Republic of the Philippines

CEBU TECHNOLOGICAL UNIVERSITY

DAANBANTAYAN CAMPUS
Agujo, Daanbantayan, Cebu
Website:https://www.ctu.edu.phE-mail:info-daanbantayan@ctu.edu.ph
Tel. No. (032) 437-85261437-3383 Fax. No.: (032) 437-8523

Name: JESSA DELA ROSA TORING Date: May 07,2021

Program: MAED-AS Term: 1stTrimester
Course: Educ- 607 – Fiscal Administration and Supervision Professor: Dr. Tracy L. Mantos

LEARNING ELEMENT
in
Government Accounting and Auditing

1. Objectives:
1. 1 Identify the different salient features of government accounting
1. 2 Explain the importance to have more comparable global accounting
standards
1. 3 Provide quantitative information primarily financial in nature about the
operations of the government, both national and local.

2. Documentation:
Chan, H., 2019, January. Government Accounting and Auditing.
Jones, Richard, 2020, July 1. Comparability in International Accounting
Standards. Dalkin, James, 2020, June 30. Government Auditing Standards: 2018
Revision.
3. Content Outline:
 Government Accounting Defined
 Decision-making Process in Government
 Salient Features of Government Accounting
 Accounting Responsibility
 Comparability in International Accounting Standards
4. Report Proper
A. Introduction

The concept of accountability for use of public resources and government

authority is the key to our nation’s governing processes. Government auditing is
essential in providing accountability to legislators, oversight bodies, those charged with
governance, and the public. The government is the largest financial organization in
terms of assets, liabilities, capital, sources of income and items of expenditures.

B. Body

Government Accounting encompasses the processes of analysing,recording,

classifying, summarizing and communicating all transactions involvingthe receipt and
disposition of government funds and property and interpreting theresults thereof.

These (3) types of governmental organizational units:

National Government Agencies (NGAs)

Local Government Unit (LGU)
Government Owned or Controlled Corp. (GOCC)

The decision-making process in government is an important aspect of the

environment of state accounting because accounting information is intended to be useful
in making economic decisions and in making reasoned choices among alternative
courses of action.

The ultimate authority for decision-making in the Philippines government rests

with the people. This authority is exercised through duly elected representatives, acting
as agents of the people. It is the sovereign right of the people to change them if the
authority is misused and abused.

On the basis of national policy, the President submits a budget to the legislative
body for consideration and processed until approved and passed into a law.

Salient Features of Government Accounting

 The financial resources of the Government are very limited. It relies heavily on
collected taxes. This means that it has to operate through a system of fiscal and
accounting controls. The following control mechanisms adopted as sub-systems of
government accounting are not adopted in commercial accounting:

A. Fund Accounting. A fund is a sum of money or other resources set aside for the
purpose of carrying out specific activities or attaining certain objectives in
accordance with specific regulations, restriction, and limitations. The two major
classification of funds as to purpose for which they may be used:
1. General Fund – one which is generally available for all functions of the
government.
2. Special Fund - one which, by legislative action, segregates specified
revenues for limited purposes.
B. Obligation Accounting. As a control mechanism of government accounting
system, obligation accounting provides the ceiling of the maximum extent by
which an agency can incur obligations or commit the resources of the
government in the performance of its functions. With obligation accounting, an
agency can operatesonly within the amount actually released to it by the DBM,
which is within or covered by the amount approved appropriation. Obligation
accounting refers to the accounting practice, procedures and techniques for
recording obligations in the government.
C. Cash Disbursement Ceiling Accounting. The cash disbursement ceiling
accounting is another control mechanism of government accounting system. The
cash operations of the government under the cash disbursement ceiling
accounting are limited within the boundaries of the appropriations release to
government agencies in the form of allotments, and any additional amount
granted by the DBM to liquidate or pay existing valid obligation.

Comparability in International Accounting Standards

The first priority of the Financial Accounting Standards Board (FASB) is to

improve financial reporting for the benefit of investors and other users of financial
information in U.S. capital markets. We do that by striving to set the highest-quality
standards, which collectively are known as Generally Accepted Accounting Principles
(GAAP). By highest quality, we mean standards that provide users of financial
statements with information that is clear, useful, and relevant to their needs, while
considering whether the expected benefits of that information justify the costs of
providing and using it.

The FASB believes that seeking more comparable global accounting standards
—improving the quality of accounting standards used around the world while reducing
differences among those standards—is consistent with its core mission. Investors,
companies, auditors, and other participants in the U.S. financial reporting system benefit
from the increased comparability that can result from the closer alignment of standards
used internationally. More comparable standards have the potential to reduce costs for
both users and preparers of financial statements and make worldwide capital markets
more efficient. The Securities and Exchange Commission (SEC) expects the FASB to
consider, in developing standards, the extent to which international comparability is
necessary or appropriate in the public interest and for the protection of investors.

