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ha p r •
I r

Chapter 2
The Budget Process

Learning Objectives
1. Enumerate the steps in the budget process.
2. Describe briefly the principles of responsibility accounting.

The National Budget

Government accounting is primarily budgetary accounting.
Government accounting does not only aim to provide information
on past events and transactions but also budget information in
accordance with PPSAS 24.
The Philippine Constitution and other laws require
government funds to be utilized in accordance with a national
budget that is duly approved by · legislation. Government
accounting, therefore, is concerned with providing information
useful in assessing the conf ormance of utilization of government
funds with the approved budget.
The national budget (government budget) is government
estimate of the sources and uses of government fund ·within
fiscal year . ·This forms the basis for expenditure s and is
the government's key instrument for promoting its socio-
economics objectives.
The formulation and eventual utilization of the national
budget are summarized in the budget cycle.

The Budget Cycle

The budget cycle has four phases namely
1. Budget Preparation
2. Budget Legislation
3. Budget Execution
4. Budget Accountability
 Tire B11rfgct Process

Budget Prepa ration

The budget preparation in the Phi l ippi n , . . ,,
8 u s s
approach. Under "bottom-up" budgc • bottom-u
c:i
Un , ?,,
. . . . g, sev ra 1 pa rb'·',
participa te m the budget prepa ra tion sta rHng firom th L •
. ' e owest fo the
highest levels of the govern ment Governmen t ag"nc'
. · "' ics a re a1 s<>
tasked to increase the participation of citizen-stakeholder s in th
budget preparation. The opposite of "bottom-up' ' b udgeting is
"top-down" budgeting - wherein the budget prepa ration starts
from the agency heads.
In 2011, the Philippine Government attempted to a start
Junting. a new tradition by shif ting from the old "incrmental" system of
'lllation budgeting to. the nzero-based budgeting" approach . (The Philippine
Public Transparency Reporting Project, January 11, 2011)
ttion in

require vs.
);;> The current year's budget is > The current year's budget is
zational formulated based on the formulated without regard
nrnent previous year's budget, to the previous year's
iJ1ation which is just adjusted for budget. Government
tunent any variances experienced agencies are required to
in the past. Presumably, the justify their current year's
en rs proposed programs and proposed programs and
thin a expenditures m the expenditures, irrespective
i's the previous year are of whether these are new or
automatically approved in carried over from the
the current year. previous year.
> Uses a "roll-over" approach. );:> Uses a "back-to-zero" or
> Prone to abuse. "clean late" approach.
);:> Promotes efficient and
effective utilization of
funds.

1. Budget call _ The budget preparation starts when the

Department of Budget and Management (DBM) issues a
Budget Call to all government agencies. The budget call