No money shall be pai o!" o# "he T$eas!$y e%&ep" in p!$s!an&e o# an app$op$ia"ion ma e by la'() In"$o !

&"ion Article IX-D, Section 2, par. 2 of the 1987 Constitution provides, that The Commission on Audit shall have exclusive authority, subject to the limitations in this Article, to define the scope of its audit and examination, establish the techniques and methods required therefore and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unreasonable expenditures, or uses of government funds and property. !ursuant to this "andate, the Co""ission on Audit #C$A% revised the e&istin' 'overn"ent accountin' s(ste". )he *e+ ,overn"ent Accountin' S(ste" #*,AS% too- effect last .anuar( 1, 2//2. )he shift to the ne+ accountin' s(ste" +as pro"pted 0( the need to si"plif( the 'overn"ent accountin' s(ste", +hich +as a0out half a centur( old, in order to #a&ili"a"e "he p$o&ess o# $e&o$ in* "$ansa&"ions and the p$epa$a"ion o# #inan&ial $epo$"s, and ulti"atel(, to &omp!"e$i+e "he en"i$e *o,e$nmen" a&&o!n"in* sys"em . In addition, the ne+ s(ste" includes responsi0ilit( accountin'. Go,e$nmen" A&&o!n"in* It enco"passes the processes of anal(1in', recordin', classif(in', su""ari1in' and co""unicatin' all transactions involvin' the receipt, disposition and utili1ation of 'overn"ent funds and propert( and interpretin' the results thereof. It also includes 2oo--eepin' referred to as anal(sis, recordin' and 3ournali1in'. !ostin'4'roupin'4classif(in' of si"ilar ite"s. !reparation of periodic financial reports. Anal(sis of reports to deter"ine their accurac( and ade5uac(, as +ell as the efficienc( of a'enc( operations. Distin'uishin' characteristic of 'overn"ent accountin' is the re5uire"ent of a 0ud'et +hich shall 0e the 0asis for all e&penditures. 2ud'etin' is perfor"ed on a 0asis consistent +ith the revenue and appropriation s(ste". )he appropriation s(ste" provides for the control and ulti"ate dis0urse"ent of funds. Ob-e&"i,es 1. !rovide infor"ation concernin' past operation and present conditions. 2. !rovide 0asis as 'uidance for future operation. 6. !rovide control for the acts of pu0lic 0odies and offices re'ardin' receipts, disposition, and utili1ation of 'overn"ent funds and propert(. 7. 8eport and provide infor"ation on the financial condition and results of operation of 'overn"ent a'encies to all persons concerned. Go,e$nmen" .!siness ,s( /$i,a"e .!siness .!siness Go,e$nmen" 8ender pu0lic service As to purpose *o defined o+nership As to o+nership ,overned 0( specific la+s As to "ana'e"ent and re'ulations 9ro" collection of ta&es As to inco"e and fees Ne' Go,e$nmen" A&&o!n"in* Sys"em (NGAS) /$i,a"e Accu"ulate profit Defined o+nership 9e+ li"itations 9ro" services rendered and co""odities sold

NEW GOVERNMENT ACCOUNTING SYSTEM (NGAS)

Is a si"plified set of accountin' concepts, 'uidelines and procedures desi'ned to ensure correctness, co"pleteness, and ti"eliness in the recordin' of 'overn"ent financial transactions, and production of financial reports.

Ob-e&"i,es 1. Si"plif( 'overn"ent accountin'. 2. Confor" to international accountin' standards. 6. ,enerate periodic and relevant financial reports for 0etter "onitorin' of perfor"ance. S!b-e&"s 1. *ational ,overn"ent : depart"ents, 0ureaus, co""issions, 0oards, state colle'es and universities 2. ;ocal ,overn"ent - ;,<s 6. ,overn"ent-o+ned or controlled corporations - ,$CCs Componen"s 1. 2asic 9eatures 2. Codin' Structure 6. Chart of Accounts 7. 2oo-s of Accounts .asi& 0ea"!$es ?odified ACC8<A; ACC$<*)I*, <nder this "ethod, all e&penses shall 0e reco'ni1ed +hen incurred. Inco"e shall 0e on accrual 0asis e&cept for transactions +here accrual 0asis is i"practical or +hen other "ethods "a( 0e re5uired 0( la+. 8@S!$*SI2I;I)A C@*)@8S )he *,As and ;,<s, as +ell as the ,$CCs provide for responsi0ilit( centers. $*@-9<*D C$*C@!) <nder a one-fund concept, all 'overn"ent a'encies shall "aintain onl( one fund. )o provide each 'overn"ent a'enc( accessi0ilit( to cost infor"ation and to properl( control and "onitor cost incurred, responsi0ilit( centers and cost centers, +ith assi'ned codes, shall 0e set for each a'enc( and its re'ional offices, includin' their pro'ra"s, pro3ects, and activities. Separate fund accountin' shall 0e done onl( +hen specificall( re5uired 0( la+ or 0( a donor a'enc( or +hen other+ise necessitated 0( circu"stances su03ect to prior approval of the Co""ission. 2$$BS $9 ACC$<*) All national a'encies shall "aintain t+o sets of 0oo-s 8e'ular A'enc( #8A% and *ational ,overn"ent #*,% 0oo-s. 8e'ular A'enc( 2oo-s #Chole A'enc(% shall 0e used to record the receipt and utili1ation of *otice of Cash Allocation #*CA% and other inco"e4receipts +hich the a'encies are authori1ed to use. 1o!$nals 2e *e$s Cash 8eceipts .ournal #C8.%D ,eneral ;ed'er #,;% Cash Dis0urse"ents .ournal #CD.%D Su0sidiar( ;ed'er #S;% for Cash, 8eceiva0les, Inventories, Invest"ents, Chec- Dis0urse"ents .ournal #C-D.%D !!@, Construction-in-!ro'ress, ,eneral .ournal #,.% ;ia0ilities, Inco"e, @&penses DCollectin' and Dis0ursin' $fficers shall "aintain for A'enc(Es respective su0-unit =. Accountin' 8ecords >. Accountin' 8eports 7. Accountin' 9or"s

