFM) Reforms
Electronic New Government Accounting System
(e-NGAS)
Harmonization of Philippine Government
Accounting Standards with the International
Public Sector Accounting Standards (IPSAS)
Philippine Public Sector Accounting Standards
(PPSAS)
Harmonization of the Chart of Accounts and
Code Structure of COA and DBM (UACS)
Revision of NGAS Manual (Govt. Accounting
Manual)
AUTHORITY/LEGAL BASIS
Article IX-D, Section 2 Par. (2) of the 1987
Constitution of the Republic of the Philippines)
The Commission shall have exclusive authority, subject

to the limitations in this Article, to XXX ... and
promulgate accounting and auditing rules and regulations,
including those for the prevention and disallowance of
irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures or uses of government funds
and properties.
Article IX-D, Section 2 Par. (1) of the 1987

Constitution of the Republic of the Philippines)
It shall keep the general accounts of the
Government and, for such period as may be
provided by law, preserve the vouchers and
other supporting papers pertaining thereto.
Section 4
The Commission shall submit to the President and
the Congress, within the time fixed by law, an
annual report covering the financial condition and
operation of the Government, its subdivisions,
agencies and instrumentalities, including GOCCs,
and non-governmental entities subject to audit,
and recommend measures necessary to improve
their effectiveness and efficiency. It shall submit
such other reports as may be required by law.
MANDATE
1. Auditing and Custodial Services
2. Rule-making Services
3. Limited Accounting
4. Reportorial Services
5. Adjudicatory and Quasi-judicial Services
6. Professional Development and Other
Services
Linkage of Oversight Agencies and National Government

Agencies
President
of the
Phils.
Congress
of the
Philippines
GAA Appropriations
Allotments &
NCA
AFR
Department
of Budget and
Management
GAA Appropriations
Government
Agencies
Allotments
Commission
on
Audit
FS & FR
MDS Checks
MDS-GSBs
Income
Collections
AGDBs/AABs
Bureau
of the
Treasury
FS & FR
Legend:
AFR - Annual Financial Report
AABs - Authorized Agent Banks
AGDBs - Authorized Government Depository
Banks
FR - Financial Reports
FS - Financial Statements
GAA - General Appropriations Act
MDS-GSBs - Modified Disbursement System
Government Servicing Banks
NCA - Notice of Cash Allocation
Government Accounting
encompasses the processes of
analyzing,
recording,
classifying,
summarizing, and
communicating
all transactions involving the receipt and
disposition of government funds and
property, and
interpreting the results thereof.
(Section 109, PD 1445)
Objectives of Government
Accounting
Government accounting shall aim to:
1)
produce information concerning past

operations and present conditions;
2) Provide a basis for guidance for future
operations;
3) Provide for control of the acts of public bodies
and officers in the receipt, disposition and
utilization of funds and property; and
4) Report on the financial position and the results
of operations of government agencies for the
information of all persons concerned.
Accounting System Simplification and

Computerization Project
Objectives:
Standardize recording of financial transactions;

Consolidate financial reports of all agencies;
Harmonize the accounting system with IAS/IFRS,
IPSAS and other relevant standards, laws, rules,
regulations and best practices; and
Improve accountability and governance thru
transparency in government financial reporting.
What is the NGAS?

NGAS is a simplified set of accounting
concepts, guidelines and procedures
designed to ensure correctness,
completeness, and timeliness in the
recording of government financial
transactions, and production of
financial reports.
Why a New System was developed?
The old system was about half a century

old (in 2001) and designed for manual
operation.
JLRecto
The NGAS is more in conformity with International

Public Sector Accounting Standards (IPSAS)/
International Financial Reporting Standards (IFRS).
It is more responsive to the current demands

of government financial managers.
It helps government executives in monitoring

the performance of their agency more
effectively.
JLRecto
It leads to eventual computerization.
It enables agencies to generate relevant and

periodic financial statements and other
operation reports needed by government
planners and other users.
Expenditures
Revenues
Gross
Borrowings
Implementation of the NGAS
National
Government
Agencies
- 2002
GOCCs (except
Govt. Banks,
GSIS & SSS )
- 2005
Local
Government
Units
- 2002
Barangays
- 2007
Philippine Government Accounting

