LARGE Disbursement

Appropriation, Allotment, Expenditures and Disbursement
Lecturer:
Vickie L. Jaurigue, SA IV
October 2013
At the end of the session, participants will be able to:
Understand the appropriation, allotment, obligation and disbursement process;

Distinguish between expenditure, expense and disbursement; Identify correctly the classification of the different types of expenditures.
LARGE Seminar, October 2013
Budget Preparation
4
Budget Accountability
2
Budget Authorization
3
Budget Execution
2013 National Budget (by Sector)

- P2.006 TRILLION
10.46% higher than the 2012 budget
2013 National Budget (by Expense Class)
Budgetary Accounts
Appropriation Allotment Obligations
- an authorization made by law or other legislative enactments allowing obligations to be incurred and payments to be made with funds of the government under specified conditions and/or specified purposes.
- Continuing vs. Automatic Appropriations - Programmed vs. Unprogrammed Appropriations
- an authorization issued by the DBM which allows agencies/offices to incur obligations up to a specified amount within a legislative appropriation. - issued thru and ABM or SARO
- Under NGAS, not journalized; recorded in RAOs

NBC 545 dtd 1/2/13
APPROPRIATION, ALLOTMENT, OBLIGATION AND
DISBURSEMENT PROCESS (NGA)

PREPARATION OF BUDGET ESTIMATES, 1.1. PREPARATION OF BUDGET ESTIMATES, FORMS
AND INSTRUCTIONS FORMS & INSTRUCTIONS
8. APPROVAL BY CONGRESS / SENATE 2. PREPARATION BY AGENCIES OF REVENUE & EXPENDITURE ESTIMATES 3. REVIEW AND CONSOLIDATION OF AGENCY REQUESTS BY DEPARTMENT 4. TRANSMISSION OF DEPARTMENT REQUESTS TO DBM 5. NEGOTIATION BETWEEN DEPARTMENT & DBM; PREPARATION OF DRAFT BUDGET 6. CABINET REVIEW OF DRAFT BUDGET FOR PRESIDENTS APPROVAL 7. FINAL BUDGET SUBMITTED TO CONGRESS FOR APPROVAL (w/in 30 DAYS fr. Opening of each regular session)
9. SIGNING OF THE GENERAL APPROPRIATIONS ACT by the President 10. SUBMISSION OF BUDGET EXECUTION DOCUMENT (BED) BY AGENCY TO DBM 11. ISSUANCE OF ALLOTMENT RELEASE ORDER (ARO) BY DBM TO AGENCIES (with corresponding NCA) 12. INCURRENCE OF OBLIGATIONS
(Expenditures)
13. PAYMENT OF OBLIGATIONS

(Disbursements)
DBCC
Start Convenes to determine levels of revenue, expenditure & borrowing program for a given year
DBM
Prepares and Issues Circular Letter on Budget Call to GOCCs Circular Letter Meets the GOCCs to present/ explain the Budget Call
GOCCs
Conduct Corporate Planning to establish the plans and programs for the budget year based on the approved macro-economic and fiscal policy framework of the govt.
Budget ceiling Macro-economic assumptions
Submit to DBM forms for Budget Estimates Budget Estimates
Evaluates Budget Estimates if Budgetary support should be given to the GOCC.
Conducts consultation meetings with the GOCCs with Budgetary Support

No Submit Revised/ Additional Requirements
Complete Requirements?
Yes
LARGE Seminar, October 2013 A
DBM
BMB-F recommendations to the Preliminary Executive Review Board (PERB) and Final Executive Review Board (FERB)
Based on the approved level of Budgetary Support by the FERB, BMB-F prepares the necessary budget documents to be submitted to OP for approval
Notifies the respective GOCCs of the Approved Budgetary Support Levels
Letter BESF
NEP
Presidents Budget Message

See GOCC budget guide
House of Representatives
(Appropriation Committee) Initial budget review (House Committee) Budget hearing (House Body) Presentation of GAB
Senate
(Senate Finance Committee) Budget review/scrutiny Proposes Amendments (Senate Body) Approves GAB
Bicameral Conference Committee

Approves budget bill
President
Signs GAB into GAA
DBM
GOCCs
Start Submit COB, Financial Plan and Projected Monthly Cash Flow Statement to DBM Budget Estimates COB/FP
Cash Program
Transmittal Letter
Prepares Cash Program for the Budget year in coordination with BTr
DBM issues SARO

to DBM to COA to BTr
SARO
No
Defers the Issuance of the NCA pending inclusion In the Cash Program
W/in Limitation of Cash Program
Yes
Prepares NCA
to DBM to COA to BTr
End
NCA & transmittal
LCE
Presents the Executive Budget
Sanggunian
Conducts Preliminary Review & evaluation of the executive budget
(Committee on Appropriations/ Finance)
Local Finance Committee
Head of Dept. & Offices

Justifies their Budget proposals
Deliberates on the budget
Assists Sanggunian in analysis & review of the annual & supplemental budgets
Authorizes the Annual Budget
Forwards Appropriation Ordinance to the LCE (Secretary to the Sanggunian)

