LOCAL FISCAL ADMINISTRATION

1. 1. Reporter: RAUL R. MELEGRITO

2. 2. Local government units, by virtue of the 1987 Constitution and the Local Government
Code of 1991, otherwise known as Republic Act 7160 have been given the power to raise
certain taxes.
3. 3. Each local government unit (LGU) has the power to create its own sources of revenue
and to levy taxes, fees, and charges The grant of power to create sources of revenue is
consistent with the basic policy of local autonomy The taxes, fees and charges shall accrue
exclusively to the LGU. Power to Create Sources of Revenue (Sec. 129)
4. 4. 1.) Province - It is the largest unit in the political structure of the Philippines. It consists in
varying numbers of municipalities and, in some cases, of component cities. 2.) City -There are
three classes of cities in the Philippines: the highly-urbanized, the independent component
cities which are independent of the province, and the component cities which are part of the
provinces where they are located and subject to their administrative supervision. Following
political subdivisions have the power to tax:
5. 5. 3.) Municipality- It is a political corporate body which is endowed with the facilities of a
municipal corporation, exercised by and through the municipal government in conformity with
law. It is a subsidiary of the province which consists of a number of barangays within its
territorial boundaries, one of which is the seat of government found at the town proper. 4.)
Barangay- The smallest political unit into which cities and municipalities in the Philippines are
divided. It is the basic unit of the Philippine political system. It consists of less than 1,000
inhabitants residing within the territorial limit of a city or municipality and administered by a set
of elective officials, headed by a barangay chairman.
6. 6. CONSTITUTION AUTHORIZES CREATION OF SOURCES OF REVENUE AND LEVY
TAXES Section 5. Each local government unit shall have the power to create its own sources
of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as
the Congress may provide, consistent with the basic policy of local autonomy. Such taxes,
fees, and charges shall accrue exclusively to the local governments. SEC. 130. Fundamental
Principles the following fundamental principles shall govern the exercise of the taxing and
other revenue-raising powers of local government units:
7. 7. a. Taxation shall be uniform in each local government unit; b. Taxes, fees, charges and other
impositions shall: 1. Be equitable and based as far as practicable on the taxpayers ability to
pay; 2. Be levied and collected only for public purposes; 3. Not be unjust, excessive,
oppressive, or confiscatory; 4. Not be contrary to law, public policy, national economic policy, or
in restraint of trade; c. The collection of local taxes, fees, charges and other impositions shall in
no case be let to any private person; d. The revenue collected pursuant to the provisions of
this Code shall inure solely to the benefit of, and be subjected to disposition by, the local
government until levying the tax, fee, charge or other imposition unless otherwise specifically
provided herein; and e. Each local government unit shall, as far as practicable, evolve a
progressive system of taxation.
8. 8. THE CONDUCT AND MANAGEMENT OF FINANCIAL AFFAIRS, TRANSACTIONS, AND
OPERATIONS OF PROVINCES, CITIES, MUNICIPALITIES, AND BARANGAYS.
9. 9. SEC. 305. Fundamental Principles. The financial affairs, transactions, and operations of
local government units shall be governed by the following fundamental principles: (a) No
money shall be paid out of the local treasury except in pursuance of an appropriations
ordinance or law; (b) Local government funds and monies shall be spent solely for public
purposes; (c) Local revenue is generated only from sources expressly authorized by law or
ordinance, and collection thereof shall at all times be acknowledged properly; (d) All monies
officially received by a local government officer in any capacity or on any occasion shall be
accounted for as local funds, unless otherwise provided by law; (e) Trust funds in the local
treasury shall not be paid out except in fulfillment of the purpose for which the trust was
created or the funds received;
10. 10. (f) Every officer of the local government unit whose duties permit or require the possession
or custody of local funds shall be properly bonded, and such officer shall be accountable and
responsible for said funds and for the safekeeping thereof in conformity with the provisions of
law; (g) Local governments shall formulate sound financial plans, and the local budgets shall
be based on functions, activities, and projects, in terms of expected results; development
plans, goals, and strategies in order to optimize the utilization of resources and to avoid
duplication in the use of fiscal and physical resources; (i) Local budgets shall operationalize

approved local development plans; (j) Local government units shall ensure that their respective
budgets incorporate the requirements of their component units and provide for equitable
allocation of resources among these component units;
11. 11. (k) National planning shall be based on local planning to ensure that the needs and
aspirations of the people as articulated by the local government units in their respective local
development plans are considered in the formulation of budgets of national line agencies or
offices; (l) Fiscal responsibility shall be shared by all those exercising authority over the
financial affairs, transactions, and operations of the local government units; and (m) The local
government unit shall endeavor to have a balanced budget in each fiscal year of operation.
PUBLIC FISCAL ADMIN
1. 1. LOCAL GOVERNMENT ADMINISTRATION Presented by: LOUIE A. MEDINACELI & DAVID
GOLLA DR. LOURDES G. BANDOY Professor Republic of the Philippines EULOGIO
AMANG RODRIGUEZ INSTITUTE OF SCIENCE AND TECHNOLOGY Nagtahan, Sampaloc,
Manila GRADUATE PROGRAM MASTER IN PUBLIC ADMINISTRATION TOPIC: PUBLIC
FISCAL ADMINISTRATION
2. 2. PUBLIC FISCAL ADMINISTRATION defined Refers to the Formulation Implementation
Evaluation of the Policies and Decisions on TAXATION REVENUE ADMINISTRATION
RESOURCE ALLOCATION BUDGETING PUBLIC EXPENDITURE BORROWING
DEBT MANAGEMENT ACCOUNTING AUDITING
3. 3. FISCAL = refers to ADMINISTRATION = refers to the Closely linked with other policy
instruments of the government such as MONETARY, PRICE and TRADE POLICY,
INVESTMENT and WAGE. FISCAL POLICIE S NGAs GOCCs GFIs LGUs Government Sector
people whom the government serve beneficiaries, voters, taxpayers, youth, farmers, urban
poor Formulation Implementatio n Evaluation Government s FISCAL POLICIES
4. 4. Administration of FISCAL POLICIES actually takes place within a Political System Public
Fiscal Administration and Political Process are interrelated and influence each other
ADMINISTRATION referring to carrying out or implementing that collective will of the society
Formulate and recommend urgent policy measures for congressional deliberation and approval
POLITICS referring to formulating of laws and policies as expression of the collective will of the
state Legislature Rule Making Also engaged in POLICY implementation thru their PORK
BARREL funds
5. 5. (1) Department of Finance Bureau of Internal Revenue Bureau of Custom Bureau of
Treasury Implementation of policies on TAXATION and TARIFF Custodian of Government
Funds (2) Department of Budget and Management leads the formulation of expenditure policy
as well as borrowing
6. 6. central planning body formulate, review, and assess fiscal policy prepares / prescribes the
programs, projects and activities of government and how these prioritized and finance (3)
National Economic Development Authority (4) Bangko Sentral Ng Pilipinas major actor in the
fiscal policy process to ensure that monetary policies are in consonance with fiscal policy
decisions (5) External Forces International Lending Institutions both influence the fiscal policy
adminis- tration Government giving agencies ( e.g. IMF, WB, ADB ) give advise on fiscal and
other policies of the government
7. 7. Composition Bangko Sentral Ng Pillipinas Governor - Member Department of Budget and
Management Secretary (Chairman) Department of Finance Secretary - Member
formulates the policy framework for the National Budget determines the level of deficit
establishes the priorities and the amount of allocation for the sectors Office of the President
Representative Member (6) Development Budget and Coordination Council National
Economic Development Authority (Director General)