Standards (PGAS) COA
Resolution No. 2006-006 dated
January 31, 2006
Basic Concepts and Accounting Policies

Under NGAS
One Fund Concept
only one fund shall be maintained by all
government agencies
Separate fund accounting shall be done only
when specifically required by law or by a donor
agency or when otherwise necessitated by
circumstances subject to prior approval of the
Commission.
Maintenance of two sets of books of accounts
Regular Agency Books to record the
National Government Books to record
regular transactions of the agency like the

receipt and utilization of the Notice of Cash
Allocation; and collection of income and other
receipts which can be used by the agency.
income and receipts which the agency are not
authorized to use and are required to be
remitted to the National Treasury
Adoption of Accrual Basis of Accounting

Expenses are recognized when incurred and
reported in the financial statements in the
period to which they relate
Income/revenue is recorded when realized
except for transactions where accrual basis
is impractical or when other methods are
required by law
Maintenance of Petty Cash Fund (PCF)

under the Imprest System
PCF shall not be used to purchase supplies
for stock
Balance of PCF at year-end is not refunded
Asset Method of Accounting

Recording disbursements as assets when
expenditures apply to more than one
accounting period
Examples: Prepaid insurance, Prepaid
interest, Prepaid rent
Payable accounts are recognized and

recorded in the books only upon
acceptance of the goods/inventory/other
assets and rendition of services to the
agency
Use of the Perpetual Inventory System in

accounting for Supplies and Materials
Supplies and materials purchased for
immediate use or on emergency or
directly delivered to end users shall be
taken up as expense
Cost of ending inventory of office supplies
and materials, and other inventory items
are computed using Moving Average
Method
Small Tangible Items

Small items of supplies with serviceable life
of more than one year listed in Annex A COA Circular No. 2005-002
Recorded as inventory upon purchase and

as expense upon issuance
Covered by Inventory Custodian Slip for
monitoring and control
Implementation of valuation accounting

Recognition of Bad Debts Expense derived
from percentage and aging of accounts
receivable as follows:
Age of Accounts
1 60 days
61 - 180 days
181 days 1 year
More than 1 year
Percentage
1%
2%
3%
5%
Implementation of valuation accounting

Recognition of depreciation for property,
plant and equipment
Property, Plant and Equipment are carried

at cost less accumulated depreciation
Use of Straight Line Method
Economic life prescribed under COA Circular
No. 2003-007 dated December 11, 2003
Residual value of 10% of the cost of asset
Depreciation starts on the second month after
purchase
Recording of budget/appropriations,
allotments and obligations in the
Registries instead of the books of
accounts (General Journal and General
Ledger)
Notice of Cash Allocation (NCA) is recorded in

the Regular Agency (RA) books of agencies as
Cash, National Treasury-MDS and Subsidy
Income from NG
Maintenance of Registry of Public

Infrastructures
Treatment of Borrowings as Long-Term
Liability
Transactions in foreign currencies are
recorded in Philippine Peso based on the
BSP rate of exchange prevailing at the
date of transactions
Revised Chart of Accounts

Account Name
Account Numbering System
The chart of accounts provides the framework within which
the accounting records are constructed. It is defined as: a
list of General Ledger Accounts consisting of the Real and
Nominal accounts
Real Accounts - these are the balance sheet (financial
position) accounts for assets, liabilities and equity
accounts.
Nominal Accounts - these are the income, expense and
intermediary (financial performance) accounts
Books of Accounts Maintained by

Government Agencies
Regular Agency
1. Cash Receipts Journal
4.
General Journal
2. Cash Disbursements Journal
5.
General Ledger
3. Check Disbursements
Journal
6.
Subsidiary Ledgers
National Government
1. Cash Journal
2. General Journal
4. Subsidiary Ledgers
3. General Ledger
Records and Registers

