— Chapter 14 Government Accounting - General Fund Definition (Section 109 of PD 1445) Govemment Accounting encomposses the processes of analyzing, recording, classifying, summarizing and communicating all transactions involving the receipt, disposition and utilization of government funds and property and interpreting the results thereof. AS a process, it puts together all activities pertaining to the gathering of data which are to be used as the bases for management decisions. It includes: 1. bookkeeping referred to as analysis, recording and joumalizing. 2. posting or grouping or classifying of similar items 3. preparation of periodic financial reports 4. analysis of reports to determine their accuracy and adequacy os well as the efficiency and effectiveness of agency operations. Uke commercial accounting. government accounting is on art and are based on fundomental concepts regarding accounting functions and the rules goveming accounting practices. These rules which are derived from experience and reason are flexible and ina Constant process of evolution. Primary Purpose of Government Business To render senice to the public 08 distinguished from the usual profil motive of the private business. Pecullarities of Government Business As to Purpose: The primary purpose lowest cost possible o: nment business Is to render service to the public at the OF the ao eng trom the usual profil motive of the private business. i distinguishes As to Ownership: ownership interests in he govemmetn business that con be There are no defined individue) Cw tne commercial sense. Although every cllizen is cequired, sold, transteres “osels ‘af the government, no one may dispose of his share and said fo have a share in realize profit from it 921 Scanned with CamScanner922 Chapter ty jement: “ ee private businesses have relatively few internal toons vate otoay wed odministrators of the government ‘business who ore IO fic lows ang regulations. Asio Income: Pivote business derives its Income from charges made for services ronioted oF comotiteg sold while the government derives most of ils income from the colle faxes and fees pasle Objectives of Goverment Accounting the bosic objectives of government accounting OF : Fe te provide information concerring past Operators cand present conditions 2. To provide as 3 basis for guidance for fulure ‘operations. ; 3 To provide for contol he acts of public bodes ‘and offices regarding the receigt, ‘posifion, and uilization of govemment funds ‘and property 4, Toveport on the financial condition and the results ‘of operations of government ‘gencies for the information of all persons concerned. Subjects of Government Accounting The subjects of government accounting includes: 1. National Government - consisting of deperiments, bureaus. commi state colleges and universities. 2, local Government ~ provinces, chartered cities. municipailies. ond porongore. 3 Government-owned or govemment controlled corporations ~ which were rected by law fo manage specific type of business. . boards, Government Accounting Manual Government Accounting Manual {GAM} shall be used by all National Government Agencies (NGAs) inthe: 1. preparation of the general purpose finencial statements in accordance with the PPSAS ond other financial reports as may be required by laws, rules and regulations;and 2. reporting of budget, revenue ond expenditure i i s, wes So raablions: in accordance with laws, Objective of Government Accounting Manual The New Government Accounting System (NGAS) Manual presenls Ihe basic polices 8 procedures: the new coding system: the accounting systems, books. registries records farms, fepod ond finoncilstotements and iustatve accounting enities to be adore ‘agencies eff i yn Manual are to prescribe the following: eclve January 1, 2002. The objecive ° 1. Stondords, policies, guidetin i : Stondrds, policies quicetines ond procedures in accountng or government x Coding structure and accounts;and Ace ist -ounting books. registries, records, forms, reporis and finoncialstatemen' Scanned with CamScannerGovernment Aceounting ~ Genera py, 4 in : si . ic Sector Accouegunting Policies and principies in accordance with the rao, Standards (PPSAS} adopted thru COA Resolution Gnd other pertinent laws, rules and regulations. i gone etTMen! Agencies (NGAS) Inthe: Purpose financial statements in accordance with the S and other fi nancial reports as may be required by laws, rules and regulations:ang * feporting of budget, . iture i ond regulation, 2°” “VENUE and expenditure in accordance with laws, rules Definition of Terms.For the be construed to mean as + General Provisions, Basic ‘Standords and Policies 1. Acer is ‘ecrval basis means a basis of ‘Accounting under which transactions and other events are recognized when th wh : ean 2 as is received or paig). Fe a Reamer! Assets — are resources controlle which future economi theentity. Purpose of this Manual, the le terms used a5 stated below shall follows: d by an entity as a result of past events, and from ic benefits or service potential ore expected to flow to Contributions trom owners ~ means future economic benelis or service potential that have been contributed to the entity by parties extemat fo the enti than those that result in liabilities of the entity, thet establish a financial interest in the net assets/equity of the entily.which: . conveys entitlement both to (i) distributions of future economic benefits or 5 service potential by the entily during its fe, such distributions being at the discretion of the owners or their representatives; and to (ii) distributions of any excess of assets over liabilities in the event of the entity being wound up;and/ or + can be sold, exchanged, transfered, onedeemed, — 4. Distributions to owners - means future economic benefits or service potential " Qistributed by the entity to all or some of i!s owners. either as a retum on investment finvestment. . ot