8. 8. The Major Functions of DBCC 1. Establishment of the level of annual government

expenditure program and ceilings of government spending in economic and social
development, national defense, general government and debt services; 2. Determination of the
proper allocation of expenditures for each development activity between current operating
expenditures (COE) and capital outlays (CO), allotting not more than 85% of total government
expenditures to COE and at least 15% to capital outlays. 3. Allocation of the amount set for
capital outlays under each development activity for the various capital infrastructure projects; 4.
Assessment of the reliability pf revenue estimates; 5. Recommendation of appropriate tax or
other revenue measures and extent and type of borrowings; 6. Conduct of periodic review and
general examination of costs, accomplishment, and performance standards applied in
undertaking development projects, including the review of a mid year and annual budgetary
performance; 7. Approval and recommendation to the President of general policy guidelines in
the preparation of the national budget; and 8. Approval and confirmation of various requests of
the Ministry of Finance for bond floatation.
9. 9. NGAs General Appropriation Act = called the national government budget = contain
subsidies, transfers, and/or allotments to GOCCs, GFIs, and LGUs GOCCs GFIs LGUs Have
their own distinct and separate budgets
10. 10. PUBLIC FISCAL ADMINISTRATION PUBLIC FINANCE = closely related = both talk about
revenue and expenditures Also talks about government revenues and expenditures and their
impact in the economy a subject area or branch in economics which deals with the revenues
and expenditures patterns of the government and their various effects on the economy
concerned with the implementation and practicalities of these concepts has always been
considered part of economics Economics Deals with the utilization of scarce resources that
have alternative uses to satisfy human wants. Encompasses the practical aspects of fiscal
governance such as: > revenue collection > preparation of budgets > budget allocation and
spending > management of debt > auditing of account deals with certain at a rather broad
conceptual level financial issues e.g. real problems as economic incentives , aggregate
employment, & inflation
11. 11. PUBLIC FISCAL ADMINISTRATION PUBLIC FINANCE Deals with, but is not restricted to
the more limited issues covered by public fiscal In recent times, however, with the emergence
of the field of public administration, much interest has been directed towards the political
administrative and management aspects of formulating, implementing and evaluating fiscal
policy-hence, the term public fiscal administration Is centered on the determination and
analysis of fiscal policies starting from their formulation to their implementation and evaluation.
12. 12. FISCAL POLICY MONETARY POLICY refers to the combination of policies on:
TAXATION EXPENDITURES adopted by the BORROWING government BUDGETING to
achieve ACCOUNTING objectives AUDITING concerned with the control of the aggregate
supply of money (cash in pockets and balances in bank accounts) in the economy and is
monitored and shaped primarily by the Central Bank tight and easy money regimes are
simply its effects End product of fiscal administration its major objectives are price
stabilization, full employment, and economic growth Serves as tools to achieve general
welfare objectives, and shape and influence by the POLITICAL PROCESS its conduct is an
art, involving a delicate balancing act, the use of appropriate tools, the sending of proper
signals to the market on its broad intentions Note: Have no dividing line as to the impact of
fiscal and monetary policies in the economy Example: a decision to incur a budget deficit ( a
matter of fiscal policy) will require domestic borrowing thru the issuance of treasury bills which
affect the money supply (monetary policy).
13. 13. Fiscal Policy Functions Allocation It is the process by which total resource use is divided
between private and social goods and which the mix of social goods is chosen. In the
performance of allocation function, fiscal policy is expected to regulate the balance in making

available both private goods, merit goods, and social goods. The government intervenes
through subsidies, price regulation, and direct provision of social goods.Distributio n The
distribution of income and wealth is shaped by the distribution of the factors of production.
Fiscal policy is directed toward correcting this income and wealth. ex. high tax for rich, and low
tax for poor; favorable public policies on agrarian reform, wages, labor and employment,
among others
14. 14. Fiscal Policy Functions Stabilization instability may be due to changes in prices of major
imports, cost of foreign borrowings, and the availability of foreign borrowings which lead to
huge deficits in the budget and balance of payments and trade. Using expenditure and tax
policies for stabilization in developing countries may be more difficult. An increase in
expenditures may entail either additional taxes or more borrowing. The low tax base and
inefficient tax administration makes a case of public borrowing. A country aspiring to achieve
growth and development may have to experience instabilities and suffer chronic balance of
payments deficit, severe inflation, high levels of unemployment and underemployment and the
like. Developmen t (in developing countries) Development is an expensive endeavor. For it to
be achieved by developing countries, a radical shift in revenue and expenditure priorities is
called for. Human development process of enlarging the range of peoples choices;
increasing their opportunities for education, health care, income and employment, and
covering the full range of human choices from a sound physical environment and political
freedom. Sustainable development is a process of change in which the exploitation of
resources, the direction of investments, the orientation of technological development, and
institutional change are made consistent
15. 15. TARGETS OF MONETARY POLICY given the effect of MP on the inflation rate, interest
rates and levels of output and employment, and growth, monetary authorities try to target some
variables in order to achieve a certain inflation rate or GNP growth Monetary Aggregates
Refer to the different measures of money. As per the Quantity Theory of Money, money supply
increases do tend to raise the inflation rate Interest Rates It does not directly target. Rather,
BSP uses the policy interest rates for Repurchase Agreements (Repos) and Reverse Repos
(RRPs) to signal to the market their intention to tighten or loosen monetary policy or simply
maintain the status quo. These are made by the MB. Inflation Targeting The governments
inflation target is defined in terms of the average year-on-year change in the consumer price
index (CPI) over the calendar year
16. 16. Price Index an average of prices of commodities in relation to their prices in a specified
base year COMPUTING AN INDEX Price of Rice (per kg) Price Index (Rice) 2000* 14.00
(14/14) X 100 = 100.0 2003 15.40 (15.40/14) X 100 = 110.0 2004 16.17 (16.17/14) X 100 =
115.5 Annual Increase (%) 2003 2004 = (16.17 15.40) 15.40 = 5.0% Annual increase (%)
2003 2004 = (115.5 110) 110 = 5.0%
17. 17. Three elements in the construction of an average price index 1. the items in the market
basket 2. the weight of each item 3. the base year used as the point of comparison. Inflation
yardsticks: 1. GNP deflator - 2. Producers Price Index (PPI) 3. Consumer Price Index (CPI)
18. 18. INFLATION YARDSTICKS: 1. GNP deflator - a measure, which shows the general price
level of the final output of goods and services by Philippine nationals for a given period. 2.
Producers Price Index measures the price changes of finished goods, intermediate materials
and crude materials at the level of the factory or production unit. 3. Consumer Price Index is
a measure of the changes in prices of consumer goods and services.
19. 19. TOOLS OF MONETARY POLICY (monetary policy instruments used by the BSP to ease
and tighten credit in the economy thus promote price stability, and increase or reduce liquidity
in the financial system) (1) Tools Aimed at Monetary Aggregates ? a. Purchase / Sale of
Foreign Exchange in the FOREX Market in order to ensure that banks are able to provide
ample liquidity in the market but, at the same time, conduct their business in a sound manner,