Accountable Officers (Collecting and
Disbursing Officers) shall maintain the following
records:
a. For Agencies/ROs/FOs/OUs with
complete books
Cash Receipts Record
Cash in Bank Record
Cash Disbursements Record
Records and Registers

b. For Agencies/ROs/FOs/OUs without
complete books
Cash Receipts Register
Cash in Bank Register
Cash Disbursements Register
Responsibility Accounting
Responsibility centers or cost centers are set
up for each agency and its regional offices,
including their programs, projects, and
activities to properly control and monitor
the costs incurred.
Codes are assigned for Responsibility
Centers for each government agency,
including its regional offices and operating
units in the coding structure.
Use of two-money column trial balance

Department of ABC
Trial Balance (RA Books)
As of December 31, 2012
Acct.
Code
Account Title
Cash-National Treasury, MDS
Due from Officers and Employees
Other Receivables
Office Supplies Inventory
Prepaid Rent
Prepaid Insurance
Prepaid Interest
Office Equipment
Accounts Payable
Due to GSIS
108
123
149
155
177
178
179
221
401
413
Government Equity
Subsidy Income from NG
501
651
701
751
Salaries and Wages - Regular Pay
Traveling Expenses - Local

Total
Debit
Credit
11,600
500
1,000
800
1,200
600
2,400
10,000
10,000
700
1,000
40,000
20,000
3,600
51,700
51,700
Financial Statements
Balance Sheet
Statement of Government Equity
Statement of Income and Expenses
Statement of Cash Flows
NGAS was designed for computerization

Accounting for Typical Transactions:

a. Income/Revenue and Receipts
b. Budget/Appropriations, Allotments
and Obligations
c. Disbursements
Accounting for Income/

Revenue and Receipts
Fundamental Principles governing the financial

transactions and operations of any government
agency under Section 4, Government Auditing Code
of the Philippines (PD 1445)
(1) No money shall be paid out of any public treasury

or depository except in pursuance of an
appropriation law or other specific statutory
authority (Art. VI, Sec. 29, 1987 Constitution)
(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 for which the trust was
created or the funds received.
(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.
(6) Claims against government funds shall be
supported with complete documentation.
(7) All laws and regulations applicable to financial

transactions shall be faithfully adhered to.
(8) Generally accepted principles and practices of
accounting as well as of sound management and
fiscal administration shall be observed, provided
that they do not contravene existing laws and
regulations.
Relevant Government Rules & Regulations

per COA Issuances
1. COA Circular 2012-001 dated June 14, 2012
Re: Prescribing the Revised Guidelines and
Documentary Requirements for Common
Government Transactions
2. COA Circular 2012-004 dated Nov. 28, 2012
Re: Demand for Immediate Liquidation and
Settlement of All Cash advances Outstanding as of
December 31, 2011

per COA Issuances
3. COA Circular 2007-001 dated October 25, 2007
Re: Revised Guidelines in the granting, utilization,
accounting and audit of the funds released to
NGOs/POs
4. COA Circular 94-013 dated December 13, 1994
Re: Rules and regulations on the granting,
utilization and liquidation of fund transfers to
implementing agencies (IAs)
Basic Rules and Regulations on

Collections and Deposits
1. Collecting officers or agent shall be designated by
the head of the respective agencies.
2. All employees entrusted with the handling of cash
are required to be bonded under the Fidelity Fund.
The amount of cash in the hands or under the
custody of the accountable employee shall be
limited within the amount covered by the bond to
render protection to the full extent.
3. All Collecting Officers are required to

acknowledge all payments received by issuing
immediately official receipts. Where mechanical
devices are used to acknowledge cash receipts,
the COA may approve upon request, exemption
from the use of accountable forms. The receipts
may be in the form of postage, internal revenue,
or documentary stamps and the like, or officially
pre-numbered receipts, subject to proper custody,
accountability and audit; Money Orders and
Checks may be accepted in payment of bills and
amounts due the Government.
4. All Collecting Officers shall deposit intact all

their collections, as well as collections turned
over to them by sub-collectors/tellers, with
AGDB daily or not later than the next banking
day pursuant to the provisions of Department of
Finance Order No. 52-96 dated May 22, 1996.
5. At no instance shall money in the hands of the

