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Government Accounting - 2018 Edition
Punzalan and Cardona
Chapter 1 – Nature and Scope of NGAS

Questions & Answers:
1
...

Answer: Pursuant to Section 109 of PD 1445,
government accounting is the one which
“encompasses the process of analyzing,
recording,
classifying,
summarizing
and
communicating all transactions involving the
receipt and disposition of government fund
and property and interpreting the result
thereof
...
Enumerate the objectives of the government
accounting
according
to
Section
110,
Presidential Decree 1445
...
To produce information concerning past
operations and present conditions;
1

2

b
...
To provide for control of the acts of
public bodies and offices in the receipt,
disposition and utilization of funds and
property; and
d
...

3
...

Answer: Primarily, the Public Sector Accounting
Standards Board (PSASB) was created in 2008
under COA Resolution No
...
\

Sector

4
...

Answer: The following are the processes and
other considerations in developing the Philippine
Public Sector Accounting Standards (PPSAS):
a
...

Existing
IPSAS
were
assessed
to
determine
the
applicability
of
the
provisions in the Philippine setting as
bases in the development of PPSAS
...
Exposure draft of PPSAS
...

The
PSASB
sets
a
reasonable time to allow interested
3

4

parties to consider and comment on its
proposals
...

c
...

Where an accounting principle or a
significant element of a disclosure
requirement contained in IPSAS is
considered to be in conflict with the
Philippine laws, rules and regulations,
this would be regarded as a fundamental
issue and the accounting principle or
disclosure requirement may be changed
...
Statutory authority
...

e
...


4

Disclosure requirements may be amended
when the amendments are regarded as
being significant for improving fair
presentation of the matter
...
PPSAS numbering
...
Where
a PPSAS is developed and there is no
IPSAS equivalent, the standard will be
assigned a number in a series of PPSAS
starting
with
101
...

Standards of PPSAS have equal authority
regardless of the numbering used
...
Financial reporting issues not dealt with
by IPSAS
...

h
...


to

PSASB

for

Where there are significant changes or
unresolved issues associated with an
exposure draft, the PSASB may decide to
re-expose a proposed PPSAS
...
If considered appropriate, focus group
discussions will be held to obtain further
opinions on issues identified by the
exposure process
...
What are the government offices primarily
charged
with
accounting
responsibility?
Explain their respective responsibility
...

Commission on Audit
6

The Commission on Audit (COA) keeps the
general accounts of the government,
promulgates
accounting
rules
and
regulations, and submits to the President
and Congress, within the time fixed by law
(not later than the last day of September
each year – Section 41, PD 1445), an annual
report of the government, its subdivisions,
agencies and instrumentalities, including
government-owned
or
controlled
corporations
...

(2)of
the 1987 Constitution of
the
Philippines, to wit: “The Commission on
Audit shall have exclusive authority,
subject to the limitation in this Article, to
define the scope of its audit and
examination, establish the techniques and
methods required therefor, and promulgate
accounting
and
auditing
rules
and
regulations,
including
those
for
the
prevention and disallowance of Illegal,
irregular,
unnecessary,
excessive,
extravagant,
or
unconscionable
expenditures, or uses of government
7

8

funds and properties,” the Commission on
Audit revised the previous government
accounting system
...
2013-1 dated August 6, 2013,
Unified Accounts Code Structures (UACS),
the consistency of account classification
and coding structures with the Revised
Chart
of
Accounts
shall
be
the
responsibility of the COA
...
(2) of
the 1987 Constitution of the Philippines, the
Commission on Audit shall have exclusive
authority, subject to the limitation 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:
1
...

Cases considered irregular uses of government funds
include the following:
a
...
Honoraria and other forms of allowances such as per
diems, representation allowance, Christmas bonus,
gift checks paid to Department Secretaries,
Undersecretaries, Assistant Secretaries or their
alternates as members of governing boards of
collegial bodies as these partake of the nature of
additional compensation/ remuneration proscribed
under the Phil
...
Payment of allowances and per diems to BOD,
Secretariat and other officers of GOCC subsidiaries
that were acquired through Proclamation 50;
3
...
Payment of EMEs (Emrgency Meeting Expenses) to
members of the BOD;
9

10

5
...
Honoraria granted to private individuals sitting as
members of special committee/s of a government
agency without authority or approval from proper
authorities (DBM/OP);
7
...
2003-5)
8
...
Grant of loyalty/service awards to employees not in
accord with the requirements of CSC MEMO Circ
...

42 (GR142760);
10
...
00;
11
...
Grant of RATA and other benefits to OGCC lawyers
rendering legal assistance to GOCCs in the absence
of three concurring conditions required under EO
878 (COA Dec
...
Payment of COLA and other allowances deemed
integrated in the salary (GR#153266);
14
...
Premiums paid for the personnel accident insurance
of officers and employees of GOCCs in the absence
of a prior authority from the OP and DBM;
16
...
Payment of salaries and wages wherein signatures
per logbook vary with those in the payroll/DTR; or
unauthorized payment to person/s other than the
payee;
18
...
Overtime pay for services/tasks that can be
undertaken during regular hours;

11

12

b
...
Hiring of consultants and contractuals to perform
functions that will exercise control and supervision
over regular employees (CSC Memo Circ
...
Attorney’s fees to lawyers holding plantilla
positions;
e
...
Payment for deliveries of goods without passing the
required quality test such as that of the Bu
...
Acceptance of a (infrastructure) project not
constructed in accordance with plans and specs
and with noted deficiencies;
h
...
Use of funds (intended for specific purpose) for
purposes other than its original intent unless
realignment thereof is authorized/approved by
proper authorities; release of funds in the form of
assistance to unauthorized beneficiaries
j
...
Grant of cash advance for no specific purpose;
l
...
2004)
2
...

Illustrative cases include the following payments:
1
...
Award of contracts to bidders who fail to meet
the minimum amounts required to be put up at
the time the bids were submitted;
3
...
Communication
equipment
without
the
purchaser’s and dealer’s permit from the National
Telecommunications Commission (RA 3846 on
Radio Control Law)
5
...
Payment of claims awarded not strictly in accord
RA 9184 and its IRR;
7
...
Payment of compensation or benefits to
government personnel not in accord with
provisions of existing laws such as the following:
a) Additional retirement benefits beyond that allowed
under existing laws
b) Hazard pay to health workers/personnel not assigned
in establishment not specifically mentioned in Section

14

21, R
...
7305 and without proof of exposure to public
health hazards for at least 50% of working hours
c) Hazard allowance to employees not engaged in the
delivery of health or health related services such as
the social insurance group
9
...

Entering into a contract, amount for which is over and
beyond existing approved appropriations/not covered by
an appropriation law;
11
...

Entering into a contract without the covering
certificate of availability of funds signed/issued by the
Chief Accountant, even if the contract is signed by said
Chief Accountant as witness (GR151373-74, 17 Nov
...

Grant of cash advance with no specific purpose
14
...

(GAA provision);

15

16

15
...

Overpricing of goods/services purchased
...

Grant of Xmas bonuses, cash gift and other benefits
to consultants, members of governing boards who are not
organic personnel of the government agency;
18
...
365, GR
#157001)
3
...
e
...
;
l) Installation of materials/items in excess of
requirements or in places where there is no need
for the same/with already existing installations that
additional item/s result to redundancy (such as
17

18

installation of camera/s with existing functional
items);
m) Continuous extension of services of
foreign
consultant/s for relatively simple supervisory work
during the final stages of the project, tasks which
can be undertaken by local consultant/s or the
implementing agency itself (GR101370);
4
...
);
i) Construction
of
structures/buildings/procurement of equipment
not
really
needed/not
put
to
use/not
completed/could
not
be
properly
maintained/operations not sustained;
j) Construction
of
housing
units
not
distributed/awarded/disposed
within
considerable period of time as evidenced by the
deterioration of the units;
k) Replacement
of
serviceable
structure/equipment

19

20

l) Continuous repair of vehicles and equipment
considered
beyond
economic
repair
as
evidenced
by
frequent
breakdowns/unseviceability after repair;
m) Construction
of
roads/bridges
left
uncompleted for a number of years;
n) Construction of structures/buildings without
any
intended
purpose;
using
a
structure/building/assets
other
than
the
intended purpose may also be an indication that
the acquisition of the same is not necessary;
5
...
, advertising the entity,
except for banks, trading entities, hotels or venues
for culture and arts;

21

22

k) Lavish celebrations of Christmas, anniversaries, and
other special occasions
...
Unconscionable expenditures pertain to expenditures
acquired in unreasonable and immoderate price or
quantities, and which no reasonable person/person in his
right mind would incur/make, nor would a fair and honest
man would accept as reasonable; those incurred without
considering ethical and moral standards
...
Live-in seminars in five-star hotels with significant
number of participants and unreasonable length of
time;
2
...
Release of significant amounts to NGOs/Pos
without
the
justification/evaluation
on
the
necessity of the project, needs of intended
beneficiaries,
reasonableness
of
project
requirements, etc
...
Granting loans to unqualified borrowers and
borrows unlikely to payback the loans;
5
...
No
...
Reimbursement of expenses for unauthorized
attendance
in
conferences/meetings/official
functions
Or uses of government funds and properties
...
2013-1 dated August 6, 2013, Unified
Accounts Code Structures (UACS) (will be
discussed in detail
in Chapter
3), the
consistency of account classification and coding
structures with the Revised Chart of Accounts
(will be discussed in detail in Chapter 4) shall be
the responsibility of COA
...
The PPSAS shall
apply to all apply to all National Government
Agencies (NGAs), Local Government Units
(LGUs)
and
Government-Owned
and/or
Controlled Corporations (GOCCs) not considered
as Government Business Enterprises (GBEs), in
which case, the Philippine Financial Reporting
Standards (PFRS) and relevant standards issued
by the Financial Reporting Standards Council,
23

24

Board
of
Accountancy,
and
Professional
Regulation Commission shall apply
...

