CHAPTER 2:

BUDGET
PROCESS
GROUP 1: ASILO, AUREA, BURDEOS,
DELA CRUZ, MONTON
NATIONAL/
GOVERNMENT
BUDGET
the government’s estimate
of the sources and uses of
government funds within a
fiscal year.
BUDGET
PREPARATION
• a process with
designated organizations
and individuals having
defined responsibilities
that must be carried out
within a given timetable
STEPS:

01 BUDGET CALL

02 BUDGET HEARINGS

03 PRESENTATION TO THE OFFICE OF

THE PRESIDENT
The President’s Budget contains the following
documents:

1)President’s Budget Message

2)National Expenditure Program (NEP)
3)Budget of Expenditures and Sources
of Financing (BESF)
4)Other Documents
ILLUSTRATIONS: EXCERPTS FROM PRESIDENT'S
BUDGET MESSAGE
APPROACHES:

1. BOTTOM-UP BUDGETING 3. INCREMENTAL BUDGETING

• several parties participate on the • the current year’s budget is based
Budget preparation from the on the previous year’s budget
lowest to the highest level of which is adjusted for any variances
Government experienced in the past

2. TOP-DOWN BUDGETING 4. ZERO-BASED BUDGETING

(CLEAN SLATE)
• Budget preparation starts from the
• the current year’s budget is
agency heads
formulated without regard to
the previous year’s budget
BUDGET
LEGISLATION STEPS:

• A due process is
undertaken to legalize 01 HOUSE DELIBERATIONS
the proposed budget
through the deliberation 02 SENATE DELIBERATIONS
of the government funds
that be spent in
03 BICAMERAL DELIBERATIONS
pursuance of an
appropriation made by
law 04 PRESIDENT'S ENACTMENT
APPROVED BUDGET
• is the expenditure • The approved budget consists of the
authority derived from following:
appropriation laws,
government
ordinances, and other
decisions related to the
anticipated revenue or
receipts for the
budgetary period.
APPROPRIATION
• is the authorization • New General Appropriations- are annual
made by a legislative authorizations for incurring obligations,
body to allocate as listed in the GAA.
funds for purposes • Continuing Appropriations- are the
specified by the authorizations to support the incurrence
legislative or similar of obligations beyond the budget year.
authority. • Supplemental Appropriations- are
additional appropriations to augment the
original appropriations which proved to
be insufficient.
• Automatic Appropriations- are the authorizations programmed annually
which do not require periodic action by Congress.
• Unprogrammed Funds- Reserved or standby appropriations which may
availed only upon the occurrence of certain instances.
• Retained Income/Funds- Collections which the agencies can use directly
in their operations.
• Revolving Funds- Receipts derived from business-type activities of
departments/agencies which are authorized by law to be constituted as
such. These are self-liquidating and all obligations and expenditures
incurred by virtue of said business-type activity shall be charged against
the fund.
• Trust Receipts- Receipts by a government agency acting as trustee, agent
or administrator for the fulfillment of some obligations or conditions.
BUDGET EXECUTION

• A phase where government funds are spent

• DBM issues guidelines on the release and utilization of funds while
various agencies submit their Budget Execution Documents (BEDs)
• BEDs - it summarizes an agency’s fiscal year plans and performance
targets
⚬ Physical and Financial Plan
⚬ Monthly cash program
⚬ Estimate of monthly income
⚬ List of obligations that are not yet due and demandable
RECIPIENTS OF THE
BUDGET:
• National Government Agencies (NGAs)
⚬ Agencies within the Executive,
Legislative, and Judicial branches of
Government
⚬ Ex: DPWH, DOST,DOT
• Local Government Units (LGUs)
• Government Owned and Controlled
Corporations (GOCCs)
⚬ Ex: GSIS, DBP,PhilHealth
• Allotment – is an authorization The DBM formulates 2 documents in the
issued by the DBM to NGAs to incur allotment process:
obligations for specified amounts
contained in a legislative 1. Allotment Release Program (ARP) - It
appropriation in the form of budget sets the limit for allotment releases
release documents. It is also during the upcoming year to ensure that it
referred to as Obligational conforms to the national budget
Authority.
⚬ Obligation – is an act of a duly • General Appropriations Act Release
authorized official which binds Document (GAARD)
the government to the • Special Allotment Release Order
immediate or eventual (SARO)
payment of a sum of money • General Allotment Release Order
(GARO)
The DBM formulates 2 documents in the allotment
process:

2. Cash Release Program (CRP)- It sets the

disbursement limits for the year, each quarter,
and for each month

• Notice of Cash Allocation (NCA)

• Non-Cash Availment Authority (NCAA)
• Cash Disbursement Ceiling (CDC)
• Notice of Transfer of Allocation (NTA)
BUDGET ACCOUNTABILITY
• reviewing or monitoring the conformance of actual
results with planned targets

Budget Accountability Reports:

a. Monthly Report of Disbursements

b. Quarterly Physical Report of Operation
c. Statement of Appropriations, Allotments, Obligations,
Disbursements and Balances
d. Summary of Appropriations, Allotments, Obligations,
Disbursements and Balances by Object of Expenditures
e. List of Allotments and Sub-Allotments
Reports:

f. Statement of Approved Budget, Utilization,

Disbursement and Balances
g. Summary of Approved Budget, Utilization,
Disbursement and Balances by Object of
Expenditures
h. Quarterly Report of Revenue and Other Receipts
i. Aging of Due and Demandable Obligations

• The budget reports provide information in

preparing the Statement of Comparison of
Budget and Actual Amounts
 • Performance Reviews
DBM and COA perform periodic reviews of
agencies' performance and budget
accountability.

