CHAPTER 2

ACCOUNTING FOR BUDGETARY

ACCOUNTS
 Section 29 (1), Article VI of the 1987 Constitution
provides, No money shall be paid out of the Treasury
except in pursuance of an appropriation by law.
Accordingly,it may be said that acccounting for budgetary
accounts formally commences upon enactment of the
General Appropriations Act (GAA), which contains the
legal authorization to use public money for the various
programs, activities and projects of the National
Government.
 Department of Budget and Management (DBM)
-The approved appropriations are, in turn, the
bases of the DBM for issuing allotments or the authority of
government agencies to incur obligations or enter into
commitments to spend government funds.
 ACCOUNTING SYSTEMS
General Accounting Plan(GPA)
-shows the overall accounting system of a
government agency/unit. It includes the source documents,
the flow of transactions and its accumulation in the books of
accounts and finally the conversion into financial
information/data presented in the financial reports.
 The following accounting system:
1. Budgetary Accounts System
2. Receipt/income and deposiit system
3.Disbursement system
4. Financial reporting system
 The National (Government) Budget
-is a plan for financing the government activities for a fiscal year
prepared and submitted by responsible executive to a representative
body whose approval and authorization are necessary before the plan
can be executed.

- in other words, it is the financial blueprint of a country's development

plan.
 Form and contents of the National budget
Section 22, Article VII of the Constitution of the Philippines
provides that :
The President of the philippines shall submit to Congress
within 30 days from the opening of every regular session,
as the basis of the General appropriations bill, a budget of
expenditures and sources o financing, including receipts
from existing and proposed revenue measures.
Fundamental principles of fiscal operations
P-ublic Treasury
G-overnment funds or property
T-rust funds
F-iscal responsibility
D-isbursements or disposition
C-omplete Documentation
A-ll laws and regulations
G-enerally accepted principles and practices of
accounting
 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
 Balanced Budget
- It is a budget where the proposed expenditures are equal
to or less than the estimated revenues.

Performance-Informed Budgeting (PIB)

-It is a budgeting approach that uses performance
information to assist in deciding where the funds will go.
 Performance information 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
achieve the objectives.
 Budget Cycle
1. Budget Preparation
2. Legislative Authorization(Budget legislation)
3. Budget Execution and Opertion
4. Budget Accountability
 Conduct of the Agency Performance Review

Consistent with performance-based budgeting, a quarterly

evaluation of the agency performance shall be conducted
by DBM by comparing agency plans and targets per
BEDs
In case of delays in programs/ project implementation, the
agency shall develop a detailed cat-up plan remedial
action to reflect the specific measures to be implemented
that will lessen the impact, if not resolve, the identified
budget execution problems.
 Budgetary Accounts
1. Appropriation
2.Allotment
3.Obligation
 General Appropriations Act 2014
To facilitate the swift and efficient implementation of the
government administration's expenditure program, the
Department of Budget and Management phased-out the
Agency Budget Matrix and Special Allotment Release
Orders from the budget process starting 2014.
Budgetary Accounts system
Reporting Requirements
 Budget Execution Documents (BEDs)
1.BED No.1: Financial Plan(FP)
2.BED No.2: Physical Plan (PP)
3.BED No.3: Monthly Disbursements Program(MDP)
-Notice of Cash Allocation (NCA)
-Cash Disbursement Ceiling (CDC)
-Non-Cash Availment Authority (NCAA)
4.BED No.4: Annual Procurement Plan for Common-Use
Supplies and Equipment (APP-CSE)
Budget and Financial Accountability
Reports (BFARs)
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
borrowings limits, and the translation of approved
priorities and activities into expenditure levels.
 President's Budget Message (PBM)
-This is where the President explains the policy
framework and priorities in the budget.
Budget of Expenditures and Sources of Financing (BESF)
-Mandated by the Constitution, this contains the
macroeconomic assumptions,public sector context
(including overviews of LGU and GOCC financial position),
breakdown of the expenditures and funding sources for the
fiscal year and the two previous years.
 National Expenditure Program (NEP)
-This contains the details of 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 mire detailed disaggregation of key programs,projects
and activitiew in the NEP, especially those in line with the National
government's development plan.