ae ea goverment agency, depariment or operating/field unit. may Fea ened ton ins GAM os cnogency. = 8) Goon eal ‘decreases in economic benefits or service potential during the 6 Expenses = ore eee form of outflows or consumption of assets or incumence of reporting period in in net assets/equity, other than those relating to liabilities that result in decreases hn : distributions 1OOWNES: | the financial plan of a govemmeit-for a given period, 7. Government Budge! = 0 ON cet is ihe govemment'skey instrument for promoting usually fora fiscal err ves. The government budget also refers 10 the income, its socio-economic Ores of borrowings of the National Goverriment (NG} that expenditures and *2\" ational objectives, stategies ond evar ee are used to achieve ven of the entity arising from past events, the settleme 8. Liabilities — are fim cE Td in on oullfow trom Ihe ently of resources embodying ich Is expecter ential. Sie benefis of SericaPet interest in the assets of the entlfy after deducting equity = Tieag : New ened f econémic benefits or service potential during the 10. ovanie is he TOSS ow ee resultin on increase in net astets/equily, other . e\ at yn thos m . reporting period When No ntfioutions fromowners. than increases relating Scanned with CamScanner924 n. 13. 14. 15. 16. 7. 19. 20. 2. 22. 23. Chapter 14 i agency of the revenue funds - comprise all lunds derived [rom the incor ohare een | government ‘and available for appropriation ‘or expen low Budget Executlon, Monitoring and Reporting oa Atofment = 1s. on authorization Issued by the [DBM to NGAS fo incur obligations for specified omounts contained in a legistative ‘appropriation In the form of budget is ihority. eee aoc tis also retemed 10 as ObigationalAvnen ee ypropriation — fr ine authorization made by @ legsiallve y for purposes specitied by the legislative or sir larauthorily. ‘ition tov ‘Approved Budget - is the expenditure ‘outharity derived from apport s, goverment ordinances, and other decisions ‘ated to the anticipated revenue Srreceipis for the budgetary period, The approved budge! consists of thefollowing: New General Appropriations or Continuing Appropriations 02 Supplemental Appropriations 03 ‘Automatic Appropriations 04 Unprogrammed Funds 05 Retained Income/Funcs 06 Revolving Funds a Trust Receipts ions programmed annually or for ‘Automotic Appropriations - ore the authorizall f ‘of outstanding legislation which some other period prescribed by law, by virtue does not require periodic action byCongress. Budge! Information - the budgetary information consists of. mong others, data on appropriations or the approved budget. allotments, obligations. revenues and other receipts, anddisbursements. Continuing Appropriations ~ ore the authorizations to support obligations for o Specltic purpose oF project, such as raul-year construction projects which require the incurrence of obligations even beyond the budgetyear Disbursements - are the actucl amounis spent or paid out of the pudgetedamounts. Fino! Budget ~ isthe original budget adjusted for oll reserves, cony-over omoun!s, tronsters, allocotions and olher authorized legislative orsimilar authority changes applicable to the budgelperiod. New General Appropriations = are annual authorizations for incuring obligations during a specified budget year, as listed in theGAA, Obligation ~ is on act of a duly authorized official which binds the goverment to 7 bgp — payment of a sum of money. Obligation maybe refered loas a. commitment that encom; i iit Bee rere passes possible future liabilities based on current Original Budget - Is the initial approved budget for th fe General Appropriations Act (GAA). The ‘original cudgel SeyPinciage renvol Gppropriated amounts automatically comied over from prior years By k nw such O5 prior year commitments or possible future liabilities based on pen conte Ggreement. @ current contractual Revenues ~ ofe increases in economic accounting period in the form of plate ce neeees blavanaraeteon ro liabilities thot result in increases in net assets/equit assets or decreases of contributions fromowners. ty, other than those relating to Scanned with CamScannerGovernment Accounting 18 — General Fund a 24. Supplementat Appro, fo augment the orginal or Cre additional appropriations authorized by low intended purpose due to eco tions which proved to be insufficient for their Centtication of Avatobitty sign llical or social concitons supported by a . Revenue dnd Other Ree, ‘ ‘Unds (CAF) from theBTr. 25. Bequest ~is a transter maoe Si will The past event givingrse oye ne 9, ne Brovislons of a deceased person's Benefits oF service poten ne con91olresources embodying fulure economic enforceable claim: tr seen aio 2, Bequest occurs when the entity has an probate, depending ore aoe doom of the testator, or the granting of fiction. 2 Concessionary loons - are loans received by on entity at below marketterms. ange transactions ~ are transactions in which ity receh z services, or has liabilities extinguished, tect gives opproximalely equal value (primary hr he 4 guished, and directly gives approximately equal eniily in exchenge’ (OT Ff C08, Goods, senices, or use of esses] to another 28. Fair value ~ is the amount for which an asset could be exchanged, or @ liability settled, belween knowledgeable, wiling parties in an arm's lengthtransaction 29. Fines - are economic benefis or service potential received or receivable by NGAS, from an individual or other entity, as determined by a court or other law enforcement body, os « Consequence of the individual or other ently breaching he requirements of laws or regulations. 30. Gifts, Donations and Goods In-kind - are voluntary transfers of assets, including cosh or other monetary. ossets, goods in-kind ond services in-kind that one entity makes to another, normally tree from stipulations. the transferor may be an entity or an individual. For gifls ond donations of cash or other monetary assets and goods inckind, the post event giving rise to the control of resources embodying future economic benefits or service potential is normally the receipt of the gift or donation. 