Cash 8eceipts 8ecord Cash Dis0urse"ent 8ecord Chec- Dis0urse"ent 8ecord

*ational ,overn"ent 2oo-s shall 0e used to record cash receipts4collections +hich are re5uired to 0e re"itted to the 2ureau of )reasur( and Authori1ed ,overn"ent Depositar( 2an- #A,D2%. 1o!$nals 2e *e$s Cash .ournal #8eceipts and ,eneral ;ed'er 8e"ittances% ,eneral .ournal *@C CFA8) $9 ACC$<*)S A*D ACC$<*) C$D@S A ne+ chart of accounts and codin' structure #C$A Circular *o. 2//6-/1 as a"ended 0( C$A Circular *o. 2//8-/1% +ith a three-di'it account nu"0erin' s(ste" shall 0e adopted. *$)IC@ $9 CASF A;;$CA)I$* #*CA% 8eceipt of *CA 0( an a'enc( shall 0e recorded in the re'ular 0oo-s of accounts Dr Cr Cash : *ational )reasur(, ?odified Dis0urse"ent S(ste" && Su0sid( Inco"e fro" *ational ,overn"ent && A;;$)?@*)S A*D $2;I,A)I$*S 8eceipt of 0ud'etar( allot"ents fro" the D2?, as +ell as incurrence of o0li'ations shall not 0e recorded in the re'ular 0oo-s of accounts. Instead, the( shall 0e separatel( recorded in the four #7% 8e'istries of Allot"ents and $0li'ations #8A$%, na"el( - 8A$C$ - 8e'istr( of Allot"ents and $0li'ations : Capital $utla( - 8A$?$ - 8e'istr( of Allot"ents and $0li'ations : ?aintenance and $ther $peratin' @&penses - 8A$!S - 8e'istr( of Allot"ents and $0li'ations : !ersonal Services - 8A$9@ - 8e'istr( of Allot"ents and $0li'ations : 9inancial @&penses 8@C$,*I)I$* $9 ;IA2I;I)A ;ia0ilit( shall 0e reco'ni1ed at the ti"e the 'oods and services are accepted or rendered and supplier4creditor 0ills are received in accordance +ith the International Accountin' Standards. 9I*A*CIA; @X!@*S@S 9inancial e&penses such as 0an- char'es, interest e&pense, co""it"ent fees, and other related e&penses shall 0e separatel( classified fro" ?aintenance and $ther $peratin' @&penses #?$$@%. 8@,IS)8A $9 !<2;IC I*98AS)8<C)<8@S 9or a'encies that construct pu0lic infrastructures, such as roads, 0rid'es, pla1as, "onu"ents, etc., separate re'istries shall 0e "aintained, such as - 8!I : 2rid'es - 8!I : 8oads - 8!I : !ar-s, !la1as, etc. Durin' construction, the a0ove properties shall 0e recorded in the re'ular 0oo-s of the concerned a'enc( as Construction-in-!ro'ress. <pon co"pletion, the( shall 0e transferred to appropriate 8!I and re"oved fro" the a'enc(Es re'ular 0oo-s of accounts. C$*S)8<C)I$* $9 ASS@)S 9or assets under construction, lia0ilit( shall 0e reco'ni1ed as 0ills are received, 0ased on !ercenta'e of Co"pletion. )he construction period theor( shall 0e applied for costin' purposes. D@!8@CIA)I$*

)he strai'ht-line "ethod of depreciation shall 0e used. )he C$A shall issue separate 'uidelines indicatin', a"on' others, the deprecia0le lives and residual or scrap values of various assets. 9or ;easehold I"prove"ents, it shall 0e depreciated over the period of the lease or the life of the i"prove"ent +hichever is shorter. A;;$CA*C@ 9$8 D$<2)9<; ACC$<*)S A9DA shall 0e set-up for esti"ated uncollecti0le receiva0les. )his +ill allo+ for a fair valuation of receiva0les prior to +rite-off. I*)@8@S) ACC8<A; Chenever applica0le and appropriate, interest inco"e and4or e&pense shall 0e accrued and reco'ni1ed in the 0oo-s of accounts.