and guard against speculative activity, limits on their net open foreign exchange position are
instituted. Open Foreign Exchange Position shall refer to the extent that banks' foreign
exchange assets do not match their foreign exchange liabilities An open position may either
be: o "positive", "long", or "overbought" (i.e., foreign exchange assets exceed foreign exchange
liabilities) or o "negative", "short", or "oversold" (i.e., foreign exchange liabilities exceed foreign
exchange assets). Allowable Open Foreign Exchange Position. Banks' allowable open
foreign
20. 20. Any excess of the allowable limit shall be settled on a daily basis. Penalties on excess
overbought and oversold positions of banks when PDS trading is suspended shall be waived.
b. Open Market Operations - are a key component of monetary policy implementation. These
consist of repurchase and reverse repurchase transactions, outright transactions, and foreign
exchange swaps. i.Repurchase and reverse repurchase In a repurchase or repo transaction,
the BSP buys government securities from a bank with a commitment to sell it back at a
specified future date at a predetermined rate. The BSPs payment to the bank increases the
latters reserve balances and has an expansionary effect on liquidity. In a reverse repo, the
BSP acts as the seller of government securities and the banks payment has a contractionary
effect on liquidity
21. 21. ii. Outright transactions refer to the direct purchase/sale by the BSP of its holdings of
government securities from/to banking institutions. In an outright transaction, the parties do
not commit to reverse the transaction in the future, creating a more permanent effect on money
supply. The transactions are conducted using the BSPs holdings of government securities.
When the BSP buys securities, it pays for them by directly crediting its counterpartys
Demand Deposit Account with the BSP. The transaction thus increases the buyers holdings
of central bank reserves and expands the money supply. Conversely, when the BSP sells
securities, the buyers payment (made by direct debit against his Demand Deposit Account
with the BSP) causes the money supply to contract. iii. Foreign exchange swaps refer to
transactions involving the actual exchange of two currencies (principal amount only) on a
specific date at a rate agreed on the deal date (the first leg), and a reverse exchange of the
same two currencies at a date further in the future (the second leg) at a rate (different from the
rate applied to the first leg) agreed on deal date.
22. 22. TOOLS OF MONETARY POLICY (2) Tools Aimed at Influencing the Multiplier or Interest
Rate a. Reserve Requirements - refer to the percentage of bank deposits and deposit
substitute liabilities that banks must keep on hand or in deposits with the BSP and therefore
may not lend. Money multiplier is inversely related to the required reserves percentage. If the
required reserves are low, banks can lend more of their deposit and the multiplier is high. If it is
increased, banks can lend less and the multiplier goes down. Changes in reserve
requirements have a significant effect on money supply in the banking system, making them a
powerful means of liquidity management. Reserve requirements apply to peso demand,
savings, time deposit and deposit substitutes (including long-term non-negotiable tax-exempt
certificates of time deposit or LTNCTDs) of universal banks (UBs) and commercial banks (KBs)
and may be kept in the form of cash in vault, deposits with the BSP and government securities.
23. 23. TOOLS OF MONETARY POLICY Required reserves consist of two forms: regular or
statutory & liquidity reserves - Deposits maintained by banks with the BSP up to 40 percent of
the regular reserve requirement are paid interest at 4 percent per annum - Liquidity reserves
are paid the rate on comparable government securities less half a percentage point. The use of
liquidity reserves help to reduce bank intermediation costs since they are paid market-based
interest rates. - In March 2006, the Monetary Board began to require banks to keep liquidity
reserves in the form of term deposits in the reserve deposit account (RDA) with the BSP
instead of government securities bought directly from the BSP.

24. 24. TOOLS OF MONETARY POLICY b. Rediscounting The BSP extends discounts, loans
and advances to banking institutions in order to influence the volume of credit in the financial
system. Rediscounting is a standing credit facility provided by the BSP to help banks meet
temporary liquidity needs by refinancing the loans they extend to their clients. The
rediscounting facility allows a financial institution to borrow money from the BSP using
promissory notes and other loan papers of its borrowers as collateral. There are two types of
rediscounting facilities available to qualified banks: the peso rediscounting facility and the
Exporters Dollar and Yen Rediscount Facility (EDYRF) which was introduced in 1995. If the
BSP wants to constrict deposits and money supply, it simply reduced the amount of funds it
makes available and/or raises the rediscount rate.
25. 25. Differences between Developed and Developing Countries in FISCAL SYSTEMS stems
from the following: Level of Economic Development Historical Experience Scars and
Traumas of Wars Process of Colonization Politico Economic Relationships Developed
Countries = goals are more concerned with maintaining growth and economic stability
Developing Countries = its goal is to achieve DEVELOPMENT, or narrowly,
INDUSTRIALIZATION

Philippine Public Fiscal Administration by Daisy T. Besing (MPA)

1. 1. Fiscal administration IS THE ACT OF MANAGING INCOMING AND OUTGOING MONETARY
TRANSACTIONS AND BUDGETS FOR GOVERNMENTS, EDUCATIONAL INSTITUTIONS, NONPROFIT
ORGANIZATIONS, AND OTHER PUBLIC SERVICE ENTITIES.
2. 2. Fiscal administration -systems, -structures, -processes, -Officials and personnel, - and the policy
environment governing intergovernmental, and inter-local fiscal relations
3. 3. Fiscal administration March 17, 1897 -Revolutionary Government was founded in Naic, Cavite - Dir.
Baldomero Aguinaldo, DOF 1901- the Department of Finance and Justice(CS) - William Howard Taft - Sec.
Gregorio Araneta 1916 - Reorganization Act No. 2666 - DFJ split into two
4. 4. Fiscal administration 1936 DOF and Budget Commission 1949 Central Bank of the Philippines was
created 1970 Minister Cesar A. Virata was appointed Secretary 1974- with the adoption of the
parliamentary form of government, the Department was changed to a Ministry.
5. 5. Fiscal administration 1980s- of inter-agency committees -Investment Coordination Committee (ICC)
-Government Corporate Monitoring and Coordinating Committee (GCMCC) -1987-the Ministry of Finance
was reverted to a Department following the ratification of the 1987 Constitution which provided for a
presidential form of government.
6. 6. Fiscal administration 1988- Value Added Tax was introduced and replaced a complicated sales tax
structure. 1997 - Asias Newest Tiger - National Government recorded a budget surplus for the third
consecutive year, and the public sector generated its fiscal surplus since the sector started to be monitored
in 1985.
7. 7. FISCAL
ADMINISTRATION
OVERVIEWZEROS
IN
ON
THE
MANAGEMENT
OF
FINANCIALRESOURCES AND THOSE ACTIVITIES AND OPERATIONS TOGENERATE REVENUE, MAKE
THOSE AVAILABLE, AND SEE TO ITTHAT FUNDS ARE WISEFULLY, LAWFULLY, EFFECTIVELY
ANDEFFICIENTLY SPENT.-THE ADMINISTRATION OF FINANCES IS AN INTRINSICCOMPONENT OF
MANAGEMENT RESPONSIBILITY.- THERE IS AN INTIMATE LINKAGE BETWEEN ADMINISTERINGAND
FUNDING.- AN ADMINISTRATIVE ACT HAS FINANCIAL IMPLICATIONS. Fiscal administration
8. 8. PHILIPPINE PUBLIC FISCAL ADMINISTRATION OVERVIEW A DECISION TO INCREASE TAXES
INCREASES REVENUE OF GOVERNMENTTO IMPLEMENT SOCIAL AMELIORATION PROGRAM
CREATESA CHARGE ON REVENUE EARNED WHILE AT THE SAME TIME DISTRIBUTES AND
DISPERSES SOCIAL BENEFITS.
9. 9. FISCAL ADMINISTRATION ORGANIZING TOP MANAGEMENT LEVEL (INTERESTED IN IT) MIDDLE
MANAGEMENT (DEEPLY INVOLVED IN IT) RANK AND FILE(AFFECTED BY WHATEVER RESULTS
FROM IT)

