THE MANUAL ON THE

NEW GOVERNMENT ACCOUNTING SYSTEM

for National Government Agencies
(Manual Based)
ACCOUNTING POLICIES
Volume I

Table Of Contents
Page No.

Chapter 1.Introduction

Sec. 1. Objectives of the Manual 1

Sec. 2. Coverage 1
Sec. 3. Legal Basis 1

Chapter 2.Basic Features and Policies

Sec. 4. Basic Features and Policies 2

Chapter 3.Accounting Systems

  Sec. 5.General Accounting Plan 8

Sec. 6.Budgetary Accounts System 8
Sec. 7.Budgetary Accounts 8
Sec. 8.Agency Budget Matrix 10
  Sec. 9.Procedures for the Preparation of 10
ABM
  Sec. 10. Allotment Release Order 11
Sec. 11. Recording of Allotments 11
Sec. 12. Procedures in the Monitoring and 12
Recording of Allotments
Received from DBM
Sec. 13. Procedures for the Recording of 14
Sub-Allotment Release Order
(Sub-ARO by RO/OU)
Sec. 14. Accounting for Obligation 17
Sec. 15. Procedures for the Recording of 17
Obligations
Sec. 16. Receipts/Income Collections and 20
Deposits System
Sec. 17. Sources of Income of the National 20
Government
Sec. 18. Methods of Accounting for Income 21
Sec. 19. Fines and Penalties 21
Sec. 20. Other Receipts 21
Sec. 21. Deposit of Collections 22
Sec. 22. Reporting of Collections and 23
Deposits
Sec. 23. Procedures for Collections and 23
Deposits Through the Collecting
Officer
Sec. 24. Procedures for Collections through 26
Accredited Agent Banks
Sec. 25. Dishonored Checks 27
Sec. 26. Procedures in Recording 28
Dishonored Checks
Sec. 27. Disbursements Defined 30
Sec. 28. Basic Requirements for 30
Disbursements
Sec. 29. Disbursements System 30
Sec. 30. Certification on Disbursements 30
Sec. 31. Disbursements by Checks 31
Sec. 32. Recording of Checks Disbursements 31
in the Check Disbursements
Record
Sec. 33. Reporting of Checks Issued/ 31
Released
Sec. 34. Procedures for Disbursements by 32
Checks
Sec. 35. Disbursements by Cash 38
Sec. 36. Cash Advances for Travel 38

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 Sec. 37. Procedures for Disbursements by 39
Cash – Payment for Payroll and
Other Expenses
Sec. 38. Disbursements Through Bank – 41
Payroll Payment
Sec. 39. Disbursements Through Petty Cash 42
Fund
Sec. 40. Procedures for Disbursements 42
Through Petty Cash Fund
Sec. 41. Purchase or Construction of 46
Property, Plant and Equipment
Sec. 42. Property and Inventory Accounting 46
System
Sec. 43. Perpetual Inventory Method 47
Sec. 44. Moving Average Method 47
Sec. 45. Procedures in the Receipt, 48
Inspection, Acceptance and
Recording Deliveries of
Inventory Items and Equipment
Sec. 46. Procedures in the Requisition and 50
Issuance of Inventory Items
Sec. 47. Procedures in the Requisition and 54
Issuance of Equipment
Sec. 48. Miscellaneous Transactions 56
Sec. 49. Accounting for Loss of Cash and 57
Property
Sec. 50. Grant of Relief from Accountability 57
Sec. 51. Accounting for Cash Overages 58
Sec. 52. Accounting for Stale Checks 58
Sec. 53. Accounting for Disallowances 58
Sec. 54. Accounting for Overpayments 59
Sec. 55. Pro-forma Accounting Entries 59

  Chapter 4.Trial Balances, Financial Reports and

Statements

  Sec. 56. Financial Reporting System 64

  Sec. 57. Trial Balance 65
  Sec. 58. Purposes of the Trial Balance 65

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 Sec. 59. Pre-Closing Trial Balance 65
  Sec. 60. Adjusting or Correcting Journal 65
Entries
  Sec. 61. Adjustment for Accrued Items 65
  Sec. 62. Asset/Revenue Adjustment 65
  Sec. 63. Liability/Expense Adjustment 66
  Sec. 64. Adjustment for Deferred Items 66
  Sec. 65. Asset/Expense Adjustments 66
  Sec. 66. Bad Debts 66
  Sec. 67. Depreciation for Property, Plant and 67
Equipment
  Sec. 68. Method of Depreciation 67
Sec. 69. Closing Journal Entries 68
  Sec. 70. Post-Closing Trial Balance 69
  Sec. 71. Procedures in the Preparation and 70
Submission of Trial Balances
and Other Reports
  Sec. 72. Generation of Financial Statements 75
and Supporting Schedules
  Sec. 73. Responsibility for Financial 76
Statements
Sec. 74. Statement of Management 77
Responsibility for Financial
Statements
  Sec. 75. Balance Sheet 77
  Sec. 76. Statement of Income and Expenses 78
  Sec. 77. Statement of Government Equity 78
Sec. 78. Statement of Cash Flows 78
  Sec. 79. Preparation of the Statement of 78
Cash Flows
  Sec. 80. Notes to Financial Statements 81
  Sec. 81. Interim Reports 83
Sec. 82. Worksheet 83

  Chapter 5.Responsibility Accounting

Sec. 83. Responsibility Accounting Defined 85

Sec. 84. Responsibility Center Defined 85

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 Sec. 85. Objectives of Responsibility 85
Accounting
Sec. 86. Concepts of Responsibility 85
Accounting
Sec. 87. Responsibility Center Code 87
Structure
Sec. 88. Computerized Accounting System 88
     
  Chapter 6.Illustrative Accounting Entries

  Sec. 89. Illustrative Accounting Entries in 89

Regular Agency (RA) Books

Sec. 90. Illustrative Accounting Entries in 89

National Government (NG)
Books

Appendices:

1. Table of Estimated Useful Lives 90

2. Pre-Closing Trial Balance 96
3. Post-Closing Trial Balance 99
4. Statement of Management's 101
Responsibility For Financial
Statements
5. Detailed Balance Sheet 102
6. Condensed Balance Sheet 105
7. Schedule of Accounts Receivables 106
8. Schedule of Accounts Payables 107
9. Schedule of Public Infrastructures 108
10. Statement of Allotments, 109
Obligations and Balances
11. Detailed Statement of Income and 110
Expenses
12. Condensed Statement of Income and 112
Expenses
13. Statement of Government Equity 113
14. Statement of Cash Flows 114
15.Notes to Financial Statements 116

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Annexes:

A.Illustrative Accounting Entries - 121

Typical transactions of
Central/Regional Offices and
Operating Units receiving NCA
direct from the DBM

B.Illustrative Accounting Entries - 130

Typical transactions of
Central/Regional Offices and
Operating Units receiving NCA
direct from DBM and ROs/OUs
receiving funding checks from
CO/RO
C.Illustrative Accounting Entries - 135
Typical Transactions of
Agencies with Collections/
Income to be recorded in the
National Government (NG)
books

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