31. . Non-exchang value from an fe transactions are transactions in which an entity either receives ‘other entily without directly giving approximately equal value in seeinge. or gives valve to another enlly without directly receiving opproximately equal value in exchange. (Por, 11, PPSAS9| | ao eels ore unentorceable undertokings 10 transfer assels to the recipiententity. tedges oe ays: inflow of economic benelis oF service potential during the S ne period wnen those Inflows resull In an increase in nel assets/equity, other senor i i fromowners. b contributions = thon ore fo con ovided by individuals to.public sector agencies Services in-kint services provi in a non-exchangetransaction. Se ero {id and lego! obligations of NGAS, for which, goods/ . sowicesh oc have been deliveredirendered/completed and accepted, services/pro} Jalions wereincured. regardless of the yeor vine yay tele fo on authorization issued by the NGA/OU 36. Advice to Debi! Account [Ne tne List ‘of Due and Demandable Accounts appearing in the lowes Ae Count (LDDAP-ADA\. It serves as instruction to the + Payable- Advice 10 1 system. ‘Govemment Servicing Banks (MDS-GSBs) to debit Modified Disbursement ST vanable NCA palance under regular MDS sub, a specified amou Gceount for poyme fom Urediion/payees through the Expanded Modified n q Disbursement Poymen =refers fo va! Scheme(ExMOPS)- Scanned with CamScannerChapter 926 tapter Iy or office of the national governmen), of any political subdivision. as well gs it-governing board or Commission 37. Agency ~ refers to any depariment, burcou of any of its branches and instrumentalities, ‘any GOCCS. including ils subsidiaries, or other se! of thegovernment. 38. Disbursements - constitute all cash pal k. 3. iplernenting, Mgency = relers to the agency | ee the funds are transferred tor the purpose of prosecuting/implementing theprojec : 40. Moullieg Disbusement System (MoS) Check - refers to a check issued by Government agencies chargeable against the account of the Treasurer of the Philippines : a Petty Cosh Furd ~ refers to the amount gronted to duly designated Petty Cash Fund Custodion for payment of authorized petty or miscellaneous expenses which cannot be cor eniently poid throughchecks. : 42. Tox Remittonce Advice ~ refers to 0 serially-numbered document prescribed by the D&M that should be used by the NGAs in the remittance of withheld faxes on funds coming from DBM. 3 out during a given period in currency Responsibility Accounting ). Responsibility Accounting - provides access to cost and revenve inform: under the supervision of a manager having o direct responsibility for its performance. itis o system thot measures the plans (by budgets) and actions (by actual resuls} ‘of each responsibilitycenter. 2. Responsibility Center ~ is c pat. segment, unit or function of @ government agency, headed by a manager, who Is accountable for @ specified set of activities. Except for some, which derive most of theirincome from collection of taxes and fees, NGAS ‘ore basically cost centers which primary purpose is to render service to the public at the lowest possible cost, Cost centers cre established to provide each government agency's accessibility to cost information and to facilitate cost monitoring at any givenperiod. Objectives of General Purpose Financial Statements The objectives of general purpose financial statements (GPFSs} are to provide information ‘about the financial position, financial performance, and cash flows of an entity that is useful 0 ‘a wide range of users in making and evalvating decisions about the allocation of resource’. Specifically, the objectives of general purpose financial reporting in the public sector are 10 provide information useful for decision-making, and to demonstrate the oi lity of the enility for the resources entrusted to it pec ountooihy. Fair Presentation.the FSs shall present fairly the financial position, financi id | : . financial yance an cosh flows of an entity. Fair presentation requires the faithiul ee ore effects of transactions, other events, and conditions in accordance with the definition recognition cried for assets, liabilities, revenue, and expenses set oul in PPSAS, Th ficoati itn : ; . The wil appropriate disclosures, if necessary, would result in fair Drosentaton ot ine FS ae Going Concern, The FSs shal! be prepared on a going cone K # i ern ba intention to discontinue the entity operation, or if there is no realistic allemetive bul to ese. ne Consistency of Fresentation.The presentation and classification of items in the FSs shall B° feloined from one period fo the next unless lows, rules : 4 change inpresentation. and reguldtions, and PPSAS requie ? Scanned with CamScannerGovernment Accounting ~ General Fund = Matertallty and a. in the financial st Storeon-Each Material class of similar items shall be presented seporately unless they are immaterie), iow" °! @ dissimilar nature or function shall be presented separately ‘on the face of FSs or in a i S ae Hem Is not material, it is aggregated with other items either 4 les ot be satistied if the information ic ponent Gisclosure requirement in a PPSAS need Eee santas ‘nd revenue and expenses shall not_ be allowed to offset a PPS, transaction or olherevent,Y © PPSAS except when offsetting reflects the substance of the Comporative arrormation.Comparative Information shall be disclosed with respect to the ive Gnd aoe cMOUNIS reported in the FSs. Comparative information shall be included for ore 2nd descriptive information when itis televant to an understanding of the current peri Compliance with PPSAS3.An entity whose financial statements comply with PPSASs shall make on explicit and unreserved siclement of such complionce