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Govt Acctg Print
Govt Acctg Print
Govt Acctg Print
CAILA JANE RIVERA Functions under the Department of Finance and is the cash custodian of the government. The BTr is authorized
CHAPTER 1: OVERVIEW OF GOVERNMENT ACCOUNTING to:
Government Accounting encompasses the processes of analyzing, recording, classifying, summarizing and ➢ Receive and keep national funds and manage and control the disbursements thereof; and
communicating all transactions involving the receipt and disposition of government funds and property, and ➢ Maintain accounts of financial transactions of all national government offices, agencies and
interpreting the results thereof. (State Audit Code of the Philippines, P.D. No. 1445, Sec. 109) instrumentalities.
The Objectives of government accounting:
• To produce information concerning past operations and present conditions; Government Agencies
• To provide a basis for guidance for future operations; ❖ Any department, bureau or office of the national government, or any of its branches and instrumentalities,
• To provide for control of the acts of public bodies and officers in the receipt, disposition and utilization of or any political subdivision, as well as any government owned or controlled corporations (GOCC), including
funds and property; and its subsidiaries, or other self-governing board or commission of the government.
• To report on the financial position and the results of operations of government agencies for the ❖ responsible in directly implementing the projects of, and performing the functions delegated by the
information of all persons concerned. government.
❖ Each agency shall maintain accounting books and budget registries which are reconciled with the cash
Responsibility, Accountability and Liability over Government Funds and Property records of the BTr and the budget records of the COA and DBM.
RESPONSIBILITY OVER GOVERNMENT FUNDS AND PROPERTY
➢ Government resources shall be utilized efficiently and effectively in accordance with the law. The head of a Entity – refers to a government agency, department or operating/field unit.
government agency is directly responsible in implementing this policy and is primarily responsible for Financial reporting – is the process of preparation, presentation and submission of general purpose financial
government resources entrusted to his agency. statements and other reports. The objective of financial reporting is to provide information about the entity that
➢ All those who are exercising authority over a government agency shall share fiscal responsibility. is useful to users for accountability purpose and decision making.
NGAS – New Government Accounting System
ACCOUNTABILITY OVER GOVERNMENT FUNDS AND PROPERTY GAM – Government Accounting Manual for NGAs
➢ A government officer entrusted with the possession of government resources is responsible for the IPSAS – International Public Sector Accounting Standards
safekeeping thereof in accordance with the law. Every accountable officer shall be properly bonded. IFRS – International Financial Reporting Standards
➢ The transfer of government funds from one officer to another shall, except as allowed by law, be made only PPSAS – Philippine Public Sector Accounting Standards
after the authorization of the COA. The transfer shall be properly documented in an invoice and receipt.
COVERAGE: The GAM for NGAs provides the basic concepts to be used in:
LIABILITY OVER GOVERNMENT FUNDS AND PROPERTY • Preparing general financial statements in accordance with the Philippine Public Sector Accounting
➢ The unlawful use of government resources shall be the personal liability of the employee found to be Standards (PPSAS) and other financial reports as may be required by laws, rules and regulations.
directly responsible thereof. • Reporting of budget, revenue and expenditure in accordance with laws, rules and regulations.
➢ Every accountable officer shall be liable for all losses resulting from the unlawful use or negligence in the
safekeeping of government resources. OBJECTIVE: The GAM for NGAs aims to update the following:
➢ No accountable officer shall be relieved from liability merely because he has acted under the direction of a • Standards, policies, guidelines and procedures in accounting for government funds and property;
superior officer in unlawfully utilizing the government resources entrusted to him, unless before that act, • Coding structure and accounts; and
he has notified the superior officer, in writing, that the utilization is illegal. The superior officer shall be • Accounting books, registries, records, forms, reports and financial statements.
primarily liable while the accountable officer who fails to serve the required notice shall be secondarily
liable. FUND CLUSTER ACCOUNTING: The books of accounts are maintained by fund cluster
➢ An accountable officer shall immediately notify the COA for any loss of government funds from unforeseen
Code Fund Cluster
events (force majeure) within 30 days. Failure to do so will not relieve the officer of liability.