C$*)I*,@*) ACC$<*)S Contin'ent assets4lia0ilities are off-0oo- ite"s and shall 0e sho+n onl( in the notes to financial state"ents. Fo+ever, if it has reasona0le assurance of "aturin' into an actual lia0ilit(, such a"ount shall 0e reco'ni1ed in the 0oo-s and the appropriate 3ournal entr( shall 0e "ade AD.<S)I*,48@G@8SI*, @*)8I@S Corrections of erroneous 3ournal entries shall not 0e affected 0( ne'ative 3ournal entries 0ut 0( "a-in' the necessar( reversin'4ad3ustin' entries, all in positive a"ounts. C$8$;;A8A4*@,A)IG@ .$<8*A; @*)8I@S )he follo+in' shall no lon'er 0e used in the ne+ accountin' s(ste". Ac5uisition of inventor(, fi&ed assets and other assets shall 0e reco'ni1ed as capital e&penditures in the re'ular 0oo-s of accounts, eli"inatin' the need for corollar( 3ournal entries. ACC$<*)I*, 8@!$8)S )he ff. reports shall 0e prepared Repo$" )rial 2alance 2alance Sheet State"ent of Inco"e and @&penses Cash 9lo+ State"ent - 2alance Sheet Approach - Inco"e State"ent Approach The NATIONA2 .U4GET )he national 0ud'et is the 'overn"ent esti"ate of its inco"e and e&penditure. It is +hat the 'overn"ent plans to spend for its pro'ra"s and pro3ects. It is 0ased on +hat the 'overn"ent thin-s it +ill spend durin' the (ear and the sources of +hat it hopes to have as funds, either fro" revenues or fro" 0orro+in', +ith +hich to finance such e&penditure. 5in s o# .! *e" As to *ature a. Annual 2ud'et - 0asis of an annual appropriation. 0. Supple"ental 2ud'et - purports to supple"ent4ad3ust a previous 0ud'et +hich is dee"ed inade5uate for the purpose for +hich it is intended. )his is the 0asis for supple"ental appropriation. 0$e3!en&y ?onthl( Huarterl( Huarterl( Huarterl(

c. Special 2ud'et - 'enerall( su0"itted in special for"s on account on the fact that ite"i1ations are not ade5uatel( provided in the Appropriation Act. As to 2asis a. !erfor"ance 2ud'et - 0ud'et e"phasi1in' the pro'ra"s4services conducted and 0ased on functions, activities, and pro3ects +hich focus attention upon the 'eneral character and nature of the +or- to 0e done, or upon services to 0e rendered, rather than upon the thin's to 0e ac5uired, such as personal services, supplies and e5uip"ent. It is a "ana'e"entoriented +hich "easure actual and esti"ated results in the 0asis, ter"s of 0enefits accruin' to the pu0lic and their costs. 0. ;ine-Ite" 2ud'et - 0asis of +hich are the o03ects of e&penditures such as salaries and +a'es, travelin' e&penses, frei'ht, supplies, "aterials, e5uip"ent, etc. As to Approach and )echni5ues a. Iero-2ase 2ud'etin' - process +hich re5uires s(ste"atic consideration of all pro'ra"s, pro3ects and activities +ith the use of defined ran-in' procedures. Activities are anal(1ed and presented in Jdecision pac-a'esK or -e( 0ud'etar( inclusions. 0. Incre"ental Approach - focuses anal(sis of incre"ental chan'es in the 0ud'et and "a( 0e done +ithin the conte&t of perfor"ance and pro'ra" 0ud'etin'. $ther for"s a. 8e'ional 2ud'etin' - is prepared consistent +ith the re'ional or'ani1ation of the national 'overn"ent, +herein the D2? identifies 0( re'ion the e&penditures of 'overn"ent a'encies and releases funds also on a re'ional 0asis. 0. ;on'-ter" 2ud'et - lon'er-ran'e esti"ate of revenue and e&penditures re5uire"ents. c. Be( 2ud'etar( Inclusions : refer to financial co""it"ents of a'encies pertainin' to a 0ud'et (ear. B2IEs are a "aintained for the purpose of 1. Controllin' "a3or financial co""it"ents so that funds are not "isappropriated or to prevent 3u''lin' funds. 2. Disclose the funds and have a clear picture of e&penditures. 6. )rac- do+n "andator( o0li'ations and insure fundin' of priorit( pro3ects.