in ine notes. Finoncial statements shall not be described as complying with PPSASs unless they comply with all the requirements of PPSASs. Inoppropriate accounting policies that do not comply ‘with PPSAS ore not reciified elther by disclosure of the accounting policies used, or by notes or explanatorymaterial, Departure from PPSAS.In the event that Management strongly believes that compliance with the requirement of PPSAS would result in misleading presentation that it would contradict the objective of the FSs set forth in PPSAS, the entity may depart ftom thot requirement if the relevant regulatory framework allows, or otherwise does not prohibit, such o departure. Comparative information.Comparative information shall be disclosed with respect to the previous period for all amounts reported in the FSs. Compiarative information shall be included for narrative and descriptive information when itis relevant to an understanding of the current period’ sFSs. . Components of General Purpose Financtal Statements.the complete set of GPFSs consists of: L Statement of Financial ed Statement of Financial Performance Statement of Changes in Net Assets/Eq Cash Flows Sisnen Comparison of Budget and Actual Amounts:and inanci prising a summary of the Financial Statements, compri Gecounting policies ond other explanatory notes. Pe ReN nancial Reporting.An enlity shall present information including Pte Cre alee that meets a number of qualitative characteristics such oe Gacounting policies Penees materiatity, reliabllity and comparability. These qualitative chuerstanday, 42k exeributes that make the information provided in the FSs useful to users acteristics are : ch component shall be identified clearly and distinguished Structure and Content.The Fss and each c* ment. é ublished docu ffom other information in the sor Pe tion, An entity shall present current and non-current 1, Statement ot ncurent ‘and non-current liabilifies, as separate Classifications on assets, as wel Financial Position(SFP). statement of the face of the Scanned with CamScanner928 4 Chapter 14 it Performa Jotement of Financial nce Statement of Financial Performance. The Sto! ment Fes ond net is (SFPet) shall include line ltems that present the ficlt tor thepetiod. Soterne Period. Net Assets/Equity. An entity shall Pres Statement of Changes I ae ‘of Changes in Nel Assets/Equity (SCNA/E) the following: ‘a. Net income or Deficit for theperiod A : Each item of revenue and expenses for the period that, e requied by Standards, Is recognized directly in net assets/equity, and the total of theseltems; tor he petoctand b. Total revenue and expenses for the period.o! : ¢. foreach eraoorenl ol nat ossals/equity separately disclosed, the effects of changes in accounting policies and corrections of errors recognized in Sccordance with Accounting Poficies, Changes in ‘Accounting Estimates and Errors. Statement of Cosh Flows. The Statement of Cash Flows (SCF) provides information to users of FSs 0 basis to assess the ability of the entity to generate cash and cash equivalents ond to determine the entity's uifization of funds. This also provides formation on how the entity generates income authorized 10 be used in their ‘operation and its utilization. Statement of Comparison of Budget and Actual Amounts. A comparison of budget Set elual amounls will enhance the transparency of financial reporting in government. This shall be presented by government agencies os 0 separate Saditional financial statement referred in this Manual as the Statement of Comparison of Budget and Actual Amounts (SCBAA). Notes to Financial Statements. The Notes to FSs contain Information in addition fo that presented in the SFP, SFPer, SCNA/E, SCF and SCBAA. Notes provide norrotive Gesctiptions or disaggregation of items disclosed in those FSs and information about items that do not quality for recognition in thosestatements. ent In the Statement Books of Accounts and Registrles.The books of accounts and registries of the NG entitles consist of: te Journals a. General Joumal b. Cash Receipts Journal ¢. Cash Disbursements Journal d. Check Disbursements Joumal Ledgers a. General Ledgers b. Subsidiary Ledger Registries a. Registries of Revenue ond Other Receipts b. Reglsty of Appropriations ond Allotments c. Registries of Allotments, Obligations on. d. “Registries of Budget, Uillization and Duswonane Scanned with CamScannerGovernment Accountin, 18 General Fi ne 929 Fund Accounting.the bo, Oks ©! accounts shail be maintained by fund cluster astollows: or 02 Regular Agency Fund o See Assisted Projects Fund = Sbacial Account Locally Funded/Domestic Grant's Fund ne Ba \ccount-Foreign Assisted/Foreign Grants Fund 4 fernally Generated Funds 07 Business Related Funds Trust Receipts Responsibility Center Cod defined os organization canes Each NGA shall be assigned a responsibility center code SSattlonal three dich coeeeT if,the UACS Manual. For monitoring revenue and expenses, fhe organization cone. nc! fo" the agency's mojo ofices/departments shall be oppended 10 ine oration Code. The exganizaicn code end the agency's mojor offices/departments* 90 900 9000000 900 Organization Department Agency Lower Level Operating Unit Additional code for major oflice/department Major Office/ Department Key Features of Assets.The key features of an asset are: the benefits must be controlled by theenti a. b. the benefits must have arisen from past eventiond future economic benefits or service potential must be expected fo flow lo theentily, The following are indicators of control of the benefits by the entity: ne eike ability of an entity 10 benefil from the asset and to deny or regulate the access of others to thalbenefit. «en SSatty con, depending on the nature of the asset, exchange it, use it to Crovice goods oF services, exact a price for others’ use of i. use to seltle eronities. hold it, or perhaps even disibute it toowners. »_ pesestion or