Accounting Responsibility

Under PD 1445, accounting responsibility for all government funds and property
is entrusted, immediately and primarily, to the head of the government agency or office.
It is the duty of the head of the agency to take reasonable steps to minimize, if not to
avoid the risk of losses, defalcations and other types of irregularities in the utilization of
all government resources (to safeguard the resources of the government under his
custody) and periodic reporting to concern authorities. His responsibility, however, is
supervised by higher authorities and government bodies.

The officer in possession or custody of government funds or property by reason

of his duties are accountable for the safekeeping thereof. As such, he shall be properly
bonded. The Head of the agency is made immediately and primarily responsible for all
government funds and property pertaining to his agency. Secondary responsibility is
made to rest on the persons entrusted with the actual possession or custody of the funds
or property. They are the accountable officers and are immediately responsible to the
agency head. The imposition of primary responsibility on the agency head for
government funds and property is in keeping with the concept of fiscal responsibility
which now lodge with agency head. The head of the agency shall exercise the diligence
of a good father or a family in supervising accountable officers to prevent the incurrence
of loss of government funds and property, otherwise, he shall be jointly and solidarily
liable with the person primarily accountable thereof.

Although supervisory work of government accounting is vested upon to the

Commission on Audit, accounting responsibilities in the government, by virtue of the
provision of the Constitution of the Philippines, laws, Presidential Decrees and other
issuances, are shared primarily by the Commission on Audit(COA), Department of
Budget and Management, (DBM), Department of Finance (Bureau of Treasury) and
government agencies.

The Commission on Audit serves as the external auditor of the government

agencies. It is a constitutional office and its mandates are provided in Section 2, Art. IX-
D of the 1987 Constitution of the Philippines. The COA examine, audit and settle all
accounts pertaining to revenues or receipts and expenditures or uses of government
funds and property, keeps the general accounts of the national government , prescribes
the standard chart of accounts, promulgates accounting rules and regulations and
exercise technical super vision over the accounting functions of each agency. over the
accounting functions of each agency. The office is mandated by the Constitution to
submit to the President and the legislative body within the timeframe fixed by law, an
annual audit report of the government, its subdivision, agencies and instrumentalities
including government owned or controlled corporations and recommend measures
necessary to improve efficiency and effectiveness.

The DBM is responsible for the design, preparation, and approval of the
accounting systems of government agencies, determines the accounting and other item
of information needed to monitor budget performance and assess effectiveness of the
agency operation. It prescribes the forms, schedules of submission and other
component of reporting system needed to accomplish and submit the required
information. It acts on agencies’ recommendations for the modification or changes to
prescribed systems for procedures to affect simplicity and/or meet the requirements of
the peculiarities of the agencies concerned. It approves the Agency Budget Matrix and
issues the allotments to agencies in accordance with the approved budget and issues
Notice of Cash Allocation.

The Bureau of Treasury (BTr) performs banking function for the national
government. It receives and keeps government funds, controls the disbursements
thereof and maintains accounts of the financial transactions of national government
agencies. It is required to prepare and submit to the COA and other fiscal activities, daily
statements of cash receipts, disbursements and fund balances in the National Treasury.

The National Government Agencies (NGAs) consist of various organizational

units such as departments, bureaus, commissions, boards, offices, tribunals, councils,
institutions, state colleges or universities and establishments.

These agencies are required to establish and maintain a system of accounting

for their financial resources and operation in accordance with pertinent rules and
regulations. Accounts should be kept in such details as is necessary to meet the need of
agency management and furnish information tofiscal and control agencies such as COA,
DBM and BTr.

1. Conclusion

The main challenge for the new President and his Cabinet lies on building on the
gains in the last six years in order to ensure his government can bridge more Filipinos to
self-sufficiency; tackle the new and even more complex challenges to sustainable
development; and ease the manner of doing business to attract robust investments from
here and abroad. In other words, the next leadership must ensure more Filipinos,
regardless of birth, gender, and origin, will share in the country’s progress.

Government accounting and financial reporting aims to protect and manage

public money and discharge accountability. In order to achieve ambitious socioeconomic
goals, developing countries require public sector institutional capacity for setting and
implementing public policy, which in turn necessitates government accounting reform.
The social value of government accounting reform therefore lies in its contribution to
development goals, including poverty reduction. including poverty reduction.

1. Schematic Diagram
 Government Accounting and Auditing

Decision- making process

Salient Features
in Government
ofComparability
Government Accounting Accounting Standards
in International

Definition Accounting Responsibility

Fund Accounting Cash Disbursement Ceiling (CDC) Accounting

Obligation Accounting

1. Thought Provoking Questions

1. Why it is important to have more comparable global accounting standards?
2. If you will be the government auditor, your responsibility is to ensure the proper
use of public funds. What do you look for as an indication that a non-profit or
government agency is spending as it should?
3. What do you consider as an essential element or task that all citizens in a
country must deliver or achieve for the country to be successful?
4. Why is it important for the government to hire an experienced auditing and
accounting officer?
5. Do you think our country excel in accounting and auditing? Why? Why not?

Submitted by:
JESSA DELA ROSA TORING
CTU-Daanbantayan Campus Graduate Student