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Helps in
evaluating
past
performance
vis--vis
financial
budgets/
targets
Enables
managers or
unit heads in
making
appropriate
and strategic
decisions
Aids in making
financial plans
for the future
End
product-
Comprehensive
Financial
statements
Simple
(understandable)
NGAS
INTRODUCED
1.Basic
Old Government
AccountingVS
System
NGAS
Simplified
Numerous special
journals are maintained
Updated accounting
system
Manual accounting
system is tedious
Generated financial
reports are often
inefficientual for those
w/o government
accounting background
background
Generates/ produces
functional user-friendly
financial reports
NGAS OBJECTIVES
(TO RESPOND TO THE NEED OF THE FOLLOWING)
Law makers
General
public
ACCOUNTING RESPONSIBILITY
Emanates from
Constitution
Laws
Policies
Rules and regulation
DBM
BTr
Other Government
Agencies
COA
Submits to the
President and
congress within
the time fixed by
law (not later
than Sept. 30
each year)
annual
government
report
DBM
BTr
Other Government
Agencies
DBM
Its subdivision
Agencies and
instrumentalities
Government
owned and
controlled
corporations
BTr
Other Government
Agencies
DBM
(Pursuant to Sec
2, Chap 1 Title
VII, Book IV of
the
Administrative
Code of the
Philippines,
(Executive Order
292)
Formulates and
implements the
national budgets
Responsible for
the efficient and
sound utilization
of government
funds and
revenues
BTr
Other Government
Agencies
COA
DBM
BTr
Registry and
Appropriations and
Allotments (RAPAL)
Controls and
monitors
appropriations
and allotments
Registry of Special
thru the
Purpose Fund
registries it
Appropriation (RESPFA)
maintains:
Registry of Allotments
and notice of Cash
Allotments (RANGA)
Other Government
Agencies
COA
DBM
BTr
Other Government
Agencies
Play a pivotal
role in the cash
operations of the Maintains the Registry
national
of NCA and
government
replenishment
As one of the
(RENREP)
operating
bureaus of the
Maintain accounts of
Dept of Finance. financial transaction of
It is authorized
all national government
to:
DBM
BTr
Other Government
Agencies
These includes the
department,
bureaus, offices
and other
instrumentalities
of the national
government,
including the
Congress, the
Judiciary, the
Constitutional
bodies, State
Colleges and
Universities and
other selfcontained
institutions and
hospitals
DBM
BTr
Funds
Sum of money or other resources
Set aside for specific activities
Fund operations
Controlled by system of budgets
Budgets
A plan of financial operation
Composed of estimates/proposed expenditures
for a given period or purpose
Budget
Preparation and
Presentation
Covers
estimation,
determination
and translation
of government
revenues,
priorities and
activities
Budget
Authorization
Budget Execution
and Operation
Budget
Accountability
Steps
Government
agencies prepare
budgets for the
year
Submit to Dept
of Budget and
Management for
review
DBM
consolidates all
budgets to form
the national
budget
National budget
is submitted to
the President for
final approval
Budget
Authorization
Budget Execution
and Operation
Budget
Accountability
Budget
Preparation and
Presentation
Budget
Authorization
Submission of
the National
Government
Budget to the
Legislative Body
Budget Execution
and Operation
Budget
Accountability
Budget
Preparation and
Presentation
Budget
Authorization
Steps
Reviews,
Deliberates
Formulates and
Appropriation
Bill
Forwards to the
President for
approval and
signature
Budget Execution
and Operation
Budget
Accountability
Budget
Preparation and
Presentation
Budget
Authorization
Budget Execution
and Operation
Covers
implementation
of the various
operational
aspects of the
budget
Budget
Accountability
Budget
Authorization
Budget Execution
and Operation
Steps:
Release of
allotments to
various agencies
Continuing
review of
governmental
fiscal position
Other related
activities
Budget
Accountability
Budget
preparation and
presentation
Budget
authorization
Budget execution
and operation
Budget
accountability
Involves
evaluation of
expenditures
and
performance
against
predetermined
budgets
Budget authorization
Budget accountability
Steps
Personnel
use of funds
and work
accomplishe
d are
compared
with plans
and goals
as indicated
in their
budgets by
agency
heads
COA
examines
the
operations
og agencies
Accounting methods
Modified Accrual Basis of Accounting is in
used
All expenses are recognized when incurred
and reported in the financial statements in
the period in which they relate
Examples:
1. Miscellaneous Personal Fund- Being used for