The .! *e" /$o&ess a. 2<D,@) !8@!A8A)I$* )his 0e'ins +ith the issuance of a J0ud'et callK issued 0( the D2?. )his docu"ent outlines the priorit( areas of 'overn"ent activit( applica0le to the 0ud'et (ear. It li-e+ise reiterates the fiscal li"its and appro&i"ate rate of increase in 'overn"ent ceilin's applica0le to the 0ud'et (ear and appearin' in the developin' plan, as updated in the lon'-ter" fiscal pro3ection appearin' in the latest 2ud'et ?essa'e. 8e'ional 0asis is e&plicit in the 0ud'et process +hich re5uires the participation of a'enc( re'ional offices4units, coordinated at the re'ional level under various 8e'ional Develop"ent Councils #8DC% or autono"ous re'ions. After the re'ional phase, 0ud'et proposals are su0"itted to the Central $ffices +here the( are collated and received prior to su0"ission to the D2?. 6e$o7.ase .! *e"in* It is a process +hich re5uires s(ste"atic consideration of all pro'ra"s, pro3ects and activities +ith the use of defined ran-in' procedures. )his approach has 0een adopted to correct traditional 0ud'etin' practices, stren'then perfor"ance 0ud'etin' and to "a&i"i1e the use of availa0le funds thru s(ste"atic, anal(tical and creative "ethod of allocatin' resources. )he ter" J1ero-0aseK refers to the (earl( anal(sis, evaluation and 3ustification of each activit(, pro3ect or pro'ra", startin' fro" a J1eroK perfor"ance and 0ud'etin' level. 0. ;@,IS;A)IG@ A<)F$8IIA)I$*

8efers to the second phase of the 0ud'et process relative to the enact"ent of ,eneral Appropriations 2ill as 0ased on the 0ud'et of J8eceipts and e&pendituresK su0"itted 0( the !resident, i.e., the enact"ent of the 2ill into an Appropriation Act pursuant to the provision of Section 29 ##% of Article GII of the 1987 Constitution. )o co"pl( +ith this constitutional ti"eta0le, the !residentEs 2ud'et is su0"itted to the le'islature +ithin 6/ da(s fro" the openin' of its re'ular session, as the 0asis of the 'eneral appropriation 0ill. )he ,eneral Appropriation 2ill presents the proposals of the !resident for the co"in' (ear. )he proposals are listed 0( the a'enc( or lu"p su" fund and are detailed 0( 0ud'etar( function activities pro3ect. @ach function is 0riefl( descri0ed in the so-called appropriations lan'ua'e. An( conditions 'overnin' a'enc( e&penditures are presented as Special !rovisions applica0le to the a'enc(, +hich also identif( the a"ount intended for the "ost si'nificant activities of the a'enc(. ,eneral !rovisions are also provided in the 2ill, representin' the e&penditure rules and conditions applica0le to all a'encies or to 'roup of a'encies. 2ud'et 0riefin's are conducted +here0( the various heads of a'encies +ould e&plain to the Con'ress the details of their respective 0ud'ets. *o 0ill passed 0( either Fouse shall 0eco"e a la+ unless it has passed three readin's on separate da(s, and printed copies thereof in its final for" have 0een distri0uted to its ?e"0ers three #6% da(s 0efore its passa'e, e&cept +hen the !resident certifies to the necessit( of its i""ediate enact"ent to "eet a pu0lic cala"it( or e"er'enc(. <pon the last readin' of a 0ill, no a"end"ent thereto shall 0e allo+ed, and the vote thereon shall 0e ta-en i""ediatel( thereafter, and the (eas and na(s entered in the .ournal. #Sec. 2> #2%, Art. GI% @ver( 0ill passed 0( the Con'ress shall, 0efore it 0eco"es a la+, 0e presented to the !resident. If he approves the sa"e, he shall si'n itL other+ise, he shall veto it and return the sa"e +ith his o03ection to the Fouse +here it ori'inated, +hich shall enter the o03ections at lar'e in its .ournal and proceed to reconsider it. If, after such reconsideration, t+o-thirds of all ?e"0ers of such Fouse shall a'ree to pass the 0ill, it shall 0e sent, to'ether +ith the o03ections of the other Fouse 0( +hich it shall li-e+ise 0e reconsidered, and if approved 0( t+o-thirds of all ?e"0ers of that Fouse, it shall 0eco"e a la+. In all such cases, the votes of each Fouse shall 0e deter"ined 0( (eas and na(s, and the na"es of the ?e"0ers votin' for or a'ainst shall 0e entered in its .ournal. )he !resident shall co""unicate his veto of an( 0ill to the Fouse +here it ori'inated +ithin thirt( #6/% da(s after the date of receipt thereofL other+ise, it shall 0eco"e a la+ as if he had si'ned it. #Sec. 27 #1%, Art. GI% Appropriations are approved 0( the le'islative 0od( in the for" of ,eneral Appropriations ;a+ coverin' "ost of the e&penditures of the 'overn"entL Continuin' Appropriations for various pu0lic +or-s pro3ectsL Supple"ental Appropriation la+s +hich are passed fro" ti"e to ti"e, to ad3ust or correct an alread( e&istin' appropriationL and certain auto"atic appropriations intended for fi&ed and specific purpose. c. 2<D,@) @X@C<)I$* )his covers the various operational aspects of 0ud'etin', thus "a-in' 0ud'etin' serves as one of the principal tools of "ana'e"ent control to ensure that pu0lic funds are spent onl( for specific purposes for +hich the( are appropriated. )he responsi0ilit( for "onitorin' of this phase is the Depart"ent of 2ud'et and ?ana'e"ent #D2?%. )he "ain o03ectives of 0ud'et e&ecution are #1% preservin' le'islative intentL #2% o0servin' financial li"itationsL and #6% "aintainin' fle&i0ilit( in 'overn"ental operations. $ther re5uire"ents co"prise of the follo+in' esta0lish"ent of o0li'ational authorit( ceilin's, the evaluation of +or- and financial plans for individual activities, the continuin' revie+ of 'overn"ental fiscal position, re'ulation of fund release, i"ple"entation of cash pa("ent schedules and other related activities such as up-to-date plannin' and schedulin' of activities. )his phase covers the operational aspects of 0ud'etin' co"posed of