Approves Appropriation Ordinance Overrides Veto by 2/3 vote of the majority of all members
See -LGU budget guide
Vetoes the Appropriation
Posts Appropriation Ordinance and forwards copies thereof to the reviewing authority (Secretary to the Sanggunian)
- refers to commitment by a government agency arising from an act of a duly authorized official, in pursuit of its functions/programs and within the authorized appropriation/allotment, which binds the government to the immediate or eventual payment of a sum of money. - Recorded in the RAOs thru the ObR/BUR
Expenditures
Incurrence of a liability, payment of cash, or transfer of property for the purpose of acquiring an asset or service or settling a loss using the accrual basis of accounting. All charges incurred whether paid or unpaid for services rendered or assets purchased. The benefits may extend current accounting period.
beyond
the
Expenses
Financial transactions or events that decrease assets (such as cash) or increase liabilities (such as accounts payable) with a corresponding decrease in owners equity.
Items of expenditure incurred in operating a business/agency operations, including all items that enter into costs of manufacture or merchandising; offsets against earnings and income.
CLASSIFICATION OF EXPENSES (NGAS)

Personal Services MOOE
Financial Expenses
Note: Purchase/construction of fixed assets or PPE which are charged to the allotment for Capital Outlay are immediately recorded in the appropriate Asset Account
1. Current operating expenditures refer to appropriations for the purchase of goods and services for current consumption or for benefits expected to terminate within the fiscal year. PS MOOE
FE
2. Capital outlays /expenditures refer to appropriations for the purchase of goods and services, the benefit of which extend beyond the fiscal year and which add to the asset of the government.
Salaries and wages Per diem
Overtime pay
Training and personnel improvements Bonuses and incentives Pensions and other benefits Consultants fees
Social security insurance premium
Examples of Personal Services

Traveling expenses Communications services Repair and maintenance of government facilities Repair and maintenance of government vehicles Transportation services Supplies and materials Rents Interest Grants, subsidies and contributions Awards and indemnities Loan repayments
Water Illumination Power services Auditing services Training and seminar expenses Confidential and intelligence expenses Taxes, duties and fees Advertising and Publication expenses Insurance premiums
Examples of MOOE
Investment outlay Loan outlay Livestock and crops outlay Land and Land Improvement outlay
Buildings and structures outlay

Furniture, fixtures, equipment and books outlay
Work animal outlay
Examples of Capital Outlays

DISBURSEMENTS
Represent the movement of cash either from the treasury or from an authorized disbursing officer to the recipient; Payment by currency or check
MDS checks Commercial checks
PROCESS Incurrence of Obligation
DOCUMENTS ObR/BUR/ Contract/PO DTR/ Invoice/DR/ Acceptance Report DV/Voucher/PCV/ Liquidation Report - Check/Cash RCI/ROD/ PCR/CBR/CDR
RECORDS/ BOOKS of ACCOUNTS

RAOs/RBU Daily Cash Position Report Subsidiary Ledgers Bank Cashbk/ DOs Cashbk PCR/CBR/CDR JCI/ JD
Delivery of Goods/ Services
Payment
Reporting/ Recording
Understand the appropriation, allotment, obligation and disbursement process;

Distinguish between expenditure, expense and disbursement; Identify correctly the classification of the different types of expenditures.
Procedures for the Preparation and Approval of the Operating Budgets of GOCCs
EO 518 dated January 23, 1979 Government Corporate Budget EO of 1978
Declaration of Policy
The budgets of all components of government shall be supportive of national objectives and development plans and that in pursuance thereof, the budgets of government-owned or controlled corporations shall be supportive of and consistent with the budgets of the departments, bureaus, offices and agencies of the national government.
The budgets of GOCCs shall observe the budget, organization and compensation policies and guidelines which govern agencies of the national government and which are contained in pertinent budget and compensation laws, rules and regulations.
The budget process of government corporations shall observe the concept of flexible budgeting and as such shall allow immediate adjustment to changes in economic and business conditions.
Corporations that earn a profit shall be allowed greater flexibility in terms of administrative expenses and compensation but corporations that incur losses shall be subject to the same conditions and guidelines as those that govern regular agencies of the government: Provided, however, that exceptions may be allowed with the approval of the President in the case of corporations that are at the initial stages of operation and which are expected to show a profit within a reasonable period of time.
Operating Budgets
The budgets of GOCCs shall be consistent in format and timing with that of the National Government budget, except as these may be modified to suit the peculiarities of individual corporations. These budgets shall be formulated on the basis of an obligational authority and/or a cash basis of accounting, or variations thereof as may be duly approved under pertinent law.
Prepared prior to the beginning of the fiscal year and recommended by the Governing Board of the Corporation, for consideration and final approval by the President Consists of: (1) estimates of revenues, (2) estimates of expenditure, and (3) estimates of borrowings (4) Projected financial statements
projected Balance Sheet, projected Profit and Loss Statement, projected Cash Flow Statement, and such other financial projections as may be required, together with the underlying assumptions adopted in making the projections.
Operating Budgets
Operating Budgets
Attachment of corporations, including financial institutions, to operating budget proposals:
a) the projected sources and uses of funds statement for the budget year, b) an estimated sources and uses of funds statement for the current year, and c) an actual statement of sources and uses of funds for the preceding year.
(Note: The latter two submissions shall be accompanied by comparative data on the approved funds flows established for the said year. )
It shall also be accompanied by an assessment of the economic and business conditions which will have a bearing on the corporation's operations.
Operating Budgets For Financial Institutions

