ACCOUNTING FOR BUDGETARY

ACCOUNTS
Article VI of the 1987 Constitution
Section 29 (1). No money shall be
paid out of the Treasury except in
pursuance of an appropriation by law.

ACCOUNTING SYSTEMS
General Accounting Plan (GAP) the
overall accounting system of a government
agency or unit.
The
following
are
accounting systems:

objective-specific

Budgetary Accounts Systems

Receipt/Income and Deposit System
Disbursement System
Financial Reporting System

THE NATIONAL BUDGET

-a government document presenting the
government's proposed revenues and
spending for a financial year that is often
passed by the legislature, approved by the
chief executive or president and presented
by the Finance Minister to the nation.

KINDS OF BUDGET
1. As to
a.
b.
c.
2. As to
a.
b.
3. As to

Nature
Annual
Supplemental
Special
Basis
Performance
Line-item
approach and technique

a. Zero-based
b. Incremental

THE BUDGET PROCESS

1. Budget Preparation this covers
estimation of government revenues,
the determination of budgetary
priorities and activities within the
constraints imposed by available
revenues and by borrowing limits,
and the translation of approved
priorities
and
activities
into
expenditure levels.
Budget proposals shall not be based
on the following:
a. A given percentage or peso
increase or decrease from a prior
years budget level
b. A given percentage of the
aggregate budget level
c. A similar rule of thumb that is not
based on specific justification
2. Legislative
Authorization

budget process relative to the

enactment
of
the
General
Appropriation Bills based on the
budget of receipts and expenditures
submitted by the President of the
Philippines.
General Appropriation Bills presents
the proposals of the President for
new general appropriations in the
coming year.
Appropriations are approved by the
legislative body in the form of:

a. A general appropriation law which

covers most of the expenditures
of government
b. Supplemental appropriations laws
that are passed from time to time
to augment or correct an already
existing appropriation
c. Certain automatic appropriations
intended for fixed and specific
purposes
3. Budget Execution and Operation
covers the various operational
aspects of budgeting. It comprise,
among others, of the following:
a. Establishment
of
authority
ceilings on obligations
b. Evaluation of work and financial
plans for individual activities
c. Continuing review of government
fiscal position
d. Regulation of fund releases
e. Implementation of cash payment
schedules
f. Updating planning and scheduling
activities
4. Budget Accountability
phase consist of the following:

this

a. Periodic
reporting
by
the
government
agencies
of
performances
under
their
approved budget
b. Top management review of
government activities and the
fiscal policy implementation
c. The actions of Commission on
Audit (CoA) in assuring the
fidelity of officials and employees
by carrying out the intent of the

legislative regarding the handling

of receipts and expenditures

BUDGETARY ACCOUNTS
1. Appropriation an authorization
made by law or other legislative
enactment, directing payment of
goods
and
services
out
of
government funds under specific
conditions or for special purpose
2. Allotment an authorization issued
by the Department of Budget and
Management
(DBM)
to
the
government agency, which allows it
to incur obligations, for specified
amounts, within the legislative
appropriation
3. Obligation a commitment by a
government agency arising from an
act of duly authorized official which
binds the government to the
immediate or eventual payment of a
sum of money

BUDGETARY ACCOUNTS SYSTEM

The
Budgetary
Accounts
System
encompasses the processes of preparing
Agency Budget Matrix (ABM), monitoring
and recording of allotments received by the
agency from the DBM, releasing of SubAllotment Release Order (Sub-SARO) to
Regional Offices (RO) by the Central Office
(CO); issuance of Sub-SARO to Operating
Units (OU) by the RO; and recording and
monitoring of obligations.

BUDGETARY ACCOUNTS
Budgetary
accounts
consist
of
the
appropriations, allotments and obligations.
Appropriations refer to authorizations made
by law or other legislative enactment for
payments to be made with funds of the
government under specified conditions
and/or
for
specified
purposes.
Appropriations shall be monitored and
controlled through registries and control
worksheets by the DBM and COA,
respectively.
Budgetary
accounts
allotments and obligations are discussed in
the succeeding sections.

THE ALLOTMENT RELEASE ORDER

(ARO)
-is a formal document issued by the DBM
to the agency containing the authorization,
conditions and amount of an agency
allocation

agencies targets and plans for the current

year,
and
Budget
Accountability
Reports
(BARs),
which
contain
information
on
the
agencies
accomplishments and performance for a
given period.
The BEDs include:
1.
2.
3.
4.

Physical and Financial Plan (PFP)

Monthly Cash Program (MCP)
Estimate of Monthly Income
List of Not Yet Due and Demandable
Obligations

The BARs include:

1. Quarterly
Physical
Reports
of
Operations
2. Quarterly
Financial
Reports
of
Operations
3. Quarterly Report of Actual Income
4. Statement of Allotment, Obligations
and Balances
5. Monthly Report of Disbursements

The document may be the:

1. Agency Budget Matrix effectively
releases the amount indicated as not
needing clearance; or
2. Special Allotment Release Order
(SARO)

issued
subject
to
compliance with laws or regulations
or is subject to separate approval or
clearance by competent authority.

GENERAL GUIDELINES ON THE RELEAE

OF FUNDS
Pending the effective date of the new
General Appropriation Act (GAA), national
government agencies are authorized to
incur overdraft in allotment for obligations
corresponding to the actual requirement of
their regular operations chargeable against
the GAA, as re-enacted.

REPORTING REQUIREMENTS
Per Nation Budget Circular No. 507, dated
January 31, 2007, the DBM requires
national government agencies to submit,
on a regular basis, Budget Execution
Documents (BEDs), which contain the

AGENCY BUDGET MATRIX (ABM)

The ABM refers to a document showing the
disaggregation of agency expenditures into
components like, among others, by source

of appropriations, by allotment class and

by need of clearance.

1. Needing Clearance portion of the

ABM consisting budgetary items in
the agency specific budgets that
shall be released upon compliance of
certain documentary requirements
2. Not Needing Clearance portion
of the ABM referring to budgetary
items of agency budgets under the
GAA not included under Needing
Clearances portion and categorized
as such in the submitted financial
plan of the agency.

KEY TERMS ON RELEASE OF

DISBURSEMENT AUTHORITIES
1. Release of Notice of Cash Allocation
(NCA)
2. Release of non-cash Availment
Authority (NCAA)
3. Release
of
Cash
Disbursement
Ceiling

CONDUCT OF THE AGENCY

PERFORMANCE REVIEW
Consistent
with
performance-based
budgeting, a quarterly evaluation of the
agency performance shall be conducted by
comparing agency plans and targets per
BEDs vis--vis actual accomplishments per
BARs.

COMMON FUND SYSTEM

The common fund system policy (for use of
personal services, maintenance and other
operating expenses, capital outlays, and
financial expenses without realignment)
shall continue to be used. However, it will
not apply to current year Accounts Payable
to
external
creditors
of
the
five
departments covered by the Direct
Payment Scheme. These departments are:
1. Department of Public Works and
Highways
2. Department of Education
3. Department of Health
4. Commission on Higher Education
5. State Universities and Colleges