Cashier/Collecting Officer be utilized for the
encashment of private checks or payment of
obligations/expenses.
6. For checks received, the collecting officer shall

indicate on the OR the address of the payor of
the check to facilitate communication with him, if
necessary.
7. Cash Receipt Records of the Cashier or Designated Collecting Officer shall be updated daily
and shall be available for inspection/ audit at all
times.
8. Cash, cash items and other accountable forms

under the custody of the Collecting Officer shall
at all times be kept in a safe or cabinet under
lock and key.
9. Cashiers or Designated Collecting Officers are
required to prepare and submit to the
Accounting Unit a periodic Report of Collections
and Deposits. This report shall be supported by
documentary evidence such as duplicate
copies of Official Receipts and validated deposit
slips.
Policy in Accounting for Income and

Receipts
Maintenance of Two (2) Sets of Books of
Accounts
Regular Agency Books used to record the receipt
and utilization of the Notice of Cash Allocation; and
collection of income and other receipts which can be
used by the agency which are either required to be
remitted to the National Treasury or deposited in an
AGDB.
Policy in Accounting for Income and

Receipts
National Government Books used to record
collections or income which the agency cannot
use and are required to be remitted to the
National Treasury
Preparation/accomplishment of two sets of
reports/forms
Collection and Deposit

PROCEDURAL WORKFLOW
Official Receipt
Journal
Entry Voucher
Cash Journal/
Cash
Receipts Journal
Cash
Receipts Record
Reports of
Collections &
Deposits
List of
Collections
Deposit Slips
General Ledger
Budget/Appropriations,
Allotments and Obligations
Sec. 29, (1) of the Constitution

No money shall be paid
out of the Treasury except in
pursuance of an appropriation
made by law.
THE BUDGETARY PROCESS

National Government Agency
Allotments
ABM/
SARO
RAOs
Obligations
DV/PO/
Contract
ObR
SAOB
DBM and COA

Maintenance of Registries to record the receipt of

allotment and incurrence of obligation by agency, by
PAP/by allotment class
RAOCORegistry of
Allotments and
Obligations Capital Outlay
RAOMORegistry of
Allotments and
Obligations Maintenance and Other
Operating Expenses
RAOPSRegistry of
Allotments and
Obligations Personal Services
RAOFERegistry of
Allotments and
Obligations Financial Expenses
1/13/2014
COA Circular No. 2006-003
Dated January 31, 2006
Obligation Request
REGISTRY OF ALLOTMENTS AND OBLIGATIONS

PERSONAL SERVICES (PS)
Department of Energy
Agency
Fiscal Year 2013
P.A.P
Sheet No. :
Date
Reference
Jan 4 03-1-001
5 PS 03-1-002
PS-03-1-003
Account
Code
701
711
712
731
732
733
Allotment Obligation
Received Incurred
20,000
16,000
1,000
1,000
900
100
300
A.1.A
1
Balance
20,000
4,000
3,000
2,000
1,100
1,000
700
Maintenance of Registry to record the budget

and utilization approved by authorized agency
officials for use of income per law
RBU Registry of Budget and Utilization
Budget Utilization Request

THE BUDGETARY CONTROL AND REPORTING

ON AUDIT (GAS)
From
Congress/OP
COMMISSION
Appropriations
GAA Special
Laws
RAPAL
Allotments
From DBM
ABM/ SARO
SAAOB
Obligations
From NGAs
SAOB
To Congress/OP
Oversight Agencies
BSP/Other
Stakeholders
THE BUDGETARY CONTROL AND REPORTING

UNITS
From
Sanggunian
Appropriation
Ordinance
LOCAL GOVERNMENT
Appropriations
RAAO
Allotments
From LCE
Advice of
Allotment
Obligations
From LGU
Budget Unit
DV/PO/
Contract
SAAOB
ObR
To
Sanggunian,
LCE and COA
THE BUDGETARY PROCESS Government

Corporations
Approved
Budget
Budget
RBUs
Utilization
DV/PO/
Contract
BUR
SBU
COA
Accounting for Disbursements
General Requirements for All Types

of Disbursement:
1) Certificate of availability of funds issued by the
Chief Accountant
2) Existence of lawful and sufficient allotment duly
obligated as certified by authorized
officials(except for GOCC/GFIs)
3) Legality of transactions and conformity with laws,
rules and regulations
4) Approval of expenditure by Head of Office or his
authorized representative
5) Sufficient and relevant documents to establish
validity of claim
PROCEDURAL FLOW DISBURSEMENT- Agencies