GOVERNMENT BUSINESS
ENTERPRISE (GBE)
CHARACTERISTICS:
1
...
Has been assigned the financial
and operational authority to carry
on a business;
3
...
Not
reliant

on

continuing

government funding to be a going
concern (other than purchase of
outputs at arm’s length); and

24

5
...

Department of Budget and Management
Pursuant to Section 2, Chapter 1, Title
XVII, Book IV of the Administrative Code of
the Philippines (EO 292), “The Department
of Budget and Management shall be
responsible
for
the
formulation
and
implementation of the National Budget
with the goal of attaining our national
socio-economic plans and objectives
...
”
And, as provided by the Joint Circular No
...
In addition, the
25

26

validation and assignment of new program,
activity, project codes shall be decided
jointly by the proponent agency and DBM
...
Receive and keep national funds,
manage and control the disbursements
thereof; and
2
...

Thus, the Bureau of Treasury shall control
and monitor the Notice of Cash Allocation
(NCA) released by the Department of
Budget and Management; as well as the
bank transfers it makes in replenishing its
Modified Disbursement
System
(MDS)
accounts
...
2013-1
dated August 6, 2013, Unified Accounts
26

Code Structures (UACS), the consistency of
accounts
classification
and
coding
standards with the Government Finance
Statistics (GFS) shall be the responsibility
of Department of Finance - BTr
...
Accounting personnel
shall (1
...
) provide advice
on the financial condition and status of the
appropriations and allotments of the
agency as its Head may require, and (3
...
They
shall perform the aforesaid duties in
accordance with existing laws, rules,
regulations, procedures and comply with
the
reporting
requirements
of
the
Commission on Audit, the Department of
Finance and the Department of Budget and
Management
...
Enumerate the registries of the National
Government Agencies (NGAs) as provided by
the Government Accounting Manual (GAM)
...
Registry of Revenue and Other Receipts
– Summary (RRORS)
...
Registry of Revenue and Other Receipts
– Regular Agency and Foreign Assisted
Projects Fund (RROR-RA&FAP)
...
) Regular
Agency Fund; and, 2
...

c
...

This registry shall be maintained by the
Budget Division/Unit of the entity for the
following fund clusters: 1
...
) Special Account –
Foreign Assisted/Foreign Grants Fund
...
Registry of Revenue and Other Receipts
– Internally Generated Funds (OffBudgetary Funds – Retained Income
Funds)/Business Related Funds (RRORIGF/BRF)
...
) Internally
Generated
Funds
(Off-Budgetary
–
Retained Income Funds); and, 2
...

e
...

This registry shall be maintained by the
Budget Division/Unit of the entity for the
Trust Receipts/Inter-agency Transferred
Funds
...
Registry
of
Appropriation
Allotments (RAPAL)
...
Separate registry shall be
maintained
for
prior
year’s
appropriations
...
Registry of Allotments, Obligations and
Disbursements – Personnel Services
(RAOD-PS)
...

h
...

This registry shall be maintained by the
Budget Division/Unit by Appropriation
Act, fund cluster, by Major Final Output
(MFO) or Program/Activity/Project (PAP)
for maintenance and other operating
expenses
...
Registry of Allotments, Obligations and
Disbursements – Financial Expenses
(RAOD-FE)
...

31

32

j
...

This registry shall be maintained by the
Budget Division/Unit by Appropriation
Act, fund cluster, by Major Final Output
(MFO) or Program/Activity/Project (PAP)
for capital outlays
...
Registry of Budget, Utilization and
Disbursements – Personnel Services
(RBUD-PS)
...

l
...

This registry shall be maintained by the
Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program
32

Activity/Project (PAP) for maintenance
and other operating expenses
...
Registry of Budget, Utilization and
Disbursements – Financial Expenses
(RBUD-FE)
...

n
...

This registry shall be maintained by the
Budget Division/Unit by fund cluster, by
Major Final Output (MFO) or Program
Activity/Project (PAP) for capital outlays
...
Registry of Allotments and Notice of
Cash Allocation (RANCA)
This registry shall be maintained by the
Accounting Division/Unit to determine
the amount of allotments not covered by
NCA and to monitor available NCA
...
Registry of Allotments and Notice of
Transfer of Allocation (RANTA)
This registry shall be maintained by the
Accounting Division/Unit to determine
the amount of allotments not covered by
NTA and to monitor available NTA
...
What are the basic accounting and budget
reporting principles under GAM?
Answer: The following are the basic accounting
and budget reporting principles as provided by
GAM:
a
...

COA Resolution No
...
These PPSASs were based on
International Public Sector Accounting
Standards (IPSASs) which were published in
the 2012 Handbook of International Public
34

Sector Accounting Pronouncements of the
IPSASB
...
Accrual basis of accounting in accordance
with the PPSAS
...
Thus, the transaction and events are
recognized in the accounting records and
recognized in the financial statements of
the periods to which they relate
...

c
...

IPSAS
24,
Presentation
of
Budget
Information
in
Financial
Statements,
requires a comparison of budget amounts
and the actual amounts arising from
execution of the budget to be included in
the financial statements of entities that are
35

36

required to, or elect to, make publicly
available their approved budget/s, and for
which they are, therefore, held publicly
accountable
...

d
...

The Commission on Audit as member of the
International Organization of Supreme Audit
Institutions (INTOSAI) is encouraged to
adopt relevant International Accounting
Standards
...
And to provide new accounts
for the adoption of the PPSAS which were
harmonized with the IPSAS to enhance the
accountability and transparency of the
36

financial reports, and ensure compatibility
of financial information, the COA revokes
COA Cir
...
2004-008 and the COA Circular
No
...

Furthermore, COA issued Circular No
...

e
...
In the double-entry
accounting system, two accounting entries
are required to record each accounting
37

38

transactions
...

f
...

The objectives of general purpose financial
reporting in the public sector should be to
a) provide information useful for decision
making, and b) to demonstrate the
accountability of
the entity for the
resources entrusted to it, by:
a) Providing
information
about
the
sources, allocation, and uses of
financial resources;
b) Providing information about how the
entity financed its activities and met
its cash requirements;
c) Providing information that is useful in
evaluating the entity’s ability to finance
its activities and to meet its liabilities
and commitments;

38

d) Providing
information
about
the
financial condition of the entity and
changes in it, and;
e) Providing aggregate information useful
in evaluating the entity’s performance
in terms of service costs, efficiency
and accomplishments;
8
...

Answer: Fund cluster refers to an accounting
procedure for recording expenditures and
revenues associated with a specific activity for
which accounting records are maintained and
periodic financial reports are prepared
...
How would the general purpose financial
reporting in the public sector provide useful
information
for decision making and
demonstrate
the accountability of the
government agency?
Answer: COA Circular No
...
Providing information about the sources,
allocation,
and
uses
of
financial
resources;
b
...
Providing information that is useful in
evaluating the entity’s ability to finance its
activities and to meet its liabilities and
commitments;
d
...
Providing aggregate information useful in
evaluating the entity’s performance in
terms of service costs, efficiency and
accomplishments
...
Enumerate and explain the concept of
responsibility accounting
...
Responsibility
accumulating and reporting data on
revenues and costs on the basis of the
manager’s action, who has authority to
41

42

make the day-to-day decisions about the
items;
2
...
Responsibility accounting can be used at
every level of management in which the
following conditions exist:
a
...
Costs and revenues are controllable at
the level of responsibility with which
they are associated; and
c
...

4
...
A
distinction
is
made
between
controllable and non-controllable costs
...
A cost is considered controllable at a
given
level
of
managerial
42

responsibility if that manager has
the power to incur it within a given
period of time
...

2
...

b
...

5
...
Responsibility reports
usually compare actual costs with
flexible budget data
...

43

44

6
...


44

Answers to Multiple Choice (Chapter 1)
1
...

2
...
Commission on Audit
b
...
Bureau of Treasury
d
...
A
Under the Revised Administrative Code, the
Bureau of Treasury, as one of the operating
bureaus of the Department of Finance is
authorized to:
1
...
Maintain
accounts
of
financial
transactions of all national government
offices, agencies and instrumentalities
...
B
The Commission on Audit based on the
authority granted under Section 2(2), Article
IX-D of the 1987 Constitution of the Republic
of the Philippines prescribed the New
Government Accounting System
...
D
Per COA Cir
...
2013-002 dated January 30,
2013 effective January 1, 2014, the account
code structure consists of eight (8) mandatory
digits, which is composed of the following:
Account Group: one digit; Major Account
Group: two digits; Sub-Major Account Group:
two digits; General Ledger Accounts: two
digits; and GL Contra Accounts: one digit
...
A
The books of original entry or journals, shall
be used to record in time sequence, financial
transactions and information presented in duly
certified and approved accounting documents
...

7
...