Staffing Summary
- This containsb a summary of the staffing complement of each
department and agency, iincluding number of positions and amounts allocated
for the same.
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 tje
budget of receipts and expenditures,generally, submitted by
the President of the Philippines within 30 days from the
opening of its regular session,as the basis of the General
Appropriation Bill.
3. Budget Execution and Operation

-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.
4. Budget Accountability

-The budget process, of course does not end when

government agencies spend public funds: each and every
peso must be accounted for to ensure that is used properly,
contributing to the achievement of socio-economic goals.
This phase happens alongside the Budhey Execution phase.
Through Budget Accountability, the DBM monitors the
efficiency of fund utilization, assesses agency performancr
and provides a vital basis for reforms and new policies.
 BUDGETARY ACCOUNTS
1.Appropriation
2.Allotment
3.Obligation
 Budgetary Accounts System
-According to National budget Circular (NBC) No. 556
dated January 5, 2015, the Allotment Release Program
(ARP) shall serve as the ceiling for the aggregate allotment
releases during the year from all sources.
 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, such as: the
targeted commitments/obligations per NEP for the budget
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 Dusbursement 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, such as:
NCA
CDC
NCAA
4.BED No.4: Annual Procurement Plan for Common-Use Supplies
and Equipment (APP-CSE)
- this shall reflect the monthly quantity and cash
equivalents by items categorized into: Available at
Procurement Service Stores, and other items not available
at Procurement Service but regularly purchased from other
sources.
 Budget and Financial Accountability Reports (BFARs)

The following reports/documents are required for submission to the DBM

and COA:
1. Quarterly Physical Report of Operations(QPRQ) - BAR No.1

2.Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances (SAAODB)- FAR No.1
Fund Authorization
Major Financial Output (MFO)
Program/Activity/Project (PAP)
Major Programs/Projects
3.Summary of Appropriations, Allotments, Obligations, Disbursements and Balances
by Object of Expenditures (SAAODBOE)-FAR NO.1-A

4.List of Allotments and Sub-Allotments (LASA)-FAR No. 1-B

5. Statement of Approved Budget,Utilizations,Disbursements and Balances

(SABUDB) - FAR No.2 (for Off-Budget Fund)

6.Summary of Approved Budget,Utilizations, Disbursements and balances by Object

of Expenditures (SABUDBOE) - FAR No. 2-A ( for Off-Budget Fund)

7.Aging of Due and Demandable Obligations (ADDO) - FAR NO.3

8.Monthly Report of Disbursements (MRD) - FAR NO.4

9.Quarterly Report of Revenue and Other Receipts

(QRROR) - FAR No.5
The lower operatzing units
The regional office
The agency central office
 GENERAL GUIDELINES
The Allotment Release Program (ARP), which determines the level of allotment
releases for a given fiscal year, is composed of the following:
Obligations incurred
Obligations authorized as overdraft
Special allotment release order (SAROs) issued from the beginning of
current year to the effeciency date of the current General Appropriation Act
Releases from the unprogrammed fund (UF). Allotment releases from the
multi- user special purpose funds (SPFs) such as: Calamity Fund, Contingent
Fund, E- government fund, international commitment fund, miscellaneous
personnel benefit fund, national unification fund, priority development
assistance fund, and pension and gratuity fund shall be over the agency
allotment release program.
 Validity of appropriation
Personnel Services (PS) until the end of the current year
Maintenance and other operating expenses(MOOE) and capital outlays
(CO) until the end of the following year.
Continuing appropriation of the previous year for MOOE and CO under RA
10633 until the end of the current year
Supplemental budget for MOOE and CO appropriation under RA 10652 until
the end of the current year. The deadline for submission of Special Budget
Request(SBR) for release chargeable against this source shall be on
February 13, 2015.
All programmed Automatic Appropriations for PS, MOOE and CO shall be
available for release and obligation up to the end of the current year only
Guidelines on the release of dibursement authorities

1. Release of notice of cash allocation (NCA)

2. Release of non- h availment authority (NCAA)
3. Release of cash disbursement ceiling (CDC)
 Common Fund System
The common fund system policy (for use of personnel
services, maintenance, and other operating expenses,
capital outlays and financial expenses without realignment
) shall continue to be used.