Personnel benefits not provided in the regular budget
2. Calamity Fund- used for relief, rehabilitation and
other services with calamities
3. Organizational Adjustment Fund- Being used for
budgetary requirements of newly created
organizations, programs, projects, activities within
an agency
SOURCES OF FUND
General Fund
All financial
resources of the
government except
those restricted
Special Purpose
Proceeds of specific
revenue from taxes
GOVERNMENT CHART OF
ACCOUNTS
List of Ledger Accounts
REAL
NOMINAL
CLASSIFICATION OF ACCOUNTS
Balance Sheet Accounts
Assets:
Current Assets
Investments
Property, Plants and
Equipments
Other Assets
Liabilities:
Current Liabilities
Long-term liabilities
Other Liabilities
Government equity
Intermediate Accounts
Equity:
2 major
income
statements
accounts
classifications
3 major
expense
classifications
Specific accounts
classifications
Expense classification
Personal Services (PS)
Inclusive of current
operating expenses
1. Pay proper
2. Authorized
allowances
3. Bonus
4. Cash gifts
5. Incentive
6. Benefits
7. Other personal
benefits paid to
government officials
and employees
Financial expenses
Inclusive of:
1. Bank charges
2. Interest expense
3. Commitment fees
4. Other financial
charges
5. Forex losses
ACCOUNTING REPORTS
Quarterly
Pre-closing
Post-closing
Balance Sheet
CODING SYSTEM
Accounts
Account Code
Assets
100-299
Contra assets account
300-399
Liabilities
400-499
Equity
500-599
Revenue/Income
Tax Revenue:
National Taxes
550-579
Local Taxes
580-599
General Income:
Permits and Licenses 600-609
Service Income
610-629
Accounts
Account Code
Business Income
630-649
Subsidy Income 650-659
Other Income 660-679
Gain or Loss Account
680-699
Expenses 700-999
Personal Services 700-749
Maintenance and Other
Operating Expenses 750-969
Financial expenses 970-999
Basic Objective
1. Simplify Government Accounting
2. Conform to international accounting standard
3. Generate periodic and relevant financial reports for
better monitoring of performance.
Basic Features and Policies
a. Accrual Accounting- under this method, all
expenses shall be recognized when incurred and
income shall be on accrual basis except for transactions
where accrual basis is impractical or when other
methods are required by law.
Consist of:
Cash Journal (CJ)
General Journal (GJ)
General Ledger (GL)
d. Accounting Reports
e. Two-Money Column Trial Balance
f. Allotment and Obligation- is modified to eliminate
the complicated procedures in the occurrences of
obligation and the recording of the budgetary accounts
(appropriation, allotments and obligation incurred and
liquidated)
s. Elimination of corollary and negative entriesshall no longer be used in the new accounting system.
Acquisition of inventory and other assets shall be
recognized as capital expenditures in the regular books
of accounts, negating the need for corollary entry.
100
10
10
10
10
To record the remittance of the taxes withheld, if the NCA includes the
taxes to be withheld
PERSONAL SERVICES
Payment for salaries, wages, other remuneration to the
personnel of the Agency may be made through the ff:
1. Payroll Fund in the hands of Disbursing Officer (DO)
2. Payroll Fund deposited in an authorized bank,
withdrawal by the employees is through the
automated teller machine (ATM)
3. Direct payment to employees by individual checks.
Cash-disbursing Officer
Cash-National Treasury
420
420
20
30
Due to GSIS
60
Due to PAG-IBIG
60
Due to PHILHEALTH
40
Cash-National Treasury-MDS
160
ILLUSTRATION:
Rent: The government signed a contract for the rental of the
office space with 3 months advance payment of P90
starting November.
Prepaid Rent
90
Cash- National Treasury, MDS
To record the obligation in the RAOMO
90
CASH ADVANCES
To illustrate the accounting for cash advances, assume the
following transactions:
1. Set up petty cash funds for miscellaneous expenses, P120.
2. Release of the cash advance to the disbursing officer.
3. Release for replenishment of the petty cash fund for the
following expenses:
Office Supplies P50
Transportation fares
10
Repairs
20
FEDEX air cargo
15
Total P95
4. Replenishment of the petty cash fund.
5. Liquidation at year end for Office Supplies Expense P80 and
Traveling Expense, P20
6. Return of unused petty cash fund (PCF).
20
95
20
20
PURCHASE/CONSTRUCTION OF FIXED
ASSETS
Fixed Asset account are recognized upon purchase. All
incidental expenses are to be capitalized. Depreciation is
taken up starting on the month succeeding the month of
purchase or completion of construction.
