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.
Fiscal administration

-systems,
-structures,
-processes,
-Officials a n d personnel ,
- a n d t h e pol i cy e n v i ro n m e n t g o v e r n i n g
i nt e rgovernm ent al , a n d inter-local fiscal
re l at i ons
Fiscal administration

March 17, 1897 -Revolutionary Government

was founded in Naic, Cavite
- Dir. Baldomero Aguinaldo,
DOF
1901- the Department of Finance and
Justice(CS)
- William H o w a r d Taft
- Sec. Gregorio Araneta
1916 - Reorganization Act No. 2666
- D F J split i nt o t w o
Fiscal administration

1936 – DOF and Budget Commission

1949 – Central Bank of the Philippines was
created
1970 – Minister Cesar A. Virata was
appointed Secretary
1974- with the adoption of the parliamentary
form of government, the Department was
changed to a Ministry.
Fiscal administration

1980s- of 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.
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.
 FISCAL ADMINIS RA ION
OVERVIEW
-ZEROS IN ON THE MANAGEMENT OF FINANCIAL
RESOURCES AND THOSE ACTIVITIES AND OPERATIONS TO
GENERATE REVENUE, MAKE THOSE AVAILABLE, AND SEE TO IT
THAT F U N D S 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.

Fiscal administration
PHILIPPINE PUBLIC FISCAL ADMINIS RA ION

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 DISP E RSE S SOCIAL BENEFITS.
 FISCAL ADMINIS RA ION
ORGANIZING

TOP
MANAGEMENT
LEVEL
(INTERESTED IN IT)

MIDDLE MANAGEMENT
(DEEPLY INVOLVED IN IT)

RANK AND FILE

(AFFECTED BY WHATEVER
RESULTS FROM IT)
FISCAL ADMINIS RA
ION ORGANIZING

THE P R I N C I P A L AGENCIES T A S K E D
W I T H FISCAL FUNCTIONS:

- CONGRESS, E S P E C I A L L Y THE L O W E R
HOUSE,

- D E PARTME NT OF FINANCE

- DEPARTMENT OF BUDGET AND

MANAGEMENT

-COMMISSION ON AUDIT
 F i s c a l a d mi n i s t r a t i o n
(Offices/agencies)
CONGRESS
DEPARTMENT OF FINANCE (DOF)
DEPARTMENT OF BUDGET AND MANAGEMENT
COMMISSION ON AUDIT
DEPARTMENT OF INTERIOR AND LOCAL GOV’T
OFFICE OF THE PRESIDENT (OP
Bureaus:
B u re a u of Internal R e v e n u e (BIR)
B u re a u of Custo ms (BOC)
B u re a u of t h e Treasury (BTR)
B u re a u of Local G o v e r n me n t F i n a n c e (BLGF)
Offices:
Priv a ti za t io n a n d M a n a g e me n t Office (PMO)
Ag encies a n d Corporations
I n s u r a n c e C o mmi s s i o n (IC)
Na tio na l Tax R e s e a rc h Center (NTRC)
Central Board of A s s e s s me n t Appeal (CBAA)
P h i l i p p i n e D e p o s i t I n s u r a n c e Corporation (PDIC)
P h i l i p p i n e Export-Import Credit Ag ency (PHILEXIM)
G o v e r n me n t S e r v i c e I n s u r a n c e S y s t e m (GSIS)
So cia l S e c u r i t y S y s t e m (SSS)
P u b l i c E s t a t e s Authority (PEA)
Cooperative D e v e l o p me n t Authority (CDA)
Reg io na l Offices
 FISCAL CON ROL MECHANISMS
(FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET)

PREVENT MISAPPROPRIATION OF FUNDS

REQUIRES REVIEW AND APPROVAL BY THE
ADMINISTRATIVE OFFICIAL OF THE LINE OR
OPERATING AGENCY, OF ALL REQUESTS FOR
MONEY RELEASES AND BUDGETARY
ALLOTMENTS, VOUCHERS AND SIMILAR PAPERS
BEFORE PAYMENTS ARE MADE SO THAT
EXPENDITURES ARE IN ACCORDANCE WITH
POLICY AND LAW AND NOT IRREGULAR,
UNNECESSARY, EXCESSIVE, EXTRAVAGANT AND
UNCONSCIONABLE
 REPUBLIC ACT NO. 7160
AN ACT PROVIDING FOR A LOCAL
GOVERNMENT CODE OF 1991