01 Regular Agency Fund
Accounting Responsibility: The following offices are charged with government accounting responsibility: 02 Foreign Assisted Projects Fund
▪ Commission on Audit (COA)
03 Special Account - Locally Funded / Domestic Grants Fund
▪ Department of Budget and Management (DBM)
▪ Bureau of Treasury (BTr) 04 Special Account - Foreign Assisted / Foreign Grants Fund
▪ Government Agencies 05 Internally Generated Funds
The Approved Budget The following are the major recipients of the budget:
Approved budget – is the expenditure authority derived from appropriation laws, government ordinances, and 1. National Government Agencies NGAs) – include all agencies within the executive, legislative and judicial
other decisions related to the anticipated revenue or receipts for the budgetary period. The approved budget branches of government. (e.g. commissions, departments, landbank of the Philippines, Social security system,
consists of the following: etc)
UACS Code UACS Code 2. Local Government Units (LGUs) – include (a) autonomous regions, (b) provinces and cities independent from
New General Appropriations 01 Unprogrammed Funds 05 a province, (c) component cities (cities which are part of a province) and municipalities, and (d) barangays.
3. Government Owned and Controlled Corporations (GOCCs) – corporations that are owned or controlled,
Continuing Appropriations 02 Retained Income / Funds 06 directly or indirectly, by the government and vested with functions relating to public funds.
Supplemental Appropriations 03 Revolving Funds 07
Automatic Appropriations 04 Trust Receipts 08 9. Allotment – the DBM formulates the allotment release program (ARP) to set the limit for allotment releases
during the upcoming year. This is used as a control device to ensure that releases conform to the national budget.
Alongside, is a Cash Release Program (CRP), which sets the disbursement limits for the year, for each quarter and
The Unified Accounts Code Structure (UACS) refers to the standard coding system used in financial reporting of for each month.
the National Government. ➢ Allotment – is an authorization issued by the DBM to government agencies to incur obligations for specified
➢ Appropriation – is the authorization made by the legislative body to allocate funds for purposes specified amounts contained in a legislative appropriation in the form of budget release documents. It is also referred
by the legislative or similar authority. to as Obligational Authority. [It is illegal for a government entity to incur obligations without having first
received the “allotment”. Moreover, the type and amount of obligations to be incurred must conform to
those that are specified in the allotment.]
➢ Obligation - is an act of a duly authorized official which binds the government to the immediate or 2. Ledgers
eventual payment of a sum of money. Obligations maybe referred to as a commitment that encompasses • General Ledgers
possible future liabilities based on current contractual agreement. • Subsidiary Ledgers
3. Registries
The following are the documents used in releasing allotments to government agencies: • Registries of Revenue and Other Receipts
1. General Appropriations Act Release Document (GAARD) – serves as the obligational authority for the • Registry of Appropriations and Allotments
comprehensive release of budgetary items appropriated in the GAA, categorize as For Comprehensive Release. • Registries of Allotments, Obligations and Disbursements
2. Special Allotment Release Order (SARO) – covers budgetary items under for later release (negative list) in • Registries of Budget, Utilization and Disbursements
the entity’s submitted Budget Execution Documents (BEDs), subject to compliance of required
documents/clearances. Release of allotments for Special Purpose Funds (e.g. calamity fund, contingency fund, Budget Registries
E-Government fund, Feasibility studies fund, International commitment fund, Miscellaneous personnel benefits 1. Registries of Revenue and Other Receipts (RROR) – used to monitor the budgeted amounts, actual collections
fund and pension and gratuity fund) are also covered by SAROs. and remittances of revenue and other receipts.
3. General Allotment Release Order (GARO) – is a comprehensive authority issued to all national government 2. Registry of Appropriations and Allotments (RAPAL) – used to monitor appropriations and allotments. This is
agencies, in general, to incur obligations not exceeding an authorized amount during specified period for the to ensure that allotments will not exceed appropriations.
purpose indicated therein. It covers automatically appropriated expenditures common to most, if not all, 3. Registries of Allotments, Obligations and Disbursements (RAOD) – used to monitor the allotments received,
agencies without need of special clearance or approval from a competent authority, i.e. retirement and life obligations incurred against corresponding allotment, and the actual disbursements made. This is to ensure that
insurance premium. obligations will not exceed allotments while actual disbursements will not exceed obligations incurred.