CASE 1: Purchase of Office Equipment
1. Issued PO for the office equipment, P150.
2. Received the office equipment with the charge invoice.
3. Paid the office equipment less withholding tax of P10.
The above transaction are recorded as follows:
1. Either the obligation of P150 in the RAOCO, P150.
2. Office Equipment
150
Accounts Payable
150
3. Accounts Payable
150
Due to BIR
10
Cash-National Treasury, MDS
140
CASE 2: Construction of Building by Contract
1. Signed the construction contract for the construction of
the building, P200.
2. Paid 30% of the contract price, P60.
3. Received the first billing, 50% of the contract price, P100.
4. Paid the first billing less withholding tax of P8.
5. Received the second billing for the balance of the current
price, P100% completed.
6. Paid the second billing less withholding tax of P20.
PURCHASE/CONSTRUCTION OF FIXED
ASSETS
7. To recognize the Building account and to close the Construction
in Progress account.
8. To close Withholding Tax Payable account to Subsidy Income
from the NG.
The above transaction are recorded as follows:
1. The obligation for the contract price is entered in the RAOCO, 200
2. Advances to Contractor 60
Cash- National Treasury- MDS 60
3. Construction in progress- Agency Assets
100
Advances to Contractor 60
Accounts Payable 40
4. Accounts payable 40
Due to BIR
8
cash- National Treasury-MDS 80
5. Construction in progress- Agency Assets 100
Accounts Payable
100
6. Accounts Payable
100
Due to BIR 20
Cash- National Treasury-MDS 80
7. Buildings
200
Construction in progress- Agency Assets
200
8. Due to BIR
28
Subsidy Income from National Government 28
30
30
Miscellaneous Transactions
Interagency transfer of funds to implement an Agency Project.
The agency making the transfer is the Source Agency (SA) and
the receiving agency is the Implementing Agency (IA).
Illustration: Assume the following transactions
1. Agency ABC is to transfer cash of P400 to Agency XYZ for a land
beautification project.
2. Cash is transferred to Agency XYZ.
3. Received report from Agency XYZ.
400
400
400
Taxes
Operating and Service Income
Grants and Donations
Borrowings
Miscellaneous Receipts and Collections
Income Taxes
1. Collection of income taxes from individuals by the
Bureau of Internal Revenue (BIR), 100.
2. Remits the above collections to Bureau of Treasury
(BTR).
The following are the journal entries to record the above
transactions in the books of BTR.
1. Cash Collecting Officer
Income taxes Individuals
2. Income Taxes Individuals
Cash Collecting Officer
100
100
100
100
200
200
200
300
300
2. Registration Fee.
300
Cash Collecting Officer
300
Assume
the
following types
of
Rent
1. Issuance of bill for the rent of office space, P20.
2. Collection of the rent.
3. Deposit to the bank.
4. Use of the collection for the repair of the office
space.
income
20
20
10
10
TRIAL BALANCE
A trial balance is a list of ledger account in their debit
balances. It is usually prepared before the preparation of
the financial statements. In the old government
accounting system, a four column or the trial balance of
totals and balances was required. Under the new system
(NGAS) the two-money column or the trial balance of
balances is required.
The column headings of the trial balance are:
Account Title
Account Code
Debit
Credit
ADJUSTING ENTRIES
Under the NGAS, before the preparation of financial
statements, adjusting entries are to be prepared for
proper matching of revenues and expenses. As in
commercial accounting, there are two principal types of
adjustments: accrued items and deferred items.
Depreciation accounting will be followed in the new
accounting system. Like in commercial accounting
depreciation shall be recorded in the books as expense
and is credited to the accumulated depreciation.
Straight-line method of computing depreciation is to be
used.
CLOSING ENTRIES
Under the NGAS the following shall be closed at the end of
the year:
Unused Notice of Cash Allocation (NCA)
Nominal or temporary accounts.
Unused NCA
At the end of the year unused or unutilized NCA is to be
reverted to the Bureau of Treasury (BTR) because of the
policy of the DBM that the NCA will only be used for the
year it was issued.
FINANCIAL STATEMENTS
After the preparation of the trial balance, adjusting and
closing the appropriate accounts, financial statement can
now be prepared. As in commercial accounting worksheet
is prepared to facilitate the preparation of financial
statement. Under the NGAS the following are the types of
financial statements:
1. Statement of Income and Expenses
2. Balance Sheet
3. Cash Flow Statement
FINANCIAL STATEMENTS
The formats of the financial statements are presented in
the Appendix of this chapter.