SEC. 315. SUBMISSION OF DETAILED STAT EMENT S OF INCOME

AND EXP ENDIT URES
.
(A) ON OR BEFORE THE FIFTEENTH (15TH)
DAY OF JULY OF EACH YEAR, LOCAL TREASURERS SHALL
SUBMIT TO THEIR RESPECTIVE LOCAL CHIEF EXECUTIVES A
CERTIFIED STATEMENT COVERING THE INCOME AND
EXPENDITURES OF THE PRECEDING FISCAL YEAR, THE ACTUAL
INCOME AND EXPENDITURES OF THE FIRST TWO (2) QUARTERS
OF THE CURRENT YEAR, AND THE ESTIMATED INCOME AND
EXPENDITURES FOR THE LAST TWO
(2) QUARTERS OF THE CURRENT YEAR.
 REPUBLIC ACT NO. 7160
AN ACT PROVIDING FOR A LOCAL
GOVERNMENT CODE OF 1991

SEC. 353. THE OFFICIAL FISCAL YEAR.

THE OFFICIAL FISCAL YEAR OF LOCAL GOVERNMENT

UNITS SHALL BE THE PERIOD BEGINNING WITH THE
FIRST DAY OF JANUARY AND ENDING WITH THE THIRTY-
FIRST DAY OF DECEMBER OF THE SAME YEAR.
 REPUBLIC ACT NO. 7160
AN ACT PROVIDING FOR A LOCAL
GOVERNMENT CODE OF 1991

SEC. 354. ADMINISTRATIVE ISSUANCES;

BUDGET O P E R AT I O N S MANUAL.

THE SECRETARY OF BUDGET AND MANAGEMENT JOINTLY

WITH THE CHAIRMAN OF THE COMMISSION ON AUDIT
SHALL, WITHIN ONE (1) YEAR FROM THE EFFECTIVITY OF
THIS CODE, PROMULGATE A BUDGET OPERATIONS MANUAL
FOR
LOCAL GOVERNMENT UNITS TO IMPROVE AND
SYSTEMATIZE METHODS, TECHNIQUES, AND PROCEDURES
EMPLOYED IN BUDGET PREPARATION,
AUTHORIZATION, EXECUTION, AND ACCOUNTABILITY.
 FISCAL CON ROL MECHANISMS
(FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET)

CONTROL TO IMPLEMENT PROSPECTIVE POLICY

PROACTIVE ADMINISTRATION INHIBITS
GOVERNMENTAL UNITS FROM DIRECTLY
TRANSACTING AND NEGOTIATING MONEY
MATTERS SINCE SUCH KIND OF TRANSACTION IS
OFFICIALLY CHANNELED THROUGH THE
DEPARTMENT OF BUDGET AND MANAGEMENT IN
THE FORM OF BUDGET ESTIMATES AS
ENDORSED BY THE PRESIDENT
 FISCAL CON ROL MECHANISMS
(FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET)

ENSURE THE WISDOM AND PROPRIETY OF

EXPENDITURE CLAIMS FOR PAYMENT FROM
PUBLIC FUNDS, LEGALITY, PRUDENCE,
REASONABLENESS, THE MORALITY OF THE
CLAIM OR CHARGE SHOULD BE ESTABLISHED. A
REVIEW OF EXISTING CONTRACTS AND
TRANSACTIONS SHOULD BE MADE.
 FISCAL CON ROL MECHANISMS
(FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET)

PREVENT DEFICITS FISCAL SUPERVISION AND

CONTROL MAY BE USEFUL BUT SHOULD NOT
UNDULY INTERFERE WITH AGENCY
PREROGATIVE TO CARRY OUT PROGRAMS
MANDATED BY THE CONSTITUTION AND THE
LAWS.
 PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE
BUDGET PHILIPPINE NATIONAL BUDGET

T h e National B u d g e t re p re s e n t s t h e
e s t i m a t e of e x p e c t e d i n c o m e a n d
projected e x p e n d i t u re s o v e r a p e r i o d of
t i m e referred t o a s t h e fiscal year.