Object of Expenditures
10. Incurrence of Obligations – government agencies incur obligations which will be paid by the government, The classification of expenditures by object are as follows:
e.g. entering into contracts, hiring of personnel, purchase of supplies, etc. ➢ Personnel Services (PS) – pertains to all types of employee benefits, e.g. salaries, bonuses, allowances, cash
gifts, etc.
11. Disbursement Authority – the DBM issues disbursement authority to the government agencies. This is the ➢ Maintenance and Other Operating Expenses (MOOE) – pertains to various operating expenses other than
point where government agencies obtain access to the government funds. employee benefits and financial expenses, e.g. travel, utilities, supplies, etc.
➢ Financial Expenses (FE) – pertain to finance costs, e.g. interest expense, bank charges, etc. financial
Budget Accountability: This phase occurs concurrently with the budget execution phase. As the budget is being expenses also include losses on foreign exchange transactions.
executed, it is regularly monitored to determine the conformance of actual results with planned targets. ➢ Capital Outlays (CO) – pertain to capitalizable expenditures, e.g. expenditures on the construction of public
infrastructures, acquisition of equipment, etc.
12. Budget Accountability Reports – government agencies are required to submit the following accountability 4. Registries of Budget, Utilization and Disbursements (RBUD) – used to record the approved special budget
reports: and the corresponding utilizations and disbursements charged to retained income.
• Monthly report of disbursements
• Quarterly physical report of operation Basic Recordings
• Statement of appropriations, allotments, obligations, disbursements and balances Appropriation
• Summary of appropriations, allotments, obligations, disbursements and balances by object of expenditures Entity A (a government agency) receives its GAA consisting of the following:
• List of allotments and sub-allotments Personnel Services P100,000
• Statement of approved budget, utilizations, disbursements and balances Maintenance and Other Operating Expenses 60,000
• Summary of approved budget, utilizations, disbursements and balances by object of expenditures Financial Expenses 0
• Quarterly report of revenue and other receipts Capital Outlay 200,000
Total Appropriation for the current year 2022 P360,000
13. Performance reviews – the DBM and COA perform reviews of the agencies’ performance and budget
accountability and report to the President. Allotment
Entity A receives its allotment from the DBM consisting of the following:
14. Audit – the COA audits the agencies. Personnel Services P 90,000
Maintenance and Other Operating Expenses 40,000
CHAPTER 3: THE GOVERNMENT ACCOUNTING PROCESS Financial Expenses 0
The government accounting process comprises the activities of analyzing, recording, classifying, summarizing Capital Outlay 170,000
and communicating transactions involving the receipt and disposition of government funds and property, and Total Allotment P300,000
interpreting the results thereof.
Incurrence of Obligation
Books of Accounts and Registries: The books of accounts and registries of government entities consists of: Obligation Request and Status (ORS)
1. Journals Obligations shall be incurred through the issuance of obligation request and status (ORS). The requesting office
• General Journal shall prepare this document, supported by a valid claim documents like disbursement vouchers, payrolls,
• Cash Receipts Journal purchase/job orders, itinerary of travels, etc. The head of the requesting office shall certify the necessity and
• Cash Disbursement Journal legality of the obligation and the validity of the supporting documents. The head of the budget division shall
• Check Disbursement Journal certify the availability of the allotment.
b. in the books of the BIR and BOC, the constructive receipt of the tax revenue and customs duties; and
Entity A enters into the following contracts: c. in the books of the BTr, the constructive receipt of the taxes and customs duties remitted.
a. Personnel Services – Employment contracts (job orders) amounting to P70,000
b. Maintenance and Other Operating Expenses – Purchase contract for office supplies worth P25,000 Books of Entity A
c. Capital Outlays – Purchase contract for office equipment worth P160,000 Cash – Tax Remittance Advice P 10,000
Subsidy from National Government P10,000
Up to this point, nothing is recorded yet in the accounting books. The recordings are made on the budget
registries. Journal entries shall be made only after: Due to BIR P10,000
a. the employees have rendered services Cash – Tax Remittance Advice P10,000
b. the office supplies are delivered and received; and
c. the office equipment is delivered and received. Books of BIR
Cash – TRA P10,000
Disbursement Authority – Notice of Cash Allocation (NCA) Income Tax P10,000
Entity A receives a Notice of Cash Allocation from the DBM amounting to P200,000, net of tax.