Operating budgets shall be subject to the review and approval process under this Act, provided that:
Rediscounting, lending and borrowing transactions shall not be considered as part of their operating budgets ;
Capital outlays included within the scope of the budget review and approval process shall include permanent investments, such as equity investments in subsidiaries or affiliated companies, land acquisition, building construction, land improvements, and the like;
Loans granted to other financial institutions which have the effect of increasing the fringe benefits or compensation of the staff of the original lending institutions or for purposes of allowing the implementation of capital projects for use of the institution shall be considered as part of the operating budget.
Operating Budgets For Financial Institutions

Long Term Budget The Governing Board of an institution shall prepare a long term budget consisting of estimates of income, expenditure and debt for the budget year and at least the subsequent four-year period. In the case of capital outlays, budget estimates shall be prepared to cover the cost of capital projects scheduled over the five year period beginning with the budget year.
Budget Flexibility
Supplemental budgets may be proposed by corporations for approval only when supported by adequate funding sources. The approval of supplemental budgets shall observe the same procedures as those established for the principal operating budget of the corporation.
in lieu of a system of supplemental budgets, the President may approve a flexible budget system for individual corporations, which would allow automatic changes in expenditure level to accompany changes in revenue, raw material or other direct expenses the President may delegate to the Governing Board, the authority to change allocations within limits and under such conditions as he may specify.
Changes in the approved principal or supplemental budgets shall be made only with the approval of the President subject to the above
Trust Funds
Each corporation shall submit to the President budget estimates covering the income and expenses associated with funds administered, managed, or held in trust by the GOCC: Provided, That transactions relating to the receipts, disbursements, or generally the disposition of the principal and accumulated net income of such Trust Funds shall not be considered as forming part of the corporation's operating budget.
Expenditure Authority
No GOCC shall incur obligations or make payments for current operating or capital expenditures after the beginning of each calendar year without a budget as approved under this Order.
Equity Investment
Budgetary Requests - GOCCs may propose payment of capital stock subscriptions of the NG and the allocation of subsidy payments in the form of a budgetary request submitted in response to the annual budget call issued by the DBM in the preparation of the annual GAB: Provided that,
Corporate equity investments shall be within the limit of the authorized capital stock of the requesting corporation
Budgetary request shall be submitted in such format and within the timetable as set by the DBM Requests for equity investment shall be accompanied by projected financial statements and details of the proposed projects for which the requested government equity investments is intended.
Equity Investment
Fund Releases - Funds appropriated for government equity investments and subsidies shall be released upon submission of Special Budgets as provided by Sec. 40 of P.D. No. 1177, the usage of such funds shall be specified, including the projects to be implemented or undertaken with equity investments.
Local Budget and Fiscal Administration
41
Local Budget and Fiscal Management 1. Preparation

heads of offices and treasurers of the LGU submit to the LCE their expenditure and budget proposals; LCE uses the proposals to prepare the budget for the ensuing year setting forth the ff: a. Estimates all income certified collectibles by the treasurers concerned; and b. The total appropriation covering the Current operating expenditures and Capital outlays
LARGE Seminar, October 2012 42
Local Budget and Fiscal Management

2. Legislation
On or before the end of the FY the local board or council approves through the enactment of an appropriation ordinance the annual budget for each type of funds that goes to the LGUs for the ensuing FY based on the certified estimated income and budget proposals submitted by the LCE. In case of cities, the budget enacted by the local board or council require the approval of the majority of the members thereof. The Summary of the board or council furnishes the local treasuries with at least 3 copies of the approved appropriation ordinance within 10 days after its approval. In case of provinces or cities, the local auditor is also furnished with copies.
Local Budget and Fiscal Management 3. Budget Review Once a budget is passed by the legislature, the appropriations ordinance is subject to review by authorities depending on the nature of the LGU.
DBM reviews the appropriation ordinance of provinces, highly urbanized cities, independent component cities, and municipalities within MM. Sangguniang Panlalawigan reviews the ordinance of component cities and municipalities
Local Budget and Fiscal Management

Budgetary Requirements: Must not exceed budgetary requirements of income (Sec.
324)
Full provisions for statutory and contractual obligations Debt servicing not to exceed 20% Set aside funds of component barangays not less than P1,000 5% of total income for calamity fund 10% of general fund for SK funds 20% of IRA for development projects (Sec. 287) Proceeds from share of national wealth for local development and livelihood projects. For hydrothermal, geothermal and other sources of energy, 80% of share to be applied to lower the cost of energy.
LAWS AND RULES ON GOVERNMENT EXPENDITURES & DISBURSEMENTS

Lecturer:
Vickie L. Jaurigue, SA IV
October 2013
At the end of the session, participants will be able to: Enumerate the basic principles for expenditures and disbursements; Identify the fundamental principles for expenditures and disbursements in actual work situations;
State some applicable general provisions of the GAA.

