Lesson 3:

LOCAL FISCAL
ADMINISTRATION
Reported by:
Marites A. Mondina
Ryan Andrei Estigoy
 LOCAL FISCAL ADMINISTRATION

 It refers to the conduct and management of

financial affairs, transactions, and operations of
provinces, cities, municipalities, and barangays.
 Revenue generation
 Revenue allocation and utilization
 Management and control over revenue
generation and resource utilization
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WHAT IS A BUDGET?

 it is a Financial Plan
 it is a Managerial Tool

 it is a Process
 it is a Policy Instrument
 it is a Blueprint

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 THREE TYPES OF FUND

General
Special
Fund or
Education Trust Fund
Annual
Fund (SEF)
Budget

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 LGU BUDGET INVOLVES
THREE KEY DECISIONS

Stabilization /
Allocation Distribution
Growth

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 Planning and Budgeting Linkage

This is pursuant to
The Annual Section 305 (i) of
Investment Plan as RA No. 7160 which states
basis of budget that “Local budget shall
preparation operationalize approved
local development plans.”

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THE LOCAL
BUDGETING
PROCESS

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 Preparation

Accountability Authorization

Execution Review

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 BUDGET
PREPARATION

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 KEY PLAYERS IN BUDGET PREPARATION

 Local Chief Executive (LCE)

 Local Finance Committee
 Local Treasurer
 Local Budget Officer
 Local Planning and Development Officer
 Local Accountant
 Heads of Departments/Offices
 Civil Society Organizations and Private
Sector Group
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 BUDGET PREPARATION SCHEDULE
Indicative Responsible
Activity Schedule Official
Issuance of Budget Call June 16 Local Chief Executive
Conduct of Budget Forum June 16 LCE/LFC/Department
Heads
Prepare and Submit Budget Proposals July 15 Department Heads
Review and consolidate budget proposals Local Budget Officer
Conduct budget hearing August 15 LCE / LFC
Prepare the LEP September 30 LCE / LFC
Prepare Budget Message and BESF October 10 LCE / LFC
Submit Executive Budget to the October 16 Local Chief Executive
Sanggunian
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BUDGET PREPARATION
Specific Expenditure Requirements:
 Barangay Aid

 Calamity Fund

 Development Plan

 Discretionary

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 THE EXECUTIVE BUDGET
Proposals are consolidated by the LFC into a Local
Expenditure Program (LEP).
Another document called the
Budget of Expenditure and Sources
LEP of Financing will also be prepared
BESF

Budget
EXECUTIVE
BUDGET

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 BUDGET
AUTHORIZATION

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 Key Players in Budget Authorization

 Local Chief Executive (LCE)

 Local Sanggunian
 Committee on Appropriations/Finance
 Secretary to the Sanggunian
 Local Finance Committee
 Heads of Departments/Offices
 Civil Society Organizations and Private
Sector Group

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 Budget Authorization Flowchart
Local Chief Local Finance Department
Sanggunian
Executive Committee Heads
LCE presents the Executive The Committee on
Appropriations/Finance Justifies Budget Proposals
Budget
subjects the Executive Budget
to a Preliminary Review and Assists the Sanggunian in the
Evaluation analysis and review of the annual
and supplemental budgets
Deliberates on the budget

Authorizes the Annual Budget

LCE approves/vetoes the Forwards the Appropriation

Appropriation Ordinance Ordinance to the LCE

If AO is Approved – the Secretary to the

Sanggunian posts the AO and forwards copies
thereof to the Reviewing Authority
If AO is vetoed – Sanggunian may override the
Veto by 2/3 votes of all
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BUDGET
REVIEW

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KEY PLAYERS IN BUDGET REVIEW

 Secretary to the Sanggunian

 Sangguniang Panlalawigan
 Local Finance Committee
 Department of Budget and Management
Regional Office
 Civil Society Organizations and Private
Sector Group

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 REVIEWING AUTHORITIES

Department of Budget and Sangguniang Panlalawigan:

Management (DBM):
• Component cities
• Provinces • Municipalities
• Highly-urbanized cities
• Independent component cities
• Municipalities within the Sangguniang Panlungsod/
Bayan:
Metropolitan Manila area
• Component barangays

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 REVIEW ACTIONS

 Operative in its entirety

 Operative in its entirety subject to

conditions

 Inoperative in part

 Inoperative in its entirety

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NATURE OF THE REVIEW ACTIONS

 The review action DOES NOT amend the

act of the Sanggunian as embodied in the
Appropriation Ordinance.

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 BUDGET REVIEW FLOWCHART
Secretary to the Reviewing Local Chief
Sanggunian
Sanggunian Authority Executive
Submits the Appropriation Checks the Appropriation
Ordinance Ordinance and budgetary
requirements
Accomplish LBR Form Nos.
1A and 1B

1) Checks compliance with

budgetary requirements and
general limitations Reviews the Appropriation
2) Checks compliance with Ordinance
AIP
3)Checks for items that are
prohibited by law

 Accomplish LBR Form

No. 02 Advises the Sanggunian on the Acts on the Budget Review
 Prepare Review Action Issues the Review Action Budget Review Action Findings
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 BUDGET
EXECUTION

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KEY PLAYERS IN BUDGET EXECUTION

 Local Chief Executive (LCE)

 Vice Governor/Vice Mayor
 Local Budget Officer
 Local Treasurer
 Local Accountant
 Local Planning and Development Officer
 Department Head
 Civil Society Organizations and Private
Sector Group
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 LIMITATIONS ON DISBURSEMENT
1) Total disbursement shall not exceed 50% of the unallocated
estimated revenue accruing to such fund in addition to actual
collections.
2) No advance payments shall be made unless goods have been
delivered or services rendered.
3) No cash advances shall be made to any local official or employee
unless made in accordance with the Commission on Audit rules and
regulations.
4) No appropriations shall be transferred from one item to another.
5) Use of savings is allowed from other items to augment any items in
the budget provided that it is within the same expense class.