Budget
From
Claimant
SDs
ObR
Accounting
ObR
and SDs
Approving
Officer
DV, ObR
and SDs
DV,ObR
and SDs
Cash/
Check
DV
JEV
Treasury/C
ash
Cash/
Check, DV,
ObR and
SDs
Cash/Check to Claimant
Cash/Check,
DV, ObR and
SDs
CDJ/
CkDJ
RD/RCI
GL

per COA Issuances
1. COA Circular 2012-001 dated June 14, 2012
Re: Prescribing the Revised Guidelines and
Documentary Requirements for Common
Government Transactions
2. COA Circular 2012-004 dated Nov. 28, 2012
Re: Demand for Immediate Liquidation and
Settlement of All Cash advances Outstanding as of
December 31, 2011

per COA Issuances
3. COA Circular 2007-001 dated October 25, 2007
Re: Revised Guidelines in the granting, utilization,
accounting and audit of the funds released to
NGOs/POs
4. COA Circular 94-013 dated December 13, 1994
Re: Rules and regulations on the granting,
utilization and liquidation of fund transfers to
implementing agencies (IAs)
4. Financial Reporting
Sec. 121, PD 1445 Financial reports and statements
(1) The financial reports prepared by the agencies shall
comply with the specific requirements of applicable
laws and regulations as to nature, accounting basis,
content, frequency, and distribution as well as with
all applicable restrictions pertaining to information
that is classified for national security purposes.
Sec. 121, PD 1445 Financial reports and
statements
(2) The financial statements shall be based on

official accounting records kept in
accordance with law and the generally
accepted accounting principles and
standards.
Sec. 122, PD 1445 Submission of reports
(1) Whenever deemed necessary in the exigencies of
the service, the Commission may under regulations
issued by it require the agency heads, chief
accountants, budget officers, cashiers, disbursing
officers, administrative or personnel officers, and
other responsible officials of the various agencies to
submit trial balances, physical inventory reports,
current plantilla of personnel, such other reports as
may be necessary for the exercise of its functions.
Sec. 122, PD 1445 Submission of reports
(2) Failure on the part of the officials concerned to
submit the documents and reports mentioned
herein shall automatically cause the suspension of
payment of their salaries until they shall have
complied with the requirements of the
Commission.
a. Agency Level
Trial Balance Preparation
General
Ledger
Adjusted/
Pre-Closing
TB
Adjusting
Entries
Unadjusted
TB
Closing
Entries
Post Closing
TB
Generation of
Detailed
Condensed
Balance Sheet
Detailed
Condensed
Statement of Cash Flows (Direct Method)

a. Agency Level
Financial Statements and Quarterly Financial
Accountability Reports
1.
2.
3.
4.
5.
6.
Quarterly Trial Balance

Pre-closing and Post-closing Trial Balance
due on February 14 of each year
Detailed and Condensed Statement of
Income and Expenses
Detailed Balance Sheet
Statement of Cash Flows (Direct Method)
a. Agency Level
Financial Statements and Quarterly Financial
Accountability Reports
7.
8.
9.
10.

Statement of Appropriations, Allotments,
Obligations, Disbursements and Balances
List of Agency Budget Matrix (ABM)/SAROS
and Sub-AROs
Detailed Statement of Current Years
Obligations, Disbursements and Unpaid
Obligations
Financial Statements (FS) and Reports

11.
12.
Summary of Prior Years Obligations,

Disbursements and Unpaid Prior Years
Obligations
Summary Reports of Disbursements
Use of two-money column trial balance

Department of ABC
Trial Balance (RA Books)
As of December 31, 2012
Acct.
Code
Account Title
Cash-National Treasury, MDS
Other Receivables
Prepaid Rent
Prepaid Insurance
Prepaid Interest
Office Equipment
Accounts Payable
Due to GSIS
108
123
149
155
177
178
179
221
401
413
Government Equity
Subsidy Income from NG
501
651
701
751
Salaries and Wages - Regular Pay
Traveling Expenses - Local