ownership of cn objec! or ight would normally be synonymous Ossessmyol over ne fulure economic benelils embodied in the right orobject. set shat be recognized in the financial position when and future economic benefits wil flow to the entity; and ‘an be measuredreliably, Recognition of an Asset.An cs only when (a) itis probable thet {ne Ht {b) the asset has a cost OF value that 4s for Revenve.The following accounting standards shall apply for fs of government entities: or eges only the gfoss inflows of economic Benefits or se 3 and receivable by the entity in its own account. Accounting Stondar revenue and receip! a, Revenve inclu’ potentiol receivet Scanned with CamScannerChapter 1g 934 12. Income fom Grants and Donations inkind nen. in respect of on intiow y revere tromnonenchange transactions may a9 Gre MT. present obligation aeouces trom @ non-exchange Iransaction. Ine entity so! ‘on i e which may be astollows: : Metials ot te es ich omer Deposits Payable ond Guoranty/Security Deposi, Payable 14, Delened Credits - Deterred Finance Les? Revenue and Other DeteredCredis + property ond Other UneamedRevenve 15, Unearned Revenue ~ Investmen Recognition of Revenue from Non-Exchange tronsactions.The cash Po el lsccountt shall be applied by oll government agencies in the recognition of revenue ror non. Sxehonge rantoction until areliable model of measurement ofthis evenve is developed, Jherolows, osset ond the cortesperding revenve or obilly tho} arises from non-exchange Hontoction shal be recognized when collected or when these ore measurable ong legally collectible. ©. Taxotion revenue shall be determined reduced for expenses paid through the faxsystem, b. Gills ond donations, other than services in kind shall be recognized 0s ossets Gnd revenue when itis probable tha! the future economic benefits Or service potential will flow to the entily ond shall be measured at fcirvalve. c. Goods inkind received without conditions shall be recognized as revenue immediately. d. — Donotion in cash or in kind shall be recognized asrevenus. at a gross amount. It shall not be Measurement of Revenue from Non-Exchange Transactions. Revenue from non- exchange transactions shall be measured at the amount of the increase in net assels recognized by the entity, unless itis olso required to recognize « liability. Where a labitly Is recognized and subsequently reduced, because the toxable event occurs, or a condition is satisfied, the amount of the reduction in the liability will be recognized os revenue. Measurement of Assets on Initia! Recognition trom Non-Exchange Transactions. An asset ‘acquired through a non-exchange transaction shall initially be measured at its fair volue 5 at the date of acquisition. 7 Measurement of Liabilities on Initial Recognition.Where the time value of money is materiol, the liability will be measured at the present value of the amount expect red 10 settle the obligation. ee Tax Revenve.Toxes are economic benefits or service potential R q ° compubory paid or payable 19 public secter ‘agencies, in accordance with laws and or regulations, eclapished to provide revenue fo the government. Taxes do not include fines e revenue lo or other penalties imposed for breaches Recognition of Asset through Transters.An entity shall recogni: ‘cognize an asset in transters when the transferred resources meet the definition of an asset and sot tho Sita 10" recognition as an asset. irae Measurement of Transferred Assets. Transferred assets are measured at their f date of acquisition. value as ot ne Scanned with CamScannerGovernment Accounting — Gen teral Fy ral Fund 935 Recognition and Measurement of Fines ++ Fines are recogni: asset and sane WZEd as tevenue when the receivable meets the definition of an + Where on entife ine, tera for recognition es an axsel recognized os nace tects fines in the capacity of an agent, the fine will not be + Assets aring te Of the collecting entity, to the entity,” M28 are measured at the bes! eslimote of the inflow of resources Recognition and Measurement of g, + Bequests which sati : fevenve wns Sati the definition of on asse! are recognized as assets and will flow 10 the ee oOOBEe that the future economic benefits or service potential ne entity and the fair valve of the assets can be measured feliably. * The fair volve of bequeathed assets i ined in the same mat : : manner as for gift nee sets is determined in the s Fas for gifts lequests Recognition and Measurement of Gitts, Donations and Goods in-kind . Gifts and donations (other than services in-kind) are recognized as assets and revenue when il is probable that the future economic benefits or service potential will flow fo the entity and the fair valve of the assets can be measured reliably. * Goods in-kind are tangible assets transferred to an entity in a non-exchange transaction, without charge, but may be subject to stipulations . Goods in-kind are recognized as assets when the goods are received, or there is a binding arrangement to receive the goods. If goods in-kind are received without conditions attached, revenue is recognized immediately. If conditions are attached, a liability is recognized, which is reduced and revenue recognized as the conditions are satisfied. * On initial recognition, gifts and donations including goods in-kind are measured at their fair value as at the date of acquisition, which may be ascertained by reference to on active market, or by appraisal. 4. Basle Features and Policies ‘Manual has the following basic features and policies: The Government ae "Inder this method, all expenses shall be recognized when 1. Accrual Accovmported in the financial statements in the period to which they incurred and reper on accrual basis except for transactions where accrual iets trmpractical ‘or when other methods are required by law. is system adopts the one fund:concept. Separate fund 2" One Fund Concept, re ori when specilicaly required by law or by © donor accounting iia otherwise necessitated by circumstances subject to prior approval jency oF w SP ine Commission on Audit (COA). 