LARGE Seminar; October 2013
Give examples of irregular, unnecessary, excessive, extravagant or unconscionable expenditures; and
47
Section 2 - PD 1445
It is the declared policy of the State that all resources of the government shall be managed, expended or utilized in accordance with law and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned.
48
1. No money shall be paid out of any 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.
49
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, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of the government agency.
50
5. Disbursement or disposition of government funds or property shall invariably bear the approval of the proper officials.
6. Claims against government funds shall be supported with complete documentation.
51
7. All laws and regulations applicable to financial transactions shall be faithfully adhered to. 8. Generally accepted principles and practices of accounting as well as of sound management and fiscal administration shall be observed, provided that they do not contravene existing laws and regulations.
52
1. Certificate of Availability of Funds 2. Approval of claim or expenditure by head of office or his duly authorized representative
3. Documents to establish validity of claim

4. Conformity of the expenditure to existing laws and regulations 5. Proper accounting treatment
53
Appropriation Before Entering Into Contract

Section 85, PD 1445
No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, is sufficient to cover the proposed expenditure.
LARGE Seminar; October 2013 54
Funds Availability
Sec. 86, PD 1445 CAF
no contract involving expenditure of public funds shall be entered into or authorized unless the proper accounting official of the agency has certified that funds have been duly appropriated for the purpose Contract for PS Supplies for current consumption not exceeding 3 months Banking transactions of GOCC banks
Exceptions:
55
Void contract
Section 87, PD 1445
Any contract entered into contrary
to the requirements of the two

immediately preceding sections shall be void, and the officer or officers entering into the contract shall be liable to the government or other contracting party for any
Prohibition Against Advance Payment

Section 88, PD 1445
Except with the prior approval of the President, the government shall not be obliged to make an advance payment for services not yet rendered or for supplies and materials not yet delivered under any contract therefor.
(refer to Sec. 4, Annex D of October IRR of RA 9184 as amended by57 LARGE Seminar; 2013
Limitation on Cash Advance

Section 89, PD 1445
No cash advance shall be given unless for a legally authorized specific purpose. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served.
No additional cash advance shall be allowed to any official or employee

Payments to Creditors
Section 91, PD 1445
Payments to creditors shall be made only upon the specific approval of the head of the agency concerned or his duly authorized representative, or if
there be no such officer, upon the

Report of Disbursing Officers

Section 100, PD 1445 Disbursing officers in any government agency shall render monthly reports of their transactions pursuant to
regulations of the Commission to be submitted not later that the fifth day of
Accountable Officers
Section 101, PD 1445
Every officer of any government
agency whose duties permit or require the possession or custody of
government funds or property shall be
accountable
therefor
and
for
the
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Liability for Acts Done by Direction of Superior Officer Section 106, PD 1445
No accountable officer shall be relieved from liability by reason
of his having acted under the direction of a superior officer in

paying out, applying, or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the
superior officer in writing of the illegality of the payment,

application or disposition. The officer directing any illegal payment or disposition of the
funds or property shall be primarily liable for the loss, while the
accountable officer who fails to serve the required notice shall be secondarily liable.
Irregular, Unnecessary, Excessive, Extravagant or Unconscionable Expenditures

(COA Cir. No. 2012-003 and 85-55A)
Irregular
incurred without adhering to
established
procedural
rules,
guidelines,
regulations,
policies,
principles or practices that have gained

recognition in law. Illegal

(COA Cir. No. 2012-003 and 85-55A)
Unnecessary
could not pass the test of prudence or the obligation of a good father of a family, thereby non-responsive to the
exigencies of the service.

Factors to be considered:
Time of Need 3 months limit LARGE Seminar; October 2013
64

(COA Cir. No. 2012-003 and 85-55A)
Excessive Unreasonable expenses
incurred at an immoderate quantity or exorbitant price

Variables:

Price 10% variance Quantity - Volume discounts not considered

Factors to be considered: Supply and Demand Government Price Quotations Warranty/Special Features Brand of Products

(COA Cir. No. 2012-003 and 85-55A)
Extravagant
incurred without restraint, judiciousness and economy; exceed the bounds of propriety; immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive, and injudicious. Factors to be considered: nature of agencys operation, mission, profitability, availability of resources Variables: quantity is relative to ranks of user and purpose

(COA Cir. No. 2012-003 and 85-55A)
Unconscionable
incurred without knowledge or sense of what is right, reasonable and just and not guided or restrained by conscience.
MoreGAA provisions
Limitations on Government Expenditures