8
...
Specifically,
validation and assignment of new codes for
funding sources, organization, sub-object
codes for expenditure items shall be the
responsibility of DBM; consistency of account
classification and coding structure with the
Revised Chart of Accounts shall be the
responsibility of COA; consistency of account
classification and coding standards with the
Government Finance Statistics shall be the
responsibility of DOF-BTr; and validation and
assignment of new Program, Activity, Project
Codes shall be decided jointly by the
proponent agency and DBM
...
D
See explanation in No
...

10
...
8
...
B
The PPSAS shall be applied to National
Government Agencies, Local Government
Units,
and
Government-Owned
and/or
Controlled Corporations not considered as
Government Business Enterprises, where the
Philippine Financial Reporting Standards
(PFRS) and relevant standards issued by
FRSC, BOA, and PRC shall apply
...
C
The Public Sector Accounting Standards
Board was created in 2008 under COA
Resolution No
...

13
...

14
...

15
...

16
...


Chapter 2 – Unified Accounts Code Structure
(UACS)
Questions & Answers
1
...

Answer: The key elements of UACS are as
follows:
1
...
However, per Joint
Circular No
...

2
...

The first two digits (1st and 2nd) represent
the Department Code
...

The next seven digits (6th to 12th) are for
Operating Unit Classification Code
...
Location Codes
Location code is a nine-digit code
composed
of
Region,
Province,
City/Municipality, and Barangay
...
Province
code is a two-digit code (3 rd and 4th) that
identifies the province
...
Barangay code is a
three-digit code (7th to 9th)
...
Major
Final
Output
(MFO)/Program,
Activity and Project (PAP) Codes
As provided by Joint Circular No
...
The
first digit is for Program
...
The
next two digits (4th and 5th) are for 1st
Level Activity
...

However, this was enhanced by Joint
Circular No
...
Also
included is another digit for the last
category of MFO/PAP to ensure that
there is sufficient number of code
values bringing this to five digits (from 5digit code)
...

51

52

5
...
If disaggregation is necessary,
sub-object codes shall be used to show
the breakdown of selected assets,
income and expenses
...

2
...

Answer: The objective or purpose of UACS is to
establish the accounts and codes needed in
reporting the financial transactions of the
National Government Agencies
...

The key purpose of the UACS is to enable the
timely and accurate reporting of actual revenue
collections and expenditures against budgeted
programmed revenues and expenditures
...
Enumerate the reporting requirements that
will be best served by UACS
...
Financial reports as required by the DBM
and COA
...
Financial statements as required by the
Public Sector Accounting Standards Board
of the Philippines
...
Management reports as required by the
executive officials/heads of departments
and agencies; and
4
...

4
...
The codes from the COA Revised Chart of
Accounts prepared for accrual basis
financial reporting
...
The addition of some sub-object codes; and
53

54

3
...

5
...
20141 dated November 7, 2014
...
2014-1, were as
follows:
Fund
Cluster
Fund Cluster Description
Code
01
Regular Agency Fund
02
Foreign
Assisted
Project
Fund
03
Special Accounts – Locally
Funded/Domestic
Grants
Fund
04
Special Accounts – Foreign
Assisted/Foreign
Grants
Fund
05
06

Internally Generated Funds
Business Related Funds
54

07

Trust Receipts

6
...
2014-1 dated
November 7, 2014
...
20141, dated November 7, 2014, MFO/PAP Codes is
now a 15-digit code due to enhancement
...
And to provide the tagging of the
horizontal outcomes, another 2-digit code was
added, for Horizontal Outcomes, next to Sector
Outcomes,
7
...
It is the core of the national
standard geographic system, and is composed of
the Province Code, followed by Municipality
Code; therefore, the municipality identifier not
55

56

only identifies the municipality but also the
province to which it belongs
...
Regardless of the region,
the municipality identifier for a certain town
remains the same as long as it is part of that
province
...
Explain the transitory measure to allow
government
agencies/operating
units
sufficient time in the familiarization of the
UACS codes
...
554, “Conversion of Codes to
Conform to the UACS,” as a transition measure
to allow Government Agencies/Operating Units
sufficient time in the familiarization of the UACS
codes, the DBM shall still reflect the previous
codes alongside the UACS codes in the release
documents
...
In case of any
discrepancy noted in the indicated UACS codes
56

per SARO/NCA vis-à-vis the UACS Manual, the
codes per UACS Manual shall be adopted by the
agency concern
...
A
Funding Source Code is an eight-digit code to
reflect the Fund Cluster Source, Financing
Source, Authorization, and Fund Category
...
2014-1 dated November 7,
2014
...

The next two digits are for Authorization
...
D
Location code is a nine-digit code composed of
Region,
Province,
City/Municipality,
and
Barangay
...
D
Organization Codes is a twelve-digit code to
reflect the Department, Agency and SubAgency or Operating Unit/Revenue Collecting
Unit
...
D
For purposes of UACS, Constitutional Offices,
the Judiciary and the Legislature are
categorized as department-level entities
...
B
A program is an integrated group of activities
that contributes to an agency or department’s
continuing
objective
...

6
...

7
...
2013-1 dated August 6, 2013, the
Department of Budget and Management
(DBM),
Commission
on
Audit
(COA),
Department of Finance (DOF), and Bureau of
Treasury (BTr) jointly developed the Unified
Accounts Code Structure (UACS)
...


B
Province is a political corporate unit of
government which consists of a cluster of
municipalities,
or
municipalities
and
component cities
...


9
...


10
...


59

60

Chapter 3 – The Revised Chart of Accounts
Questions & Answers
1
...

Answer: The chart of accounts provides the
framework within which the accounting records
are constructed
...

The chart of accounts is prescribed for use by
all national government agencies and local
government units
...

2
...
2013-002 dated January 30,
2013 was created
...

And 2)to provide new accounts for the adoption
of the Philippine Public Sector Accounting
Standards (PPSAS) which were harmonized with
the IPSAS to enhance the accountability and
transparency of the financial reports, and ensure
compatibility of financial information, the COA
recognizes the need to revise the existing NGAS
Chart of Accounts prescribed in COA Cir
...

2004-008 dated September 20, 2004
...
Accordingly,
the COA revokes COA Cir
...
2004-008 and the
Revised Chart of Accounts in Circular No
...

3
...
2013-002 dated January 30,
2013?
Give the sub-major account group
classifications
...
2013-002 dated
January 30, 2013, Revised Chart of Accounts,
the expense accounts are classified into:
1
...
Salaries and wages
b
...
Personnel Benefit Contributions
d
...
Maintenance and Other Operating Expenses:
a
...
Training and Scholarship
Expenses
c
...
Utility Expenses
e
...
Awards/Rewards and Prizes
g
...
Demolition/Relocation and
Desilting/Dredging Expenses
i
...
Confidential, Intelligence,
Extraordinary Expenses
k
...
General Services
m
...
Financial Assistance/Subsidy
o
...
Labor and Wages
q
...
Financial Expenses:
Financial Expenses
4
...
Cost of Goods Manufactured
b
...
Non-Cash Expenses:
a
...
Amortization
c
...
Losses

63

64

4
...
Explain briefly
...
2013-002 provides that
the accounts code structure consists of eight
(8) mandatory digits, as follows:
1
...

2
...
g
...

3
...
g
...

4
...
g
...

This is composed of two segments: the
first two digits from the left is the
general ledger code, and the last digit is
reserved for contra accounts, like:
Allowance for Impairment, Accumulated
Depreciation, etc
...
General
Ledger
Contra-Accounts
–
Contra-accounts are shown as reduction
from the related accounts, and this
includes, among others, Allowance for
Impairment, Accumulated Depreciation,
etc
...


65

66

Answers to Multiple Choice (Chapter 3)
1
...

2
...
g
...

3
...
Asset is an account group
...

4
...
Due from Bureaus and Due from
Central Office are intra-agency receivables
...
A
Other receivables are other receivables
...

6
...

This
Maintenance and Other Operating Expenses in
the Revised Chart of Accounts
...


A
Investment account is a major account group
...
Treasury bills account is a
general ledger account
...


B
Liabilities account is an account group
...
Sinking fund is a general
ledger account
...


C
Financial assets held for trading is a general
ledger account
...
Investment is
a major account group
...
A
The basis for coding the object classification
in the COA Revised Chart of Accounts is
accrual
accounting,
which
requires
transactions to be recorded in the period
when they occur (and not when cash or its
equivalent is received or paid)
...


68

Chapter 4 – Accounting for Budgetary Accounts
Questions & Answers
1
...

Answer: The General Accounting Plan (GAP)
shows the overall accounting system of a
government agency/unit
...

The following are the accounting system:
1
...

2
...
All collecting officers shall
deposit intact all their collections, as well
as collections turned over to them by subcollectors/tellers, with their AGDB daily
or not later than the next banking day
...
At the end of each
70

business day, the collecting officers shall
accomplish the Report of Collections and
Deposits (RCD)
...
Disbursement System
Disbursements constitute all cash paid
out during a given period either in
currency (cash) or by check
...

It shall be covered by Disbursement
Voucher (DV)/Petty Cash Voucher (PCV) or
The
Disbursement
System
Payroll
...

4
...
Under the
New Government Accounting System,
financial
reporting
includes
the
preparation and submission of trial
balances, financial statements and other
reports needed by fiscal and regulatory
agencies
...
) preparation and submission
of trial balances and other reports; and
(2
...

