Professional Documents
Culture Documents
ACCTG 013
Module 2
Responsibility, Accountability
and Liability over
Gov’t Funds and Property
Responsibility over Government Funds and Property
Module 2
Accounting Responsibility
Accounting Responsibility
◼ emanates from the Constitution, laws, policies,
rules and regulations.
The Constitution
❖ mandates the keeping of General accounts of
the government;
❖ Promulgation of accounting rules;
❖ Submission of reports covering the financial
condition and operation of the government.
Entities with Accounting Responsibility
1. Commission on Audit (COA)
➢ Keeps the general accounts of the gov’t.;
➢ Promulgates accounting rules and regulations;
➢ Submits to the President and Congress within
the time fixed by law* an annual report of all
gov’t. agencies (audit);
➢ Shall be responsible for the
-Unified Account Code Structure (UACS)
-Revised Chart of Accounts (RCA) as to
consistency of Account classification and
coding structure.
2. Dept. of Budget and Management (DBM)
shall be responsible for the:
Module 2
Government Accounting Manual
for NGAs
The Legal Basis
The Government Accounting Manual (GAM) is
prescribed by COA pursuant to Article IX-D, Section 2
par. (2) of the 1987 Constitution of the Republic of the
Philippines
Module 2
Contents of the GAM
◼ Volume I
➢ Guidelines and Procedure
➢ Illustrative Accounting entries
➢ Sample format of the Financial Statements
◼ Volume II
➢ Books, Registries and Records
➢ Forms and Reports
➢ Instructions on how to accomplish and where
to submit the Reports
◼ Volume III
➢ List of Accounts
➢ Codes and Description of Accounts
GOVERNMENT ACCOUNTING
(Sec. 109, PD 1445)
Encompasses the process of
❑ analyzing,
❑ recording ,
❑ classifying,
❑ summarizing and
❑ communicating
Module 2
Basic Accounting and
Budget Reporting Principles
(to be used by all NGAs)
Module 2
QUALITATIVE
CHARACTERISTICS
Qualitative Characteristics
(Definition)
❑ Enhancing
a) Comparability
b) Understandability
c) Verifiability
d) Timeliness
1.(FQC) RELEVANCE
A. Capacity of the information to influence
a user to make a meaningful decision.
It must reflect:
a)Confirmatory value (feedback value)-
confirms or corrects previous
predictions (shows the effects of past
performance of the business)
b)Predictive value – forecast outcome of
events (what might happen in
the future)
B.MATERIALITY
◼ Characteristics:
a) Completeness- all information must have
been taken into account so as not to
be misleading .
May warrant an adequate disclosure or
full disclosure in the notes to financial
statements. (nature of the item, numerical
and descriptive depiction and explanations)
(FQC) FAITHFUL REPRESENTATION
b)Neutrality – “Principle of fairness”
Information should be useful to all users.
It is free from bias.
(Information was not manipulated to
increase the probability that users will
receive it favorably or unfavorably)
PRUDENCE (conservatism)
◼ Accountant should exercise caution
when using estimates or information
marked with uncertainty
➢ No overstatement of assets /revenues
➢ No understatement of liabilities/expenses
ENHANCING
QUALITATIVE CHARACTERISTICS
◼ Relates to the presentation or form of the
financial information
◼ Intended to increase the usefulness of the
financial information that is relevant and
faithfully represented.
a)Comparability
b)Consistency
c) Understandability
d) Verifiability
1.(EQC) Comparability
◼ Enables users to understand similarities
between one information to another
information.
◼ Principle of Consistency
-Implicit qualitative characteristic of
comparability
-applying the same accounting treatment
from one period to another
➢ Intra-comparability (horizontal
comparability)
-comparability of financial information
within the entity
Types of verification:
➢ Direct – direct observation (validation or
replication of the technique
➢ Indirect – check inputs /recalculate
formulas
4. EQC - Timeliness
◼ Information is available within the period
of time that it is needed to form judgement
or decisions so as not to lose its
usefulness.
Cost Constraint
❑ The benefit derived from the information should
exceed the cost incurred in obtaining the
information.
GOVAC
ACCTG 013
Module 2
Components of
General Purpose Financial Statements
FINANCIAL STATEMENTS
➢ means by which the information
accumulated and processed in financial
accounting is periodically communicated to
the users.
➢ End product of Financial Accounting
Module 2
ELEMENTS OF THE
FINANCIALSTATEMENTS
FINANCIAL STATEMENTS
◼ portray the financial effects of transactions
and other events by grouping them into
broad classes according to their economic
characteristics referred to as the Elements
of FS.
◼ Elements of the FS
-refer to the quantitative information reported in
Statement of Financial Position and Statement
Financial Performance.
-building blocks from which FS are constructed
CLASSIFICATIONS OF THE ELEMENTS
(As to Measurement)
◼ Financial Position
a) Asset
b) Liability
c) Equity
◼ Financial Performance
a) Revenue
b) Expense
Module 2
Recognition of the Elements
of the Financial Statements
RECOGNITION OF THE ELEMENTS
◼ Means the reporting of an asset, liability,
income and expenses on the face of the
Financial Statements of an entity
◼ \
1.Asset Recognition Principle
ASSET – defined as a
◼ Resource controlled by the entity
◼ Result of a past event
◼ From which future economic benefits are
expected to flow.
CONTROL
◼ the ability to benefit form an asset or prevent others
from benefitting from that asset
Past Event
◼ A transaction that already occurred that gave rise to
control of future economic benefits
Module 2
Measurement of the Elements
of the Financial Statements
MEASUREMENT OF THE ELEMENTS
◼ Process of determining the monetary
amounts at which elements are to be
recognized and carried in the statement of
Financial Position and Income Statement
◼ 4 Measurement Bases:
a) Historical Cost
b) Current Cost
c) Realizable value
d) Present value
Measurement Bases
1.Historical cost
❖ Amount of cash or cash equivalent paid
❖ Fair value of the consideration given at the time of
acquisition
❖ Known as “ past purchase exchange price”
❖ Most commonly adopted in the FS