Pursuant to the General Provisions of
Republic Act No. 10352
GAA for CY 2013

68
Sec. 15 - Use of the Current Years Appropriations
In exceptionally valid and justifiable circumstances, DBM may authorize payment of unbooked PY obligations after COA validation to be charged against available savings of the agency concerned.
The appropriations in this act shall be disbursed only for the purposes authorized herein and incurred during the current year.
69
Sec. 16 - Use of Government Funds by NGAs/ GOCCs/ LGUs appropriations authorized for the purpose LRR, such as, but not limited to: a) Purchase of goods, infrastructure projects and consulting services, including common-use supplies shall be in accordance with RA No. 9184 and its Revised IRR; b) Purchase of motor vehicles shall be made in accordance with AO 233, s. 2008 as amended by AO 15, 2. 2011, and BC 2010-2 dtd March 1, 2010;
shall be in accordance with:
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Sec. 16 - Use of Government Funds not limited to:

c) Payment of foreign travel expenses of government official or employee for training, seminar or conference abroad in accordance with EO 248, 248-A, s.1995 as amended by EO 298, s.2004 and when the officials/personnel of the foreign mission cannot effectively represent the country therein, and travels necessitated by authorized international commitments exception: when they are due to retire within one year after the said foreign travel.
71
Sec. 16 - Use of Government Funds not limited to:

d) Provision of fuel, parts, repair and maintenance to any government vehicle properly identified as such and which carry its official government plate number; In case of transport crisis, government vehicles of any type shall be made available to meet the emergency and may be utilized to transport for free the commuters on a round-the-clock basis e) Grant of CNA incentives, honoraria and other allowances authorized by law
72
Sec. 17 Lease-Purchase Agreements NGAs/SUCs are authorized to use their annual rental appropriations for office space or building for the acquisition of their office building under a lease-purchase agreement until full payment thereof.
not to exceed the annual rental appropriations at the time of signing of the lease-purchase agreement
73
Sec. 18 - Purchase of Supplies, Materials and Equipment Spare Parts for Stock
Inventory not requirement; to exceed normal 3-months
Inventory of critical goods may be increased, in anticipation of cost increases, national emergency or impending shortage, specifying maximum quantities of individual items but not to exceed one year's requirement, unless approved by the President, upon joint recommendation of the Secretary concerned and the COA Chairman
74
Sec. 19 - Emergency Purchases Emergency purchases of supplies, materials and spare parts of motor transport equipment are allowed for unforeseen contingency requiring immediate purchase, subject to the conditions prescribed under RA No. 9184 and its Revised IRR.
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Sec. 20 - Domestic/Foreign Goods Procurement (CA 138 and Sec. 43 of RA 9184 and R-IRR)
Preference to domestic entities/bidders: a) Domestic entity - secure DTI or SEC certification that it has all the qualifications required under C.A. No. 138, R.A. No. 9184 and its Revised IRR; b) Domestic bidder - secure DTI certification that the goods forming part of its bid are substantially composed of articles, materials, or supplies grown, produced, or manufactured in the Philippines
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Sec. 20 - Domestic/Foreign Goods Procurement

Conditions:
Foreign military sales agreements, heavy equipment imports for infra projects, and other importations of agencies financed by foreign borrowings may be made, subject to the requirements of LOI No. 880 and other LRR. Infra projects by administration or by contract preference to be given to locally-produced and manufactured materials, including FAPs with loan agreements that expressly allow or do not prohibit the same.
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Sec. 21 - Contracting Multi-Year Projects Agencies shall request the DBM for the issuance of a MYOA following the guidelines under DBM CL 2004-12 dated 10/27/04. The obligation to be incurred in any given year shall in no case exceed the allotment released for the purpose during said calendar year.
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Sec. 37 - Authorized Deductions from salaries

Deductions shall not reduce the employee's monthly net take home pay to an amount lower than P4,OOO; Preferred order of payment:
a) BIR, PHILHEALTH, GSIS and HDMF; b) Mutual benefits associations/thrift banks/non-stock savings/loan associations operating under existing laws and managed by and/or for the benefit of government employees; c) Associations/cooperatives/provident funds organized and managed by government employees for their benefit and welfare; d) Duly licensed insurance companies accredited by national government agencies e) Rural banks accredited by the BSP.
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Sec. 42 - Special Counsel Allowance

Those who appear in court as special counsel in collaboration with the SolGen or prosecutors are authorized an allowance of P1,250 for each appearance or attendance of hearing except pursuant to a motion for extension, chargeable to savings in the appropriations of their respective offices, but not exceeding P5,OOO per month. Allowance not provided for appearance before quasijudicial and administrative agencies. Implementation is subject to guidelines issued by the DBM.
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Sec. 52 - Use of Savings The President of the Philippines, Senate President, Speaker of the House of Representatives, the Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman are hereby authorized to use savings in their respective appropriations to augment actual deficiencies incurred for the current year in any item of their respective appropriations.
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Sec. 53 - Meaning of Savings and Augmentation

Savings unobligated balance of any programmed appropriation from: a) Completion/final discontinuance/abandonment of work, activity or purpose authorized in the GAA; b) Unpaid compensation from vacant positions and LWOP;
c) Cost-cutting measures that were implemented that improved systems and efficiencies at a lesser cost.
82
Sec. 53 - Meaning of Savings and Augmentation Augmentation - implies the existence in the GAA of a p/p/a with an appropriation, which upon implementation or subsequent evaluation of needed resources, is determined to be deficient.
In no case shall a non-existent program, activity, or project, be funded by augmentation from savings or by the use of appropriations otherwise authorized in this Act.
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Sec. 54 - Rules in the Realignment of Savings