Cash-Modified Disbursing Sytem, Regular P200,000 Books of BTr
Subsidy from National Government P200,000 Subsidy to NGAs P10,000
Cash – TRA P10,000
Disbursements
Salaries and Wages P35,000 Remittance of GSIS, Pag-Ibig and Philhealth
PERA 5,000 Due to GSIS P2,000
Gross Compensation 40,000 Due to Pag-Ibig 2,000
Withholding Tax (10,000) Due to Philhealth 1,000
GSIS (2,000) Cash – MDS, Regular P5,000
Pag-Ibig (2,000)
Philhealth (1,000) BILLINGS, COLLECTIONS & REMITTANCES
Total Deductions (15,000) a. Entity A bills revenue of P100,000 for rent income.
Net P25,000 Accounts Receivable P100,000
Rent / Lease income P100,000
a. set-up of payable to officers and employees upon approval of payroll
Salaries and Wages, Regular 35,000 b. Entity A collects P100,000 from the billed revenue and remitted the collection to the BTr.
Personnel Economic Relief Allowance (PERA) 5,000 Cash – Collecting Officer P100,000
Due to BIR 10,000 Accounts Receivable P100,000
Due to GSIS 2,000
Due to Pag-Ibig 2,000 Cash – Treasury, Regular P100,000
Due to Philhealth 1,000 Cash – Collecting Officer P100,000
Due to Officers and Employees 25,000
P.D. No. 1445 requires that all collections must be remitted to the National Treasury unless another law
b. posting of payable to the section C of obligation request and status specifically allows otherwise.
c. Grant of Cash advance for payroll.
Advances for payroll P25,000 Reversion of Unused Notice of Cash Allocation (NCA)
Cash – Modified Disbursement System (MDS), Regular P25,000 Government entities are required to revert any unused NCA at the end of the accounting period.
Cash - Modified Disbursement System (MDS), Regular
d. posting of the disbursement to the payment column of section C of the ORS and disbursement column of the
RAOD receipt of NCA 200,000.00
e. liquidation of cash advance 25,000.00 advances for payroll
Due to officers and employees P25,000
5,000.00 Remittances
Advances for Payroll P25,000
Receipt and deposit of cash of refund of cash advance: Entity A collects unbilled service income of P370,000 and remits P340,000 of the total collection.
Cash – collecting officers 200 Permit fees 200,000
Advances to officers and employees 200 Registration fees 160,000
Cash – Treasury / agency deposit 200 Other service income 10,000
Cash collecting officers 200 Total collection 370,000
III. Capital Outlays (CO)
Purchased of office equipment Cash – collecting officers 370,000
Receipt the delivery of purchased of equipment worth P300,000 from current years obligation: Permit fees 200,000
Office equipment 300,000 Registration fees 160,000
Accounts payable 300,000 Other service income 10,000
To recognize delivery of equipment To recognize collection of unbilled service income
Traveling expenses – foreign 1,800
Cash treasury/agency deposit 340,000 Office supplies expense 63,000
Cash – collecting officers 340,000 Water expense 1,000
To recognize remittance of income to the BTr Electricity expense 5,000
Telephone expense 2,000
7. Unadjusted Trial Balance Janitorial expense 10,000
An unadjusted trial balance is a list of the accounts in the General Ledger together with their balances. Its purpose Security expense 12,000
is to test the equality of total debits and total credits in the accounts. Depreciation expense – bldgs. 50,000
Depreciation expense – equipment’s 30,000
8. adjusting Entries Impairment loss – A/R 2,000
1. reversion of unused Notice of Cash Allocation (NCA) Revenue and Expense summary 223,200
2. Depreciation expenses: To recognize closing of income and expense accounts
Buildings 50,000
Equipment 30,000 Revenue and expense summary 890,200
3. allowance for impairment of accounts receivable 2,000 Accumulated surplus/(deficit) 890,200
To recognize closing of revenue and expense summary
Subsidy from National Government 6,000
Cash – MDS, Regular 6,000 Chapter 4: Revenues and Other Receipts
To recognize reversion of unused NCA Revenue – is the gross inflow of economic benefits or service potential during the period when those inflows
result in an increase in equity, other than increases relating to contributions from owners; includes only those
Depreciation expense – buildings and other structure 50,000 that are received or receivable by the entity in its own account. Receipts refer to actual cash collections from all
Accumulated depreciation – Bldgs. 50,000 sources during a period.
