GOVERNMENT ACCOUNTING

Definition of Terms:
a. Accrual basis – means a basis of accounting under which transactions and other events are recognized when
they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions and events
are recognized in the accounting records and recognized in the financial statements of the periods to which they
relate. The elements recognized under accrual accounting are assets, liabilities, net assets/equity, revenue, and
expenses.
b. Assets – are resources controlled by an entity as a result of past events, and from which future economic
benefits or service potential are expected to flow to the entity.
c. Entity – refers to a government agency, department or operating/field unit. It may be referred to in this GAM as
an agency.
d. Expenses – are decreases in economic benefits or service potential during the reporting period in the form of
outflows or consumption of assets or incurrence of liabilities that result in decreases in net assets/equity, other
than those relating to distributions to owners.
e. Government Accounting – encompasses the processes of analyzing, recording, classifying, summarizing and
communicating all transactions involving the receipt and disposition of government funds and property, and
interpreting the results thereof. (Sec. 109, Presidential Decree (P.D.) No. 1445)
f. Government Budget – is the financial plan of a government for a given period, usually for a fiscal year, which
shows what its resources are, and how they will be generated 3 and used over the fiscal period. The budget is
the government's key instrument for promoting its socio-economic objectives. The government budget also
refers to the income, expenditures and sources of borrowings of the National Government (NG) that are used to
achieve national objectives, strategies and programs.
g. Liabilities – are firm obligations of the entity arising from past events, the settlement of which is expected to
result in an outflow from the entity of resources embodying economic benefits or service potential.
h. Net assets/equity – is the residual interest in the assets of the entity after deducting all its liabilities.
i. Revenue – is the gross inflow of economic benefits or service potential during the reporting period when those
inflows result in an increase in net assets/equity, other than increases relating to contributions from owners.
j. Revenue funds – comprise all funds derived from the income of any agency of the government and available for
appropriation or expenditure in accordance with law.
k. Allotment – is an authorization issued by the DBM to NGAs to incur obligations for specified amounts contained
in a legislative appropriation in the form of budget release documents. It is also referred to as Obligational
Authority.
l. Appropriations – is the authorization made by a legislative body to allocate funds for purposes specified by the
legislative or similar authority.
m. Approved Budget – is the expenditure authority derived from appropriation laws, government ordinances, and
other decisions related to the anticipated revenue or receipts for the budgetary period.

The approved budget consists of the following:

UACS Code New General Appropriations
01 Continuing Appropriations
02 Supplemental Appropriations
03 Automatic Appropriations
04 Unprogrammed Funds
05 Retained Income/Funds
06 Revolving Funds
07 Trust Receipts
n. Automatic Appropriations – are the authorizations programmed annually or for some other period prescribed by
law, by virtue of outstanding legislation which does not require periodic action by Congress.
 o. Budget Information – the budgetary information consists of, among others, data on appropriations or the
approved budget, allotments, obligations, revenues and other receipts, and disbursements.
p. Continuing Appropriations – are the authorizations to support obligations for a specific purpose or project, such
as multi-year construction projects which require the incurrence of obligations even beyond the budget year.
q. Disbursements – are the actual amounts spent or paid out of the budgeted amounts.
r. Final Budget – is the original budget adjusted for all reserves, carry-over amounts, transfers, allocations and
other authorized legislative or similar authority changes applicable to the budget period.
s. New General Appropriations – are annual authorizations for incurring obligations during a specified budget year,
as listed in the GAA.
t. Obligation – is an act of a duly authorized official which binds the government to the immediate or eventual
payment of a sum of money. Obligation maybe referred to as a commitment that encompasses possible future
liabilities based on current contractual agreement.
u. Original Budget – is the initial approved budget for the budget period usually the General Appropriations Act
(GAA). The original budget may include residual appropriated amounts automatically carried over from prior
years by law such as prior year commitments or possible future liabilities based on a current contractual
agreement.
v. Revenues – are increases in economic benefits or service potential during the accounting period in the form of
inflows or increases of assets or decreases of liabilities that result in increases in net assets/equity, other than
those relating to contributions from owners.

Objectives of General Purpose Financial Statements.

The objectives of general purpose financial statements (GPFSs) are to provide information about the financial position,
financial performance, and cash flows of an entity that is useful to a wide range of users in making and evaluating
decisions about the allocation of resources. Specifically, the objectives of general purpose financial reporting in the
public sector are to provide information useful for decision-making, and to demonstrate the accountability of the entity
for the resources entrusted to it.

Components of General Purpose Financial Statements.

The complete set of GPFSs consists of:
a. Statement of Financial Position (Annex A)
b. Statement of Financial Performance (Annex B)
c. Statement of Changes in Net Assets/Equity (Annex C)
d. Statement of Cash Flows (Annex D)
e. Statement of Comparison of Budget and Actual Amounts (Annex E)
f. Notes to the Financial Statements, comprising a summary of significant accounting policies and other explanatory
notes. (Annex F)

Registries of Allotments, Obligations and Disbursements

The Registries of Allotments, Obligations and Disbursements (RAOD) shall be maintained by the Budget Division/Unit of
agencies to record allotments, obligations and disbursements. It shall show the allotments received for the year,
obligations incurred against the corresponding allotment and the actual disbursements made. The balance is extracted
every time an entry is made to prevent incurrence of obligations in excess of allotment and overdraft in disbursements
against obligations incurred. The RAODs shall be maintained by appropriation act, fund cluster, MFO/PAP, and allotment
class.
a. Registry of Allotments, Obligations and Disbursements-Personnel Services (RAOD-PS) (Appendix 9A) shall be
used to record the allotments received, obligations incurred and disbursements classified under PS.
b. b. Registry of Allotments, Obligations and Disbursements-Maintenance and Other Operating Expenses (RAOD-
MOOE) (Appendix 9B) shall be used to record the allotments received, obligations incurred and disbursements
classified under MOOE.
c. Registry of Allotments, Obligations and Disbursements-Financial Expenses (RAOD-FE) (Appendix 9C) shall be
used to record the allotments received, obligations incurred and disbursements classified under FE.
d. Registry of Allotments, Obligations and Disbursements-Capital Outlays (RAOD-CO) (Appendix 9D) shall be used
to record the allotments received, obligations incurred and disbursements classified under CO.