5 adopts the fund concept, and that is the general fund, The NGAS a Funds are funds which ore generally available for all : ny purpose that Congress may choose fo apply, s that do nol otherwise accrue to eneral nt oF for nd of ‘ll receipts or revenues General Fund. G functions of gover and are compose other funds. Scanned with CamScannerChapter 14 a i ited by Separate fund accounting shall be done oe Ee ones pee aie agency or when otherwise ne fl a pir approval of tre Commission on Aucit (COA). in which cose, a Special Purpose Fund may be created. Special-purpose Fund. Speclal-purpose Fund is o fund appropriated for purposes ‘ther then those provided in the regular funds of government ggencies, such as: Miscellaneous Personnel Fund, Calamity Fund, and Organizational Adjustment Fund. New General Appropriations. New General Appropriations are annual ‘authorizations for incurring obligations during a specified budget year, os listed in the General Appropriations Act (GAA). The GAA is the legislative authorization thet identifies new appropriat.ons in terms of specific amounts for salaries, wages and other personnel benefits; Maintenance and Other Operating Expenses (MOOE), Financial Expenses (FEx} and Capital Outiays (CO} for the implementation of programs, projects and activities of all departments, bureaus and offices of govemment for a given year. Continuing Appropriations. Continuing Approptiations are authorizations to support obligations for a specified purpose or project, even when these obligations are incuned beyond the budget year. Because MOOE and CO appropriations in the GAA are valid for two years, unobligated and unreleased appropriations for these budget items are valid uniil the end of their second year and are classified os Continuing Appropriations. Supplemental Appropriations. Supplemental Appropriations are additional ‘appropriations enacted by Cong fess to augment original appropriations thal have proven insufficient for their intended purpose because of economic, political or social conditions. Supplemental Appropriations must also be supported by 0 Cetfiication of avcilabilty of funds by ihe Bureau of Treasury (BT), Automatic Appropriations. Automatic Appropriations ji ‘ore authorizations made annually or for some other period prescribed by law, by virtue of stancing fegistation. which do not require periodic action by the Congress, ° Unprogrammed Funds. Unprogrammed Fund: i joni Programs or projecs of the government, ONGEY OPPrOprations for priotY shall be charged agains! the Revolving Fund s€ business type activiies Trust Receipts. Trust Recelpts are recei eipts thi ick . government agencies oF & public officer ge torte SY In the possession of which have been received for the fulfiment ofa enna or acinldile ular obligation. Scanned with CamScannerGovernment Accou; 937 Vie Chart of Acco, x unts and eee Provides he ee Accounts Code Structure (UACS). The Chart of S UCIEd. It's detined or ee ork within which the accounting records are minal Accounts presence CL general leciger accounts consisting of reol and red for the use of national and local ened we Coding Scher me. Code: counts in the general ond eo mned '© account groups to facilitate tocaticn of sidiary ledgers, to provide systematic arrangement and classificatio: N of accor if financial reports os oles ON facilitate preparation of the consolidated Code 1 Account Groups 2 Assets 3 Liabilities A Equity 4 Income Expenses The account code structure consists of eight (8) mandatory digits as follows: 9 00 000 Account Group 4 Major Account Group 4 Sub- Major Account Group < General Ledger Accounts 4 < General Ledger Contra- Accounts Account Group represents the accounts classification os 10 assets, abiliies, equity. income and expenses. Major account group represents classification within the account group, e.g. for Berets major accounts: cash and cash equivalents, investments, receivables, frventories, invesiment properly. etc. ossification within the major account, ecount group represents < ink, eg jor occoun! otrglents: Cash on Hand, Cosh in Bonk-Local Currency, Cosh rrency. el. Sub-maj for cash and in Bank-Foreign Cu nt the accounts to be presented in the L) accoun ; General Iedaet (Gt eens, e.g. Cosh Colecing Officer. Folly Cosh ote. Is detailed tmanciol He ments. Te fist two Gigils {rom lett is the GL code and the composes ed (2) sega accounts ike, A¥owance for Impairment, Accumulated last digit is Depreciation. 1 assets with 2 Is represer eg cat ets CAE Soca nt ‘Coding o! Scanned with CamScanner938 Chapter 14 Asset without Contra Account Asset Cash and Cash Equivalents Casti on Hand < Cosh Collecting Olficer << General Ledger Contra- Accounts. Asset with Contra Account Asset Receivables Loans and Receivable Accounts Accounts Receivable Allowance for Impairment - Accounts Receivable ‘Accounts titles have been changed and some files have been added. There are no longer contingent accounts. Expenditures charged to capital outlay are no longer classified as expenses. Financial expenses have been categorized 0s separate expense items. Income accounts have been categorized into general income accounts ond Agency specific income accounts. In order to be effective in identifying the performance of a segment or uni of the agency under the control ond responsibilily of ihe segment’s manager. the coding structure has been formulated 4 ACOA Circular No. 2014 - 003 was issued to provide guideli dures on the conversion of the Philippine Government Chart Ot nccounh (PSCAl per Commission on Audit (COA) Circular No. 2004-008 dated September 20, 2004, 08 3d, 1o the Revised Chart of Accounts (R iron i 2001 euler No. 2013-002 dated January 30, Sols eoNeeS In Paragraph ‘As a consequence, & governmeht-wide Unified Accounts C ture (UACS) wos