To recognize depreciation of buildings
Fundamental Principles for Revenue
Depreciation – machinery and equipment 30,000 a. all revenue of an entity shall be remitted to the national treasury and included in the general fund of the
Accumulated depreciation – equipment 30,000 national government unless another law specifically allows otherwise.
To recognize depreciation of office equipment b. all money and property received by a public officer, acting in any capacity or upon any occasion, shall be
accounted for as government funds and property, unless another law specifically states otherwise.
Impairment loss – loans and receivable 2,000 c. amounts received in trust and from business-type activities of the government may be separately recorded
Allowance for impairment – A/R 2,000 and disbursed in accordance with relevant rules.
To recognize loss on accounts receivable d. receipts shall be recorded as revenue of special, fiduciary or trust funds, or funds other than general fund only
when authorized by law.
9. Closing Entries e. a collecting officer shall immediately issue an official receipt (OR) upon collecting a payment of any nature.
The following are necessary closing entries: f. where mechanical devices (e.g. electronic official receipt) are used to acknowledge cash receipts, the COA may
a. closing of the “ cash treasury/agency deposit account to the “accumulated surplus/(deficit) account approve, upon request, the exemption from the use of accountable forms.
b. closing of the “subsidy from national government” account to the “revenue and expense summary” account g. temporary receipts shall never be used to acknowledge the receipt of public funds.
c. closing of the “revenue and expense summary” to the accumulated surplus/(deficit) account h. pre-numbered official receipts (ORs) shall be issued in strict numerical sequence. Duplicate copies shall be the
exact copies of the original.
accumulated surplus/(deficit) 575,200 i. a collecting officer shall accept payments to the government in the form of checks, upon proper endorsement
cash – treasury / agency deposit 575,200 and identification of the payee or endorsee. The collecting officer shall not use government funds to encash
to recognize closing of cash deposit account private checks.
j. receipts of government funds shall be acknowledged in accordance with the law – indicating the date of receipt,
subsidy from national government 667,000 from whom and on what account the fund was received.
revenue and expenses summary 667,000
to recognize closing of subsidy account Types of Funds
▪ General fund – a fund which is available for any purpose other than those which other funds have been
immigration tax 100,000 designated to.
permit fees 200,000 ▪ Special fund – a fund designated for special purposes.
registration fees 160,000 ▪ Trust fund (fiduciary) - fund held by a government agency or public officer acting as trustee, agent, or
other service income 10,000 administrator for the fulfilment of a condition.
power supply system fees 100,000 ▪ Revenue fund – comprises all funds derived from the income of any government agency and available for
landing and parking fees 80,000 appropriation or expenditure in accordance with the law.
salaries and wages 200,000 ▪ Depository fund – fund held in authorized depository bank over which the recipient agency retains control
PERA 50,000 for the lawful purposes for which the fund was received.
▪ Special account in the general fund (SAGF) – established to facilitate the funding of priority activities of the b. Royalties are recognized as they are earned in accordance with the substance of the relevant agreement; and
government. The SAGF is a sourced from specific fees, grants and donations, and other sources identified c. Dividends are recognized when the entity’s right to receive payment is established.
under the law. The following are relevant legal provisions regarding the SAGF:
a. all income and collections for SAGF shall be remitted to the Treasury and treated as SAGF Measurement of Revenue from Exchange Transactions
b. the SAGF shall be considered as being automatically appropriated for the purposes authorized by Revenue from exchange transactions are measured at the fair value of the consideration received or receivable.
law, except when the general appropriations act (GAA) provides otherwise. Any trade discounts and volume rebates shall be taken into account.
c. SAGF shall be released to the government agencies subject to the approval of the President. ▪ Fair value – is the amount for which an asset could be exchanged, or a liability settled, between
▪ Special purpose funds (SPFs) – are funds that the President allocates for special programs and projects. knowledgeable willing parties in an arm’s length transaction.