Total
Debit
Credit
11,600
500
1,000
800
1,200
600
2,400
10,000
10,000
700
1,000
40,000
20,000
3,600
51,700
51,700
Department of ABC
Balance Sheet
December 31, 2012
Assets
Current Assets
Receivables
Other Receivables
Inventories
Prepayments
Prepaid Rent
Prepaid Insurance
Prepaid Interest
Total Current Assets
Property, Plant and Equipment
Office Equipment
Total Assets
P 500.00
1,000.00
P1,500.00
800.00
1,200.00
600.00
2,400.00
4,200.00
P6,500.00
10,000.00
P16,500.00
Department of ABC
Balance Sheet
December 31, 2012
Liabilities
Current Liabilities
Accounts Payable
Due to GSIS
Total Liabilities
P10,000.00
700.00
P10,700.00
Equity
Government Equity, Beginning Balance
Retained Operating Surplus
Current Years Operation
Total Equity
Total Liabilities and Equity
P1,000.00
4,800.00
5,800.00
P16,500.00
Department of ABC
For the Year Ended December 31, 2012
Income
Subsidy Income from National Government (SING)
Less: Reversion of Unused Notice of
Cash Allocation (NCA)
SING Net
Less: Expenses
Salaries and Wages Regular Pay
Traveling Expenses
Total Expenses
Excess of Income over Expenses
P40,000.00
11,600.00
P28,400.00
20,000.00
3,600.00
P23,600.00
P4,800.00
NEW GOVERNMENT ACCOUNTING SYSTEM

NATIONAL GOVERNMENT AGENCIES
General Accounting System Plan
MANUAL SYSTEM
Particular
Income and Collections

Collections/Deposits/
Billing
Remittances
Receipt of
Allotment
Budgetary Accounts
Release of
Allotment
Incurrence of
Obligation
Payment
by Cash
Disbursements
Payment
by ADA
Payment
by Checks
Direct
by TRA
Transfer of
Direct Payments/ Public Prop.
Other Disb.
to Registries
BTr DA
Source Documents/
Basis
OR
DS
ABM/
SARO
SSARO
OP
Reports/Summarizing
Documents
for Recording
Basis of
Recording
Books of Original
Entry
DV/P
DV/P
C/PO
RCD
JEV
GJ
JEV
RA Books
CRJ
NG
Books
CJ
ObR
RAO
RAO
RAO
RD
RCI/
DV
JEV
JEV
CDJ
IAR
TRA
SD
SD
SD
DV
DV/P
C/SA
ADA
JEV
CkDJ
WA
DV/SD
JEV
BTr
JEV
JEV
JEV
GJ
RPI
RRP
Books of Final
Entry
GL
R
E
P
O
R
T
I
N
G
SL
Trial Balance and

Supporting Schedules
FI
N
A
N
C
I
A
L
TB
BS
SIE
SCF
SS
LEGEND:
Source Documents
ABM - Agency Budget Matrix
ADA - Authority to Debit the Account
B - Bill
BTr DA - BTr Debit Advice
BTr JEV - Bureau of the Treasury JEV
C - Contract
DS - Deposit Slip
DV - Disbursement Voucher
IAR - Inspection & Acceptance Report
OP - Order of Payment
OR - Official Receipt
P - Payroll
PO - Purchase Order
SARO - Special Allotment Release Order
SSARO - Sub-Special Allotment
Release Order
TRA - Tax Remittance Advice
WA - Withrawal Application
Reports/Summarizing Documents/
Basis for Recording
ObR - Obligation Request
JEV - Journal Entry Voucher
RAO - Registry of Allotments and Obligations depending on the kind of releasesPS, MOOE, CO, FE
RCD - Report of Collections and Deposits
RD - Report of Disbursements
RPI-Registry of Public Infrastructures
RRP-Registry of Reforestation Projects
Books of Original Entry