2
...

Answer: The National (Government) Budget is a
plan for financing the government activities
for a fiscal year prepared and submitted by
responsible executive to a representative
body whose approval and authorization are
necessary before the plan can be executed
...
As such, it
72

should present a detailed demonstration of
the revenues and expenditures of the
government for the past and ensuing years,
and
should
furnish
not
only
definite
information regarding the general character,
purpose
and
amount
of
government
expenditures, but also detailed data regarding
the cost entailed in maintaining particular
units of organization and in performing
particular units of organization and in
performing particular activities
...

To strengthen the link between planning and
budgeting and to simplify the presentation of
the budget, the DBM introduced, in the
preparation of the proposed National Budget
for FY 2014, a new approach to budgeting
...
117, the DBM introduced PerformanceInformed Budgeting (PIB), which will ensure
that public resources are managed more
efficiently and with the greatest degree of
discipline by re-directing funds to programs
that would be responsive to the needs of the
73

74

people especially those in regions beset by
poverty
...
Enumerate and explain the different kinds of
budget
...
As to Nature
a
...
It is the basis of an
annual appropriation
...
Supplemental Budget – a budget which
supplement or adjust a previous budget
which is deemed inadequate for the
purpose it is intended
...

c
...

74

2
...
Performance
Budget
–
a
budget
emphasizing the program or services
conducted and based on functions,
activities, and projects, which focus
attention upon the general character and
nature of work to be done, or upon the
services to be rendered
...
Line-Item Budget – a budget the basis of
which are the objects of expenditures
such as: salaries and wages, traveling
expenses, freight, supplies and materials,
equipment, etc
...
As to Approach and Technique
a
...
In this
approach, activities are analyzed and
presented in “decision packages” or key
budgetary inclusions
...
Incremental Approach – a budget where
only
additional
requirements
need
justifications
...

4
...

Answer: The Budget Process/Cycle:
1
...
Estimates are prepared
by the various government agencies,
reviewed and finalized by the President of
the Philippines, and then submitted to the
Legislative Department as basis for the
preparation of the annual Appropriation Act
...
To
ensure that the National Budget is enacted
on time, the DBM, under the Aquino
Administration, has established a new
tradition
of
beginning
the
Budget
Preparation phase earlier
...

2
...
This phase starts upon the
receipt of the President’s Budget by the
77

78

House
Speaker
and
President’s enactment
Appropriation Act
...
It then crafts the
General Appropriation Bill (GAB)
...

Normally, after receiving the GAB from the
House of Representatives, the Senate
conducts its own committee hearings and
plenary deliberations on the GAB
...
This committee will then
discuss and harmonize the conflicting
provisions of the House and Senate
Versions of the GAB
...
Once submitted to the
President for his approval, the GAB is
considered enrolled
...

Constitution, the GAB is the only legislative
measure where the President can impose a
line-veto (in all other cases, a law is either
approved or vetoed in full)
...

3
...
This phase of budget cycle
begins with DBM’s issuance of guidelines on
the release and utilization of funds
...
These documents
outline agency plans and performance
targets
...
A Cash Release Program (CRP) is
also formulated alongside to set a guide for
disbursement levels for the year and for
every month and quarter
...
Obligations are liabilities
legally incurred, which the government will
pay for
...
Most of the time, it
takes the form of a Notice of Cash
Allocation (NCA ); and in special cases, the
Non-Cash Availment Authority (NCAA) and
Cash Disbursement Ceiling (CDC)
...
Budget Accountability
The last phase of budget process consists
of the following: (1) periodic reporting by
the government agencies of performances
under their approved budget; (2) top
management
review
of
government
activities
and
the
fiscal
policy
implementations thereof; and (3) the actions
of Commission on Audit in assuring the
fidelity of officials and employees by
carrying out the intent of the National
Assembly regarding the handling of receipts
and expenditures
...

Through
Budget
81

82

Accountability, the DBM monitors the
efficiency of fund utilization, assesses
agency performance and provides a vital
basis for reforms and new policies
...
Submitted by agencies on a
monthly and quarterly basis, 1) Budget
Accountability Reports (BARs) are required
reports that show how agencies used their
funds and identify their corresponding
physical accomplishments
...
The DBM regularly reports
results to the President
...
Nonetheless, auditing is
critical in ensuring agency accountability in
the use of public funds
...

5
...


and

Answer: Budgetary
following:

explain

accounts

the

Budgetary

consist

of

the

1
...

2
...

3
...

6
...

Answer: Performance-Informed Budgeting is a
budgeting approach that uses performance
information to assist in deciding where the funds
will go
...
Performance information typically
includes the following:
1
...

2
...

3
...

4
...

Performance-informed budgeting differs from
the traditional line item-based budgeting in a
way that it focuses more on outputs and
outcomes and places less emphasis on the
84

inputs
...
This new face of
the National Budget will no longer contain an
excessively detailed line item document, but
a
budget
that
presents
performance
information aligned to planned resources that
promises
to
be
understandable
and
accessible to the people because of its
simplicity
...
Enumerate and explain the obligational
authorities prescribed by the Government
Accounting Manual (GAM)
Answer: Obligational Authority or Allotment – the
following are the documents which authorize the
entity to incur obligations:
a) General Appropriation Act Release
Document (GAARD)
This
serves
as
the
obligational
authority
for
the
comprehensive
release
of
budgetary
items
appropriated
in
the
General
Appropriation Act (GAA), categorized
as For Comprehensive Release (FCR)
...

b) Special
(SARO)

Allotment

Release

Order

This covers budgetary items under For
Later Release (FLR) (negative list) in
the entity submitted Budget Execution
(BEDs),
subject
to
Documents
compliance
of
required
documentats/clearances
...
g
...

c) General
(GARO)

Allotment

Release

Order

This is a comprehensive authority
issued to all national government
agencies,
in
general,
to
incur
obligations
not
exceeding
an
authorized amount during a specified
period for the purpose indicated
therein
...

8
...

Answer:
Disbursement
Authority
–
the
following documents authorize the entity to
pay obligations and payables:
a
...

b
...

c
...

d
...

9
...
1-2000 dated January 3, 2000, as amended
by JC No
...
Estimated
taxes are computed based on the following
percentages: Personnel Services – 8%;
Maintenance and Other Operating Expenses –
5%; and Capital Outlay – 5%
...

10
...

Answer: National Budget Circular No
...

Budget
90

Execution Documents are annual documents
required on the onset of the budget execution
phase that contain the agencies’ targets and
plans for the current year; while Budget
Accountability Reports are reports which
contain information on the agencies’ actual
accomplishments/performance for a given
period
...
B
This is the definition of budgetary accounting
...
D
The national budgetary system consists of
methods and practices of the government for
planning, programming and budgeting
...

3
...

4
...
22, Article VII of the
Philippine Constitution, the President of the
Philippines shall submit to Congress within 30
days from the opening of every regular
session, as the basis of the general
appropriation bill, a budget of expenditures
and sources of financing, including receipts
from existing and proposed revenue measure
...
B
This phase of budget process/cycle involves
the review and approval of the budget by the
legislative and
the
formulation
of
an
appropriation bill
...
C
This phase of budget process/cycle involves
the implementation of the budget by different
government agencies
...
B
This phase of budget process/cycle involves
the
comparison
of
performance
with
92

predetermined plans
...

8
...
29(1), Article VI of the
1987 Constitution
...
A
Pursuant to Sec
...
Code,
appropriations refers to an authorization made
by law or other legislative enactment,
directing the payment of goods and services
out of government funds under specified
conditions or for special purposes
...
C
This is the definition of allotment
...
A
This is the definition of obligation
...
A
This is the definition of program
...
A
Under
the
new
accounting
system,
government
agencies/units
shall
now
journalize the receipt of Notice of Cash
93

94

Allocation using this journal entry
...

14
...
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
...
Allotment – an authorization issued by the
Department of Budget and Management
to the government agency, which allows
it to incur obligations, for specified
amounts,
within
the
legislative
appropriation
...
Obligation – a
commitment
by a
government agency arising from an act of
duly authorized official which binds the

94

government to the immediate or eventual
payment of a sum of money
...
A
The Allotment Release Order is a formal
document issued by the Department of Budget
and Management to the head of the agency
containing the authorization, conditions and
amount of
an agency allocation
...

16
...

Telephone charge, Rent, and Meal allowance
for overtime work are incorrect because these
are
maintenance
and
other
operating
expenses
...
C
Purchase and/or construction of fixed assets
such as building and structures, land, land
improvements, equipment, etc
...

Salaries and wages account is incorrect
because this is Personnel service
...

Merchandise inventory is incorrect because
this is current asset
...
C
Budget Execution Documents is the annual
documents required by the DBM at the onset
of the budget execution phase, which contain
the following: 1
...
) Monthly Disbursements Program, 3
...
) List of
Not Yet Due and Demandable Obligations
...
A
Physical and Financial Plan is a budget
execution document that serves as overall
plan
of
the
government
agencies
96

encompassing the physical and financial
aspects, consistent with their approved
budget level for the year, broken down by
quarter
...
D
Statement of Allotment, Obligations and
Balances is a budget accountability report
which serve as the agencies’ summary report
of allotments received and corresponding
obligations incurred during the month from all
sources by object of expenditure, and shall be
reported
on
monthly
basis
...

21
...

22
...
550 set the deadline for agency
submission of the BEDs to DBM on November
30
...