(1 ) t o s p e n d for its programs a n d projects

( 2 ) w h e r e t h e m o n e y will c o m e from
 PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE
PHILIPPINE BUDGETARY PROCESSS

S e c t i o n 22, Article VII of t h e 1987 C o n stitu tio n

s e t s t h e t o n e for t h e b u d g e t a r y process.
U n d e r t h i s Article, t h e P re s i d e n t s u b m i t s to
C o n g res s w i t h i n thirty d a y s from t h e o p e n i n g of
e v e r y reg u la r sessio n , a fin a n cial p l a n of
e x p e n d i t u re s a n d s o u rc e s of financing, i n c l u d i n g
re c e i p t s from e x i s t i n g a n d p ro p o s e d re v e n u e
m e a s u re s a s b a sis for a g e n e r a l a p p ro p ria tio n s
bill.
 PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE
PHILIPPINE BUDGETARY PROCESSS

STAGES
1.BudgetPreparation
2.BudgetAuthorization
3.BudgetImplementation
4.BudgetAccountability
 FIVE MAJOR PHASES IN THE BUDGET PROCESS
(UBOM)

1. BUDGET PREPARATION

2. BUDGET AUTHORIZATION

3. BUDGET REVIEW

4. BUDGET EXECUTION

5. BUDGET ACCOUNTABILITY

Fiscal administration
 FUNCTIONS OF LOCAL OFFICIALS IN
L.F.A

LOCAL CHIEF EXEC. LOCAL SANGGUNIAN

- Executive Direction and - Taxing Authority
Control - Enactment of Policies,
- Licensed a nd Issuing of Implementing Rules a nd
Permits Regulations

COMPOSITION OF LOCAL FINANCE CLUSTER

(Assessor; Accountant; Bidget Officer; Treasurer;
Planning & Development Officer)
- Income projections
- Recommendations on Tax/Revenues Measures
- Accounting of the Budget

Fiscal administration
 SOURCES OF INCOME OF LGUS
EXTERNAL
1. Inte r nal R e v e n u e
Allotment (IRA)
2 . S h a re from t h e Uti l i zati on
of n a t i o n a l Wealth
3. Grants a n d D o n a t i o n s
4. Dome sti c L o a ns
5.Credit -Financing S c h e m e s
Fiscal administration
INTERNAL
1.Taxes, F e e s, a n d Char ge s
2.Income d e r i v e d from t h e
Inve stme nt s, pr i vati ze d a n d
D e v e l o p m e n t Ente r pr ises,
a n d Inter-Local
G o v e r n m e n t Coope r ati on
 II.LEGAL BASIS FOR LOCAL FISCAL
ADMINISTRATION

1987 PHILIPPINE CONSTITUTION

SECTION 2 Article X: “The territorial a n d political s u b d i v i s i o n s shal l e njoy
local Autonomy.”

REGION

PROVINCE

CITY

MUNICIPALITY

B ARANGAY
Fiscal administration
t h e s h a re of e a c h provi nc e , c i ty or m u n i c i p a l i t y shal l b e
c e t e r m i n e d o n t h e ba si s of t h e ff. F or mul a (Sec. 285, RA 7160)

- PROVINCES: 23, 81 PROVINCES

- CITIES: 23%12, POPULATION 50%LAND AREA 25%EQUAL

SHARING 25%

- MUNICIPALITIES: 34%- 1,501 MUN.