1. Su0"ission, evaluation and approval of A'enc( 2ud'et ?atri& and su0se5uent issuance of *CA 0ased on the A'enc(Es Annual Cash !ro'ra". 2. Continuous "onitorin' and revie+ of the 'overn"ent fiscal policies. 6. Cash "ana'e"ent and "onitorin' and 'enerall( seein' to it that funds are availa0le to support the approved a'enc( functions and pro3ects. )he principal 0ud'et e&ecution and control techni5ues used in the !hilippines are the release of allot"ents to 'overn"ental a'encies, the institution of positive retrench"ent "easures #includin' the outri'ht slashin' of appropriations in the event that actual revenues do not co"e up to anticipated levels%, the "andator( settin' up of reserves, and the institution of accountin' and auditin' re5uire"ent in pu0lic spendin'. d. 2<D,@) ACC$<*)A2I;I)A )he si'nificance of this reportin' process is clear, as onl( +ith it can the 0ud'et c(cle 0e co"pleted. Data on fundsM use evidences the i"ple"entation of the le'islative and appropriations intention and is a "a3or 0asis of 0ud'et preparation and evaluation for the succeedin' (ear. )his phase consists of 1. !eriodic reportin' 0( the a'encies of perfor"ances under their approved 0ud'ets. 2. )op "ana'e"ent revie+ of 'overn"ent activities and the fiscal and polic( i"plications thereof. 6. )he action of the Co""ission on Audit is assurin' the fidelit( of officials and e"plo(ees 0( carr(in' out of the intent of the *ational Asse"0l( in re'ard to their handlin' of receipts and e&penditures. The .! *e"a$y A&&o!n"s an o"he$ e#ini"ions8

App$op$ia"ion refers to an authori1ation "ade 0( la+ or other le'islative enact"ent for pa("ents to 0e "ade +ith funds of the 'overn"ent under specified conditions and4or for specified purposes. Allo"men" is an authori1ation issued 0( the D2? to an a'enc(, +hich allo+s it to incur o0li'ations +ithin specified a"ount that is +ithin a le'islative appropriation. Obli*a"ions are co""it"ents 0( a 'overn"ent a'enc( arisin' fro" an act of a dul( authori1ed official +hich 0ind the 'overn"ent to the i""ediate or eventual pa("ent of a su" of "one(. A*en&y .! *e"a$y Ma"$i% (A.M) refers the docu"ent that sho+s the dese're'ation of a'enc( e&penditures into co"ponents li-e, a"on' others, 0( Source of appropriation, 0( Allot"ent Class, and 0( *eed of Clearance. No"i&e o# Cash Allo&a"ion is an authori1ation issued 0( the D2? to an a'enc( to +ithdra+ cash fro" 2ureau of )reasur( to pa( e&penses incurredL purchase of "aterials, and propert(, plant and e5uip"entL pa("ent of pa(a0lesL and other authori1ed dis0urse"ents thru the issuance of ?DS chec-s and other "odes of dis0urse"ents. )he a*en&y is authori1ed to incur o0li'ations onl( in the perfor"ance of activities +hich are in pursuit of its functions and pro'ra"s authori1ed in appropriations acts4la+s +ithin the li"it of the Allot"ent 8elease $rder #A8$%. ACCOUNTING RECOR4S MAINTAINE4 by8 4E/ARTMENT O0 .U4GET AN4 MANAGEMENT A. !egistry of Appropriations and Allotments "!A#A$% shall 0e "aintained for each a'enc(40ureau to "onitor the 0alance of appropriations at an( 'iven ti"e. )he total appropriation of the a'enc( appearin' in the ,AA or other appropriations act shall 0e posted in the 8A!A; at the 0e'innin' of each (ear or upon approval of the appropriation act 0( allot"ent class #!S,?$$@,C$,9@%.