10. 10. FISCAL ADMINISTRATION ORGANIZING THE PRINCIPAL AGENCIES TASKED WITH FISCAL
FUNCTIONS: - CONGRESS, ESPECIALLY THE LOWER HOUSE, -DEPARTMENT OF FINANCE
-DEPARTMENT OF BUDGET AND MANAGEMENT -COMMISSION ON AUDIT
11. 11. Fiscal administration (Offices/agencies)CONGRESSDEPARTMENT OF FINANCE (DOF)DEPARTMENT
OF BUDGET AND MANAGEMENTCOMMISSION ON AUDITDEPARTMENT OF INTERIOR AND LOCAL
GOVTOFFICE OF THE PRESIDENT (OPBureaus:Bureau of Internal Revenue (BIR)Bureau of Customs
(BOC)Bureau of the Treasury (BTR)Bureau of Local Government Finance (BLGF)Offices:Privatization and
Management Office (PMO)Agencies and CorporationsInsurance Commission (IC)National Tax Research
Center (NTRC)Central Board of Assessment Appeal (CBAA)Philippine Deposit Insurance Corporation
(PDIC)Philippine Export-Import Credit Agency (PHILEXIM)Government Service Insurance System
(GSIS)Social Security System (SSS)Public Estates Authority (PEA)Cooperative Development Authority
(CDA)Regional Offices
12. 12. FISCAL
CONTROL
MECHANISMS
(FOUR
JUSTIFICATIONS
FOR
EXPENDITURE
CONTROLTHROUGH THE BUDGET) PREVENT MISAPPROPRIATION OF FUNDS REQUIRES REVIEW
AND APPROVAL BY THE ADMINISTRATIVE OFFICIAL OF THE LINE OR OPERATING AGENCY, OF ALL
REQUESTS FOR MONEY RELEASES AND BUDGETARY ALLOTMENTS, VOUCHERS AND SIMILAR
PAPERS BEFORE PAYMENTS ARE MADE SO THAT EXPENDITURES ARE IN ACCORDANCE WITH
POLICY AND LAW AND NOT IRREGULAR, UNNECESSARY, EXCESSIVE, EXTRAVAGANT AND
UNCONSCIONABLE
13. 13. REPUBLIC ACT NO. 7160 AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991SEC.
315. SUBMISSION OF DETAILED STATEMENTS OF INCOMEAND EXPENDITURES. (A) ON OR BEFORE
THE FIFTEENTH (15TH)DAY OF JULY OF EACH YEAR, LOCAL TREASURERS SHALLSUBMIT TO
THEIR RESPECTIVE LOCAL CHIEF EXECUTIVES ACERTIFIED STATEMENT COVERING THE INCOME
ANDEXPENDITURES OF THE PRECEDING FISCAL YEAR, THE ACTUALINCOME AND EXPENDITURES
OF THE FIRST TWO (2) QUARTERSOF THE CURRENT YEAR, AND THE ESTIMATED INCOME AND
EXPENDITURES FOR THE LAST TWO (2) QUARTERS OF THE CURRENT YEAR.
14. 14. REPUBLIC ACT NO. 7160 AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991SEC.
353. THE OFFICIAL FISCAL YEAR.THE OFFICIAL FISCAL YEAR OF LOCAL GOVERNMENTUNITS
SHALL BE THE PERIOD BEGINNING WITH THEFIRST DAY OF JANUARY AND ENDING WITH THE
THIRTY-FIRST DAY OF DECEMBER OF THE SAME YEAR.
15. 15. REPUBLIC ACT NO. 7160 AN ACT PROVIDING FOR A LOCAL GOVERNMENT CODE OF 1991SEC.
354. ADMINISTRATIVE ISSUANCES;BUDGET OPERATIONS MANUAL.THE SECRETARY OF BUDGET
AND MANAGEMENT JOINTLYWITH THE CHAIRMAN OF THE COMMISSION ON AUDITSHALL, WITHIN
ONE (1) YEAR FROM THE EFFECTIVITY OFTHIS CODE, PROMULGATE A BUDGET OPERATIONS
MANUALFORLOCAL GOVERNMENT UNITS TO IMPROVE ANDSYSTEMATIZE METHODS,
TECHNIQUES, AND PROCEDURESEMPLOYED IN BUDGET PREPARATION,AUTHORIZATION,
EXECUTION, AND ACCOUNTABILITY.
16. 16. FISCAL
CONTROL
MECHANISMS
(FOUR
JUSTIFICATIONS
FOR
EXPENDITURE
CONTROLTHROUGH THE BUDGET) CONTROL TO IMPLEMENT PROSPECTIVE POLICY PROACTIVE
ADMINISTRATION INHIBITS GOVERNMENTAL UNITS FROM DIRECTLY TRANSACTING AND
NEGOTIATING MONEY MATTERS SINCE SUCH KIND OF TRANSACTION IS OFFICIALLY CHANNELED
THROUGH THE DEPARTMENT OF BUDGET AND MANAGEMENT IN THE FORM OF BUDGET
ESTIMATES AS ENDORSED BY THE PRESIDENT
17. 17. FISCAL
CONTROL
MECHANISMS
(FOUR
JUSTIFICATIONS
FOR
EXPENDITURE
CONTROLTHROUGH THE BUDGET) ENSURE THE WISDOM AND PROPRIETY OF EXPENDITURE
CLAIMS FOR PAYMENT FROM PUBLIC FUNDS, LEGALITY, PRUDENCE, REASONABLENESS, THE
MORALITY OF THE CLAIM OR CHARGE SHOULD BE ESTABLISHED. A REVIEW OF EXISTING
CONTRACTS AND TRANSACTIONS SHOULD BE MADE.
18. 18. FISCAL
CONTROL
MECHANISMS
(FOUR
JUSTIFICATIONS
FOR
EXPENDITURE
CONTROLTHROUGH THE BUDGET) PREVENT DEFICITS FISCAL SUPERVISION AND CONTROL MAY
BE USEFUL BUT SHOULD NOT UNDULY INTERFERE WITH AGENCY PREROGATIVE TO CARRY OUT
PROGRAMS MANDATED BY THE CONSTITUTION AND THE LAWS.
19. 19. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE BUDGET PHILIPPINE NATIONAL BUDGETThe
National Budget represents theestimate of expected income andprojected expenditures over a period oftime
referred to as the fiscal year.(1) to spend for its programs and projects(2) where the money will come from
20. 20. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSSSection
22, Article VII of the 1987 Constitutionsets the tone for the budgetary process.Under this Article, the

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22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