Worksheet
The following is the suggested format of the worksheet:
Account
Account
Code
Title
Pre
Adjust-
Post
Statement
Closing
ments
Closing
of Income
Trial
Trial
and
Balance
Balance
Expenses
Dr : Cr Dr : Cr Dr : Cr Dr
Balance
Sheet
: Cr
Dr : Cr
Inter-agency transfers
Equity contribution
FINANCIAL STATEMENT
Agency
Balance Sheet
As of _______________, 20___
ASSETS
CURRENT ASSETS
Cash
Petty Cash Fund xx
Cash-Collecting Officers xx
Cash-Disbursing Officers xx
Cash in bank-Local Currency, CA xx
Cash in Bank-Local Currency, SA xx
Cash in Bank-Foreign Currency, SA xx
Cash in Bank-Foreign Currency, TD
xx
xx
Receivables
Accounts Receivable
xx
Less: Allowance for Doubtful Accounts xx xx
Interest Receivablexx
Due from Officers & Employees xx
Due from NGAs xx Due from LGUs xx
Due from GOCCs xx
Other Receivables xx xx
Marketable Securities
Stocks xx
Other Marketable Services xx xx
Inventories
Office Supplies Inventory xx
Spare Parts Inventory xx
Gasoline, Oil and Lubricants Inventory xx
Other Inventory Itemsxx xx
Prepaid Expenses
Prepaid Rent xx
Other Prepaid Expenses xx xx
Other Current Assets
xx Total Current Assets
Long-Term Investments
Investments in Stocks
Other Long-Term Investments
Total Long-Term Investments
FIXED ASSETS
Land xx
Land Improvements xx
Buildingsxx
Less: Accumulated Depreciation
IT Equipment & Software xx
Less: Accumulated Depreciation
Office Equipment xx
Less: Accumulated Depreciation
xx
xx
xx
xx
xx
xx
Office Equipment xx
Less: Accumulated Depreciation
xx
xx
Furniture and Fixtures
xx Less: Accumulated
Depreciation
xx
xx
Books xx
Other Fixed Assets xx
Less: Accumulated Depreciation
xx
xx
Construction in Progress-Agency Assets xx
Fixed Depreciated Assets xx
Fixed Assets in Transit
xx
Total Fixed Assets
xx
Other Assets
Deferred Charges
xx
Total Other Assets
xx
TOTAL ASSETS
xx
Long-Term Liabilities
Retirement Gratuity Payablexx
Other Long-Term Payable
Total Long-Term Liabilities
Other Liabilities
Deferred Credits to Income xx
Other Deferred Credits xx
Total Other Liabilities
xx
Total Liabilities
xx
xx
xx
Equity
Government Equity, beginning balance xx
Retained Operating Surplus (FY 20__) xx
Total Equity
xx
TOTAL LIABILITIES AND EQUITY
xx
Agency
Balance Sheet
As of _______________, 20___
ASSETS
CURRENT ASSETS
Cash xx
Receivables xx
Marketable Securities xx
Inventories xx
Prepaid Expenses xx
Other Current Assets xx
Total Current Assets xx
INVESTMENT AND FIXED ASSETS
Long-Term Investments xx
Fixed Assets xx
Less: Accum. Depreciation xx xx
Total Fixed Assets xx
TOTAL ASSETS xx
XX
XX
XX
XX
XX
Agency
Statement of Income and Expenses
For the Fiscal Year Ended December _______________, 20___
Income
Subsidy Income from National Government
xx
Less: Reversion of Unused Notice
of Cash Allocation
xx
xx
Income from Government Services
xx
Income from Government Business Operation
Sales Revenue
xx
Rent Income
xx
Interest Income
xx
Gain on Sale of Assets
xx
Total Income
xx
xx
Less Expenses:
Salaries and Wages-Regular Pay
xx
PERA xx
Additional Compensation xx
Representation Allowance
xx
Transportation Allowance
xx
Clothing Allowance
xx
Christmas Bonus xx
Cash Gift
xx
Productivity Incentive Bonus xx
Life & Retirement Insurance Contributions xx
PAG-IBIG Contributions xx
PHILHEALTH Contributions xx
Other Personal Benefits xx
Traveling Expenses-Local
xx
Traveling Expenses-Foreign
xx
Electricity xx
Telephone/Internetxx
Rent Expense
xx
Office Supplies Expense xx
Agency
Statement of Income and Expenses
For the Fiscal Year Ended December _______________, 20___
Income
xx
Less: Expenses
Net Income Over Expenses
xx
xx
Agency
Statement of Cash Flow
For the Fiscal Year Ended December _______________, 20___
(xx)
(xx)
xx
xx
Agency
Statement of Cash Flow
For the Fiscal Year Ended December _______________, 20___
Deduction:
Increase due in NGA
xx
Increase in prepaid rent
xx
Increase in spare parts inventory
xx
Increase in other receivables
xx
Decrease in accounts payable
xx xx
Cash Provided by Operation
xx