CDJ - Cash Disbursements Journal
CJ - Cash Journal
CkDJ-Check Disbursements Journal
CRJ - Cash Receipts Journal
GJ - General Journal
Books of Final Entry
GL - General Ledger
SL - Subsidiary Ledger
BS - Balance Sheet
SIE - Statement of Income and Expenses
SCF-Statement of Cash Flow
Trial Balance and Supporting Schedules

TB - Trial Balance
SS - Supporting Schedules
b. Whole Government Level
Preparation of the Annual Financial

Report (AFR) for:
National Government Agencies
Local Government Units
Government Owned and/or Controlled
Corporations
Submission of AFR on or before September 30

of each year to:
- Office of the President

- Senate of the Philippines
- Congress of the Philippines
Copies of AFR furnished to:
- DBM
- DOF and BTr
- NEDA and NSCB
- BSP
- Other Stakeholders
e-NGAS
accounting software which ensures correctness,
reliability, completeness and timeliness in recording

government financial transactions and
generate financial reports in accordance with the
policies and procedures set in NGAS

Implemented in October 2003
IMPLEMENTATION
of the Philippine Public Sector
Accounting Standards,
Chart of Accounts and
Government Accounting Manual
Philippine Public Sector Accounting Standards

(PPSAS) consist of:
International Public Sector Accounting
Standards (IPSAS) (Accrual Based IPSAS
per 2012 Handbook) developed by IPSASB
and published by the International
Federation of Accountants (IFAC), and
Philippine Application Guidance (PAG) to
IPSAS.
International Public Sector

Accounting Standards
(IPSAS)

Accounting Standards (IPSAS)
These internationally accepted accounting
standards are developed by the IPSAS Board.
IPSAS apply to public sector entities other than
governmental business enterprises (GBEs).
IPSAS Board is an independent

standard-setting body created by the
International Federation of Accountants
(IFAC).
What is Philippine Public Sector

Accounting Standards or PPSAS?
It is a set of standards which define the
recognition, measurement,
presentation and disclosure
requirements for financial reporting in
the Philippine Public Sector
BASIS OF PPSAS

Accounting Standards (IPSAS)
International Financial Reporting
Standards (IFRS)
Existing laws
Best practices
Capacity of agencies to comply
Methodology in the Development of

PPSAS
1. Adopt the IPSAS issued by IPSASB and include in the
Philippine Application Guidance the modification
or exemption, if any
2. Develop a PPSAS to deal with a specific accounting

issue
3. Conduct Focus Group Discussions
Public Sector Accounting

Standards Board (PSASB)
Functions of PSASB :
Assist CP formulate and implement
accounting standards for the Philippine public
sector (PPSAS)
Establish and maintain linkages with
international bodies, professional
organizations and academe on accounting
related fields on financial management.
Approach to PPSAS Implementation

Phased Implementation
Phase 1 (25 PPSAS for implementation in 2014)
Phase 2 (3 PPSAS for implementation in 2015)
Revised Chart of Accounts

dated January 30, 2013
Effective Date : January 1, 2014
Objectives
To provide new accounts for the adoption
of the Philippine Public Sector Accounting
Standards (harmonized with IPSAS)
To provide uniform accounts for national
government accounting and budget
systems to facilitate the preparation of
harmonized
financial
and
budgetary
accountability reports
Objectives
To expand the account code from three
(3) digits in the NGAS Chart of Accounts to
eight (8) digits, to allow expansion or
creation of new accounts as may be
necessary to implement new standards or
policies and provide up to four levels of
consolidation depending on the users
information needs.
Major Changes
a. Coverage is limited only to all national
government agencies and GOCCs
receiving funds constituted as SAGF from
the National Government
b. Expanded account code structure
- from three (3) digits to eight (8) digits
COA Revised Chart of Accounts

ACCOUNT CODE STRUCTURE
COA Revised Chart of Accounts

Account Groups
Codes are assigned to account groups to facilitate
location of accounts in the general and subsidiary
ledgers, to provide systematic arrangement and
classification of accounts and facilitate preparation
of the consolidated financial reports as follows:
Code
Account Groups
1
Assets
2
Liabilities
3
Equity
4
Income
5
Expenses
ASSET WITHOUT CONTRA ACCOUNT