President submits toCongress within thirty days from the opening ofevery regular session, a financial plan
ofexpenditures and sources of financing, includingreceipts from existing and proposed revenuemeasures as
basis for a general appropriationsbill.
21. PHILIPPINE PUBLIC FISCAL ADMINISTRATIONTHE PHILIPPINE BUDGETARY PROCESSS
STAGES1. Budget Preparation2.Budget Authorization3.Budget Implementation4.Budget Accountability
22. FIVE MAJOR PHASES IN THE BUDGET PROCESS (UBOM)1. BUDGET PREPARATION 2. BUDGET
AUTHORIZATION 3. BUDGET REVIEW 4. BUDGET EXECUTION5. BUDGET ACCOUNTABILITY Fiscal
administration
23. FUNCTIONS OF LOCAL OFFICIALS IN L.F.A LOCAL CHIEF EXEC. LOCAL SANGGUNIAN- Executive
Direction and -Taxing AuthorityControl - Enactment of Policies,-Licensed and Issuing of Implementing Rules
andPermits Regulations COMPOSITION OF LOCAL FINANCE CLUSTER (Assessor; Accountant; Bidget
Officer; Treasurer; Planning & Development Officer) -Income projections -Recommendations on
Tax/Revenues Measures -Accounting of the Budget Fiscal administration
24. SOURCES OF INCOME OF LGUS EXTERNAL INTERNAL1.Internal Revenue 1.Taxes, Fees, and
ChargesAllotment (IRA) 2.Income derived from the2.Share from the Utilization Investments, privatized andof
national Wealth Development Enterprises,3.Grants and Donations and Inter-Local4.Domestic Loans
Government Cooperation5.Credit-Financing Schemes Fiscal administration
25.
II.LEGAL
BASIS
FOR
LOCAL
FISCAL
ADMINISTRATION
1987
PHILIPPINE
CONSTITUTIONSECTION 2 Article X: The territorial and political subdivisions shall enjoy local Autonomy.
REGION PROVINCE CITY MUNICIPALITY BARANGAY Fiscal administration
26. the share of each province, city or municipality shall becetermined on the basis of the ff. Formula (Sec.
285, RA 7160)-PROVINCES: 23, 81 PROVINCES-CITIES: 23%12, POPULATION 50%LAND AREA
25%EQUALSHARING 25%-MUNICIPALITIES: 34%- 1,501 MUN.- BARANGAYS: 20%33,461 BARANGAYS
27. LOCAL TAXESPrepare Local Revenue Generation PlanConduct Public Consultations on Revenues
measuresUpdate Local Code TaxesProvide Incentives to Tax CollectorsREAL PROPERTY
TAXESEngage Participation of other StakeholdersComputerize records of Assessors and Treasures
OfficeStrengthen tax collection enforcementConduct Tax Mapping Operations for the Real
PropertyLOCAL BUSINESS TAXES Use info. from databases of other govt agencies Establish one stop
shop for tax payments and business permitapplications Conduct tax mapping inventory of business Fiscal
administration
28. FUNDS MAINTAIN BY LGUSA. GENERAL FUND- AVAILABLE FOR ANY PURPOSE TOWHICH THE
LEGISLATIVE BODY MAYDECIDE TO APPLY IT.B. SPECIAL FUNDS B.1 SPECIAL EDUCATION FUND
B.2 TRUST FUND - PRIVATE AND PUBLIC MONIESWHICH HAVE OFFICIALLY COME
INTOPOSSESSION OF THE LOCALGOVERNMENT. Fiscal administration
29. BUDGETARY PROCESS AT THE LOCALGOVERNMENTFOUR BASIC STEPS:(1) BUDGET
PREPARATION(2) BUDGET AUTHORIZATION (3) BUDGET IMPLEMENTATION(4) BUDGET REVIEW
TYPES OF AUDIT A. PRE-AUDIT B. POST-AUDIT Fiscal administration
30. Levels (Php Billion) Percent Share Increase/(Decrease)PARTICULARS 2012 2013 2012 2013 Amount
Percent Prog. Proposed Prog. ProposedEconomicServices 439.0 511.1 24.2 25.5 72.1 16.4SocialServices
613.4 698.8 33.8 34.8 85.4 13.9Defense 87.2 89.7 4.8 4.5 2.5 2.9General PublicServices 320.3 346.1 17.6
17.3 25.7 8.0Net Lending 23.0 26.5 1.3 1.3 3.5 15.2Debt Service 333.1 333.9 18.3 16.6 0.8 0.2Total 1,816.0
2,006.0 100.0 100.0 190.0 10.5
31. 2012 Program 2013 Proposed Level Level Particulars Rank Rank (Php Billion) (Php Billion)DepEd (incl.
MPBF and SBP) 238.8 1 292.7 1/ 1DPWH (incl. PSEPF and BSGC) 126.4 2 152.9 2/ 2DND (incl. MPBF and
PGF) 108.1 3 121.6 3DILG (incl. MPBF and PGF) 99.8 4 121.1 4DA (incl. PSEPF and BSGC) 61.4 5 74.1
5DOH (incl. MPBF, PSEPF and BSGC) 45.8 7 56.8 6DSWD 48.8 6 56.2 7DOTC (incl. MPBF, PGF, PSEPF
and BSGC) 34.7 8 37.1 3/ 8DOF (incl. MPBF and BSGC) 23.6 9 33.2 9DENR (incl. MPBF and PGF) 17.5 10
23.7 10Notes: Legend:1/ Gross of School Building Program MPBF- Miscellaneous Personnel Benefits
Fund2/ Net of School Building Program SBP School Building Program3/ The corporate funds of DOTC
attached corporations PGF Pension and Gratuity Fund (MIAA, MCIAA, CIAC and CAAP) amounts to
P2.6B in2013 PSEPF Priority Social and Economic Projects Fund BSGC Budgetary Support to
Government Corporations