2. !egistry of Allotments and &CA 'ssued "!A&CA'% shall also 0e "aintained to ensure that the *CA issued for the current (earEs operations +ill not e&ceed the allot"ents released. NATIONA2 GOVERNMENT AGENCIES A. 8e'istr( of Allot"ents and $0li'ations #8A$% shall 0e "aintained 0( national 'overn"ent a'encies 0( allot"ent class, particularl( 0( 2ud'et <nit to "onitor allot"ents availa0le for o0li'ations. )he re'istries "aintained 0( the a'encies are as follo+s 8A$!S - !ersonal Services 8A$?$ - ?aintenance and $ther $peratin' @&penses 8A$C$ - Capital $utla( 8A$9@ - 9inancial @&penses ACCOUNTING 0OR .U4GETARY ACCOUNTS8 2ud'etar( Accounts S(ste" enco"passes the processes of 1. 8ecordin' of appropriations 2. !reparin' of A2? 6. ?onitorin' and recordin' of allot"ents received 0( the a'enc( fro" the D2? 7. 8eleasin' of Su0-Allot"ent 8elease $rder #SA8$% to 8e'ional $ffices 0( the Central $ffice =. Issuance of Su0-SA8$ to $peratin' <nits 0( the 8$L and >. 8ecordin' and "onitorin' o0li'ations TREATMENT O0 O.2IGATIONS AN4 ACTUA2 2IA.I2ITY8 $0li'ation Accountin' is "odified such that o0li'ation are no+ recorded in the appropriate 8e'istr( Allot"ents and $0li'ations #8A$% "aintained 0( allot"ent class. )he actual lia0ilit( of 'overn"ent arisin' fro" financial transaction is reco'ni1ed 0( a direct credit to the pa(a0le account. INCOME9 CO22ECTIONS9 4E/OSITS9 AN4 RE2ATE4

ACCOUNTING 0OR TRANSACTIONS

!evenues('ncome refer to the annual or periodic (ield of ta&es, fines and penalties, char'es for services, char'es for use of "one( and propert( and other char'es +hich the 'overn"ent collects or receives into its treasur( for pu0lic use. )a&es 9ines4!enalties Inco"e fro" ,overn"ent Service Inco"e fro" ,overn"ent 2usiness $peration 8ent Inco"e !eceipts include all cash actuall( received fro" all sources4accounts durin' a 'iven fiscal period. *otes a. !roceeds fro" loans40orro+in's are no lon'er credited to ;on'-)er" ;ia0ilities such as ;oans !a(a0le : ;on' ter", do"estic ;oans !a(a0le : 9orei'n 0. )rust 8eceipts are no+ presented as !a(a0les Cithholdin' ta& pa(a0le ,SIS pa(a0le !a'-i0i' pa(a0le !hilhealth pa(a0le Due to *,As recorded as Inco"e 0ut directl( 2onds !a(a0le : ;on' ter", do"estic 2onds !a(a0le : 9orei'n

.oo:s o# A&&o!n"s (0o$ Re&eip"s) !egulatory Agency )oo*s record the re'ular transactions of the a'enc( li-e the receipt and utili1ation of the *otice of Cash AllocationL and collection of inco"e and other receipts +hich can 0e used 0( the A'enc(. &ational +overnment )oo*s record collections or inco"e +hich the a'enc( cannot use and are re5uired to 0e re"itted to the 2ureau of )reasur(.

