MODULE 3 – GOVERNMENT ACCOUNTING

Main Concept:
OVERVIEW OF GOVERNMENT
Government resources ACCOUNTING
must be utilized MANUALin accordance with law.
efficiently and effectively
Government officials are responsible in implementing this policy, are accountable for the
government
The GAM forresources
NGAs in their custody, and are liable for any loss.

Overview of Government Accounting Manual

An “old” government accounting system had been used for about five decades before it was
replaced by the New Government Accounting System (NGAS) in 2002. However, on January 1,
2016, the NGAS was replaced by the Government Accounting Manual for National Government
Agencies (GAM for NGAs).

The GAM for NGAs was promulgated primarily to harmonize the government accounting
standards with international accounting standards, particularly the International Public Sector
Accounting Standards (IPSAS). The IPSASs are based on the International Financial Reporting
Standards (IFRS).

The Philippine Government has adopted the IPSAS through the Philippine Public Sector
Accounting Standards (PPSAS). The provisions of the PPSAS are incorporated in the GAM for
NGAs.

Since the PPSAS are based on the IPSAS, which are in turn based on the IFRSs/PFRSs,
most of the concepts that we will be learning in this book would be very familiar to you  ☺.

Legal basis
The GAM for NGAs is promulgated by the Commission on Audit (COA) based on the authority
conferred to it by the Philippine Constitution:

Relevant provision of law:

➢ “The Commission (on Audit) shall have exclusive authority, subject to the limitations
in this Article, to define the scope of its audit and examination, establish the techniques
and methods required therefor, 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.” (Art. IX-D, Sec. 2(2), Philippine Constitution)
Coverage
The GAM for NGAs provides the basic concepts to be used in:
a. Preparing general purpose financial statement in accordance with the Philippine Public Sector
Accounting Standards (PPSAS) and other financial reports as may be required by laws, rules
and regulations.
b. Reporting of budget, revenue and expenditure in accordance with laws, rules and regulations.

Objective
The GAM for NGAs aims to update the following:
a. Standards, policies, guidelines and procedures in accounting for government funds and
property;
b. Coding structure and accounts; and
c. Accounting books, registries, records, forms, reports and financial statements. (GAM
for NGAs; Chapter 1, Sec.3)

Basic Accounting and Budget reporting Principles

The financial records and reports of government entities shall comply with the following:

1. Philippine Public Sector Accounting Standards (PPSAS) and relevant laws, rules and
regulations;

2. Accrual basis of accounting;

Under the accrual basis of accounting, transactions are recognized when they occur (and
not only when cash is received or paid). Therefore, transactions are recognized in the periods
to which they relate.

3. Budget basis for presentation of budget information in the financial statements;

4. Revised Chart of Accounts prescribed by COA;

5. Double entry bookkeeping;

6. Financial statements based on accounting and budgetary records; and

7. Fund cluster accounting.
The books of accounts are maintained by fund cluster (i.e., according to the types of
funds being accounted for) as follows:

Code Fund Clusters

01 Regular Agency Fund
02 Foreign Assisted Projects Fund
03 Special Account-Locally Funded/Domestic Grants Fund
04 Special Account-Foreign Assisted/Foreign Grants Fund
05 Internally Generated Funds
06 Business Related Funds
07 Trust Receipts

For example, separate accounting books (Journals and Ledgers) and budget registries shall
be maintained for Regular Agency Fund. Another separate accounting books and budget registries
shall be maintained for Foreign Assisted Projects Funds, and so on.