Unlike for other funds, SPFs are not under the accountability of any particular government agency/office
or unit. Example:
Entity A sells goods with a list price of P10,000, on account, with the following credit term 10%, 10%, and 5%.
Sources of Revenue Revenue is recognized as follows:
a. exchange transactions – are transactions in which one entity receives assets or services, or has liabilities Accounts receivable 7,695
extinguished, directly gives approximate equal value to another entity in exchange. (PPSAS 9.11) examples: sale Sales revenue 7,695
of goods and rendering of services To recognize sale of goods on account
b. non-exchange transactions – are transactions in which an entity either receives value form another entity (10,000 x 90% x 90% x 95%)
without directly giving approximate equal value in exchange or gives value to another entity without directly
receiving approximate equal value in exchange. (PPSAS 9.11) Exchange of Goods or Services
examples: tax revenue, fines and penalties and donations Exchange of goods or services with:
a. similar nature and value do not give rise to revenue.
Exchange Transactions b. dissimilar nature and value give rise to revenue measure using the following order of priority;
Sale of Goods or Provisions of Services to third parties or other government entities. i. fair value of the goods or services received, adjusted by the amount of any cash transferred.
a. service income – permit fees, registration fees, franchising fees, licensing fees, legal fees, passport and ii. fair value of the goods or services given up, adjusted by the amount of any cash transferred.
visa fees, processing fees, and the like.
b. business income – school fees, examination fees, rent/lease income, communication network fee, income Non-Exchange Transactions
from hostel/dormitories, sales revenue, hospital fees, share in the profit of joint venture, and the like. Revenue from non-exchange transactions are derived mostly from taxes, fines and penalties, gifts, donations and
goods in-kind. These are received without directly providing something of equal of value in return.
Use by other entity of assets yielding interest, royalties, and dividends or similar distributions. ▪ Taxes – are compulsory payments intended to provide revenue for the government. Taxes do not include
a. interest income – charges for the use of cash or cash equivalents or amounts due to the entity. fines and penalties.
b. royalties – fees paid for the use of entity’s assets such as trademarks, patents, software and copyrights; ▪ Fines and Penalties – are monetary sanctions received as a consequence of breach of laws.
c. dividends – share of the National Government from the earnings of its capital/equity investments in ▪ Gifts, Donations and Goods/Services in kind - are voluntary transfers of assets and services that one entity
Government Owned or Controlled Corporations (GOCCs) and other entities. makes to another, normally free from stipulations.
Recognition of Revenue from Exchange Transactions Recognition of Revenue from Non-Exchange Transactions
Sale of Goods: Revenue from non-exchange transactions are recognized on a cash basis until reliable measurement model is
Revenue from the sale of goods shall be recognized when all of the following conditions are satisfied: developed. Accordingly, the asset and revenue or liability arising from a non-exchange transaction are recognized
i. significant risk and rewards of ownership of the goods are transferred to the buyer; when collected or when these are measurable and legally collectible. (Chapter 5., Sec. 12 GAM for NGAs)
ii. the entity does not retain continuing managerial involvement or effective control over the goods sold;
iii. it is probable that economic benefits will flow to the entity; Tax Revenue is recognized at a gross amount and not reduce for expenses paid through the tax system.
iv. revenue can be measured reliably; and Expenses paid through the tax system are those expenses which should be paid irrespective of whether the
v. cost relating to the transaction can be measured reliably. taxpayer pays taxes or uses a particular mechanism to pay taxes.
Tax revenue shall not be grossed up for the amount of the tax expenditures.
Rendering of Services Tax expenditures are preferential provisions of the tax law that provide certain taxpayers with concessions that
Revenue from the supply of services is recognized on a straight-line basis over the period the services is rendered. are not available to others. Tax expenditures are foregone revenue, not expenses.