551 dated January 2, 2014
...
C
Balanced budget is a budget where the
proposed expenditures are equal to or less
than the estimated revenues
...
As such, it is serving government
priorities to achieve a balanced budget by
increasing
revenues
and
cutting
on
expenditures
...
A
Performance-Informed
Budgeting
is
a
budgeting approach that uses performance
information to assist in deciding where the
funds will go
...

25
...
However, in contrast, the
submission of the President’s budget under
the Aquino Administration is a day after the
State of the Nation Address
...

This phase starts upon the receipt of the
President’s Budget by the House Speaker and
ends with the President’s enactment of the
General Appropriation Act
...
C
Line item budget is a budget the basis of
which is the object of expenditures such as:
salaries and wages, travelling expenses,
freight, supplies and materials, equipment,
etc
...
B

99

100

Special budget is a budget of special nature
and generally submitted in special forms on
account that itemization are not adequately
provided in the Appropriation Act or that the
amounts are not at all included in the
Appropriation Act
...
C
The budget preparation begins with the
issuance of a “Budget Call” by the DBM
...

29
...

30
...

100

The General Appropriations Act Release
Document (GAARD), as a budget release
document,
shall
serve
as
obligational
authority and will replace the ABM, in order to
eliminate the need to prepare ABM; thereby,
abolishing the lengthy and elaborate process
of releasing allotments to departments and
agencies
...

Released
Released
Allotments
NCA
150,000
120,000
120,000
90,000
230,000
200,000
14,000
Special Purpose
Fund
150,000
Total
664,000

Unfunded
Allotments
30,000
30,000
30,000

12,000

2,000

125,000

25,000

547,000

117,000

2
...

Cash – MDS, Regular
Subsidy income from
national government

103

547,00
0
547,000

104

Chapter 5 – Accounting for Disbursements and
Related Transactions
Questions & Answers
1
...

Answer:
All
financial
transactions
and
operations of any government entity shall be
governed by the following fundamental principles
provided in Section 4 of P
...
No
...

2
...

Answer:
The
following
are
the
basic
requirements
and
certifications
for
disbursements of government: a) Availability of
allotment/budget
for
obligation/utilization
certified by the Budget Officer/Head of Budget
Unit; b) Obligations/Utilizations properly charged
against available allotment/budget by the Chief
c)
Accountant/Head
of
Accounting
Unit;
Availability of funds certified by the Chief
Accountant; d) Availability of cash certified by
the Chief Accountant; e) Legality of the
transactions and conformity with existing rules
105

106

and regulations; f) Submission of proper
evidence to establish validity of the claim; and g)
Approval of the disbursement by the Head of
Agency or by his duly authorized representative
...
Explain the use of Notice of Cash Allocation
...

The NCA specifies the maximum amount of
withdrawal that an entity can make from a
government bank for the period indicated
...
Explain the use of Notice of
Allocation
...

5
...

Answer: There are two types of checks being
issued by government agencies as follows: a)
Modified Disbursement System Checks – are
checks
issued
by
government
agencies
chargeable against the account of the Treasurer
of the Philippines, which are maintained with
different MDS-GSBs; and b) Commercial Checks –
are checks issued by NGAs chargeable against
the Agency Checking Account with GSBs
...

6
...

Answer: The COA rules and regulations (and
other issuances) governing the grant and
liquidation of cash advances are as follows: a)No
cash advance shall be given unless for a legally
authorized specific purpose; b) A cash advance
107

108

shall be reported on and liquidated as soon as
the purpose for which it was given has been
served; c) No additional cash advance shall be
allowed to any official or employee unless the
previous cash advance given to him/her is first
settled/liquidated or a proper accounting thereof
is made; d) Except for cash advance for official
travel, no officer or employee shall be granted
cash advance unless he/she is properly bonded
in accordance with existing laws or regulations
...
Officers and
employees who are given cash advances for
official travel need not be designated as
Disbursing Officers; g) Transfer of cash advance
from one accountable officer to another shall not
be allowed; and h) The cash advance shall be
used solely for specific legal purpose for which it
was granted
...

7
...

Answer: The Tax Remittance Advice (TRA) refers
to a serially-numbered document prescribed by
the DBM that should be used by the NGAs in the
remittance of withheld taxes on funds coming
from DBM
...
1-2013 dated January 23, 2013,
the TRA is accomplished on-line which is called
the Electronic TRA ( eTRA)
...
The same document shall be the basis for
the BIR and the BTr to draw a JEV to record the
tax collection and deposit in their respective
books of accounts
...
The e TRA shall be supported with the
Summary of Taxes Withheld (STW) certified by
109

110

the Chief Accountant
...

The Accounting Division/Unit shall
maintain SL to monitor remittances of taxes
withheld from individual employees, suppliers
and contractors
...
Define and discuss what a Cash Disbursement
Ceiling is
...
The following are the
accounting policies regarding disbursements by
Foreign-based Government Agencies: a) Based
on the proposed budget of FSP/Foreign Attaché,
a Working Fund shall be established to cover
payment of PS and MOOE
...
At the end of the month, the
110

Finance Officer of FSPs/Foreign Attachés shall
prepare and submit RCDisb together with the
SDs to the Central

111

112

Office concerned for preparation of JEV to
record
the
liquidation
made
by
the
accountable officer
...

Answer to Multiple Choices (Chapter 5)
1
...
B
3
...
D
5
...
A
7
...
B
9
...

11
...

13
...

15
...

17
...


A
C
A
C
C
D
B
A
C
112

19
...
B
Answers to Problems (Chapter 5)
1-A
Cost per unit P4,950,000/6
units

P825,00
0

If the promotional item received is the same
as the PPE purchased, the total purchase
price shall be allocated to the total quantity
purchased plus the promotional item
...
)
1010
297,
Cash - TRA
4070
000
Subsidy from
4030
297,000
National Government 1010
(Payment of accounts payable
...
)
2020
297,000
Due to BIR
1010
1010
297,000
Cash - TRA
4070
2-A

Cost per unit 12,000 – 1,200)/6 units P1,800
If the promotional item received is different
from the PPE purchased, the fair value of the
promotional item shall be the cost of the
promotional item and deducted from the
total price paid
...

B(Purchase of furniture and fixtures
...
)
Office equipment
1060
114

1,200

10,800

Accounts payable

5020
2010
1010

1,200

(Payment of accounts payable
...

(Remittance of withholding tax to BIR
...
In other words, the subsidy
from national government recorded by the
agency upon receipt of NCA does not include
the portion for TRA; thus, the above journal
entry
...
Differentiate revenue from revenue funds
...

Revenue funds on the other hand comprise all
funds derived from the income of any agency of
the government and available for appropriation
or expenditure in accordance with law
...
Enumerate
the
fundamental
principles
governing revenues accruing to the NGAs
...
The receipt may be in
the form of postage, internal revenue or
118

documentary stamps and the like, officially
numbered receipts, subject to proper custody,
accountability, and audit; f) Where mechanical
devices (e
...
electronic official receipt) are used
to acknowledge cash receipts, the COA may
approve, upon request, exemption from the use
of accountable forms; g) At no instance shall
temporary receipts be issued to acknowledge
the receipt of public funds; h) Pre-numbered ORs
shall be issued in strict numerical sequence
...
Checks drawn in favor of the
government
in
payment
of
any
such
indebtedness shall likewise be accepted by the
officer concerned
...

3
...

Answer: All revenues (income) accruing to the
departments, offices and agencies by virtue of
the provisions of existing laws, orders and
regulations shall be deposited in the NT or in the
duly authorized depository of the Government
and shall accrue to the General Fund of the
Government,
unless
otherwise
specifically
provided by law
...

4
...


the

sources

of

Answer: The sources of revenues of NGAs are a)
exchange and b) non-exchange transactions
...


Non-exchange transactions are transactions in
which an entity either receives value from
another
entity
without
directly
giving
approximately equal value in exchange, or gives
value to another entity without directly receiving
approximately equal value in exchange
...
How
are
exchange
and
non-exchange
transactions recognized and measured?
121

122

Answer: Revenue from exchange transaction
shall be measured at fair value of the
consideration received or receivable and it shall
be recognized when it is probable that future
economic benefits or service potential will flow
to the entity and these benefits can be measured
reliably
...

Revenue from non-exchange transactions shall
be measured at the amount of the increase in
net assets recognized by the entity, unless it is
also required to recognize a liability
...

6
...


122

Answer: Revenues received by the NGAs from
exchange transactions are derived from the a)
sale of goods or provisions of services to third
parties or to other NGAs and b) use by other
entity of assets yielding interest, royalties and
dividends or similar distributions while revenue
of the NGAs from non-exchange transactions are
derived mostly from taxes, gifts and donations,
goods in kind and fines and penalties
...
Discuss what a Dishonored Check is
...

Dishonor by non-payment occurs when (a) the
check is duly presented for payment and
payment is refused or cannot be obtained; or
(b) presentment is excused and the check is
overdue and unpaid
...