• Audit
COA audits the agencies.
RESPONSIBILITY ACCOUNTING

• Is a system of providing cost and revenue

information over which a manager has direct
control of.
• It requires the identification of responsibility
centers, and the distinction between controllable
and non-controllable costs.
⚬ Responsibility Centers- is a part, segment,
unit or function of a government agency,
headed by a manager, who is accountable
for a specified set of activities.
A distinction is made between controllable and non-
controllable costs.

a) Controllable Cost- the manager has the power to incur it

within a given period of time. It follows that
(1)all costs are controllable by top management because
of the broad range of its activity; and
(2)fewer costs are controllable as one move down to lower
level of managerial responsibility because of the
manager’s decreasing authority.

b) Non-controllable costs- are costs incurred indirectly

and allocated to a responsibility level.
Responsibility Center Code
Structure

• Each NGAs shall be assigned a

responsibility center code
defined as organization code in
the UACS Manual. The
organization code and the
agency’s major
offices/departments’ code
shall consist of 15 digits as
follows:
 The
Budget
Process

Illustrative Example
 Bottom-up
Budget Call
Budgeting

Budget
Preparation

Presentation to the
Office of the
President Budget Hearing Zero-based Budgeting
 House Deliberation Senate Deliberation Bicameral Deliberation

Budget
Legislation
Approved Budget is
2,500.00

President's
Enactment Ratification of Bicam
version
 Allotment
Released Guidlines and BEDs
Disbursement in the 1st week were as follows:-
Me: Php100 installment payment to jisoo's
store and Php50 on personal needs Budget
Little Brother: Php 75 on personal needs Execution
Total disbursement in 1st week Php 225

Incurrence of Obligation

NTA NCA
 Budget
Accountability
Budget Accountability Reports

Appropriation: Php 2,500

Allotment Received: Php 2,000
Unreleased appropriation: (Php 2,500 - Php 2,000) =
Php 500 Audit
Obligations incurred: (Php 500 to Jisoo + Php50 on my
personal needs +Php 75 on little brother's needs) =
Php625
Unobligated allotment: (Php 2,000 Allotment - Php
625) = Php 1,375
Disbursements: Php 225
Unpaid Obligations: (Php 625 obligations incurred -
Php 225 disbursements) = Php 400(Payable to Jisoo's
Store)
Unused NCA = (Php 500 NCA - Php 225 Disbursements)
= Php 275
Performance Review
Department of Public
Works & Highways
(DPWH)

ANNUAL AUDIT FINDINGS 2022

2022
#1 (a) Audit Observation
(b) Audit Recommendation
(c) What should government officials do to prevent the
reoccurrence of findings?

• The government should expedite project implementation and

completion in order to fully maximize allotted funds and avoid
project delays, suspensions, and non-implementation. They
must perform thorough planning and implement effective
procedures in order to meet the goals of programs and
initiatives. Establish clear timetables for project
implementation and completion to avoid postponement of
intended benefits and expirations of unutilized allotments.
#2 (a) Audit Observation
(b) Audit Recommendation
(c) What should government officials do to prevent the reoccurrence
of findings?
As to recommendation 1, to prevent the reoccurence of the findings, the
government officals must:

a. Conduct regular audits and evaluations - to assess the adherence to using

historical records and actual data in the planning process.

b. Mandate the use of historical records and actual data - through policy
directives and guidelines

c. Emphasize the importance of data-driven decision-making - through

training programs and workshops.
(c) What should government officials do to prevent the reoccurrence
of findings?
As to recommendation 2, to prevent the reoccurence of the findings, the
government officals must:

a. Streamline processes - by identifying bottlenecks and unnecessary steps to

eliminate delays and promote efficiency.

b.Set clear timelines - by establishing realistic yet strict deadlines for each
stage of the procurement evaluation process

c. Improve coordination and communication - where regular meetings, progress

reporting, and feedback mechanisms should be put in place to ensure all
parties are aligned and informed about project timelines and requirements
(c) What should government officials do to prevent the reoccurrence
of findings?
As to recommendation 3, to prevent the reoccurence of the findings, the
government officals must:

a. Enhance oversight mechanisms to closely monitor the utilization of cash

allocations by the DPWH

b. Strengthen Coordination by establishing inter-agency task forces, improving

communication channels, and fostering collaboration to ensure efficient use
of resources and avoid unnecessary reversion of funds.
#3 (a) Audit Observation
(b) Audit Recommendation

(c) What should government officials do to prevent the

reoccurence of findings?
Government officials must compel the government agency to regularly remit the
interest income and unused collections from the sale of bid documents in
prescribed time as pursuant to DOF Circular No.01-2015. This is to harmonize
the government funds and not incur problems in making budget preparation for
the next year. To prevent the reoccurrence of this, they must sue such agency as
they did not comply to the law regarding this matter.
#4 (a) Audit Observation
Audit Observation
Audit Observation
Audit Observation
Audit Observation
Audit Observation
(b) Audit Recommendation
(b) Audit Recommendation
(c) What should government officials do to prevent the
reoccurence of findings?

To prevent the reoccurence of the issues mentioned, government officials should

take proactive measures to improve planning and executions.
(1)Effective Project Management
(2)Detailed Engineering and Design
(3)Data and Technology Utilization

By implementing these measures, government officials can minimize the

reoccurence, and promote more efficient and successful project implementation.
#5 (a) Audit Observation
(b) Audit Recommendation
(c) What should government officials do to prevent the
reoccurence of findings?

To prevent the reoccurrence of the findings:

• At the start of the fiscal year the management should have a thorough
planning of all the projects that will be implemented during the year.
• There is a need to improve the organization's absorptive capacity for them to
successfully achieve their objective of implementing all the planned projects.
• There is also a need in improving the organizations monitoring of the status of
their implemented projects to fully utilize the budget on the projects.
Thank You
For Your Attention
Have a Good Night!