Realignment from one allotment class to another needs prior approval from the DBM. Augmentation is authorized within PS and MOOE, except intelligence funds which require prior approval of the President. Realignment among objects of expenditures within CO require prior DBM approval. Realignment for authorized payment of magna carta benefits require prior DBM approval.
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Sec. 55 - Rules in the Realignment of Savings for CNA

MOOE savings, derived from cost-cutting measures identified in CNAs, may be used for one-time annual payment of CNA incentives by agencies with duly executed CNAs upon a written resolution signed by labor and management representatives, and approved by agency head
Funding source shall in all cases be limited to the allowable MOOE allotments and rates determined by DBM, respectively. DBM Cir. No. 2006-1 and 2011-5 and such other issuance implementing guidelines
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Sec. 56 - Priority in the Use of Savings Priority for augmentation of the amounts set aside for compensation, year-end bonus and cash gift, retirement gratuity, terminal leave benefits, old-age pension of veterans and other personnel benefits authorized by law, and to expenditure items in the agency special provisions and in other sections of the General Provisions in this Act.
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Sec. 57 - Mandatory Expenditures

The amounts programmed for petroleum, oil and lubricants as well as for water, illumination and power services, telephone and other communication services and rent requirements shall be disbursed solely for such items of expenditures. Any savings after taking into consideration the agency's full year requirements may be realigned only in the last quarter subject to the rules on realignment.
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Sec. 58 - Expenditures for Business-type Activities Appropriations for procurement of goods intended for use in business-type activities shall not be realigned and shall be disbursed solely for such business-type activity.
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Sec. 59 - Intelligence Funds (IF)

Released or disbursed only upon approval of the President, or as specifically identified and authorized in the GAA.
Also applies to IF in government agency budgets, incl. savings authorized by special provisions to be used for intelligence and counter-intelligence activities.
Sec. 60 Confidential Funds

Released or disbursed only upon approval of the Department Secretary concerned.
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Sec. 61 Use of CIF for GOCCs and LGUs

Released or disbursed for confidential and intelligence activities only upon approval of the President/their respective Sanggunians and specifically identified and authorized in their corporate/local budgets. Grant of CIF shall be limited to corporations/LGUs performing activities related to information gathering and surveillance activities which have direct impact to national security and/or intended to support its mandates and operations.
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Sec. 62 Realignment of Funds for ForeignAssisted Projects (FAPs) The loan proceeds and peso counterpart in the GAA for FAPs shall not be realigned except to other FAPs after considering allocation for every component; An agency may, with valid reason realign from one sub-project to another within the same FAP as long as total project cost as prescribed in the relevant loan agreement is not exceeded.
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Sec. 63 - Availability of Appropriations
All appropriations authorized in this
Act are available for release and

obligation for the specified purpose
until end of FY 2013.
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Sec. 69 - Certification of Availability of Funds

Before entering into contracts for expenditure of public funds, secure CAF from the agency chief accountant; CAF to be contained in, and made part of, the contract duly signed by the chief accountant as provided in PD No. 1445.
For projects covered by a MYOA, the same shall be used as basis in the certification of availability of funds required prior to contract execution.
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Sec. 70 - Disbursement of Funds All appropriated funds to be disbursed, with proper authority for its incurrence, only through the BTr and/or authorized servicing banks under the MDS. Sec. 71 - Limitations on Cash Advance Cash advances to be granted only after earlier cash advances availed of shall have been liquidated.
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Sec. 72 - Fund Transfers to CSOs
Shall be made only when earlier fund releases, if any, have been fully liquidated and at least 70% of the latest fund transfer availed of by the CSOs shall have been liquidated, shall still be subject to COA Circ. 2007-01 dtd Oct. 25, 2007 or subsequent COA issuances. Government agencies shall likewise ensure that the CSOs they deal with are legitimate.
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Sec. 83 - Internal Revenue Allotment of LGUs The IRA which is automatically appropriated shall be apportioned using allocation formula in Section 285 of RA 7160. LGUs shall include in their budgets income form both local and external sources, and receipts from borrowings, including their IRA which shall be approved by their respective sanggunians.
Enforcement of Sec. 325a and 331b of RA 7160 is waived.

