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Public Fiscal Administration Part 1

1. 1. PUBLIC FISCAL ADMINISTRATION Filipino Administrative Institutions PA


211

2. 2. Fiscal Administration • Is the act of managing incoming and outgoing


monetary transactions and budgets for governments, educational
institutions, nonprofit organizations, and other public service entities. •
Refers to systems, processes, resources, and the policy, environment,
government, the inter-governmental and inter-local fiscal relations,
affecting among others.

3. 3. Fiscal Administration  Revolutionary Government Emiliano Riego de


Dios (Minister of Finance) Tejeros Convention Baldomero Aguinaldo
(Director of Finance) Naic, Cavite Mariano Trias (Minister of Finance) Jan. 21
– May 7, 1899 Hugo Ilagan (Minister of Finance) May 7 – Nov. 13, 1899 
1901 – Department of Finance and Justice (Second Philippine Commission)
appointed by Pres. McKinley Headed by William Howard Taft Sec. Gregorio
Araneta (July 1, 1908 – Oct. 30, 1913) Sec. Victorino Mapa (Nov. 1, 1913 –
Jan. 14, 1917)  1916 – Reorganization Act No. 2666 DFJ split into two

4. 4. Fiscal Administration 1936 – DOF and Budget Commission January 3,


1949 – Central Bank of the Philippines was created (RA 265) Central Bank
Act of 1948. 1970 – with the adoption of the parliamentary form of
government, the Department was changed to a Ministry.

5. 5. Fiscal Administration 1980s – Inter-agency committees  Investment


Coordination Committee (ICC)  Government Corporate Monitoring and
Coordinating Committee (GCMCC) 1987 – the Ministry of Finance was
reverted to a Department following the ratification of the 1987 Constitution
which provided for a presidential form of government.

6. 6. Fiscal Administration 1988 – Value Added Tax was introduced and


replaced a complicated sales tax structure. 1997 – Asia’s Newest Tiger
National Government recorded a budget surplus for the third consecutive
year, and the public sector generated its fiscal surplus since the sector
started to be monitored in 1985.

7. 7. • Fiscal administration zeros in on the management of financial resources


and those activities and operations to generate revenue, make those
available, and see to it that funds are wisefully, lawfully, effectively and
efficiently spent. • The administration of finances is an intrinsic component
of management responsibility. There is an intimate linkage between
administering and funding. An administrative act has financial implications.

8. 8. Fiscal Policy of the Philippines • Fiscal policy refers to the “measures


employed by governments to stabilize the economy, specifically by
manipulating the levels and allocations of taxes and government
expenditures. Fiscal measures are frequently used in tandem with monetary
policy to achieve certain goals.”

9. 9. OVERVIEW A DECISION TO INCREASE TAXES INCREASES REVENUE OF


GOVERNMENT TO IMPLEMENT SOCIAL AMELIORATION PROGRAM CREATES
A CHARGE ON REVENUE EARNED WHILE AT THE SAME TIME DISTRIBUTES
AND DISPENSES SOCIAL BENEFITS.

10. 10. ORGANIZING FOR FISCAL ADMINISTRATION • Interested in it Top


Management Level • Deeply involved in it Middle Management • Affected
by whatever results from it Rank and File

11. 11. Principal Agencies tasked with fiscal functions: A. CONGRESS (Lower
House) B. DEPARTMENT OF FINANCE C. DEPARTMENT OF BUDGET AND
MANAGEMENT D. COMMISION ON AUDIT

12. 12. CONGRESS (Lower House) Responsible for revenue and expenditure
policies.

13. 13. DEPARTMENT OF FINANCE Revenue generation and collection Fund


custody Disbursements Keeping of accounts

14. 14. DEPARTMENT OF BUDGET & MANAGEMENT Review of estimates and


fiscal policy studies in close consultation with the National Economic
Development Authority.

15. 15. COMMISSION ON AUDIT Conducts fund and performance audit to see
to it that expenditures are in accordance with the Appropriation Law
approved.

16. 16. BANGKO SENTRAL NG PILIPINAS (BSP) and OTHER ECONOMIC


PLANNING ENTITIES (Offices & Agencies) • See to it that fiscal plans and
programs are geared towards national development.