123

124

A dishonored check may also be defined as a
check paid to the agency that was dishonored
by the AGDB due to “Drawn Against
Insufficient Fund (DAIF)” or “Drawn Against
Uncleared Deposits (DAUD)
...
How is Cash Shortage/Overage of Disbursing
Officer accounted for by NGAs?
Answer: Cash overage discovered by the Auditor
that cannot be satisfactorily explained by the
Disbursing Officer shall be forfeited in favor of
the government and an official receipt shall be
issued by the Collecting Officer/Cashier
...
Cash shortage which is not restituted
by the Disbursing Officer despite demand in
writing by the Auditor shall be taken up as
receivable from the Disbursing Officer
...
Define and provide the accounting treatment
for Cancelled Checks
...
The
depository bank considers a check stale, if it
has been outstanding for over six months from
124

date of issue or as prescribed
...
A certified copy of the
previously paid DVs shall be attached to the
request for replacement
...

replacement check shall be reported in the RCI
...

2
...

4
...

6
...

8
...
B
10
...

12
...

14
...

16
...

18
...

20
...
Discuss the purpose of Financial Statements
...

Specifically, the objectives of general purpose
financial reporting in the public sector are a)
to provide information useful for decision
making,
and
b)
to
demonstrate
the
accountability of the entity for the resources
entrusted to it
...

2
...

3
...


of

Management

Answer: A The Statement of Management
Responsibility for Financial Statements shall
serve as the covering letter in transmitting
the entity financial statements to the COA,
and other regulatory agencies and other
entities
...


128

4
...
It includes information on
the three elements of financial position,
namely, assets, liabilities and equity
...

b) Statement of Financial Performance shows
the
results
of
operation/performance of the entity at the
end of a particular period
...

129

130

of
Changes
in
Net
c) Statement
Assets/Equity - The Statement of Changes
in Net Assets/Equity shows the changes
in equity between two accounting periods
reflecting the increase or decrease in the
entity’s net assets during the year
...
It identifies the
sources of cash inflows, the items on
which cash was expended during the
reporting period, and the cash balance as
at the reporting date
...

e) Statement of Comparison of Budget and
Actual Amounts – A separate additional
financial statement for comparison of
budget and actual amounts shall be
prepared since the financial statements
130

and budget of NGAs are not on the same
accounting basis
...
Notes to financial statements are
integral parts of the financial statements
...

It
provides
narrative description or disaggregation of
items in the financial statements and
information about them that do not
qualify for recognition
...
Identify and discuss briefly the qualitative
characteristics of Financial Statements
...


Understandability – information is
understandable
when
users
might
131

132

reasonably be expected to comprehend its
meaning
...
Information about
complex matters should not be excluded
from the financial statements merely on the
grounds that it may be too difficult for
certain users to understand
...


Relevance – information is relevant
to users if it can be used to assist in
evaluating past, present or future events or
in
confirming,
or
correcting,
past
evaluations
...


c
...
Information is material if its
omission or misstatement could influence
the decisions of users or assessments made
on the basis of the financial statements
...

d
...

Ongoing factors such as the complexity of
an entity’s operations are not sufficient
reason for failing to report on a timely basis
...

If there is an undue delay in the reporting
of information, it may lose its relevance
...

Conversely,
if
reporting is delayed until all aspects are
known, the information may be highly
reliable but of little use to users who have
had to make decisions in the interim
...
( PPSAS 1 )
e
...


f
...


g
...

134

other events is not always consistent with
their legal form
...


Neutrality – information is neutral
if it is free from bias
...


i
...
However, the exercise of
prudence does not allow, for example, the
creation of hidden reserves or excessive
provisions, the deliberate understatement of
assets or revenue, or the deliberate
overstatement of liabilities or expenses,
because the financial statements would not
be neutral and, therefore, not have the
quality of reliability
...


Completeness – the information in
financial statements should be complete
within the bounds of materiality and cost
...


Comparability – information in
financial statements is comparable when
users are able to identify similarities and
differences between that information and
information in other reports
...

important implication of the characteristic
of comparability is that users need to be
informed of the policies employed in the
preparation
of
financial
statements,
changes to those policies, and the effects of
those changes
...


136

6
...


a statement of compliance with
PPSASs;

b
...


the measurement basis (or
bases) used in preparing the financial
statements;

ii
...


the other accounting policies
used
that
are
relevant
to
an
understanding
of
the
financial
statements;

137

138

c
...


additional information required by
PPSAS that is not shown on the face of the
financial statements but is relevant to an
understanding of any of them which
includes the following:
i
...
If any budgeted
amounts or appropriations have been
exceeded or expenses incurred without
appropriation/allotment, then details shall
be disclosed; (Par
...
nature and extent of prior period errors;
( PPSAS 3)

iii
...
contingent liabilities (PPSAS 19), and
unrecognized contractual commitments;
v
...
non-financial disclosures, e
...
, the entity’s
financial risk management objectives and
policies
...
What are the Events After the Reporting Date?
Answer: Events after the reporting date are
those events, both favorable and unfavorable,
that occur between the reporting date and the
date when the financial statements are
authorized for issue
...


Adjusting
events
after
the
reporting date – those that provide evidence
of conditions that existed at the reporting
date; and

b
...
(Par
...

8
...

9
...

Answer: Current period errors – are errors
committed and discovered within the same
140

period
...

Prior period errors – are omissions from, and
misstatements
in,
the
entities’
financial
statements for one or more prior periods arising
from failure to use, or misuse of reliable
information that was available when financial
statements for those periods were authorized for
issue and could reasonably be expected to have
been obtained and taken into account in the
preparation and presentation of those financial
statements
...
( Par
...
The correction of
a prior period error is excluded from the
computation of income and expense for the
period in which the error is discovered
...
What
are
the
limitations
for
the
retrospective restatement of prior period
errors?
Answer:
The
limitations
of
retrospective
restatement of prior period errors are as follows:
a
...
(Par
...


When it is impracticable to determine the
period-specific effects of an error on
comparative information for one or more
prior periods presented, the entity shall
restate the opening balances of assets,
liabilities, and net assets/equity for the
earliest period for which retrospective
restatement is practicable (which may be
the current period)
...
49, PPSAS 3)

c
...
(Par
...
What are Interim Financial Statements?
Answer: Interim Financial Statements
are
Financial Statements that are required to be
prepared at any given period or at a financial
reporting period without closing the books of
accounts
...
Adjusting and
closing journal entries shall be prepared
...

facilitate the preparation of the interim financial
statements, the use of the worksheet is
recommended
...
Differentiate Trial Balance from Pre-closing
Trial Balance and Post-closing Trial Balance
...

The Pre-Closing Trial Balance shall be prepared
143

144

after posting the AJE in the GJ and the same to
the GL
...
This is also
described/termed as the Adjusted Trial Balance
...
Since revenue and expense
accounts have been closed out, the only
accounts with balances are balance sheet or
real accounts
...

2
...

4
...

6
...

8
...


C
C
B
C
D
B
C
B
C

10
...

12
...

14
...

16
...

18
...

20
...

Capital
outlay
MOOE
Total NCA
received
Less
payments:
Left wing
constructio
n
Right wing
repainting
Total
Less:
W/tax (5% +
2%)
Purchase
of furniture
and
fixtures
and

14,250,000
11,400,000
15,650,000

6,500,00
0
2,000,00
0
8,500,00
0
595,000

3,000,00
0

7,905,00
0

equipment
Purchase
of office
supplies
Total
Less:
W/tax (5% +
1%)
Cash
balance

2,500,00
0
5,500,00
0
330,000

5,170,00 13,075,000
0
2,575,000

2
...

Current assets
Property, plant and
equipment
Total assets
Less: Current liabilities
Accumulated
surplus/Deficit

500,000
800,000
1,300,00
0
200,000
1,100,00
0

4
...
Define bank reconciliation
...
It compares the bank balance with the
entity balance and explains any differences
...
According to the GAM, what are the objectives
of the Bank Reconciliation Statement (BRS)?
According
to
GAM, the Bank
Answer:
Reconciliation
Statement
(BRS)
shall
be
prepared in order to:
a
...
Serve as a determent to fraud, and
c
...


3
...

Answer: When an agency/entity uses a bank as
a depository and clearing house for checks
issued and checks/cash received, the use of a
bank, among others, facilitates the control of
cash, because it creates a double record of all
bank transactions – one by the agency/entity
and one by the bank
...
What are the two accounts in Revised Chart of
Accounts of National Government Agencies
covered by this chapter for purposes of bank
reconciliation? Enumerate the components of
each account
...

AGDB accounts comprised of Cash in Bank –
Current Accounts; while the Treasury account
for MDS accounts comprised of: a) Cash – MDS,
Regular; b) Cash – MDS, Special Accounts; and
c) Cash – MDS, Trust
...
Explain briefly the reconciliation procedure as
provided by the GAM
...
In other words, in
reconciling the bank account, it is customary to
reconcile the balance per books and balance per
bank to their adjusted cash balances
...
Under this
method, the book balance and the bank balance
are brought to an adjusted cash balance that
must appear in the Statement of Financial
Position
...
Enumerate the reconciling items for Cash –
MDS accounts
...
Enumerate the reconciling items for Authorized
Government Depository Bank accounts
...

 Cancelled checks
 Returned check deposit
 Bank charges
 Errors committed by the agency/entity
8
...


memorandum

from

Answer: Credit memorandum is a document
issued by the bank informing an increase in the
depositor’s (agency’s/entity’s) account, such as
previous bank debit errors and collections
directly deposited to the agency’s/entity’s bank
account
...


Answers to Multiple Choice (Chapter 8)
1
...


