Employees’ Compensation Commission Request for Guidance in the Preparation of the

Reconciliation required under PPSAS 24-Presentation of Budget Information in the Financial

Statements between the Statement of Comparison of Budget and Actual Amounts (SCBAA)
and the Statement of Cash Flows (SCF)

Observations and Recommendations:

1. On the submitted SCBAA, the following were noted:

a. Some headings used were not in conformity with the format prescribed in COA
Circular No. 2017-004 dated December 13, 2017.

E.g., "Receipts" and "Payments" should be used instead of "Sources of Funds" and
"Uses of Funds", respectively.

b. Under the "Sources of Funds" heading, the line items for receipts should have been
presented (e.g., Tax Revenue, Service and Business Income, Assistance and
Subsidy, etc.) instead of “Corporate Funds”. There is no need to provide additional
information for these line items of receipts (“State Insurance Fund” and “Retained
Earnings”).

c. Under the "Uses of Funds" heading, the line items presented are per expense class,
but there is no need to provide additional information for these expense classes
(“State Insurance Fund” and “Retained Earnings”).

2. The reconciliation required under PPSAS 24 can be prepared using the format below:

Operating Investing Financing Total

Actual Amounts on
Comparable Basis xxx xxx xxx xxx
as Presented in the
SCBAA
Basis Differences xxx xxx xxx xxx
Timing Differences xxx xxx xxx xxx
Entity Differences xxx xxx xxx xxx
Actual Amounts as
Presented in the xxx xxx xxx xxx
SCF

a. The actual amounts on a comparable basis, as presented in the "Receipts" and

"Payments" portion of the SCBAA, are to be sourced from the SCF. These actual
amounts should pertain only to the current year. Please see Annex S of COA
Circular No. 2017-004 for additional information on how to prepare the SCBAA.

b. The above reconciliation is prepared only if the "Net Receipts/Payments" line item
in the SCBAA does not corresponds to the "Net Increase/(Decrease) in Cash
Equivalents" line item in the SCF. If this will be the case, there is a need to classify
the actual amounts on comparable basis as presented in the SCBAA as to whether
these are from operating, investing and financing activities.
c. The amounts on a comparable basis as presented in the SCBAA, classified as to
whether operating, investing or financing, are to be presented in the above
reconciliation “net” (receipts minus payments) since these are to be reconciled with
the net cash provided/(used in) per activity in the SCF.

d. The resulting differences between the actual amounts on a comparable basis as

presented in the SCBAA and the actual amounts as presented in the SCF shall be
separately classified as to whether basis, timing or entity differences. PPSAS 24
provides guidance on these differences.

E.g., there may be payments of expenses pertaining to prior years which are
included in the cash outflows from operating activities in the SCF, but these are
excluded in the actual amounts presented under "Payments" in the SCBAA, since
they pertain to prior years. This is an example of timing difference which should be
separately identified in the above reconciliation.

e. The above reconciliation shall be disclosed as part of the Notes to FS.