Government Accounting

LESSON 1 – OVERVIEW OF GOVERNMENT ACCOUNTING

Learning Objectives
After reading the chapter, the students should be able to:

1. Differentiate government accounting from the accounting for

business entities.
2. State the government entities charged with accounting
responsibility.
3. Describe briefly the GAM for NGAs.
4. State the basic principles used in government accounting.
5. State the recognition criteria for assets.
Under Sec. 109 of P.D. 1455, Government accounting
encompasses the process of analyzing, recording,
classifying, summarizing and communicating all
transactions involving the receipt and disposition of
government funds and property, and interpreting the
results thereof.
Objectives of Government Accounting
1. to provide information concerning past operations and present
conditions.
2. To provide a basis for guidance for future operations.
3. To provide for control of the acts of public bodies and officers in
the receipt.
4. To report on the financial position and the results of operations of
government agencies for the information of all persons concerned.
Emphasis of Government Accounting
1. Sources and utilization of government funds.
2. Responsibility, accountability and liabilities of entities trusted with
government funds and properties.
* The sources of government funds include receipts from taxes and
other fees, borrowings, and grants from other governments and
international bodies.
** The utilization of government funds includes expenditures on
programs, projects, unanticipated losses from calamities and the
like.
Responsibility over government funds
Government resources shall be utilized efficiently and
effectively in accordance with the law. The head of
the government agency is directly responsible in
implementing this policy and is primary responsible
for government resources entrusted to his agency.
Those who are entrusted with the possession of
government resources are directly responsible to the
head of the agency.
Responsibility over government funds
All those who are exercising authority over a
government agency shall share fiscal
responsibility.
Accountability over government funds
A government officer entrusted with the
possession of government resources is
responsible for safekeeping therefor in
accordance with law. Every accountable officer
shall be properly bonded.
Accountability over government funds
The transfer of government funds from one
officer to another shall, except as allowed by
law, be made only after the authorization of the
COA. The transfer shall be properly documented
in an invoice or receipt.
Liability over government funds
The unlawful use of government resources shall
be the personal liability of the employee found
to be directly responsible therefor.
Liability over government funds
Every accountable officer shall be liable for all
losses resulting from the unlawful use or
negligence in the safekeeping of government
resources.
Liability over government funds
No accountable officer shall be relieved from
liability merely because he has acted under the
direction of superior officer in unlawfully
utilizing the government resources entrusted to
him, unless before the act, he has notified the
superior officer, in writing, that the utilization is
illegal.
Liability over government funds
The superior officer shall be primarily liable
while the accountable officer who fails to serve
the required notice shall be secondarily liable.
Liability over government funds
An accountable officer shall immediately notify
the COA for any loss of government funds for
unseen events within 30 days. Failure to do so
will not relieve the officer of liability.
Accounting Responsibility
1. Commission on Audit
2. Department of Budget and Management
3. Bureau of Treasury
4. Government Agencies
Commission on Audit
1. Exclusive authority to promulgate accounting
and auditing rules and regulations.
2. Keeps the general accounts of the
government, supporting vouchers, and other
documents.
3. Submits financial reports to the President
and Congress.
Department of Budget and Management
1. Formulation and implementation of the
national budget with the goal of attaining
the nation’s socio-economic objectives.
Bureau of Treasury
1. Receive and keep national funds and manage
and control disbursements thereof.
2. Maintain accounts of financial transactions
of all national government offices, agencies
and instrumentalities.
Government Agency
Refers to any department, bureau or office of
the national government, or any of its branches
and instrumentalities, or any political
subdivision, as well as any Government Owned
and Controlled Operations (GOCC), including its
subsidiaries, or other self-governing board or
commission of the government.
Government Agencies
They are responsible in direct implementation of
projects of, an performing the functions
delegated by the government.
Each agency shall maintain accounting books
and budget registries which are reconciled with
the cash records of the BTr and the budget
records of the COA and DBM.
Government Agencies
Government agencies are required by law to
have accounting units/divisions/departments.
Even the barangay is required to have an
accounting unit.
GAM for NGAs
The 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 GAM for
NGAs.
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 International Financial Reporting
Standards (IFRS).
Coverage of GAM for NGAs
1. Preparing general purpose financial
statements in accordance with the PPSAS
and other financial reports as may be
required by laws, rules and regulations.
2. Reporting of budget, revenues and
expenditure in accordance with laws, rules
and regulations.
Objective of GAM for NGAs
1. Update standards, policies, guidelines and
procedures in accounting for government
funds and property.
2. Coding structure and accounts
3. Accounting books, registries, records, forms,
reports, and financial statements.
Basic Accounting and Budget Principles
1. PPSAS
2. Accrual Basis of Accounting
3. Budget Basis
4. Revised Chart of Accounts prescribed by COA
5. Double Entry Bookeeping
6. FS based on accounting and budgetary records.
7. Fund Cluster Accounting
Fund Cluster Accounting
Qualitative Characteristics
1. Understandability
2. Relevance
3. Materiality
4. Timeliness
5. Reliability
6. Faithful Representation
7. Substance over Form
8. Neutrality
Qualitative Characteristics
9. Prudence
10. Completeness
11. Comparability
Components of General Purpose FS
1. Statement of Financial Position
2. Statement of Financial Performance
3. Statement of Changes in Net Assets/ Equity
4. Statement of Cash Flows
5. Statement of Comparison of Budget and Actual
Amounts
6. Notes to Financial Statements.
Elements of Financial Statements
Assets - Features
1. Must be controlled by the entity
2. Must have arisen from past event.
3. Future Economic Benefits
Elements of Financial Statements
Assets - Recognition
1. Probable
2. Has a cost or value
3. Probable inflow of future economic benefits
4. Can be measure reliably.
 Elements of Financial Statements
Liabilities
Equity
Revenue and Expenses

*Same concept to IFRS

Do you have questions?
THANK YOU FOR LISTENING!

K.I.B CPA MBA