Public Fiscal Administration Part 1

1. 1. PUBLIC FISCAL ADMINISTRATION Filipino Administrative Institutions PA 211
2. 2. Fiscal Administration Is the act of managing incoming and outgoing monetary transactions
and budgets for governments, educational institutions, nonprofit organizations, and other
public service entities. Refers to systems, processes, resources, and the policy, environment,
government, the inter-governmental and inter-local fiscal relations, affecting among others.
3. 3. Fiscal Administration Revolutionary Government Emiliano Riego de Dios (Minister of
Finance) Tejeros Convention Baldomero Aguinaldo (Director of Finance) Naic, Cavite Mariano
Trias (Minister of Finance) Jan. 21 May 7, 1899 Hugo Ilagan (Minister of Finance) May 7
Nov. 13, 1899 1901 Department of Finance and Justice (Second Philippine Commission)
appointed by Pres. McKinley Headed by William Howard Taft Sec. Gregorio Araneta (July 1,
1908 Oct. 30, 1913) Sec. Victorino Mapa (Nov. 1, 1913 Jan. 14, 1917) 1916
Reorganization Act No. 2666 DFJ split into two
4. 4. Fiscal Administration 1936 DOF and Budget Commission January 3, 1949 Central
Bank of the Philippines was created (RA 265) Central Bank Act of 1948. 1970 with the
adoption of the parliamentary form of government, the Department was changed to a Ministry.
5. 5. Fiscal Administration 1980s Inter-agency committees Investment Coordination
Committee (ICC) Government Corporate Monitoring and Coordinating Committee (GCMCC)
1987 the Ministry of Finance was reverted to a Department following the ratification of the
1987 Constitution which provided for a presidential form of government.
6. 6. Fiscal Administration 1988 Value Added Tax was introduced and replaced a complicated
sales tax structure. 1997 Asias Newest Tiger National Government recorded a budget
surplus for the third consecutive year, and the public sector generated its fiscal surplus since
the sector started to be monitored in 1985.
7. 7. Fiscal administration zeros in on the management of financial resources and those
activities and operations to generate revenue, make those available, and see to it that funds
are wisefully, lawfully, effectively and efficiently spent. The administration of finances is an
intrinsic component of management responsibility. There is an intimate linkage between
administering and funding. An administrative act has financial implications.
8. 8. Fiscal Policy of the Philippines Fiscal policy refers to the measures employed by
governments to stabilize the economy, specifically by manipulating the levels and allocations of
taxes and government expenditures. Fiscal measures are frequently used in tandem with
monetary policy to achieve certain goals.
9. 9. OVERVIEW A DECISION TO INCREASE TAXES INCREASES REVENUE OF
GOVERNMENT TO IMPLEMENT SOCIAL AMELIORATION PROGRAM CREATES A
CHARGE ON REVENUE EARNED WHILE AT THE SAME TIME DISTRIBUTES AND
DISPENSES SOCIAL BENEFITS.
10. 10. ORGANIZING FOR FISCAL ADMINISTRATION Interested in it Top Management Level
Deeply involved in it Middle Management Affected by whatever results from it Rank and File
11. 11. Principal Agencies tasked with fiscal functions: A. CONGRESS (Lower House) B.
DEPARTMENT OF FINANCE C. DEPARTMENT OF BUDGET AND MANAGEMENT D.
COMMISION ON AUDIT
12. 12. CONGRESS (Lower House) Responsible for revenue and expenditure policies.
13. 13. DEPARTMENT OF FINANCE Revenue generation and collection Fund custody
Disbursements Keeping of accounts
14. 14. DEPARTMENT OF BUDGET & MANAGEMENT Review of estimates and fiscal policy
studies in close consultation with the National Economic Development Authority.
15. 15. COMMISSION ON AUDIT Conducts fund and performance audit to see to it that
expenditures are in accordance with the Appropriation Law approved.
16. 16. BANGKO SENTRAL NG PILIPINAS (BSP) and OTHER ECONOMIC PLANNING
ENTITIES (Offices & Agencies) See to it that fiscal plans and programs are geared towards
national development.
17. 17. FISCAL CONTROL MECHANISMS Four Justification for Expenditure Control through the
Budget: 1) Prevent Misappropriation of Funds 2) Control to Implement Prospective Policy 3)
Ensure the Wisdom and Propriety of Expenditure 4) Prevent Deficits
18. 18. BUDGETING CONCEPTS 1. Planning Programming Budget System (PPBS) Type 2.
Zero Base Budgeting (ZBB) Type
19. 19. BUDGETING CONCEPTS Planning Programming Budget System (PPBS) Type. a)
Gives assurance that the budget will help achieve desired agency results. b) Unit head

defends the budget, explains its contribution to the realization of agency goals, develops a cost
projection for each program. c) Submits this to top management which reviews the program
and decides on final budget allocation.
20. 20. BUDGETING CONCEPTS Zero Base Budgeting (ZBB) Type a) The agency justifies the
entire appropriation request for the fiscal year as if the programs are entirely new, instead of
justifying only the increase requested above the previous years appropriation. b) The agency
is obligated to defend all programs every year and rank these in terms of priority using the ratio
between cost and benefit criterion. c) Provides opportunity for top management to re- evaluate
the need for on-going programs, compare these with the proposed and the prioritized for
implementation.
21. 21. LINE ITEM versus PERFORMANCE BUDGETING 1. Line Item Object of the expenditure
type Consists of a detailed listings of every position to be filled Gives the legislative body
tremendous discretion to strike out or to approve individual items. Funds appropriated may
not be transferred from one category of expense to another. Also known as rule of thumb
budgeting where figures of past years are reflected but without income indicators.
22. 22. LINE ITEM versus PERFORMANCE BUDGETING Three columns of figures appear in
each budget sheet: a) Actual expenditure for each object during the previous fiscal year b)
Estimated amounts to be spent for the same objects for the current fiscal year c) Amount
desired for the same objects for the incoming or future fiscal year
23. 23. LINE ITEM versus PERFORMANCE BUDGETING 2. Performance Budgeting is lump
sum budgeting is program budgeting which spells out functions, activities and projects allow
transfer of funds from one organizational unit to another, between work activities and objects to
spent for. there is difficulty in identifying what work units perform or not perform, since its
most important concern is the overall performance of the agency.
24. 24. NEW POLICY GUIDELINES FOR BUDGETING Based on this agenda: The formulation of
the national budget must be in the context of a three year planning framework Expenditures
must achieve program targets and support development strategy
25. 25. NEW POLICY GUIDELINES FOR BUDGETING Agency programs will be supportive of
the identified priority areas which include the following: 1. Modernization of the agricultural
sector to augment farmer income, bolster production and attain food security. 2. Improvement
of the quality of basic social services like health and sanitation, nutrition, education, social
welfare and housing. 3. Acceleration of countryside infrastructure development. 4.
Enhancement of global competitiveness through liberalization, deregulation, and privatization.
5. Provision for macroeconomic stability by instilling fiscal discipline, prudent government
spending and efficient revenue generation. 6. Reform in governance to make it responsive to
the current domestic and global environment.
26. 26. PRINCIPLES FOR AGENCY GUIDANCE 1) Prudent Spending 2) Entrepreneurial
Budgeting 3) Performance Based Budgeting 4) Wholistic Budgeting 5) Consistency with SubSectoral Development Objectives
27. 27. INCOME SOURCES 1. Tax Revenue 2. Non-Tax Revenue
28. 28. INCOME SOURCES 1) Tax Revenue a) Income tax b) Property tax c) Domestic goods and
services tax d) International trade and transactions sales tax e) Value added tax (VAT)
29. 29. INCOME SOURCES 2) Non-Tax Revenue a) Operating and service income b) Income
from public enterprises and investments c) Miscellaneous income d) Capital revenue e) Grants
f) borrowings

Public fiscal adm pwrpt

1. 1.
2. 2. OVERVIEW:<br /><ul><li>Fiscal administration zeros in on the management of financial
resources and those activities and operations to generate revenue, make those available, and
see to it that funds are wisefully, lawfully, effectively and efficiently spent.
3. 3. The administration of finances is an intrinsic component of management responsibility.
There is an intimate linkage between administering and funding. An administrative act has
financial implications. </li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>OVERVIEW:<br /><ul><li>A decision to increase taxes increases revenue of government;
4. 4. To implement social amelioration program creates a charge on revenue earned while at the
same time distributes and disperses social benefits.

5. 5. Because administrative activity is principally dependent upon availability of allocable