established. the UACS provides a fromework for Reming cawageting an mepamiing F ancial transactions in budget preparation, execution, accounting an ing. : : ‘The key purpose of the UACS is to enable the timely a le of actual revenue collections and expenditures at Harari lia adi revenues and expenditures. igainst budgeted programm Scanned with CamScanner ayGovernment Accounting — General Fund 538 Reporii i rept ne ‘eurements that will be best served by the UACS Include Manoaen cPorls a5 required by the Department of Budget and 2 Finanaer gent (08M) and the Commission on Audit (COA), eS Statements os required by the Public Sector Accounting 3, Yondards Board of the Philippines, * gnegement reports as required by the executive officialsheads of 4, SSPariments and agencies, and "Eger Omic statistics consistent with the Government Finance Statistics (GES) Manual 2001. Application, The UACS willbe used by all deporimenis ond agencies of the National Budactan ay ond Government-Owned and/or Controlled Corporations with selary Supper! from National Government including those maintaining Special Counts in the General Fund. The source of eccount descriptions and codes in the UACS object coding elements includes the following: |. The codes from the COA Revised Charl of Accounts prepared for eccrual basis financial reporting, 2, The addition of some sub-object codes, ond 3. Additional expenditure accounts designed for cash: basis budgeting, such 95 those for capital outlays. When this object coding is combined with budget classification coding for funding source, organization. location and program, this framework collectively provides the harmonized budgetary and accounting classification codes (UACS).. Responsibllities. The DBM, Department of Finance-Bureau of the Treasury {DOF-8Tr] ‘and COA are collectively responsible for the UACS. Validation and assignment of new Codes for funding source. organization, sub-object codes for expenditure ilems shall be the responsibility of DBM Validation and assignment of new Program. Activity, and Project Codes shall be decided jointly by Ihe proponent agency and DBM, Consistency of account Classification and coding structure with the Revised Chart of Accounts shall be the responsibilily of COA. Consistency of account classification and coding standards with the Government Finance Statistics shali be the responsibility of DOF — BIr. Elemerits. The key elements of the coding framework ore: le Funding Source codes 2 Orgenization ‘codes tion codes 3 Ae Syrrogrom, Activily and Project (PAP) codes, and $ Gbject Codes for Assets, Liablities, Equity, Income and Expenses. vised Chart of Accounts does no! include classification endl eode necounty tery accounts Thus, the information system will need to and codes for Pise to ine required input of any expenditure account code—an prowaein eon fo te reaure nel ef an expenaue occeun codon amount with resp ements, Transfers, Adjusted Allotments, Unreleased Appropriations, Appropiavons Hlotments, Disbursements and Unpald Obligations. Obligations, Unobligated AI Statistics) Coding. GFS coding will generally not ve GFS (Government inant Cs, instead, GFS data will be obicined from reference shown fo be part of Ine Tr i map GFS Function coding from MFO/PAP codes, tt . fables inside the system ification coding from Object Codes for Non-Financik ic Classifica! nial ‘as well as GFS corer opiitles, Revenues and Expenses. Assets, Financia! Scanned with CamScanner940 12. 14. Chapter 14 e VAS. Codes are classified un ACS key elements for items pera je to Allthe Codes for specific code assignments usiness Rules Applicabl Others” to es APhipe ne components Of OTe cuest f teen sign, subject 10 the submission o fo the UACS Administrator. Authorization Code vacs PARTICULARS a New General Appropriations z Continuing Appropriations oe Supplemental Appropriations - ‘Automatic Appropriations oe Unprogrammed Funds el Retained Income/Funds ee Revolving Funds es Trust Receipts ; Books oy Recounts. Alinational agencies shall mainiorn two sets of books, namely: Books faguiar Agency (RA) Books. These shall be ‘used fo record the receipt and Reg ee Gtitce of Cash Allocation (NCA) and ‘other income/receipts viization of ol os are auinorized 10 use andl 1 deposi with Authorized which the ae ccritory Bank (AGDB) and the National Treasury. These shall ‘consist of journals and ledges. as follows: Journals Cosh Receipts Journal (CR) Cash Disbursements Journal (CDJ) heck Disbursements Journal (CkDJ) General Journal (GJ) Ledger General Ledger {GL} Subsidiary Ledgers (SL) for: = Cash Receivables Inventories Investments Properly, Piant and Equipment Construction in Progress Liabilities Income Expenses b. National Government (NG) Books. These sha it y . it me ‘erin the agencies are not authorized to use eet = to cece emited fo the National Treasury. These shall consist of: o . * Cash Joumal (CJ ° * ‘General Joumal (GJ) * General Ledger (GL) * Subsidiary Ledger (SL) wit 7 : ith the implementation of the computerized agency accounting system, only the Generc eenoi bear: al Journal shall be used together with the ledge? Two-Money Column Trial Balai He ere ene el Be tied He egy Column Wl balance shor commercial accounting, 4G, This is similar with the usual trial balance Allotment and Obligation. Obiigati _ 1. igation accountir i mana etc oye nace an Shall be maintained to control the olloimene onl I Separate 295", shall be maintained to cont! the allotments nl diguldated), Separate ee tout Scanned with CamScannerGévernment Accounting — General, und 15. 17. 