C – Outstanding checks
C – Notice of Cash Allocation

B – Bank statement
4
...
D – Credit memorandum
6
...
D – All of the above
8
...
E – Chief Accountant or Designated Staff
10
...


Chapter 9 – Accounting for Local Government
Units
Questions & Answers
1
...

Answer: The three separate books that shall be
maintained by local government units under
Section 308 – 310 of the local government
code are:
a
...

b
...
This amount
accruing to special education fund shall
be automatically released to the local
schools
...
Trust Fund
This consists of private and public
monies received, by local government or
of a local government official as trustee,
agent or administrator, as a guaranty for
the fulfillment of some obligations
...

2
...

Answer: Special accounts maintained in the
General Fund that shall be supported by
subsidiary ledgers are the following:
a
...

Loans, interests, bonds issued, and
other contributions for specific purposes;
c
...
Other special accounts, which may be
created by law or ordinance
...
Identify and discuss the two different kinds of
books of accounts to be used by the local
government unit
...
Cash Receipt Journal (CRJ)
2
...
Check Disbursements Journal (CkDJ)
4
...
General Ledger (GL)
2
...
Cash
b
...
Inventories
d
...
Property, Plant and Equipment
f
...
Income
h
...
Cash book – Cash in Treasury
2
...
Cash book – Cash Advances

4
...
The estimates of
income certified
collectible by the treasurer; and
2
...

5
...

Answer: The main sources of income of local
government units are as follows:
1
...

2
...

3
...

The sources of income are further classified
into general income accounts and specific
income accounts
...
Enumerate and explain
accounting for income
...
Accrual Method – Accrual method of
accounting shall be used to record Share
from Internal Revenue Collections in the
books of accounts
...

However, Cash in Bank account shall be
debited upon receipt of Bank Credit
Advice as to receipt of the Share from
Internal Revenue Collections regardless
of whether or not the Notice of Funding
Check Issued has been received from the
Department of Budget and Management
...
Modified Accrual Method – Modified
accrual method of accounting shall be
used for real property taxes; that is, Real
Property Tax Receivable and Special
Education Tax Receivable shall be

established at the beginning of the year
...


3
...

7
...
Explain briefly
...
Borrowings – Borrowings are proceeds
of repayable obligations, generally with
interest from the bank, national agency,
another local government unit, and
private sector
...

2
...

Similar to commercial accounting, the
applicable asset accounts shall be
cancelled from the books upon disposal
...
Refund of Cash Advances – Cash
advances for official travel shall be
recorded as a receivable from the
concerned official or employee
...

Cash
advances for salaries and wages shall be
recorded as debits to the account Cash
Disbursing Officers, and any refund shall
be credited to the same account
...
Receipt of Performance/Bidders’ Bonds –
Similar
to
national
government
accounting, performance bond posted by
contractor or supplier to guaranty full
and faithful performance of their work
may be in form of cash, certified check
or surety
...
In case of surety bond, this is
recognized
by
an
acknowledgment
receipt to be issued by the authorized
official
...
Enumerate the reasons behind the adoption of
special accounts of local government units
...
To determine whether the income
generated by the public utilities or
economic enterprises are sufficient to
meet their respective operating costs
...
To provide adequate information as to the
assets, liabilities and equity of each
special account
...
What are
accounts?

the

sub-codes

for

the

special

Answer: The following shall be the sub-codes for
the special accounts:

SPECIAL ACCOUNTS
General Fund Proper
Market Operation
Slaughterhouse Operation
Waterworks System
Electricity, Light and Power
System
Telephone System
Toll Roads, Bridges and Ferries
Transportation System
Hospital
School
Sport Center
Recreational Center
Housing Projects
Convention/Conference Center
Parking Space
Ice Plant
Cemetery
20% Development Fund
80% Share from Energy Sources
Share from Development of
National Wealth

SUBCODE
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20

Loans
Interests

21
22

Bond Issues

23

10
...

Answer: Supplies or property shall have the
following classification:
a
...
Examples are stationery, fuel,
spare parts, etc
...

b
...
Examples are furniture,
fixtures, transport equipment, etc
...

c
...
Examples are contractual
services like trucking, hauling, janitorial,
security and related services
...


Answers to Multiple Choice (Chapter 9)
1
...

However, separate fund accounting shall be
done when specifically required by law or by a
donor agency or when otherwise necessitated
by circumstances subject to prior approval of
the Commission
...

2
...
It
shall be prepared by the Accounting Unit
based on transaction documents presented
and shall be the basis of recording the
transactions in the appropriate journals
...
B

Cash receipt journal shall be used to record
all collections and deposits reported during
the month for the Regular Agency books
...

4
...

5
...

6
...
Recording to this
journal shall be based on the JEVs supported
with
paid
disbursement
vouchers
and
duplicate copies of checks listed in the Report

of
Checks
Issued
submitted
Cashier/Disbursing Officers
...
A
In order to monitor allotments received,
obligations incurred, NCAs received and
utilized,
public
infrastructures,
dormant
accounts, accounts written off, loans and
grants, among other, registries shall be
maintained by the concerned government
agencies
...
A
Section 61 of the NGAS manual provides that
liquidation report shall be prepared by the
concerned employees/officers to liquidate
cash advances for travel or for other purposes
except those cash advances granted to
Regular/Special Disbursing Officers
...
B
Section 53 of the NGAS manual provides that
Requisition and Issue Slip shall be used to
request for supplies and materials that are
carried on stock
...
C

Grants and donations coming from foreign
funding
institutions,
other
levels
of
government and private institutions/individuals
for specific projects/purpose shall accrue to
the Trust Fund
...

11
...
The year-end debit or credit
balance of this account is closed to Retained
Operating Surplus account
...
Instead, the prior period adjustment
is directly credited to the Government Equity
account
...
Likewise, the COA Circular No
...

12
...

However, Cash in Bank account shall be
debited upon receipt of Bank Credit Advice as
to receipt of the Share from Internal Revenue
Collections regardless of whether or not the

Notice of Funding Check Issued has been
received from the Department of Budget and
Management
...
D
Approval of disbursements by the Local Chief
Executive himself shall be required whenever
local funds are disbursed, except for regularly
recurring administrative expenses such as:
payrolls for regular or permanent employees,
expenses for light, water, telephone and
telegraph
services,
remittances
to
government creditor agencies and others,
where the authority to approve may be
delegated
...
A
The periodic physical count of inventory of
supplies or property every semester shall be
reported in the Report of the Physical Count of
Inventory (RCPI) and shall be submitted to the
auditor not later than July 31 and January 31
of each year for the first and second
semesters, respectively
...

15
...


Chapter 10 – The New Barangay Accounting
System
Questions & Answers
1
...
Accounting Method
The IPSASB’s Conceptual Framework deals
with concepts that apply to general purpose
financial reporting under the accrual basis
of
accounting
...
Therefore,
the transactions and events are recorded in
the accounting records and recognized in
the financial statements of the periods to
which they relate
...
The cash basis IPSASs
encourages an entity to voluntary disclose
accrual based information, although its core
financial statements will nonetheless be
prepared
under
the
cash
basis
of
accounting
...
Recognition of Liability
Liabilities shall be taken up only for goods
actually delivered and accepted or services
rendered or upon receipt of bills from
suppliers/creditors
...
Surety bonds
shall not be recorded in the books
...
Purchase of Supplies and Materials and
Small Items
Purchase of supplies and materials and
small items with serviceable life of more
than one year, like stapler, puncher, ruler,
mechanical tools, etc
...
Cost of
transporting supplies and materials to
barangay shall be charged to “Delivery
Expense” account
...
Cash Advances
Cash advance for payment of personnel
services shall be accounted for as
“Advances for Payroll”; while cash advance
granted for travel and other special time –
bound undertaking shall be accounted for
as “Advances to Officers and Employees”
...
Audit Disallowances
Audit disallowances shall be recorded only
when they become final and executory
...
Barangay Accounts

Barangay accounts shall be kept within the
framework
of
the
New
Government
Accounting
System
(NGAS)
chart
of
accounts
...
Processing of Transaction and Recording in
the Books
Processing of transactions shall be done at
the barangay level; while recording in the
books through Journal Entry Voucher shall
be done by the City/Municipal accountant
...
Recording in the
barangay books shall be based on the
reports
submitted
by
the
Barangay
Treasurer/Barangay Record Keeper
Reports and documents supporting entries
in the reports shall remain with the
Barangay
Treasurer/Barangay
Record
Keeper in the Barangay and shall be made
available to the Commission on Audit
anytime for examination
...
Certified Registers
In accordance with the New Barangay
Accounting System, the following certified
registers shall be used:
1
...
Cash on Hand and in Bank Registers
3
...
Check Disbursement Registers
5
...
Status if Appropriations, Commitments and
Balances
The Status of Appropriations, Commitments
and Balances of each barangay under the
city/municipality shall be consolidated by
the city/municipal Budget Officer
...
Trial Balance
The two-money column trial balance shall
be used
...
Financial Statements
The New Barangay Accounting System
requires the preparation of the following
financial statements:

1
...
Statement of Income and Expenses
(Detailed and Condensed)
3
...
Statement of Changes in Government
Equity
The City/Municipal accountant shall furnish
the
Sangguniang
Barangay
and
the
Auditor/Audit Team Leader with financial
statements within thirty (30) days after the
close of each month
...
Schedules
Statements

Supporting

the

Financial

The following schedules supporting the
financial statements prepared by Barangays
shall be used
1
...
Schedule of Accounts Payable
3
...