financial resources, the management of finances becomes a very important administrative
responsibility.</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>ORGANIZING FOR FISCAL ADMINISTRATION:<br /><ul><li>Fiscal activity is present in all
levels of the organization, whether line or staff; top management level through middle
management; the rank and file.
6. 6. Top management is most interested in it; middle management is deeply involved in it; the
rank and file is affected by whatever results from it. </li></li></ul><li>PHILIPPINE PUBLIC
FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL ADMINISTRATION:<br />The
principal agencies tasked with fiscal functions:<br />Congress, especially the Lower House,
<br />Department of Finance<br />Department of Budget and Management<br />Commission
on Audit<br />
7. 7. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL
ADMINISTRATION:<br />Functions of the Finance Department:<br />Revenue generation and
collection,<br />Fund custody<br />Disbursements <br />Keeping of accounts <br />
8. 8. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />ORGANIZING FOR FISCAL
ADMINISTRATION:<br /><ul><li>Review of estimates and fiscal policy studies are done by the
Department of Budget and Management in close consultation with the National Economic
Development Authority;
9. 9. The Central Bank and other economic planning entities of the state to see to it that fiscal
plans and programs are geared towards national development. </li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>ORGANIZING
FOR
FISCAL
ADMINISTRATION:<br /><ul><li>The Commission on Audit conducts fund and performance
audit to see to it that expenditures are in accordance with the Appropriation Law approved
10. 10. Congress
is
responsible
for
revenue
and
expenditure
policies.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />FISCAL
CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET:<br />Prevent Misappropriation of Funds<br /><ul><li>requires
review and approval by the administrative official of the line or operating agency, of all requests
for money releases and budgetary allotments, vouchers and similar papers before payments
are made so that expenditures are in accordance with policy and law and not irregular,
unnecessary, excessive, extravagant and unconscionable. </li></li></ul><li>PHILIPPINE
PUBLIC FISCAL ADMINISTRATION<br />FISCAL CONTROL MECHANISMS<br />FOUR
JUSTIFICATIONS FOR EXPENDITURE CONTROL THROUGH THE BUDGET:<br />Control
to Implement Prospective Policy<br /><ul><li>proactive administration inhibits governmental
units from directly transacting and negotiating money matters since such kind of transaction is
officially channeled through the Department of Budget and Management in the form of budget
estimates as endorsed by the President.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />FISCAL CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS
FOR EXPENDITURE CONTROL THROUGH THE BUDGET:<br />Ensure the Wisdom and
Propriety of Expenditure<br /><ul><li>claims for payment from public funds, legality, prudence,
reasonableness, the morality of the claim or charge should be established.
11. 11. A
review
of
existing
contracts
and
transactions
should
be
made.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />FISCAL
CONTROL MECHANISMS<br />FOUR JUSTIFICATIONS FOR EXPENDITURE CONTROL
THROUGH THE BUDGET:<br />Prevent Deficits<br /><ul><li>Fiscal supervision and control
may be useful but should not unduly interfere with agency prerogative to carry out programs
mandated by the constitution and the laws.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />BUDGETING CONCEPTS<br />Budgeting may be of the:<br /> (1)
Planning-Programming Budget System (PPBS) type<br /><ul><li>gives assurance that the
budget will help achieve desired agency results
12. 12. unit head defends the budget, explains its contribution to the realization of agency goals,
develops a cost projection for each program
13. 13. submits this to top management which reviews the program and decides on the final
budget allocation.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br
/>BUDGETING CONCEPT<br />(2) Zero-Base Budgeting (ZBB) type<br /><ul><li>the agency
justifies the entire appropriation request for the fiscal year as if the programs are entirely new,
instead of justifying only the increase requested above the previous years appropriation.
14. 14. The agency is obligated to defend all programs every year and rank these in terms of
priority using the ratio between cost and benefit criterion
15. 15. provides opportunity for top management to re-evaluate the need for on-going programs,
compare
these
with
the
proposed
and
the
prioritized
for

implementation.</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>BUDGETING CONCEPT<br />*** Both are special budgeting types to minimize drawbacks
of traditional method wherein budget requires are based on current projects continuing year
after year and where requests for new programs are made without a clear idea of how it will
contribute to the achievement of overall agency goals ***<br />
16. 16. PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>LINE
ITEM
versus
PERFORMANCE BUDGETING<br />Budgeting may also be:<br />(1) Line-Item<br
/><ul><li>object of the expenditure type
17. 17. consists of a detailed listing of every position to be filled
18. 18. gives the legislative body tremendous discretion to strike out or to approve individual items
19. 19. funds appropriated may not be transferred from one category of expense to another.
20. 20. Also known as rule of thumb budgeting where figures of past years are reflected but
without
income
indicators</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br />LINE ITEM versus PERFORMANCE BUDGETING<br />Three
columns of figures appear in each budget sheet:<br />(a) actual expenditure for each object
during the previous fiscal year<br />(b) estimated amounts to be spent for the same objects for
the current fiscal year.<br />(c) amount desired for the same objects for the incoming or future
fiscal year<br />
21. 21. PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>LINE
ITEM
versus
PERFORMANCE BUDGETING<br />(2) Performance Budgeting<br /><ul><li>is lump-sum
budgeting
22. 22. is program budgeting which spells out functions, activities and projects
23. 23. allow transfer of funds from one organizational unit to another, between work activities and
objects to be spent for.
24. 24. There is a difficulty in identifying what work units perform or not perform, since its most
important concern is the overall performance of the agency.</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>NEW
POLICY
GUIDELINES
FOR
BUDGETING<br />Based on this agenda: <br /><ul><li>the formulation of the national budget
must be in the context of a three-year planning framework
25. 25. expenditures must achieve program targets and support development strategy.
</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />NEW POLICY
GUIDELINES FOR BUDGETING<br />Agency programs will be supportive of the identified
priority areas which include the following:<br />modernization of the agricultural sector to
augment farmer income, bolster production and attain food security<br />improvement of the
quality of basic social services like health and sanitation, nutrition, education, social welfare
and housing<br />acceleration of countryside infrastructure development<br />
26. 26. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />NEW POLICY GUIDELINES FOR
BUDGETING<br />Agency programs will be supportive of the identified priority areas which
include the following:<br />enhancement of global competitiveness through liberalization,
deregulation, and privatization<br />provision for macroeconomic stability by instilling fiscal
discipline, prudent government spending and efficient revenue generation<br />reform in
governance to make it responsive to the current domestic and global environment<br />
27. 27. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />PRINCIPLES FOR AGENCY
GUIDANCE<br /> (1) Prudent Spending<br /><ul><li>calls for rational fund allocation
28. 28. scaling down or phasing out devolved or non-essential activities
29. 29. doing away with duplicating functions; moratorium on increasing personnel and setting up
new units
30. 30. adopting
a
system
for
reasonable
use
of
supplies,
materials
and
facilities.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />PRINCIPLES
FOR AGENCY GUIDANCE<br />(2) Entrepreneurial Budgeting<br /><ul><li>this involves
mobilization of government resources for development programs
31. 31. improving front-line public services
32. 32. requiring the agencies to study their fee structure in order to recover expenditure for
specific
services
rendered.</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br />PRINCIPLES FOR AGENCY GUIDANCE<br />(3) PerformanceBased Budgeting<br /><ul><li>key results areas (KRAs) and commitment for specific
programs are indentified to optimize effective use of resources.</li></ul> (4) Wholistic
Budgeting<br /><ul><li>expenditure levels of regional units are provided by the agency as
guide for preparing the regional budget.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />PRINCIPLES FOR AGENCY GUIDANCE<br />(5) Consistency with
Sub-Sectoral Development Objectives<br /><ul><li>like that of the Technical Education and
Skills Act of 1994 (TESDA)