18. > 941 Notice of Cash ai . ash Ail re S loc egorded in the b oon (ca), The receipt of NCA by the agency shall be Disbursement System tag ‘ebit to account “Cash-National Treasury, Modified government’. Ond credit fo account “Subsidy Income from Notional Expenses, commitment charg r from Maintenances Financial ex, Penses such as bank charges, Interest $ and other related ex Separately clossilied (penses shall be separately iti Qnd Other Operating Expenses (MOOE}. : ee Financial ex expenses also i ; transactions ‘ai ‘GIso include losses incurred relative to foreign excht Operations icoege services subsidy to Government cenee-contiie’ al Inv 5 for invent ory pone . Supplies and Materials. Supplies and materials purchased Regular purehere se shall Be recorded using the perpetual inventory system. thereat shal be secret be coursed thry the inventory account ond Issuances Cosh Fund wher Grt2d 3 they take place excep! those purchased out of Fetty shall be charged directly to the appropriate expense accounts. Valuation of invent nventory. Cost of ending invent ie ited use tem enero wenlory of supplies and matetals shea be ‘Maintenance of Supplies and Proj : perty, Plant and Equipment Ledger Cards. For cpproniote check and balance, the Accounting Units of agencies, as well as the roperty Offices, shall maintain Supplies Ledger Cards/Stock Cards by stock number and Property, Plant and Equipment Ledger Cards/Property Cards by category ‘of property, plant ond equipment, respectively. Construction of Assets. For assets under construction, the Construction Period Theory shall be applied for costing purposes. Bonus paid to the contractor for completing the work ahead of fime shall be added to the total cost of the project, fquidated damages charged and paid for by the contractor shall be deducted frcm the total cost of the project. Any related expenses incurred during the fom tuction of the project, such os taxes, Interest, license fees, permit fees, ibe copilalized, and those incurred atter the construction clearance fee, etc. shall shall form part of operating cost. try of Reforestation Projects. For agencies intrastructures/RegIst z th as roads, bridges, waterways, railways, i¢ infrastructures, suc! J civesl on reforestation projects, a Registry of Public forestation Projects (RRP) shall be maintained for tion projects. Examples are: Registry of Public I that construct publl plaza, monuments, efc., and Infrastructures (RPI) MRegi Fl reretoresia in eee catego Public Inrastructure - Brass eR) ‘ i i structures ~ Rl 3 Registry of Public Infos J parks (RPIP) lic Infrastructures - Pal + Registry of Fup ration Projects (RRP| 2 Registry Joli Infrastructures/R shall be prepared and ‘eforestation Projects A Summemy ine Notes 10 Financiol Statements. _ nethod of depreciation shall be used. Depreciation Depreciation. The, srl ne on od ot Surchase of the properly, plan! and Depresjari on ihe SECONG Tr equivalent 10 ten PEIcen! Of Ne Oe cole spotfpment, and.c residue! Tasch res/raforestalion Prolee's ot well os serviceable shall be set-up. Ce rosruclt ey snail nol be Charged any depreciation fe n0 : ane mmenis tne estimated vsetul fe shall depend on the hold improvements, Pe ihe lease oF Ihe estimated useful ite of of teasenold Ime tne pet the tease. I never is shorter. In cases length of the assets, 05 9 Scanned with CamScanner942 23. 24. 25. 26. 27. 28. Chapter ig 9 longer being used shall be ssets pectoutticotion of Assets. serviceable ass215 10 Ale ct tq depreciation, so conified to "Other Assets" account and shall no ‘Aigo included under “Other Assets" ore obsolete ‘and unserviceable assels awaiting final disposition. ‘Allowance for Doubtful Accounts: An Allowance 10F Doubtful Accounts shail be set tp for estimated uncollectibie Wade receivables fo allow for their fair valuation, This account is used to record reduction in the value of rade receivable accounts, iivch'k estimoted as uncolleciible. It is debited [or accounts of customers/ciients, Which have been determined to be uncollectibie for which authority to write-off has been granted. On the other hand, this accoun! will be credited for estimated ‘amount of uncollectible accounts. Elimination of Contingent Accounts. Contingent ‘accounts shall no longer be used. ‘Al fincnciol transactions shall be recorded using the appropriate accounts. Cash shortages and disallowed payments, which become final and executory, shall be fecorded under receivable accounts “Due from Officers ‘and Employees” or vRecsivobles-Disallowances/ Charges", as the case may be. nition of tiabilty. Liability shall be recognized at the time goods and services Recog! ills ore received. ‘are accepted or rendered and supplier/creditor Further, cecoun's payable account is used fo record obligations/indebledness to Contractors/supplie’s arising from the purchase of goods and services and other Obligations in connection with the agencies’ operation/trade/business Interest Accrual. Whenever practical ond appropriate, interes! income and/or expense shall be accrued and recognized in the books ‘of accounis. The “interest income" account is used fo record ail interest eared on deposits wi bnks loons and investments in bonds, treasury notes, treasury bills and promissory notes held. On the other hand, the “interest expense” account i: ‘ is used to record charges Te ee ie are) teed of the use of money belonging to others, such o interest in bonds, loans, treasury bills, treasury notes, i bledness. ‘and other interest bearing financial obligations. Ceriticate of Indebios Accounting for Borrowings and Loans. All borrowi be ae covad i tne appropriote fobilty accounts. red loans ich sl Elimination of corollary and negative journal ei ation a nities. The use of corollary on negative journal ene sal be stopped. Acauisiion/Disposition of astels shall be he appropriate asset acc itled, Correcting entry to adjust the original entry shallbe. aaa is commities Petty Cosh Fund. The Petty Cosh Fund shall be maintaii vest system. Assuch, allreplenishments shall be Girectly chorged to th ane mn ‘and at all times, the Petty Cash Fund shall be equal, othe fot re empenie| a ee the unreplenished expenses. The Petly Cosh Fund shal Pi ce ey pcos regular inventory/items for stock, not be used to pur Scanned with CamScanner