Ex. Cash, Collecting Officer
ASSET WITH CONTRA ACCOUNT

with contra
account
Ex.Asset
Accounts
Receivable
11 03
03 01
1 01
0101
Asset
Asset
Receivables
Receivables
Loans
Loansand
andReceivable
Receivable
Accounts
Accounts
Accounts Receivable
Accounts Receivable
General
Ledger
Allowance
for Impairment Contra-Account
Accounts
Receivable
ASSET CONTRA ACCOUNT

Ex. Allowance for Impairment
Accounts Receivable
Asset with contra account
03
01
011
Relevant Accounts
Per Revised Chart of Accounts
Account Code
Account Title
Infrastructure Assets
137
1 06 03 010
1 06 03 011
1 06 03 012
1 06 03 020
1 06 03 021
1 06 03 022
Road Networks
Accumulated Depreciation - Road Networks
Accumulated Impairment Losses - Road Networks
Flood Control Systems
Accumulated Depreciation - Flood Control Systems
Accumulated Impairment Losses - Flood Control Systems
1 06 03 030
1 06 03 031
1 06 03 032
1 06 03 040
1 06 03 041
Sewer Systems
Accumulated Depreciation - Sewer Systems
Accumulated Impairment Losses - Sewer Systems
Water Supply Systems
Accumulated Depreciation - Water Supply Systems
137
Relevant Accounts
Per Revised Chart of Accounts
Account Code
Account Title
1 06 03 042
Accumulated Impairment Losses - Water Supply Systems
1 06 03 050
1 06 03 051
1 06 03 052
Power Supply Systems

Accumulated Depreciation - Power Supply Systems
Accumulated Impairment Losses - Power Supply Systems
1 06 03 060
1 06 03 061
1 06 03 062
Communication Networks
Accumulated Depreciation - Communication Networks
Accumulated Impairment Losses - Communication Networks
1 06 03 070
1 06 03 071
1 06 03 072
Seaport Systems
Accumulated Depreciation - Seaport Systems
Accumulated Impairment Losses - Seaport Systems
138

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Public Management Development Program

Public Finance and Budgeting Module:

Public Finance and Budgeting Module

Objective of Financial Statements

Public Management Development Program

Public Finance and Budgeting Module

Public Management Development Program

Public Finance and Budgeting Module

Committee on Accounting Terminology of

Public Finance and Budgeting Module

Public Management Development Program

Public Finance and Budgeting Module

Public Finance and Budgeting Module

3. Communicating - formal component;

Public Management Development Program

Public Finance and Budgeting Module

Basic Purpose of Accounting

Public Management Development Program

Public Finance and Budgeting Module

Public Management Development Program

Public Finance and Budgeting Module

accumulation and preparation of financial reports

Public Management Development Program

Public Finance and Budgeting Module

Generally Accepted Accounting Principles

GAAP are conventional, ie, they become

Public Management Development Program

Public Finance and Budgeting Module

Accounting Principles relate to three

Public Finance and Budgeting Module

Financial Reporting Standards Council (FRSC)

- the accounting standard setting body

Public Finance and Budgeting Module

Public Finance and Budgeting Module

Objective of Financial Statements (FS)

- to provide information about the

Public Management Development Program

Public Finance and Budgeting Module

Financial Position (Balance Sheet)

Public Finance and Budgeting Module

Cash Flows information about cash

Public Management Development Program

Public Finance and Budgeting Module

Assets = Liabilities + Capital (Equity)

Public Management Development Program

Public Finance and Budgeting Module

Public Management Development Program

Public Finance and Budgeting Module

Accounting Concepts (Cont.)

Public Management Development Program

Public Finance and Budgeting Module

Accounting Concepts (Cont.)

In Government accounting, this theory is

Public Finance and Budgeting Module

Notes to Financial Statements

- provide the necessary disclosures

Public Management Development Program

Public Finance and Budgeting Module

Elements of Financial Statements

2. Liabilities present obligations of the entity

Public Finance and Budgeting Module

Elements of Financial Statements

5. Expense is decrease in economic benefit

Public Finance and Budgeting Module