33. 33. Research and Development (R&D) in the material, technological and engineering sciences,
implementation of the Systems Designated Statistics pursuant to Executive Order
352.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />INCOME
SOURCES<br />Two general sources of government income :<br />(1) Tax Revenue<br
/><ul><li>income tax
34. 34. property tax
35. 35. domestic goods and services tax
36. 36. international trade and transactions tax , sales
37. 37. value
added
tax
(VAT).</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br />INCOME SOURCES<br />Two general sources of government
income :<br />(2) Non-Tax Revenue<br /><ul><li>operating and service income revenue from
the operations of national and local government and government corporations
38. 38. income from public enterprises and investments income received for the use of financial
assets dividends; net rent for the use of government land and royalty for the use of copyrights
and patents owned by the government.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL
ADMINISTRATION<br />INCOME SOURCES<br />Two general sources of government
income :<br />(2) Non-Tax Revenue<br /><ul><li>miscellaneous incomerevenues not
classified under other categories such as sale of goods and merchandise confiscated, waste
materials; inventory adjustments and gains on exchange rate.
39. 39. capital revenue income derived from the sale of capital assets like buildings, equipment,
machines,
land
and
intangible
assets
like
patent,
copyright
and
trademark</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />INCOME
SOURCES<br />Two general sources of government income :<br />(2) Non-Tax
Revenue<br /><ul><li>grants non-repayable transfers received from other levels of the
government, private sector or international institutions.
40. 40. borrowings includes domestic and foreign debts, regardless of source, whether in cash or
in
kind.</li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>APPROPRIATIONS AND OBLIGATIONS<br />These are estimates and projections of what
the departments and agencies incur or expect to incur. <br />These include:<br />New General
Appropriations as provided for in the General Fund, Fiduciary Fund or Special Account in the
General Fund<br />Supplemental Appropriations these are stand-by appropriations
authorized by Congress apart from the programmed appropriations for a given fiscal year.
<br />
41. 41. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Automatic Appropriations expenditures authorized by specific laws like
Commonwealth Act 186 and Republic Act 660 for retirement and insurance premiums of
government employees; Presidential Decree 1234 and other laws for special accounts and
funds; grant proceeds; custom duties and taxes; proceeds from the sale of non-serviceable,
obsolete and unnecessary equipment ; net lending; interest payment for national debt;
amortization for domestic and foreign debts as per Presidential Decree 1967 and Republic
Acts 4860 and 245.<br />
42. 42. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Continuing Appropriations obligations provided under Executive Order
No. 182 known as Public Works Act for Multiyear infrastructure Projects; agrarian reform;
unobligated allotments for maintenance and other operating expenses and unreleased
appropriations for maintenance and other operating expenses and capital outlays as provided
by RA 8250 and RA 8522.<br />
43. 43. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />APPROPRIATIONS AND
OBLIGATIONS<br />Budgetary Adjustments transfers to the reserve fund; transfer from the
agrarian reform fund; organizational adjustment fund; general fund adjustment; miscellaneous
personnel benefits; contingency fund; sale of military camps; countrywide development;
Pinatubo assistance resettlement and development and unprogrammed projects.<br />
44. 44. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE BUDGET<br /> The budget is
a management tool <br /><ul><li>to account for what has been received
45. 45. how this will be spent at a given period of time. </li></ul>How a government forecasts and
allocates its income and expenditures is illustrated in the budget document.<br />
46. 46. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE BUDGET<br />PHILIPPINE
NATIONAL BUDGET<br />The National Budget represents the estimate of expected income
and projected expenditures over a period of time referred to as the fiscal year.<br /> It is what
government plans:<br /> (1) to spend for its programs and projects<br /> (2) where the money
will come from<br />

47. 47. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY

PROCESS<br />Section 22, Article VII of the 1987 Constitution sets the tone for the budgetary
process. <br />Under this Article, the President submits to Congress within thirty days from the
opening of every regular session, a financial plan of expenditures and sources of financing,
including receipts from existing and proposed revenue measures as basis for a general
appropriations bill.<br />
48. 48. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br /> (1) Budget Preparation the determination of budgetary priorities and activities guided by the overall national
development plan with the ceilings and constraints imposed by available revenues and
borrowing limits. <br />
49. 49. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(2) Budget Authorization
the President submits the overall budget to Congress in the form of detailed Expenditure
Program accompanied by the Budget of Expenditures and Sources of Financing; the Budget
Message of the President, and the Regional Allocation of the Expenditure Program.<br />
50. 50. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(3) Budget
Implementation after the President signs the General Appropriations Act into law, the
Department of Budget and Management requires the different agencies of government to
submit their respective work and financial work plans.<br />
51. 51. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br />The Philippine Budget undergoes four stages:<br />(4) Budget Accountability
evaluation of actual performance and initially-approved work targets, obligations incurred,
<br />
52. 52. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />THE PHILIPPINE BUDGETARY
PROCESS<br /><ul><li>Personnel hired and work accomplished by comparing all these with
the targets set at the time agency budgets were approved.
53. 53. Performance and cost effectiveness of agencies are evaluated since no results can be
obtained if agency efficiency is slow and funds are wastefully spent
54. 54. Detailed examination of the agencys book of account is undertaken to ensure that all
expenses have been disbursed for the purpose for which the funds have been
authorized.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />LOCAL
FISCAL MANAGEMENT<br />FUNDAMENTAL PRINCIPLES <br /><ul><li>The Local
Government Code of 1991 requires local governments to formulate sound financial plans.
55. 55. Local budget plans and goals must harmonize with national development plans, strategies
and goals to optimize utilization of resources, fiscal or physical. </li></li></ul><li>PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>LOCAL
FISCAL
MANAGEMENT<br
/>FUNDAMENTAL PRINCIPLES <br /><ul><li>Local government units should incorporate the
needs and requirements of their component units and equitably allocate resources among said
units.
56. 56. The most basic limitation is the requirement that all local government units should
endeavor
to
have
balanced
budget
for
every
fiscal
year
of
its
operation.</li></li></ul><li>PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGET
FORM AND CONTENT<br /> Two parts Of Local government budget <br />estimate of
income<br />total appropriations covering the current operating expenditures and capital
outlays<br />
57. 57. PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>BUDGETARY
REQUIREMENTS<br />The budget of local government units for any<br />fiscal year shall
comply with the following:<br />(a) the aggregate amount appropriated shall not exceed the
estimates of income<br />(b) full provisions shall be made for all<br /> statutory and
contractual obligations of the <br /> local government unit concerned, provided <br /> the
amount of appropriations for debt <br /> servicing shall not exceed twenty percent <br /> (20%)
of the regular income of the local <br /> government unit concerned.<br />
58. 58. PHILIPPINE
PUBLIC
FISCAL
ADMINISTRATION<br
/>BUDGETARY
REQUIREMENTS<br />The budget of local government units for any<br />fiscal year shall
comply with the following:<br />(c) aid to component barangays shall be provided in amounts
of not less than one thousand pesos (P1,000.00) per barangay.<br />(d) five percent (5%) of
the estimated revenue from regular resources shall be set aside as an annual lump-sum
appropriation for unforeseen expenditures arising form the occurrence of calamities<br />
59. 59. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />BUDGETARY PROCESS AT THE
LOCAL GOVT LEVEL<br />The stages of are analogous to that of the national level of

government. <br />Four basic steps are also observed.<br /> (1) Budget Preparation<br /> (2)
Budget Authorization<br /> (3) Budget Implementation<br /> (4) Budget Review<br />
60. 60. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />AUDIT OF FUNDS <br
/><ul><li>Accounting of Funds as a management tool is best ensured by the audit function.
61. 61. It is a component of the budgetary process since it is a mechanism for determining whether
the expenditures are legal and desirable. </li></ul>TWO TYPES OF AUDIT:<br />PreAudit<br />Post-Audit<br />
62. 62. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />TWO TYPES OF AUDIT<br />PreAudit <br />This is audit performed before money is actually spent and takes place before
payment of an obligation or before the expense is incurred. <br />Post-Audit <br /> This is
audit after money has been spent in order to find out whether funds are spent in accordance
with the approved appropriation. <br />
63. 63. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />End of Presentation<br />
64. 64. PHILIPPINE PUBLIC FISCAL ADMINISTRATION<br />Reference: <br />AvelinoP.
Tendero<br />