E-NGAS

Whenever
possible,
the use
of
the
Electronic New Government Accounting
System at the City/Municipality level is
encourage to facilitate the recording of
barangay transactions and to hasten the
consolidation of all barangay financial
statements and reports
...
Describe
plan
...
It starts with the
receipt of the certified registers/reports from
the Barangay Record Keeper on or before the
5th day of the following month, the recording of
the barangay financial transactions in the
books of the original and final entry and the
ultimate conversion into financial information
as presented in the financial statements
...
Receipts and Deposits
2
...
Public Infrastructures and Reforestation
Projects
4
...
What are the major financial transactions of
barangays? Explain briefly
...
The approved appropriations of
barangays are covered by General
Appropriation Ordinance (GAO)
...

b) Receipts and Deposits
Receipts represent all collections in form
of cash and checks received by the
Barangay for a given period such as:
share in national taxes and revenues,
Barangay taxes, other revenues and other
sources
...

The
Barangay
Treasurer
shall
be
responsible in handling collections of
income and other receipts of the
Barangay and the deposit of the same
with Authorized Government Depository
Bank (AGDB), such as: Development Bank
of the Philippines, Land Bank of the
Philippines,
and Veterans Bank of the Philippines
...

c) Disbursements
Disbursements refer to all cash/check
paid out during a given period for
settlement
of
government
expenditures/payables
...

Existing rules ands regulations require
that all disbursements of public funds be
supported by documents necessary to
prove their validity, propriety, and legality
...
Except
in emergency cases, all procurement

shall
be
covered
by
Approved
Procurement Program as required in RA
9184
...

Supplies,
inspected
by
Inspection Committee, shall be accepted
by Barangay Treasurer, who will act as
the Property Officer of the barangay
...

Similar with supplies and materials, all
procurement of property, plant and
equipment shall be in accordance with
the requirements of RA 9184, and shall be
insured with GSIS
...
Procurement of
property, plant and equipment and

construction of public infrastructures
shall be charged against appropriation of
capital outlay and shall be recorded in
Property, Plant and Equipment Registry
for control and monitoring purposes
...
The
property, plant and equipment shall be
subject to depreciation using the straight
line method
...
The estimated useful life of the
PPE as prescribed by COA shall be used
in computing the rate of depreciation
...
Any
unserviceable PPE shall be returned to
the
Barangay
Treasurer
for
the
cancellation
of
the
Property
Acknowledgement Receipt and shall be
reported in the Inventory and Inspection
Report of Unserviceable Property
...
The
cost of the projects and the cumulative
cost of repairs and maintenance shall be
monitored
using
the
appropriate
registries such as, but not limited to:
1
...
Registry of Public Infrastructure –
Parks, plazas and monuments
3
...
What are the five funds to be recorded in the
Registry of Appropriations and Commitments
of barangays?
Answer: The five funds to be maintained in the
Registry of Appropriations and Commitments of
barangays are:
1
...
20% Development Fund
3
...
Sangguniang Kabataan Fund

5
...
Explain
briefly
the
appropriations
commitments transaction of barangays
...
Laws, rules and
regulations of the government provide that all
disbursements of public funds, except those
received for specific purposes, shall be
covered by an approved General Appropriation
Ordinance (GAO) authorizing appropriation for
the annual budget, the expenditures items of
which shall be in accordance with the
Philippine Government Chart of Accounts
under NGAS
...

Charges (deductions) against the appropriated
funds shall be based on the commitments
made by the Barangay as shown in the
Disbursement Vouchers, Payroll for personnel

services, Contracts or Purchase Orders, and
Purchase Requests
...

6
...


and

deposit

Answer:The Barangay Treasurer
shall
be
responsible in handling collections of income
and other receipts of the Barangay and the
deposit
of
the same with
Authorized
Government Depository Bank (AGDB), such as:
Development Bank of the Philippines, Land
Bank of the Philippines, and Veterans Bank of
the Philippines
...


All collections shall be acknowledged by the
issuance of a pre-numbered Official Receipt or
its equivalent like Real Property Tax Receipt
and Community Tax Certificate subject to
proper custody, accountability and audit,
which shall be secured from the City/Municipal
Treasurer
...

7
...

Answer: Basic requirements applicable to all
classes of barangay disbursements are:
a) Existence of appropriation sufficient to
cover the expenses
...

c) Approval of the expenses by the Punong
Barangay
...


8
...
Check Disbursements Register
2
...
Cash Disbursements Register
4
...
What are the two modes of disbursement
applicable to barangays? Explain briefly
...
) By check - Commercial checks for
disbursements is covered by deposit with
AGDB
...

2
...

Disbursements made by petty cash
custodian out of his petty cash fund
...

10
...

Answer: Requisition, procurement, issuance,
physical inventory and loss of supplies and
materials
are
governed
by
existing
government rules and regulation
...
Procurement of supplies
shall be charged directly to Maintenance and
Other Operating Expenses and shall be
recorded using the appropriate expense
accounts
...
The cost of supplies and
materials acquired through purchase shall be
based on the invoice cost
...
The recipient of small items with more
than one year life shall be responsible for its
upkeep during the estimated life of the item
and shall be issued an Inventory Custodian
Slip
...
Enumerate the reports that shall be prepared
for
property,
plant
and
equipment
of
barangays
...

Inventory and Inspection Report of
Unserviceable Property
2
...

Inspection and Acceptance Report

12
...
Pre-Closing Trial Balance
It is prepared after all the adjusting entries
have been recorded in the General Journal

and the accounts are posted to the General
Ledger and respective Subsidiary Ledger
...
Post-Closing Trial Balance
It is prepared at year-end after all the
closing journal entries have been recorded
in the General Journal and the accounts are
posted to the General Ledger
...
Enumerate the financial statements and
supporting schedules for barangays
...
Balance sheet
2
...
Statement of cash flows
4
...
Notes to financial statements
6
...
Schedule of reforestation projects
8
...
Schedule of accounts payable

and

14
...


Answer: The following
responsibilities
of
accountant:

are the duties and
the
city/municipal

a) Maintain the General Journal, General
Ledger, Subsidiary Ledgers, and Registries
of
Public
Infrastructures/Reforestation
Projects for each of the barangays under
the city/municipality
...

c) Record the Journal Entry Vouchers in the
General Journal and post journal entries to
the
General
Ledgers
and
Subsidiary
Ledgers
...


e) Prepare and submit the Bank Reconciliation
Statement to COA auditor/audit team leader
concerned
...

g) Submit monthly and year-end barangay
individual
financial
reports
to
the
Sangguniang Barangay, and the printed and
digital copies of the consolidated year-end
trial balances, financial statements and
reports/schedules
of
the
barangaya
together with those of the city/municipality
to GAFMIS-COA and to the auditor/audit
team leader concerned
...
A
Purchase of supplies and materials and small
items with serviceable life of more than one
year, like stapler, puncher, ruler, mechanical
tools, etc
...
Cost
of
transporting
supplies and materials to barangay shall be
charged to “Delivery Expense” account
...
B
The IPSASB’s Conceptual Framework deals
with concepts that apply to general purpose
financial reporting under the accrual basis of
accounting
...
Therefore, the transactions and events
are recorded in the accounting records and
recognized in the financial statements of the
periods to which they relate
...
The

cash basis IPSASs encourages an entity to
voluntary disclose accrual based information,
although its core financial statements will
nonetheless be prepared under the cash basis
of accounting
...


and

Cash

basis

of

3
...

4
...

5
...
Laws, rules and

regulations of the government provide that all
disbursements of public funds, except those
received for specific purposes, shall be
covered by an approved General Appropriation
Ordinance (GAO) authorizing appropriation for
the annual budget, the expenditures items of
which shall be in accordance with the
Philippine Government Chart of Accounts
under NGAS
...
A
The General Fund of barangays is composed
of personnel services, maintenance and other
operating expenses, capital outlay, and
financial expenses, which are recorded in the
respective Registry of Appropriations and
Commitments
...
D
Expenses for personnel services, maintenance
and other operating expenses, and financial
expenses shall be charged against respective
appropriation; while investments, purchase of
property,
plant
and
equipment,
and
construction of public infrastructures and
reforestation projects shall be charged
against appropriation for capital outlay
...

Balances at year-end of other appropriations
shall revert to unappropriated status
...
A
The Barangay Treasurer shall be responsible
in handling collections of income and other
receipts of the Barangay and the deposit of
the
same
with
Authorized
Government
Depository
Bank
(AGDB),
such
as:
Development Bank of the Philippines, Land
Bank of the Philippines, and Veterans Bank of
the Philippines
...

9
...
The
LGU or the DBM making the direct remittance
shall furnish the Barangay a copy of he advice
for information and counterchecking with the
credit memo received from the bank
...
D
The petty cash fund shall be maintained using
the imprest system
...
334 (b) RA 7160)
...
C
Except in emergency cases, all procurement
shall be covered by Approved Procurement
Program as required in RA 9184
...
Supplies, inspected by
Inspection Committee, shall be accepted by
Barangay Treasurer, who will act as the
Property Officer of the barangay
...
D
The budget officer shall consolidate the
Statement of Appropriations, Commitments and
Balances of each barangay for the five funds,
such as: General Fund, 20% Development Fund,
Calamity Fund, Sangguniang Fund, and Gender
and Development Fund

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