Chapter 3:

The Government
Accounting Process
Learning
Objectives
1. Record the basic transactions of government entity.

2. Prepare a worksheet.

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Government Accounting
Process

￮ comprises the activities of analyzing, recording,

classifying, summarizing, and communicating
transactions involving receipt and disposition of
government funds and property, and interpreting
the result thereof.

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“
This process is similar to the business entity, except that
it incorporates budgetary controls, such as recording in
the budget registries and preparing perioding budget
accountability reports.

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Book of Accounts and Registries
The book of accounts and registries of government entities consist of:

1 Journals
a. General Journal
b. Cash Receipts Journal
c. Cash Disbursement Journal
2
Legders
3 Registries
a. Registries of Revenue and Other Receipts
a. General Ledgers (RROR)
b. Subsidiary Ledgers b. Registries of Appropriations and
Allotments (RAPAL)

d. Check Disbursement Journal c. Registries of Allotments, Obligations,

and Disbursements (RAOD)

d. Registries of Budget, Utilization , and

Disbursement (RBUD)
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 Budget Registries
1. Registries of Revenue and Other Receipts (RROR)- used to monitor the budgeted
amounts, actual collections and remittances of revenue and other receipts.

2. Registries of Appropriations and Allotments (RAPAL)- used to monitor appropriations

and allotments. This is to ensure that allotments will not exceed appropriations.

3. Registries of Allotments, Obligations, and Disbursements (RAOD)- used to monitor

the allotments received, obligations incurred against the corresponding allotment, and
the actual disbursement made.

Separate RAOD shall be maintained for each object of expenditure.

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 Object of Expenditures
The classification of expenditures by object are as follows:

a. Personnel Services (PS)- pertain to all types of employee

benefits, e.g. salaries, bonuses, allowances, cash gifts, etc.
b. Maintenance and Other Operating Expenses (MOOE)-
pertain to various operating expenses other than employee
benefits and financial expenses, e.g., travel, utilities,
supplies, etc.
c. Financial Expenses (FE)- pertain to finance costs, e.g.,
interest expenses, bank charges, etc. Financial expenses
also include losses on foreign exchange transactions.
d. Capital Outlays (CO)- pertain to capitalize expenditures,
e.g., expenditures on the construction of public
infrastructures, acquisition costs of equipment, etc.

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 Budget Registries

Accordingly, the following separate RAODs shall be maintained: (a) RAOD-PS; (b)
RAOD-MOOE; (c) RAOD-FE; and (d) RAOD-CO.

4. Registries of Budget, Utilization , and Disbursement (RBUD)- used to record the

approved special budget and the corresponding utilizations and disbursement charged to
retained income. Separate RBUDs are also maintained for each object of expenditure, i.e.,
(a) RBUD-PS; (b) RBUD-MOOE; (c) RBUD-FE; and (d) RBUD-CO.

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Keeping of the General Accounts
The COA shall keep the general accounts of the Government and preserve the vouchers
and other supporting documents

Basic Recordings
Appropriation
Entity A (government agency) receives its GAA consisting of the following:

Personnel Services (PS) 100,000

Maintenance and Other Operating Expenses (MOOE) 60,000
Financial Expenses (FS) -
Capital Outlays (CO) 200,000
Total appropriation for the current year 20x1 360,000

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The receipt of the appropriation is posted (recorded) in the Registry of Appropriations
and Allotment (RAPAL) as follows:

REGISTRY OF APPROPRIATIONS AND ALLOTMENTS

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Date Ref Appropriations Allotments Unreleased Appropriations

F
PS MOOE FE CO Total PS MOOE CO Total PS MOOE FE CO Total
E

1/1/x1 GAA 100,000 60,000 - 200,000 360,000 - -

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Allotment
Entity A receives its allotment from the DBM consisting of the following:

Personnel Services (PS) 90,000

Maintenance and Other Operating Expenses (MOOE) 40,000
Financial Expenses (FS) -
Capital Outlays (CO) 170,000
Total appropriation for the current year 20x1 300,000

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 The receipt of the allotment is posted (recorded) in the Registry of Appropriations and
Allotment (RAPAL) and Registries of Allotments, Obligations, and Disbursement
(RAOD) as follows:
RAPAL

REGISTRY OF APPROPRIATIONS AND ALLOTMENTS

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Date Ref Appropriations Allotments Unreleased Appropriations

PS MOOE FE CO Total PS MOOE FE CO Total PS MOOE FE CO Total

1/1/x1 GAA 100,000 60,000 - 200,000 360,000 - -

1/2/x1 GAARD 90,000 40,0000 - 170,000 300,000 10,000 20,000 - 30,000 60,000

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 RA0Ds

REGISTRY OF ALLOTMENTS, OBLIGATIONS, AND DISBURSEMENTS

PERSONNEL SERVICES
For the year 20x1

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Unpaid Obligations

Date Ref Allotments Obligations Unobligated Allotments Disbursements Not Yet Due
Due and Demandable and
Demandable