Accounting #olicies for !egulatory )oo*s, 1. Cithout authorit( to use : the collection shall 0e recorded in the *, 0oo-s and for deposit +ith *ational )reasur(. 2. Cith authorit( to use - the collections shall 0e recorded in the 8A 0oo-s and for deposit either to the A,D2 or the *ational )reasur(. 6. Authorit( +ith li"itations - an( e&cess of collection shall 0e re"itted to the *ational )reasur(, such as collections for se"inar and convention fees. 7. Inco"e fro" sale of e5uip"ent proceeds is dee"ed auto"aticall( appropriated for the purchase of ne+ ones and4or for the repair of e&istin' e5uip"ent. Collections ho+ever shall 0e first re"itted to 2)r and upon receipt of SA8$ and *CAS, "a( 0e used to purchase another one. =. ,rants and donations - shall 0e re"itted to the *ational )reasur(. In case +ith authorit( to use, a special 0ud'et shall 0e approved 0( the D2? to 0e covered 0( *CA. >. ?iscellaneous collections - refund of cash advance paid thru Cash-*ational )reasur(, ?DS and collection of !erfor"ance42idderEs42ail 2onds shall 0e recorded in the 8A 0oo-s and re"itted to the *ational )reasur(. ACCOUNTING 0OR 4IS.URSEMENTS AN4 RE2ATE4 TRANSACTIONS -isbursements constitute all cash paid out durin' a 'iven period. )he( represent "ove"ent of cash either fro" the 2)r or A,D2 or fro" an authori1ed dis0ursin' officer to the final recipient. )he( refer to the settle"ent of 'overn"ent pa(a0le4o0li'ations 0( cash or 0( chec-. .xpenditures include the a"ount actuall( e&pended for 'oods delivered or services rendered +hether paid or not. Mo es o# 4isb!$semen"s by8 Cash #thru Dis0ursin' $fficer% Cash dis0urse"ents out of cash advances of re'ular and special dis0ursin' officers for personal services, pett( e&penses and ?$$@ for field operatin' re5uire"ents. Che&: a. ?DS chec-s for dis0urse"ents covered 0( *CA ?DS chec-s issued 0( *,As char'ea0le a'ainst the account of the )reasurer of the !hilippines "aintained +ith different ?DS-,overn"ent Servicin' 2an-s #2S2s% 0. Co""ercial chec-s for dis0urse"ents covered 0( inco"e4receipt authori1ed to 0e deposited +ith A,D2sL for 8$s4$<s dis0urse"ents out of 9undin' Chec-s received fro" Cos48$s. NCAA (Non7Cash A,ailmen" A!"ho$i"y) 4isb!$semen"s are non-cash dis0urse"ents thru .@G 0( availin'4i"ple"entin' a'enc(L adopted to account for the cash e5uivalent of the loan proceeds availed of throu'h supplierEs credit4constructive cash. A4A (A ,i&e "o 4ebi" "he A&&o!n") issued 0( national 'overn"ent a'encies +hich serves as notice to the 0an- to de0it the a'enc(Es ?DS account for pa("ents "ade for accounts pa(a0le and retire"ent 'ratuit(4 ter"inal leave 0enefit. TRA (Ta% Remi""an&e A ,i&e) refers to the accounta0le docu"ent issued 0( *,A to record the re"ittance of all ta&es +ith the 2I8. )he sa"e docu"ent shall 0e the 0asis for the 2I8 and the 2)r to record the ta& collection and deposit in their respective 0oo-s of accounts.

.asi& Re3!i$emen"s Appli&able "o All Types o# 4isb!$semen"s 1. @&istence of a la+ful and sufficient allot"ent and a"ount dul( o0li'ated and certified 0( the 2ud'et $fficer. 2. Galidit( of $0li'ation certified 0( the Chief Accountant. 6. ;e'alit( of the transactions and confor"it( +ith e&istin' rules and re'ulations. 7. Su0"ission of proper evidence to esta0lish the clai". =. Approval of the dis0urse"ent 0( the Chief of $fficer or 0( his dul( authori1ed representative. /ERSONA2 SERVICES !a(roll 9und in the hands of the Dis0ursin' $fficer as cash advance. !a("ents are "ade in cash to the e"plo(ees. !a(roll 9und deposited in an authori1ed depositar( 0an-. Cithdra+al is thru A)?. Direct pa("ents are "ade thru chec-. MAINTENANCE AN4 OT;ER O/ERATING E</ENSES Asset method +ill 0e follo+ed in recordin' dis0urse"ents +hen e&penditures appl( to "ore than 3ust the accountin' period. @&a"ples are Insurance 8ent Interest Supplies and "aterials #erpetual 'nventory method !urchase of supplies and "aterials for stoc-, re'ardless of +hether or not the( are consu"ed +ithin the accountin' period, shall 0e recorded as Inventor( follo+in' the !erpetual Inventor( ?ethod. Supplies and "aterials purchased for i""ediate use or on e"er'enc( shall 0e ta-en up as an e&pense. !ett( cash hall not 0e used to purchase supplies for stoc-. 0INANCIA2 E</ENSES )hese are the e&penses +hich are not used in the actual operation of the a'enc(. @&a"ples are 2an- Char'e Interest Char'e CA/ITA2 OUT2AYS (/!$&hase=Cons"$!&"ion o# 0i%e Asse"s) 9i&ed assets are char'ed a'ainst allot"ent for capital outla(. )he purchase is i""ediatel( recorded as asset. Construction !eriod )heor( shall 0e follo+ed in recordin' fi&ed assets +here all e&penses durin' the construction period shall 0e capitali1ed, e.'., interest and licenses. 2onus paid to the contractor for co"pletin' the +or- ahead of schedule shall 0e added to the total cost of the pro3ect. Fo+ever, li5uidated da"a'es char'ed to the contractor for dela(ed co"pletion should 0e deducted fro" total cost.

NGAS #o$ 2OCA2 GOVERNMENT UNITS ,@*@8A; ACC$<*)I*, !;A* sho+s the overall accountin' c(cle in the ;,<. )8A*SAC)I$*S shall e"anate fro" different offices4depart"ents +hich +ill provide the source docu"ents and other accountin' for"s +hich +ill lead to the perfection of the transaction.