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BUDGETARY ACCOUNTS IN
BUDGET EXECUTION

 Appropriations

 Allotments

 Obligations

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 BUDGET EXECUTION FLOWCHART
Local Budget Local Department Local Finance Local
Officer Accountant Heads Committee Treasurer

Release the Allotments Prepare the Detailed Prepare Summary of

(LBM/ARO) Prepare the Cash
Financial / Physical Financial / Physical
Program
Performance Targets Performance Targets

Obligate and Disburse Adjust Cash Programs,

Funds for Financial / Physical
Implementation of PPAs Performance Targets
for Shortages and
Overages

Implement Corrective
Actions for Negative
Deviations

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 LOCAL BUDGET EXECUTION FORMS

 LBE Form No. 01 – Allotment Release Order for

Personal Services.pdf
LBE Form No. 1A – Allotment Release Order for
MOOE.pdf
LBE Form No. 1B – Allotment Release Order for
Financial Expenses.pdf
LBE Form No. 2 – Allotment Release Order for Capital
Expenditures.pdf
LBE Form No. 3 – Summary of Financial and Physical
Performance Targets.pdf
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 BUDGET
ACCOUNTABILITY

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KEY PLAYERS IN BUDGET ACCOUNTABILITY

 Local Chief Executive (LCE)

 Local Treasurer
 Local Accountant
 Local Budget Officer
 Local Planning and Development Officer
 Department Heads
 Local Finance Committee
 Civil Society Organizations and Private Sector
Group
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 BUDGET ACCOUNTABILITY FLOWCHART
Budget Budget Planning/ Budget Budget
Execution Accountability Programming Preparation Authorization

Implementation of Planning
Resource
PPAs Programming
Allocation
of PPAs

Monitor Receipts and Submit Accountability

Expenditures Reports

Monitoring of Outputs/ Performance Evaluation

Results of PPAs (outputs vs. targets)

Results

Constituents

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 ACCOUNTABILITY RULES

1) Maintain a General Fund to account for monies and

resources received by and disbursed from the local treasury.
2) Special fund which shall consist of the proceeds from the 1%
additional tax on real property to be appropriated for
education and sports development projects.
3) Trust funds for monies which have officially come into the
possession of a local government official as a trust agent or
administrator.

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 LOCAL ISSUES AND CONCERNS
ON FISCAL ADMINISTRATION

Budget Preparation – expenditure items such as

mandatory contributions for social security and
insurance benefits of employees, reserve money
for earned leave credits of retiring employees and
gratuities of employees that optionally retiring and
other personal service are not considered for
inclusion in the budget.

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 LOCAL ISSUES AND CONCERNS
ON FISCAL ADMINISTRATION

Conflicts between the executive and legislative branches of the

local government cause the delay of the passage of the budget.

Change in the process of review of appropriation led to non-

conformity of review actions and decisions. Some
sanggunians would authorize anything appropriated by lower
level of local units for political purposes. Failure to submit
supporting documents on time is also one of the causes of
negative results of the review.
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 LOCAL ISSUES AND CONCERNS
ON FISCAL ADMINISTRATION

In budget execution, there are instances for non-submission of

work and financial plan and request for funding requirements
by the heads of departments which causes the delay of
implementation of programs and projects.

More often than not, requests for funding are not approved due
to non-submission of supporting documents to support the
requests.

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 PROGRAMS AND PROJECTS UNDERTAKEN
AS A RESULT OF THE DEVOLUTION

1) Taking Care of the People and the

Environment in Negros Oriental
2) Energizing the Purok in Sampalok Quezon
through a Kapit-Bisig Program
3) Saving the Mangroves of Kalibo, Aklan
4) Saving the Marikina River
5) The Mandaluyong Public Market

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 PROGRAMS AND PROJECTS UNDERTAKEN
AS A RESULT OF THE DEVOLUTION

6) Transforming Malalag into a Provincial Agro-

Industrial Center in Davao del Sur
7) Acquiring a Complete Equipment Pool in
Muñoz, Nueva Ecija
8) Floating Bonds for Low Cost Housing in
Victorias, Negros Occidental
9) Improving the Productivity of Naga City

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 PROGRAMS AND PROJECTS UNDERTAKEN
AS A RESULT OF THE DEVOLUTION

10) Lote para sa Mahirap (Land for the Poor)

11) Solid Waste Management Program in Sta. Maria
Bulacan
12) Eco-Walk for the Environment in Baguio City
13) Health Insurance Project of Guimaras Province
14) Carabao and Tractor Pool in Puerto Princesa
15) Talahib Handicraft in Jones Isabela

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 REFERENCES:

 DAF 226 Module

 Local Budget Circular No. 112, dated June

10, 2016 – Budget Operations Manual for
Local Government Units (BOM for LGUs), 2016
Edition

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No questions?

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