1/2/
90,000
x1

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 RA0Ds

REGISTRY OF ALLOTMENTS, OBLIGATIONS, AND DISBURSEMENTS

MAINTENANCE AND OTHER OPERATING EXPENSES
For the year 20x1

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Unpaid Obligations

Date Ref Allotments Obligations Unobligated Allotments Disbursements Not Yet Due
Due and Demandable and
Demandable

1/2/
40,000
x1

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 RA0Ds

REGISTRY OF ALLOTMENTS, OBLIGATIONS, AND DISBURSEMENTS

CAPITAL OUTLAYS
For the year 20x1

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Unpaid Obligations

Date Ref Allotments Obligations Unobligated Allotments Disbursements Not Yet Due
Due and Demandable and
Demandable

1/2/x1 170,000

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Incurrence of Obligation
Obligation Request and Status (ORS)

Obligation shall be incurred through the issuance of Obligation Request and Status
(ORS). The Requesting Office shall prepare this document, supported by valid
claim documents like disbursement, vouchers, payrolls, purchase/ job orders,
itinerary of travel, etc.

The Head of the Requesting Office shall certify the necessity and legality of the
obligation and the validity of the supporting documents. The Head of the Budget
Division shall certify the availability of the allotment.

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Entity A enters into the following contracts:

a. Personnel Services – Employment contract s (Job Order) amounting to Php 70,000.

b. Maintenance and Other Operating Services- Purchase contract for offices supplies worth
Php 25, 000.
c. Capital Outlays- Purchase contract for office equipment worth Php 160,000.

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To simplify the illustration, only one ORS is presented for the three contracts. Separate ORSs should be
prepared for each of them.

The “obligations” are recorded in the Registries of Allotments, Obligations and Disbursements (RAOD)
as follows:

REGISTRY OF ALLOTMENTS, OBLIGATIONS, AND DISBURSEMENTS

CAPITAL OUTLAYS
For the year 20x1

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Unpaid Obligations

Date Ref Allotments Obligations Unobligated Allotments Disbursements Not Yet Due
Due and Demandable and
Demandable

1/2/x1 90,000

1/3/x1 70,000 20,000 0 0 70,000

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 REGISTRY OF ALLOTMENTS, OBLIGATIONS, AND DISBURSEMENTS
CAPITAL OUTLAYS
For the year 20x1

Entity Name: Entity A

Fund Cluster: Regular Agency Fund

Unpaid Obligations

Date Ref Allotments Obligations Unobligated Allotments Disbursements Not Yet Due
Due and Demandable and
Demandable

1/2/x1 170,000

1/3/x1 160,000 10,000 0 0 160,000

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 Notice of Obligation Request and Status Adjustment (NORSA)
If the obligations recorded in the RAOD and ORS above need to be adjusted, the subsequent
adjustment shall be made through the use of the Notice of Obligation Request and Status
Adjustment (NORSA). The adjustment shall be effected through a positive entry (addition) or
a negative entry (reduction), as appropriate.

Up to this point, nothing is recorded yet in the accounting books. The recordings above are
made on the budget registries. Journal entries shall be made only after:

a. the employees have rendered services;

￮ b. the office supplies are delivered and received; and

￮ c. the office equipment is delivered and received.

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Only after these events occur that the entity’s financial statement elements
are affected, and thus, an accountable event has occurred that needs to be
recognized.

In the meantime, the “obligations” recorded in the registries (but not yet in
the accounting books) are referred to as “Not Yet Due and Demandable.”

Notice that government entities and business entities use the term
“obligation” or the phrase “incurrence of obligation” differently.

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 Government entity Business entity
 Obligation- is an act of a duly
authorized official which binds the
government to the immediate or
eventual payment of sum of money.  Obligation is another term for
Obligation maybe referred to as a liability.
commitment that encompasses
possible future liabilities based on
current contractual agreeement.

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 Disbursement Authority- Notice of Cash Allocation (NCA)
Entity A receives Notice of Cash Allocation (NCA) from the DBM amounting to P200,000 net
of tax.

This time a journal entry shall be made in the accounting books because the financial
statement elements of the entity are now affected, i.e., increase in cash and increase in
revenue. The entry is as follows:

Cash-Modified Disbursement System (MDS),

Regular 200,000
Date
Subsidy from National Government 200,000
To recognize receipt of NCA from DBM

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The registries used to monitor the NCA are the following:

1. Registry of Allotments and Notice of Cash Allocation (RANCA)- used

to determine the amount of allotments not covered by NCA and to
monitor the available balance of NCA.

2. Registry of Allotment and Notice of Transfer of Allocation (RANTA)-

used to determine the amount of allotments not covered by Notice of
Transfer Allocation (NTA) and to monitor the available balance of NTA.

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The NCA is posted (recorded) in the RANCA as follows:

REGISTRY OF ALLOTMENTS, AND NOTICE OF CASH ALLOCATION

For the period January 20x1

Entity Name: Entity A Fund Cluster: Regular Agency Fund

Sheet Number: 1

Amount

Allotment Received Notice of Cash Allocation Balance

Date Ref
Received Utilized Unutilized Unfunded Allotment

(a) (b) (c) (b-c) (a-b)

1/4/x1 300,000 200,000 - 200,000 100,000

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