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Sec. 84 - Use and Disbursement of IRA of LGUs The IRA shall be used in accordance with Section 17 (g) and 287 of RA No. 7160: Sec. 17(g) - Any fund or resource available for the use of local government units shall be first allocated for the provision of basic services or facilities;
Sec. 287 - Each local government unit shall appropriate in its annual budget no less than twenty percent (20%) of its annual IRA for development projects.
97
Sec. 85 - Strict Adherence to Procurement Procedures, L/R/R All agencies shall strictly adhere to the provisions
of RA No. 9184, its Revised IRR, and other GPPB guidelines and use the PhilGEPS as the primary source of information on government procurement of common-use supplies and as repository of all government procurement information
More for LGUs

98
Laws and Rules on LGU Expenditures
99
General Limitations on the Use of LGU Funds, Sec. 325 of LGC

(a) The total appropriations, whether annual or supplemental, for PS of a LGU for a fiscal year shall not exceed 45% in the case of first to third class provinces, cities and municipalities, and 55% in the case of fourth class or lower, of the total annual income from regular sources realized in the next preceding fiscal year.
General Limitations on the Use of LGU Funds, Sec. 325 of LGC

The appropriations for salaries, wages, representation and transportation allowances of officials and employees of the public utilities and economic enterprises owned, operated, and maintained by the LGU concerned shall not be included in the annual budget or in the computation of the maximum amount for PS. The appropriations for the PS of such economic enterprises shall be charged to their respective budgets;
General Limitations on the Use of LGU Funds,

(b) No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder;
(c) No local fund shall be appropriated to increase or adjust salaries or wages of officials and employees of the national government, except as may be expressly authorized by law;

(d) In cases of abolition of positions and the creation of new ones resulting from the abolition of existing positions in the career service, such abolition or creation shall be made in accordance with pertinent provisions of this code and the civil service law, rules and regulations;
103

(e) Positions in the official plantilla for career positions which are occupied by incumbents holding permanent appointments shall be covered by adequate appropriations;
104

(f) No changes in designation or nomenclature of positions resulting in a promotion or demotion in rank or increase or decrease in compensation shall be allowed, except when the position is actually vacant, and the filling of such positions shall be strictly made in accordance with the civil service law, rules and regulations;
(g) The creation of new positions and salary increases or adjustments shall in no case be made retroactive;
105

(h) The annual appropriations for discretionary purposes of the LCE shall not exceed two percent (2%) of the actual receipts derived from basic real property tax in the next preceding calendar year. Discretionary funds shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law. No amount shall be appropriated for the same purpose except as
Prohibition in Spending LGU Funds

Election Campaign Reception and Entertainment Expenses (up to limit of RA authorized by law) Cash Advances Advance Payment Religious Benefit or Private Purpose Appropriation Law Trust Funds
General Limitations on the Use of LGU Funds, Sec. 331(b) of LGC

The total annual appropriations for personal services of a barangay for one (1) fiscal year shall not exceed fifty-five percent (55%) of the total annual income actually realized from local sources during the next preceding fiscal year.
108
End of Session 2
109
Enumerate the modes of disbursing government funds
State some general policy guidelines for the institution of the MDS
State when cash payments may be made Enumerate the responsibilities of an accountable officer
111
By check
Modified Disbursement System (MDS) Commercial checks
By cash, through the cash advance granted to the AO
By Tax Remittance Advice (TRA)

Other Disbursements
By Non-Cash Availment Authority (NCAA)
By Advice to Debit the Account (ADA)
112
All funds appropriated in the General Appropriations Act (GAA) Public Works Act
Other supplemental appropriations for the different departments including their bureaus, offices and agencies/hospitals All other funds deposited in the National Treasury including Special Accounts maintained by NGAs and GOCCs
113
Revolving Fund authorized to be deposited with a government depository bank. Constructive cash requirements/disbursement scheme covering loan availments for FAPs for which NCAA shall be issued by the DBM to the implementing agencies. Utilization of foreign collections of the DFA, BIR, DOLE, DTI and DECS. Agency requirements directly drawn against Special Accounts (Working Fund) maintained by the BTR with the BSP.
114
DBM issues NCA NCA from DBM is journalized by the agency GSBs maintain separate accounts or ledgers for each agency by fund based on NCA Agencies reconcile accounts with the GSBs
115
MDS and commercial checks to be supported by duly approved DVs Refund of cash advances & overpayments NCA - remit to BTR FC - deposit with GSB in agencys current account
116
NCA balance at the end of the year automatically expires Agencies prepare monthly Bank Reconciliation Statements Prior years obligations shall only be paid in the ensuing year out of NCA requested & released for the purpose
117
1. Daily receipts must be deposited intact. 2. All payments must be made by check. 3. Only payments in small amounts may be made through the petty cash fund.
118
When it is difficult, impractical or impossible to make such payment, cash advance is resorted to.
119
General Guidelines in Granting and Utilizing Cash Advances

1. No CA granted unless for a legally specific purpose; 2. No additional CA unless the previous CA given is first settled/reported on; 3. CA to be liquidated soon as purpose has been served; 4. Only permanently appointed officials designated as disbursing officers;
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5. Only disbursing officers to be granted CA or perform disbursing functions; 6. Grant of CA only to properly bonded accountable officer; 7. Transfer of CA from one AO to another is not allowed; 8. CA to be used solely for the specific legal purpose for which it was granted;
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9. No CA for payment of infrastructure or project; 10. CA for special time-bound undertakings to be liquidated within one month from date of accomplishment of the purpose of CA; 11. CA that is no longer needed or has not been used for 2 months to be returned/deposited immediately to collecting officer/treasurer;
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12. Accountant shall obligate all cash advances granted and shall see to it that CA for a specific year is not used to pay for other years expenses.
123
1. Regular Cash Advances salaries & wages payroll = commutable allowances one pay period honoraria petty operating expenses PCF (no limit for NGA; 1 months need for LGU)
2. Special cash advances
Current operating, expenditures of the agency field office Travel expenditures