17. 17. FISCAL CONTROL MECHANISMS Four Justification for Expenditure


Control through the Budget: 1) Prevent Misappropriation of Funds 2)
Control to Implement Prospective Policy 3) Ensure the Wisdom and
Propriety of Expenditure 4) Prevent Deficits

18. 18. BUDGETING CONCEPTS 1. Planning – Programming Budget System


(PPBS) Type 2. Zero – Base Budgeting (ZBB) Type

19. 19. BUDGETING CONCEPTS Planning – Programming Budget System (PPBS)


Type. a) Gives assurance that the budget will help achieve desired agency
results. b) Unit head defends the budget, explains its contribution to the
realization of agency goals, develops a cost projection for each program. c)
Submits this to top management which reviews the program and decides on
final budget allocation.
20. 20. BUDGETING CONCEPTS Zero – Base Budgeting (ZBB) Type a) The agency
justifies the entire appropriation request for the fiscal year as if the
programs are entirely new, instead of justifying only the increase requested
above the previous year’s appropriation. b) The agency is obligated to
defend all programs every year and rank these in terms of priority using the
ratio between cost and benefit criterion. c) Provides opportunity for top
management to re- evaluate the need for on-going programs, compare
these with the proposed and the prioritized for implementation.

21. 21. LINE ITEM versus PERFORMANCE BUDGETING 1. Line Item • Object of
the expenditure type • Consists of a detailed listings of every position to be
filled • Gives the legislative body tremendous discretion to strike out or to
approve individual items. • Funds appropriated may not be transferred from
one category of expense to another. • Also known as “rule of thumb”
budgeting where figures of past years are reflected but without income
indicators.

22. 22. LINE ITEM versus PERFORMANCE BUDGETING Three columns of figures
appear in each budget sheet: a) Actual expenditure for each object during
the previous fiscal year b) Estimated amounts to be spent for the same
objects for the current fiscal year c) Amount desired for the same objects
for the incoming or future fiscal year

23. 23. LINE ITEM versus PERFORMANCE BUDGETING 2. Performance Budgeting


• is lump sum budgeting • is program budgeting which spells out functions,
activities and projects • allow transfer of funds from one organizational unit
to another, between work activities and objects to spent for. • there is
difficulty in identifying what work units perform or not perform, since its
most important concern is the overall performance of the agency.

24. 24. NEW POLICY GUIDELINES FOR BUDGETING Based on this agenda: The
formulation of the national budget must be in the context of a three year
planning framework Expenditures must achieve program targets and
support development strategy

25. 25. NEW POLICY GUIDELINES FOR BUDGETING  Agency programs will be
supportive of the identified priority areas which include the following: 1.
Modernization of the agricultural sector to augment farmer income, bolster
production and attain food security. 2. Improvement of the quality of basic
social services like health and sanitation, nutrition, education, social welfare
and housing. 3. Acceleration of countryside infrastructure development. 4.
Enhancement of global competitiveness through liberalization,
deregulation, and privatization. 5. Provision for macroeconomic stability by
instilling fiscal discipline, prudent government spending and efficient
revenue generation. 6. Reform in governance to make it responsive to the
current domestic and global environment.
26. 26. PRINCIPLES FOR AGENCY GUIDANCE 1) Prudent Spending 2)
Entrepreneurial Budgeting 3) Performance Based Budgeting 4) Wholistic
Budgeting 5) Consistency with Sub-Sectoral Development Objectives

27. 27. INCOME SOURCES 1. Tax Revenue 2. Non-Tax Revenue

28. 28. INCOME SOURCES 1) Tax Revenue a) Income tax b) Property tax c)
Domestic goods and services tax d) International trade and transactions
sales tax e) Value added tax (VAT)

29. 29. INCOME SOURCES 2) Non-Tax Revenue a) Operating and service income
b) Income from public enterprises and investments c) Miscellaneous income
d) Capital revenue e) Grants f) borrowings

30. 30. END OF PART 1 Public Fiscal Administration THANK YOU! Reporter: Ryan
Candido Amilhussin

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