However, revenue is recognized by reference to the stage of completion (e.g. percentage of completion method) Type of Tax Taxable Event
if the outcome of the transaction can be estimated reliably, such as when all of the following conditions are
satisfied: a. Income Tax Earnings of taxable income
i. the stage of completion of the transaction at the reporting date can be measured reliably; b. Value-added Tax Undertaking of taxable activity
ii. it is probable that economic benefits will flow to the entity;
c. Goods and Services Tax Purchase or Sale of taxable goods or services
iii. revenue can be measured reliably; and
iv. costing relating to the transaction can be measured reliably. d. Customs Duty Movement of dutiable goods or services across the customs boundary
e. Death Duty Death of the owner of the taxable property
Interest, Royalties and Dividends
a. interest is recognized on a time proportion basis that takes into account the effective yield on the asset; f. Property Tax Passage of time period for which the tax is levied
Transfers: inflows of future economic benefits or service potential from non-exchange transactions, other than Cash in Bank, BSP 10M Cash – MDS
taxes. (PPSAS 23); include fines, gifts, donations of goods or services in-kind, debt forgiveness, bequest, and 10M
grants. All of these transactions transfer resources without approximate equal value in exchange and are not
taxes but some are with conditions. c. completion of the project
Other Deferred Credits 10M Flood Control System
Fines and Penalties: recognized as income in the year they are collected. However, fines are recognized as 10M
revenue when the receivable meets the recognition criteria for asset and are measured at the best estimate of Income from Grants and Donations 10M CIP – Infrastructure Assets
inflow or resources to the entity.An entity collecting fines in the capacity of an agent shall not treat those fines 10M
as revenue.
Pledges: unenforceable undertakings to transfer assets to the recipient entity; not recognized as revenue
Gifts, Donations and Goods in-kind: are recognize as revenue when it is probable that future economic benefits because they do not meet the recognition criteria for asset. If the pledged item is subsequently transferred to
or service potential will flow to the entity. Those that are received without conditions are recognized immediately the recipient entity, it is recognized as a gift or donation. Pledges may warrant disclosure as contingent assets.
as revenue. Those with conditions are initially recognized as liability and recognized as revenue only when the
conditions are satisfied. Concessionary Loans: are loans received by an entity at below market terms. The entity considers whether the
difference between the transaction price (loan proceeds) and the fair value of the loan on initial recognition is
Services in-kind: are not recognized as revenue due to the uncertainties affecting the entity’s ability to control non-exchange transaction.
those services and measure them at fair value. Examples of services in-kind include technical assistance from
foreign bodies, community services rendered by persons convicted of offenses, volunteer services, and the like. Impairment losses and Allowance for Impairment Losses: When an amount already recognize as revenue
Services in-kind may be disclosed in the notes. becomes uncollectible, it is recognized as expense rather than an adjustment to the revenue originally recognize.
Measurements Other Receipts include, but not limited to, the following:
Assets, liabilities and revenue arising from a non-exchange transaction are measured as follows: a. receipt of subsidy from the National Government.
a. assets – at the acquisition date – fair value i. Notice of Cash Allocation
b. liabilities – at present value when the effect of time value of money is material ii. Tax Remittance Advice
c. revenue – at the amount of increase in net assets. If the non-exchange transaction is initially recognized as iii. Non-cash Availment Authority
liability, the subsequent reduction in that liability is recognized as revenue. iv. Cash Disbursement Ceiling
Grant with Condition c. receipt of excess cash advance granted to officers and employees
As asset received under a grant with condition is initially recognized as liability and recognized as revenue only d. receipt of refund of overpayment of expenses
when the condition is satisfied. e. receipt of performance bond or security bond
a performance bond is a security deposit required from a contractor or supplier to guaranty the full and faithful
Illustration: performance of a contract.
The national government (NG) received a foreign grant of P10M conditioned on the construction of a flood
control system which must be completed within the next 2 years, otherwise the grant must be returned to the Cash Collecting Officers 100,000
grantor. The Department of Public Works and Highways (DPWH) is the implementing entity. Guaranty/Security Deposits Payable 100,000
The journal entries are as follows: Cash – Treasury/Agency Deposit, Trust 100,000
a. receipt of grant Cash Collecting Officer 100,000
books of the NG – BTr books of DPWH
Cash in Bank – BSP 10M Cash, MDS, Regular 10M f. collections made on behalf of another entity
Other Deferred Credits 10M Subsidy from NG 10M g. intra-agency and inter-agency fund transfers