MANAGEMENT OF GOVERNMENT

EXPENDITURES
• Government Expenditures include all
charges against the fund of the agency for
current operating expenditures, capital….
and provisions for retirement of long term
obligations.
• Expenses – the amount of goods and
services used or consumed during a period
• Disbursements – all cash paid out during a
given period either in currency or by check
 Government Expenditures
Classified
(a) Current operating expenditures
(b) Capital outlays
Current operating expenditures are in
turn classified into:
* Personal Services
* Maintenance and Operating
Expenses
Capital Outlays – appropriations for the
purchase of goods and services, the
benefits of which add to the assets of
government, including investments in the
capital of government-owned or controlled
corporations as well as investments in
public utilities and slaughterhouses
Controls on Expenditures
• to avoid or at least minimize irregular or
illegal expenditure of public funds
1. Budget cycle consisting of budget
preparation, legislative authorization,
budget execution and budget
accountability operates as control
mechanisms in the outflow of government
funds
2. Advice of allotment which represents the
authority to obligate [Sec. 38(c), P.D.
1177
3. Accounting and monitoring forms
prescribed by the Commission on Audit
(COA), Department of Budget and
Management (DBM) have to be
accomplished before and after the
incurrence of obligations and actual
liquidation thereof.
Government Auditing
 audit of public funds whether conducted by
auditors of the Commission on Audit or
those of agencies themselves.
 the analytical and systematic examination
and verification of financial transactions,
operations, accounts and reports of any
government agency determining their
accuracy, integrity and authenticity and
satisfying the requirements of laws, rules
and regulations
General Auditing Services :
1. Audit shall be performed by a person
possessed with adequate technical
training and proficiency as auditor.
2. Auditor shall maintain complete
independence, impartially and
objectivity
3. Auditor exercises due professional care
and be guided by applicable laws,
regulations and the generally accepted
principles of accounting
Fundamental Principles in Financial
Transaction
(1) No money shall be paid out of ant
public treasury or depository except in
pursuance of an appropriation law or
other specific statutory authority.
(2) Government funds or property shall be
spent or used solely for public
purposes.
(3) Trust funds shall be available and may
be spent only for the specific purpose
for which the trust was created or the
funds received.
(4) Fiscal responsibility shall be shared by
all those exercising authorities over the
financial affairs, transactions and
operations of the government agency.
(5) Disbursements or dispositions of
government funds or property shall bear
the approval of the proper officials
(6) Claims against government funds shall
be supported with complete
documentation
(7) All laws and regulations applicable to
financial transactions shall be faithfully
adhered
(8) Generally accepted principles and
practices of accounting shall be observed
provided that they do not contravene
existing laws and regulations
Four basic rules in disbursement of
appropriated funds:
1. Revenue funds shall not be paid out of
any public treasury or depository
except in pursuance of an
appropriation law or other specific
statutory authority.
2. Trust funds shall not be paid out of any
public treasury or depository except in
fulfillment of the purpose for which
the trust was created.
3. National revenue and trust funds shall
not be withdrawn from the National
Treasury except upon.
a.) withdrawal approved by the
Secretary of Finance
b.) recommended by the Treasurer
of the Philippines
4. Temporary investment of investible
cash in the National Treasury in any
securities issued by the National
Government and its political….
 subdivisions and instrumentalities
shall not be construed as disbursements of
funds.
Four Fundamental Principles on Local
Fund Expenditures:
1. No money shall be paid out of the local
treasury except in pursuance of an
appropriation, ordinance or law
2. Local government funds and money
shall be spent solely for public
purposes.
3. Trust funds in the local treasury shall
not be paid out except in fulfillment of
the purpose for which the trust was
created or the funds received
4. Fiscal responsibility shall be shared by
all those exercising authority over the
financial affairs, transactions and
operations of the local government
units.
Trust Fund – funds which have become
officially into the possession of any
agency of the government or of a public
officer as a trustee, agent or administrator
or which have been received for the
fulfillment of some obligations
Fiscal Responsibility – heaped upon the
shoulders of the head of the agency
Multifarious Duties and
Responsibilities in relation to the
expenditure of agency funds are
the following:
1. Manage operate and control the
operation of his agency in accordance
with laws and regulations
2. Set up a strong internal control which
will safeguard the agency’s assets,
check the accuracy and reliability of its
accounting data
3. Prepare annually a budget and program
of expenditures for agency operations
4. Set-up and maintain a system of
monitoring and evaluation of the
operation
SHARED FISCAL RESPONSIBILITY
 shared by those whose duties and
responsibilities are related to the
transaction
 Any official who countersigns warrants
or checks shall be….
 responsible for the legality or
regularity of the fiscal transaction
involved
 bear the approval of the proper
officials of the agency [Sec. (495), P.D.
1445]
“In cases of special or trust funds,
disbursements shall be approved by the
administrator of the fund.”
“In cases of temporary absence or
incapacity of the department head or chief
of office, the officer next-in-rank
automatically perform function and be
fully responsible for it.”
 ACCOUNTING AND AUDITING
PRACTICES
• Complete Documentation

- Claims supported with the

complete documentations [Sec. 4(6) P.D.
1445]
- COA Cir. 78-84, dated Aug. 1, 1978
enumerates the basic documents needed to
support particular claim or transaction
 - basic required documents for
each particular type of claim or
disbursement [COA Cir. 81-155]
• Adherence to Laws and Regulations
[Sec. 497), P.D. 1445]
• Generally accepted principles and
practices of accounting, sound
management and fiscal
administration shall be observed
[Sec. 4(8), Ibid]
 Four Basic and Common
Requirements in the Expenditure of
Public funds,
GUEVARRA VS. AUDITOR
GENERAL GIMENEZ, ET. AL. [G.R
L-17115, PROM. NOV. 30, 1962,
REITERATED IN VILLEGAS VS
AUDITOR GENERAL, 18 SCRA 877]
1. Existence of a law appropriating funds
for a given purpose
2. A contract, signed by the proper
officer, has been entered into in
conformity with said appropriation law
3. Goods or services covered by said
contract have been delivered or
rendered in as attested to by the proper
officers
4. Payment authorized by officials of the
Certificate of Availability of Funds
• No contract involving the expenditure
of public funds shall be entered into
unless there is an appropriation
• Contracts for the procurement of
supplies and materials to be carried in
stock may be entered into but not
exceeding the estimated consumption
for three months
Contract - meeting of minds between two
persons whereby one binds himself, with
respect to the other, to give something or to
render some service [Art. 1305, civil
Code]. In the government, there must be a
formal and written contract based of
payment
Contract - law between parties
!Government contract found to be
EXCESSIVE, Commision on Audit is
authorized to reduce pursuant to its power
 THANK YOU!
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