S$<8C@ D$C<?@*)S shall 0e the 0asis of the reports of the $99IC@ $9 )F@ )8@AS<8@8. $99IC@ $9 )F@ ACC$<*)A*) shall 8ecord the transactions to the re'istries or to the correspondin' 0oo-s of ori'inal entr( includin' !ostin' to the 0oo-s of final entr(, and preparation of 9inancial 8eports. 2<D,@) CAC;@ #;,<% 2<D,@)A8A o0li'ations. ACC$<*)S are co"posed of appropriations, allot"ents and

;ocal SA*,,<*IA* approves the annual 0ud'et thru issuance of A!!8$!8IA)I$* $8DI*A*C@. Allot"ents are released 5uarterl( 0ased on the C$8B and 9I*A*CIA; !;A* and 8@H<@S) 9$8 8@;@AS@ $9 A;;$)?@*). <pon receipt of the ADGIC@ $9 A;;$)?@*), the Accountant shall enter in the 8@,IS)8A $9 A!!8$!8IA)I$*S, A;;$)?@*)S A*D $2;I,A)I$*S #8AA$%. 9or each $2;I,A)I$*, the re5uestin' depart"ent4office shall prepare the A;;$)?@*) A*D $2;I,A)I$* S;I! #A;$2S% si'ned 0( the depart"ent4office head as the re5uestin' official and for+ard this to'ether +ith the supportin' docu"ents to the 2<D,@) $99IC@8 to certif( the e&istence of appropriation. $0li'ations shall 0e ta-en up in the re'istries as the( incurred. )he CFI@9 ACC$<*)A*) shall record paid dis0urse"ent vouchers in the Status of $0li'ation portion of the A;$2S, and ad3ust the a"ount of recorded o0li'ations in the 8AA$.

T;E NEW .ARANGAY ACCOUNTING SYSTEM (>??@) ?A.$8 9I*A*CIA; )8A*SAC)I$* 1. Appropriations and Co""it"ents

 ,eneral fund 2/N Develop"ent fund Cala"it( fund San''unian' Ba0ataan fund ,ender and Develop"ent fund 2. 8eceipts and Deposits 6. Dis0urse"ents 0( Chec Cash 7. Supplies and ?aterials, !!@, !u0lic Infrastructure48eforestation !ro3ect 9I*A*CIA; S)A)@?@*)S A*D S<!!$8)I*, SCF@D<;@S 9inancial State"ents 1. 2alance Sheet #Detailed and Condensed% 2. State"ent of Inco"e and @&penses #Detailed and Condensed% 6. State"ent of Cash 9lo+s #Direct ?ethod% 7. State"ent of Chan'es in ,overn"ent @5uit( =. *otes to 9inancial State"ents Schedules 1. Schedule of !u0lic Infrastructures and 8eforestation !ro3ects 2. Schedule of Accounts !a(a0le 6. Schedule of Accounts 8eceiva0le

2ASIC 9@A)<8@S A*D !$;ICI@S ACC$<*)I*, ?@)F$D ?odified Accrual accountin' is used. - Inco"e shall 0e recorded +hen earned e&cept +hen i"practical or +hen la+ re5uires other "ethod. - @&penses shall 0e recorded +hen incurred irrespective of their ti"e of pa("ent. - Inco"e and e&penses shall 0e reported in the 9S in the period the( relate. 2A8A*,AA ACC$<*)S shall 0e -ept +ithin the fra"e+or- of *,AS chart of accounts. C@8)I9I@D 8@,IS)@8S 1. Cash 8eceipt 8e'ister 2. Cash on Fand and in 2an- 8e'isters 6. !ett( Cash 9und 8e'ister 7. Cash and Chec- Dis0urse"ent 8e'isters @-*,AS is encoura'ed to facilitate the recordin' of transactions and to hasten the consolidation of all 0aran'a( financial state"ents. !8$C@SSI*, $9 )8A*SAC)I$* A*D 8@C$8DI*, I* )F@ 2$$BS - !rocessin' shall 0e done at the 0aran'a( level. - 8ecordin' in the 0oo-s thru .ournal @ntr( Goucher shall 0e done 0( the Cit(4?unicipal accountant. 8@C$,*I)I$* $9 ;IA2I;I)A - ;ia0ilities shall 0e ta-en onl( for 'oods actuall( delivered and accepted or services rendered, or upon receipt of 0ills fro" suppliers4creditors. - All 0orro+in's and secured loans shall 0e recorded usin' the appropriate lia0ilit( account. - Cash received to 'uarant( faithful perfor"ance of an activit( shall 0e recorded as lia0ilit(. - Suret( 0ond shall not 0e recorded. !<8CFAS@ $9 S<!!;I@S, ?A)@8IA;S A*D S?A;; I)@?S +ith servicea0le life of "ore than one (ear, shall 0e directl( char'ed to e&pense account. Cost of transportin' supplies and "aterials shall 0e char'ed to D@;IG@8A @X!@*S@ account. CASF ADGA*C@S - Char'ed to !AA8$;; 9<*D as pa("ent for personal services. - Char'ed to ADGA*C@S )$ $99IC@8S A*D @?!;$A@@S if 'ranted for travel and other special ti"e-0ound underta-in'.

A<DI) DISA;;$CA*C@S shall 0e recorded onl( +hen final and e&ecutor(. )8IA; 2A;A*C@, t+o "one( colu"n shall 0e used.