- BARANGAYS: 20%33,461 BARANGAYS

LOCAL TAXES
Prepare Local Revenue Generation Plan
Conduct Public Consultations on Revenues measures
Update Local Code Taxes
Provide Incentives to Tax Collectors

REAL PROPERTY TAXES

Engage Participation of other Stakeholders
Computerize records of Assessor’s and Treasures Office
Strengthen tax collection enforcement
Conduct Tax Mapping Operations for the Real Property

LOCAL BUSINESS TAXES

 U s e info. from d a t a b a s e s of o t h e r gov’t a g e n c i e s
 E s t a b l i s h o n e s t o p s h o p for t a x p a y m e n t s a n d b u s i n e s s pe r mi t
appl i c ati ons
 C o n d u c t t a x m a p p i n g – i n v e n t o r y of b u s i n e s s

Fiscal administration
FUNDS MAINTAIN BY LGUS

A. GENERAL FUND
- AVAILABLE FOR ANY PURPOSE TO
WHICH THE LEGISLATIVE BODY MAY
DECIDE TO APPLY IT.

B. SPECIAL FUNDS
1. SPECIAL EDUCATION FUND
2. TRUST FUND
- PRIVATE AND PUBLIC MONIES
WHICH HAVE OFFICIALLY COME INTO
POSSESSION OF THE LOCAL
GOVERNMENT.
Fiscal administration
BUDGETARY PROCESS AT THE LOCAL
GOVERNMENT

FOUR BASIC STEPS:

(1) BUDGET PREPARATION

(2) BUDGET AUTHORIZATION (3) BUDGET
IMPLEMENTATION
(4) BUDGET REVIEW

TYPES OF AUDIT

A. PRE-AUDIT
B. POST-AUDIT

Fiscal administration
 Levels (Php Billion) Percent Share Increase/(Decrease)
PARTICULARS 2012 2013 2012 2013
Amount Percent
Prog. Proposed Prog. Proposed

Economic
Services 439.0 511.1 24.2 25.5 72.1 16.4

Social
Services 613.4 698.8 33.8 34.8 85.4 13.9

Defense 87.2 89.7 4.8 4.5 2.5 2.9

General Public
Services 320.3 346.1 17.6 17.3 25.7 8.0

Net Lending 23.0 26.5 1.3 1.3 3.5 15.2

Debt Service 333.1 333.9 18.3 16.6 0.8 0.2

Total 1,816.0 2,006.0 100.0 100.0 190.0 10.5

 2012 Pro g r a m 2013 Pro p o s e d
Level Level
Parti cu l ars
Ra n k Ran k
( Ph p Billion) ( Ph p Billion)

Dep E d (incl. MPBF a n d S B P) 238.8 1 292.7 1/ 1

DPWH (incl. PS E PF a n d BSGC) 126.4 2 152.9 2/ 2

DND (incl. MPBF a n d PGF) 108.1 3 121.6 3

DILG (incl. MPBF a n d PGF) 99.8 4 121.1 4

DA (incl. PS EPF a n d BSGC) 61.4 5 74.1 5
DOH (incl. MPBF, PSEPF a n d BSGC) 45.8 7 56.8 6
DSWD 48.8 6 56.2 7

DOTC (incl. MPBF, PGF, PSEPF a n d BSGC) 34.7 8 37.1 3/ 8

DOF (incl. MPBF a n d BSGC) 23.6 9 33.2 9
DENR (incl. MPBF a n d PGF) 17.5 10 23.7 10
Notes: Leg en d:

1/ Gross of S ch ool B u i l d i n g P r o g r a m MPBF- Miscellan eous Person n el Benefits F u n d

2/ N e t of School B u i l d i n g P r o g r a m S B P – S ch ool B u i l d i n g P r o g r a m

3/ Th e c o r p o r a t e f u n d s of DOTC a t t a c h e d c o r p o r a t i o n s PGF – Pen si on a n d G r a t u i t y F u n d

(MIAA, MCIAA, CIAC a n d CAAP) a m o u n t s to P2.6B i n
2013 PSEPF – P r i o r i t y S o c i a l a n d E con om i c Pr oj ect s F u n d
B S GC – B u d g e t a r y S u p p o r t t o G o v e r n m e n t
Corporations
REFERENCES:

P u b l i c Admi ni str ati on i n t h e P h i l i p p i n e s R u n n i n g a

B u re a u c r a c y http://www.scribd.com/doc/37770745/Local -Fiscal-
Administration

http://en.wikipedia.org/wiki/Department_of_Finance_
%28Philippines%29
http://www.gov.ph/2012/07/24/president -aquino-submits-p2-006-t-
2013-empowerment -budget-to-congress/