124
Responsible Person
Responsibility
AO
1. Liquidate cash advance
Salaries & Wages - w/in 5 days after each 15 days of the month pay period
Petty & Field Operating Expenses - 20 days after eo year

Official Travel - (Foreign) w/in 60 days after arrival - (Local) w/in 30 days
125
Responsible Person
Responsibility
AO
2. Prepare 3 copies of RD & submit to the accountant with DVs and Liquidation Voucher and SDs
Accountant 3. Verify, record and submit to auditor w/in 10 days upon receipt
Auditor AO AO 4. Complete the audit w/in 30 days, issues CN 5. Settles suspension/ disallowance 6. Returns CA if no longer needed for 2 month
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Salaries, wages, commutable allowances, honoraria and other similar payments

1. Report of Disbursements /CDR duly signed 2. All pertinent supporting documents
Petty operating expenses

1. Report of Disbursements/PCR with supporting documents 2. Approved Requisition and Issue Slips with the receipts, sales invoices 3. Certificate of Acceptance/Inspection 4. Duly approved trip ticket 5. Supporting documents required by the nature of the expense
127
Current operating expenditures
1. Same requirements as those for salaries, wages, etc. and petty operating expenses
2. Canvass of at least three suppliers
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1. For accountable officers with total cash accountability over P5,000 the bonding requirements are: Appointment /designation as AO; Latest copy of SALN; If renewal, copy of latest BTR letter approving renewal application Proof of payment of bond premium to AGDB Agency Certification of no pending administrative/criminal case
129
When accountability is increased, the Accountant ensures that additional bond is applied for When the AO ceases to be one, the Accountant immediately informs the Fidelity Bond Division Bond for accountability shall be in accordance with schedule of cash accountability and bond issued by the BTr.
130
Exercise 3.0-1 Case on Cash Advance

Instructions: Go over the situation Your group should discuss what would be the answer to the case. Be ready to explain the reason for our answer. Write your answer on the kraft paper. Reporting: Your responses will be discussed in plenary. Please assign a reporter to present your output. Time allotted: 15 minutes
131
Enumerate the modes of disbursing government funds
State some general policy guidelines for the institution of the MDS
Enumerate the responsibilities of an accountable officer
State when cash payments may be made
132
133

LARGE Disbursement

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Appropriation, Allotment, Expenditures and Disbursement

At the end of the session, participants will be able to:

Understand the appropriation, allotment, obligation and disbursement process;

LARGE Seminar, October 2013

2013 National Budget (by Sector)

LARGE Seminar, October 2013

2013 National Budget (by Expense Class)

LARGE Seminar, October 2013

LARGE Seminar, October 2013

LARGE Seminar, October 2013

- Under NGAS, not journalized; recorded in RAOs

APPROPRIATION, ALLOTMENT, OBLIGATION AND

DISBURSEMENT PROCESS (NGA)

13. PAYMENT OF OBLIGATIONS

Budget ceiling Macro-economic assumptions

Submit to DBM forms for Budget Estimates Budget Estimates

Evaluates Budget Estimates if Budgetary support should be given to the GOCC.

Conducts consultation meetings with the GOCCs with Budgetary Support

LARGE Seminar, October 2013 A

Notifies the respective GOCCs of the Approved Budgetary Support Levels

Presidents Budget Message

See GOCC budget guide

Bicameral Conference Committee

DBM issues SARO

W/in Limitation of Cash Program

NCA & transmittal

Local Finance Committee

Head of Dept. & Offices

Deliberates on the budget

Authorizes the Annual Budget

Forwards Appropriation Ordinance to the LCE (Secretary to the Sanggunian)

See -LGU budget guide

Vetoes the Appropriation

LARGE Seminar, October 2013

LARGE Seminar, October 2013

CLASSIFICATION OF EXPENSES (NGAS)

LARGE Seminar, October 2013

Salaries and wages Per diem

Social security insurance premium

Examples of Personal Services

Buildings and structures outlay

Work animal outlay

Examples of Capital Outlays

LARGE Seminar, October 2013

PROCESS Incurrence of Obligation

RECORDS/ BOOKS of ACCOUNTS

Delivery of Goods/ Services

At the end of the session, participants will be able to:

Understand the appropriation, allotment, obligation and disbursement process;

Operating Budgets For Financial Institutions

Operating Budgets For Financial Institutions

Local Budget and Fiscal Administration

LARGE Seminar, October 2012

Local Budget and Fiscal Management 1. Preparation

Local Budget and Fiscal Management

Local Budget and Fiscal Management

LAWS AND RULES ON GOVERNMENT EXPENDITURES & DISBURSEMENTS

State some applicable general provisions of the GAA.

Give examples of irregular, unnecessary, excessive, extravagant or unconscionable expenditures; and

LARGE Seminar; October 2013

LARGE Seminar; October 2013

LARGE Seminar; October 2013

LARGE Seminar; October 2013