ACCOUNTING FOR BUDGETARY a.

Zero-based
ACCOUNTS b. Incremental

Article VI of the 1987 Constitution

Section 29 (1). “No money shall be
paid out of the Treasury except in
pursuance of an appropriation by law.”
ACCOUNTING SYSTEMS
General Accounting Plan (GAP) – the
overall accounting system of a government
agency or unit.
The following are objective-specific
accounting systems:
 Budgetary Accounts Systems
 Receipt/Income and Deposit System
 Disbursement System
 Financial Reporting System
THE NATIONAL BUDGET
-a government document presenting the
government's proposed revenues and
spending for a financial year that is often
passed by the legislature, approved by the
chief executive or president and presented
by the Finance Minister to the nation.
KINDS OF BUDGET
THE BUDGET PROCESS
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.
Budget proposals shall not be based
on the following:
a. A given percentage or peso
increase or decrease from a prior
year’s budget level
b. A given percentage of the
aggregate budget level
c. A similar rule of thumb that is not
based on specific justification
2. Legislative Authorization –
budget process relative to the
enactment of the General
Appropriation Bills based on the
budget of receipts and expenditures
submitted by the President of the
Philippines.

1. As to Nature General Appropriation Bills presents

a. Annual the proposals of the President for
b. Supplemental new general appropriations in the
c. Special coming year.
2. As to Basis
Appropriations are approved by the
a. Performance
legislative body in the form of:
b. Line-item
3. As to approach and technique
 a. A general appropriation law which
covers most of the expenditures
of government
b. Supplemental appropriations laws
that are passed from time to time
to augment or correct an already
existing appropriation
c. Certain automatic appropriations
intended for fixed and specific
purposes
3. Budget Execution and Operation
– covers the various operational
aspects of budgeting. It comprise,
among others, of the following:
a. Establishment of authority
ceilings on obligations
b. Evaluation of work and financial
plans for individual activities
c. Continuing review of government
fiscal position
d. Regulation of fund releases
e. Implementation of cash payment
schedules
f. Updating planning and scheduling
activities
4. Budget Accountability – this
phase consist of the following:
a. Periodic reporting by the
government agencies of
performances under their
approved budget
b. Top management review of
government activities and the
fiscal policy implementation
c. The actions of Commission on
Audit (CoA) in assuring the
fidelity of officials and employees
by carrying out the intent of the
legislative regarding the handling
of receipts and expenditures
BUDGETARY ACCOUNTS
1. Appropriation – an authorization
made by law or other legislative
enactment, directing payment of
goods and services out of
government funds under specific
conditions or for special purpose
2. Allotment – an authorization issued
by the Department of Budget and
Management (DBM) 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 official which
binds the government to the
immediate or eventual payment of a
sum of money
BUDGETARY ACCOUNTS SYSTEM 
The Budgetary Accounts System
encompasses the processes of preparing
Agency Budget Matrix (ABM), monitoring
and recording of allotments received by the
agency from the DBM, releasing of Sub-
Allotment Release Order (Sub-SARO) to
Regional Offices (RO) by the Central Office
(CO); issuance of Sub-SARO to Operating
Units (OU) by the RO; and recording and
monitoring of obligations.
BUDGETARY ACCOUNTS agencies’ targets and plans for the current
year, and Budget Accountability
Budgetary accounts consist of the Reports (BARs), which contain
appropriations, allotments and obligations. information on the agencies’
Appropriations refer to authorizations made accomplishments and performance for a
by law or other legislative enactment for given period.
payments to be made with funds of the
government under specified conditions The BEDs include:
and/or for specified purposes.
Appropriations shall be monitored and 1. Physical and Financial Plan (PFP)
controlled through registries and control 2. Monthly Cash Program (MCP)
worksheets by the DBM and COA, 3. Estimate of Monthly Income
respectively. Budgetary accounts 4. List of Not Yet Due and Demandable
allotments and obligations are discussed in Obligations
the succeeding sections. The BARs include:

1. Quarterly Physical Reports of

THE ALLOTMENT RELEASE ORDER Operations
(ARO) 2. Quarterly Financial Reports of
Operations
-is a formal document issued by the DBM 3. Quarterly Report of Actual Income
to the agency containing the authorization, 4. Statement of Allotment, Obligations
conditions and amount of an agency and Balances
allocation 5. Monthly Report of Disbursements

The document may be the:

1. Agency Budget Matrix – effectively GENERAL GUIDELINES ON THE RELEAE

releases the amount indicated as not
needing clearance; or
2. Special Allotment Release Order
(SARO) – issued subject to
compliance with laws or regulations
or is subject to separate approval or
clearance by competent authority.
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 to the actual requirement of
their regular operations chargeable against
the GAA, as re-enacted.

REPORTING REQUIREMENTS

Per Nation Budget Circular No. 507, dated
January 31, 2007, the DBM requires
national government agencies to submit,
on a regular basis, Budget Execution
Documents (BEDs), which contain the
AGENCY BUDGET MATRIX (ABM)
The ABM refers to a document showing the
disaggregation of agency expenditures into
components like, among others, by source
of appropriations, by allotment class and
by need of clearance.
1. Needing Clearance – portion of the
ABM consisting budgetary items in
the agency specific budgets that
shall be released upon compliance of
certain documentary requirements
2. Not Needing Clearance – portion
of the ABM referring to budgetary
items of agency budgets under the
GAA not included under Needing
Clearances portion and categorized
as such in the submitted financial
plan of the agency.
COMMON FUND SYSTEM
The common fund system policy (for use of
personal services, maintenance and other
operating expenses, capital outlays, and
financial expenses without realignment)
shall continue to be used. However, it will
not apply to current year Accounts Payable
to external creditors of the five
departments covered by the Direct
Payment Scheme. These departments are:
1. Department of Public Works and
Highways
2. Department of Education
3. Department of Health
4. Commission on Higher Education
5. State Universities and Colleges

KEY TERMS ON RELEASE OF

DISBURSEMENT AUTHORITIES

1. Release of Notice of Cash Allocation

(NCA)
2. Release of non-cash Availment
Authority (NCAA)
3. Release of Cash Disbursement
Ceiling

CONDUCT OF THE AGENCY

PERFORMANCE REVIEW

Consistent with performance-based

budgeting, a quarterly evaluation of the
agency performance shall be conducted by
comparing agency plans and targets per
BEDs vis-à-vis actual accomplishments per
BARs.